James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Q1 FY2006 Earnings Presentation
43 slides from James Hardie Industries's earnings presentation, Aug 25, 2005
Slide 1: FY06 1st Quarter Results
FY06 1st Quarter Results 19 August 2005 In this Management Presentation, we present financial measures that we believe are customarily used by our Australian investors. In each case where we present one of these measures, the equivalent US GAAP financial measure is defined in the Definitions section
Slide 2: Agenda
Overview and Operating Review - Louis Gries, CEO Financial Review - Russell Chenu, CFO Voluntary asbestos compensation funding proposal - Russell Chenu, CFO Questions and Answers Agenda
Slide 3: Overview
Overview Strong 1st quarter results Strong top-line growth within our targeted range Sales volumes in US below targeted range Very strong EBIT growth Principal Deed discussions continue to run behind schedule
Slide 4: Overview 1st Quarter
Overview 1st Quarter Q1'06% Net Sales up 17 Gross Profit up 31 EBIT up 49 Operating Profit from Continuing Operations up 51 Net Operating Profit Including Discontinued Operations up 54
Slide 5: Highlights 1st Quarter
Highlights 1st Quarter USA Fibre Cement - EBIT up 49% Australia and New Zealand Fibre Cement - EBIT flat Philippines Fibre Cement - EBIT growth Hardie Pipe - EBIT loss reduced Chilean Fibre Cement - sold July New Debt facilities
Slide 6: Operating Review
Operating Review Louis Gries, CEO
Slide 7: USA Fibre Cement
USA Fibre Cement
Slide 8: 1st Quarter Result - Strong Sales Growth
1st Quarter Result - Strong Sales Growth Net Sales up 19% to US$287.5 million Sales Volume up 7% to 523.4 mmsf Average Price up 12% to US$549 per msf EBIT up 49% to US$94.1 million EBIT Margin up 6.5 pts to 32.7% USA Fibre Cement
Slide 9: USA Fibre Cement 1st Quarter Trading Conditions
USA Fibre Cement 1st Quarter Trading Conditions Housing construction activity remained buoyant Low interest rates Strong household income and employment growth Strong house prices Consumer and builder confidence Repair and remodeling activity at healthy levels
Slide 10: USA Fibre Cement Key Points
USA Fibre Cement Key Points Strong revenue growth, but volumes in April and May below our expectations Good growth in both external and internal products ColorPlus strategy progressing well Margin expansion Continued ramp up of new Reno, Nevada plant Commenced ramp-up of new trim line at Peru, Illin
Slide 11: USA Fibre Cement Outlook
USA Fibre Cement Outlook Continued growth in demand for fibre cement Housing construction and repair & remodelling to remain healthy Strong economy Permits strong Backlog of unused permits Builder confidence strong Interest rates low - further modest increases expected Market penetration against alt
Slide 12: USA Fibre Cement Top Line Growth
USA Fibre Cement Top Line Growth 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Volume (mmsf) / Starts (000's Units) $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Revenue (USDM) JH Volume JH Revenue Housing Starts
Slide 13: USA Fibre Cement Average Selling Price
USA Fibre Cement Average Selling Price US$ per MSF
Slide 14: USA Fibre Cement EBIT and EBIT Margin
USA Fibre Cement *Excludes restructuring and other operating expenses of US$12.6 million in Q3'FY02 EBIT and EBIT Margin* 0 10 20 30 40 50 60 70 80 90 100 FY01 FY02 FY03 FY04 FY05 Q1 FY06 EBIT US$M 0 5 10 15 20 25 30 35 EBIT MARGIN % EBIT EBIT/Sales
Slide 15: USA Fibre Cement Strategy
USA Fibre Cement Strategy Aggressively grow market for fibre cement Grow our overall market position while defending our share in existing market segments Offer products with superior value to that of our competitors, introducing differentiated products to reduce direct price competition
Slide 16: Asia Pacific Fibre Cement
i ath ‘ @® James Hardie Asia Pacific Fibre Cement
Slide 17: Asia Pacific Fibre Cement 1st Quarter Result
Asia Pacific Fibre Cement 1st Quarter Result Net Sales up 8% to US$61.7 million Sales Volume down 2% to 92.0 mmsf EBIT up 3% to US$12.4 million EBIT Margin down 0.8 pt to 20.1%
Slide 18: Asia Pacific Fibre Cement Strategy
Strategy Grow primary demand for fibre cement Vigorously protect and grow category share in existing market segments Leverage our superior technology to offer differentiated products and systems with superior value to those of competitors Asia Pacific Fibre Cement
Slide 19: Australia and New Zealand - Key Points
Asia Pacific Fibre Cement Australia and New Zealand - Key Points Further weakness in new housing Net sales up 8% - up 1% in A$ EBIT flat
Slide 20: Australia and New Zealand - Outlook
Asia Pacific Fibre Cement Australia and New Zealand - Outlook New housing and renovation activity to remain soft Some product bans and boycotts in Australia to remain until voluntary asbestos compensation arrangement finalised New product initiatives will start generating additional fibre cement dem
Slide 21: Philippines Key Points
Asia Pacific Fibre Cement Philippines Key Points Net sales flat in local currency Weaker construction activity - political and economic uncertainty Higher domestic prices EBIT improvement Outlook Entering more favourable season for building and construction Continued political and economic uncertain
Slide 22: Other Fibre Cement USA Hardie Pipe Key Points
Other Fibre Cement USA Hardie(r) Pipe Key Points Net sales lower due to impact of higher prices on demand Still EBIT negative, but cash positive
Slide 23: Other Fibre Cement Europe
Other Fibre Cement Europe Fibre Cement Demand growing steadily Artisan(tm) Roofing Early market development progressing
Slide 24: Outlook
Outlook Housing construction in North America expected to remain healthy in the short-term sales growth to be better than the overall market confident of achieving 15% - 25% revenue growth for the year expect to run above EBIT margin target in the near term Further SCI and related costs expected
Slide 25: Financial Review
Financial Review Russell Chenu, CFO
Slide 26: Overview - Strong financial position
Overview Strong financial position Continued strong operating cashflow generation Net debt eliminated - US$47.3m improvement to US$1.5m net cash at quarter end
Slide 27: Results - Q1
US$ Million Q1'06 Q1'05 % Change Net sales 359.4 306.1 17 Gross profit 145.3 111.3 31 SG&A expenses (45.5) (45.1) 1 Research & development expenses (6.3) (5.0) 26 SCI and other related expenses (5.2) (2.9) 79 Impairment loss on business held for sale (1.4) - - EBIT 86.9 58.3 49 Net interest expense
Slide 28: Segment Net Sales - Q1
Segment Net Sales - Q1 US$ Million Q1 '06 Q1 '05 % Change USA Fibre Cement 287.5 240.7 19 Asia Pacific Fibre Cement 61.7 57.3 8 Other Fibre Cement 10.2 8.1 26 Total 359.4 306.1 17
Slide 29: Segment EBIT - Q1
Segment EBIT - Q1 US$ Million Q1 '06 Q1 '05 % Change USA Fibre Cement 94.1 63.1 49 Asia Pacific Fibre Cement 12.4 12.0 3 Other Fibre Cement (3.5) (3.3) (6) R & D (3.2) (4.1) 22 Total Segment EBIT 99.8 67.7 47 General Corporate (12.9) (9.4) (37) Total EBIT 86.9 58.3 49 R&D includes "core" R&D expense
Slide 30: Corporate Costs - Q1
Corporate Costs - Q1 US$ Million Q1'06 Q1'05 Stock Options Expense 1.1 0.2 SCI and Other Related Expenses 5.2 2.9 Other Costs 6.6 6.3 Total 12.9 9.4
Slide 31: Net Interest Expense
Net Interest Expense US$ Million Q1'06 Q1'05 %Change Net Interest Expense (0.7) (2.5) (72)
Slide 32: Income Tax Expense
Income Tax Expense US$ Million Q1'06 Q1'05 %Change Income Tax Expense (30.3) (18.7) 62 Rate 35.2% 33.5%
Slide 33: EBITDA - Q1
EBITDA - Q1 Q1'06 Q1'05 %Change EBIT USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement R & D General Corporate 94.1 12.4 (3.5) (3.2) (12.9) 63.1 12.0 (3.3) (4.1) (9.4) 49 3 (6) 22 (37) Depreciation and Amortisation USA Fibre Cement Asia Pacific Fibre Cement Other 6.1 2.5 0.8 5.8 2.4 0.7
Slide 34: Capital Expenditure - Q1
Capital Expenditure - Q1 Capital Expenditure Capital Expenditure Depreciation Depreciation US$ Million Q1'06 Q1'05 Q1'06 Q1'05 USA Fibre Cement 32.6 28.5 6.1 5.8 Asia Pacific Fibre Cement 1.0 1.0 2.5 2.4 Other 0.4 0.8 0.8 0.7 Total Segments 34.0 30.3 9.4 8.9 Other includes Other Fibre Cement, R & D
Slide 35: Key Ratios
Key Ratios Q1'06 FY'05 FY '04 EPS (Diluted) 12.1c 27.7c 27.2c Dividend Paid per share - 3.0c 5.0c Return on Shareholders Funds* # 38.5% 22.4% 27.6% Return on Capital Employed# 39.9% 23.6% 23.4% EBIT/ Sales (EBIT margin) 24.2% 16.2% 17.5% Gearing Ratio (0.2)% 6.8% 17.0% Net Interest Expense Cover 131
Slide 36: New Debt Facilities
New Debt Facilities US$355m revolving US$ cash advance facilities Bilateral agreements with 6 banks Initial term 364 days Convert to 5 year term upon satisfaction of certain conditions Interest rate is LIBOR, plus a margin Replaces previous revolving stand by facilities
Slide 37: Voluntary asbestos-related compensation funding proposal
Voluntary asbestos-related compensation funding proposal Russell Chenu, CFO
Slide 38: Summary
Summary Strong top-line and bottom-line growth SCI and other related expenses continue to be a significant cost burden Some points of difference in Principal Deed discussions remain - negotiations continuing Financial position of company remains sound
Slide 39: Questions & Answers
@® James Hardie Questions & Answers
Slide 40: Disclaimer
Disclaimer This Management's 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 41: 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, a Financial Report and Results at a Glance document. Definitio
Slide 42: Endnotes - Financial Ratios
Endnotes Financial Ratios Net debt payback - Net cash/debt divided by cash flows from operations times 12 months. Gearing Ratio -is borrowings less cash (net debt) divided by net debt plus shareholders' equity. Net Interest Expense Cover - EBIT divided by Net Interest Expense. Net Interest Paid Cove
Slide 43: FY06 1st Quarter Results
FY06 1st Quarter Results 19 August 2005 Unless otherwise stated, results are for continuing operations only and comparisons are of the 1st quarter of the current fiscal year versus the 1st quarter of the prior fiscal year.
Hardie James Industries — Q1 FY2006 Earnings Presentation on 6ix