James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (September 2017)
49 slides from James Hardie Industries's investor presentation, Sep 14, 2017
Slide 1: James Hardie's USA Investor/Analyst Tour Day 1 Presentations
For personal use only JAMES HARDIE’S USA INVESTOR/ANALYST TOUR 14th & 15th SEPTEMBER 2017 DAY 1 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: James Hardie - Louis Gries
For personal use only JAMES HARDIE INVESTOR UPDATE Louis Gries
Slide 6: Agenda
AGENDA For personal use only • NA FC Organic Growth Strategy & Returns • Beyond FC in North America • Organization Capability to Deliver PAGE 2
Slide 7: Share Growth in North America
SHARE GROWTH IN NORTH AMERICA For personal use only Growth Above Market Index Primary Hard Siding Demand Growth Alternatives (PDG) Defend against Growth against lower value Growth against Vinyl, Stucco substitutes: Natural Wood and Brick OSB, Hardboard, CFC PAGE 3
Slide 8: Homeowner Value Proposition
HOMEOWNER VALUE PROPOSITION For personal use only • Curb, porch & deck appeal • Fire & abuse • Low maintenance • Affordable PAGE 4
Slide 9: Market Development to Convert Vinyl
MARKET DEVELOPMENT TO CONVERT VINYL For personal use only Segment / Target / Position Basics New Construction - Geography - Category of home - Builder profile - Better home ↔ Better builder ↔ Better development Repair & Remodel - Geography - Neighborhoods - Value proposition direct to home owner PAG
Slide 10: Defend Against Lower Value Substitutes
DEFEND AGAINST LOWER VALUE SUBSTITUTES For personal use only Homeowner Value Proposition - Engineered for climate durability - Lower maintenance - Substrate - Surface finish - Full exterior wrap Keys to defend against discounting - Channel partners - Homeowner awareness - Contractor alignment PAGE 6
Slide 11: Safety at the Forefront
SAFETY AT THE FOREFRONT For personal use only • Standard and sustainable systems • Establish playbook and train employees • Zero tolerance for unsafe behaviors Safety culture evolving from 2&10 to Zero Harm PAGE 7
Slide 12: Drive Delivered Unit Cost Trends
DRIVE DELIVERED UNIT COST TRENDS For personal use only Delivered Unit Cost FY17 1Q FY18 Improving delivered unit cost trend … in a sustainable way PAGE 8
Slide 13: Expand Product Capability
EXPAND PRODUCT CAPABILITY For personal use only Durability Engineered Density for Climate Future Capability Sourcing Surface Alternatives Shapes Finish PAGE 9
Slide 14: North America Manufacturing Capacity
NORTH AMERICA MANUFACTURING CAPACITY For personal use only Capacity Expansion Since Housing Downturn 0.3 3.7 0.7 0.1 • Plant City 3 0.2 • Summerville 1 2.4 • Fontana 2 • Fontana 1 • Waxahachie 1 • Plant City 4 • Cleburne 3 FY10 FY13 FY14 FY17 FY18 FY18 Nameplate Wax Restart Fontana Restart Start Ups
Slide 15: FY19 Capacity Outlook
FY19 CAPACITY OUTLOOK For personal use only FY19 Capacity 3.7 Billions of Square Feet 2.8 PAGE 11
Slide 16: Beyond Current North America Organic Growth Strategy
For personal use only BEYOND CURRENT NORTH AMERICA ORGANIC GROWTH STRATEGY
Slide 17: International
INTERNATIONAL For personal use only • Steady share gains in APAC • Reset game plan in Europe • Further expansion with GDP per capita bias PAGE 13
Slide 18: Non-Fiber Cement in North America
NON-FIBER CEMENT IN NORTH AMERICA For personal use only Target Building Materials Searching Across Leverage James Hardie Differentiated Product or Growth Segments Capabilities Business Model Close Adjacencies Organic Growth Potential Assets with Defendable Moats Large Market Size Continue to explore
Slide 19: Organizational Capability to Enable
For personal use only ORGANIZATIONAL CAPABILITY TO ENABLE
Slide 20: Management Team
MANAGEMENT TEAM For personal use only Louis Gries CEO 39 Years; 26 JH Years Sean Gadd Jack Truong Matthew Marsh EVP, Markets & President, International CFO and EVP Segments 27 Years; <1 JH Years 20 Years; 4 JH Years 22 Years; 13 JH Years Zean Nielsen Ryan Kilcullen Kirk Williams EVP, NA Sales & EVP,
Slide 21: FY17/18 Supply Issues & Ramifications
For personal use only FY17/18 SUPPLY ISSUES & RAMIFICATIONS
Slide 22: Supply Issues & Ramifications
SUPPLY ISSUES & RAMIFICATIONS For personal use only • Focus has shifted to building on traction in manufacturing now that demand / supply equation has returned to balance • Recapturing lost ground in the market … significant effort is required • Improving delivered unit cost trend with network stabi
Slide 23: Key Messages
KEY MESSAGES For personal use only • Zero Harm safety commitment • Manufacturing reset • Regain market traction lost during supply shortage period • International growth • Non-FC opportunity scans • Management team build • Broad-based organizational capability build PAGE 19
Slide 24: External Environment & Business Fundamentals
For personal use only EXTERNAL ENVIRONMENT & BUSINESS FUNDAMENTALS Matthew Marsh, EVP & CFO
Slide 25: Agenda
AGENDA For personal use only • U.S. Economic Conditions • Housing Environment • North America Capacity PAGE 2
Slide 26: Key Economic Indicators Stable
KEY ECONOMIC INDICATORS STABLE For personal use only GDP Growth S&P Index Source: Bureau of Economic Analysis Source: Yahoo! Finance GDP remains 2-3%. Market strong. PAGE 3
Slide 27: Key Economic Indicators Stable
KEY ECONOMIC INDICATORS STABLE For personal use only Crude Oil Consumer Confidence Index USD$/Barrel Source: World Bank Source: OECD Oil prices stable. Continued strength in consumer confidence. PAGE 4
Slide 28: Key Economic Indicators Stable
KEY ECONOMIC INDICATORS STABLE For personal use only 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. PAGE 5
Slide 29: Political Environment
POLITICAL ENVIRONMENT For personal use only (+) Corporate Tax Reform ↔ Infrastructure Bill ↔ NAFTA ↔ Mortgage Interest Deduction ↔ Healthcare (‐) Immigration Policy / DACA PAGE 6
Slide 30: U.S. Natural Disasters
U.S. NATURAL DISASTERS For personal use only • 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
Slide 31: Solid Confidence & Investment in Housing
SOLID CONFIDENCE & INVESTMENT IN HOUSING For personal use only Real Estate Confidence Index Residential Fixed Investment as % of GDP 2008 2017 Source: National Association of Realtors, Source: Federal Reserve Economic Data, Realtors Confidence Survey, June 2017 Federal Reserve Bank of St. Louis PAGE
Slide 32: Growth of New Housing Continues
GROWTH OF NEW HOUSING CONTINUES For personal use only Housing Permits Source: U.S. Census Bureau PAGE 9
Slide 33: Growth Across New Construction Segments
GROWTH ACROSS NEW CONSTRUCTION SEGMENTS For personal use only Housing Starts by Segment Thousands of Starts Source: U.S. Census Bureau Positive growth in all segments. Single-family continues to outpace multi-family. PAGE 10
Slide 34: Demand Exceeding Supply
DEMAND EXCEEDING SUPPLY For personal use only U.S. Housing Supply Case-Shiller Home Price Index # Months Supply Source: Federal Reserve Economic Data, Source: Core Logic Case-Schiller Federal Reserve Bank of St. Louis Home Price Index Supply remains tight. Prices continue to escalate. PAGE 11
Slide 35: New Occupant Population Exists
NEW OCCUPANT POPULATION EXISTS For personal use only U.S. Population by Young Adults, 18-34, Living at Home Age Source: U.S. Census, American Community Survey Source: U.S. Census New residence eligible population living at home PAGE 12
Slide 36: Affordability Remains Significant Headwind
AFFORDABILITY REMAINS SIGNIFICANT HEADWIND For personal use only Outstanding Credit & Borrower FICO Score at Origination Student Loan Debt Source: Urban Institute, CoreLogic, eMBS, HMDA, SIFMA Source: Federal Reserve Economic Data Student debt continues to rise. Financing eligibility remains elevate
Slide 37: Availability of Labor Continued Concern
AVAILABILITY OF LABOR CONTINUED CONCERN For personal use only % Builders Reporting Labor Shortages 2016 Source: NAHB PAGE 14
Slide 38: Repair & Remodel Remains Stable Growth Segment
REPAIR & REMODEL REMAINS STABLE GROWTH SEGMENT For personal use only Age of Housing Stock Repair & Remodel Project Growth Source: U.S. Census Bureau, American Housing Survey Source: Hanley Wood Average Age = 41 Years Repair & remodel projects continue to grow at ~5% annually PAGE 15
Slide 39: Historic Market Share
HISTORIC MARKET SHARE For personal use only Present Future 100% JH wins against wood‐look alternatives PAGE 16
Slide 40: Demand to Determine Future Capacity
DEMAND TO DETERMINE FUTURE CAPACITY For personal use only Future capacity decisions based on: Tacoma, WA ‐ Geographic demand ‐ Location Reno, NV ‐ Product mix Peru, IL Pulaski, VA ‐ Optimal delivered unit cost Summerville, SC Fontana, CA Waxahachie, TX ‐ Materials sourcing Prattville, AL ‐ Efficient
Slide 41: Historic & Future Capacity Utilization
HISTORIC & FUTURE CAPACITY UTILIZATION For personal use only 100% • Protect 20% growth • 85% utilization trigger • Capacity adds to keep supply ahead of demand FY09 FY11 FY13 FY15 FY17 FY19 FY21 Current gross hours utilization ~94% PAGE 18
Slide 42: Tacoma, Washington
TACOMA, WASHINGTON For personal use only • 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 PAGE 19
Slide 43: Prattville, Alabama Greenfield
PRATTVILLE, ALABAMA GREENFIELD For personal use only • 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 produc
Slide 44: Key Messages
KEY MESSAGES For personal use only • U.S. economy strong • Housing recovery slow but steady • Capacity in place to support growth PAGE 21
Slide 45: Growth Through International - Jack Truong
For personal use only GROWTH THROUGH INTERNATIONAL Jack Truong
Slide 46: International Business in Context - FY 2017
INTERNATIONAL BUSINESS IN CONTEXT- FY 2017 For personal use only 2Unless otherwise stated for fiscal years 2011 through to 2017, Adjusted EBIT graphs and editorial comments refer to EBIT that may exclude asbestos, asset impairments, ASIC expenses, non-recurring stamp duty and/or New Zealand weathert
Slide 47: Growth Above Market in APAC & Europe
GROWTH ABOVE MARKET IN APAC & EUROPE For personal use only • Continue to focus on gaining share in new home construction and repair & renovation segments • Expand product portfolio from cladding, linings and ceilings to facades, floors and decking • Invest in consumer insights, local R&D and manufac
Slide 48: Expanding Our Footprint in Europe and Asia
EXPANDING OUR FOOTPRINT IN EUROPE AND ASIA For personal use only Our business has a strong platform in: • USA • Canada • Australia • New Zealand • the Philippines • the UK Our international growth expansion will be in • Western Europe • China (region specific), • Southeast Asia Note: Bubble size: To
Slide 49: For personal use only
For personal use only
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