James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q4 FY2011 Earnings Presentation
57 slides from James Hardie Industries's earnings presentation, May 20, 2011
Slide 1: Q4 FY11 Management Presentation
Q4 FY11 Management Presentation 19 May 2011
Slide 2: Disclaimer
Disclaimer This Management's Presentation of Results 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 United States Securities and Exchange Commission on Forms 20-F and 6-K, in the annual re
Slide 3: Agenda
Agenda Overview and Operating Review - Louis Gries, CEO Financial Review - Russell Chenu, CFO Questions and Answers 3 In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures included in the Definitions sec
Slide 4: Operating Review
Operating Review Louis Gries, CEO
Slide 5: Group Overview
Group Overview The net operating result excluding asbestos, ASIC expenses and tax adjustments, which includes withholding tax of US$32.6 million, for the 4th quarter ended 31 March 2011 increased 41% to US$33.3 million The 4th quarter operating result reflects the seasonal slowdown and continuing di
Slide 6: USA and Europe Fibre Cement 4th Quarter Result
4th Quarter Result * Net Sales flat at US$197.7 million Sales Volume down 2% to 308.8 mmsf Average Price up 2% to US$640 per msf EBIT up 11% to US$38.5 million EBIT Margin up 1.8 pts to 19.5% 6 USA and Europe Fibre Cement *Comparisons are of the 4th quarter of fiscal year 2011 versus the 4th quarter
Slide 7: USA and Europe Fibre Cement Full Year Result
Full Year Result * Net Sales down 2% to US$814.0 million Sales Volume down 4% to 1,248.0 mmsf Average Price up 3% to US$652 per msf EBIT down 23% to US$160.3 million EBIT Margin down 5.5 pts to 19.7% 7 USA and Europe Fibre Cement *Comparisons are of the full year results fiscal year 2011 versus the
Slide 8: Average Net Sales Price, USA and Europe Fibre Cement
(CHART) Average Net Sales Price US$ per MSF USA and Europe Fibre Cement US$652 8
Slide 9: USA and Europe Fibre Cement EBIT and EBIT Margin
USA and Europe Fibre Cement * Excludes impairment charges of US$45.6 million in Q4 FY08 9 EBIT and EBIT Margin* EBIT EBIT Margin
Slide 10: USA Fibre Cement Housing Starts
USA Fibre Cement Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 10
Slide 11: USA and Europe Fibre Cement Primary Growth Performance
USA and Europe Fibre Cement Primary Growth Performance All market and market share figures are management estimates. 11
Slide 12: Asia Pacific Fibre Cement 4th Quarter Result
4th Quarter Result * Net Sales up 16% to US$90.7 million Sales Volume up 5% to 102.1 mmsf Average Price flat at A$883 per msf EBIT up 36% to US$19.4 million EBIT Margin up 3.1 pts to 21.4% 12 Asia Pacific Fibre Cement *Comparisons are of the 4th quarter of fiscal year 2011 versus the 4th quarter of
Slide 13: Asia Pacific Fibre Cement Full Year Result
Full Year Result * Net Sales up 19% to US$353.0 million Sales Volume up 5% to 407.8 mmsf Average Price up 2% to A$916 per msf EBIT up 35% to US$79.4 million EBIT Margin up 2.7 pts to 22.5% 13 Asia Pacific Fibre Cement *Comparisons are of the full year results fiscal year 2011 versus the full year re
Slide 14: Group 4th Quarter Summary
14 Group 4th Quarter Summary * *Comparisons are of the 4th quarter of fiscal year 2011 versus the 4th quarter of the prior fiscal year USA and Europe Fibre Cement business results reflected: Higher average net sales price Lower SG&A expenses Lower sales volume Increased pulp and freight costs A cont
Slide 15: US housing starts data remained weak in the fourth quarter
15 US housing starts data remained weak in the fourth quarter Total USA Housing Starts - US Census Bureau
Slide 16: Group Outlook
Group Outlook 16 United States Despite some recovery in the broader US economy, the US residential housing construction market remains constrained, in particular, by the lack of stability in house values Activity in the US residential market is expected to remain relatively flat this year, with no s
Slide 17: Group Outlook Key Priorities
17 Group Outlook Key Priorities The company's key medium term priorities in the US are: Grow primary demand and exterior cladding market share - with focus on repair and remodel and non-metro markets Increase market penetration of our ColorPlus(r) products Overall Group Strategy The company remains
Slide 18: Financial Review
Financial Review Russell Chenu, CFO
Slide 19: Overview
Overview 19 Operations Results for the full year reflect the weak US housing construction market, partially offset by the strong performance of the Asia Pacific businesses and lower SG&A expenses Strong net cash flow generation in the full year has enabled a further reduction in net debt by US$94.4
Slide 20: Consequences of changes - A$ versus US$
Consequences of changes - A$ versus US$ A$/US$ Exchange Rate Favourable impact from translation of Asia Pacific results - Q4 FY11 vs Q4 FY10 Unfavourable impact from corporate costs incurred in Australian dollars - Q4 FY11 vs Q4 FY10 Unfavourable impact from translation of asbestos liability balance
Slide 21: Results - Q4
Results - Q4 21 1 Includes a charge of US$32.6 million arising from the company's corporate structure simplification, as announced on 17 May 2011, which will be paid during the 2012 financial year
Slide 22: Results - Q4 (continued)
Results - Q4 (continued) 22 1 Includes AICF SG&A, interest income and gain on investments 2 Includes a charge of US$32.6 million arising from the company's corporate structure simplification, as announced on 17 May 2011, which will be paid during the 2012 financial year
Slide 23: Results - Full Year
Results - Full Year 23 1 Includes a charge of US$345.2 million recognised in the second quarter of the current financial year following the dismissal of RCI's appeal of the 1999 disputed amended tax assessment, which did not result in a cash outflow for the year ended 31 March 2011. Also includes a
Slide 24: Results - Full Year (continued)
Results - Full Year (continued) 24 1 Includes AICF SG&A, interest income and gain on investments. 2 Includes a charge of US$345.2 million recognised in the second quarter of the current financial year following the dismissal of RCI's appeal of the 1999 disputed amended tax assessment, which did not
Slide 25: Segment Net Sales - Q4
wat Segment Net Sales - Q4 US$ Millions Q4°11 Q4'10 % Change USA and Europe Fibre Cement 197.7 196.8 - Asia Pacific Fibre Cement 90.7 78.1 16 Total 288.4 274.9 5 25
Slide 26: Segment Net Sales - Full Year
Segment Net Sales - Full Year 26
Slide 27: Segment EBIT - Q4
1 Research & development includes "core" research & development expenses and administrative expenses, but excludes product development expenses Segment EBIT - Q4 27
Slide 28: Segment EBIT - Full Year
1 Research & development includes "core" research & development expenses and administrative expenses, but excludes product development expenses Segment EBIT - Full Year 28
Slide 29: Income Tax Expense - Q4
Income Tax Expense - Q4 29 1 Includes AICF SG&A, interest income and gain on investments 2 Includes a charge of US$32.6 million arising from the company's corporate structure simplification, as announced on 17 May 2011, which will be paid during the 2012 financial year
Slide 30: Income Tax Expense - Full Year
Income Tax Expense - Full Year 30 1 Includes AICF SG&A, interest income and gain on investments. 2 Includes a charge of US$345.2 million recognised in the second quarter of the current financial year following the dismissal of RCI's appeal of the 1999 disputed amended tax assessment, which did not r
Slide 31: Cash Flow
a. Cash Flow USS Millions EBIT Non-cash items: Asbestos adjustments Other non-cash items Net working capital movements Cash Generated By Trading Activities Tax payments Change in asbestos-related assets & liabilities, Paymentto the AICF Deposit with ATO Interest paid (net) Net Operating Cash Flow Pu
Slide 32: Debt
Debt Net debt decreased by US$94.4 million compared to net debt at 31 March 2010 Net debt decreased by US$17.4 million compared to net debt at 31 December 2010 Weighted average remaining term of total facilities of US$320.0 million was 1.9 years at 31 March 2011 down from 2.6 years at 31 March 2010
Slide 33: Asbestos Compensation Funding Arrangements
Asbestos Compensation Funding Arrangements 33 Updated actuarial report completed as at 31 March 2011 Discounted central estimate decreased to A$1.478 billion from A$1.537 billion As per AFFA, a contribution of approximately US$51.5 million will be made to AICF in July 2011
Slide 34: Updated Actuarial Estimate
Updated Actuarial Estimate 34
Slide 35: Updated Actuarial Estimate
Updated Actuarial Estimate 35
Slide 36: Asbestos Fund Update
Asbestos Fund Update 36 AICF holdings at 31 March 2011 A$59.9 million - cash and short-term investments (A$63.1 million at 31 March 2010) Net claims paid full year FY 2011: *FY 2011 Actuarial Estimate as at 31 March 2010
Slide 37: Capital Management and Simplification of Corporate Structure
37 Capital Management and Simplification of Corporate Structure New policy to distribute between 20% and 30% of profits after tax (excluding asbestos adjustments) in the form of ordinary dividends Expect to resume paying dividends following 2nd quarter FY12 results On market buy-back seeking to acqu
Slide 38: Legacy Issues Update
Legacy Issues Update 38 ATO - 1999 Disputed Amended Assessment James Hardie's initial appeal dismissed in September 2010 Charge of US$345.2 million effective 1 September 2010 (no impact to net operating cash flow in FY11) Appeal to full bench of the Federal Court heard on 16 - 18 May 2011; decision
Slide 39: Key Ratios
Key Ratios 1 Excludes asbestos adjustments, AICF SG&A expenses, AICF interest income, gain / impairment on AICF investments, tax expense / benefit related to asbestos adjustments, ASIC expense / recoveries and tax adjustments 2 Excludes asbestos adjustments, AICF SG&A expenses and ASIC expenses 3 Ex
Slide 40: Summary
40 Summary * The net operating profit, excluding asbestos, ASIC expenses and tax adjustments for the 4th quarter FY11 increased 41% to US$33.3 million Full year net operating result excluding asbestos, ASIC expenses and tax adjustments decreased 12% to US$116.7 million The full year results reflecte
Slide 41: Questions and Answers
@sames Hardie Questions and Answers
Slide 42: Appendix
@sames Hardie Appendix
Slide 43: General Corporate Costs - Q4
General Corporate Costs - Q4 43
Slide 44: General Corporate Costs - Full Year
General Corporate Costs - Full Year 44 * FY2011 includes US$10.3 million recovery from third parties
Slide 45: EBITDA - Q4
wal EBITDA-Q4 aatt 410% Change EBIT USA and Europe Fibre Cement. 38.5 348 11 Asia Pacific Fibre Cement 19.4 143 36 Research & development (6.1) (4.1) (49) General corporate excluding asbestos and ASIC expenses (6.0) 7) 25 Depreciation and Amortisation USA and Europe Fibre Cement. 13.3 13.5, (1) Asia
Slide 46: EBITDA - Full Year
7. EBITDA— Full Year USS Millions EBIT USA and Europe Fibre Cement Asia Pacific Fibre Cement Research & development General corporate excluding asbestos and ASIC expenses Depreciation and Amortisation USA and Europe Fibre Cement Asia Pacific Fibre Cement Total EBITDA excluding asbestos and ASIC expe
Slide 47: Capital Expenditure
mal Capital Expenditure USS Millions. FY 2011 FY 2010 _% Change. USA and Europe Fibre Cement 39.5 42.3 (7) Asia Pacific Fibre Cement 99 67 48 General Corporate 09 1.5 (40) Total 50.3 50.5 : 47
Slide 48: Net Interest Expense
wad Net Interest Expense USS Millions Qatt aatoFY.2011__ FY 2010 Gross interest expense (20) (7) 62) (64) Capitalised interest : on 2 02 Interest income oa on 04 o4 Realised loss on interest rate swaps (4) (13) 69) 25) Net interest expense excluding AICF interest income (3.0) (28) @7) (73) ICE inter
Slide 49: Endnotes
Endnotes 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. Definitions Non-financ
Slide 50: Financial Measures - US GAAP equivalents (continued)
Financial Measures - US GAAP equivalents (continued) Operating profit - is equivalent to the US GAAP measure of income. Net operating profit - is equivalent to the US GAAP measure of net income. Sales Volumes mmsf - million square feet, where a square foot is defined as a standard square foot of 5/1
Slide 51: Non-US GAAP Financial Measures
Non-US GAAP Financial Measures EBIT and EBIT margin excluding asbestos and ASIC expenses - EBIT and EBIT margin excluding asbestos and ASIC expenses are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. James Hardie has
Slide 52: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Net operating profit excluding asbestos, ASIC expenses and tax adjustments - Net operating profit excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningfu
Slide 53: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments - Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be mo
Slide 54: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Effective tax rate excluding asbestos and tax adjustments - Effective tax rate excluding asbestos and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than effective tax rate. The com
Slide 55: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) 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 profitability or liq
Slide 56: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) General corporate costs excluding ASIC expenses and domicile change related costs - General corporate costs excluding ASIC expenses and domicile change related costs is not a measure of financial performance under US GAAP and should not be considered to be
Slide 57: Q4 FY11 Management Presentation
Q4 FY11 Management Presentation 19 May 2011
James Hardie Industries — Q4 FY2011 Earnings Presentation on 6ix