James Hardie Industries Plc. · NYSE:JHX

James Hardie Industries — Investor Presentation (September 2011)

73 slides from James Hardie Industries's investor presentation, Sep 21, 2011

  1. Slide 1: ColorPlus Supply Chain

    20/09/2011 For personal use only ColorPlus Supply Chain Ryan Sullivan DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K, in

  2. Slide 2: Agenda

    20/09/2011 AGENDA For personal use only  Why Supply Chain is critical to James Hardie  Past to current day Supply Chain  Supply Chain Strategy and Systems  Execution Update  Go Forward 3 Why Supply Chain is critical to James Hardie 2

  3. Slide 3: Supply Chain Barriers – New Product and ColorPlus Growth

    20/09/2011 SUPPLY CHAIN BARRIERS – NEW PRODUCT GROWTH For personal use only Barriers limit pace of new James Hardie products adoption  Catch-22: channel won’t get behind new products without builder demand; builders reluctant without strong channel support  Higher channel margins—partly to cover i

  4. Slide 4: Supply Chain Barriers – Market Strategy and Opportunity

    20/09/2011 SUPPLY CHAIN BARRIERS – MARKET STRATEGY For personal use only  James Hardie market strategies are requiring advanced Supply Chains to deliver on customer value proposition and gain access  Cemplank Strategy  Short lead-time  Less than Truck Load (LTL)  Multifamily Strategy  Direct t

  5. Slide 5: Past to Current Day Supply Chain

    20/09/2011 For personal use only Past to Current Day Supply Chain JAMES HARDIE SUPPLY CHAIN NETWORK – 1990s JH Plant 10 5

  6. Slide 6: James Hardie Supply Chain Network – 2000s and 2010s

    20/09/2011 JAMES HARDIE SUPPLY CHAIN NETWORK – 2000s For personal use only JH Plant ColorPlus Freight Reloads C+ VMIs C+ Reloads Retail VMIs 11 JAMES HARDIE SUPPLY CHAIN NETWORK – 2010s JH Plant ColorPlus Freight Reloads VMIs C+ Reloads Retail VMIs 12 6

  7. Slide 7: Future State Supply Chain

    20/09/2011 FUTURE STATE SUPPLY CHAIN For personal use only The future Supply Chain of James Hardie will be:  Multiple Supply Chains (programs) configured for specific customer and product segments – all aligned around core principles  Full market access  Low-cost value chain  Value added service

  8. Slide 8: Channel Strategy Objectives

    20/09/2011 For personal use only Supply Chain Strategy and Systems CHANNEL STRATEGY OBJECTIVES Channel Objectives That Support Share Growth Share Growth JH Full Market Lowest Cost Value-Added Affordability Access Value Chain Services to the Market • Enable Hardie to sell • Bring savings to Hardie, •

  9. Slide 9: Key Supply Chain Programs and Job Packs

    20/09/2011 KEY SUPPLY CHAIN PROGRAMS For personal use only To execute our strategy there are a few key Supply Chain Programs:  ColorPlus Job Packs  Vendor Managed Inventory (VMI)  Less than Truck Load orders (LTL)  Channel Interface Systems 17 WHAT ARE JOB PACKS? Job packs are to-the-piece order

  10. Slide 10: Why Job Packs and Their Impact on Supply Chain

    20/09/2011 WHY JOB PACKS? For personal use only Job Packs are an initiative in support of our on-going strategy of product differentiation  Since its introduction, ColorPlus has been a critical aspect of our differentiation strategy  Market adoption of ColorPlus is slowed by supply chain issues 

  11. Slide 11: Reduced Lead Times and Job Site Waste Reduction

    20/09/2011 REDUCED LEAD TIMES For personal use only Our end state ColorPlus Job Pack lead time will be 5-8 business days from order to receipt by dealer  Today contractor experienced lead time ranges from three to six weeks ColorPlus Timeline: From Order to Delivery Today vs. with Job Packs DAYS 0

  12. Slide 12: Far Broader Access to Products; Job Pack Scope

    20/09/2011 FAR BROADER ACCESS TO PRODUCTS For personal use only Job packs dramatically increase access to non-stocked SKU’s Chicago ColorPlus SKU’s Shingle Plank Panel Soffit Trim Future Products Colors 1 day lead time (stocked by Dealer) 3 day lead time (stocked by Distribution) Formerly 3 week lea

  13. Slide 13: Supply Chain Flow and Customer Portal

    20/09/2011 SUPPLY CHAIN FLOW For personal use only Customer Delivery Order Fulfillment Products Interface Distribution / VMI Planning and Take Offs Scheduling Transportation Pricing / Quote Manufacturing Order Invoicing Processing Warehouse Management 25 STREAMLINE COMMUNICATION – CUSTOMER PORTAL On

  14. Slide 14: Online Order Entry and Tracking

    20/09/2011 FUTURE STATE VALUE CHAIN – ONLINE ORDER ENTRY AND For personal use only TRACKING JH Web Platform Target Customer Distributor Big Box / VMI Dealer Builder Contractor Serious DIY Plant Order Product 27 ONLINE ORDER ENTRY – PROJECT VALUES In order to be successful our designed solution must:

  15. Slide 15: Current Job Pack Markets

    20/09/2011 For personal use only Execution/Results Update CURRENT JOB PACK MARKETS Standard Markets Current Job Pack Markets 30 15

  16. Slide 16: Job Pack Adoption and Market Access

    20/09/2011 JOB PACK ADOPTION For personal use only Job Pack Volume Job Packs Total C+ Vol ‐ US only % ColorPlus via Job Packs % of US C+ Volume Volume (msf) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Job Packs have seen rapid adoption in all markets launched to date 31 JOB P

  17. Slide 17: Job Packs – Accessory Attachment Increases

    20/09/2011 JOB PACKS – ACCESSORY ATTACHMENT INCREASES For personal use only ColorPlus Trim Attachment Chicago ColorPlus Trim Attachment PNW Job Packs Launched Job Packs Launched FY10 FY11 FY12 (YTD) FY11 FY12 (YTD) Job Packs help to increase accessory attachment in low penetration markets 33 Go Forw

  18. Slide 18: Go Forward

    20/09/2011 GO FORWARD For personal use only In the next 12 months we will deliver on a number of key elements:  Channel Interface launch – Q4  ColorPlus Manufacturing capability enhancements – Q1  Additional Job Pack markets – on going  VMI network expansion – key markets 35 CURRENT JOB PACK MAR

  19. Slide 19: Summary

    20/09/2011 For personal use only Summary SUMMARY  The James Hardie Supply Chain is developing from a base manufacture model to an advanced value chain to support and drive market initiatives  Job Packs continue to expand and grow while driving expected value in the market  Continued development a

  20. Slide 20: Questions and Answers

    20/09/2011 For personal use only Questions and Answers 20

  21. Slide 21: Channel Strategy & Management

    20/09/2011 For personal use only Channel Strategy & Management Robb Rugg DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K,

  22. Slide 22: Channel Strategy Review

    20/09/2011 AGENDA For personal use only  Channel Strategy Review  Channel Objectives  Distribution Review & Approach  Dealer Approach CHANNEL STRATEGY REVIEW We are reviewing and adjusting (where necessary) our channel strategy.  Goal: greater alignment with our four channel objectives and grea

  23. Slide 23: Channel Strategy Objectives

    20/09/2011 CHANNEL STRATEGY OBJECTIVES For personal use only Four core goals: access, low delivered cost, value-add services and affordability.  These four objectives are how the channel partners help JH to achieve market share growth Channel Objectives That Support Market Share Growth Market Share

  24. Slide 24: Starts Density and Population Density

    20/09/2011 STARTS DENSITY For personal use only Source: Dodge 8/11 & NAHB Builder and Consumer Practice Reports ‘09 (8/10) POPULATION DENSITY Source: MapPoint 8/11 4

  25. Slide 25: Summary

    20/09/2011 SUMMARY For personal use only  Mapped out U.S. based on starts and population  Pure Non-Metro or Metro exception vs. the rule  Base case Distribution Model is mature Metro with supplemental Non-Metro component for added function(s)  Increasing James Hardie sales involvement with deale

  26. Slide 26: Dealer Approach

    20/09/2011 DEALER APPROACH For personal use only  Continue to drive primary demand with builder, contractor and owners  Educate, train and go to market with dealer partners in a planned, complimentary and coordinated manner  Cost effectively deliver differentiated product, systems and services to

  27. Slide 27: Strategy Execution Roadmap – Next Five Years

    20/09/2011 STATEGY EXECUTION ROADMAP – NEXT FIVE YEARS For personal use only Timeline 0 – 3 Years 3 – 5 Years Easy to do Business with – Build the Infrastructure – Objective “Simplify” “Connect” • Customer Service improvement • R&R Contractor integration • Online Order Entry platform • Builder integ

  28. Slide 28: Organization – Channel Focus

    20/09/2011 ORGANIZATION – CHANNEL FOCUS For personal use only  Building a channel focused sales organization  Organization will work with channel partners to develop and implement strategic growth plans  Hardie, channel partners and marketplace will get market access, low-cost value chain, value-

  29. Slide 29: Product North Strategy

    20/09/2011 For personal use only Product North Strategy Sean Gadd DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K, in its

  30. Slide 30: What Is the 3 Product Strategy

    20/09/2011 AGENDA For personal use only  What is the 3-product strategy  Why the 3-product strategy is important  Market opportunity  Market approach  Results  Go forward WHAT IS THE 3 PRODUCT STRATEGY  As the leader in Fiber Cement, with our product leadership position and advances in techno

  31. Slide 31: HardiePlank HZ5 and HardieTrim NT3

    20/09/2011 3 PRODUCTS – HARDIEPLANK HZ5 LAP SIDING WITH IMPROVED DRIP EDGE For personal use only  Superior moisture shedding  Clean lines  More durable edge 3 PRODUCTS – HARDIETRIM NT3 BOARDS Concealed fasteners  virtually eliminates touchup  speeds up installation 12’ Lengths (5/4” and 4/4”) 

  32. Slide 32: New HardieShingle Siding; Complete ColorPlus Exterior

    20/09/2011 3 PRODUCTS – NEW HARDIESHINGLE® SIDING For personal use only Authentic wood shingle appearance  New tab dimensions  5 different widths  Reduces waste  Improved pattern variation  2 different panel types  New texture  More authentic look  Available ColorPlus individual shingles COM

  33. Slide 33: Why the Product Strategy Is Important

    20/09/2011 WHY THE 3 PRODUCT STRATEGY IS IMPORTANT For personal use only  Delivers on James Hardie’s brand promise, creating more value along the value chain  Fortifies the ColorPlus™ value proposition – removes the need for the painter at the site and delivers a superior finish  Re-invigorates o

  34. Slide 34: Competition in the North; Market Approach

    20/09/2011 COMPETITION IN THE NORTH For personal use only STRATEGY – MARKET APPROACH Approach, dependent on market dynamics 6

  35. Slide 35: Delivering Positioning Through Channel; Execution

    20/09/2011 4 Ps For personal use only Product Place ColorPlus Complete Exterior: Delivering positioning through channel 4 step process: 1. Dealer stocking / accepting of supply chain 2. Developing dealer relationships 3. Educating contractors with the dealer 4. Converting contractors with dealers to

  36. Slide 36: Northern Markets – Results

    20/09/2011 NORTHERN MARKETS – RESULTS For personal use only Shingle Attachment Trim Attachment Attachment % (wall coverage) Attachment FY 10 FY 11 FY 12TD FY 08 FY 09 FY 10 FY 11 FY 12 Color Penetration FY 07 FY 08 FY 09 FY 10 FY11 FY12 YTD GO FORWARD  Continue our product development strategy  De

  37. Slide 37: Questions and Answers

    20/09/2011 For personal use only Questions and Answers 9

  38. Slide 38: Repair & Remodel Segment

    20/09/2011 For personal use only Repair & Remodel Segment David Donofrio DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K,

  39. Slide 39: Overview; Repair & Remodel Market

    20/09/2011 OVERVIEW For personal use only  Market/Strategy Review  James Hardie R&R Execution Update  Summary and Go Forward  Questions and Answers Repair & Remodel Market Overview 2

  40. Slide 40: R&R Opportunity vs New Construction; Segment Strategy

    20/09/2011 R&R OPPORTUNITY CONTINUES TO GROW VS NEW CONSTRUCTION For personal use only 2006 2010 New Construction, 27% New Construction, 46% Repair & Remodeling, 54% Repair & Remodeling, 73% 5 Total Value in USD Source: NAHB R&R SEGMENT STRATEGY  Business Strategy – Switch the preference from vinyl

  41. Slide 41: R&R Strategic Objectives

    20/09/2011 R&R STRATEGIC OBJECTIVES For personal use only Objectives Outcomes/Challenges  James Hardie can impact seller  Get into home via education, and buyer behavior contractor or both  ColorPlus and trim attachment  PDG ( Market Share ~ 35%) rates lead business  Category Share is approx. 

  42. Slide 42: Contractor Landscape; R&R Product Targets

    20/09/2011 CONTRACTOR LANDSCAPE For personal use only Top 24% of contractors: Breakdown by • James Hardie primarily targets the Specialty Sales Revenue Contractor while expanding to include influential Full Line Contractors $ 10 mm + 2% • James Hardie reaching out to top 15%+ of 10% $ 2.0 – $9.9 mm

  43. Slide 43: Repair & Remodel Progress Update

    20/09/2011 For personal use only Repair & Remodel Progress Update R&R PROGRESS UPDATE  James Hardie Organization  Creating the Standard  Contractor Partnerships  James Hardie Siding Center Update 6

  44. Slide 44: R&R Progress – Organisation; Neighbourhood Targeting

    20/09/2011 R&R PROGRESS – JAMES HARDIE ORGANISATION For personal use only  Continue to build an R&R competency inside our organization – Segment Managers and a dedicated James Hardie Repair and Remodel sales force focusing on the top US market opportunities  Field sales focus continues to shift –

  45. Slide 45: Driving the Standard

    20/09/2011 DRIVING THE STANDARD Vinyl Hardie For personal use only Well Established Battleground Vinyl Neighborhood DOWN TO THE STREET 8

  46. Slide 46: Street Level Targeting

    20/09/2011 STREET LEVEL TARGETING For personal use only Yard Signage Canvassing (before Testimonial letter to & after) HOA from homeowners Hardie Direct mail in targeted Referrals Avenue neighborhoods Neighborhood “Open House” event Door Hangers Letter & pictures to HOA (before, during, and after on

  47. Slide 47: Contractor Partnership Programs

    20/09/2011 JAMES HARDIE CONTRACTOR PARTNERSHIP PROGRAMS For personal use only Our Objective is to develop a productive and mutually beneficial partnership with Contractors and Remodelers who want to build a better business and are looking to create a competitive advantage in the marketplace selling

  48. Slide 48: WinWithHardie.com

    20/09/2011 WINWITHHARDIE.COM For personal use only Website Demo WHY JAMES HARDIE? • Endorsement on James Hardie’s website • Preferred Remodeler logo & certificate • Direct consumer leads via Request a Quote page • Customized sales, marketing, & lead generation support • Guild Quality customer satisf

  49. Slide 49: R&R Progress – James Hardie Siding Center

    20/09/2011 WHY JAMES HARDIE? BUSINESS GROWTH WEBINAR SERIES For personal use only R&R PROGRESS – JAMES HARDIE SIDING CENTER  5 years into our learning experience in Denver  Learn and understand the repair and remodel segment, how to generate leads, target specific areas and price points as well as

  50. Slide 50: R&R Progress Issues and Challenges

    20/09/2011 R&R PROGRESS ISSUES AND CHALLENGES For personal use only  Continue to build organizational competency  Emphasis on target acquisition and neighborhood segmentation  Grow Preferred Remodeler geographic presence  Preferred Remodelers as an extension of JH in the home  Create a bench of

  51. Slide 51: Repair & Remodel Summary and Go Forward

    20/09/2011 For personal use only Repair & Remodel Summary and Go Forward JAMES HARDIE R&R SEGMENT SUMMARY AND GO FORWARD  Original assumptions are valid – JH can and is having an impact in R&R; both the homeowner and contractor are positively impacted when JH is presented as an affordable option 

  52. Slide 52: R&R Segment Summary and Go Forward

    20/09/2011 JAMES HARDIE R&R SEGMENT SUMMARY AND GO FORWARD For personal use only  Continue to convert the large middle market with Colorplus Full Wrap offering  Drive into the upper and lower markets – proper product targeting and early, direct Hardie sales involvement  Benefits and affordability

  53. Slide 53: Non-Metro Segment

    9/20/2011 For personal use only Non-Metro Segment David Donofrio DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K, in its a

  54. Slide 54: Why Non-Metro Segment Focus; Non-Metro vs Metro Map

    9/20/2011 AGENDA For personal use only  Why Non-Metro Segment Focus  Market Execution Mid-South  Summary/Go Forward  Q&A 3 NON-METRO VS METRO MAP – ORIGINAL ASSUMPTIONS Metro Priority Non-Metro (45) 4 Secondary Non-Metro (low opportunity) 2

  55. Slide 55: Starts Density; SF Construction Prominent in Non-Metro

    9/20/2011 STARTS DENSITY Source: Dodge 8/11 & NAHB Builder and Consumer Practice Reports ‘09 (8/10) For personal use only SF CONSTRUCTION PROMINENT IN NON-METRO Type SF (%) MF (%) Mobile Average % of home (%) Home Size Housing (sf) cost as a % of income Metro 59% 37% 4% 2,443 22% Non-Metro 78% 7% 15

  56. Slide 56: James Hardie Is Underpenetrated in Non-Metro

    9/20/2011 JAMES HARDIE IS UNDERPENETRATED IN NON-METRO For personal use only  Vinyl & Wood 75% Non-Metro Primary Wall Exterior 100% 2% 2% 1% 13% 14% 10% 90% 80% 70% 36% 34% Other 60% 52% Fiber Cement 50% Vinyl 40% 18% 20% Stucco 1% 30% Wood 8% 6% 23% Brick 20% 10% 23% 24% 12% 0% US Metro Non‐Metro

  57. Slide 57: Non-Metro Strategic Objective

    9/20/2011 NON-METRO STRATEGIC OBJECTIVE For personal use only Objectives Outcomes/Challenges  Fundamentally changed  Provide the consumer 100% distribution and logistics in non- market access to full JH product metro markets offering  Full line product availability  Align channel to support and

  58. Slide 58: Non-Metro Execution; Mid-South Execution

    9/20/2011 NON-METRO EXECUTION For personal use only Pilot Program – 2 Regions Mid-South Mid-West  Heavy primed Hardie markets  Color / Primed Split Markets (HZ5) (HZ10)  Fragmented dealer base  Fragmented dealer base  Fragmented builder base  Fragmented builder base  Competitive pressure (woo

  59. Slide 59: Mid-South Product/Segment Strategy; Place

    9/20/2011 MID-SOUTH NON-METRO PRODUCT/SEGMENT STRATEGY For personal use only  Full Line access to James Hardie family of products  ColorPlus available in job pack quantities  Cemplank available for the cost conscious builder  Prevail available for the multifamily segment Single Family Single Fam

  60. Slide 60: Mid-South Distribution Zones; Promotion and Price

    9/20/2011 MID-SOUTH EXECUTION – DISTRIBUTION ZONES For personal use only MID-SOUTH PROMOTION AND PRICE We have expanded James Hardies direct sales presence as well as James Hardie installation support in the Mid-South  James Hardie will take direct sales responsibilities to dealers of scale and act

  61. Slide 61: Mid-South Execution Summary

    9/20/2011 MID-SOUTH EXECUTION SUMMARY For personal use only Hardie Sales Model Executed  Increased Sales and Install presence as well as Sales Manager  Currently dealer focused for alignment / transition to market development  Standard operating procedure being developed for rep effectiveness Dis

  62. Slide 62: Summary – Go Forwards

    9/20/2011 SUMMARY – GO FORWARDS For personal use only  The non-metro markets remain a growth opportunity for James Hardie  Better executed Mid-South pilot, continue dealer game plan and transition to market development  Re-focus on Mid-West restructure, resourcing ramp, new management in place 19

  63. Slide 63: Brand Positioning

    20/09/2011 For personal use only Brand Positioning Rob Gilfert DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K, in its ann

  64. Slide 64: Product/Segment Strategy

    20/09/2011 PRODUCT/SEGMENT STRATEGY For personal use only Achieving market growth requires us to continue to develop our product strategy to meet the needs of different customer segments Single Family Single Family Manufactured New Repair & Retail Multi Family Housing Construction Remodel AGENDA Win

  65. Slide 65: Cemplank Strategy Reset

    20/09/2011 For personal use only Cemplank CEMPLANK STRATEGY RESET Objective: Win back and defend our category share with the price-conscious bottom ~ 1/3 of the market. Core Strategy: Price Cemplank to the dealer at parity to commodity fiber cements and position as a component of a full line, single

  66. Slide 66: Choosing Cemplank Markets; Product Positioning

    20/09/2011 CHOOSING CEMPLANK MARKETS For personal use only Where we sell and do not sell Cemplank is a function of several variables We are more likely to introduce Cemplank to markets that are/have:  More mature (high S-Curve)  Lower category share  Dual-stocking channel  Consolidated channel 

  67. Slide 67: Cemplank Pricing, Distribution Strategies and Results

    20/09/2011 CEMPLANK PRICING AND DISTRIBUTION STRATEGIES For personal use only We have multiple pricing and distribution ‘design experiments’ in place, all aligned around achieving the following objectives:  Sell Cemplank to dealers who primarily sell James Hardie product  Match & follow ‘everyday’

  68. Slide 68: HardiePlank Innovation

    20/09/2011 For personal use only HardiePlank Innovation JAMES HARDIE INNOVATION PATH 6

  69. Slide 69: Custom Colonial – Texas; HardiePlank Design Collection

    20/09/2011 CUSTOM COLONIAL – TEXAS For personal use only In the fall of 2010 we launched a plank differentiation strategy, via a pilot project in Texas  Introduced ‘Custom Colonial’ – an upgrade of our existing Colonial product  Nail line / branding  Improved product shaping  Improved pattern al

  70. Slide 70: Next Generation Plank Innovation

    20/09/2011 NEXT GENERATION PLANK INNOVATION For personal use only In 2012 we will introduce step-change innovation across our entire HZ10 plank platform. Our objective is to provide clear differentiation in terms of both aesthetics and performance We are currently evaluating innovation concepts arou

  71. Slide 71: Made For Living; Model Home Experience

    20/09/2011 MADE FOR LIVING For personal use only “Made For Living” is a pilot program designed to educate the market on the value of a full-wrap James Hardie home by partnering with influential new home builders Model Home Experience Real Estate Network Consumer Marketing Home Buyer MODEL HOME EXPER

  72. Slide 72: Model Home Experience – Real Estate Community

    20/09/2011 MODEL HOME EXPERIENCE For personal use only REAL ESTATE COMMUNITY By educating and influencing the real estate community, we reach a broader audience with our message and drive traffic back to our partner builders. Since inception we have communicated directly with over 2,000 Houston real

  73. Slide 73: Summary

    20/09/2011 SUMMARY For personal use only Achieving market growth requires us to continue to develop our product strategy to meet the needs of different customer segments.  Cemplank ‘Builder Grade’ for the price-conscious bottom 1/3 of the market  Continued innovation of our HardiePlank products to

James Hardie Industries — Investor Presentation (September 2011) on 6ix