James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q3 FY2013 Earnings Presentation
56 slides from James Hardie Industries's earnings presentation, Mar 1, 2013
Slide 1: Q3 FY13 Management Presentation
Exhibit 99.4 Q3 FY13 MANAGEMENT PRESENTATION 27 February 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: 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 secti
Slide 4: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 5: Group Overview
GROUP OVERVIEW 1 US$ Millions Q3 Q3 % 9 Months 9 Months % FY 2013 FY 2012 Change FY 2013 FY 2012 Change Net operating profit (loss) 31.5 (4.8) - 115.0 123.6 (7) Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product 28.8 28.0 3 113.1 109.3 3 liability expenses
Slide 6: USA and Europe Fibre Cement - 3rd Quarter Result
USA AND EUROPE FIBRE CEMENT 1 3rd Quarter Result Net Sales up 16% to US$224.5 million Sales Volume up 17% to 351.1 mmsf Average Price down from US$641 per msf to US$639 per msf 2 EBIT down 2% to US$30.4 million 2 EBIT Margin down 2.6 pts to 13.5% 1 Comparisons are of the 3rd quarter of the current f
Slide 7: USA and Europe Fibre Cement - Nine Months Result
USA AND EUROPE FIBRE CEMENT 1 Nine Months Result Net Sales up 11% to US$714.6 million Sales Volume up 13% to 1,108.7 mmsf Average Price down 1% to US$645 per msf 2 EBIT down 1% to US$124.7 million EBIT Margin2 down 2.2 pts to 17.5% 1 Comparisons are of the 3rd quarter of the current fiscal year vers
Slide 8: US Organisational Capability
US ORGANISATIONAL CAPABILITY In anticipation of a continued market recovery in the US housing market, the company has incurred higher costs in the US to increase its organisational capability Such costs include: Increase in headcount relative to 31 March 2012: Manufacturing up 7% Marketing, Sales an
Slide 9: USA and Europe Fibre Cement Quarterly EBIT and EBIT Margin
USA AND EUROPE FIBRE CEMENT 1 Quarterly EBIT and EBIT Margin EBIT EBIT Margin 1 Excludes impairment charges of US$38.6 million in Q4 FY08, US$14.3 million in Q4 FY12 and US$5.8 million in Q3 FY13 9
Slide 10: USA and Europe Fibre Cement Average Net Sales Price
USA AND EUROPE FIBRE CEMENT Average Net Sales Price (US dollars) 1 US$645 1 FY13 average net sales price represents 3rd quarter year-to-date; other years presented are for the full year 10
Slide 11: Asia Pacific Fibre Cement - 3rd Quarter Result
ASIA PACIFIC FIBRE CEMENT 1 3rd Quarter Result Net Sales up 6% to US$95.9 million Sales Volume up 6% to 100.2 mmsf Average Price down 3% to A$922 per msf 2 EBIT down 3% to US$19.2 million EBIT Margin2 down 1.8 pts to 20.0% 1 Comparisons are of the 3rd quarter of the current fiscal year versus the 3r
Slide 12: Asia Pacific Fibre Cement - Nine Months Result
ASIA PACIFIC FIBRE CEMENT 1 Nine Months Result Net Sales down 2% to US$279.9 million Sales Volume down from 298.2 mmsf to 297.5 mmsf Average Price down 1% to A$914 per msf EBIT 2 down 13% to US$58.2 million EBIT Margin2 down 2.6 pts to 20.8% 1 Comparisons are of the nine months of the current fiscal
Slide 13: Group 3rd Quarter Summary
GROUP3rdQUARTER SUMMARY 1 USA and Europe Fibre Cement results reflected: Higher sales volume Lower average net sales price Lower input costs (primarily pulp and freight) Higher fixed manufacturing costs Asset impairment charges of US$5.8 million Higher organisational costs to fund initiatives that i
Slide 14: Group Outlook
GROUP OUTLOOK United States Industry data indicates consistent improvement in builder confidence and increased activity in the US housing market - momentum of recovery appears well founded In anticipation of housing recovery continuing, the business is funding initiatives to improve organisational c
Slide 15: Group Outlook - Key Priorities
GROUP OUTLOOK Key Priorities The company’s key medium-term priorities in the US are: Grow primary demand and exterior cladding market share – with focus on repair and remodel and non-metro markets Increase market penetration of ColorPlus ® and Trim products Continue to rollout the job pack distribut
Slide 16: Financial Review
FINANCIAL REVIEW Russell Chenu, CFO
Slide 17: Operating Review Highlights
OPERATING REVIEW Highlights Third quarter and nine month earnings impacted by: Improved sales volume in the US business reflecting an improved market environment Price in the US business constrained by targeted penetration into price-sensitive market segments Funding of initiatives in the US busines
Slide 18: Changes in A$ versus US$
CHANGES IN A$ VERSUS US$ – Favourable impact from translation of Asia Pacific results – Q3 Earnings Balance Sheet FY13 vs Q3 FY12 N/A – Unfavourable impact on corporate costs incurred in Australian dollars – Q3 FY13 vs Q3 FY12 N/A – Favourable impact from translation of asbestos liability balance –
Slide 19: Results Q3
RESULTS Q –3 US$ Millions Q3 '13 Q3 '12 % Change Net sales 320.4 283.0 13 Gross profit 96.2 90.6 6 SG&A expenses (59.7) (48.0) (24) Research & development expenses (9.9) (7.3) (36) Asset impairments (5.8) - - Asbestos adjustments 11.7 (33.5) - EBIT 32.5 1.8 - Net interest income (expense) 2.1 (1.5)
Slide 20: Results Q3 (continued)
RESULTS Q – 3 (CONTINUED) US$ Millions Q3 '13 Q3 '12 % Change Net operating profit (loss) 31.5 (4.8) - Asbestos: Asbestos adjustments (11.7) 33.5 - Other asbestos 1 (2.9) 0.1 - Tax expense (benefit) related to asbestos 2.5 (0.1) - adjustments Asset impairments 5.8 - - ASIC expenses 0.1 0.3 (67) New
Slide 21: Results Nine Months
RESULTS N – INE MONTHS US$ Millions 9 Months 9 Months FY 2013 FY 2012 % Change Net sales 994.5 928.2 7 Gross profit 317.5 311.4 2 SG&A expenses (160.6) (142.1) (13) Research & development expenses (27.8) (21.6) (29) Asset impairments (5.8) - - Asbestos adjustments 14.5 15.2 (5) EBIT 137.8 162.9 (15)
Slide 22: Results Nine Months (continued)
RESULTS N – INE MONTHS (CONTINUED) 9 Months 9 Months US$ Millions FY 2013 FY 2012 % Change Net operating profit 115.0 123.6 (7) Asbestos: Asbestos adjustments (14.5) (15.2) 5 Other asbestos 1 (4.4) 0.1 - Tax expense (benefit) related to asbestos 5.1 (0.1) - adjustments Asset impairments 5.8 - - ASIC
Slide 23: Segment Net Sales Q3
SEGMENT NET SALES Q3– US$ Millions Q3 '13 Q3 '12 % Change USA and Europe Fibre Cement 224.5 192.8 16 Asia Pacific Fibre Cement 95.9 90.2 6 Total 320.4 283.0 13 23
Slide 24: Segment Net Sales - Nine Months
SEGMENT NETSALES– NINEMONTHS 9 Months 9 Months US$ Millions FY 2013 FY 2012 % Change USA and Europe Fibre Cement 714.6 641.3 11 Asia Pacific Fibre Cement 279.9 286.9 (2) Total 994.5 928.2 7 24
Slide 25: Segment EBIT Q3
SEGMENT EBITQ3 – US$ Millions Q3 ’13 Q3 ’12 % Change 1 USA and Europe Fibre Cement 30.4 31.0 (2) 2 Asia Pacific Fibre Cement 19.2 19.7 (3) 3 Research & Development (6.8) (5.0) (36) Total segment EBIT excluding asset impairments 42.8 45.7 (6) and New Zealand product liability expenses General corpora
Slide 26: Segment EBIT Nine Months
SEGMENT EBITNINE – MONTHS 9 Months 9 Months US$ Millions FY 2013 FY 2012 % Change 1 USA and Europe Fibre Cement 124.7 126.3 (1) 2 Asia Pacific Fibre Cement 58.2 67.0 (13) 3 Research & Development (19.1) (15.2) (26) Total segment EBIT excluding asset impairments and New Zealand product liability expe
Slide 27: Income Tax Expense Q3
INCOME TAX EXPENSE Q3– Q3 '13 Q3 '12 US$ Millions Operating profit before income taxes 35.1 1.8 Asbestos: Asbestos adjustments (11.7) 33.5 1 Other asbestos (2.9) 0.1 Asset impairments 5.8 - Operating profit before income taxes excluding asbestos and asset impairments 26.3 35.4 Income tax expense (3.
Slide 28: Income Tax Expense Nine Months
INCOME TAX EXPENSE NINE – MONTHS 9 Months 9 Months US$ Millions FY 2013 FY 2012 Operating profit before income taxes 141.3 158.7 Asbestos: Asbestos adjustments (14.5) (15.2) 1 Other asbestos (4.4) 0.1 Asset impairments 5.8 - Operating profit before income taxes excluding asbestos and asset impairmen
Slide 29: Cashflow
CASHFLOW 1 US$ Millions 9 Months 9 Months FY 2013 FY 2012 EBIT 137.8 162.9 Non-cash items: Asbestos adjustments (14.5) (15.2) Asset impairments 5.8 - Other non-cash items 45.5 55.6 Net working capital movements 34.1 25.8 Cash Generated By Trading Activities 208.7 229.1 Tax payments, net (85.0) (28.4
Slide 30: Capital Management
CAPITAL MANAGEMENT On 23 July 2012, the Company paid a FY2012 second half dividend of US$166.4 million, reflecting a payment of US38.0 cents per security (nil in FY12). On 25 January 2013, the Company paid a FY2013 first half dividend of US$22.1 million (US$17.4 million in FY12), reflecting a paymen
Slide 31: Debt
DEBT At 31 December 2012: US$ Millions Total facilities 280.0 Gross debt - Cash 159.5 Net cash (159.5) Unutilised facilities and cash 439.5 Net cash of US$159.5 million compared to net cash of US$265.4 million at 31 March 2012 Weighted average remaining term of total facilities was 0.4 years at 31 D
Slide 32: Asbestos Fund Pro-Forma (Unaudited)
ASBESTOS FUND PRO – FORMA (UNAUDITED) A$ millions AICF cash and deposits - 31 March 2012 62.5 1 Contribution to AFFA by James Hardie 177.5 Insurance and cross claim recoveries 34.1 Interest income and unrealised gain on investments 6.3 Claims paid (98.0) Operating costs (2.9) Repayment of NSW Govern
Slide 33: Key Ratios
KEY RATIOS * 9 Months 9 Months 9 Months FY 2013 FY 2012 FY2011 1 EPS (Diluted) 25.8c 24.9c 18.9c 2 EBIT/ Sales (EBIT margin) 14.5% 16.4% 15.7% 1 Gearing Ratio -13.9% -2.0% 4.6% 2 Net Interest Expense Cover 43.6x 25.8x 24.2x 2 Net Interest Paid Cover 110.8x 24.9x 22.6x 3 Net Debt Payback - - 0.3yrs *
Slide 34: Summary
1 SUMMARY Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability expenses and tax adjustments for the 3rd quarter and nine months was US$28.8 million and US$113.1 million, respectively. The 3rd quarter results reflected: Higher sales volume in the US
Slide 35: FY2013 Guidance
FY2013 GUIDANCE Management expects full year earnings excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability expenses and tax adjustments to be between US$136 million and US$141 million Management cautions that guidance is dependent upon US housing industry conditions co
Slide 36: Questions
QUESTIONS
Slide 37: Appendix
APPENDIX
Slide 38: Financial Summary
FINANCIAL SUMMARY NINE – MONTHS 9 Months US$ Millions Q3 '13 Q3 '12 % Change FY2013 FY2012 % Change Net Sales USA and Europe Fibre Cement $ 224.5 $ 192.8 16 $ 714.6 $ 641.3 11 Asia Pacific Fibre Cement 95.9 90.2 6 279.9 286.9 (2) Total Net Sales $ 320.4 $ 283.0 13 $ 994.5 $ 928.2 7 1 EBIT - US$ Mill
Slide 39: USA Fibre Cement Top Line Growth
USA FIBRE CEMENT Top Line Growth JH Volume Housing Starts JH Revenue Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 39
Slide 40: Total U.S. Housing Starts
* i TOTAL U.S. HOUSING STARTS U.S. Housing Starts Calendar Quarters 800 600 400 = 200 oo CESS SF SSE F ESSE ESI Pees 2 Das 800 -1000 =1200 Housing starts —-—%Growth (same QtrPY’) Source: US Census Bureau - New Privately-Owned Housing Units Stated 40
Slide 41: General Corporate Costs Q3
GENERAL CORPORATE COSTS Q3 – US$ Millions Q3 '13 Q3 '12 % Change Stock compensation expense 3.1 4.6 33 Other costs 5.0 4.3 (16) General corporate costs excluding ASIC expenses 8.1 8.9 9 ASIC expenses 0.1 0.3 67 General corporate costs 8.2 9.2 11 41
Slide 42: General Corporate Costs - Nine Months
GENERAL CORPORATE COSTS– NINEMONTHS 9 Months 9 Months US$ Millions FY 2013 FY 2012 % Change Stock compensation expense 8.7 8.4 (4) Other costs 19.3 17.7 (9) General corporate costs excluding ASIC expenses, intercompany foreign exchange gain and recovery of legal costs 28.0 26.1 (7) ASIC expenses 0.5
Slide 43: EBITDA Q3
EBITDA –Q3 US$ Millions Q3 ’13 Q3 ’12 % Change EBIT 1 USA and Europe Fibre Cement 30.4 31.0 (2) 2 Asia Pacific Fibre Cement 19.2 19.7 (3) Research & Development (6.8) (5.0) (36) General corporate excluding asbestos and ASIC expenses (8.1) (8.9) 9 Depreciation and Amortisation USA and Europe Fibre Ce
Slide 44: EBITDA Nine Months
EBITDA –NINE MONTHS 9 Months 9 Months % Change US$ Millions FY 2013 FY 2012 EBIT 1 USA and Europe Fibre Cement 124.7 126.3 (1) 2 Asia Pacific Fibre Cement 58.2 67.0 (13) Research & Development (19.1) (15.2) (26) General corporate excluding asbestos and ASIC expenses (19.8) (26.1) 24 Depreciation and
Slide 45: Capital Expenditure
CAPITAL EXPENDITURE 9 Months 9 Months US$ Millions FY 2013 FY 2012 % Change USA and Europe Fibre Cement (including 34.1 20.6 66 Research and Development) Asia Pacific Fibre Cement 7.7 4.9 57 Total 41.8 25.5 64 Capital expenditure of US$34 million approved for reconfiguration and refurbishment of the
Slide 46: Net Interest Income (Expense)
NET INTEREST INCOME (EXPENSE) US$ Millions 9 Months 9 Months Q3 ’13 Q3 ’12 FY 2013 FY 2012 Gross interest expense (0.9) (0.9) (2.5) (2.9) Interest income 0.1 - 0.7 0.2 Realised loss on interest rate swaps (0.5) (1.4) (1.5) (3.2) Net interest expense excluding AICF interest income (1.3) (2.3) (3.3) (
Slide 47: 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 48: Endnotes (continued)
ENDNOTES (CONTINUED) 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 of 5/16” thickness Financial Ratios Gearing Ratio – Net debt (cash) dividedb
Slide 49: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos, asset impairments, ASIC expenses and New Zealand product liability expenses – EBIT and EBIT margin excluding asbestos, asset impairments, ASIC expenses and New Zealand product liability expenses are not measures of financial per
Slide 50: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability expenses and tax adjustments – Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability expenses and tax
Slide 51: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability expenses and tax adjustments – Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability expe
Slide 52: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Effective tax rate excluding asbestos, asset impairments and tax adjustments – Effective tax rate on earnings excluding asbestos, asset impairments and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to b
Slide 53: 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 54: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) General corporate costs excluding ASIC expenses, intercompany foreign exchange gain and recovery of RCI legal costs General corporate costs excluding ASIC expenses, intercompany foreign exchange gain and recovery of RCI legal costs is not a measure of finan
Slide 55: 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 56: Q3 FY13 Management Presentation
Q3 FY13 MANAGEMENT PRESENTATION 27 February 2013
James Hardie Industries — Q3 FY2013 Earnings Presentation on 6ix