James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY2017 Earnings Presentation
37 slides from James Hardie Industries's earnings presentation, Aug 12, 2016
Slide 1: Q1 FY17 Management Presentation
Q1 FY17 MANAGEMENT PRESENTATION Exhibit 99.7 12 August 2016
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 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 and Exchange Commission,
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (continued) 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 i
Slide 4: Note to the Reader
NOTE TO THE READER As of 30 June 2016, the Company changed its reportable operating segments. Previously, the Company reported on three operating segments: (i) North America and Europe Fiber Cement, (ii) Asia Pacific Fiber Cement, and (iii) Research and Development. As of 30 June 2016, the Company w
Slide 5: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
USE OF NON-GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY This Management Presentation includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (US GAAP). These financial measures are des
Slide 6: Agenda
AGENDA Overview and Operating Review – Louis Gries, CEO Financial Review – Matt Marsh, CFOand Executive VP - Corporate Questions and Answers
Slide 7: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 8: Group Overview
GROUP OVERVIEW Higher volumes and strong net sales growth in all operating segments3 Q1 FY17 North America Fiber Cement EBIT margin of 25.5% Q1 FY17 International Fiber Cement EBIT margin of 23.2% Commissioned Plant City sheet machine during Q1 FY17 Net operating cash flow increased US$60 million co
Slide 9: North America Fiber Cement Summary
NORTH AMERICA FIBER CEMENT SUMMARY Volume Steady growth in R&R and new construction markets Market penetration momentum continues to improve Q1 FY16 included adverse impact from price increase on 1 March 2015 Overall, satisfied with tactical pricing and price positioning EBIT EBIT growth lagging net
Slide 10: North America Fiber Cement
1 Excludes asset impairment charges of US$14.3 million in Q4 FY12, US$5.8 million in Q3 FY13 and US$11.1 million in Q4 FY13 NORTH AMERICA FIBER CEMENT Q1 FY17 EBIT Margin down 270 bps to 25.5% compared to pcp but remains above target range
Slide 11: North America Fiber Cement
NORTH AMERICA FIBER CEMENT Price decrease due to maintaining current strategic pricing levels and the ongoing execution of tactical pricing strategies Overall, satisfied with tactical pricing and price positioning Revenue up 15% in Q1 FY17 on 16% volume growth Q1 FY16 revenue and volume adversely im
Slide 12: International Fiber Cement Summary
Volume Volume increased 6%, excluding the Australian Pipes business Strong volume growth in the Australian and New Zealand businesses Price Favorably impacted by Australia’s annual price increase and product mix Adversely impact by changes in foreign exchange rates compared to pcp EBIT Higher gross
Slide 13: International Fiber Cement (USD) – 1st Quarter FY17
INTERNATIONAL FIBER CEMENT (USD) – 1st QUARTER FY17 1 Excludes Australian Pipes business which was sold in Q1 FY16 Australia Strong market and PDG performance EBIT favorably impacted by price/mix and non-recurring startup costs at Carole Park in Q1 FY16 New Zealand Volume grew across most regions Ne
Slide 14: Financial Review
FINANCIAL REVIEW Matt Marsh, CFO and Executive VP – Corporate
Slide 15: Results – 1st Quarter FY17
Net sales increased 12% Higher volume in all operating segments3 Higher average net sales price in International Fiber Cement segment Adversely impacted by stronger USD Gross profit increased 12%; gross margin increased 20 bps Top line growth slightly out paced increase in COGS SG&A expenses increas
Slide 16: Changes in AUD vs. USD
CHANGES IN AUD vs. USD 1 As Reported 3 Months FY17 figures converted using 3 Months FY16 weighted average exchange rates 2 Reflects the difference between FY17 As Reported and FY17 using 12 Months FY16 weighted average exchange rates
Slide 17: North America Input Costs
NORTH AMERICA INPUT COSTS The price of NBSK pulp remained relatively flat compared to pcp Cement prices continue to rise, up 5% compared to pcp Gas prices are down 20% compared to pcp Freight prices are down 12% compared to pcp Electricity prices are down 4% compared to pcp The information underlyin
Slide 18: Segment EBIT – 1st Quarter FY17
North America Fiber Cement EBIT summary EBIT increased by 4% when compared to pcp Driven by favorable volume, partially offset by slightly lower average net sales price, higher SG&A expense and higher production costs SEGMENT EBIT – 1st QUARTER FY17 International Fiber Cement EBIT summary EBIT incre
Slide 19: Segment EBIT – 1st Quarter FY17
Other Businesses summary EBIT loss improved by 30% when compared to pcp Driven by higher gross profit in Windows business R&D summary On strategy to invest 2-3% of net sales Fluctuations reflect normal variation and timing in the number of R&D projects in process in any given period General Corporat
Slide 20: Income Tax
1 Includes Asbestos adjustments, AICF SG&A expenses and net AICF interest expense (income) 2 Excludes tax effects of Asbestos and other tax adjustments 27.1% estimated adjusted effective tax rate (ETR) for the year Adjusted income tax expense and adjusted ETR for the quarter increased due to changes
Slide 21: Cashflow
1 CASHFLOW Increase in net operating cash flow: Favorable change in working capital due to increased sales and normal variation related to timing in AR4 and AP4 Increase in net income adjusted for non-cash items Capital expenditures down slightly compared to pcp Higher financing activities due to in
Slide 22: Capital Expenditure
CAPITAL EXPENDITURE Q1 FY17 CAPEX spend of US$17.8 million down slightly compared to pcp North America capacity projects: Commissioned new sheet machine at Plant City facility during the quarter Nearing completion of the sheet machine at Cleburne facility Began construction on new line at Philippine
Slide 23: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Management Disciplined Capital Allocation Liquidity and Funding Strong margins and operating cash flows Strong governance and transparency Investment-grade financial management Invest in R&D and capacity expansion to support organic growth Main
Slide 24: Liquidity Profile
LIQUIDITY PROFILE Corporate debt structure US$500 million revolving credit facility, with a December 2020 maturity US$325 million 8 year senior unsecured notes2 US$75 million re-offering of the 2023 senior unsecured notes issued at 103% of par value (5.327% yield to maturity) on 22 July 2016 Strong
Slide 25: FY2017 Guidance
FY2017 GUIDANCE Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2017 is between US$264 million and US$302 million Management expects full year Adjusted net operating profit to be between US$260 million and US$290 million assu
Slide 26: Questions
@)vames Hardie QUESTIONS
Slide 27: Appendix
@)vames Hardie APPENDIX
Slide 28: Financial Summary
FINANCIAL SUMMARY 1 Excludes Asbestos related expenses and adjustments
Slide 29: Asbestos Claims Data
ASBESTOS CLAIMS DATA Claims received were 1% below actuarial estimates and 11% higher than pcp Claims reporting for mesothelioma: 3% lower than pcp 1% lower than actuarial estimates Claims reporting for non-mesothelioma: 61% higher than pcp 4% higher than actuarial estimates Average claim settlement
Slide 30: Depreciation and Amortization
DEPRECIATION AND AMORTIZATION
Slide 31: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 Condensed Consolidated Financial State
Slide 32: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES 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 Condensed Consolidated Financi
Slide 33: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT – Earnings before interest and taxes 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 square feet, where a
Slide 34: Non-US GAAP Financial Measures
Financial Measures – US GAAP equivalents NON-US GAAP FINANCIAL MEASURES
Slide 35: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES
Slide 36: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES
Slide 37: Q1 FY17 Management Presentation
Q1 FY17 MANAGEMENT PRESENTATION 12 August 2016
James Hardie Industries — Q1 FY2017 Earnings Presentation on 6ix