James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q4 FY2016 Earnings Presentation
40 slides from James Hardie Industries's earnings presentation, May 19, 2016
Slide 1: Q4 FY16 Management Presentation
Q4 FY16 MANAGEMENT PRESENTATION 19 May 2016 Exhibit 99.4
Slide 2: Disclaimer
DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie Industries plc (the “company”) may from time to time make forward-looking statements in its periodic reports filed with or furnished to the Securities and Exchange Commission, on Forms 20-F and 6-K, in its annu
Slide 3: Disclaimer (continued)
DISCLAIMER (continued) 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
Slide 4: Agenda
AGENDA Overview and Operating Review – Louis Gries, CEO Financial Review – Matt Marsh, CFOand Executive VP - Corporate Questions and Answers In this Management Presentation, James Hardie may present financial measures, sales volume terms, and Non-US GAAP financial measures included in the Definition
Slide 5: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 6: Group Overview
GROUP OVERVIEW Higher volumes in all businesses3 Solid net sales growth for FY16 in both segments in local currencies Continued focus on operational efficiency at our plants to sustain improved performance FY16 North America and Europe fiber cement EBIT margin of 24.6% within our target range of 20%
Slide 7: North America and Europe Fiber Cement Summary
NORTH AMERICA AND EUROPE FIBER CEMENT SUMMARY Volume Modest R&R and new construction market growth US volume grew above market index, however PDG continues to track below our targeted level EBIT Lower freight and unit costs relative to pcp Sustained positive performance improvement trend in our manu
Slide 8: North America and Europe Fiber Cement: Full Year EBIT Margin
1 Excludes asset impairment charges of US$14.3 million in 4th quarter FY12, US$5.8 million in 3rd quarter FY13 and US$11.1 million in 4th quarter FY13 NORTH AMERICA AND EUROPE FIBER CEMENT Full Year EBIT Margin up 220 bps to 24.6%
Slide 9: North America and Europe Fiber Cement
NORTH AMERICA AND EUROPE FIBER CEMENT Gross price increased 2-3% offset by strong US dollar Overall, satisfied with tactical pricing and price positioning Revenue up 9% in FY16 on 8% volume growth Continuing to outpace U.S. housing starts growth 1 Rolling 12 month average of seasonally adjusted esti
Slide 10: Asia Pacific Fiber Cement Summary
Volume Favorable conditions in addressable markets Excluding the Australian Pipes business, volume increased for both the quarter and full year Price Favorably impacted by annual price increase, mix and appreciation of Philippines currency against the AUD EBIT A$ EBIT grew 10% for the quarter and 8%
Slide 11: Financial Review
FINANCIAL REVIEW Matt Marsh, CFO and Executive VP – Corporate
Slide 12: Results – 4th Quarter FY16
Net sales increased 6% Higher volume in both operating segments3 Higher average net sales price in APAC segment Adversely impacted by stronger USD Gross profit margin decreased 40 bps Higher production costs in both US and APAC: Isolated production matter at one US plant Carole Park startup costs an
Slide 13: Results – Full Year 2016
Net sales increased Higher volume in both operating segments3 Higher average net sales prices in local currencies Gross profit margin increased 170 bps Lower production costs in the US business due to manufacturing network improved performance, lower freight and lower input costs SG&A expenses incre
Slide 14: Changes in AUD vs. USD
CHANGES IN AUD vs. USD 1 As Reported 12 Months FY16 figures converted using 12 Months FY15 weighted average exchange rates 2 Reflects the difference between FY16 As Reported and FY16 using 12 Months FY15 weighted average exchange rates $ (Unfav)/Fav % (63.0) u 4% (21.3) u 4% (13.3) u 4% (10.7) u 5%
Slide 15: US Input Costs
US INPUT COSTS The information underlying the table above is sourced as follows: Pulp – Cost per ton – from RISI Cement – Relative index from the Bureau of Labor Statistics Gas – Cost per thousand cubic feet for industrial users – from US Energy Information Administration Electric – Cost per thousan
Slide 16: Segment EBIT – 4th Quarter and Full Year FY16
1 Excludes New Zealand weathertightness claims 2 Excludes Australian Pipes business which was sold in Q1 FY16 North America and Europe Fiber Cement EBIT summary Quarter and full year EBIT increased by 4% and 19%, respectively when compared to pcp Favorable freight, improved plant performance, lower
Slide 17: Segment EBIT – R&D and General Corporate Costs
1 Excludes Asbestos related expenses and adjustments, ASIC expenses, and non-recurring stamp duty R&D summary On strategy to invest between 2%-3% of sales Decrease impacted by strengthening US dollar Fluctuations reflect normal variation and timing in number of R&D projects in process in any given p
Slide 18: Income Tax
1 Includes Asbestos adjustments, AICF SG&A expenses and net AICF interest expense (income) 2 Excludes tax effects of Asbestos and other tax adjustments 25.8% adjusted effective tax rate (ETR) for the year Adjusted income tax expense and adjusted ETR for the full year increased due to changes in geog
Slide 19: Cashflow
1 CASHFLOW 45% increase in cash flow from operations Increase in net income adjusted for non-cash items Difference in annual contribution to AICF Unfavorable change in working capital due to: Normal timing variances in AR4 and AP4 Partially offset by lower inventory Lower capital expenditures Austra
Slide 20: Capital Expenditure
CAPITAL EXPENDITURE Full year FY16 CAPEX spend of US$73.2 million decreased US$203.0 million compared to pcp Maintenance CAPEX continues US capacity projects substantially complete Commissioning of new sheet machines at our Plant City and Cleburne facilities has been deferred, subject to our continu
Slide 21: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Management Disciplined Capital Allocation Liquidity and Funding Strong margins and operating cash flows Strong governance and transparency Investment-grade financial management Invest in R&D and capacity expansion to support organic growth Main
Slide 22: Liquidity Profile
LIQUIDITY PROFILE Corporate debt structure US$500 million revolving credit facility, with a December 2020 maturity US$325 million 8 year senior unsecured notes2,3 Strong balance sheet US$107.1 million cash US$405.7 million net debt4 at Q4 FY16 62% liquidity on bank debt at Q4 FY16 Interest rate swap
Slide 23: Asbestos Compensation Key Points
ASBESTOS COMPENSATION KEY POINTS Updated actuarial report completed as at 31 March 2016 Undiscounted and uninflated central estimate decreased to A$1.434 billion from A$1.566 billion Change in estimate: NPV is now A$1,904 million Decreased from A$2,143 million at 31 March 2015 A$239 million decrease
Slide 24: Funding Arrangements
FUNDING ARRANGEMENTS FY16 claims received were 12% below actuarial estimates and 13% lower than pcp Claims reporting for mesothelioma: 4% lower than previous year 1% lower than actuarial estimates Claims reporting for non-mesothelioma: 31% lower than prior year 33% lower than actuarial estimates FY1
Slide 25: FY2017 Key Planning Assumptions
FY2017 KEY PLANNING ASSUMPTIONS The Company expects to see moderate growth in the US housing market in fiscal year 2017 US Residential Starts forecasted to be between 1.2 and 1.3 million starts North America and Europe Fiber Cement Segment EBIT expected to grow EBIT margins expected to remain at the
Slide 26: Summary
SUMMARY 1 Excludes Asbestos related expenses and adjustments, New Zealand weathertightness claims, non-recurring stamp duty and tax adjustments 2 Excludes Asbestos related expenses and adjustments, New Zealand weathertightness claims and non-recurring stamp duty Overall strong financial performance
Slide 27: Questions
@)vames Hardie QUESTIONS
Slide 28: Appendix
@)vames Hardie APPENDIX
Slide 29: Financial Summary
FINANCIAL SUMMARY 1 Excludes New Zealand weathertightness claims 2 Excludes Asbestos related expenses and adjustments and non-recurring stamp duty
Slide 30: Net Post-Tax Unfunded Asbestos Liability
NET POST-TAX UNFUNDED ASBESTOS LIABILITY FY16 FY15 Central Estimate – Undiscounted and Uninflated 1,433.8 1,565.9 Provision for claims handling costs of AICF 32.2 33.7 Other US GAAP adjustments 87.4 28.3 Net assets of AICF (24.2) (11.1) Contributions for asbestos research and education 0.6 2.1 Effec
Slide 31: Asbestos Cash Movements for Full Year Ended March
ASBESTOS CASH MOVEMENTS FOR FULL YEAR ENDED 31 MARCH
Slide 32: Updated Actuarial Estimate
UPDATED ACTUARIAL ESTIMATE AS million 1,782 1837 4,478 1580 1000 | 1596 1685 1568 1.517 1.555 4355 1,426 So,un 31 Mar 30June 91 Mar 30 Sept 31 Mer Si Mar 31Mar 31Mar 31Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 2010 2011 2012 2013 2014 2015 2016 [saree Harsie
Slide 33: Depreciation and Amortization
DEPRECIATION AND AMORTIZATION
Slide 34: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 Consolidated Financial Statements Defi
Slide 35: Definitions and Other Terms: Financial Measures – US GAAP Equivalents
DEFINITIONS AND OTHER TERMS 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 Consolidated Financial Statements
Slide 36: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES This Management Presentation includes certain financial information to supplement the Company’s Consolidated Financial Statements which are prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). These financial measures a
Slide 37: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES US$ Millions Q4'16 Q4'15 FY16 FY15 Net operating profit 28.8 $ 27.7 $ 244.4 $ 291.3 $ Asbestos: Asbestos adjustments 27.0 63.5 (5.5) (33.4) AICF SG&A expenses 0.4 0.6 1.7 2.5 AICF interest expense (income), net 0.2 (0.4) 0.3 (1.4) New Zealand weathertightness claims -
Slide 38: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES US$ Millions Q4'16 Q4'15 FY16 FY15 EBIT 56.3 $ 12.6 $ 354.0 $ 335.0 $ Depreciation and amortization 24.7 18.9 79.8 70.9 Adjusted EBITDA 81.0 $ 31.5 $ 433.8 $ 405.9 $ Three Months and Full Year Ended 31 March Q4'16 Q4'15 FY16 FY15 Adjusted net operating profit (US$ Mill
Slide 39: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES US$ Millions Q4'16 Q4'15 FY16 FY15 Operating profit before income taxes 48.0 $ 7.6 $ 330.5 $ 322.6 $ Asbestos: Asbestos adjustments 27.0 63.5 (5.5) (33.4) AICF SG&A expenses 0.4 0.6 1.7 2.5 AICF interest expense (income), net 0.2 (0.4) 0.3 (1.4) New Zealand weathertigh
Slide 40: Q4 FY16 Management Presentation
Q4 FY16 MANAGEMENT PRESENTATION 19 May 2016
James Hardie Industries — Q4 FY2016 Earnings Presentation on 6ix