James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2018)
53 slides from James Hardie Industries's investor day presentation, Sep 20, 2018
Slide 1: James Hardie North America Investor & Analyst Tour Day 2 Presentations
For personal use only • Xxx • Xxx JAMES HARDIE NORTH AMERICA INVESTOR & ANALYST TOUR 20th & 21st SEPTEMBER 2018 DAY 2 PRESENTATIONS
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS For personal use only This Management Presentation contains forward-looking statements. James Hardie Industries plc (the “Company”) may from time to time make forward- looking statements in its periodic reports filed with or furnished to the Securities a
Slide 3: Cautionary Note on Forward-Looking Statements (Continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (CONTINUED) For personal use only Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue,” “may,” “objective,” “outlook” and sim
Slide 4: Exteriors
For personal use only • Xxx • Xxx Exteriors Sean Gadd
Slide 5: Housing Starts
HOUSING STARTS For personal use only Millions of Starts Millions of Starts Source: Dodge Data & Analytics Single-family growth stable. Multi-family growth moderating. PAGE 2
Slide 6: Repair & Remodel
REPAIR & REMODEL For personal use only Repair & Remodel Project Growth Source: Hanley Wood Repair & remodel projects continue to grow at ~5% annually PAGE 3
Slide 7: Key Takeaways
KEY TAKEAWAYS For personal use only • Market is growing at a moderate rate, which is good for James Hardie • It provides the right environment to grow market share • Builders and contractors are confident and looking to differentiate PAGE 4
Slide 8: Agenda
AGENDA For personal use only • Strategy = 35/90 • How it works • Penetration vs. vinyl and wood • Defend against lower value alternatives • Key enablers of the strategy • ColorPlus® Technology • Non-metro markets • Aspyre PAGE 5
Slide 9: 35/90 – Exteriors Growth Strategy
For personal use only • Xxx • Xxx 35/90 – Exteriors Growth Strategy
Slide 10: 35/90 – Exteriors Growth Strategy
35/90 – EXTERIORS GROWTH STRATEGY For personal use only • Exteriors growth strategy remains 35/90 • Organic growth strategy measured by our growth above our market index (primary demand growth) • Primary demand growth is delivered by: • Winning share from vinyl and wood • Defending against lower val
Slide 11: 35/90 – Exteriors Growth Strategy: Market Segmentation
35/90 – EXTERIORS GROWTH STRATEGY For personal use only Market segmentation ... JH positioned for growth in all segments • Single family ~85%, multi-family ~15% • ~40% new construction, ~60% repair and remodel Segment Market Size & Siding Market Share Terminal Composition Multi Family > 35% terminal
Slide 12: 35/90 – Value Proposition vs. Competition
35/90 – VALUE PROPOSITION VS. COMPETITION For personal use only Vinyl Wood & Wood Alternatives Competitive Fiber Cement • Exterior appeal • Product Durability • Trusted brand – curb, porch and deck • Low maintenance • Engineered for Climate® • Durability - Resistance to fire & abuse • Full product r
Slide 13: Grow Against Vinyl
For personal use only • Xxx • Xxx Grow Against Vinyl
Slide 14: James Hardie Versus Vinyl
JAMES HARDIE VERSUS VINYL For personal use only Historic Vinyl Share Source: NAHB + Internal Management Estimates Positioned to accelerate our market share against vinyl with color by leveraging our superior value proposition, sales force and market development approach PAGE PAGE 11
Slide 15: Market Development vs. Vinyl – New Construction
MARKET DEVELOPMENT VS. VINYL – NEW CONSTRUCTION For personal use only • Market development approach Segment, Target, Position “Money Ball” • For the target builder looking to differentiate Segment • Providing a better looking home • Sell their homes at a higher price Target • Sell their homes faster
Slide 16: Total Cost Versus Perceived Value
TOTAL COST VERSUS PERCEIVED VALUE For personal use only Fiber Cement has a compelling value proposition against vinyl Fire Drive Low Resistance Affordability Maintenance Curb Durability $ Appeal Sell the affordable gap Vinyl Current JH New JH Source: Internal Management Estimates Curb Appeal Durabil
Slide 17: Accelerating Growth Against Vinyl
ACCELERATING GROWTH AGAINST VINYL For personal use only In the single-family new construction segment, driving affordability for the builder will significantly increase the available market size for James Hardie House Closings By Price Band Number of closings Starter 1st 2nd Semi custom Luxury homes
Slide 18: Key Leverage Points for Affordability
4 KEY LEVERAGE POINTS FOR AFFORDABILITY For personal use only Channel • Enable most efficient supply chain • Increase available capacity Install • Drive site & process efficiency • Deliver optimized systems • ColorPlus® Technology eliminates field paint costs Product • Product enhancements to drive
Slide 19: Accelerate Adoption
ACCELERATE ADOPTION For personal use only Marketing Developer Investment Program Architect Advocate Program Builder Conversion Fund Employee Targeted Advocacy Geography Installer Partnership Program Affordable Realtor Design Engagement Offer PAGE 16
Slide 20: Market Development vs. Vinyl – Repair and Remodel
MARKET DEVELOPMENT VS. VINYL – REPAIR AND REMODEL For personal use only • Market development approach Segment, Target, Position • Target homeowner looking for a re-side • In the right neighborhood • James Hardie “Lockdown” • Vinyl battleground PAGE 17
Slide 21: Value for Contractors
VALUE FOR CONTRACTORS For personal use only Via an aligned contractor • Looking to partner and grow • Position James Hardie fiber cement products in the home • At the right price PAGE 18
Slide 22: Re-Side Leads for Partner Contractors
RE-SIDE LEADS FOR PARTNER CONTRACTORS For personal use only Over 15,000 home owner leads generated in 2017 PAGE 19
Slide 23: Repair and Remodel
REPAIR AND REMODEL For personal use only • Drive awareness and preference for James Hardie with ColorPlus® technology in vinyl battleground neighborhoods • Sell value proposition directly to the home owner via an aligned contractor • Leverage that home in the desired neighborhood • Move the battlegr
Slide 24: Enhancing the Wake
ENHANCING THE WAKE For personal use only PAGE 21
Slide 25: Defend Against Lower Value Alternatives
For personal use only • Xxx • Xxx Defend Against Lower Value Alternatives
Slide 26: Win Against Lower Value Alternatives
WIN AGAINST LOWER VALUE ALTERNATIVES For personal use only • As we pull a market off a vinyl standard, builders we don’t touch move to hard siding • Lower value alternatives can pick up some of this business • “Me too” positioning • Utility product benefit, particularly trim • Ease of install PAGE 2
Slide 27: Win Against Lower Value Alternatives
WIN AGAINST LOWER VALUE ALTERNATIVES For personal use only • Targeted geographic approach • Sell the superior advantages of James Hardie fiber cement exterior to the homeowner via our builders and aligned contractors • Tactically deliver competitive packages to the builder 1. ColorPlus® Technology 2
Slide 28: Position Fiber Cement Against Wood
POSITION FIBER CEMENT AGAINST WOOD For personal use only James Hardie siding products are designed to combat the shortcomings of wood and wood alternatives to provide a longer-lasting, lower- maintenance, weather resistant exterior “No Wood Is Good” Don’t be fooled. When it comes to long-term on-the
Slide 29: Strategic Game Plan
STRATEGIC GAME PLAN For personal use only • Product superiority – cement vs. wood • Company vs. Company – primary demand / value creation • Full product portfolio • Move to ColorPlus® Technology as the primary solution • Sell full wrap (primed siding and trim) • Fulfill design needs with the Aspyre
Slide 30: Value Add Partner Programs
VALUE ADD PARTNER PROGRAMS For personal use only PAGE 27
Slide 31: Go-Forward
GO-FORWARD For personal use only • Central US market focus • “No Wood is Good” marketing strategy • Maintain direct sales, primary demand model • Continue to develop account management competency • Accelerate growth in non-metro markets • Improved non-product value creation to JH partners PAGE 28
Slide 32: ColorPlus Technology
For personal use only • Xxx • Xxx ColorPlus® Technology
Slide 33: Win With Color
WIN WITH COLOR For personal use only • ColorPlus® Technology remains a key enabler for future growth against vinyl and lower value alternatives • James Hardie has significant scale advantage with ColorPlus® Technology • ColorPlus® Technology penetration flattened as we moved away from building an ef
Slide 34: ColorPlus Technology Value Proposition
COLORPLUS® TECHNOLOGY VALUE PROPOSITION For personal use only ColorPlus® Technology can create more value for customers: • KEEP: Delivers a factory applied finish – better than field paint • REINFORCE: Able to provide benefit of a lower total cost solution in many markets ... particularly “mid paint
Slide 35: ColorPlus Technology Strategic Importance
COLORPLUS® TECHNOLOGY STRATEGIC IMPORTANCE For personal use only In addition to competitive installed cost, ColorPlus® offers other important benefits: • Hardie’s scale enables more efficient manufacturing and distribution of prefinished product Competitive Advantage • Hardie’s pull strategy enables
Slide 36: ColorPlus Technology Penetration: Blockers
COLORPLUS® TECHNOLOGY PENETRATION: BLOCKERS For personal use only Blocking Challenges: “Medium Paint Cost Markets” Product Install Supply Chain • Not clearly delivering • Pool of capable C+ • Complexity of product affordability labor is lacking in many offering can lead to markets increased investme
Slide 37: ColorPlus Technology Penetration: Solutions
COLORPLUS® TECHNOLOGY PENETRATION: SOLUTIONS For personal use only Blocking Challenges: “Medium Paint-Cost Markets” Product Install Supply Chain • Not clearly delivering • Pool of capable C+ • Complexity of product affordability labor is lacking in many offering can lead to • Manufacturing • Localiz
Slide 38: Pilot Markets Show Potential of 'Win With Color'
PILOT MARKETS SHOW POTENTIAL OF ‘WIN WITH COLOR’ For personal use only As we activate our “Win With Color” strategy in pilot markets, we see good indicators for future markets NA Color Penetration “Win With Color” Pilot Markets 30% Potential 40% 25% 20% 15% 10% 5% 0% FY09 FY18 Midwest Market A Mid S
Slide 39: Non-Metro
For personal use only • Xxx • Xxx Non-Metro
Slide 40: Non-Metro Markets
NON-METRO MARKETS For personal use only • Winning in non-metro markets remains key deliverable to achieve 35/90 PAGE 37
Slide 41: Non-Metro Market Assumptions
NON-METRO MARKET ASSUMPTIONS For personal use only • Lower population density more difficult to cover with direct sales • Lower average income & home values less willingness to pay • Large geographic spread & lower volumes more expensive distribution • Fragmented installer base harder to train on ne
Slide 42: Importance of Non-Metros
IMPORTANCE OF NON-METROS For personal use only Non-metro markets are in the aggregate a larger market than metros ... we cannot achieve 35/90 without a stronger presence in these markets US Housing Starts – Addressable We believe we need ~20% penetration of non- metros to achieve 35/90 Source: Dodge
Slide 43: Non-Metro – How It Works
NON-METRO – HOW IT WORKS For personal use only • James Hardie’s job is to change the market standard • Find or create natural aggregation points • Improve efficiency/cost • Integrate non-metro installers and dealers into the James Hardie network PAGE 40
Slide 44: Strategic Objective and Go-Forward Game Plan
STRATEGIC OBJECTIVE AND GO-FORWARD GAME PLAN For personal use only • Introduce non-metro segment team to accelerate market adoption • Aligning partners & eliminating market barriers • Create a repeatable approach to plan, target & accelerate growth • Focus on the affordability to drive conversion fr
Slide 45: Key Takeaways
KEY TAKEAWAYS For personal use only • We cannot deliver 35/90 without growth in non-metros • Implementation of a James Hardie market acceleration team • Network of in market partners delivering the value proposition of fiber cement to builders and homeowners • Affordability throughout the supply cha
Slide 46: Aspyre Collection from James Hardie
For personal use only • Xxx • Xxx Aspyre Collection from James Hardie™
Slide 47: Aspyre Enables Growth Against Wood
ASPYRE ENABLES GROWTH AGAINST WOOD… For personal use only To achieve 35/90, we must capture market share against wood The Aspyre collection is a product line designed to target 300 mmsqft of high-end wood Aspyre allows us to defend against low-value alternatives and new entrants, while extending the
Slide 48: By Targeting the Top-of-Market Segment
BY TARGETING THE TOP-OF-MARKET SEGMENT… For personal use only Reveal® Outdoor Living: Accent Shiplap Ceiling Bar Surround Reveal Shiplap Column Horizontal Ceiling Vertical Shiplap Shiplap Applications Aspyre Products • Vertical and Horizontal Siding • Shiplap: ~3500 Sqft • Reveal accents and Columns
Slide 49: Enabling Versatile Design Options
ENABLING VERSATILE DESIGN OPTIONS… For personal use only • Lock-joints enable hidden fasteners and easy install • Thick planks enable mitered corners delivering desired contemporary design • Machined profiles enable high-end wood profiles and design PAGE 46
Slide 50: Building on Core JH Advantages
BUILDING ON CORE JH ADVANTAGES For personal use only • Engineered for Climate® Performance • Resistance against rot, fire, pests • Low maintenance Financials Brand • Revenue per home • #1 Fiber Cement brand • Margin dollars/home • Architect awareness Channel Manufacturing • Local market stocking pos
Slide 51: Key Takeaways
For personal use only • Xxx • Xxx Key Takeaways
Slide 52: Key Takeaways
KEY TAKEAWAYS For personal use only • Housing market remains relatively strong • Hardie is set to accelerate share growth through market development against vinyl and through a sales approach against low value alternatives and wood • Hardie has the scale advantage to use color as a key enabler • Har
Slide 53: Q&A
For personal use only • Xxx • Xxx Q&A
James Hardie Industries — Investor Day (September 2018) on 6ix