James Hardie share price: What’s the outlook following FY21 Results?

FY21 Results in Focus

Global building and construction company James Hardie (ticker: JHX) on Tuesday released its fourth quarter and FY21 full-year results to the market.

Overall, for the fourth quarter and on a year-on-year basis, the company reported:

• Global net sales of US$807.0 million, up 20%
• Global adjusted earnings (EBIT) of US$173.1 million, up 43%
• Adjusted net income of $US124.9 million, up 44%

That solid quarter of growth bolstered the company’s FY21 performance, with James Hardie reporting full-year:

• Global net sales of US$2.9 billion, up 12%
• Adjusted net income of US$458.0 million, up 30%
• Operating cash flow of US$786.9 million, up 74%.

Despite posting double-digit growth across a number of key metrics, investors bid the stock lower on Tuesday, with the James Hardie share price finishing out the session down 4.32% or $1.82 at $40.28 per share.

Short-term price weakness aside, the stock has performed well over the last year, gaining 69% in that period.

The Outlook

The company used the full-year release to reiterate its growth ambitions while also touting its expanding global footprint.

Broken down geographically, North America remains the biggest sales driver for the group, with FY21 net sales of $2,040 million; the APAC region ranked second in terms of importance, with net sales of $458 million; and the EU market came in third, at $410 million.

Highlight: In FY21 APAC earnings (EBIT) margins hit 28%. This, said the company, was driven by plant consolidation, profit growth in New Zealand and the exit from the JH Systems Business.

In terms of earnings margins, management also upwardly revised its medium-term FY22 to FY24 margin guidance – on a region-by-region basis. Revisions highlighted in the table below:

Beyond margin guidance, the company said it expected total annual CAPEX to come in at US$250 million between FY22 and FY24.

Looking forward, management said they expected FY22 net income of between US$520 million to US$570 million, which implies a growth rate of between 14% to 24%, respective, on a PCP basis.

Finally, James Hardie's Chief Executive Officer, Dr. Jack Truong went onto elaborate that:

'Our expanded focus for fiscal year 2022 and beyond is to execute on the three strategic initiatives that we introduced in February 2021. This includes commercialisation global product innovation, further penetrating into existing and new market opportunities, and extending the James Hardie brand from a premium professional brand into a market-leading consumer brand.'

JHX currently trades on an 82x earnings multiple.

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