James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (October 2014)
43 slides from James Hardie Industries's investor presentation, Oct 13, 2014
Slide 1: Investor Presentation October 2014
For personal use only INVESTOR PRESENTATION OCTOBER 2014
Slide 2: Disclaimer
DISCLAIMER For personal use only This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K, in its annual reports to shareholders, in offering
Slide 3: Disclaimer (continued)
DISCLAIMER (continued) For personal use only 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 id
Slide 4: Agenda
AGENDA For personal use only • Global Strategy and Business Overview • USA & Europe Fiber Cement • Asia Pacific Fiber Cement • Capital Management Framework • Group Outlook and Guidance • Appendix In this Management Presentation, James Hardie may present financial measures, sales volume terms, financ
Slide 5: Global Strategy: Industry Leadership and Profitable Growth
GLOBAL STRATEGY For personal use only Industry Leadership and Profitable Growth • Introduce differentiated products to deliver a sustainable competitive advantage • Aggressively grow demand for our products in targeted market segments Australia PAGE 5
Slide 6: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.6+b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,100 employees • Market cap US$6b • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 20 August 2014.
Slide 7: Q1 FY15 Group Net Operating Profit
1 Q1 FY15 GROUP NET OPERATING PROFIT For personal use only Q1 Q1 % US$ Millions FY 2015 FY 2014 Change Adjusted net operating profit ² 50.1 52.0 (4) Adjusted diluted earnings per share (US cents) 11 12 Net operating profit reflects: • Higher sales volumes and average net sales prices in both the USA
Slide 8: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT USA & Europe Asia Pacific For personal use only DUBLIN JHX Manufacturing Operations JHX Manufacturing Operations – Production Suspended JHX Sales Office Net Sales EBIT ² Asia Pacific Asia Pacific 23% 23% Geographic Mix¹ USA and Europe USA and Europe 77% 77% 1 All percent
Slide 9: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$33.1m spent on Research & Development in FY14 • US$363.1m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 10: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE For personal use only Fiber cement is more durable than wood and engineered wood, looks and performs better than vinyl, and is more cost effective and quicker to build with than brick Fiber Cement Vinyl Engineered Wood Fire resistant ? ? Hail resistant ? ?
Slide 11: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS For personal use only Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 11
Slide 12: USA and Europe Fiber Cement Segment
USA AND EUROPE FIBER CEMENT SEGMENT For personal use only USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,100 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC TX 1Q FY
Slide 13: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Market Share North America Wood-Look Market Size 4.7BSF Fiber Cement Share: 17% Fiber Cement Share 25% Source: Internal estimates based on NAHB product usage data adjusted for Source: Internal estimates bas
Slide 14: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only USA Fiber Cement Top Line Growth Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau PAGE 14
Slide 15: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only USA and Europe Fiber Cement Average Net Sales Price 710 US$ per MSF US$680 670 630 590 550 FY10 FY11 FY12 FY13 FY14 Q1 FY15 PAGE 15
Slide 16: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS For personal use only USA and Europe Fiber Cement Quarterly EBIT and EBIT Margin1 80 35 70 30 60 25 EBIT US$M 50 EBIT Margin 20 40 15 30 20 10 10 5 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 EBIT EBIT Margin 1 Excludes asset impairment charges of US$14.3 million
Slide 17: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 985 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility 1Q FY15 1Q FY14 Net Sales US$95.3m US$94.1m EBIT US$20.7m US$21.1m EBIT Margin 21.7% 2
Slide 18: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS For personal use only Asia Pacific Fiber Cement Segment Average Net Sales Price Quarterly EBIT and EBIT Margin1 960 30 30 A$931 25 25 A$ per MSF 920 20 20 EBIT US$M EBIT 15 15 880 10 10 5 5 840 0 0 FY10 FY11 FY12 FY13 FY14 Q1 FY15 FY10 FY11 FY12 FY13 FY14 FY15
Slide 19: Targeting the Right Product into the Right Market
TARGETTING THE RIGHT PRODUCT INTO THE RIGHT MARKET For personal use only Asia Pacific Core Markets Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 19
Slide 20: JHX Approach to Capital Management
JHX APPROACH TO CAPITAL MANAGEMENT For personal use only Objectives • To optimize our capital structure with a view towards a target net debt position in the range of 1-2 times EBITDA excluding asbestos Strategy • While reinvesting in R&D and capacity expansion required for growth; • Provide consist
Slide 21: JHX FY15 Liquidity and Capital Allocation
JHX FY15 LIQUIDITY AND CAPITAL ALLOCATION For personal use only Liquidity • In May 2014, we added US$150.0 million of credit facilities intended to replace and augment an existing US$50.0 million credit facility which expired on 14 February 2014 • With the addition of this facility, we have US$505.0
Slide 22: JHX FY15 Group Outlook
JHX FY15 GROUP OUTLOOK For personal use only USA and Europe Fiber Cement • The US operating environment continues to recover, but at a more modest pace than expected earlier this year • The recent flattening in housing activity has created some uncertainty about the pace of the recovery in the short
Slide 23: JHX FY15 Guidance
JHX FY15 GUIDANCE For personal use only • Management expects full year Adjusted net operating profit to be between US$205 million and US$235 million assuming, among other things, housing industry conditions in the United States continue to improve at a more moderate level than originally assumed at
Slide 24: Appendix
For personal use only APPENDIX
Slide 25: JHX Key Ratios
JHX KEY RATIOS For personal use only 3 Months 3 Months 3 Months FY2015 FY2014 FY2013 1 EPS (Diluted) (US Cents) 11c 12c 10c 2 EBIT/ Sales (EBIT margin) 17.1% 18.1% 17.0% Gearing Ratio 1 (3.3)% (16.5)% (32.1)% Net Interest Expense Cover 2 79.1x 84.4x 57.7x Net Interest Paid Cover 2 89.0x 67.5x 115.4x
Slide 26: USA and Europe Fiber Cement – Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY10 FY11 FY12 FY13 FY14 Net Sales 828 814 862 951 1,128 US$m Sales Volume 1,304 1,248 1,332 1,489 1,697 mmsf Average Price 632 648 642 626 652 US$ per msf ² EBIT US$m¹ 209 160 163 163 237 EBIT Margin %¹ 25 20 19 17 21 1Excl
Slide 27: Asia Pacific Fiber Cement – Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY10 FY11 FY12 FY13 FY14 Net Sales 297 353 376 370 366 US$m Sales Volume 390 408 392 394 417 mmsf Average Price 886 906 906 901 930 A$ per msf ² EBIT US$m¹ 59 79 86 75 83 EBIT Margin %¹ 20 23 23 20 23 1Excludes New Zealand pro
Slide 28: JHX 1st Quarter FY15 Group Results
JHX 1ST QUARTER FY15 GROUP RESULTS For personal use only • Earnings impacted by: • Higher sales volumes and average sales prices across all business units; • Higher production costs, primarily due to higher market prices for input costs and plant inefficiencies; and • Higher organizational spend, pr
Slide 29: JHX 1st Quarter FY15 Results
JHX 1ST QUARTER FY15 RESULTS For personal use only Highlights • Net sales increased 12% favorably impacted by: US$ Millions Q1 '15 Q1 '14 % Change • Higher sales volumes; and • Higher average net sales prices in local currencies Net sales 416.8 372.2 12 Gross profit 140.2 126.3 11 • Gross profit mar
Slide 30: JHX 1st Quarter FY15 Results (continued)
JHX 1ST QUARTER FY15 RESULTS (continued) For personal use only Summary • Asbestos adjustments were favorable due to a 2% favorable change in the Australian US$ Millions Q1 '15 Q1 '14 % Change dollar spot exchange rate against the US Net operating profit 28.9 142.2 (80) dollar from the beginning bala
Slide 31: JHX 1st Quarter FY15 - Segment EBIT
JHX 1ST QUARTER FY15 - SEGMENT EBIT For personal use only US$ Millions Q1 ’15 Q1 ’14 % Change USA and Europe Fiber Cement 68.0 59.4 14 Summary 1 Asia Pacific Fiber Cement 20.7 21.1 (2) US and Europe FC EBIT +14% driven Research & Development 2 (6.8) (6.1) (11) by volume and price, partially offset
Slide 32: JHX 1st Quarter FY15 - Income Tax Expense
JHX 1ST QUARTER FY15 - INCOME TAX EXPENSE For personal use only US$ Millions Q1 ’15 Q1 ’14 Summary Operating profit before income taxes 45.6 157.1 Adjusted effective tax rate increased compared to Asbestos: the prior corresponding quarter due to a shift in Asbestos adjustments 21.5 (94.5) the geog
Slide 33: JHX 1st Quarter FY15 - Cashflow
JHX 1ST QUARTER FY15 - CASHFLOW For personal use only US$ Millions Q1 ’15 Q1 ’14 EBIT 50.4 156.9 Non-cash items: 1 Asbestos adjustments 21.5 (94.5) Other non-cash items 18.4 16.0 Net working capital movements (6.7) 9.5 Cash Generated By Trading Activities 83.6 87.9 Tax payments, net (1.9) (1.7) Chan
Slide 34: JHX 1st Quarter FY15 - Capital Expenditure
JHX 1ST QUARTER FY15 - CAPITAL EXPENDITURE For personal use only US$ Millions Q1 ’15 Q1 ’14 % Change USA and Europe Fiber Cement (including 38.5 11.6 Research and Development) Asia Pacific Fiber Cement 10.1 14.5 (30) Total 48.6 26.1 86 • We continued to spend on previously announced capital expansio
Slide 35: JHX Manufacturing Capacity Expansion
JHX MANUFACTURING CAPACITY EXPANSION For personal use only The following major capacity expansion projects in the USA and Europe and Asia Pacific Fiber Cement businesses are in progress: Project Description Approximate Estimated Commission Investment Date Plant City, Florida – 4th sheet machine and
Slide 36: JHX Net Debt/Cash
JHX NET DEBT/CASH For personal use only At 30 June 2014: US$ Millions Total facilities 505.0 Gross debt - Cash 32.1 Net cash 32.1 Unutilised facilities and cash 537.1 • Weighted average remaining term of debt facilities was 3.0 years at 30 June 2014, up from 2.4 years at 31 March 2014 • We remain we
Slide 37: Asbestos Fund – Proforma (unaudited)
ASBESTOS FUND – PROFORMA (unaudited) For personal use only A$ millions AICF cash and investments - 31 March 2014 65.5 Insurance recoveries 18.8 Interest expense, net (0.2) Claims paid (32.7) . Operating costs (1.1) Other 1.6 AICF cash and investments - 30 June 2014 51.9 • Year to date claims experie
Slide 38: USA and Europe Input Costs
USA AND EUROPE INPUT COSTS For personal use only Quarterly US Input Costs Discussion 1,200 10 9 • Input costs are significantly up over the 1,000 prior year, primarily driven by pulp, 8 silica and cement Gas and Electric Prices 7 800 6 • Many of our input costs fluctuate in-line Pulp Prices with com
Slide 39: USA and Europe Fiber Cement – Plant Capacity
USA AND EUROPE FIBER CEMENT – PLANT CAPACITY For personal use only Plant Capacity Flat Sheet Plant Capacity (mmsf) Plants operating Cleburne, Texas 466 Additional capacity by mid calendar year 2015 200 Peru, Illinois 560 Plant City, Florida 300 Additional capacity by mid calendar year 2015 300 Pulas
Slide 40: Total US Housing Starts
TOTAL US HOUSING STARTS For personal use only PAGE 40
Slide 41: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Condensed C
Slide 42: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales. For personal use only Sales Volumes mmsf – million square feet, where a square foot is defined as a standard square foot of 5/16” thickness msf – thousand square feet, where a square foot is define
Slide 43: For personal use only
For personal use only INVESTOR PRESENTATION OCTOBER 2014
James Hardie Industries — Investor Presentation (October 2014) on 6ix