James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (September 2015)
48 slides from James Hardie Industries's investor presentation, Sep 10, 2015
Slide 1: Investor Presentation September 2015
For personal use only INVESTOR PRESENTATION SEPTEMBER 2015
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER For personal use only FORWARD-LOOKING STATEMENTS This Investor 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
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 • Guidance • Appendix In this Investor Presentation, the company may present financial measures, sales volume terms, financial ratios, and Non-U
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$1.7b • Total assets US$2.1b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,208 employees • Market cap US$5.9b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 20 Aug
Slide 7: Group Overview – 1st Quarter FY16 Results
GROUP OVERVIEW – 1ST QUARTER FY16 RESULTS For personal use only Three Months Ended 30 June Q1'16 Q1'15 Change Adjusted EBIT (US$ millions) 89.7 71.2 26% Adjusted EBIT Margin % 20.9% 17.1% 3.8 pts Adjusted Net Operating Profit (US$ millions) 63.5 50.1 27% Net operating cash flow (US$ million) 55.1 42
Slide 8: Key Themes – 1st Quarter FY16 Results
KEY THEMES – 1ST QUARTER FY16 RESULTS For personal use only • Group net sales increased 3% for the quarter compared to pcp1 • Group adjusted net operating profit increased 27% to US$63.5 million for the quarter, compared to pcp1 • Higher volumes and average net sales price across our USA and Europe
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales Asia Pacific 23% USA and Europe 77% EBIT ² Asia Pacific 24% Employees¹ • 2,267 in USA and Europe • 941 in Asia Pacific USA and Europe 76% 1 All percentages and numbers are for the full year ended 31 March 2015 ² EBIT – excl
Slide 10: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$31.7m spent on Research & Development in FY15 • US$394.8m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 11: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Share¹ 7% 7% 18% Fiber Cement 7% Vinyl Wood (including engineered wood) Stucco Brick 12% Stone Other (aluminium etc) 28% Fiber Cement Share 25% 21% 35/90 Plan • Grow fiber cement share to 35% of the exterio
Slide 12: 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 13: 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 13
Slide 14: 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 • 2,267 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC TX Q1 FY
Slide 15: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only USA Fiber Cement Top Line Growth 3,000 $1,300 2,800 $1,200 JH Volume (mmsf), Starts (000s Units) 2,600 $1,100 2,400 $1,000 2,200 $900 Revenue (US$M) 2,000 1,800 $800 1,600 $700 1,400 $600 1,200 $500 1,000 $400 800 $300 600 400 $200 2
Slide 16: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only USA and Europe Fiber Cement 710 Average Net Sales Price 686 675 670 652 648 US$ per MSF 642 632 626 630 609 588 597 590 550 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Q1 FY16 PAGE 16
Slide 17: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin1 100 30 90 25 80 70 20 EBIT Margin EBIT US$M 60 50 15 40 10 30 20 5 10 0 0 FY11 FY12 FY13 FY14 FY15 FY16 EBIT EBIT MARGIN We expect EBIT margins for fiscal year 2016 to be towards the higher end of, and ma
Slide 18: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 941 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility Q1 FY16 Q1 FY15 Net Sales A$117.4m A$102.2m EBIT A$25.4m A$22.1m EBIT Margin (A$) 21.6
Slide 19: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS For personal use only Asia Pacific Fiber Cement Segment 1 Average Net Sales Price Quarterly EBIT and EBIT Margin 1000 A$975 30 30 980 960 25 25 A$ (per msf) 940 20 20 EBIT US$M EBIT 920 15 15 900 10 10 880 860 5 5 840 0 0 FY10 FY11 FY12 FY13 FY14 FY15 Q1 FY16
Slide 20: 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 20
Slide 21: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH 1 2 3 For personal use only Strong Financial Disciplined Capital Liquidity and Management Allocation Funding Investing in R&D and capacity Strong margins and expansion to support organic ~$590 million of bank facilities, 68% liquidity as of operating cash
Slide 22: FY2016 Guidance
FY2016 GUIDANCE For personal use only • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2016 is between US$244 million and US$286 million • Management expects full year Adjusted net operating profit to be between US$240 milli
Slide 23: Appendix
For personal use only APPENDIX
Slide 24: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months Ended 30 June US$ Millions Q1 '16 Q1 '15 % Change Net Sales USA and Europe Fiber Cement $ 337.0 $ 321.5 5 Asia Pacific Fiber Cement 91.3 95.3 (4) Total Net Sales $ 428.3 $ 416.8 3 EBIT - US$ Millions USA and Europe Fiber Cement $ 89.5 $ 68.0 32 1
Slide 25: Key Ratios
KEY RATIOS For personal use only Three Months Ended 30 June 3 Months FY16 3 Months FY15 3 Months FY14 EPS (Diluted)1 (US Cents) 14c 11c 12c EBIT/ Sales (EBIT margin)2 20.9% 17.1% 18.1% Gearing Ratio 1 20.4% (3.3)% (16.5)% Net Interest Expense Cover2 15.0x 79.1x 84.4x Net Interest Paid Cover2 108.5x
Slide 26: USA and Europe Fiber Cement – Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 814 862 951 1,128 1,277 US$m Sales Volume 1,248 1,332 1,489 1,697 1,850 mmsf Average Price 648 642 626 652 675 US$ per msf ² EBIT US$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17 21 22 1Ex
Slide 27: Asia Pacific Fiber Cement – Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 353 376 370 366 380 US$m Sales Volume 408 392 394 417 456 mmsf Average Price 906 906 901 930 942 A$ per msf1 EBIT US$m2 79 86 75 83 90 EBIT Margin %2 23 23 20 23 24 1During the second quarter
Slide 28: Results for the 1st FY16 Quarter
RESULTS FOR THE 1st FY16 QUARTER Net sales increased 3% For personal use only Three Months Ended 30 June • Higher sales volumes • Higher average net sales prices in local currencies US$ Millions Q1 '16 Q1 '15 % Change Gross profit margin increased 320 bps Net sales 428.3 416.8 3 • Continued performa
Slide 29: Results for the 1st FY16 Quarter (continued)
RESULTS FOR THE 1st FY16 QUARTER (continued) For personal use only Asbestos adjustments Three Months Ended 30 June • 1% change in the AUD / USD exchange rate from beginning US$ Millions Q1 '16 Q1 '15 % Change to ending balance sheet date for the period compared to a Net operating profit 60.0 28.9 2%
Slide 30: Gross Profit – Group
GROSS PROFIT - GROUP For personal use only 180.0 38.0 157.6 Gross Margin (US$M) 160.0 Gross Margin (% ) 37.0 140.2 140.0 126.3 36.8 36.0 120.0 100.0 35.0 33.9 33.6 80.0 34.0 60.0 33.0 40.0 32.0 20.0 - 31.0 Q1 FY14 Q1 FY15 Q1 FY16 • Gross profit margins remain strong • Price improvements continue as
Slide 31: US Input Costs
US INPUT COSTS For personal use only Quarterly US Input Costs • The price of NBSK pulp reduced by ~5% 1,200 10 compared to pcp1, while cement has increased 9 1,000 ~8% over pcp1 Cement, Gas and Electric Prices 8 7 800 • The cost of electricity for industrial users Pulp Prices 6 decreased from prior
Slide 32: Segment EBIT – 1st Quarter FY16
SEGMENT EBIT – 1st QUARTER FY16 For personal use only USA and Europe Fiber Cement 100 89.5 USA and Europe Fiber Cement EBIT summary: 80 • EBIT increased by 32% when compared to pcp US$ Millions 68.0 59.4 60 • The increase for the quarter was driven by improved Q1 EBIT 40 plant performance, lower inp
Slide 33: Segment EBIT – 1st Quarter FY16 (R&D and Corporate)
SEGMENT EBIT – 1st QUARTER FY16 For personal use only Research and Development R&D summary: (7) (6.8) • Continued broadly in line with historic trend line on a US$ Millions (6.1) (6) (6.0) percentage of sales basis Q1 EBIT • Fluctuations reflect normal variation and timing in number of R&D projects
Slide 34: Changes in AUD vs. USD
CHANGES IN AUD vs. USD For personal use only Earnings Balance Sheet • Unfavorable impact from translation of Asia Pacific results √ N/A • Favorable impact on corporate costs incurred in Australian dollars √ N/A • Unfavorable impact from translation of asbestos liability balance √ √ PAGE 34
Slide 35: Income Tax
INCOME TAX For personal use only 26.5% estimated adjusted effective tax rate (ETR) Three Months Ended 30 June for the year Q1’16 Q1’15 • Adjusted income tax expense increased due to the increase in operating profit before income taxes, primarily in the US Operating profit before taxes 81.3 45.6 Asbe
Slide 36: Cashflow
CASHFLOW • Net income increased US$31.1 million compared For personal use only (US$ Millions) Q1'16 Q1'15 Change (%) to prior corresponding period Net Income 60.0 28.9 1 Asbestos related 1 4.6 20.9 (78) • Improved working capital driven by: Depreciation & amortization 18.2 16.6 10 • Improved invento
Slide 37: Liquidity Profile
LIQUIDITY PROFILE For personal use only Debt Maturity Profile1 • Strong balance sheet position: $325 • US$92.3 million of cash • US$382.6 million of gross debt $225 • US$590 million of bank debt facilities $150 • US$325 million 8 year unsecured notes2,3 $125 • 68% liquidity as of Q1’16 $50 $40 • At
Slide 38: Asbestos Claims Data
ASBESTOS CLAIMS DATA For personal use only Claims Data Three Months Ended 30 June • Claims received during the quarter were 15% Q1 '16 Q1 '15 % Change below actuarial estimates and 11% lower than the Claims received 139 156 11 prior corresponding period Actuarial estimate for the period 164 153 (7)
Slide 39: 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 Consolidated Fin
Slide 40: 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 Consolidate
Slide 41: 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 defined
Slide 42: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBIT margin – Adjusted EBIT and Adjusted EBIT margin are not measures of financial performance under For personal use only US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these fin
Slide 43: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted net operating profit – Adjusted net operating profit is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than net operating profit. Management has included this financial measure to p
Slide 44: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted diluted earnings per share – Adjusted diluted earnings per share is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than diluted earnings per share. Management has included this fina
Slide 45: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted income tax expense and Adjusted effective tax rate – Adjusted income tax expenses and Adjusted effective tax rate on earnings is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted EBITDA – is not a measure of financial performance under US GAAP and should not be considered an alternative to, or more meaningful than, income from operations, net income or cash flows as defined by US GAAP or as a measure of profitabil
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted selling, general and administrative expenses – Adjusted selling, general and administrative expenses is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than selling, general and admi
Slide 48: For personal use only
For personal use only INVESTOR PRESENTATION SEPTEMBER 2015
James Hardie Industries — Investor Presentation (September 2015) on 6ix