James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (December 2014)
39 slides from James Hardie Industries's investor presentation, Dec 9, 2014
Slide 1: Investor Presentation December 2014
Exhibit 99.3 INVESTOR PRESENTATION DECEMBER 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
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$1.7+b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,140 employees • Market cap US$4.8b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 19 November 2014. Total ass
Slide 7: Group Overview
GROUP OVERVIEW Three Months and Half Year ended 30 September Q2'15 Q2'14 Change 1H'15 1H'14 Change Adjusted EBIT (US$ millions) 85.1 72.7 17% 156.3 140.2 11% Adjusted EBIT Margin % 19.3 18.5 0.8 pts 18.2 18.3 (0.1) pts Adjusted Net Operating Profit 65.4 56.3 16% 115.5 108.3 7% Net operating cash flo
Slide 8: Q2'15 & 1H'15 - Summary and Key Themes
Q2’15 & 1H’15 - SUMMARY AND KEY THEMES • Group net sales increased 12% for both the quarter and half year compared to last year • Group adjusted net operating profit increased 16% for the second quarter 2015 and 7% for the half year 1 2015 compared to pcp • US housing market remains below our expect
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT USA & Europe Asia Pacific JHX Manufacturing Operations JHX Manufacturing Operations – Production Suspended JHX Sales Office Net Sales EBIT ² Asia Pacific Asia Pacific 24% 26% Geographic Mix¹ USA and Europe USA and Europe 76% 74% 1 All percentages are for the 2nd quarter
Slide 10: 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 11: 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 12: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 12
Slide 13: 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 Reno, NV Peru, IL • 2 research and development Pulaski, VA facilities Fontana, CA Summerville, Waxahachie, SC TX 2Q FY15 2Q FY14 Net Sales U
Slide 14: 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 for Source: Internal estimates based on NAHB product usage data adjusted for re
Slide 15: 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 15
Slide 16: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS USA and Europe Fiber Cement Average Net Sales Price 710 679 670 635 630 590 550 FY10 FY11 FY12 FY13 FY14 1H'15 PAGE 16
Slide 17: USA and Europe: Delivering Strong Returns
USA AND EUROPE: DELIVERING STRONG RETURNS 1 Quarterly EBIT and EBIT Margin 1 Excludes asset impairment charges of US$14.3 million in 4 th quarter FY12, US$5.8 million in 3 rd quarter FY13 and US$11.1 million in 4 th quarter FY13 PAGE 17
Slide 18: 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 2Q FY15 2Q FY14 Net Sales US$105.0m US$93.3m EBIT US$25.7m US$22.1m EBIT Margin 24.5% 23.7% EBIT and EBIT ma
Slide 19: 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 1 EBIT and EBIT margin excludes New Zealand weathertightness claims PAGE 19
Slide 20: Targeting 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 20
Slide 21: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH 1 Strong Financial Management 2 Disciplined Capital Allocation 3 Liquidity and Funding Investing in R&D and capacity ~$500 million of bank Strong margins and expansion to support organic facilities, 37% liquidity as of operating cash flows growth Q2’15 Strong g
Slide 22: FY2015 Outlook and Guidance
FY2015 OUTLOOK AND GUIDANCE USA and Europe Fiber Cement Outlook • The US housing market recovery remains uncertain in the short-term, however, our view remains unchanged on the medium and longer-term outlook • Due to the slower then expected recovery, we will defer the planned commissioning of a num
Slide 23: Appendix
James Hardie APPENDIX
Slide 24: JHX Key Ratios
JHX KEY RATIOS Half Year ended 30 September 1H'15 1H'14 1H'13 1 EPS (Diluted) (US Cents) 26c 24c 19c 2 EBIT/ Sales (EBIT margin) 28.1% 18.3% 16.2% 1 Gearing Ratio 21.5% (9.5)% (6.4)% 2 Net Interest Expense Cover 96.3x 66.8x 54.7x 2 Net Interest Paid Cover 200.7x 77.9x 109.3x Net Debt Payback 1.1yrs
Slide 25: USA and Europe Fiber Cement – 5 Year Results Overview
USA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW FY10 FY11 FY12 FY13 FY14 Net Sales 828 814 862 951 1,128 US$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$m ¹ 209 160 163 163 237 EBIT Margin % ¹ 25 20 19 17 21 1 Excludes asset impairme
Slide 26: Asia Pacific Fiber Cement – 5 Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW FY10 FY11 FY12 FY13 FY14 Net Sales 297 353 376 370 366 US$m Sales Volume 390 408 392 394 417 mmsf Average Price 886 906 906 901 930 A$ per msf ² EBIT US$m ¹ 59 79 86 75 83 EBIT Margin % ¹ 20 23 23 20 23 1 Excludes New Zealand product liability expe
Slide 27: Results for the 2nd Quarter
RESULTS FOR THE 2 nd QUARTER Three Months ended 30 September Summary US$ Millions Q2 '15 Q2 '14 % Change Net sales increased 12%, favorably impacted by: Net sales 440.4 392.0 12 • Higher sales volumes; and Gross profit 150.9 133.1 13 • Higher average net sales prices in local currencies SG&A expense
Slide 28: Gross Profit - Group
GROSS PROFIT - GROUP • Gross profit has remained strong throughout the past three years • Price has improved as we continue to execute on pricing strategies and the reduction of pricing inefficiencies • Production costs continue to increase in line with the higher market prices for pulp, gas and sil
Slide 29: Income Tax
INCOME TAX • 23.1% estimated adjusted effective tax rate (ETR) • Adjusted income tax expense and adjusted ETR increased due to changes in geographical mix of earnings • Income taxes are paid and payable in Ireland, the U.S., Canada, New Zealand and the Philippines • Income taxes are not currently pa
Slide 30: Cashflow
CASHFLOW (US$ Millions) 1H'15 1H'14 Change (%) EBIT 196.0 224.7 (13) • First half cash flow from operations 1 reflect our US$113.0 million contribution Asbestos related 1 (42.5) (92.9) (54) to AICF Annual AICF contribution (113.0) - Depreciation & Amortization 34.1 30.6 11 • Higher working capital W
Slide 31: Liquidity Profile
LIQUIDITY PROFILE Debt Maturity Profile1 • Strong balance sheet position: $190 • $60.5 million of cash • $505 million of debt facilities $125 • 37% liquidity as of Q2’15 $100 $50 • As of Q2’15, we had net bank debt of US$319.5 million $40 compared to net cash of US$167.5 million at Q4’14 $0 FY'15 FY
Slide 32: HY FY15 Global Capex Spend and Key Projects
HY FY15 GLOBAL CAPEX SPEND AND KEY PROJECTS Project Capital Budget Progress during 1H'15 th Key engineering work on track Plant City, Florida - 4 sheet machine and ancillary facilities US$65.0 million Expected to complete construction FY'16 rd Key engineering work on track Cleburne, Texas - 3 sheet
Slide 33: USA and Europe Fiber Cement – Plant Capacity
USA AND EUROPE FIBER CEMENT – PLANT CAPACITY Plant Capacity Flat Sheet Plant Capacity (mmsf) Plants operating Cleburne, Texas 466 Additional capacity by mid calendar year 2015 200 Peru, Illinois 560 Plant City, Florida 300 Additional capacity by mid calendar year 2015 300 Pulaski, Virginia 600 Reno,
Slide 34: US Input Costs
US INPUT COSTS Quarterly US Input Costs Discussion: • Input costs are up significantly over the prior year • The price of NBSK pulp is at a three-year peak • The cost of gas for industrial users has nearly doubled since 2013 • We are engaged in effective sourcing strategies to reduce the impact of i
Slide 35: Asbestos Fund – Proforma (unaudited)
ASBESTOS FUND – PROFORMA (unaudited) A$ millions Claims Data AICF cash and investments - 31 March 2014 65.5 • For the quarter a nd half year ended 30 September 2014, we Contribution to AFFA by James Hardie 119.9 note the following related to asbestos claims: Insurance recoveries 23.4 • Claims receiv
Slide 36: 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 Consolidated Financial Statements Defi
Slide 37: 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 ConsolidatedFinancial St
Slide 38: 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 39: Investor Presentation
INVESTOR PRESENTATION DECEMBER 2014
James Hardie Industries — Investor Presentation (December 2014) on 6ix