James Hardie Industries plc (ASX: JHX) shares are on the move on Wednesday morning.
At the time of writing, the embattled building materials company's shares are up 10% to $33.35.
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Why are James Hardie shares jumping?
The catalyst for today's move has been the release of the company's eagerly anticipated second quarter update this morning.
According to the release, for the three months ended 30 September, the ASX 200 blue chip share expects to report net sales of US$1.29 billion to US$1.30 billion.
As for earnings, the company expects to deliver adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) of US$326 million to US$331 million.
Management also advised that James Hardie's adjusted net income will be in the range of US$151 million to US$157 million, with adjusted diluted earnings per share in the range of 26 US cents to 27 US cents.
Net debt at the end of the period stood at US$4.5 billion.
How does this compare?
This preliminary result was significantly better than the market was expecting.
For example, the consensus estimate was for net sales of US$1.19 billion and earnings per share of 15 US cents.
In light of this, it isn't surprising to see James Hardie shares storming higher on Wednesday.
Commenting on the company's performance during the quarter, James Hardie's CEO, Aaron Erter, said:
Our Siding & Trim sales performance exceeded the expectations reflected in our modeling considerations. Siding & Trim second quarter organic net sales fell low single-digits vs. the prior year, and distributors and dealers reduced inventory less than we had anticipated. Even as single-family new construction remains challenging, our customers' commitment to ensuring the availability of our products demonstrates the importance of our brand and strong partnerships.
We are encouraged by our second quarter results and believe the outlook for Siding & Trim has modestly improved. We will provide an update to our full year guidance through March with our second quarter earnings call in November.
Erter also spoke about the recent acquisition of AZEK and its integration. He adds:
The integration of AZEK and our synergy capture initiatives remain on-track. AZEK performed well in the second quarter, with mid-single digit growth in both net sales and sell-through for Deck, Rail & Accessories vs. the prior year. While our fiscal third quarter, ending December 31st, is traditionally the seasonally smallest for Deck, Rail & Accessories shipments, it remains a key period when dealer partners make shelf space plans for the following year's selling season.
We have clear opportunities to secure incremental shelf space for our Deck, Rail & Accessories products and expand James Hardie Siding & Trim into AZEK's loyal dealer network in key repair and remodel geographies. Our ability to deliver against these new business opportunities reflects the value proposition we bring to our customers through a comprehensive product portfolio, trusted brands and long-term partnerships. These shelf space opportunities represent early proof points that reinforce our confidence in our ability to drive commercial synergies next fiscal year.
