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Eagle Materials inc (NYSE:EXP)
Q1 2022 Earnings Call
Jul 28, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day everyone, and welcome to Eagle Materials' First Quarter of Fiscal 2022 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir.

Michael R. Haack -- President and Chief Executive Officer

Thank you, Josh. Good morning. Welcome to Eagle Materials conference call for our first quarter for fiscal 2022. This is Michael Haack. Joining me today are Craig Kesler, our Chief Financial Officer; and Bob Stewart, Executive Vice President of Strategy, Corporate Development, and Communications.

We are glad you could be with us today. There will be a slide presentation made in connection with this call. To access it, please go to eaglematerials.com and click on the link to the webcast. While you're accessing the slides, please note, the first slide covers our cautionary disclosure regarding forward-looking statements made during this call. These statements are subject to risks and uncertainties and could cause the results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release.

I'll begin today with some perspectives about our business environment, one that is continuing to improve. Residential construction represents the most important single demand driver for us, driving around 80% of the demand for Gypsum Wallboard and about 30% of the demand for cement. The outlook for housing starts, especially single-family starts, which are particularly important for wallboard demand, remain strong.

As long as mortgage interest rates stay in the lower quartile by historic standards, this should be largely sustainable. As we have been underbuilding against underlying demand in the U.S. for over a decade. This underbuilding has led to a record shortage of homes at the same time that household formations have been increasing. Repair and remodeling is a very important component of residential construction, and it is healthy component of the underlying demand engine.

With a financial boost from recent federal stimulus and strong house price appreciation, homeowners are continuing to invest in the upkeep and improvement of their homes. Homeowners also seem to be undertaking larger discretionary renovations, ones in many cases were deferred during the pandemic uncertainties. People are buying homes in record numbers, and I should emphasize where availability allows.

And the knock-on effect for repair and remodel is significant. Whether it's getting a home in tiptop condition to sell or personalizing the home after purchase, there is a demand relationship between home buying and repair and remodeling. It was notable that President Biden said this month that he planned to make an historic investment in affordable housing by building and rehabilitating more than 2 million homes. The National Association of Realtors said that there is a cumulative demand-supply gap of 6.8 million homes. The loss of the existing units through demolition, natural disaster, or functional obsolescence has contributed to this shortfall along with the underproduction of new housing units. These intentions, if acted upon, represent upside to our already robust outlook for Gypsum Wallboard.

Cement demand is driven most heavily by infrastructure. There has also been a lot of discussion about President Biden's intentions around federal funding for infrastructure, and this is needed and it is, of course, welcome. Implementation will further challenge U.S. cement supply in many parts of the U.S., which is already straining to meet current demand. It is also important to emphasize, as I have in the past, that the lion's share of funding for infrastructure comes from states, not federal government. There was quite a bit of concern about state budgets being impacted by the pandemic, but as we shared in the prior earnings calls, our analysis of sources of state funding suggest the impact would not be as great as some feared, especially in the U.S. heartland states in which we operate. As it turned out, state and local revenues are in fact healthy.

At Eagle, we remain virtually sold out of our manufactured cement. Our entire U.S. heartland system is now starting to tension more than it has over the last decade. I'd emphasize that our cement volumes this quarter were slightly impacted by wet weather and not by the lessening of demand. The point of this is that the demand picture is robust today for both of our businesses. The factors driving this strength should be sustainable at least through the mid-term.

That is the demand side. Now let me spend some time on the supply side. I want to start the supply side discussion with some comments I made in the last earnings call as I think they are important to reiterate. The first item is around the diminishing supply of synthetic gypsum in the eastern half of the U.S. This is due to less burning of coal as power plants change fuel sources from coal to natural gas and from the outright closure of coal-fired power plants. With a diminishing supply of synthetic gypsum, existing synthetic wallboard plants will be limited in their ability to fully utilize their current capacity, increase current, or build new capacity. Conversely, almost all of Eagle's plants have many decades of raw material supply, which are primarily owned natural gypsum deposits. We are largely insulated from the direct effects of this diminishing synthetic gypsum trend while our plants are also in a position to indirectly benefit from the supply dynamics that this trend creates. And this way, it is notable that the gypsum wallboard industry is increasingly looking more like the cement industry.

The second point we discussed in the last call was around the significant regulatory and capital barriers to U.S. cement capacity expansion, whether it be existing facilities or through the construction of new ones. This is why in the face of increasing demand and with industry capacity now nearing full utilization, clinker capacity in the number of cement kilns has not only not expanded since 2010 but since the clinker capacity and the number of cement kilns has actually been reduced in the U.S. Against this backdrop, high-cost imports are increasingly required to serve U.S. coastal markets. Eagle is well positioned in the heartland of the U.S. away from the coast, and here too Eagle will be positively impacted from this trend.

These imports also carry with them a much larger carbon footprint than even the most inefficient domestic cement producers. This carbon footprint is not only from their in-country manufacturing processes but also from the logistics associated with delivering their product to their end-use customer. It is worth a reminder that Eagle operates some of the most modern and efficient plants in the U.S. and all of our plants operate within established stringent U.S. environmental limits. If you'd like to learn more about our ambitious cementitious materials agenda and our role in creating a net-zero carbon future, I'd invite you to review our recently released Environmental and Social Disclosure Report featured on our website.

At Eagle, we are exceptionally well positioned to take advantage of opportunities that this current business environment provides us. Our balance sheet is strong, giving us substantial financial firepower when growth opportunities arise. We have also restarted our share repurchase program and completed the issuance of 2.5% 10-year senior notes that will further strengthen Eagle's capital structure. In short, as we stated in past quarters, favorable demand outlooks, constrained U.S. manufacturing supply capability, and limited practical substitutes for our products in both of our businesses add up to a very bright future for Eagle Materials.

With that let me turn it over to Craig to discuss the financials.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thank you, Michael. First quarter revenue was a record $476 million, an increase of 11% from the prior year. The increase reflects higher wallboard and cement sales prices as well as increased wallboard and paperboard sales volume. First quarter earnings per share was $2.25. That's a 3% decrease from the prior year. However, the prior year included a $0.93 per share gain from the sale of our Northern California businesses.

Turning now to segment performance. This next slide shows the results in our Heavy Materials sector, which includes our cement and concrete and aggregates segments. Revenue in the sector increased 3% driven by the increase in cement sales prices. The price increases range from $6 to $8 per ton and were effective in most markets in early April. These price increases were partially offset by lower cement sales volume, which was largely the result of heavy rainfall in Texas and reduced inventory levels across our cement network.

Operating earnings increased 3%, again reflecting higher cement prices, which were partially offset by higher maintenance spending in the first quarter of fiscal 2022. As we mentioned in the earnings release, during the initial stages of the pandemic last year, we modified the timing and extent of our annual maintenance outages and we had lower-than-normal maintenance expense last year. However, this year we completed full outages at each facility during the quarter, which increased maintenance spending during the quarter. The impact in the shift in timing and extent of the outages was approximately $10 million.

Moving to the Light Materials sector on the next slide. Revenue in our Light Materials sector increased 25%, reflecting higher wallboard sales volume and prices. Operating earnings in the sector increased 51% to $67 million, reflecting higher net sales, prices, and volume, partially offset by higher input costs, namely recycled fiber costs and energy. However, wallboard margins improved to 38% versus 32% in the prior year.

Looking now at our cash flow, which remained strong. During the first quarter, operating cash flow increased 17% to $111 million, reflecting strong earnings and disciplined working capital management. Capital spending declined $12 million. And as Michael mentioned, we restarted our share repurchase program during the quarter and returned $62 million to shareholders during the quarter, which equated to approximately 426,000 shares.

Finally, a look at our capital structure. Eagle's June 30th capital structure remained about flat with year-end. And at June 30th, our net debt to cap ratio was 34% and our net debt to EBITDA leverage ratio was 1.2 times. We ended the quarter with $307 million of cash on hand. Subsequent to the quarter, we completed the refinancing of our capital structure, which included issuing $750 million of 10-year senior notes with an interest rate of 2.5%, extending our bank credit facility five years, paying off the bank term loan, and retiring our 2026 senior notes. The results of these actions provide Eagle with a low-cost, long-dated capital structure with significant liquidity.

Thank you for attending today's call. We'll now move to the question-and-answer session. Josh?

Questions and Answers:

Operator

[Operator Instructions]. Our first question comes from Trey Grooms with Stephens. You may proceed with your question.

Trey Grooms -- Stephens Inc. -- Analyst

Hey, good morning, everyone, and congrats on a nice quarter.

Michael R. Haack -- President and Chief Executive Officer

Thanks.

Trey Grooms -- Stephens Inc. -- Analyst

So the first one is on the Texas weather. I mean clearly impacted the JV. But I think weather has started to clear up there. So are you expecting a bounce back here in JV volumes in the 2Q?

Michael R. Haack -- President and Chief Executive Officer

Yeah. Trey, everything is dependent on weather at that time of the year. And as you said, it's been drier down there. As it's dry, the demand is there. As I said in the comments, it was nothing to do with a demand driver on there. As we dry out, we'll be seeing cement shipments resume at a faster pace.

Trey Grooms -- Stephens Inc. -- Analyst

And kind of sticking with the JV, I believe on the last call you'd mentioned a mid-year price increase in that market. Is that still on track and are there any other markets where you could have mid-year increases in the cement?

Michael R. Haack -- President and Chief Executive Officer

Yeah. We're currently in process of implementing that cement price increase we mentioned last time. As for other markets out there, we continue to evaluate other markets and determine if we will implement a price increase at those markets at any time depending on our cost structure, demand and supply levers there.

Trey Grooms -- Stephens Inc. -- Analyst

Okay. That makes sense. So I guess on the margins, clearly turning in the right direction, and obviously, pricing is playing a role here. And Craig, you talked about or mentioned briefly a couple of things that you're seeing there on the cost front, OCC, then specifically. But could you give us a little bit more detail on what you're seeing on the cost front on both sides of the business as far as inflation and maybe any more detail you can give us around that?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah, Trey. So on the cement side, again, we largely control our primary raw materials into the cement business and our fuel costs and electricity costs are pretty consistent. And so we didn't see much there. What we did see in this quarter specifically was the timing and magnitude of the outages at the cement plants. A year ago we had modified the timing and extent just to deal with those early days of the COVID shutdowns. And so we're back to a little bit more normal pace. So we actually should see that benefit in the second half of the year because we had moved some of those outages into last year's second half.

On the wallboard side, again, paper cost while they're going up, they're not dramatic, and at the paper mill level, we end up passing those costs through. Now we do that on a quarterly lag basis. So sometimes it takes us a quarter to catch up with the pricing. But we pass the vast majority of that through. The other thing we are watching is freight. We saw freight costs go up this quarter, and it's something we're watching very closely.

Trey Grooms -- Stephens Inc. -- Analyst

On that front, Craig, obviously, Texas import market you guys have a terminal there. It's a strong market from a demand standpoint, excluding the weather impact, obviously, but strong market from a demand standpoint. It's sold out. What role is the freight having and the increasing freight costs having there in that market as far as imports are concerned?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. I'd make the statement more broadly than just Texas. So you've got domestic freight, which is railroads and trucks, which has gone up. Then you think about ocean freight rates, which have gone up considerably in the last six to nine months, and that is imports are necessary to fill the void as demand outstrips supply, and they've generally been high-cost imports with the higher cost of ocean freight rates. Those imports are becoming more and more expensive. Again, what that ends up doing is shrinking the shipping radius for those imports and really keeping them closer to the coast. So it's consistent with what we've seen historically.

Trey Grooms -- Stephens Inc. -- Analyst

One last one for me, and it's nice to see you guys reinstating or restarting the buyback and being out there repurchasing shares. Can you tell us or kind of talk a little bit about, well, first, a reminder of kind of what you have on authorization; and then secondly, more high level kind of how you're thinking about balancing the buybacks with maybe some internal opportunities you may have or possibly even M&A?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Look, what I would tell you, the capital allocation priorities have been consistent and served us very well. And 1A is to continue to grow the company and grow Eagle in a profitable way. And as you've heard us say for years, there's a very high barrier to entry for that growth and that is both a financial return criteria as well as a strategic criteria. But that is the capital allocation number one. 1B, which is very closely followed, is continuing to maintain our assets in like-new condition and keep our modern facilities and improve our low-cost producer position.

To the extent there's additional free cash flow after those, we have historically returned that cash to shareholders, and we've done that generally through a share repurchase program. We did reinstitute our quarterly cash dividend this year and it was payable and paid in July, but from a significant return of cash flow, we've generally done that through our share repurchase program. Those have been tried and true for many, many years, and we've taken out a considerable amount of the float in the last five years, 10 years or going back 20 years. And I would point out, we've done all of that while we've tripled the size of the company, especially on the cement side, and we've done it all with the balance sheet that still sits in a unique position, a little over 1 times debt to EBITDA. That gives us a lot of opportunity for growth when those opportunities come our way.

So with that, I'd say from a share repurchase authorization, we've got a considerable amount of shares that we can repurchase. We're right around the 7 million share level at June 30th and more than enough opportunity for us.

Trey Grooms -- Stephens Inc. -- Analyst

All right. That's it for me. Thanks, guys. Nice work. Good luck with the quarter.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thanks, Trey.

Operator

Thank you. Our next question comes from Brent Thielman with D.A. Davidson & Company. Please proceed with your question.

Brent Thielman -- D.A. Davidson & Co. -- Analyst

Great, thank you. Just on cement, the dip in JV cement volume makes sense, just given the inclement weather. I was more curious about the flat to slightly lower sales volume in wholly owned. It seems like a pretty tight demand environment right now, just the way you guys are describing it and decent weather elsewhere in the country. Just wanted to get your thoughts around that.

Michael R. Haack -- President and Chief Executive Officer

Yeah. And we've talked about this a little bit in some of the past calls. We did have a substantial amount. We did an investment in our Sugar Creek facility, and we put in a grinding mill there, and we had some inventory that was in place last year that led us actually grind that into finished product and sell that and do an inventory reduction with it. So what you're seeing in some of the areas with it is that our facilities are manufacturing tonnage pretty much at the sold-out levels with it, and we don't have those levers to pull necessarily with those inventories.

That being said, we continuously look for opportunities to expand any one of our plants and get the next clinker ton out of it that we can get out of it. And we have several projects that we're looking at on how we do that across our facilities, but we are manufacturing sold out at this time.

Brent Thielman -- D.A. Davidson & Co. -- Analyst

Okay. And then on wallboard, I guess how can we think about the June wallboard price tag, how much is reflected I guess this quarter? And as we think about kind of the September quarter, anything to suggest there's been sort of a higher level of pre-buy I guess associated with the April and June hikes?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Brent, look, as it comes to pre-buy activity, that's largely kind of come and gone with economic activity and specifically residential construction activity where it's a strong market demand environment for us. And to your point, though, we did implement this price increase in June. So it's partially reflected in this quarter's average price, but there will be some more upside as we fully implement it, or get the full effect of it in the September quarter.

Brent Thielman -- D.A. Davidson & Co. -- Analyst

Okay. That's helpful. And then the paperboard profit contributions, you mentioned recycled fiber, energy expenses play into that. I guess just kind of wondering if we're at an inflection point here where those headwinds should gradually abate and we should see some better bottom line contributions here going forward.

Michael R. Haack -- President and Chief Executive Officer

Yeah. On paperboard, what's to remember too with that is we should see some leveling out in that, but we also need to remember too that we have a quarter lag with passing on some of those costs with how our contracts are structured. So where you may see some noise in one quarter, you'll see the rebound of that noise in the next quarter on. If it continues to go up, you'll see noise in a couple quarters in a row. But at the end of the day, that cost is predominantly passed on through our contracts.

Brent Thielman -- D.A. Davidson & Co. -- Analyst

Okay. Appreciate you taking the questions. Thanks a lot.

Operator

Thank you. Our next question comes from Adrian Huerta with J.P. Morgan. You may proceed with your question.

Adrian Huerta -- JPMorgan Casa de Bolsa SA de CV -- Analyst

Hi, thank you. Congrats to everyone for the strong results. Quickly on cement. There was a very strong quarter-over-quarter increase on cement prices. Was there any impact from mix because we haven't really seen an increase of this magnitude on a sequential basis in the second quarter?

And the second question is on [Indecipherable] prices. You mentioned that ocean freight costs have increased significantly. Have you started to see cement prices in the coastal regions increasing in line versus what we have seen with freight cost as well?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Thanks, Adrian. On your first question, not really a mix issue on the cement price increase, but I will tell you a year ago, as the pandemic was hitting, we did push our price increases, which generally had been an April 1st date to June 1st. So as you're comparing year over year, we had the full effect this quarter of the price increase. So the up 7% year-over-year, I would suspect in the September and December quarters, absent anything else happening, should look more like a 5% to 6% increase as you get a more apples-to-apples comparison.

And then, look, to your second question, the only market where we really participate or see exposure to imports is Texas. So we can't necessarily speak to the East or West Coast necessarily, but undoubtedly we've seen some significant moves in the cost of imports and eventually that feeds through that system.

Adrian Huerta -- JPMorgan Casa de Bolsa SA de CV -- Analyst

Thank you, Mike. But even on cement, on a sequential basis, this quarter was up 3.2%, which is a pretty big number for a second quarter. So that's why I was wondering if there was any mix impact there?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

No, our price is always up, well, from the fourth quarter to our first quarter as we're implementing prices in April generally.

Adrian Huerta -- JPMorgan Casa de Bolsa SA de CV -- Analyst

All right. Thank you.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from Jerry Revich with Goldman Sachs. You may proceed with your question.

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Yes, hi. Good morning, everyone. Michael, really interesting comments about wallboard industry structure moving toward cement in your prepared remarks. I'm wondering if you could just talk about what capital deployment opportunities you see for you folks in that area because over the past 10-plus years you've been more focused on adding cement. And I'm wondering if your comment signaled opportunities for M&A or otherwise to grow the wallboard footprint. Can you just expand on your opening comments in that area? Thanks.

Michael R. Haack -- President and Chief Executive Officer

Yeah. Yeah. I appreciate the question, Jerry. No, where the comments are focused around is if you look back at the wallboard industry, especially over this last three or four years, you'll see that there has been a consolidation in that industry, too. So with the consolidation in the industry and there is still capacity in that industry, we still have some capacity in the industry. So our main focus with this is to maximize our production out of those facilities, be the low-cost producer. What our historic structure has been is owning our raw material resources, keeping our plants in like-new conditions, and just making sure we can produce as much as we can out of those facilities with it. So the investment that we do on the capital allocation side is really keeping those plants in like-new condition. And anything we need to do with any kind of logistics distribution side with just making sure we could get to the customers we have today.

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Okay. So you're not optimistic on any opportunities in wallboard?

Michael R. Haack -- President and Chief Executive Officer

When I look at it, I would never rule out anything with it. We'll look at anything, but with the consolidations that happened in that industry in the past, it is getting to be a more consolidated industry at this time.

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Okay. And Craig, can you talk about what was wallboard pricing exit rate in the quarter?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. We were ahead of where the quarterly average was. We'll certainly give you that total number for the September quarter when we get there. But we were north of the average.

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Yeah. No, it's clear. The question is if you're willing to comment on order of magnitude.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

It was meaningfully higher, Jerry. And so we'll give you that total number when we report the September quarter.

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Okay. Thanks, Craig. And then in cement, pretty sizable maintenance outage this quarter. Can you talk about as we think about the year-over-year comparisons for cement margins over the balance of the year, which quarters does that $10 million free up as we think about the comps where outage costs are going to be lower over the next three quarters?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Most of it pushed into the September quarter. There was a little bit that bled into the December quarter last year, but we'll see the majority of it in the September quarter.

Michael R. Haack -- President and Chief Executive Officer

Yeah. And Jerry, just for a little color on that, too, just so you're aware is the whole reason was the pandemic on that. I didn't feel comfortable taking down all of our plants at one time during that timeframe. So we pushed these throughout the year, and we want to get back to a normal schedule, how we normally do it in the first part. So that's why you're seeing this change.

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Very helpful context. Thank you.

Operator

Thank you. Our next question comes from Stanley Elliott with Stifel. You may proceed with your question.

Stanley Elliott -- Stifel, Nicolaus & Co., Inc. -- Analyst

Good morning, guys. Thank you all for taking the call. Could you talk a little bit about what you're seeing on the rest of the M&A environment on the heavy side?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Stanley, the opportunities within really both businesses. Michael highlighted on the wallboard side, but they're opportunistic. There aren't a significant number of assets that are on the market at any given time. And even when there are, we've got that strict criteria, both at a financial level and a strategic level. So we are constantly looking at opportunities out there. We've walked by many more than we've executed on. The pipeline and the number of opportunities are out there. We're just trying to make sure that we find the right quality at the right value. And that's what's most important to us. And we've been very fortunate over the last decade that we've found a number of ways to invest and grow the company in a very profitable way and that's going to continue to be the exercise that we go through.

Stanley Elliott -- Stifel, Nicolaus & Co., Inc. -- Analyst

Perfect. And then as it relates to the cement business, different blends that are out there and you guys do a nice job with that. Is it reasonable for us to think that with adoption of some of these new blends, some of the things you're doing that you can continue to kind of drive out low-single-digit volume growth even though we're in effectively a sold-out sort of environment?

Michael R. Haack -- President and Chief Executive Officer

Yeah. That's a great question and, yes, that is a true fact that you stated there. That's where we focus on right now is how much additives we could put in and still make ASTM specs. We also do some investments. We're going through a investment right now to maximize our grind capacity with our clinker capacity to service markets during their peak times, which is an investment with a storage dome that we're putting at our Fairborn facility which should get us some more potential into the next year of some extra product being available. But as you stated, it's kind of the low-single digits is where we're at on improving our organic growth side with it. But we look at every single plant and maximize every plant we can, and we have a great group of engineers and a great group of production people that have been able to do that for us.

Stanley Elliott -- Stifel, Nicolaus & Co., Inc. -- Analyst

Perfect. And then lastly for me, could you remind us if you all have a program in place as it relates to the repurchases?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yes. Yeah, absolutely, Stanley. So we've got, as I said earlier, nearly 7 million shares under a repurchase authorization. And we began repurchasing shares during this quarter. It was about 426,000 shares, and we generally do that through open market purchases.

Stanley Elliott -- Stifel, Nicolaus & Co., Inc. -- Analyst

Perfect, guys. Thank you very much for the time and best of luck.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thanks, Stanley.

Operator

Thank you. Our next question comes from Adam Thalhimer with Thompson Davis. You may proceed with your question.

Adam Thalhimer -- Thompson Davis & Co., Inc. -- Analyst

Hey, good morning, guys. Great quarter.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thanks, Adam.

Adam Thalhimer -- Thompson Davis & Co., Inc. -- Analyst

Wanted to dig in a little bit on wallboard margins. Kind of what drove that increase from 32% to 38% and then how sustainable is the Q1 result?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Look, Adam, we saw a pretty meaningful price move during the quarter. I think prices are up $30, $31 a thousand because of the demand environment and much higher utilization rates. And on the cost side, well, while we saw some increases around paper and energy, we were able to raise prices ahead of that and continue to expand margins. And look, what I would also comment that while we see some of these cost pressures on the energy side and paper side, the nice thing, and Michael made it in his comments, we own decades' worth of natural gypsum at the majority of our facilities. And that gypsum is close to the plants, and it's a low-cost raw material source for us. So we don't face some of the inflation pressures that you see in other industries and maybe across other geographies.

Adam Thalhimer -- Thompson Davis & Co., Inc. -- Analyst

Okay. And then you briefly mentioned freight. Also natural gas costs are up. Is there anything else you're worried about there from a cost standpoint, Craig?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Again, no. Again, this isn't a labor-intensive business and we own the decades' worth of natural gypsum. So it's something we're keeping our eye on, freight and natural gas, but no other major changes there.

Adam Thalhimer -- Thompson Davis & Co., Inc. -- Analyst

And then in cement, are there any markets that are on allocation? And then what are the implications of that if there are?

Michael R. Haack -- President and Chief Executive Officer

We've been able to work with our customers so far and provide with our customers. As we come in through, this is the peak shipping time with it and we are close to allocation in some markets, but we've been able to satisfy our customers' demands and partner with those customers.

Adam Thalhimer -- Thompson Davis & Co., Inc. -- Analyst

Great. Okay. Thanks, guys.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thanks, Adam.

Operator

Thank you. Our next question comes from Philip Ng with Jefferies. You may proceed with your question.

Collin Verron -- Jefferies LLC -- Analyst

Good morning. This is actually Collin on for Phil. I guess just continuing [Phonetic] on the cement market. It seems very tight. So I was just curious as to what you need to see to announce a second price increase. And have you seen any of your competitors announce a summer increase outside of Texas?

Michael R. Haack -- President and Chief Executive Officer

Yeah. We continuously monitor the market to see supply and demand fundamentals to determine when we will announce that. We're continuously monitoring that today. As we talked about last time, we're implementing one in Texas currently, with it some of the other markets. We will monitor those over the coming months and decide.

As for our competition announcing price increases, I mean I don't really comment on those too much. We really look at it from what our supply demand fundamentals are and what our manufacturing capacity is.

Collin Verron -- Jefferies LLC -- Analyst

Okay. Thank you for the color. And then just touching on wallboard demand. We've heard from public builders that they've been reining in their orders somewhat. So have you guys seen any choppiness in your business since it's a large driver of wallboard demand, or have you guys just been able to carry through?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

We continue to see a very strong business environment for our wallboard business.

Collin Verron -- Jefferies LLC -- Analyst

Okay. That's all I had. Thank you.

Operator

Thank you. Our next question comes from Josh Wilson with Raymond James. You may proceed with your question.

Joshua Wilson -- Raymond James & Associates, Inc. -- Analyst

Yes. Good morning, Mike and Craig. Thanks for taking the questions. Wanted to start with just making sure we have the maintenance costs down on cement. I think last year you said the benefit was $6 million. So did you pull some extra costs in, and is everything this year now as it will be or could something shift next fiscal year a little bit to get truly back to normal?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Look, on the last part of that, I don't know that we've 100% scheduled every maintenance event for next year and want to be nimble and on our toes don't anticipate any changes. But look, last year versus this year was not just a matter of timing but magnitude. We made some decisions last year, again, as COVID was unfolding to minimize what we were doing to minimize the downtime at the plants. And so as we get back to a more normal maintenance schedule and extent that's why those costs were a little bit higher this year versus last year.

Joshua Wilson -- Raymond James & Associates, Inc. -- Analyst

Got it. And can you give us your current CapEx expectations for the year?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Frankly, not all that different than what we guided to back in May. It's going to be in that $90 million to $100 million level for the full year. It takes a while for some of the projects that had been pushed off to get spooled back up. But I'd expect to see that start to pick up again in the second half of the year.

Joshua Wilson -- Raymond James & Associates, Inc. -- Analyst

And then last one for me. Other income has still been a little bit of a volatile piece of EBITDA and EPS. Can you give us a sense of what drove the higher-than-normal levels there this quarter and what that should look like going forward?

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Yeah. Those are little extraneous things that happen from time to time whether it's a small parcel of land that gets sold in one market or some other opportunity where we have an opportunity to sell something, a piece of equipment or inventory, something like that. So it's hard to forecast that quarter to quarter, and so I wouldn't put much in there. It's relatively small.

Joshua Wilson -- Raymond James & Associates, Inc. -- Analyst

Got it. Good luck with the next quarter.

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Thanks, Josh.

Operator

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Michael Haack for any further remarks.

Michael R. Haack -- President and Chief Executive Officer

Thank you very much for joining us today, and we look forward to talking to you at the next quarter earnings call.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Michael R. Haack -- President and Chief Executive Officer

Craig Kesler -- Executive Vice President of Finance and Administration and Chief Financial Officer

Trey Grooms -- Stephens Inc. -- Analyst

Brent Thielman -- D.A. Davidson & Co. -- Analyst

Adrian Huerta -- JPMorgan Casa de Bolsa SA de CV -- Analyst

Jerry Revich -- Goldman Sachs & Co. LLC -- Analyst

Stanley Elliott -- Stifel, Nicolaus & Co., Inc. -- Analyst

Adam Thalhimer -- Thompson Davis & Co., Inc. -- Analyst

Collin Verron -- Jefferies LLC -- Analyst

Joshua Wilson -- Raymond James & Associates, Inc. -- Analyst

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