Global Net Sales declined 4% to US$860.8
Million for the Third Quarter Adjusted Net Income declined
16% to US$129.2 Million for the Third Quarter Adjusts Fiscal
Year 2023 Adjusted Net Income Guidance Range to US$600
Million and US$620 Million
James Hardie Industries plc (ASX: JHX; NYSE: JHX), the
world’s #1 producer and marketer of high- performance fiber cement
and fiber gypsum building solutions, today announced results for
its third quarter fiscal year 2023, the three-month period ending
31 December 2022.
Third Quarter Fiscal Year 2023 Highlights, Compared to Third
Quarter Fiscal Year 2022, as applicable:
- Global Net Sales declined 4% as Global Volumes declined 11%,
partially offset by Price/Mix growth in all three regions as we
delivered value added solutions to our customers
- Global Adjusted EBIT decreased 19% to US$165.4 million, with an
Adjusted EBIT margin of 19.2%
- North America Fiber Cement Segment Net Sales remained flat at
US$645.4 million and EBIT declined 5% to US$174.1 million, with an
EBIT margin of 27.0%
- Asia Pacific Fiber Cement Segment Net Sales decreased 13% to
A$171.2 million and EBIT decreased 21% to A$42.3 million, with an
EBIT margin of 24.7%
- Europe Building Products Segment Net Sales increased 4% to
€101.2 million and EBIT decreased 86% to €1.5 million, with an EBIT
margin of 1.5%
Speaking to the results, James Hardie CEO Aaron Erter said, “Our
team executed in the face of significant challenges to deliver
strong financial results in fiscal year 2023. The team’s
performance is reflected in strong Price/Mix growth in all three
regions, including North America Price/Mix growth of +10%, Asia
Pacific Price/Mix growth of +6% and Europe Price/Mix growth of
+14%. The team’s success in driving high value product growth is
underpinned by our superior value proposition. We are homeowner
focused, customer and contractor driven, providing the entire value
chain with world class products and services.”
Speaking to adjusting to the dynamic market conditions, Mr.
Erter stated, “We are managing quickly and decisively to accelerate
our competitive advantages through this market downturn and we view
this time as an opportunity. We are focused on five key areas: (i)
continued strong execution of our strategy, (ii) driving profitable
volume share gain, (iii) effectively balancing our manufacturing
network, (iv) optimizing SG&A for the current market
environment and (v) continuing to invest in profitable growth.
We have made adjustments to our manufacturing networks in all
three regions. We did this by reducing our shifts and changing
shift patterns. We believe we will achieve a lower unit cost based
on our adjustments while providing flexibility to ramp up as we see
signs of housing market recovery.
We also reduced SG&A headcount to ensure alignment with our
strategic needs. In addition, we have lowered our discretionary
SG&A spend in the second half of FY23 compared to the first
half. We continue to significantly invest in strategic growth
initiatives, and believe we are entering FY24 at the appropriate
SG&A spend level. We will continue to strategically invest in
growth initiatives, including adding the right talent, and
investing in marketing to all members of our value chain. Regarding
marketing, the adjustments we have made are to better balance our
investments across our various mediums and audiences with a focus
on targeted conversions and share gain, while continuing to
increase brand awareness.
Most importantly we remain aggressive, and we are laser focused
on driving profitable volume share gain in every region and segment
we do business in.
We are being agile and adaptive in responding to significant
changes in market conditions, but we are also being thoughtful and
focused on where we can accelerate our competitive advantages. We
have the right solutions that our customers are seeking coupled
with a team dedicated to delivering differentiated results.”
Third Quarter Fiscal Year 2023 Results Compared to Third
Quarter Fiscal Year 2022 Results
Global: Global Net Sales declined 4% to US$860.8 million, while
Global Adjusted EBIT decreased 19% to US$165.4 million. Global
Adjusted Net Income decreased 16% to US$129.2 million. Global
Adjusted EBIT margin of 19.2% was achieved through continued
operational improvements and the delivery of a high value product
mix offset by high input costs, reduced volumes and our ongoing
investment in growth initiatives.
North America Fiber Cement Segment: Net Sales remained flat at
US$645.4 million. Volumes declined 10%, adversely impacted by the
new construction housing market slowing sharply as well as a softer
repair and remodel market. However, this was offset by ongoing
execution of our high value product mix strategy that delivered
Price/Mix growth of +10%, which was underpinned by robust
ColorPlus™ volume growth of +18%. LEAN manufacturing initiatives
continued to generate improved performance across the North
American manufacturing network. However, lower volumes and high
input costs led to a 5% decline in EBIT to US$174.1 million. The
EBIT margin contracted 140 basis points to 27.0%.
Asia Pacific Fiber Cement Segment: Net sales decreased 13% to
A$171.2 million. Volumes declined by 19% and were adversely
impacted by softening demand as well as customers reducing
inventory levels in Australia and New Zealand. Execution of our
high value product mix strategy led to Price/Mix growth of +6%.
EBIT decreased 21% to A$42.3 million, at an EBIT margin of
24.7%.
Europe Building Products Segment: Net Sales increased +4% to
€101.2 million. Volumes declined 10%, as the housing market
remained weak throughout our European markets. However, this was
more than offset by strong Price/Mix growth of +14%. EBIT decreased
86% to €1.5 million, with an EBIT margin of 1.5%. The EBIT margin
declined by 920 basis points, primarily due to restructuring costs,
the impact of inflation on key input costs as well as reduced
volumes.
Capital Resources
Operating cash flow generation of US$432.1 million in the first
nine months of fiscal year 2023 was driven by profitable organic
sales growth, partially offset by an increase in working capital.
Working capital increased by US$54.2 million primarily due to
increased inventory levels globally and lower accounts payable
balances, partially offset by lower accounts receivable.
James Hardie Chief Financial Officer, Jason Miele, stated, “Our
Capital Allocation Framework was updated in November 2022 and
matches who we are: a growth company. The number one and primary
focus of our Capital Allocation Framework is to invest in organic
growth; our 5-year average Adjusted ROCE of 36% is proof that
investing in our growth should be our number one use of capital. As
announced in November, we return excess capital to shareholders via
a share buyback rather than a dividend as it provides a growth
company the optimal flexibility to ensure investment in organic
growth is prioritized, while maintaining financial strength and
flexibility through cycles. Through these cycles we will target an
average leverage ratio below 2.0x. In December, we commenced our
share buyback program, and during the quarter we bought back 1.6
million shares for total consideration of US$31.2 million.”
Sustainability
At James Hardie, we are all committed to Building Sustainable
Communities and we recognize that keeping environmental and social
considerations at the core of everything we do is fundamental to
our success.
Commenting on sustainability, Mr. Erter said: “The decisions we
make each day must be environmentally and socially responsible to
create sustainable value for homeowners, our customers and our
investors. The Company’s sustainability progress reflects the
efforts of our global team, whose passion and commitment drives the
success of our business outcomes in a sustainable way.”
For more on our commitment to Sustainability including our
goals, see our FY22 Sustainability Report at
https://www.jameshardie.com/why-hardie/sustainability
Outlook and Earnings Guidance
Based on our lower than expected second half volume results in
both North America and APAC and restructuring charges incurred in
the second half, management has lowered the fiscal year 2023
Adjusted Net Income guidance range. The updated 2023 Adjusted Net
Income guidance range is US$600 million to US$620 million, changed
from the prior range of US$650 million and US$710 million. The
comparable prior year Adjusted Net Income for fiscal year 2022 was
US$620.7 million.
James Hardie’s guidance is based on current estimates and
assumptions and is subject to several known and unknown
uncertainties and risks.
Key Financial Information
Q3 FY23
Q3 FY22
Change
9 Months FY23
9 Months FY22
Change
Group (US$ millions)
Net Sales
860.8
900.0
(4) %
2,859.3
2,646.5
8%
Adjusted EBIT
165.4
204.1
(19%)
592.3
590.3
—%
Adjusted EBIT Margin (%)
19.2
22.7
-3.5 pts
20.7
22.3
-1.6 pts
Adjusted Net Income
129.2
154.1
(16%)
459.3
443.2
4%
Operating Cash Flow
432.1
553.3
(22%)
North America Fiber Cement (US$
millions)
Net Sales
645.4
644.9
—%
2,136.1
1,857.3
15%
EBIT
174.1
183.3
(5%)
578.7
535.1
8%
EBIT Margin (%)
27.0
28.4
-1.4 pts
27.1
28.8
-1.7 pts
Asia Pacific Fiber Cement (A$
millions)
Net Sales
171.2
196.5
(13%)
582.4
577.2
1%
EBIT
42.3
53.6
(21%)
149.7
164.6
(9%)
EBIT Margin (%)
24.7
27.3
-2.6 pts
25.7
28.5
-2.8 pts
Europe Building Products (€
millions)
Net Sales
101.2
97.6
4%
314.0
305.5
3%
EBIT
1.5
10.4
(86%)
17.3
38.1
(55%)
EBIT Margin (%)
1.5
10.7
-9.2 pts
5.5
12.5
-7.0 pts
Further Information
Readers are referred to the Company’s Condensed Consolidated
Financial Statements and Management’s Analysis of Results for the
third quarter ended 31 December 2022 for additional information
regarding the Company’s results, including information regarding
income taxes, the asbestos liability and contingent
liabilities.
Management Briefing for Analysts, Investors and Media
James Hardie will conduct a teleconference and audio webcast for
analysts, investors, and media on Tuesday 14 February 2023, 9:00am
Sydney, Australia time (Monday 13 February 2023, 5:00pm New York
City, USA time). Analysts, investors, and media can access the
management briefing via the following:
All participants wishing to join the webcast, please use the
following link:
https://edge.media-server.com/mmc/p/uk82i4ue
All participants wishing to join the teleconference will need to
pre-register by navigating to:
https://s1.c-conf.com/diamondpass/10028036-61ap3z.html
Once registered, you will receive a calendar invite with dial-in
numbers and a unique PIN which will be required to join the
call.
Webcast Replay: Will be available after the Live Webcast
concludes at https://ir.jameshardie.com.au
Use of Non-GAAP Financial Information; Australian Equivalent
Terminology
This Media Release includes financial measures that are not
considered a measure of financial performance under generally
accepted accounting principles in the United States (GAAP), such as
Adjusted net income and Adjusted EBIT. These non-GAAP financial
measures should not be considered to be more meaningful than the
equivalent GAAP measure. Management has included such measures to
provide investors with an alternative method for assessing its
operating results in a manner that is focused on the performance of
its ongoing operations and excludes the impact of certain legacy
items, such as asbestos adjustments. Additionally, management uses
such non-GAAP financial measures for the same purposes. However,
these non-GAAP financial measures are not prepared in accordance
with GAAP, may not be reported by all of the Company’s competitors
and may not be directly comparable to similarly titled measures of
the Company’s competitors due to potential differences in the exact
method of calculation. The Company is unable to forecast the
comparable US GAAP financial measure for future periods due to,
amongst other factors, uncertainty regarding the impact of
actuarial estimates on asbestos-related assets and liabilities in
future periods. For additional information regarding the non-GAAP
financial measures presented in this Media Release, including a
reconciliation of each non-GAAP financial measure to the equivalent
GAAP measure, see the section titled “Non-GAAP Financial Measures”
included in the Company’s Management’s Analysis of Results for the
third quarter ended 31 December 2022.
In addition, this Media Release includes financial measures and
descriptions that are considered to not be in accordance with GAAP,
but which are consistent with financial measures reported by
Australian companies, such as EBIT and EBIT margin. Since the
Company prepares its Condensed Consolidated Financial Statements in
accordance with GAAP, the Company provides investors with
definitions and a cross- reference from the non-GAAP financial
measure used in this Media Release to the equivalent GAAP financial
measure used in the Company's Condensed Consolidated Financial
Statements. See the section titled “Non- GAAP Financial Measures”
included in the Company’s Management’s Analysis of Results for the
third quarter ended 31 December 2022.
Forward-Looking Statements
This Media Release contains forward-looking statements and
information that are necessarily subject to risks, uncertainties
and assumptions. Many factors could cause the actual results,
performance or achievements of James Hardie to be materially
different from those expressed or implied in this release,
including, among others, the risks and uncertainties set forth in
Section 3 “Risk Factors” in James Hardie’s Annual Report on Form
20-F for the fiscal year ended 31 March 2022; changes in general
economic, political, governmental and business conditions globally
and in the countries in which James Hardie does business; changes
in interest rates; changes in inflation rates; changes in exchange
rates; the level of construction generally; changes in cement
demand and prices; changes in raw material and energy prices;
changes in business strategy and various other factors. Should one
or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described herein. James Hardie assumes no
obligation to update or correct the information contained in this
Media Release except as required by law.
This media release has been authorized by the James Hardie Board
of Directors.
James Hardie Industries plc is a limited liability company
incorporated in Ireland with its registered office at Europa House,
2nd Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20,
Ireland
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230213005648/en/
Investor/Media/Analyst Enquiries: James Brennan-Chong
Director of Investor Relations and Market Intelligence
Telephone: +61 2 9638 9205 Email:
media@jameshardie.com.au
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