Margins Showing Better Resiliency This Cycle; Growth In Data Centers Emerging

研报英文原文证据摘录

Margins Showing Better Resiliency This Cycle; Growth In Data Centers Emerging

d IN. While pricing is

still at market (no premium), the scale and clustering of projects can tighten regional supply and

support utilization, making data centers an important demand lever. These projects typically span

12–18 months, offering better visibility, but mgmt is selective which projects it pursues to best

optimize mix and margins, and maintain LT relationships with existing customers.

Wallboard holding up better than past cycles. Demand remains trough-like (~25 bsf) amid weak

housing, but industry structure has improved materially. Capacity rationalization, raw material

constraints (synthetic gypsum), and consolidation have driven meaningfully better price discipline

vs. prior cycles, limiting downside despite low utilization. EXP noted the June wallboard price

increase is cost-driven (freight), but mgmt highlighted margins are holding up much better this

cycle with demand at a trough. That said, with wallboard prices bleeding, we see EBITDA margins

in wallboard dipping to ~32% in FY27. Mgmt highlights potential to return to ~40% EBITDA in

wallboard in a normalized housing environment, reflecting both improved supply dynamics and a

steeper cost curve.

Staying disciplined on M&A. Capital deployment priorities remain unchanged: favor high-return

organic investment and selective M&A, with buybacks as the default when valuation or deal

economics are not compelling. Mgmt highlighted an expanding M&A pipeline, with increased

inbound dialogue, especially as EXP has pursued deals in aggregates. Mgmt will remain highly Philip Ng, CFA * | Equity Analyst

disciplined on M&A that's returns-driven at reasonable valuations. M&A targets in aggregates don't +1 (212) 336-7369 | png@jefferies.com