James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (March 2014)
39 slides from James Hardie Industries's investor presentation, Mar 10, 2014
Slide 1: Investor Presentation March 2014
For personal use only INVESTOR PRESENTATION March 2014
Slide 2: Disclaimer
For personal use only 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
Slide 3: Disclaimer (continued)
For personal use only 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 id
Slide 4: Agenda
For personal use only AGENDA • Business Overview • USA & Europe Fibre Cement • Asia Pacific Fibre Cement • Capital Management and Dividends • Group Outlook and Summary • Appendix In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and N
Slide 5: JHX: A Growth Focused Company
For personal use only JHX: A GROWTH FOCUSED COMPANY Annual net sales US$1.5b Total assets US$1.9b Net cash US$185m Operations in North America, Asia Pacific and Europe 2,700 employees Market cap US$6+b S&P/ASX 100 company NYSE ADR listing Note: Market capitalization as at 7 March 201
Slide 6: Group Overview
For personal use only GROUP OVERVIEW 1 US Millions Q3 Q3 % 9 Months 9 Months % FY2014 FY2013 Change FY2014 FY2013 Change Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product 43.7 26.7 64 152.0 109.4 39 liability and tax adjustments Net Operating Profit 92.2
Slide 7: JHX: A World Leader in Fibre Cement
For personal use only JHX: A WORLD LEADER IN FIBRE CEMENT • USA and Europe Fibre Cement Products • Siding • Soffit • Fascia • Trim • Backerboard • Asia Pacific Fibre Cement Products • Residential siding • Commercial exteriors • Flooring • Ceilings and internal walls 7
Slide 8: Global Business Portfolio
For personal use only 1 GLOBAL BUSINESS PORTFOLIO 100% 90% 80% 70% 80% 74% 71% 60% 50% 40% 30% 20% 26% 29% 20% 10% 0% Volume Net Sales EBIT* USA and Europe Fibre Cement Asia Pacific Fibre Cement 1 All numbers are for the 3rd quarter ended 31 December 2013 *EBIT – Excludes Research and Development, a
Slide 9: Fibre Cement: Superior Product Performance
For personal use only FIBRE CEMENT: SUPERIOR PRODUCT PERFORMANCE Fibre 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 Fibre Cement Vinyl Engineered Wood ! Fire resistant ? ? ! Hail resistant
Slide 10: Product Leadership Example: HardieZone System
For personal use only PRODUCT LEADERSHIP EXAMPLE: HARDIEZONE™ SYSTEM • 7th Generation versus 2nd Generation generic fibre cement • The HardieZone™ System represents a logical extension of Hardie technology 10
Slide 11: The USA Business: Largest Fibre Cement Producer in North America
For personal use only THE USA BUSINESS: LARGEST FIBRE CEMENT PRODUCER IN NORTH AMERICA JH Plant Design Capacity Plant locations Flat Sheet Capacity Plants (mmsf) • Tacoma, WA Plants operating Cleburne, Texas 500 Additional capacity by mid 200 calendar year 2015 Peru, IL Peru, Illinois 560 Plant City
Slide 12: USA Fibre Cement Top Line Growth
For personal use only USA FIBRE CEMENT Top Line Growth 3,000 $1,300 2,800 JH Volume (mmsf), Starts (000s Units) $1,200 2,600 $1,100 2,400 2,200 $1,000 $900 Revenue (US$M) 2,000 1,800 $800 1,600 $700 1,400 $600 1,200 $500 1,000 $400 800 $300 600 400 $200 200 $100 0 $0 '00 '01 '02 '03 '04 '05 '06 '07
Slide 13: USA and Europe Fibre Cement Quarterly EBIT and EBIT Margin
For personal use only USA AND EUROPE FIBRE CEMENT 1 Quarterly EBIT and EBIT Margin 80 35 70 30 60 EBIT Margin 25 EBIT US$M 50 20 40 15 30 10 20 10 5 0 0 FY09 FY10 FY11 FY12 FY13 FY14 EBIT EBIT Margin 1 Excludes asset impairment charges of US$14.3 million in 4th quarter FY12, US$5.8 million in 3rd qu
Slide 14: USA and Europe Fibre Cement Average Net Sales Price
For personal use only USA AND EUROPE FIBRE CEMENT 1 Average Net Sales Price (US dollars) 670 US$651 630 US$ per MSF 590 550 FY09 FY10 FY11 FY12 FY13 Q3 YTD FY14 1 Prior period amounts have been restated to conform with current year refined methodology for calculating average net sales price 14
Slide 15: Asia Pacific Fibre Cement
For personal use only ASIA PACIFIC FIBRE CEMENT • Five manufacturing plants in Asia Pacific 1 • Net sales US$370.7m 1 • EBIT US$86.0m • Higher value differentiated products Asia Pacific manufacturing facilities 1 Net Sales and EBIT equal to YTD as at 31 December 2013 annualised. EBIT excludes New Ze
Slide 16: Asia Pacific Fibre Cement - Examples
For personal use only ASIA PACIFIC FIBRE CEMENT - EXAMPLES Ceilings and partitions Exterior cladding Philippines Australia Australia Interior walls New Zealand General purpose flooring 16
Slide 17: Capital Management Framework
For personal use only CAPITAL MANAGEMENT FRAMEWORK Objectives • To optimize JHX capital structure with a view towards a target net debt position in the range of 1-2 times Adjusted EBITDA1 Strategy • While reinvesting in R&D and capacity expansion required for growth; • Provide consistent dividend pa
Slide 18: Capital Management and Dividends
For personal use only CAPITAL MANAGEMENT AND DIVIDENDS Dividends • In February 2014 the company announced a 125 year anniversary special dividend of US28.0 cents per security in recognition of the company's 125 year anniversary Declared in US currency and will be paid on 30 May 2014 with a record
Slide 19: Group Outlook
For personal use only GROUP OUTLOOK USA and Europe Fibre Cement • The US operating environment continues to reflect an increasing number of housing starts • The company is continuing with its plan to expand production capacity through new capital investments and re-commissioning of idled facilities
Slide 20: FY2014 Guidance
For personal use only FY2014 GUIDANCE • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2014 is between US$189 million and US$202 million1 • Management expects full year earnings excluding asbestos, asset impairments, ASIC ex
Slide 21: Summary
For personal use only SUMMARY • We have a strong, well-established, growth-focused, strong cash-generating and high return business • We have a sustainable competitive advantage • Our model for strong growth is based on: Large market opportunity Superior value proposition Proprietary and/or pr
Slide 22: Appendix
For personal use only Agenda APPENDIX
Slide 23: Global Strategy
For personal use only GLOBAL STRATEGY Industry leadership and profitable growth • Aggressively grow demand for our products in targeted market segments • Grow our overall market position while defending our share in existing market segments Australia • Introduce differentiated products to deliver a
Slide 24: Total US Housing Starts
For personal use only TOTAL US HOUSING STARTS 24
Slide 25: Key Ratios
For personal use only KEY RATIOS 9 Months 9 Months 9 Months FY2014 FY2013 FY2012 EPS (Diluted) 1 34c 25c 25c EBIT/Sales (EBIT Margin) 2 17.5% 14.5% 16.5% US & Europe EBIT/Sales (EBIT Margin) 3 21.4% 17.5% 15.3% Gearing Ratio1 (13.4)% (13.9)% (2.0)% Net Interest Expense Cover 2 63.0x 43.6x 25.9x Net
Slide 26: USA and Europe Fibre Cement Year Results Overview
For personal use only USA AND EUROPE FIBRE CEMENT 5 YEAR RESULTS OVERVIEW FY09 FY10 FY11 FY12 FY13 Net Sales 929 828 814 862 951 US$m Sales Volume 1,527 1,304 1,248 1,332 1,489 mmsf Average Price 608 632 648 642 627 2 US$ per msf EBIT US$m1 199 209 160 163 163 EBIT Margin %1 21 25 20 19 17 1Excludes
Slide 27: Asia Pacific Fibre Cement Year Results Overview
For personal use only ASIA PACIFIC FIBRE CEMENT 5 YEAR RESULTS OVERVIEW FY09 FY10 FY11 FY12 FY13 Net Sales 273 297 353 376 370 US$m Sales Volume 391 390 408 392 394 mmsf Average Price 871 886 906 906 901 US$ per msf 2 1 EBIT US$m 47 59 79 86 75 1 EBIT Margin % 17 20 23 23 20 1Excludes New Zealand pr
Slide 28: Financial Summary
For personal use only FINANCIAL SUMMARY 1 Excludes asset impairments charges of US$5.8 million in the 3rd quarter and nine months of the prior fiscal year. 2 Asia Pacific Fibre Cement EBIT excludes New Zealand product benefit of US$4.2 million and expense US$7.5 million in Q3 ‘14 and Q3 ‘13, respect
Slide 29: Endnotes
For personal use only ENDNOTES 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 St
Slide 30: Endnotes (continued)
For personal use only ENDNOTES (CONTINUED) 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 consolidated finan
Slide 31: Endnotes (continued)
For personal use only ENDNOTES (CONTINUED) 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 s
Slide 32: Non-US GAAP Financial Measures
For personal use only NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos, asset impairments, ASIC expenses and New Zealand product liability – EBIT and EBIT margin excluding asbestos, asset impairments, ASIC expenses and New Zealand product liability are not measures of financial
Slide 33: Non-US GAAP Financial Measures (continued)
For personal use only NON-US GAAP FINANCIAL MEASURES (CONTINUED) Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability and tax adjustments – Net operating profit excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability and
Slide 34: Non-US GAAP Financial Measures (continued)
For personal use only NON-US GAAP FINANCIAL MEASURES (CONTINUED) Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability and tax adjustments – Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses, New Zealand product l
Slide 35: Non-US GAAP Financial Measures (continued)
For personal use only NON-US GAAP FINANCIAL MEASURES (CONTINUED) Effective tax rate excluding asbestos, asset impairments, New Zealand product liability and tax adjustments – Effective tax rate on earnings excluding asbestos, asset impairments, New Zealand product liability and tax adjustments is no
Slide 36: Non-US GAAP Financial Measures (continued)
For personal use only NON-US GAAP FINANCIAL MEASURES (CONTINUED) 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 o
Slide 37: Non-US GAAP Financial Measures (continued)
For personal use only NON-US GAAP FINANCIAL MEASURES (CONTINUED) General corporate costs excluding ASIC expenses, intercompany foreign exchange gain and recovery of RCI legal costs – General corporate costs excluding ASIC expenses, intercompany foreign exchange gain and recovery of RCI legal costs i
Slide 38: Non-US GAAP Financial Measures (continued)
For personal use only NON-US GAAP FINANCIAL MEASURES (CONTINUED) Selling, general and administrative expenses excluding New Zealand product liability – Selling, general and administrative expenses excluding New Zealand product liability is not a measure of financial performance under US GAAP and sho
Slide 39: For personal use only
For personal use only INVESTOR PRESENTATION March 2014
James Hardie Industries — Investor Presentation (March 2014) on 6ix