James Hardie Industries Announces Second Quarter Fiscal Year 2024 Results

Record Adjusted Net Income of US$178.9 Million

Record First Half Operating Cash Flow of US$459.1 Million

Q3 Adjusted Net Income Guidance of US$165 Million to US$185 Million

Announces New US$250 Million Share Buyback Program

James Hardie Industries plc (“James Hardie”), announced results for its second quarter ending 30 September 2023.

Second Quarter Fiscal Year 2024 Highlights, Compared to Second Quarter Fiscal Year 2023, as applicable:

• Global Net Sales of US$998.8 Million
• Record Global Adjusted EBITDA of US$285.5 Million, with an Adjusted EBITDA margin of 28.6%
• Record Global Adjusted EBIT of US$240.0 Million, with an Adjusted EBIT margin of 24.0%
• Record Adjusted Net Income of US$178.9 Million, up 2%
• Adjusted Diluted EPS of US$0.41 per share, up 3%
• Record First Half Operating Cash Flow of US$459.1 Million, up 74%

Speaking to the results, James Hardie CEO Aaron Erter said, “Our team’s focus remains simple: working safely, partnering with our customers, managing decisively, and controlling what we can control. This focus has enabled us to deliver a strong first half, and a record quarterly result for Adjusted Net Income.”

Mr. Erter continued, “I believe our last three quarterly results are proof points that we are accelerating through this cycle and taking share. We have a superior value proposition that helps our customers grow profitably and be successful. Our team is focused on maintaining momentum to deliver strong financial results again in the third quarter as highlighted by our guidance range provided today. We are homeowner focused, customer and contractor driven, providing the entire value chain with world class products and services.”

Second Quarter Segment Results

Second Quarter Fiscal Year 2024 Results Compared to Second Quarter Fiscal Year 2023 Results

North America Fiber Cement Segment

Net Sales declined 2% to US$734.4 million. Average Net Sales Price (ASP) growth of +2% was offset by a 5% decline in volumes. Volume of 773 million standard feet was just above the top end of August guidance of 740 million to 770 million standard feet. EBIT increased 9% to a record US$232.7 million, supported by a higher average net sales price and lower freight and input costs, primarily pulp. These benefits offset the decline in volume as well as the increased SG&A investments in Homeowner and Trade marketing initiatives. EBIT margin expanded 330 basis points to a record 31.7%.

Asia Pacific Fiber Cement Segment

Net sales increased 7% to a record A$225.1 million. ASP growth of +15%, was partially offset by a 9% decline in volumes, with Australia performing the strongest and leading the region. EBIT increased 21% to A$67.9 million, supported by a higher average net sales price which offset higher cost of goods sold per unit. EBIT margin expanded by 360 basis points to 30.2%.

Europe Building Products Segment

Net sales increased 5% primarily related to a 20% increase in ASP and a €3.3 million favorable true-up related to customer rebate estimates. The growth in ASP resulted from our strategic price increases and growth in High Value Products. Volumes declined 15%, driven by reduced market activity in Fiber Gypsum. EBIT of €11.5 million increased 161%, supported by a higher ASP, which offset increases in cost of goods sold per unit, as well as increased investment in SG&A to drive growth initiatives. EBIT margin expanded by 640 basis points to 10.7%.

Capital Resources

Operating cash flow increased 74% to a record US$459.1 million for the first half of fiscal year 2024. First half operating cash flow was driven by strong results in all three regions and significant improvement in working capital of US$82.7 million; both of which were supported by the execution of the Hardie Operating System (HOS).

James Hardie Chief Financial Officer, Rachel Wilson, stated, “Our Q2 leverage ratio of 0.79x and US$608.0 million of liquidity reflects our strong margins and cash generation. During the first half, we improved our liquidity position by US$132.2 million while not only executing the final tranche of our initial share buyback program with the purchase of US$121.3 million of stock, but also repaying US$90.0 million of our revolving credit facility. These actions reflect a balanced approach to capital deployment. Our capital allocation framework is unchanged and matches who we are, a growth company. The primary focus of our capital allocation framework is to invest in organic growth.”

Commenting on capital resources, Ms. Wilson stated “Our capacity expansion program is guided by our expectation for sustainable long-term profitable share gain. For the first half of FY24, total capital expenditures were US$232.6 million. While we are closely monitoring market conditions, we remain committed to appropriately investing in capacity expansion such that we remain flexible and agile to respond as demand increases coming out of this cycle.

Since the commencement of our share buyback program in November 2022, we have bought back 8.2 million shares at an average price of US$24.26, for total consideration of approximately US$200 million. Today we announced a new US$250 million buyback program, which we expect to complete over the next 12 months.”

Subsequent to the quarter end through October 2023, we paid down the entire US$140 million balance on our revolving credit facility. On 27 October 2023, we also entered into a new five-year US$300 million Term Loan Agreement, maturing October 2028. As of 31 October 2023, our liquidity was nearly US$1.0 billion, versus US$608 million at 30 September 2023, with net leverage of approximately 0.70x.

Sustainability

Speaking on ESG, Mr. Erter said, “We released our fiscal year 2023 Sustainability Report on 10 August. Sustainability is a never-ending journey for us. We continue to identify and develop solutions that do right by our planet, our people and the communities where we operate. We have increased our ESG commitments, with even larger ambitions across the company while putting roadmaps in place to get us there and hold ourselves accountable. While this is just the beginning, we are all ready to do our part in building a better future for all.”

Our 2023 Sustainability Report can be found here.

Outlook and Earnings Guidance

The outlook for the housing markets we participate in globally continues to remain uncertain. In our largest market, North America, the external data providers we utilize expect our addressable market to decrease between 7% and 14% in calendar year 2023 versus calendar year 2022.

Guidance for the third quarter of fiscal year 2024; includes:

• North American volumes to be in the range of 730 million to 760 million standard feet
• North American EBIT margin to be in the range of 30% to 32%
• Adjusted Net Income to be in the range of US$165 million to US$185 million

For the full year FY24, we expect to spend a total of approximately US$550 million in capital expenditures.

James Hardie’s guidance is based on current estimates and assumptions and is subject to several known and unknown uncertainties and risks.

To view the full second quarter results, click here.

About James Hardie

James Hardie Industries plc is a limited liability company incorporated in Ireland with its registered office at 1st Floor, Block A, One Park Place, Upper Hatch Street, Dublin 2, D02 FD79, Ireland.

Contact:

James Brennan-Chong – Director of Investor Relations and Market Intelligence – media@jameshardie.com.au – (312) 756-9919

Source: James Hardie Industries plc