James Hardie Industries plc (JHX) Earnings Call Transcript & Summary

All right. Good morning, and welcome to James Hardy's 2026 Investor Day. Thank you for everyone that's joining us in person today. It was a huge turnout. We got an extra room over there for the spillover, and thanks to everyone for joining online. A big thanks to those people who traveled far. We've got a pretty big contingent Australia with us today. Let's see here. Safety note. So you came in these doors right here. There's an emergency exit to the left there, and the convenience staff will be there to help you if you need it. And let's go through the FLS, the fun stuff. Please note that today, we may refer to non-GAAP financial measures and make forward-looking statements. You can refer to several related cautionary and other notes in this slide. Forward-looking statements made today speak only to the date of this presentation. Forward-looking statements are subject to risks and uncertainties and could cause actual results to differ materially from those in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements. In addition, non-GAAP measures should be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of non-GAAP measures discussed are found in the presentation in the appendix. So let's walk through the agenda here for today. Okay. So we're going to start with Aaron Erter, then we do Jon Skelly, John Mats and Sam Tool. And then we're going to do the first Q&A session where all those speakers will come up. We'll take a short break. During that break, you're welcome to go out there and see the demos again. And then we'll come back with Ryan Kilcullen and Ryan Lada. And then Aaron will do a short close, and then we're going to bring the whole group up for a final Q&A. And then what we have is then we're going to have the leadership luncheon, which is kind of what you saw there. We'll have lunch out there, another chance, an hour for you to check out the demos. And then just 1 little note here, we're doing a decking teach-in. So for those of you who want a primer on decking, we're going to -- it's not on the schedule here, but we're doing a teach-in for decking. That will start at 1:15 to 2, that's optional, of course, if you want to do that. So that, again, the main demo area will shut down kind of about 1 a little bit after, and then we'll start the decking presentation for those of you that want to do that 1:15 to 2. All right. Let's get started, and we're going to queue up a video. [Presentation]

All right. Good morning, everyone. What a voice on that announcer there. That's the Hardy operating system in action. All right. Hey, good morning. It's great to see everyone here and also welcome to everyone who's on the webcast here. We got a packed house in a beautiful day here in New York City. Also I want to thank our team. We have some of our leadership team that you'll hear from here today. And then also, you'll get a chance, if you haven't already, meet many of them who are out there manning some of the product stations. And also, I want to thank our team across the globe. This is a monumental moment for us as we think about what we've been through over the last year. It's been 14 months since we came together with AZEK. And there's been a lot of ups, a lot of downs. Integration is never perfect here. But here's really the message I want everyone to take away is, this is working. This is working. What we said was going to happen over a year ago, putting these 2 companies together, this is working. I think the important point here is we're just getting started. Part of the thesis of bringing the 2 companies together is really what our Investor Day theme is here, and it's built to outperform resilient by design. So what I'd like to do here now, and you're going to hear the rest of the day here is this thesis and how we're going to make this happen. So let me dive right into it. Look, as we brought these 2 companies together, the idea was to be able to outgrow the market no matter what. Certainly, the market is challenging right now. One quarter does not make a total thesis right. But like I said, we're on our way, and it's working. I think the other thing as we brought the 2 companies together was to accelerate growth, and you'll hear some of the initiatives that we have and we only have by bringing these 2 companies together. The other piece of this, which is not unique to our industry and building products, but you see more and more consolidation within our industry. That happens every day, you hear about a deal, that is not going to stop happening. If anything, as the market picks up a little bit, we think that's only going to accelerate. And that's why having the strength of brands, the team, the products, makes this much more important for us to do. And we're sitting in a really good place here right now. So look, the 5 pillars that are going to really -- we're going to dive into here today is delivering growth above the market. And that means, it's not dependent on, okay, when housing comes back, we're going to be able to grow. We're going to be able to grow no matter what. That's what putting these 2 companies together. And we're able to do that because you'll see from the team we have fiber cement, we have Deck, Rail & Accessories initiatives that are going to sustain long-term growth for us. The other piece, which we're excited about, and we've made a lot of progress. I know when we announced this deal, there were many naysayers about our $500 million in commercial synergies. That is going to happen. We are well on our way. I would even say at least $500 million of commercial synergies for us. And you'll hear John, and John bring some of this to life. But our customers are aligned with us. They want to do business with us. Our contractors want to use our products. So that's point number one. If I think about point number two, it's the enduring competitive advantages. And I'll spend some time on this, but you can see on the list here, we said products, brands, manufacturing, Hardie operating system, deep relationships, our commercial strategy. If a company had 1 or 2 of these together, they would feel pretty good. We string all of these together. This is very hard to compete with. The other thing we're going to unveil here, I know in these Investor Days, and certainly many years past, but I've done it before. People have done it before. As you put 3-year 5-year targets out there, the way the market is, how could any of us predict what that's going to be? What we feel comfortable with and what you're going to see -- I'm going to take you through it in my section here, Ryan will dive more into it. is we have a compelling growth algorithm. Think of it as a differentiated type of portfolio growth stack of things that we're going to do, that we're going to be able to outperform the market no matter what, right? So outperforming the market, whether the macro is tough, right? There's inflation. There's more consolidation. So you'll see that. And look, what's exciting is we continue to enhance our cash flow. We are delevering pretty quickly. You see our margins continue to build. So we're going to have a lot of cash. And I think what's really interesting here and what's exciting is the optionality we're going to have, as Ryan takes you through the capital allocation. The other thing which I'm most excited about is us being able to consistently execute, and I know that's what you look for, right? Are we able to do this day in and day out? And as I told my team last night, many of you are here, you want to see if you understand the strategy, you want to understand if you have confidence in it, but then there's, do you have confidence in the team that's going to go out and execute upon that. And I think we have the best team in the industry. So you're going to hear more about these investment pillars, if you will. But let me go right to what I just mentioned and talk a little bit about our team because one of the things that I'm most excited about is for you to hear from this team. And look, I won't go through all their backgrounds because they can take you through it. But as we decided to bring these 2 companies together, there's different approaches you can take. And I've been through a few of these. You can say, okay, we're the acquirer. We're going to do whatever, it's going to be the legacy team that's going to run the business. We took a different approach. We said, these are very similar type of companies, right? And so the best approach for us as we move forward, and this is what we've done not only with the team, but we've also done this with the way we've set up the entire organization, our processes is we're going to take the best of both. And that's what we've done here. And there's really no coincidence why as you look at the backgrounds here, you have equal amount of legacy AZEK equal amount of legacy Hardie here. So Jon Skelly, who runs our largest business. He's going to come up after me. You can see the breadth of experience that he has John Matson, who's our Chief Sales Officer, new to that role, but certainly not new, the industry is a legacy James Hardy guy since 2004. Sam Tool, who's legacy ASAC but deep experience in marketing. -- with consumer brands companies. Ryan Kilcullen, legacy James Hardie guy. And then my partner in crime there, Ryan Lada, who's legacy ASAC that we were able to bring him back. So Look, we have a very strong leadership team. And with that context, what I'd like to just breeze through here quickly is who is James Hardie, today Okay. So won't go through this in detail because I think many of you are familiar with this. But James Hardie, we're listed in New York Stock Exchange, listed on the ASX. You can see our last year's sales, EBITDA and EBITDA margin. One of the things to talk about, and I know sometimes this can seem like fluff, but it's very important to us and was very important as we brought these 2 cultures together, is about our purpose, vision, mission and values. What we always start out with when we talk to a customer or we talk to a supplier, as we talk about our purpose, we think it differentiates us, and our purpose is building a better future for all. You saw a little bit about that in the video. That's what unites us. Of all the different things our teams are doing, our purpose unites us because we want our team to look through that guys on how are we building a better future for our stakeholders, whether that be our customers, our suppliers, the communities in which we live and work and also certainly for our investors as well. You can see the split out of the business. Obviously, North America, the lion's share. This is pretty divestiture. So we have Europe and Australia and New Zealand. You can see it's about 10% each. And then getting more into North America since we've come together with AZEK. Repair & Remodel accounts for about 57% of our business, new construction, 43% and then diving a little deeper into North America, you can see the product or the segment breakout. And the legacy Hardie business, fiber cement is still 60% of our business. Okay? All right. So let's take a little bit more of a dive into North America, and Jon and Ryan is going to cover more of this. But our business in North America, this is the growth engine that's split out in Siding and Trim and it split out in Deck, Rail & Accessories. As we mentioned, Siding and Trim is the largest part of our business. The other thing to take note from this slide is you just see the footprint of our manufacturing locations. When we talk about enduring competitive advantages, this is really key because we have about 26 manufacturing locations across North America. They are close to our customers. This is on purpose. About 90% of our customers are within 1 day's haul. This matters, right, for quick turnaround. So this is a competitive advantage for us. So as I said, the team is going to dive more into North America. Let me cover our international business here very quickly. So Australia and New Zealand and Europe, and I'll get to Europe here in a second. One of the questions I anticipate, and I'll cover it right now is, are you committed to Australia and New Zealand? Yes. Absolutely. And I see some of our friends from Australia here laughing. Yes, we are committed to Australia and New Zealand. We love this business. This has been a great business for us. John O'Neill and his team do a great job you talk about difficult operating conditions. That's what's going on in Australia right now and these guys continue to deliver growth. So we like this business. It's our most profitable business. We have good market share there. Our brand is iconic in Australia, and we see growth in Australia. And one of the things that we're starting to do because of the strength of our brands, the strength of our position within the channel is we're getting into more building products. It was really just fiber cement. So we just launched this past year air-rated concrete. It's called Hardie Gravis. And we expect next year to take some of the AZEK technology and get into outdoor living in Australia. So a great business for us. We like this business a lot. Going to Europe, look, we announced the divestiture of Europe. And I know, with many investors, this is always the question, what are you going to do with Europe? Look, the European team is a stellar team. They've done a great job. If I look over the last 4 years, their ability to grow the business in a down market, accretive margins. They've done an excellent job. What we wanted to do is shift our focus where we think we have the best right to win and the greatest opportunity and that is Australia, New Zealand, but primarily in North America. So you can see the sale of Europe $980 million, EBITDA multiple around [ 12 ]. We think this is going to close the first half of next year. And certainly, you saw the announcement, we're going to use some of the proceeds to accelerate our debt pay down and then we announced board approval for a share buyback. Okay? So a little setup on the business. And I got to keep moving here stay on time. But we talked about this in the beginning, 14 months since the close of the AZEK acquisition. And I talked to many of you, it feels a lot longer than 14 months. Sometimes it feels like that this has been years upon years. And that's usually how integrations go. And our team has worked relentlessly in making this a success. And again, after being through a few of these, this has been a success is the way we put these 2 companies together. Certainly, nothing is ever perfect. But I think the numbers speak for themselves and what we gain by bringing the 2 companies together. I mentioned the commercial synergies. We'll unpack that a little more. We feel very, very confident in our ability to be able to deliver on those commercial synergies. And I think all of you are going to walk out here and be like, geez, it's only $500 million. The other thing, our cost synergies is we said that we were going to do this in 3 years. We're going to finish it at the end of this year. So we're going to be at our $125 million in cost synergies by the end of this year. That's a testament to the team and the work that they've done. Now does it stop there? No. Where we shift more towards to, which we always do, and Ryan will talk more about it, is our Hardie operating system, which I like to say is our inflation mitigator, but it's our cost savings arm, right? We are always in continuous improvement. So we certainly see more opportunity. But what we stated out there publicly, we're going to be finished with to hit that goal at the end of the year. I think the other thing that's really exciting, and I'm going to get into here in a moment, is bringing the 2 companies together. Again, this is a point of stronger together versus separate is we increased our opportunity, our TAM by more than double, right? We now have a serviceable addressable market that goes from when we were just James Hardie, $10 billion to now $23 billion. So that's pretty exciting if you're sitting there as an investor, certainly exciting to us as we think about the opportunities out there. And then I'm not going to get into the commercial because John is going to cover that, Jon and John will cover that. And Ryan is going to cover more of the operational piece. But look, it's exciting to see, again, taking the best of both. One of the things that we've done is taken our Hardie operating system and started to implement that in the AZEK plants, and we're seeing a tremendous amount of efficiency here. All right. So let me shift more towards what is the opportunity for us. Look, it's large, right, if we think about this. And it is really set up well for us, right, for having resilient, beautiful product, right? Customers are more -- when you think about Repair & Remodel, for instance, it's just not turnover Repair & Remodel. It's preference Repair & Remodel. They're choosing what they want, a lot of them who are more affluent, right, who are buying our products are choosing to have resilient beautiful product, product that stands up to water, stands up to past, stands up to fire. If we look at our portfolio, we're really the only ones who can claim that out there. So that is a big part of what we do is material conversion. And our opportunity is to convert share from inferior, less resilient products. You can pick the product or the substrate inferior products, we're working with homeowners and contractors to convert them. I think we do have some tailwinds here. If you look at the aging housing stock, you look at, for Repair & Remodel 35 million homes, 20 to 40 years old. They're ready to be repaired. You go around here in the New York City area where I'm from, Chicago, you go to suburbs, is just endless, right, the vinyl homes, the wood homes that are all ripe for our 500-person sales team and all of our partners to be able to go out there and convert. And then you look at the number of decks that are older and the team will talk about this, but certainly another opportunity to convert inferior products like wood to our PVC and composite materials. And then look, the other thing that is more prevalent here in the U.S. as you think about 1/3 of the U.S. homes are in wooly zones. So I know I'm going to get this wrong. I do every wildland and urban interface, zones, right? So think about wildfires. And if you're rebuilding, you need to use materials that are fire resistant. And as I talked to, our materials are perfect for that. So that runway is meaningful because we now have the portfolio to capture more of the exterior. So let me just show you how this comes together, and I'm not going to spend a lot of time on this, but you can see siding, trim, decking, railing accessories, all outdoor living, right? I think the point here, and we went back to talking about consolidation within our industry, this completeness that we have to offer now changes the conversation that we used to have as James Hardie and AZEK used to have as AZEK. Now we have more to offer, whether that be our contractor, our homeowner, our dealer partners. That's very important as we think about what's going on in our industry. So look, a complete portfolio matters, but what's even more important too is having iconic brands, right, that contractors are demanding, that they want because homeowners are asking for. And I won't go through all the 1s and 2s, and I don't like to see 2s, and we're going to change those here very soon. But you can see from siding, we are the brand out there. Decking, we are the brand with the Pro. You can see trim, exteriors, we are the brand, pergolas, structures, railing and then even recycling. So this is very important for us. We call them iconic brands I think about them as hero brands. So look, these brands are really important, but part of bringing the 2 companies together was really important and a big part of our strategy is having the right distribution model. And the team is going to go through this more in detail. But we announced this about 45 days ago, our 2-step distribution partnerships. Now I'll just step back here very quickly and tell you this. This has been part of our plan for well over a year. As we think about the 2 companies coming together, and here's the list of actions that we're going to go out and do to make these -- the $500 million synergies a reality. To be able to go out and service our customers better, this has been part of the plan. And so we were able to do this by coming together. Certainly, Boise has been a long-standing, great partner of James Hardie for years. And so we utilize that relationship, talk to them about decking, talk to them about trim. We did some test markets. It worked, exceeded their expectations. So this is full alignment with what we think is the premier national 2-step distributor. That plays well to our strategy of having our product readily available and more available to more of our customer partners. Coupled with that, because of our AZEK relationship is the best-in-class regional 2-step distribution partners. So we have been talking so much, I'll give you, for instance, about our desires, James Hardie, to go out and spread fiber cement in the Midwest. That's not been an area that we focused on for years, right? We were focused on more new construction areas, but that is a hot bed of repair and remodel for us. We have, for instance, and all of these are outstanding 2-step regional distributors, but we have a partner in Lumberman's who knows that market better than anyone, who are now going to bring in James Hardie fiber cement for the first time, getting rid of a competitor, and they're all in with us. So I'll let Jon talk more about this, but this is really, really exciting to us on our future and how we're going to be able to achieve our goals. So as I start to wind down here, how are we going to win, right? And how are we going to defend? And I just look at our -- we started to think about what do we do that no one else can touch, right? And I talked about this in the beginning, but really enduring competitive advantages, the leading brands, resilient product portfolio, scaled localized manufacturing, our Hardie operating system, deep relationships across the value chain. And this is really important because we talk about 500 sales reps, but Jon will take you through this here in a moment. You start to compound that 500 with all the relationships we have, the thousands of one-step distributors. Boise Cascade with 750 people on the street and it just compounds. They're all out unified with us aligned in selling our product portfolio. And then certainly, we think about the differentiated commercial strategy. Again, and just to take note of this. You have 1 or 2 of these. It's a differentiator. You have all of these together, this is very, very hard to compete with. So you translate these to the team of what are you going out and what are you doing each and every day? And this is what our team is focused on. Number one, accelerate material conversion. Everything really leads into this. So that is converting inferior product to our product, drive channel expansion. As we talked about some of the deals we just mentioned with Boise, regional distributors, we'll talk about ABC, we've talked about Lansing. The list goes on and on. Make our product more available out there. Jon will cover advanced product innovation. This is, again, bringing the best of both together. And we think we have a long runway and some exciting innovation that we're going to offer our teams, continue to extend our brand leadership, and then this is really who we are when we talk about enhanced homeowner and Pro journey. This is all about being a homeowner focused customer and contractor driven. How do we make it easier for all of those in the value chain? So look, this all leads up to where we think we can take this business. And ultimately, we're judged by the points we put on the scoreboard. And what we're doing is we're targeting organic growth of 4% to 7%. That's not market-dependent. And the way I like to think about this is a differentiated portfolio. So certainly, we have the long runway of material conversion that I just mentioned. We have growth initiatives and we have our revenue synergies that we would layer with us and then certainly net price that we come out with every single year. So if you ask me to break this up, I'm not going to. This is a differentiated portfolio because one year, one may be more than the other. But in balance, we are confident that we can get to that 4% to 7%, not market-dependent. And then if we think about opportunity here on top of this for growth, certainly bolt-on M&A, and if we get some tailwinds from the market. So in closing here, our investment thesis for all of you is, look, we're going to deliver growth above the market. It's not cycle dependent. We have a list of competitive advantages. Put them all together, very hard to compete with us. A compelling growth algorithm with compounding earnings. It's going to increase and enhance our cash flow that's going to give us optionality as we think about moving forward, what to do with that cash. And then we have the team that's going to deliver consistent execution to really build on long-term growth. Okay? So look forward to spending the day with you. I'm excited to introduce here our President and General Manager of North America, John Skelly. All right. Jon.

Good morning, everybody. Wow, a room. It's great to see so many familiar faces. And and get to share with you a little bit about the North Market American business. So my goal, my objective here is to get you a layer deeper. I really want to focus on how we execute, how we win? That's going to be the agenda today. So I appreciate the introduction from Aaron. I joined AZEK in 2018. Prior to that, I had leadership positions at Grainger and Home Depot. I was President of the AZEK business prior to taking that role here as the President and General Manager of North America. I'm just 1 individual. I think what's most important is the full team that we put together, right? I think we have a team that has a proven ability to execute and drive share gain and value creation, right? We work together hand in glove. This -- the operating cadence, the capabilities, what we do as a team is really different. You put that team on top of the platform that Aaron just mentioned that's how you drive value creation, right? So if I leave you with nothing today, it's not just a differentiated platform. It's not just an individual, it's a team of individuals, massively aligned around vision, a mission and a purpose and we're here to deliver value creation and share gain. In terms of the 4 key points that we'd like to focus on today, it's pretty simple. First and foremost, we're in a highly attractive market, right? Aaron talked to you about the $23 billion opportunity that we have in front of us. We have a massive, massive opportunity around material conversion. What does that mean? That means we don't need a new strategy. We don't need to create new growth categories. We have a $23 billion opportunity that we have to execute against, and we're already doing that. We're winning. We're putting points on the board. We're delivering. Second, we have a great strategy. It's simple, 5 things. We're focused on it. And again, back to the team, we know how to take that strategy and drive execution against it, right? A lot of people look good on paper, but what really matters is do you get results. And we're going to talk to you about how we get those results. Third, we have unique advantages, right? So Aaron touched on it, I'm going to go deeper on that today. When you look at the brands, you look at the manufacturing capabilities, you look at the downstream conversion capability, right? It's just massive. I'm going to show you a slide later that I want everybody to pay attention to. It's got puzzle pieces on it. It's going to talk about how it all comes together, create sustained strategic advantage, and it's very difficult to replicate. Fourth, with that platform, what you're going to see, it's a little different about us is we don't have a spread the peanut butter a one-size-fits-all approach. We have focused regional execution and strategies to win. What resonates here in the Northeast is not necessarily going to resonate in California or Texas. And so we're going to have a focused strategy to win and focused execution in each of those markets from a product perspective, from a sales perspective, from a manufacturing perspective, it all comes together, delivered locally at scale. So let's talk a little bit about the opportunity. This is the breakout of the $23 billion by our product lines. When you take a look at this, what's most important is we have a lot of opportunity across each and every one of our product categories. So whether it's in Siding, Decking or Trim, we have 70% to 80% opportunity to convert. Again, back to the earlier point here, we don't have to go look and say, what's a new growth channel for us to go -- to grow. We had these opportunities, they're massive, Siding $12 billion, other exteriors, an additional $4 billion, decking $6 billion. So you look at the size of these market opportunities, you think about our presence and think in each and every one of these, as Aaron mentioned, inferior materials, right? People don't want wood that rates on their home. They don't want vinyl that fades in 3 to 5 years. They don't want Stucco that cracks. We have solutions and opportunities to address each and every one of these inferior materials and convert them to our value-added beautiful and resilient materials. I think when you think about the long-term opportunity for this business and why material conversion matters so much, 1 point, if we can drive 1 point of material conversion. And if you look at our history over the last several years, we've driven massive material conversion. Every point of material conversion drives 4 points of category growth for us, right? So that leverage effect is really important. So when you look at that opportunity, when I say 70% to 80% of the market can still convert to us, each point drives 4 points of category opportunity for us, right? That's a massive opportunity. So what's our plan to win? This is it, 5 pieces, and this is what we're going to execute. I'm going to give you a slide on each of these in the future. We're going to walk through each 1 step by step. What's really important here is we have a proven track record. So again, I talk about that team. This is not a dream. This is reality. Each and every one of these pillars, we've already made significant progress against. And I'll talk to you about how we're going to continue to drive that growth in the future through them. First, foremost, material conversion. We have to accelerate that. It's about education, awareness and driving contractors, dealers and homeowners to understand the value proposition, why they should use our products and not something that fails. It's pretty simple. Replace things that fade and rot with things that are long lasting, beautiful and resilient. Channel expansion. This is just getting our product more available and on more shelves for more customers to buy, right? We're going to go into detail on this, whether it's Pro, big box, whatever it might be, we want our products to be available everywhere, and we want more of the portfolio to be available everywhere. Third, advanced product innovation. This is core. This is -- this touches on the kind of best of both principle that Aaron shared with you. This is bringing the AZEK innovation engine to the entire One James Hardie, and accelerating our ability to bring products to market that solve customer problems. Fourth, extend brand leadership. The best brands drive the most traffic at our customers. The best brands are what are trusted and desired by homeowners. We have those leadership positions. And where we're not #1, we're going to get to #1 very quickly. Then finally, enhance the homeowner and Pro journey. This one is really important. The easier we are to do business with, the easier it is for you to repair your home, the easier it is to install our products on a home, the more we win. So we're going to continue to improve the opportunities for homeowners and contractors to work with us and drive more value creation for the business. And this is all underpinned by the advantages we generate around HOS, the technology investments that we've made and the entire support system that works with business, the commercial organization, the product team, the manufacturing teams to get fully aligned and drive our strategic priorities. Okay. So material conversion. This is, by far, our biggest opportunity, right? I shared with you the numbers, the conversion opportunity, 78% opportunity. If you look at the macro here, if you look at the setup, it's all about education and awareness, right? So again, whether you have an aging home, whether you're -- you have some of those climate issues such as fire or hurricanes or moisture, all of those trends, we have consumers' attention. The homeowner cares about these things. What's beautiful about our portfolio is it fits perfectly against those macro trends, and that's going to help us accelerate material conversion. If you've had an issue with a fire, if you've had an issue with a flood at your home, the last thing you're going to do is put wood back on it. You're going to find a product that comes from James Hardie to solve your problem. So we have the consumers' attention, and we're capitalizing on that to drive accelerated conversion. With that awareness, we take our 500 salespeople, and we take our thousands of partners to drive that message. We cross-sell the full portfolio. If we get somebody's interest in siding that's fire resistant, how would you like to buy fire-resistant decking to go along with it? So that allows us to unlock the cross-sell in this full portfolio sell. What our team does, that's really unique back to local strategy is. You have 500 salespeople on the ground. I call those the ground troops. So they're out there market by market and not just market by market, block by block. If you flip 1 home in a neighborhood to Hardie and the guy next to you has got vinyl, the guys looking over a pence and saying, "I want that." So that's market development, we do it market by market. Take the ground troops, bring in our world-class marketing organization, that's our air cover, right? So whether it's a national campaign, a local campaign, they are getting down and dirty, working closely with the ground troops to say, "Hey, if you're in California, you're probably going to get messaging about fire. If you're in the Southeast, you're probably going to get messaging about rotted pressure-treated lumber," right? So it's a tailored approach deliver at scale, and that's something that's really unique to us. We have the capability to have the right messaging, the right product offering that's going to connect the most with that consumer based on your region. And then what we do with the product organization and the innovation engine is we take feedback, okay? What are our gaps? What are opportunities from a product perspective. We're talking to builders, we're talking to architects, we're talking to contractors. How do we improve our product offer? We take that back to our lab, back to the R&D, drive the innovation of the new product that we then launch to solve that customer problem. So it's this positive flywheel effect that you have in the business that allows us to take additional share. And when you look at that local relevance, you take that big $23 billion opportunity and say, "Okay, how do I boil that down to local market?" A couple of examples here, fiber cement in the Northeast, look at that conversion opportunity. It's massive. And then you go down the south you go at pressure-treated lumber, you will get the opportunity to convert all that pressure-treated wood to TimberTech decking. It's huge. What's really unique about our business, if you look at the Midwest, and Aaron touched on this with 1 of our partners, Lumberman's. But if you look at the legacy TimberTech and AZEK relationships in the Midwest and Northeast, we are the brands. We're the winners. We have the locations. We have the customers. We have the contractors. What are we doing? We're pulling through fiber cement R&R in that market. Same is true for James Hardie in the South. They own the south. Now they're helping pull through decking and railing those relationships that they've established in the South. So when you talk best of both and when you say what is the synergy, that's a synergy brought to life, where you take relationships, presence and a broader portfolio and you drive cross-sell in 2 very important markets with large conversion opportunities. Okay. This is the aforementioned really important slide, so I want to spend some time on this, right? When you think about what is sustained competitive advantage, like what can this company do that no other competitors can do? This is it. So let's dig in a little bit here. Channel expansion. What this means is, again, how do I have my products closest to the customer to drive value creation and share gain. It starts with Ryan Kilcullen come up here and tell you a little bit more about the manufacturing network. Aaron showed you the math, look at that platform of manufacturing that we've created, right? We have billions of dollars of investment against this, right? So for those of you who don't know, it's not cheap to build a fiber cement plant, right? And we have them incredibly close to our customers across the U.S. You take that product from those manufacturing facilities with high service and great quality and then you deliver it to the best-in-class distribution network that Aaron just showed you, right? So we have the best of the best in terms of service. They have the most salespeople. They have the most demand generation. They're taking our product and then they're delivering it close to the customer. So who's the customer? It's close to 4,000 big box locations and 14,000-plus dealer locations, right? So those distributors, and again, they're not just delivering product. What they're doing is those distributors are bringing that product to those retail locations to those dealer locations. In the case of Boise, they have 750 salespeople and you just compound that by all those other distributors, and you had a massive force of downstream demand generation happening at the customer level, okay? They're doing things like quoting, they're merchandising, they're training, I mean make no mistake about it. These are not delivery drivers, right? These are value creators, right? And then they're educating those dealers, along with our sales team. So Jon will talk more about this. You have this massive training and massive coaching opportunity where the inside sales teams and the outside sales teams of all these locations or even the in-store sales associate in a place like Home Depot or a Lowe's, they're being trained, educated and we're merchandising all these locations. So when you walk in to one of those locations as a homeowner, you're seeing this massive amount of TimberTech, AZEK, James Hardie, and you're being sold to by an educated salesperson that we've trained and the distributors have trained. We then attach that to our Pro network. 30,000 Pros are in our program. We have about 300,000 total in our system, right? They are -- and these Pros, as some of you've heard before, they bleed green, right? I mean they are completely connected to our business. We think that, that's 10x the size of any competitor in terms of people in the program, right? So when we offer things like additional labor warranties, when we offer them training and coaching and development when we offer them leads, we'll talk about later, I mean, we delivered last year 40,000 homeowner leads to that contractor base. I don't know about you, but if you're a contractor and you're trying to grow a business, do you want to work with a company that gives you 40,000 leads a year, that has market-leading brands, that stands behind you when you have an issue with a product, if you have a warranty claim, that's who I want to work with. And that's why our customers are so sticky with us. And then we attack millions and millions of homeowners. We touch them every day, local marketing, national marketing. We're driving the trends in the industry. They see the beauty, they see the aesthetics, they see the capabilities of the company and they say, "I want James Hardie on my house." No one else can replicate this. No one can. I mean, this took decades to create. And when you talk about why the scale matter, this is when scale matters. The scale that we're able to operate this at and then deliver it locally, it's incredibly unique. We think this is a sustained competitive advantage. We think this is virtually impossible for anybody else to recreate. So innovation. At the end of the day, I think it's really important to remember that the reason we exist is because we're a product company, right? That's where it all started. We developed beautiful, high-aesthetic, high-quality products that solve customer problems. And what we've been able to do is we've been able to evolve over time. Both James Hardie and legacy AZEK sort of started from a premium position. That's where you always want to start. You want to start at the highest quality level and then that gives you a lot of optionality. What we've done is we've expanded into good, better, best and premium. Why does that matter? That allows us to meet the customer at whatever value points import to them. That allows us to be more important to more consumers and to more contractors across North America. So we have a very focused product development strategy and a very focused R&D agenda. This is the best of both. We've consolidated our R&D groups, our product groups and we are reigniting the innovation engine across James Hardie. So there, again, a sustained competitive advantage, the ability to continue to produce products that consumers ask for, take those insights, bring them back into the business, create new products and then go back out with our downstream sales and marketing execution and drive share gain. We're making significant investments here. Aaron talked a little bit about the recycling capabilities that we have. This allows us to not only do good things for the environment, but at a very favorable cost position. Brands. So you're going to get a lot of this from Sam in a moment. I love these charts up to the right, big plus signs, lots of big numbers. I think you get the point, right? A brand is really important to driving success in this business, right? Contractors, again, want the brand they trust. Homeowners want a brand they trust. Our ability to activate these brands is second to none. Sam is going tell you a little bit about it. We in-sourced our entire marketing team. We don't rely on outside agencies. Everybody who does marketing for James Hardie, does at 100% of their time. They're focused on our brand message. They're focused on our creative. They're focused on our execution. This is what's going to allow us to be #1 across all categories, right? We're getting close. We have a lot of momentum. We've been driving massive brand awareness and preference over the last several years. We're the clear #1 in siding, we will be #1 in decking. What really matters here, again, is this whole trust concept, right? We have to stand behind our products. We have to deliver value at each point of the value chain across our businesses and we've been doing that, right? Again, I said it earlier, if you have a warranty claim, if you have a product question, if you have a color question or whatever it might be, we're going to be there for you. We're going to stand behind you. This is why the contractors are so sticky with us. They know that we stand behind our products. They know if there's an issue, we're going to take care of them. They know that once they install the product and they leave the home, that the product is going to withstand and still look beautiful for years to come. The contractor's biggest nightmare is getting the call back. That's time taken away with no additional money. We stand behind it. That's what our brand means. That's what our brand stands for. And I think you're going to be really excited to hear some of the things that Sam and her team are doing to execute against this. Homeowner and Pro engagement, I talked a little bit about this earlier. Again, our massive advantage that we have in terms of the contractor base. We work with 300,000. We have 30,000 in the network. Each time we convert 1 of that 300 into the 30 and grow that, that becomes a really positive flywheel. Jon is going to talk to you about some of the specific wins like the way I -- my words on this would be simple is we're hitting a lot of singles, like every day, 10, 20, 30 contractors are, I'm putting in siding. I walked into the house. I'm sitting down at the kitchen table with the homeowner. And I show them that they're decks rotting. So what am I going to do? I'm going to talk to them about TimberTech, right? I see that there's trims right around the windows. I'm going to talk to them about AZEK, right? So this position that we have, the breadth of our contractor network, the depth of our contractor network, that gives us an opportunity that nobody else has. We are at the kitchen table with the homeowner. We're talking to them about the beauty of their home. We're talking about the resilience of their home. We have their attention, we have their access and now we have more products to sell them. It's a huge advantage. Talked about those 40,000 homeowner leads that we have. It's massive. One of the other things that we have to do here is reduce any friction that's involved in the business from trying to get to an inspiration and idea what my home could look like to a completed project. We're investing massively against that, whether it's visualization, digital tools, we are driving more engagement and we are driving an easier process to get either your home recited or to create the outdoor living space to your dreams. Massive investments against that. It's working. We'll talk more about it. And then this is just -- I'm not going to spend a lot of time on this, but just a quick snapshot. Jon is going to come in and talk more of this. This is a vision of how we execute regionally, right? So again, different approaches, different strategies by region with dedicated playbooks that allow us to win and what's locally relevant across. But again, what's really exciting here is just pick your geography. $1.3 billion opportunity around fire in the West, $1 billion opportunity around fiber cement R&R in the Midwest and Northeast, right? Anywhere you go, we have multibillion dollar opportunities to win and convert inferior products, whether it's wood, stucco, engineered wood, brick, you name it. We've got a plan to win, and we're executing that plan, and we'll put the points on the board. So I'll end with where I started, 4 key points. We got a great business and a great market, and we know how to take share. We have a 5-pillar simple, executable strategy. What you've been seeing from our recent results is we've put points on the board, we're delivering against that strategy. The product innovation and scale capabilities are unmatched. We have the ability to bring new products to market, drive downstream conversion and generate wins, and we're doing that locally in a locally relevant way, by region, and again, proven results, and we really, really think our opportunity to continue to drive share gain and market development across North America is unmatched. Thanks so much for your time. I'm going to hand it over to John Matson. Thanks, everybody.

All right. Good morning. My name is John Matson. It's good to see a few familiar faces in here. I have been with this organization for 22 years. And it's a pleasure to have done many of the roles that I'm going to talk to you about today. and some of the markets that I've worked in are where we're really attacking differentiated positions in North America. So before we get started, I want to walk away with some of our key messages. One, we've been through a tremendous lift over the course of the past 14 months. We've done things to pull this team together. And when you have the opportunity to lead an organization inside of this industry that we get to work in, where you have 2 companies that are coming together that are anchored in material conversion and in hunger to grow and take share from the competition, and then you get to put them together. It's no easy feat, and we're talking about how we built that organization built on commercial excellence, focus on the customer, believing in the value that is our #1 value that it starts and ends with the customer. Then we've got to take the game plans into our regional playbooks. And so each market is different. What we do every single day, what type of competition we're against, what customer needs are, how we develop and train our leaders that develop and train our teams, each day, we have a playbook that we're running and we're operationalizing. We've got to take those teams in a specialized way to deliver value to our customers, knowing that the needs at a particular dealer location could span exteriors, outdoor living and their targets and how do we activate that the most effectively with the teams that we have in the field driving that position and pulling through and converting material every single time we go and work with each of these dealers and how we drive that. And then finally, leveraging the portfolio. Aaron and Jon talked about our opportunities that we've already are well underway with our revenue synergies. And my job here is to ensure that you understand that there is proof behind this because we are out working with our customers, developing those team members and converting inferior materials through the access that we have with those customers and driving that shelf space gain with each of our product lines. And I'm going to take you through what we've built over the course of the past 14 months, and it's been not easy. We've started this back in July when we came together. We began the integration of the 2 teams, and we started with the customer. It was focused specifically on what the customers' needs are, what their voice was saying and how we deliver the most value to them. And when you look at what we've built, we have over a 500-person sales force. We have 1 point of contact at the channel level. We took this new role, which is the channel manager, and they are the quarterback at the channel. We have 6 divisions across North America. We have over 13 -- we have 13 regions. We have 36 different districts. And in those districts, you can see these market directors are leading teams that have a channel manager that work with our dealer partners every single day. They work on different needs that the customer may have, whether it be a Pro 1 stepper that has a space constraint, and we're looking at how we deliver that material more efficiently and effectively. The targets that we're driving to grow exist expanded category or market share and that particular channel manager takes those needs, identifies joint targeted opportunities and passes them to the specialized sales force that we have in those regions. We've specialized our teams around siding and trim and our outdoor living game plan. those particular individuals are dedicated to downstream demand conversion. They're identifying targets with their customer partner, their dealer partner. And they're identifying them and taking the value propositions that we have regionalized to each of those opportunities so that we're creating value at the contractor level, that answers the call of our homeowner journey and then pulls that back through our aligned partners in a way that's differentiating our position, creating value at the dealer level and enabling them to sell more and make more selling James Hardie suite of products than any of their competitors. When you look at the outdoor living and DR&A specialists, they work in tandem with that channel manager, but we enable it on the site so that we can convert that product line with our technical specialists. We've created technical sales across the business for many years, but this team continues to enhance in a way that's differentiated versus our competition. We've got technical sales leaders that oversee a region. They work with contractors and the companies as they identify new opportunities with their builder or in our communities or in our contractors. We have technical sales managers that drive that relationship in those districts. They work closely with them on the technical aspects of putting the materials to the wall or to the joist and then they really drive our opportunity to leverage the labor in the marketplace with our technical sales specialists, a group of bilingual individuals that are activating our capabilities on the wall so that we can take more opportunities against final or inferior materials, create efficiencies to drive that growth and then ultimately move a market from an inferior material like vinyl to James Hardie. This organization was handpicked. We have the best 2 companies in our industry coming together. There's capabilities across both sides where we balanced our 6 divisions. As Jon and Aaron both stated, we took the best of both. We have a perfectly balanced 3 regional vice presidents from the legacy AZEK organization, 3 regional vice presidents from the legacy James Hardie organization. Each of their particular regions in the market are well balanced between legacy leaders on each side of the business, taking the capabilities, the strengths and the development opportunities and putting them into action with our sales team. Many of our frontline leaders are unchanged. Our frontline sales folks are unchanged. They had an expertise in outdoor living or an expertise and exteriors, and they're taking and harnessing that with the channel manager to drive that growth back to the dealer level, pulling that material conversion back through, gaining shelf space share and delivering value through the channel manager to enable our ability to be the most effective partner our entire value chain. And I'm going to show you a slide here in a little bit that articulates that value chain and walks you through how that force multiplier that Aaron referenced is activated with this team and how we designed it. When you look at the regions, it's not a one-size-fits-all approach. The West is a wildly different market. I worked in Seattle for a number of years. I came from the Northeast and said, we should be selling color in the West. We've got this. But when you have a high category share opportunity and you have a tremendous opportunity against wood conversion, you have differentiated positions that you have to attack it based on the needs of the market. And one of those needs is the wildland-urban interface that we've talked about, and I'll touch on that here in a bit, is there is so much opportunity to shift our market based on what the events that are happening in the market. And so when we look at the West, outdoor living is a tremendous opportunity for us. Jon mentioned, where we have very high share of TimberTech, we have opportunities to grow with Hardie, where we have very high share of Hardie, we have opportunities to grow TimberTech. What we have is trust and credibility at that dealer level and with our 2-step distribution partners in a way that we're gaining access at those dealers. We're telling the value proposition of our full portfolio of products, the opportunity to be able to engage a contractor and develop their business in a market that isn't as buoyant as years passed, but still is rich in opportunity for us to go out and convert material. When we develop these contractors around our regionalized playbooks and develop the market around the go-to-market strategy or where we aspire to change that market, we have a unique skill set and develop sales people that are out there to attack it. And when I look at this as a very clean strategy around material conversion, shelf space gains through our dealer partners and activating it with the homeowner, we are creating that level of value to change to the marketplace. You get down into the Southeast. We're driving material conversion with each of our business partners and how we take a challenge against stucco and convert that to fiber cement with a very robust game plan around developers, municipalities, engineers on block versus frame construction. How in a market where people are trying to build more affordably, more efficiently we can change the construction style from a block construction in Orlando to a full frame construction, and we engage every member of that value chain so that we have more addressability on the wall. Each of these markets, each of these playbooks are uniquely differentiated and enabled by our team that is backed by our segments and operations team that are dedicated to each of the functions that we drive every single day. We have a team for outdoor living. We have a team for exteriors. We have a team in L&D that developed the sellers to deliver the value by the region in the differentiated way that we execute it in the North American market. I mentioned fire. You take a market like Denver. This is a market where the fire -- or wildland-urban interface is continuing to expand its presence with the consumer. Over 50% of that market is in the [indiscernible] zone. There is opportunity where we have a differentiated position versus our competition where our products are either Class A flame spread in our vintage line of decking PVC or noncombustible with fiber cement, which is a requirement. And as that gains traction in each of these markets, we have a very valuable value proposition that we can share with the entire community of builders, contractors, but more importantly, the homeowners, and how we take that air cover that John was mentioning and drive it into our marketing message back to the contractor and really capture our capabilities in a market like Denver or at the Colorado market and the entire West. Then you get into flood. I mentioned the Florida market and what we're doing differently. Our products don't rot. Our products don't have challenges with the high climate contents that we would see in floods, hurricanes, wind risks. But we have this momentum behind us and our composites and PVC decking are going to sustain the performance in those marketplaces, and we have a tremendous opportunity to continue to tell that message around rebuild, preventative approaches and true value to the regions that we have. This is the slide that I mentioned. And this has been a ton of fun over the course of the past year because we saw this opportunity when we came together. You had 2 great companies that have great distribution networks, but very few of them were harmonized between the 2 companies. And so as we came together, we needed the easiest path to market with the best-in-class 2-step distribution. And we lived by our principles of best -- 2 best-in-class in market. This is a consolidating space that we wanted to give a long runway for growth for our partners to be able to develop our markets, work with us closely to drive that force multiplier of our sales force of 500, their sales forces of dedicated exclusive partners and you have a partner like Boise Cascade that both Aaron and Jon discussed, these guys are dedicated to what the call of our history is with James Hardie, and we've been a partner with Boise Cascade for the past 25 years. But when you look at what their presence is now with James Hardy in the full TimberTech, James Hardie, [indiscernible] suite of goods, they are a force to reckon with, and they're complemented by our regional distributors in capital, Dixie, Lumberman's Parksight and Woodgreen. And then you pass that over to our pro distribution partners in ABC, QXO, BFS, these are entrenched in what we've done over the course of the past history with James Hardy. And in the partnerships that we have with or independent lumber yards like Riverhead or Interstate and the slurry of those independent lumber yards across the country, TimberTech was well positioned and AZEK was well positioned with both of them. And James Hardie has been well positioned with the one-step channel. And as you've heard, ABC and Lansing have developed into new relationships with James Hardie, and I'm going to park on ABC here in a bit with what we've been able to drive as a partnership and answer the calls of their challenges to really drive value proposition back through our channel. And then on the right-hand side, this is where the specialists are activated. The channel manager works with the 2-step distributors, the 1-step distributor and retailers, and then further with the specialization, we are targeting single-family builders, contractors and installers every single day. We're working with them to create the value proposition so that they're selling in the home, a more effective approach with that exterior envelope. And then with the builder community, as the market changes, we have the positions with our good, better, best model to be able to drive our capabilities with each member inside of the builder community. And we're fortunate to have earned a position with 23 of the top 25 national homebuilders. And what that drives is a scaled position back to our dealer partners so that they have the turns on our product line. That turn allows them to work with the contractors in the R&R space so that they have a robust position around our product groups and are enabled to be able to sell that in every different segment that they operate in. So I want to take you through the example of our 2-step distribution synergy with Boise Cascade. Aaron mentioned that we've been in this for over a year. And when we look at the partnership that we've had with Boise Cascade for the past 25 years, the fragmentation of 2-step distribution prior to our 2 companies coming together and the opportunity to grow that between a full-line James Hardie product group, we started in Baltimore and Pittsburgh. We had that fragmented distribution around each of the categories, and we're able to harmonize through a test with Baltimore and Pittsburgh. And we have the solution that was anchored in our 2 best-in-class management philosophy and a go-to-market strategy where exclusivity prevails over our previous history. And this enables our outdoor -- outside sales reps to be able to drive a position where we win, they win, when they win, we win. And it's this accountability between our partnership that enables our groups to go out and sell every single day. Our solution for our 2-step distribution strategy was a very clear 2-partner approach in every market. It gives them the reach, the connection and the capability to be able to sell more effectively. The outcome was 1 national partner. We have over 1,250 -- 1,250 persons combined sales force. That means when we're working with them in the field, they're developing an opportunity, and we're taking that back to the channel partners, they sell to every single day, retail, pro lumber yards, volume lumber yards, national distributors and the Pro distribution like ABC Supply. I'm super excited about this. But when you look at our partnership, I'd best heard from the customer themselves. So I'd like to introduce Joanna Barney, the Head of Distribution for Boise Cascade and hear it in her own words.

James Hardie and Boise Cascade have a partnership that can be measured in decades. We are in constant communication about market performance, design trends, changes in the industry that we believe will drive future performance. And as a national distributor that services every market segment. from independent and national dealers to retail and home center channel to the 1 steppers, the big players in the multifamily segment. In order for our business to grow, we have to be partnered with the best-in-class suppliers, those who manufacture and consistently innovate and bring the top products to market. James Hardie has been one of those companies for many, many years. And with their purchase of the AZEK and TimberTech brand, we saw not as a strategic move with a bold vision for where they can take the whole exterior product category in the future and the value of their portfolio and products can create up and down the channel, which is a future that we at Boise Cascade [indiscernible] as well, and 1 that we are excited to support. And frankly, it's a vision that we believe we will make inevitable. With the combined strength of our organizations, the sales forces that will come together with one common goal, the trust that we have each built through the channel with our customers and with the quality of the James Hardie, TimberTech and AZEK products. So we are excited to be on the forefront of where this bold vision is going and the success we believe this partnership will generate long into the future.

That bold vision is shared between all of their outside sellers and ours to drive that value back to the customers. And one of those customers is truly differentiator above the rest. When we partnered with ABC about 10 years ago, it was a growth algorithm for converting vinyl. They created an alignment around that value, and it expanded beyond just the vinyl markets. When the 2 companies came together, we were faced with an opportunity that we took head on. They had a fragmented position around PVC, who is an owner decision at each individual branch level. Our partnership with James Hardie enabled us -- or our partnership from the past as James Hardie, enabled us to have that trust and credibility with their leadership to create a solution for ADC supply that's going to expand into beyond $1 billion partnership. Over the course of the past year, we've integrated into their business with a One Hardie exterior portfolio to include our AZEK PVC line. This enables us to get into locations that we wouldn't have formerly been in, in the north where PVC was fragmented and they were using a competitive product. Over the course of the past year, they've consolidated that to one product line, and that gives us that opportunity to reach into vinyl locations that would have PVC on the ground, create credibility with the branch leader, get the trust of the outside sellers and earn the opportunities to meet with builders that are buying vinyl and PVC by James Hardie and AZEK, and get that as a conversion opportunity for future fiber cement growth. Our partnership is just getting started with ABC Supply, and we couldn't be more proud of what we've done so far. And we've got more opportunity to continue to drive that as we expand our entire portfolio with their business. You look at the challenges of expanding that portfolio and you look -- and you see that we have to make this very easy for our contractors to be able to purchase our full line of products. And ColorPlus as a contractor was a multiple product line that was purchased by distribution through the dealer potentially through a Dream collection, and we need to simplify that for an offering that enabled vinyl contractors to sell James Hardie in the home more efficiently and more effectively. So we launched our statement Essentials collection. That's 55 SKUs that enables the dealer to have the on-hand materials of at least 80% of what people buy every single day, that doesn't take a tremendous footprint, but allows them to grow effectively and offer to their customers what they need. Then you expand that through our partnership with Boise into our master distribution profile, where we have 5 locations across the Northeast and Midwest that have a robust position of over 600 SKUs on the ground. This is same day or next day type of delivery to these dealer partners so that as the customer gets more engaged with the product line at the contractor level, sells a differentiated position to a consumer that wants more than our statement essentials, they have that availability through our 2-step partnership and our full extended statement position. And for beyond that, we have our made-to-order collection, which is future products like Timber Hugh, our Dream collection, all enabled through our manufacturing capabilities sold through our 2-step distribution partners and dealers and giving each of our consumers a differentiated position. Now as you make it easier to purchase, you also need to make it easier to install. So we enabled a new tactic that you'll be able to see out in the ProLab offering in the other room there, which enables contractors to be more efficient. We've talked on the wall cost for a long time. But really to compress it, we need to make contractors more efficient. And so we've used our teams in technical sales. We've partnered closely with our dealers where we are identifying labor, and we're using the the contractor and the dealer to create a host site for us to train in the masses how you can more efficiently put Hardie on the wall and get the gap to vinyl closed. And we do that through our partners at ABC, our partners at the Pro channel and then take that over into our Trim-Over method in the field with our tech sales specialists that drive that on-the-wall cost through efficiency and taking days off of the wall with our Score and Snap technology and only fiber cement can be Scored, Snapped and trimmed over in the way that you will see in the room down the hall that enables us to take days off the wall. And when you're taking days off the wall and compressing it against vinyl, you now have that opportunity to attack that $1 billion-plus R&R market in the Northeast and Midwest and turn it into an opportunity with single-family new construction where you're gaining that throughput at the dealer level that allows our dealers to put all their energy and focus on James Hardie fiber cement and AZEK exteriors and TimberTech. I want to use this example with D.R. Horton that takes Trim-Over, ProLab, Statement Essentials and into real life with America's largest homebuilder, D.R. Horton, in Omaha, Nebraska, our price band was in the north of $500,000 range. We had about 10% of their starts under that were their vinyl homes. They had 90% of the market was vinyl was Hardie, but they were struggling to sell their homes as efficiently as their Hardie houses. We used our opportunity to introduce Trim-Over, which enabled the contractor on the vinyl side to score and Snap, not taking technical tools to the site calling down numbers, they were able to use a tactic that it allowed them to be more efficient on the wall. As a result, that simpler install, coupled with the increased speed, enabled the cost to be more effective against vinyl. This converted that entire market from vinyl to Hardie and then they acquired a builder named Celebrity Homes that added another 700 homes to their profile. That was a competitive hard siding manufacturer that supplied that particular product to Celebrity. And as Celebrity became part of D.R. Horton, that material conversion transitioned into James Hardie and now Omaha, Nebraska with D.R. Horton is a full-wrap exterior solution by our James Hardie's line of products. This then creates a wake. It creates a price band differentiation. You now have vinyl being substituted at a price band that wouldn't have historically been done. And as the #1 homebuilder, it gives us that opportunity to create that wake behind it. Finally, a contractor synergy where we have tremendous upside for our future. We have over 30,000 contractors in our network. Those contractors are dedicated to our lines of products. This particular example is RPS remodeling a gentleman by the name of Rick James out of Northern California. He's a long-term James Hardie alliance contractor, but his ability to add decking was sporadic. Once we announced our acquisition and partnership with AZEK, TimberTech, he quickly added that to his portfolio of offering, answering the need of the wildfire or wildland-urban interface, but the demand is also of the consumer as he grows his business. And what you want to hear from Rick is that he saw this as an opportunity to really drive growth through his business. [Presentation]

Rick is one of many examples, and we're going to do this continuously. We're just getting started when it comes to our contractor conversion, and we've got countless examples that this occurs every single day. I look forward to taking this team to the next level and working closely with our product teams, our manufacturing teams and continuing to deliver this integrated sales organization. We've deployed these regional playbooks. We're in a position to go out and win, and we've got an activated specialized sales force that is the expert in outdoor living and siding and trim to create the demand with our partners, pull-through solutions with each of our channel members and deliver value every single day to the contractors, consumers and builders that we work with. Thank you for your time this morning. I look forward to talking to you more out in the hall.

Okay. Hello, everybody. Now we're going to talk about marketing. And before we get into it, I want to share a little bit about my background. I've been -- spent most of my career building brands and helping consumers make long complicated purchase decisions. in and around the home. And in the last 5 years at James Hardie -- AZEK and then James Hardie, I've seen firsthand the power of what brands do to give customers confidence around that and how we can help use marketing to drive material conversion and growth. So the story is pretty straightforward. With the brand advantage like that, we have the opportunity to expand the way that we think about these journeys and the purchase decisions around home products. So it's not just a marketing story. It's a growth story. We're helping homeowners choose Hardy, helping contractors install and specify Hardy and increase our share overall. So the key message I want to make sure you walk away with today or I'm going to talk about. First of all, is the brand. And the brand creates a significant competitive advantage, as I said. Second, the unified architecture we have built around the brands makes our portfolio easier to understand and more powerful in the marketplace. Third, the localized marketing and digital experiences help accelerate the material conversion and the way that we're able to grow through those 2 things. And then maintaining our leadership position with the Pro is still really critical. Pros are they are critical to specification, loyalty, repeat business. They're really integral to everything. So as I move through the presentation, and particularly have a video at the end, that will bring all of this together. I want you to pay attention to how all these things relate with one another. All these pieces work together. So the brand creates the demand, the digital experiences and the localized marketing help homeowners understand what it means to them and how to make decisions. And then the pros convert all that into projects. So before I get into that, I want to spend a minute talking about the team. You or John talked about the momentum that TimberTech has built. This slide represents the team that was responsible for that. TimberTech grew in awareness 20 points in 5 years where our nearest competitor essentially remained flat. That momentum did not happen by accident. We helped create one of the strongest brands in the industry and drove awareness, that growth that outpaced our competitors by in-housing a lot of our capabilities by building that world-class capabilities in-house across creative, media, digital experience, analytics, growth marketing. As you heard John talk about, we're not using agencies for that, we own that internally. The people that are driving that owning the brand are shareholders in the company, they understand our customers, they're really committed to what we do. We brought all that -- all those capabilities into James Hardie now. So it's not just about AZEK team joining the Hardy team. What really excites me is that we're bringing the best, the best of both teams to increase the talent and the capabilities, the expertise that we can offer across the whole James Hardie portfolio. So we're really all organized around one common growth strategy. What that does is it makes us more nimble. We're more able to execute faster. We have greater accountability. We don't have the delays of telephone tag between different parties on the outside trying to understand what we're trying to do and move quickly. You'll see some of our strategies that rely on localized specialized messaging we're able to deliver that quickly because we have that internal team. Okay. So this slide represents the strategic importance of our whole portfolio. We believe we've defined where the category is going. As you've heard, homeowners increasingly want products that combine durability, resilience, low maintenance, long-term value, those are exactly the attributes that all of our brands stand for. So the home of resilient beauty is not a marketing slogan. It's not just a tagline. It's actually a strategic framework that brings together what's unique about our products, all in one place, it brings together what homeowners care about emotionally. They want a home that's beautiful and that's built to last. And what combining that with what they care about functionally, right? They want low maintenance, they want performance, durability, confidence that their investment is going to last. So Importantly, every brand in our portfolio supports that promise. So as climate resilience becomes more important, as building codes change, as we're creating a stronger consumer understanding of our portfolio, that all gives us a meaningful competitive advantage. And by pulling this all into one place, as I said, it makes it easier for customers to understand and makes our -- us just more powerful in the marketplace in a way that, really, there's no other competitor that has this range and this breadth of product that delivers against those promises. Okay. So let's talk about the homeowner. We see a really strong alignment. We've all referred to it, I'm just going to hit it more directly between what homeowners care about and the strengths of our portfolio. So climate resistance, you've heard. There's not -- I live in California. There hasn't been a fire immediately near me, but believe me, it's on my mind all the time. There's nowhere -- 1 in 3 homes are in the [indiscernible] zone. I mean this is just the way we live now. It's the way -- it's what everyone is thinking about. Homeowners also care about long-term value. They want to make good investments. They care about the design of their home and the curb appeal. They want it to be beautiful. It's not enough just to be high performance. It has to also be really beautiful. And they also really care now about outdoor living. I was speaking to someone earlier in the reception area out there around how people want to live outdoors. COVID changed the way we think about how we live in our houses. We're not going back. We want to cook outside. We want to live outside, we want our kids to play outside. We want to work outside. We want to have an outdoor living room. This whole idea of living outdoors is really powerful, and that's exactly where homeowners are right now, what they're thinking about. So what's important is these aren't creating sort of headwinds for us. All these things are creating tailwinds. This is all helping us. Our products are purpose-built for all the things that homeowners increasingly want. And this gives us the opportunity to convert aging wood and vinyl and participate in more of these exterior decisions as you part. Once we create the homeowner preference, the next opportunity -- or the next question is how do we convert it. And you heard Jon and John outline all of the opportunities, the billions of dollars of opportunity regionally across the U.S. Well, that requires different marketing tactics to activate all those? So the national brand gives you strength and consideration, but it's the localization that really is what really converts it. Different markets have different housing stock, different climate, as you know, different competitive dynamics, all the things. So we are able by tailoring our media and messaging to activate in those local markets. We create a stronger homeowner buy in to what our promises because it's more relevant to them. We can't do the peanut butter spread, as John says. We have to be specific to the right message to the right customer at the right time. And with our internal team, we're able to be nimble, we're able to activate. We're able to learn quickly because our analytics are quick. We know what's working. We know how to adjust it as needed, and we know how to move from a message in the Northeast. That's maybe about vinyl or about an upscale product that you want for your home to what you need in the West when you care about more resilient products. Yes. I think that's enough on that. Owning the Pro. Now let's talk about the Pro. So homeowners initiate the product -- the project, but contractors are the ones who are really critical to the specification and to the installation. So I like to think of it as we're creating homeowner pull, so they know our products and they're asking for us by name, and we're allowing all of our contractors and customers, dealer customers to be ready to push to be there to deliver it, right? So maintaining our position with the Pro is very strategically important. And how do we do that? Our goal is really simple. We help contractors grow their business. We help them be more profitable and more successful with all James Hardy products, and that allows them to -- or that creates their loyalty and stickiness to us that you heard John and John referenced. So that we do that. How do we do that? We do that by delivering better leads, creating stronger match between a homeowner and a contractor by building capability through training and certification and reinforcing that loyalty through our loyalty programs like the Board and Alliance. We've also created efficiencies through integration, right? So these programs used to all be separate. Now we're bringing them all together. So now we're even more powerful altogether. We're aligned training. We're expanding education to include the whole portfolio. We're bringing together loyalty capabilities and digital engagements getting simpler and easier to access. So over time, we're creating a more connected contractor experience and the same philosophy applies to warranty, to service, to support. Contractors want it all in one place. They want 1 relationship. They want 1 ecosystem. They want 1 trusted partner across the whole exterior. And when we deliver that experience, we increased our loyalty. We strengthen our share of wallet. We create a greater sort of material conversion opportunity. So it's not all of this adds up. These are not just sort of contractor support marketing programs. It's actually a growth strategy to be this close to the contractor and maintained our #1 position with them. This slide is the capstone of my section. So this is what really brings it all together. So I talked about the homeowner and I talked about the contractors. So in repair and remodeling, homeowners and contractors do not operate separately. Their journeys intersect repeatedly throughout the whole decision process, and success requires creating an experience that works for both. So for homeowners, their journey is probably familiar to you, right? It starts with inspiration and they do a little research and they pick their materials. They find a contractor and they go through the project, they agree on that and they move forward. And eventually, they recommend that to their friends. For contractors, it's a little different but similar, it starts with the lead generation, then specification and purchase and installation to go through warranty and advocacy at the end. But there their journeys intersect consistently throughout that. So digital is what connects those journeys. Things like inspiration and education through digital means, the visualization tools are really important. Contractor matching, guidance and education is one of the most highly researched categories, anything around the home. And by delivering all of that, giving the customer that information to take that next best action is really, really important. Because if you think about it, when a homeowner is more informed, and they understand the value, the Pro has a better lead, better chance of closing. When the Pro is more equipped, homeowners have more confidence. They feel more good about the decisions they have an easier time sort of making these decisions. So a lot of that friction that John referenced gets removed if you have a really strong digital journey as I like to think about it, they're consistent and mutually reinforcing. So we spend a lot of time here because removing friction here is really an unlock. It's really a key to how we grow and how we unlock more opportunities for all of our products across all of our customer sets across the full portfolio. So now I'm going to bring this together in this video, And as you watch this, what I want you to pay attention to is so -- is how the themes that we've discussed kind of come together here. So you can see the importance of trust in for the homeowner. You'll see what resilience and durability and low maintenance and long-term value, what that looks like from a homeowner's perspective, and you'll see the all the contact replace in guiding the homeowner through this process and how the digital tools and education help create this confidence along the way. And this is exactly what we mean by material conversion. It's really about helping homeowners make better decisions and helping contractors deliver successful projects. [Presentation]

Okay. So I'll close where I started. The key takeaways are pretty simple. We have the best brands, and those brands represent a significant competitive advantage. We're accelerating the demand through the unified brand architecture that makes everything easier to restore a more powerful. We're driving the material conversion through localized marketing and digital, and we got to maintain our #1 position with the Pro. What really gives me confidence is our ability to execute in this with the combined team and all of the talents and deep expertise we have around that team and how all those things work together. So now I'm going to bring up Bill. Thank you for your time.

All right. We're running a little bid schedule. So we're going to make an adjustment to the schedule. We'll start a break right now, be back by 10:35. The team is going to be out there to answer questions as well. So yes, be back by 10:35. And of course, we've got a longer Q&A at the end of the day. So thanks. [Break]

All right. Good morning. Welcome back from break, everybody. I'm Ryan Kilcullen, COO of James Hardie. Happy to be this morning and walk you through our operations update. A little bit of about myself before we get into it. I've been with the company for 19 years. I started as a pretty junior engineer. My first job was a night ship supervisor on one of our fiber cement production line. So I'm pretty excited to talk to you about making fiber cement Cement today. I led -- the past couple of years, I led some of the larger transformational efforts in our operations, our lean manufacturing implementation, a lot of the foundational work in our supply chain. My last role, I was EVP of Global Operations and led the implementation of the Hardie Operating System into our international business units and then a year ago, stepped in the COO role with the acquisition of AZEK. And honestly, the last 12 months has been the highlight of my career so far, and I'm really excited to show you the capabilities that's brought us. What are teams -- what are our teams accomplish, I think more exciting what's in front of us. Before I jump into that, I wanted to thought coming back from break would be useful to put this section in context from what you just saw from my colleagues. So you guys just saw Sam really bring our brand to life. She does an amazing job at that. One of the things you hear so loudly in our brand is the confidence in our product performance, okay? And that -- the source of that confidence is really directly in the expertise and the IP that we own in our manufacturing and R&D organizations, and you'll see that brought to life here. Secondly, you heard Matson talk about winning with our customers. Okay? We enable that in operations with a really unique advantage in our local supply chain as well as a lot of investment in the technology that helps us directly integrate with our customers. We'll see that. And you also heard Skelly talk about the really exciting addressable market that sits in front of us capturing that share takes capacity. What you'll see is we've already invested ahead of that share capture with capacity. And we've got plans in place to get more out of what's already on the ground. Okay. That will be a good segue, I'll lead it to Ryan, who will -- Ryan [indiscernible] will talk about how we translate the Hard operating system and those incremental capacity gains in the margin improvement and free cash flow. So that's how this fits into the day. I'll make those connections as we go through here with these 4 key messages. One, we've got 2 really significant structural advantages in our operations, our local supply chain and the technology that sits inside our factories. Next, we've got the Hardie Operating System. You guys have heard a fair amount about that already so far, which is great. What I'll try to do is bring that for life. That's our productivity engine. And when I say productivity engine, what you should all hear is margin expansion and inflation offset. Okay? So we'll bring that to life. And then finally, we've got capacity on the ground to support the growth that Jon and John talked about, and we're going to deliver more out of what's already there through our advanced manufacturing program. Before we get into the operations, I want to start with our most important foundational value in the company, okay, and that's Zero Harm. Zero Harm is our safety culture is how we describe our aspiration to have a zero incident work environment. You can see one way to talk about how good yard safety is to measure itself the peers. You can see we benchmark very favorable with significantly fewer incident frequency than peer companies in the space. That's important. What really matters here for us is that this is about a commitment to our people. You saw John and John talk about the incredible people on our commercial teams. You'll see more about them in operations. They deserve to work for a company that aspires for zero incidents. And then finally, we just think that if you want to consider yourself a truly great industrial business, you got to prioritize safety excellence, and we firmly believe we belong in that category, and this is really important to us. So with that, we'll start clicking into the operations here. Here's a setup slide with our operational footprint for North America. You can see 26 factories that either make product or recycle material into stuff we make out of product. It gets across the full portfolio, decking, railing siding trim across the U.S. We'll double-click into each of those networks here. I want to talk really specifically about the 4,500 operations professionals that work across our business. This team is incredible, okay? They're passionate. The brand that Sam talked about, the brand promise, they take that personally. They are also continuous improvements [indiscernible], okay? So there's a lot they have to be proud of what they've accomplished over the years, and you'll see some of that here. But at the same time, they wake up every day, trying to win the day, trying to make the place better. And a lot of what we try to do with the Hardie Operating System is standardize the way that those teams work so we can get them working together and connected. When we do that well, they can really move the needle quickly, and we'll show you a couple of examples of really great results from that team Okay. And then finally, we're showing -- try to give you a sense of scale of what this network actually looks like. When you side it, one of the ways to do that is to talk about what it would cost to replace it. So if you rebuilt this network new at today's cost, it takes about $8 billion to rebuild this factory network, okay? That gives you a sense of scale. From a competitive lens also, it gives you sort of the daunting figure that would be in front of you if you try to replicate what we have. I think what makes this figure even more daunting is that would just get to the factories, okay, not the significant mountain of IP and capabilities that sit inside those walls, okay? And so that's a good transition to how we'll start to talk through some of the differentiated capabilities that exist in Hardie operations, okay? We'll highlight -- I'll highlight 3 of them here: our localized supply chain, our proprietary manufacturing technology across both fiber cement and our decking platform and then our continuous improvement engine. I think each of these independently are pretty significant. What really differentiates us in building products is our ability to put all 3 together and do it day in and day out and that I'll come through over the next couple of slides. We'll start. So we described -- and this example is our fiber cement network. We describe our supply chain as being a local supply chain advantage, okay? So what does that mean? Most building materials companies, when they decide where to build a factory, they're stuck with a choice. Do I build it near raw materials or I build it near the market? No matter what they choose, what they end up with is typically a pretty long and complicated supply chain. They compensate for that by pushing costs to the customer. So long lead times, excessive working capitals, stringent mixing rules and how you can order from them, okay? Within our fiber cement network, we don't have to make that choice, okay? So the vast majority of the weight of the product that goes into fiber cement is available in free supply at high quality across the whole U.S. okay? So we're free to choose to build our factory wherever we want to. And what this slide shows is where we choose to build factories is right in the back of the art of our customers and right down the street from our suppliers. The result of that is there's a couple of structural advantages that, that creates. One is proximity, which ultimately for customer means we're simple and fast, okay? You heard Skelly talk about industry-leading lead times and service where 90% of the factories are day away from the customer, 75% of the raw materials are right down the street within 150 miles. We are very, very responsive to customer demand. Secondly, we're flexible without giving up efficiency, okay? So our products can be made at all factories across the U.S. We don't put stringent mixing rules on customers. Customers can transact with us in a way that works for their business and how they're driving their needs. We take -- so those are 2 pretty important structural advantages, and we doubled down on those with a really strong integration approach to our customer supply chain. So we've invested in technology. Hardie Link is an example. That's a portal that all of our customers interact with us. We've got internal supply chain technology that we use to optimize this network and then we have organizational integration. So you saw all the logos from Matson's presentation of our customers. A number of those large customers, we would have dedicated supply chain teams that wake up every day and do nothing but thinking about how we enable those customers to achieve their objectives in our network, okay? And so that creates that combination of real structural advantage and then an integrated approach to supply chain management creates a really durable advantage in our network. We go from the network and now we'll drill in inside the 4 walls of the factory and talk about the proprietary manufacturing advantage that we have in fiber cement. So sort of the punchline here is that we own all of the significant technology associated with making fiber cement in a high throughput, high product capability environment. We own all of it. You can't find fiber cement factories that look like ours anywhere else in the world, certainly nowhere else in the U.S. The source of that differentiation, a lot of it comes from just decades of really deep organizational expertise, okay? So you can see up there, we've got over 150 central scientists, R&D professionals, engineers outside of data aid manufacturing that do nothing but wake up every day and think about how do I move the fiber cement manufacturing and technology platform forward. That is really deep focus and expertise for a single product line, single manufacturing platform. What is that -- what do you get from that is probably the question. So one example is a significant scale up in the throughput of a fiber cement sheet machine. So from the time the company came to the U.S. to now, there's been a massive scale up in the technology. One of the easiest ways to bring that to life for you is talk about the most recent factory we built in Prattville, Alabama, okay? That plant will produce -- when it's fully ramped, will produce over $1 billion a day worth of revenue. So really a year, day would be really big, of -- we're working on that. We're working on that. $1 billion a year of revenue under 1 roof, okay? That's a really, really high scale factory, a really unique level in building products, okay? Another way to think about the capability and the advantages that, that expertise has produced is, you saw a lot from Jon and John the regional approach and how different regions in the U.S. have different climate requirements, different product needs, okay? We are able to engineer [indiscernible]. If you were in the factories, watching it run and change between those products, it's hard to describe. You just got to trust me, that's really, really hard to do with fiber cement. It's taken decades to build that. And certainly, nobody else in the U.S. does that. So that's decades of expertise that we've turned into really durable advantages in technology inside of our factories. If I shift gears into decking, okay, our decking -- and talk about the technology that sits in our decking plants. Our decking plants are modular and flexible, the production lines that make them, okay? We're able to get product. We're able to -- it's a high changeover efficiency process. You saw the innovation from Skelly's presentation. We're able to go from innovation to the market very quickly with our ability to move things in these lines. You also saw from Jon's presentation our ability to mimic the look of high-end real wood okay? And that capability exists in pretty unique places in the TimberTech decking factories. It's taken years to build. And then finally, you've heard a lot about PVC decking, today, [indiscernible] competitors when it comes to the ability to deliver PVC product that performs like that across the U.S. Next, we'll shift into recycling, which is a really key component of our decking operations and exteriors. One thing to think about that you guys are very aware of the sustainability element of recycling on this slide. I'd actually think about it from a cost lens. So the biggest cost inputs to composite decking are the raw resins like PVC that go into it. Our ability to use to replace that raw resin with recycled content is really important for our continued margin expansion. It also provides a buffer. Those commodities are pretty volatile. So it provides an inflation buffer. And the challenge with using recycle as a lean manufacturing is you get a lot of variation from recycling, okay? So being the largest vertically integrated PVC recycler in the country means we have a lot of control over that variation, and we're able to do lots of things in how we source it, process it and then run it through the factory that allows us to make really high-quality products with recycled material and gives us a lot of confidence that we've got a really long runway ahead of us to continue to increase the percentage of recycled content in those materials. We have a great team on the recycle side. Many of you probably met Dave, who's out there talking to -- he's not shy. So if you want to learn more about recycling, go talk to Dave. He'll educate you. We've got a team of experts on that. Hardie Operating System. This is a really important slide for us. You've heard it a number of times throughout the day. So I'll park here for for a couple of minutes on it. You heard about -- I've just described some of the really structural advantages we have in our network and technology. Those are great. I think the most exciting thing about this business is the runway in front of us. So across all manufacturing platforms in our supply chain, there's significant headroom to improve our productivity. And again, when I say improved productivity, you should all think margin improvement, cash flow. And so Hardie Operating System, or HOS, is our productivity engine. It's how we do that. There's 4 main value creation levers that are up there, lean manufacturing, procurement excellence, that's how we buy efficiently formulation, value improvement and supply chain efficiencies. And I'll bring a couple of them to life, starting with lean manufacturing or what I'll probably call HMOS, which is what we call it internally. Before I get into that example there, a little about how we think about it. Lean manufacturing for us isn't just a bunch of buzzwords, okay? It's how we operate. And to give you -- bring that to for you a little bit. I want to talk about our daily management system. So it's 11:00 in New York, okay? That means by now, we've executed our tiered daily management system at all 26 factories across the U.S. It started at 5:00 a.m. Our leaders went out on the floor. They understood what happened on night-shift and then we've executed 3 standardized tiered meetings where every level of our factory has already talked about what their plan is to win the day, okay? And at Hardie, winning the day means achieving their productivity targets, okay? And as those teams achieve their productivity targets across the 26 plants that rolls up to our network productivity target that delivers margin expansion, okay? So this is not a bunch of buzzwords. This is how this team operates, they're relentless. They do it every day and it's what drives really significant operating leverage and improvement across the business. An example of that to bring to life, so we show a chart that describes the progress we've made in our fiber cement plants on OEE or just kind of your highest level of productivity measure in the factories. Pre-lean, we show you where we were. For the 6 years following lean implementation, we improved our OEE in fiber cement by 14 percentage points, okay? That's really big improvement and a network of this scale. And again, back to this idea of this is a proven productivity engine with lots of runway. We've got a similar level of improvement opportunity still in front of us in fiber cement. We think that's really exciting. Another part of HOS bring to life is our product reformulation value improvement. Here, we've got teams of -- between the product management group, R&D, process engineers that build long-term road maps and how we reformulate our product to give the same performance at lower cost. The magic of HOS for us is we're able to take those road maps with that deep expertise and then break it into small pieces that we run through our factory and the team is able to achieve lots of small improvements every day that add up to big change over time. So we're pretty guarded with our formulation secrets. But what I'd tell you is we've got a really big runway ahead of us, particularly on the decking side on how we can continue to take cost out of our product to offset inflation and drive margin expansion. So that's a bit of our Hardie Operating System brought to life. Another way to show you the highlight of this, and this is why I say that the 12 months has been one of the highlights of my career. This has been awesome to see the 2 teams work together, the legacy Hardie and legacy AZEK to implement Hardy operating system into the legacy business. You'll meet our 2 manufacturing leaders, as John Ashworth and Scott Winter. Their teams are working together and doing an incredible job implementing lean manufacturing, our procurement and supply chain best practices and reformulation efforts into the legacy AZEK business. Lean has been a pretty new concept in AZEK and their teams have just fully, fully bought in and embraced it. And that's one of the big reasons why when Ryan gets up, he's going to talk about our being ahead of schedule on our cost synergies and our confidence that, that's an engine that's going to keep going. These guys are on track to deliver over $50 million in synergy savings. I think they're just getting started. So that's been really fun. The teams are super energized, and I'm really excited to see what they continue to do with bringing HOS to life in our legacy AZEK network. We'll shift gears a little bit here as we close and talk about capacity. So as I mentioned, we've got ambitious growth plans that requires capacity ahead of those share gains. We're in a really good position with investments we've already made ahead of those share gains. We show you the utilizations there. You can see 70% of the fiber cement, 65% in decking and 60%. We've already got assets on the ground ready for that growth. And a fair amount of that opportunity to continue to increase utilization sits in brand new state-of-the-art facility. So I already talked about the Prattville plant and then our new state-of-the-art decking facility in Boise, Idaho, which is an ideal position to support the growth you saw from Jon and John on the -- in the Western part of the U.S. So we're in a very good spot in capacity. We're ready to enable that share growth without the need for near-term investment. And lastly, I'll close with, I think the most exciting part of this is also not only do we have capacity on the ground, we've got a plan to get a lot more out of that capacity. And so this is our advanced manufacturing strategy that we're in execution mode on. The punchline is we see an opportunity to step change increase the line speed of our fiber cement manufacturing lines. As we've started to execute HMOS, those lines are showing the sprint potential to go at faster speeds. And now we've built the team and created a plan to implement technology into those factories to allow us to sustain at those Sprint levels. As we do that and realize that full potential that will deliver $1 billion and the equivalent of $1 billion worth of capital offset out in the future. The teams are doing -- we've got a ways to go. The teams have done really good work. We we're up 5% already in line speeds over the last 12 months, and I'm really excited to see where this keeps going. So that takes you to close. I'd summarize our Hardie operations. We've got real structural advantages in our local supply chain network and the technology that we've built over decades with deep experience. On top of that, we've got an asset base of $8 billion that we've already invested in. We've got a proven productivity engine in HOS that drives margin expansion and cash flow and lots of headroom to keep going. And then we've got the capacity already in place to support the share growth you saw from Jon and John and a plan to get more out of what we've built. So I told you it's been the highlight of my career working through this integration with these teams. They're just getting started, a lot of headroom to go. And what that will turn into is continued margin expansion and free cash flow and that's a good transition over to Ryan, who'll take you through the financials.

Well, thanks, and good morning, everyone. Thank you for being here today. Thanks, Ryan, for the handoff. I'm going to connect the story you heard today to the financials from our competitive advantages to our commercial initiatives and synergies and to the scale and leverage of our supply chain and manufacturing, and why we believe these will help us generate sustained growth cash flow and returns. Let's get into it. So 5 key messages I want you to leave with today. Our execution is driving above-market growth and the housing recovery would only add upside to this. Two, the AZEK synergies are delivering, commercial is on track and cost is ahead of schedule. Three, we are generating strong free cash flow as a business. This funds a clear deleveraging path and provides us capital allocation optionality. Four, the growth algorithm drives sustained market outperformance. And regardless of housing cycle, it still works. We believe this is a compounder model poised to generate strong long-term shareholder returns. Let's begin with the market backdrop. To Aaron's point earlier, we are not assuming housing conditions improve in our algorithm, but the setup is more constructive than the mood suggests, and new construction starts have been below the 60-year average most of the last decade with strong stretches near trend. This shortage in housing is a product of a decade plus of underbuilding versus household formation. We are not counting on a snapback story, but we believe rates and affordability will help set the pace of recovery. Structurally, this could be a multiyear tailwind not in our algorithm. Next, the U.S. housing stock is aging. Roughly half of the homes were built pre-1980, with a meaningful share carrying 30-year-old-plus vinyl siding that's ready for repair and remodel. At the same time, elevated mortgage rates create a lock-in effect, owners are staying put, not trading up and [indiscernible] investing in their property. This can be seen in the R&R growth and resilience even through the cycle troughs. In 2015, $277 billion was the rough R&R number. The last 5 years have been north about $500 billion, and we expect that to continue. What's unique about Hardie setup is we win both ways. R&R continues to deliver now. And when new construction returns, it's upside. Let's move to synergies, starting with the commercial side. As you recall, our target of $500 million of commercial synergies recognized over 5 years through the portfolio combination of James Hardie and AZEK. We are on track to reach at least $125 million exit run rate by the end of full year 2027. On the activated side, the recently announced Boise Cascade and regional distribution agreements provide meaningful steps towards that target and built upon previously announced Lansing and CBUSA deals. The forward-looking pipeline is just as intangible -- or just as tangible start. As John Matson discussed earlier, we continue to expand coverage in one-step dealers, builders, contractors, independent lumber yards and retail. In new construction and multifamily, where a lot of runway remains, we are expanding Deck, Rail & Accessories. Internationally, we are preparing to introduce decking into the Australian market. Switch gears to the cost side. We were targeting $125 million of cost synergies over 3 years, and we're excited to update you that we plan to exit the full year run rate of $125 million by the end of full year '27, which is 1 year ahead of our original schedule. From a cost to achieve perspective, we are under budget and we did not sacrifice service or execution quality to get there. What's remaining is you heard the team talk about earlier, but deploying Hard operating system into our ASIC plants, leveraging our procurement at scale across our global business and then system consolidation that makes us more effective. We will continue to update you on realization. Turning to cash flow. Over the years, we've made heavy capacity investments, which have positioned us well for future growth. as a percentage of sales was 10% in 2025, roughly 7.8% in '26. This year, we're estimating 6% to 7% for 2027, normalizing in the 6% to 8% range in the near term. As Ryan discussed earlier, our plant and equipment is substantially in place. We do not expect any large new projects in the near term, and we will work to optimize our current state through advanced manufacturing. For free cash flow, the full year '26 dip total $425 million was driven by roughly $207 million of deal and integration costs, I don't repeat. Our full year '27 guide expected roughly $500 million of free cash flow we are raising that target to roughly $600 million plus now based on the cash the business is generating this year. From a conversion perspective, you can see '26, we are roughly 30% jumping up to 38% this year. We anticipate 40% plus moving forward for free cash flow conversion. Before I turn to capital allocation, I'll spend a minute on what Aaron highlighted around our EU business. We recently announced the divestiture, which is a full exit of our European business that involves selling our fiber gypsum business and closing down the EU fiber cement business. The agreed sale price is roughly $980 million on a USD basis which represents a 12x multiple on 2026 EBITDA. We expect the deal to close in the first half of 2027. In the interim, Europe will move to discontinued operations beginning in Q2 2017. Our guide is also updated to reflect this. We expect this divestiture to be accretive to the overall margin by roughly 150 basis points. And we plan to use the proceeds roughly $600 million for debt pay down and roughly $250 million share repurchase, which was authorized by our Board of Directors in August. This directly accelerates deleveraging while sharpening our growth and return profile. On that note, where does the free cash flow go? This is the priority order of our capital allocation and funded by the strong free cash flow we are generating. First, we will invest in organic growth. This will fund sales initiatives, product innovation and channel expansion. You heard Jon and John talk about earlier. Second, we will continue to deleverage our target of 2.4x by the end of the financial year 27 and under 2x by 2Q full year '28. We will accelerate this using the $600 million debt paydown that we discussed related to the EU deal. Third, we will provide shareholder returns through opportunistic repurchases. We are currently authorized to execute a $250 million buyback once the EU deal closes. Finally, fourth, we will look at bolt-on M&A via our structured playbook once we hit our leverage target. This is a clear disciplined capital allocation framework that we will apply consistently as we generate more cash. Now let's walk through our Q2 and fiscal 2027 guidance. Note, just as I mentioned earlier, this consolidated guide now excludes Europe, which is moving to discontinued operations. We are reaffirming our Q2 and full year '27 guidance, but we are raising our free cash flow guide from $500 million plus to roughly $600 million plus given our strong free cash flow generation. As discussed, our guidance does not assume any macro housing recovery, and we remain cautious on housing until we see key indicators meaningfully improve. In addition, we've seen no relief on fundamental costs, including freight and diesel. We are encouraged by our initiative traction. We are driving material conversion, and we are realizing our synergies. The demand for our products remain strong, and we are focused on executing and driving above-market growth. Next, our growth algorithm that Aaron touched on earlier. This is the engine behind everything we've walked through. The North America target is roughly 4% to 7% organic growth above the market built on 3 levers. The first lever is material conversion. As a rule of thumb, 1 point of conversion equals roughly 4% of growth for the industry. This has been a durable multiyear contributor for our business. We expect to continue. Jon and John discussed earlier, but we have a long run rate of conversion ahead of us across our portfolio. Second lever is the product of our growth initiatives and the $500 million of renew synergies you heard us discuss. Third lever is net price realization. This is based on the strength of our value proposition across our portfolio and is supported by a multiyear history of price value-based increases. Together, we expect roughly 4% to 7% growth above market with a 35% plus adjusted EBITDA flow-through. This does not underwrite or rely on a market tailwind to work. outside the core stack, bolt-on M&A and any housing recovery add upside. So let's review what this means in 3 scenarios that test this. This is not tied to a specific year, rather the positive impact of growth on our financials. This is for illustrative purposes only and is not intended to be our full year '28 guidance. As a reminder, the full year '27 estimate is the midpoint of our guidance, excluding Europe. We used 3 market areas, down 1.5%, a plus 0.5% and plus 2.5%. Our market definition is based on roughly 60% repair and remodel and 40% new construction, which includes single-family and multifamily. Our above-market outperformance is held constant at 5.5 points, which is the midrange of our 4% to 7% outgrowth. Our EPS benefits from margin improvement, debt pay down and share repurchase. Assumptions include roughly 35% EBITDA flow-through, roughly 40% plus free cash flow conversion, roughly 22% tax rate and 580 million shares. For EPS, this also assumes $600 million of debt pay down at a 5.5% blended rate and $250 million of share buyback at 31%. What this model generates at is assuming the mid case at 0.5% market, we see 6% sales growth with margins expanding roughly 60 basis points. This outpaced sales growth while improving free cash flow, ROIC and EPS. There's upside to this model, if there's any outperformance to the mid-single-digit range we highlighted. This does not include any additional bolt-on M&A we may choose to do, and this doesn't include any incremental debt or share repurchase outside of what we've already announced. Even in a down market, we can deliver sales growth, margin expansion, and improved free cash flow and ROIC. That resilience across markets is the core story. But there's other catalysts that could help have a positive impact. Index inclusion is a positive benefit worth touching on. We became a U.S. domestic filer in April and filed our first 10-K in May. This opened the door to U.S. index inclusion. As you know, index ownership is where a meaningful pool of incremental demand exists. An average of 23% of S&P 500 shares are held via U.S. index today and only roughly 2% for James Arty. We are encouraged by our early wins. We are now in the MSCI small-cap index as well as the S&P completion Index. As we move forward, we believe we have an opportunity to be in the S&P 400 mid-cap as well as others, which brings me to where this leaves the stock. We believe our growth and margin profile sets us up for multiple expansion over time. This chart is a simple comparison of 3-year average EBITDA margin to valuation versus a group of peers. This peer group includes building product players and what we consider best-in-class industrial peers. We've maintained and grown margins through the cycle and believe we have a meaningful opportunity to continue to improve margin and to close the valuation gap, which we intend to do through sales growth, margin expansion, deleveraging and disciplined capital allocation. Now I'll bring this back to where we started, the 5 key message. We are reaffirming our guide, executing above market despite the macro and a housing recovery only adds upside that we're ready to capitalize on. Two, we are delivering on our synergies with cost ahead of schedule. Three, our business is generating strong free cash flow that will allow us to delever quicker and gives us capital allocation optionality. Fourth, our growth algorithm is resilient and outperforms across housing markets. Putting this all together, durable growth, expanded margins, strong free cash flow, disciplined capital allocation and a valuation that hasn't caught up, we believe we have our compounder model set up to deliver strong long-term shareholder returns. Thank you. With that, I'll hand it back to Aaron to close this out.

Thank you, Ryan Brian. Okay. We will quickly close out and get to Q&A. Hey, a couple of goals that we had here for today is to have you all walk away with understanding our strategy. Then second is having confidence in our strategy. And then third is that we have the right team to be able to go out and accomplish that strategy. We are understandably very, very confident in our ability to be able to go out and do this. And I think we have some proof points here as 1 company since we've been brought together. We've made a lot of meaningful progress over the last 14 months. Certainly, as you look at our track record on what we've been able to do on revenue synergies, which we're just getting started on, feel very confident of achieving our cost synergies a year ahead of schedule, setting up our footprint and the right cost structure. We're on the right path as far as deleveraging the business. And certainly, our ability to focus on the areas where we have the right to win and make the tough calls. And I think we did that and exhibit that by what we're doing with Europe. Again, I started out by saying this the last 14 months, we've done a lot. This is working. This is working, and we have a long road ahead of us. So that's what gets me excited, and hopefully, all of you as investors get really excited about this. And I think you should get confidence that as we look at 2 separate companies, AZEK was able to outgrow the market. JamesHardie, on our long stretch, we have been able to outgrow the market. And now we're putting 2 teams together that have a proven track record with enduring competitive advantages. And that's why when we think about why to invest in JamesHardie, you can see this investment thesis here. Obviously, we talked about this, but we're not cycle dependent. What's going on right now. And certainly, we've proven that. We have to prove it quarter after quarter. But there is enough opportunity for us to go out and convert the market with our resilient beautiful products. We have enduring competitive advantages. I've said this over and over, but any company would love to have 1 or 2 of those, we have multiple ones, which makes it very, very hard to compete with. Ryan just went through it. I talked about it. We've got a growth algorithm. Think about it as a diversified portfolio where we are going to outgrow the market, 4% to 7%. And then there's upside to that as we think about certainly the optionality of having bolt-on M&A but also you get a little tailwind from the market out there. And we continue to improve the profitability of our business. Ryan just talked about the efficiency and our reduced CapEx spend. We're going to continue to be able to generate a lot of cash. And that brings optionality for us in what we do with it, including returning to shareholders. And then I think the thing that gives me the most confidence is the speakers you heard from here today, right? Their ability, proven track record to go out and execute, right? This truly is a new James Hardy, and it's a new JamesHardie and a better JamesHardie, because we brought together the best of both. And I think it's exhibited by our team not only here in the room, but who you're going to interact with out there. So look, I'll start out our end with what we started out with and really is the theme of this day and the thesis behind bringing the 2 companies together is we're built to outperform resilient by design. So thank you. I appreciate the time. We'll now move into Q&A here. So I ask the team to come on up and give you all a chance to ask. You always get to ask Ryan and I have questions. So it gives you a chance to be able to talk to the whole leadership team here. Hopefully that's mine. I'm a chair guy. Do we have enough chairs here?

I've got 1 coming.

You got it. Zero harm, Bill. All right.

Okay. So we have the mic runners, so please raise your hand. Just 1 note on the webcast. For those people that are on the webcast there's a portal to ask a question, we'll filter it through and they'll send me the question up here. So all right. Let's go in the front. It's Trey.

Thanks for doing this. Thanks for the info. This has been great. Aaron, I know you didn't want to get in the super granular around the growth [indiscernible]. But if you look at the historic market outperformance in both sides of the business, and then you look at the revenue opportunity, synergy opportunities, 4% to 7% looks pretty conservative. So maybe if you could, any details you could get or give us around what could get us to the low end versus the high end or even above the high end of the range of 4% to 7%.

Appreciate the question. Look, first of all, I think any company to be able to grow in this building product space at 4% to 7% would be having a pretty good year, outgrow the market 4% to 7%. With that said, there certainly is opportunity to outgrow that, right? When we think about having bolt-on acquisitions, we have some of our growth stack perform a little better than others. What we want to present to you is to be -- this is something we think we can do no matter what the market delivers to us and that gives you confidence on consistent performance. We've talked about this before. This is something that AZEK regulator was able to do. JamesHardie, absent the last couple of was able to do consistently. So we feel very confident in what we put out there.

Okay, let's go to the other side here. Michael.

Mike Rehard, Melius Research. Thanks for the presentation. The question, I guess, on the commercial synergy opportunity. You outlined by region, by homebuilders to end markets, is there a way to think about maybe from a, let's say, a disproportionate perspective, either regionally where you see the greater opportunity that $500 million? And I'd also love for you to dive into the $750 million homebuilder opportunity because I know historically AZEK was kind of underrepresented as the industry was in the new construction channel?

Yes. I'll start out, and then I'll send it over to Jon and John here. Look, again, I'll just reiterate, we're very confident in that $500 million. I say $500 million, it's really $500 million plus. And I think the team laid out a good sampling of where we're going, right? Certainly, as we think about the Boise Cascade alignment, also a regional distributor alignment, that is significant synergy opportunity. And that really spans across the whole United States out there. I think Jon or John headed up there. But when we look at it from a segment standpoint, certainly, we see a tremendous amount of opportunity of leveraging some of the hearty relationships and with contractors with 2 steppers with 1 steppers to be able to get TimberTech and AZEK in there, and we have exhibited that. But just as much, we see the opportunity in being able to get JamesHardie I think some of the 2-step regional distribution is a perfect example of that. Some of the lumber yards in areas like the Northeast and the Midwest are perfect examples of that. So I would say it is nationwide, and it is pretty representative for each of our product groups. But Jon, John, you want to chime in here and then talk about the regional building opportunity?

Yes. I think it was well said, Aaron. When you look at the northern markets, AZEK, TimberTech had really good penetration in those marketplaces where we're still emerging as a fiber cement manufacturer. At the same time in those northern markets, there's also a really strong independent lumberyard partnerships with TimberTech and AZEK. And we have, from a Fiber Cement standpoint, very strong partnerships at the 1 step. You go to the south, you have the inverse of that. Very strong penetration from a Fiber Cement standpoint and a lot of growth opportunity against pressure-treated wood in the south underpinned by really strong partnerships with the volume lumber yards and independents as well. So as we look at this, we create the value on that side on the north with more opportunities in independent lumber yards that reach both single-family new construction and R&R. And then specifically in the North against vinyl, it's truly a partnership with the one steppers and our AZEK product line to give them a good, better, best portfolio as people graduate from their first home through the reside of their existing or long-term home. So that's where we feel that there's a kind of strength through our 2-step partnership, their reach to independent lumber yards. Our partnerships collectively with the volume national partners and how we take that and pull it all the way back through to include retail where JamesHardie fiber cement is well established in the retailers, and we're emerging with TimberTech between both retailers.

You want to cover the regional homebuilder?

Yes. Absolutely. And when you look at the $750 million of regional activity. We have really strong share within the top 300. Top 300 is anybody over 100 homes annually. When you look under that 100 homes annually, there are so many different single-family opportunities with those homebuilders where we have our trimmed plus our full portfolio enables a 1 Hardie solution that allows that regional homebuilder to compete with the nationals and differentiates them from that. And our teams are built to deliver that with those types of builders and/or contractors and the smaller scale and the large scale through national accounts or with the infield team.

I think 1 of the synergies that we've had up there before that really supports what John is saying is our alliance with which is the largest regional homebuilding buying group out there. The other thing to build off that, when you think about 1 plus 1 equals 3 is these regional builders a lot of them are shopping. They're getting their materials in places like lumber yards, which AZEK has traditionally been very strong at, right? It also has access to those contractors. So that's an example of the synergy that AZEK is bringing in JamesHardie, kind of the tie your whole question back together.

Keith here.

Be mad at Bill, because I'm not calling on anyone, it's him.

I'm just going to go front to back.

It's Keith Hughes from Truist. Is doing some rough math on your margin gain. It looks like maybe 35%, 40% contribution margin on the forward view that you gave. That's a healthy number everwhere the capacity at year Ryan. That seems like another kind of conservative number. Is that fair? Is there something else going on that I'm not thinking about that keeps it lower?

Yes. I mean I think if you look at the averages of the businesses, we always saw a fiber cement kind of in the low 40s on incremental volume. On the DRNA side, it's kind of that 30% to 35% range. So we kind of brought those together a blended rate of 35%. Yes, there could be incremental to that, but we figured in almost any environment on the flow through we can achieve that.

I assume that volume improved probably be above that number for a period of time in the [indiscernible].

Yes, absolutely, with where we are from a utilization that leverage on our fixed cost, you can take that all the way up through the utilization range.

Tim Wojs from Baird. Thanks for all the detail. Maybe just looking at just kind of the vinyl kind of R&R and kind of recapture opportunity. I think the average lifespan of vinyl is about 30 years. And if you look at the census data, it seems like you'd almost be kind of just entering that replacement cycle, I guess, would you agree with that? And how would you kind of track that opportunity or present that opportunity to us? Because it does seem like there's a pretty sizable basically from the mid-90s to the mid-2000s of installed vinyl that has yet to really convert?

Tim, have you been listening to us for the last year? This is well -- I'm just kidding, but this is really what we've been talking about really primarily over the last year is our largest opportunity, right? And some of the stats we put out there support exactly what you're saying when you think about the aging housing stock, you have this many homes sold, right? So they fit in that sweet spot of what you're talking about. And then since the '90s, I think, over 10 million homes, cloud and vinyl. So that's why we see this as a tremendous opportunity. We saw it years ago. think that we finally are bringing together, right, the right product proposition, being able to reduce the installed time. So we're decreasing that differential between us and vinyl. And then on top of that, being able to have some of the support in key regions that have been vinyl regions that we get from the AZEK acquisition only people access to contractors, but also access to customers. So we are at a great time to be able to go out and get after that. And that's why we list this as our #1 opportunity. We think Northeast, Midwest. It's a $1 billion opportunity. Jon was just talking about for the team. We have objectives that are more locally focused, right, versus, hey, we're going to do this across the country in Northeast and Midwest asked some of our sales team out there and what they're going on, it's how are we going to display vinyl. So we are set up the right way to be able to get after that. And as far as how do you track it, how we're winning on some of our earnings calls, right, we've talked about some of the reach we've had with trim over, right? How many homes, the percentage increase. And we'll continue to do that. So we're making good progress. But I think the thing that is really encouraging is we're in our infancy here and being able to go out and get after it. And you may ask, well, why? Why didn't you get after it before? Look, from a JamesHardie perspective, we had amount of opportunity in certain regions of the country to really get after new construction. And we'll take that all day long. And we've been very successful with that. Now as we look at, okay, what are other opportunities for us as JamesHardie, repair and remodel in some of those regions of the country are top of mind.

And on the growth algo, just is -- has anything changed on the net pricing contribution relative to what the organization has done historically?

Look, we usually say roughly 2% on when we think of DRNA, and we think north of 3% on fiber cement. But it goes back to what I said before, some years, these are going to be different. Each 1 of those growth stacks. Right now, that is our thinking is that we will target that. But I think it's to look at the growth algorithm in totality here of that 4% to 7%.

Great job, guys. Phil Ng from Jefferies. Ryan, the presentation of operations was really impressive. The 2 things I wanted to really tackle is speed pick up 5% for fiber cement aspirationally, call it, 3 to 5 years, what's a good target? Would that require a lot of capital. the other piece I wanted to really tack on is the reformulation piece, right? Is there an area to kind of reformulate 5% in particular to kind of reduce installed costs, right? I mean the changeover method was really impactful, but is there an opportunity to kind of reduce that install cost really open the TAM and go after that PVC market?

Yes, sure. Thanks -- the -- let us take -- I'll take the first one, line speed. The question was line speed fiber cement, kind of what's a 3- to 4-year view of that? Is that the question?

Yes.

Yes. Yes. Okay. So I think -- and then the second part was how much CapEx is required. So I'll take the CapEx, I would expect pretty incremental -- like a level of CapEx you guys won't notice. Most of that will come -- there's like instrumentation and tech stuff on the line and then debottlenecking work as we -- the sheet machines ramped up, you run into everything. But I think the headline will be a number that's not really meaningful for you guys would be a lot work. What's reasonable over the next 3 to 5 years. We won't get the full $1 billion over the 3 to 5 years. I'll tell you that. I think we'll get a good chunk. We gave you what we've done over the last 12 months. I think that's a good indication of the potential run rate. We're pretty early. It's pretty hard stuff. If I did a range in my range would be pretty big for you. But we're making progress. So I think we took that what we've done in the last 12 months coupled with we're not going to get it all in 3 to 5 years, you can kind of get a sense of where we think we'll land with the thing. Reformulation for fiber cement. I think we've got run room on it. We've been doing it a long time. So I think the way to set expectations there is, I don't see like a reformulation lever that sort of resets our cost position dramatically. There's a lot of runway to keep contributing to that annual productivity inflation offset that kind of activity. I'd see bigger probably step change opportunity on deck formulation that exit of first, but there's still plenty of juice to squeeze. It's going to come kind of incrementally on fiber cement and help us roll up to that annual productivity.

So Phil, here's what I would say. The way we've set up the organization, again, best of both. So we have a product organization under job, right? So we have general managers who are dedicated to product. They have a P&L. They're working hand-in-hand with an R&D organization, right? What they're constantly trying to do not only go out and sell more product, but how do we make it more profitable as well. So the other thing on top of that is we have group that is solely dedicated to reformulation and what I call VI, value improvement. So it's part of the competency of Jon's team of product managers to not only develop more product go out and sell more, but how to make it more profitable as well. And this is 1 of the things that we used to do at Hardie. So now we're doing that, we're instituting across the whole company here. So we should continue to see when Ryan put up there, the HOS type of savings target out there is to deliver on that year in and year out.

Got you. If I could sneak 1 more in. On the AZEK reformulation side, that's the bigger opportunity. What are the 1 or 2 things that really excite you where you could really unlock value on the AZEK side?

Jon, probably take that.

So it's -- Phil, it's just going to be a continuation of what we've been working on before. But I think we're able to accelerate our efforts now with the combined R&D organization, right? So simply put, we have more sort of credentialed proven scientists in partnership with the combined 1 hard R&D organization. And to Aaron's point, we created a separate organization within an organization, a team 100% focused on this formulation and cost savings opportunity that historically was purely focused on fiber cement and now they're focused on a full portfolio. And so when you think about just the expansion of the capability and the depth team. We just think everything we were working on before, we're not going to be able to get there faster. And I think that kind of came through in Ryan's presentation in terms of the acceleration of the $50-plus million of synergy capture from operations. that's a direct result of the kind of consolidated best of both R&D team.

Okay. I think we're going to move over to anybody in the -- Okay, let's go right here and then. Yes.

It's Matt Bouley, Barclays. So the commercial synergies, I think you said it a handful of times today that there's upside to the million you didn't say exactly how much upside. Curious if you have a number, I would love to hear it, but really what I'm wondering is...

We're not giving that far out.

Just -- you know, got to give it a shot. Maybe if you can kind of take off some of the top opportunities or examples. You rolled back 12 months ago, you laid out the 500. What's new? What do you really think there's an opportunity on that has changed?

Let me start out and John maybe be good to take this because I've talked a lot about this. the things because we always give these headlines, right? And certainly, they're very important. Boise, ABC, Lancing, go on and on and on. I think an important piece to remember is go back to John Madson slide on RPS and Rick James, easy name to remember. What we've done with Rick James who the contractor, that's being done thousands of times. And it will compound on each other. That is where the real thesis of this and I do want to say magic because it's not magic. It's a lot of hard work. But that is the work that is ongoing and it will continue over and over again. So we can give you the headlines, which are certainly, I think, impressive. But that's what I want to get across is that example of that contractor. There are hundreds of thousands of those. And Skelly talked a little bit about it and so did Sam, as we have 30,000 of those in our network that are signed up. We have 300,000 of them our network. You start to think about some of the reach and the power that we have and the relationships we have, not only with our contractors, but as we try to get more contractors converted to our materials, look at the reach from our customer base, and they're aligned with us. Boise, for instance, our regional distributors, Boise is not selling any other decking or railing or trim besides our product. they're going out and trying to convert. So it's a force multiplier. I think 1 of the guys had said it before. But I want to start with that because I think that's really important, but maybe give it to John to talk a little more here.

Yes. I mean Aaron talked about 1 of our objectives is about establishing confidence and credibility in our execution, right? And so nothing we showed here today doesn't have a plan with a team assigned with clear accountabilities and clear targets. So everything we've talked about today we add a playbook we're executing against. Everybody likes to talk about the home runs, it's great to talk about Boise. ABC is a great win where you're consolidating their entire PVC business across hundreds and hundreds of locations. I get as a leader, I get just as excited about those singles, like that contractor flipped, right? That dealer flipped, just keep getting people on base, keep scoring runs, keep delivering and those wins, they compound, right? And so it's just win, win, hit a couple over the fence here or there, but we have a proven track record of delivering those quick wins, those long-term wins. And so it's of actions that we're taking, we'll hold the team highly accountable to, and that's what's delivering the share gains. So there's no new secret recipe that we developed overnight when we put the companies together. It's just the integration, I think, has allowed us to accelerate a lot of our initiatives faster than we would have gotten to individually on our own, right? And so that's what I'm holding the team [indiscernible].

Got it. No, that's great to hear. And then second 1 is a quick clarification on the margin guide. So that 35% flow through. I think I saw in the slides that 5% of revenue targeted for HOS savings every year. And then obviously, you're guiding to net price every year. So that 35% just volume? And are those other 2 areas potentially incremental to that?

So think of HOS as more of an inflation mitigator for us. That's why we have a target at that, but do you want to take any more?