James Hardie Industries plc
) reported first-quarter fiscal 2014 (ended Jun 30, 2013)
adjusted earnings of 11.7 cents per share, up 17% from the
prior-year quarter's earnings of 10 cents per share. The results
missed the Zacks Consensus Estimate of 60 cents.
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On a reported basis, earnings more than doubled to 32.1 cents per
share from 15.6 cents in the year-ago quarter. Earnings in the
reported quarter include asbestos, asset impairments, ASIC
expenses, New Zealand product liability expenses and tax
Revenues in the reported quarter increased 10% year over year to
$372 million. However, the results fell short of the Zacks
Consensus Estimate of $396 million. The growth was mainly driven
by enhanced sales volume and higher sales price in the USA and
Europe Fibre Cement and the Asia Pacific Fibre Cement segments.
The segments were aided by increased activity in both new
construction as well as repair and remodel markets.
Cost of sales rose 6.9% to $246 million from $230 million in the
year-ago quarter. Gross profit improved 15% year over year to
$126 million. Consequently, gross margin expanded 150 basis
points (bps) to 33.9% year over year.
Selling, general and administrative expenses excluding New
Zealand product liability expenses increased 23.9% year over year
to $54.9 million. Operating profit increased to $142.2 million
from $68.5 million in the prior-year quarter. Operating margin
rose around two-fold to 38% from the year-ago quarter.
Net operating cash flow jumped about 58% year over year to $78.2
million in the quarter, reflecting higher earnings and favorable
working capital movements.
For the year ended Jun 30, 2013, net capital expenditures
increased to $25.7 million from $14.9 million in the prior year.
The increase in capital expenditures was due to investments made
to fund facility upgrades and refurbishments of idled equipment
in anticipation of continued recovery in the U.S. housing market.
James Hardie expects that improvement in the U.S. operating
environment reflects sustainable recovery in the housing market
and improving house values. In anticipation of the ongoing
recovery, the company is investing in capacity expansions by
re-commissioning idled facilities, as well as funding market and
James Hardie anticipates that EBIT margins for full-year 2014
will increase as organisational expenditure is expected to remain
flat. These gains are expected to result in an EBIT margin above
20% in the USA and Europe Fibre Cement segment.
The operating environment in Australia is likely to remain
subdued and the company is not anticipating any substantial
increase in net sales. However, the New Zealand business is
expected to deliver improved results supported by a stronger
local housing market with an increase in housing starts activity.
The Phillippines business continues to experience steady growth
in the core market segment and expected to deliver consistent
earnings over the next twelve months.
Based in Dublin-Ireland, James Hardie manufactures fibre cement
products and systems for internal and external building
construction applications in the United States, Australia, New
Zealand and the Philippines. These products are used in a number
of markets, including new residential construction, manufactured
housing, repair and remodeling and a variety of commercial and
One of James Hardie's peers
) reported second-quarter 2013 adjusted earnings from continuing
operations of 47 cents per share, up 57% from 30 cents in the
year-earlier quarter. The results surpassed the Zacks Consensus
Estimate of 38 cents.
James Hardie currently retains a Zacks Rank #3 (Hold).
Other stocks in the same industry with a favorable Zacks Rank
CaesarStone Sdot-Yam Ltd.
) with a Zacks Rank #1 (Strong Buy) and
) with a Zacks Rank #2 (Buy).