JHX

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 6:00 p.m. ET Vice President of Investor Relations - Bill Seymour Chief Executive Officer - Aaron Erter Chief Financial Officer - Ryan Lada President and General Manager of North America Building Products - Jon Skelly Operator: Welcome to the James Hardie Fiscal First Quarter 2027 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Bill Seymour, VP of Investor Relations. Please go ahead. Bill Seymour: Thank you, operator, and thank you to everyone for joining today's call. I'm joined today by Aaron Erter, CEO of James Hardie; Ryan Lada, CFO of James Hardie; and Jon Skelly, President and General Manager of James Hardie, North America Building Products. Before we begin the call, please note that during prepared remarks and Q&A, we may refer to non-GAAP financial measures and make forward-looking statements. You can refer to several related cautionary and other notes on Slide 2 of our earnings presentation for more information. Forward-looking statements made during today's conference call and in the earnings materials speak only as of the date of this presentation. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements. In addition, non-GAAP measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of non-GAAP measures discussed today can be found in our earnings presentation, which is posted on our website. Also, unless otherwise indicated, our materials and comments refer to figures in U.S. dollars and any comparisons made are to the corresponding period in the prior fiscal year. Organic net sales comparisons exclude the impact of the AZEK acquisition. With that opening, I'm pleased to hand the call to Aaron. Aaron Erter: Thanks, Bill, and thank you all for joining us today. In my remarks, I'll cover the highlights of our fiscal first quarter, discuss our strategy and outlook and then hand it to Ryan for a detailed walk-through of the financials and our guidance. We're off to a good start to the fiscal year. First quarter results were ahead of our expectations, led primarily by better-than-expected organic growth in our fiber cement business, performance that came against an economic and housing macro backdrop that remains uncertain. Our team stayed focused on what we can control, strong execution and serving our customers at a high level. We entered the year with a clear set of priorities: return fiber cement to growth, outperform the market across our portfolio, expand adjusted EBITDA, achieve cost and revenue synergies and drive a step-up in free cash flow to support deleveraging. One quarter in, we're pleased with our progress against each of these priorities. Let me get into the highlights of the quarter. Net sales for the quarter were above the high end of our original guidance range with pro forma growth of 12%, strong outperformance versus the market. Adjusted EBITDA was also above the high end of our guidance range. As you saw in our results today, starting in Q1, we are excluding share-based compensation expense in adjusted EBITDA and other non-GAAP financial measures. We believe excluding stock-based comp provides a clear view of our underlying performance and makes us more comparable to our peers. We have also heard from a number of our investors that they would like to see this change, and we appreciate that input. We will continue to break out SBC as a separate line item in our reconciliation tables so investors can clearly see the impact of this change. Back to the results. Our outperformance in the quarter was broad-based, but it was led by our fiber cement business, where organic growth of 20% came in ahead of our expectations. Three things primarily drove the beat. First, strong execution against our growth initiatives, including ColorPlus, Statement Essentials and Trim-Over, where we're seeing continued proof points on material conversion, particularly in the Northeast and Midwest. Second, strength in two parts of the market where we are particularly strong that have held up better than the rest, the higher end of the market, including repair and remodel and multifamily new construction. Third, we lapped the inventory destock from a year ago. Our strong execution and progress in fiber cement are encouraging as we head into the balance of the year, even as the market environment remains uncertain. In Deck, Rail & Accessories, underlying demand remained healthy with nearly double-digit sell-through that reaccelerated through the quarter, driven by strong consumer demand and incremental shelf space across the platform. We're encouraged by the continued strength in TimberTech, driven by wood deck conversions, mix shift to more premium products and commercial synergy momentum. The Australia, New Zealand and Europe businesses performed well, both growing revenue double digits and outperforming in a challenging macro environment. We made progress on debt paydown in the quarter, redeeming $400 million of unsecured notes ahead of their 2028 maturity. This keeps us well on track towards our net leverage target of approximately 2.4x at the end of this fiscal year and less than 2x by fiscal Q2 2028. Turning to the integration. Commercial synergy momentum continues to build. We're seeing broad-based wins across our combined sales force, strengthening our conviction in the fiscal 2027 $125 million run rate commercial revenue synergy target. Last quarter, we highlighted 2 examples, Lansing Building Products and CBUSA. And as you saw earlier this week, we announced an expanded nationwide partnership with Boise Cascade, one of the largest U.S. wholesale distributors of building materials. This agreement makes Boise a national distribution partner across our entire portfolio from Hardie Siding & Trim to AZEK Exteriors and for the first time, TimberTech decking and railing. In addition to the expanded partnership with Boise, we have expanded our partnership with 6 major regional distributors: Capital, Dixie, Lumbermen's, Parksite, Woodgrain and Wolf, now carrying the full line of the Hardie portfolio. They will now become fiber cement partners in addition to their existing decking partnerships, extending our reach into the repair and remodel market. These expanded partnerships are a validation of our strategy and the culmination of months of planning to bring together James Hardie's industry-leading exterior building products with the best-in-class national distributor and best-in-class regional distributors. These expanded partnerships also mark a significant step forward toward achieving our revenue synergy target. On cost synergies, we remain ahead of schedule while under budget for cost to achieve without sacrificing service or execution. Our combined sales force gathered for a company-wide sales meeting in Chicago in late May, bringing our legacy Hardie and AZEK teams together under one roof for the first time. One company, one sales force, one culture with a shared playbook. At 500 strong, we believe we have the largest and best sales force in the industry, and the early results reflect that. We also continued extending the Hardie operating system across the AZEK manufacturing network, resulting in improved productivity, tighter procurement discipline and better cost visibility across the combined plant footprint. These examples are the best of both companies coming together in practice. As a reminder, our $23 billion exterior total addressable market in North America remains heavily underpenetrated by more resilient materials, yielding a $17 billion-plus conversion opportunity. We're executing against 5 pillars to capture it, and I'll touch briefly on each. First, material conversion. We continue to see contractors switch competitive decking to TimberTech and long-time Hardie siding contractors add composite and PVC decking to their offering. There are approximately 60 million decks in the U.S., and the vast majority are wood. These 2-way wins remain a meaningful contributor to above-market growth. Second, channel expansion. We continue to scale Hardie into TimberTech and AZEK strong accounts in the North, and TimberTech into Hardie strong accounts in the South, adding new stocking locations across the combined footprint this quarter. Third, innovation and new product development. Our combined product and R&D teams remain focused on solutions that accelerate material conversion, applying the AZEK innovation playbook to fiber cement with products like TimberHue, which offers authentic woodgrain finishes in 8 colors. Fourth, brand preference. Brand search volume and customer sample orders, a leading indicator of future demand both continue to grow at a healthy clip in the quarter, reinforcing our position as one of the most recognized brands in our categories and supporting sustained share gains over time. And fifth, simplifying the consumer journey. Our replatformed website continues to improve our homeowners research, compare and connect with our contractor network. Together, these 5 pillars remain the core of how we win in North America, and we're pleased with our progress across each of these this quarter. Let me give you an update on our fiber cement growth plan. As discussed last quarter, our focus remains on the Northeast and Midwest where repair and remodel, wood and wood-look siding alone represents an approximately $1 billion conversion opportunity. And where AZEK gives us immediate channel relevance, an established footprint, strong relationships and complementary products, the expanded statement and statement Essentials rollout is gaining traction, continuing with double-digit growth in the Midwest East pilot and is now live in an additional 5 regions. Building on that momentum, we opened 2 new expanded Statement partner stocking locations on the East Coast, improving service and availability of the full collection across our pilot markets, with ColorPlus mix continuing to grow. At the same time, we've expanded our Hardie ProLab, our mobile contractor training units to drive Statement Essentials adoption across the broader Midwest and Northeast footprint, and we're seeing that training translate into sell-through. Our 3 conversion priorities remain unchanged: converting vinyl siding, winning against wood and expanding our presence in premium products. On vinyl, we are accelerating penetration in the Northeast, Midwest and the Carolinas backed by expanded ColorPlus rollout and contractor training. On wood, fire resilience, especially in the West, continues to be an increasingly important part of the conversation as building codes evolve insurance requirements tighten and homeowners place greater emphasis on durability and risk mitigation. Finally, TimberHue and our enhanced Artisan lineup, our premium, higher-priced, higher-margin lines are gaining traction with custom builders and high-end remodelers. Let me close my remarks with a quick word on the external environment before I hand it to Ryan. The housing macro backdrop remains uncertain and broadly similar to what we discussed last quarter. Mortgage rates remain elevated and builder confidence and consumer sentiment remain cautious. Housing starts have converged down toward permits over the quarter. And as I touched on earlier, we are seeing a divergence by price band with the middle to upper tiers where we participate more significantly holding up better than the rest of the market. In our outlook, we are not assuming housing industry conditions improve from here. We are focused on what we can control in our own execution, and we remain committed to our fiscal 2027 priorities, market outperformance, a return to growth in fiber cement, attainment of cost and revenue synergies, adjusted EBITDA expansion and significant growth in free cash flow and further deleveraging. Now let me turn it over to Ryan, who will walk you through our financial results and outlook in more detail. Ryan Lada: Thanks, Aaron. Total net sales for the first quarter were $1.47 billion, growing 64% on a reported basis and 12% on a pro forma basis, above the high end of our original guidance range. As Aaron mentioned, starting this quarter, we're excluding share-based compensation expense from adjusted EBITDA and our other non-GAAP measures. We'll continue to break share-based compensation out as a separate line in our reconciliation tables, so investors can see the impact clearly in both current and prior periods. Adjusted EBITDA was $422 million with margins of 28.6%, above the high end of our original guide with and without the share-based compensation exclusion, reflecting volume leverage and the benefit of our cost actions. A few modeling notes. Adjusted corporate and unallocated R&D was $32.3 million in the quarter. Keep in mind, a portion of our cost synergy benefits continue to run through that line. Our adjusted effective tax rate was 21.7%, in line with expectations. Weighted average diluted shares were approximately 584 million in the quarter, and we expect share count to remain broadly consistent throughout the year. Adjusted net interest was $64.8 million in Q1, and we expect it to normalize around $60 million per quarter for the remainder of the fiscal year. Adjusted EPS was $0.36, up 13%, with growth diluted by the increase in shares from the AZEK consideration. As we discussed last quarter, we continue to convert customers as part of our commercial synergy program, and some of those wins involve buying back existing channel inventory. These are investments tied to specific conversion wins, not a reflection of underlying demand, and we'd expect to see these investments continue as we close out more of our commercial synergy pipeline. On costs, we continue to expect approximately $80 million to $100 million of cost pressure in fiscal 2027, primarily raw materials, freight and energy, with roughly 2/3 of that impact in North America. The pricing actions we announced in late April are directly offsetting this pressure, and we're pleased with the execution and realization to date. Our raw material cost assumptions have improved modestly, but we're seeing offsetting pressure in freight, where elevated spot rates and network dynamics are running above our original planning assumptions. We are actively working on contracting a higher percentage of our freight lanes to help reduce this pressure. Oil prices have moved below our planning assumptions, but refined products like diesel have not seen the same relief. We are holding our assumption of $80 million to $100 million of cost pressure in fiscal 2027, and we're continuing to watch this closely given the volatility. Separately, the $25 million in annualized fiscal year 2027 savings from our Fontana and Summerville plant closures, along with continued cost savings across sourcing, productivity and formulation, are tracking as planned. In Siding & Trim, net sales were $859.8 million, up 34% with organic growth of 20%, ahead of our expectations and led by fiber cement. Adjusted EBITDA margin was 33.5%, reflecting volume leverage, pricing and continued plant cost savings from our manufacturing footprint optimization work. Sell-through was strong exiting the quarter, outpacing shipments, driving volume leverage and bringing channel inventory to healthy levels. In Deck, Rail & Accessories, net sales were $305.1 million, a decline of 5%. The year-over-year sales comparison reflects the planned channel inventory normalization we discussed last quarter, not a change in the underlying health of the category. Sell-through improved sequentially each month and we exited the quarter with channel inventory and days on hand at healthy levels. We continue to see strong engagement with TimberTech and AZEK across both legacy AZEK and legacy Hardie accounts, supporting our confidence in the long-term material conversion opportunity. Adjusted EBITDA margin was 27.1%. In Australia and New Zealand, U.S. dollar net sales were $153.3 million, up 26% with EBITDA margin of 34.9%. This reflected strong volume growth, disciplined cost management and the benefit of FX. In Europe, net sales were $156.4 million, up 15%, with an EBITDA margin of 19.4%, reflecting continued expense management, improved manufacturing efficiency, solid fiber gypsum and fiber cement demand and the benefit of FX. Free cash flow in the quarter was $254 million, driven by higher profitability, lower capital expenditures, improved working capital and a continued reduction in acquisition and integration-related costs. As Aaron mentioned, we redeemed $400 million of senior unsecured notes in the quarter, bringing net leverage down to 2.7x, on track towards the leverage targets Aaron reiterated. Turning to our outlook for the second quarter and fiscal year 2027. Before I jump in, it's worth flagging as you think about modeling the next few quarters. The distribution changes Aaron discussed create real upside to both the current year and long term, and we've built what visibility we have into our guide. The moving pieces here are mostly on sell-in as new and legacy distributors transition at the same time. Given that, we'd expect some quarter-to-quarter noise there over the next couple of periods. Sell-through, though, we expect to remain strong through the transition. We'll also incur some costs along the way. Marketing, sales support and other transition-related investments as we onboard new partners and wind down legacy relationships. Additionally, beginning with our second quarter results, we have fully lapped the AZEK acquisition. So going forward, we will not reference pro forma or organic growth metrics for quarterly comparisons. In Q2, we expect net sales of $1.485 billion to $1.575 billion, or growth of 14.9% to 21.9%. We expect adjusted EBITDA of $420 million to $455 million. Given our first quarter performance, we are raising our full year outlook. We now expect sales of $5.564 billion to $5.723 billion or growth of 5.9% to 9% on a pro forma basis for the full year fiscal 2027. We now expect adjusted EBITDA of $1.536 billion to $1.625 billion. This outlook reflects the flow through of the first quarter performance and the current expectations for the incremental contribution from our new distribution partnerships. We continue to plan the back half prudently against an uncertain macro backdrop. We expect free cash flow to exceed $500 million for the full year and capital expenditures to be approximately 6% to 7% of net sales. With that, I'll turn the call back to Aaron. Aaron Erter: Thanks, Ryan. Before we open it up to questions, let me leave you with a few thoughts. We're encouraged with our start to fiscal 2027, a good quarter, with strong outperformance and execution in a market that remains uncertain. This solid performance gives us confidence as we move through the rest of the year, and we remain well positioned when the macro backdrop improves. We look forward to sharing more with you at our Investor Day in New York on September 15. If you need more information on this, please reach out to our IR team. Finally, I want to thank our team for their continued execution and discipline. None of this happens without you. With that, operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Ryan Merkel with William Blair. Ryan Merkel: I'd like to start with the North America fiber cement organic growth up 20%. Aaron, I know an easy comp helped, but it's really impressive growth. So can you just talk about why you beat your guide? What's working? And then why are we seeing an inflection now? Aaron Erter: Yes. Ryan, thanks for the question. I think many of you know, we've talked about fiber cement coming into this year being our #1 priority. In the Q1 results, they are very encouraging. With that said, we're not satisfied. I think the -- as we think about the -- I like to bucketize the 3 main reasons why we're seeing fiber cement grow, why we saw it in Q1. As I really frame it is the execution of our strategic initiatives, the destock comp and the rest being really price and mix. And let me dive a little bit more into thinking about our strategic initiatives. We've talked a lot about ColorPlus and that being a big focus of ours as we think about really getting after repair and remodel, namely in those areas that have been underpenetrated for us. We've done that with the expanded statement program, which now is live nationwide. We just had 2 more locations added in Baltimore and Chicopee, Massachusetts. And then we've talked a lot about the Trim-Over and that being a way for us to really get after a vinyl siding. And we continue to make really good progress. A year into this pilot, we continue to see encouraging results in the pilot regions. We keep rolling this out to more and more contractors. One of the things that I know you've seen and that we put out there is really our ProLabs, which are mobile training centers really to take contractors through what Trim-Over is and why it can be easier for them to install and why they can make more money. We've had 50 events in Q1, and we've done -- we've trained over 1,200 contractors out there. The other thing that we're really seeing is the multifamily business. That's about 15% of our volumes that has taken off for us in Q1. And then if you look at our growth regions, areas that we really are concentrated in, areas like the Carolinas, these are more affordable price point metros, they're really running ahead of the national market. The other thing I would say is we've had competitors not able to serve the market, we've been able to take advantage of that. So a lot of this I'd say, number one, to bucketize its execution of our initiatives. The team has done an outstanding job. The other thing, we talked about the easier comp and then price being the last. So that's how I would bucketize it. As we look at the sell-through as well, and we haven't talked a lot about sell-through, that is something that our teams are concentrated on. It's something that our teams are incentified on. Our sell-through for fiber cement really accelerated each month, with June being our strongest with up 19%. So those are the reasons, Ryan, why we would say fiber cement is up about 20%. So a good quarter for us. But like I said, we're not satisfied. Ryan Merkel: That's great. And then my next question is just on the guide for 2Q. The revenue in both segments is well above what most of us were thinking. Any way to parse out the assumptions for sell-through and channel load? Any help you can give us put that in context. Aaron Erter: Yes. So I'll start out and then I'll hand it over to Ryan here. If you think about our guide, we look at for, of course, the full year, part of this is just letting our beat run through. And then thinking about -- as you can imagine, there's lots of puts and takes with what we announced as it relates to distribution with the Boise partnership and some of our regional partnerships and then also the transitions out there. So that is really what we've added to the full year guide, but I'll hand it over Ryan. He can talk more specifically to Q2. Ryan Lada: Yes. If you think about the Q2 side, from a Deck, Rail & Accessories perspective, we're up over 40% year-over-year. The easiest way to think about that is we did the channel inventory normalization here in Q1. We saw really strong sell-through above estimated demand in Q1, and that's continued into the quarter so far that we've seen through July. So you're kind of having an upside due to that. And then there is about 1/3 of it that's related to building our new distribution partners. So those are the 2 major drivers of the DR&A side. And then when you think about Siding & Trim, as we mentioned, we saw a stronger Q1. We saw a stronger sell-through. And from an inventory perspective, we're in a very good position with our channel partners. So we feel confident that, that execution will continue in Q2 here. Operator: Your next question comes from the line of Brook Campbell-Crawford with Barrenjoey. Brook Campbell-Crawford: Just the first one on the implied second half group -- hello? Just checking to make sure you can hear me? Aaron Erter: Yes. We got you, Brook. Brook Campbell-Crawford: All right. Great. Yes. Just checking on the implied second half group EBITDA, it looks to be kind of down a couple of percent when you normalize last year's stock comp. So just trying to check any specific dynamics there that would sort of drive that decline year-over-year just given the really strong first half? Or is it just planning for the worst here? Aaron Erter: Yes. Look, Brook, I think as you can probably appreciate, as we look at the full year guidance, the second half is a sequential step down from H1 is really the normal seasonality there. The other piece is certainly the uncertainty as we look to the back half of the year. So I think more than anything, we're being prudent as we look at the back half of the year. Ryan Lada: Yes. I think the only other thing I'd add, right, as we announce those distribution changes, there are some costs that we called out on the call that we would incur. That is included in kind of the guide right now to the best of our knowledge. So that does have a little bit of pressure there. And as you recall, DR&A seasonally that October through December period is always the lowest quarter. So with sales being down pretty substantially, you do feel some pressure on margin in the quarter typically. Brook Campbell-Crawford: That's great. And just on my second one around the Trim-Over methodology, doing pretty well with traction there. Do you mind just providing like a little bit of history. My understanding is that's been around for quite a while. And for whatever reason, Hardie in the past has not really promoted that more broadly across the U.S. So was there any sort of risk that previous... Aaron Erter: Yes. Brook, you broke up there, and I think we've covered this maybe on a few calls before. If we think about Trim-Over, certainly in some of the areas where Hardie has been around with high production this type of installed methodology has been around. What we wanted to do is make sure when we brought this out and rolled this out from a national standpoint, we took the time needed to test this out fully, and it took us a couple of years to do that. So we felt comfortable. And that's why we see this as an advantage for certain contractors that are going against vinyl. Again, from a Trim-Over methodology standpoint, what it allows you to do is cut down on your labor costs and be able to install Hardie at a faster rate. So contractors can go out there and do more jobs and they can make more money. So this has been around this pilot for us that we wheeled out about a year now, as I mentioned before. We keep seeing success with this, and we keep wheeling it out to more regions of the country. Operator: Your next question comes from the line of Keith Hughes with Truist. Keith Hughes: First question, with the new agreement with Boise, if you could talk big picture, longer term, what this does and which side of the business will have a bigger impact on TimberTech or HardiePlank or whatever your views are there? Aaron Erter: Yes. Keith, a really good question. Look, we're extremely excited about what we announced with Boise and some of the other regional distributors. Look, as you know, Boise is a scaled national 2-step distributor. And we've had a deep and proven relationship with Boise with our fiber cement business, which was effectively national even before this agreement was signed. So we're building on a partnership that has already been proven that works. We know what Boise can do. We think they're one of the best in the business. The other thing is just moving to a full line exclusive relationship, that's really 3 things for us. It concentrates demand behind a single national partner that is now fully aligned with James Hardie and AZEK and TimberTech portfolios rather than really splitting attention across competing lines. And I think that's really important because we talk so much about our large sales force of having 500-plus people, if you put Boise's sales force with that, call it, 600-plus people and you put them together, that's a really formidable type of force that's going out there and selling our full exterior lineup. And look, it really pairs Boise's national reach and logistics with our own downstream demand generation, as I mentioned before. So we're driving pull-through at the dealer and contractor level, while Boise is handling distribution. But they're also driving pull-through as well. And look, I think the other thing that is really obvious, Boise now has every reason to grow our brands and actively convert volume because their success is directly tied to ours. And I think that's the best type of partnership out there. So we're really excited about it. To answer your question, who is to gain more? Look, we have some pretty ambitious targets, joint targets with Boise, and we think we're going to be able to continue to grow fiber cement business. And certainly, the TimberTech business and the AZEK business is going to be relatively new. So right off the bat, we think we'll see gains there. But one thing to keep in mind since we closed on the deal with AZEK. This has been part of our plan. There's a few different chess pieces that we have planned here since when we signed the deal. This is one of them and helps us be able to grow our business, our collective business and helps us to really accelerate our revenue synergies out there. But more than anything, we think signing with Boise, we think with these regional partners is going to help us service our customers better. And that really is the key point there. Keith Hughes: One other question, if I may. Siding & Trim had an excellent price mix growth, high single digits. Is that something that you think will maintain at that level for the rest of the fiscal year? Aaron Erter: Yes. Keith, the way I think about it, look, we have -- from Siding & Trim, fiber cement, we're about 5.5% from a price standpoint, roughly be 0.5 point from a mix, and that's really the growth that we've seen in ColorPlus. We think it's more like a 3.5% to 4% type of range when we look through the rest of the year. Operator: Your next question comes from the line of Keith Chau with MST Marquee. Keith Chau: First one, just to follow up, Ryan, on some of the comments you made earlier. I think you said -- and please correct me if I'm wrong, but the growth you're expecting in Deck, Rail & Accessories in the second quarter, up 40% versus last year. I think you mentioned 1/3 of that is related to movement in the channel. So let's just talk in round number terms, but that's probably roughly $15 million at EBITDA, which leaves you somewhere close to $30 million as an underlying improvement for the DR&A. Now understanding that there is seasonality into that business into the end of the year, so your September comp is typically -- September quarter is typically low, but then that improves into December. Is it fair to assume that, that $30 million EBITDA improvement in the second quarter can be annualized going into the full year? Or is that being way too aggressive? Ryan Lada: I would probably say that's a little bit aggressive, right? I mean, your Q1 results, you saw the decline driven by the lower sales number and then us intentionally pulling down production and having slightly less absorption. Q2 kind of gets back to a little bit of a higher flow-through due to that incremental volume. So I think you probably need to do more of like a 2- to 3- quarter average just because using 2Q with all that additional volume is probably a little bit too much. Keith Chau: Okay. And then I think at the last result, you mentioned you were going to potentially at least try and quantify some of the costs associated with all of these distribution changes and I certainly appreciate that it's not necessarily the easiest thing to do. But on the cost side, when you're funding Boise to make some of these changes and potentially some of the other distribution partners, what level of costs do you expect to incur in the third and fourth quarters for this financial year? And will those costs be taken above the line or below the line, please? Aaron Erter: Yes. So Keith, what I would say from a cost standpoint, I mean, and also from a sales standpoint, there's a lot of puts and takes there. As we know, we've embedded in our guide from a sales and cost standpoint. Ryan Lada: One thing that's a little bit unique, as we called out on the call is if there is a channel inventory buyback, we would call that out separate. The guide does not contemplate that fully. As you transition, you wait to see how it burns down and what kind of inventory transfers between locations. So that would be something we would call out as we get into the next guide if it was material. And I know we called out that if there was any impact in Q1, we would let you know. And it was pretty minimal, it was under $1 million. So we didn't call it out specifically from some of the synergy wins that we had in the first quarter. Operator: [Operator Instructions] Your next question comes from the line of Phil Ng with Jefferies. Philip Ng: Well, Aaron, what a way to celebrate your 1-year anniversary for the AZEK deal with such strong results, and congratulations to the team. I guess, first off, a question perhaps for Ryan. You gave us some color for 2Q with some load-in dynamic. On decking in particular, any more consideration? Does that have an impact, perhaps in the back half in terms of your sales because you implied sales guidance for both decking and siding is flat. So I don't know if there was any pull forward that will impact the back half from that dynamic? And is the load-in largely just decking? Is there any siding consideration? So just kind of give us some color on the back half framework calling for flat sales. Ryan Lada: You think kind of the load-in Q2, right, it's primarily on the decking, DR&A side. There is a modest amount of fiber cement, but it's a pretty small number. With some of the other distribution partners that we called out this week as well, there will be some load-in fiber cement that may impact the back half of the year depending on timing. So any time load-in happens, right, you can get a little bit of impact on pull forward, which is why I mentioned some quarter-to-quarter volatility during the call earlier. But that could be just timing as you look at latency as you look in, you wait to see the sell-through. And that could impact the back half slightly. But right now, just given the backdrop from that perspective, we thought it was prudent to kind of keep the back half as we originally guided. And if things improve, we would have an opportunity to guide differently as we execute this year. Philip Ng: Okay. So it sounds like it's more conservatism. Any way to kind of flush out some of this noise, Ryan? How you're thinking about sell-out for decking or siding for this year? Ryan Lada: Yes. I don't think we've quantified the full year amount. But I know when we started at the beginning of the year, we said we expected mid-single-digit sell-through in DR&A side, and we continue to expect that. I mean, the trend we've seen in Q1 was extremely positive. It built each month and built from April on throughout the end of the quarter. And then we have preliminary kind of July results, and we continue to see right around that double-digit number in July. So we feel pretty good about kind of the mid-single digits for the remainder of the year on the decking side. And then, Aaron, I don't know if you want to add a comment on the fiber cement side. Aaron Erter: Yes. Look, we talked about Q1 and what we saw from a sell-out of fiber cement. And we said it's 9% up. And our June -- end of June, it was 19% up. So we continue to see strength there that is very encouraging for us. Philip Ng: Okay. And then, Aaron, you kind of teased about this already on the commercial synergies perhaps coming in better than you expected. I think initially, when you guys gave us the framework, it didn't account for any wins on a 2-step distribution with a guy like Boise. Would that be incremental? And is there any way to kind of size that perhaps maybe not just this year, like 12 to 18 months out with some of these moves you've made on the distribution side, how much potential upside you could generate on the commercial synergy top line perspective? Aaron Erter: Yes, Phil, look, what we've said on commercial synergies, we would exit the year $125 million. So certainly, there can be some potential upside there. We're not ready to call that yet. But why don't I do this? I have Jon Skelly in here, who leads our North American business. And he and his team are responsible for really going after and getting after these commercial synergies day in and day out. And Jon can speak to a little bit about what we're seeing there. Jonathan Skelly: Yes, Phil. I think we talked a little bit about this last call. Again, I think the customer permission and reception has exceeded our expectations, right? So I think we've been able to uncover more opportunities than we initially expected. Again, some of these things take time to actually get closed and turn into revenue. So having said that, I do believe that the targets we've laid out are highly achievable with the combination of Boise plus the enhanced relationships with new regional distributors, it could allow us to get there faster. It could allow us to achieve the capture slightly ahead of schedule, but we're still comfortable with what we laid out in terms of total opportunity. Aaron Erter: Yes. Phil, just to remind you and everyone else, the way we bucketize these when we think commercial synergies are really national dealers, retail, independent lumber yards, distribution, regional and national builders and then you're looking at contractors. So those are some of the areas that Jon and his team are going after and seeking those opportunities each and every day. Operator: Your next question comes from the line of Peter Steyn with Macquarie. Peter Steyn: Aaron, perhaps just another question around the distribution. If you think about a couple of the factors that I'm sure was in your conversations and contemplations, service, incremental optimization of the supply chain and then the potential to enable some of the next things that no doubt follow from here, as you just pointed out. How did you think about and how did Boise and the combination play into those different buckets, i.e., lifting service or incrementally improving ultimately the profitability of your supply chain? Aaron Erter: Yes. Look, really good question there, Peter. We contemplated everything when we thought about this move. Obviously, this was a huge move for us, as I mentioned before, this is something that we have been thinking about over the last year. So as you can imagine, our teams thought about everything. We also had a lot of comfort as we started out a couple of pilots with TimberTech with Boise, and you think about within Pittsburgh, within Baltimore and really exceeding expectations out there. So number one, and this was even before this move when we looked at all our 2-step distributor partners was how do they service. And we certainly took that as the #1 factor out there. And then as you can imagine, all the other variables and some of them you mentioned, we looked at. Peter Steyn: Perfect. I won't use my follow-up on a follow-up, if I may. The other topic that's come up a few times in today's conversation is the Hardie operating system and the impact that you're starting to see from a manufacturing perspective. Could you perhaps just allude or give us a little more detail on that and what you're seeing? Aaron Erter: Yes. Certainly, just for all of you on the call, our Hardie operating system is really our version of lean. And so that started out with our manufacturing plants and has really extended to other areas, areas like procurement, we think about formulation. So we have a target level of savings that we go out and get after every single year. That is on track. Everyone is involved in the Hardie operating system, but really Ryan Kilcullen, who leads our operations spearheads that for us. And our plans are running extremely well. Even when we saw lower volumes, they ran well. And as you can imagine, getting more volume has helped them to run even better. So we continue to see progress there. As we think about synergies and around cost synergies and some opportunities we have, we've talked for some time about really implementing the Hardie operating system within the legacy AZEK plants. So Ryan and his team have done that, and we're already seeing really solid results. When we think about efficiency, when we think about downtime, that's been something -- even those plants ran well. Now we have a unified system across our entire network. Operator: Your next question comes from the line of Tim Wojs with Baird. Timothy Wojs: Nice job. Maybe just first question. When you guys have historically done 2-step distribution changes in the past, I know they've been at a much smaller scale. But in your history, what is the typical kind of training period or training ramp for those sales forces to be kind of fully effective from kind of beginning to kind of when they're fully effective selling your products? Aaron Erter: Yes. Tim, we'll hand that over to Jon to answer that. Jonathan Skelly: Yes. Tim, I think in the Boise situation, clearly, they've been selling composite decking for a long period of time. So there's a lot of experience overall with the category. And so what we need to do is get them trained and armed and ready around the value proposition of TimberTech, right? And so we're already in the process of doing that. And again, we expect that curve to ramp up pretty quickly. A relevant data point, you'll recall when TimberTech converted Capital out West a few years back. Again, it's a very similar situation. They were already experienced in the category. And we leveraged that knowledge, got trained on the TimberTech value proposition, and that enabled us to move very quickly and drive really strong growth with that conversion. So we expect to see that again. Some of the other regional distributors that we've taken on that will add fiber cement siding, several of them were already in the siding category. So they're again, familiar with the category and there will be a similar training process around the value proposition and then the joint sales targeting from the commercial organizations, joint marketing across the marketing organizations to drive that downstream pull-through demand. Timothy Wojs: Okay. Okay. Very good. And then, Ryan, just on the cost inflation, I think the $80 million to $100 million is the same as it was last quarter. How much of that did you feel in the first quarter? And how much is baked into the second? Ryan Lada: Yes. We probably felt probably -- yes, I don't think we quantified it, but I would say $20 million to $25 million in Q1 and mainly on the freight side there, right? So a lot of the raw materials will be hung up on the balance sheet, just the way the inventory is brought in. But from a freight perspective, that was immediate. And as you see, even when rates come down, freight doesn't drop fast. So that was kind of the major driver there. I mean, we have seen a little bit of relief on the commodity and natural raw materials side. But as we called out the freight piece, we're running at a higher volume, and then there is some general discrepancies in the freight market right now. So those spot rates are higher than normal. So we're working actively to try to contract more of our freight lanes under contract versus spot. So we do actively work that kind of relief, but that's why we kept it at the $80 million to $100 million for now. Operator: Your next question comes from the line of Harry Saunders with E&P. Harry Saunders: Firstly, I know we've touched on this. Just wondering what the share-based payment expense was previously assumed in the old guidance range before and perhaps sort of what we could assume for the balance of the year just as a run rate, please? Aaron Erter: Yes. Go ahead, Ryan. Ryan Lada: Yes. So in the original guide that we would have released at fiscal year end there, it was about $50 million of share-based comp. I think in Q1 we called out about $15 million. So I think you could probably use that kind of as a run rate based on the current valuation of the stock. So I think that I would kind of plan on it as that annualized for Q1. Harry Saunders: Understood. And just also wondering, I know we've touched on this as well a bit, but have you quantified the net stocking benefit, given -- I guess you're giving up some coverage as well elsewhere, but any net stocking benefit from the Boise and other deals, have you quantified that for Q2 and for the balance of the year, please? Aaron Erter: Yes. I mean, it's embedded in our guide. I mean I think the way to look at it from a full year standpoint is as we took our beat and we rolled that forward and then we kept the back half relatively flat if you will. And the other piece of that, that you see is going to be the puts and takes from the 2-step distribution changes. Operator: Your next question comes from the line of Matthew Bouley with Barclays. Matthew Bouley: Questions on the kind of balance of sort of your own organic growth initiatives and then the commercial synergies. So basically, where are you on those commercial synergies in the first half of the year, Q1 and Q2? I know you kept the full year at $125 million and said there might be some upside. But if I'm kind of rank ordering them, I guess, when we look about your growth here relative to the market, commercial synergies, some of your initiatives like ColorPlus, Trim-Over, et cetera, what do you think is kind of the most powerful couple of drivers that are leading this level of growth? Aaron Erter: Yes. Great question. Look, we haven't given exactly what those commercial synergies are quarter-by-quarter, as you can imagine, and Jon talked a little bit about this. They're fluid as it relates to when they happen. I mean, what we can reaffirm is the $125 million exit run rate. And certainly, we think there could be possibly upside to that with some of the new news we talked about. So from a commercial synergy standpoint, that's how I would talk about that. As far as how we bucketize what is having the greatest impact. I mentioned for Q1, 1/3, 1/3, 1/3, basically, of 3 different buckets. And that's strategic initiatives. Obviously, we got a little bit of help from the comp, from the destocking and certainly then price as well. But we really are seeing strong execution on our initiatives particularly in fiber cement around areas like ColorPlus. We mentioned the expanded statement collection, which is just getting started. We talked about the Trim-Over. And these are things, yes, we're seeing the benefits in one quarter. But these are sustained growth items for us as we think about our strategy moving forward. Matthew Bouley: Got it. Okay. Secondly, given what you just guided for Q2 and your comments about inventory, and it sounds like that this probably didn't really happen. But my question is on often in this industry, when you have price increases, you might see some pre-buys and things like that. And so just given you had a couple of price announcements during the quarter there, did you see any kind of unusual inventory swings related to that? Aaron Erter: Yes, we really didn't. And we're sitting, I mean, broadly speak -- I mean, I can say this across our segments, we're at a normalized inventory level. Operator: Your next question comes from the line of Daniel Sykes with Jarden. Daniel Sykes: Just had 2 really. Number one, just on the volumes. I mean, obviously, it's very strong with double-digit growth in exterior products. I was just wondering whether you could quantify the destocking. I know you mentioned it was kind of a soft comp, but in the context of that double-digit growth, what was the destocking impact in there? Aaron Erter: Yes. As far as from a dollar volume standpoint, I mean, we would say it was roughly $40 million to $50 million from a destocking standpoint. And when we talked about our growth in fiber cement, we talked about those components really being roughly 1/3, 1/3, 1/3 of that type of 20% growth. Daniel Sykes: Okay. Great. And then just another one, just in terms of the definitional changes to adjusted EBITDA. In relation to the old FY '27 guidance, can you just confirm, was that under the same definition? Or is the definition changed in this new guidance? Ryan Lada: So the original guide included stock-based comp in our adjusted EBITDA. So now it would be excluded moving forward. So I think the easiest way to restate the original guide would just basically add $50 million stock comp back from the low to the high end of the guide at every point. So that would be the major change. I think given where the stock value is today, some of that will go up a little bit, and that's why I think we called out about $15 million in the quarter. I think annualizing that's the same to be for the remainder of the year. But that's the major change. There was about $50 million you could flow through at any point in the guide. Operator: Your next question comes from the line of Rafe Jadrosich with Bank of America. Rafe Jadrosich: Just the -- obviously, the pretty big beat and raise. Just the 2Q, the segment margin going forward are coming down on a percent basis for the full year for both siding and decking. Can you just talk about what the headwinds are there? Is that because of either inventory buyback or investments or mix? Just sort of bridge as to what's happening on a percent basis? Ryan Lada: Yes. I would say the major piece is we called out the freight issue that we're seeing on the spot rate and kind of just availability. The other piece is really just driven off of the investments in these distribution partners. That's everything from sales to marketing activity to ensuring the right rate set up there. So that's the major driver there. And then as the back half, as we said, right, I mean Q3, that October to December period is always the lowest from a DR&A perspective. So as it is like when volumes up, the flow-through is a little bit higher, you're not investing at the same rate. These investments kind of hit us from Q2 on. So that's why you see that margin decline. Rafe Jadrosich: Got it. Okay. That's helpful. And then following up on the decking, railing, the sell-through up double digit. You called out a shelf space, taking some incremental shelf space. Can you just give a little bit more color on where that's happening. It does look like there's been some placement at Home Depot. I was wondering if you could -- if there's been more expansion at retail? Or are there specific channels where you're seeing that? Aaron Erter: Yes. We'll let Jon answer that. Jonathan Skelly: Yes. So what you see is in the quarter, that's prime season. And so we landed a lot of additional shelf space gains during last year's early buy season. And so what you're seeing is that's when you actually get those conversions, right? That's when you place the inventory into the channel. And then once you drive the sell-through with that double-digit sell-through, that's what gets you to reorder points. So those new gains in addition to the core business, which continue to operate at a very high level, that's what led to some of the outperformance in sell-through. Core business performing and then pulling through the product at the gains that we got through early buy is what drove that double-digit. Operator: We have reached the end of the question-and-answer session. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in James Hardie Industries Plc, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and James Hardie Industries Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. James Hardie (JHX) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

James Hardie Industries plc recently reported first-quarter 2027 results, with net sales of US$1,474.6 million and net income of US$104.3 million, and provided new guidance for second-quarter 2027 sales of US$1,485 to US$1,575 billion alongside higher full-year fiscal 2027 revenue expectations of US$5.56 to US$5.72 billion. The combination of stronger quarterly earnings and an upgraded full-year revenue outlook highlights improving operational performance at a time when analysts were already framing the business around growth from AZEK integration and product expansion. With management now raising full-year guidance, we’ll examine how this stronger outlook interacts with prior expectations around pricing power and merger synergies. We've uncovered the 4 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. To own James Hardie today, you need to believe the AZEK acquisition and broader product set can translate into sustainable volume growth and improving margins despite housing cyclicality and elevated leverage. The latest quarter’s stronger sales and earnings, together with higher full year revenue guidance, support the near term catalyst of AZEK integration and synergy delivery, while also easing (but not removing) concerns that high debt in a softer housing market could pressure cash flow. The most relevant update is management’s decision on 6 August 2026 to lift fiscal 2027 net sales guidance to US$5.564 to US$5.723 billion, up from the prior US$5.25 to US$5.41 billion range. This upgrade, coming alongside Q1 revenue of US$1,474.6 million and net income of US$104.3 million, directly links to the core catalyst of synergy capture and product expansion, and gives investors more concrete numbers to weigh against housing demand and integration risks. Yet against this stronger outlook, investors should be aware of how quickly high leverage could constrain James Hardie if housing demand weakens and synergy benefits arrive more slowly than expected... Read the full narrative on James Hardie Industries (it's free!) James Hardie Industries' narrative projects $6.3 billion revenue and $925.1 million earnings by 2029. This requires 9.3% yearly revenue growth and an $821.1 million earnings increase from $104.0 million. Uncover how James Hardie Industries' forecasts yield a A$35.59 fair value, a 18% downside to its current price. Some of the lowest ranked analysts were already cautious, assuming revenue of about US$6.2 billion and earnings of roughly US$859 million by 2029, so this stronger near term guidance could either soften that pessimism or reinforce concerns depending on how you view the housing cycle and AZEK integration risk. Explore 7 other fair value estimates on James Hardie Industries - why the stock might be worth 39% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your James Hardie Industries research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision. Our free James Hardie Industries research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate James Hardie Industries' overall financial health at a glance. Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay: AI is about to change healthcare. These 7 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. Capitalize on the AI infrastructure supercycle with our selection of the 55 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. This technology could replace computers: discover 26 stocks that are working to make quantum computing a reality. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include JHX.AX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in James Hardie Industries PLC.? Here are five stocks we like better. James Hardie exceeded Q1 guidance: Reported sales rose 64% to $1.47 billion, while Adjusted EBITDA reached $422 million and adjusted EPS increased 13% year over year to $0.36. Fiber cement drove growth, with Siding & Trim sales up 34% and organic growth of 20%, supported by strategic product initiatives, pricing, favorable mix and stronger repair-and-remodel demand. Decking sales declined 5% due primarily to planned channel-inventory normalization. The company raised its fiscal 2027 outlook to sales of $5.564 billion–$5.723 billion and Adjusted EBITDA of $1.536 billion–$1.625 billion, while expecting more than $500 million in free cash flow. Expanded distribution partnerships and AZEK integration are expected to accelerate commercial synergies, despite ongoing cost inflation and cautious housing sentiment. James Hardie Industries (NYSE:JHX) reported first-quarter results above its original guidance, supported by stronger-than-expected organic growth in fiber cement products, commercial execution and continued integration progress following its AZEK acquisition. Total net sales rose 64% on a reported basis to $1.47 billion and increased 12% on a pro forma basis. Adjusted EBITDA reached $422 million, or a 28.6% margin, also exceeding the high end of the company’s guidance range. Adjusted earnings per share were $0.36, up 13% year over year. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling The company said it has begun excluding share-based compensation from Adjusted EBITDA and other non-GAAP measures. CFO Ryan Lada said James Hardie will continue to disclose the expense separately in reconciliation tables. The original full-year guidance had included approximately $50 million of share-based compensation expense, while first-quarter expense was about $15 million. Siding & Trim sales increased 34% to $859.8 million, including 20% organic growth that management said was led by fiber cement. Segment Adjusted EBITDA margin was 33.5%, aided by volume leverage, pricing and plant-cost savings. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Management attributed fiber-cement growth to execution on initiatives including ColorPlus, Statement Essentials and the Trim-Over installation method, which is intended to help contractors install siding more quickly and reduce labor costs. The company also cited strength in higher-end repair-and-remodel activity and multifamily new construction, as well as an easier comparison against prior-year inventory destocking. During the question-and-answer session, management said approximately one-third of the fiber-cement growth reflected strategic initiatives, one-third reflected the comparison with prior-year destocking, and the remainder was associated with price and mix. June fiber-cement sell-through rose 19%, according to the company. → No Hangover: Revisiting Microsoft One Week After Earnings James Hardie said it has expanded its Statement program into additional regions and added stocking locations in Baltimore and Chicopee, Massachusetts. It also held 50 Hardie Pro Lab contractor-training events during the quarter, training more than 1,200 contractors on the Trim-Over method. Deck, Rail & Accessories sales declined 5% to $305.1 million, a comparison management said reflected planned channel-inventory normalization rather than weakening demand. The segment’s Adjusted EBITDA margin was 27.1%. The company said sell-through in decking and railing improved sequentially during the quarter and continued at roughly double-digit levels into July. Demand was supported by wood-deck conversions, premium-product mix and additional shelf space across the platform. James Hardie recently announced an expanded national distribution partnership with Boise Cascade. The agreement makes Boise a national distributor across the company’s Hardie siding and trim, AZEK Exteriors, TimberTech decking and railing portfolio. The company also expanded relationships with six regional distributors: Capital, Dixie, Lumbermen’s, Parksite, Woodgrain and Woolf. Management said the distribution changes should support commercial revenue synergies, though they could create quarter-to-quarter sales variability as new partners are loaded with inventory and legacy distributor relationships transition. Lada said approximately one-third of the expected more-than-40% year-over-year growth in Deck, Rail & Accessories during the second quarter is tied to loading new distribution partners. President and General Manager of North America Building Products Group Jon Skelly said distributor reception to the combined product portfolio had exceeded expectations. He said the Boise relationship and expanded regional partnerships could help the company achieve its fiscal 2027 commercial revenue-synergy target faster, while James Hardie maintained its target of a $125 million exit run rate. In Australia and New Zealand, U.S.-dollar sales increased 26% to $153.3 million, with an EBITDA margin of 34.9%. Europe sales rose 15% to $156.4 million, with a 19.4% EBITDA margin. The company cited volume growth, cost management, manufacturing efficiency and foreign-exchange benefits in those businesses. Free cash flow totaled $254 million in the first quarter, driven by higher profitability, lower capital expenditures, improved working capital and reduced acquisition and integration costs. James Hardie redeemed $400 million of senior unsecured notes ahead of their 2028 maturity, reducing net leverage to 2.7 times. Management reiterated its goal of approximately 2.4 times leverage by the end of fiscal 2027 and less than 2 times by fiscal second-quarter 2028. The company continues to expect $80 million to $100 million in fiscal 2027 cost pressure, primarily from raw materials, freight and energy. Lada said about $20 million to $25 million of pressure was experienced in the first quarter, largely due to freight. Pricing actions announced in late April are intended to offset the anticipated inflation. For the second quarter, James Hardie forecast net sales of $1.485 billion to $1.575 billion and Adjusted EBITDA of $420 million to $455 million. The company raised its fiscal 2027 outlook, projecting sales of $5.564 billion to $5.723 billion, representing pro forma growth of 5.9% to 9%, and Adjusted EBITDA of $1.536 billion to $1.625 billion. Management expects full-year free cash flow to exceed $500 million and capital expenditures to equal approximately 6% to 7% of net sales. While noting that mortgage rates remain elevated and housing sentiment remains cautious, the company said its outlook does not assume an improvement in industry conditions during the remainder of the year. James Hardie Industries plc (NYSE: JHX) is a global manufacturer of high-performance fiber cement building products. The company specializes in exterior cladding, trim and soffit, as well as interior backerboard solutions designed for residential and commercial construction. By combining cement, sand and cellulose fibers, James Hardie produces durable, low-maintenance materials that resist moisture, fire and termite damage, catering to builders, contractors and homeowners through a network of distributors and retail channels. The company's flagship products include Hardie® Plank® and Hardie® Panel® siding systems, Hardie® BackerBoard® for tile applications, and a range of architectural trim solutions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "James Hardie Industries Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Q1 FY2027 results exceeded expectations with pro forma net sales growth of 12% and adjusted EBITDA above the high end of guidance. Fiber cement organic growth of 20% was driven by strong execution of strategic initiatives like Color Plus, Statement Essentials, and Trim Over, with sell-through accelerating each month. Expanded distribution partnerships with Boise Cascade and six regional distributors are expected to drive significant revenue synergies and market reach. Cost synergies from the AZEK acquisition are ahead of schedule, with the Hardie Operating System improving productivity and cost visibility across the combined plant footprint. Strong free cash flow of $254 million in Q1 supported debt reduction, with net leverage down to 2.7x and on track to reach ~2.4x by fiscal year-end. The housing macro backdrop remains uncertain with elevated mortgage rates and cautious builder confidence, and the company is not assuming industry improvements. Cost pressures of $80-100 million for FY2027 persist, driven by raw materials, heat, energy, and elevated freight spot rates that are running above planning assumptions. Deck, Rail & Accessories net sales declined 5% year-over-year due to planned channel inventory normalization, though sell-through improved sequentially. The transition to new distribution partners is expected to create quarter-to-quarter noise and incur transition-related costs, which may pressure margins in the near term. Adjusted EBITDA margins are expected to decline in the second half of the year due to seasonality, distribution investments, and freight cost pressures. Warning! GuruFocus has detected 10 Warning Signs with JHIUF. Is JHIUF fairly valued? Test your thesis with our free DCF calculator. Q: North America fiber cement organic growth of 20% was impressive. Can you talk about why you beat your guide, what's working, and why we are seeing the inflection now? A: Aaron Erder, CEO, attributed the beat to three main factors: strong execution of strategic initiatives like Color Plus, Statement Essentials, and Trim Over, which are driving material conversion; strength in the higher-end market segments (repair/remodel and multi-family) where James Hardie is particularly strong; and lapping the inventory destock from a year ago. He noted that fiber cement sell-through accelerated each month, with June being the strongest at 19%. Q: With the new agreement with Boise Cascade, can you talk big picture, longer-term, what this does and which side of the business will have a bigger impact on, TimberTech or Hardie? A: Aaron Erder, CEO, stated that the expanded partnership with Boise Cascade, a national two-step distributor, is a validation of their strategy. It concentrates the brand behind a single national partner fully aligned with the James Hardie, AZEK, and TimberTech portfolios. This pairs Boise's national logistics with James Hardie's downstream demand generation, creating a formidable sales force. While they expect gains in both fiber cement and the relatively new TimberTech/AZEK business, the partnership is a key piece of their plan to accelerate revenue synergies and better serve customers. Q: The implied second half EBITDA growth looks to be down a couple of percent when normalized for last year's stock comp. Are there specific dynamics driving that decline year over year, or is it just planning for the worst? A: Ryan Latta, CFO, explained that the second half being a sequential step down from H1 is normal seasonality. He also cited the uncertainty in the macro backdrop and the costs associated with the new distribution changes as reasons for being prudent in their back-half planning. Additionally, the Deck, Rail, and Accessories segment is seasonally lowest in the October-December quarter, which puts pressure on margins. Q: Can you parse out the assumptions for sell-through and channel load in the strong Q2 guidance for both segments? A: Ryan Latta, CFO, noted that for Deck, Rail, and Accessories, the strong year-over-year growth is driven by the channel inventory normalization in Q1, strong sell-through that has continued into July, and about a third related to loading new distribution partners. For Siding, they saw stronger Q1 sell-through and are in a good inventory position with channel partners, giving them confidence that execution will continue in Q2. Q: On the cost inflation side, the 80 to 100 million is the same as last quarter. How much of that did you feel in the first quarter and how much is baked into the second? A: Ryan Latta, CFO, stated they felt about 20 to 25 million in Q1, mainly on the freight side, which is immediate. While they have seen some relief on commodities and raw materials, freight spot rates are running higher than normal. They are actively working to contract a higher percentage of freight lanes to reduce this pressure, but have kept the 80 to 100 million cost pressure assumption for fiscal 2027. Q: Siding and trim had excellent price/mix growth by single-digits. Is that something that you think will maintain at that level for the rest of the fiscal year? A: Aaron Erder, CEO, clarified that for fiber cement, they are seeing about 5.5% from price and roughly half a point from mix, driven by growth in Color Plus. He expects this to normalize to a more sustainable range of 3.5% to 4% for the rest of the year. Q: On the commercial synergies, you initially didn't account for wins on a two-step distribution with a guy like Boise. Is there any way to size the potential upside to the commercial synergy top-line perspective over the next 12 to 18 months? A: Aaron Erder, CEO, and John Skelly, President and GM of North America, stated that while they are not ready to call an increase, the customer reception has exceeded expectations. The combination of the Moen line and enhanced relationships with new regional distributors could allow them to achieve the $125 million exit run rate target faster than scheduled, but they remain comfortable with the total opportunity laid out. Q: When you have historically done distribution changes, what is the typical training period for those sales forces to be fully effective? A: John Skelly, President and GM of North America, explained that in the Boise situation, they are already experienced in the composite decking category, so the training curve is expected to ramp up quickly. He cited the past conversion of TimberTech with Capital out west as a relevant data point, where leveraging existing category knowledge enabled them to move quickly and drive strong growth. Q: Just on the volumes, it's very strong with double-digit growth in exterior products. Can you quantify the destocking impact in that double-digit growth? A: Aaron Erder, CEO, quantified the destocking impact at roughly 40 to 50 million dollars. He reiterated that the components of the 20% growth in fiber cement were roughly a third from strategic initiatives, a third from the easier comp/destocking, and a third from price. Q: The segment margins going forward are coming down on a percent basis for the full year for both siding and decking. Can you talk about what the headwinds are there? A: Ryan Latta, CFO, identified the major pieces as the freight issue with elevated spot rates and the investments in new distribution partners, which include sales and marketing activity. He also noted that the seasonally low Q3 (October-December) for the Deck, Rail, and Accessories segment puts pressure on margins, and these investments will hit over the next couple of quarters. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

For the quarter ended June 2026, James Hardie (JHX) reported revenue of $1.47 billion, up 63.9% over the same period last year. EPS came in at $0.36, compared to $0.29 in the year-ago quarter. The reported revenue represents a surprise of +0.77% over the Zacks Consensus Estimate of $1.46 billion. With the consensus EPS estimate being $0.32, the EPS surprise was +12.5%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how James Hardie performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Revenues- Siding & Trim: $859.8 million versus $825.98 million estimated by three analysts on average. Revenues- Deck, Rail & Accessories: $305.1 million versus the three-analyst average estimate of $299.21 million. Revenues- Australia & New Zealand: $153.3 million versus $141.64 million estimated by two analysts on average. Revenues- Europe: $156.4 million compared to the $145.94 million average estimate based on two analysts. Adjusted EBITDA- Deck, Rail & Accessories: $82.8 million versus the three-analyst average estimate of $80.63 million. Adjusted EBITDA- Siding & Trim: $287.7 million compared to the $278.85 million average estimate based on three analysts. EBITDA- Europe: $30.4 million compared to the $23.3 million average estimate based on two analysts. Adjusted EBITDA- Australia & New Zealand: $53.5 million versus the two-analyst average estimate of $49.08 million. View all Key Company Metrics for James Hardie here>>> Shares of James Hardie have returned +16.9% over the past month versus the Zacks S&P 500 composite's +3.3% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report James Hardie Industries PLC. (JHX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

First Quarter Highlights Net Sales of $1.475 Billion, an Increase of 64% Year Over Year; Pro Forma Net Sales Increased 12%, Exceeding Original Guidance Siding & Trim Net Sales of $860 Million; North American Fiber Cement Up 20% Organically Net Income of $104 Million; Adjusted EBITDA of $422 Million, Exceeding Original Guidance Cost Synergies Ahead of Schedule; Revenue Synergies On Track FY27 Outlook Raising Full-Year Outlook Targeting Pro Forma Sales Growth of 5.9% to 9.0% and Pro Forma Adjusted EBITDA Growth of 7.4% to 13.7% for full year FY27; Organic Growth Expected in Siding & Trim for remainder of the year FY27 Free Cash Flow Target of $500+ Million Reaffirmed, Reflecting an Increase of More than $200 Million Year Over Year CHICAGO, August 06, 2026--(BUSINESS WIRE)--James Hardie Industries plc (NYSE / ASX : JHX) ("James Hardie" or the "Company"), a leading provider of exterior home and outdoor living solutions, today announced results for its first quarter ended June 30, 2026. Beginning in the first quarter FY27, the Company revised the definitions of certain non-GAAP financial measures, including Adjusted EBITDA, to exclude share-based compensation costs. The Company believes that this provides greater transparency into the underlying operating performance of the business and enhances comparability with peers. This presentation affects only how we calculate non-GAAP measures, each of which is reconciled to the most directly comparable GAAP measure in the accompanying tables, where the share-based compensation adjustment is shown separately. Such non-GAAP financial measures for prior periods presented herein have been recast to reflect this change. Aaron Erter, CEO of James Hardie, said, "In the first quarter, we delivered sales and adjusted EBITDA ahead of our original guidance. The above-market performance was driven primarily by strong double-digit sell-through in Siding & Trim, reflecting the success of our growth initiatives, underlying demand for our products, and lapping an inventory reduction from a year ago. Deck, Rail & Accessories delivered near double-digit sell-through alongside continued channel inventory normalization. In addition, Europe and Australia & New Zealand both experienced double-digit revenue growth." Mr. Erter added, "We are encouraged by the traction from our sales initiatives to grow the fiber cement business, continued material conversion in decking, and positive contributions from both sales and cost synergies. Our commercial synergy momentum continues to build, highlighted by our recently announced expanded nationwide partnerships with Boise Cascade and major regional distributors." Mr. Erter concluded, "Our strong first-quarter results reflect disciplined execution and continued above-market growth, rather than a meaningful improvement in the underlying U.S. housing market. We are not assuming a housing market improvement, but our performance and growth expectations support raising our full-year outlook. We remain firmly committed to our fiscal 2027 priorities: returning fiber cement to growth, outperforming the market, expanding Adjusted EBITDA, achieving cost and revenue synergies, and driving a meaningful step-up in free cash flow to support continued deleveraging. We look forward to sharing more on our long-term strategy and value creation opportunities at our Investor Day in New York City in September." Siding & Trim net sales increased 34% compared to the quarter ended June 30, 2025, driven by low-double-digit volume increase in Fiber Cement, strong price/mix realization, and the contribution from AZEK Exteriors not in the prior period. On an organic basis, net sales increased 20%, led by a return to volume growth in North American fiber cement and traction from our strategic growth initiatives. Exterior product volumes increased mid-double digits in the quarter, with both Single-Family and Multi-Family growing double digits. Interior products, a small portion of the segment, declined low-double digits. Growth was driven by share gains against vinyl and other competitive materials, strategic initiatives such as ColorPlus® and our Expanded Statement™ program, and greater resilience in the higher-end repair and remodel and multi-family markets. Because the Company's shipments track more closely to home completions than to starts, single-family completions performing better than starts supported volumes even as forward-looking indicators remained soft. Year-over-year volume comparisons also benefited from an easier prior-year comparison, as channel inventory was reduced in the first quarter of fiscal 2026; with inventory now at normalized levels and ordering patterns stabilized, sell-in recovered in the quarter. The Company expects this comparison benefit to moderate over the balance of the year. First quarter reported operating income margin of 25.0% which was approximately flat year-over-year, as favorable net price and operating leverage were offset by AZEK acquisition-related expenses and the amortization of acquired AZEK intangibles. Adjusted EBITDA margin, which excludes these items, increased 140 basis points year-over-year to 33.5%, driven primarily by favorable net price realization, favorable raw material costs and continued cost savings from the Hardie Manufacturing Operating System, partially offset by higher freight costs. Higher volumes provided operating leverage on the segment's fixed cost base, and disciplined SG&A management contributed further. As organic volumes continue to recover, the Company expects to benefit from strong incremental margins driven by the deployment of the Hardie Manufacturing Operating System and improved manufacturing utilization across the network. DR&A net sales decreased 5% on a proforma basis compared to the quarter ended June 30, 2025. The volume decline reflected the planned reduction in production and shipments the Company implemented late in the prior quarter to align channel inventory with end-market demand, rather than any weakening in the underlying category. Adjusted EBITDA margin was 27.1%. Underlying demand remained healthy and improved through the quarter, with total sell-through approaching double digit growth. Sell-through accelerated each month and outpaced shipments, bringing channel inventory down to more normalized levels and positioning the segment well for the balance of the year. Retail sell-through was particularly strong, supported by solid consumer demand as well as incremental shelf space across the combined platform. The runway for margin improvement in DR&A is supported by cost synergies, continued progress in recycled material usage and formulation optimization, improved utilization across the manufacturing network, and the application of the Hardie Operating System ("HOS"). As production normalizes with channel demand, the Company expects manufacturing absorption to improve. The Company continues to execute its proven growth strategy focused on material conversion from wood, share gains, and product innovation. James Hardie's combination with AZEK continues to support growth through expanded distribution, incremental shelf space, and a more comprehensive exterior solutions offering. Net sales increased +26% in the quarter, or 14% in Australian dollars, driven by low double digit volume growth and a FX tailwind in the period. Volume growth reflected a combination of gradual improvement in the Australian housing market, ongoing share gains, continued conversion and new builder wins. EBITDA margin of 34.9% decreased 50 basis points in the quarter as strong flow-through on higher volumes was offset by the margin diluting effect of the fuel levy, which is passed through at cost, and the allocation of certain R&D expenses that were not allocated to the segment in the prior period. The Company is focused on driving growth in Australia and New Zealand by evolving from a fiber cement business to a broader building products platform. The strategy centers on defending and extending our core fiber cement operations while accelerating adoption of whole-home solutions, including Hardie™ Gravis™, to better align with changing customer preferences and modern building design trends. While first-quarter macro conditions were relatively favorable, the Company is not assuming a market recovery and remains focused on operational execution, including advanced manufacturing initiatives and HOS productivity improvements to support margin performance and consistent profitability. Net sales increased 15% in the quarter, or 12% in Euros, driven by high-single digit volume growth in Fiber Gypsum, strong price realization, and a favorable FX tailwind. Operating Income Margin of 12.9% increased 180 basis points year over year. EBITDA margin of 19.4% increased 340 basis points year-over-year. Margin expansion was driven by operating leverage on higher volumes, favorable pricing, and continued cost savings from HOS, which more than offset higher freight costs stemming from elevated diesel prices in the current global environment. SG&A spending was held relatively flat despite higher sales, driving improved operating leverage. Market conditions across Europe, particularly in Germany, the Company's largest market, remain challenged, with ongoing inflationary pressure on raw materials, energy, and freight. Against this backdrop, the Company remains focused on improving the profitability of its core fiber gypsum business through product innovation and continued optimization of its operating network. We are prioritizing our higher-margin, innovation-led product portfolio, including flooring systems and underfloor heating solutions, which continues to deliver strong growth and attractive returns. We also see an opportunity to expand in adjacent applications, including fire protection and prefabricated construction, where our differentiated product performance and sustainability advantages support continued share gains. Margin expansion is expected to be driven by operating leverage from sales growth, alongside ongoing efficiency initiatives, including manufacturing optimization, logistics improvements and HOS productivity actions. Q2 FY27 Guidance and Full Year Planning Assumptions Ryan Lada, CFO said, "Our first quarter results came in ahead of expectations, and that outperformance was driven through synergy realization, our enhanced go-to-market model, and the manufacturing cost actions we took in FY26, not a shift in the underlying housing market. We’re raising our full-year guidance to reflect that execution, while continuing to plan conservatively on the macro environment. In Siding & Trim, channel inventories are normalized and the prior-year destocking comparison is now largely behind us; we expect organic growth from repair and remodel expansion, improved mix, and commercial synergies. In Deck, Rail & Accessories, we expect above-market performance for the full year, supported by the sell-through strength we saw in the quarter as production aligns with demand. At the total company level, we expect earnings growth driven by synergy realization, manufacturing cost improvements, and disciplined execution, with Free Cash Flow improving meaningfully as most FY26 integration and acquisition-related costs roll off." We provide certain of our outlook on a non-GAAP basis, as we cannot predict some elements that are included in reported GAAP results, including the impact of actuarial estimates on asbestos-related assets and liabilities in future periods. Refer to the discussion of non-GAAP financial measures below for more details. Updated Full Year Planning Assumptions: Net Sales for Siding & Trim: $3.226 to $3.314 billion Net Sales for Deck, Rail & Accessories: $1.210 to $1.240 billion Total Net Sales: $5.564 to $5.723 billion Adjusted EBITDA for Siding & Trim: $1.045 to $1.106 billion Adjusted EBITDA for Deck, Rail & Accessories: $339 to $357 million Total Adjusted EBITDA: $1.536 to $1.625 billion Free Cash Flow: At Least $500 million Second Quarter Guidance Assumptions: Both segments enter the second quarter with normalized channel inventory and improving visibility. Net Sales for Siding & Trim: $835 to $875 million Net Sales for Deck, Rail & Accessories: $365 to $395 million Total Net Sales: $1.485 to $1.575 billion Adjusted EBITDA for Siding & Trim: $259 to $289 million Adjusted EBITDA for Deck, Rail & Accessories: $116 to $128 million Total Adjusted EBITDA: $420 to $455 million Note: All planning assumptions include a full-year contribution from the AZEK acquisition. Free cash flow represents net cash provided by operating activities less purchases of property, plant and equipment plus proceeds from the sale of property, plant and equipment. First Quarter operating cash flow totaled $344.0 million, up from $206.9 million a year ago, driven by net income adjusted for non-cash items of $336.9 million and a $71.2 million working capital inflow, partially offset by $33.1 million of asbestos claims and handling costs paid. Capital expenditures totaled $89.8 million, resulting in Free Cash Flow of $254.2 million for the quarter, more than double the prior year. Our capital allocation priorities for FY2027 are unchanged and remain sequenced: invest in organic growth, deploy capital with discipline, and reduce leverage. We are targeting less than 2.0x net leverage by the end of the second quarter of fiscal year 2028. For the remainder of FY2027, we expect capital expenditures to be in the range of approximately 6% to 7% of net sales, reflecting maintenance and targeted growth investments across the manufacturing network. Our footprint today is well positioned to support demand across both fiber cement and decking, and we do not anticipate the need for significant new capacity in the near term. The previously announced closures of our Fontana, California and Summerville, South Carolina facilities are expected to generate approximately $25 million in annualized cost savings for Fiscal Year 2027. Readers are referred to Part 1. Item 1. Financial Statements and Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 for additional information regarding the Company’s results. All comparisons made are vs. the comparable period in the prior fiscal year and amounts presented are in U.S. dollars, unless otherwise noted. James Hardie will hold a conference call to discuss results and outlook Thursday August 6, 2026 at 6:00pm EDT (Friday, August 7, 2026 at 8:00am AEST). Participants may register for a live webcast and access a replay following the event of the event on the Investor Relations section of the Company’s website (ir.jameshardie.com). James Hardie will host its Investor Day in New York City on September 15, 2026. The event will offer investors the opportunity to hear directly from key leaders across the business and gain deeper insight into our long-term strategy and value creation. Registration invitations have been distributed. James Hardie Industries plc is the industry leader in exterior home and outdoor living solutions, with a portfolio that includes fiber cement, fiber gypsum, and composite and PVC decking and railing products. Products offered by James Hardie are engineered for beauty, durability, and climate resilience, and include trusted brands like Hardie®, TimberTech®, AZEK® Exteriors, Versatex®, fermacell® and StruXure®. With a global footprint, the James Hardie portfolio is marketed and sold throughout North America, Europe, Australia and New Zealand. James Hardie Industries plc is incorporated and existing under the laws of Ireland. As an Irish plc, James Hardie is governed by the Irish Companies Act. James Hardie’s principal executive offices are located at 1st Floor, Block A, One Park Place, Upper Hatch Street, Dublin 2, D02 FD79, Ireland. This Earnings Release contains forward-looking statements and information within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are not statements of historical fact, contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. Words such as "believe," "anticipate," "plan," "expect," "intend," "target," "estimate," "project," "predict," "forecast," "guideline," "aim," "will," "should," "likely," "continue," "may," "objective," "outlook" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of James Hardie to be materially different from those expressed or implied in this release, including, among others, the risks and uncertainties described in "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026; changes in general economic, political, governmental and business conditions globally and in the countries in which James Hardie does business; changes in interest rates; changes in inflation rates; changes in exchange rates; the level of construction generally; changes in cement demand and prices; changes in raw material and energy prices; changes in business strategy; the AZEK integration and its anticipated benefits and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Forward-looking statements are based on the Company’s current expectations, estimates and assumptions. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company assumes no obligation to update any forward-looking statements or information except as required by law. To supplement our Earnings Release and condensed consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States, or ("GAAP"), we use certain non-GAAP financial measures, as described with this earnings release, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP financial measures to assist investors in seeing our financial performance and liquidity from management’s view and because we believe they provide an additional tool for investors to use in comparing our core financial performance and liquidity over multiple periods with other companies in our industry. Adjusted Net Income: Defined as net income before legacy items such as asbestos related expenses and adjustments, AICF interest income, and significant non-recurring items, such as restructuring gain or expenses, pre-close financing costs, acquisition and pre-close financing related costs, inventory fair value adjustment, amortization of intangible assets resulting from AZEK acquisition, as well as share-based compensation expense and adjustments to tax expenses. Adjusted EBITDA: Defined as net income before interest, net, other expense (income), net, income tax expense, depreciation and amortization, legacy items such as asbestos related expenses and adjustments, share-based compensation expense, and significant non-recurring items, such as restructuring gain and expenses, acquisition related expenses and inventory fair value adjustment. Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by net sales. Adjusted Diluted EPS: Defined as Adjusted Net Income divided by weighted average common shares outstanding – diluted, to reflect the conversion or exercise, as applicable, of all outstanding shares of restricted stock awards, restricted stock units and options to purchase shares of our common stock. Adjusted Segment EBITDA: Defined as segment operating income before depreciation and amortization and significant non-recurring items such as restructuring expenses, acquisition related expenses, inventory fair value adjustment and amortization of intangible assets resulting from AZEK acquisition. The Company does not calculate net income by segment, therefore, Adjusted Segment EBITDA is reconciled to the closest GAAP measure of segment profitability, Segment operating profit. Adjusted General Corporate and Unallocated R&D EBITDA: Defined as General Corporate and Unallocated R&D costs before depreciation and amortization, share-based compensation expense, legacy items such as asbestos related expenses and adjustments, and significant non-recurring items such as restructuring, net and acquisition related expenses. The Company does not calculate net income for General Corporate and Unallocated R&D costs, therefore, Adjusted General Corporate and Unallocated R&D EBITDA is reconciled to the closest GAAP measure of profitability, General Corporate and unallocated R&D costs. Adjusted Income Before Income Taxes: Defined as Income before income taxes before share-based compensation expense, legacy items such as asbestos related expenses and adjustments and AICF interest income, and significant non-recurring items such as restructuring, net, pre-close financing costs, acquisition related expenses, inventory fair value adjustment and amortization of intangible assets resulting from AZEK acquisition. Adjusted Income Tax Expense: Defined as income tax expense before tax adjustments. Adjusted Effective Tax Rate: Defined as Adjusted Income Tax Expense divided by Adjusted Income Before Income Taxes. Adjusted Interest, net: Defined as Interest, net before legacy items such as AICF interest income, and significant non-recurring items such as pre-close financing and interest costs. Adjusted Other Expense (Income), net: Defined as Other expense (income), net, before significant non-recurring items such as non-cash loss on interest rate swap. Free Cash Flow: Defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment plus proceeds from sale of property, plant and equipment. These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. See the accompanying earnings tables for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures. The Company is unable to forecast the comparable U.S. GAAP financial measure for future periods due to, amongst other factors, uncertainty regarding the impact of actuarial estimates on asbestos-related assets and liabilities in future periods. Such reconciling items that impact Adjusted EBITDA and Free Cash Flow have not occurred, are outside of our control or cannot be reasonably predicted. Accordingly, a reconciliation of each of Adjusted EBITDA and Free Cash Flow to its most comparable GAAP measure is not available without unreasonable effort. However, it is important to note that material changes to these reconciling items could have a significant effect on our Adjusted EBITDA and Free Cash Flow planning assumptions and future GAAP results. This Earnings Release has been authorized by the James Hardie Board of Directors. View source version on businesswire.com: https://www.businesswire.com/news/home/20260806254771/en/ Contacts Investor and Media Contact Bill SeymourV.P. Investor RelationsT: +1 312 856 7460E: [email protected]

Interested in Boise Cascade, L.L.C.? Here are five stocks we like better. Boise Cascade’s second-quarter sales rose 5% to $1.8 billion, while net income reached $57.3 million, or $1.63 per share. Wood Products earnings improved substantially as plywood prices and volumes increased. The company will become James Hardie’s sole nationwide distribution partner for siding, trim, decking and railing products. The expansion is expected to support long-term growth, but inventory wind-downs and supplier changes will create transition costs across multiple quarters. Building Materials Distribution sales grew 5%, but EBITDA margins declined amid competitive pricing pressure and higher delivery costs; third-quarter EBITDA is expected to weaken further. Boise Cascade also repurchased about $108 million of stock in the first half and raised its quarterly dividend 5% to $0.23 per share. Faith In The Construction Boom? Follow Buffet's New Buys Here Boise Cascade (NYSE:BCC) reported higher second-quarter sales and Wood Products earnings as plywood prices and volumes improved, while the company outlined a broad distribution expansion with James Hardie that it expects will create near-term transition costs but support longer-term growth. Consolidated sales rose 5% from a year earlier to $1.8 billion in the second quarter. Net income was $57.3 million, or $1.63 per share. Chief Executive Officer Jeff Strom said both net income and earnings per share exceeded the prior-year quarter when excluding gains on asset sales reflected in last year's results. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control These 3 Wood Stocks are about to go on Discount Strom said U.S. housing starts declined 1% year over year during the quarter, while single-family starts fell 4%. He cited consumer sentiment and housing affordability as the principal headwinds for residential construction, alongside geopolitical uncertainty and volatile mortgage rates. Boise Cascade said it will become James Hardie's sole nationwide distribution partner across Hardie Siding and Trim, AZEK Exteriors, and TimberTech Decking and Railing products. Under the arrangement, James Hardie will consolidate its distribution network across regional markets, while Boise Cascade will transition away from competing siding and PVC trim product lines. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Strom called the agreement a growth opportunity and said Boise Cascade expects to compete for business previously supplied through James Hardie's other distribution relationships. He also highlighted the ability to offer a complete product line nationally, particularly to home centers, and said the company sees an opportunity to convert customers from its existing decking business. Jo Barney, executive vice president of Building Materials Distribution, said the combined exterior-products portfolio could help reduce transaction costs for customers by allowing them to use one purchase order, receive one delivery truck and work with one sales representative. She said Boise Cascade has more than 600 salespeople across the country who will work alongside the James Hardie and TimberTech/AZEK sales teams. → Why Rare Earth Processing Could Be the Real 2027 Opportunity The transition will take multiple quarters, management said. Boise Cascade plans to work down inventory from legacy suppliers through the remainder of 2026, begin loading James Hardie products into many locations in September, and begin selling the full suite of James Hardie products in the fourth quarter. The company said it will provide further updates through 2026 and into 2027. Chief Financial Officer Kelly Hibbs said near-term results will be affected by the supplier transition, including inventory wind-down activities and the timing of James Hardie's exits from prior distribution arrangements. Financial support under the agreement begins Oct. 1 as Boise Cascade ramps sales of the expanded product lineup. Building Materials Distribution, or BMD, posted second-quarter sales of $1.7 billion, up 5% from the prior-year period. Sales volume increased 4%, while pricing contributed 1%. General line product sales rose 9% and commodity product sales increased 7%, while engineered wood products, or EWP, sales declined 6%. BMD segment EBITDA was $85.6 million, down from $91.8 million a year earlier. The comparison included a $3.8 million gain on the sale of a non-operating property in the prior-year quarter. BMD's EBITDA margin declined to 5.0% from 5.7%, reflecting lower gross margins, higher selling and distribution costs, and the prior-year asset-sale gain. Gross margin was 15.2%, down 20 basis points year over year. Competitive pressure reduced margins on general line products and EWP, although higher lumber prices improved commodity-product margins. Selling and distribution expenses increased $10.8 million from a year earlier, with roughly half of that increase tied to higher fuel and outbound delivery costs. For the third quarter, Boise Cascade expects BMD EBITDA of $53 million to $68 million and gross margins of 14% to 14.75%. Hibbs said the majority of the expected sequential EBITDA decline is attributable to supplier transition activities, with softer end-market demand also contributing. Wood Products sales, including sales to the distribution segment, increased 3% year over year to $459.6 million. Segment EBITDA rose to $52.4 million from $37.3 million in the prior-year quarter, which had included a $3.9 million gain from the sale of the company's former Roxboro, North Carolina, property. The EBITDA increase primarily reflected higher plywood prices and sales volumes, along with lower per-unit OSB costs used in I-joist manufacturing. Those gains were partly offset by lower EWP sales prices and higher per-unit conversion costs. Plywood sales volume totaled 368 million feet, compared with 356 million feet a year earlier. Average plywood net sales prices increased 15% both year over year and sequentially to $393 per thousand. Hibbs attributed the improvement in pricing to lower imports, noting Brazilian imports declined 25% year over year through the second quarter. New Section 301 tariffs are now in effect and may influence market conditions in coming months, he said. I-joist and LVL volumes each declined 2% from the year-earlier period but rose 18% and 17%, respectively, from the first quarter. Management said some customers accelerated second-quarter purchases ahead of a planned EWP price increase and amid concerns over transportation constraints. Boise Cascade expects Wood Products EBITDA of $22 million to $57 million in the third quarter. The company expects EWP volumes to decline by a mid-single-digit percentage sequentially, while plywood volumes are expected to decline by a low-single-digit percentage. It expects EWP pricing to rise slightly sequentially as a roughly 3% price increase is implemented over time, though contractual obligations will delay full realization. Boise Cascade spent $63 million on capital expenditures in the first six months of 2026 and maintained its full-year capital spending range of $150 million to $170 million. The company repurchased approximately $108 million of common stock during the first half, including about $43 million during the second quarter. About $130 million remained available under its repurchase program at quarter-end. The board also approved a 5% increase in the quarterly dividend to $0.23 per share, payable in mid-September. Strom said the company believes its integrated manufacturing and distribution model, financial position and investments through the business cycle will help it capitalize on long-term housing and repair-and-remodel demand drivers. Boise Cascade Company operates as a leading manufacturer and distributor of wood products and building materials in North America. The company's operations are organized into two primary segments: wood products manufacturing and building materials distribution. In its manufacturing segment, Boise Cascade produces a wide array of engineered wood products, including plywood, oriented strand board (OSB), lumber, particleboard and laminated veneer lumber (LVL), serving residential, commercial and industrial customers. In its distribution segment, Boise Cascade sources and delivers building materials through an extensive network of distribution centers, servicing professional builders, remodelers, contractors and industrial customers. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Boise Cascade Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is leveraging an integrated manufacturing and distribution model to maintain resilience against headwinds from volatile mortgage rates and cautious consumer sentiment. The company announced a major strategic shift, becoming the sole nationwide distribution partner for James Hardie's full product portfolio, including siding, trim, and decking. This partnership is designed to simplify the customer purchasing experience while providing Boise Cascade with a deeper addressable market and a competitive advantage in national accounts. Performance in the Wood Products segment was bolstered by higher plywood prices and volumes, driven by reduced Brazilian imports and internal shifts in veneer production. BMD sales growth of 5% was supported by seasonal demand improvements and a 9% increase in general line products, despite competitive pricing pressures in EWP. The company is intentionally transitioning away from legacy siding and PVC trim suppliers to align exclusively with the James Hardie brand across all regional markets. The James Hardie transition is expected to create near-term revenue pressure in decking, siding, and trim as legacy inventory is wound down through the remainder of 2026. Management expects a 3% price increase in EWP to be fully realized by Q1 2027, though contractual obligations will delay the immediate financial benefits. Third quarter guidance for BMD assumes a moderation in sales pace due to slowing end-market signals and the complexities of the supplier transition. The company anticipates a mid-single-digit sequential decline in EWP volumes for Q3 as order intake slows following a period of customer pull-forward activity. Financial support elements within the James Hardie agreement are scheduled to begin October 1, 2026, to help mitigate the financial impacts of the product ramp-up. Selling and distribution expenses increased by $10.8 million, with approximately 50% of the rise attributed to higher fuel and outbound delivery costs. The Board approved a 5% increase in the quarterly dividend to $0.23 per share, reflecting confidence in the company's cash generation capabilities. Management noted that Brazilian plywood imports declined by 25% year-over-year, though new Section 301 tariffs may further alter market dynamics in coming months. Boise Cascade repurchased $43 million of common stock in Q2, leaving $130 million remaining under the current authorization for future opportunistic buybacks. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects the deal to drive growth by capturing market share from exited distributors and leveraging James Hardie's #1 or #2 positions across categories. Operational efficiencies will be gained through 'customer stickiness' by offering a single point of contact for a full exterior product suite, improving truck fill rates and cross-selling. The transition is viewed as a multi-quarter journey; Boise Cascade will begin loading new James Hardie inventory in September while utilizing larger branches as hubs to move legacy stock. Management does not see the revenue shift as a one-for-one offset but as a strategic move to own the full exterior envelope of the home. The current EWP order file is 3x higher than the same period last year, which supported the recent price increase despite broader macroeconomic headwinds. Management acknowledged some volume pull-forward by customers seeking to beat the price increase or avoid potential transportation constraints.