James Hardie(JHX) - 2026 Q1 - Quarterly Report

Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets as of 30 June 2025 and 31 March 2025 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 Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended 30 June 2025 and 2024 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] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows for the Three Months Ended 30 June 2025 and 2024 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 Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended 30 June 2025 and 2024 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 1. Organization and Significant Accounting Policies 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] - 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] - 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] 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][23] 2. Revenues 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 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][27] 4. Inventories 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 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][31][32][33] - 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][37][38] - 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] - 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] - 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] 6. Asbestos 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] 7. Derivative Instruments 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] 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 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] - 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] 9. Income Taxes 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] - 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] - 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] 10. Stock-Based Compensation 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] 11. Capital Management 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] 12. Segment Information 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] 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] 13. Accumulated Other Comprehensive Loss 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 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] - The acquisition was funded by net proceeds from the Company's new Senior Secured Notes and Term Facilities, along with cash on-hand[75] - 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] - 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]