James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — James Hardie US Investor Visit, Denver, 14-17 September 2008
36 slides from James Hardie Industries's conference presentation, Sep 17, 2008
Slide 1: Repair and Remodel: The Market, Historical Overview and New Approach/Go Forward
James Hardie US a at hosel 14-17 September 2008 | Den Repair and Remodel Paul Gentzel, R&R Business Mai The Market, Historical Overview and New Approach/Go Forward
Slide 2: Forward-looking statements
This Management Presentation contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders, in offering
Slide 3: Outline
1. Market Overview 2. James Hardie R&R History up to 2008 3. New Approach/Go Forward Outline
Slide 4: Repair and Remodel Market Overview: The Market
Repair and Remodel Market Overview The Market
Slide 5: McGraw Hill Dodge NC Starts have declined rapidly
McGraw Hill Dodge NC Starts have declined rapidly Starts by Quarter 73 91 93 81 53 48 365 457 441 364 369 399 313 250 256 287 226 167 146 174 88 97 85 76 72 83 66 61 0 50 100 150 200 250 300 350 400 450 500 Q1 2005 Q2 Q3 Q4 Q1 2006 Q2 Q3 Q4 Q1 2007 Q2 Q3 Q4 Q1 2008 Q2 (Thousands of Starts) MF low-ri
Slide 6: R&R opportunity exceeds new construction
NAHB Data 2007 As measured in Square Feet R&R opportunity exceeds new construction
Slide 7: James Hardie Exterior Cladding Markets: R&R Market Opportunity
NAHB Data 2007 James Hardie Exterior Cladding Markets R&R 67% New 33% Overall R&R market opportunity
Slide 8: Contractor landscape: breakdown by sales volume
$ 10 mm + $750K - $999K $500K - $749K $250K - $499K > $250K Breakdown by Sales Volume 12% of the contractors Traits: Re-invests 10-15% of the Sales in Pro-active Advertising Scalable - Ability to Grow Commitment to the segment Sales Systems - Ability to Sell Value Mean Contractor: $1.04 mm Median Co
Slide 9: Contractor landscape: Re-sider and Generalist
Re-sider (Quality Focused) Generalist (Price Focused) Re-side Gross Sales: $3mm+ 100 - 300 Re-sides/yr. Operational efficiency. Focus is Lead Acquisition Proactive Advertiser 10%-15% of Sales spent on advertising Product Drivers Looks for high brand awareness - Lower Lead Costs Product Exclusive Gro
Slide 10: James Hardie Repair and Remodel History up to 2008
James Hardie Repair and Remodel History up to 2008
Slide 11: R&R History up to 2008 - continued
FY2000 FY2008 FY2001 FY2003 FY2002 FY2004 FY2005 FY2006 FY2007 Everlast (tm) Exclusive One-Step Pre-finished 6/2002 Color Exclusive Pitch 10/2003 2/2004 Pitch JH Retail 4 /2005 Retail Pilot Initiated 1/2006 Remodeling Program Sustains 25+% Growth Year over Year JHSC 1st Anniversary 7/2007 SFI Pilot
Slide 12: Program launched 1999, grown to over 300 contractors
Launched in 1999 Designed to "Partner and Penetrate" target markets Grown to over 300 contractors in 43 states Primarily populated with "visionaries" and "early movers" mostly replacing failed Wood/Hardboard/OSB in high S curve markets Provides solid foundation upon which to build R&R History up to
Slide 13: Findings from R&R history
Findings Contractor Segmentation Slow to change approach as market developed Business Structure Key Gross Margins necessary to build a sustainable company JH Structure "Specialized" R&R staff, limited penetration in target markets Key measures Better measures of Program contractors Total Solution -
Slide 14: Launched James Hardie Siding Center - June 2006
Launched James Hardie Siding Center - June 2006 3 High Quality Retail Siding Centers - consumer destinations Siding Center creates awareness in Denver market with Full Spectrum Marketing Plan Learning curve has been high value education - Manufacturer to Professional Replacement Contractor A refined
Slide 15: New Approach/Go Forward
New Approach/Go Forward
Slide 16: James Hardie R&R Strategy Statement
James Hardie R&R Strategy Statement " Switch the preference from vinyl to fiber cement by directly communicating the benefits and affordability of James Hardie to the consumer." New Approach/Go Forward
Slide 17: Steps to James Hardie Success: Educate, Quote, Install
Educate Quote Install An Affordable Solution JH is not only for the top of the market Price Gap vs. vinyl continues to shrink #1 ROI Cost vs. Value report - - REMODELING MAGAZINE Timely Installation Full Wrap Solution JH Best Practices JH Install Techs enable Install Capacity building across all mar
Slide 18: Penetration Curve
Penetration Curve Houston Portland Atlanta Seattle Raleigh San Antonio Charlotte St. Louis Minneapolis Detroit New Jersey Austin Chicago Denver DC Mix Shift in High Penetration Markets Large PDG Opportunity in Early S Curve Markets Opportunity in Every Market
Slide 19: Terminal share with and without JH direct intervention
Middle 3rd Top 3rd Terminal Share without JH direct intervention Bottom 3rd Terminal Share with JH direct intervention Middle 3rd Top 3rd Bottom 3rd Wood/Stone Wood/Stone Vinyl Vinyl Typical Vinyl Market
Slide 20: Multiple parallel strategies in target markets
We will employ a combination of the following in target markets across the US: JH Siding Centers Creates Wake Pull Contractors into Wake Control Consumer Message Sales Competency Building High cost Repeatability slow Install Efficiency challenging Key Partners Scalable Aligned with JH Product Strate
Slide 21: James Hardie Siding Center
James Hardie s Hardie Siding Center @ damesHardiesicingCenter
Slide 22: James Hardie Siding Centers: positives and challenges
Positives Has created sizable wake in Denver re-side market Marketing has carryover effect on New Construction Web leads for all partners are up vs. 2007 100% of jobs are profitable, with profits in our target band Sales efficiency is up leading to higher close rates Provides unmatched credibility w
Slide 23: JH Siding Centers - Website Contractors
Pre Opening FY06 Opened June 2006 Post Opening to FY08 Material purchases ~$800,000 +20% +28% ColorPlus 35% 50% 70% Replacement Contractors 12 small to mid size 15 small to mid size 10 mid to large Marketing strategy Limited marketing 1st Mass Marketer enrolled to program Multiple Mass Marketers enr
Slide 24: Key Partner Program
Key Partner Program
Slide 25: Hardie partners with Airoom in Chicago
Hardie partners with Airoom in Chicago Airoom - full line remodeling professionals for 50 years $ US35 mil+ annually - Large, professional sales force Join with JH to launch "Exteriors Only" line extension focused on selling siding (JH), windows (Marvin) and doors (ThermaTru) Key Partners
Slide 26: Key Partners - continued
Two large showroom locations - both will contain the look and feel of a scaled down Denver Siding Center JH contributes aspects of JHSC - incl. full spectrum marketing plan with right of approval on all content Designed to create rapid growth in Chicago market with Mix Shift Products Key Partners -
Slide 27: Website Contractor Program
Website Contractor Program
Slide 28: Why does a Contractor Choose James Hardie?
Why does a Contractor Choose James Hardie? Value proposition to the Contractor Ability to differentiate themselves from vinyl JH Value Propositions resonate with the Home Owner FC market fastest growing siding segment Alignment with a Premium Brand - Leadership position Turn-Key business solution -
Slide 29: Consistent, sustainable profits that outpace vinyl
Why does a Contractor Choose James Hardie? Consistent, Sustainable Profits that outpace vinyl Prevalent straight line margin/pricing model means greater profit per square and job over similar vinyl job 15 sq. job = ~50% greater profit Fewer, more profitable jobs per month Model requires fewer leads/
Slide 30: Website Contractors gain credibility and leads
Existing Program Contractors provide a good base Website Contractors gain credibility in the home and leads via association with James Hardie and presence on JH Website Website Contractors must represent the most JH-aligned contractors in the US Website Contractors - continued
Slide 31: New program outlines Mix Shift targets
JH must leverage the above credibility and alignment for mutual benefit New Program outlines Mix Shift Targets by geography - ColorPlus(r), HardieTrim(tm), HardieWrap(tm) New Program includes job reporting requirements via secure web link ensuring alignment and product usage Result will be increase
Slide 32: Consumer education on JH Mix Shift products
Consumer Education and reinforcement of JH Mix Shift products with high value in the home Website Contractors - continued
Slide 33: Significant increase in James Hardie field reps focusing on R&R
Significant increase in James Hardie field reps focusing on R&R + 300% Reps will work in 4 key areas Existing Website Partners New Targets Multi-Family Re-side Aggregate Fragmented via the Channel Reps use Regional Segment Managers who are segment experts for guidance and training New Approach/Go Fo
Slide 34: Aggregate fragmented contractors via Key Channel Partners
Aggregate the large pool of smaller, fragmented contractors via our Key Channel Partners with disciplined Aggregation Events run by JH Field Sales. 88% of the contractors Traits: Limited Advertising Referral based Typically not growth oriented Works across segments Sells himself with the consumer Ne
Slide 35: Summary: R&R segment is the largest opportunity
R&R Segment is the largest opportunity for JH today We have a base of knowledge - we must accelerate James Hardie R&R Strategy Statement "Switch the preference from vinyl to fiber cement by directly communicating the benefits and affordability of James Hardie to the consumer" Focus on the Educate/Qu
Slide 36: The Path to Success
The Path to Success Attack target markets with multiple, parallel strategies Aligned Website Contractor program - sell and install key Mix Shift Products while reporting critical data JH Field Reps - greatly increased focus in target markets Hardie products enable the strategies and provide foundati
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