James Hardie Industries plc

Thank you for standing by, and welcome to the James Hardy Fiscal Second Quarter 2026 Earnings Conference Call. After prepared remarks by management, there will be an opportunity to ask questions. 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 Ahlersmeyer, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and thank you to everyone for joining today's call. I am joined today by Aaron Erder, Chief Executive Officer of James Hardy, and John Skelly, President of AZEC Residential. 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 two 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. 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. And with that, I'm pleased to hand the call over to Aaron.

Good morning, and thanks for joining us today. With me on today's call are John Skelly, president of our ASAC business, and Joe Olesmeyer, our vice president of investor relations. Before we get into the second quarter results, I wanted to provide an update on some important developments for the company. Today, we announced the appointment of Nigel Steen as chair of the James Hardy Board of Directors. Nigel's extensive board experience, understanding of James Hardy and his leadership come at a transformative time as we focus on execution and long-term value creation for our shareholders. Our board also announced the creation of an integration and performance committee to support the successful integration of ASAC and the performance of the combined businesses. The committee will be chaired by Jesse Singh and will include board members Howard Heckes, Percio Lisboa, and myself. I look forward to working with Nigel and the entire board to advance our strategy and continue strengthening the company for the future. As you may have seen in our press release, Rachel Wilson will be leaving James Hardy to pursue other opportunities. Rachel has been a valued partner and an important part of our team during her tenure at James Hardy. I want to thank Rachel for her many contributions over the last two years. Finally, I'm very pleased to announce that Ryan Latta will join us as our new Chief Financial Officer. Ryan comes to us from Watts Water, where he recently served as CFO. Many of you know him from his prior role as CFO at Azac. Ryan is a proven leader who brings strong operational and financial experience and a deep knowledge of the building products industry. He's the right person to partner with me in leading James Hardy in this next phase of growth. We have every confidence in a smooth CFO transition. We released our second quarter results yesterday, which were consistent with what we shared in our pre-release in early October. While we continue to navigate a dynamic market environment, we are actively focused on driving improved performance in our results. We have identified several opportunities to enhance how we operate today while positioning James Hardy to take full advantage of the favorable long-term fundamentals of the U.S. housing market. Our strategy remains grounded in profitable growth, disciplined execution, and ongoing material conversion across our businesses from wood and inferior materials to composite alternatives and fiber cement. Before getting into the details of these initiatives, I wanted to address the changes we made to our outlook since we lowered our full-year guidance in August. At the time, what we were hearing from our customers and what was evident in their ordering rates was more cautious positioning and the possibility of additional inventory tightening in the channel. The magnitude of the August guidance reduction was deliberate and based on the information we had at the time. Since then, we've seen conditions stabilize with recent customer conversations and data shared by customers showing a more stable market and normalized inventory levels. And based on that, we're modestly raising our full-year guidance. We still expect a broader market to be challenging in the near term, and that view is embedded in our guidance range. The variability in our guidance this year has highlighted the need for greater consistency and discipline in our financial forecasting process. We know we can do better, and we've taken decisive action to strengthen execution, improve predictability, and drive consistency in our results. We have been working with our customers and are now receiving more frequent, granular data from them giving us a clearer view of inventory and market demand. These improvements, among others, will help us deliver more predictable results going forward. Our two largest segments, sliding and trim and deck rail and accessories, position the company with 80% of our net sales from North America, with a strong record of structural growth and substantial material conversion runway across both segments of the business. The balance of our net sales are generated in Australia and New Zealand, where we run a highly profitable fiber cement business, and in Europe with an improving financial profile and an attractive fiber gypsum business. In North America, Our partnership with large one-step dealers and our success converting home builders from vinyl to fiber cement have driven new construction to approximately 40% of our North America revenue, inclusive of AZEC, with repair and remodel at approximately 60% of sales. Over time, We expect repair and remodel to grow faster given favorable structural fundamentals and deliberate focus to accelerate fiber cement penetration in that end market. In siding and trim, current conditions remain mixed, reflecting the category's higher exposure to new construction in the southern states. From a channel inventory perspective, customers are appropriately positioned for this time of year relative to forward demand expectations. And while the new home market is still uncertain, demand trends have improved relative to our expectations in August. We now expect mid-single digit organic net sales declines for the full year. We are focused on returning our siding and trim segment to growth in the future. A few examples of our growth plan in the segment include On-the-wall cost reduction pilots in Detroit, Pittsburgh, Indianapolis, and the Ohio area are delivering early wins. In some cases, we've cut the relative cost gap versus vinyl by about 50%, thanks to improved material availability and new installation methods. Statement Essentials with Boise Cascade simplifies our ColorPlus lineup, about a 90% SKU reduction versus the full statement collection. with products reliably stocked at dealers and pilot regions. This improves availability and reduces project delays, which directly helps contractors win more jobs. Intuitive Edge training and productivity programs are expanding. We're teaching contractors the trim-over method, which can improve productivity by about 35%. That means less time measuring, cutting, and caulking. These steps make it simpler and more affordable for contractors to install our products and help attract new users to fiber cement. We plan to scale these efforts across major Midwest, Northeast, and Mid-Atlantic markets in early calendar year 2026 in close partnership with Boise Cascade. Based on the early results, we see meaningful expansion potential in those regions. Beyond installation, We believe Color Plus is a differentiated product with large opportunities in repair and remodel, especially in the Northeast and Midwest, where aging housing stock supports conversion from vinyl. We continue to invest in contractor conversion, and we're seeing strong performance in Color Plus versus Prime products, with growing momentum among our sales team and dealer partners. Organic net sales in the legacy James Hardie North America fiber cement business declined 3% in the second quarter, driven mainly by lower volumes, partly offset by higher average sales price. Single-family exteriors volumes were down mid-single digits, with interiors down low double digits and multifamily up mid-single digits. On a pro forma organic basis, Azac Exteriors grew revenue up 5% in the quarter and up 7% in the first half. In siding and trim, which reflects both our core James Hardy fiber cement business and Azac Exteriors, adjusted EBITDA was $224 million in the second quarter, with adjusted EBITDA margin of 29.2%, down year-over-year primarily due to approximately 400 basis points of margin decline in our North American fiber cement business, actually reflecting underutilization in our plants. We're not satisfied with our performance in the quarter, and we are taking action to improve future performance, including accelerating identified cost synergies from the AZAC combination, reducing variable costs in our plants, and optimizing our manufacturing network to improve utilization. These steps are already underway and will drive meaningful margin improvement. Going forward, we expect utilization to improve and margin expansion as we move into fiscal 2027. For the full year, we now expect total raw material inflation in the organic business to run mid-single digits, better than the high single digits we expected earlier. Pricing is expected to offset cost inflation while HOSS, or the Hardy Operating System, will help dampen the impacts of underutilization. Now let's turn to deck rail and accessories. In deck rail and accessories, performance remains strong, with mid-single-digit sell-through growth in a market that is down in the low single digits. TimberTech continues to outperform through our proven playbook focused on wood conversion, new product development, channel expansion, and strong downstream execution. This business continues to demonstrate that we can deliver above-market growth and profitability through customer-focused execution. Demand in this segment remains solid, supported by a higher mix of repair and remodel work and a large presence in the north and midwest regions. We delivered mid-single-digit sell-through growth in the quarter, again outperforming the broader market by several hundred basis points. TimberTech continues to drive conversion by doing what it's always done well, consistent downstream execution, focusing on material conversion, deeper engagement with TimberTech pros, expanding our channel presence with dealers and distributors, and new product development. Over the last 12 months, TimberTech's brand awareness has increased by seven points to its highest level since we began tracking this measure five years ago. New products are also adding momentum. The recently announced TimberTech Advantage Rail is a great example of how we continue to innovate and strengthen our position in outdoor living by launching products that provide the highest levels of quality, style, and design while improving contractor productivity. Our quarterly survey of TimberTech Pros shows a stable market. Our contractors continue to report approximately seven weeks of project backlog, consistent with both prior quarters and the same period last year. They also expect future market conditions to remain relatively stable, in line with recent quarters and the prior year's outlook. Based on this and other data points, we expect both sell-through and net sales to grow low to mid-single digits on a full-year basis in FY26 for the post-close period, July 1st through March 31st, compared to the same pre-acquisition period. We expect sequential growth from the December to March quarter, boosted by new product launches and expanded distribution ahead of the spring season. and we are anticipating our partners to carry a seasonally normal level of inventory through the balance of our fiscal year. The integration with ASAC remains on track. We've already aligned key functions like marketing and operations under single leadership. Most recently, we appointed Sam Toole as Chief Marketing Officer of James Hardy. Sam has done an outstanding job leading ASAC's marketing organization for the past four years. Under her leadership, we'll strengthen our marketing capabilities, deepen customer engagement, and expand our reach across North America. On cost synergies, we've moved quickly on G&A opportunities while being deliberate in how we integrate manufacturing and commercial operations. With six months left in FY26, we've already surpassed our first-year cost synergy goals. and we're pushing hard toward our $125 million total cost synergy target. Dealer feedback has been very positive. Several key partners have already chosen to make AZAC their exclusive PVC trim brand, drawn by the combination with James Hardy and the strong loyalty contractors have to our combined portfolio. Our sales teams are leaning in, turning these opportunities into revenue and setting us up for faster growth ahead. Distributive feedback has also been positive. Last month, we announced a multi-year expansion with Boise Cascade and Select Markets. This agreement expands our strategic statement of Central's offering and adds the TimberTech and ASAC exterior brands into our longstanding relationship with Boise. The strong feedback we are hearing across every level of the channel reinforces our confidence in delivering over $500 million of revenue synergies over the next five years from the AZAC combination. And it's important to note that this isn't coming from one group or one region. It's broad-based across our dealer network and the contractors and builders who use our leading brands every day. Through countless meetings over the past few months, we are seeing firsthand how the combined portfolio is resonating, how our teams are executing together in the field, and how we can bring to bear the relative strengths of the two companies. Those early signals give us conviction in the value creation opportunity ahead. I will now turn it over to Joe to run through the financials. Joe?