James Hardie Industries plc Q2 FY2026 earnings call

• Announced Nigel Stein as Chair of the Board, creation of Integration and Performance Committee, Rachel Wilson's departure, and Ryan Lada as CFO.
• Second quarter results consistent with prerelease, modestly raising full-year guidance due to stabilized market conditions.
• Siding & Trim segment facing mixed conditions, focusing on growth plans like cost reduction pilots in Detroit, Pittsburgh, etc., simplified product lineup with Boise Cascade, and Intuitive Edge training programs.
• Deck, Rail & Accessories segment performing strongly with mid-single-digit sell-through growth, TimberTech outperforming, and new product like TimberTech Advantage Rail.
• Integration with AZEK on track, surpassing first-year cost synergy goal, targeting $125M total cost synergy.

Siding & Trim: Net sales were up 10%, including $89 million from a full quarter of AZEK. Organic net sales declined 3% in the quarter, with adjusted EBITDA $224 million and margin 29.2%. Deck, Rail & Accessories: Net sales increased 6% on a pro forma basis, with adjusted EBITDA $79 million and margin 30.7%. Australia and New Zealand: Net sales declined 10% in USD, with adjusted EBITDA down 19%. Europe: Net sales up 18% in EUR, with adjusted EBITDA margin 15.3% up 80 basis points.

• For Siding & Trim, raising net sales guidance to $2.925 to $2.995 billion and adjusted EBITDA guidance to $920 million to $955 million.
• For Deck, Rail & Accessories, modestly increasing net sales guidance low end to $780 million, high end remaining $800 million, with adjusted EBITDA $215 million to $225 million.
• Total company adjusted EBITDA guidance $1.20 billion to $1.25 billion.

• Dynamic market conditions affecting new construction.
• Raw material inflation and inventory tightening concerns.
• Competition in the decking and railing market.

Q: Trevor Allinson with Wolfe Research asked about trends in Siding & Trim, particularly builder customers in the South.

A: Aaron Erter said new construction has softened but not as significantly as previously factored, with regional variations in market conditions.

Q: Keith Hughes with Truist asked about price in the decking business.

A: Aaron Erter and Jonathan Skelly said they've taken price and will remain consistent, expecting to continue taking inflationary pricing.

Q: Lee Power with JPMorgan asked about core reasons for struggles with ColorPlus in the Northeast.

A: Aaron Erter said it's about decreasing price differential vs. inferior substrates and they're seeing progress with pilots and partnerships.

Q: Ryan Merkel with William Blair asked about margins and improvement in the second half.

A: Aaron Erter said they expect benefits from cost initiatives, price/mix, and manufacturing network optimization.

Q: Tim Wojs with Baird asked about cost synergies.

A: Aaron Erter said they've achieved 85% of G&A cost synergy target and are focused on realizing them.

Q: Peter Steyn with Macquarie asked about one-step dealer network.

A: Aaron Erter said they have strong relationships with one-step dealers, highlighting value of combined brands.

Q: Philip Ng with Jefferies asked about scaling on-the-wall cost reduction pilots.

A: Aaron Erter said they're scaling up in the back half, targeting to double ColorPlus volume through the initiative.

Q: Keith Chau with MST Marquee asked about Siding & Trim quarterly margins.

A: Aaron Erter and Joe Ahlersmeyer explained volume declines, price realization, and decrementals relative to volume changes.

Q: Adam Baumgarten with Vertical Research asked about customer outlook for calendar '26.

A: Jonathan Skelly said backlogs are consistent, outdoor living is a tailwind, and they're seeing stable market conditions.