Eagle Materials Inc. (EXP): PESTLE Analysis [Nov-2025 Updated]

You're trying to figure out if Eagle Materials Inc. (EXP) is a buy or a hold right now, and the answer lies in a tightrope walk between two massive forces. On one side, the Political and Economic landscape is delivering a powerful tailwind from the Infrastructure Investment and Jobs Act (IIJA), helping EXP maintain its estimated FY2025 revenue near $2.2 billion despite a slowdown in residential housing due to the Fed Funds Rate hovering around 5.5%. But on the other side, the Environmental and Legal pressures-specifically the mandate for net-zero carbon and tightening EPA rules-mean EXP faces significant capital expenditure for decarbonization, a cost that will defintely challenge their pricing power and margins over the next few years. So, you need to understand how this push-and-pull between federal infrastructure dollars and the rising cost of carbon compliance will truly shape their stock performance; let's break down the full PESTLE picture.

Eagle Materials Inc. (EXP) - PESTLE Analysis: Political factors

Infrastructure Investment and Jobs Act (IIJA) funding remains stable through 2025.

The political commitment to infrastructure spending remains the single largest tailwind for Eagle Materials Inc. (EXP), but the near-term funding flow is getting complicated. The Infrastructure Investment and Jobs Act (IIJA), or Bipartisan Infrastructure Law, authorized a massive $1.2 trillion in total spending over eight years. This is a huge, multi-year pipeline for cement and aggregates.

As of August 31, 2025, the Department of Transportation (DOT) reported that out of the $431.8 billion in adjusted enacted budget authority, $319.2 billion had been obligated, meaning it's under a binding agreement with a recipient. That's a solid 73.91% obligation rate. However, the actual money paid out (outlays) is still lower at $177.5 billion, or 41.10%. This gap between obligated and outlayed funds is the key political risk: the money is promised, but the pace of actual construction starts can slow.

Honestly, the biggest recent variable is the political shift in Washington. An Executive Order in January 2025 directed federal agencies to pause and review disbursements of IIJA funds, creating significant uncertainty. While the total budget authority is locked in by law, a slowdown in agency approvals and disbursements could push project starts into late 2025 or 2026. You need to watch the pace of DOT outlays, not just the total authorized amount.

Here's the quick look at the federal funding progress:

Trade policy stability reduces risk of sudden tariffs on imported raw materials.

The core assumption of trade stability is defintely out the window for 2025. The new administration's protectionist trade policy has introduced significant volatility, but for a domestic producer like EXP, this is a clear opportunity, not a risk. Sweeping new tariffs were announced in April 2025, directly impacting imported construction materials, including cement.

The US cement sector produced around 86 million metric tons (Mt) in 2024, but still imported 20-25 Mt to meet demand. The new duties make imported product much less competitive, essentially creating a price umbrella for EXP's domestic cement. For example, cement imports from Canada and Mexico now face a 25% tariff, and imports from Vietnam face a massive 46% rate. This is a huge advantage for EXP, whose entire cement production is US-based.

• Tariffs on imported cement from Vietnam: 46%.
• Tariffs on imported cement from Canada/Mexico: 25%.
• Domestic capacity utilization (2024): 72% (120 Mt/year capacity vs. 86 Mt production).

The tariffs don't just reduce competition; they incentivize domestic capacity expansion, which is EXP's strategic focus. This political move directly supports the domestic manufacturing base, which is exactly where EXP sits.

Federal government focus on Buy American requirements favors domestic producers like EXP.

The 'Buy American' requirements are a political mandate that directly translates into preferential treatment for Eagle Materials. These rules, which apply to federally funded projects, mandate a minimum domestic content threshold for construction materials.

The domestic content requirement for construction materials in federal procurements is set at 65% for the period from January 1, 2024, through December 31, 2028. This is up from the previous 60%. Furthermore, a final rule effective March 17, 2025, terminated a general waiver for manufactured products in Federal Highway Administration (FHWA) projects, tightening the rules considerably. Cement, being a domestically sourced and produced material for EXP, is perfectly positioned to capture this demand.

This preference is particularly strong for EXP's core products:

• Cement and aggregates are inherently heavy and costly to transport, making local sourcing preferable anyway.
• The Buy American mandate locks in demand for US-made products on all IIJA-funded projects.
• EXP's network of over 70 facilities across 21 states makes it a prime supplier for this domestic-first policy.

State-level permitting processes for quarries and plants remain a key variable.

While federal policy is a massive tailwind, state and local politics-the classic 'Not In My Backyard' (NIMBY) problem-remain the single biggest operational risk to EXP's growth plans. Cement and aggregates are heavy, local businesses; you can't just ship them across the country.

In Texas, a key market for EXP, the Lieutenant Governor asked the state environmental agency to halt all new cement plant permits until the 2025 legislative session. This is a direct political roadblock driven by local community opposition, regardless of the strong economic argument for new capacity. This kind of local political friction can delay a new plant or quarry by years, impacting EXP's ability to capitalize on the IIJA demand surge.

On the flip side, the federal government is trying to help streamline things. The EPA, in a September 2025 action, announced a reform to provide flexibility, allowing certain non-emissions-related building activities-like installing cement pads-to begin before a final Clean Air Act construction permit is issued. This federal move aims to expedite the construction of new or expanded plants, potentially offsetting some of the state-level permitting drag.

Eagle Materials Inc. (EXP) - PESTLE Analysis: Economic factors

EXP's estimated FY2025 revenue is around $2.3 billion, driven by pricing power.

Eagle Materials Inc. (EXP) demonstrated pricing resilience in a challenging economic environment, reporting a record revenue of $2.3 billion for the full fiscal year 2025 (FY2025), which ended March 31, 2025. This was a slight increase from the prior year, primarily reflecting higher sales prices across all business lines. To be fair, this pricing strength was critical because it had to offset a headwind: lower sales volumes in the Heavy Materials sector, specifically in cement, concrete, and aggregates. The company's strategy of focusing on domestic, high-growth markets, combined with its operational efficiency, allowed it to maintain a strong financial position, ending FY2025 with a moderate net leverage ratio of only 1.5 times.

High interest rates (e.g., Fed Funds Rate near 4.00%) slow residential housing starts.

The Federal Reserve's sustained high interest rate policy has defintely slowed down the housing market, which directly impacts demand for Eagle Materials' gypsum wallboard. As of November 2025, the Federal Funds Rate target range was at 3.75%-4.00%, following a 25 basis point (bps) cut in October 2025. This high-cost financing environment pushed down residential construction activity. For example, privately-owned housing starts in August 2025 dropped 8.5% month-over-month to a seasonally adjusted annual rate of 1.307 million units. Single-family starts, a key driver for wallboard, saw a 7.0% decline, falling to a rate of 890,000 units. This softness means the Light Materials sector must rely heavily on price control and non-residential repair and remodel activity.

Non-residential construction shows resilience, especially in data centers and manufacturing.

While residential activity is sluggish, the non-residential construction market provides a crucial offset, especially in specific sub-sectors. Total non-residential construction spending was at a seasonally adjusted annual rate of approximately $1.24 trillion in August 2025. The real growth engine here is the digital infrastructure boom. Data center construction, fueled by cloud storage and artificial intelligence (AI) demand, continues to surge, with forecasts projecting a massive increase of 33.4% in 2025. Manufacturing construction, driven by semiconductor chip fabrication facilities (fabs), had previously soared but is now tapering off, dropping 0.9% in August 2025 and being 8.2% lower year-to-date. This mixed picture means Eagle Materials' heavy materials-cement, concrete, and aggregates-have a strong, albeit concentrated, demand base from these large-scale infrastructure and mega-projects.

Inflation in energy and logistics costs continues to pressure operating margins.

The persistent inflation in key inputs remains a structural challenge, squeezing operating margins despite the company's pricing power. Construction costs overall are expected to rise between 5% and 7% in 2025. Energy and logistics costs, critical for a materials company, are still volatile. This external pressure is evident in the company's segment performance. Here's the quick math on the Heavy Materials sector, which includes cement:

• FY2025 Heavy Materials Revenue: $1.4 billion (down 2% year-over-year)
• FY2025 Heavy Materials Operating Earnings: $310.7 million (down 11% year-over-year)

The operating earnings decline of 11%, despite higher sales prices, highlights that inflation and lower volumes are eating into the profitability of the Heavy Materials sector. This is a classic margin compression scenario.

Strong pricing power in cement and gypsum offsets volume softness in some markets.

Eagle Materials' ability to raise prices has been the primary defense against market volume softness and cost inflation. In the Light Materials sector (Gypsum Wallboard and Recycled Paperboard), revenue increased 3% to $969.2 million in FY2025. This was largely due to higher prices, as wallboard sales volume was only up slightly. The average net sales price for Gypsum Wallboard climbed 1% to $236.04 per MSF. Similarly, in the Heavy Materials sector, higher net sales prices for cement partially offset a 5% decline in cement sales volume. This pricing discipline is a clear competitive advantage, allowing the company to generate operating cash flow of $549 million in FY2025, even with market turbulence.

Eagle Materials Inc. (EXP) - PESTLE Analysis: Social factors

Growing demand for green building materials and low-carbon cement products.

You are seeing a clear, non-negotiable shift in social values toward sustainability, which directly impacts the demand for Eagle Materials Inc.'s core products. This isn't just a marketing trend; it's a capital allocation driver. The public and large commercial builders are increasingly prioritizing low-carbon alternatives, especially in heavy materials like cement, which is one of the world's largest industrial emitters.

Eagle Materials Inc. is already responding, which is smart. They started up a 500,000-ton slag-cement facility in Houston through their Texas Lehigh Cement Company LP joint venture. Slag cement is a supplementary cementitious material (SCM) that significantly reduces the carbon footprint of concrete. Also, in their Light Materials sector, they completed a wastewater-reduction project at their paper mill that lowered water usage by over 30% in fiscal 2025. This focus on resource efficiency will defintely become a competitive advantage as social pressure mounts.

The industry faces a real threat from climate litigation, as evidenced by a lawsuit against a competitor, which could set a precedent for holding cement producers accountable for emissions. Investing in SCM capacity is a clear, actionable step to mitigate this social and legal risk.

Persistent skilled labor shortages in construction and manufacturing sectors increase wage pressure.

The US construction labor market is severely constrained, creating significant wage pressure that flows directly into Eagle Materials Inc.'s operating costs and the cost of its customers' projects. The Associated Builders and Contractors (ABC) estimated the US construction industry needed to attract an estimated 439,000 net new workers in 2025 just to meet anticipated demand. That's a huge gap.

This shortage is structural, driven by an aging workforce and a lack of vocational training. For the workers they can find, the cost is rising fast: the US average construction hourly earnings reached $38.76 in March 2025, representing a 4.5% increase from the previous year. This translates to higher operating expenses for the company's Heavy Materials segment, which includes Cement, Concrete, and Aggregates.

Here's the quick math on the labor challenge:

• Skilled Labor Shortage: Approximately 80% of contractors report difficulty finding skilled labor.
• Wage Inflation: Construction wages were up 4.5% year-over-year as of March 2025.
• Industry Need (2025): 439,000 net new workers required.

When 71% of contractors report project delays due to this shortage, it means fewer projects are completed on time, slowing down the volume demand for Eagle Materials Inc.'s products, even if the underlying market demand is strong.

Increased public scrutiny on industrial emissions and environmental justice issues near plant sites.

Public scrutiny on the environmental impact of industrial operations is intensifying, particularly around cement plants. This is an environmental justice (EJ) issue, as these facilities are often located near lower-income communities. New research is strengthening the link between heavy industry emissions and climate harms, which increases the risk of community opposition and litigation.

The US Environmental Protection Agency (EPA) is active here, finalizing amendments to the Portland Cement Manufacturing National Emission Standards for Hazardous Air Pollutants (NESHAP) in July 2025. While the EPA determined that revisions to emissions limits were not necessary at that time, the regulatory spotlight remains on the industry. As a purely domestic U.S. manufacturer, Eagle Materials Inc. is fully exposed to these evolving US-specific regulations and community activism.

The key risk is that local opposition can delay or halt expansion and modernization projects, like the one underway at their Mountain Cement plant, or the planned Duke, OK Gypsum Wallboard plant expansion, which is a $330 million investment. Community trust is now a critical operational asset.

Demographic shifts drive demand for affordable housing, favoring gypsum board volume.

The core demographic reality for Eagle Materials Inc.'s Light Materials sector (Gypsum Wallboard and Recycled Paperboard) is that affordability is king. The high cost of housing is forcing a shift toward smaller, denser, and often multi-family construction, which is a key market for gypsum board. The Light Materials sector generated $969.2 million in revenue for fiscal year 2025.

While overall US household growth is projected to slow to an average of 860,000 per year between 2025 and 2035, the need for affordable units remains acute. This is driving a design shift where homes are getting smaller and denser, a trend that favors the high-volume use of gypsum wallboard in interior construction.

The company's Gypsum Wallboard annual sales volume for FY2025 was 3.0 billion square feet (BSF), with an average net sales price of $236.04 per MSF. The volume was up slightly from the prior year, even as new housing starts faced headwinds, demonstrating the underlying stability of demand, especially from the residential remodeling market, which is also expected to return to growth in 2025.

The table below shows the key financial and volume data for the Light Materials segment, which is most sensitive to residential demographic shifts and affordable housing demand:

The stability of the wallboard price and the slight volume increase, despite broader economic uncertainty, shows the resilience of the residential market's need for their product. Your next step, honestly, is to ensure the supply chain for that 3.0 BSF of wallboard is robust enough to capitalize on the multi-family and remodeling surge.

Eagle Materials Inc. (EXP) - PESTLE Analysis: Technological factors

Increased capital expenditure on Carbon Capture, Utilization, and Storage (CCUS) feasibility studies.

You can't just talk about decarbonization; you have to fund it. While a specific line item for CCUS feasibility studies isn't broken out, Eagle Materials Inc.'s technology strategy is clearly centered on major capital investment to reduce its carbon footprint, which is the necessary precursor to commercial-scale CCUS.

The company is making a massive investment in its Heavy Materials sector, which is where the carbon intensity challenge lies. For context, organic capital expenditures over the past five fiscal years totaled $546 million. The single largest project driving this technological shift is the modernization and expansion of the Laramie, Wyoming cement plant, a project estimated at $430 million. This investment isn't just about capacity; it's a technology play. The new kiln line is expected to reduce the facility's CO2 intensity by nearly 20% once complete. That's a direct, measurable return on a technology investment.

Furthermore, the company is strategically investing in next-generation low-carbon materials through an exclusive agreement with Terra CO2. This partnership aims to deploy multiple plants to produce Supplementary Cementitious Material (SCM), which is critical for reducing clinker content and, therefore, process-related CO2 emissions. This is defintely a smarter way to hedge against future carbon taxes than just running studies.

Adoption of alternative fuels (e.g., biomass, waste) to reduce reliance on coal in cement kilns.

The push for alternative fuels (AF) is a near-term lever for cost reduction and emissions control, and Eagle Materials Inc. is integrating this into its core CapEx. The $430 million Laramie modernization project is specifically designed to enable the use of lower-cost alternative fuels and natural gas, replacing solid fuels. This is a direct operational technology upgrade.

More immediately, the company is using product technology to reduce its reliance on high-carbon clinker, which requires intense heat from fuels like coal. The goal is to have 100% of the company's cement sales be for Portland Limestone Cement (PLC) or other blended cement products by the end of 2025. PLC uses less clinker, which means less fuel is burned per ton of cement. While the U.S. cement industry's overall thermal substitution rate for AF was around 16% in 2023, the Laramie upgrade positions Eagle Materials Inc. to significantly increase its own rate in the coming years.

Digitalization of logistics and supply chain to optimize distribution costs.

Logistics costs are a killer in the heavy materials business, and digitalization is the only way to manage them effectively. In fiscal year 2025, the company showed a clear commitment to this by increasing its Corporate General and Administrative Expenses, with $3.2 million of that increase specifically allocated to higher information technology spending for ongoing upgrades to its enterprise resource planning (ERP) systems.

This ERP investment is the foundation for a more efficient supply chain (a fancy term for getting cement and wallboard from the plant to the job site). It helps optimize everything from truck routing to inventory visibility, which is crucial when your Heavy Materials sector revenue is $1.4 billion. The goal here is simple: move product faster and cheaper. A single, integrated system helps prevent costly delays and ensures a better match between production and customer demand.

Use of drones and AI for quarry mapping and inventory management improves efficiency.

The aggregates and cement industries are rapidly adopting aerial intelligence to turn physical inventory into real-time data. While Eagle Materials Inc. doesn't publicly detail its specific drone fleet size, the industry trend is clear and compelling. Drones equipped with LiDAR (Light Detection and Ranging) and AI-powered software are now standard for quarry operations.

Here's the quick math on why this technology is a must-have for a major player like Eagle Materials Inc. with its extensive quarry reserves:

• Accuracy: AI processing of 3D drone maps can improve inventory accuracy by up to 70% compared to traditional methods.
• Speed: Drone-based surveying can reduce the time for a full-facility inventory count from 90 days to just 2.5 days in some manufacturing environments, dramatically freeing up labor.
• Safety: Remote data capture removes surveyors from dangerous areas like high-walls and unstable stockpiles, reducing risk.

This technology translates directly to better financial planning by providing more precise, real-time valuation of the company's limestone resources, which stood at 673.4 million tons at the end of fiscal 2024. You can't manage what you don't measure accurately.

Next Step: Operations: conduct a quarterly review of the $3.2 million ERP spend to ensure the logistics module is delivering a measurable reduction in freight-related operating costs.

Eagle Materials Inc. (EXP) - PESTLE Analysis: Legal factors

You're operating in an environment where regulatory scrutiny is rising across air quality, water use, and corporate transparency. The legal landscape for Eagle Materials Inc. (EXP) in 2025 is defined by a mix of new, costly compliance mandates and a critical, high-stakes pause on federal climate reporting. This isn't just about avoiding fines; it's about managing the capital expenditure required to maintain your low-cost producer status.

Environmental Protection Agency (EPA) is tightening rules on $\text{NO}_\text{x}$ and $\text{SO}_2$ emissions from cement kilns.

The EPA's renewed focus on air quality, particularly through the Clean Air Act's Good Neighbor provision, is a clear legal pressure point. The cement sector is one of the nation's largest industrial polluters, emitting over 500,000 tons per year of $\text{SO}_2$, $\text{NO}_\text{x}$, and carbon monoxide combined. The agency has finalized new $\text{NO}_\text{x}$ limits that require significant capital investment to meet, especially for older kilns.

For example, new proposed $\text{NO}_\text{x}$ emission limits for different kiln types are specific and demanding.

Here's the quick math: if you operate a Long Wet Kiln, you face a tougher compliance challenge than a modern Precalciner Kiln, which has a limit 43% lower. Eagle Materials Inc. reported environmental compliance capital expenditures of \$1.0 million in fiscal year 2025 for its Gypsum Wallboard operations, but \$0 for its Concrete and Aggregates operations. This suggests a major capital spending wave for cement kiln upgrades is defintely on the horizon to meet these new standards, even if the reporting year showed minimal spend on the heavy side.

Increased litigation risk related to water usage and dust control at mining operations.

Water scarcity and particulate matter (dust) are increasingly becoming grounds for community lawsuits and regulatory action, moving from environmental issues to legal liabilities. For a company like Eagle Materials Inc., whose operations are resource-intensive, this risk is immediate.

The good news is that management is being proactive. The company is investing \$22 million in a wastewater treatment facility upgrade, aiming to reduce water consumption by 50%. This investment is a direct legal risk mitigation strategy, lowering the exposure to water rights disputes and potential fines in water-stressed regions of the U.S. Still, the industry faces continuous pressure to meet stringent dust control standards, such as the focus on achieving a 95% compliance rate for measured respirable crystalline silica particulate in related mining sectors.

• Proactive investment reduces future legal defense costs.
• Water rights litigation remains a core operational risk.
• Dust control violations lead to significant, visible community pushback.

Stricter reporting requirements under the Securities and Exchange Commission (SEC) on climate-related risks.

The SEC's landmark climate-related disclosure rules, which require public companies to report on material climate risks and their greenhouse gas (GHG) emissions, were set to begin compliance in fiscal year 2025 for Large Accelerated Filers like Eagle Materials Inc.. This would have mandated disclosure of material Scope 1 and Scope 2 GHG emissions.

However, the legal landscape shifted dramatically in March 2025 when the SEC voted to end its defense of the rules due to multiple legal challenges, resulting in a voluntary stay. What this estimate hides is the continued need for preparation. You can't just stop. Even with the federal rule paused, companies must still prepare for:

• California's own mandatory climate disclosure laws.
• The European Union's Corporate Sustainability Reporting Directive (CSRD) if you have significant European operations.
• Investor demand for climate data, which hasn't slowed down.

Finance: draft a limited-assurance Scope 1 and Scope 2 emissions report by the end of the year, regardless of the stay. It's coming back, or it's coming from a state.

Occupational Safety and Health Administration (OSHA) compliance costs rise due to new safety standards.

OSHA is raising the financial stakes for non-compliance, which directly impacts the bottom line through higher potential penalties. Effective January 15, 2025, the maximum penalty for a Serious or Other-Than-Serious violation increased to \$16,550 per violation (up from \$16,131). For Willful or Repeated violations, the fine jumped to a maximum of \$165,514 per violation (up from \$161,323).

Plus, new safety standards are in effect. A new rule effective January 13, 2025, mandates that all Personal Protective Equipment (PPE) in construction must 'properly fit' each employee. This requires a full audit of your PPE inventory and new procurement processes, especially for diverse workforces. The good news is that Eagle Materials Inc. achieved its lowest total recordable injury rate in company history in fiscal year 2025. That's a strong indicator of a safety-first culture, which is the best defense against these rising financial risks.

Eagle Materials Inc. (EXP) - PESTLE Analysis: Environmental factors

The environmental factor presents a dual challenge for Eagle Materials Inc.: a massive capital expenditure (CapEx) requirement to meet industry-wide decarbonization goals, plus the emerging, unquantifiable risk of regional carbon pricing. Your focus must be on modeling the cost of non-compliance, not just the cost of compliance.

Cement industry faces intense pressure to meet net-zero carbon pledges by 2050.

The cement sector, responsible for roughly 7-8% of global carbon dioxide ($\text{CO}_2$) emissions, is under a global mandate to decarbonize. The American Cement Association (ACA) Roadmap commits US manufacturers to net-zero by 2050. More immediately, the Global Cement and Concrete Association (GCCA) is pushing for a 20% reduction in $\text{CO}_2$ per ton of cement between 2020 and 2030.

Eagle Materials Inc. is ahead of the curve on one key lever: Portland Limestone Cement (PLC), a blended product that uses less carbon-intensive clinker. The company increased its sales of blended cement products to 75% of its total manufactured product sales in fiscal year 2024, and expects this figure to rise to 100% by the end of fiscal year 2025. That's a massive, necessary step, but it only addresses part of the problem.

The next phase requires heavy investment in kiln modernization and carbon capture, utilization, and storage (CCUS), which is not yet commercially scalable. The company's total cement production for fiscal year 2025 was approximately 6.0 million short tons, making the sheer volume of emissions a persistent financial risk. Here's the quick math on their major CapEx commitment:

EXP's carbon footprint is a growing concern for institutional investors like BlackRock.

Institutional investors are increasingly treating climate risk as financial risk. While BlackRock has recently stated it will not use its voting power to directly engineer a specific decarbonization outcome, it still expects 75% of its corporate and sovereign assets to be in issuers with science-based targets by 2030. This is a clear signal: if you don't have a plan, you get a higher cost of capital.

Eagle Materials Inc.'s carbon intensity of production was 0.72 metric tons $\text{CO}_2$ per metric ton of cement (as of 2020 data), which is better than the US median of 0.78, but still a high-emission profile. For context, a single institutional investor, Federated Hermes, noted in 2021 that Eagle Materials Inc. represented 17% of their SDG Engagement Equity Fund's total carbon footprint, highlighting the company's disproportionate impact on their portfolio risk. The company's stated goal of a 20% reduction in carbon intensity by 2030 (vs. 2011 baseline) is viewed by some investors as too conservative given the industry's global push.

Increased cost of carbon credits or taxes in states adopting cap-and-trade programs.

The immediate threat of a carbon tax is geographically limited but growing. Eagle Materials Inc. generates approximately 65% of its revenue in states like Texas, Oklahoma, and Missouri, which currently have no carbon pricing mechanism. In fact, Texas lawmakers are actively moving to ban a state carbon tax. But this regional insulation is temporary.

The financial risk comes from two places: potential federal legislation and the rising cost in states where the company does have exposure or where future expansion may occur. You need to watch the market price of carbon allowances, as they represent the future cost of doing business:

• California Cap-and-Trade: Allowance price was around \$26.72 per tonne of $\text{CO}_2$ in April 2025.
• Regional Greenhouse Gas Initiative (RGGI): Price fell to approximately \$19.41 per tonne of $\text{CO}_2$ in April 2025.

A cost of \$25 per tonne applied to the company's cement production (6.0 million short tons, or approximately 5.4 million metric tons) would represent a theoretical annual cost of roughly $135 million. This is a potential liability that could erode the Heavy Materials sector's fiscal year 2025 operating earnings of $310.7 million.

Focus on quarry reclamation and biodiversity preservation as part of operating permits.

Quarry operations present a different, but equally critical, environmental and regulatory risk. Operating permits are contingent on strict adherence to reclamation plans and biodiversity preservation. Failure here means operational shutdowns, not just fines.

The company is constantly depleting its reserves; proven and probable limestone reserves declined from 312.8 million tons in fiscal year 2023 to 308.2 million tons in fiscal year 2024. This small, 1.5% annual depletion rate necessitates continuous investment in land management.

• Permit Compliance: Laws require Eagle Materials Inc. to reclaim land upon completion of extraction and mining operations.
• Biodiversity: A subsidiary, Fairborn Cement Company, successfully reclaimed a quarry in Beavercreek Township, restoring it to prairie grass and wetlands, setting an internal benchmark for best practice.

So, your next step is clear: Finance needs to model the CapEx impact of a 20% reduction in kiln emissions by 2028, using a conservative estimate for carbon credit costs. That's the defintely most important variable right now.