James Hardie Industries plc 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our annual consolidated financial statements and related notes and our discussion and analysis of financial condition and results of operations, which were included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, as well as Part 1, Item 1. Financial Statements in this Form 10-Q. The term “fiscal year” refers to our fiscal year ended March 31 of such year; the term “$” refers to U.S. dollars; the term “A$” refers to Australian dollars; and the term “€” refers to Euros. FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements, including within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may also make forward-looking statements in other reports filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”) and/or the Australian Securities Exchange (“ASX”), in materials delivered to shareholders and in press releases. In addition, the Company’s representatives may from time to time make oral forward-looking statements. These statements, which are not statements of historical fact, contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue,” “may,” “objective,” “outlook” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Examples of forward-looking statements include: • statements about the future integration of AZEK, including its anticipated benefits and costs to achieve them; • statements about the Company’s future performance; • projections of the Company’s results of operations or financial condition; • statements regarding the Company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or its products; • expectations concerning the costs associated with the suspension or closure of operations at any of the Company’s plants and future plans with respect to any such plants; • expectations concerning the costs associated with the significant capital expenditure projects at any of the Company’s plants and future plans with respect to any such projects; • expectations regarding the extension or renewal of the Company’s credit facilities including changes to terms, covenants or ratios; • expectations concerning dividend payments and share buy-backs; • statements concerning the Company’s corporate and tax domiciles and structures and potential changes to them, including potential tax charges; • statements regarding tax liabilities and related audits, reviews and proceedings; • statements regarding the possible consequences and/or potential outcome of legal proceedings brought against us and the potential liabilities, if any, associated with such proceedings; • expectations about the timing and amount of contributions to AICF, a special purpose fund for the compensation of proven Australian asbestos-related personal injury and death claims; • statements regarding the Company’s ability to manage legal and regulatory matters (including, but not limited to, product liability, environmental, intellectual property and competition law matters) and to resolve any such pending legal and regulatory matters within current estimates and in anticipation of certain third-party recoveries; and • statements about economic or housing market conditions in the regions in which we operate, including but not limited to, the levels of new home construction and home renovations, unemployment levels, changes in consumer income, changes or stability in housing values, the availability of mortgages and other financing, mortgage and other interest rates, housing affordability and supply, the levels of foreclosures and home resales, currency exchange rates, and builder and consumer confidence. 19 Table of Contents Forward-looking statements are based on the Company’s current expectations, estimates and assumptions. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, filed with the Securities and Exchange Commission (“SEC”) on May 19, 2026. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company assumes no obligation to update any forward-looking statements or information except as required by law. Overview James Hardie Industries plc is a leading provider of exterior home and outdoor living solutions, serving the new home construction, repair and remodel and outdoor living markets. Our current primary geographic markets include the United States of America (“US,” “USA” or the “United States”), Australia and Europe. On July 1, 2025, we completed the acquisition of The AZEK Company Inc. (“AZEK”), an industry-leading designer and manufacturer of low maintenance and environmentally sustainable outdoor living products, which has manufacturing and recycling facilities in the United States. As of June 30, 2026, the Company has four reportable segments: • Siding & Trim segment - Manufactures fiber cement and PVC exterior siding and trim products, as well as moulding, interior linings, and accessories in the United States. These products are sold in the United States and Canada. • Deck, Rail & Accessories segment - Manufactures decking, railing, cladding, pergolas, cabanas and related accessories in the United States. These products are sold in the United States and Canada. • Australia & New Zealand segment - Includes fiber cement products manufactured in Australia. These products are sold in Australia and New Zealand. • Europe segment - Includes fiber gypsum products and cement bonded boards manufactured in Europe, and fiber cement products manufactured in the United States. These products are sold in Europe, primarily Germany, Great Britain and Switzerland. 20 Table of Contents Results of Operations Q1 FY27 vs Q1 FY26 Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Change Net sales $ 1,474.6 $ 899.9 64 % Cost of goods sold 925.9 563.0 64 % Gross profit 548.7 336.9 63 % Gross margin (%) 37.2 37.4 (0.2) pts Selling, general and administrative expenses 295.4 156.1 89 % Research and development expenses 15.4 12.1 27 % Restructuring expenses 5.2 — 100 % Acquisition related expenses 16.6 29.4 (44 %) Asbestos adjustments (1.6) 0.7 (329 %) Operating income 217.7 138.6 57 % Operating income margin (%) 14.8 15.4 (0.6) pts Interest, net 61.5 37.8 63 % Other (income) expense, net (1.1) 11.1 (110%) Income before income taxes 157.3 89.7 75 % Income tax expense 53.0 27.1 96 % Net income 104.3 62.6 67 % Net sales increased 64% primarily driven by the AZEK acquisition on July 1, 2025, which contributed net sales of $397.1 million, as well as higher net sales in our Siding & Trim, Australia & New Zealand and Europe segments. Gross margin decreased 0.2 percentage points primarily driven by the amortization of certain intangible assets resulting from the AZEK acquisition of $16.0 million, which was partially offset by higher gross margin in our Siding & Trim and Australia & New Zealand segments. Selling, general and administrative expenses (“SG&A”) increased 89% and as a percentage of sales increased 2.7 percentage points. As a percentage of sales, this increase was primarily due to the amortization of certain intangible assets resulting from the AZEK acquisition of $61.6 million, partially offset by lower labor costs and professional fees. Restructuring expenses increased 100%, due to fixed asset impairments, lease exit and employee costs related to the closure of a recycling plant in Oregon. These same costs were not incurred in the prior period. Acquisition related expenses decreased 44% primarily due to lower professional service fees, partially offset by higher travel expenses. Costs associated with the AZEK acquisition are included in this line. Interest, net increased 63%, primarily driven by a higher principal balance outstanding related to our senior secured credit facilities and senior secured notes. This was partially offset by pre-close financing and interest costs of $34.9 million incurred in the prior year. Income tax expense increased 96%, while the effective tax rate increased 3.5 percentage points. The increase in tax expense reflects higher income before income taxes compared to fiscal year 2026, while the higher effective tax rate was primarily driven by discrete items. Net income increased 67% due to h igher operating income and lower other expense as the first quarter of fiscal year 2026 included an $11.6 million non-cash loss on our interest rate swap. This was partially offset by higher interest and income tax expense. 21 Table of Contents Segment Results of Operations Siding & Trim Segment Operating results for the Siding & Trim segment were as follows: Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Change Net sales $ 859.8 $ 641.8 34% Cost of goods sold 525.7 401.3 31% Gross profit 334.1 240.5 39% Gross margin (%) 38.9 37.5 1.4 pts Selling, general and administrative expenses 105.4 76.0 39% Research and development expenses 9.5 2.3 313% Acquisition related expenses 4.3 1.0 330% Operating income 214.9 161.2 33% Operating income margin (%) 25.0 25.1 (0.1 pts) Q1 FY27 vs Q1 FY26 Net sales increased 34%, driven by higher sales in both the North America fiber cement and AZEK businesses. AZEK, which was acquired on July 1, 2025, contributed sales of $92.0 million during the first quarter of fiscal year 2027. North America fiber cement sales increased 20% primarily due to higher volume of 13% as customers inventory levels normalized compared to customer inventory management in prior year and higher average net sales price primarily resulting from our annual price increase. Gross margin increased 1.4 percentage points primarily due to a higher average net sales price and favorable raw material costs, partially offset by higher freight costs. In addition, gross margin was unfavorably impacted by the amortization of certain intangible assets resulting from the AZEK acquisition of $2.9 million. SG&A expenses increased 39%, and as a percentage of sales, SG&A expenses increased 0.5 percentage points. This increase was primarily driven by the amortization of certain intangible assets resulting from the AZEK acquisition of $15.6 million, partially offset by lower marketing, labor costs and professional fees as a percentage of sales. Research and development expenses (“R&D”) expenses increased $7.2 million primarily due to the allocation of $6.1 million of R&D expenses which were not allocated to our segments prior to the second quarter of fiscal year 2026. Acquisition related expenses increased $3.3 million due to higher travel and professional service fees related to the AZEK acquisition integration. Operating income margin remained relatively flat at 25.0% based on factors described above. 22 Table of Contents Deck, Rail & Accessories Segment Operating results for the Deck, Rail & Accessories segment were as follows: Three Months Ended June 30, (Millions of U.S. dollars) 2026 Net sales $ 305.1 Cost of goods sold 208.2 Gross profit 96.9 Gross margin (%) 31.8 Selling, general and administrative expenses 92.1 Research and development expenses 2.9 Restructuring expenses 5.2 Operating loss (3.3) Operating loss margin (%) (1.1) Q1 FY27 Net sales of $305.1 million were 5% lower than AZEK's net sales for the comparable period prior to the acquisition, driven by lower volumes. Gross margin of 31.8% includes the amortization of certain intangible assets resulting from the AZEK acquisition of $13.1 million. SG&A expenses of $92.1 million includes the amortization of certain intangible assets resulting from the AZEK acquisition of $46.0 million. Restructuring expenses of $5.2 million includes exit costs related to the closure of a recycling plant in Oregon. Exit costs primarily consisted of fixed asset impairments, lease exit costs and employee costs. Operating loss of $3.3 million includes the amortization of certain intangible assets resulting from the AZEK acquisition of $59.1 million. Australia & New Zealand Segment Operating results for the Australia & New Zealand segment were as follows. Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Change Net sales $ 153.3 $ 121.6 26% Cost of goods sold 86.1 69.3 24% Gross profit 67.2 52.3 28% Gross margin (%) 43.8 43.0 0.8 pts Selling, general and administrative expenses 19.1 14.2 35% Research and development expenses 1.3 0.3 333% Operating income 46.8 37.8 24% Operating income margin (%) 30.5 31.1 (0.6 pts) 23 Table of Contents Q1 FY27 vs Q1 FY26 Net sales increased 26%, driven by higher volumes of 11% and favorable exchange rates, as net sales in Australian dollars increased 14%. The increase in volumes was primarily attributable to customers pre-buying our products in anticipation of future fuel price increases. Gross margin increased 0.8 percentage points primarily due to a higher average net sales price due to favorable exchange rates, partially offset by higher freight costs. SG&A expenses increased 35% primarily due to unfavorable exchange rates and higher marketing, labor costs and professional fees. In Australian dollars, SG&A expenses increased 21%. As a percentage of sales, SG&A expenses increased 0.8 percentage points. R&D expenses increased $1.0 million due to the allocation of certain R&D expenses which were previously unallocated to our segments prior to the second quarter of fiscal year 2026. Operating income margin decreased 0.6 percentage points to 30.5% primarily due to higher SG&A and R&D expenses as a percentage of sales, partially offset by higher gross margin. Europe Segment Operating results for the Europe segment were as follows: Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Change Change Net sales $ 156.4 $ 136.5 15 % Cost of goods sold 105.9 92.4 15 % Gross profit 50.5 44.1 15 % Gross margin (%) 32.3 32.3 — pts Selling, general and administrative expenses 29.4 28.2 4 % Research and development expenses 0.9 0.8 13 % Operating income 20.2 15.1 34 % Operating income margin (%) 12.9 11.1 1.8 pts Q1 FY27 vs Q1 FY26 Net sales increased 15% due to a 7% increase in volume, primarily driven by higher fiber gypsum volume, higher average net sales price and favorable exchange rates. Net sales in Euros increased 12%. Higher average net sales price was primarily driven by favorable exchange rates and our May/June 2026 and January 2026 price increases. Gross margin remained flat at 32.3% as higher average net sales price and lower energy, paper and gypsum costs were offset by higher freight. SG&A expenses increased 4%, primarily driven by higher labor costs, partially offset by lower marketing expenses. As a percentage of sales, SG&A expenses decreased 1.9 percentage points . Operating income margin increased 1.8 percentage points to 12.9% primarily driven by lower SG&A expenses as a percentage of sales, while gross margin remained flat. 24 Table of Contents General Corporate costs Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Change General Corporate costs 1 $ 60.9 $ 75.5 (19%) ____________ 1. First quarter fiscal year 2026 includes unallocated R&D costs. Q1 FY27 vs Q1 FY26 General corporate costs decreased 19%, driven by lower acquisition related expenses of $16.1 million, primarily due to lower professional service fees associated with the AZEK acquisition. In addition, the decrease was also due to the allocation of $7.3 million of R&D costs to our segments beginning July 1, 2025. These decreases were partially offset by AZEK expenses related to stock compensation and employee costs. Legacy Corporate costs were relatively flat compared to the first quarter of fiscal year 2026. Non-GAAP Financial Measures To supplement our unaudited Condensed Consolidated Financial Statements prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we use certain non-GAAP performance financial measures, as described below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP financial measures to assist investors in seeing our financial performance from management’s view and because we believe they provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. Our GAAP financial results include significant expenses that are not indicative of our ongoing operations as detailed in the tables below. However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our unaudited Condensed Consolidated Financial Statements prepared and presented in accordance with GAAP. Three Months Ended June 30, (Millions of U.S. dollars, except per share amounts) 2026 2025 GAAP Financial Measures: Net income $ 104.3 $ 62.6 Net income per common share - diluted 0.18 0.15 Net income margin 7.1 % 7.0 % Net cash provided by operating activities $ 344.0 $ 206.9 Net cash used in investing activities $ (103.6) $ (105.3) Net cash (used in) provided by financing activities $ (261.4) $ 1,402.8 25 Table of Contents Three Months Ended June 30, (Millions of U.S. dollars, except per share amounts) 2026 2025 Non-GAAP Financial Measures: Adjusted Net Income $ 209.3 $ 136.1 Adjusted Diluted Earnings Per Share 0.36 0.32 Adjusted EBITDA $ 422.1 $ 236.4 Adjusted EBITDA Margin 28.6 % 26.3 % Free Cash Flow $ 254.2 $ 103.7 Adjusted Net Income, Adjusted Diluted Earnings Per Share (“EPS”), Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow We define Adjusted Net Income as net income before legacy items such as asbestos related expenses and adjustments, and AICF interest income and significant non-recurring items, such as restructuring gain or expenses, acquisition and pre-close financing related costs, inventory fair value adjustment, amortization of intangible assets resulting from AZEK acquisition, as well as share-based compensation expense and adjustments to tax expenses. We define Adjusted Diluted EPS as Adjusted Net Income divided by weighted average common shares outstanding – diluted, to reflect the conversion or exercise, as applicable, of all outstanding shares of restricted stock awards, restricted stock units and options to purchase shares of our common stock. We define Adjusted EBITDA as net income before interest, net, other expense (income), net, income tax expense and depreciation and amortization, and items such as asbestos related expenses and adjustments, share-based compensation expense, and significant non-recurring items, such as restructuring gain and expenses, acquisition related expenses and inventory fair value adjustment. Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by net sales. We believe Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA Margin are useful to investors because they help identify underlying trends in our business that could otherwise be masked by certain expenses that can vary from company to company depending on, among other things, its financing, capital structure and the method by which its assets were acquired, and can also vary significantly from period to period. For example, management excludes share-based compensation expense because the amount recognized in any period is impacted by factors such as grant timing, valuation assumptions, and vesting schedules, which may vary from period to period and may not directly reflect the ongoing operating performance of the business. We believe these adjustments are helpful to investors in assessing our net income performance in a way that is similar to the way management assesses our performance. Additionally, Adjusted EBITDA and Adjusted EBITDA margin are common measures of operating performance in our industry, and we believe they facilitate operating comparisons. Our management also uses Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with other GAAP financial measures for planning purposes, including as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: • These measures do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; • These measures do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; 26 Table of Contents • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our income tax expense or the cash requirements to pay our taxes; • Adjusted EBITDA and Adjusted EBITDA Margin exclude depreciation and amortization expense. Although depreciation expense is a non-cash expense, the assets being depreciated may have to be replaced in the future; • Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA Margin exclude AICF interest income, acquisition and pre-close financing related costs, each of which can affect our current and future cash requirements; • Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA Margin exclude share-based compensation expense, which is an important part of our compensation programs and strategy; and • Other companies in our industry may calculate Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures. Because of these limitations, none of these metrics should be considered indicative of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. In addition, we provide Free Cash Flow, which is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities less purchases of property, plant and equipment plus any proceeds on sale of property, plant and equipment. We believe Free Cash Flow is useful to investors as an important liquidity measure of the cash that is available to us after net capital expenditures. Free Cash Flow is used by our management as a measure of our ability to generate and use cash, including in order to invest in future growth, fund acquisitions, return capital to our shareholders and repay indebtedness. Our use of Free Cash Flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under GAAP. Some of these limitations are: • Free Cash Flow is not a substitute for net cash provided by (used in) operating activities, including because our capital expenditures as a manufacturing company can be significant and can vary from period to period; • Free Cash Flow does not reflect our future contractual commitments or mandatory debt repayments and accordingly does not represent residual cash flow available for discretionary expenditures or the total increase or decrease in our cash balance for a given period; and • Other companies in our industry may calculate Free Cash Flow differently than we do, limiting its usefulness as a comparative measure. 27 Table of Contents The following tables present our reconciliations of the most comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures for the periods indicated: Adjusted Net Income and Adjusted Diluted EPS Reconciliation Three Months Ended June 30, (Millions of U.S. dollars, except per share amounts) 2026 2025 Net income $ 104.3 $ 62.6 Asbestos related expenses and adjustments (1.0) 1.0 AICF interest income (3.3) (2.6) Restructuring expenses 5.2 — Pre-close financing costs 1 — 46.5 Acquisition related expenses 16.6 29.4 Amortization of intangible assets resulting from AZEK acquisition 77.6 — Share-based compensation expense 2 14.8 10.9 Tax impact of adjustments 3 (4.9) (11.7) Adjusted Net Income $ 209.3 $ 136.1 Three Months Ended June 30, 2026 2025 Net income per common share - diluted $ 0.18 $ 0.15 Asbestos related expenses and adjustments — — AICF interest income (0.01) (0.01) Restructuring expenses 0.01 — Pre-close financing costs 1 — 0.10 Acquisition related expenses 0.03 0.07 Amortization of intangible assets resulting from AZEK acquisition 0.13 — Share-based compensation expense 2 0.03 0.03 Tax impact of adjustments 3 (0.01) (0.02) Adjusted Diluted Earnings Per Share 4 $ 0.36 $ 0.32 ____________ 1. The first quarter of fiscal year 2026 includes pre-close financing interest of $ 34.9 million and $ 11.6 million non-cash loss on our interest rate swap. 2. Effective as of June 30, 2026, we revised the definition of Adjusted Net Income and Adjusted Diluted Earnings Per Share to exclude share-based compensation expense. For the three months ended June 30, 2026, share-based compensation expense of $0.4 million is included in acquisition related expenses. The prior period has been recast to reflect the change. 3. Includes tax adjustments related to the amortization of certain U.S. intangible assets, asbestos, share-based compensation and discrete items relating to the AZEK acquisition. 4. Weighted average common shares outstanding used in computing diluted net income per common share of 584.3 million a nd 431.1 million for the three months ended June 30, 2026 and 2025, respectively. 28 Table of Contents Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Net income $ 104.3 $ 62.6 Interest, net 61.5 37.8 Other (income) expense, net (1.1) 11.1 Income tax expense 53.0 27.1 Depreciation and amortization 168.8 56.5 Acquisition related expenses 16.6 29.4 Asbestos related expenses and adjustments (1.0) 1.0 Restructuring expenses 5.2 — Share-based compensation expense 1 14.8 10.9 Adjusted EBITDA $ 422.1 $ 236.4 Three Months Ended June 30, 2026 2025 Net income margin 7.1 % 7.0 % Interest, net 4.2 % 4.2 % Other (income) expense, net (0.1) % 1.2 % Income tax expense 3.6 % 3.0 % Depreciation and amortization 11.4 % 6.3 % Acquisition related expenses 1.1 % 3.3 % Asbestos related expenses and adjustments (0.1) % 0.1 % Restructuring expenses 0.4 % — % Share-based compensation expense 1 1.0 % 1.2 % Adjusted EBITDA Margin 28.6 % 26.3 % ____________ 1. Effective as of June 30, 2026, we revised the definition of Adjusted EBITDA and Adjusted EBITDA Margin to exclude share-based compensation expense. For the three months ended June 30, 2026, share-based compensation expense of $0.4 million is included in acquisition related expenses. The prior period has been recast to reflect the change. Free Cash Flow Reconciliation Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Net cash provided by operating activities $ 344.0 $ 206.9 Purchases of property, plant and equipment (89.8) (103.2) Free Cash Flow $ 254.2 $ 103.7 Net cash used in investing activities $ (103.6) $ (105.3) Net cash (used in) provided by financing activities $ (261.4) $ 1,402.8 29 Table of Contents Liquidity and Capital Resources Overview Our primary cash needs are to fund working capital, capital expenditures, debt service and acquisitions we may undertake. A s of June 30, 2026, we had cash and cash equivalents on hand of $289.9 million a nd $843.2 million ava ilable under our Revolving Facility. Our gross debt balance decreased from $4,567.2 million at March 31, 2026 to $4,306.3 million at June 30, 2026, primarily due to the redemption of our $400 million senior unsecured notes due 2028, partially offset by a $150.0 million draw on our Revolving Facility . Readers are referred to Note 7, “Debt” to the unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q for further information on our debt obligations. Sources of Liquidity We have historically relied on cash flows from operations, borrowings under the credit facilities and our continued access to capital markets on both a short-term and long-term basis, to fund our cash needs. These internal and external sources of liquidity are primarily used to fund working capital, capital expenditures, payments of principal and interest on our debt, share repurchases and our annual contribution to AICF in accordance with the terms of the AFFA. Based on our existing cash balances, together with anticipated operating cash flows and unutilized credit facilities, we anticipate we will have sufficient funds to meet our planned working capital and other expected cash requirements for the next twelve months. Cash Flow Three Months Ended June 30, (Millions of U.S. dollars) 2026 2025 Change Change % Net cash provided by operating activities $ 344.0 $ 206.9 $ 137.1 66 Net cash used in investing activities (103.6) (105.3) 1.7 2 Net cash (used in) provided by financing activities (261.4) 1,402.8 (1,664.2) (119) Cash Provided by Operating Activities The $137.1 million increase in cash provided by operating activities is primarily driven by higher operating income generated by increased net sales. This increase was partially offset by lower cash provided by working capital, principally reflecting less favorable changes in accounts receivable and accounts payable. Cash Used in Investing Activities The $1.7 million decrease in cash used in investing activities is primarily due to lower purchases of plant property and equipment, offset by the net purchase of restricted investments for Asbestos. Cash (Used in) Provided by Financing Activities The $1,664.2 million decrease in cash (used in) provided by financing activities is primarily due to the repayment of $790.9 million of debt in the current year, as well as the issuance of the 2031 and 2032 Notes of $1,700.0 million to finance the cash portion of the AZEK acquisition in the prior year. This was partially offset by proceeds from the Revolving Facility in the current year and debt paydowns in the prior year. 30 Table of Contents AICF Funding During fiscal year 2027, we will contribute A$128.2 million to AICF, excluding interest, in quarterly installments. The first payment of A$32.1 million was made on July 1, 2026. Readers are referred to Note 1, “Organization and Significant Accounting Policies” and Note 8 , “Asbestos” to the unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q for further information on asbestos. Contingent Commitments We have contractual commitments for purchases of certain minimum quantities of raw materials at index-based prices, marketing contracts and non-cancelable finance and operating leases, outstanding letters of credit and fixed asset purchase commitments. For a description of our contractual obligations and commitments, see Note 7, “Debt” and Note 11, “Commitments and Contingencies” to the unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q. Critical Accounting Estimates As stated in Note 1 to the unaudited Condensed Consolidated Financial Statements in Part I, Item 1, the preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported revenue and expenses during the periods presented therein. There have been no material changes to the Company’s critical accounting estimates since our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. Recently Issued Accounting Pronouncements Information regarding recently issued accounting pronouncements are included in Note 1, “Organization and Significant Accounting Policies” in the Notes to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.