James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (December 2014)
39 slides from James Hardie Industries's investor presentation, Dec 8, 2014
Slide 1: Investor Presentation December 2014
For personal use only INVESTOR PRESENTATION DECEMBER 2014
Slide 2: Disclaimer
DISCLAIMER For personal use only 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
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 Management Presentation, James Hardie may present financial measures, sales volume terms, financ
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$1.7+b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,140 employees • Market cap US$4.8b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 19 No
Slide 7: Group Overview
GROUP OVERVIEW For personal use only Three Months and Half Year ended 30 September Q2'15 Q2'14 Change 1H'15 1H'14 Change Adjusted EBIT (US$ millions) 85.1 72.7 17% 156.3 140.2 11% Adjusted EBIT Margin % 19.3 18.5 0.8 pts 18.2 18.3 (0.1) pts Adjusted Net Operating Profit 65.4 56.3 16% 115.5 108.3 7%
Slide 8: Q2'15 & 1H'15 - Summary and Key Themes
Q2’15 & 1H’15 - SUMMARY AND KEY THEMES For personal use only • Group net sales increased 12% for both the quarter and half year compared to last year • Group adjusted net operating profit increased 16% for the second quarter 2015 and 7% for the half year 2015 compared to pcp1 • US housing market rem
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 24% 26% Geographic Mix¹ USA and Europe USA and Europe 76% 74% 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$33.1m spent on Research & Development in FY14 • US$363.1m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 11: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE For personal use only Fiber cement is more durable than wood and engineered wood, looks and performs better than vinyl, and is more cost effective and quicker to build with than brick Fiber Cement Vinyl Engineered Wood Fire resistant ? ? Hail resistant ? ?
Slide 12: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS For personal use only Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 12
Slide 13: USA and Europe Fiber Cement Segment
USA AND EUROPE FIBER CEMENT SEGMENT For personal use only USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,100 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC TX 2Q FY
Slide 14: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Market Share North America Wood-Look Market Size 4.7BSF Fiber Cement Share: 17% Fiber Cement Share 25% Source: Internal estimates based on NAHB product usage data adjusted for Source: Internal estimates bas
Slide 15: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only USA Fiber Cement Top Line Growth Volume (mmsf) / Starts (000s Units) Revenue (US$M ) '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 JH Volume Housing Starts JH Revenue Rolling 12 month average of seasonally adjusted esti
Slide 16: 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 679 670 US$ per MSF 635 630 590 550 FY10 FY11 FY12 FY13 FY14 1H'15 PAGE 16
Slide 17: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin1 80 35 70 30 60 25 EBIT Margin 50 EBIT US$M 20 40 15 30 10 20 10 5 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 EBIT EBIT Margin 1 Excludes asset impairment charges of US$14.3 million in 4th quarter FY12, US$5.8
Slide 18: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 985 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility 2Q FY15 2Q FY14 Net Sales US$105.0m US$93.3m EBIT US$25.7m US$22.1m EBIT Margin 24.5%
Slide 19: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS For personal use only Asia Pacific Fiber Cement Segment Average Net Sales Price Quarterly EBIT and EBIT Margin1 1000 30 30 A$959 25 25 960 A$ per MSF 20 20 EBIT US$M EBIT 920 15 15 10 10 880 5 5 840 0 0 FY10 FY11 FY12 FY13 FY14 Q1 FY15 Q2 FY15 FY10 FY11 FY12 F
Slide 20: Targeting 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 20
Slide 21: 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 ~$500 million of bank facilities, 37% liquidity as of operating cash
Slide 22: FY2015 Outlook and Guidance
FY2015 OUTLOOK AND GUIDANCE USA and Europe Fiber Cement Outlook For personal use only • The US housing market recovery remains uncertain in the short-term, however, our view remains unchanged on the medium and longer-term outlook • Due to the slower then expected recovery, we will defer the planned
Slide 23: Appendix
For personal use only APPENDIX
Slide 24: JHX Key Ratios
JHX KEY RATIOS For personal use only Half Year ended 30 September 1H'15 1H'14 1H'13 EPS (Diluted)1 (US Cents) 26c 24c 19c EBIT/ Sales (EBIT margin)2 28.1% 18.3% 16.2% Gearing Ratio 1 21.5% (9.5)% (6.4)% Net Interest Expense Cover2 96.3x 66.8x 54.7x Net Interest Paid Cover2 200.7x 77.9x 109.3x Net De
Slide 25: USA and Europe Fiber Cement – Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY10 FY11 FY12 FY13 FY14 Net Sales 828 814 862 951 1,128 US$m Sales Volume 1,304 1,248 1,332 1,489 1,697 mmsf Average Price 632 648 642 626 652 US$ per msf ² EBIT US$m¹ 209 160 163 163 237 EBIT Margin %¹ 25 20 19 17 21 1Excl
Slide 26: Asia Pacific Fiber Cement – Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY10 FY11 FY12 FY13 FY14 Net Sales 297 353 376 370 366 US$m Sales Volume 390 408 392 394 417 mmsf Average Price 886 906 906 901 930 A$ per msf ² EBIT US$m¹ 59 79 86 75 83 EBIT Margin %¹ 20 23 23 20 23 1Excludes New Zealand pro
Slide 27: Results for the 2nd Quarter
RESULTS FOR THE 2nd QUARTER For personal use only Three Months ended 30 September Summary US$ Millions Q2 '15 Q2 '14 % Change Net sales increased 12%, favorably impacted by: Net sales 440.4 392.0 12 • Higher sales volumes; and Gross profit 150.9 133.1 13 • Higher average net sales prices in local cu
Slide 28: Gross Profit - Group
GROSS PROFIT - GROUP For personal use only 160.0 34.3 35.0 Gross Margin (US$M) 140.0 Gross Margin (% ) 33.3 34.0 150.9 120.0 33.0 100.0 111.3 32.0 80.0 31.0 60.0 30.0 40.0 29.0 20.0 28.0 - 27.0 Q2 FY13 Q2 FY14 Q2 FY15 • Gross profit has remained strong throughout the past three years • Price has imp
Slide 29: Income Tax
INCOME TAX For personal use only • 23.1% estimated adjusted effective tax rate (ETR) Three Months and Half Year ended 30 September Q2’15 Q2’14 1H’15 1H’14 • Adjusted income tax expense and adjusted ETR increased Operating profit before taxes 144.7 67.5 190.3 224.6 Asbestos: due to changes in geograp
Slide 30: Cashflow
CASHFLOW For personal use only (US$ Millions) 1H'15 1H'14 Change (%) EBIT 196.0 224.7 (13) • First half cash flow from operations reflect 1 1 our US$113.0 million contribution to AICF Asbestos related (42.5) (92.9) (54) Annual AICF contribution (113.0) - • Higher working capital Depreciation & Amort
Slide 31: Liquidity Profile
LIQUIDITY PROFILE For personal use only Debt Maturity Profile1 • Strong balance sheet position: $190 • $60.5 million of cash • $505 million of debt facilities $125 • 37% liquidity as of Q2’15 $100 $50 • As of Q2’15, we had net bank debt of US$319.5 $40 million compared to net cash of US$167.5 millio
Slide 32: HY FY15 Global Capex Spend and Key Projects
HY FY15 GLOBAL CAPEX SPEND AND KEY PROJECTS For personal use only Project Capital Budget Progress during 1H'15 a Key engineering work on track Plant City, Florida - 4th sheet machine and ancillary facilities US$65.0 million a Expected to complete construction FY'16 a Key engineering work on track Cl
Slide 33: USA and Europe Fiber Cement – Plant Capacity
USA AND EUROPE FIBER CEMENT – PLANT CAPACITY For personal use only Plant Capacity Flat Sheet Plant Capacity (mmsf) Plants operating Cleburne, Texas 466 Additional capacity by mid calendar year 2015 200 Peru, Illinois 560 Plant City, Florida 300 Additional capacity by mid calendar year 2015 300 Pulas
Slide 34: US Input Costs
US INPUT COSTS For personal use only Quarterly US Input Costs Discussion: • Input costs are up significantly over the prior year • The price of NBSK pulp is at a three-year peak • The cost of gas for industrial users has nearly doubled since 2013 • We are engaged in effective sourcing strategies to
Slide 35: Asbestos Fund – Proforma (unaudited)
ASBESTOS FUND – PROFORMA (unaudited) For personal use only Claims Data A$ millions AICF cash and investments - 31 March 2014 65.5 • For the quarter and half year ended 30 September 2014, we Contribution to AFFA by James Hardie 119.9 note the following related to asbestos claims: Insurance recoveries
Slide 36: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only 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 Consolidated Fin
Slide 37: 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 Condensed C
Slide 38: 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 define
Slide 39: For personal use only
For personal use only INVESTOR PRESENTATION DECEMBER 2014
James Hardie Industries — Investor Presentation (December 2014) on 6ix