Thank you for standing by, and welcome to the James Hardie Q4 FY '24 Results Call. [Operator Instructions] There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Mr. Aaron Erter, CEO. Please go ahead.

Thank you, operator. Good morning and good evening to everyone, and welcome to our fourth quarter and total fiscal year 2024 results briefing. Turning to Page 2, you will see our standard cautionary note on forward-looking statements. Please note that the presentation today does contain forward-looking statements and the use of non-GAAP financial information. Also, except where we explicitly state otherwise during our prepared remarks, all references to monetary amounts should be assumed to be in U.S. dollars. Moving to Page 3, you will see our agenda for today. Joining me is our CFO, Rachel Wilson. For today's call, I will start by providing a strategy and operations update. Rachel will then discuss our financial results and I will return to discuss our outlook, guidance and provide a brief closing. We will then open it up for questions. Before I share an update on our strategy and operations, I would like to take this opportunity to thank all of our team members around the world who remain focused on safely delivering the highest quality products, solutions and services to our customer partners. Our James Hardie team truly represent the very best in our industry and consistently enable our superior value proposition. Let's start on Page 5 with a brief business update. Our team's focus remains simple; working safely, partnering with our customers, investing in long-term growth and driving profitable share gain. Our fourth quarter results continue to highlight how impactful that focus has been and is reflected in our full year results. For the full year, we achieved record global net sales of just under $4 billion, up 4% versus the prior corresponding period with record global adjusted net income of $708 million, up 17% versus the prior corresponding period. Both our global net sales and adjusted net income results…

Thank you, Aaron. Let's start on Page 10 to discuss our global results for the fourth quarter. Our team has delivered a strong set of results in the fourth quarter compared to last year with consistent and focused execution through fiscal year 2024. For the quarter, group net sales were up 9% to just over $1 billion, adjusted net income increased 19% to $174.2 million, the global adjusted EBITDA margin was 27.9%, up 250 basis points and operating cash flow for FY '24 was a record $914.2 million, up 50%. Our team is focused on executing on our strategy and these consistent results demonstrate the value of focused execution. Now, turning to Slide 11, I'll detail our adjusted net income waterfall for the fourth quarter. As mentioned, adjusted net income increased 19% or $28 million year-over-year to $174.2 million and was in line with guidance provided in February. The increase was primarily driven by strong EBIT growth in North America, which contributed $35.9 million to the increase in adjusted net income. The increase was also supported by growth in EU, which contributed $3.6 million to the increase in adjusted net income. During the quarter and as part of our ongoing marketing investments to drive long-term growth, global SG&A, including corporate, increased 24% to $164.2 million. This equates to 16.3% of revenues, up from 14.5% last year. Sequentially, global SG&A was up 5% compared to the third quarter of fiscal year 2024. The increase in investment primarily in our marketing tentpoles reflects our continued focus on growing brand awareness and driving profitable share gain. In Q4 year-over-year, we saw our homeowner leads up 22% nationally and our high-opportunity R&R markets or epicenter markets, up over 2x. General corporate SG&A expenses decreased modestly year-over-year. Higher employee costs, stock compensation expenses and professional…

Thank you, Rachel. We have delivered record results in FY '24 in a difficult operating environment. In addition, we have continued to outperform our end markets. These results are proof points that we are accelerating and taking share, all while we have increased our investment and long-term demand creation. Let's now move to Page 19 to discuss our market outlook and guidance. For our largest market, North America, we are again providing the calendar year 2024 market outlook data from several external data providers. The average estimate for single-family new construction is for growth of 7%. Multifamily new construction is forecasted to contract 21%. In Repair and Remodel, our largest end market, is estimated to decline 4%. Using these external ranges along with our assumed market segment exposures, the implied range for our blended addressable market is down 6% to up 3%, implying an average 2% decline. This compares to the flat outlook that was forecasted in February. It won't come as a surprise to you to see that these third-party forecasts for R&R have weakened throughout the quarter, led by a deferral and interest rate cut expectations. That said, since joining James Hardie, I have seen us execute our strategy at a high level and increase our investment in long-term demand creation. Our business and team remain in a strong position to capitalize on the expected return to growth in the R&R segments over the years ahead. We remain laser-focused on driving profitable share gain and are demonstrating this with market outperformance. If you turn to Page 20, we have again provided the volume sensitivity analysis for FY '25. This sensitivity analysis was prepared in the same manner as last quarter, which assumes our current range of expectations for raw material costs and freight rates while continuing to invest…

[Operator Instructions] Your first question comes from Keith Chau from MST.

First question and perhaps the obvious one, I just want to work out your comments around market share growth for FY '25 against the guidance that you provided. So Aaron, you talked about delivering strong PDG for FY '25. There's a comment in the presentation of plan to outperform the market, which frankly is not quite as explicit as Hardie is typically is. But you're guiding to an addressable market of down 2%. At the midpoint of guidance, your volumes are flat. So effectively, the PDG is 2%. When the company has invested heavily in SG&A, this discussion about homeowner leads up 22%. And in your performance scorecard is a target of PDG of 400 basis points. And I take your point about not looking at a quarterly PDG. So, let's just work on full year numbers and effectively assume it's 2% based on the guidance. So, can you just help me square up how that all works? Because it just seems as though your comments on PDG is certainly more bullish than what the implied quantitative guidance is.

Yes, absolutely. Yes, Keith, absolutely. And we'll walk you through it, and Rachel and I will tag team this. Obviously, one of the things that we did that you'll all notice, which is new for us under this leadership team has provided full year guidance. One of the things I'm proud of is the new process that we put in over a year ago and seeing the track record that we've had over the last year, we feel very confident in giving full year guidance here. Also, as you know, PDG and you just mentioned that it's best looked upon for a full year standpoint. Obviously, the last 12 months, if you look at our PDG growth in North America, it was high single digits. So, a really large bar for us to cross here from a PDG standpoint. I think part of it is the range here and where it's loaded. I'll have Rachel walk you through that and then I'll get back on and give you a few other comments here. Rachel, you want to walk Keith through it.

Absolutely. So, as we pointed out in that slide, while you point to the 2%, minus 2% of the average, the range right now is pretty broad, right? It's minus 6% to plus 3%. And when you really dig into, particularly in R&R, where it becomes more positive on a quarterly basis, it's in the back part of the year. And as we talk about our epicenter R&R market, guess what, steady winter, right? So that's something that we are taking into account as we think about our guidance range. Volume is our largest factor for revenue and margin and it is a broad range. We are trying to narrow that. So, rather than go all the way from the minus 6% to the plus 3%, you've noted correctly from flat point, it's really minus 3% to plus 3%. We are expecting raw material headwinds, which are working to offset the cost and pricing and we continue to invest in the business. That's demand creation initiatives and HOS investments to enhance that scalability. And finally, look, we're early in the year. So, our unknowns around this broader macro and raw materials outlook are with us. We're forecasting net sales growth in all divisions with positive price in all regions. Margins remain strong and we do have a 4% North America PDG outlook with continued investment. So, we have some confidence around the momentum of our business. I'll turn it back to Aaron.

Yes. No, I think you hit most of it Rachel. And look, Keith, I mean, the obvious here is we just came off what is a record FY '24. So, we do have a lot of positive momentum. We continue to expect to take share. As I mentioned, we do feel strongly of having 4% PDG growth. That's after a year of 8% PDG growth.

Sorry, and so my follow-up then is, if you're still expecting 4% PDG growth, is the midpoint of your guidance range relevant based on where the midpoint of your addressable market expectation is? Because if you square up the two headline ranges, the implied PDG for the full year is 2%. And I take your point, you came off high PDG last year, depending on how you square off it's probably high single digits to low double digits. But in the prior year, PDG was low. So, you kind of -- you've got 2 years to square off. So, just help me understand, is the midpoint of guidance relevant or not based on your expectations for PDG of 4% and your addressable market change of negative 2%?

Yes. Keith, what I would say to that, it’s early in the year, it’s a range. And as Rachel said, a large part of that, which, again, you look at PDG from a full year standpoint is loaded into the back half of the year.

Your next question comes from Lee Power from UBS.

Aaron, Rachel, just kind of continuing on from Keith's point around PDG. So, can you, Aaron, can you maybe talk a little bit about competition trends in the market? And maybe if we focus on the 24 of the top 25 large builders as an example. I think you mentioned today, 80% committed to growing share around this time last year. I think you were talking to north of 85%. I get they're very hard numbers to calculate. But can you maybe use that as an example and if there's any sort of changing trends around competition in that space?

Yes. Lee, it actually is morning here. We're here in Sydney. So, we're right here with you. I would say this, we have more share than we did last year as we started out the year. It continues to grow with the large builders. We've talked traditionally about the top 25. Over the last couple of quarters, I think I've introduced talking about the top 200. So, if we look at the top 200, we've grown from 131 contracts out there to 141 out there. So, we continue to grow and take share with these large builders. We talk a lot about SG&A and the investment there. Some of the investments that we've made are focusing on these top 200 builders. So, we've seen some good return early on when you think about some of these numbers here. The other thing I would say, when we talk about share, we've mentioned Trim is a large opportunity for us. So, if I look just the last 12 months and the progress we've made and what is our epicenter of focus market as it relates to R&R, the North, we've taken 1% share versus PVC out there in Trim. So, we're seeing some good share gains out there with large builders, one of our focus areas in Trim, obviously still in R&R, but that is a depressed market out there right now.

And just maybe as a follow-up, just any change in thinking about the timing of demand creation? Like homeowner leads up 22%, as you mentioned, marketing spend is elevated. I just be interested in your thoughts around kind of when that should flow through?

Yes. Lee, I know you’re asking when is R&R going to recover, right? Look, I think we all had some expectations, a lot of us in the industry that we were going to have interest rate cuts. We talked about it in the spring months ago, now it’s further out if it happens at all in this calendar year. We really look at 4 things as it relates to R&R recovery. We look at existing home prices. So, they’re recovering, right? Prices are good, that’s positive for R&R. Consumer confidence, it’s recovering. That’s good for R&R. Contractor confidence, I would say it’s stable. It’s in positive territory, but not necessarily improving yet. And then I think you’re all aware, and you follow this as well as you look at big-box transactions. Look, it’s in decline, and it’s been in decline, I think, for almost 8 quarters now. So that’s not good for R&R. It seems to correlate with some of those big box transactions. You heard one of the largest out there talk about larger transactions being down above the fleet. So – but what I would say, and this is why we continue to invest, right? We’ve talked about all the older homes in the U.S. We talk about people staying in their homes longer. These are all variables that put together make us very optimistic for the long-term growth and the prospect of material conversion from vinyl or other substrates to James Hardie.

Your next question comes from Harry Saunders from E&P.

Firstly, just wondering on the margin guidance for the full year, 29% to 31%. Just trying to square that with your quarterly average -- the quarterly averages. That implies your -- I guess, your guidance volume midpoint of 763 quarterly implied that's -- that should be more like 30% to 32%. So, just trying to square that, please?

Thanks, Harry. A few factors here as we think about margin for the year. I'll start by talking about Aaron's emphasis on continued strategic investment that is around HOS, that is around demand creation. But also in raw materials, I've talked about it in the past, we do expect raw material costs to be higher in FY '25. As you know, our 4 primary input costs are pulp, cement, freight and labor, together, they represent about 50% of our variable COGS. And 6 of our top 8 inputs, we do forecast to increase mid-single to double-digit year-over-year. So that's some of the headwinds we are expecting to face. Additionally, as you work yourself down the income statement, I did talk about the tax rate moving from 23% and we gave you a range of 23.5% to 24.5% at the midpoint of 24%, just to give you a feel for that. If you apply that to last year, it'd be worth about $9 million to net income. So, those are some of the factors that we're weighing as we go down. But again, we feel very confident about where we're positioned right now and our PDG position in the market.

And my follow-up, just I wanted to confirm, there's no lag in the R&R end market. So, your calendar year '24 end market guidance could be a little different to your FY '25 for R&R?

Yes. I think a factor here, Harry, is to probably talk about is when you look at [indiscernible] and how has this changed, right, relative to where we were when we were looking at it in February. Yes, the higher interest rates were longer, but also it’s the shape of the quarters. And so what’s important here is in the front half of the year, if there is anything, even more negative. And in the back half of the year, where we were expecting that positive inflection, it’s now pushed out. And as you think about our markets and their geographic location, that’s actually fairly significant for us. So, when you just take that average of minus 2%, you got to think about the shape of when is that recovery expected to happen. And for us in our epicenter markets like we take advantage of it.

Your next question comes from Andrew Scott from Morgan Stanley.

In your prepared comments, you talked about your arrangements with the big builders. And if I'm not mistaken, you said they are unchanged. We obviously saw a little while ago, your competitor LP announced a supply arrangement with Lennar. They're a long-standing customer. I think I'm right in saying when you're only providing sampling to 2 players, they were one of them. Can I just clarify there that you don't believe you've lost any volume and your arrangement with Lennar has not changed?

So Andrew, I'm not here to talk about our competitors. I do respect them. But our relationship, as I said, is unchanged. There's nothing new. Across the top 25 builders, we have relationships and we have an average of 80% share with the top 24.

And maybe just in light of that, but also your push to increasing your share with the top 200 and the big builders, can you talk to us about that 4% to 5% price increase that was announced January 1. Do you think we should expect that to be delivered on the new housing segment? Or is this given the push into that segment? Is it more likely that that's diluted there and we only see it come through on the R&R side?

Yes. I think what matters is we're going to have a positive average sale price, right? I think that's the key thing, Andrew. It doesn't matter where it comes from. We're going to have positive average sales price this year.

Well, Aaron, I mean positive is quite different to 4% to 5%. It sounds like you're suggesting substantially less than the full 4% to 5% dropping through?

We roughly have 4% price, Andrew.

Your next question comes from Brook Campbell-Crawford from Barrenjoey.

If you just look at the first quarter FY '25 volume guidance in North America, at the midpoint, it's basically the same, slightly lower than what you've delivered in the March quarter. And the March quarter would have had a pretty light January, I think, because there is pull forward of volume into December and January had some adverse weather, I think, in places like Texas. So, I'm just surprised you're not expecting a seasonal uplift or better volume in the June quarter versus March. And so can you provide a few comments around that, maybe what we're missing here?

I'll give it to Rachel here. You want to take it.

Yes. Brook, a few points. You're right. It's flat sequentially March Q to June Q. But as a reminder, this is up 2% year-over-year. I mean, I've had a pretty chilly start to the year. So, we feel excited about where we are and we think that's reflective of the environment we're in.

And my follow-up, just around Australia, can you just provide some comments on what you're seeing there in the forward expectations or what your customers are telling you here on demand? Because I guess it looks like that's going to be a drag on earnings in FY '25, given the market softening. So, can you provide some maybe comments on volumes or margin expectations for the APAC region in FY '25?

Yes. Brook, what I would say about Australia, it's a very challenging market right now. I think our volumes are projected to be roughly down 5%. But I will say this, we're having success from a pricing standpoint. I think our average sales price is up roughly 9% in Australia. It was in the fourth quarter. So, very challenging right now in the Australian market. I would almost characterize it as being, call it, a year ago what the U.S. faced. But look, our team continues to go out there and take share and have success with the value proposition that we're offering our customers out there.

Your next question comes from Daniel Kang from CLSA.

I just wanted to delve a little deeper on PDG. Your comment on 4% for the FY '25 year, it's still a great number to be positive, but it's a deceleration from the high single digits levels for FY '24, which you quoted. Can you just comment on what you're seeing in terms of, I guess, the competitive landscape to other substrates? Are you seeing an intensification from other materials?

Yes. What I'd say, Daniel, really good question. Look, as we look at PDG, I mean, we equate 4% to 1% market share gain. It is a very competitive market out there. But I think more than anything, it's the macro right now versus the competitive marketplace out there.

Yes, I got it.

Yes. And then, Daniel, I mean, just look, once again, in any market, we have to outperform and we put forth what we think is going to be a challenging market environment, particularly in R&R, which is our largest segment. But we feel pretty confident that we're going to be able to go out there and attain that 4% PDG.

And maybe one for Rachel, in terms of raw material and just general costs -- general inflation trends. Can you just provide some color on what you're seeing there?

Yes. I mean, look, we talked about how our largest costs are pulp, cement, freight and labor. And I mean, I’d like to just pick up a paper and you know what’s happening with pulp right now. Cement has been continuously up, but we did have a bunch of contracts come up in Q4, which we talked about. So, when you think those 2 in particular, and then I did mention that 6 of our top 8 input costs, we are expecting to increase mid to single and double digits year-over-year. So, this is why we’re really pushing here on costs and really making sure that our programs are tight and also being very disciplined about pricing as we are expecting these headwinds.

Your next question comes from Shaurya Visen from Bank of America.

Aaron, a question for you. Just some thoughts on your strategy given the competitive landscape. And I know you've previously spoken about it. But I'm just curious, just given your biggest competitor is now suggesting that they're focused on targeting the bigger builders that traditionally has been your market. So, 2 questions on that. Firstly, do you think the market is large enough for both of you? And secondly, do you expect pricing pressures as you two compete? Any thoughts around that?

Yes. Thank you for the question. Look, I'd say number one, and you hear me talk about this a lot. We're going to focus on what we can control. So, I can't control what any competitors are doing out there. Look, our main competitor in my mind, is other substrates. So that is a very large total addressable market out there and we feel very, very confident in our ability to go and have material conversion. Look, I would just say this in reference to pricing, and I've said this before, we're not a commodity. We are not a commodity. So, this like-to-like whomever or whatever it may be, becomes a little bit irrelevant, right, when you think about the value proposition that we're offering to our customer partners. So yes, it's a competitive marketplace, but I feel very confident in our ability to go out and win. If you look at the results from last year, the type of PDG growth we had, we feel like in any market, we're going to be able to go out and take share.

Rachel, a quick one for you. Just North America, look at your ASP increase for the quarter, which is 4%. Could you give us a sense of the price and the mix within that?

Our ASP has been 4%, correct, on a year-over-year on a Q4 basis. As we are looking ahead, this is a market where Aaron was saying where is Trim going to be, right? And what is the size of some of this. So, we are thinking about mix and R&R, as you know, from a gross margin perspective, does have a higher and the color has a higher gross margin even if we aren’t equal on an EBIT basis. So again, while mix will be a factor, we are expecting positive ASP as discussed and really feel confident that we will end up.

Your next question comes from Simon Thackray from Jefferies.

Rachel, just a quick one actually, we're going through a pretty decent period of investment as reflected in the CapEx and the D&A is going to have to move up as we've seen sequentially each quarter in '24. I think it would be helpful just to understand the impact on the EBIT margins on the [normal] cash side by getting some guidance on FY '25 group D&A because you've kindly done for CapEx. Would that be possible?

Yes. We've not provided that guidance at the D&A level, but we have given you guidance about what we have coming on for CapEx, how much we're going to spend. And also, we have quite detailed on our property, plants and equipment in the 20-F. So that should be one that can be projected.

So, then maybe just on SG&A expectations either in dollar terms or percentage terms then to '25, given that the group cash spend in the fourth quarter was approaching 12% of revenues. So that would be helpful. Are we to assume we're going to maintain at that level or adjust? Or is it up or down from the fourth quarter run rate?

Yes. Simon, what I've always said is we're going to invest in the business what we need to for long-term growth. I would say if you have to look at it, though, as far as just modeling purposes, it's going to be similar as what you've seen before. That's what I would give with this.

Can I just be cheeky and sneak in one just to understand something on Page 12. You've made the comment there, actually, that the exterior volume is up low double digits, but total volume is up 9% in Q4. What's -- how do I reconciliate that? Sorry, if it's obvious, but I don't quite understand that exterior volume is up low double digits, but sales volume is up 9%.

Yes. I think that interiors would be down significantly more. That's where you're getting that. And it goes to reason when you think about what we talked about from some of the big boxes and some of their transactions, I think it correlates pretty well with that, Simon.

Look, this is an emphasis of how are we doing in the marketplace. So, there’s PDG, but also there’s a mix of products and just to emphasize that an exterior volume, we are continuing to be very strong here, being up low double digits.

Your next question comes from Sam Seow from Citi.

Maybe just following on from Simon there. Aaron, when you took over, SG&A or since you took over, SG&A has probably increased $200 million. And if I annualize that fourth quarter number, it's getting close to $650 million. Just wondering, is there any flexibility in that? Could you bring that down to manage profitability? Or as you think about FY '25, is that fourth quarter exit rate largely what spend might look like irrespective of market conditions?

Yes. Sam, look, a good question. We talked a lot about pedal and clutch, right? So, when we see the need to be able to do that, we can clutch spend particularly a lot of the marketing spend. But look, as I've said before, we're investing in long-term growth. We've talked about the opportunities that we see out there in R&R from a long-term standpoint. And we need to be ready, whether that be people, whether that be investment, what we're doing in CapEx, whether that be demand generation. We feel strongly with our strategy that we need to continue to invest in these areas. It's some of these, but it's also areas we've talked about HOS and some investments that we're doing today to ensure scalability but also cost savings in the future, systems, tools, processes, those types of things, Sam. So we are focused on that. Yes, we can clutch. But for the long-term viability of the business, we believe that these investments we're making right now are the right investments.

So maybe just following on from that. The profitable share gain, the high single-digit is impressive, but largely driven by new housing implying the PDG in R&R piece is a fair bit lower. So my question is basically, is that right? And then after these heavy SG&A investment, what would be a realistic target for PDG in R&R specifically?

Yes. Sam, really simply, we don’t talk PDG by segment. As I said before, we’re targeting 4% PDG growth for the year and that’s what we’re focused on.

That does conclude our time for questions. I'll now hand back to Mr. Aaron for closing remarks.

All right. Thank you, operator. Appreciate everyone’s time here. Thank you, and thank you to all the James Hardie employees around the world for a great FY ‘24 and looking forward to a positive FY ‘25. Thank you, all.

That does conclude our conference for today. Thank you for participating. You may now disconnect.