James Hardie Industries plc

Welcome to the James Hardy Fiscal First Quarter 2027 Earnings Conference Call. After prepared remarks by management, there will be an opportunity to ask questions. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I would now like to hand the call over to Bill Seymour, VP of Investor Relations. Please go ahead.

Thank you, operator, and thank you to everyone for joining today's call. I'm joined today by Aaron Erter, CEO of James Hardy, Ryan Latta, CFO of James Hardy, and John Skelly, President and General Manager of James Hardy 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 two 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 ASIC acquisition. With that opening, I'm pleased to hand the call to Aaron.

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 walkthrough 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 and adjusted EBITA and other non-GAAP financial measures. We believe excluding stock-based comp provides a clearer view of our underlying performance and makes us more comparable to our peers. Thank you for joining us today. 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 Color Plus, Statement Essentials, and Trim Over, where we're seeing continued proof points on material conversion, particularly in the Northeast and Midwest. Second, strengthen 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 multi-family 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 and accessories, Underlying demand remained healthy with nearly double-digit sell-through that re-accelerated through the quarter driven by strong consumer demand and incremental shelf space across the platform. We're encouraged by the continued strength in timber tech driven by wood deck conversions, mixed 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 pay down in the quarter redeeming 400 million of unsecured notes ahead of their 2028 maturity. This keeps us well on track toward our net leverage target of approximately 2.4 times at the end of this fiscal year and less than two times 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 two 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 US wholesale distributors of building materials. This agreement makes Boise a national distribution partner across our entire portfolio, from Hardy Siding and Trim to Azac Exteriors and, for the first time, TimberTech Decking and Railing. In addition to the expanded partnership with Boise, we have expanded our partnership with six major regional distributors, Capital, Dixie, Lumbermans, ParkSite, Woodgrain, and Wolf. now carrying the full line of the Hardy 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 Hardy'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 Hardy and ASAC 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 Hardy operating system across the AZAC 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 five pillars to capture it, and I'll touch briefly on each. First, material conversion. We continue to see contractors switch competitive decking to timber tech, and longtime Hardy 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 two-way wins remain a meaningful contributor to above-market growth. Second, channel expansion. We continue to scale Hardy into TimberTech and Azac Strong Accounts in the north and TimberTech into Hardy 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 AZAC innovation playbook to fiber cement with products like Timber Hue, which offers authentic wood grain finishes in eight 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 replatform website continues to improve how homeowners research, compare, and connect with our contractor network. Together, these five 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 AZAC gives us immediate channel relevance and 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 five regions. Building on that momentum, we opened two new expanded statement partner stocking locations on the East Coast, improving service and availability of the full collection across our pilot markets with Color Plus Mix continuing to grow. At the same time, we've expanded our Hardy Pro Lab, are 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 three 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 Color Plus 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. Let me turn it over to Ryan, who will walk you through our financial results and outlook in more detail.