A strong lime story bounces back from a quick dip
- USLM sells basic but important materials, mainly lime and limestone products, into many industrial and construction markets.
- Fiscal 2025 was very strong: revenue rose 17.3%, helped by an 8.4% volume gain and an 8.2% price gain.
- Q1 2026 broke that streak with a revenue drop, but Q2 2026 saw a strong rebound with revenue up 8.3%.
- The bull case depends on data center construction demand and the new Texas kiln starting up well in summer 2026.
- The bear case is that fuel and transportation costs stay high while overall construction demand eventually cools.
The rebound after a short pause
USLM had a standout 2025. Revenue from lime and limestone products rose 17.3% to $372.7 million. The growth was balanced, with volumes up 8.4% and average prices up 8.2%. Gross profit margin also improved to 48.9% from 45.3%, helped by higher prices, stronger demand, and lower fuel costs.
After a rare dip in Q1 2026, the second quarter showed a strong rebound. Revenue grew 8.3% from the prior year, driven by a 6.6% volume increase and a 1.7% price increase. Demand came roaring back from construction and steel customers, which validated management's positive outlook and sent gross profit up 11.6%.
The bull case is gaining momentum again. Management expects data center projects to keep supporting strong construction demand. A new Texas kiln is expected to start up in summer 2026, costing about $65 million. If that kiln runs well, USLM will have fresh capacity right as demand recovers.
The bear case focuses on costs and cycle timing. Even with the revenue rebound, USLM is still fighting higher fuel and transportation costs. If the recent jump in construction is short, the new Texas kiln might open just as the market softens, which could pressure profit margins.
Quarries, kilns, and local demand
USLM mines limestone and turns it into products that customers use in construction, steelmaking, water treatment, paper, glass, roofing, farming, and oilfield work. It operates plants and distribution facilities in Arkansas, Colorado, Louisiana, Missouri, Oklahoma, and Texas. Most products are shipped by truck or rail within about 400 miles of each plant, so the business is local and regional.
The company makes money by selling tons of material at prices above its mining, kiln, labor, energy, and freight costs. That sounds simple, but small changes in volume, price, fuel, or transportation can move profit a lot. Management says profits are very sensitive to sales volumes, prices, and costs.
Customer concentration looks low at the company level. In 2025, about 675 customers bought lime and limestone products, and no single customer was more than 10% of those sales. The bigger concentration question is not one named customer. It is how much recent growth came from data center construction, which the filings do not break out.
Old materials with hard-to-skip uses
Quicklime
Quicklime is made by heating limestone in kilns. Customers use it in metal processing, flue gas treatment, construction soil stabilization, paper, sanitation, and water treatment.
Hydrated lime
Hydrated lime is made by reacting quicklime with water. It is used in water treatment, soil stabilization, flue gas treatment, asphalt, drilling mud, and chemicals.
Lime slurry
Lime slurry is a water mix of calcium hydroxide. USLM says it is used mainly in soil stabilization for highway, road, and building construction.
Pulverized limestone
Pulverized limestone is ground limestone. It goes into roof shingles, asphalt paving, animal feed, glass, agriculture, flue gas treatment, and mine safety dust.
Crushed limestone
Crushed limestone is sold mainly as a construction aggregate. It is a basic input, so demand can rise and fall with local construction activity.
Natural gas interests
USLM also has royalty and non-operated working interests in natural gas wells in the Barnett Shale in Johnson County, Texas. This is not the core lime business.
Production comes from six mines
USLM reports one main lime and limestone business, but its 2025 filing gives mined limestone tons by property. The mix below uses 2025 mined tons, not revenue, so it does not show customer or data center exposure.
What could crack the margin
Construction slowdown
High impact · Medium oddsConstruction has been a key demand driver, including large data center work. Demand rebounded in Q2 2026, but any long slowdown could leave USLM with weaker volumes just as new kiln capacity arrives.
Fuel and freight squeeze
High impact · Medium oddsKilns and hauling use energy, trucks, rail, and fuel. Higher fuel and transportation costs remain a headwind, even though gross profit grew in Q2 2026. If USLM cannot pass those costs into prices, margins can fall quickly.
New Texas kiln ramp risk
Medium impact · Medium oddsThe new Texas kiln is expected to start up in summer 2026 and is estimated to cost about $65 million. A late start, poor early output, or low customer take-up would weaken the growth case. Depreciation also begins when the kiln consistently produces saleable quicklime, which could lift expenses in the second half of 2026.
Uneven pricing power
High impact · Medium oddsUSLM had an 8.2% average price increase in 2025, a 0.2% drop in Q1 2026, and a 1.7% gain in Q2 2026. Pricing power is uneven. If customers push back while costs rise, the 2025 profit margin level may be hard to repeat.
Permits and plant interruptions
Medium impact · Low oddsUSLM depends on quarries, mines, kilns, plants, trucks, and rail. Accidents, weather, labor issues, supply delays, utility problems, or permit trouble can stop shipments. Environmental, health, safety, and mine rules also affect how the company expands and runs its sites.
In one breath
What does United States Lime & Minerals do?
USLM makes lime and limestone products. Its materials are used in construction, steel, water treatment, flue gas treatment, roofing, agriculture, paper, glass, and oilfield services.
How is the company performing in 2026?
After a rare revenue decline in the first quarter, USLM bounced back in Q2 2026. Revenue grew 8.3% year-over-year due to strong volume and price increases, led by construction and steel demand.
Why does the Texas kiln matter?
The Texas kiln adds capacity and is expected to start up in summer 2026. It matters because the growth case depends on filling that new capacity at profitable prices, while the risk is that demand or costs disappoint.
Is USLM exposed to data centers?
Yes, the company said recent volume growth was helped by construction demand, including large data centers. The filing does not say exactly how much revenue comes from data centers, making it an important watch item.
