James Hardie Industries plc

Hello, I'm Aaron Erter, CEO of James Hardie. Today, I want to provide an overview of our first quarter 2026 results. Before I share the results, I would like to share my perspective on our future now that James Hardie and Azac are one company. The combination of these two businesses, now completed, has created a leading provider of exterior home and outdoor living solutions. We have significantly expanded our offer. and in doing so, have strengthened our customer value proposition and positioned James Hardie to capture multiple opportunities for material conversion with a total addressable market more than twice the size of legacy James Hardie. Our team is stronger as one and we are better equipped than ever to serve our customers and create value for all our stakeholders. I am pleased with the focus shown by everyone through pre-integration planning and now into integration execution. And in particular, with an unwavering dedication to working safely each day and serving our customer partners. I should note specifically that we will begin reporting contribution from the ASAC brands with our fiscal second quarter results later this year. It is imperative that we continue to build upon the strong momentum the ASAC team has established by not only maintaining continuity with customers and channel partners, but also achieving alignment across our collective North American organization as we accelerate growth by winning in the market and capturing commercial synergies as one James Hardy. Our integration roadmap starts with the customer, both with how we engage with them and how we support them. We will maintain continuity in terms of the face to our customers, immediately leveraging the entirety of our combined sales force, as well as our portfolio of leading brands, products, and solutions. Our dealer and distributor customers have seen the growth James Hardie can drive across their businesses, and we will continue to provide the support and solutions to further our collective growth as key strategic partners. Internally, Working safely through zero harm and efficiently through the Hardy operating system remain foundational imperatives. Key to our focus today is also unifying our cultures and identifying best practices from both organizations to drive continuous improvement across our global operations, supporting and enabling the success of the combined organization. As I've said to our team, We aren't going to be married to the James Hardy or the Azak way. We are going to be married to success. Integration is off to a very positive start, and I look forward to sharing more details on our actions and progress in the future. Now, let's take a look at our financial results. Our first quarter results were largely as we had anticipated. and reflect an expected normalization of channel inventories due to moderating growth expectations by customers as uncertainty built throughout April and early May. In the first quarter, total net sales were 9% below last year's strong first quarter result, mostly consistent with our internal expectations at $900 million globally. We delivered $226 million of adjusted EBITDA in the quarter, with an adjusted EBITDA margin of 25.1%. Total adjusted EBITDA declined 21% against last year's record Q1, and margins decreased by 370 basis points. Adjusted net income in the quarter was $127 million, and the adjusted diluted EPS was 29 cents per share. Lastly, free cash flow was $104 million, up 88% driven by continued strength in the cash generation profile of our business and moderating capital spending requirements. Despite near-term market headwinds and further reduction in channel inventories, we remain committed to outperforming the market demand over the long term and are employing purposeful strategies to deliver on this commitment. These strategies are centered around our value proposition to customers and our execution against these strategies amplifies our expansive material conversion opportunities. The opportunity that lies ahead is substantial. We will not lose sight of the bright future our company has or be deterred from strategically investing through periods of softer demand to support our future growth when markets rebound. Presently, demand in both repair and remodel and new construction in North America are challenging. Uncertainty is a common thread throughout conversations with customer and contractor partners. Homeowners are deferring large ticket remodeling projects like residing. And affordability remains the key impediment to improvement in single family new construction, where more recently, home builders are moderating their demand expectations and slowing starts to align their home inventory with a decelerating pace of traffic and sales. We are resolute in our strategy that is grounded in being homeowner focused, customer and contractor driven. In essence, this means that the driving force of our business is our unwavering commitment to deliver winning solutions across the customer value chain. Everything we do starts and ends with the customer. We have purposeful strategies to create demand across the value chain, winning over homeowners, contractors, and customers with our value proposition and fostering loyalty to the James Hardy brand. We have unmatched resilience and beauty in our innovative and differentiated product offerings. And lastly, our localized manufacturing, unrivaled by any other competitor, is instrumental to the growth plans of our largest, fastest growing customers. Our customer partnership, our innovation focus, our broad product range, and our scaled manufacturing and support network continually deliver material conversion wins. We know that our core strategies are working. and we will continue to invest strategically to profitably grow the business and bring our strategies to life as our end markets recover. We see immense material conversion opportunity ahead, fueling our growth engine and value creation flywheel. With the closing of the ASAC acquisition now behind us, we are working diligently to integrate and deliver on cost and commercial synergies on an accelerated timeline, positioning ourselves to capture the expansive material conversion opportunity ahead to deliver on our long-term value creation commitments to shareholders. I am so proud of the focus and dedication shown by our one Hardy team over the last 50 days. And I am confident that together we are elevating James Hardy to be a clear leader in the building products industry. In closing, our value proposition as a growth company is even more compelling with three primary pillars for shareholder value creation. First, we have the right strategy, one where our success perpetuates, driving even greater success. Second, we have bold ambitions and a talented team that is relentless in the pursuit of challenging goals. And third, our financial profile is attractive and will only continue to improve as we diligently allocate capital and work towards achieving our longer term aspirations. As ever, We remain steadfast in achieving our mission to be the most respected and desired building materials brand in the world. Thank you.