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• Global net sales rose +22% to $900.0 million for the third quarter.
• Adjusted Net Income rose +25% to $154.1 million for the third quarter.
• Estimated Fiscal Year 2023 Adjusted Net Income guidance range of $740 million to $820 million.

James Hardie Industries plc (JHX), the world’s #1 producer and marketer of high-performance fiber cement and fiber gypsum building solutions, announced results for its third quarter fiscal year 2022, the three-month period ending Dec. 31, 2021.

Third Quarter Fiscal Year 2022 Highlights, Compared to Third Quarter Fiscal Year 2021, as Applicable:

• North America Fiber Cement segment net sales increased +24% to $644.9 million and adjusted EBIT increased +18% to $183.3 million, with an adjusted EBIT margin of 28.4%.
• Europe Building Products segment net sales increased +14% to €97.6 million and adjusted EBIT increased +18% to €10.4 million, with an adjusted EBIT margin of 10.7%.
• Asia Pacific Fiber Cement segment net sales increased +20% to A$196.5 million and adjusted EBIT increased +17% to A$53.6 million, with an adjusted EBIT margin of 27.3%.
• Global adjusted EBIT increased +22% to $204.1 million, with an adjusted EBIT margin of 22.7%.
• Global net sales increased +22% on global volume growth of +9%, as all three regions continue to deliver on the global strategy of driving high value product mix penetration.

James Hardie Interim CEO, Harold Wiens said:

“I am pleased to report the James Hardie team has continued to execute well on our stated global strategy. This is reflected in strong Price/Mix growth in all three regions, including North America Price/Mix growth of +12%, Europe Price/Mix growth of +13% and Asia Pacific Price/Mix growth of +11%.

"The team’s success in delivering high value products, which underpins Price/Mix, is the result of (1) enabling our customers to make more money by selling more James Hardie products and, (2) marketing directly to the homeowners to create demand of our high value products through our customers.”

Mr. Wiens continued, “The team and I are also pleased to have recently announced the release of the Hardie Architectural Collection. This collection is being debuted at the International Builders Show in Orlando this week and comprises an innovative portfolio of new products that lets the world re-imagine what’s possible for home exteriors.”

Commenting on the third quarter results, Mr. Wiens stated:

“The team’s execution on delivering our high value product mix strategy resulted in Global Net Sales increasing +22% to US$900.0 million with Global volume growth of +9%.” Mr. Wiens continued, “Global Adjusted EBIT increased +22% to US$204.1 million. The focus on a high value product mix combined with the execution of LEAN, has enabled us to absorb high input cost pressures and invest significantly in marketing, innovation and talent.”

Mr. Wiens concluded, “I believe our strategy, along with a world class leadership team and 5,000 committed and hard-working employees, will drive James Hardie to meet our mission of being a high-performance global company that delivers organic growth above market with strong returns.”

Third Quarter Fiscal Year 2022 Results Compared to Third Quarter Fiscal Year 2021 Results

Global Segment: Global net sales increased +22% to $900.0 million, while global adjusted EBIT increased +22% to $204.1 million. Global adjusted net income increased +25% to $154.1 million, compared to $123.3 million. The global adjusted EBIT margin of 22.7% was achieved through continued operational improvements and the delivery of a high value product mix, offset by high inflation and the ongoing reinvestment in growth initiatives.

North America Fiber Cement Segment: Net sales increased +24% to $644.9 million, driven by the continued execution of the high value product mix strategy that delivered price/mix growth of +12%, with strong volume growth of +12% in the quarter.

In addition to high value product mix, LEAN manufacturing initiatives continued to generate improved performance across the company’s North American manufacturing network, helping to deliver +18% adjusted EBIT growth to $183.3 million. The strong adjusted EBIT margin of 28.4% was achieved through the delivery of a high value product mix offset by the impact of high inflation and the ongoing reinvestment in growth initiatives.

North America President, Sean Gadd remarked:

“Our North America business delivered an outstanding quarter for Net Sales and EBIT, led by the team’s execution of the high value product mix strategy. With our commercial team partnering closely with our customers, our focus on creating demand by marketing directly to the homeowner, and the additional capacity provided by our on-time ramp up of our Prattville facility, we are well positioned to sustain growth above market and strong returns.

"I am particularly pleased with the momentum in Price/Mix throughout Fiscal Year 2022, which demonstrates the success of our strategy. I believe our North America business is well positioned for continued growth.”

Europe Building Products Segment: Net sales increased +14% to €97.6 million, as the company partnered with customers to drive a high value product mix, which resulted in price/mix growth of +13%. Fiber cement net sales grew +22% and fiber gypsum net sales grew +13%.

Adjusted EBIT increased +18% to €10.4 million, with an adjusted EBIT margin of 10.7%. The adjusted EBIT margin was reduced by 440 basis points due to the impact of €4.3 million hyperinflation on key energy prices.

Chief Financial Officer, Jason Miele remarked, “The European team’s execution on our high value product mix strategy is resulting in strong Price/Mix that is transforming the business. Momentum in margin expansion this quarter was significantly impacted by hyperinflation, however the European team has adjusted to these market dynamics and are on-track to return EBIT Margin to the mid-teens in the fourth quarter.”

Asia Pacific Fiber Cement Segment: Net sales increased +20% to A$196.5 million. Adjusted EBIT increased +17% to A$53.6 million, at an adjusted EBIT margin of 27.3%. The strong adjusted EBIT margin of 27.3% was achieved through the delivery of high value product mix offset by the impact of high inflation and the ongoing reinvestment in growth initiatives.

Mr. Wiens remarked, “The APAC team has delivered a strong set of results. The team’s focus on the high value products strategy and partnering closely with our customers allowed the business to deliver 11% Price/Mix.”

Capital Resources

The strong operating cash flow generation of $553.3 million in the first nine months was driven by continuous improvement in the LEAN manufacturing performance, strong profitable organic sales growth, and the integration of the company's supply chain with customers.

Working capital decreased by $19.9 million during the first nine months of fiscal year 2022. The company has achieved global LEAN savings of $185.8 million since the inception of LEAN, including $131.0 million LEAN savings in North America.

James Hardie CFO, Jason Miele, stated, “We continued to deliver strong cash flow generation in the first nine months, with operating cash flow of $553.3 million.”

Commenting on global capacity additions, Executive Vice President Global Operations, Ryan Kilcullen stated, “We are on the path to delivering a transformational global capacity expansion program. This capacity expansion program reflects our confidence in our ability to drive growth for our high value products by continuing to penetrate new and existing markets through innovation and marketing directly to the homeowners.”

Outlook and Earnings Guidance

Based on the continued, strong execution of the global strategy across all three regions and the expectation for continued residential and market growth in the US, the company is raising its guidance for fiscal year 2022, ending March 31, 2022. Management raised the fiscal year 2022 adjusted net income guidance range to $620 million and $630 million. The comparable prior year adjusted net income for fiscal year 2021 was $458.0 million.

Management is pleased to announce their fiscal year 2023 adjusted net income guidance range of $740 million and $820 million.

James Hardie’s guidance is based on current estimates and assumptions and is subject to several known and unknown uncertainties and risks, including those related to the COVID-19 pandemic.

James Hardie continues to assess the impacts and the uncertainties of the COVID-19 pandemic on the geographic locations in which it operates, and the continuing impact of the pandemic on the company’s business and future financial performance remains uncertain.