James Hardie Industries plc

Welcome to the James Hardie Fiscal First Quarter 2025 Earnings Conference Call. After prepared remarks by management, there will be an opportunity to ask questions. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please limit yourself to one question and one follow-up. If you have additional questions, please rejoin the queue. I would now like to hand the call over to Joe Orlesmeyer, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining today's call. Please note that on today's call, management will be referring to non-GAAP financial measures and making forward-looking statements. You can refer to several related cautionary notes on page two for more information. 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. Now, please turn to page three, where you will find the agenda for today's call. I am joined by Erin Erder, Chief Executive Officer of James Hardy, and Rachel Wilson, our Chief Financial Officer. Erin will share key messages for the quarter and discuss our strategy before handing it over to Rachel, who will go through our results in more depth, detail our outlook and guidance, and provide an update on our financial position and capital allocation framework. Then Aaron will return to summarize and close out our prepared remarks. At that time, we will move to Q&A. I'm now pleased to hand the call over to our Chief Executive Officer, Mr. Aaron Erder.

Thanks, Joe. Before I begin, I would like to take the opportunity to thank all our employees around the world who work to safely deliver the highest quality products, solutions, and services to our customers. Our employees truly represent the very best in our industry, and I am proud of their ongoing contributions to James Hardy's success. Now, let's begin on page four. The collective effort and focus of our teams enabled a solid start to the year. I believe our results continue to serve as proof points that we are driving profitable share gain through this dynamic an uncertain market environment, and that our superior value proposition is helping our customers grow and achieve success. This is of particular importance and is especially appreciated by our business partners in what has been a challenging market. Our operational focus starts with executing our strategy and delivering on our commitments. As I will discuss in a moment, We have strong conviction in our strategy to be homeowner focused, customer and contractor driven. But it starts with our people. And I believe we have the best team in the industry. We are well positioned to win in the marketplace and drive consistent value for our stakeholders. In the quarter, business conditions remain challenging. We anticipate that our markets will contract low single digits to mid single digits for the fiscal year, and that the second quarter will be particularly challenging. But as an organization, we're being proactive and are positioning ourselves for when markets transition to recovery. Our people are managing decisively through the current environment, relentlessly pursuing outperformance versus our end markets. We continue to deliver robust profitability while simultaneously investing to scale for growth and gain share through our efforts across the value chain. This is a deliberate choice that will enable us to maintain our position of strength and accelerate our profitable share gain to generate sustained double-digit top-line growth and even stronger margins over the long term. We delivered a solid start to the year. We surpassed our bottom line expectations and delivered on each of our first quarter commitments by achieving all three of our guidance metrics. North America volumes rose slightly in the quarter and were within the range we committed to in May, despite headwinds in certain important geographic markets. We acted to offset these pockets of softness through targeted HOSS savings and delivered a 31.2% North America EBIT margin, just above the midpoint of our guidance. We are investing, and we will continue to invest prescriptively and strategically across the value chain. As the underlying fundamentals speak to the opportunity for sustainable growth, even as we anticipate our markets will remain challenging in the coming quarter and for the remainder of the fiscal year. Finally, we achieved total adjusted net income of $178 million, which surpassed our expectations, driven by robust operating results across each of our regions. In addition to delivering on our Q1 commitments in North America, I am proud of how our teams in Asia Pacific have performed while contending with softer markets. With strong execution against our strategic priorities to defend and grow share, along with the strong profitability we have continued to demonstrate in our core markets, I remain very optimistic about the future of our APAC business. And in Europe, our teams delivered record sales, driving strong growth in our high-value products, with these sales up low double digits in the quarters. The foundation we are building today will serve as a solid platform for profitable growth in the years to come, and I look forward to sharing our continued progress along the way. Our near-term playbook is working as we navigate the current environment, and I have confidence in our team's ability to continue to win in the market by delivering on our strong customer value propositions. This confidence underpins our ongoing commitment to outperform our end markets and enables us to reaffirm our full year guidance. Please turn to slide five. During the quarter, we hosted an investor day where we brought our value proposition to life and showed you firsthand what it means to be homeowner focused, customer and contractor driven. We have been doing this in one form or another for many years. The enhancement in the strategy today versus those of the past is that our approach has become a holistic effort by our teams across the entire value chain. Importantly, we are doing it the right way and not sacrificing on our foundational imperatives. Zero harm in the hardy operating system are our commitments to putting world-class safety at the forefront of all that we do and continually improving how we get work done across the company. As a testament to this commitment, we recently celebrated five years without a lost time incident at our manufacturing plant in Orejo, Spain. Nothing is more important than the safety of our workforce. So to each of our team members who share in this achievement, I say thank you. Sustainability is foundational at James Hardy. Each of our employees plays a role in putting sustainability into action. And this cross-functional collaboration is driving progress toward meeting our ambitious commitments. That's why I'm so proud of our teams for recently earning James Hardy recognition by Green Builder Media as a 2024 Eco Leader, a distinction that honors the most forward-thinking manufacturers in the industry. Next week, we will publish our FY24 Sustainability Report, which I encourage everyone to read to learn more about how we're building a culture of sustainability and making progress against our ambitious goals. And of course, when it comes to our people, I believe we have the best talent in the industry. Day in and day out, I see the drive, talent, commitment, and passion as we work towards our purpose of building a better future for all. And it's even better when those outside our organization agree. Recently, two of our leaders, Kelly Paler and Justine Simmons, were recognized by HBS dealer as top women in hardware and building supply. The industry's premier award for celebrating the impact of women and recognizing female leaders who possess the traits of business excellence and the potential to make a difference in their companies and communities. Kelly and Justine were selected from over 600 nominees. Kelly's leadership, cross-functional collaboration, and commitment to her team earned her recognition as an honoree for business excellence. And Justine's accomplishments as a results driven and inspirational people leader earned her a spot as a rising star honoree. I couldn't agree more with these selections and I'm honored to have Kelly and Justine on the James Hardy team. Put simply, everything you see on this slide is our blueprint by which together we move James Hardy forward. I remain confident in our team and our strategy. Together, they position us to execute at a high level and drive profitable share gain in all three regions. Please turn to slide six. Our regional leaders detailed at our investor day how their priorities aligned at James Hardy's three strategic initiatives. As a reminder, those overall strategic initiatives are. First, to profitably grow and take share where we have the right to win. Second, to bring our customers high-value differentiated solutions. And third and finally, to connect and influence all participants in the customer value chain. I will now briefly summarize each region's aligned strategic priorities. In North America, led by Sean Gadd, our first two strategic priorities align to the vast opportunities within our repair and remodel and new construction and markets. Within repair and remodel, we know we can go and win against vinyl and wood, driving material conversion by leveraging our superior product offering. But by building an ecosystem across the value chain, we can leverage the access that our products provide to create additional value with our customer and contractor partners. Efforts like Dream Builder events amplify our messaging through our customers to get incremental contractors to appreciate the overall value proposition and buy into our Contractor Alliance program. For new construction, it is about bolstering our share with our national home builder partners and extending our reach across all scaled home builders. We continue to integrate deeper with our existing customers as we demonstrate our unrivaled business support and the dependability that comes along with our strategically located network of manufacturing plants throughout the US, a clear competitive advantage. Customer integration is taking the form of delivering the value that our home builder partners seek by setting goals and objectives that align with our customers' efforts around design, growth targets, and efficiency. In recognition of our unrivaled business support, this year we were once again recognized as a National Preferred Partner by David Weekly Homes, representing our 17th award in 20 years. Meritage Homes, the fifth largest builder in the country, elected to deepen their strong relationship with James Hardie by signing a national hard siding and trim exclusive agreement extending to all divisions nationwide. This agreement expands our partnership, creating a new position for James Hardie products in several divisions and sets the standard on every new Meritage Home built across the country. A win that will influence what defines a beautiful home in these communities for decades to come. And with our third strategic priority, we are accelerating profitable share gain through targeted marketing efforts to each participant across the value chain. This means driving brand awareness and building an ecosystem that allows us to be the partner and product of choice. Our marketing investments are vital accelerators of our market share, and our leading indicators give us confidence that we are investing in the right things. We will continue to employ a prescriptive test and learn approach that allows us to adapt rapidly and iteratively, adjusting as needed, but capitalizing on what is clearly working. We remain encouraged by the leading indicators we previously shared with you at Investor Day around brand awareness, website traffic, qualified leads, and increases in our Contractor Alliance program. Regarding our Asia Pacific region, led by John Arneal, our teams are defending and growing market share with both builders and homeowners, with an emphasis on leveraging our right to win and customer integration. The material conversion opportunity is significant in our efforts to change the way homeowners remodel and builders build position us to accelerate growth in fiber cements category share. Finally, we continue to innovate to compete and win against brick and masonry. The concept of right to win is integral to where our efforts and resources should be focused to drive future value. And that is why today we announced our intention to exit the Philippines market. We conducted a thorough review and ultimately determined that operating in the Philippines was not consistent with our value creation strategy. This was a very difficult decision, but it is the right decision for James Hardy. Turning to Europe, led by Christian Klaus. our team is laser focused on driving profitable growth through increased sales of high value products. Within Fiber Cement, we continue to build a foundation for growth, concentrating our demand creation efforts with decision makers, namely architects and specifiers. Within Fiber Gypsum, increasing our product penetration using innovative solutions like Therm25 remains a key opportunity for us to further drive our value proposition with customers. The collective focus on high-value products, along with our efforts to drive efficiencies across our business, underpins our plans to improve the profitability of this business significantly in the coming years. In Germany, we were recognized for our exceptional and consistent focus on our customers, receiving the German Customer Award which considers transparency, customer feedback, and additional traits that align to our core organizational values. I am proud to say that our team achieved the highest score ever for a winner of this award, demonstrating a real commitment to being customer driven. Turning to slide seven, I'll summarize how our strategy builds upon its own momentum to drive long-term value creation. starting with demand creation we have prescriptive test and learn marketing programs leading indicators tell us that these are working with respect to innovative solutions we have the right products for the right customer at the right time turning to unrivaled support we are bringing value to our customers but increasingly we are harnessing the power of our customers to be our best sales people which means having not just hundreds, but thousands of feet on the street. And finally, what has been our heritage and what I believe our team is best in the industry at delivering is material conversion. One home, one neighborhood, one region at a time. And with the scale we've achieved today and the support we have built around our teams, we believe we can accelerate material conversion. Each individual component of this cycle is perpetuated and amplified by the others, illustrating how together they form a flywheel for long-term value creation. Now, turning to slide eight, this is where I will share how our strategy and value creation flywheel translate to our aspirations for long-term performance. We've talked about our track record of material conversion. which has led to more than 11 million homes in North America to be clad with James Hardy. It took us years to do this, to scale the business, and while this is a tremendous achievement for our organization, we accomplished this overwhelmingly through our superior product. We continue to have what we truly believe is the best product in the market, but what excites me most is that we pulled together the best pieces of our strategies to address each individual member of the value chain and have moved to a holistic approach that is embodied in our strategy of being homeowner focused, customer and contractor driven. That is what will allow us to more than double our presence across America's housing from 11 million to 25 million homes over the next decade. And as we do that, we can aspire to drive peer leading financial results in our North America business that include double digit top line growth and 500 basis points of adjusted EBITDA margin expansion. Altogether, we believe achieving these goals would enable us to triple our North American segment adjusted EBITDA. Now, I would like to hand it over to Rachel to share more details about our first quarter results. Rachel?