James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q4 FY2015 Earnings Presentation
53 slides from James Hardie Industries's earnings presentation, May 21, 2015
Slide 1: Q4 FY15 Management Presentation
Exhibit 99.4 Q4 FY15 MANAGEMENT PRESENTATION 21 May 2015
Slide 2: Disclaimer
DISCLAIMER 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, on Forms 20-F and 6-K, in its annu
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 • Overview and Operating Review – Louis Gries, CEO • Financial Review – Matt Marsh, CFO • Questions and Answers In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures included in the Definitions an
Slide 5: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 6: Key Themes
KEY THEMES • Group net sales increased 9% and 11% for the quarter and full year, respectively, compared to pcp 1 • Group adjusted net operating profit increased US$12.0 million to US$57.3 million for the quarter and US$24.2 million to US$221.4 million for the full year, when compared to pcp 1 • Anno
Slide 7: Group Overview
GROUP OVERVIEW Three Months and Full Year Ended 31 March Q4'15 Q4'14 Change FY15 FY14 Change Adjusted EBIT (US$ millions) 80.8 57.4 41% 304.0 252.8 20% Adjusted EBIT Margin % 19.6 15.3 4.3 pts 18.3 16.9 1.4 pts Adjusted Net Operating Profit (US$ millions) 57.3 45.3 26% 221.4 197.2 12% Net operating
Slide 8: USA and Europe Fiber Cement Quarter and Full Year Summary
th USA AND EUROPE FIBER CEMENT 4 QUARTER AND FULL YEAR SUMMARY th 4 Quarter Results Full Year Result Net Sales Up 13% to US$325.1 million Net Sales Up 13% to US$1,276.5 million Sales Up 9% to 474.1 mmsf Sales Up 9% to 1,849.7 mmsf Volume Volume Average Up 3% to US$670 per msf Average Up 4% to US$675
Slide 9: USA and Europe Fiber Cement Quarterly EBIT and EBIT Margin
USA AND EUROPE FIBER CEMENT 1 Quarterly EBIT and EBIT Margin 90 35 80 30 70 25 60 20 50 40 15 30 10 20 5 10 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 EBIT EBIT Margin EBIT Margins remain within our 20% to 25% target range 1 Excludes asset impairment charges of US$14.3 million in 4 th quarter FY12, US$5
Slide 10: USA Fiber Cement Top Line Growth
USA FIBER CEMENT Top Line Growth 3,000 $1,300 2,800 $1,200 2,600 $1,100 2,400 $1,000 2,200 2,000 $900 1,800 $800 1,600 $700 1,400 $600 1,200 $500 1,000 $400 800 $300 600 400 $200 200 $100 0 $0 JH Volume Housing Starts JH Revenue Rolling 12 month average of seasonally adjusted estimate of housing sta
Slide 11: USA and Europe Fiber Cement Average Net Sales Price
USA AND EUROPE FIBER CEMENT 710 Average Net Sales Price 675 670 648 652 642 632 626 630 609 597 588 590 558 550 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Executing on pricing strategy … ~4% increase realized in FY15 PAGE 11
Slide 12: Asia Pacific Fiber Cement Quarter Summary and Full Year
ASIA PACIFIC FIBER CEMENT 4 th QUARTER SUMMARY AND FULL YEAR th 4 Quarter Results Full Year Result Net Sales Up 11% to A$109.2 million Net Sales Up 11% to A$434.5 million Sales Volume Up 7% to 114.0 mmsf Sales Volume Up 9% to 456.2 mmsf Average Price Up 4% to A$946 per msf Average Price Up 1% to A$9
Slide 13: FY15 Key Global Capex Projects
FY15 KEY GLOBAL CAPEX PROJECTS Full Year FY15 Project Description th Plant City, Florida - 4 sheet machine and ancillary facilities US$46.4 million rd Cleburne, Texas - 3 sheet machine and ancillary facilities US$24.7 million Carole Park, Queensland - Capacity expansion project US$36.2 million Tacom
Slide 14: Financial Review
FINANCIAL REVIEW Matt Marsh, CFO
Slide 15: Group Results
GROUP RESULTS • Earnings impacted by: • Higher sales volumes across all business units • Higher average sales prices across the USA and Europe and Asia Pacific Fiber Cement segments • Higher input costs for both the quarter and full year driven by market prices for raw materials • Improved plant per
Slide 16: Results for the 4th Quarter
RESULTS FOR THE 4 th QUARTER Summary Three Months Ended 31 March Net sales increased 9%, favorably impacted by: • Higher sales volumes US$ Millions Q4 '15 Q4 '14 % Change • Higher average net sales prices in local currencies in both the USA Net sales 411.3 376.4 9 and Europe and Asia Pacific Fiber C
Slide 17: Results for the 4th Quarter (continued)
RESULTS FOR THE 4 th QUARTER (continued) Summary Three Months Ended 31 March Asbestos adjustments reflects: • A US$111.3 million unfavorable movement in the underlying US$ Millions Q4 '15 Q4 '14 % Change actuarial valuation Net operating profit (loss) 27.7 (186.8) • Offset by a US$47.8 million favor
Slide 18: Results – Full Year
RESULTS – FULL YEAR Summary Full Year Ended 31 March Net sales increased 11%, favorably impacted by: US$ Millions FY15 FY14 % Change • Higher sales volumes; and • Higher average net sales prices in the USA and Europe and Net sales 1,656.9 1,493.8 11 Asia Pacific Fiber Cement segments Gross profit 57
Slide 19: Results – Full Year (continued)
RESULTS – FULL YEAR (continued) Full Year Ended 31 March Summary Asbestos adjustments reflect: US$ Millions FY15 FY14 % Change • A US$144.7 million favorable exchange rate difference as the AUD/USD exchange rate decreased 17% compared to a 12% Net operating profit 291.3 99.5 decrease in the pcp. Asb
Slide 20: Gross Profit - Group
GROSS PROFIT - GROUP 180.0 38.0 37.1% 160.0 37.0 $152.5 36.0 140.0 35.0 120.0 34.0 100.0 $101.8 33.0 80.0 32.0 31.2% 60.0 31.0 40.0 30.0 20.0 29.0 - 28.0 Q4 FY13 Q4 FY14 Q4 FY15 • Gross profit margins remain strong, expanding above primary demand growth rates • Price improvements continue as we exec
Slide 21: US Input Costs
US INPUT COSTS Quarterly US Input Costs Discussion: 1,200 10 9 • Input costs have generally trended higher than 1,000 8 the prior year 7 800 6 • The price of NBSK pulp reached its peak during 600 5 the year, but has trended down slightly during 4 the fourth quarter 400 3 2 • The cost of gas and elec
Slide 22: Segment EBIT – 4th Quarter and Full Year
SEGMENT EBIT – 4 th QUARTER and FULL YEAR USA and Europe Fiber Cement1 USA and Europe Fiber Cement EBIT summary: 350 300 285.9 • Quarter and full year EBIT increased by 39% and 21%, 250 237.0 200 respectively, when compared to pcp 162.5 Q4 EBIT 150 • The increase for the quarter was driven by favora
Slide 23: Segment EBIT – R&D and General Corporate Costs
SEGMENT EBIT – 4 th QUARTER and FULL YEAR Research and Development R&D summary: (30) (26.0) (26.0) (24.4) (25) • Continued broadly in line with historic trend (20) • Fluctuations reflect normal variation and timing in number of R&D (15) Q4 EBIT projects in process in any given period Full Year (10)
Slide 24: Changes in AUD vs. USD
CHANGES IN AUD vs. USD Earnings Balance Sheet • Unfavorable impact from translation of Asia Pacific results N/A • Favorable impact on corporate costs incurred in Australian dollars N/A • Favorable impact from translation of asbestos liability balance PAGE 24
Slide 25: Income Tax
INCOME TAX Three Months and Full Year Ended 31 March • 23.7% adjusted effective tax rate (ETR) for the year • Adjusted income tax expense and adjusted ETR increased Q4’15 Q4’14 FY15 FY14 due to a higher proportion of taxable earnings in jurisdiction Operating profit (loss) before taxes 7.6 (265.6) 3
Slide 26: Cashflow
CASHFLOW (US$ Millions) FY 2015 FY 2014 Change (%) • Net income increased US$191.8 million compared to prior year Net Income 291.3 99.5 1 1 Asbestos related (33.0) 194.1 • Cash flow from operations includes US$113.0 Annual AICF contribution (113.0) - million contribution to AICF paid in Q2’15 Deprec
Slide 27: Capex Spend Full Year FY15
CAPEX CAPEX Spend Full - Year FY15 • Continuing to invest in capacity expansion in the US and Australia • Construction on brownfield capacity projects nearing completion: $65.8 $103.1 • Plant City, FL • Cleburne, TX • Carole Park, Australia $107.3 • Opportunistic land purchases completed at Tacoma (
Slide 28: 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 expansion to support organic ~$590 million of bank Strong margins and growth facilities, 64% liquidity as of operating cash flows Q4’15 Strong g
Slide 29: Liquidity Profile
LIQUIDITY PROFILE 1 Debt Maturity Profile • Strong balance sheet position: $325 • US$67.0 million of cash • US$590 million of bank debt facilities $225 2 • US$325 million 8 year unsecured notes $150 $125 • 64% liquidity as of Q4’15 $50 $40 • As of Q4’15, we had net debt of US$330.5 million compared
Slide 30: New Zealand Weathertightness Claims
NEW ZEALAND WEATHERTIGHTNESS CLAIMS NZ Weathertightness Provision 25.0 20.0 15.0 10.0 5.0 - Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 • For the full year, New Zealand weathertightness moved from an expense of US$1.8 million to a benefit of US$4.3 million. The benefit was larg
Slide 31: Asbestos Compensation
ASBESTOS COMPENSATION SUMMARY Updated actuarial report completed as at 31 March 2015 Undiscounted and uninflated central estimate increased to US$1.566 billion from US$1.547 billion Total contributions of US$113.0 million were made to AICF during FY2015 from our FY2014 free cash flow From the time A
Slide 32: Funding Arrangements
FUNDING ARRANGEMENTS A$ millions (except where stated) FY15 FY14 Change in estimate – NPV is now A$2,143 million. Central Estimate – Undiscounted and Uninflated 1,565.9 1,546.6 Increased from A$1,870 million at 31 March 2014 Provision for claims handling costs of AICF 33.7 35.2 The A$273 million inc
Slide 33: Updated Actuarial Estimate
UPDATED ACTUARIAL ESTIMATE 7,000 6,000 5,000 4,000 3,000 3,586 3,604 3,131 3,079 3,169 3,027 3,124 2,811 2,906 2,805 2,743 2,000 2,661 2,525 2,513 2,143 1,782 1,870 1,000 1,536 1,685 1,568 1,555 1,537 1,580 1,694 1,517 1,355 1,426 1,478 0 30 Jun 31 Mar 30 June 31 Mar 30 Sept 31 Mar 31 Mar 31 Mar 31
Slide 34: Asbestos Fund – Pro Forma
ASBESTOS FUND – PRO FORMA Claims Data For the quarter and full year ended 31 March 2015, Full Year Ended 31 March we note the following related to asbestos claims: FY15 FY14 % Change • Claims received during the full year were 9% Claims received 665 608 (9) above actuarial estimates and the prior pe
Slide 35: FY2016 Key Planning Assumptions
FY2016 KEY PLANNING ASSUMPTIONS US & Europe Fiber Cement • Fiscal year 2016 addressable markets broadly in line with fiscal year 2015 growth rates, with some improvement in the US new construction compared to fiscal year 2015 1 • McGraw Hill Construction US Residential Starts forecasted to be betwee
Slide 36: Summary
SUMMARY • Group net sales increased 9% and 11% for the quarter and full year respectively, when compared to the prior corresponding periods • Group adjusted net operating profit increased 26% for the quarter and 12% for the full year when compared to the prior corresponding periods • Results driven
Slide 37: Questions
James Hardie QUESTIONS
Slide 38: Appendix
James Hardie APPENDIX
Slide 39: Financial Summary
FINANCIAL SUMMARY Three Months and Full Year Ended 31 March US$ Millions Q4 '15 Q4 '14 % Change FY15 FY14 % Change Net Sales USA and Europe Fiber Cement $ 325.1 $ 288.2 13 $ 1,276.5 $ 1,127.6 13 Asia Pacific Fiber Cement 86.2 88.2 (2) 380.4 366.2 4 Total Net Sales $ 411.3 $ 376.4 9 $ 1,656.9 $ 1,493
Slide 40: Key Ratios
KEY RATIOS Full Year Ended 31 March 2015 2014 2013 EPS (Diluted) 1 (US Cents) 50c 44c 32c Dividend Paid per share 88c 45c 43c 1 Return on Shareholders’Funds 14.6% 48.1% 34.9% Return on Capital Employed2 28.6% 23.8% 17.2% EBIT/ Sales (Adjusted EBIT margin)2 18.3% 16.9% 13.7% 1 Gearing Ratio 20.5% (19
Slide 41: EBITDA – Full Year
EBITDA – FULL YEAR Full Year Ended 31 March US$ Millions FY15 FY14 % Change EBIT USA and Europe Fiber Cement $ 285.9 $ 237.0 21 1 Asia Pacific Fiber Cement 89.8 82.9 8 Research & Development (26.0) (24.4) (7) General Corporate excluding asbestos and non-recurring stamp duty (45.7) (42.7) (7) Depreci
Slide 42: Net Interest Expense
NET INTEREST EXPENSE Three Months and Full Year Ended 31 March US$ Millions Q4 FY15 Q4 FY14 FY15 FY14 Gross interest expense (4.9) (0.9) (9.7) (3.9) Capitalized interest 1.1 - 1.7 - Interest income - 0.1 0.4 0.5 Realized loss on interest rate swaps (0.6) (0.1) (1.3) (0.6) Net interest expense exclud
Slide 43: Asbestos Cash Movements for Full Year Ended 31 March
ASBESTOS CASH MOVEMENTS FOR FULL YEAR ENDED 31 MARCH A$ millions AICF cash and investments - 31 March 2014 65.5 Contribution to AFFA by James Hardie 119.9 Insurance recoveries 33.2 Loan Drawdowns 17.7 Loan Repayments (51.0) Interest income, net 1.6 Claims paid (154.3) Operating costs (4.7) Other 1.0
Slide 44: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS This ManagementPresentation 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 Defin
Slide 45: 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 Consolidated Financial Statements
Slide 46: 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 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBIT margin – Adjusted EBIT and Adjusted EBIT margin are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these financial measures to pro
Slide 48: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted net operating profit – Adjusted net operating profit is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than net operating profit. Management has included this financial measure to provide investors with
Slide 49: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted diluted earnings per share – Adjusted diluted earnings per share is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than diluted earnings per share. Managementhas included this financial measure to provid
Slide 50: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted effective tax rate on earnings – Adjusted effective tax rate on earnings is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than effective tax rate. Management has included this financial measure to provi
Slide 51: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES 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 of profitability or liquidity. Not
Slide 52: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted selling, general and administrative expenses – Adjusted selling, general and administrative expenses is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than selling, general and administrative expenses. M
Slide 53: Q4 FY15 Management Presentation
Q4 FY15 MANAGEMENT PRESENTATION 21 May 2015
James Hardie Industries — Q4 FY2015 Earnings Presentation on 6ix