James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2018)
50 slides from James Hardie Industries's investor day presentation, Sep 20, 2018
Slide 1: Exteriors – Sean Gadd
Exhibit 99.8 • Xxx • Xxx Exteriors Sean Gadd
Slide 2: Housing Starts
HOUSING STARTS Millions of Starts of Millions Starts of Millions Source: Dodge Data & Analytics Single-family growth stable. Multi-family growth moderating. PAGE 2
Slide 3: Repair & Remodel
REPAIR & REMODEL Repair & Remodel Project Growth Source: Hanley Wood Repair & remodel projects continue to grow at ~5% annually PAGE 3
Slide 4: Key Takeaways
KEY TAKEAWAYS • Market is growing at a moderate rate, which is good for James Hardie • It provides the right environment to grow market share • Builders and contractors are confident and looking to differentiate PAGE 4
Slide 5: Agenda
AGENDA • Strategy = 35/90 • How it works • Penetration vs. vinyl and wood • Defend against lower value alternatives • Key enablers of the strategy • ColorPlus ® Technology • Non-metro markets • Aspyre PAGE 5
Slide 6: 35/90 – Exteriors Growth Strategy
• Xxx • Xxx 35/90 – Exteriors Growth Strategy
Slide 7: 35/90 – Exteriors Growth Strategy
35/90 – EXTERIORS GROWTH STRATEGY • Exteriors growth strategy remains 35/90 • Organic growth strategy measured by our growth above our market index (primary demand growth) • Primary demand growth is delivered by: • Winning share from vinyl and wood • Defending against lower value alternatives Primar
Slide 8: 35/90 – Exteriors Growth Strategy: Market segmentation
35/90 – EXTERIORS GROWTH STRATEGY Market segmentation ... JH positioned for growth in all segments • Single family ~85%, multi-family ~15% • ~40% new construction, ~60% repair and remodel Segment Market Size & Siding Market Share Terminal Composition Multi Family > 35% terminal market share Single F
Slide 9: 35/90 – Value Proposition vs. Competition
35/90 – VALUE PROPOSITION VS. COMPETITION Vinyl Wood & Wood Alternatives Competitive Fiber Cement • Exterior appeal • Product Durability • Trusted brand – curb, porch and deck • Low maintenance • Engineered for Climate® • Durability - Resistance to fire & abuse • Full product range for all • Technol
Slide 10: Grow Against Vinyl
• Xxx • Xxx Grow Against Vinyl
Slide 11: James Hardie Versus Vinyl
JAMES HARDIE VERSUS VINYL Historic Vinyl Share Source: NAHB + Internal Management Estimates Positioned to accelerate our market share against vinyl with color by leveraging our superior value proposition, sales force and market development approach PAGE PAGE 11
Slide 12: Market Development vs. Vinyl – New Construction
MARKET DEVELOPMENT VS. VINYL – NEW CONSTRUCTION • Market development approach Segment, Target, Position “Money Ball” • For the target builder looking to differentiate Segment • Providing a better looking home • Sell their homes at a higher price Target • Sell their homes faster Position • Suppor
Slide 13: Total Cost Versus Perceived Value
TOTAL COST VERSUS PERCEIVED VALUE Fiber Cement has a compelling value proposition against vinyl Fire Drive Low Resistance Affordability Maintenance Curb Durability $ Appeal Sell the affordable gap Vinyl Current JH New JH Source: Internal Management Estimates Curb Appeal Durability Fire Resistance PA
Slide 14: Accelerating Growth Against Vinyl
ACCELERATING GROWTH AGAINST VINYL In the single-family new construction segment, driving affordability for the builder will significantly increase the available market size for James Hardie House Closings By Price Band Number Number of closings Starter 1st 2nd Semi custom Luxury homes Move up Move u
Slide 15: Key Leverage Points for Affordability
4 KEY LEVERAGE POINTS FOR AFFORDABILITY Channel • Enable most efficient supply chain • Increase available capacity Install • Drive site & process efficiency • Deliver optimized systems • ColorPlus ® Technology eliminates field paint costs Product • Product enhancements to drive efficiencies • Value
Slide 16: Accelerate Adoption
ACCELERATE ADOPTION Marketing Developer Investment Program Architect Advocate Program Builder Conversion Fund Employee Targeted Advocacy Geography Installer Partnership Program Affordable Realtor Design Engagement Offer PAGE 16
Slide 17: Market Development vs. Vinyl – Repair and Remodel
MARKET DEVELOPMENT VS. VINYL – REPAIR AND REMODEL • Market development approach Segment, Target, Position • Target homeowner looking for a re-side • In the right neighborhood • James Hardie “Lockdown” • Vinyl battleground PAGE 17
Slide 18: Value for Contractors
VALUE FOR CONTRACTORS Via an aligned contractor • Looking to partner and grow • Position James Hardie fiber cement products in the home • At the right price PAGE 18
Slide 19: Re-side Leads for Partner Contractors
RE-SIDE LEADS FOR PARTNER CONTRACTORS Over 15,000 home owner leads generated in 2017 PAGE 19
Slide 20: Repair and Remodel
REPAIR AND REMODEL • Drive awareness and preference for James Hardie with ColorPlus ® technology in vinyl battleground neighborhoods • Sell value proposition directly to the home owner via an aligned contractor • Leverage that home in the desired neighborhood • Move the battleground neighborhood to
Slide 21: Enhancing the Wake
ENHANCING THE WAKE eee oe = 0k! ‘i ew Saver wi ©. ao Request for eo ie Information Referrals Canvasing (Before and After) Digital ° Local Events (Website and Email) This bume is being Retail Direct Mail in cuefully restored with James Hardie” Siding with Door Hangers / — Targeted Neighborhoods| Yard
Slide 22: Defend Against Lower Value Alternatives
• Xxx • Xxx Defend Against Lower Value Alternatives
Slide 23: Win Against Lower Value Alternatives
WIN AGAINST LOWER VALUE ALTERNATIVES • As we pull a market off a vinyl standard, builders we don’t touch move to hard siding • Lower value alternatives can pick up some of this business • “Me too” positioning • Utility product benefit, particularly trim • Ease of install PAGE 23
Slide 24: Win Against Lower Value Alternatives
WIN AGAINST LOWER VALUE ALTERNATIVES • Targeted geographic approach • Sell the superior advantages of James Hardie fiber cement exterior to the homeowner via our builders and aligned contractors • Tactically deliver competitive packages to the builder 1. ColorPlus® Technology 2. Full-wrap 3. 100% Ha
Slide 25: Position Fiber Cement Against Wood
POSITION FIBER CEMENT AGAINST WOOD James Hardie siding products are designed to combat the shortcomings of wood and wood alternatives to provide a longer-lasting, lower- maintenance, weather resistant exterior “No Wood Is Good” Don’t be fooled. When it comes to long-term on-the-wall performance, eng
Slide 26: Strategic Game Plan
STRATEGIC GAME PLAN • Product superiority – cement vs. wood • Company vs. Company – primary demand / value creation • Full product portfolio • Move to ColorPlus® Technology as the primary solution • Sell full wrap (primed siding and trim) • Fulfill design needs with the Aspyre collection from James
Slide 27: Value Add Partner Programs
VALUE ADD PARTNER PROGRAMS PAGE 27
Slide 28: Go-Forward
GO-FORWARD • Central US market focus • “No Wood is Good” marketing strategy • Maintain direct sales, primary demand model • Continue to develop account management competency • Accelerate growth in non-metro markets • Improved non-product value creation to JH partners PAGE 28
Slide 29: ColorPlus Technology
• Xxx • Xxx ColorPlus® Technology
Slide 30: Win With Color
WIN WITH COLOR • ColorPlus ® Technology remains a key enabler for future growth against vinyl and lower value alternatives • James Hardie has significant scale advantage with ColorPlus ® Technology • ColorPlus ® Technology penetration flattened as we moved away from building an efficient supply chai
Slide 31: ColorPlus Technology Value Proposition
COLORPLUS ® TECHNOLOGY VALUE PROPOSITION ColorPlus ® Technology can create more value for customers: • KEEP: Delivers a factory applied finish – better than field paint • REINFORCE: Able to provide benefit of a lower total cost solution in many markets ... particularly “mid paint cost markets” Cost
Slide 32: ColorPlus Technology Strategic Importance
COLORPLUS ® TECHNOLOGY STRATEGIC IMPORTANCE In addition to competitive installed cost, ColorPlus® offers other important benefits: • Hardie’s scale enables more efficient manufacturing and distribution of prefinished product Competitive Advantage • Hardie’s pull strategy enables channel members to g
Slide 33: ColorPlus Technology Penetration: Blockers
COLORPLUS ® TECHNOLOGY PENETRATION: BLOCKERS Blocking Challenges: “Medium Paint Cost Markets” Product Install Supply Chain • Not clearly delivering • Pool of capable C+ • Complexity of product affordability labor is lacking in many offering can lead to markets increased investment in inventory • Pro
Slide 34: ColorPlus Technology Penetration: Solutions
COLORPLUS ® TECHNOLOGY PENETRATION: SOLUTIONS Blocking Challenges: “Medium Paint-Cost Markets” Product Install Supply Chain • Not clearly delivering • Pool of capable C+ • Complexity of product affordability labor is lacking in many offering can lead to • Manufacturing • Localizedmarkets • Install R
Slide 35: Pilot Markets Show Potential of 'Win With Color'
PILOT MARKETS SHOW POTENTIAL OF ‘WIN WITH COLOR’ As we activate our “Win With Color” strategy in pilot markets, we see good indicators for future markets NA Color Penetration “Win With Color” Pilot Markets 30% Potential 40% 25% 20% 15% 10% 5% 0% FY09 FY18 M��w�st�Ma�k�t�A M���South�Ma�k�t�B Target f
Slide 36: Non-Metro
• Xxx • Xxx Non-Metro
Slide 37: Non-Metro Markets
NON-METRO MARKETS • Winning in non-metro markets remains key deliverable to achieve 35/90 PAGE 37
Slide 38: Non-Metro Market Assumptions
NON-METRO MARKET ASSUMPTIONS • ��we��p�pul������de�s��y� more difficult to cover with direct sales • ��we���ve��ge���c�me�&�h�me�v�lues� less willingness to pay • ���ge�ge�g��ph�c�sp�e�d�&�l�we��v�lumes� more expensive distribution • F��gme��ed���s��lle����se� harder to train on new products
Slide 39: Importance of Non-Metros
IMPORTANCE OF NON-METROS Non-metro markets are in the aggregate a larger market than metros ... we cannot achieve 35/90 without a stronger presence in these markets US Housing Starts – Addressable We��el�eve�we��eed� ~��%�pe�e���������f����- me���s�����ch�eve���/9� Source: Dodge Analytics & Internal
Slide 40: Non-Metro – How It Works
NON-METRO – HOW IT WORKS • James Hardie’s job is to change the market standard • Find or create natural aggregation points • Improve efficiency/cost • Integrate non-metro installers and dealers into the James Hardie network PAGE 40
Slide 41: Strategic Objective and Go-Forward Game Plan
STRATEGIC OBJECTIVE AND GO-FORWARD GAME PLAN • Introduce non-metro segment team to accelerate market adoption • Aligning partners & eliminating market barriers • Create a repeatable approach to plan, target & accelerate growth • Focus on the affordability to drive conversion from vinyl and wood base
Slide 42: Key Takeaways
KEY TAKEAWAYS • We cannot deliver 35/90 without growth in non-metros • Implementation of a James Hardie market acceleration team • Network of in market partners delivering the value proposition of fiber cement to builders and homeowners • Affordability throughout the supply chain remains key • Uniqu
Slide 43: Aspyre Collection from James Hardie
• Xxx • Xxx Aspyre Collection from James Hardie™
Slide 44: Aspyre Enables Growth Against Wood
ASPYRE ENABLES GROWTH AGAINST WOOD… To achieve 35/90, we must capture market share against wood The Aspyre collection is a product line designed to target 300 mmsqft of high-end wood Aspyre allows us to defend against low-value alternatives and new entrants, while extending the fiber cement S-curve
Slide 45: By Targeting the Top-of-Market Segment
BY TARGETING THE TOP-OF-MARKET SEGMENT… Reveal® Outdoor Living: Accent Shiplap Ceiling Bar Surround Reveal Shiplap Column Ceiling Horizontal Vertical Shiplap Shiplap Applications Aspyre Products • Vertical and Horizontal Siding • Shiplap: ~3500 Sqft • Reveal accents and Columns • Reveal: ~2000 Sqtt
Slide 46: Enabling Versatile Design Options
ENABLING VERSATILE DESIGN OPTIONS… • Lock-joints enable hidden fasteners and easy install • Thick planks enable mitered corners delivering desired contemporary design • Machined profiles enable high-end wood profiles and design PAGE 46
Slide 47: Building on Core JH Advantages
BUILDING ON CORE JH ADVANTAGES • Engineered for Climate® Performance • Resistance against rot, fire, pests • Low maintenance Financials Brand • Revenue per home • #1 Fiber Cement brand • Margin dollars/home • Architect awareness Channel Manufacturing • Local market stocking positions • Capacity expa
Slide 48: Key Takeaways
• Xxx • Xxx Key Takeaways
Slide 49: Key Takeaways
KEY TAKEAWAYS • Housing market remains relatively strong • Hardie is set to accelerate share growth through market development against vinyl and through a sales approach against low value alternatives and wood • Hardie has the scale advantage to use color as a key enabler • Hardie has an innovative
Slide 50: Q&A
• Xxx • Xxx Q&A
James Hardie Industries — Investor Day (September 2018) on 6ix