James Hardie — Second Quarter FY27 Earnings Summary

Financial Performance:

• Net sales from continuing operations were $1.428 billion for the quarter, a 24% increase year-over-year, and $2.746 billion for the first half, a 43% increase year-over-year.
• Net income from continuing operations was $149.8 million for the quarter compared to a loss of $64.3 million in the prior year period; for the first half, net income was $240.4 million compared to a loss of $12.0 million.
• Operating income margin was 18.4% for the quarter (up 1,730 basis points year-over-year) and 16.8% for the first half (up 960 basis points).
• Adjusted EBITDA was $454.7 million for the quarter, a 44% increase year-over-year, with a margin of 31.8% (up 450 basis points); for the first half, Adjusted EBITDA was $847.4 million, a 60% increase, with a margin of 30.9%.
• Adjusted Net Income was $248.5 million for the quarter (up 67% year-over-year) and $443.2 million for the first half (up 63%).
• Adjusted Diluted Earnings Per Share was $0.42 for the quarter (up 68%) and $0.76 for the first half (up 41%).
• First-half operating cash flow totaled $693.7 million, up from $254.3 million in the prior year period.
• Free cash flow for the first half was $535.4 million, compared to $58.4 million in the prior year period.
• The Company repaid $111 million of term loan debt in the quarter.

Guidance and Future Outlook:

• Consolidated full-year fiscal 2027 net sales guidance is reaffirmed at $4.990 billion to $5.133 billion.
• Consolidated full-year fiscal 2027 Adjusted EBITDA guidance is reaffirmed at $1.446 billion to $1.534 billion.
• Free cash flow target for fiscal 2027 is raised to more than $650 million.
• Third quarter net sales guidance is $1.058 billion to $1.140 billion.
• Third quarter Adjusted EBITDA guidance is $298 million to $320 million.
• Management expects Adjusted EBITDA to be lower in the third quarter and second half due to DR&A seasonality, incremental freight costs, and a weaker macro environment.
• The Company targets net leverage below 2.0x by the end of the second quarter of fiscal 2028.

Business Segments and Product Lines:

• Siding & Trim: Net sales were $880.3 million for the quarter (up 15% year-over-year) and $1.740 billion for the first half (up 24%). Adjusted EBITDA was $304.4 million (up 36%) with a margin of 34.6%. Fiber cement volumes increased mid-single digits, with multi-family up high-teens.
• Deck, Rail & Accessories (DR&A): Net sales were $387.0 million for the quarter (up 51% year-over-year) and $692.1 million for the first half (up 171%). Adjusted EBITDA was $128.7 million (up 64%) with a margin of 33.3%. Growth was driven by strong sell-through, channel inventory normalization, and the initial load-in of the new business with Boise Cascade.
• Australia & New Zealand (ANZ): Net sales were $160.9 million for the quarter (up 21% in USD, up 12% in AUD) and $314.2 million for the first half (up 23%). EBITDA was $56.8 million (up 31%) with a margin of 35.3%. Growth was driven by volume growth, share gains, and foreign exchange tailwinds.
• The Company is evolving from a fiber cement business to a broader building products platform in ANZ, focusing on whole-home solutions like Hardie™ Gravis™ and outdoor living with TimberTech®.

Market and Competitive Landscape:

• The U.S. housing market remains challenging, particularly in new construction, yet the Company delivered sales growth well above the market.
• Fiber cement sell-through increased low double digits, outperforming declining end markets.
• Growth was driven by share gains against vinyl and other materials, material conversion from wood, and strategic initiatives such as ColorPlus®, trim-over, and the rollout of Hardie ProLabs.
• Retail sell-through in DR&A was particularly strong, supported by solid consumer demand and incremental shelf space.

Risks and Challenges:

• Higher freight and diesel costs partially offset margin gains.
• Material inflation and higher input costs impacted the DR&A segment.
• The U.S. new construction market remains soft.
• The Company notes uncertainty regarding the impact of actuarial estimates on asbestos-related assets and liabilities in future periods.

Management Commentary and Tone:

• CEO Aaron Erter stated the quarter was strong, with sales up 24% and Adjusted EBITDA margins expanding 450 basis points.
• Management emphasized confidence in delivering on fiscal 2027 commitments halfway through the year, driven by self-help growth levers and the Hardie Operating System (HOS).
• Synergy momentum continues to build, with cost synergies ahead of schedule and commercial synergies on track to reach fiscal 2027 targets.
• CFO Ryan Lada noted that the plan does not depend on a near-term recovery in the U.S. housing market.

Other Key Points:

• In August 2026, the Company announced the strategic divestiture of its European operations and the intended closure of its European fiber cement operations, which are now presented within discontinued operations.
• The Company expects to apply approximately $600 million of proceeds from the Europe divestiture toward debt repayment, with the transaction expected to close in the first half of calendar 2027.
• The previously announced closures of the Fontana, California and Summerville, South Carolina facilities are expected to generate approximately $25 million in annualized cost savings for Fiscal Year 2027.
• Effective June 30, 2026, the Company revised the definitions of Adjusted EBITDA and Adjusted Net Income to exclude share-based compensation costs.
• Capital expenditures for the first half were $158.3 million, with FY2027 expected to be in the range of 6% to 7% of net sales.
• The Company does not anticipate the need for significant new capacity in the near term.