Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

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ASX 200 stock James Hardie Industries plc (ASX: JHX) is the worst performer of the S&P/ASX 200 Index (ASX: XJO) today after the building materials company released its FY24 4Q and full-year results.

Despite reporting record net sales and record adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the 12 months to 31 March, investors are punishing the ASX 200 stock today.

The James Hardie share price hit an intraday low of $48.22 this morning, down 11.95% on yesterday's close. The ASX 200 stock is currently swapping hands for $49.20, down 10.17%.

Let's review the numbers.

ASX 200 materials stock plunges on full-year numbers

Here are the highlights of the full year ending 31 March: 

  • Record net sales of US$3,936.3 million, up 4% on the prior corresponding period (pcp) of FY23
  • Record adjusted EBITDA of US$1,125.8 million
  • Adjusted EBITDA margin of 28.6%
  • Record adjusted EBIT of US$940.8 million
  • Adjusted EBIT margin of 23.9%
  • Record adjusted net income of US$707.5 million, up 17%
  • Adjusted diluted earnings per share (EPS) of US$1.61 per share, up 18%
  • Record full year operating cash flow of US$914.2 million, up 50%  

Here are the highlights of 4Q FY24: 

  • Record net sales of US$1,004.9 million, up 9% on the prior corresponding period (pcp) of Q4 FY23
  • Adjusted EBITDA of US$280.8 million
  • Adjusted EBITDA margin of 27.9%
  • Adjusted EBIT of US$232.5 million
  • Adjusted EBIT margin of 23.1%
  • Adjusted net income of US$174.2 million, up 19%

The company said it plans to continue repurchasing shares under its US$250 million share buyback program instead of paying dividends.

In Q4, James Hardie bought back 1.9 million shares at an average price of US$39.42, costing approximately US$75 million.

What did management say? 

James Hardie CEO Aaron Erter said:

Our team's focus remains simple: working safely, partnering with our customers, managing decisively, and controlling what we can control.

This focus has enabled us to deliver a strong fourth quarter and fiscal year for Adjusted Net Income.

Erter added that the FY24 results were "proof points" that the company was taking new market share.

He added:

We have a superior value proposition that helps our customers grow profitably and be successful.

Our team is focused on maintaining momentum and consistency to deliver strong financial results again in fiscal year 2025 as highlighted by our guidance range provided today.

What's next?

James Hardie said the outlook for its housing markets "continues to remain uncertain".

It expects its total addressable market in North America to decline by 2%. The company said it intended to outperform the market by growing the business and investing for long-term gains.

The guidance for FY25 is as follows:

  • North American volumes to be in the range of 2,950 million to 3,150 million standard feet vs. 3,054 million standard feet in FY24
  • North American EBIT margin in the range of 29% to 31%
  • Adjusted net interest of US$25 million to US$29 million vs. US$24.3 million in FY24
  • Adjusted effective tax rate of between 23.5% and 24.5% vs. 23% in FY24
  • Adjusted net income in the range of US$630 million to US$700 million
  • Capital expenditures of US$500 million to US$550 million

Broker says FY25 guidance 'disappointing'

UBS analyst Lee Power says James Hardie's FY25 earnings guidance is "disappointing".

The broker currently has a buy rating on the ASX 200 stock and a 12-month price target of $66.50.

In The Australian today, Power said the midpoint of James Hardie's FY25 net profit guidance range at US$665 million is 13% below the consensus expectations of $US762 million.

Power said:

The FY25 outlook is disappointing and while North American FY25 margin guidance of 29-31 per cent is broadly in line with UBS expectations, volumes are significantly below expectations.

FY25 volumes were 6 per cent below consensus, according to Power.

He noted the upper end of the FY25 NPAT guidance was eight percent below his estimates.

ASX 200 stock price snapshot 

James Hardie shares are down 13.5% in the year to date. By comparison, the ASX 200 is up 2.9%. 

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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