James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Non-Deal Roadshow (September 2019)
69 slides from James Hardie Industries's roadshow presentation, Sep 12, 2019
Slide 1: Profitable Growth in Europe and in Asia Pacific
For personal use only Profitable Growth in Europe and in Asia Pacific Jack Truong, CEO1
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This Management Presentation contains forward-looking statements. James Hardie Industries plc (the “Company”) may from time to time make For personal use only forward-looking statements in its periodic reports filed with or furnished to the Securities an
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (continued) For personal use only Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue,” “may,” “objective,” “outlook” and sim
Slide 4: Europe is Our Most Compelling Region for Geographic Expansion
Europe is Our Most Compelling Region for Geographic Expansion… …However, We Struggled to Gain Traction, prior to Fermacell Acquisition For personal use only $50,000 JH Presence pre- 2018 $41 $45,000 Strong USA/Canada Aus / NZ, Weak $326 Gross National Income per Capita $40,000 None Europe, $35,000 4
Slide 5: Transforming European Business with Fermacell Acquisition
Transforming European Business with Fermacell Acquisition For personal use only Before Day 1 After Day 1 Revenue • ~€30 MM • ~€300 MM Market • UK, FR, DK, DE • 12+ countries Coverage • Fiber Gypsum Products • Niche Fiber Cement • Cement Bonded (US products) • Capability to Develop Fiber Cement Produ
Slide 6: We Are an Organic Growth Company with Global Reach
We Are an Organic Growth Company with Global Reach… For personal use only EUROPE Net Sales $368MM EBIT $10MM EBIT % 2.7% # Employees 1,000 EBIT included Integration costs ASIA PACIFIC NORTH AMERICA Net Sales $447MM Net Sales $1,677MM EBIT $100MM EBIT $388MM EBIT % 22.3% EBIT % 23.1% # Employees 1,10
Slide 7: Clear Objectives for Long Term Value Creation
We Have Clear Objectives for Long Term Value Creation Growth Above Market with Strong Returns For personal use only EUROPE €1 BILLION REVENUE with 20% EBIT MARGIN NORTH AMERICA 35/90 with 20-25% EBIT MARGIN ASIA PACIFIC DELIVER GROWTH with 20-25% EBIT MARGIN 7 ABOVE MARKET
Slide 8: Europe: €1B Revenue at 20% EBIT Margin by FY2029
EUROPE: €1B Revenue at 20% EBIT Margin by FY2029 Growth Pathway For personal use only €1B European Manufacturing Footprint New Fiber Cement Existing Fiber Cement €320MM Fiber Gypsum Unlocking Plant Capacity to Improve Margin + ~200-300 bps margin improvement + ~200 bps margin improvement 8
Slide 9: APAC: 3-5% Growth Above Market at 20-25% EBIT Margin
APAC: 3-5% Growth Above Market at 20-25% EBIT Margin For personal use only FROM: Consumer Survey: Cladding Preference TO: (June 2018, n = 6,500, JH Insights) 9
Slide 10: James Hardie Sustainability Highlights
James Hardie Sustainability Highlights For personal use only Zero to Landfill Zero Harm Culture Manufacturing process produces zero landfill waste Commitment to providing a safe and healthy in Fiber Gypsum Plants working environment for every individual (employee, vendor, and visitor) 100% Recycled
Slide 11: Growing Europe to 1bn € at Hardie like returns
For personal use only Growing Europe to 1bn € at Hardie like returns Jörg Brinkmann, Managing Director 1
Slide 12: A driven team managing James Hardie Europe
A driven team managing James Hardie Europe For personal use only 2
Slide 13: Agenda
Agenda For personal use only • JHEU – platform built for accelerated growth • Growing fiber cement in Europe • Increased profitability through better operations 3
Slide 14: Agenda
Agenda For personal use only • JHEU – platform built for accelerated growth • Growing fiber cement in Europe • Increased profitability through better operations 4
Slide 15: JHEU is a high performing building solution company
JHEU is a high performing building solution company For personal use only • Best all-around interior liner • Best all-around exterior solution • Supreme fire-protection • One layer instead of two layers • Low maintenance • Weather, frost and water resistance • Outstanding fire, sound and impact • Du
Slide 16: We generate growth in all market segments
We generate growth in all market segments For personal use only Residential 40% Commercial 20% Repair & Remodel 40% Source: JH internal 6
Slide 17: We operate an effective sales and marketing organization
We operate an effective sales and marketing organization For personal use only Digital tools 13 Technical staff 42 Sales and Marketing staff >300 Test certificates >5,000 Active customers >5,300 Unique website visitors / day >10,000 Source: JH internal 7
Slide 18: Case study: Digital specification tool
Case study: Digital specification tool For personal use only Winning inside and outside – digital project platform “Bluebeam” Source: JH internal 8
Slide 19: Case study: Installation video
Case study: Installation video For personal use only Source: https://www.youtube.com/watch?v=GHwnJH_n4q4 9
Slide 20: We have a leading position in our fiber gypsum markets
We have a leading position in our fiber gypsum markets Country Fiber gypsum JH share For personal use only share in interior lining market #1 #1 fermacell® brand awards #1 #1 #1 #1 Source: JH internal fermacell® Point-of-Sale presence in Bauhaus, Düsseldorf, Germany 10
Slide 21: Case study: Fiber gypsum value in commercial segment
Case study: Fiber gypsum value in commercial segment For personal use only + +32 rooms vs. plan + All regulations met with one layer of FG solution Cabinn Metro, Copenhagen, Denmark Source: JH internal 11
Slide 22: We have a proven track-record of growing above market
We have a proven track-record of growing above market fermacell growth above market (indexed) For personal use only fermacell Renovation Residential new build Commercial new build 15y-CAGR 250 5.3% 200 150 0.6% 100 -1.3% 50 2004 2007 2010 2013 2016 FY19 Source: JH internal, Euroconstruct (as of Mar-
Slide 23: Well positioned to capture future market trends
Well positioned to capture future market trends For personal use only WirtschaftsWoche, 28 August 2019 Fraunhofer research, 22 August 2019 • Lack of skilled labor • Lack of affordable housing Handelsblatt Edison, 4 October 2018 • Increased pre-fabrication • Need for ecological, light-weight construc
Slide 24: Agenda
Agenda For personal use only • JHEU – platform built for accelerated growth • Growing fiber cement in Europe • Increased profitability through better operations 14
Slide 25: Our path to 1bn € is driven by fiber cement growth
Our path to 1bn € is driven by fiber cement growth For personal use only Step-change, profitable growth to 1bn € business within 10 years Leverage Innovate Transform New fiber cement Fiber cement based on JH global portfolio Fiber gypsum Cement boards FY18 FY29 Source: JH internal 15
Slide 26: Fiber cement category share leveraging customer base
Fiber cement category share leveraging customer base For personal use only JHEU market coverage • Leveraging on fermacell® customer access and supply- chain network European fiber cement cladding market ~5% ~700€m Source: JH internal, Etex annual report (2017), Cembrit annual report (2017), Source:
Slide 27: Case study: Winning fiber cement business in Denmark
Case study: Winning fiber cement business in Denmark For personal use only HardiePlank® in Hammel, Denmark Joint delivery of HardiePlank® and fermacell® fiber gypsum boards in Denmark in 2019 HardiePlank® in Hinnerup, Denmark Source: JH internal 17
Slide 28: Case study: Synergistic solution for architects
Case study: Synergistic solution for architects For personal use only Installation of HardiePanel® and fermacell® in Plelan-le-Grand, France in 2019 Installation of HardiePanel®, fermacell® fiber gypsum boards and fermacell® Powerpanel H2O boards in Sweden in 2019 Source: JH internal 18
Slide 29: Fiber cement growth through innovation
Fiber cement growth through innovation For personal use only • Leveraging existing global fiber cement product platforms • Adjust Hardie offering to European market needs Western European facade market FC Wood Wooden planks in Sweden 3% Metal Light- Brick weight Other 500m sqm Concrete Render Source
Slide 30: Case study: HardieWindbreaker launch
Case study: HardieWindbreakerTM launch For personal use only HardieWindbreaker™ on JH websites HardieWindbreaker™ installation on site in Ashford, UK 20
Slide 31: Market share growth with transformational innovation
Market share growth with transformational innovation For personal use only • Innovation for render-look market • Offering full systems as fast and efficient solutions Western European facade market FC Wood 3% Metal EasylapTM Light- Brick weight Other 500m sqm Concrete Render Source: JH internal, B+L
Slide 32: Case study: Market Gemba of global innovation team
Case study: Market Gemba of global innovation team For personal use only Façade in UK Façade in Switzerland Façade in Italy Façade in Germany Façade in Netherlands 22
Slide 33: Agenda
Agenda For personal use only • JHEU – platform built for accelerated growth • Growing fiber cement in Europe • Increased profitability through better operations 23
Slide 34: Six plants operating in a truly European supply chain
Six plants operating in a truly European supply chain For personal use only Fiber gypsum plants 4 Cement bonded plant 1 Raw materials plant 1 Warehouses 14 Truck deliveries / day 285 Source: JH internal 24
Slide 35: Production based on recycling and automation
Production based on recycling and automation For personal use only Recycling paper in Münchehof, Germany Sustainability certificates Production line and control room in Wijchen, Netherlands 25
Slide 36: Our fiber gypsum network has further upside potential
Our fiber gypsum network has further upside potential For personal use only • Focus on preventive maintenance and run-to-standard • Launch HMOS to unlock capacity • Invest in organization and capabilities to improve the business Annual output of fiber gypsum network (sqm) ~20% Value stream mapping a
Slide 37: Case study: Best-practice replication from US
Case study: Best-practice replication from US For personal use only European Operations team meeting JH experts in US in July 2019 Implementation of Global Zero Harm Standards in European plants Source: JH internal 27
Slide 38: We are on a continuous improvement track
We are on a continuous improvement track For personal use only • Leveraging global JH manufacturing know how • Best-practice sharing Continuous improvement track in recent period* Net productive hours vs. PY (%) Output (sqm) 2.6% 1.7% 1.6% 1.5% 0.3% Mar 19 Apr 19 May 19 Jun 19 Jul 19 Loading fermace
Slide 39: Growing Europe to 1bn € at Hardie like returns
Growing Europe to 1bn € at Hardie like returns For personal use only • James Hardie Europe has the right platform and the right people for accelerated growth • We are well positioned for accelerated growth in fiber gypsum and fiber cement capitalizing on growing market trends • EBIT improvements wil
Slide 40: Asia Pacific
For personal use only ASIA PACIFIC Conrad Groenewald, General Manager 1
Slide 41: Agenda
AGENDA For personal use only • Driving Growth Above Market − APAC Strategy − Australia Execution − Philippines Execution • Driving Lean Manufacturing − APAC − New Zealand Manufacturing Recovery 2
Slide 42: Agenda
AGENDA For personal use only • Driving Growth Above Market − APAC Strategy − Australia Execution − Philippines Execution • Driving Lean Manufacturing − APAC − New Zealand Manufacturing Recovery 3
Slide 43: APAC Has Historically Grown Above Market While Delivering ~25% EBIT Margins
APAC HAS HISTORICALLY GROWN ABOVE MARKET WHILE DELIVERING 20-25% EBIT MARGINS For personal use only • Proven track record of delivering growth above market with strong EBIT margin • Business is set up to deliver 3-5% growth above market throughout FY20-FY22 • Continued execution at high level APAC Y
Slide 44: How James Hardie APAC Outperforms the Market
HOW JAMES HARDIE APAC OUTPERFORMS THE MARKET For personal use only End User & Customer Insights Differentiated Products and Growth Systems Focused Tools Sustainable growth above market Customer Focused Strong Demand Channel Network Generation 5
Slide 45: APAC Segment Diversity
APAC SEGMENT DIVERSITY Australia New Zealand Philippines For personal use only Source: Internal New Residential - New Residential - Alterations and Commercial Single Detached Medium Density Additions (A&A) 6
Slide 46: APAC Insights
APAC INSIGHTS For personal use only Best In Industry Insights: Consumers Developer / Builders & Trades Designers / Architects Australia 16,600 1,800 2,300 New Zealand 1,500 1,500 500 JH Systems - 500 800 Philippines 600 350 900 Source: Internal, 2019 7
Slide 47: APAC Insights Into Action
APAC INSIGHTS INTO ACTION For personal use only INSIGHTS & DATA • Life-stage consumer segmentation • Builder segmentation to • Home building path to purchase understand key business drivers • Leading design trends - Hamptons • Insights on the Millennial buyer • Insights on the Millennial buyer • Spe
Slide 48: APAC Differentiated Products & Systems
APAC DIFFERENTIATED PRODUCTS & SYSTEMS For personal use only 9
Slide 49: APAC Differentiated Products & Systems
APAC DIFFERENTIATED PRODUCTS & SYSTEMS For personal use only 10
Slide 50: APAC Strong Channel Network
APAC STRONG CHANNEL NETWORK Australia New Zealand For personal use only Philippines Kelly Hardware & EVY 11
Slide 51: Agenda
AGENDA For personal use only • Driving Growth Above Market − APAC Strategy Detached NC - Win vs. Brick − Australia Execution A&A – Win via channel & digital − Philippines Execution • Driving Lean Manufacturing − APAC − Australia Execution − New Zealand Manufacturing Recovery 12
Slide 52: Detached New Construction – Win Versus Brick
DETACHED NEW CONSTRUCTION – WIN VERSUS BRICK Large opportunity remains for Fiber For personal use only Materials Share ‐ Detached Homes Cement growth in detached new construction Brick Veneer (Timber Frame Construction) We will capitalize on current market trends: Double Brick • Consumer aesthetic p
Slide 53: James Hardie Brick Conversion Program
JAMES HARDIE BRICK CONVERSION PROGRAM For personal use only Type Residential Mass Housing Application Cladding Reasons for Conversion • A differentiated ‘Look’ • Speed of Install • More living space • Less on site trades Location Queensland 14
Slide 54: James Hardie Brick Conversion Program
JAMES HARDIE BRICK CONVERSION PROGRAM For personal use only Type Residential Mass Housing Application Cladding Reasons for Conversion • A differentiated ‘Look’ • Design and construction support Location Victoria 15
Slide 55: James Hardie Brick Conversion Program
JAMES HARDIE BRICK CONVERSION PROGRAM For personal use only Type Residential Mass Housing Application Cladding Reasons for Conversion • Leading design trends - Hamptons • Insights on the Millennial buyer • Speed of install Location New South Wales 16
Slide 56: Drive A&A via Channel
DRIVE A&A VIA CHANNEL For personal use only Converting commercial renovators via James Hardie Channel programs: • Entice via in-store promotions • Engage via trade events • Educate via training seminars 17
Slide 57: Drive A&A via Digital
DRIVE A&A VIA DIGITAL For personal use only JH will provide a digital platform to Recruit, Educate and Connect small builders and decking contractors to consumers on the renovation path to purchase via the MyHardie program MyBuilder portal: • Feature as • Job management a Hardies’ builder portal • L
Slide 58: Agenda
AGENDA For personal use only • Driving Growth Above Market − APAC Strategy − Australia Execution Strong value proposition − Philippines Execution Increased retailer density • Driving Lean Manufacturing − APAC − Australia Execution − New Zealand Execution 19
Slide 59: Fiber Cement Retailer Density
FIBER CEMENT RETAILER DENSITY For personal use only • Store openings continue, creating link between distributor and retailer − Retailers engage in carpenter training programs Source: Internal, 2019 Images of retailers with product on shelves 20
Slide 60: Fiber Cement Value Proposition - Plywood
FIBER CEMENT VALUE PROPOSITION - PLYWOOD For personal use only Type: Residential Mass Housing Application Won: Eaves Conversion from: Plywood Reasons for Conversion: • Durability (moisture, fire & termite) • Value Engineering • Price Value Location: South Luzon Fiber Cement Value Proposition vs. Ply
Slide 61: Fiber Cement Value Proposition - Plasterboard
FIBER CEMENT VALUE PROPSITION - PLASTERBOARD For personal use only Type: Commercial – Hotel & Casino Application Won: Wet Area Walls & Common Area Conversion from: Plasterboard 9mm Reasons for Conversion: • Durability (moisture for wet area & impact for common areas) • Cost Efficiency Developer init
Slide 62: Agenda
AGENDA For personal use only • Driving Growth Above Market − APAC Strategy − Australia Execution − Philippines Execution • Driving Lean Manufacturing − APAC − New Zealand Manufacturing Recovery 23
Slide 63: APAC Lean Manufacturing - History
APAC LEAN MANUFACTURING - HISTORY For personal use only • Started Lean journey in Rosehill toward the end of FY14, replicated: • Carole Park Q3 FY15 • Penrose Q1 FY17 • Cabuyao Q3 FY17 • Heavy focus on Daily Management System to “run the business” • Transitioned to “improve the business”, the first
Slide 64: APAC Lean Manufacturing – Path Forward
APAC LEAN MANUFACTURING – PATH FORWARD For personal use only • A$27 million in targeted savings from lean initiatives FY20-FY22 • Intense focus on RTY in addition to net operating hours • Replicate key learnings from North America lean progress • Maximize Operator Engagement • FY20 is on-track 25
Slide 65: Agenda
AGENDA For personal use only • Driving Growth Above Market − APAC Strategy − Australia Execution − Philippines Execution • Driving Lean Manufacturing − APAC − New Zealand Manufacturing Recovery 26
Slide 66: New Zealand Manufacturing
NEW ZEALAND MANUFACTURING For personal use only Leverage HMOS platforms to improve manufacturing: • Focus on Zero Harm • Leadership and Employee Engagement is the key to success • Drive: − Operator Standard Work − Leader Standard Work − Daily Management System as foundations to performance • Reduce
Slide 67: Key Messages
KEY MESSAGES For personal use only • Relentless focus on execution to drive Growth Above Market across network • Execute lean manufacturing initiatives to enable continued and sustainable cost improvements • Reaffirm growth above market of 3-5% and EBIT Margin of 20-25% 28
Slide 68: Profitable Growth in Europe and in Asia Pacific
For personal use only Profitable Growth in Europe and in Asia Pacific Jack Truong, CEO 1
Slide 69: Summary
SUMMARY For personal use only 1. We have the right platform for profitable growth in Europe: Broad channel access and market coverage Premium interior solutions to complement exterior solutions Strong Fermacell brand Well established manufacturing and supply chain capabilities Global JH R&D capabili
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