James Hardie Announces Adjusted Net Operating Profit of US$80.9 Million for Q2 Fiscal Year 2019 and US$160.8 Million for the Half Year Ended 30 September 2018

James Hardie announces a fiscal year 2019 first half dividend of
US10.0 cents per security

SYDNEY–(BUSINESS WIRE)–James Hardie today announced results for the second quarter of fiscal
year 2019 and the half year ended 30 September 2018:

  • Group Adjusted net operating profit of US$80.9 million for the quarter
    and US$160.8 million for the half year, an increase of 7% and 17%,
    respectively, compared to the prior corresponding periods (“pcp”);
  • Group Adjusted EBIT of US$106.9 million for the quarter and US$214.0
    million for the half year, an increase of 1% and 10%, respectively,
    compared to pcp;
  • Group net sales of US$644.6 million for the quarter and US$1,295.6
    million for the half year, an increase of 23% and 25%, respectively,
    compared to pcp;
  • North America Fiber Cement Segment volume increased 5% for the quarter
    and half year, compared to pcp;
  • North America Fiber Cement Segment EBIT margin excluding product line
    discontinuation expenses of 22.8% for the quarter and 23.8% for the
    half year;
  • Asia Pacific Fiber Cement Segment EBIT margin of 23.4% for the quarter
    and 23.8% for the half year;
  • Europe Building Products Segment Adjusted EBIT margin excluding costs
    associated with the acquisition of 9.7% for the quarter and 10.9% for
    the half year; and
  • The Fermacell acquisition closed on 3 April 2018 and is included in
    the financial results for the first half of fiscal year 2019.

CEO Commentary

James Hardie CEO Louis Gries said, “Our North America Fiber Cement
Segment delivered good top line growth of 9% for the quarter and 10% for
the half year, respectively. Volume increased 5% for both the quarter
and half year, with our exteriors business continuing to grow modestly
above our addressable market. Additionally, EBIT margin excluding
product line discontinuation expenses of 22.8% and 23.8% for the quarter
and half year, respectively, remain within our target range, but
continue to be pressured by the increasing market costs of raw materials
and freight. We anticipate this inflationary pressure against our key
input costs will continue through the rest of the year. Furthermore,
while primary demand growth improved in the second quarter, our focus
remains on continuing to build momentum and delivering a higher primary
demand growth in fiscal year 2020.”

He continued, “Within our Asia Pacific Fiber Cement Segment, our
Australian and Philippines businesses achieved volume growth above their
underlying market growth. Furthermore, our Australian business delivered
a 10% and 13% increase in EBIT for the quarter and half year,
respectively, in local currency. However, the segment results in US
dollars for the quarter and half year were unfavorably impacted by the
change in foreign exchange rates.”

He added, “We closed our acquisition of Fermacell on 3 April 2018, and
the new Europe Building Products Segment delivered strong net sales
compared to the prior corresponding periods, and an Adjusted EBIT margin
excluding costs associated with the acquisition of 9.7% for the quarter
and 10.9% for the half year. We are encouraged by the early indicators
from our European business.”

Mr. Gries continued, “After a detailed review of our product portfolio
and business segments, we have determined the appropriate path forward
is to discontinue the Windows business and the Multiple Contour Trim
product line, and to simplify our core ColorPlus product offering. These
decisions will help focus us on our core business, drive higher return
on capital and accelerate our focus on 35/90 in North America, €1
billion in 10 years in Europe and continued growth in Asia Pacific.”

He concluded, “Our consolidated group results reflected overall steady
financial performance in a difficult input cost and foreign exchange
environment, and modest growth in our primary markets.”

Outlook

We expect to see the modest growth in the US housing market to continue
in fiscal year 2019. The single family new construction market and
repair and remodel market are expected to grow similarly to the
year-on-year growth experienced in fiscal year 2018. The Company expects
new construction starts between approximately 1.2 and 1.3 million.

We expect our North America Fiber Cement segment EBIT margin to be in
the top half of our stated target range of 20% to 25% for fiscal year
2019. This expectation is based upon the Company continuing to achieve
strong operating performance in its plants, exchange rates at current
levels and a continuation of current inflationary trends for input costs.

Net sales from the Australian business are expected to trend above the
average growth of the domestic repair and remodel and single family
detached housing markets in the eastern states of Australia.

Full Year Earnings Guidance

Management notes the range of analysts’ forecasts for net operating
profit excluding asbestos for the year ending 31 March 2019 is between
US$313 million and US$335 million. Management expects full year Adjusted
net operating profit to be between US$280 million and US$320 million
assuming, among other things, housing conditions in the United States
continue to improve in line with our assumed forecast of new
construction starts, input prices remain consistent and an average
USD/AUD exchange rate that is at, or near current levels for the
remainder of the year. Management cautions that although US housing
activity has been improving, market conditions remain somewhat uncertain
and some input costs remain volatile.

The comparable Adjusted net operating profit for fiscal year 2018 was
US$291.3 million. The Company is unable to forecast the comparable US
GAAP financial measure due to uncertainty regarding the impact of
actuarial estimates on asbestos-related assets and liabilities in future
periods.

Further Information

Readers are referred to the Company’s Condensed Consolidated Financial
Statements and Management’s Analysis of Results for the second quarter
and half year ended 30 September 2018 for additional information
regarding the Company’s results, including information regarding income
taxes, the asbestos liability and contingent liabilities.

As of 30 June 2018, the Company changed its reportable operating
segments. Previously, the Company reported on four operating segments:
(i) North America Fiber Cement, (ii) International Fiber Cement, (iii)
Other Businesses, and (iv) Research and Development. As of 30 June 2018,
the Company began reporting on five operating segments: (i) North
America Fiber Cement, (ii) Asia Pacific Fiber Cement, (iii) Europe
Building Products, (iv) Other Businesses, and (v) Research and
Development. The significant changes to how certain businesses are
reported in the new segment structure are as follows: (i) our European
Fiber Cement business as well as the newly acquired Fermacell business
are now reported as the Europe Building Products segment, and the
remaining businesses that were historically reported in the
International Fiber Cement segment are now reported in the Asia Pacific
Fiber Cement segment. The Company has revised its historical segment
information at 31 March 2018 and for the second quarter and half year
ended 30 September 2017 to be consistent with the new reportable segment
structure. The change in reportable segments had no effect on the
Company’s financial position, results of operations or cash flows for
the periods presented. Readers are referred to Note 15 of our condensed
consolidated financial statements for further information on our
segments.

Use of Non-GAAP Financial Information;
Australian Equivalent Terminology

This Media Release includes financial measures that are not considered a
measure of financial performance under generally accepted accounting
principles in the United States (GAAP), such as Adjusted net operating
profit and Adjusted EBIT. These non-GAAP financial measures should not
be considered to be more meaningful than the equivalent GAAP measure.
Management has included such measures to provide investors with an
alternative method for assessing its operating results in a manner that
is focused on the performance of its ongoing operations and excludes the
impact of certain legacy items, such as asbestos adjustments.
Additionally, management uses such non-GAAP financial measures for the
same purposes. However, these non-GAAP financial measures are not
prepared in accordance with US GAAP, may not be reported by all of the
Company’s competitors and may not be directly comparable to similarly
titled measures of the Company’s competitors due to potential
differences in the exact method of calculation. For additional
information regarding the non-GAAP financial measures presented in this
Media Release, including a reconciliation of each non-GAAP financial
measure to the equivalent US GAAP measure, see the section titled
“Non-US GAAP Financial Measures” included in the Company’s Management’s
Analysis of Results for the second quarter and half year ended 30
September 2018.

In addition, this Media Release includes financial measures and
descriptions that are considered to not be in accordance with US GAAP,
but which are consistent with financial measures reported by Australian
companies, such as operating profit, EBIT and EBIT margin. Since the
Company prepares its Consolidated Financial Statements in accordance
with US GAAP, the Company provides investors with a table and
definitions presenting cross-references between each US GAAP financial
measure used in the Company’s Consolidated Financial Statements to the
equivalent non-US GAAP financial measure used in this press release. See
the sections titled “Non-US GAAP Financial Measures” included in the
Company’s Management’s Analysis of Results for the second quarter and
half year ended 30 September 2018.

Forward-Looking Statements

This Media Release contains forward-looking statements and information
that are necessarily subject to risks, uncertainties and assumptions.
Many factors could cause the actual results, performance or achievements
of James Hardie to be materially different from those expressed or
implied in this release, including, among others, the risks and
uncertainties set forth in Section 3 “Risk Factors” in James Hardie’s
Annual Report on Form 20-F for the year ended 31 March 2018; changes in
general economic, political, governmental and business conditions
globally and in the countries in which James Hardie does business;
changes in interest rates, changes in inflation rates; changes in
exchange rates; the level of construction generally; changes in cement
demand and prices; changes in raw material and energy prices; changes in
business strategy and various other factors. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described
herein. James Hardie assumes no obligation to update or correct the
information contained in this Media Release except as required by law.

Contacts

Media/Analyst Enquiries:
James Hardie
Jason Miele, +61
2 8845 3352
Vice President, Investor and Media Relations
media@jameshardie.com.au

leverton

I have been involved with publishing and marketing for the past 32 years. My passion is helping people share their voice. I am able to do this through two important venues: One, with Area-Info.net where people can share everything from opinions to events to news. It is your choice! What do you want to share? Two, through a new program called America's Real Deal I am involved with to help business owners get their voice heard.I schedule speaking engagements with community groups and business groups to share my passion about the importance of "sharing your voice".Contact me directly at lee@leeeverton.coom for scheduling information.