James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q2 FY2016 Earnings Presentation
38 slides from James Hardie Industries's earnings presentation, Nov 20, 2015
Slide 1: Q2 FY16 Management Presentation
Exhibit 99.4 Q2 FY16 MANAGEMENT PRESENTATION 19 November 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 and Executive VP - Corporate • Questions and Answers In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures i
Slide 5: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 6: Group Overview
GROUP OVERVIEW Adjusted Net Operating Profit Adjusted Diluted EPS 2nd Qtr Half Year 2nd Qtr Half Year US$65.3M Flat US$128.8M 12% US15 cents Flat US29cents 12% Adjusted EBIT Net Operating Cash Flow 2nd Qtr Half Year Half Year US$95.3M 12% US$185.0M 18% US$85.5M 151% Adjusted EBIT Margin % 2nd Qtr Ha
Slide 7: USA and Europe Fiber Cement Summary
USA AND EUROPE FIBER CEMENT SUMMARY Volume • Modest R&R and new construction market growth Q2'16 1H'16 • PDG tracked below our targeted level Net Sales US$361.9M US$698.9M 8% 6% Price Sales Volume (mmsf) 517.8 997.8 • Favorably impacted by 2-3% annual price 7% 5% increase Average Price US$685 per ms
Slide 8: USA and Europe Fiber Cement
USA AND EUROPE FIBER CEMENT 1 Quarterly EBIT and EBIT Margin 100 30 90 25 80 70 20 60 50 15 40 10 30 20 5 10 0 0 FY11 FY12 FY13 FY14 FY15 FY16 EBIT EBIT/Sales Half Year EBIT Margin up 390 bps to 25.6% 1 th rd th Excludes asset impairment charges of US$14.3 million in 4 quarter FY12, US$5.8 million i
Slide 9: USA and Europe Fiber Cement
USA AND EUROPE FIBER CEMENT Top Line Growth 1 Average Net Sales Price 710 3,000 $1,300 685 2,800 $1,200 675 2,600 2,400 $1,100 670 652 $1,000 648 2,200 $900 642 2,000 632 1,800 $800 626 1,600 $700 630 1,400 $600 1,200 $500 1,000 $400 800 590 $300 600 400 $200 200 $100 0 $0 550 FY10 FY11 FY12 FY13 FY
Slide 10: Asia Pacific Fiber Cement Summary
ASIA PACIFIC FIBER CEMENT SUMMARY Volume Q2'16 1H'16 • Favorable conditions in addressable markets Net Sales A$121.6M A$239.0M • Excluding the Australian Pipes business, volume 7% 11% increased for both the quarter and half year Sales Volume 115.6 mmsf 234.7 mmsf 1% 4% Sales Volume 115.6 mmsf 224.9
Slide 11: Financial Review
FINANCIAL REVIEW Matt Marsh, CFO and Executive VP – Corporate
Slide 12: Results – 2nd Quarter FY16
nd RESULTS – 2 QUARTER FY16 Net sales increased • Higher volume in both USA and Europe and Asia Three Months Ended 30 September 3 Pacific Fiber Cement segments US$ Millions Q2'16 Q2'15 % Change • Higher average net sales prices in local Net sales 450.2 440.4 2 currencies Gross profit 165.0 150.9 9 G
Slide 13: Results – Half Year FY16
RESULTS – HALF YEAR FY16 Net sales increased • Higher volume in both segments Half Year Ended 30 September • Higher average net sales prices in local currencies US$ Millions 1H'16 1H'15 % Change Gross profit margin increased 270 bps Net sales 878.5 857.2 2 • Improved performance across our US plants
Slide 14: Changes in AUD vs. USD
CHANGES IN AUD vs. USD 1.00 0.95 0.90 0.85 0.80 0.75 0.70 0.65 0.60 30 Sep 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sep 14 31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15 1 2 As Reported Excluding Translation Impact Translation Impact US$ Millions 1H'16 1H'15 % Change 1H'16 % Change 1H'16 % Change Net Sales 878.
Slide 15: US Input Costs
US INPUT COSTS Quarterly US Input Costs 1,200 10 9 • The price of NBSK pulp decreased by ~2% 1,000 8 1 compared to pcp 7 800 6 • Cement prices are up 7-8% compared to 600 5 pcp1 4 400 3 • Gas prices down 20+% compared to pcp1 2 200 1 • Electricity prices down slightly compared to 1 0 0 pcp Q2'13 Q3'
Slide 16: Segment EBIT – 2nd Quarter and Half Year FY16
nd SEGMENT EBIT – 2 QUARTER and HALF YEAR FY16 USA and Europe Fiber Cement USA and Europe Fiber Cement EBIT summary 200 178.9 • Quarter and 1H EBIT increased by 20% and 25%, 150 126.7 142.8 respectively when compared to pcp 100 89.4 Q2 EBIT • Primarily driven by plant performance and lower input 74.
Slide 17: Segment EBIT – 2nd Quarter and Half Year FY16
nd SEGMENT EBIT – 2 QUARTER and HALF YEAR FY16 Research and Development (15) R&D summary (13.6) (12.0) (11.6) • On strategy to invest between 2%-3% of sales (10) (6.8) (6.0) • Fluctuations reflect normal variation and timing in (5.5) Q2 EBIT (5) 1H EBIT number of R&D projects in process in any given
Slide 18: Income Tax
INCOME TAX Three Months and Half Year Ended 30 September 26.2% estimated adjusted effective tax rate (ETR) for the year Millions of US dollars Q2’16 Q2’15 1H'16 1H'15 • Adjusted income tax expense and adjusted ETR Operating profit before taxes 153.9 144.7 235.2 190.3 increased due to changes in geog
Slide 19: Cashflow
CASHFLOW 1 US$ Millions 1H'16 1H'15 Change (%) • Net income increased US$34.1 million compared to prior corresponding period Net Income 190.2 156.1 1 Adjustment for non-cash items (20.0) (4.4) • Increase in net operating cash flow Annual AICF contribution (62.8) (113.0) 44 • Lower contribution to AI
Slide 20: Capex
CAPEX CAPEX Spend Half - Year FY16 • 1H FY16 CAPEX spend of US$42.4 million decreased US$117.1 million compared to pcp • US capacity projects substantially complete $14.8 $27.6 • Carole Park capacity expansion project complete and commissioned during 1H FY16 Capacity Maintenance & Other • Maintenanc
Slide 21: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH 1 Strong Financial Management 2 Disciplined Capital Allocation 3 Liquidity and Funding Strong margins and Investing in R&D and capacity ~$590 million of bank facilities, operating cash flows expansion to support organic 44% liquidity as of Q2’16 growth Strong g
Slide 22: Liquidity Profile
LIQUIDITY PROFILE • Strong balance sheet: 1 • US$83.6 million of cash Debt Maturity Profile $325 • US$590 million of bank facilities • US$325 million 8 year senior unsecured $225 2,3 notes $150 • 44% liquidity as of Q2’16 $125 $50 • US$507.0 million net debt as of 1H FY16 $40 FY'16 FY'17 FY'18 FY'19
Slide 23: FY2016 Guidance
FY2016 GUIDANCE • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2016 is between US$252 million and US$270 million • Management expects full year Adjusted net operating profit to be between US$230 million and US$250 million
Slide 24: Questions
(@) vames Hardie QUESTIONS
Slide 25: Appendix
James Hardie APPENDIX
Slide 26: Financial Summary
FINANCIAL SUMMARY Three Months and Half Year Ended 30 September US$ Millions Q2'16 Q2'15 % Change 1H'16 1H'15 % Change Net Sales USA and Europe Fiber Cement $ 361.9 $ 335.4 8 $ 698.9 $ 656.9 6 Asia Pacific Fiber Cement 88.3 105.0 (16) 179.6 200.3 (10) Total Net Sales $ 450.2 $ 440.4 2 $ 878.5 $ 857.
Slide 27: Key Ratios
KEY RATIOS Half Year Ended 30 September 1H'16 1H'15 1H'14 1 EPS (Diluted) (US Cents) 29c 26c 24c 2 EBIT/ Sales (EBIT margin) 21.1% 18.2% 18.3% 1 33.1% 21.5% (9.5)% Gearing Ratio 2 14.8x 96.3x 66.8x Net Interest Expense Cover 2 15.5x 200.7x 77.9x Net Interest Paid Cover 3 1.7yrs 1.1yrs - Net Debt Pay
Slide 28: Asbestos Claims Data
ASBESTOS CLAIMS DATA • Claims received during the quarter and half year were 5% and 10% below actuarial estimates, respectively • Mesothelioma claims reported for the half year are Three Months and Half Year Ended 30 September 5% above non-seasonally adjusted expectations Q2'16 Q2'15 Change % 1H'16
Slide 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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. Management has included this financial measure to provi
Slide 35: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES Adjusted income tax expense and Adjusted effective tax rate – Adjusted income tax expenses and Adjusted effective tax rate is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than income tax expense and effective t
Slide 36: 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 37: 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 38: Q2 FY16 Management Presentation
Q2 FY16 MANAGEMENT PRESENTATION 19 November 2015
James Hardie Industries — Q2 FY2016 Earnings Presentation on 6ix