James Hardie Industries (JHX) Q1 2026 earnings summary

Executive summary

• Q1 FY26 net sales were $900 million, down 9% year-over-year, with market softness and inventory normalization impacting North America and Asia Pacific.

• Adjusted EBITDA was $226 million, down 21% year-over-year, with margin at 25.1%; operating income fell 41% to $139 million.

• The AZEK acquisition closed July 1, 2025, creating a leading provider of exterior home and outdoor living solutions, with integration and early cost and commercial synergies underway.

• Strategic focus remains on material conversion, innovation, and customer-centric growth, with investments in product development and operational excellence.

• Guidance for FY26 was updated to reflect AZEK's contribution, with a focus on integration, cost savings, and capital allocation priorities.

Financial highlights

• Q1 net sales were $900 million, down 9% year-over-year; adjusted EBITDA was $226 million, margin 25.1%, and adjusted diluted EPS was $0.29, down 28% year-over-year.

• Free cash flow rose 88% to $104 million, driven by strong cash generation and lower capital spending.

• AZEK Residential segment reported net sales of $417 million and adjusted EBITDA of $127 million, margin 30.4%.

• Gross margin decreased 2.6 percentage points to 37.4%, mainly due to lower North America margins.

• Net leverage ratio improved to 0.46x from 0.66x year-over-year.

Outlook and guidance

• FY26 guidance: Siding & Trim net sales of $2.675–$2.85 billion, Deck, Rail & Accessories net sales of $775–$800 million, total adjusted EBITDA of $1.05–$1.15 billion, and free cash flow of at least $200 million.

• Guidance includes AZEK's contribution from July 1, 2025, and reflects $315 million in incremental interest expense and integration costs.

• Net leverage targeted to be at or below 2x within two years post-close.

• Capital expenditures projected at $400 million for FY26.

• Benefits from new product launches and exclusivity wins expected more in FY27 and beyond.