James Hardie Industries plc
) gained around 3.7% after the company reported strong results
for third-quarter fiscal 2014 (ended Dec 31, 2013). Adjusted
earnings improved 67% to 10 cents per share from the prior-year
quarter figure of 6 cents. However, results lagged the Zacks
Consensus Estimate of 48 cents. However, results lagged the Zacks
Consensus Estimate of 48 cents.
On a reported basis, earnings increased three-fold to 21 cents
per share from 7 cents in the year-ago quarter. Earnings in the
reported quarter included asbestos, asset impairments, Australian
Securities and Investments Commission (ASIC) expenses, New
Zealand product liability and tax adjustments.
Revenues in the reported quarter increased 10% year over year to
$353 million. However, results fell short of the Zacks Consensus
Estimate of $394 million. The growth was mainly driven by
enhanced sales volume and higher sales price in the USA and
Europe Fibre Cement segments. The segments were aided by improved
activity in the new construction as well as the repair and
remodel markets and the execution of company's pricing
Cost of sales rose 3.3% to $231.7 million from $224 million in
the year-ago quarter. Gross profit improved 26% year over year to
$121.5 million. Consequently, gross margin expanded 440 basis
points (bps) to 34.4% year over year.
Selling, general and administrative expenses, excluding New
Zealand product liability adjustment, decreased 9.9% year over
year to $53.8 million. Adjusted operating income (excluding
asbestos, ASIC expenses and New Zealand product liability)
increased to $55.2 million from $34.7 million in the prior-year
quarter. Operating margin was 15.6%, a 480 bps expansion from the
Cash flow from operating activities for the nine-month period
ended Dec 31, 2013 increased to $254.7 million from $83.3 million
in the prior-year comparable period, driven by amended tax
assessment, decrease in contribution to Asbestos Injuries
Compensation Fund Ltd. (AICF) and higher earnings.
For the nine-month period ended Dec 31, 2013, net capital
expenditures climbed to $67.9 million from $41.3 million in the
prior year. The increase was primarily due to purchase of
previously-leased land and buildings located at the Carole Park
and Brisbane plant as well as refurbishment of idled
manufacturing assets at the California plant.
On Nov 2013, James Hardie Industries announced a dividend of 8
cents per share (fiscal 2014 first-half dividend) compared with 5
cents in the year-ago comparable period. The dividend has paid on
28 Mar 2014, with a record date as of 19 Dec 2013. In addition,
the company declared a special dividend of 28 cents per share.
The 125-year anniversary special dividend will be paid on 30 May
2014 to shareholders of record on 21 Mar 2014.
In May 2013, James Hardie Industries announced a new share
buyback program to acquire up to 5% of its issued capital. During
the quarter, the company repurchased and cancelled 305,153 shares
for $3.5 million, at an average market price of $11.60.
James Hardie Industries will benefit from the expected recovery
in the U.S. housing market. According to the U.S. Census Bureau,
the single family building permits were 482,600 for the nine
months ended 31 Dec 2013, an increase of 18% from the year-ago
James Hardie Industries forecasts earnings before interest and
tax (EBIT) margin for full-year 2014 to be above 20% in the U.S.A
and Europe Fibre Cement segment, led by improvement in the
underlying market demand and financial performance. However,
uncertainty in the U.S. operating environment will adversely
impact the margin.
The operating environment in Australia will improve modestly.
However, the New Zealand business is expected to deliver improved
results on the back of a stronger local housing market,
particularly in Auckland and Christchurch.
Based in Dublin, Ireland, James Hardie Industries manufactures
fiber 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 as well
as a variety of commercial and industrial applications.
James Hardie Industries currently has a Zacks Rank #2 (Buy). Some
better-ranked stocks in the sector include
CaesarStone Sdot-Yam Ltd.
). While CaesarStone sports a Zacks Rank #1 (Strong Buy), USG
Corporation and Wolseley carry a Zacks Rank #2 (Buy).
CAESAR STONE SD (CSTE): Free Stock Analysis
JAMES HARDI-ADR (JHX): Free Stock Analysis
USG CORP (USG): Free Stock Analysis Report
WOLSELEY -ADR (WOSYY): Get Free Report
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