James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (April 2017)
50 slides from James Hardie Industries's investor presentation, Mar 31, 2017
Slide 1: Investor Presentation April 2017
For personal use only INVESTOR PRESENTATION APRIL 2017
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This Investor Presentation contains forward-looking statements. James Hardie Industries plc (the “company”) may from time to time make forward-looking For personal use only statements in its periodic reports filed with or furnished to the Securities and
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (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 sim
Slide 4: Note to the Reader
NOTE TO THE READER For personal use only As of 30 June 2016, the Company changed its reportable operating segments. Previously, the Company reported on three operating segments: (i) North America and Europe Fiber Cement, (ii) Asia Pacific Fiber Cement, and (iii) Research and Development. As of 30 Ju
Slide 5: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
USE OF NON-GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY For personal use only This Management Presentation includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (US GAAP). These fina
Slide 6: Agenda
AGENDA For personal use only • Strategic Focus and Business Overview • North America Fiber Cement • International Fiber Cement • Capital Management Framework • Appendix PAGE 6
Slide 7: Our Strategic Focus
OUR STRATEGIC FOCUS For personal use only PEOPLE Continue to invest in the safety, development and promotion of our people DRIVING PROFITABLE GROWTH BRAND PROMISE DELIVERING MARKET POSITION Build on industry leadership SUPERIOR Grow fiber cement market through unrivalled commitment to manufacturing,
Slide 8: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.9b • Total assets US$1.9b • Strong operational cash generation • Operations in North America, Asia Pacific and Europe • 3,257 employees • Market cap US$6.5b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales International 22% North America 78% EBIT ² International 21% North America 79% 1 All percentages are for the nine months ended 31 December 2016 ² EBIT – excludes research and development, asbestos-related expenses and adjus
Slide 10: Group Overview 3rd Quarter FY17 Results
GROUP OVERVIEW 3rd QUARTER FY17 RESULTS For personal use only Adjusted Net Operating Profit1 Adjusted Diluted EPS 1 3rd Qtr Nine Months 3rd Qtr Nine Months US$52.6M 6% US$194.0M 5% US12 cents Flat US44 cents 7% Adjusted EBIT 2 Net Operating Cash Flow 3rd Qtr Nine Months Nine Months US$73.5M 10% US$2
Slide 11: Key Themes 3rd Quarter FY17 Results
KEY THEMES 3rd QUARTER FY17 RESULTS For personal use only • Higher volume in North America Fiber Cement segment • Higher average net sales price in International Fiber Cement segment • Weaker than anticipated bottom line growth due to high production costs in North America Fiber Cement segment • YTD
Slide 12: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$29.5m spent on Research & Development in FY16 and US$22.2m in nine months to FY17 • US$461.4m spent on Research & Development since 2000 James Hardie Siding Pr
Slide 13: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Share¹ 7% 7% 19% Fiber Cement Vinyl 9% Wood (including engineered wood) Stucco Brick Stone 9% Other (aluminium etc) 28% 21% 35/90 Plan • Grow fiber cement share to 35% of the exterior cladding market agains
Slide 14: 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 15: 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 15
Slide 16: North America Fiber Cement Segment
NORTH AMERICA FIBER CEMENT SEGMENT For personal use only North America Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,391 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, SC Waxahachie,
Slide 17: Capacity – Annual Design
CAPACITY – ANNUAL DESIGN For personal use only Design Capacity Plant Location Owned/Leased (mmsf) Cleburne, Texas Owned 466 Incremental Capacity 200 Peru, Illinois Owned 560 Plant City, Florida Owned 300 Incremental Capacity 400 Pulaski, Virginia Owned 600 Reno, Nevada Owned 300 Tacoma, Washington O
Slide 18: North America Fiber Cement Summary
NORTH AMERICA FIBER CEMENT SUMMARY For personal use only 9 Months Volume Q3'17 FY17 • Steady growth in R&R and new construction markets Net Sales US$350.9M US$1,105.7M • Market penetration momentum continues to improve 10% 12% • Volume growth constrained by manufacturing capacity Sales Volume 516.7
Slide 19: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only North America Fiber Cement Top Line Growth1 3,000 $1,600 2,800 $1,500 JH Volume (mmsf), Starts (000s Units) 2,600 $1,400 2,400 $1,300 2,200 $1,200 $1,100 Revenue (US$M) 2,000 $1,000 1,800 $900 1,600 $800 1,400 $700 1,200 $600 1,000 $
Slide 20: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only North America Fiber Cement 710 Average Net Sales Price 666 669 666 670 641 638 US$ per MSF 630 625 630 616 590 550 FY10 FY11 FY12 FY13 FY14 FY15 FY16 9 Months FY17 • Slight decrease ~1% due to maintaining current strategic pricing leve
Slide 21: North America Delivering Strong Returns
NORTH AMERICA DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin1 100 30 90 25 80 70 20 EBIT Margin 60 EBIT US$M 50 15 40 10 30 20 5 10 0 0 FY12 FY13 FY14 FY15 FY16 FY17 EBIT EBIT/Sales YTD EBIT Margin % in target range, but down 280 bps to 24.2% compared to pcp 1 Exclude
Slide 22: International Fiber Cement Summary
INTERNATIONAL FIBER CEMENT SUMMARY Volume For personal use only 9 Months Q3'17 FY17 • YTD volume increased 1%, excluding the Pipes business Net Sales US$99.5M US$309.0M • Volume growth in Australia, New Zealand and Europe 7% 6% • Volume declined in Philippines Sales Volume 115.4 mmsf 361.3 mmsf 1% 2
Slide 23: International Delivering Strong Returns
INTERNATIONAL DELIVERING STRONG RETURNS International Fiber Cement Segment For personal use only Quarterly EBIT and EBIT Margin1 30 25 20 15 10 5 0 Q3 FY2012 Q3 FY2013 Q3 FY 2014 Q3 FY 2015 Q3 FY 2016 Q3 FY2017 EBIT EBIT Margin 1 EBIT and EBIT margin excludes New Zealand weathertightness claims PAGE
Slide 24: International Fiber Cement (USD)
INTERNATIONAL FIBER CEMENT (USD) For personal use only Q3'17 9 Months FY17 Australia Australia Australia 1 Volume Net Sales EBIT Volume Net Sales EBIT • Solid EBIT growth for quarter and YTD • Non-recurring start-up costs at Carole Park in FY16 Q3'17 9 Months FY17 New Zealand New Zealand New Zealand
Slide 25: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Disciplined Capital For personal use only Liquidity and Funding Management Allocation • • Conservative leveraging of • Strong margins and operating Invest in R&D and capacity balance sheet within 1-2 times cash flows expansion to support organi
Slide 26: Appendix
For personal use only APPENDIX
Slide 27: USA Marketplace
USA MARKETPLACE For personal use only PAGE 27
Slide 28: Australia & New Zealand Marketplace
AUSTRALIA & NEW ZEALAND MARKETPLACE For personal use only PAGE 28
Slide 29: Australia, New Zealand & Philippines Core Markets
AUSTRALIA, NEW ZEALAND & PHILIPPINES CORE MARKETS For personal use only Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 29
Slide 30: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months and Nine Months Ended 31 December 9 Months 9 Months US$ Millions Q3'17 Q3'16 % Change % Change FY17 FY16 Net Sales North America Fiber Cement $ 350.9 $ 317.9 10 $ 1,105.7 $ 989.2 12 International Fiber Cement 99.5 92.9 7 309.0 292.5 6 Other Busine
Slide 31: North America Fiber Cement – Year Results Overview
NORTH AMERICA FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY12 FY13 FY14 FY15 FY16 Net Sales 834 914 1,084 1,225 1,335 US$m Sales Volume 1,313 1,468 1,673 1,822 1,969 mmsf EBIT US$m¹ 162 166 235 290 352 EBIT Margin %¹ 19 18 22 24 26 1Excludes asset impairment charges of US$14.3 mill
Slide 32: International Fiber Cement – Year Results Overview
INTERNATIONAL FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY12 FY13 FY14 FY15 FY16 Net Sales 404 397 400 418 379 US$m Sales Volume 412 414 441 484 481 mmsf EBIT US$m¹ 90 75 86 90 79 EBIT Margin %¹ 22 19 22 22 21 1Excludes New Zealand weathertightness claims of US$5.4 million , US$13
Slide 33: Results – 3rd Quarter FY17
RESULTS – 3rd QUARTER FY17 For personal use only Three Months Ended 31 December Net sales increased 10% • Higher volume in North America Fiber Cement segment US$ Millions Q3'17 Q3'16 % Change • Higher average net sales price in International Fiber Net sales 453.8 413.9 10 Cement segment Gross profit
Slide 34: Results – Nine Months FY17
RESULTS – NINE MONTHS FY17 For personal use only Nine Months Ended 31 December Net sales increased 10% • Higher volume in North America Fiber Cement segment 9 Months 9 Months US$ Millions % Change FY17 FY16 • Higher average net sales price in International Fiber Net sales 1,427.3 1,292.4 10 Cement s
Slide 35: North America Input Costs
NORTH AMERICA INPUT COSTS For personal use only Quarterly US Input Costs 1,200 10 • The price of NBSK pulp increased 9 6% compared to pcp 1,000 Cement, Gas, Electric and Freight Prices 8 7 800 • Cement prices continue to rise, up 6 Pulp Prices 600 5 5% compared to pcp 4 400 3 • Gas prices are up 9%
Slide 36: Segment EBIT – 3rd Quarter and Nine Months FY17
SEGMENT EBIT – 3rd QUARTER and NINE MONTHS FY17 For personal use only North America Fiber Cement EBIT summary North America Fiber Cement 300 • Q3 FY17 EBIT decreased 11% and YTD EBIT 266.8 267.8 250 remained flat compared to pcp 207.2 US$ Millions 200 • Driven by unfavorable plant performance, incre
Slide 37: Segment EBIT – 3rd Quarter and Nine Months FY17
SEGMENT EBIT – 3rd QUARTER and NINE MONTHS FY17 Other Businesses For personal use only (7) (6) (6.2) Other Businesses US$ Millions (4.7) (5) • Q3 FY17 EBIT remained flat and YTD EBIT loss (4) (3.2) (3) (2.1) (2.1) Q3 EBIT improved by 24% compared to pcp (2) (1.4) 9 months (1) • Driven by improving p
Slide 38: Changes in AUD vs. USD
CHANGES IN AUD vs. USD 1.00 For personal use only 0.90 AUD/USD Exchange Rate 0.80 0.70 0.60 31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16 30 Jun 16 30 Sep 16 31 Dec 16 1 As Reported 9 Months FY17 figures converted using 9 Months FY16 weighted average exchange rates 2 Reflects the diffe
Slide 39: Income Tax
INCOME TAX For personal use only Three Months and Nine Months Ended 31 December 25.1% estimated adjusted effective tax rate for 9 Months 9 Months the year US$ Millions Q3’17 Q3’16 FY17 FY16 Operating profit before taxes 102.9 47.3 295.9 282.5 • Adjusted income tax expense for the quarter and 1 (35.0
Slide 40: Cashflow
CASHFLOW 9 Months 9 Months For personal use only US$ Millions Change (%) FY17 FY16 Increase in net operating cash flow Net Income 232.0 215.6 8 Increase in net income adjusted for non-cash 1 Adjustment for non-cash items 50.5 36.8 37 items Annual AICF contribution (91.1) (62.8) (45) Favorable ch
Slide 41: Capital Expenditures
CAPITAL EXPENDITURES For personal use only • YTD CAPEX of US$58.5 million up by 12% compared to pcp CAPEX Spend • North America capacity projects: 25 • Commissioned 3rd sheet machine at Cleburne; 20 • Continued start-up of the 3rd sheet machine and began recommissioning a 4th sheet machine at Plant
Slide 42: Liquidity Profile
LIQUIDITY PROFILE For personal use only Debt Profile Strong balance sheet US$ Millions US$88.1 million cash 1 US$410.9 million net debt3 at Q3 FY17 $250 78% liquidity on bank debt at Q3 FY17 $500 Corporate debt structure $110 US$110m bank facilities drawn at Q3 FY17; US$88.1m held in cash US
Slide 43: Asbestos Claims Data
ASBESTOS CLAIMS DATA Claims Received • For personal use only Quarter and nine months claims received 469 455 428 decreased by 10% and 6%, respectively, compared to pcp 143 156 159 • Quarter and nine months claims received were 8% and 9%, below actuarial estimates, respectively Q3'17 Q3'17 Q3'16 9 Mo
Slide 44: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only This Management Presentation forms part of a package of information about the company’s results. It should be read in conjunction with the other parts of this package, including the Management’s Analysis of Results, Media Release and Condensed Consol
Slide 45: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Condense
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only EBIT – Earnings before interest and taxes EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales Sales Volumes mmsf – million square feet, where a square foot is defined as a standard square foot of 5/16” thickness msf – thousan
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Financial Measures – US GAAP equivalents Adjusted EBIT US$ Millions Three Months and Nine Months Ended 31 December 9 Months 9 Months Q3'17 Q3'16 FY17 FY16 EBIT $ 108.7 $ 52.1 $ 315.0 $ 297.7 Asbestos: Asbestos adjustments (35.6) 29.0 (39.0) (32.5)
Slide 48: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted diluted earnings per share Three Months and Nine Months Ended 31 December 9 Months 9 Months Q3'17 Q3'16 FY17 FY16 Adjusted net operating profit (US$ Millions) $ 52.6 $ 55.8 $ 194.0 $ 184.5 Weighted average common shares outstanding - 441.
Slide 49: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted EBITDA US$ Millions Three Months and Nine Months Ended 31 December 9 Months 9 Months Q3'17 Q3'16 FY17 FY16 EBIT $ 108.7 $ 52.1 $ 315.0 $ 297.7 Depreciation and amortization 22.6 19.3 62.5 55.1 Adjusted EBITDA $ 131.3 $ 71.4 $ 377.5 $ 352.
Slide 50: For personal use only
For personal use only INVESTOR PRESENTATION APRIL 2017
James Hardie Industries — Investor Presentation (April 2017) on 6ix