James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q3 FY2012 Earnings Presentation
56 slides from James Hardie Industries's earnings presentation, Mar 1, 2012
Slide 1: Q3 FY12 Management Presentation
Exhibit 99.4 Q3 FY12 MANAGEMENT PRESENTATION 28 February 2012
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This Management 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 SEC on Forms 20-F and 6-K, in its annual reports to shareholders, in offering circula
Slide 3: Agenda
AGENDA Overview and Operating Review – Louis Gries, CEO Financial Review – Russell Chenu, CFO Questions and Answers 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 secti
Slide 4: Operating Review
OPERATING REVIEW Louis Gries, CEO
Slide 5: Group Overview
GROUP OVERVIEW 1 rd 3 quarter operating results reflected higher sales volume (in the US business), improved manufacturing performance, lower general corporate costs and an appreciation of Asia Pacific businesses’ currencies compared to the US dollar, partially offset by an unfavorable product mix a
Slide 6: USA and Europe Fibre Cement: 3rd Quarter Result
USA AND EUROPE FIBRE CEMENT 3rd Quarter Result 1 Net Sales up 6% to US$192.8 million Sales Volume up 8% to 301.0 mmsf Average Price down 2% to US$641 per msf EBIT up 18% to US$31.0 million EBIT Margin up 1.7 pts to 16.1% 1 rd rd Comparisons are of the 3 quarter of the current fiscal year versus the
Slide 7: USA and Europe Fibre Cement: Nine Months Result
USA AND EUROPE FIBRE CEMENT 1 Nine Months Result Net Sales up 4% to US$641.3 million Sales Volume up 4% to 980.6 mmsf Average Price flat at US$654 per msf EBIT up 4% to US$126.3 million EBIT Margin down 0.1 pts to 19.7% 1 Comparisons are of nine months of the current fiscal year versus the nine mont
Slide 8: USA and Europe Fibre Cement: Average Net Sales Price
USA AND EUROPE FIBRE CEMENT Average Net Sales Price (US dollars) 1 US$654 1 680 640 600 560 520 480 440 400 360 FY06 FY07 FY08 FY09 FY10 FY11 Q3 FY12 1 FY12 average net sales price represents 3 rd quarter year to date; other years presented are for the full year 8
Slide 9: USA and Europe Fibre Cement: EBIT and EBIT Margin
USA AND EUROPE FIBRE CEMENT EBIT and EBIT Margin 1 140 35 120 30 100 25 80 20 60 15 40 10 20 5 0 0 Q3 FY04 Q3 FY05 Q3 FY06 Q3 FY07 Q3 FY08 Q3 FY09 Q3 FY10 Q3 FY11 Q3 FY12 EBIT EBIT Margin 1 Excludes impairment charges of US$45.6 million in Q4 FY08 9
Slide 10: USA and Europe Fibre Cement: Primary Growth Performance
USA AND EUROPE FIBRE CEMENT Primary Growth Performance 30% 20% 10% 0% -10% -20% -30% -40% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 %JHBP Growth (sdft) NC/R&R Growth Rolling 4Qtr - JHBP Growth (sdft) Rolling
Slide 11: Asia Pacific Fibre Cement: 3rd Quarter Result
ASIA PACIFIC FIBRE CEMENT 3rd Quarter Result 1 Net Sales flat at US$90.2 million Sales Volume down 5% to 94.4 mmsf Average Price up 4% to A$946 per msf EBIT down 3% to US$19.4 million EBIT Margin down 0.7 pts to 21.5% rd rd 1 Comparisons are of the 3 quarter of the current fiscal year versus the 3 q
Slide 12: Asia Pacific Fibre Cement: Nine Months Result
ASIA PACIFIC FIBRE CEMENT 1 Nine Months Result Net Sales up 9% to US$286.9 million Sales Volume down 2% to 298.2 mmsf Average Price flat at A$924 per msf EBIT up 10% to US$66.0 million EBIT Margin up 0.1 pts to 23.0% 1 Comparisons are of the nine months of the current fiscal year versus the nine mon
Slide 13: Group 3rd Quarter Summary
GROUP3 rd QUARTER SUMMARY 1 USA and Europe Fibre Cement results reflected: Quarterly demand has stabilized and continues to run slightly above last year Decrease in unit price due to product mix and geographic mix Increased SG&A driven by planned increase in field sales activities Positive primary d
Slide 14: Total USA Housing Starts – US Census
TOTAL USA HOUSING STARTS US CENSUS – 14
Slide 15: Group Outlook
GROUP OUTLOOK United States Although industry activity and demand have stabilised, there remains no evidence of a sustainable recovery Pulp price index (NBSK) steadily declining, but remains at elevated levels Freight costs continue to be high compared to prior year Company initiatives, such as the
Slide 16: Group Outlook: Key Priorities
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® and Trim products Continue to rollout our job pack distri
Slide 17: Financial Review
FINANCIAL REVIEW Russell Chenu, CFO
Slide 18: Overview
OVERVIEW Highlights Earnings this quarter reflect increased sales volume and category and market share gains in the US business and the appreciation of Asia Pacific business’ currencies Strong net operating cash flow has enabled a further reduction in net debt from US$40.4 million at 31 March 2011 t
Slide 19: Consequences of Changes in A$ versus US$
CONSEQUENCES OF CHANGES A$ VERSUS – US$ 1.20 1.10 1.00 0.90 0.80 0.70 0.60 30 Jun 08 30 Sep 08 31 Dec 08 31 Mar 09 30 Jun 09 30 Sep 09 31 Dec 09 31 Mar 10 30 Jun 10 30 Sep 10 31 Dec 10 31 Mar 11 30 Jun 11 30 Sep 11 31 Dec 11 Earnings Balance Sheet Favourable impact from translation of Asia Pacific r
Slide 20: Results Q3
RESULTS Q –3 US$ Millions Q3 '12 Q3 '11 % Change Net sales 283.0 272.6 4 Gross profit 90.6 84.8 7 SG&A expenses (48.0) (49.4) 3 Research & development expenses (7.3) (5.9) (24) Asbestos adjustments (33.5) (46.4) 28 EBIT 1.8 (16.9) - Net interest expense (1.5) (1.3) (15) Other income 1.5 2.7 (44) Inc
Slide 21: Results Q3 (continued)
RESULTS Q – 3 (CONTINUED) US$ Millions Q3 '12 Q3 '11 % Change Net operating loss (4.8) (26.4) 82 Asbestos: Asbestos adjustments 33.5 46.4 (28) Other asbestos 1 0.1 - - Tax expense related to asbestos adjustments (0.1) - - ASIC related expenses 0.3 - - Tax adjustments (1.3) 1.0 - Net operating profit
Slide 22: Results Nine Months
RESULTS N – INE MONTHS US$ Millions 9 Months 9 Months FY2012 FY2011 % Change Net sales 928.2 878.6 6 Gross profit 311.4 295.0 6 SG&A expenses (142.1) (130.4) (9) Research & development expenses (21.6) (19.6) (10) Asbestos adjustments 15.2 (91.1) - EBIT 162.9 53.9 - Net interest expense (3.7) (3.3) (
Slide 23: Results Nine Months (continued)
RESULTS N – INE MONTHS (CONTINUED) 9 Months 9 Months US$ Millions FY2012 FY2011 % Change Net operating profit (loss) 123.6 (345.2) - Asbestos: Asbestos adjustments (15.2) 91.1 - Other asbestos 1 0.1 (0.7) - Tax expense related to asbestos adjustments (0.1) 0.6 - ASIC related expenses (recoveries) 1.
Slide 24: Segment Net Sales Q3
SEGMENT NET SALES Q3– US$ Millions Q3 '12 Q3 '11 % Change USA and Europe Fibre Cement 192.8 182.6 6 Asia Pacific Fibre Cement 90.2 90.0 - Total 283.0 272.6 4 24
Slide 25: Segment Net Sales Nine Months
SEGMENT NET SALES NINE – MONTHS US$ Millions 9 Months 9 Months FY2012 FY2011 % Change USA and Europe Fibre Cement 641.3 616.3 4 Asia Pacific Fibre Cement 286.9 262.3 9 Total 928.2 878.6 6 25
Slide 26: Segment EBIT Q3
SEGMENT EBITQ3 – US$ Millions Q3 ’12 Q3 ’11 % Change USA and Europe Fibre Cement 31.0 26.3 18 Asia Pacific Fibre Cement 19.4 20.0 (3) Research & development 1 (5.0) (4.0) (25) Total segment EBIT 45.4 42.3 7 General corporate excluding asbestos and ASIC expenses (8.9) (12.1) 27 Total EBIT excluding a
Slide 27: Segment EBIT Nine Months
SEGMENT EBITNINE – MONTHS US$ Millions 9 Months 9 Months FY2012 FY2011 % Change USA and Europe Fibre Cement 126.3 121.8 4 Asia Pacific Fibre Cement 66.0 60.0 10 1 Research & development (15.2) (14.0) (9) Total segment EBIT 177.1 167.8 6 General corporate excluding asbestos and ASIC expenses (26.1) (
Slide 28: Income Tax Expense Q3
INCOME TAX EXPENSE Q3– Q3 '12 Q3 '11 US$ Millions Operating profit (loss) before income taxes 1.8 (15.5) Asbestos: Asbestos adjustments 33.5 46.4 Other asbestos 1 0.1 - Operating profit before income taxes excluding asbestos 35.4 30.9 Income tax expense (6.6) (10.9) Asbestos: Tax expense related to
Slide 29: Income Tax Expense Nine Months
INCOME TAX EXPENSE NINE – MONTHS 9 Months 9 Months US$ Millions FY2012 FY2011 Operating profit before income taxes 158.7 46.0 Asbestos: Asbestos adjustments (15.2) 91.1 Other asbestos 1 0.1 (0.7) Operating profit before income taxes excluding asbestos 143.6 136.4 Income tax expense (35.1) (391.2) As
Slide 30: Cashflow
CASHFLOW 1 US$ Millions 9 Months 9 Months FY2012 FY2011 EBIT 162.9 53.9 Non-cash items: Asbestos adjustments (15.2) 91.1 Other non-cash items 53.1 54.1 Net working capital movements 25.8 27.4 Cash Generated By Trading Activities 226.6 226.5 Tax payments, net (28.4) (33.0) Change in Other Non-Trading
Slide 31: Debt
DEBT At 31 December 2011 US$ Millions Total facilities 320.0 Gross debt 13.0 Cash 38.8 Net debt (cash) (25.8) Unutilised facilities and cash 345.8 Net debt decreased by US$66.2 million to net cash of US$25.8 million compared to net debt at 31 March 2011 Weighted average remaining term of total facil
Slide 32: Legacy Issues Update
LEGACY ISSUES UPDATE ATO – RCI successful in its appeal of the 1999 disputed amended tax assessment James Hardie’s initial appeal dismissed by the Federal Court of Australia in September 2010 Charge of US$345.2 million effective 1 September 2010 (no impact on net operating cash flow in FY11) On 22 A
Slide 33: Asbestos Fund Update Pro-Forma (Unaudited)
ASBESTOS FUND UPDATE PRO– FORMA (UNAUDITED) A$ millions AICF cash and deposits - 31 March 2011 59.9 1 Contribution to AFFA by James Hardie 48.9 Insurance and cross claim recoveries 22.0 Interest income and unrealised loss on investments 1.9 Claims paid (73.9) Operating costs (4.0) Other 1.5 AICF net
Slide 34: Key Ratios
KEY RATIOS * 9 Months 9 Months 9 Months FY2012 FY2011 FY2010 1 EPS (Diluted) 24.7c 18.8c 25.3c 2 EBIT/ Sales (EBIT margin) 16.3% 15.6% 20.1% Gearing Ratio 1 -2.0% 4.6% 11.7% Net Interest Expense Cover 2 25.6x 24.1x 37.9x Net Interest Paid Cover 2 24.8x 22.5x 33.4x Net Debt Payback - 0.3yrs 0.5yrs *
Slide 35: Summary
1 SUMMARY Net operating profit, excluding asbestos, ASIC expenses and tax adjustments for the rd 3 quarter and nine months was US$27.7 million and US$108.3 million, respectively rd The 3 quarter results reflected: Stable US and subdued Asia Pacific operating environments Higher sales volumes due to
Slide 36: Guidance
GUIDANCE Challenges remain, with the operating environment in the US still weak and the Asia Pacific residential markets softening Management anticipates FY12 full year earnings excluding asbestos, ASIC expenses and tax adjustments expected to be within the range of US$130 million to US$140 million
Slide 37: Questions
&) James Hardie QUESTIONS
Slide 38: Appendix
&) James Hardie APPENDIX
Slide 39: Global Strategy
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 compet
Slide 40: USA Fibre Cement: Top Line Growth
USA FIBRE CEMENT Top Line Growth 3,000 $1,300 2,800 $1,200 2,600 $1,100 2,400 $1,000 2,200 2,000 $900 1,800 $800 1,600 $700 1,400 $600 1,200 $500 1,000 $400 800 $300 600 400 $200 200 $100 0 $0 JH Volume Housing Starts JH Revenue Rolling 12 month average of seasonally adjusted estimate of housing sta
Slide 41: General Corporate Costs Q3
GENERAL CORPORATE COSTS Q3 – 1 US$ Millions Q3 '12 Q3 '11 % Change Stock compensation expense 4.6 3.3 (39) Other costs 4.3 8.8 51 General corporate costs excluding ASIC expenses 8.9 12.1 27 ASIC related expenses 0.3 - - General corporate costs 9.2 12.1 24 1 Certain reclassifications have been reflec
Slide 42: General Corporate Costs Nine Months
GENERAL CORPORATE COSTS NINE– MONTHS 1 9 Months 9 Months US$ Millions FY2012 FY2011 % Change Stock compensation expense 8.4 9.0 7 Other costs 17.7 19.8 11 General corporate costs excluding ASIC expenses and domicile change related costs 26.1 28.8 9 ASIC related expenses (recoveries) 1.0 (9.5) - Domi
Slide 43: EBITDA Q3
EBITDA –Q3 US$ Millions Q3 ’12 Q3 ’11 % Change EBIT USA and Europe Fibre Cement 31.0 26.3 18 Asia Pacific Fibre Cement 19.4 20.0 (3) Research & development (5.0) (4.0) (25) General corporate excluding asbestos and ASIC expenses (8.9) (12.1) 27 Depreciation and Amortisation USA and Europe Fibre Cemen
Slide 44: EBITDA Nine Months
EBITDA –NINE MONTHS 9 Months 9 Months % Change US$ Millions FY2012 FY2011 EBIT USA and Europe Fibre Cement 126.3 121.8 4 Asia Pacific Fibre Cement 66.0 60.0 10 Research & development (15.2) (14.0) (9) General corporate excluding asbestos and ASIC expenses (26.1) (30.6) 15 Depreciation and Amortisati
Slide 45: Capital Expenditure
CAPITAL EXPENDITURE 9 Months 9 Months US$ Millions FY2012 FY2011 % Change USA and Europe Fibre Cement 20.6 31.4 (34) Asia Pacific Fibre Cement 4.9 5.9 (17) Total 25.5 37.3 (32) 45
Slide 46: Net Interest Expense
NET INTEREST EXPENSE US$ Millions 9 Months 9 Months Q3 ’12 Q3 ’11 FY2012 FY2011 Gross interest expense (0.9) (1.0) (2.9) (3.2) Interest income - - 0.2 0.3 Realised loss on interest rate swaps (1.4) (1.0) (3.2) (2.8) Net interest expense excluding AICF interest income (2.3) (2.0) (5.9) (5.7) AICF int
Slide 47: Legacy Issues Update: ASIC Proceedings
LEGACY ISSUES UPDATE ASIC Proceedings NSW Court of Appeal judgement handed down on 17 December 2010 Company’s appeal dismissed Non-executive directors’ appeals upheld On 13 May 2011, ASIC and one former executive granted special leave to appeal to the High Court of Australia Appeals were heard by th
Slide 48: 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 Condensed Consolidated Financial Statements. Definitions
Slide 49: Endnotes (continued)
ENDNOTES (CONTINUED) 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 foot of 5/16” thickness. Financial Ratios Gearing Ratio – Net debt (cash) divide
Slide 50: 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. Management has in
Slide 51: 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 52: Non-US GAAP Financial Measures (continued)
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
Slide 53: 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. Managem
Slide 54: 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 55: 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 56: Q3 FY12 Management Presentation
Q3 FY12 MANAGEMENT PRESENTATION 28 February 2012
James Hardie Industries — Q3 FY2012 Earnings Presentation on 6ix