JHX Investor Day 2024 Presentation – Day Two

Rhea-AI Summary

James Hardie presented its Investor Day 2024 materials, revealing a strategic vision to reach ~25 million homes with its siding by 2035, doubling its market presence. The company aims for double-digit revenue growth by expanding capacity to ~8 billion standard feet and adding new machines at the Prattville and Cleburne facilities.

The Board approved a US$50 million increase in its share buyback program, totaling US$300 million. North American EBITDA margins are expected to expand by 500bps+, and adjusted EBITDA is projected to triple from the FY24 baseline.

CEO Aaron Erter and CFO Rachel Wilson emphasized the company's commitment to profitable growth and attractive shareholder returns.

Positive

• Aspirational goal to reach ~25 million homes by 2035.
• Projected double-digit revenue growth over the long term.
• Expansion of production capacity to ~8 billion standard feet.
• US$50 million increase in share buyback program, totaling US$300 million.
• Triple North American adjusted EBITDA versus FY24 baseline.
• Expansion at Cleburne facility to add 600 million standard feet capacity.

Negative

• Continued expansion subject to ongoing market conditions.
• High dependence on North American market growth and material conversion opportunities.

Insights

Financial Analyst

James Hardie's aspirations to increase the number of homes with their siding to ~25 million by 2035 signal strong ambitions for market expansion. To support this, they plan to boost production capacity by ~50%. This aligns with the company's historical trend of expanding through underlying market growth and material conversion opportunity. However, while ambitious, achieving double-digit revenue growth and expanding EBITDA margins by 500 bps in North America will require consistent market conditions and effective execution of their strategies.

The announcement of a $50 million increase in the share buyback program demonstrates confidence in cash flow generation and a commitment to returning value to shareholders. With $225 million already utilized, the remaining $75 million authorization could help bolster the stock price in the short term by reducing the supply of shares.

Retail investors should note that while the long-term growth framework is promising, the real impact will depend on market conditions and the company's ability to execute on its expansion plans without eroding profitability. The increased buy-back program could provide immediate shareholder value, but it also indicates management's expectation of maintaining strong cash flows.

Market Research Analyst

From a market perspective, James Hardie's plan to increase their market presence to ~25 million homes is ambitious, doubling from their current footprint. This growth hinges on continued demand in the residential construction sector, which can be influenced by factors such as interest rates, housing starts and economic conditions. The company's focus on aesthetics and durability has positioned it well within the market, but significant growth will also depend on maintaining competitive advantages and effectively marketing to new customers.

The announced capacity expansions, specifically the Prattville sheet machines 3 and 4 and the Cleburne facility expansion, indicate a proactive approach to meeting future demand. However, these expansions will require substantial capital investment and efficient integration into existing operations to avoid potential issues with scale.

For investors, the key takeaway is to watch how these strategic initiatives translate into actual market share gains and revenue growth. Long-term success will depend on the company’s ability to leverage its value proposition and navigate potential market fluctuations.

Announces Aspirational Goal Of ~25 Million Homes With James Hardie Siding By 2035

Shares Long-Term Financial Value Creation Framework

Announces Increased Share Buyback Program

SYDNEY & NEW YORK--(BUSINESS WIRE)-- James Hardie today released its Investor Day 2024 Presentation – Day Two Materials. This event is being held in New York, NY on Monday, 24 June 2024. Copies of this document are available on James Hardie’s Investor Relations website at ir.jameshardie.com.au.

Speaking to the company’s long-term aspirations, James Hardie CEO Aaron Erter said, “Over the last two decades, James Hardie products have improved the aesthetics and durability of 11+ million homes in North America. The underlying fundamentals of our end markets have never been more supportive of long-term growth. Enabled by our strategy of being Homeowner Focused, Customer and Contractor Driven™, we can aspire to more than double our presence in the market in the coming decade to ~25 million homes with James Hardie.”

Mr. Erter went on to discuss certain financial implications of this goal:

“Our ability to expand the reach of our products through capitalizing on underlying market growth and the material conversion opportunity, coupled with gaining share through our superior value proposition across the value chain allows us to aspire to double-digit revenue growth over the long-term”.

• To support capturing the opportunity inherent in these long-term aspirations:
  • The company expects to increase nameplate capacity to ~8bnsf from ~5.3bnsf, including Prattville sheet machines 3 and 4, subject to ongoing market conditions.
  • The James Hardie Board has approved to proceed with a Brownfield expansion at the Cleburne facility in Texas. This project will add 600 million standard feet of capacity through the addition of two sheet machines. On completion, the expanded Cleburne site will operate with five sheet machines with nameplate capacity of ~1.2 billion standard feet.

James Hardie CFO Rachel Wilson said, “The aspirations laid out today illustrate that we are a growth company, but we are also grounded as an organization around delivering profitable growth, sustaining our strong returns on capital and generating attractive returns to shareholders.”

• Specifically, management announced the following financial aspirations:
  • To expand North America EBITDA margins by 500bps+ versus the FY24 baseline.
  • To triple the company’s North American adjusted EBITDA versus the FY24 baseline.

Today, James Hardie also announced that its Board has approved a US$50 million increase to its existing share buyback program. The company can now purchase up to US$300 million of common stock as part of this program. As of 24 June 2024, US$225 million has been utilized, leaving a remaining authorization of US$75 million.

Joe Ahlersmeyer, CFA
Vice President, Investor Relations

This announcement has been authorized for release by the CEO Mr. Aaron Erter

View source version on businesswire.com: https://www.businesswire.com/news/home/20240624119709/en/

media@jameshardie.com.au

Source: James Hardie Industries plc

FAQ

What is James Hardie's goal for the number of homes with its siding by 2035?

James Hardie aims to reach approximately 25 million homes with its siding by 2035.

What are James Hardie's long-term revenue growth projections?

James Hardie projects double-digit revenue growth over the long term.

What is the increase in James Hardie's share buyback program?

James Hardie increased its share buyback program by US$50 million, bringing the total to US$300 million.

What is the projected expansion in North American EBITDA margins for James Hardie?

James Hardie aims to expand North American EBITDA margins by 500 basis points or more versus the FY24 baseline.

How much capacity will the new expansions add to James Hardie's production?

James Hardie's expansions will add approximately 2.7 billion standard feet of capacity, bringing the total to about 8 billion standard feet.

What is the timeline for James Hardie's Investor Day 2024 presentation?

James Hardie's Investor Day 2024 presentation was held on Monday, 24 June 2024.