James Hardie Reports Fourth Quarter FY26 and Full-Year FY26 Results; Provides FY27 Outlook

Fourth Quarter Highlights

Net Sales of $1.40 Billion, an Increase of 45% Year Over Year; Organic Net Sales Decreased 1%

Net Income of $29 Million, Adjusted EBITDA of $381 Million, Exceeding Guidance and Expectations

Full Year Highlights

Net Sales of $4.84 Billion, an Increase of 25% Year Over Year; Organic Net Sales Decreased 2%

Net Income of $104 Million, Adjusted EBITDA of $1.27 Billion, Exceeding Guidance and Expectations

Cost Synergies Ahead of Schedule, Commercial Synergies On Track

FY27 Outlook

Company Targeting Pro Forma Adjusted EBITDA Growth of 4% to 8% in FY27; Organic Growth Expected in Siding & Trim

FY27 Free Cashflow of $500+ Million Expected, an Increase of more than $200+ Million Year Over Year

CHICAGO--(BUSINESS WIRE)--James Hardie Industries plc (NYSE / ASX : JHX) ("James Hardie" or the "Company"), a leading provider of exterior home and outdoor living solutions, today announced results for its fourth quarter ending March 31, 2026.

Aaron Erter, CEO of James Hardie said, "We delivered Adjusted EBITDA above our guidance range in the fourth quarter, reflecting disciplined execution and the strength of our business model in a challenging operating environment. Despite unfavorable weather in February and early March that impacted reported results and disrupted construction activity across key regions, the business delivered underlying performance that exceeded expectations."

Mr. Erter added, “Fiscal 2026 was a transformational year for James Hardie, highlighted by the closing of the AZEK acquisition. As we integrate the businesses, we are seeing continued progress across both cost and commercial synergies, further strengthening our belief in the long-term value creation opportunity from the combination. For the full fiscal year, we delivered solid financial performance despite a challenging operating environment. Despite our markets declining mid-to-high single digits for the year, our organic net sales declined just 2% year over year. We finished the year with Adjusted EBITDA of $1.27 billion and Adjusted EBITDA margin of 26.2%. We delivered strong flow-through on our cost actions and realized meaningful benefits from the operational initiatives implemented throughout the year, positioning the business for improved margin performance moving forward.”

Mr. Erter concluded, “Inflationary and affordability pressures continue to weigh on housing activity. We are focused on what we can control: our cost base, pricing discipline, and providing exceptional products and service to our customers. Against that backdrop, we enter fiscal year 2027 with confidence. We see customers responding to our differentiated products, strong brands, and go to market strategy of the combined company. We are making solid progress on the integration and have surpassed our FY26 cost synergy target. That puts us ahead of plan and increases our confidence in achieving our $125 million cost synergy target ahead of our original three-year timeline. On the commercial front, based on recently signed agreements and the activity we’re seeing in the market, we have confidence in reaching our $125 million run-rate commercial synergy milestone exiting FY27. We also expect a meaningful step-up in Free Cash Flow to greater than $500 million in FY27. This will be driven by higher Adjusted EBITDA as we realize both cost and commercial synergies, a reduction in one-time integration and transaction-related costs, and continued discipline around capital spending and working capital. As these factors come together, cash conversion will improve, giving us greater flexibility to reduce leverage over time.”

Siding & Trim net sales increased 7% compared to the quarter ended March 31, 2025, driven by the contribution from AZEK Exteriors. On an organic basis, net sales declined 7%, reflecting lower volumes from softer market demand, partially offset by price/mix.

Exterior product volumes declined low-double digits in the quarter, with Single-Family down mid-double digits, partially offset by Multi-Family growth of low-single digits. Interior product volumes declined high-single digits. The decline in Single-Family Exteriors was driven by softer new construction activity, particularly in the Southeast and Western regions, where the Company has strong exposure to large national homebuilders. Texas, the Company’s largest region by volume, declined high-single digits year-over-year but improved approximately 25% sequentially, though activity remains below historical levels.

For the full fiscal year, Exterior product volumes declined high-single digits, with Single-Family down low double digits and Multi-Family up mid-single digits. Interior product volumes declined low-double digits. Geographic trends were consistent with the fourth quarter, with the Southeast and Western regions representing the primary areas of weakness. Texas declined low-double digits year-over-year.

Market conditions remained challenging, with subdued building activity and ongoing affordability pressures. Siding & Trim experienced weather-related volume headwinds in February and early March, reflecting its geographic exposure across key new construction markets. Year-over-year comparisons were further impacted by elevated channel inventory levels in the prior year, creating an additional headwind to current quarter volumes.

Fourth quarter and full year reported operating income margins of 19.1% and 22.3% decreased 910 and 710 basis points year-over-year, respectively, primarily reflecting AZEK acquisition-related expenses, amortization of acquired intangibles, and restructuring charges. Adjusted EBITDA margin, which excludes these items, decreased 140 basis points year-over-year in the quarter to 33.0%, and decreased 290 basis points for the full year to 32.1%. Volume declines in the quarter weighed on year-over-year margins, partially offset by improved decremental margins reflecting cost actions and disciplined SG&A management. The quarterly decline was further impacted by marketing-related costs associated with the integration of the two companies, as previously committed contractor events, trade shows, and sales meetings from both organizations were held in the quarter, as well as the allocation of certain R&D expenses held at the corporate level not previously included in the segment. These headwinds were partially offset by mid-single-digit average net sales price increase.

As volumes recover, the Company expects to benefit from strong incremental margins driven by the deployment of the Hardie Manufacturing Operating System for improved manufacturing utilization across the network.

DR&A net sales increased +5% compared to the quarter ended March 31, 2025, prior to the acquisition, driven primarily by price/mix improvement, as volumes were essentially flat year-over-year. Adjusted EBITDA margin was 28.2% reflecting the benefit of top-line growth.

During the quarter, the Company fulfilled strong early buy orders, resulting in elevated channel inventory levels as sell-through, which was up low-single-digits, moderated in February and early March due to weather related disruptions. In response, we reduced production exiting the quarter to better align with channel conditions. We expect a temporary P&L impact in the first quarter of FY27 as this inventory is absorbed.

In addition to cost synergies, the runway for margin improvement in Deck, Rail & Accessories is supported by continued progress in recycled material usage and formulation optimization, improved utilization across the manufacturing network, and the application of the Hardie Operating System ("HOS").

We continue to execute our proven growth strategy focused on material conversion from wood, share gains, and product innovation. Recent introductions — including new railing and accessory offerings launched in early 2026 — have been well received, expanding our portfolio and enhancing both aesthetics and functionality for homeowners and contractors.

We remain focused on driving downstream demand through contractor engagement while selectively expanding our channel presence. James Hardie's combination with AZEK continues to support growth through expanded distribution, incremental shelf space and a more comprehensive exterior solutions offering.

Net sales increased +18% in the quarter, or 6% in the Australian dollar, with mid-single digit volume growth and low-single digit average net sales price growth in Australian dollars. Adjusted EBITDA margin of 35.8% increased 130 basis points in the quarter as volume growth and lower cash costs reflecting favorable raw material prices and improved manufacturing performance drove strong operating leverage. This improvement was modestly offset by the allocation of R&D costs not previously charged to the segment and slightly higher SG&A costs, primarily marketing-related.

The Company is focused on driving growth in Australia and New Zealand by evolving from a fiber cement business to a broader building products platform. The strategy centers on defending and extending our core fiber cement operations while accelerating adoption of whole home solutions to better align with changing customer preferences and modern building design trends. While market conditions remain challenged, the ANZ team continues to focus on operational execution, including advanced manufacturing initiatives and HOS productivity improvements to support margin expansion and consistent profitability.

Net sales increased 13% in the quarter, or 2% in Euros, driven by low-single digit volume growth, an FX tailwind, and flat price/mix realization. Operating Margin of 9.4% decreased 50 basis points year over year. EBITDA margin of 14.9% decreased 130 basis points year over year, reflecting a prior year one-time item that did not repeat, commissioning costs associated with our new Orejo production line and higher freight to support fiber gypsum growth. These headwinds were partially offset by favorable raw material purchasing, as well as improved plant performance.

Markets across Europe remain challenged, particularly in Germany, the Company’s largest market, where recovery is expected to be gradual. Against the backdrop, we remain focused on improving profitability of our core fiber gypsum business through product innovation and continued optimization of our operating network.

We are prioritizing our higher-margin, innovation-led product portfolio, including flooring systems and underfloor heating solutions, which continues to deliver strong growth and attractive returns. We also see an opportunity to expand in adjacent applications, including fire protection and prefabricated construction, where our differentiated product performance and sustainability advantages support continued share gains. Margin expansion is expected to be driven by operating leverage from sales growth, alongside ongoing efficiency initiatives, including manufacturing optimization, logistics improvements and HOS productivity actions.

Q1 FY27 Guidance and Full Year Planning Assumptions

Turning to guidance, Ryan Lada, CFO, said, “The operating environment remains uncertain. We are not assuming a market recovery. What gives us confidence is execution — synergy realization, our enhanced go-to-market model, manufacturing cost actions taken in FY26, and disciplined capital allocation. In forming our fiscal year 2027 outlook, we assessed a broad range of macroeconomic indicators, including commentary from large homebuilders, repair and remodel market trends, channel inventory levels across our distribution network, and broader consumer sentiment.

In Siding & Trim, channel inventories have normalized and visibility has improved. We expect to return to organic growth, driven by repair and remodel expansion in underpenetrated regions, improved product mix, and the contribution of commercial synergies from the combined platform.

In Deck, Rail & Accessories, we expect above-market performance for the full year, supported by product innovation, channel expansion, and contractor conversion.

At the total company level, we expect earnings growth, driven by synergy realization, manufacturing cost improvements, and disciplined execution. We also expect Free Cash Flow to improve meaningfully in FY27, driven by higher profitability and the roll-off of most integration and acquisition-related costs we had in FY26."

We provide certain of our outlook on a non-GAAP basis, as we cannot predict some elements that are included in reported GAAP results, including the impact of actuarial estimates on asbestos-related assets and liabilities in future periods. Refer to the discussion of non-GAAP financial measures below for more details.

Full Year Planning Assumptions Are As Follows:

• Net Sales for Siding & Trim: $3.04 to $3.13 billion
• Net Sales for Deck, Rail & Accessories: $1.11 to $1.15 billion
• Total Net Sales: $5.25 to $5.41 billion
• Adjusted EBITDA for Siding & Trim: $1.02 to $1.07 billion
• Adjusted EBITDA for Deck, Rail & Accessories: $333 to $343 million
• Total Adjusted EBITDA: $1.45 to $1.50 billion
• Free Cash Flow: At Least $500 million

Now Turning To The First Quarter:

Siding & Trim enters Q1 with normalized channel inventory and improved visibility. In Deck, Rail & Accessories, channel inventories are slightly elevated following strong early buy orders and weather-related sell-through softness in February and early March. We expect a near-term P&L impact in Q1 as inventory normalizes. The full year outlook for the segment is unchanged.

First Quarter Guidance Assumptions Are As Follows:

• Net Sales for Siding & Trim: $758 to $781 million
• Net Sales for Deck, Rail & Accessories: $291 to $300 million
• Total Net Sales: $1.32 to $1.35 billion
• Adjusted EBITDA for Siding & Trim: $256 to $272 million
• Adjusted EBITDA for Deck, Rail & Accessories: $78 to $82 million
• Total Adjusted EBITDA: $354 to $375 million

Operating cash flow totaled $589.8 million for the twelve months ended FY26, driven by net income adjusted for non-cash items of $806.7 million, partially offset by $107.0 million of asbestos claims and handling costs paid and higher working capital of $33.9 million. Capital expenditures were $383.9 million.

Our capital allocation priorities for FY2027 are straightforward: invest in organic growth, deploy capital expenditures with discipline, and reduce leverage. We are targeting approximately 2.0x net leverage by the end of the second quarter of fiscal year 2028.

Capital expenditures for FY2027 are expected to be in the range of approximately 6% to 7% of net sales, reflecting maintenance and targeted growth investments across the manufacturing network. Our current footprint is well positioned to support demand across both fiber cement and decking, and we do not anticipate the need for significant new capacity in the near term.

The previously announced closures of our Fontana, California and Summerville, South Carolina facilities are expected to generate approximately $25 million in annualized cost savings beginning in FY2027.

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