James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (March 2016)
50 slides from James Hardie Industries's investor presentation, Mar 11, 2016
Slide 1: Investor Presentation March/April 2016
For personal use only INVESTOR PRESENTATION MARCH / APRIL 2016
Slide 2: Disclaimer
DISCLAIMER For personal use only This Investor 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 and Exchange Commission, on Forms 20-F
Slide 3: Disclaimer (continued)
DISCLAIMER (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 similar expressions are intended to id
Slide 4: Agenda
AGENDA For personal use only • Global Strategy and Business Overview • North America and Europe Fiber Cement • Asia Pacific Fiber Cement • Capital Management Framework • Guidance • Appendix In this Investor Presentation, the company may present financial measures, sales volume terms, financial ratio
Slide 5: Global Strategy: Industry Leadership and Profitable Growth
GLOBAL STRATEGY For personal use only Industry Leadership and Profitable Growth • Introduce differentiated products to deliver a sustainable competitive advantage • Aggressively grow demand for our products in targeted market segments Australia PAGE 5
Slide 6: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.7b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,178 employees • Market cap US$5.4b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 19 Feb
Slide 7: Group Overview 3rd Quarter FY16 Results
GROUP OVERVIEW1 3rd QUARTER FY16 RESULTS Adjusted Net Operating Profit Adjusted Diluted EPS For personal use only 3rd Qtr Nine Months 3rd Qtr Nine Months US$56.2M 16% US$185.0M 13% US13cents 18% US41cents 11% Adjusted EBIT Net Operating Cash Flow 3rd Qtr Nine Months Nine Months US$82.0M 23% US$267.0
Slide 8: Key Themes 3rd Quarter FY16 Results
KEY THEMES1 3rd QUARTER FY16 RESULTS For personal use only • Higher volumes in all businesses2 • Higher average net sales prices in local currencies • Continued focus on operational efficiency as our plants continue to sustain improved performance • YTD North America and Europe Fiber Cement segment
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales Asia Pacific 20% North America and Europe 80% EBIT ² Asia Pacific 19% Employees¹ • 2,269 in North America and Europe • 909 in Asia Pacific North America and Europe 81% 1 All percentages are as at 31 December 2015 and number
Slide 10: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$31.7m spent on Research & Development in FY15 • US$394.8m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 11: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Share¹ 7% 7% 18% Fiber Cement 7% Vinyl Wood (including engineered wood) Stucco Brick Stone 12% Other (aluminium etc) 28% 21% 35/90 Plan • Grow fiber cement share to 35% of the exterior cladding market again
Slide 12: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE For personal use only Fiber cement is more durable than wood and engineered wood, looks and performs better than vinyl, and is more cost effective and quicker to build with than brick Fiber Cement Vinyl Engineered Wood Fire resistant ? ? Hail resistant ? ?
Slide 13: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS For personal use only Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 13
Slide 14: North America and Europe Fiber Cement Segment
NORTH AMERICA AND EUROPE FIBER CEMENT SEGMENT For personal use only USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,269 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, S
Slide 15: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only North America and Europe Fiber Cement Revenue up 8% YTD on 7% volume growth. Continuing to outpace U.S. housing starts growth 1Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau PAGE 15
Slide 16: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only North America and Europe Fiber Cement 2+% gross price annual increase, partially offset by the strengthening US dollar and product mix PAGE 16
Slide 17: North America and Europe: Delivering Strong Returns
NORTH AMERICA AND EUROPE: DELIVERING STRONG RETURNS For personal use only YTD EBIT Margin up 340 bps to 25.1% 1 Excludes asset impairment charges of US$14.3 million in 4th quarter FY12, US$5.8 million in 3rd quarter FY13 and US$11.1 million in 4th quarter FY13 PAGE 17
Slide 18: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 909 employees • 4 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility 9 Months 9 Months FY16 FY15 Net Sales A$354.8m A$325.3m EBIT A$83.0m A$77.3m EBIT Marg
Slide 19: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS Asia Pacific Fiber Cement Segment For personal use only Average Net Sales Price Quarterly EBIT and EBIT Margin1 30 30 1020 A$1,018 25 25 1000 980 20 20 EBIT US$M EBIT Margin 960 940 15 15 920 900 10 10 880 5 5 860 840 0 0 820 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 20: Targeting the Right Product into the Right Market
TARGETING THE RIGHT PRODUCT INTO THE RIGHT MARKET For personal use only Asia Pacific Core Markets Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 20
Slide 21: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH For personal use only Strong Financial Disciplined Capital Liquidity and Funding Management Allocation • Strong margins and operating • Invest in R&D and capacity • Conservative leveraging of cash flows expansion to support organic balance sheet within 1-2 time
Slide 22: FY2016 Guidance
FY2016 GUIDANCE For personal use only • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2016 is between US$237 million and US$249 million • Management expects full year Adjusted net operating profit to be between US$240 milli
Slide 23: Appendix
For personal use only APPENDIX
Slide 24: U.S. Marketplace
U.S. MARKETPLACE For personal use only PAGE 24
Slide 25: Australia & New Zealand Marketplace
AUSTRALIA & NEW ZEALAND MARKETPLACE For personal use only PAGE 25
Slide 26: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months and Nine Months Ended 31 December 9 Months 9 Months US$ Millions Q3'16 Q3'15 % Change % Change FY16 FY15 Net Sales North America and Europe Fiber Cement $ 330.5 $ 294.5 12 $ 1,029.4 $ 951.4 8 Asia Pacific Fiber Cement 83.4 93.9 (11) 263.0 294.2 (1
Slide 27: Key Ratios
KEY RATIOS For personal use only Nine Months Ended 31 December 9 Months 9 Months 9 Months FY16 FY15 FY14 EPS (Diluted)1 (US Cents) 41c 37c 34c EBIT/ Sales (EBIT margin)2 20.7% 17.9% 17.5% Gearing Ratio 1 27.7% 20.3% (13.4)% Net Interest Expense Cover2 14.7x 49.6x 63.0x Net Interest Paid Cover2 20.1x
Slide 28: North America and Europe Fiber Cement – Year Results Overview
NORTH AMERICA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 814 862 951 1,128 1,277 US$m Sales Volume 1,248 1,332 1,489 1,697 1,850 mmsf Average Price 648 642 626 652 675 US$ per msf ² EBIT US$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17
Slide 29: Asia Pacific Fiber Cement – Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 353 376 370 366 380 US$m Sales Volume 408 392 394 417 456 mmsf Average Price 906 906 901 930 942 A$ per msf1 EBIT US$m2 79 86 75 83 90 EBIT Margin %2 23 23 20 23 24 1During the second quarter
Slide 30: Results – 3rd Quarter FY16
RESULTS – 3rd QUARTER FY16 For personal use only Net sales increased Three Months Ended 31 December • Higher volume in both operating segments3 US$ Millions Q3'16 Q3'15 % Change • Higher average net sales prices in local currencies Net sales 413.9 388.4 7 Gross profit 149.5 135.2 11 Gross profit mar
Slide 31: Results – Nine Months FY16
RESULTS – NINE MONTHS FY16 For personal use only Net sales increased Nine Months Ended 31 December • Higher volume in both operating segments 9 Months 9 Months US$ Millions FY16 FY15 % Change • Higher average net sales prices in local currencies Net sales 1,292.4 1,245.6 4 Gross profit margin increa
Slide 32: US Input Costs
US INPUT COSTS For personal use only Quarterly US Input Costs 1,200 10 • The price of NBSK pulp decreased by 9 1,000 ~9% compared to pcp 8 Cement, Gas and Electric Prices 7 800 6 • Cement prices continue to rise, up 8% Pulp Prices 600 5 compared to pcp 4 400 3 • Gas prices are down more than 20% 200
Slide 33: Segment EBIT – 3rd Quarter and Nine Months FY16
SEGMENT EBIT – 3RD QUARTER and NINE MONTHS FY16 For personal use only North America and Europe Fiber North America and Europe Fiber Cement EBIT summary 300 Cement 257.9 • Quarter and YTD EBIT increased by 24% and 25%, 250 respectively when compared to pcp US$ Millions 206.3 200 179.8 150 Q3 EBIT • P
Slide 34: Segment EBIT – R&D and General Corporate
SEGMENT EBIT – 3RD QUARTER and NINE MONTHS FY16 For personal use only Research and Development R&D summary (25) (19.7) • On strategy to invest between 2%-3% of sales (20) (18.0) US$ Millions (17.5) (15) • Decrease impacted by strengthening US dollar (10) (6.4) Q3 EBIT • Fluctuations reflect normal v
Slide 35: Changes in AUD vs. USD
CHANGES IN AUD vs. USD For personal use only 1.00 0.95 0.90 AUD/USD Exchange Rate 0.85 0.80 0.75 0.70 0.65 0.60 31 Dec 13 31 Mar 14 30 Jun 14 30 Sep 14 31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 1 2 As Reported Excluding Translation Impact Translation Impact 9 Months 9 Months 9 Months 9 Month
Slide 36: Income Tax
INCOME TAX For personal use only 26.6% estimated Adjusted effective tax rate Three Months and Nine Months Ended 31 December (ETR) for the year 9 Months 9 Months US$ Millions Q3’16 Q3’15 FY16 FY15 • Adjusted income tax expense and adjusted ETR Operating profit before taxes 47.3 124.7 282.5 315.0 incr
Slide 37: Cashflow
CASHFLOW For personal use only US$ Millions 9 Months 9 Months Change (%) • Increase in net operating cash flow 1 FY16 FY15 Lower annual contribution to AICF FY16 v Net Income 215.6 263.6 1 FY15 Adjustment for non-cash items 36.8 (36.2) Annual AICF contribution (62.8) (113.0) 44 Favorable change
Slide 38: Capex
CAPEX For personal use only CAPEX Spend • YTD FY16 CAPEX spend of US$52.1 million 40 decreased US$188.3 million compared to pcp 35 30 • Maintenance CAPEX continues 25 20 • US capacity projects substantially complete 15 10 • Commissioning of new sheet machines at our Plant City and Cleburne facilitie
Slide 39: Liquidity Profile
LIQUIDITY PROFILE For personal use only • Corporate debt structure Debt Profile US$ Millions US$500 million revolving credit facility, with a December 2020 maturity, replaced 4 $250 bilateral loan facilities US$325 million 8 year senior unsecured $500 notes1,2 $175m bank facilities $175 drawn at
Slide 40: Asbestos Claims Data
ASBESTOS CLAIMS DATA For personal use only • Claims received during the quarter and nine months were 4% and 8% below actuarial estimates, Three Months and Nine Months Ended 31 December respectively 9 Months 9 Months Q3'16 Q3'15 Change % Change % FY16 FY15 • Mesothelioma claims reported for the nine
Slide 41: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only 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 Fin
Slide 42: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Consolidate
Slide 43: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS EBIT – Earnings before interest and taxes For personal use only EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales Sales Volumes mmsf – million square feet, where a square foot is defined as a standard square foot of 5/16” thickness msf – thousand s
Slide 44: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBIT margin – Adjusted EBIT and Adjusted EBIT margin are not measures of financial performance under For personal use only US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these fin
Slide 45: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted net operating profit – Adjusted net operating profit is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than net operating profit. Management has included this financial measure to p
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted diluted earnings per share – Adjusted diluted earnings per share is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than diluted earnings per share. Management has included this fina
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted income tax expense and Adjusted effective tax rate – Adjusted income tax expenses and Adjusted effective tax rate is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than income tax e
Slide 48: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted 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 profitabil
Slide 49: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted selling, general and administrative expenses – Adjusted selling, general and administrative expenses (“Adjusted SG&A”) is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than selling
Slide 50: March/April 2016
For personal use only INVESTOR PRESENTATION MARCH/ APRIL 2016
James Hardie Industries — Investor Presentation (March 2016) on 6ix