Shares in James Hardie Industries opened up 10% at A$33.35, tracking overnight gains in the United States, after the building products group lifted guidance for the September quarter.
The company now expects second-quarter sales of US$1.29 billion to US$1.30 billion and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$326 million to US$331 million, ahead of the prior corresponding period’s US$263 million. However, adjusted net income is guided to US$151 million to US$157 million, which is flat to lower than the US$157 million recorded a year earlier, and adjusted diluted earnings per share is forecast at US26 cents to US27 cents versus US36 cents in the prior period.
Chief executive Aaron Erter said full-year guidance will be provided on the second-quarter earnings call on November 19 (AEDT). “Our Siding & Trim sales performance exceeded the expectations reflected in our modeling considerations," he said. "Siding & Trim second quarter organic net sales fell low single-digits vs. the prior year, and distributors and dealers reduced inventory less than we had anticipated. Even as single-family new construction remains challenging, our customers’ commitment to ensuring the availability of our products demonstrates the importance of our brand and strong partnerships. We are encouraged by our second quarter results and believe the outlook for Siding & Trim has modestly improved. We will provide an update to our full year guidance through March with our second quarter earnings call in November.”
Erter continued, “The integration of AZEK and our synergy capture initiatives remain on-track. AZEK performed well in the second quarter, with mid-single digit growth in both net sales and sell-through for Deck, Rail & Accessories vs. the prior year. While our fiscal third quarter, ending December 31st, is traditionally the seasonally smallest for Deck, Rail & Accessories shipments, it remains a key period when dealer partners make shelf space plans for the following year’s selling season. We have clear opportunities to secure incremental shelf space for our Deck, Rail & Accessories products and expand James Hardie Siding & Trim into AZEK’s loyal dealer network in key repair and remodel geographies. Our ability to deliver against these new business opportunities reflects the value proposition we bring to our customers through a comprehensive product portfolio, trusted brands and long-term partnerships. These shelf space opportunities represent early proof points that reinforce our confidence in our ability to drive commercial synergies next fiscal year.”
Erter, who faces shareholder scrutiny over potential remuneration outcomes at the upcoming annual meeting tied to the Azek acquisition, said the company will update investors further next month.