James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Q3 FY2009 Earnings Presentation
52 slides from James Hardie Industries's earnings presentation, Feb 17, 2009
Slide 1: James Hardie Q3 FY09 Results Management Presentation
James Hardie Q3 FY09 Results Management Presentation - 12 February 2009 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 section of this document starting on page 45. The
Slide 2: Disclaimer
Disclaimer This Management Presentation contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders,
Slide 3: Agenda
Overview and Operating Review - Louis Gries, CEO Financial Review - Russell Chenu, CFO Questions and Answers Agenda
Slide 4: Overview
Overview Operating results significantly affected by further declines in the US housing market and overall market downturn Net operating profit for the quarter and nine months affected by material favourable asbestos adjustments, unfavourable ASIC expenses and unfavourable tax adjustments US$ Millio
Slide 5: Operating Review
Operating Review Louis Gries, CEO
Slide 6: Global Strategy
Aggressively grow demand for our products in targeted market segments Grow our overall market position while defending our share in existing market segments Offer products with superior value to that of our competitors Introduce differentiated products to reduce direct price competition Global Strat
Slide 7: USA Fibre Cement: 3rd Quarter Result
3rd Quarter Result * Net Sales down 26% to US$192.3 million Sales Volume down 28% to 316.6 mmsf Average Price up 3% to US$607 per msf EBIT down 36% to US$41.1 million EBIT Margin down 3.6 pts to 21.4% * Comparison is of the 3rd quarter of the current fiscal year versus the 3rd quarter of the prior f
Slide 8: USA Fibre Cement: Nine Months Result
Nine Months Result * Net Sales down 20% to US$725.9 million Sales Volume down 21% to 1,203.8 mmsf Average Price up 1% to US$603 per msf EBIT down 36% to US$168.2 million EBIT Margin down 5.7 pts to 23.2% * Comparison is of the nine months of the current fiscal year versus the nine months of the prio
Slide 9: 3rd Quarter Market Conditions
3rd Quarter Market Conditions Ongoing weakness in the US housing market - both new construction and the repair and remodel segments continue to deteriorate Starts down 43% for the quarter, compared to last year Repair & Remodel down to a much lesser extent Market demand affected by US recession, inc
Slide 10: 3rd Quarter Key Points
3rd Quarter Key Points Sales down due to declining market Sales volumes were lower in each key region, other than Canada ColorPlus(r) again increased as a percentage of our product mix Average net sales price increased slightly due to product mix and material costs USA Fibre Cement
Slide 11: Total Housing Starts - NAHB
Total Housing Starts - NAHB Continuous downgrading of projected housing starts Latest NAHB downgrade to 649k in 2009 Source: NAHB Executive Level Forecasts - Total US Housing Starts (incl. SF, MF-low and MF-high) NAHB forecast of calendar 2009 Housing Starts is down 29% to 649k (incl. MF-high) NAHB
Slide 12: Outlook
Outlook Continued weakness in housing starts James Hardie is planning on approximately 550k US housing starts, including multi-family high, for calendar year 2009 (~450k, excluding multi-family high) On-going downward pressure on house prices and weaker demand Continued deterioration of Repair & Rem
Slide 13: USA Fibre Cement Top Line Growth
USA Fibre Cement Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau Top Line Growth Volume (mmsf) / Starts (000s Units) Revenue (US$M) JH Volume JH Revenue Housing Starts 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Q3FY09 0 400 800 1,200 1,600
Slide 14: USA Fibre Cement Primary Growth Performance
USA Fibre Cement Primary Growth Performance Sources: Dodge US addressable starts (SF & MF-low); US Census R&R $ expenditures less CPI Note: • US Census discontinued their R&R $ expenditures report in 2007 • 2008 R&R = avg. published Home Depot & Lowe's same store sales less CPI - -40% - -30% - -20%
Slide 15: Average Net Selling Price
Average Net Selling Price US$ per MSF USA Fibre Cement 360 400 440 480 520 560 600 640 FY03 FY04 FY05 FY06 FY07 FY08 YTD FY09
Slide 16: USA Fibre Cement EBIT and EBIT Margin
*Excludes restructuring and other operating expenses of US$12.6 million in Q3 FY02 and impairment charges of US$45.6 million in Q4 FY08 USA Fibre Cement EBIT and EBIT Margin* 0 20 40 60 80 100 120 140 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Q3 FY09 EBIT US$M 0 5 10 15 20 25 30 35 EBIT MARGIN % EBIT EBIT/
Slide 17: Asia Pacific Fibre Cement: 3rd Quarter Result
3rd Quarter Result * Net Sales down 25% to US$58.5 million Sales Volume down 3% to 97.5 mmsf Average Price up 4% to A$897 per msf EBIT down 29% to US$10.5 million EBIT Margin down 1.2 pts to 17.9% Asia Pacific Fibre Cement * Comparison is of the 3rd quarter of the current fiscal year versus the 3rd
Slide 18: Asia Pacific Fibre Cement: Nine Months Result
Nine Months Result * Net Sales down 2% to US$220.7 million Sales Volume down less than 1% to 301.4 mmsf Average Price up 1% to A$877 per msf EBIT up 2% to US$40.4 million EBIT Margin up 0.7 pts to 18.3% Asia Pacific Fibre Cement * Comparison is of the nine months of the current fiscal year versus th
Slide 19: Asia Pacific Fibre Cement Key Points
Key Points Residential construction declined in both Australia and New Zealand US$ financial results affected negatively by depreciation of Asia Pacific currencies Q3 net sales up 1% in A$ due to 4% increase in the average Australian dollar net sales price, partially offset by 3% decrease in sales v
Slide 20: Asia Pacific Outlook
Outlook Building approvals expected to continue to fall in Australia and to remain at current levels in New Zealand Housing affordability to remain under pressure in New Zealand with increased building costs Continued growth in sales of differentiated products Non-differentiated products in Australi
Slide 21: Financial Review
Financial Review Russell Chenu, CFO
Slide 22: Financial Overview
Overview Result affected by further decline in US housing construction activity Net operating profit affected by asbestos, ASIC expenses and tax adjustments: Asbestos adjustments: US$93.6m in Q3 and US$193.9m for nine months - favourable currency movement on A$ asbestos liability ASIC expenses of US
Slide 23: A$ : US$ Exchange Rate
A$ : US$ Exchange Rate Consequences of depreciating Australian dollar versus US dollar Unfavourable impact from translation of Asia Pacific results Favourable impact on corporate costs incurred in Australian dollars Favourable impact from translation of asbestos liability balance Unfavourable impact
Slide 24: Results - Q3
Results - Q3 - - (32.4) - - Asset impairments 6 (54.3) (50.8) SG&A expenses - - 17.1 111.0 Net operating profit 24 (8.9) (6.8) Income tax expense - - 0.8 (1.1) Net interest (expense) income - - 25.2 118.9 EBIT - - 1.2 93.6 Asbestos adjustments 2 (6.4) (6.3) Research & development expenses (30) 117.1
Slide 25: Results - Q3 (continued)
Results - Q3 (continued) - - 20.0 - - Asset impairments (net of tax) - - 1.1 4.3 ASIC expenses (net of tax) - - 2.6 (4.1) Tax adjustments (56) 37.8 16.5 Net operating profit excluding asbestos, ASIC expenses, asset impairments and tax adjustments 43 (2.8) (1.6) AICF interest income (50) 1.0 0.5 AICF
Slide 26: Results - Nine Months
Results - Nine Months - - (32.4) - - Asset impairments 5 (167.9) (158.8) SG&A expenses - - 75.3 265.9 Net operating profit 9 (72.9) (66.2) Income tax expense - - 3.3 (1.9) Net interest (expense) income - - 144.9 334.0 EBIT - - (57.8) 193.9 Asbestos adjustments (5) (19.8) (20.7) Research & developmen
Slide 27: Results - Nine Months (continued)
Results - Nine Months (continued) - - 20.0 - - Asset impairments (net of tax) - - 3.4 9.2 ASIC expenses (net of tax) - - 0.4 - - Tax expense related to asbestos adjustments - - 4.2 11.9 Tax adjustments (43) 156.8 89.7 Net operating profit excluding asbestos, ASIC expenses, asset impairments and tax
Slide 28: Segment Net Sales - Q3
US$ Millions Q3'09 Q3'08 % Change USA and Europe Fibre Cement 195.9 263.9 (26) Asia Pacific Fibre Cement 58.5 77.5 (25) Total 254.4 341.4 (25) Segment Net Sales - Q3
Slide 29: Segment Net Sales - Nine Months
US$ Millions 9 Months'09 9 Months'08 % Change USA and Europe Fibre Cement 740.6 931.1 (20) Asia Pacific Fibre Cement 220.7 224.8 (2) Total 961.3 1,155.9 (17) Segment Net Sales - Nine Months
Slide 30: Segment EBIT - Q3
US$ Millions Q3'09 Q3'08 % Change USA and Europe Fibre Cement 40.3 63.3 (36) Asia Pacific Fibre Cement 10.5 14.8 (29) Research & development1 (4.7) (4.2) (12) Total segment EBIT 46.1 73.9 (38) General Corporate excluding ASIC expenses (14.5) (15.0) 3 Total EBIT excluding asbestos, ASIC expenses and
Slide 31: Segment EBIT - Nine Months
US$ Millions 9 Months'09 9 Months'08 % Change USA and Europe Fibre Cement 167.0 258.8 (35) Asia Pacific Fibre Cement 40.4 39.6 2 Research & development1 (14.7) (13.1) (12) Total segment EBIT 192.7 285.3 (32) General Corporate excluding ASIC expenses (38.9) (42.9) 9 Total EBIT excluding asbestos, ASI
Slide 32: Corporate Costs - Q3
US$ Millions Q3'09 Q3'08 % Change Stock compensation expense 1.6 1.9 16 Earnings-related bonus 0.3 0.9 67 ASIC expenses 5.8 1.5 - Other costs 12.6 12.2 (3) Total 20.3 16.5 (23) Corporate Costs - Q3
Slide 33: Corporate Costs - Nine Months
US$ Millions 9 Months'09 9 Months'08 % Change Stock compensation expense 5.2 5.0 (4) Earnings-related bonus 1.3 2.0 35 Non-US warranty provision - 4.0 - ASIC expenses 12.3 4.6 - Other costs 32.4 31.9 (2) Total 51.2 47.5 (12) Corporate Costs - Nine Months
Slide 34: Net Interest (Expense) Income
Net Interest (Expense) Income (7.3) (7.3) (2.5) (2.4) Gross interest expense (1.1) 1.6 (2.7) (0.3) - - Q3 ' 09 0.8 2.8 (2.0) 0.9 (0.4) Q3 ' 08 (3.7) (6.7) Net interest expense excluding AICF net interest income 7.0 4.8 AICF net interest income 3.3 (1.9) Net interest (expense) income 0.6 - - 9 Months
Slide 35: Income Tax Expense - Q3
Income Tax Expense - Q3 2.6 (4.1) Tax adjustments (8.9) (6.8) Income tax expense 27.4% 47.2% Effective tax rate excluding asbestos and tax adjustments (6.3) (10.9) Income tax expense excluding tax adjustments 23.0 23.1 Operating profit before income taxes excluding asbestos (2.8) (1.6) AICF interest
Slide 36: Income Tax Expense - Nine Months
Income Tax Expense - Nine Months 4.2 11.9 Tax adjustments Asbestos: 0.4 - - Tax expense related to asbestos adjustments (72.9) (66.2) Income tax expense 33.9% 40.3% Effective tax rate excluding asbestos and tax adjustments (68.3) (54.3) Income tax expense excluding asbestos and tax adjustments 201.7
Slide 37: EBITDA - Q3
US$ Millions Q3'09 Q3'08 % Change EBIT USA and Europe Fibre Cement 40.3 63.3 (36) Asia Pacific Fibre Cement 10.5 14.8 (29) Research & development (4.7) (4.2) (12) General Corporate excluding ASIC expenses (14.5) (15.0) (3) Depreciation and Amortisation USA and Europe Fibre Cement 10.7 12.6 (15) Asia
Slide 38: EBITDA - Nine Months
US$ Millions 9 Months'09 9 Months'08 % Change EBIT USA and Europe Fibre Cement 167.0 258.8 (35) Asia Pacific Fibre Cement 40.4 39.6 2 Research & development (14.7) (13.1) (12) General Corporate excluding ASIC expenses (38.9) (42.9) 9 Depreciation and Amortisation USA and Europe Fibre Cement 33.8 35.
Slide 39: Cash Flow
Cash Flow - - (196.3) - - Treasury Stock purchased - - - - (101.6) ATO Settlement - - 32.4 - - - - Asset impairments 51 37.0 55.9 - - Change in restricted cash - - asbestos - - - - (50.7) Payment to the AICF (72) (123.1) (34.6) Dividends paid 3 232.6 239.8 Net Debt - - 31 December 2008 (49) (153.9)
Slide 40: Capital Expenditure
Capital Expenditure 41 28.7 16.8 Total 12 4.1 3.6 Asia Pacific Fibre Cement 46 24.6 13.2 US A and Europe Fibre Cement % Change 9 Months ' 08 9 Months ' 09 US$ Millions 41 28.7 16.8 Total 12 4.1 3.6 Asia Pacific Fibre Cement 46 24.6 13.2 US A and Europe Fibre Cement % Change 9 Months ' 08 9 Months '
Slide 41: Debt
Debt Weighted average remaining term of the total facilities was 1.8 years at 31 December 2008 In November 2008 signed new credit facility for US$50.0m with terms consistent with current facilities James Hardie remains well within its debt covenants US$ Millions Total facilities 498.3 Gross Debt 298
Slide 42: Key Ratios
Key Ratios 9 mths'09 FY08 FY07 EPS (Diluted)1 20.7c 36.9c 49.3c Dividend Paid per share 8.0c 27.0c 9.0c Return on Shareholders' Funds1 14.3% 17.7% 24.0% Return on Capital Employed2 20.3% 24.2% 27.7% EBIT/ Sales (EBIT margin)2 16.0% 19.2% 21.6% Gearing Ratio1 22.4% 21.5% 12.5% Net Interest Expense Co
Slide 43: Summary
Net operating profit affected by favourable asbestos adjustments, unfavourable ASIC expenses and unfavourable tax adjustments EBIT affected by reduced contribution from US business Results significantly affected by further declines in US housing market Corporate costs continuing to be affected by on
Slide 44: Questions & Answers
@sames Hardie Questions & Ans
Slide 45: Endnotes: Definitions
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 Management's Analysis of Results, a Media Release and a Financial Report. Definitions Financial Measures - US GAA
Slide 46: Endnotes: Financial Ratios
Endnotes Financial Ratios Gearing Ratio - Net debt (cash) divided by net debt (cash) plus shareholders' equity. Net interest expense cover - EBIT divided by net interest expense. Net interest paid cover - EBIT divided by cash paid during the period for interest, net of amounts capitalised. Net debt
Slide 47: Non-US GAAP Financial Measures: EBIT
Non-US GAAP Financial Measures EBIT and EBIT margin excluding asbestos, ASIC expenses and asset impairments - EBIT and EBIT margin excluding asbestos, ASIC expenses and asset impairments are not measures of financial performance under US GAAP and should not be considered to be more meaningful than E
Slide 48: Non-US GAAP: Net operating profit
Non-US GAAP Financial Measures (continued) Net operating profit excluding asbestos, ASIC expenses, asset impairments and tax adjustments - Net operating profit excluding asbestos, ASIC expenses, asset impairments and tax adjustments is not a measure of financial performance under US GAAP and should
Slide 49: Non-US GAAP: Diluted earnings per share
Non-US GAAP Financial Measures (continued) Diluted earnings per share excluding asbestos, ASIC expenses, asset impairments and tax adjustments - Diluted earnings per share excluding asbestos, ASIC expenses, asset impairments and tax adjustments is not a measure of financial performance under US GAAP
Slide 50: Non-US GAAP: Effective tax rate
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 51: Non-US GAAP: EBITDA
Non-US GAAP Financial Measures (continued) 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. N
Slide 52: James Hardie Q3 FY09 Results Management Presentation
James Hardie Q3 FY09 Results Management Presentation - 12 February 2009 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 section of this document starting on page 45. The
Hardie James Industries — Q3 FY2009 Earnings Presentation on 6ix