James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2017)
21 slides from James Hardie Industries's investor day presentation, Sep 14, 2017
Slide 1: External Environment & Business Fundamentals
EXTERNAL ENVIRONMENT & BUSINESS FUNDAMENTALS Matthew Marsh, EVP & CFO Exhibit 99.3
Slide 2: Agenda
PAGE 2 AGENDA • U.S. Economic Conditions • Housing Environment • North America Capacity
Slide 3: Key Economic Indicators Stable: GDP Growth
PAGE 3 KEY ECONOMIC INDICATORS STABLE GDP Growth Source: Bureau of Economic Analysis S&P Index Source: Yahoo! Finance GDP remains 2-3%. Market strong.
Slide 4: Key Economic Indicators Stable: Oil and Consumer Confidence
PAGE 4 KEY ECONOMIC INDICATORS STABLE Crude Oil USD$/Barrel Consumer Confidence Index Source: World Bank Oil prices stable. Continued strength in consumer confidence. Source: OECD
Slide 5: Key Economic Indicators Stable: Unemployment and Wages
PAGE 5 KEY ECONOMIC INDICATORS STABLE U.S. Unemployment Rate Average Hourly Wage Source: Bureau of Labor Statistics Source: Bureau of Labor Statistics U.S. returned to near full employment. Wage growth in line with inflation.
Slide 6: Political Environment
PAGE 6 POLITICAL ENVIRONMENT ( + ) Corporate Tax Reform ↔ Infrastructure Bill ↔ NAFTA ↔ Mortgage Interest Deduction ↔ Healthcare ( - ) Immigration Policy / DACA
Slide 7: U.S. Natural Disasters
PAGE 7 U.S. NATURAL DISASTERS • Hurricanes Harvey and Irma marked the first time two Atlantic Category 4 hurricanes have made U.S. landfall in the same year. • Comparatively, Sandy (‘12) and Katrina (‘05) made landfall as Category 3s. • Hurricane impacted area represents ~15% of JH NA volume. • Plan
Slide 8: Solid Confidence & Investment in Housing
PAGE 8 SOLID CONFIDENCE & INVESTMENT IN HOUSING Residential Fixed Investment as % of GDP Source: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis Real Estate Confidence Index Source: National Association of Realtors, Realtors Confidence Survey, June 2017 2008 2017
Slide 9: Growth of New Housing Continues
PAGE 9 GROWTH OF NEW HOUSING CONTINUES Housing Permits Source: U.S. Census Bureau
Slide 10: Growth Across New Construction Segments
PAGE 10 GROWTH ACROSS NEW CONSTRUCTION SEGMENTS Housing Starts by Segment Thousands of Starts Positive growth in all segments. Single-family continues to outpace multi-family. Source: U.S. Census Bureau
Slide 11: Demand Exceeding Supply
PAGE 11 DEMAND EXCEEDING SUPPLY Source: Core Logic Case-Schiller Home Price Index U.S. Housing Supply # Months Supply Case-Shiller Home Price Index Supply remains tight. Prices continue to escalate. Source: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis
Slide 12: New Occupant Population Exists
PAGE 12 NEW OCCUPANT POPULATION EXISTS U.S. Population by Age Young Adults, 18-34, Living at Home Source: U.S. Census, American Community Survey Source: U.S. Census New residence eligible population living at home
Slide 13: Affordability Remains Significant Headwind
PAGE 13 AFFORDABILITY REMAINS SIGNIFICANT HEADWIND Source: Urban Institute, CoreLogic, eMBS, HMDA, SIFMA Outstanding Credit & Student Loan Debt Borrower FICO Score at Origination Student debt continues to rise. Financing eligibility remains elevated. Source: Federal Reserve Economic Data
Slide 14: Availability of Labor Continued Concern
PAGE 14 AVAILABILITY OF LABOR CONTINUED CONCERN Source: NAHB % Builders Reporting Labor Shortages 2016
Slide 15: Repair & Remodel Remains Stable Growth Segment
PAGE 15 REPAIR & REMODEL REMAINS STABLE GROWTH SEGMENT Source: U.S. Census Bureau, American Housing Survey Source: Hanley Wood Repair & remodel projects continue to grow at ~5% annually Average Age = 41 Years Repair & Remodel Project Growth Age of Housing Stock
Slide 16: Historic Market Share
PAGE 16 HISTORIC MARKET SHARE Present Future 100% JH wins against wood-look alternatives
Slide 17: Demand to Determine Future Capacity
PAGE 17 DEMAND TO DETERMINE FUTURE CAPACITY Future capacity decisions based on: - Geographic demand - Location - Product mix - Optimal delivered unit cost - Materials sourcing - Efficient freight - Skilled labor availability Peru, IL Pulaski, VA Summerville, SC Plant City, FL Prattville, AL Waxahach
Slide 18: Historic & Future Capacity Utilization
PAGE 18 HISTORIC & FUTURE CAPACITY UTILIZATION Current gross hours utilization ~94% FY09 FY11 FY13 FY15 FY17 FY19 FY21 • Protect 20% growth • 85% utilization trigger • Capacity adds to keep supply ahead of demand 100%
Slide 19: Tacoma, Washington
PAGE 19 TACOMA, WASHINGTON • Currently under construction • Expected commissioning Q1 FY19 • Nameplate capacity - 300 mmsqft/year • Plank, Backer, Heritage, ColorPlus® Technology • ~130 employees at full production • Site benefits • Low input cost • Proximity to growing markets
Slide 20: Prattville, Alabama Greenfield
PAGE 20 PRATTVILLE, ALABAMA GREENFIELD • Anticipate ground breaking Q3 FY18 • Expected commissioning Q1 FY20 • Minimum nameplate capacity – 600 mmsqft/year • Plan for diverse product capability • Plank, Trim, Backer, Heritage, ColorPlus® Technology • ~200 – 275 employees at full production • Site be
Slide 21: Key Messages
PAGE 21 KEY MESSAGES • U.S. economy strong • Housing recovery slow but steady • Capacity in place to support growth
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