James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q3 FY2020 Earnings Presentation
48 slides from James Hardie Industries's earnings presentation, Feb 12, 2020
Slide 1: Q3 FY20 Management Presentation
Q3 FY20 MANAGEMENT PRESENTATION 12 February 2020
Slide 2: Cautionary Note on Forward-Looking Statements
James Hardie Q3 FY20 Results 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 Securi
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
James Hardie Q3 FY20 Results 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
Slide 4: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
James Hardie Q3 FY20 Results 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). The
Slide 5: Agenda
James Hardie Q3 FY20 Results AGENDA • Group Operating Review Dr. Jack Truong, CEO • Financial Review Jason Miele, VP of Investor Relations • Strategy Update Dr. Jack Truong, CEO • Questions and Answers Page 5
Slide 6: Group Operating Review
GROUP OPERATING REVIEW – DR. JACK TRUONG, CEO
Slide 7: FY20 Group Results Overview
James Hardie Q3 FY20 Results FY20 GROUP RESULTS OVERVIEW Q3 FY20 9 Months FY20 • Volume increased 6% in the quarter, led by 912.6 mmsf 2,830.0 mmsf Sales Volume 11% in North America 6% 4% aa • Adjusted EBIT grew 18% in the quarter, US$616.7 M US$1,933.6 M Net Sales driven by: 5% 3% ◦ North America +
Slide 8: FY20 North America Summary
James Hardie Q3 FY20 Results FY20 NORTH AMERICA SUMMARY Q3 FY20 9 Months FY20 • Exteriors volume continued growth 593.0 mmsf 1,826.6 mmsf Sales Volume ◦ +13% for the quarter 11 % 7 % ◦ +8% for the nine months aa US$430.0 M US$1,341.9 M Net Sales • Interiors volume returned to growth 12 % 7 % ◦ aa +3
Slide 9: FY20 Europe Summary
James Hardie Q3 FY20 Results FY20 EUROPE SUMMARY Q3 FY20 9 Months FY20 • Continued Fiber Cement growth 189.2 mmsf 595.8 mmsf ◦ Net Sales +20% for the quarter in Euros Sales Volume -2 % FLAT ◦ Net Sales +27% for the nine months in Euros €76.5 M €240.9 M • SoftFiberGypsumNetSalesinEuros Net Sales 1% 4
Slide 10: FY20 APAC Summary
James Hardie Q3 FY20 Results FY20 APAC SUMMARY Q3 FY20 9 Months FY20 • Continued growth above market in Australia 130.4 mmsf 407.6 mmsf Sales Volume -4 % -2 % • ModerateEBITgrowthinAustraliandollarsforthe aa third quarter, +5% A$149.4 M A$468.0 M Net Sales -3 % FLAT • EBITMargininthetophalfoflongter
Slide 11: FY20 Key Assumptions & Market Outlook
James Hardie Q3 FY20 Results FY20 KEY ASSUMPTIONS & MARKET OUTLOOK North AmericaEurope Asia Pacific Modest growth in the US Housing market down slightly Addressable housing market housing market across addressable market in Australia is contracting US Residential Housing starts Continued introductio
Slide 12: Financial Review
FINANCIAL REVIEW – JASON MIELE, VP OF INVESTOR RELATIONS
Slide 13: Group Results – 3rd Quarter and Nine Months FY20
James Hardie Q3 FY20 Results GROUP RESULTS – 3RD QUARTER AND NINE MONTHS FY20 Q3 FY20 9 Months FY20 Volume and Net Sales 912.6 mmsf 2,830.0 mmsf Sales Volume • Strong top line growth driven by volume growth in North 6% 4% aa America US$616.7 M US$1,933.6 M Net Sales 5% 3% aa Gross profit increased 1
Slide 14: North America Fiber Cement Summary
James Hardie Q3 FY20 Results NORTH AMERICA FIBER CEMENT SUMMARY Q3 FY20 9 Months FY20 Volume 593.0 mmsf 1,826.6 mmsf Sales Volume 11 % 7 % • PDG on‐track; FY20 target raised to 6+% ddddddddd ◦ Exteriors volumes +13% for Q3 and +8% for the nine months US$430.0 M US$1,341.9 M Net Sales 12 % 7 % • Inte
Slide 15: North America Fiber Cement Q3 and YTD EBIT Margin
James Hardie Q3 FY20 Results NORTH AMERICA FIBER CEMENT Q3 and YTD EBIT Margin of 26.1% Page 15
Slide 16: North America Input Costs
James Hardie Q3 FY20 Results NORTH AMERICA INPUT COSTS • The price of NBSK pulp down 22% compared to pcp •Freight pricesdown 12% compared to pcp • Cement prices up 2% compared to pcp •Gas prices down 29% compared to pcp • Electric prices up 6% compared to pcp The information underlying the table abo
Slide 17: APAC Summary
James Hardie Q3 FY20 Results APAC SUMMARY Q3 FY20 9 Months FY20 Volume 130.4 mmsf 407.6 mmsf Sales Volume -4 % -2 % • Continued softening of Australian housing market d d dd d d dd d A$149.4 M A$468.0 M • Volume growth above market index in Australia Net Sales -3 % FLAT d d dd d d dd d EBIT A$1,023
Slide 18: Europe Building Products Summary
James Hardie Q3 FY20 Results EUROPE BUILDING PRODUCTS SUMMARY Q3 FY20 9 Months FY20 Nine Months 189.2 mmsf 595.8 mmsf • Net sales in Euros increased 4% driven by: Sales Volume -2 % FLAT ◦ Fiber cement net sales +27% ddddddddd €76.5 M €240.9 M ◦ Fiber gypsum net sales +2% Net Sales 1% 4% 1 ddddddddd•
Slide 19: Segment EBIT and Income Tax
James Hardie Q3 FY20 Results SEGMENT EBIT AND INCOME TAX (26.5) (21.9) (19.7) (7.4) (7.4) (6.6) 0.0 (0.1) Exited Windows business Committed to R&D investment 1 2 (56.2) (42.6) (24.3) (13.1) Higher stock compensation expense Adjusted ETR within our expectations 2 1 Excludes asbestos related expenses
Slide 20: General Corporate Costs
James Hardie Q3 FY20 Results GENERAL CORPORATE COSTS 1 • General Corporate Costs1 of US$24.3 million • Includes US$3.5 million of acceleration of expense: 24.3 ◦ Acceleration in the timing of accounting for expenses associated with a retired executive's non‐compete and 20.8 consulting arrangements 1
Slide 21: Cash Flows and Capital Expenditures
James Hardie Q3 FY20 Results CASH FLOWS CAPITAL EXPENDITURES 9 Months 9 Months US$ Millions Change % FY20 FY19 a a a a Cash provided by operations 393.4 309.3 27 % 1 Cash used in investing (204.3) (812.1) (75 %) Cash (used in) provided by financing (126.1) 327.8 Higher operating cash flow CAPEX spen
Slide 22: Liquidity Profile at December 2019
James Hardie Q3 FY20 Results LIQUIDITY PROFILE AT 31 DECEMBER 2019 Strong balance sheet Millions • US$148.9 million cash 1 • US$1,262.8 million net debt3 • US$315.3 million available on revolving credit facility 22Corporate debt structure • US$400 million 4.75% senior unsecured notes maturing 2025 •
Slide 23: FY20 Key Assumptions & Market Outlook
James Hardie Q3 FY20 Results FY20 KEY ASSUMPTIONS & MARKET OUTLOOK North AmericaEurope Asia Pacific Modest growth in the US Housing market down slightly Addressable housing market housing market across addressable market in Australia is contracting US Residential Housing starts Continued introductio
Slide 24: Strategy Update
STRATEGY UPDATE – DR. JACK TRUONG, CEO
Slide 25: Transforming from a Big, Small to a Small, Big Company
James Hardie Q3 FY20 Results TRANSFORMING FROM A BIG, SMALL TO A SMALL, BIG COMPANY FROM: TO: Pull Push‐Pull Independent plants HMOS (based on LEAN) Technology push innovation Market driven innovation Top down Empowerment & accountability Functional silos Cross‐functional Regionally focused Globally
Slide 26: Being Customer Focused: Push-Pull
James Hardie Q3 FY20 Results BEING CUSTOMER FOCUSED: PUSH‐PULL Page 26
Slide 27: Lean Transformation: Global Progress
James Hardie Q3 FY20 Results LEAN TRANSFORMATION: GLOBAL PROGRESS Page 27
Slide 28: Market Driven Innovation
James Hardie Q3 FY20 Results MARKET DRIVEN INNOVATION • Innovation is one of four pillars supporting our long term growth strategy • We are committed to increased investment in innovation • We are integrating customer insights into our innovation process to deliver high impact new products Page 28
Slide 29: Innovation: HardieWindbreaker and RAB Board
James Hardie Q3 FY20 Results INNOVATION: HARDIEWINDBREAKERTM AND RABTM Where: Europe as HardieWindbreakerTM Sheathing Australia as RABTM Board When: Europe: May 2019 Australia: Nov 2019 What: Air and water barrier installed beneath external cladding or rain screens deliver: 1. Superior water resista
Slide 30: Innovation: ExoTec Vero Façade Panel
James Hardie Q3 FY20 Results INNOVATION: EXOTEC™ VERO FAÇADE PANEL Where: Australia When: Nov 2019 What: A pre‐finished concrete look façade panel that is deemed non‐combustible and is part of the ExoTecTM Façade System Segment: Commercial https://www.exotec.com.au Page 30
Slide 31: Innovation: EasyTex Cladding
James Hardie Q3 FY20 Results INNOVATION: EASYTEX™ CLADDING Where: Australia When: Jan 2020 What: A fiber cement panel used as external cladding featuring: – an embedded fine render texture which eliminates the need for render or wet trades – an interlocking mechanism for faster construction Segment:
Slide 32: Questions
QUESTIONS
Slide 33: Appendix
APPENDIX
Slide 34: FY20 Guidance
James Hardie Q3 FY20 Results FY20 GUIDANCE • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2020 is between US$356 million and US$380 million, with a mean of US$367 million • Management expects full year Adjusted net operati
Slide 35: Financial Management Framework
James Hardie Q3 FY20 Results FINANCIAL MANAGEMENT FRAMEWORK Strong Financial Management Disciplined Capital Allocation Liquidity and Funding • Strong margins and operating cash flows • Invest in R&D and capacity expansion to • Conservative leveraging of balance sheet support organic growth at a targ
Slide 36: North America Fiber Cement
James Hardie Q3 FY20 Results NORTH AMERICA FIBER CEMENT • FY20 strategic price increase effective April 2019 • Overall, satisfied with price positioning Page 36
Slide 37: Translation Impact on Consolidated Results
James Hardie Q3 FY20 Results TRANSLATION IMPACT ON CONSOLIDATED RESULTS 1 As reported Q3’20 and nine months FY20 figures converted using Q3‘19 and nine months FY19 average exchange rates, respectively 2 Reflects the difference between Q3’20 As Reported and Q3’20 using Q3’19 average exchange rates, a
Slide 38: Asia Pacific Fiber Cement Results AUD vs USD
James Hardie Q3 FY20 Results ASIA PACIFIC FIBER CEMENT RESULTS AUD vs USD Three Months and Nine Months Ended 31 December Q3 FY20 9 Months FY20 Results in Results in Impact of Results in Results in Impact of AUD USD FX AUD USD FX Average net sales price per unit +3% -2% -5% +3% -4% -7% (per msf) Net
Slide 39: Financial Summary
James Hardie Q3 FY20 Results FINANCIAL SUMMARY Three Months and Nine Months Ended 31 December US$ Millions Q3 FY20 Q3 FY19 % Change 9 Months FY20 9 Months FY19 % Change Net Sales North America Fiber Cement $ 430.0 $ 385.5 12 $ 1,341.9 $ 1,254.9 7 Asia Pacific Fiber Cement 102.0 110.1 (7) 322.6 344.5
Slide 40: Asbestos Claims Data
James Hardie Q3 FY20 Results ASBESTOS CLAIMS DATA Quarter ended 31 December 2019 • Claims received were 9% above actuarial estimates and 1% lower than pcp • Average claim settlement was 8% below actuarial estimates and 1% higher than pcp Nine Months ended 31 December 2019 • Net cash outflow was 6% b
Slide 41: Depreciation and Amortization
James Hardie Q3 FY20 Results DEPRECIATION AND AMORTIZATION Three Months and Nine Months Ended 31 December US$ Millions Q3 FY20 Q3 FY19 9 Months FY20 9 Months FY19 Depreciation and amortization North America Fiber Cement $ 22.0 $ 20.9 $ 66.0 $ 58.5 Asia Pacific Fiber Cement 3.2 3.4 9.4 9.8 Europe Bui
Slide 42: Non-US GAAP Financial Measures and Terms
James Hardie Q3 FY20 Results NON‐US GAAP FINANCIAL MEASURES AND 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 partsof this package, including the Management’s Analysis of Results, Media Release a
Slide 43: Non-US GAAP Financial Measures
James Hardie Q3 FY20 Results 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 C
Slide 44: Non-US GAAP Financial Measures
James Hardie Q3 FY20 Results NON‐US GAAP FINANCIAL MEASURES Financial Measures – US GAAP equivalents Adjusted EBIT Three Months and Nine Months Ended 31 December US$ Millions Q3 FY20 Q3 FY19 9 Months FY20 9 Months FY19 EBIT $ 88.2 $ 97.5 $ 373.3 $ 328.9 Asbestos: Asbestos adjustments 18.5 (12.1) (8.
Slide 45: Non-US GAAP Financial Measures
James Hardie Q3 FY20 Results NON‐US GAAP FINANCIAL MEASURES North America Fiber Cement Segment Adjusted EBIT excluding product line discontinuation Three Months and Nine Months Ended 31 December US$ Millions Q3 FY20 Q3 FY19 9 Months FY20 9 Months FY19 North America Fiber Cement Segment EBIT $ 112.3
Slide 46: Non-US GAAP Financial Measures
James Hardie Q3 FY20 Results NON‐US GAAP FINANCIAL MEASURES Adjusted diluted earnings per share Three Months and Nine Months Ended 31 December Q3 FY20 Q3 FY19 9 Months FY20 9 Months FY19 Adjusted net operating profit (US$ Millions) $ 77.4 $ 65.9 $ 266.2 $ 226.7 Weighted average common shares outstan
Slide 47: Non-US GAAP Financial Measures
James Hardie Q3 FY20 Results NON‐US GAAP FINANCIAL MEASURES Adjusted EBITDA excluding asbestos Three Months and Nine Months Ended 31 December US$ Millions Q3 FY20 Q3 FY19 9 Months FY20 9 Months FY19 EBIT $ 88.2 $ 97.5 $ 373.3 $ 328.9 Depreciation and amortization 30.2 29.8 93.8 88.7 Adjusted EBITDA
Slide 48: Q3 FY20 Management Presentation
Q3 FY20 MANAGEMENT PRESENTATION 12 February 2020
James Hardie Industries — Q3 FY2020 Earnings Presentation on 6ix