Financial Data and Key Metrics Changes - The express delivery industry maintained robust growth with business volume increasing by 17.3% year over year [5] - ZTO's parcel volume grew 16.5% year over year to reach CNY 9.85 billion, with adjusted net income decreasing 26.8% to RMB 2.1 billion due to competitive pricing pressures [6][14] - Total revenue increased 10.3% to RMB 11.8 billion, while total cost of revenue rose 25.1% to CNY 8.9 billion [15][16] - Gross profit decreased 18.7% to RMB 2.9 billion, with gross margin dropping 8.9 points to 24.9% [16] - Operating cash flow decreased 37.7% to CNY 2.2 billion, primarily due to higher advances for expanded reverse logistics services [17] Business Line Data and Key Metrics Changes - Retail parcel volume grew over 50% year over year, peaking at over 8% of total volume during the quarter [7] - The average selling price (ASP) for the core express delivery business decreased 4.7% or RMB 0.06, influenced by a decline in average weight per parcel and higher volume incentives [15] - Combined unit cost of sorting and transportation decreased 11.1% or CNY 0.07, benefiting from economies of scale and productivity gains [16] Market Data and Key Metrics Changes - The express delivery industry experienced a slight slowdown, with growth rates expected to be lower in the second half of the year compared to the first half [24] - The industry dynamics are shifting from volume-driven expansion to balanced growth in both quantity and quality [11] Company Strategy and Development Direction - ZTO emphasizes quality first, with a focus on enhancing service capability and efficiency to optimize volume mix [6][8] - The company is integrating AI tools across all business segments to drive cost efficiencies and improve service quality [27] - ZTO aims to shift from price competition to value and capability competition for sustainable growth [38][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledges uncertainties in the macroeconomic environment and industry dynamics, leading to a wide range in volume guidance for the second half of the year [26] - The company believes in the long-term growth prospects of China's express delivery and logistics industry, supported by its unique culture and robust infrastructure [13] Other Important Information - ZTO's capital expenditure for the second quarter totaled CNY 1.1 billion, with an anticipated annual CapEx of RMB 5.5 billion to RMB 6 billion [17] - The company is actively collaborating with industry leaders on autonomous vehicle technology to enhance last-mile delivery efficiency [40] Q&A Session Summary Question: Outlook for the second half of the year and key factors impacting market growth - Management noted that the volume growth was below expectations, with a slight slowdown anticipated for the second half of the year due to various uncertainties [24][26] Question: Technology and AI's application in operations - ZTO is integrating AI tools to improve decision-making and cost efficiencies, with initiatives such as a digitized parallel model at sorting centers and AI-powered customer service systems [27][28] Question: Sustainability of price increases in Guangdong and impact on profits - Management indicated that recent price adjustments in Guangdong are positive, relieving pressure on outlets and couriers, with a belief that such price increases could be sustainable [31][32] Question: Pricing development for the remainder of the year - Management expects that the pricing landscape will stabilize, moving from price competition to value competition in the long run [38][39] Question: Development of unmanned vehicles and their impact - ZTO is in the early stages of commercializing autonomous vehicles, which have shown significant cost reduction benefits in last-mile delivery [40][41] Question: Shareholder returns and buybacks - The company is considering both dividends and share repurchases to increase shareholder returns, while monitoring market trends and uncertainties [43]

Financial Data and Key Metrics Changes - The express delivery industry maintained robust growth with business volume increasing by 17.3% year over year [6] - ZTO's parcel volume grew 16.5% year on year, reaching CNY 9.85 billion, while adjusted net income decreased by 26.8% to RMB 2.1 billion due to competitive pricing pressures [7][15] - Total revenue increased by 10.3% to RMB 11.8 billion, despite a decline in average selling price (ASP) for core express delivery services by 4.7% [16] - Gross profit decreased by 18.7% to RMB 2.9 billion, with gross margin dropping by 8.9 points to 24.9% [17] Business Line Data and Key Metrics Changes - Retail parcel volume grew over 50% year over year, contributing positively to the overall volume mix [8] - The core express delivery business saw a positive unit contribution of $0.17 in revenue and CNY 0.02 in gross profit, despite overall unit costs increasing [8][17] - Combined unit cost of sorting and transportation decreased by 11.1% due to economies of scale and productivity gains [17] Market Data and Key Metrics Changes - The express delivery market in China is evolving from volume-driven expansion to balanced growth in both quantity and quality [12] - The industry dynamics indicate a shift towards comprehensive logistics solutions powered by digitization and intelligent operations [12] Company Strategy and Development Direction - ZTO emphasizes quality first, aiming to enhance service capabilities and efficiency while optimizing volume mix [7][10] - The company is focusing on digitization and intelligent operations to improve resource allocation and operational efficiency [9][28] - ZTO's long-term strategic vision includes collaboration with partners to deliver lasting value and returns to shareholders [14] Management Comments on Operating Environment and Future Outlook - Management acknowledges a slight slowdown in industry growth for the second half of the year, with expectations of lower growth rates compared to the first half [24] - The company remains committed to achieving balanced improvements in service quality, volume, and profit [26] - Management believes in the vast growth prospects of China's express delivery and logistics industry, supported by ZTO's unique culture and robust infrastructure [14] Other Important Information - The company anticipates capital expenditures for 2025 to be between RMB 5.5 billion and RMB 6 billion [18] - ZTO is revising its parcel volume guidance for 2025 to a range of CNY 38.8 billion to CNY 40.1 billion, representing a 14% to 18% annual increase [19] Q&A Session Summary Question: Outlook for the second half of the year and key factors impacting market growth - Management noted that the wide range in volume guidance reflects uncertainties in the macroeconomic environment and industry dynamics [23][27] Question: Technology and AI applications - ZTO is integrating AI tools across business segments to drive cost efficiencies and improve service quality, with significant reductions in management headcount and sorting errors [28][29] Question: Sustainability of price increases in Guangdong - Management believes the recent price adjustments in Guangdong are positive and may sustain, relieving pressure on outlets and couriers [32][33] Question: Pricing development for the remainder of the year - Management expects a shift from price competition to value and capability competition, with a focus on sustainable pricing practices [39][49] Question: Development of unmanned vehicles - ZTO is actively collaborating with industry leaders on autonomous vehicles, which have shown significant cost reduction benefits [40][41] Question: Shareholder returns and buybacks - The company is considering both dividends and share repurchases to increase shareholder returns, monitoring market trends and uncertainties [44]

Financial Data and Key Metrics Changes - Mount Gibson Iron reported sales for the year at 2,610,000 wet metric tonnes, down from 4,100,000 tonnes in the previous year, reflecting weaker prices and challenging mining conditions [4] - Sales revenue totaled AUD 330.5 million, with cash operating costs increasing to AUD 101 per wet metric ton, compared to AUD 74 in the prior year [4] - The company recorded a net loss after tax of AUD 82.2 million, compared to a net profit of AUD 6.4 million in the previous year, largely due to non-cash accounting impairments totaling AUD 90.4 million [5] Business Line Data and Key Metrics Changes - Coolin Island generated operating cash flow of AUD 26.5 million, with a profit before interest, tax, and impairments of AUD 29.3 million, but recorded a loss before interest and tax of AUD 61.1 million after impairment expenses [9] - The average waste to ore strip ratio increased to 3:1 in fiscal '25, but is expected to decrease to approximately 1.3:1 in the remaining mine life, which will enhance future sales and reduce unit costs [8] Market Data and Key Metrics Changes - The 62% FE Platts Index averaged USD 101 per dry metric ton, down from USD 119 per ton in the prior year, with high-grade 65% FE fines averaging USD 114 per ton compared to USD 131 per ton previously [10] - The average price for Pullen Island Fines rated 64.5% FE was USD 83 per ton FOB, down from USD 110 per ton for slightly higher material at 65.3% in the prior year [11] Company Strategy and Development Direction - The company is targeting strong cash flow over the next 12 to 18 months at Coolin Island, while also pursuing the acquisition of a 50% interest in the Central Tanami gold project, which is seen as a significant growth opportunity [6][13] - The focus remains on maximizing production and cash flow from Coolin Island while exploring organic growth and external investment opportunities in the mineral sector [12][17] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment was impacted by global uncertainties, including conflicts in Europe and the Middle East, which affected pricing [10] - The company expressed confidence in the upcoming fiscal year, anticipating higher-grade iron ore sales and improved cash flow following the completion of current mining activities [9][17] Other Important Information - The company has initiated a share buyback program, aiming to repurchase up to 10% of its issued capital, reflecting its strong cash position and focus on capital growth [16] - The share buyback program has seen 38.8 million shares repurchased at an average price of AUD 0.313 per share [16] Q&A Session Summary Question: Were there any questions from participants? - There were no questions from participants during the call [18]

Financial Data and Key Metrics Changes - Fiscal year 2025 net revenues declined by 2% like for like, with Q4 revenues declining by 9% [17] - EBITDA grew at a CAGR of 9% from CHF 760 million in fiscal year 2021 to CHF 1.08 billion in fiscal year 2025, with an EBITDA margin expansion of 190 basis points to 18.4% [8][21] - Adjusted EPS for fiscal year 2025 was $0.50, reflecting a 4% growth despite lower operating income [22] - Free cash flow for fiscal year 2025 was CHF 278 million, slightly below the target of CHF 300 million [22] Business Line Data and Key Metrics Changes - Prestige Fragrance business grew to a £3.5 billion segment with a CAGR of 10% from fiscal year 2021 to fiscal year 2025 [6] - Consumer Beauty business achieved a 2% CAGR from fiscal year 2021 to fiscal year 2025, recovering from previous declines [7] - In Q4, Prestige sellout grew low single digits, while Consumer Beauty sellout declined high single digits against a modestly positive market [20] Market Data and Key Metrics Changes - The U.S. Prestige beauty market grew by approximately 4% in fiscal year 2025, but the company experienced a mid-single-digit percentage decline in like-for-like sales [13] - The mass beauty market in the U.S. declined by roughly 1% in fiscal year 2025, with the company's like-for-like sales declining by a mid-teen percentage [13] - In Asia, excluding China, sellout grew approximately four times ahead of market growth [58] Company Strategy and Development Direction - The company is refocusing on core strengths in fragrances, which represent over 60% of revenues, and aims to drive growth in structurally profitable beauty categories [36][37] - A strategic shift is underway to prioritize investment in high-return areas while rebalancing resources away from less profitable segments like mass cosmetics [45][66] - The company is implementing the "All in to Win" program to deliver CHF 130 million in annual fixed cost savings through fiscal year 2027 [23] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges in fiscal year 2025, including retailer inventory buildup and execution weaknesses, which impacted performance [11] - There is an expectation of sequential improvement in sales and profit trends in fiscal year 2026, with a return to growth anticipated in the second half [30][73] - The company is actively preparing for multiple scenarios regarding tariffs and geopolitical uncertainties, with mitigation strategies in place [29][25] Other Important Information - The company has received 12 consecutive debt rating upgrades, positioning it just one notch below investment grade [9] - The company is committed to sustainability, achieving a Grand EcoVadis rating placing it in the top 5% of companies globally for sustainability performance [71] Q&A Session Summary Question: What are the expectations for sales trends in fiscal year 2026? - The company anticipates a like-for-like decline of 6% to 8% in Q1 and a decline of 3% to 5% in Q2, with sequential improvement expected throughout the year [31] Question: How is the company addressing the challenges in the U.S. market? - The company is taking decisive actions, including new leadership and a more agile regional structure, to address underperformance in the U.S. market [58] Question: What are the key initiatives for cost savings? - The company is targeting approximately CHF 200 million in combined fixed costs and productivity savings in fiscal year 2026 [50]

Financial Data and Key Metrics Changes - Operating profit increased by 5.4% to $159.7 million, supported by disciplined cost management and increased distributions from fund investments [2][10] - Revenue decreased by 12% year-on-year, primarily due to a reduction in average management fees across assets under management (AUM) [3][12] - Statutory profit fell by 31% compared to the prior period, reflecting lower mark-to-market gains on investments [11] Business Line Data and Key Metrics Changes - In the Investment Management business, AUM rose by 8.2% to $39.6 billion, driven by strong investment returns across strategies [2][18] - Management fees decreased by 8.6% due to a 13% reduction in the average fee rate, partially offset by a 4% increase in average AUM [12] - Performance fees amounted to $11.1 million, driven by strong performance in the infrastructure strategy [13] Market Data and Key Metrics Changes - The strategic partnerships segment saw profits triple to $31.1 million, contributing 20% of total operating profit [3][14] - Barron Joey's NPAT rose by 73% with revenue up 24%, indicating strong growth across multiple business lines [27] - Vimba contributed positively to the annual result for the first time, reinforcing the strategic fit and earnings potential of the partnership [14][28] Company Strategy and Development Direction - The company aims to provide diversified sources of revenue and has refreshed its corporate brand to better position itself for the future [1][5] - The strategy focuses on high-quality partnerships, particularly in investment management and specialist financial services, to enhance earnings diversity [4][30] - The company plans to pay out at least 80% of group operating profit as dividends, reflecting growth in earnings from strategic partners [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong performance from strategic partnerships and a solid balance sheet [9][10] - The company is focused on improving long-term investment performance and expanding client solutions through strategic partnerships [34][35] - Management acknowledged challenges from super fund internalization and geopolitical instability but remains committed to providing alpha for clients [51] Other Important Information - The company declared a fully franked final ordinary dividend of $0.259 per share, reflecting a payout ratio of 95% of investment management operating profit [10] - The company has over $560 million in liquid capital, providing strategic optionality for future growth [11] Q&A Session Summary Question: Update on the infrastructure fund and institutional clients' sentiment after leadership changes - Management reported no institutional client outflows following leadership changes, with positive client responses and increased attention to listed infrastructure as a strong asset class [40] Question: Is Barron Joey close to maturity or still has growth potential? - Management indicated that Barron Joey is not in a mature state and continues to see growth across multiple business lines [43] Question: Net flows in the first weeks of FY '26 compared to FY '25 - Management noted no material changes in net flows, with good momentum continuing from FY '25 [45] Question: Impact of fee transitions on margins - Management confirmed that the transition of fee rates will have a relatively small impact on overall margins [47] Question: Stability of AUM growth and future pressures - Management expressed optimism about the stabilization of AUM growth, despite ongoing challenges from super fund internalization and geopolitical instability [49] Question: Changes in revenue margins and fee reductions - Management clarified that there have been no changes in advertised rates, with the reduction in fee rates primarily due to compositional changes [54] Question: Future use of surplus capital - Management stated that they continue to explore strategic partnerships while balancing returns to shareholders through buybacks [58][60]

Financial Data and Key Metrics Changes - The company reported a profit after tax of AUD 4.9 million, with normalized profit before tax of AUD 13.9 million on revenue of AUD 152.1 million, which is similar to AUD 14.3 million in the previous corresponding period [3][4] - Revenue increased by 25% compared to the prior period, reflecting a 6.6% increase from the period ended December 2024 [4][7] - Underlying EBITDA for the period was AUD 26.9 million, consistent with AUD 26.8 million reported in the prior period, while the reported EBITDA was AUD 14.6 million [10][18] Business Line Data and Key Metrics Changes - North America revenue was AUD 83.1 million, a 225% increase on the prior period, with recurring revenue contributing 47% of segment revenues [11][12] - Latin America and Europe revenues were AUD 31.6 million, an increase from AUD 29.3 million in the prior period but a reduction of 16% compared to the prior half [13] - The digital segment reported revenue of AUD 2.08 million, down from AUD 5.1 million in the prior period due to the termination of the GAN exclusivity contract [17] Market Data and Key Metrics Changes - International revenues accounted for 80% of total revenue, down from 86% in the prior period due to stronger domestic contributions [6] - The Asia Pacific segment achieved revenue of AUD 34.6 million, an increase of 8147% from prior periods, benefiting from the release of new products [14] Company Strategy and Development Direction - The company aims to maintain its investment in product development to compete effectively against larger industry participants [5] - There is a focus on technology, development, and culture to improve product performance and staff retention [19][21] - The company is pursuing opportunities in existing and new markets, particularly in North America and Latin America [26][28] Management Comments on Operating Environment and Future Outlook - Management expressed caution due to competitive factors and challenging economic conditions that may impact operations [5] - The company remains optimistic about its infrastructure and strategies to compete against larger providers [28] - Future growth opportunities are anticipated, particularly following the release of new game titles and hardware [26][27] Other Important Information - The company has a net cash position of AUD 1.4 million with borrowings of AUD 11.4 million, reflecting a reduction in net cash due to inventory purchases [21][24] - Inventory levels increased by 14% to AUD 78.2 million, with 34% represented by finished goods [22] Q&A Session Summary Question: Inquiry about the automatic transaction - The management referred to the ASX announcement regarding the automatic takeover bid and indicated that further details would be provided to shareholders [2][29] Question: No further questions were raised during the session - The operator confirmed that there were no additional questions from participants [32]

Financial Data and Key Metrics Changes - FY 2025 EBITDA increased by 6.4% to over $2 billion, marking the first time APA has achieved annual earnings above this threshold [14][15] - Underlying EBITDA margin expanded to 74.2%, supported by stronger operating results and corporate cost growth below inflation [15] - Free cash flow rose by 1% to nearly $1.1 billion, reflecting higher underlying earnings despite increased funding costs and cash tax payments [15][18] - FY 2025 distribution of $0.57 per security, up $0.01 from the previous year, with FY 2026 distribution guidance set at $0.58 per security [9][28] Business Line Data and Key Metrics Changes - Increased demand on the East Coast for seasonal capacity and inflation-linked tariff escalations contributed to higher earnings [15] - On the West Coast, higher ownership of the Goldfields gas pipeline and increased customer demand on NGI drove earnings growth [17] - The organic growth pipeline increased from $1.8 billion to $2.1 billion, with the ability to fund this from the existing balance sheet [7][46] Market Data and Key Metrics Changes - Strong demand for gas power generation is anticipated, with significant new investment opportunities identified [33][42] - AEMO's forecasts indicate a need for 13 gigawatts of new gas power generation investment as coal retires, with additional demand expected from data centers and AI [33][42] - Domestic gas supply is not a constraint, with over 68,000 petajoules of reserves available to meet demand [37][40] Company Strategy and Development Direction - The company is focused on energy infrastructure supported by long-term, inflation-linked contracts, emphasizing gas transmission and storage as core growth areas [32][51] - Recent divestments and simplification of operations aim to enhance efficiency and focus on high-return projects [13][31] - The strategy includes addressing regulatory risks and ensuring the expansion of the East Coast gas grid to meet future demand [12][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth pipeline and the ability to deliver strong returns for security holders despite market dynamics [32][58] - The company is actively engaging with customers and government to ensure regulatory stability and support for domestic gas supply [86][87] - Management acknowledged the challenges in the supply chain for major electricity transmission and power generation equipment but remains optimistic about managing these risks [66] Other Important Information - The company has reaffirmed its climate transition targets and is committed to reducing emissions while supporting the energy transition [11][67] - The divestment of the non-core networks business is expected to simplify operations and reduce headcount by approximately 725 people [29] Q&A Session Summary Question: Changes in growth strategy regarding East Coast electricity transmission - Management clarified that while the focus on East Coast electricity transmission has shifted, the overall growth strategy remains intact with significant addressable market opportunities in gas transmission and storage [49][51] Question: Will APA need to underwrite risks for East Coast grid expansions? - Management indicated that the market is not expected to fully underwrite projects as in the past, but demand remains strong, and they are working with customers to secure necessary support [52][53] Question: How will organic growth offset future declines in earnings? - Management stated that they are not trying to replace lost earnings dollar for dollar but are focused on overall business growth and distribution increases [58] Question: Insights on gas power generation and emissions targets - Management emphasized the importance of gas-fired power generation in the energy transition and acknowledged that increased GPG could impact emissions intensity targets [65][67] Question: Update on the Baloo interlink project - Management confirmed that the Baloo interlink is a critical infrastructure project, with a target for final investment decision in FY 2026, contingent on customer engagement [71][72] Question: Split between sustaining and growth CapEx - Management indicated that approximately $600 million of the $969 million in assets commissioned during the year was related to growth capital expenditures [75] Question: Future CapEx guidance and major overhauls - Management noted that sustaining CapEx guidance includes cyclical spikes related to power generation, with significant overhauls expected towards the end of the decade [80][82]

Financial Data and Key Metrics Changes - FY 2025 EBITDA increased by 6.4% to over $2 billion, marking the first time APA has achieved annual earnings above this threshold [14][15] - Underlying EBITDA margins expanded to 74.2%, supported by stronger operating results and corporate cost growth below inflation [15] - Free cash flow rose by 1% to nearly $1.1 billion, reflecting higher underlying earnings despite increased funding costs and cash tax payments [15][17] - Distribution for FY 2025 was $0.57 per security, up $0.01 from the previous year, with guidance for FY 2026 set at $0.58 per security [8][26] Business Line Data and Key Metrics Changes - The organic growth pipeline increased from $1.8 billion to $2.1 billion, indicating strong momentum in growth initiatives [6][46] - On the East Coast, increased demand for seasonal capacity and inflation-linked tariff escalations contributed to higher earnings [15] - The Pilbara Energy assets drove strong growth in contracted power generation earnings, aligning with expectations [16] Market Data and Key Metrics Changes - The demand for gas power generation (GPG) is expected to grow significantly, with AEMO forecasting a need for 13 gigawatts of new GPG investment as coal retires [32][41] - Domestic gas supply is not a constraint, with over 68,000 petajoules of 2P reserves and 2C resources available in Eastern Australia [35][36] Company Strategy and Development Direction - The company is focused on energy infrastructure supported by long-term, inflation-linked contracts, emphasizing gas transmission and storage as core growth areas [50][31] - Recent divestments, including the non-core networks business, aim to simplify operations and enhance focus on high-return projects [13][27] - The strategy includes addressing regulatory risks and ensuring the Southwest Queensland pipeline avoids heavy regulation to facilitate expansion [12][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to fund the organic growth pipeline from existing balance sheet capacity without the need for ordinary equity raisings [24][25] - The outlook for FY 2026 is strong, with expected EBITDA growth of 7.2% and ongoing distribution growth anticipated for the twenty-second consecutive year [8][26] - Management highlighted the importance of regulatory and policy certainty to support domestic gas supply and infrastructure development [83][84] Other Important Information - The company has reaffirmed its climate transition targets and is committed to reducing emissions while supporting energy transition initiatives [11][32] - A comprehensive enterprise-wide cost reduction initiative is underway, targeting approximately $50 million in savings for FY 2026 [5][26] Q&A Session Summary Question: Can you expand on the asset classes and specific opportunities that are expanding to fill the void in the growth outlook? - Management confirmed that the strategy remains unchanged, focusing on energy infrastructure supported by long-term contracts, despite the removal of focus on larger electricity transmission projects [50] Question: Are discussions with shippers indicating a willingness to sign long-term contracts for East Coast grid expansions? - Management indicated that while long-term contracts are not expected as in the past, demand remains strong, and they are working with customers to secure the necessary support for investments [52][53] Question: How does the organic growth pipeline fit into the future earnings outlook? - Management clarified that they are not trying to replace earnings from the Wallumbilla Gladstone pipeline but are focused on overall business growth and distribution increases [56] Question: Can you provide insights on the growth CapEx for gas power generation? - Management acknowledged supply chain challenges for major equipment but expressed confidence in their relationships with suppliers to manage these effectively [62] Question: What is the status of the Baloo interlink project? - Management confirmed that the Baloo interlink is part of the East Coast Gas Grid expansion, with a target for final investment decision in FY 2026 [68][69]

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]