Boral — Investor Day (September 2019)
117 slides from Boral's investor day presentation, Sep 20, 2019
Slide 1: Investor Site Tour & Presentations
INVESTOR SITE TOUR & PRESENTATIONS Boral North America Sacramento and Napa, California 19–20 September 2019
Slide 2: Schedule
Schedule Thursday and Friday, 19-20 September 2019 Sep 19 – Time Agenda 12:00 p.m. – 1:00 p.m. Lunch 1:00 p.m. – 5:00 p.m. Management presentations and Q&A 6:00 p.m. – 9:00 p.m. Dinner – Magnolia Terrace Sep 20 – Time Agenda 6:45 a.m. – 7:20 a.m. Breakfast – Sycamore Ballroom 7:20 a.m. – 8:50 a.m. D
Slide 3: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker Eldorado Stone - Stacked Stone, Silver Lining 3
Slide 4: Boral's revenue exposures
Boral’s revenue exposures While Boral has cyclical exposures, it has portfolio benefits from diverse end market and diverse geographic exposures End market exposures, %1 Geographic exposures, %2 5 2 4 9 25 10 3 32 14 9 59 9 7 7 5 Australian RHS&B & other engineering USA single-family Australia North
Slide 5: Boral's balance sheet remains strong
Boral’s balance sheet remains strong Gearing expected to remain within comfortable range After a significant capital investment phase, targeting to reduce following the Knauf transaction capex to be broadly in line with depreciation in coming years Gearing (net debt / net debt + equity), % Total cap
Slide 6: Boral Australia: highlights
Boral Australia: highlights Boral Australia is a leading integrated construction materials business Highlights Consistent margin profile through cycle, EBITDA/sales % 16.7 17.6 16.6 Participates across multiple segments including strong 15.7 15.6 13.5 infrastructure activity — multi-year pipeline
Slide 7: Boral Australia is well-positioned with integrated downstream offering
Boral Australia is well-positioned with its fully integrated downstream concrete and asphalt offering Major transport infrastructure construction projects1 The shifting nature of major transport infrastructure is supporting an increase in VWD by financial year, A$b asphalt volumes over concrete. Oth
Slide 8: USG Boral: highlights
USG Boral: highlights USG Boral is a well performing, highly attractive business with strong growth potential Highlights With a growing revenue profile, US$m 1,478 1,575 1,606 Strong long-term growth outlook 1,397 1,268 1,091 — exposure to growing Asian economies — increasing penetration of gypsum
Slide 9: USG Boral: strength of new expanded Asia JV
USG Boral: strength of new expanded Asia JV Once completed, the expanded USG Boral Asia JV will deliver a stronger platform in Asia Operating footprint1 Plasterboard manufacturing capacity2, million m2 (number of operating sites) USG Boral’s 562m m2 plus Knauf’s 220m m2 creates 782m m2 132 15 USG Bo
Slide 10: USG Boral Australia & NZ will deliver strong cash flow
USG Boral Australia & NZ will deliver strong cash flow USG Boral Australia has strong share with >40% of revenues derived from segments other than residential; significant cash flow is expected from owning 100% of the business1 Plasterboard share2 Total plasterboard Indicative P&L from USG Boral Aus
Slide 11: FY19 results presentation: Pro-forma earnings and reporting
p.31 FY19 results presentation: Pro-forma earnings and reporting USG Boral Plasterboard division’s underlying results FY2019 FY2019 A$ million BORAL’S REPORTING IMPLICATIONS ACTUAL Pro-forma Revenue • Share of equity earnings from expanded USG Boral Asia JV and fully consolidated earnings from 100%
Slide 12: Boral North America: highlights
Boral North America: highlights Boral North America is a leader in fly ash and building products, with highly attractive growth prospects Highlights An expanding margin profile, EBITDA/sales, % 17.5 18.6 Strong positions in all key segments where the business operates 11.5 A transformed business
Slide 13: A multi-year transformation to build 3 strong divisions
A multi-year transformation to build 3 strong divisions Boral’s divisions are focused on execution of strategy after a period of transformation Our objectives are clear … BORAL BORAL BORAL GROUP 1 AUSTRALIA 2 NORTH AMERICA 3 USG BORAL 4 Maximise returns from Execute plans and deliver Fully extract v
Slide 14: Boral is a great business
Boral is a great business Each of Boral’s divisions have attractive performance and growth attributes, and should be considered relative to the markets in which they operate Highlights Boral offers a portfolio of businesses with diverse building and construction materials end markets and geographi
Slide 15: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker Boral Roofing Concrete Tile – Saxony 900 Slate, White 15
Slide 16: Agenda – Boral North America
Agenda – Boral North America Business Overview Year in Review Strategic Priorities 16
Slide 17: Boral North America overview
Boral North America (“BNA”) overview A leader in fly ash and building products Overview Revenue1 by business unit – US$m Revenue1 US$1.59b Fly Ash Roofing PEOPLE2 Stone 187 Light Building Products 158 522 Windows Meridian Brick1 6,937 200 EMPLOYEES CONTRACTORS 277 SITES 367 223 42 269 OPERATING3 DIS
Slide 18: Extensive national footprint
Extensive national footprint Strong national networks in building products and fly ash Revenue1 by geography2, % 4 9 Southeast 29 Southwest 15 Northeast2 West 7 1 2 Midwest Northeast 19 24 West2 Midwest2 International 18 8 2 49 2 2 3 223 operating sites3 Southeast2 Southwest2 22 2 1 26 1 8 1 3 7 Fly
Slide 19: Safety: a key focus across the business
Safety: a key focus across the business Significant improvements in safety culture and performance Boral North America employee and contractor RIFR1 FY19 progress (per million hours worked) Comparable data FY19 RIFR of 7.6 down from 8.9 in FY18, and LTIFR MTIFR LTIFR of 0.7 versus 1.2 last year 11
Slide 20: Boral North America leadership
Boral North America leadership President & CEO David Mariner (9 years, TIP1 3) Construction Light Building Stone Roofing Windows Materials Products Victoria Sherwood Darren Schulz David Decker Keith Depew (4 years, TIP1 1) (14 years, TIP1 1) Joel Charlton (5 years, TIP1 2) (8 years, TIP1 2) (7 years
Slide 21: Agenda – Boral North America
Agenda – Boral North America Business Overview Year in Review Strategic Priorities 21
Slide 22: Boral North America strategic objectives
Boral North America strategic objectives FY19 progress Strategic objectives FY19 progress Safety incident rates improved by 15%1 1. Zero Harm Today Headwaters businesses meeting Boral standards Delivering synergies – US$32m in FY19, cumulative US$71m 2. Integrate business and deliver on delive
Slide 23: Our safety journey
Our safety journey Working to achieve zero harm today FY19 Safety Highlights Focus on safety absolutes and hazard and risk recognition Critical control gemba walks conducted by BNA CEO at lowest Safe lifting sign New emergency exit stairs performing sites Building Products – Westfield, MA Window
Slide 24: Market drivers
Market drivers New home construction lower in FY19 – other sectors moderately higher Residential1 FY19 Boral revenue by segment, % - Single family starts down 3.4% from FY18 - Affordability and labor shortage main drag on growth - Supply of homes for sale remains low -2.4% Other - Multi-family helpe
Slide 25: Boral North America: recap of FY19 results
Boral North America Recap of FY19 results – contributing 36% share of underlying revenue Boral’s FY19 11 Boral North America’s FY19 revenue by division1, % 9 29 revenue by business1, % 36 Fly Ash 52 16 Roofing Boral Australia Stone USG Boral 21 12 15 Light Building Products Boral North America Windo
Slide 26: Boral North America EBITDA
Boral North America EBITDA Synergies have supported EBITDA growth of US$55m over past 2 years, for continuing operations $67m $8m $71m $10m US$297m US$260m $10m $64m US$242m $18m $11m Volume & Weather: Operating costs: Modest market Inflation, raw growth offset by materials, labor utility closures i
Slide 27: Agenda – Boral North America
Agenda – Boral North America Business Overview Year in Review Strategic Priorities 27
Slide 28: Boral North America – strategic objectives FY20 focus
Boral North America – strategic objectives FY20 focus Strategic objectives FY20 focus Continue Zero Harm Today journey 1. Zero Harm Today Continue to execute on synergy opportunities targeting ~US$20m in FY20 2. Deliver on synergies and manage our Execute continuous improvement and performance
Slide 29: Boral North America - synergies
Boral North America - synergies Acquisition synergies of US$32m were ahead of our FY2019 US$25m target Four-year synergy target FY2019 synergies by business1 ~$115m is US$115m ~$24m US$m Light Building Cross selling & Distribution Products ~$20m Roofing Procurement $4.5m $32m $71m $11.0m Expect $6.4
Slide 30: Boral North America is an attractive business
Boral North America is an attractive business With opportunities and strategies for further growth With a growing revenue profile (US$m) 1,539 1,592 › Aiming to grow our top line by building and maintaining 751 823 leading positions in all key segments across our 622 695 businesses › Targeting reven
Slide 31: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker Fly Ash facility in Austin, TX 31
Slide 32: Agenda – Fly ash
Agenda – Fly ash Business Overview Industry Overview Year in Review & Strategic Update Fly Ash facility in Austin, TX 32
Slide 33: Business overview
Business overview Boral is the only national fly ash marketer with a full service platform Snapshot of Boral’s position Fly ash sales by segment2 FY19 revenue of ~US$522m Fly ash sales of ~7m short tons1 in FY19 – predominantly to ready mix concrete industry New Residential Infrastructure / Na
Slide 34: Business overview: our footprint
Business overview: our footprint National footprint with strong infrastructure and full service offering Contracts and services Boral’s presence across the US Marketing/supply products comprise 70 -80% of revenue 6 NORTHEAST 1 – Fly ash marketing and site service 1 2 MIDWEST contracts with utiliti
Slide 35: Connect the utility to end user
Business model Boral is the link between the utilities and the ready mix concrete industry Boral’s Fly Ash business model 1 Utility Connect the utility to end user Utilities motivated by production Boral has relationships with utilities and end users as we costs & demand connect fly ash resource
Slide 36: Business overview: Our value proposition
Business overview: Our value proposition One stop shop, solutions provider for utilities and our end users Value to utilities Value to end users Historically, material was a waste stream and cost burden ~20 years ago: Optional material, cost savings versus cement Marketers transformed the annu
Slide 37: Agenda – Fly ash
Agenda – Fly ash Business Overview Industry Overview Year in Review & Strategic Update Fly Ash facility in Austin, TX 37
Slide 38: Industry overview: Ample saleable ash despite closures
Industry overview: Ample saleable ash despite closures Additional 1 billion tons1 of fly ash currently in landfills and growing 2017 American Coal Ash Association volumes2 Note: 2018 report available Nov ‘19 Ready mix concrete ~14m tons Fly ash used Fly ash ~24m tons Other applications: produced • B
Slide 39: Industry overview: Coal remains a long term power source
Industry overview: Coal remains a long term power source Declines from retirements expected to slow in future Electricity production1 50 Quadrillion BTU’s 45 Natural Gas 40 35 Coal will continue to be major part of energy production 30 25 Crude Oil 20 15 Renewables Coal 10 Nuclear Hydro 5 0 2017 201
Slide 40: Industry overview: EIA announced utility closures
Industry overview: EIA announced utility closures1 The impact of announced utility closures is declining Plant closures – total ash production1, m tons EIA announced closures2 , number of plants 2.8 Non-Boral closures 15 Non-Boral closures Boral closures 2.2 Boral closures 1.8 10 9 8 9 1.5 1.3 1.4 4
Slide 41: Construction driving fly ash volume
Construction driving fly ash volume Ready mix demand expected to grow ~4% during FY20 Ready mix: Infrastructure (millions of cubic yards)1 Fly ash demand underpinned by ready mix 250 demand, substitution rates and growth in 218 210 non-traditional products 198 189 188 187 186 186 180 174 171 200 1
Slide 42: Industry pricing dynamics
Industry pricing dynamics Boral pricing up 11% in FY19, driven by high demand and tightening supply Pricing relationship Regional overview 2.9 160% 2.7 Cement1 140% MIDWEST Pricing; indexed to 2.5 Jun 2005 NORTHEAST 120% 2.3 Pricing Above average Above average, driven relationship 100% WEST pricing
Slide 43: Industry overview: Competitive landscape
Industry overview: Competitive landscape National and local operators serve the market and have different areas of focus Examples of competitors1 • Midwest and Texas • Complements cement manufacturing with downstream outlet LafargeHolcim • 10 fly ash locations, weighted towards Texas Waste • Waste m
Slide 44: Industry overview: Regulatory environment
Industry overview: Regulatory environment Changes in regulatory environment underpin opportunities Regulatory milestones Industry update 2008 – Kingston coal ash spill occurs Regulatory activity at the Federal and state level will continue to run its course 2009 – EPA initiates formal rulemaki
Slide 45: Agenda – Fly ash
Agenda – Fly ash Business Overview Industry Overview Year in Review & Strategic Update Fly Ash facility in Austin, TX 45
Slide 46: Fly ash strategic priorities
Fly ash strategic priorities Integrating the businesses while growing our supply Strategic objectives FY19 progress Safety incidents down ~55%1 from FY18; 1. Zero Harm Today RIFR of 1.9 Expanded supply through new sources coming 2. Expand marketable supply through storage, on stream, better util
Slide 47: Year in review
Year in review Earnings impacted by completion of two large profitable site services projects FY19 Revenue $522m (steady) • Volume decline offset by price increases Fly Ash sales $405m (7%) • Site services impacted by completion of Site Services $117m (19%) Barry & Gaston projects EBITDA on PY Fly A
Slide 48: Year in review: Ash volumes
Year in review: Ash volumes New contracts and network utilization largely offset impact of closed plants Fly ash volumes – FY18 to FY19 FY19 Activity m tons Plant closures in FY18 and FY19 impacted available ash Abnormal weather patterns, including flooding, impacted the Midwest and West regions
Slide 49: Site services work normalized in FY19
Site services work normalized in FY19 Offering utilities a wide range of civil, design, and engineering services 28% 22% 22% Two major multi year projects concluded in FY19 % of revenue ̶ Site Services ~20% of total Fly Ash revenues without major project work FY17 FY18 FY19 Services provided inc
Slide 50: Industry closures impacted Boral in FY19
Industry closures impacted Boral in FY19 Several closures were non-Boral sites, others had limited sales impact Industry Supply: Site Closures1 Boral Supply: Site Closures1 MIDWEST MIDWEST NORTHEAST NORTHEAST 1 1 WEST WEST 1 1 2 1 2 Yorktown 1 2 SOUTH CENTRAL SOUTH CENTRAL 1 SOUTHEAST SOUTHEAST 1 Bo
Slide 51: Ash supply – current status
Ash supply – current status Focus on good quality ash being landfilled has helped to hold volumes steady in FY19 Current Supply FY2019 volumes Domestic contracted tons 15.2m 15.2m down from FY18 due to utility 0.4m tons tons 14.7m plant closures tons 0.1m Non-saleable Imports minimal in FY19; ~4
Slide 52: Boral's fly ash supply opportunities
Boral’s fly ash supply opportunities Progress made in FY2019 to grow supply of fly ash by ~1.5-2.0 million tons by 2021 Capturing more from Growing total current contracts contracted volumes Expanded storage & New domestic Harvesting ash from Grinding & blending, network optimisation contracts landf
Slide 53: Expanded storage and strengthened supply chain capability
Expanded storage and strengthened supply chain capability In FY19, expanded storage by ~70k tons Expanded storage Progress 600k tons of storage in network – 580 tons fixed and 20 tons floating US$21m of capital invested in storage in FY19 Midwest Northeast Expanded rail car fleet by ~200 cars
Slide 54: New domestic contracts
New domestic contracts In FY19, Boral expanded supply by +300k tons through new domestic contracts Progress Two sites in Alabama added in FY19 post wet to dry conversion project Northeast New contract in Florida commenced in FY19 New sources contributed ~200k tons in FY19; Midwest anticipate g
Slide 55: Harvesting ash from landfills
Harvesting ash from landfills Immediately adding supply capacity in Pennsylvania Dry impoundment Opportunities Impoundments are landfills where fly ash has been Further capacity utilization of Montour facility to increase disposed of in dry form sales Process includes removal of landfill mater
Slide 56: Harvesting ash from wet ponds
Harvesting ash from wet ponds Short-term and medium-term horizons Ponded material Opportunities Ponds are landfills where material has been disposed of ~1 billion tons estimated in ponds and landfills1 in wet form In discussion with multiple utilities; proposals underway Opportunity to harve
Slide 57: Grinding & blending
Grinding & blending Extending supply with non-traditional materials via grinding and blending Grinding Blending Actively exploring several opportunities to grind non- Options to improve quality or extend supply with non- traditional materials to supplement fly ash supply in traditional cementiti
Slide 58: Imports
Imports Extending supply with non-domestic utility based sources Imports Commenced in FY19 Sourced initially from Mexico: modest volumes currently Signed exclusive US marketing rights agreements for 2 plants Further growth from Mexico requires infrastructure investment by utility: ~400k tons
Slide 59: Technology
Technology Expanded suite of fly ash technologies to support growth and industry leadership Process Technologies Product Technologies RestoreAir® Performance Pozzolan (P2) Harvested ash processing and beneficiating Ground Bottom Ash Grinding and Blending Sintered Light Weight Aggregate
Slide 60: Providing other non-traditional services
Providing other non-traditional services Offering utilities services beyond traditional collection and marketing Synthetic materials LA Ash Leaders in synthetic gypsum dewatering equipment design, Collects, processes, and markets circulating fluidized bed processing, and sales management (CFB) b
Slide 61: Significant opportunity to grow volumes over time
Significant opportunity to grow volumes over time Boral is well-placed to capture additional volumes, with timing difficult to control Additional volume opportunities (000’s tons) Network optimization (and storage) - Minimize ash going to landfill 500+ - Utilize national supply chain Domestic contra
Slide 62: Targeting to increase fly ash supply
Targeting to increase fly ash supply Making progress to deliver targeted ~1.5m to ~2.0m tons over next 2 years Ash outlook (millions of tons) Business outlook Price: Continued opportunity to narrow gap with cement based on value proposition 7.6m Demand: Underpinned by ready mix concrete and 7.1m
Slide 63: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker 63
Slide 64: Agenda – Stone
Agenda – Stone Industry Overview Business Overview Year in Review and Strategic Priorities 64
Slide 65: Cladding and decorative stone market
Cladding and decorative stone market Exterior cladding applications are the primary driver of stone demand NA cladding material1 Decorative stone characteristics 7.8b square feet Exterior cladding applications are the single Fiber Cement largest demand driver for stone products Stone 29% 20% Stucc
Slide 66: Demand trends
Demand trends The segment has grown – CAGR 3.6% since 2013 Decorative Stone – segment trends Decorative Stone demand1 (in million square feet installed coverage area) Growth in commercial, interior applications and outdoor living is outpacing growth in residential cladding applications 3.6% CAGR f
Slide 67: Market segmentation – decorative stone
Market segmentation – decorative stone Cladding still drives demand, interior accents and outdoor living growing Interior finishes and outdoor uses growing … Increased use in light commercial and R&R applications… • Primary end use for stone Exterior • Both residential and Residential • Secondary cl
Slide 68: Competitive Landscape – Manufactured stone
Competitive Landscape – Manufactured stone Comprised of national, regional and local players Participants1 Description Manufacturers/Brands Share1 (% manufactured • Multiple plant operations stone) • Complete product lines National National 4 • National scope with multiple channels to ~45% market in
Slide 69: Agenda – Stone
Agenda – Stone Industry Overview Business Overview Year in Review and Strategic Priorities 69
Slide 70: Business Overview
Business Overview Largest manufacturer of stone products in North America Snapshot of Boral’s capabilities Sales by Segment2 FY19 revenue of US$269m1 Repair & Remodel 6 manufacturing plants to serve our customers in the US and Canada and international markets 28% Single family National distrib
Slide 71: Business Overview - Our footprint
Business Overview - Our footprint Plant network serving customers in all 50 US states and Canada CANADA Everett, Tacoma, Washington Washington Greencastle, Pennsylvania Mt Eaton, Ohio Napa, California Holmesville Ohio Chester, Perris South Carolina Boral Locations Rosarita, Mold Plant (2) Mexico Sto
Slide 72: Brand identity
Brand identity Boral brands cover the entire spectrum of segments and applications Brand market participation • BRAND Product offering to address ARCHITECTURE full spectrum of applications Segments • Premium lines account for BRANDHouse78% of total ARCHITECTURE of Brands sales Strategy New Residenti
Slide 73: Product classification
Product classification Today’s portfolio of products satisfies the following three categories Traditional / classic Contemporary / modern Mechanically fastened Timeless shapes that reflect look Trendy, dimensional stone shapes Panelized stone products for easy and feel of natural stone with mo
Slide 74: Agenda – Stone
Agenda – Stone Industry Overview Business Overview Year in Review and Strategic Priorities 74
Slide 75: FY19 Review
FY19 Review Solid performance in the face of market headwinds Product Category Growth1 Commentary Revenue breakdown by type Premium • Volumes lower on soft housing Brand starts in US and Canada Value extensions • Share stabilized 2% Mid-tier 10% Mid-tier 10% • Housing starts off 2% in Midwest Value
Slide 76: Stone strategic objectives
Stone strategic objectives FY19 progress on sales stabilization and network optimization Strategic objectives FY19 progress Improved safety indicators and reduced injury 1. Zero Harm Today severity 2. Leverage brand portfolio and align sales Stabilized share and re-energized key customer efforts
Slide 77: Recapture share: Commercial integration
Recapture share: Commercial integration A focus on the customer to gain back share loss Background FY19 progress Merger of industry leaders – Eldorado and All brands under one name - Boral - now established Cultured Stone – with recognized offerings through the value chain Large emphasis on cl
Slide 78: Grow sales: National accounts
Grow sales: National accounts Leveraging scale to capture share Background FY19 progress Post acquisition, combined 2 national accounts Secured several national builder accounts – teams to focus on maintaining/converting national e.g. Toll Brothers builder and commercial business Secured natio
Slide 79: Grow sales: Outdoor living
Grow sales: Outdoor living Leveraging Boral innovation capability across product suite Background FY19 progress Line of products developed by Eldorado targeting Partnered with Boral Innovation Factory to support outdoor living trends new product development efforts High end products including
Slide 80: Deliver synergies: Optimizing our Eastern operations
Deliver synergies: Optimizing our Eastern operations Plant upgrades to improve performance and capacity Background FY19 progress Well positioned to service large Northeast, Greencastle – completed upgrade and Southeast, and European regions commissioned plant – October 2018 Chester plant (Cult
Slide 81: StoneCraft upgrade
StoneCraft upgrade Transformed manufacturing to lower costs Background FY19 progress StoneCraft is a value tier product targeting Constructed best practice, low cost manufacturing production builders platform to drive cost saving synergies Production in former Headwaters plant in Reduced dir
Slide 82: Deliver synergies - optimizing our Western operations
Deliver synergies - optimizing our Western operations Consolidated production in two low cost, high capacity plants Background FY19 progress Rosarita, Mexico (legacy Eldorado) is a large, low cost plant Rosarita – plant upgrades to improve costs and ready plant for expansion Napa (legacy Cultu
Slide 83: Royal City closure
Royal City closure Significant cost savings realized with transfer of production Background FY19 progress Royal City – small, high-cost plant producing Closed Royal City and transferred production Eldorado products to Rosarita in November 2018 Rosarita, MX Highly successful closure – no inju
Slide 84: Stone strategic objectives
Stone strategic objectives FY20 focus on sales growth and network optimization Strategic objectives FY20 focus areas 1. Zero Harm Today Continue to improve safety incident rates with focus on behavior 2. Leverage brand portfolio and align sales Refine our customer focus beyond distribution effor
Slide 85: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker 85
Slide 86: Roofing strategic objectives
Roofing strategic objectives FY19 – a year of significant progress Strategic objectives FY19 progress 1. Zero Harm Today - Safety incidents up 4%1 with improvement in H2 Completed metal plant performance 2. Deliver synergies through plant improvement and cost improvements optimization and operatio
Slide 87: FY19 overview
FY19 overview Strong results on increased sales and operational improvements Product Category Growth1 Commentary Revenue breakdown by product category • Volume up 15% and price up 5% for concrete Tile Metal Composite • Significant growth from Florida integration 7% 5% • Significant plant turnaround
Slide 88: Expand product offerings: Boral Steel
Expand product offerings: Boral Steel Turnaround results from FY19 “fix production” initiative Background FY19 progress 3 legacy HW businesses rolled up – consolidation Consolidated into 1 product line was underway at closing Implemented LEAN manufacturing principles Plant was in poor condit
Slide 89: Deliver synergies: Florida tile
Deliver synergies: Florida tile Growth supported by integration and optimization of plant network Background FY19 progress Acquired remaining minority interest in Continued to upgrade plant performance Entegra Rationalized SKU’s / profiles FY19 focus on safety Harmonized product lines En
Slide 90: Roofing strategic objectives
Roofing strategic objectives FY20 focus on Florida optimization, steel sales growth and cross-selling Strategic objectives FY20 focus areas 1. Zero Harm Today Continue to drive down safety incidents with emphasis on plants operating 24/7 Continue to deliver synergies with key focus on 2. Deliver
Slide 91: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker 91
Slide 92: Light Building Products strategic objectives
Light Building Products strategic objectives FY19 progress on portfolio alignment and high growth products Strategic objectives FY19 progress 1. Zero Harm Today Zero LTIs; safety incidents down 22%1 2. Deliver synergies and execute on Delivered ~US$4.5m in synergies continuous improvement projec
Slide 93: Light Building Products: portfolio overview
Light Building Products: portfolio overview The portfolio consists of three main product categories Category Description Primary material Brands Light building products Vinyl Siding Vinyl Grayne™ Siding and PVC Trim Polyvinyl chloride (PVC) Kleer® Trim Invest in high Poly Ash Siding / Trim Polyureth
Slide 94: FY19 overview
FY19 overview EBITDA higher and revenue steady in FY19 despite housing headwinds Product Category Growth1 Commentary Revenue breakdown by type Specialty, High growth, high return Siding & Trim Other product groups with strong brand equity 12% Shutters and Accessories Shutters and Slower housing acti
Slide 95: Grow lightweight composite products
Grow lightweight composite products Focused on accelerating siding and trim products through the channel Background FY19 progress Strategy to invest in earlier life cycle, high growth Versetta®: launched Northern Ash, accessories & products fasteners Utilize full range of combined distribution
Slide 96: Maintain established products
Maintain established products “Nurture” shutters, accessories and tools portfolio Background FY19 progress Nurture stage of life cycle - mature and stable Vantage: Awarded Lowe’s east coast businesses that provide attractive cash flows business in FY18, now working to streamline Maximize opera
Slide 97: Deliver synergies
Deliver synergies Addressing cost escalations through regrind1 program and strategic sourcing Background FY19 progress Highest input cost is materials Leveraged material PVC purchases across FY18 - Hurricane Harvey drove polymer division supply disruptions and cost escalations Secured multip
Slide 98: Light Building Products strategic objectives
Light Building Products strategic objectives FY20 focus on growth, margin and operational initiatives Strategic objectives FY20 focus areas 1. Zero Harm Today Build on strong FY19 safety performance Continue to deliver synergies (targeting 2. Deliver synergies and execute on ~US$15m in year 4) c
Slide 99: Agenda
Agenda Introduction Mike Kane Boral North America David Mariner Fly Ash Keith Depew Stone Victoria Sherwood Roofing Darren Schulz Light Building Products Joel Charlton Windows David Decker 99
Slide 100: Windows strategic priorities
Windows strategic priorities Progress on streamlining operations and increasing capacity Strategic Objectives FY19 progress 1. Zero Harm Today Implementing behavioral safety program - 30% reduction in incident rate1 Lean initiatives and investments in Texas 2. Execute performance improvement pla
Slide 101: FY19 overview
FY19 overview Revenue growth of 5% in FY19 Product category Growth1 Commentary FY19 Revenue – end use segmentation • New customers in FY19 generated $15m of new sales Residential – • Introduced side load window Replacement single family targeting entry level housing • Leveraging Boral brand Multi-fa
Slide 102: Performance improvement
Performance improvement Progress on driving down costs and increasing capacity Background FY19 progress Highly manual manufacturing processes Overhauled hiring practices and compensation – reduced turnover, labor costs and reliance on temp employees Tight labor market results in high turnover
Slide 103: Grow sales: Houston expansion
Grow sales: Houston expansion Expanding geographical presence and addressing capacity constraints Background FY19 Progress Presence in Houston and South Texas Secured building location and commenced limited purchasing equipment for Houston plant Opportunity to deliver direct to jobsite in Pu
Slide 104: Windows strategic priorities
Windows strategic priorities FY20 - Capacity expansion to meet customer demand Strategic Objectives FY20 focus areas 1. Zero Harm Today Implement Dupont STOP behavioral safety training across business Continuous improvement of manufacturing 2. Execute performance improvement operations programs
Slide 105: Appendix
BORAL Appendix
Slide 106: Macroeconomic market overview
1.0 Macroeconomic market overview 106
Slide 107: Housing construction markets continue to recover
Housing construction markets continue to recover Single family impacted by labor shortage and affordability Single and multi family housing starts1 (‘000) Single Family -2.4% Mix1 (FY2019 % of Total) On pace with 71% long-term average Multi-family 1,253 1,223 1,201 Single family 1,149 369 387 370 1,
Slide 108: Non-residential
Non-residential Warehousing, office, and education segments drove construction in FY19 Non-residential construction1 FY19 breakdown by non-residential segment2, % (million square foot area) 1,446 +2.1% 31 9 Warehousing 34 Education 1,061 1,064 1,087 10 Office 1,023 1,002 953 Retail 864 Healthcare 9
Slide 109: Repair and remodel (R&R)
Repair and remodel (R&R) Home improvement increasing, but at a slower pace than recent years Building products retail sales1 (Nominal US$b) +2.4% 373 382 357 343 325 324 312 308 291 281 278 257 262 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1. Source: Moody’s retail sales of bu
Slide 110: Infrastructure
Infrastructure Highways continue to be the main driver in the infrastructure segment Infrastructure activity, ready mix demand1 Infrastructure cement consumption2, % (cubic yards, millions) +5.8% 4% 6% 210 191 198 8% Highways 188 187 174 180 171 Public utilities 5% Oil and gas 3% Conservation 10% 64
Slide 111: Boral North America's markets
Boral North America’s markets Outlook is for moderate growth across all segments USA new residential: 48% of BNA revenue1 USA repair & remodel: 27% of BNA revenue2 2,016 2,036 Multi-family 1,945 395 1,729 382 1,646 Single-family 373 1,571 1,546 357 343 336 325 324 312 308 308 1,270 1,253 1,223 1,201
Slide 112: Housing starts fell across all regions in FY19
Housing starts fell across all regions in FY19 Forecasters1 expect modest improvement in single family activity in FY20 Northeast1,2 housing starts FY19 Revenue by geography2,3 Multi Family Southeast1,2 housing starts ‘000 International ‘000 Single Family Northeast 250 4% 1,000 Southeast 9% 200 800
Slide 113: Headwaters synergies overview
2.0 Headwaters synergies overview 113
Slide 114: Headwaters acquisition synergies
Headwaters acquisition synergies Businesses continued to deliver synergies in line with initial assumptions Delivered in Cumulative Updated target Synergy drivers by business, US$ FY2019 Delivered within 4 years, FY2019 pa Corporate – incl. executive headcount, public company costs, procurement $2.1
Slide 115: Headwaters acquisition synergies
Headwaters acquisition synergies Businesses continued to deliver synergies in line with initial assumptions Delivered in Cumulative Updated target Synergy drivers by business, US$ FY2019 Delivered within 4 years, FY2019 pa Roofing Sub-total $11.0m $18.9m >$30m Procurement Cross-selling portfolio
Slide 116: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 19 September 2019. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic
Slide 117: Boral Limited www.boral.com.au
Boral Limited www.boral.com.au