James Hardie Industries plc (NYSE:JHX) Q2 2023 Earnings Call Transcript

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Lee Power: That’s all right. And then just on lean, can you give us an idea of what’s been achieved and the confidence that you still get that benefit as this is like to probably softer volume environment come through?

Aaron Erter: Yes, Lee, it’s a great question. I mean, I’ve been here roughly 2 months, and I’ve really been impressed with our team’s focus on lean and productivity. This is something that’s part of our scorecard and part of our DNA as a team. So, we’ve really shifted from looking at dollars as a total team to look at net hours and our yield, and those are going to be really important for us to continue to focus on as we move forward. And I’m stating the obvious in that, lean execution has never been more important in what is a high inflationary environment. And what becomes a more challenging environment for us as we think from a manufacturing standpoint.

Lee Power: Okay, thank you.

Aaron Erter: Thanks, Lee.

Operator: Thank you. Your next question comes from Peter Steyn of Macquarie Group. Please go ahead.

Peter Steyn: Good evening. Good evening, Aaron and Jason. Thanks very much. Appreciate your time. Aaron, could you talk through your cost intentions or cost management intentions under the circumstance, what you’re going to be doing around market development expense and the like? And then also, perhaps just some of the CapEx intentions in the context of where things are headed?

Aaron Erter: Yes, absolutely. Peter, good to hear from you. Look, we’re going to continue to focus on what we need to control. As I came in here, what I was impressed with the team already had a certain look at scenarios, right, and we probably have accelerated some of those scenarios sooner than we thought, when we look at the difficult market conditions. So we’re going to continue to make sure we’re focusing on the right growth initiatives. But as the market slow down, we’re going to ensure that we’re optimizing our SG&A. If we look at our capital expense, we have slowed in some areas that we don’t deem critical right now. But we are moving forward with some key projects that are important to us, right. We talked about Prattville expansion, which we’re going to continue to invest in. So, Peter, needless to say, we’re going to continue to invest in the key growth initiatives. But we’re also going to respond to the slowing market conditions where we deem necessary.

Peter Steyn: Got you. Just two very quick follow ups. So from an SG&A perspective, everything that you’re doing around consumer marketing, essentially is probably not going to change much. I assume and then Crystal City, the announcement that you put out a few weeks ago that you’re presumably just doing front end engineering and some design work on before actually breaking ground there.

Aaron Erter: Yes, so in regards to marketing, we’re going to continue to focus on marketing, because we are — initial results are very good for us, right. We talked about the growth we’re seeing with ColorPlus and R&R. The Midwest and the Northeast will be a continued focus with our marketing efforts. I would say, with marketing, we’re learning more and we’re getting more efficient, right. So we can really dial in that spin as it relates to marketing. And as I said before, as it relates to capacity expansion, Prattville is our main focus right now and we’re ramping that up. But we do have some other things that were more slow playing. And if we need to shift in higher gear, we will do so.

Peter Steyn: Got you. Thanks, Aaron. Appreciate that.

Operator: Thank you. Your next question comes from Andrew Scott at Morgan Stanley. Please go ahead.

Andrew Scott: Thank you. Aaron, just a question for you. I know there’s a lot of moving parts and things are moving quickly. But North America 4% volume growth, and we can probably debate whether starts or completions are more relevant, but completions are up 8% in the period. How confident are you that you actually grow share during the period?

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