James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2018)
56 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: Interiors
For personal use only • Xxx • Xxx Interiors Sean Gadd
Slide 5: Interiors overview
JAMES HARDIE INTERIORS For personal use only • Interiors overview • Competitive set • How we compete • Emerging trends • Growth path forward PAGE 2
Slide 6: Tile Underlay Overview
TILE UNDERLAY OVERVIEW For personal use only • Tile underlayment is installed under tile in wet areas and can be rigid or non-rigid • Backer board (a rigid tile underlayment) provides a solid foundation upon which to install the tile and protects the subfloor from moisture and mold • Tile underlayme
Slide 7: Tile Underlayment Overview
TILE UNDERLAYMENT OVERVIEW For personal use only Underlayment Technology (Estimated Volume) • Total tile underlayment market Foam / MgO is estimated at ~1.1bsqft Non rigid Foam / MgO Mats Glass Mat Gypsum Glass Mat Gypsum Fiber Gypsum, • Market for floor underlayment is in slight decline Glass Mesh
Slide 8: Historic Interiors Performance
HISTORIC INTERIORS PERFORMANCE For personal use only Average Selling Price Market Share % 60% 600 50% 550 40% 30% 500 20% 450 10% 400 0% FY16 FY17 FY18 FY19 YTD FY16 FY17 FY18 FY19 YTD 1/4" ASP 1/2" ASP 1/4" Mkt Share 1/2" Mkt Share Estimated market share stable since FY15 ... average selling price
Slide 9: Competitive Overview
COMPETITIVE OVERVIEW For personal use only Description Performance Gap vs. Example Brands HardieBacker Fiber Cement Cement board with 90% Portland cement and sand Glass mesh Cement board wrapped in • Crumbles, messy when cut USG – Durock cement fiberglass mesh • Not as stiff or strong National Gypsu
Slide 10: Value Proposition – Rigid Tile Underlayment
VALUE PROPOSITION – RIGID TILE UNDERLAYMENT For personal use only • HardieBacker® is the market leader in rigid tile underlayment, >95% category share in fiber cement • Strongest rigid tile underlayment on the market • Superior tile adhesion • Uniform composition • Highest compressive strength • Eas
Slide 11: Interiors Channel Split – Rigid Tile Underlayment
INTERIORS CHANNEL SPLIT – RIGID TILE UNDERLAYMENT For personal use only % of Rigid Example Companies Primary Customer Underlayment Retail DIY, remodeling Big Box Retail ~60% contractor, JOAT Pro-Tile ~20% Tile contractors Pro Gypsum ~10% Drywall contractors GCs, custom Lumber ~10% builders Source: C
Slide 12: Material Trends Impacting Tile Underlayment
MATERIAL TRENDS IMPACTING TILE UNDERLAYMENT For personal use only • Resilient flooring is a term that refers to floor coverings that occupy a middle ground between soft floors and hard floors. • Resilient flooring and more specific luxury vinyl tile (LVT) requires no underlayment when installed Indu
Slide 13: Grow Market Share in Rigid Underlayment
GROW MARKET SHARE IN RIGID UNDERLAYMENT For personal use only 1 • Continue to educate contractors on the value proposition and points of differentiation Share of Wall Capture • Drive end user conversion to HardieBacker® from other technologies 2 • Maintain high level of engagement in retail channel,
Slide 14: Summary
SUMMARY For personal use only • Resilient flooring, which does not require a tile underlayment, is growing and is starting to reduce the addressable market for flooring tile underlayment • James Hardie has strong market share in ¼” backer – used on the floor • Opportunity to move contractors still u
Slide 15: Q&A
For personal use only • Xxx • Xxx Q&A
Slide 16: North America Sales
For personal use only • Xxx • Xxx North America Sales Zean Nielsen
Slide 17: 35/90: Sound Game Plans Paired with Sound Execution
35/90: SOUND GAME PLANS PAIRED WITH SOUND EXECUTION For personal use only The role of my organization is to run a more effective field force, in a more complex market place, with more localized game plans. To address this reality, and increase traction with our market model, we are: 1. Introducing a
Slide 18: A Structured Framework and Systematic Approach
A STRUCTURED FRAME WORK AND SYSTEMATIC APPROACH For personal use only TARGET ORGANIZE ENABLE Identify the potential and how to get Align the sales force around Set up the sales force for success and to 35/90 – i.e. where & who to target potential and reward the right long arm them with the right Tra
Slide 19: Target: From Game Plan Design to Sales Execution
TARGET: FROM GAME PLAN DESIGN TO SALES EXECUTION For personal use only Resource Value Sales planning (HC) to Competency, Performance Target segments Geographical and Org Structure Compensation Propositions to motions/level of reach training and local KPI’s, funnel Segment Market and Roles and total
Slide 20: Snapshot of Programs and Initiatives
SNAPSHOT OF PROGRAMS AND INITIATIVES For personal use only TARGET ORGANIZE ENABLE Identify the potential Better align the sales force to both Enable field sales success defend and grow Break down of priority markets within From analog to digital --- CRM & SFDC. 35/90 with P&S Re-organized High S, Lo
Slide 21: Organize / Enable: Establishment of Sales Operations
ORGANIZE / ENABLE: ESTABLISHMENT OF SALES OPERATIONS For personal use only As we connect processes and IT systems, Basic Ops functions will develop from efficiency necessities to strategic Sales Ops drivers Strategic / Game Plan Commercial Ops focused Sales Ops focused on Basic Ops Ops focused on Sa
Slide 22: From Local to Centralized Market Analytics with Advanced Selling Tools
FROM LOCAL TO CENTRALIZED MARKET ANALYTICS WITH ADVANCED AND INTEGRATED SELLING AND REPORTING TOOLS For personal use only PAGE 7
Slide 23: Enable: Vinyl Example Through Simple Sales Tools and Programs
ENABLE: VINYL EXAMPLE THROUGH SIMPLE SALES TOOLS AND PROGRAMS For personal use only A market development transaction is a more sophisticated and consultative sale Sales enabling tool includes architectural renderings and positioning affordable design options to help change perception PAGE 8
Slide 24: Organize: Market Opportunities Are Regional in Nature
ORGANIZE: MARKET OPPORTUNITIES ARE REGIONAL IN NATURE For personal use only Current State Current resource allocation aligned with the 90 vs the 35 ToM OSB ASPY Future ToM State ASPY Game plan and Geography- based territory alignments OSB with balanced focus on market development, defend/AMA, sales
Slide 25: Drive: Sales Ops and Sales Management Focus on Right Game Plans
DRIVE: SALES OPS AND SALES MANAGEMENT WILL HELP TO ENSURE FOCUS ON THE RIGHT GAME PLANS & EXECUTION For personal use only Growth Against Market Index Growth Against Lower Growing Against Vinyl? Value Alternatives? Yes No Yes No Execute current Gap Analysis Design Execute current Gap Analysis Design
Slide 26: Productivity
For personal use only • Xxx • Xxx PRODUCTIVITY
Slide 27: Drive: Reducing Variability and Drive Productivity Per Head
DRIVE: REDUCING VARIBILITY AND DRIVE PRODUCTIVITY PER HEAD For personal use only Productivity per head ‘Org optimization’ • Align rep specialists to Sales Rep performance market opportunity for optimized ‘Tuning the machine’ efficiency and returns • Benchmarking peer groups • Coaching the gaps ‘Pace
Slide 28: Builder Type Segmentation: National Accounts
For personal use only • Xxx • Xxx BUILDER TYPE SEGMENATION: NATIONAL ACCOUNTS
Slide 29: Builder Type Segmentation: Not All Builders Are the Same
BUILDER TYPE SEGMENTATION: IN SFNC ALL BUILDERS ARE NOT THE SAME, BUT ALL ARE IMPORTANT IN 35/90 For personal use only States JH regions Strategic accounts Key accounts National 3 Large Regional – Large National Regional Impact Small Regional Local Micro 0 5 50 200 650 Closings PAGE 14 14
Slide 30: Summary
For personal use only • Xxx • Xxx SUMMARY
Slide 31: We Win by Putting It All Together and Executing the Strategies Well
WE WIN BY PUTTING IT ALL TOGETHER AND EXECUTING THE STRATEGIES WELL For personal use only TUNED UP APPROACH MANAGE VARIABILITY RE-ESTABLISH HIGH- PERFORMING ORG • JH T.O.E.D MODEL • Sales effectiveness through analytics • Re-organized sales org into • Discipline in execution & game plan vs tradition
Slide 32: Q&A
For personal use only • Xxx • Xxx Q&A
Slide 33: James Hardie Europe
For personal use only • Xxx • Xxx JAMES HARDIE EUROPE Jack Truong
Slide 34: James Hardie Europe: Profitable Growth
JAMES HARDIE EUROPE: PROFITABLE GROWTH For personal use only • Fiber Gypsum business has very good upside growth potential • Leverage fermacell market access and customer intimacy to deliver initial phase of Fiber Cement growth • Focus on strategic innovation based on European building preferences t
Slide 35: Fermacell Has Consistent Track Record of Growth
FERMACELL HAS CONSISTENT TRACK RECORD OF GROWTH For personal use only Pre-Acquisition: (pro-forma fermacell + former JH Europe) Post-Acquisition Revenue (€m) FY Q1 FY 2019: +8% revenue growth in € vs. pcp 11.9% Adj EBIT Margin Source: JH internal PAGE 3
Slide 36: Step-Change, Profitable Growth
STEP-CHANGE, PROFITABLE GROWTH For personal use only Growth Ambition: 1 Billion Euro Business within 10 years New Fiber Cement Fiber Cement based on JH Global portfolio Fiber Gypsum Cement Boards FY18 FY29 Source: JH internal PAGE 4
Slide 37: Growth of Fiber Gypsum Business
For personal use only GROWTH OF FIBER GYPSUM BUSINESS PAGE 5
Slide 38: Significant Growth Potential for Fiber Gypsum
SIGNIFICANT GROWTH POTENTIAL FOR FIBER GYPSUM For personal use only Fiber Gypsum James Hardie European gypsum board market (in m²m) share FG share share JHEU shares 82% Growth potential 264 264 1% #1 66% Growth potential 258 258 8% 85% #1 84% Growth potential 177 177 2% #1 91% 71% Growth potential 3
Slide 39: Growth in Residential, Timber Frame Homes
GROWTH IN RESIDENTIAL,TIMBER FRAME HOMES For personal use only Where to Strong position: Germany, play? Switzerland, Austria Growth opportunities: UK, Nordics, Germany Key trends: • Increased share of pre-fabricated homes • Increased multi-story family homes New timber frame home in Hameln, Germany
Slide 40: Growth in Commercial Buildings
GROWTH IN COMMERCIAL BUILDINGS For personal use only Where to Strong position: Germany, play? Denmark Growth opportunities: UK, France, Sweden, Italy, Spain Key trends: • Increased technical requirements (esp. fire protection) School, Aarhus, Denmark How to • Technical presale to architects, win? ge
Slide 41: Case Study: Hotel Projects
CASE STUDY: HOTEL PROJECTS For personal use only Fiber gypsum meets acoustic reduction and impact resistance requirements while increasing usable space Benefits: Benefits: +32 rooms vs. plan Optimal space usage All regulations met Sound requirements with one layer of met with only one fiber gypsum l
Slide 42: Repair and Remodel Growth Through Dealer Coverage
REPAIR AND REMODEL GROWTH THROUGH DEALER COVERAGE For personal use only Delivery points Where to Strong position: Very high play? dealer coverage in key markets Key trends: • Do it for me instead of DIY • Growing cities How to • Leverage on strong win? fermacell brand • Digital marketing (one-to- ma
Slide 43: Unlocking Current Fiber Gypsum Plant Capacity
UNLOCKING CURRENT FIBER GYPSUM PLANT CAPACITY For personal use only * Opportunity to leverage on James Hardie manufacturing know-how to unlock additional capacity * Potential to improve fiber gypsum margins in 2-3 years ++++ margin improvements** Operations footprint Target 2 ++ margin improvements*
Slide 44: Growth of Fiber Cement Business
For personal use only GROWTH OF FIBER CEMENT BUSINESS PAGE 12
Slide 45: Step Change Growth in Fiber Cement
STEP CHANGE GROWTH IN FIBER CEMENT For personal use only Two growth levers JH Europe competitive advantage 1 Grow in timber frame markets • Access timber frame and R&R channel • Renovation and remodel: market through fermacell residential and commercial • Leverage initial solutions from James • New
Slide 46: Coverage in Key Markets
COVERAGE IN KEY MARKETS For personal use only Market coverage … … enables Fiber Cement penetration in timber frame segment Strong James Hardie coverage Strong fermacell coverage 100% Developing fermacell coverage 80% Nordics Share of timber frame 60% 40% Austria 20% Switzerland UK Italy Benelux Germ
Slide 47: Growth in Timber Frame Segment in Northern Europe
GROWTH IN TIMBER FRAME SEGMENT IN NORTHERN EUROPE For personal use only • Northern Europe construction has high percentage of timber frame construction and cladding • Consistent construction approach across segments – R&R, single-family, multi-family • ‘Designed for climate’ needs – construction and
Slide 48: Growth in Timber Frame Segment in Central Europe
GROWTH IN TIMBER FRAME SEGMENT IN CENTRAL EUROPE For personal use only • Timber frame segment is strong in Central Europe – southern Germany, Switzerland, Austria, and eastern France • Scalable technology transfer as platform for growth • Broad base solutions – facades, functional linings, floors Au
Slide 49: Growth in Masonry Markets Across Europe
GROWTH IN MASONRY MARKETS ACROSS EUROPE For personal use only • Masonry is strong in many geographies – UK, northern Germany, western France, Benelux • Finish on masonry - 40% render/stucco, 40% brick/concrete, 20% lightweight • Market development focus • Single-family – Second story new and renovat
Slide 50: Leveraging Fermacell Market Access and Customer Intimacy
LEVERAGING FERMACELL MARKET ACCESS AND CUSTOMER INTIMACY TO GROW JAMES HARDIE FIBER CEMENT BUSINESS For personal use only Market access, regional building preferences Strong fermacell brand and logistics network Synergies in new construction channel and R&R Joint sales: fiber cement and fiber gypsum
Slide 51: James Hardie Europe: Profitable Growth
JAMES HARDIE EUROPE: PROFITABLE GROWTH For personal use only • Fiber Gypsum business has very good upside growth potential • Leverage fermacell market access and customer intimacy to deliver initial phase of Fiber Cement growth • Focus on strategic innovation based on European building preferences t
Slide 52: President and COO
For personal use only • Xxx • Xxx PRESIDENT AND COO
Slide 53: Global Strategy Remains Unchanged
GLOBAL STRATEGY REMAINS UNCHANGED For personal use only We are an Organic Growth Company • North America: 35/90 • Exteriors volume growth above market with 20-25% EBIT margin • Europe: Create a €1 billion business with Hardie like returns within the next 10 years • APAC: Deliver organic growth above
Slide 54: Strengthen the Core and Grow Some More
STRENGTHEN THE CORE……AND GROW SOME MORE For personal use only CURRENTLY OPPORTUNITIES Strong leadership team Build organizational capabilities, depth Talented employees, globally of talent and leadership Best practice sharing Manufacturing plants with high A network of high throughput throughput and
Slide 55: Short Term Focus
SHORT TERM FOCUS For personal use only • Employee engagement • Management system to improve predictability and reduce variability in our business and operations • Integrated, global strategic plan PAGE 23
Slide 56: Q&A
For personal use only • Xxx • Xxx Q&A
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