James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (October 2014)
43 slides from James Hardie Industries's investor presentation, Oct 14, 2014
Slide 1: Investor Presentation October 2014
Exhibit 99.1 INVESTOR PRESENTATION OCTOBER 2014
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: Disclaimer (continued)
DISCLAIMER (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 intended to identify forward-looking
Slide 4: Agenda
AGENDA • Global Strategy and Business Overview • USA & Europe Fiber Cement • Asia Pacific Fiber Cement • Capital Management Framework • Group Outlook and Guidance • Appendix In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and Non-US
Slide 5: Global Strategy: Industry Leadership and Profitable Growth
GLOBAL STRATEGY Industry Leadership and Profitable Growth • Introduce differentiated products to deliver a sustainable competitive advantage • Aggressively grow demand for our products in targeted market segments PAGE 5
Slide 6: A Growth Focused Company
A GROWTH FOCUSED COMPANY • Annual net sales US$1.6+b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,100 employees • Market cap US$6b • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 20 August 2014. Total assets and net c
Slide 7: Q1 FY15 Group Net Operating Profit
1 Q1 FY15 GROUP NET OPERATING PROFIT Q1 Q1 % US$ Millions FY 2015 FY 2014 Change Adjusted net operating profit ² 50.1 52.0 (4) Adjusted diluted earnings per share (US cents) 11 12 Net operating profit reflects: • Higher sales volumes and average net sales prices in both the USA and Europe Fiber Ceme
Slide 8: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT USA & Europe Asia Pacific DUBLIN JHX Manufacturing Operations JHX Manufacturing Operations – Production JHX Sales Office Suspended Net Sales EBIT ² Asia Pacific Asia Pacific 23% 23% Geographic Mix¹ USA and Europe USA and Europe 77% 77% 1 All percentages are for the 1 ST
Slide 9: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE Research & Development: Significant and consistent investment • US$33.1m spent on Research & Development in FY14 • US$363.1m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Substrate Development PAGE
Slide 10: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE 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 ? ? Resists warping ? ? Resis
Slide 11: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS Primary Products Trim / Backerboard Commercial Interior Walls Soffit Siding Flooring Fascia Exteriors / Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 11
Slide 12: USA and Europe Fiber Cement Segment
USA AND EUROPE FIBER CEMENT SEGMENT USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,100 employees • 9 manufacturing plants¹ Peru, IL • 2 research and development Reno, NV facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC TX 1Q FY15 1Q FY14 Cleburne, T
Slide 13: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS North America External Cladding Market Share North America Wood-Look Market Size 4.7BSF Fiber Cement Share: 17% Source: Internal estimates based on NAHB product usage data adjusted Source: Internal estimates based on NAHB product usage data adjusted for region
Slide 14: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS USA Fiber Cement Top Line Growth Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau PAGE 14
Slide 15: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS USA and Europe Fiber Cement Average Net Sales Price 710 US$680 670 630 590 550 FY10 FY11 FY12 FY13 FY14 Q1 FY15 PAGE 15
Slide 16: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS USA and Europe Fiber Cement 1 Quarterly EBIT and EBIT Margin 80 35 70 30 60 25 50 20 40 15 30 20 10 10 5 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 EBIT EBIT Margin 1 Excludes asset impairment charges of US$14.3 million in 4th quarter FY12, US$5.8 million in 3rd
Slide 17: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT Asia Pacific Plant Locations • 985 employees • 5 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility 1Q FY15 1Q FY14 Net Sales US$95.3m US$94.1m EBIT US$20.7m US$21.1m EBIT Margin 21.7% 22.4% EBIT and EBIT mar
Slide 18: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS Asia Pacific Fiber Cement Segment 1 Average Net Sales Price Quarterly EBIT and EBIT Margin A$931 EBIT EBIT Margin 1 EBIT and EBIT margin excludes New Zealand weathertightness claims PAGE 18
Slide 19: Targetting the Right Product into the Right Market
TARGETTING THE RIGHT PRODUCT INTO THE RIGHT MARKET Asia Pacific Core Markets Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 19
Slide 20: JHX Approach to Capital Management
JHX APPROACH TO CAPITAL MANAGEMENT Objectives • To optimize our capital structure with a view towards a target net debt position in the range of 1-2 times EBITDA excluding asbestos Strategy • While reinvesting in R&D and capacity expansion required for growth; • Provide consistent dividend payments
Slide 21: JHX FY15 Liquidity and Capital Allocation
JHX FY15 LIQUIDITY AND CAPITAL ALLOCATION Liquidity • In May 2014, we added US$150.0 million of credit facilities intended to replace and augment an existing US$50.0 million credit facility which expired on 14 February 2014 • With the addition of this facility, we have US$505.0 million of combined c
Slide 22: JHX FY15 Group Outlook
JHX FY15 GROUP OUTLOOK USA and Europe Fiber Cement • The US operating environment continues to recover, but at a more modest pace than expected earlier this year • The recent flattening in housing activity has created some uncertainty about the pace of the recovery in the short-term • Our medium-ter
Slide 23: JHX FY15 Guidance
JHX FY15 GUIDANCE • Management expects full year Adjusted net operating profit to be between US$205 million and US$235 million assuming, among other things, housing industry conditions in the United States continue to improve at a more moderate level than originally assumed at the beginning of the y
Slide 24: Appendix
James Hardie APPENDIX
Slide 25: JHX Key Ratios
JHX KEY RATIOS 3 Months 3 Months 3 Months FY2015 FY2014 FY2013 EPS (Diluted) 1 (US Cents) 11c 12c 10c EBIT/ Sales (EBIT margin) 2 17.1% 18.1% 17.0% Gearing Ratio 1 (3.3)% (16.5)% (32.1)% Net Interest Expense Cover 2 79.1x 84.4x 57.7x Net Interest Paid Cover 2 89.0x 67.5x 115.4x 1 Excludes asbestos a
Slide 26: USA and Europe Fiber Cement – 5 Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW FY10 FY11 FY12 FY13 FY14 Net Sales 828 814 862 951 1,128 US$m Sales Volume 1,304 1,248 1,332 1,489 1,697 mmsf Average Price 632 648 642 626 652 US$ per msf ² EBIT US$m¹ 209 160 163 163 237 EBIT Margin %¹ 25 20 19 17 21 1 Excludes asset impairment
Slide 27: Asia Pacific Fiber Cement – 5 Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW FY10 FY11 FY12 FY13 FY14 Net Sales 297 353 376 370 366 US$m Sales Volume 390 408 392 394 417 mmsf Average Price 886 906 906 901 930 A$ per msf ² EBIT US$m¹ 59 79 86 75 83 EBIT Margin %¹ 20 23 23 20 23 1Excludes New Zealand product liability expense
Slide 28: JHX 1st Quarter FY15 Group Results
JHX 1ST QUARTER FY15 GROUP RESULTS • Earnings impacted by: • Higher sales volumes and average sales prices across all business units; • Higher production costs, primarily due to higher market prices for input costs and plant inefficiencies; and • Higher organizational spend, primarily due to an incr
Slide 29: JHX 1st Quarter FY15 Results
JHX 1ST QUARTER FY15 RESULTS Highlights • Net sales increased 12% favorably impacted by: US$ Millions Q1 '15 Q1 '14 % Change • Higher sales volumes; and • Higher average net sales prices in local Net sales 416.8 372.2 12 currencies Gross profit 140.2 126.3 11 • Gross profit margin decreased 30 bps i
Slide 30: JHX 1st Quarter FY15 Results (continued)
JHX 1ST QUARTER FY15 RESULTS (continued) Summary • Asbestos adjustments were favorable due to a 2% favorable change in the Australian US$ Millions Q1 '15 Q1 '14 % Change dollar spot exchange rate against the US Net operating profit 28.9 142.2 (80) dollar from the beginning balance sheet date to the
Slide 31: JHX 1st Quarter FY15 - Segment EBIT
JHX 1ST QUARTER FY15 - SEGMENT EBIT US$ Millions Q1 ’15 Q1 ’14 % Change Summary USA and Europe Fiber Cement 68.0 59.4 14 Asia Pacific Fiber Cement 1 20.7 21.1 (2) US and Europe FC EBIT +14% driven 2 by volume and price, partially offset by Research & Development (6.8) (6.1) (11) higher input costs a
Slide 32: JHX 1st Quarter FY15 - Income Tax Expense
JHX 1ST QUARTER FY15 - INCOME TAX EXPENSE US$ Millions Q1 ’15 Q1 ’14 Summary Operating profit before income taxes 45.6 157.1 Adjusted effective tax rate increased Asbestos: compared to the prior corresponding Asbestos adjustments 21.5 (94.5) quarter due to a shift in the geographic Other asbestos 1
Slide 33: JHX 1st Quarter FY15 - Cashflow
ST JHX 1 QUARTER FY15 - CASHFLOW US$ Millions Q1 ’15 Q1 ’14 EBIT 50.4 156.9 Non-cash items: 1 Asbestos adjustments 21.5 (94.5) Other non-cash items 18.4 16.0 Net working capital movements (6.7) 9.5 Cash Generated By Trading Activities 83.6 87.9 Tax payments, net (1.9) (1.7) Change in other non-tradi
Slide 34: JHX 1st Quarter FY15 - Capital Expenditure
ST JHX 1 QUARTER FY15 - CAPITAL EXPENDITURE US$ Millions Q1 ’15 Q1 ’14 % Change USA and Europe Fiber Cement (including 38.5 11.6 Research and Development) Asia Pacific Fiber Cement 10.1 14.5 (30) Total 48.6 26.1 86 • We continued to spend on previously announced capital expansion projects at our Pla
Slide 35: JHX Manufacturing Capacity Expansion
JHX MANUFACTURING CAPACITY EXPANSION The following major capacity expansion projects in the USA and Europe and Asia Pacific Fiber Cement businesses are in progress: Project Description Approximate Estimated Commission Investment Date th Plant City, Florida – 4 sheet machine and US$65.0 million First
Slide 36: JHX Net Debt/Cash
JHX NET DEBT/CASH At 30 June 2014: US$ Millions Total facilities 505.0 Gross debt - Cash 32.1 Net cash 32.1 Unutilised facilities and cash 537.1 • Weighted average remaining term of debt facilities was 3.0 years at 30 June 2014, up from 2.4 years at 31 March 2014 • We remain well within our financia
Slide 37: Asbestos Fund – Proforma (unaudited)
ASBESTOS FUND – PROFORMA (unaudited) A$ millions AICF cash and investments - 31 March 2014 65.5 Insurance recoveries 18.8 Interest expense, net (0.2) Claims paid (32.7) Operating costs (1.1) Other 1.6 AICF cash and investments - 30 June 2014 51.9 • Year to date claims experience of liable entities w
Slide 38: USA and Europe Input Costs
USA AND EUROPE INPUT COSTS Quarterly US Input Costs Discussion 1,200 10 9 • Input costs are significantly up over 1,000 the prior year, primarily driven by 8 pulp, silica and cement 7 800 6 • Many of our input costs fluctuate in-line with commodity prices tracked by 600 5 external indices; the chart
Slide 39: USA and Europe Fiber Cement – Plant Capacity
USA AND EUROPE FIBER CEMENT – PLANT CAPACITY Plant Capacity Flat Sheet Plant Capacity (mmsf) Plants operating Cleburne, Texas 466 Additional capacity by mid calendar year 2015 200 Peru, Illinois 560 Plant City, Florida 300 Additional capacity by mid calendar year 2015 300 Pulaski, Virginia 600 Reno,
Slide 40: Total US Housing Starts
TOTAL US HOUSING STARTS PAGE 40
Slide 41: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 Financial
Slide 42: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS 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 square foot is defined as a standard square
Slide 43: Investor Presentation
INVESTOR PRESENTATION OCTOBER 2014
James Hardie Industries — Investor Presentation (October 2014) on 6ix