James Hardie Industries plc
) gained around 3.4% after the company reported strong results for
fourth-quarter fiscal 2014 (ended Mar 31, 2014). Adjusted earnings
improved 43% to 10 cents per share from the prior-year quarter
figure of 7 cents.
Including asbestos and New Zealand product liability and tax
adjustments as well as Australian Securities and Investments
Commission (ASIC) expenses, the company recorded a loss of 42 cents
a share, wider than loss per share of 16 cents in the year-ago
Revenues in the reported quarter increased 15% year over year to
$376 million. The growth was mainly driven by enhanced sales volume
and a higher average net sales price. The segments were aided by
improved activity in the new construction as well as in the repair
and remodel markets and execution of the company's pricing
Cost of sales rose 11.5% to $250.9 million from $225 million in the
year-ago quarter. Gross profit improved 23% year over year to
$125.5 million. Consequently, gross margin expanded 210 basis
points (bps) to 33.3% year over year.
Selling, general and administrative expenses, excluding New Zealand
product liability adjustment, increased 4.8% year over year to
$60.8 million. Adjusted operating income (excluding asbestos, ASIC
expenses and New Zealand product liability) increased to $57.4
million from $37 million in the prior-year quarter. Operating
margin expanded 400 bps from the year-ago quarter to 15.3%.
During fiscal 2014, with cash flow from operating activities was
$322.8 million, up from $109.3 million in the prior year comparable
period, driven by amended tax assessment, decrease in contribution
to Asbestos Injuries Compensation Fund Ltd. (AICF) and higher
For fiscal 2014, net capital expenditures climbed to $115.4 million
from $61.1 million in the prior fiscal. The increase was primarily
due to the various capacity expansion and refurbishment projects
undertaken by the company at its plants in Australia and the U.S.
James Hardie Industries paid a dividend of $199.1 million for the
full year ended March 2014, an increase from $188.5 million in the
prior year. The company announced an ordinary second half dividend
of 32 cents per share and a full year special dividend of 20 cents
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 616,300 for the full year ended
March 31, 2014, an increase of 13% from the prior year. James
Hardie Industries forecasts earnings before interest and tax (EBIT)
margin will continue to expand in the coming years as the U.S.
operating environment continues to improve.
The operating environment in Australia will improve modestly.
However, The New Zealand business is expected to deliver improved
results supported by a stronger local housing market, particularly
in the Auckland and Christchurch areas.
During FY14, the company also confirmed its commitment towards
infrastructure growth with the reopening of Fontana, CA location,
the commencement of capacity expansion projects at Cleburne, TX and
Plant City, FL locations. The construction of a new manufacturing
line at Carole Park, Queensland location will also drive growth.
The Company intends to increase capital expenditure to an average
of approximately $200 million per year over the next three years.
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 #3 (Hold). Some
better-ranked stocks in the sector include
Simpson Manufacturing Co., Inc.
Gibraltar Industries, Inc.
The New Home Co. LLC
). While Simpson sports a Zacks Rank #1 (Strong Buy), Gibraltar and
The New Home Company carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
JAMES HARDI-ADR (JHX): Free Stock Analysis
NEW HOME CO LLC (NWHM): Get Free Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis
SIMPSON MFG INC (SSD): Free Stock Analysis
To read this article on Zacks.com click here.