JHX changes
Pick any two versions below to diff them.
- Price
- $27.24 → $28.43(+4.4%)
- Next earnings
- Nov 5, 2026 → Feb 5, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- James Hardie trades at a discount because investors doubt the AZEK purchase and fear a weak US housing market while the company carries much more debt. Gross debt was removed: $4.3 added: $4.0 billion at removed: June added: September 30, 2026, removed: most added: all of it secured, after the company paid for AZEK partly with $1.7 billion of new notes and with secured loans. Shareholder support is also not complete: at the annual meeting on August 20, 2026, about 16% of votes withheld support from the Chair, and about 20% voted against the CEO equity grant. The company also keeps an asbestos liability in Australia that it funds each year. Recent results are better. In removed: Q1 added: Q2 fiscal 2027, removed: organic net sales removed: in Siding & Trim added: from continuing operations rose removed: 20%, added: 24%, fiber cement volumes grew by a mid-single-digit rate, the adjusted EBITDA removed: was $422 million, added: margin rose 450 basis points to 31.8%, and management raised its removed: fiscal 2027 outlook. added: free cash flow target. Management said that this growth does not come from a better housing market, and removed: that part of it removed: came from an easy comparison with a year added: expects lower adjusted EBITDA in the second half because of removed: inventory reduction. added: seasonality, freight costs and a weaker economy. For the gap to close, James Hardie must keep organic growth in fiber cement, reach its $125 million cost synergy target and its $500 million revenue synergy target, deliver removed: at least $500 added: more than $650 million of free cash flow in fiscal 2027, close the €840 million sale of Fermacell to Holcim in the first half of 2027, and bring net leverage below 2.0 times by September 30, 2027. The next test is the removed: Q2 added: Q3 fiscal 2027 report, expected in early removed: November 2026. added: February 2027. The Fermacell closing in the first half of 2027 and the leverage target in the second half of 2027 follow. If these conditions hold, the gap can close over the next four to six quarters. The main risk is a longer fall in US housing activity that cuts volumes before the debt comes down.
- Risks
- Sales depend on US new construction and repair and remodel activity. Management said that forward indicators stayed soft in Q1 fiscal 2027 and that its outlook does not assume a better housing market. Part of the Q1 growth came from an easy comparison with a year of channel inventory reduction, and this benefit gets smaller during the year. Debt rose after the AZEK purchase. Gross debt was removed: $4.3 added: $4.0 billion at removed: June added: September 30, 2026, removed: mostly added: all secured term loans and notes at a weighted average rate of removed: 5.5%. added: 5.7%. The term loans have variable rates, partly hedged with an interest rate swap. If cash flow falls short, the target of net leverage below 2.0 times by September 30, 2027 can slip. The company must integrate AZEK and deliver $125 million of cost synergies and $500 million of revenue synergies. Deck, Rail & Accessories had an operating loss in Q1 fiscal 2027, and its pro forma sales fell 5% while the company reduced channel inventory. At the annual meeting on August 20, 2026, about 20% of votes were against the CEO equity grant and about 16% withheld support from the Chair. Continued opposition from shareholders can put pressure on the board and management. James Hardie funds the Asbestos Injuries Compensation Fund in Australia. It will pay A$128.2 million to the fund in fiscal 2027, and the asbestos liability on the balance sheet was about $980 million at June 30, 2026. Higher claims can raise the required payments.
- Balance sheet
- Cash: removed: $290M added: $323M Debt: removed: $4.3B added: $4.0B Net debt: removed: $4.0B added: $3.7B Interest cover: removed: 3.5× added: 4.0× Undrawn credit line: removed: $843M, added: $993M, to May 2030 Debt due within 12 months: removed: $44M added: $55M Last debt due: 2032 removed: Most added: All debt is secured. At removed: June added: September 30, 2026, it consisted of $700 million of 5.875% notes due 2031, $1.0 billion of 6.125% notes due 2032, a removed: $750 added: $650 million term loan due removed: 2028, added: 2028 and a removed: $1.71 added: $1.70 billion term loan due removed: 2030 and $150 million added: 2030, with nothing drawn on the revolving facility. removed: The weighted average interest rate was 5.5%. In June added: Gross debt fell to $4.05 billion from $4.57 billion at March 31, 2026, added: after the company redeemed $400 million of unsecured notes due 2028 removed: with cash added: in June 2026 and removed: a revolver draw, so gross debt fell to $4.31 billion from $4.57 billion at March 31, 2026. added: repaid term loans. The added: weighted average interest rate was 5.7%. Cash was $323 million. The $1.0 billion revolving facility runs to May 30, 2030, and removed: $843 added: $993 million of it was available. Interest cover uses GAAP operating income and net interest for removed: Q1 added: the first half of fiscal 2027, and it is low because operating income includes the amortization of AZEK intangible assets. The figures leave out removed: $102 million of finance lease liabilities and the asbestos removed: liability, which was $980 million at June 30, 2026, against $213 million of restricted asbestos investments. added: liability. Management removed: guided fiscal 2027 adjusted EBITDA of $1.536 billion to $1.625 billion and added: targets free cash flow of removed: at least $500 million, added: more than $650 million in fiscal 2027 and removed: it targets net leverage below 2.0 times by the end of Q2 fiscal 2028 (September 30, 2027). It expects to use about $600 million from the sale of removed: Fermacell added: Fermacell, expected to added: close in the first half of 2027, to repay debt. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Nov 5, 2026: Q2 fiscal 2027 results: organic growth and free cash flow. removed: Pending. added: Passed. Watch: Net sales of $1.485 billion to $1.575 billion, adjusted EBITDA of $420 million to $455 million and continued organic growth in fiber cement pass; results below guidance or a cut to the fiscal 2027 outlook fail. added: Outcome: Net sales were $1.564 billion with Europe, adjusted EBITDA was above guidance, fiber cement volumes grew and the fiscal 2027 outlook was reaffirmed. Feb 5, 2027 (estimate): Q3 fiscal 2027 results: the weaker second half. Pending. Watch: Net sales of $1.058 billion to $1.140 billion and adjusted EBITDA of $298 million to $320 million, with the fiscal 2027 outlook kept, pass; results below guidance or a cut to the outlook fail. Sep 30, 2027: Net leverage below 2.0 times. Pending. Watch: Net leverage below 2.0 times at the end of Q2 fiscal 2028 passes; leverage above the target fails. 2027 (estimate): Closing of the Fermacell sale to Holcim. Pending. Watch: The sale closes for €840 million and about $600 million goes to debt repayment; a delay or a lower price fails.
- Recent events
- added: Nov 5, 2026: James Hardie reported Q2 fiscal 2027 results. Net sales from continuing operations, without Europe, rose 24% to $1.428 billion, at the high end of guidance. Siding & Trim net sales rose 15% to $880 million, and fiber cement volumes grew by a mid-single-digit rate. Adjusted EBITDA was $455 million, a margin of 31.8%, above guidance. First-half free cash flow was $535 million, and the company repaid $111 million of term loans in the quarter. It reaffirmed its fiscal 2027 net sales and adjusted EBITDA guidance and raised its free cash flow target to more than $650 million. It expects lower adjusted EBITDA in Q3 fiscal 2027. Oct 1, 2026: Jennifer Kong-Picarello, CFO of Terex, joined the board as an independent non-executive director. She is expected to join the Audit Committee in November 2026. Sep 15, 2026: At its first Investor Day since the AZEK purchase, James Hardie set a target of annual organic growth of 4% to 7% above its markets, without a housing recovery. It said that it expects to reach its $125 million cost synergy target about one year early and that the $500 million revenue synergy target is on track. It reaffirmed its target of net leverage below 2.0 times by Q2 fiscal 2028, raised its fiscal 2027 free cash flow target and kept its Q2 and fiscal 2027 guidance. Aug 20, 2026: James Hardie agreed to sell Fermacell, its European walling and flooring business, to Holcim for €840 million in cash, and it plans to close its European fiber cement business. It expects to use about $600 million of the proceeds to repay debt, and the board approved a $250 million share buyback. The sale is expected to close in the first half of 2027. At the annual meeting on the same day, about 16% of votes withheld support from Chair Nigel Stein, and about 20% voted against the CEO equity grant. Aug 6, 2026: James Hardie reported Q1 fiscal 2027 results. Net sales were $1.475 billion, up 64%, or 12% on a pro forma basis. Siding & Trim net sales rose 34%, or 20% organically. Adjusted EBITDA was $422 million, and free cash flow was $254 million. The company raised its fiscal 2027 outlook to total adjusted EBITDA of $1.536 billion to $1.625 billion and reaffirmed free cash flow of at least $500 million. Aug 3, 2026: James Hardie and Boise Cascade expanded their nationwide distribution partnership in the US. James Hardie also announced broader partnerships with regional distributors. Jun 25, 2026: James Hardie redeemed its $400 million of 5.00% senior unsecured notes due 2028, with cash on hand and a draw on its revolving facility. May 19, 2026: James Hardie reported fiscal 2026 results. Net sales were $4.84 billion, up 25% because of AZEK, but organic net sales fell 2%. Net income was $104 million, and adjusted EBITDA was $1.27 billion. The company guided pro forma adjusted EBITDA growth of 4% to 8% for fiscal 2027.