James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2017)
89 slides from James Hardie Industries's investor day presentation, Sep 14, 2017
Slide 1: James Hardie's USA Investor/Analyst Tour Day 2 Presentations
For personal use only JAMES HARDIE’S USA INVESTOR/ANALYST TOUR 14th & 15th SEPTEMBER 2017 DAY 2 PRESENTATIONS
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 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 an
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (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 sim
Slide 4: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
USE OF NON-GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY For personal use only This Management Presentation includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (US GAAP). These fina
Slide 5: People & Culture
For personal use only People & Culture Kirk Williams Chief Human Resources Officer
Slide 6: Agenda
Agenda For personal use only – Overview – Hiring Our Talent – Developing Our Talent – Retaining Our Talent – Building a World-Class HR Organization – Road to 2020: Big Bets & Early Wins – Q&A PAGE 2
Slide 7: People – Increasing Organizational Capability
People – Increasing Organizational Capability For personal use only We will refocus on optimizing our organizational capability by: • ensuring a safe work environment for everyone • developing and growing employees at all levels PEOPLE Continue to invest in • attracting top external talent the devel
Slide 8: Hiring Our Talent
For personal use only HIRING OUR TALENT
Slide 9: New GMT Members
New GMT Members For personal use only Kirk Williams, Chief Human Jack Truong, President Zean Nielsen, EVP Sales & Resources Officer International Operations Marketing • 18 years of global HR • More than 25 years of global • More than 20 years of global leadership experience GM and executive experien
Slide 10: Top Key Roles – Progress Made
Top 20 Key Roles – Progress Made For personal use only New to JH SVP Corporate Finance Returning Talent VP, HR – Operations Internal Promotions SVP, Engineering Sr. Director Talent Acquisition VP, Talent Management Director, Operations Director, HR – Operations VP, Finance – Operations Director, Ope
Slide 11: Additional Recruiting Projects
Additional Recruiting Projects For personal use only Recruiting for Remaining Key Roles Chief Technology Officer (GMT) EVP, Manufacturing (GMT) Sales and Strategic Accounts Total Rewards Material Flow Quality Tacoma Plant Startup Trim ~ 130 total employees at full Affiliations production Transportat
Slide 12: Developing Our Talent
For personal use only DEVELOPING OUR TALENT
Slide 13: Assessing our Talent – Consistent Approach
Assessing our Talent – Consistent Approach For personal use only “New in Role (0-6 mos)" "Rising Star" “Top Performer" High Potential Action – Continue onboarding for new Action – Stretch for varied roles Action – Accelerate for significant movement employees "Underachiever" "Key Performer" "High Ac
Slide 14: Developing our Talent – New Programs
Developing our Talent – New Programs For personal use only Experienced Senior Leaders Emerging Leaders Leaders Define what future success Develop and enhance core Provide high touch looks like in order to identify leadership skills. assessments and executive and close gaps. coaching for maximum impa
Slide 15: Developing our Talent – New Programs
Developing our Talent – New Programs For personal use only Individual Cohort Executive Development Programs Individual development programs Partnering with top business tailored to specific executives and schools to consider their specific development needs. differentiated learning tailored to JH ne
Slide 16: Retaining Our Talent
For personal use only RETAINING OUR TALENT
Slide 17: North America Employee Retention - Summary
North America Employee Retention - Summary For personal use only Headcount Sales Turnover 2831 17.7% 2194 14.4% FY15 FY16 FY17 FY18 Observations: Turnover • Sales turnover on a positive trend 19.10% • Voluntary turnover on a positive trend 18.20% • High performer turnover on a positive trend FY15 FY
Slide 18: Building a World Class HR Organization
For personal use only BUILDING A WORLD CLASS HR ORGANIZATION
Slide 19: Rethinking HR – Clear Objectives
Rethinking HR – Clear Objectives For personal use only PAGE 15
Slide 20: Organizing for the Future
Organizing for the Future For personal use only • Strategic partner to GMT member • Owner of Human Capital Plan • Coach and counsel leadership teams • Talent management execution HRBP • Thought leadership & • Local talent planning innovation • Employee • Expert analysis and consultation Plant develo
Slide 21: Road to 2020 – Big Bets & Early Wins
For personal use only ROAD TO 2020 – BIG BETS & EARLY WINS
Slide 22: Big Bets & Early Wins
Big Bets & Early Wins For personal use only Talent Acquisition Talent Management Total Rewards Insourced recruiting to reduce cost and Simplifying performance Redesigning pay structure to improve candidate quality management process to focus more bring consistency, market on development competitiven
Slide 23: Key Messages
Key Messages For personal use only – Addressed GMT leadership gaps with addition of 3 key hires in calendar 2017 – Continued focus on recruiting external talent where necessary – Developing our people through new development programs – Retention trends are moving in the right direction – Building a
Slide 24: Zean Nielsen, Executive Vice President Sales
For personal use only Zean Nielsen Executive Vice President Sales
Slide 25: Zean Nielsen – Headlines
ZEAN NIELSEN For personal use only Headlines • Danish, moved to the US in 1999 • 1 suitcase, $1000 • 39 years old • Married, 3 kids • Live in Wilmette, (Chicago) PAGE 2
Slide 26: Years at Bang & Olufsen
17 YEARS AT BANG & OLUFSEN For personal use only Headlines • International Dist. Development • VP of Marketing for ROW & Sales for NA • President of Bang & Olufsen Americas – Scaled Retail business – Launched B&O PLAY in NA – Built Pro Channel: Distributors, Builders, Architects, Designers & Install
Slide 27: ½ Years at Tesla
3 ½ YEARS AT TESLA For personal use only Headlines • Hired to further develop the Sales & Delivery Model for Tesla • VP of Global Sales Ops & EMEA (EMEA $2B+ business) • $2B to ~$9B+ and from ~4K to ~25K people • Opened 9 new countries and 200+ showrooms • Launched Model X • Launched Model 3. 350K+
Slide 28: Why Join James Hardie
WHY JOIN JAMES HARDIE For personal use only • JH is a great company, and much like • Untapped opportunities for digital process B&O and TESLA deeply rooted in product optimization, as well as revenue growth within existing network of partners • Great chemistry with Louis, Mike Hammes and the GMT tea
Slide 29: Transferable Skills & Opportunities
TRANSFERABLE SKILLS & OPPORTUNITIES For personal use only Transferable skills Opportunities • Built Pro Channel for B&O • Digitalization of platforms • Scaled and managed a large sales force • Integrated Sales & Marketing Programs • Int’l Executive • Pace of Play – Execute better and faster • Apprec
Slide 30: Q&A
For personal use only Q&A
Slide 31: Operations
For personal use only OPERATIONS Ryan Kilcullen & Dave Merkley September 2017
Slide 32: Agenda
AGENDA For personal use only Our Zero Harm Commitment Manufacturing Innovation & Operational Excellence Tacoma Greenfield Update JH Supply Chain Advantage PAGE 2
Slide 33: Journey to Zero Harm
For personal use only JOURNEY TO ZERO HARM
Slide 34: What Does Our Journey Look Like
WHAT DOES OUR JOURNEY LOOK LIKE For personal use only Zero Harm Safety Performance Driven by a Culture Shift that… Industry Average Ensures that safety is our first gate Incident Frequency Thrives on leadership commitment and visibility Empowers/engages all employees to proactively participate Resul
Slide 35: Zero Harm Approach
ZERO HARM APPROACH For personal use only Vision: World Class Safety Organization focused on Safe People, Safe Plants, and Safe Systems to drive a Zero Harm Culture Safe People Zero Harm Culture • Engaged, Empowered and Trained • Visible Leadership • Committed 24/7/365 Safe Plants Safe Safe • Clean &
Slide 36: Safe People
SAFE PEOPLE For personal use only A key component of our culture shift is to partner with world class safety programs that support plant floor ownership in safety… Peer‐based observations Self‐triggering assessments 3rd Party verification of JH execution PAGE 6
Slide 37: Safe Plants & Safe Systems
SAFE PLANTS & SAFE SYSTEMS For personal use only Our journey to World Class includes a shift in how we engineer, operate and manage our manufacturing facilities… Safe Plants Safe Systems Safety as a core philosophy in Predictive measures of plant & process design employee engagement Significant redu
Slide 38: Zero Harm Summary
ZERO HARM SUMMARY For personal use only • We are fully committed to a significant culture shift that results in JH becoming a World Class safety organization • Core elements of our program are visible leadership commitment, operator empowerment and predictive systems • One year in, significant progr
Slide 39: Delivering on the Potential of JH Manufacturing
For personal use only DELIVERING ON THE POTENTIAL OF JH MANUFACTURING
Slide 40: Manufacturing Advantage
MANUFACTURING ADVANTAGE For personal use only JH manufacturing: Major lever in our competitive advantage Proprietary technology delivers unit Innovation in process capability cost & ROCE advantage enables product leadership Unique throughput advantage in our Process capability delivers manufacturing
Slide 41: JH Manufacturing Evolution
JH MANUFACTURING EVOLUTION For personal use only Historical focus on step change innovation has delivered significant business value Who we will become Sheet Machine Throughput Who we have been Machine design potential Actual machine performance 4x4 FC Line 5x6 FC Line 5x9 FC Line Platform Advanceme
Slide 42: JH Reaching Its Full Potential
JH REACHING ITS FULL POTENTIAL For personal use only We have created a continuous improvement organization, the sole focus of which is to shift JH manufacturing from… Reactive Operations to Predictive Manufacturing Enabled by… Dependence on operator intervention Lean standard work & process control
Slide 43: Sample of Continuous Improvement Initiatives
SAMPLE OF CONTINUOUS IMPROVEMENT INITIATIVES For personal use only Creating a JH Approach to Lean Establishing Foundational Manufacturing Capabilities in Reliability Leader Standard Work Visual Workplace Management Standard Work Initiative Greater consistency within plants, and across our network, w
Slide 44: JH Manufacturing Step Change
JH MANUFACTURING STEP CHANGE For personal use only We have also doubled down on our ability to deliver break through engineering step change in all areas of JH manufacturing Step innovation in… …enables break through progress Next Generation Hatschek JH Manufacturing Capability New Product Enablers
Slide 45: Step Changing the Hatschek Process
STEP CHANGING THE HATSCHEK PROCESS For personal use only Current Speeds vs. Nameplate Enabled by step change innovation… Potential Speed Gains Beyond Design • Significant increase in drainage rate Sheet Machine Speed Potential to Close Gap to Nameplate • Raw material formation modifications Current
Slide 46: Manufacturing Platform Step Change
MANUFACTURING PLATFORM STEP CHANGE For personal use only Manufacturing platform innovation has the potential to unlock significant process, product and cost levers in fiber cement manufacturing. Enabling Product Enabling Total Enabling New Attributes Cost Optimization Products Platform A Platform B
Slide 47: Manufacturing Capability Summary
MANUFACTURING CAPABILITY SUMMARY For personal use only • We have an established history in step change manufacturing innovation • We are adding to and enhancing the talent and capability of our engineering teams to accelerate the pace of step change in JH • The value associated with continuous impro
Slide 48: Tacoma Greenfield Core Concepts
For personal use only TACOMA GREENFIELD CORE CONCEPTS
Slide 49: Tacoma Expansion – Site Overview
TACOMA EXPANSION – SITE OVERVIEW For personal use only • Nameplate Capacity – 300 Mmstdft/year • Capabilities – Plank, Backer, Heritage, ColorPlus® Technology • 130 Employees at full production • Site benefits • Low input cost • Proximity to growing markets PAGE 19
Slide 50: Tacoma Expansion Timeline Update
TACOMA EXPANSION For personal use only Timeline Update Q1 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Equipment Install Commission Break Building Install Start‐Up 85% Design Ground Erected Complete Capability Start‐Up Approach People Operational Zero Harm trained – Day 1 Build on Cleburne SM3 approach Netw
Slide 51: Tacoma Expansion – Pre-Autoclave Concepts
TACOMA EXPANSION – PRE-AUTOCLAVE CONCEPTS For personal use only Safety Integrated into Design 3rd Party Safety Design Consultants Large Reduction in Human/Fork Lift Interface Housekeeping Integrated into Design Material Handling Step Change Zero Forklifts from Stacker to Finishing Enables Building S
Slide 52: Tacoma Expansion – Post-Autoclave Concepts
TACOMA EXPANSION – POST-AUTOCLAVE CONCEPTS For personal use only Safety Integrated into Design Focus on Operator Access & Work Floor for Safe Operation Total Plant Product Flow Designed to Minimize Human Interface Coating Line Process Step Change Integrated High Speed Break Out Line Nested Coating L
Slide 53: JH Supply Chain Evolution
For personal use only JH SUPPLY CHAIN EVOLUTION
Slide 54: JH Supply Chain Overview
JH Supply Chain Overview For personal use only A fully integrated value chain that begins with customer value creation… Network Production Outbound Channel Customer Procurement Planning Scheduling Freight Management Experience ...and has capabilities that create a substantial competitive advantage:
Slide 55: JH Supply Chain – Capability Advantage
JH Supply Chain – Capability Advantage For personal use only Highly automated, integrated systems… Enable Customer Leverage & Exploit Optimize Delivered Cost with Integration Manufacturing Scale Freight/Sourcing Automated System Sequential low Order Taking Generates VMI cost tendering Software Reple
Slide 56: Capability Investments to Enable Growth
CAPABILITY INVESTMENTS TO ENABLE GROWTH For personal use only An expanding network enables a …requiring a new level of variety of optimization levers… network planning capability to… Achieve the true lowest landed cost network Fully exploit the scale of our VMI & reload network Appropriately level l
Slide 57: Enabling Growth Inside the Walls
ENABLING GROWTH “INSIDE THE WALLS” For personal use only Increasing plant scale & value‐add processing …requiring new capabilities inside is changing our plant size & flow… the walls… Full Product Finished Goods Inventory & Accessories • Product flow optimization ToM ColorPlus Heritage Primed Proces
Slide 58: Freight Outlook
FREIGHT OUTLOOK For personal use only Market supply/demand dynamics continue to create upward cost pressure… Market Pressure JH Response Continued economic recovery Optimize proven freight model Driver shortage Operate as “shipper of choice” Decreasing trend in driver efficiency Leverage network pro
Slide 59: Supply Chain Summary
SUPPLY CHAIN SUMMARY For personal use only • We continue to invest in supply chain capability to enable customer value creation at an optimized unit cost • Our current efforts are focused on leveraging the full benefit of our network and plant scale • Freight market headwinds persist, but we are wel
Slide 60: Key Messages
KEY MESSAGES For personal use only • We are becoming a Zero Harm organization • Step change innovation in manufacturing will continue to deliver significant business value • We are increasing our focus on continuous improvement to become a more predictable manufacturer • Tacoma Greenfield on track a
Slide 61: Market Position
For personal use only MARKET POSITION SEAN GADD EXECUTIVE VICE PRESIDENT, MARKETS AND SEGMENTS SEPTEMBER 2017
Slide 62: Agenda
Agenda For personal use only • Growth against the market index • James Hardie segment approach • Product thinking PAGE PAGE 2
Slide 63: Growth Above the Market Index
Growth Above the Market Index For personal use only Market Growth above our Market Index Market Defend against Growth against Development lower‐value natural wood to convert vinyl substitutes OSB and Competitive Hardboard Fiber Cement Single Family Single Family Multi‐Family New Construction Repair
Slide 64: Become the Market Standard in the Wood-Look Market
Become the Market Standard in the Wood-Look Market For personal use only Gain share against Vinyl and Wood while defending against lower value substitutes Vinyl Competitive Fiber Cement, wood and hardboard Vinyl & Lower Value Substitutes *Source: PAGE NAHB & JH internal analysis PAGE
Slide 65: Market Development Against Vinyl
Market Development Against Vinyl For personal use only • Value Proposition – Curb, front porch and deck appeal – Fire and abuse – Low maintenance – Affordable • New construction segmentation, targeting and positioning (STP) – Geography – Category of home – Builder profile - Better home, Better build
Slide 66: Sales Approach Against OSB and Hardboard
Sales Approach Against OSB and Hardboard For personal use only • Value Proposition – James Hardie company support – The full exterior – Low maintenance – Fire, rot, warp, termites – Core colors • Building company partnerships with all key stakeholders along the value chain PAGE PAGE 6
Slide 67: Sales Approach Against Competitive Fiber Cement
Sales Approach Against Competitive Fiber Cement For personal use only • Value Proposition – James Hardie invented fiber cement – #1 brand – Engineered for Climate ® positioning – Superior technology around durability, density, coatings – Manufacturing scale and platform advantage – Diversified segme
Slide 68: Segments
For personal use only Segments
Slide 69: Primary Demand Growth - PDG
Primary demand growth - PDG For personal use only • Taking share against vinyl with ColorPlus® technology • Market Development – Significant cost difference – Required to sell value – Switching costs / barriers risks On The Wall Cost (OTWC) • New Dealer JH Labor • New Installer • Different takeoff
Slide 70: New Construction Market Development
New Construction Market Development For personal use only 1. Establish position at top of the market aspirational product 2. Delivered to the right builder 3. “Shift left” to the next highest price band 4. Drive adoption • Highly effective sales organization • Full stakeholder engagement • Compreh
Slide 71: Repair and Remodel - Vinyl Standard Markets
Repair and Remodel - Vinyl Standard Markets For personal use only • Drive awareness and preference for James Hardie products with ColorPlus® technology in vinyl “battleground neighborhoods” • Convert battlegrounds into “lock downs” • Enable contractor growth in these key neighborhoods • Reach homeow
Slide 72: Enhancing the Wake
Enhancing the “Wake” For personal use only Sold Job Request for quote Request for quote PAGE PAGE 12
Slide 73: Partnering - Contractor Alliance Program
Partnering - Contractor Alliance Program For personal use only • First-time user acquisition • Account development (YoY business growth) • Enhanced value to promote loyalty PAGE PAGE 13
Slide 74: Defend against OSB Siding
Defend against OSB Siding For personal use only Sales development approach • Win in all segments / all geographies • Win with core colors • Add non‐product value programs • Value chain engagement & alignment PAGE PAGE 14
Slide 75: 100% Hardie
100% Hardie™ For personal use only • Position the value of full wrap • Engineered for Climate® positioning • Service guarantee PAGE PAGE 15
Slide 76: SIDE Master – Installer Affiliation Program
SIDE Master – Installer Affiliation Program For personal use only • An affiliation platform launched in the Midwest in 2015 and now expanding • Target installer SIDE Event Engagement Alignment • Adjust SIDE based on needs by market TM TM Business Building Bootcamp Networking Key Topic Breakout
Slide 77: Defend against Competitive Fiber Cement
Defend against Competitive Fiber Cement For personal use only • Competitive fiber cement manufacturers take a ‘me-too’ approach and compete on lower price against James Hardie products • Leverage our advantages to prevent commoditization of the category – #1 brand – Differentiated products – Manufac
Slide 78: Products
For personal use only Products
Slide 79: Product Strategy
Product Strategy For personal use only Take a 3C, 4P approach - Deliver the optimal product, price, placement and promotion for each segment in all geographies to deliver the long term market position for James Hardie PAGE PAGE 19
Slide 80: ColorPlus Technology
ColorPlus® Technology For personal use only • Delivers a high quality, factory-controlled coating designed for our substrate • Delivers a single-source, low-maintenance solution at reduced total cost • Drives growth against vinyl • Builds fences against close alternatives PAGE PAGE 20
Slide 81: ColorPlus Technology – Key Initiatives to Drive Growth
ColorPlus® Technology For personal use only Key initiatives to drive growth Deliver non-metro supply chain solution to increase market opportunity Next generation manufacturing model & non product value Continue demand enhancements creation in metro Leverage installer markets to make affiliation to
Slide 82: HardieTrim
HardieTrim® For personal use only • Continue to sell and promote a complete exterior solution as the ultimate low maintenance solution • Continued growth through product line extensions, installer affiliation programs and non-product value-add programs PAGE PAGE 22
Slide 83: Cemplank
Cemplank® For personal use only • Cemplank® serves as a fighter brand offering a low-cost solution to cost-conscious buyers in target segments and aids category share • Maintain James Hardie brand vs. fighter brand position through marketing mix and differentiation with our channel partners PAGE PAG
Slide 84: The Aspyre Collection from James Hardie
The ASPYRE Collection from James Hardie For personal use only TM Market Led 24
Slide 85: For personal use only
For personal use only PAGE PAGE 25
Slide 86: The Aspyre Collection – Top of Market Segment
The Aspyre Collection from James HardieTM For personal use only What is the Top of Market segment? - Top 10% of homes by price band - 400-500mmsf total opportunity, 250-300mmsf wood-look - Wood-Look opportunity dominated by cedar Why enter the Top of the Market segment? - Extend the fiber cement S-c
Slide 87: The Aspyre Collection – How We Will Win
The Aspyre™ Collection from James Hardie™ For personal use only How will we win the Top of the Market? - Commitment to continuous product innovation - Embracing the architect as key influencer - Selling tools fit for the customer - Investing in centralized marketing to combat fragmentation - Aspyred
Slide 88: The Aspyre Collection – What's Next
The Aspyre Collection from James Hardie™ For personal use only What’s next? - Launched on the West Coast in July 2017 - Capital investment made to support national launch in FY19 - Generation 2 product design efforts underway PAGE PAGE 28
Slide 89: Key Messages
Key Messages For personal use only • Become the market standard in the wood-look market • Drive PDG through the right sales approach, right products and right market programs • Penetrate the Top of Market leveraging The Aspyre Collection from James HardieTM PAGE PAGE 29
James Hardie Industries — Investor Day (September 2017) on 6ix