United States Lime & Minerals (USLM) Q3 2026 earnings review
US Lime sales rise, but higher fuel costs cut profit
United States Lime & Minerals, a supplier of lime and limestone for construction and industry, grew sales in the third quarter while its profit slipped. Revenue increased 4% from a year ago to $106 million on higher prices and steel demand, but gross margin shrank by more than 3 percentage points by our math. Chief executive Timothy W. Byrne pointed to rising diesel costs, startup inefficiencies at the new Texas kiln, and permitting delays on large building projects.
| Revenue | $106.2M +4.1% from a year ago |
|---|---|
| Gross margin | 47.8% -3.4 percentage points from a year ago |
| Diluted profit per share | $1.32 -2.2% from a year ago |
| Quarterly dividend outlook | Unchanged $0.06 per share for Q4 |
⚖️ Verdict: 🔴 Bearish
The story got worse because construction demand flipped from the company's main growth driver in the second quarter to a volume drag in the third, just as Byrne warned that Texas homebuilding is starting to slow. On the positive side, steel orders and pricing stayed positive, and interest on a $543 million current asset pile cushioned the drop in net income.
The question now is whether the margin squeeze and construction drop are temporary hiccups or the start of a regional downturn. Either commissioning the Texas kiln in the fourth quarter clears the plant inefficiencies while delayed projects resume, or slowing Texas housing keeps volumes and margins down. First-quarter 2027 gross margin and construction volume trends will tell.
🐂 Bull Case
Steel Demand and Prices Lift Revenue
United States Lime & Minerals makes lime and limestone products for builders, steel mills and industrial buyers. Third-quarter revenue rose 4.1% from a year ago to $106.2 million. The lime producer achieved "modest increases in both average sales prices and sales volumes" during the period, as stronger orders from steel producers outweighed a drop in construction activity.
This matters because steel mills and price increases kept top-line growth positive even when construction, a primary customer group in the first half of the year, pulled back. What to watch: customer demand commentary in the fourth-quarter release. Continued volume gains from steel mills would show industrial buyers can carry sales while building delays work through.
Growing Cash Balance Adds Interest Income
The Dallas-based producer carries no debt on its summarized balance sheet and retains most of its earnings after paying a $0.06 quarterly dividend. Current assets climbed 8.6% from last quarter to $543.3 million by our math, and rose 19.3% from the end of 2025. Other income grew 11.2% from a year ago to $3.8 million, driven by "interest earned on higher average balances of cash and cash equivalents".
This matters because interest income cushioned the bottom line, trimming the net income decline to 1.9% despite a 3.4% drop in operating profit by our math. What to watch: other income and current assets in the fourth-quarter report. Another sequential rise in current assets after the Texas kiln finishes construction would add more interest income to quarterly profit.
🐻 Bear Case
Construction Demand Flips to a Drag
Last quarter, chief executive Timothy W. Byrne said data center projects would support construction demand in the second half. While Byrne said management remains optimistic about future building activity, construction volumes fell this quarter and reduced total sales growth. He noted that "certain large construction projects have recently experienced delays for various reasons, including securing permits", and said the team is "monitoring indications that Texas’ residential construction is beginning to slow down".
This matters because construction was the lead contributor to volume growth in the second quarter, and Texas is a core operating region where the company is adding production capacity. What to watch: construction volume commentary in the fourth-quarter release. A second straight quarter of falling construction volumes would show that homebuilding weakness in Texas is outweighing commercial project work.
Diesel and Kiln Startup Cut Gross Margin
Gross profit fell 2.7% from a year ago to $50.8 million, even though revenue grew. By our math, cost of revenues — the cost of mining, processing and shipping lime — rose 3.4 percentage points of revenue to 52.2%, pushing gross margin down to 47.8%. The company blamed "higher transportation and fuel costs, driven principally by higher diesel costs", alongside "production inefficiencies experienced during the integration of our new Texas kiln into our existing plant operations".
This matters because price increases could not cover the jump in freight and plant integration expenses, causing quarterly net income to slip 1.9% to $38.0 million. What to watch: gross margin in the first quarter of 2027, the first full period after the Texas kiln finishes commissioning. If cost of revenues stays above half of sales, higher diesel and operating expenses are sticking beyond the startup phase.
👓 Other Themes
Texas Kiln Nears Completion
United States Lime & Minerals had planned to bring its new Texas kiln online in the summer of 2026 to expand capacity. Byrne said the kiln "began intermittently producing quicklime in the third quarter, and we expect to have final commissioning completed in the fourth quarter". Quicklime is a heated limestone product used in steelmaking and road building, and integrating the kiln caused plant inefficiencies during the quarter.
💲 Other KPIs
Overhead costs rose 2.3% from a year ago after falling 2.0% in the second quarter and 4.7% in the first quarter. Despite the dollar increase, overhead costs fell by 0.1 percentage points of revenue to 5.7% by our math, helping cushion operating profit against higher plant costs.
Net property, plant and equipment grew 3.6% from last quarter and 13.2% from the end of 2025 by our math. Sequential growth slowed from 4.8% in the first quarter and 4.2% in the second quarter as construction on the new Texas kiln neared its final stage.
Net deferred tax liabilities — future taxes owed on timing differences like accelerated equipment depreciation — rose 19.6% from last quarter and 58.7% since the end of 2025 by our math. That follows sequential increases of 14.9% in the first quarter and 15.5% in the second quarter as the Texas kiln enters service.
🔮 Guidance
Unchanged. The board of directors declared a regular quarterly dividend of $0.06 per share, payable in December 2026. The payout matches the $0.06 per share distributed in each of the last four quarters.
❓ Key Questions
How much did kiln startup vs diesel hurt margins?
Gross margin fell 3.4 percentage points from a year ago by our math on both diesel costs and Texas kiln integration. Knowing the split will show how much margin rebounds once commissioning ends in the fourth quarter.
Are delayed construction projects includes data centers?
In the second quarter, Byrne highlighted data center projects as a driver for second-half construction demand. Clarifying whether permitting delays hit data centers or other commercial work will show how long the volume pause may last.
How will management use its growing cash pile?
Current assets reached $543 million against total liabilities of $65 million, while the Texas kiln expansion is nearly finished. With major capital spending winding down, investors need to know if larger dividends or acquisitions are planned.