James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Non-Deal Roadshow (November 2016)
51 slides from James Hardie Industries's roadshow presentation, Nov 28, 2016
Slide 1: Investor Presentation November/December 2016
For personal use only INVESTOR PRESENTATION NOVEMBER/ DECEMBER 2016
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: Note to the Reader
NOTE TO THE READER For personal use only As of 30 June 2016, the Company changed its reportable operating segments. Previously, the Company reported on three operating segments: (i) North America and Europe Fiber Cement, (ii) Asia Pacific Fiber Cement, and (iii) Research and Development. As of 30 Ju
Slide 5: 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 6: Agenda
AGENDA For personal use only • Strategic Focus and Business Overview • North America Fiber Cement • International Fiber Cement • Capital Management Framework • Guidance • Appendix PAGE 6
Slide 7: Our Strategic Focus
OUR STRATEGIC FOCUS For personal use only Our strategy is to aggressively grow market demand for fiber cement and our overall market share, and to be sustainable and profitable throughout the business cycle by: • diversifying our sales across end markets and geographies • promoting value-added produ
Slide 8: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.9b • Total assets US$2.0b • Strong operational cash generation • Operations in North America, Asia Pacific and Europe • 3,257 employees • Market cap US$6.6b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales International 22% North America 78% EBIT ² International 21% North America 79% 1 All percentages are as at 30 September 2016 ² EBIT – excludes research and development, asbestos-related expenses and adjustments and New Zeal
Slide 10: Group Overview 2nd Quarter and HY FY17 Results
GROUP OVERVIEW 2nd QUARTER AND HY FY17 RESULTS Adjusted Net Operating Profit1 Adjusted Diluted EPS 1 For personal use only 2nd Qtr Half Year 2nd Qtr Half Year US$74.7M 14% US$141.4M 10% US17 cents 13% US32 cents 10% Adjusted EBIT 2 Net Operating Cash Flow 2nd Qtr Half Year Half Year US$106.1M 11% US
Slide 11: Key Themes 2nd Quarter and HY FY17 Results
KEY THEMES 2nd QUARTER AND HY FY17 RESULTS For personal use only • Higher volume in North America Fiber Cement and strong net sales growth in all operating segments1 • HY FY17 North America Fiber Cement EBIT margin of 25.5% • Net operating cash flow increased US$45.4 million compared to pcp • Announ
Slide 12: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$29.5m spent on Research & Development in FY16 and US$14.9m in HY FY17 • US$439.2m spent on Research & Development since 2000 James Hardie Siding Products Histo
Slide 13: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Share¹ 7% 7% 19% Fiber Cement Vinyl 9% Wood (including engineered wood) Stucco Brick Stone 9% Other (aluminium etc) 28% 21% 35/90 Plan • Grow fiber cement share to 35% of the exterior cladding market agains
Slide 14: 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 15: 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 15
Slide 16: North America Fiber Cement Segment
NORTH AMERICA FIBER CEMENT SEGMENT For personal use only North America Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,391 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC
Slide 17: Capacity – Annual Design
CAPACITY – ANNUAL DESIGN For personal use only Design Capacity Plant Location Owned/Leased (mmsf) Cleburne, Texas Owned 466 Incremental Capacity 200 Peru, Illinois Owned 560 Plant City, Florida Owned 300 Incremental Capacity 400 Pulaski, Virginia Owned 600 Reno, Nevada Owned 300 Tacoma, Washington O
Slide 18: North America Fiber Cement Summary
NORTH AMERICA FIBER CEMENT SUMMARY For personal use only Q2'17 1H'17 Volume • Steady growth in R&R and new construction markets Net Sales US$384.5M US$754.8M • Market penetration momentum continues to improve 10% 12% • PDG improving and trending closer to target Sales Volume 571.7 mmsf 1,120.1 mmsf
Slide 19: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only North America Fiber Cement Top Line Growth1 3,000 $1,600 2,800 $1,500 JH Volume (mmsf), Starts (000s Units) 2,600 $1,400 2,400 $1,300 2,200 $1,200 $1,100 Revenue (US$M) 2,000 $1,000 1,800 $900 1,600 $800 1,400 $700 1,200 $600 1,000 $
Slide 20: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only North America Fiber Cement 710 Average Net Sales Price 666 669 665 670 641 638 US$ per MSF 630 625 630 616 590 550 FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H'17 • Pricing down ~1% driven by regional and product mix and ongoing execution of
Slide 21: North America Delivering Strong Returns
NORTH AMERICA DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin1 100 30 90 25 80 70 20 EBIT Margin 60 EBIT US$M 50 15 40 10 30 20 5 10 0 0 FY12 FY13 FY14 FY15 FY16 FY17 EBIT EBIT/Sales Half Year EBIT Margin % remains above target range, but down 170 bps to 25.5% compared
Slide 22: International Fiber Cement Summary
INTERNATIONAL FIBER CEMENT SUMMARY For personal use only Q2'17 1H'17 Volume • Half year volume increased 2%, excluding the Australian Pipes Net Sales US$106.6M US$209.5M business 8% 5% Sales Volume 121.4 mmsf 245.9 mmsf • Volume growth in Australian, Europe and New Zealand 2% 2% businesses Sales Vol
Slide 23: International Delivering Strong Returns
INTERNATIONAL DELIVERING STRONG RETURNS International Fiber Cement Segment For personal use only Quarterly EBIT and EBIT Margin1 30 25 20 15 10 5 0 Q2 FY 2012 Q2 FY 2013 Q2 FY 2014 Q2 FY 2015 Q2 FY 2016 Q2 FY 2017 EBIT EBIT Margin 1 EBIT and EBIT margin excludes New Zealand weathertightness claims P
Slide 24: International Fiber Cement (USD)
INTERNATIONAL FIBER CEMENT (USD) 1H’17 For personal use only Q2'17 Australia Australia Australia 1 • Higher volumes and strategic pricing Net Net Volume EBIT Volume EBIT Sales Sales • Non-recurring startup costs at Carole Park in Q2 FY16 Flat Q2'17 1H’17 New Zealand New Zealand New Zealand • Higher
Slide 25: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Disciplined Capital For personal use only Liquidity and Funding Management Allocation • Strong margins and operating • Invest in R&D and capacity • Conservative leveraging of cash flows expansion to support organic balance sheet within 1-2 time
Slide 26: FY2017 Guidance
FY2017 GUIDANCE For personal use only • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2017 is between US$256 million and US$285 million • Management expects full year Adjusted net operating profit to be between US$250 milli
Slide 27: Appendix
For personal use only APPENDIX
Slide 28: USA Marketplace
USA MARKETPLACE For personal use only PAGE 28
Slide 29: Australia & New Zealand Marketplace
AUSTRALIA & NEW ZEALAND MARKETPLACE For personal use only PAGE 29
Slide 30: Australia, New Zealand & Philippines Core Markets
AUSTRALIA, NEW ZEALAND & PHILIPPINES CORE MARKETS For personal use only Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 30
Slide 31: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months and Half Year Ended 30 September US$ Millions Q2'17 Q2'16 % Change 1H'17 1H'16 % Change Net Sales North America Fiber Cement $ 384.5 $ 348.4 10 $ 754.8 $ 671.3 12 International Fiber Cement 106.6 98.4 8 209.5 199.6 5 Other Businesses 4.7 3.4 38 9.
Slide 32: North America Fiber Cement – Year Results Overview
NORTH AMERICA FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY12 FY13 FY14 FY15 FY16 Net Sales 834 914 1,084 1,225 1,335 US$m Sales Volume 1,313 1,468 1,673 1,822 1,969 mmsf EBIT US$m¹ 162 166 235 290 352 EBIT Margin %¹ 19 18 22 24 26 1Excludes asset impairment charges of US$14.3 mill
Slide 33: International Fiber Cement – Year Results Overview
INTERNATIONAL FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY12 FY13 FY14 FY15 FY16 Net Sales 404 397 400 418 379 US$m Sales Volume 412 414 441 484 481 mmsf EBIT US$m¹ 90 75 86 90 79 EBIT Margin %¹ 22 19 22 22 21 1Excludes New Zealand weathertightness claims of US$5.4 million , US$13
Slide 34: Results – 2nd Quarter FY17
RESULTS – 2nd QUARTER FY17 For personal use only Three Months Ended 30 September Net sales increased 10% • Higher volume driven by North America segment US$ Millions Q2'17 Q2'16 % Change • Higher average net sales price in International Fiber Cement Net sales 495.8 450.2 10 segment Gross profit 182.
Slide 35: Results – Half Year FY17
RESULTS – HALF YEAR FY17 For personal use only Half Year Ended 30 September Net sales increased 11% • Higher volume in all operating segments3 US$ Millions 1H'17 1H'16 % Change • Higher average net sales price in International Fiber Cement Net sales 973.5 878.5 11 segment Gross profit 358.9 322.6 11
Slide 36: North America Input Costs
NORTH AMERICA INPUT COSTS For personal use only Quarterly US Input Costs • The price of NBSK pulp increased 4% compared to 1,200 10 9 prior corresponding quarter Cement, Gas, Electric and Freight Prices 1,000 8 7 • Cement prices continue to rise, up 5% compared to 800 6 prior corresponding quarter P
Slide 37: Segment EBIT – 2nd Quarter and Half Year FY17
SEGMENT EBIT – 2nd QUARTER and HALF YEAR FY17 For personal use only North America Fiber Cement North America Fiber Cement EBIT summary 250 • 2Q and 1H EBIT increased by 7% and 5%, respectively, when 200 192.3 182.4 US$ Millions compared to pcp 150 142.1 Q2 EBIT • Driven by favorable volume, partiall
Slide 38: Segment EBIT – 2nd Quarter and Half Year FY17
SEGMENT EBIT – 2nd QUARTER and HALF YEAR FY17 For personal use only Other Businesses (5) Other Businesses (4.1) (4) • 2Q and 1H EBIT loss improved by 43% and 37%, respectively, US$ Millions (3) (2.6) (2.1) when compared to pcp (2) (1.8) Q2 EBIT (1.2) (1.2) 1H EBIT • Driven by improving performance o
Slide 39: Changes in AUD vs. USD
CHANGES IN AUD vs. USD For personal use only As Reported Excluding Translation Impact 1 Translation Impact 2 US$ Millions 1H'17 1H'16 % Change 1H'17 % Change $ (Unfav)/Fav % Net sales $ 973.5 878.5 t 11% $ 973.1 t 11% 0.4 - Gross profit 358.9 322.6 t 11% 358.8 t 11% 0.1 - Adjusted EBIT 203.7 184.9 t
Slide 40: Income Tax
INCOME TAX For personal use only Three Months and Half Year Ended 30 September 26.0% estimated adjusted effective tax rate for the year US$ Millions Q2’17 Q2’16 1H'17 1H'16 • Adjusted income tax expense for the quarter and Operating profit before taxes 82.0 153.9 193.0 235.2 half year increased due
Slide 41: Cashflow
CASHFLOW For personal use only 1 US$ Millions 1H'17 1H'16 Change (%) Increase in net operating cash flow Net Income 144.1 190.2 (24) Favorable change in working capital Adjustment for non-cash items 1 54.8 (20.0) Increase in net income adjusted for non-cash items Annual AICF contribution (91.1)
Slide 42: Capital Expenditure
CAPITAL EXPENDITURE For personal use only • Half year CAPEX of US$35.6 million down by 16% compared to pcp CAPEX Spend 25 • North America capacity projects: 20 Restarting Summerville facility with an estimated US$ Millions 15 cost of US$17.9 million; planned for early FY18 10 Expecting to commis
Slide 43: Liquidity Profile
LIQUIDITY PROFILE For personal use only Debt Profile Corporate debt structure US$ Millions US$500 million unsecured revolving credit facility, with a December 2020 maturity 1 $250 US$400 million senior unsecured notes2 maturing February 2023 $500 $225 US$225m bank facilities drawn at Strong bala
Slide 44: Asbestos Claims Data
ASBESTOS CLAIMS DATA For personal use only Claims Received • Quarter and 1H claims received decreased by 296 313 17% and 4%, respectively, compared to pcp 285 157 157 • Quarter and 1H claims received were 17% and 131 9%, below actuarial estimates, respectively • Claims reporting during the half year
Slide 45: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only This Management Presentation forms part of a package of information about the company’s results. It should be read in conjunction with the other parts of this package, including the Management’s Analysis of Results, Media Release and Condensed Consol
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Condense
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only EBIT – Earnings before interest and taxes EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales Sales Volumes mmsf – million square feet, where a square foot is defined as a standard square foot of 5/16” thickness msf – thousan
Slide 48: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Financial Measures – US GAAP equivalents Adjusted EBIT US$ Millions Three Months and Half Year ended 30 September Q2'17 Q2'16 1H'17 1H'16 EBIT $ 88.5 $ 161.1 $ 206.3 $ 245.6 Asbestos: Asbestos adjustments 17.2 (66.0) (3.4) (61.5) AICF SG&A expense
Slide 49: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted diluted earnings per share Three Months and Half Year ended 30 September Q2'17 Q2'16 1H'17 1H'16 Adjusted net operating profit (US$ millions) $ 74.7 $ 65.4 $ 141.4 $ 128.7 Weighted average common shares outstanding - 445.4 446.7 446.4 447
Slide 50: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted EBITDA US$ Millions Three Months and Half Year ended 30 September Q2'17 Q2'16 1H'17 1H'16 EBIT $ 88.5 $ 161.1 $ 206.3 $ 245.6 Depreciation and amortization 20.4 17.6 39.9 35.8 Adjusted EBITDA $ 108.9 $ 178.7 $ 246.2 $ 281.4 Adjusted selli
Slide 51: November/December 2016
For personal use only INVESTOR PRESENTATION NOVEMBER/ DECEMBER 2016
James Hardie Industries — Non-Deal Roadshow (November 2016) on 6ix