Group 1: James Hardie (JHX) - James Hardie's stock price plummeted over 34%, marking the largest drop since 1973, closing at $18.64 per share with a market capitalization of $8 billion [1][2] - For Q1 of FY2026, the company reported a net sales figure of $900 million, a 9% year-over-year decline, and an adjusted net profit of $127 million, down 29% year-over-year [2] - The CEO highlighted uncertainty in the market, attributing the decline to high borrowing costs and a bleak outlook for North American operations, particularly in single-family home construction [2][3] Group 2: Home Improvement Retailers - Home improvement retailers Lowe's and Home Depot expressed similar concerns regarding the impact of high interest rates on consumer spending and large renovation projects [3] - Lowe's projected a stable overall home improvement market for the year, while acknowledging short-term challenges such as rising mortgage rates and consumer affordability issues [3] Group 3: Palantir Technologies - Palantir's stock fell 1.1% to $156, marking the sixth consecutive day of decline, with a total drop of over 16% during this period [1][4] - The stock has dropped 18% from its recent intraday high, causing it to fall out of the list of the 20 most valuable companies in the U.S. [5] - A short report from Andrew Left of Citron Research claimed Palantir's stock is disconnected from its fundamentals, suggesting a fair value of $40 compared to its current valuation [6]

Core Viewpoint - The article highlights significant stock price declines for James Hardie and Palantir, indicating challenges in the construction materials and data analytics sectors due to market conditions and investor sentiment [1][3][5]. Group 1: James Hardie (JHX) - James Hardie's stock price plummeted over 34%, marking the largest drop since 1973, closing at $18.64 per share with a market capitalization of $8 billion [1][3]. - The company's latest financial report for Q1 of FY2026 showed a 9% year-over-year decline in net sales to $900 million and a 29% drop in adjusted net profit to $127 million, attributed to high borrowing costs and a bleak outlook for North American operations [3][4]. - CEO Aaron Erter noted that uncertainty is prevalent among customers and contractors, with weak market demand primarily due to a slowdown in single-family home activities, particularly in the southern U.S. [3][4]. Group 2: Palantir - Palantir's stock fell 1.1% to $156, marking its sixth consecutive day of decline, with a total drop of over 16% during this period [1][6]. - The company is experiencing its longest downturn since April 2024, with its stock down 18% from recent highs, causing it to drop out of the list of the 20 most valuable companies in the U.S. [7][8]. - Andrew Left from Citron Research criticized Palantir's valuation, suggesting it should be around $40 based on fundamentals, despite the company recently reporting its first $1 billion quarterly revenue, which exceeded Wall Street expectations [7][8].

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Core Insights - The company reported a 9% decline in total net sales to $900 million in fiscal Q1 2026, attributed to inventory normalization and softer global demand [5][53] - North American net sales fell 12%, driven by lower volumes, although there was a 3% increase in average net sales price [6][54] - Adjusted EBITDA decreased by 21% year-over-year to $226 million, with a margin of 25.1%, reflecting volume pressures and raw material inflation [3][53] Financial Performance - Adjusted EBITDA margin fell 370 basis points to 25.1% in Q1 2026, with North America adjusted EBITDA margin down 400 basis points year-over-year [3][6] - Free cash flow improved by 88% to $104 million due to better operating cash generation and reduced capital expenditures [7][53] - The company expects free cash flow of at least $200 million for fiscal 2026, with capital expenditures projected at approximately $400 million [10][63] Market Outlook - Guidance for fiscal 2026 anticipates a high single-digit decline in total market demand, influenced by homeowner affordability pressures and uncertain macro conditions [3][61] - The company expects adjusted EBITDA for fiscal 2026 to be between $1.05 billion and $1.15 billion, including a contribution of $250 million to $265 million from the AZEK acquisition [9][62] - North America fiber cement outlook predicts a low double-digit volume decline for fiscal 2026, primarily volume-driven [11] Strategic Initiatives - The completion of the AZEK acquisition has doubled the company's total addressable market and expanded its product offerings [8][19] - The company aims to achieve over $500 million in commercial synergies within five years, with benefits expected to begin in fiscal 2027 [12][50] - Management is focused on integrating operations and realizing cost synergies, with over 50% of targeted general and administrative cost synergies already actioned [8][44] Regional Performance - Asia Pacific net sales declined 10%, with a 25% volume decrease offset by a 22% rise in average selling price [7][57] - Europe experienced a 7% increase in net sales, driven by higher average selling prices, with an EBITDA margin improvement to 16% [7][59] - The company remains committed to outperforming market demand in both APAC and Europe despite challenging conditions [58][60]

Financial Data and Key Metrics Changes - Total net sales decreased by 9% year-over-year to $900 million, reflecting a normalization of channel inventories and lower demand expectations [32][34] - Adjusted EBITDA was $226 million, with a margin of 25.1%, down 21% from the previous year [32] - Adjusted net income was $127 million, with adjusted diluted EPS of $0.29 per share [32] - Free cash flow increased by 88% to $104 million, driven by strong cash generation and moderating capital spending [32] Business Line Data and Key Metrics Changes - North American net sales declined by 12%, primarily due to lower volumes, although average selling prices (ASP) increased by 3% year-over-year [33][34] - Legacy AZEK performed well, with mid single-digit sell-through growth in June, driven by new product contributions [9] - North American adjusted EBITDA was $206 million, with a margin of 32.1%, down 400 basis points year-over-year due to lower volumes and raw material inflation [35] Market Data and Key Metrics Changes - Single-family new construction starts in the South fell approximately 25% since February, leading to a more cautious inventory posture among builders [34] - Asia Pacific net sales declined by 10%, influenced by the cessation of operations in the Philippines, while ASP rose by 22% in Australian dollars [37] - European net sales increased by 7%, driven by higher ASP, with EBITDA margin improving to 16% [38] Company Strategy and Development Direction - The integration of James Hardie and AZEK aims to create a leading provider of exterior home and outdoor living solutions, with a focus on material conversion opportunities [4][5] - The company is committed to a homeowner-focused strategy, emphasizing customer and contractor partnerships to drive demand [11][12] - Future growth will be supported by strategic investments in innovation and localized manufacturing to enhance customer value [12][19] Management's Comments on Operating Environment and Future Outlook - Management noted that demand in both repair and remodel and new construction in North America is currently challenging, with homeowners deferring large projects due to affordability issues [6][8] - The company anticipates a mid-single-digit decline in end-market demand for the full year, adjusting expectations for softer demand in new construction [8][10] - Management expressed optimism about long-term growth potential, particularly through material conversion opportunities and strategic partnerships with homebuilders [13][72] Other Important Information - The company is on track to achieve $125 million in cost synergies over three years, with over 50% of the run rate target already realized [26] - Free cash flow for FY '26 is expected to be at least $200 million, with capital expenditures projected at approximately $400 million [42][43] - The company successfully completed a $1.7 billion debt financing, with gross debt standing at approximately $5.1 billion [45] Q&A Session Summary Question: Can you help parse out the single-family outlook versus the inventory element? - Management indicated that the Q1 results were as expected, with customers adjusting inventory levels due to a softer outlook, particularly in single-family new construction [50][52] Question: What is the plan to improve margin profiles given the demand challenges? - Management emphasized a disciplined approach to cost management, including freezing headcount and focusing on yield as volumes decline [58][60] Question: How much of the volume decline was attributed to inventory destocking? - Management noted that inventory destocking was significant, particularly in the second quarter, and that they expect some continued impact from this in the upcoming quarters [66][74] Question: How is the single-family new construction segment evolving? - Management reported that single-family new construction has been impacted significantly, with a notable decline in starts, particularly in the South [78][79] Question: What are the assumptions behind the EBITDA contribution from AZEK? - Management clarified that the guidance reflects a conservative outlook due to macroeconomic uncertainties and a cautious approach to channel inventory [85]

Financial Data and Key Metrics Changes - Total net sales for Q1 2026 were $900 million, a 9% decline compared to the previous year, aligning with internal expectations [30] - Adjusted EBITDA for the quarter was $226 million, with a margin of 25.1%, reflecting a 21% decrease from the previous year's record [30] - Adjusted net income was $127 million, with adjusted diluted EPS at $0.29 per share [30] - Free cash flow increased by 88% to $104 million, driven by strong cash generation and moderating capital spending [30] Business Line Data and Key Metrics Changes - North American net sales decreased by 12%, primarily due to lower volumes, although average net sales price (ASP) increased by 3% year-over-year [31] - Legacy AZAC performed well, with mid single-digit sell-through growth in decking, railing, and accessories, contributing to strong margin performance [8] - North America adjusted EBITDA was $206 million, with a margin of 32.1%, down 400 basis points year-over-year due to lower volumes and raw material inflation [33] Market Data and Key Metrics Changes - The South region, particularly Florida and Georgia, experienced significant pressure, with single-family starts down approximately 25% since February [32] - Asia Pacific net sales declined by 10%, influenced by the cessation of operations in the Philippines, while EBITDA margin increased to 35.4% [35] - European net sales increased by 7%, driven by higher ASP, with EBITDA margin rising to 16% due to lower freight and raw material costs [37] Company Strategy and Development Direction - The integration of James Hardie and AZAC aims to create a leading provider of exterior home solutions, with a focus on material conversion opportunities [4][5] - The company is committed to outperforming market demand through strategic investments and a customer-focused approach [10][11] - Future growth is expected to be driven by new product launches and exclusivity agreements with homebuilders [14][28] Management's Comments on Operating Environment and Future Outlook - Management noted that demand in both repair and remodel and new construction in North America is challenging, with homeowners deferring large projects due to affordability issues [6] - The company anticipates a mid-single-digit decline in end market demand for the full year, adjusting expectations for softer demand in new construction [7] - Management expressed optimism about long-term growth potential, particularly through material conversion opportunities and strong partnerships with homebuilders [12][72] Other Important Information - The company is on track to achieve $125 million in cost synergies over three years, with over 50% of the target already realized [25] - Free cash flow for FY 2026 is expected to be at least $200 million, with total capital expenditures projected at approximately $400 million [41] - The company successfully completed a $1.7 billion debt financing, with a commitment to reduce net leverage to below two times within two years post-acquisition [44] Q&A Session Summary Question: Clarification on legacy North American fiber cement volume declines - Management acknowledged a 15% volume decline and discussed the impact of inventory destocking and single-family construction outlook [47][56] Question: Cost management strategies in light of demand challenges - Management highlighted ongoing cost control measures, including headcount freezes and operational efficiencies through the Hardie Operating System [57][59] Question: Inventory destocking impact and competitive standing - Management provided insights on inventory levels and emphasized the company's strong market position despite challenges in the South [63][70] Question: Single-family new construction trends - Management noted significant changes in single-family new construction estimates and the impact on guidance, emphasizing strong partnerships with homebuilders [78][80] Question: AZEK EBITDA contribution and outlook - Management discussed conservative growth assumptions for AZEK's deck rail and accessories segment, reflecting macroeconomic uncertainties [84][85] Question: Market share with major builders - Management expressed confidence in maintaining strong relationships with top homebuilders and highlighted the company's leading position in the market [88]

[Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Balance Sheets as of 30 June 2025 and 31 March 2025](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%2030%20June%202025%20and%2031%20March%202025) The company's total assets increased significantly from $5,229.9 million at March 31, 2025, to $6,786.7 million at June 30, 2025, primarily driven by a substantial increase in restricted cash and cash equivalents, while total liabilities also rose mainly due to an increase in long-term debt Key Balance Sheet Figures (Millions of US dollars) | Item | 30 June 2025 | 31 March 2025 | | :-------------------------------- | :----------- | :------------ | | Total Assets | $6,786.7 | $5,229.9 | | Total Liabilities | $4,530.4 | $3,068.4 | | Total Shareholders' Equity | $2,256.3 | $2,161.5 | Significant Balance Sheet Changes (Millions of US dollars) | Item | 30 June 2025 | 31 March 2025 | Change | | :-------------------------------- | :----------- | :------------ | :----- | | Cash and cash equivalents | $391.6 | $562.7 | $(171.1) | | Restricted cash and cash equivalents | $1,707.8 | $5.0 | $1,702.8 | | Inventories | $382.9 | $347.1 | $35.8 | | Long-term debt | $2,524.9 | $1,110.1 | $1,414.8 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) [Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended 30 June 2025 and 2024](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20for%20the%20Three%20Months%20Ended%2030%20June%202025%20and%202024) For the three months ended June 30, 2025, James Hardie Industries plc reported a significant decrease in net sales, net income, and earnings per share compared to the same period in 2024, largely impacted by increased interest expenses and acquisition-related costs Condensed Consolidated Statements of Operations (Millions of US dollars) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | YoY Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------- | | Net sales | $899.9 | $991.9 | -9.3% | | Cost of goods sold | $563.0 | $595.0 | -5.4% | | Gross profit | $336.9 | $396.9 | -15.1% | | Operating income | $138.6 | $235.4 | -41.1% | | Income before income taxes | $89.7 | $233.9 | -61.6% | | Income tax expense | $27.1 | $78.6 | -65.6% | | Net income | $62.6 | $155.3 | -59.7% | Per Share Data (US dollars) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $0.15 | $0.36 | | Diluted EPS | $0.15 | $0.36 | - Interest, net increased significantly to **$37.8 million** in Q2 2025 from **$1.7 million** in Q2 2024, while acquisition related expenses were **$29.4 million** in Q2 2025, compared to zero in Q2 2024[5](index=5&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) [Condensed Consolidated Statements of Cash Flows for the Three Months Ended 30 June 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%2030%20June%202025%20and%202024) The company experienced a substantial net increase in cash and cash equivalents, restricted cash, and restricted cash - Asbestos of $1,506.2 million for the three months ended June 30, 2025, primarily driven by significant cash inflows from financing activities, specifically proceeds from senior secured notes Condensed Consolidated Statements of Cash Flows (Millions of US dollars) | Cash Flow Activity | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $206.9 | $185.1 | | Net cash used in investing activities | $(105.3) | $(139.8) | | Net cash provided by (used in) financing activities | $1,402.8 | $(77.4) | | Effects of exchange rate changes on cash and cash equivalents, restricted cash and restricted cash - Asbestos | $1.8 | $(0.4) | | Net increase in cash and cash equivalents, restricted cash and restricted cash - Asbestos | $1,506.2 | $(32.5) | | Cash and cash equivalents, restricted cash and restricted cash - Asbestos at end of period | $2,111.8 | $383.3 | Key Financing Activities (Millions of US dollars) | Financing Activity | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Proceeds from senior secured notes | $1,700.0 | — | | Repayments of term loan | $(290.6) | $(1.9) | | Shares repurchased | — | $(75.0) | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) [Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended 30 June 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20for%20the%20Three%20Months%20Ended%2030%20June%202025%20and%202024) Shareholders' equity increased from $2,161.5 million at March 31, 2025, to $2,256.3 million at June 30, 2025, primarily due to net income of $62.6 million and other comprehensive income, including currency translation adjustments Changes in Shareholders' Equity (Millions of US dollars) | Item | 31 March 2025 Balance | Net Income | Other Comprehensive Income | Stock-based Compensation | Issuance of Ordinary Shares | 30 June 2025 Balance | | :-------------------------------- | :-------------------- | :--------- | :----------------------- | :----------------------- | :-------------------------- | :------------------- | | Total Shareholders' Equity | $2,161.5 | $62.6 | $24.3 | $6.9 | $1.0 | $2,256.3 | Key Changes in Shareholders' Equity (YoY Comparison, Millions of US dollars) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net income | $62.6 | $155.3 | | Other comprehensive income (loss) | $24.3 | $(6.5) | | Stock-based compensation | $6.9 | $4.1 | | Shares repurchased | — | $(75.0) | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Significant Accounting Policies](index=7&type=section&id=1.%20Organization%20and%20Significant%20Accounting%20Policies) James Hardie Industries plc manufactures and sells fiber cement, fiber gypsum, and cement-bonded building products globally, having completed the acquisition of The AZEK Company Inc. on July 1, 2025, and entered into a new interest rate swap to manage market risks - James Hardie Industries plc manufactures and sells fiber cement, fiber gypsum, and cement-bonded building products primarily in the United States, Australia, Europe, and New Zealand[11](index=11&type=chunk) - On July 1, 2025, the Company completed the acquisition of The AZEK Company Inc., a designer and manufacturer of low maintenance and environmentally sustainable outdoor living products[12](index=12&type=chunk) - During the three months ended June 30, 2025, the Company entered into an interest rate swap to manage market risks by converting a portion of its floating rate debt to fixed rate debt, recognizing all derivative instruments at fair value[17](index=17&type=chunk) Earnings Per Share (Millions of shares) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Basic common shares outstanding | 429.9 | 433.1 | | Dilutive effect of stock awards | 1.2 | 1.4 | | Diluted common shares outstanding | 431.1 | 434.5 | - The Company is evaluating the impact of new accounting standards: ASU No. 2023-09 (Income Taxes) effective for fiscal years beginning after December 15, 2024, and ASU 2024-03 (Disaggregation of Income Statement Expenses) effective for fiscal years beginning after December 15, 2026[22](index=22&type=chunk)[23](index=23&type=chunk) [2. Revenues](index=9&type=section&id=2.%20Revenues) Total consolidated net sales decreased by 9.3% year-over-year for the three months ended June 30, 2025, primarily driven by a decline in North America Fiber Cement sales, while the Europe Building Products segment showed a modest increase Consolidated Net Sales (Millions of US dollars) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | YoY Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------- | | Total Consolidated Net Sales | $899.9 | $991.9 | -9.3% | Disaggregated Revenues by Segment (Millions of US dollars) | Segment | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | YoY Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------- | | North America Fiber Cement | $641.8 | $729.3 | -12.0% | | Asia Pacific Fiber Cement | $121.6 | $135.3 | -10.1% | | Europe Building Products | $136.5 | $127.3 | +7.2% | | **Total** | **$899.9** | **$991.9** | **-9.3%** | Revenue by Product Type (Millions of US dollars) | Product Type | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Fiber cement | $784.2 | $885.8 | | Fiber gypsum | $115.7 | $106.1 | [3. Cash and Cash Equivalents, Restricted Cash and Restricted Cash - Asbestos](index=9&type=section&id=3.%20Cash%20and%20Cash%20Equivalents%2C%20Restricted%20Cash%20and%20Restricted%20Cash%20-%20Asbestos) Total cash and cash equivalents, restricted cash, and restricted cash - Asbestos significantly increased to $2,111.8 million at June 30, 2025, from $605.6 million at March 31, 2025, primarily due to $1.7 billion in restricted cash held in escrow from senior secured notes Cash and Restricted Cash Reconciliation (Millions of US dollars) | Item | 30 June 2025 | 31 March 2025 | | :-------------------------------- | :----------- | :------------ | | Cash and cash equivalents | $391.6 | $562.7 | | Restricted cash | $1,707.8 | $5.0 | | Restricted cash - Asbestos | $12.4 | $37.9 | | **Total** | **$2,111.8** | **$605.6** | - Restricted cash includes **$1.7 billion** held in an escrow account for senior secured notes, pending the satisfaction of escrow release conditions met on July 1, 2025, upon the close of the AZEK acquisition, while Restricted cash - Asbestos is specifically for the settlement of asbestos claims and payment of AICF operating costs[26](index=26&type=chunk)[27](index=27&type=chunk) [4. Inventories](index=10&type=section&id=4.%20Inventories) Total inventories increased to $382.9 million at June 30, 2025, from $347.1 million at March 31, 2025, mainly driven by an increase in finished goods Inventory Components (Millions of US dollars) | Item | 30 June 2025 | 31 March 2025 | | :-------------------------------- | :----------- | :------------ | | Finished goods | $276.0 | $243.9 | | Work-in-process | $30.1 | $26.5 | | Raw materials and supplies | $90.5 | $87.4 | | Provision for obsolete finished goods and raw materials | $(13.7) | $(10.7) | | **Total** | **$382.9** | **$347.1** | [5. Debt](index=10&type=section&id=5.%20Debt) The company significantly restructured its debt during the quarter, terminating existing facilities and securing new senior secured credit facilities totaling $3.5 billion and $1.7 billion in senior secured notes to fund the AZEK acquisition, increasing total debt to $2,524.9 million at June 30, 2025, with a weighted average interest rate of 5.4% Debt Obligations (Millions of US dollars) | Item | 30 June 2025 | 31 March 2025 | | :-------------------------------- | :----------- | :------------ | | Unsecured debt | $869.2 | $1,133.0 | | Secured debt | $1,700.0 | — | | Unamortized debt issuance costs | $(44.3) | $(4.5) | | **Total debt** | **$2,524.9** | **$1,119.5** | | Weighted average interest rate of total debt | 5.4% | 4.8% | - The company terminated its Term Loan Agreement (TLA) by paying off **US$295.3 million**, its undrawn **US$600.0 million** unsecured revolving credit facility, and its 364-day Bridge Commitment during the quarter[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - New debt facilities include **US$3.5 billion** in Senior Secured Credit Facilities (Term A-1, Term A-2, and Revolving Facility) and **US$1.7 billion** in 2031 and 2032 Senior Secured Notes (5.875% and 6.125% interest rates, respectively)[34](index=34&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - The net proceeds from the new Notes and Term Facilities, along with cash on hand, were used to finance the AZEK acquisition, repay AZEK's existing debt, and cover related fees and expenses[39](index=39&type=chunk) - As of June 30, 2025, the Company was in compliance with all covenants contained in its senior unsecured notes, Senior Secured Credit Facilities, and Senior Secured Notes[43](index=43&type=chunk) - As of June 30, 2025, **US$600.0 million** of the **US$1.0 billion** Revolving Facility was available to draw, with **US$6.0 million** in issued but undrawn letters of credit and bank guarantees[44](index=44&type=chunk) [6. Asbestos](index=13&type=section&id=6.%20Asbestos) The Net Unfunded Amended and Restated Final Funding Agreement (AFFA) liability, net of tax, increased to $(473.7) million at June 30, 2025, from $(418.1) million at March 31, 2025, primarily due to movements in income taxes and the effect of foreign exchange, while the number of open asbestos claims decreased to 436 at period-end Net Unfunded AFFA Liability Rollforward (Millions of US dollars) | Item | 31 March 2025 Balance | Asbestos Claims Paid | AICF Claims-Handling Costs Incurred (Paid) | AICF Operating Costs Paid - Non Claims-Handling | Insurance Recoveries | Movement in Income Taxes | Other Movements | Effect of Foreign Exchange | 30 June 2025 Balance | | :-------------------------------- | :-------------------- | :------------------- | :---------------------------------------- | :---------------------------------------------- | :-------------------- | :----------------------- | :-------------- | :----------------------- | :------------------- | | Net Unfunded AFFA Liability, net of tax | $(418.1) | — | — | $(0.3) | — | $(38.6) | $1.6 | $(18.3) | $(473.7) | Asbestos Claims Data | Item | Three Months Ended 30 June 2025 | For the Years Ended 31 March 2025 | | :-------------------------------- | :------------------------------ | :-------------------------------- | | Number of open claims at beginning of period | 482 | 379 | | Number of new claims (Direct + Cross) | 120 | 653 | | Number of closed claims | 166 | 550 | | Number of open claims at end of period | 436 | 482 | | Average settlement amount per settled claim (US$) | $179,000 | $213,000 | | Average settlement amount per case closed (US$) | $144,000 | $190,000 | - The Company will contribute **A$193.6 million** to the Asbestos Injuries Compensation Fund (AICF) during fiscal year 2026, with the first quarterly payment of **A$48.4 million** made on July 1, 2025[49](index=49&type=chunk) [7. Derivative Instruments](index=14&type=section&id=7.%20Derivative%20Instruments) In May 2025, the company entered into an interest rate swap agreement with a notional amount of US$1.0 billion to manage interest rate risk on its Term Facilities, converting variable SOFR-based interest to a fixed rate of 3.79%, resulting in a fair value loss of US$12.0 million as of June 30, 2025 - The Company entered into an interest rate swap agreement in May 2025 with a notional amount of **US$1.0 billion**, expiring on June 30, 2028, to swap variable SOFR-based interest for a fixed rate of **3.79%** on its Term Facilities[51](index=51&type=chunk) Fair Value of Interest Rate Swap (Millions of US dollars) | Item | Fair Value as of 30 June 2025 | Fair Value as of 31 March 2025 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Interest rate swap (Other current liabilities) | $12.0 | — | | Loss recorded in Other expense (income), net (Q2 2025) | $11.6 | — | [8. Commitments and Contingencies](index=15&type=section&id=8.%20Commitments%20and%20Contingencies) The company is involved in various legal proceedings, including a class action securities claim in Australia and an Australian Tax Office (ATO) audit regarding transfer pricing, but management believes these matters will not have a material adverse effect on the company's financial position - A class action securities claim was filed in Australia in May 2023, alleging breaches related to forward-looking statements, which the Company is vigorously defending with trial set for late July 2026, and has not recorded a reserve as the chance of loss is not probable[56](index=56&type=chunk) - The Australian Tax Office (ATO) issued a transfer pricing position paper for income years 2010-2019, potentially seeking **A$110 million** in additional tax, but the Company believes its tax position is more likely than not to be sustained and has not recorded a reserve[57](index=57&type=chunk) [9. Income Taxes](index=16&type=section&id=9.%20Income%20Taxes) The company paid US$4.9 million in net taxes during the quarter, with deferred income taxes including US$79.9 million in tax loss carry-forwards, and is currently evaluating the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S - During the three months ended June 30, 2025, the Company paid taxes, net of refunds, of **US$4.9 million**[59](index=59&type=chunk) - As of June 30, 2025, the Company had tax loss carry-forwards of approximately **US$79.9 million** available to offset future taxable income in Australia, New Zealand, Europe, and the US[60](index=60&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. on July 4, 2025, and the Company is currently evaluating its impact on the condensed consolidated financial statements[62](index=62&type=chunk) [10. Stock-Based Compensation](index=16&type=section&id=10.%20Stock-Based%20Compensation) Total stock-based compensation expense increased significantly to US$10.9 million for the three months ended June 30, 2025, compared to US$2.4 million in the prior year, primarily due to higher equity awards, with unrecorded future expense related to outstanding equity awards totaling US$29.6 million Total Stock-Based Compensation Expense (Millions of US dollars) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Liability Awards | $4.0 | $(1.9) | | Equity Awards | $6.9 | $4.3 | | **Total stock-based compensation expense** | **$10.9** | **$2.4** | - As of June 30, 2025, the unrecorded future stock-based compensation expense related to outstanding equity awards was **US$29.6 million**, to be recognized over an estimated weighted average amortization period of **1.7 years**[63](index=63&type=chunk) [11. Capital Management](index=16&type=section&id=11.%20Capital%20Management) The company announced a share buyback program of up to US$300 million through October 31, 2025, but there was no activity under this program as of June 30, 2025 - The Company announced a share buyback program on November 13, 2024, to acquire up to **US$300 million** of its outstanding shares through October 31, 2025, with no activity under this program as of June 30, 2025[64](index=64&type=chunk) [12. Segment Information](index=17&type=section&id=12.%20Segment%20Information) The company operates in three reportable segments: North America Fiber Cement, Asia Pacific Fiber Cement, and Europe Building Products, all of which experienced a decline in net sales and segment operating income for Q2 2025 compared to Q2 2024, with consolidated operating income significantly impacted by higher General Corporate and Unallocated R&D costs - The Company has three reportable segments: North America Fiber Cement, Asia Pacific Fiber Cement, and Europe Building Products[67](index=67&type=chunk) Segment Performance (Millions of US dollars) | Segment | Net Sales (Q2 2025) | Net Sales (Q2 2024) | Segment Operating Income (Q2 2025) | Segment Operating Income (Q2 2024) | | :-------------------------------- | :------------------ | :------------------ | :--------------------------------- | :--------------------------------- | | North America Fiber Cement | $641.8 | $729.3 | $161.2 | $227.3 | | Asia Pacific Fiber Cement | $121.6 | $135.3 | $37.8 | $41.2 | | Europe Building Products | $136.5 | $127.3 | $15.1 | $12.2 | | **Total Segment Operating Income** | **$899.9** | **$991.9** | **$214.1** | **$280.7** | General Corporate and Unallocated R&D Costs (Millions of US dollars) | Item | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | General Corporate and Unallocated R&D costs | $(75.5) | $(45.3) | | Consolidated operating income | $138.6 | $235.4 | Capital Expenditures by Segment (Millions of US dollars) | Segment | Three Months Ended 30 June 2025 | Three Months Ended 30 June 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | North America Fiber Cement | $73.9 | $88.5 | | Asia Pacific Fiber Cement | $13.7 | $14.6 | | Europe Building Products | $12.9 | $25.7 | | General Corporate and R&D | $2.7 | $1.0 | | **Total** | **$103.2** | **$129.8** | - Beginning with the second quarter fiscal year 2026, the Company intends to rename its segments: North America Fiber Cement to Siding & Trim (including AZEK Exteriors), a new Deck, Rail & Accessories segment (remainder of AZEK), Asia Pacific Fiber Cement to Australia & New Zealand, and Europe Building Products to Europe[77](index=77&type=chunk) [13. Accumulated Other Comprehensive Loss](index=19&type=section&id=13.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss decreased to $(33.9) million at June 30, 2025, from $(58.2) million at March 31, 2025, primarily due to positive currency translation adjustments of $24.3 million Accumulated Other Comprehensive Loss (Millions of US dollars) | Item | Balance at 31 March 2025 | Other Comprehensive Income | Balance at 30 June 2025 | | :-------------------------------- | :----------------------- | :----------------------- | :---------------------- | | Cash Flow Hedges | $0.1 | — | $0.1 | | Pension Actuarial Gain | $1.4 | — | $1.4 | | Foreign Currency Translation Adjustments | $(59.7) | $24.3 | $(35.4) | | **Total** | **$(58.2)** | **$24.3** | **$(33.9)** | [14. Subsequent Event](index=19&type=section&id=14.%20Subsequent%20Event) On July 1, 2025, the company completed the acquisition of The AZEK Company Inc. for an implied total value of US$8.4 billion, funded by new debt facilities and cash on hand, with plans to rename its segments to reflect the integration of AZEK's business - On July 1, 2025, the Company completed its acquisition of The AZEK Company Inc. for an implied total value of **US$8.4 billion**, including share-based awards and repayment of AZEK's outstanding debt[74](index=74&type=chunk) - The acquisition was funded by net proceeds from the Company's new Senior Secured Notes and Term Facilities, along with cash on-hand[75](index=75&type=chunk) - Due to the limited time between the acquisition date and the report filing, the allocation of purchase price and pro forma revenues and earnings for the combined company are not yet practicable to disclose[76](index=76&type=chunk) - Post-acquisition, the Company intends to rename its North America Fiber Cement segment to Siding & Trim, create a new Deck, Rail & Accessories segment, and rename the Asia Pacific Fiber Cement and Europe Building Products segments to Australia & New Zealand and Europe, respectively[77](index=77&type=chunk)

Q1 FY26 Financial Performance - Net sales reached $900 million, a decrease of 9% compared to the prior year[34] - Adjusted EBITDA was $226 million, down 21% year-over-year, with an Adjusted EBITDA Margin of 251%, a decrease of 370 basis points[16, 34] - Adjusted diluted EPS was $029, a 28% decrease[34] - Free cash flow increased by 88% to $104 million[34] AZEK Acquisition and Integration - AZEK Residential quarterly net sales were $417 million with Adjusted EBITDA of $127 million and Adjusted EBITDA Margin of 304%[18] - The company reaffirms expectation to exit FY26 annualizing a third of total cost synergies, representing approximately $20 million of actual anticipated P&L benefit within FY26, concentrated in 2H FY26[27] - The company is on track to achieve $125 million in cost synergies and anticipates over $500 million in commercial synergies[26] FY26 Financial Guidance - The company issues new FY26 guidance reflecting contribution from AZEK[30] - FY26 Siding & Trim net sales are projected to be $2675 to $285 billion[51] - FY26 Deck, Rail & Accessories net sales are projected to be $775 to $800 million[51] - AZEK contribution to Adjusted EBITDA is expected to be +$250 to $265 million, with total Adjusted EBITDA between $105 to $115 billion[51] - Free cash flow is expected to be $200 million+, including approximately $315 million of incremental interest expense and transaction & integration costs related to the AZEK acquisition[51, 53]

Financial Results - James Hardie Industries plc is set to release its financial results for the first quarter on August 19, with expected earnings of 29 cents per share and projected revenue of $958.74 million, down from $991.9 million a year earlier [1] Stock Performance - Shares of James Hardie Industries fell by 0.4% to close at $28.90 on the previous Monday [2] Analyst Ratings - Jefferies analyst Philip Ng initiated coverage with a Buy rating and a price target of $34, while Baird analyst Timothy Wojs rated it Outperform with a price target of $32 [4] - William Blair analyst Ryan Merkel also rated it Outperform, and Truist Securities analyst Keith Hughes maintained a Buy rating but reduced the price target from $45 to $35 [4]

Core Insights - James Hardie Building Products Inc. partnered with the Pro Football Hall of Fame to present a new affordable home to a family in Canton, Ohio, as part of their charitable initiatives [1][2][4] Company Initiatives - The home was constructed with support from James Hardie as part of the charity impact from the inaugural James Hardie Pro Football Hall of Fame Invitational, a PGA TOUR Champions event [2][6] - James Hardie has funded five Habitat for Humanity projects as part of the tournament's charity initiatives in various locations including Canton and Palm Beach County [8] Product Information - The new home features Hardie® fiber cement siding in "Evening Blue," which is the company's 2025 Color of the Year, emphasizing durability and aesthetic appeal [7] Community Engagement - James Hardie has a long-standing relationship with Habitat for Humanity, supporting their mission to provide affordable housing and improve community stability [4][16] - The company has been involved in community support for over six decades, reflecting its commitment to local development and home ownership [9]