James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — FY2015 Earnings Presentation
48 slides from James Hardie Industries's earnings presentation, Jul 6, 2015
Slide 1: Investor Presentation July 2015
Exhibit 99.4 INVESTOR PRESENTATION JULY 2015
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER 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 Commission, on Forms
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 • Global Strategy and Business Overview • USA & Europe Fiber Cement • Asia Pacific Fiber Cement • Capital Management Framework • Group Outlook and Guidance • Appendix In this Investor Presentation, the company may present financial measures, sales volume terms, financial ratios, and Non-US GA
Slide 5: Global Strategy: Industry Leadership and Profitable Growth
GLOBAL STRATEGY Industry Leadership and Profitable Growth • Introduce differentiated products to deliver a sustainable competitive advantage • Aggressively grow demand for our products in targeted market segments PAGE 5
Slide 6: A Growth Focused Company
A GROWTH FOCUSED COMPANY • Annual net sales US$1.66b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,178 employees • Market cap US$6.3b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 24 June 2015. Total assets
Slide 7: Group Overview
GROUP OVERVIEW Three Months and Full Year Ended 31 March Q415 Q414 Change FY15 FY14 Change Adjusted EBIT (US$ millions) 80.8 57.4 41% 304.0 252.8 20% Adjusted EBIT Margin % 19.6 15.3 43 pts 18.3 16.9 14pts Adjusted Net Operating Profit (US$ millions) 57.3 45.3 26% 221.4 197.2 12% Net operating cash
Slide 8: FY15 and Q4 Results - Key Themes
FY15 AND Q4 RESULTS - KEY THEMES • Group net sales increased 9% and 11% for the quarter and full year, respectively, compared to pcp¹ • Group adjusted net operating profit increased US$12.0 million to US$57.3 million for the quarter and US$24.2 million to US$221.4 million for the full year, when com
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT USA & Europe Asia Pacific JHX Manufacturing Operations JHX Manufacturing Operations – Production JHX Sales Office Suspended 1 All percentages are for the full year ended 31 March 2015 ² EBIT – excludes research and development, asbestos-related items, New Zealand weather
Slide 10: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE 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 Product History of Fiber Cement Substrate Development PAGE 1
Slide 11: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE 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 Resists warping Resists buckling
Slide 12: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 12
Slide 13: USA and Europe Fiber Cement Segment
USA AND EUROPE FIBER CEMENT SEGMENT USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,267 employees • 9 manufacturing plants¹ Peru, IL Reno, NV • 2 research and development Pulaski, VA facilities Fontana, CA Summerville, Waxahachie, TX SC FY15 FY14 Net Sales US$1,27
Slide 14: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS 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 USA and Europe Fiber Cement Executing on pricing strategy … ~4% increase realized in FY15 PAGE 15
Slide 16: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS EBIT Margins remain within our 20% to 25% target range 1 Excludes asset impairment charges of US$14.3 million in 4 th quarter FY12, US$5.8 million in 3 rd quarter FY13 and US$11.1 million in 4 th quarter FY13 PAGE 16
Slide 17: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT Asia Pacific Plant Locations • 941 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility FY15 FY14 Net Sales A$435m A$392m EBIT A$103m A$89m EBIT Margin (A$) 23.6% 22.6% EBIT and EBIT margin exclud
Slide 18: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS Asia Pacific Fiber Cement Segment 1 EBIT and EBIT margin excludes New Zealand weathertightness claims PAGE 18
Slide 19: Targeting the Right Product into the Right Market
TARGETTING THE RIGHT PRODUCT INTO THE RIGHT MARKET Asia Pacific Core Markets Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 19
Slide 20: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH 1 Strong Financial Management 2 Disciplined Capital Allocation 3 Liquidity and Funding Investing in R&D and capacity ~$590 million of bank Strong margins and expansion to support organic facilities, 64% liquidity as operating cash flows growth of Q4’15 Strong g
Slide 21: FY16 Key Planning Assumptions
FY16 KEY PLANNING ASSUMPTIONS US & Europe Fiber Cement • Fiscal year 2016 addressable markets broadly in line with fiscal year 2015 growth rates, with some improvement in the US new construction compared to fiscal year 2015 1 • McGraw Hill Construction US Residential Starts forecasted to be between
Slide 22: Appendix
James Hardie APPENDIX
Slide 23: Key Ratios
KEY RATIOS Full Year Ended 31 March 2015 2014 2013 EPS (Diluted)1 (US Cents) 50c 44c 32c Dividend Paid per share 88c 45c 43c 1 Return on Shareholders’ Funds 14.6% 48.1% 34.9% Return on Capital Employed 2 28.6% 23.8% 17.2% EBIT/ Sales (Adjusted EBIT margin)2 18.3% 16.9% 13.7% 1 Gearing Ratio 20.5% (1
Slide 24: USA and Europe Fiber Cement – 5 Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW FY11 FY12 FY13 FY14 FY15 Net Sales 814 862 951 1,128 1,277 US$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$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17 21 22 1Excludes asset impairmen
Slide 25: Asia Pacific Fiber Cement – 5 Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW FY11 FY12 FY13 FY14 FY15 Net Sales 353 376 370 366 380 US$m Sales Volume 408 392 394 417 456 mmsf Average Price 906 906 901 930 942 A$ per msf 1 EBIT US$m 2 79 86 75 83 90 EBIT Margin % 2 23 23 20 23 24 1 During the second quarter of FY14, the comp
Slide 26: Results for the 4th Quarter
RESULTS FOR THE 4 th QUARTER Summary Three Months Ended 31 March Net sales increased 9%, favorably impacted by: • Higher sales volumes US$ Millions Q4 '15 Q4 '14 % Change • Higher average net sales prices in local currencies in both the Net sales 411.3 376.4 9 USA and Europe and Asia Pacific Fiber C
Slide 27: Results for the 4th Quarter (continued)
th RESULTS FOR THE 4 QUARTER (continued) Summary Three Months Ended 31 March Asbestos adjustments reflects: • A US$111.3 million unfavorable movement in the underlying US$ Millions Q4 '15 Q4 '14 % Change actuarial valuation Net operating profit (loss) 27.7 (186.8) • Offset by a US$47.8 million favor
Slide 28: Results – Full Year
RESULTS – FULL YEAR Summary Full Year Ended 31 March Net sales increased 11%, favorably impacted by: • Higher sales volumes; and US$ Millions FY15 FY14 % Change • Higher average net sales prices in the USA and Europe and Asia Net sales 1,656.9 1,493.8 11 Pacific Fiber Cement segments Gross profit ma
Slide 29: Results – Full Year (continued)
RESULTS – FULL YEAR (continued) Summary Full Year Ended 31 March Asbestos adjustments reflect: • A US$144.7 million favorable exchange rate difference as US$ Millions FY15 FY14 % Change the AUD/USD exchange rate decreased 17% compared to a 12% decrease in the pcp. Net operating profit 291.3 99.5 • A
Slide 30: Gross Profit - Group
GROSS PROFIT - GROUP 180.0 37.1% 38.0 160.0 37.0 $152.5 36.0 140.0 35.0 120.0 34.0 100.0 $101.8 33.0 80.0 31.2% 32.0 60.0 31.0 40.0 30.0 20.0 29.0 - 28.0 Q4 FY13 Q4 FY14 Q4 FY15 • Gross profit margins remain strong, expanding above primary demand growth rates • Price improvements continue as we exec
Slide 31: Income Tax
INCOME TAX Three Months and Full Year Ended 31 March • 23.7% adjusted effective tax rate (ETR) for the year • Adjusted income tax expense and adjusted ETR Q4’15 Q4’14 FY15 FY14 increased due to a higher proportion of taxable Operating profit (loss) before taxes 7.6 (265.6) 322.6 54.6 earnings in jur
Slide 32: Cashflow
CASHFLOW (US$ Millions) FY 2015 FY 2014 Change (%) • Net income increased US$191.8 million compared to prior year Net Income 291.3 99.5 1 • Cash flow from operations includes US$113.0 Asbestos related 1 (33.0) 194.1 million contribution to AICF paid in Q2’15 Annual AICF contribution (113.0) - • High
Slide 33: FY15 Key Global Capex Projects
FY15 KEY GLOBAL CAPEX PROJECTS Project Description Full Year FY15 Plant City, Florida - 4 th sheet machine and ancillary facilities US$46.4 million rd Cleburne, Texas - 3 sheet machine and ancillary facilities US$24.7 million Carole Park, Queensland - Capacity expansion project US$36.2 million Tacom
Slide 34: Capex Spend - Full Year FY15
CAPEX CAPEXSpend- FullYearFY15 • Continuing to invest in capacity expansion in the US and Australia • Construction on brownfield capacity projects $65.8 nearing completion: $103.1 • Plant City, FL • Cleburne, TX $107.3 • Carole Park, Australia • Opportunistic land purchases completed at Tacoma (US)
Slide 35: US Input Costs
US INPUT COSTS Quarterly US Input Costs Discussion: 1,200 10 9 1,000 • Input costs have generally trended higher 8 than the prior year 7 800 6 • The price of NBSK pulp reached its peak 600 5 during the year, but has trended down 4 400 slightly during the fourth quarter 3 2 200 • The cost of gas and
Slide 36: Asbestos Compensation
ASBESTOS COMPENSATION SUMMARY • Updated actuarial report completed as at 31 March 2015 • Undiscounted and uninflated central estimate increased to US$1.566 billion from US$1.547 billion • Total contributions of US$113.0 million were made to AICF during FY2015 from our FY2014 free cash flow • From th
Slide 37: Asbestos Fund – Pro Forma
ASBESTOS FUND – PRO FORMA Claims Data For the quarter and full year ended 31 March 2015, we note the following related to asbestos claims: Full Year Ended 31 March • Claims received during the full year were 9% FY15 FY14 % Change above actuarial estimates and the prior period Claims received 665 608
Slide 38: Asbestos Cash Movements for Full Year Ended 31 March
ASBESTOS CASH MOVEMENTS FOR FULL YEAR ENDED 31 MARCH A$ millions AICF cash and investments - 31 March 2014 65.5 Contribution to AFFA by James Hardie 119.9 Insurance recoveries 33.2 Loan Drawdowns 17.7 Loan Repayments (51.0) Interest income, net 1.6 Claims paid (154.3) Operating costs (4.7) Other 1.0
Slide 39: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS Definitions Non-financial Terms AFFA – Amended and Restated Final Funding Agreement AICF – Asbestos Injuries Compensation Fund Ltd NBSK – Northern Bleached Soft Kraft; the company's benchmark grade of pulp Legacy New Zealand weathertightness claims (“New Zealand weatherti
Slide 40: Definitions and Other Terms
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 41: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 – thousand square feet, where a square foot is defined as a standard square
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 US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these financial measures to pro
Slide 43: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES 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 provide investors with
Slide 44: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES 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 financial measure to provi
Slide 45: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted effective tax rate on earnings – 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 effective tax rate. Management has included this financial measure to provi
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES 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 liquidity. Not
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES 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 administrative expenses. M
Slide 48: Investor Presentation
INVESTOR PRESENTATION JULY 2015
James Hardie Industries — FY2015 Earnings Presentation on 6ix