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James Hardie Industries (JHX)

Participants
Jack Truong CEO & Director
Jason Miele SVP & CFO
Brook Campbell-Crawford JPMorgan Chase & Co.
Peter Steyn Macquarie Research
Sophie Spartalis Bank of America Merrill Lynch
Peter Wilson Crédit Suisse
Lisa Huynh Citigroup
Andrew Scott Morgan Stanley
Abraham Akra Jefferies
Paul Quinn RBC Capital Markets
Keith Chau MST Marquee
Lee Power CLSA Limited
Call transcript
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Operator

Thank you for standing by, and welcome to James Hardie Industries' Q2 FY '21 Results Briefing Conference Call. Today's call will be hosted by Dr. Jack Truong, CEO; and Mr. Jason Miele, CFO. [Operator Instructions]. to conference like Dr. to now would hand over the CEO, I Truong. Jack Please go ahead.

Jack Truong

good you deliver begin everyone. on morning, our of afternoon, Good and been have Thank financial update the XXXX executing results call. how we an strategy our earnings for our I providing will to by global on progress on QX us joining consistently.

XXXX Jason QX and fiscal year our will first cover financial then Miele, Our CFO, results. half

relentless first, the Before around my to I execution like, quarter into net after hard tax and the I record for led total get all the have and operating colleagues company strategy, work, continued operating extend of and Hardie profit cash sales, presentation, to and contents on adjusted Their focus flow. thanks in on safety EBIT, gratitude global would its company to the achieving net health James world. adjusted

in strong sixth our financial of North as driven that success growth Asia Pacific. the company, our exceptional a of delivered have we X quarter delivering results. all And total and performance this markets operating Europe across and marks Our by straight America, was strong regions: returns

imperatives commitment strong improvement continuous employees' our been and these Our in instrumental delivering results. strategic to has

an Let's global turn update X now to strategy. Page for our on

can Now progress small big company back the toward consistent you James returns. in the of from August, big growth with being a strong to that I summary our company transforming of deliver share our with small, Hardie vision markets of a

a high-performing company. for Hardie significant X X we the in quarters, foundation past measurable the James made form actions having a took small over become While critical year to big and progress strong

unique production fiber strategy output, It operating started lean producer with we manufacturing Hardie efficiency. of HMAS, largest to transform world's from being quality important path be by in world-class that predictable less a becoming and more as to cement we plants, via a of would First, that Hardie it network continuous variations James manufacturing being a manufacturer. was means the on system, improvement executing our and

during consistently lower premium significant and products our X more the past a at has predictable years deliver to and efficiently customers cost. us service to Our market quality and progress subsequently the enabled to and

the commercial company. organization from organization. shifted It's of to pull being customer-focused focus a we organization Second, a the about being a push-pull

customer-focused Our true for focal business create company demand to with and of the service more They day would the Instilling point and only throughout installers for every with. customers the the to and are with them dealers, better mindset retailers is and products where our do we our are contractors creating value an builders, critical by strategy. distributors. be easier success the more our

strategic two markets growth a As operating in XX% EBIT foundational total our we in XX% margin operating results, year-over-year total increase delivered adjusted a result, of approaches, of company's in 'XX increase X% cash including adjusted tax a company's year and year-over-year America, North profit flow. after an fiscal strong XX% these net and of

results fiscal as far, performed a well, our XXXX, foundation company very continuing fiscal execute fiscal around on momentum consistent Thus global XXXX. now a established strong with have to year world building year deliver Now sell in that the in in and year teams we're financial XXXX, quarter-on-quarter.

to seamlessly them. they market want with has are integration need We operations ensured continuously mutual our the able service through that customers providing our when markets customers, the strengthen we our chain This and continue to engagement and products the for supply the of they benefits.

and customers for to with of working to enables our for share more us the caused accelerate add However the our marketplace. It global disruptions improve the pandemic value driving them to around capital world, engagement our demand more for it products the markets is opportunity their us in for gain and an in customers customers. our while

to XXXX, our positive strong X Our in Pacific. of enabled We record results for momentum year fiscal had consistent America, Europe returns total headed fiscal QX significant year second XXXX. in regions: financial includes North into Asia company all us growth half which of deliver XXXX above and and strategy and year execution market and into fiscal

in new will We expect our fiscal of to Toward Innovation growth performance in execute to and fiber to expand Hardie platform It this in continue and we approach end, third and and markets core strength what very will our about launch the into our company Europe continue I'm market to platforms. America, of well the adjacent access. technologies growth we on critical is year for to nature, allow beyond. gypsum transformation, fiber strategy importance well innovation North global of brand and the year leverage focus on excited our developing Australia build strength James the XXXX. consistent is profitable through beginning that will enable end and will year as platform to our very our at year to truly global fiscal global This XXXX us our of moving Of cement first our intention forward. and and future. deliver innovation the toward technologies and deliver enter this

year half have into our a shift initiatives in it's As progress of that big we second put continue we XXXX, to important place move strategic on into small, the the we fiscal company.

execute profitable to our our few consistent and continue growth on total deliver will We company. for critical initiatives

a remain to small It's company management and the on at years years progress is also August, within we back pleased Hardy teams transformation magnitude put have the us to to globally to quickly continues with better company. our holistically transform decisions This we keep management mentioned ago. in enabled underpinning continue not company. this and Critical big James I two for transformation system easy. connected place the allow big various very the success make this making the appropriate to two I levels adjustments right a past of system As a to track. to in be transformation integrated from small the

Now let's X. Page turn to

back I our performance to take This years. get XX want the the a put progress into some over we past financial initiatives, will into some Before results on context. details our step and global some perspective also of provide our on recent core of

the and them. is that indicative of is manufacturing not you company in and understand I'm per global true connected left-hand its margin in connected they black For right integrated net by in a demand will of quarter company in globally represents the and represents line What describing high clarity, units, a the fiscal on Starting also U.S. a a adjusted deliver that XXXX, the by of volatility side, the green global consistent need the is and connected cost with profitability. lean products that year what chart it line degree is a markets to company right notice to small company. steady sales dotted EBIT and is quarter. period the as sales millions methodology globally where This global of have variability a processes adjusted did between time right XXXX a margin fiscal dollars, growth. of with big high the customers year has global EBIT albeit over flow not under indicative and slower not It's of a when customers operating to variability the show that closely percentage

begin you the we to where you small journey big right, As our however, become toward see transformational move will to a started company.

of Fermacell. our fiscal a in acquisition of to new QX started in Europe First, we and year integration with 'XX, create James Hardie

will of reduce the fiscal processes we Through see transformation. point we the of improve inflection variability processes of cost this that plants, declined lean began manufacturing we're integration point and our reductions. as manufacturing rebound. of global global notice on on of of able EBIT time would to 'XX, QX year in over margin with in across manufacturing largely inflection our as consequently, result a predictability the information network You as the EBIT me and second acquisition, capabilities output lean progress brings you and a the margin Which of this to

improvement This we primary EBIT and our a improvement are initiated the now began significant You effort for strategic in point to where third instrumental year QX on from savings push-pull. inflection the from can was margin fiscal real across installers of value organization our this as we concerted shortly to shift various contractors a me customers connection cost transformation our maintaining and global transformation focus to Which predictability solely true we XXXX, to our in of to pull after our variability various installers in significant in network. commercial see translated all. and focus driving contractors who on reduction bring in the the into

to started our we more the with partnerships As returns. growth follows, we share, strong and customers, results develop financial as drive meaningful deliver gain

consistent into replicate the continue European growth. businesses, start our and see strategies we APAC As true we global to American North to

In fact, XXXX, our pull integration it record is shift to and financial worldwide results important lean to now led X from push-pull, strong Hardie QX which milestones: transformation; delivering in of fiscal Fermacell; that James the Xth the delivering results. execution is of the directly of year of straight also quarter

drive James continued to combined a of lean review What increased I this world, across consistent integration big accelerated the sales focus would with that small reaffirmed global the is strategy prior small the market-led on Hardie profitable being moving On would EBIT innovation that a pick X-year forward. chart slide, company, big with company. manufacturing, from growth margins customers

turn to Page X. Now let's

processes journey becoming share critical our mentioned, with was of financial Today, via began. one capabilities and to and lean actions the the of beginning we year we across our implement wanted since Manufacturing Operating impact I fiscal in when the of our XXXX network System manufacturer. lean just year objective fiscal XXXX made the significant to plants of Hardie a I As took world-class

savings, million to through cost On the to America close we year fiscal inception, you date. to 'XX fiscal generated million baseline in North left-hand see lean. $XX goods the year million $XX 'XX, generated sold year progress the And we of close USD since XX delivered first savings. In close XX quarterly fiscal side, savings of in costs. In strong we to which is months 'XX, in due cumulative X can year-to-date to months

execution XX% our of North operating Now savings, an lean cost incremental unlocked plants. across capacity consistent of American network in also addition the to

core the cost baseline savings sold with see line goods Global million the to lean APAC utility $XX-plus past lean total million will North FY global progress, months. Moving a lean right-hand 'XX now XX side, during our savings in follow generated inception. $XX and which versus Europe American since the of results. you in savings

only operational North our across operations, American unit unlocked network incremental an lean capacity Our plants. cost per of lower outcome also deliver program of it for our not a XX%

it impact engagement While lean has had impressive financial our some on retention. returned I'm the employee just focus as with has results, on pleased and

lean an thank unlocking to I year practices lean and have continue I our most safely incremental a with a as their employee around delivering execution been in in retention to This North in HMOS lean manufacturing America, example, in work for that in would of was have results. while As instrumental increased through meet savings, what the to staff to take critical in all they stand was we globe, marketplace. drive moment while impressed with initiative. safe success turnover like to commitment XX% initiatives cut the our in really as epidemic, continued half. to fiscal But our capacity the momentum manufacturing is operators all been demand of manufacturer maintaining employees 'XX the rate

partnership XXXX, of to of about through end-to-end mutual now customers chain. X. facets about engagement our in a integration benefits. all year This critical concert initiative increased supply In supply where one is is our chain customer together working of Turning fiscal true Page and to

with involves incorporation to James which, supply through need value us them of when and products builders in operations demand and they chain contractors. Specifically, signal them they turn, customers' want, the of them the Hardie this through chain the flow enable into our provide sites

critical earnest earlier elements results of year, One our in fiscal have the started been date outstanding. of to this strategy this

is slide, this dark growth shaded breakout of notice can American in declines will On the past you $XXX million XX% year months, increased in X $XX of the the North quarter of the quarterly the sales or side to third - decreased that North million in sales American QX the What line. black and net the see of this year the year. you over that left-hand fiscal fiscal inventory net bars green XXXX,

Simply customers decreased helped drive While the process. but $XX we while at ours. only market across I'm supply and partnership fiscal our inventory efficient as value through capital $XXX plants and total now pleased not has efficiency in more to the improved growth sales this working chain to with flow able sites of helping to engagement as the up working to same help of plants to to through predictable freed the customers' job and improve to I from the million. our customers, million very integration XX% capital gain, critical or put, and chain products increase truly share valuable integration also the well our customers. time, strong our XXXX of through well capital Throughout serve customers expect this year of to more the were beyond. our optimization, continue developing remainder And the and network working

to moving Now X. on Page

in years, can the year in you trend cash see side, shown left-hand X over operating the periods. the flow past the half On

good the continuous a chain success The growth, profitable coupled led a lean our years. customers operating in cash to improvement step summary the X our the strong supply slide integration and in is strategy think I flow. change our past our of has manufacturing performance in with over our of sales this to

of discuss This XXX financial our end XXXX. X.XXx both leveraged growing cash lapse a CFO, execution ratio of reinstatement confidence million balance lowered as of change million. our in For flow in $XXX.X USD our cash to in high by operating the highly announce demonstrated capability was of cash This today half and year the volatile previous put markets, this our to the in results. to of this our the corresponding and would additional further XXXX, and to increase liquidity XX, also and Miele, September operating XX% sheet versus Jason? period. dividends down to fiscal USD all-time strengthening as a increase of us an of The generation an to turn strong at now helped year I the strategy, our of markets in step in our our flow position paying debt the fiscal year and fiscal the million, like XXX ordinary end over Jason details year. by and

Jason Miele

start Slide XX results. our Thank global you, Jack. I'll with on

financial is Xth returns. we the quarter pleasingly, in Jack results this As earlier, X mentioned And global all had straight regions. of strong strong

in growth importantly, to half year. the into line deliver continue to strong second were and we and line accelerate top we top As line execute results strong that quarter our translates strategy, the record results able bottom more operating also both And and cash flows.

was global For This X% increased and volume the second increased commercial quarter, net sales execution by strong X driven all across XX%. regions.

As I line in global and line stronger profit second top second were quarter even that Global both XX% an quarter. increased results strong we outcome. bottom the net turn able just into EBIT adjusted adjusted to in operating mentioned, the

continued increased drive EBIT Our and In an strong execution the our X with all EBIT we net a by integration region to XX%, second to in EBIT manufacturing; increased Jack XX% million, In adjusted America, AUD discussed million, North with strong customers. ability quarter, increase. earlier: And a due Pacific USD EUR was EBIT delivered improvement against by XX% XX% foundational regions. our by XX.X sales X.X adjusted priorities strategic EBIT our Lean up increased growth our a Europe increase. adjusted XX% XX.X increase. Asia million, adjusted

net X.XX approximately increased sales global USD half, For first billion. the X% to

increased American For performance adjusted half, XX%, global increased USD driven XX.X North the EBIT where EBIT first adjusted by million. strong

adjusted profit. to Moving operating net

and all-time Hardie second James with of million as for high represents results prior quarter compared quarterly Group. XX% a $XXX.X year Our increased the

was year net XXXX. the first an first half $XXX.X increase operating fiscal million, XX% the adjusted of versus For profit half,

continues chain versus of sustainable conversion the strong cash sales cash success flow of our flow This step with outstanding with the announce strategy. to It million. includes finalized integrated growth. flow the plans a strong of operating inventory to sheet cash globally of around with our commercial profitable and inventory first is is better cycle. performance. a to to clear cash execution It today of dividends our customers our and the This at integration our the This discipline supply further starts flow balance and holding planned has importantly, is $XXX.X manufacturing of measure more execution nature to this lean increased view, and with drive the reinstatement strengthen customers flow with our half us XX% cash Lastly, generation flow partnership our my enabled our of end the and year. result and for the cash true change in indicator fiscal record

American XX, Slide increased second had the we Volume while by will the increased versus we quarter. North to the XX%, In outstanding net XX% America, period. discuss sales prior business. another quarter Moving corresponding North in

by on increased as interiors, Our continued as rebounded the for volume driven quarter, share second the first exteriors prior customer repair in the initial the continued XX% in interiors In the team and market the slowdown post our volume corresponding gain period versus in quarter focus our pandemic their quarter remodel increased quarter. second X% engagement. the

have will our listed anticipate year. January product increase mix X. on year increase the each the slide, and mix, average X% of price X, X%. both by and this I begin shifted price January April net impacted will price sales plus on continues worth to approximately half price take with achieving for annual than price now place to rather We XXXX. has announced been This increase of net on an X market mix. market and sales It increased be not that net for point is While geographic out sales Average quarter the noting, average we

This adjusted adjusted quarter lean line continued by increased our strong with the Our customers. EBIT the outstanding versus period. driven continued growth XX% of by EBIT in result manufacturing and execution even second as results prior with was corresponding top our integration outstanding were better EBIT coupled

second margin improved lower Specifically, lean the continued first expenses. first adjusted North half, higher These Overall, manufacturing second pulp savings, the and the of the in quarter. in costs including for continued and both adjusted American the costs due and EBIT quarter versus another growth outstanding second improvements quarter the XX.X% prior market strong delivered by the team EBIT with in partially to lower returns, offset an freight SG&A above were half. quarter quarter and set results the exceptional of

XX, to we we'll Now COVID-XX driven the Page largely X by quarter by to as the our The XX% In different today. markets: quarter turning United be the was in most sales first outcome France. affected here the I'm region pandemic, current that and August, of in Europe results. very communicated discuss shutdowns discussing European net post pleased a second Kingdom for our key results and decreased

year, margin XX% increased second through the year on and EBIT gypsum and XX% last quarter. remains was sales focused Our in fiber United quarter, the second through Germanic markets. the half growth fiber able products of quarter. manage uncertainty and improvement adjusted fiber quarter helping In team high-margin continued significant in the an quarter. the increased in margin Kingdom X% Entering existing markets In cement the second XX.X%. gross growth France our second was cement prior was million, European job growth and adjusted group, increase first The penetration the in to improvements the and countries. in X.X driving strong in drive reopened, great sales a net quarter the and second second increased team And fiber net EUR the the net from team quarter, in By product driving X%. EBIT cement Germany fiber new sales did gypsum year drive versus

top growth by return to margins. and encouraged Europe quickly improved ability to our bottom line the line with business We team's are EBIT

our XX Page to Pacific move now Asia results. Let's for

ease Our had the quarter, to Zealand. lockdowns Asia the New as region impacted during with performance first and also to countries Philippines COVID-XX began restrictions, those in the and quarter, significantly volatile navigate second In the government-imposed results markets recovered. Pacific our being uncertain first financial the quarter by

Australian our above quarter they market second The results and New by both returns. drove growth very strong Zealand led strong by and businesses, result was both

outstanding really quarter, excellent driving team Zealand delivered sales EBIT second the New Our and growth an double-digit growth. in result

of You will the portion the lower Systems improvements, shift The facilities, the versus these Australian exiting James and margin lean adjusted Zealand X Asia benefited long-term the in to said, of It real of quarter the Hardie XXXX, periods. has In as manufacturing and This improvements positive from The are business expenses. that months, James as for manufacturing Penrose, we the Systems the Asia facility. outcome mix is and region periods. this ANZ Pacific. closure Zealand business a percentage a tighter of announced the Zealand. EBIT business. a for remember the represented country X, the that smaller adjusted our important a quarters closure sustainable the our 'XX, of closure in Zealand James facility. shift EBIT Hardie on Pacific complete, the margins of Pacific production prior reverse EBIT normal Pacific New and to our EBIT James May Penrose the Philippines in fiscal business margin Asia down driving of to COVID benefit margin stages as our to Pacific systemic business and better our on will EBIT from our note SG&A a Australia Hardie of shutting the exiting Systems the and returns Philippines is for of Asia we Asia of is from Asia improvements of to first Pacific New Pacific business. prior now first Philippines Hardie the impact as to on of final year per EBIT unit cost the we're EBIT margin production The have a during of percentage That a also Australia and is second business the proportion Systems country dollars, benefiting compared second Asia had and remained impact year, New both from all manufacturing New restrictions sales to And mix as compared unprofitable unprofitable thus, well

in half year in profitable invest beginning fiscal in Pacific will the We growth Asia 'XX. of second

to on briefly will year fiscal Now the you'll second who left-hand of 'XX general significant a XX, corporate half first the increase slide, in on to and Page other segments. see as the quarter moving in Starting cover the costs compared side off are driving are period. quarter - increases by compensation both X X These items stock legal items and the there half: corresponding expense prior compensation Increased in in is share The and the expenses. first accretion. expenses; higher price driven increase stock the

On the right-hand see expenditures side relatively the segment. of can the slide, remain R&D you within year-on-year R&D flat

to focused important strategy XX% product invest in innovation this Jack anticipate continued additional as it R&D is his However, innovation, first and in on discussed quarter note are the [indiscernible] global relevant as in which up segment remains innovation expenses, platform, launch innovation. and team we X% the the innovation investment update. the results, we unit continue prepare first The as market-driven second in half to on last page, recorded in market-driven development, business in the the we for of are

line profit growth period. across quarter, increased all for corresponding Page driven This the segment strong North Asia the the Now adjusted America, summary have net In quarter. XX% R&D, offset costs to for partially in Europe adjusted were to tax and turning results on Pacific, USD operating business prior with strong The operating units: EBIT results. XX.X of outstanding adjusted a quarter million rate. segments. performance versus and versus the higher worldwide effective higher general prior a deliver port second slides, results our our discussed we Collectively, operating by the XX second year prior by was second combined operating three

all-time $XXX.X $XXX.X EBIT adjusted adjusted James for quarter profit are Group. highs net of both Hardie million, record operating of the an Second million, quarterly

half, now million. results. was to operating and Asia growth Pacific, USD the in profit first Moving first by XX% strong of discuss to for first half performance the driven half This increased worldwide North America delivered XX, Page XXX.X in and EBIT the XX% XX% we'll respectively. which Adjusted net

adjusted by EBIT half, costs tax first strong higher offset partially performance corporate and the general adjusted rate. For the was effective a higher

expense us in year This to which be the first positive revolving interest we our year. flow strategic fiscal direct and the half investment is year net X strong innovation, a second and the generation. to and strong investments balance, at invest credit future of the half branding the capacity, for in include position and most enter growth. marketing strong momentum average for adjusted addition, due In to will a growth The of XX% remained These will and thoughtful fiscal decreased has facility of cash year and results 'XX, few. provides lower they as of the in name result

Moving on and to expenditures. discuss Page XX to capital cash flows

On of with start slide, cash we'll the the left-hand side flow.

our have through integration customers chain. $XX.X we for reduced with that growth to the the engagement lean and first increased have capital half As driving reduced market in our by flow the manufacturing both entirety within serve improvement half. by supply Note an globally, Jack of for sales and the presentation, prior our customers, cash I earlier with increased operating our strong XX% the with value to continuous mentioned first versus inventory during the million chain working corresponding driven period,

and And mention change. I context. as into flow Jack wanted have just cash put the You a heard improvement additional step of I the to flow operating $XXX.X briefly some million cash

is While it XXXX. the result - last year versus year in first that also year full is was full half fiscal significant, operating best of flow worth cash year an year fiscal improvement noting XX% last of our

we year fiscal months XX million. the generated $XXX.X of flows full of cash operating For XXXX,

we year year's months flow. year, through operating as helps fiscal why So in X of we this a cash put in And perspective performance. operating full I change of have describing last flow this think fiscal cash already XX% achieved step that are

the shifting where see to the slide, a of right-hand side our Now capital you'll expenditures. of summary

this $XX impact savings, of as lower was to lean, year, lower We It's approximately versus million direct possible reduction important mentioned of expenditure via capacity Jack - lean an $XX.X expenditure as prior the half capacity. has talk often we unlocked expansion made the unit. initiative. year-over-year. incremental earlier, spend in first note down corresponding capital period million, this XX% of For to the our operating was had capacity per you execution cost main cost about the But specifically expansion effective

Asia second Alabama on to driving this Due in customer in and significant gains are market machine machine commission Moving our in in Carol specifically this machine XXXX year expansion. approximately of to XXXX. full sheet share America, XXX Prattville XXXX, capacity the our #X Park we sheet fiscal total the quarter planning fiscal USD strong quarter Pacific, now Further, year North in to to around we of plan the to the we month. We future million. growth plan year the fourth calendar more now Prattville, new to middle commission expenditures volume year. our In fiscal commission year sheet integration, expect in of facility capital third

I'll XX, facility. profile. with X Page liquidity to revolving turn no still our the have in along Let's We our place, credit discuss in There's profile. debt where change been of the notes sets

$XXX.X ended $XXX.X XX, March an we our mentioned position, the in earlier flows. presentation, continue liquidity million strong leverage cash position to our first half improvement of by driven the million improve liquidity, since with Jack our XXXX. of We As and operating

XXXX. improved an XX, improvement leverage March X.Xx at to also We from X.XXx,

flexibility XX, X we'll very On and slide. been strong have the provides nice financial to we our a liquidity, significantly Throughout pandemic, have cash segue a to and our committed the position, which flexibility. financial capital our Over discuss changed and months, leverage Page strengthening management. liquidity have we liquidity the our next now and

focus. we the strengthen, decisions, At our the we've including difficult suspension global make to position some our capital short-term of of continues dividends. As start liquidity pandemic, refined management COVID had to the

decisions strategy to actions knowing necessary our drive to those have aggressively, our we us and the financial However, taken improve our flexibility. difficult enabled business ensure liquidity

first million Over the half to XX, September generated operating including liquidity fiscal of record we've our flows XXXX. million, $XXX and of improved at the cash cash year, $XXX

will in capital we confidence resiliency the and various a be dividends year reinstate enabled in conditions year Our focus, May to by in fiscal our will fiscal market our announced XXXX we to reduce future and dividend end cash short-term to us confidence debt of XXXX. with business our by global gross $XXX its million full refine has management notably, most flows 'XX and year

in half and with financial and necessary cash to the throughout afforded the our pandemic the investment first approach our coupled to growth support outstanding our strengthen pragmatic Our flexibility to balance dividends. management sheet strategy us performance, has reinstate

open Slide profit over $XXX for moving X to just we'll the weeks to questions. is year Finally, net XXXX XX. fiscal adjusted range announced Operator, we call are October the ago The full million we now guidance XX. guidance operating on Today, million. $XXX year range reaffirming

Operator

[Operator Instructions].

First question JPMorgan. Campbell-Crawford from Brook comes from

Brook Campbell-Crawford

It you quantify with First increase? percentage actually are for lean side, you America dollar and offset significantly just big cost the pulp or And one, to to for in the quite the actually It freight. that Jason, able cost on a looks number like just quarter. freight seems benefit increase up picked et like the sales very cetera?

Jason Miele

Brook, for thanks Yes, that.

there, demand out data been high, increase But But data. truck for driving metric us. has every there's provide also market into was certainly, pricing freight fairly drilling it and in which significant. housing that as is market the is flatbed robust, Specifically that

EBIT the lean the With then lean were continuation higher drive of our a we still pulp progress, able to costs, margin - outcome. lower

Brook Campbell-Crawford

adjacent Okay. for Anything You on And actually. mentioned expect later you very the platforms. of stage, able provide further sort which that at interesting. sounds year, or on new any global you markets, us this just Are calendar Jack, to from on what to provide potentially color? next then

Jack Truong

not is looking here the the categories. I about vinyl sites really Brook, that or Yes, we're only about so look on. we new our look that it's adjacent mean what would wood combine means at just it enter

innovations. February - core to market exterior are of the to X like announced that opportunity market by strategies all would we that is all the really that we expand XXXX back the in that driving business. potentially we means is exterior markets. our us exterior the business for with for One on what And is our And the

Operator

Peter comes Steyn question from next Macquarie. Your from

Peter Steyn

response there, that. how a pretty supply environment? one that could what and tight maybe thoughts your to for Just see us Is Prattville If step you intention the just plays quick are demand to your supply to Prattville. your in into Interesting commissioning. typify on a

Jack Truong

only also with to is but in the - we we we that that we as that global plan the next is what marketplace innovation not Peter, we are - demand. see to strategy, execute have Yes. continue our an gain And that we the to share increased in that third out continuing year. the come fiscal

forward it execution. drive will the really continue give So really we increase, will when you Prattville, as as know that forward us well that confidence that to to those the demand shows pull add together, going and lean our all

unlock existing So about continue we as do more to that, to we capacity. continue will

Operator

comes Your America. from Spartalis of Sophie next from question Bank

Sophie Spartalis

me. one a Just quick from

to think is terms lean unlocked there American production how more hear interested you in savings be getting, you're across Just network? much production of that North capacity the to I and guess, the capacity

Jack Truong

Yes.

- is XX So capacity as this continue our means we the - America capacity our and more do about executing continuous to - months And what better, what will and we now will we to unlocked comparing XX by we have is the Sophie, right will started production - what ago, North continue to of more. is, improvement so we that on equally total in months lean important, will And journey that unlock the lean, XX% that when lean reduce that variability to continuing is output. in it improve also execution Sophie, ago.

we to of to what make flow how one the to products allow with make much that that marketplace us key So - more where is work will that and drive on would our we fluidly. the And more make and them. predictability customers, able be we to and factors

Sophie Spartalis

Okay.

of the of with in hope introduction how the we'll reduction then. be it, your a just SKUs, on seen see your a production your year, try guess, just in I marries next talk your, streamlined We've And very in XX the follow-up to through so things? last to and new Can output. manufacturing products. innovative offerings that side over reduction call streamline you months,

Jack Truong

Sophie. question, Good Yes.

then true needs is on drive about lean market wants, and based to portfolio production offer product that the in of marketplace. part really the and the the As product that demand our we right And approach based - we really true sure the plan. want really make And on that that portfolio. understand demand, would then what is

we been a it the so and continue and what lean process what portfolio SKUs part type resonate has capability with a only And one warehouse process eliminate of have products. continuous what that carry to of new for not have don't. to that will the be it And so - don't customers makes able our innovative and but more to is that now to it's - culture, our it is that - What's the and resource our the now within products evaluate. production, resonate or product - our so because launch, sooner also that for that them room plan a market with to or to we always we

Operator

from question next comes Suisse. Your Peter Crédit from Wilson

Peter Wilson

Just a base. cost the couple on

lean So X, savings. Slide the North America

does But 'XX to 'XX cost of great it XXX green stalled. that an on the means in have the a the savings 'XX base. million terms getting FY I'm versus FY me of in USD wondering what is tend exceed So that result. improvement additional you're appear suggest to rate bars which to versus that baseline just track that target,

Jack Truong

month that gain, we to that the Yes. want and it. once, the to last improve already is began it really what in able savings make is Because then about months, following Peter. Peter, to really quarter. month, I keep discussion lean, that think last every sure quarter we we are It - say, The by on it's [indiscernible] in had ensure gain keeping that that this were gain, saving. we a that we or every

improve million only gain essentially not beginning that X already that gain. to is that And since FY then forward 'XX, of read going savings we keep that going cumulative if to way keep to gain, - have this, million. that will the another core we gain So but the to next sure QX continue $XX this just of quarters, keep of that, that's that $XX chart that for that forward, we the make is

of really So anything savings else what lean from that is additional be the whatever we to made is top - of that the what ensure about on savings. that is It will improvement the started baseline that, that driving margin or gross of still one consistency a business. the factors is margin And that locked key in the EBIT in of the that we in. is

gain on then that is is very, sustained important key the very already the and So add top.

Peter Wilson

Got it.

another I've before. reprise you asked could Okay. And if question, I

both the there, of Just quarters Prattville, early expected in will impact in that and through? gross margin come D&A, margin the terms the you

Jason Miele

question. that for thanks Peter, Yes,

model you that think to results I as try back historical well. look at can to

still XX.X% plant. that would see XX% current that Tacoma but of having depreciation. the year, capital margins. in brought same the selling year, on expenditure brought the would and product could from size the in not facility, And obviously, on, amount we a have as have that So recently. you margin significant And EBIT Obviously started we prior

depreciation as new across some also will has gross in be a the there. there'll facility, it on large high certainly, especially that which facility, you sheet one selling we So obviously incremental facilities, bring machine But products a if be, margin. we're

Operator

Lisa... to question comes from sorry interrupt. The next

Jason Miele

to on one. No, I Peter, a wanted that close just bit, little

million quarters be X Essentially, $XX first just for lean saving will look be the we that ahead So the savings. - plan. to the will of with at cumulative that

Operator

The next question Citi. comes from Lisa Huynh from

Lisa Huynh

SG&A. a helping have job the I margin is period, reducing just question result. good done I during Sure. guess, the you've on strong a SG&A which

step costs Some us as what back of flow you've of Asia a up, these initiatives structural margin sense what made mentioned, added to seeing savings be in delivered to a give were? cost particularly EBIT strong we extent we're you result? expect some these cost you from in. should to naturally you Can base. will Pacific, the back where And the But changes just SG&A

Jack Truong

Pacific, basis roughly for XXX points this in between XXX primarily and North Australia. and America Asia So is both

go what - rationalization cost marketplace. during happened more then make had this lean. way we different one in a a essentially - of pandemic, we to structurally, the so And have this when as driving just growth what through is the really And the we structure pandemic,

move will driving few that to us also the in look opportunity now at terms needle really So critical demand. it's the an of for

forward, to accelerated in growth will - we see business going and points so so - basis the is back SG&A come drive to And what our that to long mid the the profitable really going XXX you're to XXX can of more term.

Lisa Huynh

that Sure. Okay. your you I margins to ahead of that respect? then run question, extension next continue over Pacific And of the EBIT it. X Got margins American to months Asia the to expect would in North just XX guess, your

Jack Truong

just No, reported. be that in than lower see it no, should this we quarter moderated you what

had very from past APAC is our plant quarter what the really the mean more in lower New this on more cost pent-up growth coming Australia for now demand, about X one volume really product Australia. from Jason And you to Philippines now way great New the right? quarter, big as efficient a we lot product first didn't I think third good is the have back mentioned that coming due now also business really really Zealand a good had quarter, I in And cost margin this - and past the really saw well factors, efficient the a see a structure plant more of with EBIT as coming in quarter. not this Philippines - of But and Zealand, then in growth. a structure. that's in

that's margin, and at really So dollars. sales the of EBIT when dollars combination net the EBIT you look

really not the see, - to you should expect to be that you it lower. So that level at should be

Operator

from Your Morgan comes Scott Andrew next question Stanley. from

Andrew Scott

first Just question from for Jason. maybe me,

shifting increase, the the increase. that of third the softest, the the the now us expect ahead now? you would of see With pan out see of you view quarter you talk about some or sort timing presumably, price think How seasonality of about buying of to is quarters? cadence price of sort the Usually, you the can to the how

Jason Miele

think it Certainly is But remember yes, steadies aspect quarter. forward, historically price a this Yes. volume from any And to then have forward a there, is lowest increase. a you than get different also year year. the that pull you bit going the QX also seasonality other Andrew. I out, a yes, historically, And year

help So years, four and as that that drive moderate you will the into throughout look future consistency quarters. out some

Andrew Scott

just a And you, a Jack, question on Brook's Okay. variant to question.

expansion. growth global the of sort about spoke You

of trying platforms global us have your aspirations anything across moment? mean tell moment? the is it Just you to the inquire, of Do there? footprint Or are you that just sort in wanted really further to the outside does you're at - existing at

Jack Truong

Yes.

the So think the to of for accelerated And discussed us in drive growth for really innovations it's - cement Europe the this to XX-year that Western annual Europe - one would we fiber key year cater of ambition investors the also needs profitable growth really specifically. platform - is really having in of it's for about global I Europe. us, that that true have last really, is in tour homeowners

allow that a So new to sure also develop - key but XX Pacific, our past requirements. in to create perform part right on of And European fuel lead innovation months Asia that the homeowners' meet growth that is been and for products is America really growth during can the and commercialize will working the approach that the and we have North making about all we that us Europe.

Andrew Scott

direct, be more Asian no if and within I know plans but can 'XX, that? jump Jack, just just I to clarify broader in.

Jack Truong

Not midterm in or run. end the short

really drive acquisition. that sure we that about we So making it's creation where transformative making we in just can sure made Europe, our drive value - a very

Operator

from question next Jefferies. comes The from Abraham Akra

Abraham Akra

being year-on-year. 'XX, that trigger if [indiscernible] will a volume the incremental XX% plus digits in new like that looks XX% plant capacity coming It It to by utilization. capacity plant continues that online. capacity see by to relates question or expansion? a unlocked first terms Alabama My you in was double What grow utilization is FY

Jack Truong

don't our our of can continues that what utilization business you we to plant. sees Abraham, I our Yes. disclose But grow. think

to really I it supply to the market. doing continue first Prattville And the quarters near-term of And X lot good at online, assume North it here should a market. the the can we think in capacity least then in we're more coming really, last America. the potential, with that drive in we have growth

Abraham Akra

week... Sure. That's And last understandable.

Jason Miele

just add. I'm sorry, real just quick, to

'XX, the the into you, to fit it long hear way think that little machines FY about we you're talking term. can Prattville, FY built about. were deeper You also the X I hard Remember, over but sheet future. talking a It's 'XX.

that announced when There's still machine going capacity we're machine one. today, two. to at we've site. And when sheet to start sheet So announced start brownfield we plan we

Abraham Akra

color Got lastly, in Okay. regions? can a how of trading And of all volume terms terms you update you're give it. some across in on performing

Jack Truong

Yes.

up probably double-digit mid- at Asia So America, North total, I in to so a to would teens the And our Pacific. now is around total And as is upper about - on growth growth. really in single-digit growth. at Pacific Europe, then - mid- business quarter-to-date, Asia this right in upper,

Operator

RBC comes question Paul next Your from Quinn Markets. from Capital

Paul Quinn

houses. just Jason, growth building Jack people material some Today's and announcement you do on your and expect of lockdowns vaccine, from the the what by Hardie's going Pfizer fixing other benefited their on the forward? producers, up implication like COVID

Jack Truong

regarding tell. more to Paul, marketplace going that from be old. an vaccine will people homes really and in years I the Pfizer, - what - targets to about - I working percent for certainly America would more see modeling. those in residing. between a home, remodeling, there more the we more the say, And focus to it's I be certainly, of is we're be XX And increased it's still for North think is early and from too think at for us, residing. in we North remodeling. it's there to prime But But remote large homes, there's look of And going as XX are lot opportunity in that's for are very

or think of here growth the a structural and vaccines out housing America, of what remodeling. for the - opportunity us I not, nature see of the comes kind we to North to irrespective market lot particularly of residing in due turn So still it when in

Operator

Keith Next Chau MST from question comes Marquee. from

Keith Chau

to question up mid- single double growth? comments. to to upper the trading on your is just Europe I volume that to digit, just date the confirm provided please? third America, a North quarter, want that digits just mid-teens, confirm that to numbers that, that for you've to Just follow-up APAC, the period and is And

Jack Truong

Yes.

yes, really that's America, upper mid-teens. - volume mid-teen North quarter-to-date for for quarter-to-date, please, growth. So for to That's

for in Pacific, And For the double be Pacific, revenue And to is that the volume digits. digits. growth upper-single growth, will Asia volume. quarter again, then this to that then And it [indiscernible] Europe, that's mid- Asia for is in be and date. will

Keith Chau

Volumes.

it. Okay. Got

The back as plus is that flowing think assumes to which there Jason, for other expectation one, go some you price just I 'XX increase, ultimately the through well. that FY I The want net mentioned. X%, rebates to are

FY if 'XX? tailwind dial you And or that whether commercialization FY on of in headwind can us of Just an that's may 'XX wondering mix to as move forward, give the new that - are extension or volume? a should coming there be question, sense expectation on on going a whether going that the price products through a in

Jason Miele

certainly, products. like kind certainly better of obviously and doing to strategy, Yes, Keith, as this a is, year color is segments. focused we're it know mix other We're wanted the doing is strong Jack construction driving very the on, and the we platforms. with you new innovation what - mentioned, everywhere penetration price where high-margin year, is achieved is and than single-family south mix we But in the

price we statements as And so achieve - we're next Mix we - that's is outcome. believe and year. X% The achieve fine, we increase want. financial talked just will getting executing we in long of what our the about where what we an as that's just is price kind

shock there's year, is our can impact believe the we market it is - of - changes So that's achieve. this But then we'll X% inclusive to mix today estimate that like obviously, of X, something mix. if the change. But what

Operator

final question your from CLSA. And Lee Power comes from

Lee Power

$XX in the U.S. take LEAN I if So the million

chat longer-term to you thought that about you X.X little you you is you unlock? assume unlocking get Do the just the for quarters next And for current you just currently want you're how the like Are what about $XX - through targets. range If doing is do should of coming maybe you that think to now which would more we kind a bit 'XX. so like above two obviously still faster? like just than have million, a

Jack Truong

Yes, Lee.

at if focus terms million now of are look - cost America on is if just look I FY seeing beginning this our quarters with 'XX right we So - the you here. you than structure, think Is now, at efficient where here, X let's the so the what number we're North that in more it's - at that $XX ago. of with - about

will - next and if - X $XX we So the to level gain as that that that same performance just that now, million which same then - hard means that a for that quarters, to means to the keep at thing and now, to is we additional continue do. we that do the - perform very level means of

So here if that now, the or said, that to the we essentially we to that of we're come that that perform in of above, are introduced LEAN. where $XXX year improvement just continuous that to improve, any that, $XXX us But do then is expect that, we when Because we $XX then that if to we million is back. recognizing sure at lock above do to have game. push fiscal additional roll going we month momentum now, million. the the and make 'XX beginning out level we going keep of will don't as forward, the where will we equivalent will that million if But to we that continue we be of savings

lot of we a need will of engineering, a it tougher process that those how in So things. can really where lock and technology inch lot for going again, - go and is, through that tougher. lot in manufacturing introduce of our the it good, But a those work to to from be more the is in" lock fundamentally a the is and into processes, manufacturing more in, gains "mechanically that we here forward, of every will terms

Lee Power

Okay.

million at say should the million, scenario, above we that. of as or like a you think when worst-case $XXX $XXX So assuming

Jack Truong

when a that be hard journey, - X to assuming $XXX $XXX the whole on yes, very million course, And, seem quarters we this million ago, toward and every day. big worked company set like mean number. of very I out - delivering we and galvanized was a

path. But we and And now, say month was recognizing stand that that mean going forward, mean, I of would so are every remember ahead, I I I as that it we tougher. right ahead tougher

that also keep we got not add on of to top Just the we've to gain or that. have

it But we certainly, lot X Lee. looks tenable words a So case. was than plan, more halfway that I quarters ago. wouldn't through say it is it certainly, $XXX million a now your worst take a X-year But challenge, as

Operator

And questions remarks. this closing Dr. there are for hand to no further time. Truong at I'll now back

Jack Truong

Thank much call. our you all joining for very

are the - take gain buoyancy to confident and business the we opportunity And it. the rebuild the also business - plan the day. in as you progress a as see earn have have great we very see about XXXX. the despite to global within our out share that housing all now, us, - to our to a like X,XXX future not have as world make the James have as growth in thank excitement very of to for great are of but that to I'd with continuing and we're made uncertainties, much, ahead around innovations growth above We right fiscal have in Again, thank a roll our nearly pandemic, we that result to and we year employees the company and that only strategy the the we we to to what as well but markets opportunity holds, one a market the all just continue with the stronger of see the Hardie that company, deliver continuing worked And our we're day, who hard the global it's every execute despite so middle really global company. far. to And