James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY2011 Earnings Presentation
47 slides from James Hardie Industries's earnings presentation, Aug 13, 2010
Slide 1: Q1 FY11 Management Presentation
Exhibit 99.3 Q1 FY11 Management Presentation 12 August 2010
Slide 2: Disclaimer
Disclaimer This Management's Presentation 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 reports to sh
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 1st Quarter operating results reflect a challenging US operating environment, higher input costs (particularly pulp and freight in the US), a strong positive contribution by the Asia Pacific businesses and lower corporate costs. The net operating result including asbestos, ASIC expens
Slide 6: 1st Quarter Result - USA and Europe Fibre Cement
1st Quarter Result Net Sales up 4% to US$233.0 million Sales Volume flat at 354.8 mmsf Average Price up 5% to US$657 per msf EBIT down 18% to US$56.1 million EBIT Margin down 6.7 pts to 24.1% 6 USA and Europe Fibre Cement
Slide 7: Average Net Sales Price - USA and Europe Fibre Cement
Average Net Sales Price US$ per MSF USA and Europe Fibre Cement US$657 7
Slide 8: 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 8 EBIT and EBIT Margin* EBIT EBIT Margin
Slide 9: 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. 9
Slide 10: 1st Quarter Result - Asia Pacific Fibre Cement
1st Quarter Result Net Sales up 39% to US$85.4 million Sales Volume up 20% to 106.4 mmsf Average Price flat at A$908 per msf EBIT up 103% to US$22.1 million EBIT Margin up 8.1 pts to 25.9% 10 Asia Pacific Fibre Cement
Slide 11: Group 1st Quarter Summary
USA and Europe Fibre Cement results reflected: A challenging operating environment Higher input costs - primarily pulp and freight Higher SG&A expenses Partially offset by a higher average net sales price Asia Pacific Fibre Cement results reflected: Improved operating environments Continuing primary
Slide 12: US housing starts data indicating signs of a stalled recovery
12 US housing starts data indicating signs of a stalled recovery Total USA Housing Starts - US Census Bureau
Slide 13: Group Outlook - United States
United States The recovery in the US remains weak and fragile Hopes for an accelerated recovery have dissipated as the expiry of the US government tax incentive at the end of April 2010, together with low consumer confidence and continuing competition from foreclosed properties, combined to inhibit
Slide 14: Group Outlook - Asia Pacific and Group Strategy
Asia Pacific The residential housing markets in Australia, New Zealand and the Philippines are expected to maintain their underlying strength in fiscal year 2011 Softness in the renovation and commercial markets is expected to offset a significant portion of the stronger new housing growth Group Str
Slide 15: Financial Review
Financial Review Russell Chenu, CFO
Slide 16: Overview
Overview Operations* Results continue to be affected by weak housing activity in the US Higher input costs in the US business, particularly pulp and freight, also significantly affected this quarter's result Earnings in the quarter benefitted from: the strong contribution of Asia Pacific businesses
Slide 17: Consequences of changes - A$ versus US$
Consequences of changes - A$ versus US$ A$/US$ Exchange Rate Favourable impact from translation of Asia Pacific results - Q1 FY11 vs Q1 FY10 Unfavourable impact on corporate costs incurred in Australian dollars - Q1 FY11 vs Q1 FY10 Favourable impact from translation of asbestos liability balance - 3
Slide 18: Results - Q1
al Results - Q1 USS Millions aii Qi40 _% Change Net sales 318.4 284.5 12 Gross profit 116.8 110.4 6 SG&A expenses (45.9) (41.4) (11) Research & development expenses (7.0) (6.3) (11) Asbestos adjustments 631 (119.8) : EBIT 127.0 (67.1) : Net interest expense (1.1) (0.7) (57) Other (expense) income (4
Slide 19: Results - Q1 (continued)
Results - Q1 (continued) 19 * Includes AICF SG&A, interest income and gain on investments
Slide 20: Segment Net Sales - Q1
wag Segment Net Sales - Q1 USS Millions Qi'11 Q1'10 — %Change USA and Europe Fibre Cement 233.0 223.2 4 Asia Pacific Fibre Cement 85.4 61.3 39 Total 318.4 284.5 12 20
Slide 21: Segment EBIT - Q1
1 Research & development includes "core" research & development expenses and administrative expenses, but excludes product development expenses Segment EBIT - Q1 21
Slide 22: Income Tax Expense - Q1
Income Tax Expense - Q1 22 * Includes AICF SG&A, interest income and gain on investments
Slide 23: Cash Flow
wad Cash Flow USS Millions. ait ato EBIT 127.0 (67.1) Non-cash items: Asbestos adjustments (63.1) 119.8 Other non-cash items 22.41 40.9 Net working capital movements (22.8) (33.7) Cash Generated By Trading Activities 63.2 69.9 Tax payments (19.7) (1.2) Change in asbestos-related assets & liabilities
Slide 24: Debt
Debt Net debt increased by US$37.1 million compared to net debt at 31 March 2010 Gross debt of US$215.0m and net debt of US$171.9m at 30 June 2010 included debt incurred of US$63.7m, resulting from pre-funding of the company's contribution to AICF on 1 July 2010, with the asset treated as restricted
Slide 25: Legacy Issues Update
Legacy Issues Update Asbestos On 7 November 2009, the Australian and NSW Governments announced an A$320m standby loan facility for AICF. James Hardie is continuing to work with the NSW Government and the AICF to finalise the details of the facility ATO - 1999 Disputed Amended Assessment Federal Cour
Slide 26: Legacy Issues Update - continued
Legacy Issues Update - continued Domicile Stage one of the two stage proposal to move domicile to Ireland approved by 99.3% of votes cast on 21 August 2009 Stage two approved by 99.6% of votes cast on 2 June 2010 Following the vote, on 17 June 2010, the company moved its corporate domicile to Irelan
Slide 27: Asbestos Fund Update - Pro forma
Asbestos Fund Update - Pro forma (unaudited) 27 *In accordance with the Amended and Restated Final Funding Agreement A$ millions AICF holdings 31 March 2010 (cash and short term investments) 63.1 Claims paid (18.6) Legal costs (1.6) Insurance and cross claim recoveries 13.4 Other 0.6 AICF holding 30
Slide 28: Key Ratios
Key Ratios 1 Excludes asbestos adjustments, AICF SG&A expenses, AICF interest income, gain or impairment on AICF investments, tax benefits related to asbestos adjustments, ASIC expenses and tax adjustments 2 Excludes asbestos adjustments, AICF SG&A expenses and ASIC expenses 3 Includes restricted ca
Slide 29: Summary
29 USA and Europe Fibre Cement 1st Quarter EBIT decreased by 18% due to higher input costs (primarily pulp and freight) and higher SG&A expenses, partially offset by a higher average net sales price Asia Pacific Fibre Cement net sales increased 39% to US$85.4m for the quarter. The higher value of As
Slide 30: Guidance
30 Challenges remain, with the operating environment in the US, in particular, still weak and fragile Management anticipates FY11 full year earnings excluding asbestos, ASIC expenses and tax adjustments to be in the range of US$110m to US$125m Management cautions that conditions remain uncertain and
Slide 31: Questions and Answers
@ sames Hardie Questions and Answers
Slide 32: Appendix
@sames Hardie Appendix
Slide 33: 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 deliver a sustainable competitive advantage
Slide 34: General Corporate Costs - Q1
General Corporate Costs - Q1 34
Slide 35: EBITDA - Q1
wal EBITDA-Q1 USS Miilions ait 110 % Change EBIT USA and Europe Fibre Cement 56.1 688 = (18) Asia Pacific Fibre Cement 22.4 109 2 Research & development. (5.0) (4.0) (25) General corporate excluding asbestos and ASIC expenses (6.3) (11.9) 31 Depreciation and Amortisation . USA and Europe Fibre Cemen
Slide 36: Capital Expenditure
Capital Expenditure USS Millions. ai Qi%10 _% Change USA and Europe Fibre Cement 12.3 7.0 76 Asia Pacific Fibre Cement 1.2 27 (56) Total 13.5 9.7 39 36
Slide 37: Net Interest Expense
eat Net Interest Expense USS Millions ait Qi'40 Gross interest expense (14) (11) Interest income 04 04 Realised loss on interest rate swaps (0.4) (0.4) Net interest expense excluding AICF interest income (1.7) (1.4) AICF interest income 06 07 Net interest expense (ia) (0.7) 37
Slide 38: USA Fibre Cement housing starts
USA Fibre Cement Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 38
Slide 39: Endnotes and 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 40: Financial Ratios
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 payback -
Slide 41: 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 42: 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 43: 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 44: 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 45: Non-US GAAP Financial Measures (continued)
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 46: 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 47: Q1 FY11 Management Presentation
Q1 FY11 Management Presentation 12 August 2010
James Hardie Industries — Q1 FY2011 Earnings Presentation on 6ix