James Hardie(US:JHX)2020-02-12 04:38Financial Data and Key Metrics Changes - The company reported a volume increase of 6% for the quarter and 4% for the nine-month year-to-date period [9] - Net sales rose by 5% for the quarter and 3% for the nine-month year-to-date [9] - Adjusted EBIT increased by 18% for the quarter and 20% for the nine-month year-to-date [9][22] - Adjusted net operating profit grew by 17% in both the quarter and the first nine months of the fiscal year [9] Business Line Data and Key Metrics Changes - North America's exterior business saw a volume growth of 13% for the quarter and 8% for the nine-month period, while the interior business returned to growth with a 3% volume increase for the quarter [10][11] - EBIT dollars for the North American segment increased by 30% for the quarter, with an EBIT margin of 26.1%, reflecting a 380-basis point improvement year-over-year [11][12] - In Europe, fiber cement net sales were up 27% for the first nine months, while fiber gypsum sales were below expectations due to a softening housing market [13][15] - The APAC segment reported moderate EBIT growth of 5% for the quarter, with EBIT margins remaining in the top half of the long-term target range [15] Market Data and Key Metrics Changes - The addressable market growth for North America is estimated to be between 1% to 2%, with the company confident in achieving over 6% growth above market for Fiscal Year 2020 [10][17] - In Europe, the addressable housing market is expected to be slightly down for the full year, impacting fiber gypsum sales [18] - The Australian market is anticipated to see a mid-to-single digit decline, with APAC expected to deliver volume growth of 3% to 5% [19] Company Strategy and Development Direction - The company is undergoing a fundamental transformation to become a "small big company," focusing on sustainable and profitable growth [3][4] - The strategy emphasizes connecting different business functions and enhancing customer-centric operations [50][51] - The company aims to leverage lean manufacturing principles to improve efficiency and reduce costs across its operations [61][65] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, highlighting strong financial results and the successful execution of strategic plans [20][76] - The company acknowledged challenges in the European market but is optimistic about future growth through improved commercial execution [14][98] - Management reiterated the importance of continuous improvement and adapting to market conditions to sustain growth [57][100] Other Important Information - The company raised its guidance for adjusted net operating profit to between $350 million and $370 million [20][48] - Integration costs in Europe were higher than anticipated, impacting overall financial performance [36] - The company is committed to ongoing research and development investments to drive innovation [38] Q&A Session Summary Question: North American pricing performance and EBIT margin - Management explained that the EBIT margin decreased sequentially due to seasonality and continued investments, despite strong volume growth [78][79] Question: Future PDG targets with changing market conditions - Management indicated that while the housing market's growth could impact PDG, the company is focused on executing its strategy to maintain performance [85] Question: Geographic and product performance in North America - Management highlighted strong growth in specific regions like Texas and the Southeast, driven by a strategic focus on customer relationships [90] Question: Seasonality and internal initiatives - Management acknowledged that seasonality is expected to continue, as the company operates as a demand-driven organization [95][96] Question: Fiber gypsum market performance in Europe - Management noted that the transition to a push-pull strategy in Europe is ongoing, which has affected fiber gypsum sales [98]