James Hardie Industries Q4 Earnings Call Highlights

Key Points

• James Hardie beat on revenue and profitability in fiscal Q4, with net sales of $1.4 billion and adjusted EBITDA of $381 million. Full-year sales reached $4.8 billion as the newly added AZEK business and cost controls helped offset a weak construction market.
• AZEK integration is progressing, with the combined sales force already producing early commercial wins and cost synergies running ahead of plan. Management reiterated its goal of reaching $125 million in run-rate commercial revenue synergies exiting fiscal 2027.
• Fiscal 2027 guidance is cautious but improving, with management assuming a roughly 3% market decline yet forecasting pro forma sales growth of 0% to 3%, adjusted EBITDA of $1.45 billion to $1.5 billion, and free cash flow above $500 million. The company expects fiber cement to return to organic volume growth in fiscal 2027.

James Hardie Industries NYSE: JHX reported higher fiscal fourth-quarter revenue and adjusted EBITDA as the building products company benefited from the addition of AZEK, cost controls and early progress on integration initiatives, while management cautioned that construction markets remain challenging heading into fiscal 2027.

Chief Executive Officer Aaron Erter said the company delivered “a solid fiscal fourth quarter and full year” despite a difficult construction backdrop, citing execution, pricing discipline, cost management and customer service. For the fourth quarter, James Hardie reported net sales of $1.4 billion and adjusted EBITDA of $381 million, with an adjusted EBITDA margin of 27.1%. For the full fiscal year, net sales were $4.8 billion and adjusted EBITDA was $1.3 billion, with a 26.2% adjusted EBITDA margin.

Chief Financial Officer Ryan Lada said fourth-quarter total net sales rose 45% to $1.4 billion, including $445 million of acquired AZEK revenue. Organic net sales declined 1% in the quarter. For the full year, total net sales rose 25% to $4.8 billion, while organic net sales fell 2%, reflecting pressure in the fiber cement business from the broader market environment.

Free cash flow for fiscal 2026 was $314 million, including the benefit of an Australia land sale completed in the third quarter. Lada said integration and acquisition-related costs weighed on cash flow during the year but are expected to decline meaningfully in fiscal 2027.

Segment Results Reflect Weather Disruptions and Cost Controls

In Siding and Trim, fourth-quarter net sales were $767 million, up 7%, while adjusted EBITDA was $253 million, representing a 33% margin. Lada said cold storms and above-average precipitation in February and early March limited job site activity and delayed projects in both new construction and repair and remodel. The company estimated the weather impact on fiber cement sales at approximately $20 million in the quarter.

For the full year, Siding and Trim generated net sales of $2.96 billion, up 3%, and adjusted EBITDA of $951 million, with a 32.1% margin.

In Deck Rail and Accessories, fourth-quarter net sales were $345 million, up 5%, and adjusted EBITDA was $97.5 million, with a 28.2% margin. Lada said sell-through grew in the low single digits, with activity recovering later in the quarter after weather disruptions. For the full year, based on three quarters of contribution, the segment generated net sales of $795.2 million and adjusted EBITDA of $224.8 million.

Lada said the Deck Rail and Accessories business outperformed a market that declined in the low- to mid-single digits by more than 700 basis points. However, he said the company is taking a more conservative inventory position in the first quarter, which is expected to weigh on sales and margins before conditions normalize later in the year.

Australia and New Zealand fourth-quarter net sales were $140 million, up 18%, mainly driven by foreign exchange, with adjusted EBITDA of $50 million and a 35.8% margin. Europe fourth-quarter net sales were $152 million, up 13%, also mainly driven by foreign exchange, with adjusted EBITDA of $23 million.

AZEK Integration and Synergies Remain a Focus

Management highlighted progress integrating AZEK, including the recent combination of the companies’ sales forces. Erter said the combined company now has “the largest, most downstream-focused sales team” in its space, with a portfolio that includes James Hardie, TimberTech and AZEK.

Erter pointed to expanded relationships with Lansing Building Products and CBUSA as examples of early commercial synergy wins. He said the Lansing expansion consolidates multiple PVC trim brands to AZEK across the distributor’s footprint, while the CBUSA agreement adds TimberTech to an existing James Hardie relationship and positions the company as a broader exterior products supplier to custom builders.

The company reaffirmed its confidence in reaching $125 million in run-rate commercial revenue synergies exiting fiscal 2027. Lada said James Hardie exited fiscal 2026 with an approximately $80 million run rate of cost synergies, ahead of its original target of about $42 million, and expects $35 million to $40 million of incremental cost synergies during fiscal 2027.

Company Targets Return to Fiber Cement Growth

Erter said returning the fiber cement business to growth is the company’s top priority. He said James Hardie expects fiber cement to return to organic volume growth in fiscal 2027, supported by repair-and-remodel opportunities, regional expansion and contractor conversion initiatives.

Management emphasized under-penetrated opportunities in the Northeast and Midwest, where Erter said repair-and-remodel wood and wood-look siding represents an approximately $1 billion conversion opportunity. The company has been piloting initiatives in the Midwest, including expanded Statement Collection offerings and contractor training through Hardie ProLab mobile units.

During the question-and-answer session, Erter said the Midwest pilot produced low double-digit growth over the past year and is being rolled out to other regions, including the North, Mid-Atlantic, Carolinas and South. He also cited a roughly $750 million opportunity among regional homebuilders.

Erter said fire resilience is becoming a more important differentiator as building codes evolve, insurance requirements tighten and homeowners focus more on durability and risk mitigation. He said fiber cement’s non-combustible properties are supporting broader material conversion opportunities versus wood and other combustible materials.

Fiscal 2027 Outlook Assumes Challenging Market Conditions

Management said the market outlook has weakened in recent months, citing higher mortgage rates, softer builder confidence and weaker consumer sentiment. Lada said the company’s base case assumes its addressable market declines approximately 3% in fiscal 2027.

For fiscal 2027, James Hardie expects:

• Net sales of $5.25 billion to $5.41 billion, representing 0% to 3% growth on a pro forma basis.
• Organic sales growth of 1% to 4%.
• Adjusted EBITDA of $1.45 billion to $1.5 billion, representing 4.1% to 7.7% pro forma growth.
• Free cash flow of more than $500 million, up from $314 million in fiscal 2026.
• Capital expenditures of approximately 6% to 7% of net sales.

Lada said the company expects $80 million to $100 million of cost pressure in fiscal 2027, driven by raw materials, freight and energy, with about two-thirds of that pressure in North America. He said pricing actions announced in late April are expected to directly offset the pressure, while plant savings, sourcing, productivity and deal synergies should also support margins.

For the fiscal first quarter, James Hardie expects net sales of $1.32 billion to $1.35 billion and adjusted EBITDA of $354 million to $375 million. The company expects Siding and Trim net sales of $758 million to $781 million and Deck Rail and Accessories net sales of $291 million to $300 million.

Erter said James Hardie expects market outperformance, adjusted EBITDA expansion and significant free cash flow improvement in fiscal 2027, which management said will support deleveraging and continued investment in brands, innovation and go-to-market capabilities.

About James Hardie Industries NYSE: JHX

James Hardie Industries plc NYSE: JHX is a global manufacturer of high-performance fiber cement building products. The company specializes in exterior cladding, trim and soffit, as well as interior backerboard solutions designed for residential and commercial construction. By combining cement, sand and cellulose fibers, James Hardie produces durable, low-maintenance materials that resist moisture, fire and termite damage, catering to builders, contractors and homeowners through a network of distributors and retail channels.

The company's flagship products include Hardie® Plank® and Hardie® Panel® siding systems, Hardie® BackerBoard® for tile applications, and a range of architectural trim solutions.

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