James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q2 FY2013 Earnings Presentation
54 slides from James Hardie Industries's earnings presentation, Nov 16, 2012
Slide 1: Q2 FY13 Management Presentation
Exhibit 99.4 Q2 FY13 MANAGEMENT PRESENTATION 15 November 2012
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 • For the quarter, net operating profit excluding asbestos, ASIC expenses and tax adjustments decreased 16% to US$34.8 million • For the half year, net operating profit excluding asbestos, ASIC expenses and tax adjustments decreased 2% to US$78.6 million • 2nd quarter and half year
Slide 6: USA and Europe Fibre Cement 2nd Quarter Result
USA AND EUROPE FIBRE CEMENT 2nd Quarter Result 1 Net Sales up 4% to US$238.1 million Sales Volume up 6% to 369.5 mmsf Average Price down 2% to US$644 per msf EBIT down 7% to US$44.0 million EBIT Margin down 2.2 pts to 18.5% 1 Comparisons are of the 2nd quarter of the current fiscal year versus the 2
Slide 7: USA and Europe Fibre Cement Half Year Result
USA AND EUROPE FIBRE CEMENT Half Year Result 1 Net Sales up 9% to US$490.1 million Sales Volume up 11% to 757.6 mmsf Average Price down 2% to US$647 per msf EBIT down 1% to US$94.3 million EBIT Margin down 2.0 pts to 19.2% 1 Comparisons are of the 1st half of the current fiscal year versus the 1st h
Slide 8: USA and Europe Fibre Cement Average Net Sales Price
USA AND EUROPE FIBRE CEMENT Average Net Sales Price (US dollars) 660 1 US$647 640 620 600 580 560 540 FY07 FY08 FY09 FY10 FY11 FY12 Q2 YTD FY13 1 FY13 average net sales price represents 2 nd quarter year-to-date; other years presented are for the full year 8
Slide 9: USA and Europe Fibre Cement EBIT and EBIT Margin
USA AND EUROPE FIBRE CEMENT EBIT and EBIT Margin 1 140 35 120 30 100 25 80 20 60 15 40 10 20 5 0 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 EBIT EBIT Margin 1 Excludes impairment charges of US$45.6 million in Q4 FY08 and US$14.3 million in Q4 FY12 9
Slide 10: Total US Housing Starts
TOTAL US HOUSING STARTS U.S. Housing Starts Calendar Quarters 800 40% 28.0% 600 30% 23% 17% 27.7% 400 23.4% 20% 12% 200 6% 7% 7% 4% 4% 6% 10% 1% 0 0% 9% -200 -5% -10% -3% -7% -19% -19% -21% -400 -23%-24% -20% -25% -28% -31% -31% -31% -600 -33% -30% -800 -44% -46% -40% -51% -1000 -50% -1200 Housing S
Slide 11: Asia Pacific Fibre Cement 2nd Quarter Result
ASIA PACIFIC FIBRE CEMENT 2nd Quarter Result 1 Net Sales down 6% to US$96.3 million Sales Volume down 4% to 102.2 mmsf Average Price down 2% to A$908 per msf EBIT down 39% to US$15.6 million EBIT Margin down 8.6 pts to 16.2% 1 Comparisons are of the 2nd quarter of the current fiscal year versus the
Slide 12: Asia Pacific Fibre Cement Half Year Result
ASIA PACIFIC FIBRE CEMENT Half Year Result 1 Net Sales down 6% to US$184.0 million Sales Volume down 3% to 197.3 mmsf Average Price flat at A$911 per msf EBIT down 29% to US$33.3 million EBIT Margin down 5.6 pts to 18.1% 1 Comparisons are of the 1st half of the current fiscal year versus the 1st hal
Slide 13: Group 2nd Quarter Summary
GROUP 2nd QUARTER SUMMARY 1 USA and Europe Fibre Cement results reflected: Growth in US housing market Increased proportion of volume in more price-sensitive market segments Lower average net sales price Lower input costs (primarily pulp and freight) Higher fixed unit cost of manufacturing Higher SG
Slide 14: Group Outlook
GROUP OUTLOOK United States Industry data indicates consistent improvement in builder confidence and increased activity in US housing market The early stages of a recovery in the residential market appears to be underway The extent and rate of improvement, however, is uncertain The business is being
Slide 15: Group Outlook: Key Priorities
GROUP OUTLOOK Key Priorities The company’s key medium-term priorities in the US are: Grow primary demand and exterior cladding market share – with focus on repair and remodel and non-metro markets Increase market penetration of ColorPlus® and Trim products Continue to rollout the job pack distributi
Slide 16: Financial Review
FINANCIAL REVIEW Russell Chenu, CFO
Slide 17: Operating Review Highlights
OPERATING REVIEW Highlights Second quarter and half year earnings impacted by: Improved sales volume in US business reflecting an improved market environment Price in the US business constrained by targeted penetration into price-sensitive market segments Funding of initiatives in the US business to
Slide 18: Changes in A$ versus US$
CHANGES IN A$ VERSUS US$ 1.20 1.10 1.00 0.90 0.80 0.70 0.60 31 Dec 08 31 Mar 09 30 Jun 09 30 Sep 09 31 Dec 09 31 Mar 10 30 Jun 10 30 Sep 10 31 Dec 10 31 Mar 11 30 Jun 11 30 Sep 11 31 Dec 11 31 Mar 12 30 Jun 12 30 Sep 12 Earnings Balance Sheet – Unfavourable impact from translation of Asia Pacific re
Slide 19: Results Q2
RESULTS Q –2 US$ Millions Q2 '13 Q2 '12 % Change Net sales 334.4 331.6 1 Gross profit 111.3 112.6 (1) SG&A expenses (56.6) (48.6) (16) Research & development expenses (9.5) (7.3) (30) Asbestos adjustments (22.4) 86.9 - EBIT 22.8 143.6 (84) Net interest expense - (1.2) - Other income (expense) 0.3 (0
Slide 20: Results Q2 (continued)
RESULTS Q – 2 (CONTINUED) US$ Millions Q2 '13 Q2 '12 % Change Net operating profit 15.0 127.4 (88) Asbestos: Asbestos adjustments 22.4 (86.9) - 1 Other asbestos (0.7) (0.1) - Tax expense related to asbestos adjustments 0.4 - - ASIC expenses 0.3 0.5 (40) Tax adjustments (2.6) 0.3 - Net operating prof
Slide 21: Results Half Year
RESULTS H – alf Year US$ Millions HY '13 HY '12 % Change Net sales 674.1 645.2 4 Gross profit 221.3 220.8 - SG&A expenses (100.9) (94.1) (7) Research & Development expenses (17.9) (14.3) (25) Asbestos adjustments 2.8 48.7 (94) EBIT 105.3 161.1 (35) Net interest income (expense) 0.2 (2.2) - Other inc
Slide 22: Results Half Year (continued)
RESULTS H – alf Year (CONTINUED) US$ Millions HY '13 HY '12 % Change Net operating profit 83.5 128.4 (35) Asbestos: Asbestos adjustments (2.8) (48.7) 94 Other asbestos 1 (1.5) - - Tax expense related to asbestos adjustments 2.6 - - ASIC expenses 0.4 0.7 (43) Tax adjustments (3.6) 0.2 - Net operating
Slide 23: Segment Net Sales Q2
SEGMENT NET SALES Q2– US$ Millions Q2 '13 Q2 '12 % Change USA and Europe Fibre Cement 238.1 228.7 4 Asia Pacific Fibre Cement 96.3 102.9 (6) Total 334.4 331.6 1 23
Slide 24: Segment Net Sales Half Year
SEGMENT NET SALES Half – Year US$ Millions HY '13 HY '12 % Change USA and Europe Fibre Cement 490.1 448.5 9 Asia Pacific Fibre Cement 184.0 196.7 (6) Total 674.1 645.2 4 24
Slide 25: Segment EBIT Q2
SEGMENT EBITQ2 – US$ Millions Q2 ’13 Q2 ’12 % Change USA and Europe Fibre Cement 44.0 47.3 (7) 1 Asia Pacific Fibre Cement 15.6 25.5 (39) 2 Research & development (6.3) (5.1) (24) Total segment EBIT 53.3 67.7 (21) General corporate costs excluding asbestos and ASIC expenses 3 (7.4) (9.7) 24 Total EB
Slide 26: Segment EBIT Half Year
SEGMENT EBITHalf – Year US$ Millions HY '13 HY '12 % Change USA and Europe Fibre Cement 94.3 95.3 (1) Asia Pacific Fibre Cement 1 33.3 46.6 (29) 2 Research & Development (12.3) (10.2) (21) Total segment EBIT 115.3 131.7 (12) General corporate costs excluding asbestos and ASIC expenses 3 (11.7) (17.2
Slide 27: Income Tax Expense Q2
INCOME TAX EXPENSE Q2– US$ Millions Q2 '13 Q2 '12 Operating profit before income taxes 23.1 141.9 Asbestos: Asbestos adjustments 22.4 (86.9) Other asbestos 1 (0.7) (0.1) Operating profit before income taxes excluding asbestos 44.8 54.9 Income tax expense (8.1) (14.5) Asbestos: Tax expense related to
Slide 28: Income Tax Expense Half Year
INCOME TAX EXPENSE Half – Year US$ Millions HY '13 HY '12 Operating profit before income taxes 106.2 156.9 Asbestos: Asbestos adjustments (2.8) (48.7) Other asbestos 1 (1.5) - Operating profit before income taxes excluding asbestos 101.9 108.2 Income tax expense (22.7) (28.5) Asbestos: Tax expense r
Slide 29: Cashflow
CASHFLOW 1 US$ Millions HY '13 HY '12 EBIT 105.3 161.1 Non-cash items: Asbestos adjustments (2.8) (48.7) Other non-cash items 33.3 33.7 Net working capital movements (4.5) (5.7) Cash Generated By Trading Activities 131.3 140.4 Tax payments net (84.9) (27.1) Change in other non-trading assets and lia
Slide 30: Capital Management
CAPITAL MANAGEMENT An ordinary dividend of US5.0 cents per security (approximately US$22.0 million) was announced today. The dividend is declared in US currency and will be paid on 25 January 2012, with a record date of 18 December 2012 No share buyback activity during the half year The company expe
Slide 31: Debt
DEBT At 30 September 2012: US$ Millions Total facilities 280.0 Gross debt - Cash 77.3 Net cash (77.3) Unutilised facilities and cash 357.3 Net cash of US$77.3 million compared to net cash of US$265.4 million at 31 March 2012 Weighted average remaining term of total facilities was 0.5 years at 30 Sep
Slide 32: Asbestos Fund - Proforma (Unaudited)
ASBESTOS FUND– PROFORMA(UNAUDITED) A$ millions AICF cash and deposits - 31 March 2012 62.5 1 Contribution to AFFA by James Hardie (Early payment) 132.3 1 Contribution to AFFA by James Hardie (July payment) 45.2 Insurance and cross claim recoveries 26.3 Interest income and unrealised gain on investme
Slide 33: Key Ratios
KEY RATIOS 1 HY '13 HY '12 HY '11 1 EPS (Diluted) 17.9c 18.3c 14.0c 2 EBIT/ Sales (EBIT margin) 15.4% 17.7% 17.7% 1 Gearing Ratio -6.4% 2.7% 10.6% 2 Net Interest Expense Cover 51.8x 31.8x 28.9x Net Interest Paid Cover 2 103.6x 30.1x 34.5x 3 Net Debt Payback - 0.2yrs 1.0yrs 1 Excludes asbestos adjust
Slide 34: Summary
SUMMARY 1 Net operating profit excluding asbestos, ASIC expenses and tax adjustments for the 2 nd quarter and half year was US$34.8 million and US$78.6 million, respectively. The 2nd quarter results reflected: Higher sales volume in the USA and Europe segment due to improved housing activity and gai
Slide 35: FY2013 Guidance
FY2013 GUIDANCE Management expects full year earnings excluding asbestos, ASIC expenses and tax adjustments to be between US$140 million and US$150 million Management cautions that guidance is dependent upon US housing industry conditions continuing to improve, the accounting provision for New Zeala
Slide 36: Questions
QUESTIONS
Slide 37: Appendix
APPENDIX
Slide 38: USA Fibre Cement Top Line Growth
USA FIBRE CEMENT Top Line Growth '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 11 12 JH Volume Housing Starts JH Revenue Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 38
Slide 39: General Corporate Costs Q2
GENERAL CORPORATE COSTS Q2 – US$ Millions Q2 '13 Q2 '12 % Change Stock compensation expense 3.0 1.8 (67) Other costs 7.1 7.9 10 General corporate costs excluding ASIC expenses and recovery of legal costs 10.1 9.7 (4) ASIC expenses 0.3 0.5 40 Recovery of RCI legal costs (2.7) - - General corporate co
Slide 40: General Corporate Costs Half Year
GENERAL CORPORATE COSTS– HalfYear US$ Millions HY '13 HY '12 % Change Stock compensation expense 5.6 3.8 (47) Other costs 14.3 13.4 (7) General corporate costs excluding ASIC expenses, intercompany foreign exchange gain and recovery of legal costs 19.9 17.2 (16) ASIC expenses 0.4 0.7 43 Recovery of
Slide 41: EBITDA Q2
EBITDA –Q2 US$ Millions Q2 ’13 Q2 ’12 % Change EBIT USA and Europe Fibre Cement 44.0 47.3 (7) Asia Pacific Fibre Cement 15.6 25.5 (39) Research & development (6.3) (5.1) (24) General corporate excluding asbestos and ASIC expenses (7.4) (9.7) 24 Depreciation and Amortisation USA and Europe Fibre Ceme
Slide 42: EBITDA Half Year
EBITDA –Half Year HY '13 HY '12 % Change US$ Millions EBIT USA and Europe Fibre Cement 94.3 95.3 (1) Asia Pacific Fibre Cement 33.3 46.6 (29) Research & Development (12.3) (10.2) (21) General corporate excluding asbestos and ASIC expenses (11.7) (17.2) 32 Depreciation and Amortisation USA and Europe
Slide 43: Capital Expenditure
CAPITAL EXPENDITURE US$ Millions HY '13 HY '12 % Change USA and Europe Fibre Cement 20.9 14.6 43 Asia Pacific Fibre Cement 4.6 3.8 21 Total 25.5 18.4 39 43
Slide 44: Net Interest (Expense) Income
NET INTEREST (EXPENSE) INCOME US$ Millions Q2 ’13 Q2 ’12 HY '13 HY '12 Gross interest expense (0.8) (1.1) (1.6) (2.0) Interest income 0.2 - 0.6 0.2 Realised loss on interest rate swaps (0.5) (1.0) (1.0) (1.8) Net interest expense excluding AICF interest income (1.1) (2.1) (2.0) (3.6) AICF interest i
Slide 45: Legacy Issues Update
LEGACY ISSUES UPDATE ASIC Proceedings On 3 May 2012, the High Court of Australia delivered its judgment in the appeals and cross-appeals of the December 2010 decision of the New South Wales Court of Appeal James Hardie did not appeal the NSW Court of Appeal’s decision, so it was not party to the Hig
Slide 46: 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 47: 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) divided
Slide 48: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos and ASIC expenses – EBIT and EBIT margin excluding asbestos and ASIC expenses are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has in
Slide 49: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Net operating profit excluding asbestos, ASIC expenses and tax adjustments – Net operating profit excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningfu
Slide 50: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments – Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be mo
Slide 51: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Effective tax rate excluding asbestos and tax adjustments – Effective tax rate excluding asbestos and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than effective tax rate. Managem
Slide 52: Non-US GAAP Financial Measures (continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) 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 liquidity. N
Slide 53: 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 fin
Slide 54: Q2 FY13 Management Presentation
Q2 FY13 MANAGEMENT PRESENTATION 15 November 2012
James Hardie Industries — Q2 FY2013 Earnings Presentation on 6ix