James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (January 2016)
48 slides from James Hardie Industries's investor presentation, Jan 12, 2016
Slide 1: Investor Presentation January 2016
For personal use only INVESTOR PRESENTATION JANUARY 2016
Slide 2: Disclaimer
DISCLAIMER For personal use only This Management 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 Commission, on Forms 20-
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 • Guidance • Appendix In this Investor Presentation, the company may present financial measures, sales volume terms, financial ratios, and Non-U
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$1.8b • Total assets US$1.9b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,178 employees • Market cap US$5.08b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 11 De
Slide 7: Group Overview – 2nd Quarter & Half Year FY16 Results
GROUP OVERVIEW – 2nd QUARTER & HALF YEAR FY16 RESULTS For personal use only Adjusted Net Operating Profit Adjusted Diluted EPS 2nd Qtr Half Year 2nd Qtr Half Year US$65.3M Flat US$128.8M 12% US15cents Flat US29cents 12% Adjusted EBIT Net Operating Cash Flow 2nd Qtr Half Year Half Year US$95.3M 12% U
Slide 8: Key Themes – 2nd Quarter & Half Year FY16 Results
KEY THEMES – 2ND QUARTER & HALF YEAR FY16 RESULTS For personal use only • Higher volumes in all businesses, but PDG in our US business tracked below our target level • Higher average net sales prices in local currencies • Improved plant performance trend sustained • Half year USA and Europe Fiber Ce
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales Asia Pacific 20% USA and Europe 80% EBIT ² Asia Pacific 19% Employees¹ • 2,269 in USA and Europe • 909 in Asia Pacific USA and Europe 81% 1 All percentages are as at 30 September 2015 and numbers are for the full year ended
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: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Share¹ 7% 7% 18% Fiber Cement 7% Vinyl Wood (including engineered wood) Stucco Brick Stone 12% Other (aluminium etc) 28% 21% 35/90 Plan • Grow fiber cement share to 35% of the exterior cladding market again
Slide 12: 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 13: 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 13
Slide 14: 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 • 2,269 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC TX HY FY
Slide 15: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only USA Fiber Cement Top Line Growth1 3,000 $1,300 2,800 JH Volume (mmsf), Starts (000s Units) $1,200 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 $200
Slide 16: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only USA and Europe Fiber Cement 710 Average Net Sales Price 685 675 670 652 648 642 US$ per MSF 632 626 630 590 550 FY10 FY11 FY12 FY13 FY14 FY15 1H'16 Impact of price increases offset by US currency appreciation in 1H’16 PAGE 16
Slide 17: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin 1 100 30 90 25 80 70 20 EBIT Margin EBIT US$M 60 50 15 40 10 30 20 5 10 0 0 FY11 FY12 FY13 FY14 FY15 FY16 EBIT EBIT/Sales We expect EBIT margins for fiscal year 2016 to be towards the higher end of, and ma
Slide 18: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 909 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility HY FY16 HY FY15 Net Sales A$239.0m A$215.6m EBIT A$55.3m A$48.9m EBIT Margin (A$) 23.2
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 30 30 1020 A$1,006 1000 25 25 980 EBIT US$m EBIT Margin 20 20 960 940 15 15 920 900 10 10 880 5 5 860 840 0 0 820 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 20: Targeting the Right Product into the Right Market
TARGETING 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 Strong margins and operating Investing in R&D and capacity Conservative leveraging of balance cash flows expansion to support organic sheet within
Slide 22: FY2016 Guidance
FY2016 GUIDANCE For personal use only • Management expects full year Adjusted net operating profit to be between US$230 million and US$250 million assuming, among other things, housing conditions in the United States continue to improve in line with our assumed forecast of new construction starts be
Slide 23: Appendix
For personal use only APPENDIX
Slide 24: U.S. Marketplace
U.S. MARKETPLACE For personal use only PAGE 24
Slide 25: Australia & New Zealand Marketplace
AUSTRALIA & NEW ZEALAND MARKETPLACE For personal use only PAGE 25
Slide 26: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months and Half Year Ended 30 September US$ Millions Q2'16 Q2'15 % Change 1H'16 1H'15 % Change Net Sales USA and Europe Fiber Cement $ 361.9 $ 335.4 8 $ 698.9 $ 656.9 6 Asia Pacific Fiber Cement 88.3 105.0 (16) 179.6 200.3 (10) Total Net Sales $ 450.2 $
Slide 27: Key Ratios
KEY RATIOS For personal use only Half Year Ended 30 September 1H'16 1H'15 1H'14 EPS (Diluted)1 (US Cents) 29c 26c 24c EBIT/ Sales (EBIT margin)2 21.1% 18.2% 18.3% Gearing Ratio1 33.1% 21.5% (9.5)% Net Interest Expense Cover2 14.8x 96.3x 66.8x Net Interest Paid Cover2 15.5x 200.7x 77.9x Net Debt Payb
Slide 28: 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$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17 21 22 1Ex
Slide 29: Asia Pacific Fiber Cement – Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 353 376 370 366 380 US$m Sales Volume 408 392 394 417 456 mmsf Average Price 906 906 901 930 942 A$ per msf1 EBIT US$m2 79 86 75 83 90 EBIT Margin %2 23 23 20 23 24 1During the second quarter
Slide 30: Results – Half Year FY16
RESULTS – HALF YEAR FY16 Net sales increased For personal use only • Higher volume in both segments Half Year Ended 30 September • Higher average net sales prices in local currencies US$ Millions 1H'16 1H'15 % Change Gross profit margin increased 270 bps Net sales 878.5 857.2 2 • Improved performanc
Slide 31: US Input Costs
US INPUT COSTS For personal use only Quarterly US Input Costs 1,200 10 9 • The price of NBSK pulp decreased by ~2% 1,000 8 compared to pcp1 Cement, Gas and Electric Prices 7 800 6 • Cement prices are up 7-8% compared to pcp1 Pulp Prices 600 5 4 • Gas prices down 20+% compared to pcp1 400 3 2 • Elect
Slide 32: Segment EBIT – 2nd Quarter and Half Year FY16
SEGMENT EBIT – 2nd QUARTER and HALF YEAR FY16 For personal use only USA and Europe Fiber Cement USA and Europe Fiber Cement EBIT summary 200 178.9 • Quarter and 1H EBIT increased by 20% and 25%, 150 142.8 respectively when compared to pcp US$ Millions 126.7 100 89.4 Q2 EBIT • Primarily driven by pla
Slide 33: Segment EBIT – 2nd Quarter and Half Year FY16
SEGMENT EBIT – 2nd QUARTER and HALF YEAR FY16 For personal use only Research and Development (15) R&D summary (13.6) (12.0) (11.6) • On strategy to invest between 2%-3% of sales US$ Millions (10) (6.8) (6.0) • Fluctuations reflect normal variation and timing in (5.5) Q2 EBIT (5) 1H EBIT number of R&
Slide 34: Changes in AUD vs. USD
CHANGES IN AUD vs. USD For personal use only 1.00 0.95 AUD/USD Exchange Rate 0.90 0.85 0.80 0.75 0.70 0.65 0.60 30 Sep 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sep 14 31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15 As Reported Excluding Translation Impact1 Translation Impact2 US$ Millions 1H'16 1H'15 % Change 1H
Slide 35: Income Tax
INCOME TAX For personal use only Three Months and Half Year Ended 30 September 26.2% estimated adjusted effective tax rate (ETR) for the year Millions of US dollars Q2’16 Q2’15 1H'16 1H'15 • Adjusted income tax expense and adjusted ETR Operating profit before taxes 153.9 144.7 235.2 190.3 increased
Slide 36: Cashflow
CASHFLOW For personal use only US$ Millions 1H'16 1H'15 1 Change (%) • Net income increased US$34.1 million compared to prior corresponding period Net Income 190.2 156.1 1 • Increase in net operating cash flow Adjustment for non-cash items (20.0) (4.4) • Lower contribution to AICF Annual AICF contri
Slide 37: Liquidity Profile
LIQUIDITY PROFILE For personal use only • Strong balance sheet: • US$500 million of bank facilities • US$325 million 8 year senior unsecured notes1,2 • US$507.0 million net debt as of 1H FY16 • Net leverage of 1.24x at 1H FY16 • Net Debt within target range of 1-2 times EBITDA excluding asbestos • W
Slide 38: Asbestos Claims Data
ASBESTOS CLAIMS DATA For personal use only • Claims received during the quarter and half year were 5% and 10% below actuarial estimates, respectively • Mesothelioma claims reported for the half year are 5% Three Months and Half Year Ended 30 September above non-seasonally adjusted expectations and a
Slide 39: 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 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 income tax expense and Adjusted effective tax rate – Adjusted income tax expenses and Adjusted effective tax rate is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than income tax e
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 JANUARY 2016
James Hardie Industries — Investor Presentation (January 2016) on 6ix