James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (July 2015)
48 slides from James Hardie Industries's investor presentation, Jul 3, 2015
Slide 1: Investor Presentation July 2015
For personal use only INVESTOR PRESENTATION JULY 2015
Slide 2: Disclaimer
DISCLAIMER For personal use only FORWARD-LOOKING STATEMENTS This Investor Presentation contains forward-looking statements. James Hardie Industries plc (the “company”) may from time to time make forward-looking statements in its periodic reports filed with or furnished to the Securities and Exchange
Slide 3: Disclaimer (continued)
DISCLAIMER (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 similar expressions are intended to id
Slide 4: Agenda
AGENDA For personal use only • Global Strategy and Business Overview • USA & Europe Fiber Cement • Asia Pacific Fiber Cement • Capital Management Framework • Group Outlook and Guidance • Appendix In this Investor Presentation, the company may present financial measures, sales volume terms, financial
Slide 5: Global Strategy: Industry Leadership and Profitable Growth
GLOBAL STRATEGY For personal use only Industry Leadership and Profitable Growth • Introduce differentiated products to deliver a sustainable competitive advantage • Aggressively grow demand for our products in targeted market segments Australia PAGE 5
Slide 6: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.66b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,178 employees • Market cap US$6.3b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 24 Ju
Slide 7: Group Overview
For personal use only GROUP OVERVIEW PAGE 7
Slide 8: FY15 and Q4 Results - Key Themes
FY15 AND Q4 RESULTS - KEY THEMES For personal use only • Group net sales increased 9% and 11% for the quarter and full year, respectively, compared to pcp1 • Group adjusted net operating profit increased US$12.0 million to US$57.3 million for the quarter and US$24.2 million to US$221.4 million for t
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT USA & Europe Asia Pacific For personal use only DUBLIN JHX Manufacturing Operations JHX Manufacturing Operations – Production Suspended JHX Sales Office Net Sales EBIT ² Asia Pacific Asia Pacific 23% 24% Geographic Mix¹ USA and Europe USA and Europe 77% 76% 1 All percent
Slide 10: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$31.7m spent on Research & Development in FY15 • US$394.8m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 11: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE For personal use only Fiber cement is more durable than wood and engineered wood, looks and performs better than vinyl, and is more cost effective and quicker to build with than brick Fiber Cement Vinyl Engineered Wood Fire resistant ? ? Hail resistant ? ?
Slide 12: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS For personal use only Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 12
Slide 13: USA and Europe Fiber Cement Segment
USA AND EUROPE FIBER CEMENT SEGMENT For personal use only USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,267 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC TX FY15
Slide 14: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only USA Fiber Cement Top Line Growth 3,000 $1,300 2,800 $1,200 JH Volume (mmsf), Starts (000s Units) 2,600 $1,100 2,400 $1,000 2,200 $900 Revenue (US$M) 2,000 1,800 $800 1,600 $700 1,400 $600 1,200 $500 1,000 $400 800 $300 600 400 $200 2
Slide 15: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only USA and Europe Fiber Cement 710 Average Net Sales Price 675 670 652 648 US$ per MSF 642 632 626 630 609 597 588 590 558 550 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Executing on pricing strategy … ~4% increase realized in FY15
Slide 16: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin1 90 35 80 30 70 25 60 EBIT Margin EBIT US$M 50 20 40 15 30 10 20 5 10 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 EBIT EBIT Margin EBIT Margins remain within our 20% to 25% target range 1 Excludes asset impairm
Slide 17: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 941 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility FY15 FY14 Net Sales A$435m A$392m EBIT A$103m A$89m EBIT Margin (A$) 23.6% 22.6% EBIT
Slide 18: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS For personal use only Asia Pacific Fiber Cement Segment 1 Average Net Sales Price 30 Quarterly EBIT and EBIT Margin 30 960 A$942 25 25 EBIT Margin 940 20 20 EBIT US$M 920 A$ per MSF 15 15 900 880 10 10 860 5 5 840 0 0 FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY
Slide 19: Targetting the Right Product into the Right Market
TARGETTING THE RIGHT PRODUCT INTO THE RIGHT MARKET For personal use only Asia Pacific Core Markets Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 19
Slide 20: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH 1 2 3 For personal use only Strong Financial Disciplined Capital Liquidity and Management Allocation Funding Investing in R&D and capacity Strong margins and expansion to support organic ~$590 million of bank facilities, 64% liquidity as of operating cash
Slide 21: FY16 Key Planning Assumptions
FY16 KEY PLANNING ASSUMPTIONS For personal use only US & Europe Fiber Cement • Fiscal year 2016 addressable markets broadly in line with fiscal year 2015 growth rates, with some improvement in the US new construction compared to fiscal year 2015 1 • McGraw Hill Construction US Residential Starts for
Slide 22: Appendix
For personal use only APPENDIX
Slide 23: Key Ratios
KEY RATIOS For personal use only Full Year Ended 31 March 2015 2014 2013 EPS (Diluted)1 (US Cents) 50c 44c 32c Dividend Paid per share 88c 45c 43c Return on Shareholders’ Funds 1 14.6% 48.1% 34.9% Return on Capital Employed 2 28.6% 23.8% 17.2% EBIT/ Sales (Adjusted EBIT margin)2 18.3% 16.9% 13.7% Ge
Slide 24: USA and Europe Fiber Cement - Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 814 862 951 1,128 1,277 US$m Sales Volume 1,248 1,332 1,489 1,697 1,850 mmsf Average Price 648 642 626 652 675 US$ per msf ² EBIT US$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17 21 22 1Ex
Slide 25: Asia Pacific Fiber Cement - Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 353 376 370 366 380 US$m Sales Volume 408 392 394 417 456 mmsf Average Price 906 906 901 930 942 A$ per msf1 EBIT US$m2 79 86 75 83 90 EBIT Margin %2 23 23 20 23 24 1During the second quarter
Slide 26: Results for the 4th Quarter
RESULTS FOR THE 4th QUARTER For personal use only Summary Three Months Ended 31 March Net sales increased 9%, favorably impacted by: • Higher sales volumes US$ Millions Q4 '15 Q4 '14 % Change • Higher average net sales prices in local currencies in both the USA Net sales 411.3 376.4 9 and Europe and
Slide 27: Results for the 4th Quarter (continued)
RESULTS FOR THE 4th QUARTER (continued) For personal use only Summary Three Months Ended 31 March Asbestos adjustments reflects: • A US$111.3 million unfavorable movement in the underlying US$ Millions Q4 '15 Q4 '14 % Change actuarial valuation Net operating profit (loss) 27.7 (186.8) • Offset by a
Slide 28: Results - Full Year
RESULTS – FULL YEAR For personal use only Summary Full Year Ended 31 March Net sales increased 11%, favorably impacted by: US$ Millions FY15 FY14 % Change • Higher sales volumes; and • Higher average net sales prices in the USA and Europe and Asia Net sales 1,656.9 1,493.8 11 Pacific Fiber Cement se
Slide 29: Results - Full Year (continued)
RESULTS – FULL YEAR (continued) For personal use only Summary Full Year Ended 31 March Asbestos adjustments reflect: US$ Millions FY15 FY14 % Change • A US$144.7 million favorable exchange rate difference as the AUD/USD exchange rate decreased 17% compared to a 12% Net operating profit 291.3 99.5 de
Slide 30: Gross Profit - Group
GROSS PROFIT - GROUP For personal use only 180.0 37.1% 38.0 Gross Margin (US$M) 160.0 37.0 Gross Margin (% ) $152.5 36.0 140.0 35.0 120.0 34.0 100.0 $101.8 33.0 80.0 31.2% 32.0 60.0 31.0 40.0 30.0 20.0 29.0 - 28.0 Q4 FY13 Q4 FY14 Q4 FY15 • Gross profit margins remain strong, expanding above primary
Slide 31: Income Tax
INCOME TAX For personal use only Three Months and Full Year Ended 31 March • 23.7% adjusted effective tax rate (ETR) for the year • Adjusted income tax expense and adjusted ETR increased Q4’15 Q4’14 FY15 FY14 due to a higher proportion of taxable earnings in Operating profit (loss) before taxes 7.6
Slide 32: Cashflow
CASHFLOW For personal use only (US$ Millions) FY 2015 FY 2014 Change (%) • Net income increased US$191.8 million compared to prior year Net Income 291.3 99.5 1 1 Asbestos related (33.0) 194.1 • Cash flow from operations includes US$113.0 Annual AICF contribution (113.0) - million contribution to AIC
Slide 33: FY15 Key Global Capex Projects
FY15 KEY GLOBAL CAPEX PROJECTS For personal use only Full Year FY15 Project Description Plant City, Florida - 4 th sheet machine and ancillary facilities US$46.4 million rd Cleburne, Texas - 3 sheet machine and ancillary facilities US$24.7 million Carole Park, Queensland - Capacity expansion project
Slide 34: Capex
CAPEX For personal use only CAPEX Spend - Full Year FY15 • Continuing to invest in capacity expansion in the US and Australia • Construction on brownfield capacity projects nearing completion: $65.8 $103.1 • Plant City, FL • Cleburne, TX • Carole Park, Australia $107.3 • Opportunistic land purchases
Slide 35: US Input Costs
US INPUT COSTS For personal use only Quarterly US Input Costs Discussion: 1,200 10 9 • Input costs have generally trended higher than Cement, Gas and Electric Prices 1,000 8 the prior year 7 800 Pulp Prices 6 • The price of NBSK pulp reached its peak during 600 5 the year, but has trended down sligh
Slide 36: Asbestos Compensation
ASBESTOS COMPENSATION For personal use only SUMMARY • Updated actuarial report completed as at 31 March 2015 • Undiscounted and uninflated central estimate increased to US$1.566 billion from US$1.547 billion • Total contributions of US$113.0 million were made to AICF during FY2015 from our FY2014 fr
Slide 37: Asbestos Fund - Pro Forma
ASBESTOS FUND – PRO FORMA For personal use only Claims Data For the quarter and full year ended 31 March 2015, we note the following related to asbestos claims: Full Year Ended 31 March FY15 FY14 % Change • Claims received during the full year were 9% 665 608 (9) above actuarial estimates and the pr
Slide 38: Asbestos Cash Movements for Full Year Ended March
ASBESTOS CASH MOVEMENTS FOR FULL YEAR ENDED 31 MARCH For personal use only A$ millions AICF cash and investments - 31 March 2014 65.5 Contribution to AFFA by James Hardie 119.9 Insurance recoveries 33.2 Loan Drawdowns 17.7 Loan Repayments (51.0) Interest income, net 1.6 Claims paid (154.3) Operating
Slide 39: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only Definitions Non-financial Terms AFFA – Amended and Restated Final Funding Agreement AICF – Asbestos Injuries Compensation Fund Ltd NBSK – Northern Bleached Soft Kraft; the company's benchmark grade of pulp Legacy New Zealand weathertightness claims (
Slide 40: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Consolidate
Slide 41: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales For personal use only 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
Slide 42: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBIT margin – Adjusted EBIT and Adjusted EBIT margin are not measures of financial performance under For personal use only US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these fin
Slide 43: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted net operating profit – Adjusted net operating profit is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than net operating profit. Management has included this financial measure to p
Slide 44: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted diluted earnings per share – Adjusted diluted earnings per share is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than diluted earnings per share. Management has included this fina
Slide 45: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted effective tax rate on earnings – Adjusted effective tax rate on earnings is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than effective tax rate. Management has included this fina
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted 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 profitabil
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted selling, general and administrative expenses – Adjusted selling, general and administrative expenses is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than selling, general and admi
Slide 48: For personal use only
For personal use only INVESTOR PRESENTATION JULY 2015
James Hardie Industries — Investor Presentation (July 2015) on 6ix