James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q4 FY2017 Earnings Presentation
45 slides from James Hardie Industries's earnings presentation, May 18, 2017
Slide 1: Q4 FY17 Management Presentation
James Hardie Q4 FY17 MANAGEMENT PRESENTATION 18 May 2017
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 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,
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (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 i
Slide 4: Note to the Reader
NOTE TO THE READER 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 June 2016, the Company b
Slide 5: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
USE OF NON-GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY 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 financial measures are des
Slide 6: Agenda
AGENDA Overview and Operating Review – Louis Gries, CEO Financial Review – Matt Marsh, EVP and CFO Questions and Answers James Hardie PAGE 6
Slide 7: Overview and Operating Review
James Hardie OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 8: Group Overview
GROUP OVERVIEW Adjusted Net Operating Profit1 4th Qtr Full Year US$54.6M 6% US$248.6M 2% Adjusted EBIT 2 4th Qtr Full Year US$77.1M 8% US$354.3M 1% Adjusted EBIT Margin % 2 4th Qtr Full Year 15.6% 3.6 pts 18.4% 1.9 pts Adjusted Diluted EPS1 4th Qtr Full Year US12 cents 8% US56 cents 4% Net Operating
Slide 9: North America Fiber Cement Summary
NORTH AMERICA FIBER CEMENT SUMMARY Q4’17 Full Year Net Sales US$387.7M US$1,493.4M 12% 12% Sales Volume 578.6 mmsf 2,215.4 mmsf 12% 13% Average Price US$662 per msf US$665 per msf 1% 1% EBIT US$76.1M US$343.9M 11% 2% Volume Steady growth in R&R and new construction markets Market penetration was str
Slide 10: North America Fiber Cement: Average Net Sales Price and Top Line Growth
NORTH AMERICA FIBER CEMENT US$ per MSF Average Net Sales Price 710 670 630 590 550 669 666 665 641 638 630 625 616 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Slight decrease ~1% due to maintaining current strategic pricing levels Overall, satisfied with tactical pricing and price positioning Price incr
Slide 11: North America Machine Performance & Capacity
North America Machine Performance & Capacity Machine Performance 100% 80% FY12 FY13 FY14 FY15 FY16 FY17 FY16 step-change improvement in performance FY17 in higher band, but lower end of range Current Capacity vs. Index Billion Standard Feet 3.7 0.3 3.4 0.8 3.4 2.6 Nameplate Capacity Current Capacity
Slide 12: North America Manufacturing Capacity
North America Manufacturing Capacity Capacity Since Housing Downturn 0.7 3.4 0.2 0.1 2.4 Fontana 2 Fontana 1 Waxahachie 1 Plant City 4 Cleburne 3 FY10 FY13 FY14 FY17 FY17 Nameplate Wax Restart Fontana Restart Start Ups Nameplate Future capacity additions: FY18 brownfield additions: Summerville (190
Slide 13: North America Fiber Cement Quarterly EBIT and EBIT Margin
NORTH AMERICA FIBER CEMENT Quarterly EBIT and EBIT Margin1 EBIT US$M EBIT Margin 100 90 80 70 60 50 40 30 20 10 0 30 25 20 15 10 5 0 FY12 FY13 FY14 FY15 FY16 FY17 EBIT Quarterly EBIT/Sales Full year EBIT Margin % in target range, but down 340 bps to 23.0% compared to pcp 1 Excludes asset impairment
Slide 14: International Fiber Cement Summary
INTERNATIONAL FIBER CEMENT SUMMARY Q4’17 Full Year Net SalesUS$102.8M US$411.8M 18% 9% Sales Volume 125.9 mmsf 487.2 mmsf 12% 1% Sales Volume 125.9 mmsf 487.2 mmsf Excluding 1 12% 3% Average Price US$757 per msf US$775 per msf 7% 6% EBIT US$23.6M US$95.1M 21% 22% US$23.6M US$95.1M EBIT Excluding2 21
Slide 15: International Fiber Cement (USD)
INTERNATIONAL FIBER CEMENT (USD) Q4’17 Full Year Australia Australia1 Volume Net Sales EBIT Volume Net Sales EBIT Q4’17 Full Year New Zealand New Zealand Volume Net Sales EBIT Volume Net Sales EBIT Q4’17 Full Year Philippines Philippines Volume Net Sales EBIT Volume Net Sales EBIT Q4’17 Full Year Eu
Slide 16: Financial Review
JH James Hardie FINANCIAL REVIEW Matt Marsh, EVP and CFO
Slide 17: Results – 4th Quarter FY17
RESULTS – 4th QUARTER FY17 Three Months Ended 31 March US$ Millions Q4’17 Q4’16 % Change Net sales 494.3 435.8 13 Gross profit 160.8 160.1 - SG&A expenses (75.9) (68.7) (10) EBIT 78.2 56.3 39 Net operating 44.5 28.8 55 profit Adjusted EBIT 1 77.1 83.7 (8) Adjusted net 2 54.6 57.9 (6) operating profi
Slide 18: Results – Full Year 2017
RESULTS – FULL YEAR 2017 Full Year Ended 31 March US$ Millions FY17 FY16 % Change Net sales 1,921.6 1,728.2 11 Gross profit 674.7 632.2 7 SG&A expenses (291.6) (254.2) (15) EBIT 393.2 354.0 11 Net operating profit 276.5 244.4 13 Adjusted EBIT 1 354.3 350.7 1 Adjusted net 2 248.6 242.9 2 operating pr
Slide 19: Changes in AUD vs. USD
CHANGES IN AUD vs. USD AUD/USD Exchange Rate 1.00 0.80 0.60 31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16 30 Jun 16 30 Sep 16 31 Dec 16 31 Mar 17 As Reported Excluding Translation Impact 1 US$ Millions % Change 12 Months FY17 12 Months FY16 12 Months FY17 % Change Net Sales $1,921.6 $1,728.2 11%
Slide 20: North America Input Costs
NORTH AMERICA INPUT COSTS Quarterly US Input Costs Pulp Prices Cement, Gas, Electric and Freight Prices 1,200 1,000 800 600 400 200 0 10 9 8 7 6 5 4 3 2 1 0 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 PULP GAS ELECTRIC CEMENT FREIGHT The price of NBSK pulp increased
Slide 21: Segment EBIT – 4th Quarter and Full Year FY17
SEGMENT EBIT – 4th QUARTER and FULL YEAR FY17 North America Fiber Cement US$ Millions 400 350 300 250 200 150 100 50 0 352.2 343.9 290.0 82.8 85.4 76.1 FY15 FY16 FY17 Q4 Full Year International Fiber Cement1 US$ Millions 105 90 75 60 45 30 15 0 95.1 90.2 78.4 23.6 18.0 19.5 FY15 FY16 FY17 Q4 Full Ye
Slide 22: Segment EBIT – Other Businesses, R&D, General Corporate
SEGMENT EBIT – 4th QUARTER and FULL YEAR FY17 Other Businesses US$ Millions (10) (8) (6) (4) (2) 0 (8.6) (6.7) (4.5) (2.4) (2.0) (1.3) FY15 FY16 FY17 Q4 Full Year Research and Development US$ Millions (30) (25) (20) (15) (10) (5) 0 (26.0) (25.5) (23.9) (6.3) (6.4) (7.2) FY15 FY16 FY17 Q4 Full Year G
Slide 23: Income Tax
INCOME TAX Three Months and Full Year Ended 31 March US$ Millions Q4’17 Q4’16 FY17 FY16 Operating profit before taxes 71.1 48.0 367.0 330.5 Asbestos adjustments1 (0.8) 27.6 (37.8) (3.5) NZ weathertightness claims — — — 0.5 Adjusted operating profit before income taxes 70.3 75.6 329.2 327.5 Adjusted
Slide 24: Cashflow
CASHFLOW US$ Millions FY17 FY16 Change (%) Net Income 276.5 244.4 13 Adjustment for non-cash items 90.1 98.9 (9) Annual AICF contribution (91.1) (62.8) (45) Operating working capital1 1.5 (40.6) Other net operating activities 15.1 20.5 (26) Cash Flow from Operations 292.1 260.4 12 Purchases of prope
Slide 25: Capital Expenditures
CAPITAL EXPENDITURES CAPEX Spend US$ Millions 50 45 40 35 30 25 20 15 10 5 0 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Capacity Maintenance & Other Full year CAPEX of US$101.9 million up by 39% compared to pcp North America capacity projects: Continued to start-up both sheet machines at Fontana facili
Slide 26: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Management Strong margins and operating cash flows Strong governance and transparency Investment-grade financial management Moody’s Ba1 (upgraded Jun’16) S&P BB (Outlook revised to Positive from Stable, Rating affirmed Feb’17) Fitch BBB- (affir
Slide 27: Liquidity Profile
LIQUIDITY PROFILE Debt Profile US$ Millions $2501 $500 $400 2 $175 $400 Available Debt Outstanding at 31 March 2017 Senior Notes Bank Facilities Accordion US$175m bank facilities drawn at Q4 FY17; US$78.9m held in cash 1 Incremental liquidity of up to US$250 million may be accessed via an accordion
Slide 28: Asbestos Compensation Key Points
ASBESTOS COMPENSATION KEY POINTS Updated actuarial report completed as at 31 March 2017 Undiscounted and uninflated central estimate decreased to A$1,386 million from A$1,434 million Decreased A$164 million NPV of estimate to A$1,740 million, from A$1,904 million at 31 March 2016, reflecting: Decrea
Slide 29: Asbestos Claims Data
ASBESTOS CLAIMS DATA Claims Received 625 557 577 129 156 122 Q4’17 Actuals Q4’17 Actuarial Estimates Q4’16 Actuals FY17 Actuals FY17 Actuarial Estimates FY16 Actuals Average Claim Settlement (A$)1 327,000 327,000 287,000 258,000 248,000 224,000 Q4’17 Actuals Q4’17 Actuarial Estimates Q4’16 Actuals F
Slide 30: FY2018 Key Planning Assumptions
FY2018 KEY PLANNING ASSUMPTIONS The modest market growth and more prolonged recovery of the US housing market to continue into FY2018. The single family new construction market and repair and remodel market are expected to grow similar to the year-on-year growth experienced in fiscal year 2017 US Re
Slide 31: Summary
SUMMARY Adjusted Net Operating Profit1 4th Qtr Full Year US$54.6M 6% US$248.6M 2% Adjusted EBIT 2 4th Qtr Full Year US$77.1M 8% US$354.3M 1% Adjusted Diluted EPS1 4th Qtr Full Year US12 cents 8% US56 cents 4% Net Operating Cash Flow Full Year US$292.1M 12% The financial performance noted above large
Slide 32: Questions
JH James Hardie QUESTIONS
Slide 33: Appendix
JH James Hardie APPENDIX
Slide 34: Financial Summary
FINANCIAL SUMMARY Three Months and Full Year Ended 31 March US$ Millions Q4’17 Q4’16 % Change FY17 FY16 % Change Net Sales North America Fiber Cement $ 387.7 $ 345.8 12 $ 1,493.4 $ 1,335.0 12 International Fiber Cement 102.8 86.9 18 411.8 379.4 9 Other Businesses 3.8 3.1 23 16.4 13.8 19 Total Net Sa
Slide 35: Net Post-Tax Unfunded Asbestos Liability
NET POST-TAX UNFUNDED ASBESTOS LIABILITY A$ millions (except where stated) FY17 FY16 Central Estimate - Undiscounted and Uninflated $ 1,385.7 $ 1,433.9 Provision for claims handling costs of AICF 29.4 32.2 Cross claims and other 18.8 18.2 Net (assets)/liabilities of AICF (71.9) 45.5 Effect of tax (4
Slide 36: Asbestos Cash Movements for Full Year Ended March
ASBESTOS CASH MOVEMENTS FOR FULL YEAR ENDED 31 MARCH A$ millions AICF cash and investments - 31 March 2016 $ 22.2 Contributions to AFFA by James Hardie 120.7 Insurance recoveries 122.3 Loan drawdowns 101.6 Loan repayments (99.4) Interest expense, net (1.4) Claims paid (120.5) Operating costs (3.7) O
Slide 37: Updated Actuarial Estimate
UPDATED ACTUARIAL ESTIMATE A$ million 6,000 5,000 4,000 3,000 2,000 1,000 0 3,586 3,604 3,131 3,079 3,169 3,027 3,124 2,906 2,811 2,661 2,805 2,743 2,525 2,513 2,427 2,200 2,143 1,782 1,870 1,904 1,685 1,694 1,740 1,536 1,568 1,517 1,555 1,355 1,426 1,537 1,478 1,580 30 Jun 31 Mar 30 June 31 Mar 30
Slide 38: Depreciation and Amortization
DEPRECIATION AND AMORTIZATION US$ Millions Three Months and Full Year Ended 31 March Q4’17 Q4’16 FY17 FY16 Depreciation and amortization North America Fiber Cement $16.3 $16.4 $64.3 $61.8 International Fiber Cement 2.9 4.3 11.8 10.7 Other Businesses 0.5 0.5 2.2 2.0 Research and Development 0.3 0.5 1
Slide 39: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS This Management Presentation forms part of a package of information about the company’s results. It should be read in conjunction with the other parts of this package, including the Management’s Analysis of Results, Media Release and Consolidated Financial Statements Defi
Slide 40: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Consolidated Financial Stateme
Slide 41: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT – Earnings before interest and taxes EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales Sales Volumes mmsf – million square feet, where a square foot is defined as a standard square foot of 5/16” thickness msf – thousand square feet, where a
Slide 42: Non-US GAAP Financial Measures: Adjusted EBIT
NON-US GAAP FINANCIAL MEASURES Financial Measures – US GAAP equivalents Adjusted EBIT US$ Millions Three Months and Full Year Ended 31 March Q4’17 Q4’16 FY17 FY16 EBIT $78.2 $56.3 $393.2 $354.0 Asbestos: Asbestos adjustments (1.4) 27.0 (40.4) (5.5) AICF SG&A expenses 0.3 0.4 1.5 1.7 New Zealand weat
Slide 43: Non-US GAAP Financial Measures: Adjusted Diluted EPS
NON-US GAAP FINANCIAL MEASURES Adjusted diluted earnings per share Three Months and Full Year Ended 31 March Q4’17 Q4’16 FY17 FY16 Adjusted net operating profit (US$ Millions) $ 54.6 $57.9 $248.6 $242.9 Weighted average common shares outstanding - Diluted (millions) 441.4 447.1 443.9 447.2 Adjusted
Slide 44: Non-US GAAP Financial Measures: Adjusted EBITDA
NON-US GAAP FINANCIAL MEASURES Adjusted EBITDA US$ Millions Three Months and Full Year Ended 31 March Q4’17 Q4’16 FY17 FY16 EBIT $78.2 $56.3 $393.2 $354.0 Depreciation and amortization 20.7 24.7 83.2 79.8 Adjusted EBITDA $98.9 $81.0 $476.4 $433.8 Adjusted selling, general and administrative expenses
Slide 45: Q4 FY17 Management Presentation
JH James Hardie Q4 FY17 MANAGEMENT PRESENTATION 18 May 2017
James Hardie Industries — Q4 FY2017 Earnings Presentation on 6ix