James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (June 2024)
66 slides from James Hardie Industries's investor day presentation, Jun 24, 2024
Slide 1: James Hardie Investor Day 2024 - Day Two
James Hardie Investor Day 2024 DAY TWO | MONDAY, JUNE 24TH | NEW YORK For personal use only © 2023 Warner Bros. Discovery, Inc. or its subsidiaries and affiliates. All trademarks are the property of their respective owners. All rights reserved.
Slide 2: Cautionary Note on Forward-Looking Statements
Cautionary Note on Forward-Looking Statements Cautionary note on Use of non-GAAP financial information; For personal use only forward-looking statements Australian equivalent terminology This Management Presentation contains forward looking statements within the This Management Presentation includes
Slide 3: Formalities
Formalities For personal use only Attendance Charging Your Items Presentations Badges & Groups Welcome Bags Agenda JAMES HARDIE INVESTOR DAY 3 2024
Slide 4: Agenda: Day Two
Agenda: Day Two DAY TWO | MONDAY, JUNE 24TH | NEW YORK Registration/Breakfast at Pendry Hotel All For personal use only Logistics Overview Joe Ahlersmeyer Welcome Aaron Erter, CEO Finance Strategic Priorities Rachel Wilson, CFO Global Operations Strategic Priorities Ryan Kilcullen 9:00am Break for 5
Slide 5: Zero Harm
Zero Harm For personal use only Stay Together as a Group Utilize Safety Equipment When Provided (E.g., Hard Hats, etc.) Stay Hydrated and Leverage Facilities WATER as Needed Please be Aware of Your Surroundings and EXIT Identify the Nearest Emergency Exit JAMES HARDIE INVESTOR DAY 5 2024
Slide 6: What The Best Are Made Of
For personal use only What The Best Are Made Of JAMES HARDIE INVESTOR DAY 6 2024
Slide 7: Aaron Erter, Chief Executive Officer
For personal use only Aaron Erter CHIEF EXECUTIVE OFFICER © 2023 Warner Bros. Discovery, Inc. or its subsidiaries and affiliates. All trademarks are the property of their respective owners. All rights reserved. JAMES HARDIE INVESTOR DAY 7 2024
Slide 8: Our Continuing Evolution
Our Continuing Evolution This evolution is designed to build an even greater future for James Hardie and its people For personal use only FROM TO A focus on why we do A focus on what we do what we do Defining the kind of company Growth above all else we want to be A collaborative and A top-down appr
Slide 9: Embracing Our Future Remains Rooted In Our Purpose
Embracing Our Future Remains Rooted In Our Purpose PURPOSE VISION MISSION For personal use only Building a Better Future To inspire how communities design, Be the most respected and sought after for AllTM build, and grow today and tomorrow. building materials brand in the world. VALUES Honor Our Col
Slide 10: The James Hardie Strategy
The James Hardie Strategy Homeowner Focused, Customer and Contractor Driven For personal use only Strategic Supported by Our Enabled by Initiatives Foundational Imperatives Profitably grow and take share Customer Integration 1 where we have the right to win Zero Harm Hardie Operating System Innovati
Slide 11: Executive Leadership Team (ELT)
Executive Leadership Team (ELT) CEO For personal use only Aaron Erter Chicago Chief HR President President CFO Officer (CHRO) North America APAC Rachel Wilson Farhaj Majeed Sean Gadd John Arneil Chicago Chicago Chicago Sydney President EVP Global Chief Information VP ESG/ Chief Europe Operations Off
Slide 12: Finance Strategic Priorities
For personal use only Finance Strategic Priorities RACHEL WILSON CHIEF FINANCIAL OFFICER JAMES HARDIE INVESTOR DAY 12 2024
Slide 13: Finance Strategic Priorities
Finance Strategic Priorities Building a Better Future for All TM by focusing on what we can control supported by our strategic foundations. For personal use only Effective Strategic Partnership: Solution seeker to support our regional businesses to successfully execute our Global Strategy and meet o
Slide 14: Controlling the Controllables
Controlling the Controllable Non-Controllables Controllables For personal use only Repair & Remodel Primary Demand Growth (PDG) Market Growth New Construction Value-Based Pricing Market Growth $ Raw Material Costs $ SG&A + CapEx HOS Savings JAMES HARDIE INVESTOR DAY 14 2024
Slide 15: How We Control the Controllables: Material Share of Primary Cladding
How We Control the Controllables Material Share of Primary Cladding 1 1 Material Share of Primary Cladding 40 Controllables Vinyl -12% Share Loss 35 For personal use only 30 Primary Demand Growth (PDG) 25 % of homes 20 Fiber Cement 15 +9% Share Gain 10 Value-Based Pricing 5 0 2010 2011 2012 2013 201
Slide 16: How We Control the Controllables: Value-Based Pricing
North America Fiber Cement How We Control the Controllables ASP (US$ per msf) 1,000 912 941 814 Controllables 725 745 750 For personal use only 500 Primary Demand Growth (PDG) 250 0 FY20 FY21 FY22 FY23 FY24 Value-Based Pricing 1. Superior Value Proposition Enables $ SG&A + CapEx ▪ Consistent Annual
Slide 17: How We Control the Controllables: SG&A
How We Control the Controllables Group SG&A 750 20% Controllables SG&A % of Sales 15% US$ millions 500 For personal use only 10% Primary Demand Growth (PDG) 250 5% 0 0% FY20 FY21 FY22 FY23 FY24 Value-Based Pricing 1. Driving Profitable Growth Leading Indicators ▪ Demand Creation ▪ Brand Awareness $
Slide 18: How We Control the Controllables: HOS Progress in FY24
How We Control the Controllables Controllables HOS Progress in FY24 For personal use only Cumulative HMOS Savings Primary Demand Growth (PDG) FY24-26 Goal $31M $100M Investing in HOS to Value-Based Pricing Cumulative Procurement Generate Savings and R&D Value Improvement Current FY24-26 Goal and Fut
Slide 19: Strong Financial Performance in FY24
Strong Financial Performance in FY24 Global Global Adjusted Global Adjusted Full Year Operating For personal use only Net Sales Net Income EBIT Margin % Cash Flow ~$4Bn $708M 23.9% $914M +4%1 +17%1 +330 bps1 +50%1 Record Full Year Global Net Sales, Adjusted Net Income, Adjusted EBIT Margin, and Oper
Slide 20: 2025 Guidance
2025 Guidance Q1 FY25 Full-Year FY25 For personal use only North America Volume 745 – 775 mmsf 2,950 – 3,150 mmsf North America EBIT Margin 30% – 32% 29% – 31% Adjusted Net Income US$ 155 – 175m US$ 630 – 700m Reiterating Q1 and Full-Year FY25 Guidance JAMES HARDIE INVESTOR DAY 20 2024
Slide 21: Capital Allocation Framework
Capital Allocation Framework For personal use only Invest in Organic Growth Maintain Flexible Balance Sheet ▪ $958.2 million of liquidity at 31 March 2024 ▪ 0.67x leverage ratio at 31 March 2024 ▪ Strong liquidity position to navigate all market conditions Deploy Excess Capital to Shareholders ▪ Inc
Slide 22: Incentives Are Aligned to Our Purpose, Mission, Vision, and Values
Incentives Are Aligned to Our Purpose, Mission, Vision, and Values APAC EUROPE NORTH AMERICA FY25-27 FY25-27 FY25-27 For personal use only Zero Harm DART ≤0.07 ≤0.43 ≤0.70 Profitable PDG: 4% HVP: 15% PDG: >4% Share Gain Profitable Growth EBIT Margin % >29% >14% >30% By FY27 vs FY23 Baseline Hardie O
Slide 23: A Growth Company
A Growth Company Responsible Corporate Innovative Solutions Strong Cash Generation Citizenship & Balance Sheet Localized Manufacturing For personal use only Demand Creation Attractive Returns Experienced Management Team Brand of Choice Premium Products and Services Hardie Operating System “HOS” Glob
Slide 24: Global Operations Strategic Priorities
For personal use only Global Operations Strategic Priorities RYAN KILCULLEN EXECUTIVE VICE PRESIDENT, GLOBAL OPERATIONS JAMES HARDIE INVESTOR DAY 24 2024
Slide 25: Global Capacity Footprint
Global Capacity Footprint For personal use only Ryan Kilcullen EVP, Global Operations 19 PLANTS 4,679 MMSF OF NORTH AMERICA NAMEPLATE CAPACITY 1 669 MMSF OF APAC NAMEPLATE CAPACITY 1 GLOBALLY Operating Sites: 19 | R&D Centers: 3 Manufacturing Facilities Research and Development 1,184 MMSF OF EUROPE
Slide 26: Global Operations Strategic Priorities
Global Operations Strategic Priorities Building a Better Future for All TM by focusing on what we can control supported by our strategic foundations. Zero Harm: Continuing to drive world class performance by creating For personal use only a culture with a conviction that every incident is preventabl
Slide 27: Continuing our Journey to World Class Manufacturing via Lean
Continuing our Journey to World Class Manufacturing via Lean HMOS provides a framework to support our journey from the world’s For personal use only best fiber cement manufacturer to a world class manufacturer LEAN Journey ‘19 ‘19 2020 - 2023 2024+ JAMES HARDIE INVESTOR DAY 27 2024
Slide 28: Opportunity for Continued Operational Gains via HMOS in North America
Opportunity for Continued Operational Gains via HMOS in North America Net Hours Progression ▪ Demonstrated track record of For personal use only continuous improvement via HMOS ✓ Net Hours ✓ RTY FY19 FY24 Best-in- Class ✓ Rate (New focus in FY25) RTY Progression ▪ Opportunity for continued gains in
Slide 29: Our Localized Manufacturing Enables Efficiency Throughout Our Supply Chain
Our Localized Manufacturing Enables Efficiency Throughout Our Supply Chain Close Proximity to Our Customers For personal use only Localized Manufacturing ▪ 67% of Product Deliveries Are Within 500 miles of our Plants1 NA Manufacturing Footprint Efficient Supply Chains ▪ 81% of Raw Materials Sourced
Slide 30: Prattville Mega Site
Prattville Mega Site PRATTVILLE – JUNE 2018 Sheet Machine 3 & 4 Expansion Key Strategic Enabler of Profitable Growth For personal use only Commissioning execution for FY25 Delivery PRATTVILLE – FEBRUARY 2024 Integrated Safety Plan & Execution Team Focused manufacturing lines & high scale approach Ap
Slide 31: North American Capacity: Mega Sites
North American Capacity: Mega Sites For personal use only Location PRATTVILLE, AL CLEBURNE, TX CRYSTAL CITY, MO Development Brownfield Brownfield Greenfield Status1 Future Development Sheet Machines 2→4 3→5 Up to 4 (Brown or Greenfield) Nameplate Capacity2 1.2 Bnsf 1.2 Bnsf Up to 1.2 Bnsf Strategic
Slide 32: Aligning Capacity to Support Material Conversion and Profitable Share Gain
Aligning Capacity to Support Material Conversion and Profitable Share Gain For personal use only Foundational Culture of Zero Harm HMOS Continuous Improvement Through HOS Advanced Manufacturing Focus Aligned Global Capacity Expansion Building a Better Future For All JAMES HARDIE INVESTOR DAY 32 2024
Slide 33: ESG Roadmap
For personal use only ESG Roadmap JILL KOLLING CHIEF SUSTAINABILITY OFFICER JAMES HARDIE INVESTOR DAY 33 2024
Slide 34: ESG: A Finish Without End
ESG: A Finish Without End 2018 No Report For personal use only 2021 JILL KOLLING Chief Sustainability Officer 2021 Published 1st 2022 Sustainability Report 2022 2023 Zero Harm Planet Hired first Chief Sustainability Officer Communities Innovation 2023 Selected as ECO Actions Partner by Home Depot an
Slide 35: Our Commitments
Our Commitments For personal use only Reducing Saving Minimizing Increasing Prioritizing Emissions Water Waste Diversity Safety 42% absolute reduction in Recycle an additional 20M Zero manufacturing waste 30% gender diversity in Continuously improve our Scope 1+2 greenhouse cubic feet of water per y
Slide 36: Building a Culture of Sustainability
Building a Culture of Sustainability EMISSIONS 42% absolute reduction in Scope 1+2 greenhouse gas emissions by 2030 For personal use only ▪ Integrating into HMOS WASTE Zero manufacturing waste to landfill by 2035 ▪ Driving accountability with internal goals and metrics WATER Recycle an additional 20
Slide 37: Pathway to Achieving our Emission Goals
Pathway to Achieving our Emission Goals in 2030 In Support of Net Zero by 2050 Assumed Business-as-Usual For personal use only Greenhouse Gas Emissions – Levers to Target in 2030 Emission Growth to 2030 Offset by: 1,200,000 1,000,000 ▪ Grid decarbonization 800,000 MT COze ▪ Use of renewable electric
Slide 38: Reducing Product Carbon Footprint
Reducing Product Carbon Footprint Product manufacturing Potential savings For personal use only Product manufacturing from reaching our Scope 1+2 Potential savings from GHG emissions our Low Carbon Cement reduction goal Greenhouse Gas Emissions (kg CO2e)/m2 Technology Roadmap Cut cradle to gate carb
Slide 39: Building a Better Future For All
Building a Better Future For All James Hardie Products Meet the …And we are Being Recognized for our Challenges of a Changing World… Continued Efforts in Sustainability For personal use only 2023 – Named ECO Actions Partner by the Home Depot Our Products are: The Home Depot selected James Hardie® fi
Slide 40: Innovation Strategic Priorities
For personal use only Innovation Strategic Priorities JOE LIU CHIEF TECHNOLOGY OFFICER JAMES HARDIE INVESTOR DAY 40 2024
Slide 41: R&D Footprint
R&D Footprint For personal use only Joe Liu Chief Technology Officer 167 EMPLOYEES1 3 GLOBAL R&D CENTERS GLOBALLY Operating Sites: 19 | R&D Centers: 3 Manufacturing Facilities Research and Development JAMES HARDIE INVESTOR DAY 41 2024 1. Average number of employees for Fiscal Year 2024
Slide 42: Global Innovation Strategic Priorities
Global Innovation Strategic Priorities Building a Better Future for All TM by focusing on what we can control supported by our strategic foundations. For personal use only Accelerate Material Conversion: Prioritized growth programs aligned to the regional focuses on material conversion and profitabl
Slide 43: Accelerate Material Conversion
Accelerate Material Conversion Optimize Installation For personal use only ▪ Product and Accessories ▪ Install Tools and Processes Innovate With ColorPlus® ▪ Enhanced aesthetics ▪ Next Generation Performance Increase Trim Attachment ▪ Enhanced Aesthetics & Performance Prioritized Growth Programs Ali
Slide 44: Strengthen Our Core
Strengthen Our Core Value Improvement Through HOS For personal use only ▪ Re-formulation ▪ Process Optimization Enable ESG ▪ Sustainable Raw Materials ▪ Recycled Material Usage Low Carbon Cement Innovation ▪ Phased Roadmap Execution ▪ Leveraging Partnerships Robust Pipeline of Programs To Support an
Slide 45: Develop New Platforms That Address Mega-Trends
Develop New Platforms That Address Mega-Trends Megatrends Aesthetics Optimize Installation For personal use only Mixed Materials & Design Labor Shortages Affordable Housing ▪ Joining Systems and ▪ Product and Technology ▪ Textures and Profiles Accessories Road Mapping ▪ Coatings ▪ Holistic Designs ▪
Slide 46: A Culture of Innovation That Supports Global Strategy
A Culture of Innovation That Supports Global Strategy 40+ Years Of Innovation And Capacity Growth In North America 2000 – Hardie® Trim HLD For personal use only 2015 – Hardie® Trim (NT3) 2001 – Summerville, SC 2017 – Tacoma 2, WA 2001 – Waxahachie, TX 2018 – ColorPlus® Dream Collection 1980 – Invent
Slide 47: Value Proposition: Trusted Protection
Value Proposition: Trusted Protection For personal use only Fire Resistance1 Water Resistance Pest Damage Resistant Watch the Watch the Watch the Fire Demonstration video Dimensional Stability video Woodpecker Testimonial video 1. Hardie® siding complies with ASTM E136 as a noncombustible cladding a
Slide 48: Fire Resistance Video
For personal use only Fire Resistance Video1 1. Hardie® siding complies with ASTM E136 as a noncombustible cladding and is recognized by fire departments across the U.S. including Marietta, GA, Flagstaff, AZ JAMES HARDIE INVESTOR DAY 48 and Orange County, CA. Fiber cement fire resistance does not ex
Slide 49: North America Long-Term Aspirations
For personal use only North America Long-Term Aspirations AARON ERTER CHIEF EXECUTIVE OFFICER © 2023 Warner Bros. Discovery, Inc. or its subsidiaries and affiliates. All trademarks are the property of their respective owners. All rights reserved. JAMES HARDIE INVESTOR DAY 49 2024
Slide 50: The James Hardie Strategy
The James Hardie Strategy Homeowner Focused, Customer and Contractor Driven For personal use only Strategic Supported by Our Enabled by Initiatives Foundational Imperatives Profitably grow and take share Customer Integration 1 where we have the right to win Zero Harm Hardie Operating System Innovati
Slide 51: US Housing Fundamentals Support Long-Term Growth
US Housing Fundamentals Support Long-Term Growth Repair & Remodel New Construction For personal use only Housing Stock Aging Into Cumulative Undersupply Prime Remodeling Years of US Housing ~ 35M ~ 2.1M ~35 Million Homes U.S. Housing is Currently Aged 20 to 40 Years Old1 Undersupplied by (Single-Fam
Slide 52: US Siding Opportunity
US Siding Opportunity Accelerate growth in key end markets by driving material conversion. US Siding Opportunity1 For personal use only 12,000 ~$10Bn US Siding Opportunity ~10Bnsf 10,000 Volume - MMSF 8,000 6,000 ▪ Opportunity in R&R to win against vinyl and other 4,000 wood-look substrates 2,000 -
Slide 53: A Track Record of Material Conversion: 11+ Million Homes and Counting
A Track Record of Material Conversion: 11+ Million Homes and Counting 12 use only 10 A History of Profitable Share Gain Driven by our Value Proposition and Superior Product Solutions Millions of Homes (Cumulative) 8 45 Billion Standard Feet of Total For personal Volume Sold Since 2000 6 4 2 28 Billi
Slide 54: Hardie: A Virtuous Cycle to Deliver Long-Term Value Creation
Hardie: A Virtuous Cycle to Deliver Long-Term Value Creation Profitable Share Gain Over Create Demand Across The For personal use only The Long-Term Material Share of Primary Cladding Customer Value Chain on Dem 40 -12% Homeowner Focused, Customer and Contractor Driven rsi Vinyl Share Loss 35 ve an
Slide 55: James Hardie North America Aspirations
James Hardie North America Aspirations For personal use only Accelerate Material Support Growth With Create Long-Term Conversion High-Return Capacity Financial Value 1 ~ 8Bnsf Total Future 3x Adjusted Nameplate EBITDA Capacity 1. Conceptual number of cumulative homes with Hardie® siding in North Ame
Slide 56: Accelerating Material Conversion
Accelerating Material Conversion Cumulative Number of Homes with James Hardie Siding 25 use only 20 Millions of Homes 15 10 For personal 5 0 2015 2020 2025 2030 2035 Last 10+ Years Next 10+ Years Product Focused Building Solutions Focused Foundations & Moats Homeowner Focused, Customer Builder/Contr
Slide 57: Support Growth With High-Return Capacity
Support Growth With High-Return Capacity Conceptual Investment For personal use only To Meet 25 Million Homes ▪ Cost of One Sheet Machine: ~$250M by 2035 ▪ Cost of Ten Sheet Machines: ~$2.5Bn2 ▪ Capacity Adds are Consistent With Achieving LTI Targets for Return on Capital Employed ~ 8Bnsf Driven by:
Slide 58: North America Top Line Growth Framework
North America Top Line Growth Framework Capitalizing on a For personal use only Strong Value Proposition Double-Digit % Our Strategy Enables Commitment to Outperform in any Market Long-Term Growth ~Mid-Single Digits % Supported by Underlying Fundamentals 4%+ Primary Demand Growth ~Low Single-Digits
Slide 59: North America Margin Expansion
North America Margin Expansion North American Adjusted EBIT Margins Delivering Strong Margins in Our For personal use only FY25 Outlook: ~35% ▪ Raw Material Pressure 35% ▪ Scaling for Growth 29-31% 30% Expanding Margins over the Long-Term ▪ Unique Value Proposition ▪ Innovative Product Solutions 25%
Slide 60: North America Financial Aspirations
North America Financial Aspirations For personal use only Accelerate the Top- Double- Significant Underlying Line To Deliver on our High Incremental Returns Digit Revenue Financial Aspirations Growth Double-Digit Long-Term +500bps Margin Expansion 500bps+ of EBITDA $$$ $$ on Capacity Additions Enhan
Slide 61: North America Aspiration: 25 by 35
North America Aspiration: “25 by 35” For personal use only 25 R T BEAUTY By U STED PR Million 1 Homes NG 2035 O TI E T C S A TI L ON • LON G- © 2023 Warner Bros. Discovery, Inc. or its subsidiaries and affiliates. All trademarks are the property of their respective owners. All rights reserved. 1. Co
Slide 62: Q&A
For personal use only Q&A AARON ERTER CHIEF EXECUTIVE OFFICER JAMES HARDIE INVESTOR DAY 62 2024
Slide 63: Thank You!
For personal use only Thank You! JAMES HARDIE INVESTOR DAY 63 2024
Slide 64: Non-GAAP Financial Measures
Non-GAAP Financial Measures Financial Measures – GAAP Equivalents This document contains the financial statement line item EBIT, which is considered to be non-GAAP, but is consistent with the term used by Australian companies. Because we prepare our consolidated financial statements under GAAP, the
Slide 65: Non-GAAP Financial Measures: Adjusted EBIT and Net Income
Non-GAAP Financial Measures Non-GAAP Financial Information Derived from GAAP Measures Adjusted EBIT US$ Millions FY24 FY23 FY22 FY21 FY20 EBIT $ 767.4 $ 741.4 $ 682.6 $ 472.8 $ 342.5 For personal use only Asbestos: Asbestos adjustments loss 151.7 37.0 131.7 143.9 58.2 AICF SG&A expenses 1.6 1.4 1.3
Slide 66: Non-GAAP Financial Measures: Adjusted ROCE
Non-GAAP Financial Measures Non-GAAP Financial Information Derived from GAAP Measures Adjusted Return on Capital Employed ("Adjusted ROCE") US$ Millions FY24 FY23 FY22 FY21 FY20 For personal use only Numerator Adjusted EBIT $ 940.8 $ 779.8 $ 815.6 $ 629.0 $ 486.8 Denominator Gross capital employed (