James Hardie — First Quarter FY27 Earnings Summary

Financial Performance

• Net sales reached $1.475 billion, a 64% increase year-over-year; pro forma net sales increased 12%.
• Net income was $104.3 million, up 67% from $62.6 million in the prior year period.
• Adjusted EBITDA was $422.1 million, a 79% increase from $236.4 million, exceeding original guidance.
• Adjusted EBITDA margin expanded 230 basis points year-over-year to 28.6%.
• Operating income was $217.7 million, up 57% year-over-year, though operating income margin decreased 60 basis points to 14.8%.
• Net income margin increased 10 basis points to 7.1%.
• Adjusted diluted earnings per share were $0.36, up 13% from $0.32.
• First quarter operating cash flow totaled $344.0 million, up from $206.9 million.
• Capital expenditures were $89.8 million, resulting in free cash flow of $254.2 million, more than double the prior year.
• Total assets were $13.49 billion as of June 30, 2026, compared to $13.69 billion at March 31, 2026.
• Total liabilities were $6.95 billion, with long-term debt at $4.23 billion.

Guidance and Future Outlook

• Raised full-year FY27 outlook to target pro forma sales growth of 5.9% to 9.0% and pro forma adjusted EBITDA growth of 7.4% to 13.7%.
• Reaffirmed FY27 free cash flow target of at least $500 million, reflecting an increase of more than $200 million year-over-year.
• Full-year FY27 total net sales guidance updated to $5.564 billion to $5.723 billion.
• Full-year FY27 total adjusted EBITDA guidance updated to $1.536 billion to $1.625 billion.
• Second quarter FY27 net sales guidance set at $1.485 billion to $1.575 billion.
• Second quarter FY27 adjusted EBITDA guidance set at $420 million to $455 million.
• Management expects organic growth in Siding & Trim for the remainder of the year and above-market performance in Deck, Rail & Accessories.
• Earnings growth is expected to be driven by synergy realization, manufacturing cost improvements, and disciplined execution.
• Free cash flow is expected to improve meaningfully as most FY26 integration and acquisition-related costs roll off.

Business Segments and Product Lines

• Siding & Trim: Net sales of $860 million, up 34% year-over-year; organic growth was 20%. Operating income margin was 25.0%, and adjusted EBITDA margin was 33.5%. Growth driven by low-double-digit volume increases in fiber cement, strong price/mix realization, and contribution from AZEK Exteriors.
• Deck, Rail & Accessories (DR&A): Net sales of $305.1 million, down 5% on a pro forma basis. Adjusted EBITDA margin was 27.1%. Sell-through approached double-digit growth, outpacing shipments and normalizing channel inventory.
• Australia & New Zealand (ANZ): Net sales of $153.3 million, up 26% (14% in Australian dollars). EBITDA margin was 34.9%. Growth driven by low double-digit volume growth and FX tailwinds.
• Europe: Net sales of $156.4 million, up 15% (12% in Euros). Operating income margin increased 180 basis points to 12.9%, and EBITDA margin increased 340 basis points to 19.4%.
• Announced expanded nationwide partnerships with Boise Cascade and major regional distributors.
• Closures of Fontana, California and Summerville, South Carolina facilities expected to generate approximately $25 million in annualized cost savings for FY27.

Market and Competitive Landscape

• Siding & Trim achieved share gains against vinyl and other competitive materials.
• Single-family and multi-family exterior product volumes grew double digits.
• Interior product volumes declined low-double digits.
• Market conditions in Europe, particularly Germany, remain challenged with inflationary pressure on raw materials, energy, and freight.
• Company is prioritizing higher-margin, innovation-led product portfolios including flooring systems and underfloor heating solutions.
• Opportunities exist to expand in adjacent applications such as fire protection and prefabricated construction.

Risks and Challenges

• Elevated diesel prices in the global environment have increased freight costs.
• A fuel levy passed through at cost has diluted EBITDA margins in the ANZ segment.
• Ongoing inflationary pressure on raw materials, energy, and freight in Europe.
• Forward-looking housing indicators remain soft, though single-family completions performed better than starts.
• The comparison benefit from prior-year channel inventory destocking is expected to moderate over the balance of the year.

Management Commentary and Tone

• CEO Aaron Erter stated results were driven by strong double-digit sell-through in Siding & Trim, underlying demand, and lapping an inventory reduction from the prior year.
• Management emphasized that performance reflects disciplined execution and above-market growth rather than a meaningful improvement in the underlying U.S. housing market.
• CFO Ryan Lada noted outperformance was driven by synergy realization, an enhanced go-to-market model, and manufacturing cost actions taken in FY26.
• Management remains committed to fiscal 2027 priorities: returning fiber cement to growth, outperforming the market, expanding Adjusted EBITDA, achieving cost and revenue synergies, and driving a step-up in free cash flow to support deleveraging.
• An Investor Day is scheduled for September 15, 2026, in New York City.

Other Key Points

• Revised definitions of non-GAAP financial measures (Adjusted EBITDA, Adjusted Net Income, etc.) effective Q1 FY27 to exclude share-based compensation costs.
• Targeting less than 2.0x net leverage by the end of the second quarter of fiscal year 2028.
• Capital expenditures for the remainder of FY27 expected to be 6% to 7% of net sales.
• No significant new capacity anticipated in the near term.
• Conference call held on August 6, 2026, at 6:00 pm EDT.