James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY2014 Earnings Presentation
49 slides from James Hardie Industries's earnings presentation, Aug 13, 2013
Slide 1: Q1 FY14 Management Presentation
Exhibit 99.4 Q1 FY14 MANAGEMENT PRESENTATION 12 August 2013
Slide 2: Disclaimer
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 annual reports to shareholders, in offering circulars, invitation
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 – Russell Chenu, 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
Slide 5: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 6: Group Overview
1 GROUP OVERVIEW Q1 Q1 % US$ Millions FY 2014 FY 2013 Change Net operating profit 142.2 68.5 - Net operating profit excluding asbestos, ASIC expenses, New Zealand product liability expenses and tax 52.0 43.8 19 adjustments Diluted earnings per share excluding asbestos, ASIC expenses, New Zealand pro
Slide 7: USA and Europe Fibre Cement 1st Quarter Summary
1 1 USA AND EUROPE FIBRE CEMENT 1st QUARTER SUMMARY 1 USA and Europe Fibre Cement results reflected: • Higher sales volume • Slightly higher average net sales price • Higher input costs • Favourable shift in product mix • Increased idle facility costs • Lower fixed unit manufacturing costs • Higher
Slide 8: USA and Europe Fibre Cement 1st Quarter Result
USA AND EUROPE FIBRE CEMENT **1 1st Quarter Result Net Sales up 10% to US$278.1 million Sales Volume up 10% to 428.0 mmsf Average Price up from US$649 per msf to US$650 per msf EBIT up 18% to US$59.4 million EBIT Margin up 1.4 pts to 21.4% **st 1 Comparisons are of the 1 st quarter of the current fi
Slide 9: Quarterly EBIT and EBIT Margin
USA AND EUROPE FIBRE CEMENT Quarterly EBIT and EBIT Margin 1 80 35 70 30 60 25 50 20 40 15 30 20 10 10 5 0 0 FY09 FY10 FY11 FY12 FY13 FY14 EBIT EBIT Margin 1 Excludes asset impairment charges of US$14.3 million in 4 th rd quarter FY12, US$5.8 million in 3 quarter FY13 and US$11.1 million in 4 th qua
Slide 10: USA Fibre Cement
USA FIBRE CEMENT Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 10
Slide 11: USA and Europe Fibre Cement
USA AND EUROPE FIBRE CEMENT 11
Slide 12: Asia Pacific Fibre Cement Quarter Summary
st 1 ASIA PACIFIC FIBRE CEMENT 1 QUARTER SUMMARY Asia Pacific Fibre Cement results reflected: • Higher Australian and New Zealand housing starts • Increased sales volume and slightly higher average net sales price • Lower fixed unit manufacturing costs • Depreciation of the Australian dollar 1 Compa
Slide 13: Asia Pacific Fibre Cement 1st Quarter Result
ASIA PACIFIC FIBRE CEMENT 1 1st Quarter Result Net Sales up 7% to US$94.1 million Sales Volume up 8% to 102.4 mmsf Average Price up 1% to A$926 per msf EBIT 2 up 19% to US$21.1 million EBIT Margin2 up 2.2 pts to 22.4% 1 Comparisons are of the 1 st quarter of the current fiscal year versus the 1 st q
Slide 14: New Australian Manufacturing Capacity
NEW AUSTRALIAN MANUFACTURING CAPACITY • In Q1 FY14, James Hardie acquired the previously-leased land and buildings at its existing Carole Park (Brisbane) plant and is expanding production capacity at the site • New production capacity expected to be fully operational in first half of CY15 • Producti
Slide 15: Group Outlook
GROUP OUTLOOK USA and Europe Fibre Cement • The US operating environment continues to reflect an increasing number of housing starts and improving house values • Pick-up in repair and remodelling activity becoming apparent • The company is continuing with its plan to invest in capacity expansions th
Slide 16: Financial Review
FINANCIAL REVIEW Russell Chenu, CFO
Slide 17: Financial Review Highlights
FINANCIAL REVIEW Highlights • Earnings impacted by: • Increased sales volumes, revenues, EBIT and EBIT margins in all major business units • Unfavourable movement in the accounting provision for legacy product liability claims in New Zealand, resulting in an expense of US$4.6 million • Favourable as
Slide 18: Results Q1
RESULTS Q1 US$ Millions Q1 '14 Q1 '13 % Change Net sales 372.2 339.7 10 Gross profit 126.3 110.0 15 SG&A expenses (54.9) (44.3) (24) Research & development expenses (9.0) (8.4) (7) Asbestos adjustments 94.5 25.2 - EBIT 156.9 82.5 90 Net interest income 0.1 0.2 (50) Other income 0.1 0.4 (75) Income t
Slide 19: Results Q1 (Continued)
RESULTS Q1 (CONTINUED) US$ Millions Q1 '14 Q1 '13 % Change Net operating profit 142.2 68.5 - Asbestos: Asbestos adjustments (94.5) (25.2) - Other asbestos 1 (0.6) (0.8) 25 ASIC expenses - 0.1 - New Zealand product liability expenses 4.6 - - Asbestos and other tax adjustments 0.3 1.2 (75) Net operati
Slide 20: Segment EBIT – Q1
SEGMENT EBIT – Q1 Q1 ’14 Q1 ’13 % Change US$ Millions USA and Europe Fibre Cement 59.4 50.3 18 1 Asia Pacific Fibre Cement 21.1 17.7 19 Research & Development 2 (6.1) (6.0) (2) Total segment EBIT excluding New Zealand product 74.4 62.0 20 liability expenses General corporate costs excluding asbestos
Slide 21: Changes in A$ versus US$
CHANGES IN A$ VERSUS US$ Earnings Balance Sheet • Unfavourable impact from translation of Asia Pacific results – Q1 FY14 N/A vs Q1 FY13 • Favourable impact on corporate costs incurred in Australian dollars – N/A Q1 FY14 vs Q1 FY13 • Favourable impact from translation of asbestos liability balance –
Slide 22: Income Tax Expense – Q1
INCOME TAX EXPENSE – Q1 US$ Millions Q1 ’14 Q1 ’13 Operating profit before income taxes 157.1 83.1 Asbestos: Asbestos adjustments (94.5) (25.2) Other asbestos1 (0.6) (0.8) New Zealand product liability expenses 4.6 - Operating profit before income taxes excluding asbestos 66.6 57.1 and New Zealand p
Slide 23: Cashflow
1 CASHFLOW US$ Millions Q1 ’14 Q1 ’13 EBIT 156.9 82.5 Non-cash items: Asbestos adjustments (94.5) (25.2) Other non-cash items 16.0 17.0 Net working capital movements 20.1 (8.1) Cash Generated By Trading Activities 98.5 66.2 Tax payments, net (1.7) (0.6) Change in other non-trading assets and liabili
Slide 24: Capital Expenditure
CAPITAL EXPENDITURE US$ Millions Q1 ’14 Q1 ’13 % Change USA and Europe Fibre Cement (including 11.6 13.1 (11) Research and Development) Asia Pacific Fibre Cement 14.5 1.8 - Total 26.1 14.9 75 • In Q1 FY14, the company completed the purchase of the previously-leased land and buildings at Carole Park,
Slide 25: Capital Management and Dividends
CAPITAL MANAGEMENT AND DIVIDENDS • An ordinary dividend of US13.0 cents per security and a special dividend of US24.0 cents per security were paid on 26 July 2013 from FY13 earnings. Total dividend paid was US$163.6 million • In May 2013, the company announced a new share buyback program to acquire
Slide 26: Debt
DEBT • At 30 June 2013: US$ Millions Total facilities 405.0 Gross debt - Cash 198.1 Net cash (198.1) Unutilised facilities and cash 603.1 • Weighted average remaining term of debt facilities was 2.8 years at 30 June 2013, down from 3.1 years at 31 March 2013 • James Hardie remains well within its fi
Slide 27: New Zealand Product Liability Claims and New Zealand MOE Claim
NEW ZEALAND PRODUCT LIABILITY CLAIMS AND NEW ZEALAND MOE CLAIM New Zealand Product Liability Claims: • Since FY02 James Hardie NZ subsidiaries have been joined to product liability claims that relate to buildings primarily constructed from 1998 to 2004 • These claims often involve multiple parties a
Slide 28: Asbestos Fund – Proforma (Unaudited)
ASBESTOS FUND – PROFORMA (UNAUDITED) A$ millions AICF cash and investments - 31 March 2013 128.1 Insurance recoveries 5.4 Interest and investment income 2.0 Claims paid (38.1) Operating costs (1.1) AICF cash and investments - 30 June 2013 96.3 28
Slide 29: Summary
SUMMARY • Net operating profit of US$52.0 million, which excludes asbestos, ASIC expenses, New Zealand product liability expenses and tax adjustments, reflected: • Improved sales volumes and higher average net sales prices in both the USA and Europe and the Asia Pacific Fibre Cement segments • Incre
Slide 30: FY2014 Guidance
FY2014 GUIDANCE • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2014 is between US$165 million and US$194 million • Management expects full year earnings excluding asbestos, asset impairments, ASIC expenses, New Zealand pro
Slide 31: Questions
QUESTIONS
Slide 32: Appendix
APPENDIX
Slide 33: Financial Summary
FINANCIAL SUMMARY US$ Millions Q1 '14 Q1 '13 % Change Net Sales USA and Europe Fibre Cement $ 278.1 $ 252.0 10 Asia Pacific Fibre Cement 1 94.1 87.7 7 Total Net Sales $ 372.2 $ 339.7 10 EBIT - US$ Millions USA and Europe Fibre Cement $ 59.4 $ 50.3 18 Asia Pacific Fibre Cement 21.1 17.7 19 Research &
Slide 34: Key Ratios
KEY RATIOS 3 Months 3 Months 3 Months FY2014 FY2013 FY2012 EPS (Diluted)1 11.7c 10.0c 9.0c EBIT/ Sales (EBIT margin)2 18.1% 17.0% 18.0% 1 Gearing Ratio (16.5)% (32.1)% 2.1% 2 Net Interest Expense Cover 84.4x 57.7x 37.7x 2 Net Interest Paid Cover 67.5x 115.4x 33.2x Net Debt Payback - - 0.4yrs 1 Exclu
Slide 35: EBITDA – Q1
EBITDA – Q1 Q1 ’14 Q1 ’13 % Change US$ Millions EBIT USA and Europe Fibre Cement 59.4 50.3 18 Asia Pacific Fibre Cement 1 21.1 17.7 19 Research & Development (6.1) (6.0) (2) General corporate excluding asbestos and ASIC expenses (6.9) (4.3) (60) Depreciation and Amortisation USA and Europe Fibre Cem
Slide 36: General Corporate Costs – Q1
GENERAL CORPORATE COSTS – Q1 US$ Millions Q1 '14 Q1 '13 % Change Stock compensation expense 0.4 2.6 85 Corporate structure simplification expense 0.2 1.5 87 Other costs 6.3 5.7 (11) General corporate costs excluding ASIC expenses and intercompany foreign 6.9 9.8 30 exchange gain ASIC expenses - 0.1
Slide 37: Net Interest Income
NET INTEREST INCOME US$ Millions Q1 ’14 Q1 ’13 Gross interest expense (1.0) (0.8) Interest income 0.1 0.4 Realised loss on interest rate swaps (0.1) (0.5) Net interest expense excluding AICF interest income (1.0) (0.9) AICF interest income 1.1 1.1 Net interest income 0.1 0.2 37
Slide 38: Total US Housing Starts
_— (Thousands of Starts) 1000 1200 U.S. Housing Starts Calendar Quarters ut gt $F FP goede Housing starts Growth (same CP) 38
Slide 39: Endnotes
ENDNOTES 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 Definitions Non-financi
Slide 40: Endnotes (Continued)
ENDNOTES (CONTINUED) 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 under
Slide 41: Endnotes (Continued)
ENDNOTES (CONTINUED) 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 foot o
Slide 42: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos, ASIC expenses and New Zealand product liability expenses – EBIT and EBIT margin excluding asbestos, ASIC expenses and New Zealand product liability expenses are not measures of financial performance under US GAAP and should not
Slide 43: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Net operating profit excluding asbestos, ASIC expenses, New Zealand product liability expenses and tax adjustments – Net operating profit excluding asbestos, ASIC expenses, New Zealand product liability expenses and tax adjustments is not a measure of finan
Slide 44: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Diluted earnings per share excluding asbestos, ASIC expenses, New Zealand product liability expenses and tax adjustments – Diluted earnings per share excluding asbestos, ASIC expenses, New Zealand product liability expenses and tax adjustments is not a meas
Slide 45: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Effective tax rate excluding asbestos, New Zealand product liability expenses and tax adjustments – Effective tax rate on earnings excluding asbestos, New Zealand product liability expenses and tax adjustments is not a measure of financial performance under
Slide 46: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) 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 liq
Slide 47: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) General corporate costs excluding ASIC expenses and intercompany foreign exchange gain – General corporate costs excluding ASIC expenses and intercompany foreign exchange gain is not a measure of financial performance under US GAAP and should not be conside
Slide 48: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Selling, general and administrative expenses excluding New Zealand product liability expenses – Selling, general and administrative expenses excluding New Zealand product liability expenses is not a measure of financial performance under US GAAP and should
Slide 49: Q1 FY14 Management Presentation
Q1 FY14 MANAGEMENT PRESENTATION 12 August 2013
James Hardie Industries — Q1 FY2014 Earnings Presentation on 6ix