James Hardie Achieves Strong Third Quarter FY25 Results Providing Confidence to Reaffirm FY25 Guidance and FY26 Growth Plans

Q3 FY25 GAAP Operating Income of $206 million

Q3 FY25 Adjusted EBITDA of $262 million and Adjusted EBITDA Margin of 27.5%

Average Net Sales Price Growth Across All Regions

Reaffirms 2H and FY25 Guidance for North America Volume and EBIT Margin, Total Adjusted Net Income

Planning for Growth and Margin Expansion Across Regions for FY26

CHICAGO--(BUSINESS WIRE)--February 18, 2025-- 

James Hardie Industries plc (ASX / NYSE: JHX) ("James Hardie" or the "Company"), a leader in providing high performance, low maintenance building products and solutions, and a company inspiring how communities design build and grow, today announced results for its third quarter ending December 31, 2024. Speaking to the results, Aaron Erter, CEO said, "We delivered strong business and financial results in the third quarter, and our year-to-date performance shows that we have a strong handle on our business as we continue to scale the organization and invest to grow profitably. Our teams are focused on safely delivering the highest quality products, solutions and services to our customers, and we are executing on our strategy to outperform our end-markets."

Mr. Erter continued, "We are winning by partnering with our customers, contractors and homeowners, and this success propels our organization forward and fuels my optimism around the future of James Hardie. We have the strongest team in the industry and the right strategy to go after our material conversion opportunity. In our North American business, our results to date represent a double-digit five-year sales CAGR leading to more than +400bps of Adjusted EBITDA margin expansion, a clear demonstration of the inherent strength of our unique value proposition and the underlying momentum in our strategy."

Rachel Wilson, CFO said, "Our strong margins underpin our cash flow, and we are funding our capital priorities with cash generated by our operations. In response to current market conditions, we have demonstrated a balanced approach between cost discipline and funding growth. This has positioned us well to accelerate our outperformance, invest in growth and execute on our capital allocation framework."

Third Quarter Highlights

   -- Net Sales of $953 million, down (3%) 
 
   -- GAAP Operating income of $206 million; GAAP Operating margin of 21.6%; 
      GAAP Net income of $142 million; and GAAP Diluted EPS of $0.33 
 
   -- Adjusted EBITDA of $262 million, down (7%) with Adjusted EBITDA margin of 
      27.5%, down (120bps) 
 
   -- Adjusted Net Income of $154 million, down (15%) 
 
   -- Adjusted Diluted EPS of $0.36, down (13%) 

Segment Business Update and Results

North America Fiber Cement

In North America, the Company is outperforming its end markets through a superior total value proposition and driving leading margins despite raw material headwinds. Supportive housing fundamentals and significant material conversion opportunity drive the team's focus on preparing the North America manufacturing footprint for market recovery. The Company is investing across the value chain and growing its contractor base to capture the repair & remodel opportunity. Similarly, in new construction, efforts to deepen exclusivity and increase trim attachment rates support growth and share gain with large homebuilders including recently signing two national, multi-year exclusive hard siding and trim agreements with M/I Homes and David Weekley Homes, who are among the largest homebuilders in the US. During the quarter and comparing against record results in the prior year, net sales decreased (1%). Volumes declined (3%) due to continued market weakness, particularly in multi-family, partially offset by company specific efforts to gain share in single-family new construction and repair & remodel. Sales also benefited from a higher average net sales price, resulting from the January 2024 price increase. Volume of Exterior products declined low single-digits year-over-year, but rose +5% sequentially. Volume of Interior products declined mid single-digits on both a year-over-year and sequential basis. EBIT margin decreased (360bps) to 29.1%, due to higher pulp and cement costs as well as unfavorable production cost absorption, partially offset by Hardie Operating System (HOS) savings. Startup costs were also higher in the quarter, related to our Prattville facility. Excluding depreciation and amortization expense, which rose +23% to $41 million, EBITDA declined (8%) to $251 million with EBITDA margin of 34.8%, a decrease of (250bps) attributable to similar drivers of EBIT margin.

Asia Pacific Fiber Cement

In Australia & New Zealand, the Company is increasing share through new customer acquisitions and project conversion enabled by customer integration. The Company is influencing how homeowners build, and driving growth through Co-Creation and leveraging the James Hardie brand. The teams are innovating to accelerate material conversion with a key focus on new construction, specifically the conversion of brick & masonry. Overall, while market demand remains challenged, the Asia Pacific team is focused on finding further efficiencies and driving HOS savings to underpin the segment's consistent profitability. During the quarter, net sales decreased (13%) in Australian dollars, due to lower volumes of (28%) partially offset by a higher average net sales price of +20%. The decline in volumes and the increase in average net sales price was primarily attributable to our decision to cease manufacturing and wind down commercial operations in the Philippines. Australia & New Zealand together saw a low single-digit decrease in volume and a slight increase in average net sales price, leading to relatively flat net sales. EBIT margin rose +180bps to 29.3%, primarily attributable to the Philippines decision. Margins also rose modestly in Australia & New Zealand, due primarily to slightly positive average net sales price and HOS savings. Excluding depreciation and amortization expense, which increased +17% to $5 million, EBITDA declined (3%) to $40 million with EBITDA margin of 33.5%, an increase of +290bps attributable to the Philippines decision.

Europe Building Products

Markets across Europe remain challenged, particularly in Germany where improvement is anticipated to be more gradual, while in the UK, the Company is well-positioned to capture potential improvement in residential construction. Growth in high-value products remains a strategic priority, as leveraging a broader and deeper product portfolio should accelerate share gains and customer wins. Highlighting the strength of our offering, earlier this fiscal year Hardie$(R)$ Architectural Panel received the prestigious iF Design Award, recognizing our unwavering commitment to creating products that seamlessly blend form and function. During the quarter, net sales declined (1%) in Euros, including a (4%) impact related to a favorable customer rebate true-up in the prior year, partially offset by a higher average net sales price of +4%, driven by a price increase earlier this fiscal year. EBIT margin decreased (340bps) to 3.1%, although profitability improved, when excluding the unfavorable comparison created by the prior year customer rebate true-up. Excluding depreciation and amortization expense, which rose +9% to $8 million, EBITDA declined (22%) to $12 million with EBITDA margin of 10.3%, a (260bps) decrease similarly explained by the customer rebate true-up impact.

Market Outlook and Guidance, Planning Assumptions and Long-Term Aspirations

Full Year FY25 Market Outlook and Guidance

Speaking to the Company's market outlook, Mr. Erter said, "With our fiscal year drawing to a close, I reflect with pride on the resilience our teams have shown throughout FY25. The opportunity in the years to come is substantial, and the investments we have made throughout the year are foundational enablers of scale and critical accelerators of our future growth. But this year is not over, and our business leaders remain focused on finishing strong to cement a strong foundation for the coming years. Our market demand expectations have not changed, but importantly, neither has our commitment to outperforming our end markets and managing the business decisively to sustain our peer-leading profitability."

Ms. Wilson added with respect to financial guidance, "Despite challenging end markets and raw material headwinds, we remain well-positioned to deliver volumes within our original guidance range. Our Hardie Operating System initiatives, together with efforts to rationalize and prioritize expenses have helped mitigate uncontrollable headwinds to margins. We delivered a solid third quarter, which gives us increased confidence in reiterating both our second half and full fiscal year guidance across each of our operating metrics."

   -- North America Volumes: At least 2.95 billion standard feet (unchanged) 
 
   -- North America EBIT Margin: At least 29.3% (unchanged) 
 
   -- Adjusted Net Income: At least $635 million (unchanged) 
 
   -- Capital Expenditures: $420 million (prev. $420 million to $440 million) 

Full Year FY26 Planning Assumptions

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February 18, 2025 17:00 ET (22:00 GMT)