James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY2016 Earnings Presentation
45 slides from James Hardie Industries's earnings presentation, Aug 17, 2015
Slide 1: Q1 FY16 Management Presentation
Exhibit 99.4 Q1 FY16 MANAGEMENT PRESENTATION 14 August 2015
Slide 2: Disclaimer
DISCLAIMER 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 and Exchange Commission, on Forms 20-F and 6-K, in its annu
Slide 3: Disclaimer (continued)
DISCLAIMER (continued) Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue,” “may,” “objective,” “outlook” and similar expressions are intended to identify forward-looking
Slide 4: Agenda
AGENDA • Overview and Operating Review – Louis Gries, CEO • Financial Review – Matt Marsh, CFO • Questions and Answers In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures included in the Definitions an
Slide 5: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 6: Key Themes
KEY THEMES • Group net sales increased 3% for the quarter compared to pcp 1 1 • Group adjusted net operating profit increased 27% to US$63.5 million for the quarter, compared to pcp • Higher volumes and average net sales price across our USA and Europe and Asia Pacific Fiber Cement segments • Result
Slide 7: Group Overview
GROUP OVERVIEW Three Months Ended 30 June Q1'16 Q1'15 Change Adjusted EBIT (US$ millions) 89.7 71.2 26% Adjusted EBIT Margin % 20.9% 17.1% 3.8 pts Adjusted Net Operating Profit (US$ millions) 63.5 50.1 27% Net operating cash flow (US$ million) 55.1 42.5 30% Adjusted Diluted EPS (US cents) 14 11 27%
Slide 8: USA and Europe Fiber Cement 1st Quarter Summary
USA AND EUROPE FIBER CEMENT 1 st QUARTER SUMMARY 1 st Quarter Results Net Sales Up 5% to US$337.0 million Sales Volume Up 4% to 480.0 mmsf Average Price Up 1% to US$686 per msf EBIT Up 32% to US$89.5 million EBIT Margin Up 540 bps to 26.6% • Higher volume driven by modest market growth • Higher aver
Slide 9: USA and Europe Fiber Cement Quarterly EBIT and Margin
USA AND EUROPE FIBER CEMENT 1 Quarterly EBIT and EBIT Margin 100 30 90 25 80 70 20 60 50 15 40 10 30 20 5 10 0 0 FY11 FY12 FY13 FY14 FY15 FY16 EBIT EBIT MARGIN • We expect EBIT margins for fiscal year 2016 to be towards the higher end of, and may exceed our stated target range of 20% to 25%, with a
Slide 10: USA Fiber Cement
USA FIBER CEMENT Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau PAGE 10
Slide 11: USA and Europe Fiber Cement Average Net Sales Price
USA AND EUROPE FIBER CEMENT 710 Average Net Sales Price 686 675 670 648 652 642 632 626 630 609 588 597 590 550 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Q1 FY16 PAGE 11
Slide 12: Asia Pacific Fiber Cement 1st Quarter Summary
ASIA PACIFIC FIBER CEMENT 1st QUARTER SUMMARY 1 st Quarter Results Net Sales Up 15% to A$117.4 million Sales Volume Up 10% to 119.1 mmsf Average Price Up 5% to A$975 per msf 1 US$ EBIT Down 5% to US$19.7 million 1 A$ EBIT Up 15% to A$25.4 million 1 US$ EBIT Margin Down 10 bps to 21.6% • Favorable co
Slide 13: Financial Review
FINANCIAL REVIEW Matt Marsh, CFO
Slide 14: Group Results
GROUP RESULTS • Strong earnings growth reflects: • Higher sales volumes across all business units • Higher average sales prices across the USA and Europe and Asia Pacific Fiber Cement segments • Lower input costs for the USA and Europe Fiber Cement segment driven by pulp and utilities • Improved pla
Slide 15: Results for the 1st Quarter
RESULTS FOR THE 1st QUARTER Net sales increased 3% Three Months Ended 30 June • Higher sales volumes • Higher average net sales prices in local currencies US$ Millions Q1 '16 Q1 '15 % Change Gross profit margin increased 320 bps Net sales 428.3 416.8 3 • Continued performance improvement across our
Slide 16: Results for the 1st Quarter (continued)
RESULTS FOR THE 1 st QUARTER (continued) Asbestos adjustments Three Months Ended 30 June • 1% change in the AUD / USD exchange rate from beginning US$ Millions Q1 '16 Q1 '15 % Change to ending balance sheet date for the period compared to a Net operating profit 60.0 28.9 2% change in spot rates in t
Slide 17: Gross Profit - Group
GROSS PROFIT - GROUP 180.0 38.0 157.6 160.0 37.0 140.2 140.0 126.3 36.8 36.0 120.0 100.0 35.0 33.9 33.6 80.0 34.0 60.0 33.0 40.0 32.0 20.0 - 31.0 Q1 FY14 Q1 FY15 Q1 FY16 • Gross profit margins remain strong • Price improvements continue as we execute on pricing strategies and reduce pricing ineffici
Slide 18: US Input Costs
US INPUT COSTS Quarterly US Input Costs • The price of NBSK pulp reduced by ~5% 1,200 10 compared to pcp 1, while cement has increased 9 1,000 ~8% over pcp 1 8 7 800 • The cost of electricity for industrial users 6 decreased from prior period 600 5 4 400 • The cost of gas continued to trend down qua
Slide 19: Segment EBIT - 1st Quarter
SEGMENT EBIT – 1 st QUARTER USA and Europe Fiber Cement 100 89.5 USA and Europe Fiber Cement EBIT summary: 80 68.0 • EBIT increased by 32% when compared to pcp 59.4 60 • The increase for the quarter was driven by improved Q1 EBIT 40 plant performance, lower input costs, increased 20 volumes and lowe
Slide 20: Segment EBIT - 1st Quarter
SEGMENT EBIT – 1 st QUARTER Research and Development R&D summary: (7) (6.8) • Continued broadly in line with historic trend line on a (6.1) (6) (6.0) percentage of sales basis Q1 EBIT • Fluctuations reflect normal variation and timing in number of R&D projects in process in any given period (5) FY14
Slide 21: Changes in AUD vs. USD
CHANGES IN AUD vs. USD Earnings Balance Sheet • Unfavorable impact from translation of Asia Pacific results N/A • Favorable impact on corporate costs incurred in Australian dollars N/A • Unfavorable impact from translation of asbestos liability balance PAGE 21
Slide 22: Income Tax
INCOME TAX 26.5% estimated adjusted effective tax rate (ETR) Three Months Ended 30 June for the year Q1’16 Q1’15 • Adjusted income tax expense increased due to the increase in operating profit before income taxes, primarily in the US Operating profit before taxes 81.3 45.6 Asbestos: • The difference
Slide 23: Cashflow
CASHFLOW • Net income increased US$31.1 million compared (US$ Millions) Q1'16 Q1'15 Change (%) to prior corresponding period Net Income 60.0 28.9 1 Asbestos related 1 4.6 20.9 (78) • Improved working capital driven by: Depreciation & amortization 18.2 16.6 10 • Improved inventory and A/P turns Worki
Slide 24: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH 1 Strong Financial Management 2 Disciplined Capital Allocation 3 Liquidity and Funding Investing in R&D and capacity ~$590 million of bank Strong margins and expansion to support organic facilities, 68% liquidity as of operating cash flows growth Q’16 Strong go
Slide 25: Liquidity Profile
LIQUIDITY PROFILE Debt Maturity Profile 1 • Strong balance sheet position: $325 • US$92.3 million of cash • US$382.6 million of gross debt $225 • US$590 million of bank debt facilities $150 • US$325 million 8 year unsecured notes 2,3 $125 • 68% liquidity as of Q1’16 $50 $40 • At 30 June 2015, net de
Slide 26: Asbestos Claims Data
ASBESTOS CLAIMS DATA Claims Data Three Months Ended 30 June • Claims received during the quarter were 15% Q1 '16 Q1 '15 % Change below actuarial estimates and 11% lower than the Claims received 139 156 11 prior corresponding period Actuarial estimate for the period 164 153 (7) Difference in claims r
Slide 27: Summary
SUMMARY • Group net sales increased 3% for the quarter when compared to the prior corresponding period • Group adjusted net operating profit increased 27% for the quarter when compared to the prior corresponding period • Results driven by higher volumes, average net sales price and the continued foc
Slide 28: FY2016 Guidance
FY2016 GUIDANCE • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2016 is between US$244 million and US$286 million • Management expects full year Adjusted net operating profit to be between US$240 million and US$270 million
Slide 29: Questions
(5) vames Hardie QUESTIONS
Slide 30: Appendix
(5) vames Hardie APPENDIX
Slide 31: Financial Summary
FINANCIAL SUMMARY Three Months Ended 30 June US$ Millions Q1 '16 Q1 '15 % Change Net Sales USA and Europe Fiber Cement $ 337.0 $ 321.5 5 Asia Pacific Fiber Cement 91.3 95.3 (4) Total Net Sales $ 428.3 $ 416.8 3 EBIT - US$ Millions USA and Europe Fiber Cement $ 89.5 $ 68.0 32 Asia Pacific Fiber Cemen
Slide 32: Key Ratios
KEY RATIOS Three Months Ended 30 June 3 Months FY16 3 Months FY15 3 Months FY14 EPS (Diluted) 1 (US Cents) 14c 11c 12c EBIT/ Sales (EBIT margin) 2 20.9% 17.1% 18.1% Gearing Ratio 1 20.4% (3.3)% (16.5)% Net Interest Expense Cover 2 15.0x 79.1x 84.4x Net Interest Paid Cover 2 108.5x 89.0x 67.5x Net De
Slide 33: EBITDA - 1st Quarter
EBITDA – 1 st QUARTER Three Months Ended 30 June US$ Millions Q1'16 Q1'15 % Change Adjusted EBIT USA and Europe Fiber Cement $ 89.5 $ 68.0 32 Asia Pacific Fiber Cement 1 19.7 20.7 (5) Research & Development (6.0) (6.8) 12 General Corporate3 (13.5) (10.7) (26) Depreciation and Amortization USA and Eu
Slide 34: Net Interest Expense
NET INTEREST EXPENSE Three Months Ended 30 June US$ Millions Q1 FY16 Q1 FY15 Gross interest expense (6.6) (0.9) Capitalized interest 1.1 - Interest income 0.1 0.2 Realized loss on interest rate swaps (0.6) (0.2) Net interest expense excluding AICF interest (6.0) (0.9) income AICF net interest income
Slide 35: Asbestos Fund - Proforma (unaudited)
ASBESTOS FUND – PROFORMA (unaudited) A$ millions AICF cash and investments - 31 March 2015 28.9 Insurance recoveries 3.9 Loan Drawdowns 17.7 Interest income, net 0.1 Claims paid (36.8) Operating costs (1.0) Other 0.3 AICF cash and investments - 30 June 2015 13.1 PAGE 35
Slide 36: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS This ManagementPresentation 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 Consolidated Financial Statements Defin
Slide 37: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 Consolidated Financial Statements
Slide 38: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 – thousand square feet, where a square foot is defined as a standard square
Slide 39: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBIT margin – Adjusted EBIT and Adjusted EBIT margin are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these financial measures to pro
Slide 40: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted net operating profit – Adjusted net operating profit is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than net operating profit. Management has included this financial measure to provide investors with
Slide 41: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted diluted earnings per share – Adjusted diluted earnings per share is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than diluted earnings per share. Managementhas included this financial measure to provid
Slide 42: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted income tax expense and Adjusted effective tax rate – Adjusted income tax expenses and Adjusted effective tax rate on earnings is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than income tax expense and
Slide 43: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted EBITDA – is not a measure of financial performance under US GAAP and should not be considered an alternative to, or more meaningful than, income from operations, net income or cash flows as defined by US GAAP or as a measure of profitability or liquidity. Not
Slide 44: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted selling, general and administrative expenses – Adjusted selling, general and administrative expenses is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than selling, general and administrative expenses. M
Slide 45: Q1 FY16 Management Presentation
Q1 FY16 MANAGEMENT PRESENTATION 14 August 2015
James Hardie Industries — Q1 FY2016 Earnings Presentation on 6ix