James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY23 Earnings Presentation
39 slides from James Hardie Industries's earnings presentation, Aug 16, 2022
Slide 1: Q1 FY23 Management Presentation
Q1 FY23 MANAGEMENT PRESENTATION 16 August 2022
Slide 2: Cautionary Note on Forward-Looking Statements
Page 2 James Hardie Q1 FY23 Results CAUTIONARY NOTE ON FORWARD‐LOOKING STATEMENTS This Management Presentation contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. James Hardie Industries plc (the “Company”) may from time to time make forwar
Slide 3: Agenda
Page 3 James Hardie Q1 FY23 Results AGENDA • Strategy Update • Q1 FY23 Financial Results • North America Update • Capital Allocation, Capacity Expansion & Guidance • Questions and Answers Harold Wiens Interim CEO Jason Miele CFO Sean Gadd North America President
Slide 4: James Hardie to Host Global Investor Day
Page 4 James Hardie Q1 FY23 Results JAMES HARDIE TO HOST GLOBAL INVESTOR DAY When:Monday and Tuesday, 12‐13 September Where: Ziegfeld Ballroom, New York City Registration link HERE Who: James Hardie leadership, key customers and partners Key topics • Strategy • Markets • Customer integration and eng
Slide 5: Strategy Update
STRATEGY UPDATE
Slide 6: Strategy Is Unchanged and Continues to Drive Profitable Global Growth
Page 6 James Hardie Q1 FY23 Results STRATEGY IS UNCHANGED AND CONTINUES TO DRIVE PROFITABLE GLOBAL GROWTH Market to Homeowners to Create Demand Penetrate and Drive Profitable Growth in Existing and New Segments Commercialize Global Innovations by Expanding Into New Categories Continued Execution and
Slide 7: Adjusting in an Uncertain Market
Page 7 James Hardie Q1 FY23 Results ADJUSTING IN AN UNCERTAIN MARKET United Kingdom NSW, Australia The current Macro‐economic environment: • Has significantly increased input costs and freight costs in FY23 • Is creating uncertainty for the housing sector in all three regions James Hardie: • Rem
Slide 8: Q1 FY23 Financial Results
Q1 FY23 FINANCIAL RESULTS nf Men) sin
Slide 9: Global Results
Page 9 James Hardie Q1 FY23 Results • Net Sales increased +19% and exceeded US$1.0 billion for the first time in JHX history • All 3 regions are simultaneously executing on the Global Strategy • Adjusted Net Income increased 15% • Operating cash flow of US$153.6 million remains at step‐changed level
Slide 10: APAC Summary
Page 10 James Hardie Q1 FY23 Results APAC SUMMARY • 9% increase in Net Sales driven by strong Price/Mix growth of +12% • 3% decline in volumes, primarily driven by adverse weather in Australia • Continued execution in driving High Value Product penetration • Growth in high value innovations • Second
Slide 11: Europe Summary
Page 11 James Hardie Q1 FY23 Results EUROPE SUMMARY • 7% increase in Net Sales driven by strong Price/Mix growth of +14% • 7% decline in volumes as housing activity slowed • EBIT decreased 16% at an EBIT margin of 10.3% • Net Sales Growth, more than offset by: • Significant inflation of input and fr
Slide 12: North America Summary
Page 12 James Hardie Q1 FY23 Results NORTH AMERICA SUMMARY • 28% increase in Q1 FY23 Net Sales led by volume and Price/Mix growth • Continued execution in driving High Value Product penetration with our customers • +11% volume growth • Price/Mix growth of +17% • ColorPlus volumes +31% • 13% EBIT gro
Slide 13: North America Inflation
Page 13 James Hardie Q1 FY23 Results NORTH AMERICA INFLATION Price Mix +17% COGS $/mmsf +21% SG&A Investment ($) +33% Q1 FY23 vs. Q1 FY22 Q1 FY23 vs. Q4 FY22 Price Mix +6% COGS $/mmsf +11% SG&A Investment ($) +15% Pulp $/mmsf +8% Freight $/mmsf +17% Cement $/mmsf +17% Pulp $/mmsf +16% Freight $/mmsf
Slide 14: North America Update
NORTH AMERICA UPDATE ~ - - ee —_—_—— ee eee —
Slide 15: Delivering a Strong FY23
Page 15 James Hardie Q1 FY23 Results DELIVERING A STRONG FY23 FY23: Key Metrics Net Sales Growth EBIT Margin Target 18+% 28‐32% FY21 Quarterly Avg. FY22 Quarterly Avg. Q1 FY23 NA SG&A (US$ Million) 25.9% 0% 10% 20% 30% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 N A EB IT M ar gi n (% ) Illustrative NA EBIT Mar
Slide 16: North America – Flexibility for FY24 and Beyond
Page 16 James Hardie Q1 FY23 Results NORTH AMERICA – FLEXIBILITY FOR FY24 AND BEYOND 1 Continue to build and accelerate customer engagement and partnership 2 In FY23 maintain quarterly SG&A flat to Q1FY23 to retain flexibility heading into FY24 3 Continue to invest in marketing to the homeowner to d
Slide 17: Connecting the Rope
Page 17 James Hardie Q1 FY23 Results CONNECTING THE ROPE Managing Relationships Across the Repair and Remodel Value Chain to Drive Profitable Growth Marketing Directly to Homeowners Partnering With Customers Working Closely With Contractors / Installers
Slide 18: Magnolia
Page 18 James Hardie Q1 FY23 Results MAGNOLIA Focused on ColorPlus® Technology finished products 16 colors curated by Joanna Gaines leveraging ColorPlus® Technology finishes Builds additional credibility with homeowners Joanna Gaines builds trust and credibility around aesthetic design Chi
Slide 19: Homeowner Visualization Tool
Page 19 James Hardie Q1 FY23 Results HOMEOWNER VISUALIZATION TOOL Investing in a Visualization tool, launching with the Magnolia Home |James Hardie Collection Enabling the homeowner’s path to purchase by letting her explore design options with various products and colors on her own home 3‐D re
Slide 20: Capital Allocation, Capacity Expansion & Guidance
CAPITAL ALLOCATION, CAPACITY EXPANSION & GUIDANCE
Slide 21: Capital Allocation
Page 21 James Hardie Q1 FY23 Results CAPITAL ALLOCATION • Preserve strong liquidity and flexibility • Invest in organic growth: capacity expansion, market driven innovation & marketing • Maintain net leverage ratio of less than 2x • 0.73x leverage ratio as of 30 June 2022 • Return capital to shareho
Slide 22: Capacity Expansion
Page 22 James Hardie Q1 FY23 Results CAPACITY EXPANSION Europe Capacity Expansion − Fiber Gypsum brownfield expansion in Orejo, Spain (Q4 FY24) − Fiber Cement greenfield expansion APAC Capacity Expansion − Carole Park brownfield expansion (Q3 FY23) − Greenfield expansion in Melbourne − Rosehill Pilo
Slide 23: Full Year Fiscal Year 2023 Guidance
Page 23 James Hardie Q1 FY23 Results FULL YEAR FISCAL YEAR 2023 GUIDANCE Management adjusts full year FY23 Adjusted Net Income1 guidance to: US$730 million and US$780 million a 22% increase at the mid point relative to FY22 North America Guidance – Full Year FY23 Net Sales Growth 18+% growth versus
Slide 24: Closing
Page 24 James Hardie Q1 FY23 Results CLOSING United Kingdom NSW, Australia Financially Strong We are preparing for all scenarios, and: 1. deliver strong results throughout, AND 2. accelerate and expand our competitive advantages Right Strategy Experienced Management Team
Slide 25: Questions
QUESTIONS
Slide 26: Appendix
APPENDIX
Slide 27: Building Sustainable Communities: Environmental, Social and Governance
Page 27 James Hardie Q1 FY23 Results BUILDING SUSTAINABLE COMMUNITIES: ENVIRONMENTAL, SOCIAL AND GOVERNANCE 80% of raw materials sourced within 150 miles of manufacturing facilities 75% of employees hired locally 65% of our products are shipped within 500 miles of manufacturing facilities Total Reco
Slide 28: Driving a Higher Value Product Mix – Average Net Sales Price
Page 28 James Hardie Q1 FY23 Results DRIVING A HIGHER VALUE PRODUCT MIX – AVERAGE NET SALES PRICE 718 725 745 814 893 500 600 700 800 900 1000 FY19 FY20 FY21 FY22 Q1 FY23 U S$ p er M SF North America Average Net Sales Price 306 311 312 342 378 200 250 300 350 400 FY19 FY20 FY21 FY22 Q1 FY23 € pe r M
Slide 29: General Corporate Costs
Page 29 James Hardie Q1 FY23 Results GENERAL CORPORATE COSTS • Q1 corporate costs down 33% versus pcp primarily due to lower stock compensation expense • Stock compensation expense decreased US$11 million, primarily due to the decrease in share price during the quarter • Q1 R&D costs flat versus pcp
Slide 30: Operating Cash Flow and Capital Expenditures
Page 30 James Hardie Q1 FY23 Results 1 OPERATING CASH FLOW CAPITAL EXPENDITURES • Capacity Expansion in the quarter included • Land purchased in Melbourne, Australia • Significant progress in Prattville Trim capability • Quarterly operating cash flow declined 17% vs pcp • Working capital increased b
Slide 31: Liquidity Profile
Page 31 James Hardie Q1 FY23 Results LIQUIDITY PROFILE 2 1 Incremental liquidity of up to US$250 million may be accessed via an accordion feature, which is provided for under the terms of the syndicated RCF agreement, but not credit approved. Do no anticipate accessing accordion feature. 2 Based on
Slide 32: Depreciation and Amortization
Page 32 James Hardie Q1 FY23 Results DEPRECIATION AND AMORTIZATION
Slide 33: Asbestos Claims Data
Page 33 James Hardie Q1 FY23 Results Quarter ended 30 June 2022: • Average claim settlement was 23% below actuarial estimates and 17% below pcp • Number of claims settled were 36% above actuarial expectations and 50% above pcp • Claims received were 11% above actuarial estimates and 12% above pcp •
Slide 34: Financial Measures – GAAP Equivalents and Definitions
Page 34 James Hardie Q1 FY23 Results This Management Presentation forms part of a package of information about the company’s results. It should be read in conjunction with the other parts of this package, including the Management’s Analysis of Results, Media Release and Consolidated Financial Statem
Slide 35: Non-GAAP Financial Measures
Page 35 James Hardie Q1 FY23 Results NON‐GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBITDA US$ Millions Q1'23 Q1'22 EBIT 221.3$ 183.0$ Asbestos: Asbestos adjustments gain (13.2) (2.8) AICF SG&A expenses 0.3 0.3 Adjusted EBIT 208.4$ 180.5$ Net sales 1,000.9 843.3 Adjusted EBIT margin 20.8% 21
Slide 36: Non-GAAP Financial Measures
Page 36 James Hardie Q1 FY23 Results NON‐GAAP FINANCIAL MEASURES US$ Millions Q1'23 Q1'22 Europe Building Products Segment EBIT 12.1$ 16.3$ Europe Building Products Segment net sales 118.0 124.4 Europe Building Products Segment Adjusted EBIT margin 10.3% 13.1% Depreciation and amortization 6.6 7.6 E
Slide 37: Non-GAAP Financial Measures
Page 37 James Hardie Q1 FY23 Results NON‐GAAP FINANCIAL MEASURES 1 Includes tax adjustments related to the amortization benefit of certain US intangible assets, asbestos, and other tax adjustments US$ Millions Q1'23 Q1'22 Interest, net 8.8$ 10.1$ AICF interest income, net (0.2) (0.1) Adjusted intere
Slide 38: Non-GAAP Financial Measures
Page 38 James Hardie Q1 FY23 Results NON‐GAAP FINANCIAL MEASURES 1 Includes tax adjustments related to the amortization benefit of certain US intangible assets, asbestos, and other tax adjustments Adjusted effective tax rate US$ Millions Q1 FY23 Q1 FY22 Income before income taxes 212.3$ 172.7$ Asbes
Slide 39: Q1 FY23 Management Presentation
Q1 FY23 MANAGEMENT PRESENTATION 16 August 2022
James Hardie Industries — Q1 FY23 Earnings Presentation on 6ix