James Hardie Industries Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 14 speakers on the call.

Operator

Thank you for standing by, and welcome to the James Hardie Second Quarter Fiscal Year 20 24 Results Briefing. Today's briefing is hosted by James Hardie's CEO, Mr. Aaron Urter and CFO, Mrs. Rachel Wilson. After the briefing, we will open the lines to Q and A and I will remind participants to limit your questions to 1 plus a follow-up.

Operator

After the Q and A, I'll turn it back to Mr. Oter for closing remarks. I would now like to hand the conference over to James Hardie's CEO, Mr. Aaron Uter. Please go ahead, sir.

Speaker 1

Thank you, operator. Good morning and good evening to everyone and welcome to our Q2 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.

Speaker 1

S. Dollars. Moving to Page 3, you will see our agenda for today. Before we begin, I would like to take a moment to introduce you to our new Chief Financial Officer, Rachel Wilson. Rachel brings an impressive track record of over 25 years of experience, including extensive involvement in corporate finance, capital markets, leadership and development of high performing teams, along with a demonstrated focus on driving profitable growth.

Speaker 1

We are thrilled to have Rachel join our team, And I am looking forward to partnering with her as we continue to harness James Hardie's momentum. Over the last year, We have continued to add talent, invest in the development of our team and align our structure to support our strategy. In my first year, we have consciously built our talent in select areas such as HR, marketing and technology, while also supporting our existing team. Rachel will now share with you in her own words why she chose to join the James Hardie team.

Speaker 2

Thanks, Erin. I'm grateful for the warm welcome and onboarding support that I have received. First off, I want to tell you how excited and honored I am to Joining James Hardie as CFO. In choosing to be here, I've quite literally voted with my feet. And why is that?

Speaker 2

In simple terms, I believe James Hardie is an exceptional growth business with a significant strategic moat that is supported by a team and values that I'm eager to be a part of. My experience as a public company CFO and former Wall Street Investment Banker brings unique financial skills and leadership experience to James Hardie executive team. Under Aaron's leadership, I believe we can further drive sustainable, profitable growth and development of our people. I'm in my 12th week here and I've spent much of my time thus far meeting the team, engaging with them as functional groups as well as individually and learning about our business. I can certainly attest to the fact that the momentum here is possible.

Speaker 2

Finally, I'm very much looking forward to getting to know the investment in analyst community and continue to take you on our journey of being homeowner focused, customer and contractor driven. I'm energized to be on this team and I believe in our right to win. With that, I'll turn it back over to Aaron before I discuss our Q2 results. Aaron?

Speaker 1

Thank you, Rachel. I speak for all of us here at James Hardie when I say how excited we are to have you join our team. And I know that you will bring strong capability and leadership, which will positively impact everyone across James Hardie. 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.

Speaker 1

After that, we will then open it up for your questions. Before I share an update on our strategy and operations, I would like to take this opportunity to thank all of our employees around the world who remain focused on safely delivering the highest quality products, Solutions and services to our customer partners. Our employees truly represent the very best in our industry and consistently enable our superior value proposition. Let's start now on Page 5 with a brief business update. Our teams remain laser focused on partnering with our customers, managing decisively and controlling what we can control.

Speaker 1

Our 2nd quarter results continue to highlight how impactful that focus has been. For the 2nd quarter, We achieved global net sales of just under $1,000,000,000 flat versus the prior corresponding period with a record quarterly global adjusted net income of $178,900,000 up 2% versus the prior corresponding period. Both our global net sales and adjusted net income results were again Our 2nd quarter North American volume of 773,000,000 standard feet was at the top end of our guidance range and we delivered that with a record 31.7 percent EBIT margin. The adjusted net income result was also supported by strong financial results in our Asia Pacific in European regions. For the first half of the year, we generated record operating cash flow of $459,100,000 up 74% year over year.

Speaker 1

Finally, As we discussed last quarter, we have been accelerating our investment in SG and A, supporting our marketing tentpoles, Driving awareness and conversion in targeted regions to aid in sustaining profitable share gain. Rachel will share additional details in the financial section. While uncertainty continues to affect our end markets, Our focus remains on partnering with our customers and controlling what we can control to outperform in the markets we participate. Now please turn to Page 6 and our global strategic framework. As I shared last quarter, At the heart of our global strategy, we are homeowner focused, customer and contractor driven.

Speaker 1

With that in mind, All three regions remain focused on our 3 key strategic initiatives. Number 1, profitably grow and take share where we have the right to win. Number 2, bring our customers high value differentiated solutions and number 3, connect and influence all the participants in the customer value chain. We accelerate our strategic initiatives by establishing competitive advantages through our strategic enablers without compromising on our foundational imperatives. I remain confident in our team and our strategy.

Speaker 1

Combined, they position us to execute at a high level and drive profitable share gain in all three regions. Last quarter, I shared additional details about our 3 strategic initiatives. Today, I want to spend some time discussing 2 of our 4 foundational imperatives, 0 Harm and the Hardie operating system. Let us now turn to Slide 7 to discuss our first foundational imperative, 0 Harm. At James Hardie, our focus on 0 Harm is a non negotiable element of our global culture and is underpinned by a conviction that every instant is preventable.

Speaker 1

We operate with our team's safety, Security and well-being as our number one priority. This also includes ensuring our products are safe and that safety is here too when we work with our partners, Customers and within the communities we participate. While Zero Harm is managed centrally at the global level, it relies on participation From every employee because safety is everyone's responsibility. We take a bottom up approach to involve our employees and safety and empower them with the skills they need to avoid accidents and injuries. As seen here in October, We launched our inaugural Global Zero Harm Month at James Hardie.

Speaker 1

All of our teams across all of our manufacturing sites and offices globally dedicated a day to discuss and exclusively focus on safety. These 0 Harm Days are an annual event and show that our business We'll never put profit before safety. I would also like to highlight our progress on DART or days away restricted or transferred when compared to the industry average. At a global level, our year to date DART was 0.57. High performing companies do safety well.

Speaker 1

Why? Because it requires complex situational awareness and unrelenting focus and vigilance. While we are improving, there are no shortcuts to 0 harm and there remains more to be done as we continue to operate with a belief that all incidents are preventable. Thank you to each and every James Hardie team member for your continued focus on embedding 0 Harm And everything you do. Now let's turn to Slide 8 to discuss another foundational imperative, the Hardee operating system.

Speaker 1

The Hardie operating system or HOS is our enterprise management system, which has been developed to drive focus across all areas of our business. This system provides clarity of priorities, efficient resource allocation and execution standards This focus and discipline ensures all efforts generate expected outcomes back to the business on time. The HOS works in conjunction with our existing manufacturing system called HMOS. Simply put, Number 1, driving manufacturing efficiency through lean manufacturing principles with HMAS, delivering procurement and R and D savings and improvements in working capital. As it relates to these three components, HOS helps us to offset cost increases outside of our control, providing us with the flexibility to Strategically invest in our homeowners, customers and contractors, including the builders, where and when appropriate, while maintaining our focus on profitable share gain.

Speaker 1

Over the next 3 years, we expect to generate 1 $100,000,000 of cumulative global savings through HMAS. This is achieved by driving ongoing lean efficiency throughout our global network of plants, including roll throughput yield, net available hours and a focus on delivering against our ESG targets. Across our facilities, you can see HMAS in action as we move towards standardized HMAS visual cues such as pyramid trackers and color coded escalation billboards. This consistency underpins the rigorous lean process that is embedded in the HMAS and that we are rolling out across all of our facilities globally. Additionally, over the next 3 years, we plan on delivering $60,000,000 of savings through procurement and R and D led initiatives.

Speaker 1

From a procurement perspective, this is about leveraging the Size of our global business to purchase more efficiently and implementing best practices to drive unit costs down. From an R and D perspective, it is about value improvements, including ESG initiatives that expand our competitive advantage. It is not about cutting R and D investment. Together, our lean manufacturing and procurement and R and D savings will lead to an expected cumulative $160,000,000 of savings from FY 'twenty four through FY 'twenty six. Lastly, in terms of working capital, over the next 3 years, we plan on delivering a cumulative improvement of $100,000,000 by continuing to demonstrate discipline and rigor with how we manage all aspects of our working capital globally.

Speaker 1

These goals were first announced publicly in May 2023 in our and I am very pleased with the progress we have made to date on these 3 key HAAS initiatives And I look forward to continuing to update you in the quarters ahead. Now, I would like to hand it over to Rachel to share more details about our Q2 results. Rachel?

Speaker 2

Thank you, Aaron. Let's start on Page 10 to discuss our global results for the Q2. Against the challenging backdrop, our team has delivered strong Fed results in the Q2 compared to last year with consistent and focused execution through the half point of our fiscal year. For the quarter, group net sales were flat year over year at just under $1,000,000,000 Adjusted net income increased 2% to $178,900,000 The global adjusted EBITDA margin was 28.6 percent And operating cash flow for the 1st 6 months was a record $459,100,000 up 74% year over year. The team is executing on our strategy and these record results demonstrate the power of controlling the controllable.

Speaker 2

Now turning to Slide 11, I'll detail our net income waterfall for the 2nd quarter. As mentioned, adjusted net income increased 2% or $3,100,000 year over year to $178,900,000 and was in line with guidance provided in August. The year over year increase was primarily driven by strong EBIT growth in North America and APAC, which combined contributed $21,300,000 increase to adjusted net income. During the quarter, global SG and A spend, which includes corporate, increased 23% year over year $52,800,000 This equates to 15.3 percent of revenues, up from 12.5% last year. The increase in investments, primarily in our marketing tent pole, reflects our focus on growing brand awareness and driving profitable share gains.

Speaker 2

Some of our key initiatives include increased marketing through advertising, sponsorship and trade marketing to drive consideration and conversion across the value chain. This not only includes our It's Possible, Being TV ad campaign, but also investing in programs designed to support our contractors and HOS initiatives. Adjusted general corporate costs increased primarily due to an allowance for a legal fee insurance receivable, higher stock based compensation expense and increased employee costs. In addition, our Q2 adjusted effective tax rate was 23.9%, which was higher than our estimate in Q1 FY 2024 of 22.9%. This increase reflects a change in expected geographic mix.

Speaker 2

Our current estimate for the full year FY 2020 4 tax rate is 23.4%. While this slide focuses on adjusted net income, I did want to take this opportunity to clarify that during the quarter, we recorded a US20 $1,000,000 charge related to the previously announced cancellation of the Truganina Greenfield site. The non cash write down was recorded as an asset impairment and the impact excluded from our adjusted net income. At this time, we are actively exploring sale options for this site. Overall adjusted net income of $178,900,000 was in line with guidance.

Speaker 2

We are proud of our global teams for the way they have executed in a challenging market. We remain focused on consistent Beginning with the top line results, North American net sales of $734,400,000 was down 2% versus the prior corresponding period. Our average net sales price was up 2%, which helped to offset a 5% decrease in volumes. Volume of 773,000,000 standard feet was just above the top end of our guidance range. During the quarter, overall housing end markets were challenging with major project R and R down mid teens and single family new construction down 14% in the June quarter.

Speaker 2

As a reminder, we use a 1 quarter lag methodology as applied to single family new construction macro data to better align the data to the timing of our reported sales. Our volume decline of 5% year over year in contrast with double digit overall housing market decline highlights the success we are having in converting share against Other competitive material. This reflects James Hardie's continued material conversion advantage in building products. Similar to the Q1, we continue to see volumes in South Central regions, which is new construction dominant, outperform our total North American volume. This has been supported by our partnering with the larger leading builders who have also been taking share during this time.

Speaker 2

In the September quarter, Single family new construction term positive growing 7% year over year, albeit off a depressed base and new construction has continued to outperform R and R. We remain focused on serving both the new construction and R and R segments and continue to invest in the larger R and R market. During the quarter, our initiatives to target contractors resulted in record membership to our Contractor Alliance program with total membership at an all time high of just over 6,000 contractor members. The contractor remains a key relationship in driving conversion to Dave and Hardy's products and completes the concept of being homeowner focused and customer and contractor driven. Now turning to margins.

Speaker 2

The North America EBIT margin improved by 3 30 basis points versus the prior corresponding period to a record 31.7% and was towards the top end of our guidance range. EBIT dollars in the 2nd quarter were up 9% to a record $232,700,000 and improved $20,000,000 versus the prior corresponding period. EBIT benefited from a higher average net sales price as well as lower input costs, specifically in freight and pulp. These benefits more than offset the impact of lower volumes. During the quarter, we continued to invest with SG and A dollars increasing 18% year over year.

Speaker 2

As a percentage of sales, SG and A expenses increased 1.8 percentage points. This increase was focused on our marketing strategic investment initiative by Aaron in our last quarterly call. We are gaining awareness from these investments and since August, our request for quotes or RFQs has increased by 20%, and we've achieved this result more cost efficiently. It is early, however, to measure the ultimate return from these investments. Post the quarter end, we have communicated our annual North American price increase for calendar year 2024.

Speaker 2

On average, prices have gone up mid single digit. As outlined earlier this year, we continue to expect our reported net average selling price to be positive for the fiscal year. Despite housing market volume declines, we are encouraged by our relative share performance. By managing decisively and partnering with our customers, The North American team delivered a strong second quarter results with record EBIT and EBIT margin. Let's now turn to Page 13 to discuss the Asia Pacific results.

Speaker 2

Similar to North America, it was a strong second quarter for Asia Pacific segments against a challenging backdrop. Net sales improved 7% versus the prior corresponding period to a record AUD225.1 million. The net sales improvement was driven by a higher average net sales price up 15%, which was partially offset by a volume decline of 9%. All three countries in the APAC segment experienced a decline in volume with Australia performing the strongest. EBIT improved 21 percent to AUD67.9 million.

Speaker 2

The result was driven by a higher average net sales price, which more than offset an increase in cost of goods sold. We continue to invest in marketing, such as with The Block media campaign built around this Popular TV series. We have a focus in APAC on brand building media and showcasing before and after home transformations made possible with James Hardie products. The APAC EBIT margin improved by 360 basis points versus the prior corresponding period to 30.2%. Similar to North America, our Asia Pacific team has partnered with our customers and managed decisively to deliver a strong second quarter.

Speaker 2

We'll now turn to Page 14 to discuss the European results. Our European team had a solid second quarter as the team capitalized on a dislocated Market environment. Net sales increased 5%, primarily related to a 20% increase in ASP and a €3,300,000 favorable true up related to customer rebate estimates. The growth in ASP resulted from our strategic price increases and growth in high value products. We continue to work closely with our customers and respond with products that are geared to both multifamily and single family homes.

Speaker 2

Importantly, we are seeing our product mix continue to shift towards our higher value fiber cement offering. Our fiber Gibson volumes were down mid teens during the quarter, whereas we experienced double digit growth in our high value products. While our high value products are growing off a small base, they are becoming a larger part of the overall mix, namely the plank and panel opportunity. On a combined basis, however, volumes declined 15%, which while significant represents a lower decline in the overall European market. Our innovative architectural panel provides an example of our growing high value products.

Speaker 2

This fiber cement product offers superior fire safety, sophisticated design developed in collaboration with leading European architects and a 15 year warranty, which together represent highly valued attributes in the market. Our Architectural Panel is an innovative and cost effective solution to help meet the European multifamily housing balance. Our focus on high value products helps support EBIT growth of €7,100,000 driven by a higher average net sales price, which more than offset a higher cost of goods sold per unit that was impacted by higher labor and energy costs. Similar to North America, SG and A Investments increased to drive new product selling support and growth initiatives. The EBIT margin improved by 6.40 basis points versus the prior corresponding period to 10.7%.

Speaker 2

This margin is inclusive of the euro 3,300,000 favorable true up related customer rebate estimates. Strategically, the European teams remain focused on driving growth through high value products in FY 2024 and beyond. The strategic emphasis similarly supports the long term margin expansion opportunities. Turning now to Page 15 to reflect our strong margins, which are a hallmark of James Hardie. In the first half of FY twenty twenty four, our operating cash flow was $459,100,000 This cash flow result was driven by strong financial results in all three regions and a working capital improvement of $82,700,000 These improvements were both supported by the execution of the Hardie operating system.

Speaker 2

We continue to maintain a strong liquidity position with a Q2 leverage ratio of 0.79 times and liquidity of $608,000,000 We are stewards of investor capital. Our capital allocation framework is 1st and foremost to invest in organic growth. We do this while maintaining a flexible balance sheet while deploying excess capital to our shareholders. Through Q2, we have paid down $90,000,000 of revolver, completed our US200 $1,000,000 buyback program and today announced a new US250 $1,000,000 buyback program, which we expect to complete over the next 12 months. These actions reflect our strong cash flow and balanced approach to capital deployment.

Speaker 2

Regarding capital expenditures, for the 1st 6 months, capital expenditures totaled $232,600,000 We continue to expect to spend approximately $550,000,000 on capital expenditures in FY 2024 and we remain committed to keeping capacity supply ahead of demand. Subsequent to the quarter end and through October, the company paid down the entire $140,000,000 balance on our revolving credit facility. We also entered into a new 5 year US300 $1,000,000 term loan agreement maturing October 2028. As of 31 October, 2023, our liquidity was US1 $1,000,000,000 versus US608 million at 30 September 2023 with a net leverage of approximately 0.7 times versus 0.79 times at the quarter end. We have robust operating cash flows, substantial liquidity and a flexible balance sheet, which enables us to invest in profitable growth.

Speaker 2

I'll now turn it back over to Aaron.

Speaker 1

Thank you, Rachel. We have delivered a strong first half and a record quarterly result for adjusted income. In addition, we have outperformed our end markets in challenging conditions. These results are proof points that we are accelerating through this cycle and taking share. Now let's move to Page 17 to discuss our market outlook and guidance.

Speaker 1

For our largest market, North America, we have again provided the market outlook data from several external data providers. External ranges continue to change. The average estimate for single family new construction improved from down 12 to down 9. Multifamily new construction weakened from down 12 to down 15 and repair and remodel improved incrementally to down 11. Using these external ranges along with our assumed market segment exposures for FY 2024, the implied range for our blended addressable market is down 7 to 14 with an average of down 11.

Speaker 1

Overall, while these calendar year 2023 North American end market Forecasts have improved incrementally, there remains considerable uncertainty in the market today due to poor mortgage affordability, Interest rate volatility and unsettled market dynamics. Regardless of market conditions, we remain confident that we will be able to deliver growth above market and strong financial results. We remain laser focused on driving profitable share gain and are demonstrating this with our market outperformance. If you turn to Page 18, we have again provided the volume sensitivity analysis for FY 'twenty four. This sensitivity analysis was prepared in the same manner as last quarter, which assumes our current range of expectations on raw material costs and freight rates and assumes we continue to invest in growth as currently planned.

Speaker 1

These volumes are simply to provide context to our EBIT margin sensitivity in North America and should not be construed as volume guidance for any quarter in fiscal year 2024. Regardless of how markets fluctuate, We are confident we will outperform our end markets. Now please turn to Page 19. Today, we are providing 3 points of guidance for our Q3 of fiscal year 2024. First, We expect North America volumes to be in the range of $730,000,000 $760,000,000 standard fee.

Speaker 1

2nd, We expect North American EBIT margin to be in the range of 30% to 32%. And lastly, We expect global adjusted net income to be in the range of $165,000,000 to $185,000,000 As I mentioned earlier, our team is energized and focused on driving profitable share gain and we are positioned to deliver another strong financial result in our Q3. Finally, please move to Page 20. As always, I want to close with who we are at James Hardie, a global growth company. I am proud of our team's ability to navigate these uncertain markets to deliver a strong second quarter and build on the momentum from our Q1.

Speaker 1

We are homeowner focused, customer and contractor driven. Before I hand it over to the operator, I would like to mention that we will be hosting our next Investor Day in late June 2024 in North America. At this event, we look forward to showing you our value proposition in the field and we'll be sharing more details in the coming months. With that, I would like the operator to open the line up for questions.

Operator

Your first question comes from Lee Power from UBS. Please go ahead.

Speaker 3

Good morning, Aaron Rachel. The midpoint of volume guidance that you've given For the Q3, it's up 6% year on year. I take your end market data, that's really helpful. But just thinking about Your mix in share growth, is there something going on in the Q3 that doesn't mean we should be assuming positive year on year performance Hold through the Q4 as well.

Speaker 1

Hey, Lee, this is Aaron. We're going to Launch Rachel right into this to answer the first question. Rachel?

Speaker 2

Hi, Lee. Nice to meet you. Yes. So, when we look kind of where we are, the first thing I talk about is where is Q3 relative to Q2. And as you know for us, Q3 is typically a bit of a seasonality of bit lower of about 5%.

Speaker 2

So When you look at our guidance, to your point, the midpoint of our guidance does reflect that seasonality. But apart from that is really Fairly similar in terms of how we were guiding and frankly how we delivered for Q2. And again, we're very pleased with our performance relative to the market overall as you noted and it does reflect our focus on PBT.

Speaker 3

Yes, sorry, maybe to clarify, that's useful. But in terms of When I'm thinking about the 3Q guidance and the fact that that's up year on year, should we take that as just kind of reconciling that with the market data? Does that positive year on year performance, do you think that holds through the 4th quarter? So should we be thinking that the volumes are bottom and that we're now out on a year on year basis regardless of seasonality that we're seeing into the Q3?

Speaker 1

Yes. Hey, Lee, I'll take this. Right now, we're seeing a pretty normal pattern Order pattern, I would say, as evidenced by our guidance and up 6%, we feel very strongly About our Q3. But as we always say, we're just going to get 1 quarter of guidance and that's what we're doing here.

Speaker 3

Excellent. Thank you for that. And then the lean savings, just the follow-up, the $100,000,000 can you maybe talk a little bit about that the profile of that? I mean it sounds like you're getting great Traction, you did what 40% gross margins again for the quarter, which is great. Like how do we think about that, the weighting of that through that period?

Speaker 3

Because it Seems like you've got some great early wins on it.

Speaker 1

Yes, Lee. Look, I think you're referring to Hoss, Which there's a few components of that for us. Obviously, HMAS, which is our Hardie manufacturing operating system, We have a terrific team across our entire manufacturing organization. We think about every single region, but I'll just pick North America for instance. North America is Run by a terrific leader in Sean Gadd, Brian Kilcullen is our leader of HOS and HMOS throughout the organization and then Don Ashworth, who runs manufacturing.

Speaker 1

What this team is really looking at is we're looking at our yield, but we're also looking at our net hours when we look at that HMAS metric. The other thing that is new that we haven't talked about before is we have our ESG initiatives in That we think are going to generate substantial savings for us when we think about waste, those types of things. So that really makes up the $100,000,000 We're off to a very strong start there. The other components of HOS would be when we think about R and D and procurement. I think you've heard me mention many times that we had a change in our structure as it relates to procurement.

Speaker 1

Procurement was more regional. We've set it up centralized under Ryan Kilcone. A gentleman by the name of Rob O'Brien runs this for us. He's doing a terrific job And we're really being able to leverage James Hardie as a whole. And we're seeing savings across all different areas, But also being able to work with our suppliers when we think about payment terms and things like that.

Speaker 1

So we're off to a strong start as it relates to Haas.

Speaker 3

Excellent. Thank you.

Speaker 4

I'll leave it there.

Speaker 3

Thanks, Aaron, and welcome, Rachel.

Speaker 1

Thanks, Lee.

Operator

Thank you. Your next question comes from Sharaya Viswan from Bank of America. Please go ahead.

Speaker 5

Good morning, Aaron. Good morning, Rachel. Thanks for taking my question and congrats on a very good quarter. One question on your SG and A perhaps for you, Rachel. Looking at Page 8 of your financial statements And the SG and A cost came in at $40,500,000 was $28,000,000 for the same period last year.

Speaker 5

And I know you mentioned certain one offs related to a provision of receivable. So if you could just give us a sense of if you take that number out, What was the SG and A on an underlying basis? And also more importantly, how should we think about that number in 3Q and 4Q? Thank you.

Speaker 2

Thank you. I'm happy to take that. So we talked about 3 components about our general corporate costs that provides that 40,000,000 One is an insurance receivable unwind, is related to an expected recovery of legal fees. Again, this is an insurance receivable unwind. That probably is your largest component in the delta.

Speaker 2

The other two pieces that we should talk about are higher stock based compensation That only reflects our share cost and increase in our share price, but also a larger group of employees, which is also reflected in the 3rd component, which is our increased employee cost. Those are the 3 elements I'd point you to.

Speaker 5

Roshan, could you give us the numbers if you have them?

Speaker 2

I do think the only one that I should give a little bit more color on is the unwind of the insurance receivable because it was a one time. And that is in your kind of Low single digit million.

Speaker 5

Great. Thanks. If I can just squeeze in one very quickly to you, Arun. Just looking at Page 18 of your presentation, the guidance. I just note that I appreciate those are just ranges and sensitivities, but Looks to me that the ranges have gone up, you put in an $815,000,000 number.

Speaker 5

Is it fair to say that it sort of shows an increasing confidence or I'm Reading too much into it?

Speaker 1

Yes. Shoraya, it's good observation. I think number 1, we're trying to simplify this. Number 2, we do have confidence in what we laid out. As I mentioned before, as we start into our Q3, We're seeing very strong order pattern.

Speaker 1

So we have confidence in what we're displaying here.

Speaker 5

Okay. Thanks, Alan. I'll jump back in.

Speaker 1

Thank you.

Operator

Thank you. Your next question comes from Lisa

Speaker 6

Just a question about the price rise. I mean, can you share any feedback that you've had with your customers so far, just given You put through another price rise and commodity prices do seem lower?

Speaker 1

Yes. Lisa, so let me just remind you, I think I've gone through this What our strategy is in relation to pricing, right? We look at a value based approach When we think about pricing, it's not purely commodities go up X or go down X and that we're going to take price One way or another. So it's more value based. Also, I just want to remind everyone, we're not a commodity, Right.

Speaker 1

We think we bring the highest value proposition to our customers and it costs money, Right. Cost resources, you think of everything that we're bringing to our customer partners and they're paying for it. The other thing and you can look across the different regions, right, Strong price in North America, relatively speaking, when you think about the market dynamics. I can say the same for APAC and I can say the same for Europe as well. So we really study and take into account market dynamics as well.

Speaker 1

So as that we're going to be able to go out there And take price and still be able to defend and gain share. That's how we look at this, Lisa.

Speaker 6

Sure. That's great color. Can I also ask just around the volume trends you're seeing at the moment? You said orders have been quite Strong. I guess in the slide deck you called out South, Central and Northwest as being the best performing regions.

Speaker 6

Can we have a can you give us any color on say the Northeast and some of the other regions what you're kind of seeing there that aren't performing as well?

Speaker 1

Yes. And when I say not performing as well, it's all relative. Again, talking specifically about North America, Again, we have a terrific team. So they really are bringing solutions to our customer partners. And if you think about the difficult environment, Whether you're in R and R, whether you're in new construction, you need a partner that can bring you value and that's what we're bringing out there to our customers In each one of those segments out there.

Speaker 1

But look, we were down 5%. If you look at our volumes, we would say R and R in general was down mid Teens is what some of the outside external advisors have been telling us if you look at some of the studies out there. And the new construction down 14%. So even with that, you can see our strong performance. Now region by region, You did mention Texas and that is relatively strong because it's been buffered by new construction.

Speaker 1

That's where a lot of the new construction is going on there. And then if I look at an area like the Pacific Northwest, that is us having the right proposition that we didn't have before And going out and taking share from a competitor, plain and simple.

Speaker 6

Right. That's great color. I'll leave it there. Thanks. Thanks.

Operator

Thank you. Your next question comes from Simon Thackray from Jefferies, please go ahead.

Speaker 4

Yes, thanks. Good morning. Welcome, Rachel, as well. Just a quick here, I'll go straight to you, Rachel, On some basic math, the company free cash flow generation looks, again, pretty formidable and looking at on an annual run rate, Maybe $400,000,000 of free cash flow after the CapEx. You've announced $250,000,000 buyback.

Speaker 4

So I'm sort of Confused why you need a $300,000,000 term loan when you got the free cash flow generation. You paid out the $140,000,000 revolver. I get that. Why do you need to turn out 5 years worth of debt for $300,000,000 when you're generating that kind of cash flow, just out of interest?

Speaker 2

Yes. I mean, yes, I mean, I'm echoing.

Speaker 1

Maybe you want to mute your line there. Okay.

Speaker 7

Try to get it.

Speaker 2

All right. So the first thing you rightly know, we paid down $140,000,000 of revolver with the term loan. As it tells you, our term loan is at SOFR plus 2%. So this is very attractive money for a locked in 5 year And we are a growth company. So as you think about being a growth company, having cash on the shelf for that very accessible cash, it's very appropriate for where we are in being a growth company.

Speaker 2

And we can support that organic growth. And as you can see, we also can do an and. In this case, We just announced a new $250,000,000 share repurchase program on the heels of completing the $200,000,000 share repurchase program. Look, the $200,000,000 is equivalent of just under 2 of our shares outstanding. So again, I think we're taking a balanced approach as we think about our capital allocation and return capital structures.

Speaker 4

No, I get that. The hot system that you're talking to, Aaron, delivers you another $160,000,000 of pretax improvement Plus working capital is another 100 you're talking about. I mean, you've got cash coming at your peers on this thing. I'm just trying to really understand, is there something else that I should be thinking about I know you're saying you're a growth company. I mean is that acquisition?

Speaker 4

Is that capital allocation over and above the existing CapEx Envelope, is it capacity coming on faster? We should be thinking about, trying to really understand the logic of that given the strength of the numbers you're putting out there and the way you've

Speaker 2

Yes, I'm going to start back with the first comment is why are we generating so much cash? We have great margins, Right. And our great margins are a hallmark of James Hardie, but we're in a cyclical business. So the combination of being in a cyclical business means What is that insurance policy and what does it cost you? And at SOFR plus 2%, and again, I paid down my revolver, so not being kind of lazy with the cap structure, It does feel appropriate to support the growth ahead.

Speaker 1

All right. Simon, anything else?

Speaker 4

No, that's all good. Thanks, Aaron. Thanks, Rachel.

Speaker 1

Thanks, Simon.

Operator

Thank you. Your next question comes from Peter Stein from Macquarie. Please go ahead.

Speaker 1

Hey, Peter.

Speaker 8

Good morning, Aaron. Good morning, Rachel, and pleased to meet you. Aaron, just a quick question on SG and A. So you're clearly picking that up fairly materially At Water State, well, hopefully is the low end of the cycle. Could you talk to us a little bit about some of the benefits You're seeing there what you're specifically investing in, also picking up that comment about So in the strategy about connecting and influencing all participants in the value chain, where it is during investing and what the impacts have Because clearly that is coming through in bucketloads from a volume perspective.

Speaker 1

Yes, Peter, great question. And I think you've really seen This ramp up of SG and A over the last couple of quarters. And as we look to Q3, we expect it to be Similar to what we're seeing here now or what you just saw in Q2. Look, it supports our strategy. I've said this over and over customer focus.

Speaker 1

When I think about our strategy, homeowner focused customer and contractor driven. So more recently, I think you James Hardie talk just about the homeowner, right? And the focus has been really on media, namely Magnolia Home. We think that we need to do more than that when we think about the value chain. So as recently we've been investing in media, but it's been targeted At Media where we think it goes across our entire value chain.

Speaker 1

So that is homeowners, that's customers and contractors. And really I brought this term into play of our marketing tent poles out there. And it's really a few key areas that we think about from a marketing perspective that we're going to invest in. So if you think about the builder and contractor, we think about the brand days events. We think about our Contractor Alliance program.

Speaker 1

Also, we're getting more prescriptive as it relates to regional marketing, And that can include sponsoring local sports teams. So it really covers the gamut of that homeowner focus customer and contractor driven. One of the things that I look at is the share gains that James Hardie has been able to achieve Over the last 10 years and I think we shared that it was some census data and we achieved 8% share growth Over the last 10 years out there from 15% to 23% and this was really centered around new construction. What I'm really excited about, if you look over those last 10 years, we didn't do much of this at all, right? So if we think moving forward And you look at this investment, we expect this to accelerate our share gains.

Speaker 1

And look, it's only been 2 quarters, and I think you have to judge us On an annual basis, but we are taking share and we sit here with a year gone by, I think it will be a worthwhile investment. So early days, but that's why we're doing it, Peter.

Speaker 8

And then just turning to new construction, obviously, an area of significant focus for you this year. Could you comment on what you've experienced in terms of the entire proposition being pulled through? So beyond just the Planck, what you've seen in Trim and other products that have contributed to the overall profitability of the portfolio in the context of new construction?

Speaker 1

Yes. Look, in new construction, I would just say this, We're bringing the solutions that our customers need and value, right? So new construction and as we partner with Our large builder customers, it's very, very competitive out there. I think we've talked about it before. Part of the reason they're doing so well is there's not existing homes out there for people to buy.

Speaker 1

So they have land and they're building on them. And one of the things that they have the advantage of doing because they have such a strong balance sheet is they're buying down rates. Usually the magic Number is sub-five from an interest rate standpoint out there and they're getting traction there. And this is really the large Builders out there. So as you can imagine very, very cost conscious and we're bringing them the solutions they need for those different levels of buyers.

Speaker 1

One of the ones that we've talked about many times is Symplank, right. And we introduced that early into the year. And I think there was a lot of fears of, are we going to let this product get out of control because I know that happened before. We're managing it appropriately. And I think it's evidenced when you see the type of margins that the North American team has been able to generate.

Speaker 1

One of the things you asked about was TRIM. That's an on purpose strategy and focus for us from a North American standpoint is really to increase our trim attachment rate. We are doing that. I think probably it's best to let a whole year to go by before we would talk to that, Peter. But when we look at every single one of our product segments, we're bringing the right solutions to our customers.

Speaker 1

That's what we're focused on.

Speaker 8

Perfect. Thanks, Aaron. I'm going to be cheeky and just sneak one quick one on cash flow for Rachel. Sorry, dollars 82,700,000 worth of working capital unwind. We haven't seen that in the second quarter typically.

Speaker 8

Rachel, how much of that is structural versus sort of a seasonal Some other effect that's playing through there. So I guess how much HRS are we seeing in that number?

Speaker 2

Peter, you're absolutely right to point out there's 2 factors, right? You can't ignore that there is some seasonality, but then what part is structural? And when you dig into the working capital, I know you guys have just gotten the number, You're going to see the 2 key drivers are inventory and it's also on accounts payable. And what does that reflect? So on the inventory, We're doing a lot more with customer integration.

Speaker 2

So with the customer integration, we're specifically getting a tighter look on their inventory with our top customers, largely driven with North America. From that inventory look, we are getting that close inventory look. Not only is that a demand signal for us, But it is also a great way for us to efficiently manage their inventory and our inventory. So that is a number that is clearly part of the half. As we look at the accounts payable, that also is reflected of the procurement group that Aaron had discussed.

Speaker 2

So really, when you say things like, it's our phone bill, I mean, it's something so basic as some of that, where having a global procurement focus is letting us access some of that opportunity.

Speaker 8

Fantastic. Thank you. And I'll definitely leave it there.

Speaker 1

Thanks, Peter.

Operator

Thank you. Your next question comes from Harry Saunders from EMP. Please go ahead.

Speaker 7

Good morning, Aaron. Good morning, Rachel. Thanks for taking my questions. Firstly, just one on primary demand growth. I think you alluded to sort of 4% Previously, just wondering any idea how this is tracking?

Speaker 7

It seems it's well ahead of that sort of 4% in the quarter given The end market growth that you talked about?

Speaker 1

Yes. Harry, we set this back in March, right, the end of March We kicked off our fiscal year at 4%. And if you remember the year prior, I think we came in North America roughly 3%. So 4% was a goal that was not a layup for our team out there. I would say right now how we're tracking As we're very pleased with our performance relative to PDG.

Speaker 1

If I look at PDG, I think we need to evaluate it annually Versus 1 or 2 quarters. And I think what's really encouraging for us is we continue to take share with our superior product out there. I mentioned before, I think to Peter of just the opportunity from a material conversion that we We do have in front of us. Over the last 10 years, we've taken substantial share without doing a lot as it relates to demand creation. We're putting more behind demand creation, so we expect to see our PDG growth just accelerate.

Speaker 7

Right. So on that, when you say accelerate, so FY 'twenty five, you could expect the higher PDG than that 4%.

Speaker 1

Now Harry, you know better than to try to get me to talk about FY 2025. We're just going to give here Q3 guidance.

Speaker 7

Okay. Thank you. My other question relates to the seasonal uptick you typically In the Q4, is there anything to sort of change the view, I guess, that you usually would see a seasonal volume increase?

Speaker 1

Yes. And Harry, I think probably you might be referring to our people buying ahead as it relates to price increases. We're not we're seeing normal order patterns right now. So we're not seeing anything different.

Speaker 7

Great. And sorry, but in the March quarter, you typically will get a sort of a volume increase over the December quarter, right, Historical trends, just wondering if there's anything to change to that usual seasonality for you?

Speaker 2

Yes, I think we expect The seasonality is there with us as part of the Q3 guidance, and so there's nothing unusual in what we have seen so far.

Speaker 7

Great. Thanks, guys. Sorry, I might just sneak one more in on the HOT's cumulative savings. So just to be clear, that's a cumulative number. So can you give an idea of the run rate broadly that you might be sort of factoring in by the time you get to FY 2026?

Speaker 1

Go ahead, Rachel.

Speaker 2

Yes. I'll start by saying these targets were set as of our fiscal year end, Right. And they're through FY 'twenty six. So it's a bit premature to be talking about where we are particularly on a quarterly basis. But I think when Aaron talked about what are some of those key drivers we're looking at, he took you through in each month what we're tracking With R and D and procurement and also what I was talking about with the customer integration, particularly working capital, some of the initiatives.

Speaker 2

So that's coming together to But again, I'll remind you, we just set that baseline and it is through FY 2026.

Speaker 9

Great. Thanks.

Speaker 1

Thanks, Harry.

Operator

Thank you. Your next question comes from Brook Keppel Crawford from Barrene Joey. Please go ahead.

Speaker 10

Thanks for taking my question. It was a follow-up actually on the HOS savings. Are you able to Just clarify or provide some color on what the uses of those savings are going to be. Are you looking to move it around and invest elsewhere? Or Are you more keen to let it drop through to earnings or maybe it's a mix of both?

Speaker 10

So any sort of examples or further color on the use of those savings would be great. Thanks.

Speaker 1

Yes. Look, the way that we look at cost savings, Brook, is really it's going to help offset non controllable costs, right? Another benefit of HOS is it's going to help us add incremental capacity. And it's going to allow us to continue to invest in the Thanks to grow our business. I talked about the marketing tent poles, things like that.

Speaker 1

It's going to help us invest in people. So the list goes on and on, but that's how I look at the cost savings. It's not a one for one transfer over to the P and L.

Speaker 10

That's great. Thanks. And then would you mind providing some comments on the R and R market? I know you talked to mid teens decline in the quarter, But any sort of green shoots there? You've always sort of flagged there, Aaron, that there are some good structural drivers that should support That market adds up at some point.

Speaker 10

So are you hearing any green shoots at all? And as well as if you're able to comment about how it sort of trended through this year, just so we can think about when the comps start to get easier, I guess, in calendar 2024? Thanks.

Speaker 1

Sure, Brook. Look, we remain bullish on R and R From a mid to long term standpoint, there's many reasons why, which I'll go into. But look, just more short term, As we talk to our contractors, they feel the same way, but they're cautious right now. And they're cautious because homeowners are cautious for many different reasons. Interest rates continue to climb in North America.

Speaker 1

That's one piece. But there's just still uncertainty out there in the marketplace. But as I've said many times before, we're in a really good spot as it relates to R and R. You think about the material conversion Opportunity for us. There's so many homes out there that are older that need re sighted, Right.

Speaker 1

And that's one of the reasons why we're investing now because it is a long sales cycle for us. Also people have more wealth in Their homes than they've ever had. So as they come off the sidelines, we want to be there. Rachel uses the term, which I like a lot. We think about the R and R market, like a beach ball underwater.

Speaker 2

And that's Don, I got to credit that is an external macro. I wish I came up with

Speaker 1

She cited that, but I still like it. And that's what we see out there is this R and R market has all the elements to really take off. And if you look at some of the projections, it's for the back half of next year. We also think about our investments, I mentioned, in our marketing, but it's also having people in the field and then it's our capacity As well. If we think about Prattville 3, that's going to come online at the end of February of next calendar year.

Speaker 1

So we'll have the capacity, we'll have the demand creation in store, all the elements check off. We're really, really excited about our prospects.

Speaker 10

Thanks, positive. Thanks.

Speaker 9

Thanks.

Operator

Thank you. Your next question comes from Rowan Gallagher from Jarden Group. Please go ahead.

Speaker 11

Hi, Aaron. Can you hear me? Yes.

Speaker 1

I got you, Rowan. Yes.

Speaker 11

Hi, Hi, Aaron. Hi, Rachel. Good morning, everybody. Just first of all, congratulations on continuing to fire the market, so it's a credit to you and the team. Just in relation to costs, I noticed that the last 12 months you've had massive tailwinds associated with pulp and freight in particular.

Speaker 11

I'm conscious of the geopolitical risk, diesel prices, etcetera. Can you just comment on where you see those 4 key Cost of goods sold drivers and what you're assuming implicit in your guidance going forward where you can please?

Speaker 2

Yes. So we've been talking about 4 key cog drivers for us and we talk about freight, we talk about cement, we talk about labor And Paul, so those are the 4 that we've been tracking. And as you've discussed, those are nearly kind of 50% of our COGS. So You're right to point to those. As you pointed out, freight and pulp have been tailwinds for us this year.

Speaker 2

We've also cited that we expect to meant particularly in the very end of the year is going to be a headwind for us. So we've had puts and takes on our costs overall, But those are really the 4 of the 2 keep monitoring.

Speaker 11

And just freight in particular, are we seeing that starting to back up now?

Speaker 2

For us, freight has been for the year, you're right, favorable. But on a quarter to quarter sequential basis, pulp has been the area that's really been still supportive.

Speaker 5

Okay. Thank you.

Speaker 11

And a follow-up question Rachel, if I may, and apologies. It was a previous question and I missed the Cool. But on the term loan that you've refinanced, can you confirm whether that's number 1 fully drawn and the rate that you Sandeep on. Thank you.

Operator

Yes. So it's not

Speaker 2

a refi. So the term loan A, it's roughly a SOFR plus 2%. It's $300,000,000 it's 5 year and we used $140,000,000 of those proceeds to repay our revolver. Okay. So the other piece is we also announced the $250,000,000 new share repurchase program.

Speaker 2

So as you look across the cap structure, we are taking a balanced approach here to how we are thinking about funding and supporting our growth.

Speaker 9

Okay. And final question, if

Speaker 11

I may. Aaron, you've commented in your published remarks about mid single price increases ASP being announced, Obviously, the mix effect with your customer base will vary and as well as product mix rebates, etcetera. At what point would you envisage or could you envisage ASP in North America flatlining or even declining given the uncertain markets that we're facing currently?

Speaker 1

Yes. Rowan, just very simply, we don't see that average price declining For us, we believe for the foreseeable future, it's going to be positive.

Speaker 11

Awesome. Thank you very much. Thanks.

Operator

Thank you. Your next question comes from Sam Tsao from Citi. Please go ahead.

Speaker 9

Good morning, all. Thanks for taking my question. Just wanted to ask on 3rd quarter margin. I guess, it's normally declined sequentially on lower volumes, but you're talking on keeping that flat. I just wondered if you could walk us through the moving pieces.

Speaker 9

And in relation to margin seasonality going forward with the cost out, is there a way to balance your reinvestment in SG I guess seasonally to keep that more stable through the year?

Speaker 1

Yes. Look, I'll start and then Rachel can jump in here. As far as margins, first of all, we've had a healthy margin through this Entire year and moving forward, I think we're forecasting that as well. We're going to continue to invest in the business Where we need to invest, which we talked about some of the demand creation, mainly some of the marketing tent poles. And what's also helping our margins is the benefits we're getting from the outstanding work our team is doing around HMAS, Right.

Speaker 1

Also working with our suppliers to continue to offset inflation with some of the cost savings. So If you think about our margins and how healthy they are, those are some of the areas that are really aiding us, But we're still able to be able to invest in demand creation.

Speaker 2

Yes. What I like with Aaron's focus on us, given the market right now, he's kind of telling Control the controllable, right. So that is kind of our execution mantra as we go through. And controlling the controllable means we've given some of that Margin guidance, it's in also relation to a very specific input cost environment as well. So I think we have to also keep in mind There are things we can do and they're both of the environment.

Speaker 2

So that is one of the reasons why we're being quite cautious right now and keeping our focus very much on our execution and giving you guidance as we look ahead to the 1 quarter.

Speaker 9

Got it. But just following on from that, is there With HMOS to keep the margins more stable or the margin profile more stable through the year?

Speaker 1

Yes. So it's a great question. And I think you're probably looking at past years, correct, if you look at the margin profile. Look, I think there's opportunities with our HOS system to keep our margins Stable and really just continue to execute our existing strategy. So yes, I think there is.

Speaker 9

Okay, great. And then just quickly last year, Yes, we saw cancellation rates pick up because of rising rates. Is there any thoughts around something similar happening this year or any reasons things might be different As you look at your customer backlogs?

Speaker 1

Yes. Sam, look, based upon where we're at now and I'm reflecting back on when I started roughly a year ago and the tumultuous market that we faced. We have confidence in what we're seeing right now, hence the guidance we're putting forward. I think what's different Then last year is the strength of new construction that we're seeing out there. So we come into Q3 Very, very confident of where we're at right now.

Speaker 9

Got it. And then any thoughts on cancellation rates?

Speaker 1

We have not seen much in the way from a cancellation rate standpoint.

Speaker 2

Look, I think our guidance for Q3 underscores that confidence And that is a difference as well.

Speaker 9

Yes. Okay, cool. Congrats on the result guys. Appreciate it.

Operator

Thank you. Your next question comes from Paul Quinn from RBC Capital Markets. Please go ahead.

Speaker 12

Hey, Paul. Hey, thanks very much. Afternoon, Aaron and Rachel. Just wanted some maybe some color just on the North American volume, that 5% reduction. Was there a meaningful split between what you saw the reduction in repair and model and new home construction?

Speaker 1

Yes. Look, I think it's still good directionally. We always have said that 65% is R and R, 35% is new construction. I think directionally that still stands. But I did mention some of the areas of the country that are outperforming and one of them being Texas and that really correlates to new construction.

Speaker 1

But then conversely Pacific Northwest is more of us going out and taking share from a competitor because we have the right value proposition. But just in summary, I would say more of the new construction focused markets are doing better than what would be our R and R markets.

Speaker 12

Okay. Thanks for that. And then that contractor alliance that you've got that 6,000 members sounds like a big number. No idea how big that market is, if you could size that total market?

Speaker 1

Size the total market for R and I'm not sure I understand, Paul.

Speaker 12

I thought you guided that your Contractor Alliance membership was Total 6,000 members? Is that out of is that what is that? And percentage of contractors you've got or Total North America, what is that? How big is that market?

Speaker 1

Yes. I think we would have to have the denominator of how many contractors are out there, which we don't. All I would say is, we see sequential improvement here. So if we look last year at this time, I think we had roughly 4,000 Members and we've moved that with an on purpose plan to 6,000 at all different levels. Wow, That's quite a

Speaker 12

gain and very helpful. Thanks very much. That's all I had. Best of luck.

Speaker 1

Thanks, Paul.

Operator

Thank you. Your next question comes from Keith Chu from Sorry, MST Marquee. Please go ahead.

Speaker 13

Good morning, Aaron and Rachel. Thanks for staying on

Speaker 3

the line for me.

Speaker 13

The first one just to cover off on channel risk. I mean one of the other building products companies out there, I think overnight, we're saying that the channel was actually getting pretty thin on inventory. So I just want to try and understand whether that's the case of 5% and whether there's any risk There. And as an extension to that point, Aaron, you've been in the business for a year now. Have you noticed anything Changed significantly for the sales team.

Speaker 13

Obviously, you've got these initiatives in place to drive demand creation. But anything internally or How that sales team is being run that's changed that you picked up over the last year that's made a big difference?

Speaker 1

Yes. Keith, Good to hear from you. Hey, I think number 1, we don't see any as far as inventories in the channel, it's normalized To us, we don't see any noticeable difference of it being stuffed or thin. So that's number 1. Number 2, as it relates to the sales team, And look, we have great sales leaders across all of our regions, very, very good and aligned with our customers.

Speaker 1

Here's the difference, I think that we've seen, number 1, our customer integration keeps getting better and better. That's not only our relationships with our customers, but also the data in which they're giving us, which is helping us as it relates to helping them, Right, to have the right inventory and where they need it. Just to give you a stat, we've taken Our largest customers about we had about 30% of them that gave us data. Now we're closer to 70% this year. So that's number 1.

Speaker 1

The other thing I think that's different is we're getting more specialized from a sales standpoint. When I talk about investments, We're making investments to get specialized in certain areas. So for instance, when we think about single family new constructions, It's putting people on that's focused on some of those large builders, but also moving it past the top 25 to the top 200 As well. So I think those are 2 of the noticeable changes that we've made within the last year that we're seeing benefits from, Keith.

Speaker 13

That's great. Thanks very much for the full semester. And then just coming back to a point that was made on share gains in the Pacific Northwest. Can you give us a bit more detail on whether that's in hard siding or whether that's against vinyl or other substrates, whether that's trim or plank? Any color on that would be very useful.

Speaker 13

Thank you.

Speaker 1

Yes. I'd just say very simply it's in the hard siding and it would be in the fiber cement area.

Speaker 13

That's excellent. Thanks very much.

Speaker 1

All right.

Operator

Thank you. There are no further questions at this time. I may hand back to Mr. Urda for closing remarks.

Speaker 1

Yes. Thank you, operator. Hey, just again, thank you to everyone. I appreciate the time. I want to again Thanks all of the team at James Hardie for making an excellent Q2.

Speaker 1

Appreciate that everything you do. That's it. Thank you.

Operator

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

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Earnings Conference Call
James Hardie Industries Q2 2024
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