James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2014)
21 slides from James Hardie Industries's investor day presentation, Sep 24, 2014
Slide 1: Manufacturing Capacity
MANUFACTURING CAPACITY Tyler Hart 24 September 2014 Exhibit 99.2
Slide 2: Disclaimer
2 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, invitatio
Slide 3: Forward-looking statements (continued)
3 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 statements but are n
Slide 4: Background
4 BACKGROUND CAPACITY DIRECTIONAL CONCEPTS – LOGIC – CURRENT PLAN AND FORECAST – NEXT STATE OF MANUFACTURING TACTICAL REVIEW OF CAPITAL PROJECT AGENDA / KEY TAKE AWAYS
Slide 5: Capacity utilization logic – 85% or 95%
5 Utilization concept allows for both a short and long term sheet machine start up capacity decision while allowing flexibility to act accordingly inside the network. CAPACITY UTILIZATION LOGIC – 85% OR 95%
Slide 6: 95% Plan – Short Term
6 95% Plan – 3 to 6 Months out (Short Term) CAPACITY UTILIZATION LOGIC – 85% OR 95% History / Experience on ramp up and utilization Ramp up effects design and utilization needs
Slide 7: 85% Plan – Long Term
7 85% Plan – 16 + Months out (Long Term) CAPACITY UTILIZATION LOGIC – 85% OR 95% Start Construction Start Up Ramp Up History of Growth Risk adverse – Be early rather than late
Slide 8: Two Key Inputs to Plan
8 Two Key Inputs to Plan James Hardie Growth – R&R Growth Rate – New Construction Starts – James Hardie Market Growth Results – US house starts behind plan – James Hardie Market Growth at plan CAPACITY PLANNING LOGIC – LONG TERM Dodge New Construction Forecast FY14 – FY19
Slide 9: Determines Ideal Number of Plants
9 Determines Ideal # of plants Long Term Cost curve = + Fixed + Freight + Capital + Inventory CAPACITY PLANNING LOGIC Inflection point indicates total # of plants – New Additions Summerville Tacoma Green Fields
Slide 10: Background
10 BACKGROUND CAPACITY DIRECTIONAL CONCEPTS – LOGIC – CURRENT PLAN AND FORECAST – NEXT STATE OF MANUFACTURING TACTICAL REVIEW OF CAPITAL PROJECT AGENDA / KEY TAKE AWAYS
Slide 11: Capacity Plan FY14 and FY15 Guidance
FY14 PLAN FY15 Difference to Plan 11 CAPACITY PLAN FY14 AND FY15 GUIDANCE FY 14 No Additional Capacity Started Up SM1 Wax FY 15 Fontana SM1/SM2 and Cleburne Only need SM2 Fontana FY16 Cleburne SM3 and PC SM 4 and Trim AC Cleburne Start Up Dependent on Demand Schedule FY17 Tacoma SM2 and Summerville
Slide 12: Capacity Sensitivity
12 CAPACITY SENSITIVITY Evaluated demand plan with range of ±10% – Capacity changes are not influenced by small demand swings – Lower demand pushes out 1 yr – Higher demand pulls decisions sooner or run above utilization target
Slide 13: Capacity Efficiency
13 CAPACITY EFFICIENCY Capital $ / Square Feet Produced Revenue and/or Margin vs Capital $ Good measurement for plank and panel line Good measurement of Green Field vs Brown Field. Poor Measurement of specialty products impact on both capital cost and revenue Takes into account the impact of higher
Slide 14: Capacity Concepts Summary
14 CAPACITY CONCEPTS SUMMARY Planning is a sliding scale Capacity additions are more weighted today toward specialty products Capacity additions leads us to optimization to ensure return on investment
Slide 15: Background
15 BACKGROUND CAPACITY DIRECTIONAL CONCEPTS – LOGIC – CURRENT PLAN AND FORECAST – NEXT STATE OF MANUFACTURING TACTICAL REVIEW OF CAPITAL PROJECT AGENDA / KEY TAKE AWAYS
Slide 16: Next State of Manufacturing
16 NEXT STATE OF MANUFACTURING Optimization of capital cost Governmental Influences : Water, Air, Building Current Non Compressible Influences : Water Discharge, Curing, Raw Materials, Current Compressible Influences : Machine output, building utilization/line design, labor utilization
Slide 17: Example of Line Design, Building Utilization, Machine Output
Plant 1 Plant 2 17 NEXT STATE OF MANUFACTURING Edge Treatment Yes Yes Top Treatment Yes No Coating Process 1 Coater 2 Coaters Drying Process 1 Dryer 2 Dryers Automatic On Loader Yes No Sealers No Yes Building Space (ft^2) 30,000 100,000 # Critical Pieces of Equipment Example of Line Design, Building
Slide 18: Background
18 BACKGROUND CAPACITY DIRECTIONAL CONCEPTS – LOGIC – CURRENT PLAN AND FORECAST – NEXT STATE OF MANUFACTURING TACTICAL REVIEW OF CAPITAL PROJECT AGENDA / KEY TAKE AWAYS
Slide 19: Capacity Update
19 CAPACITY UPDATE Capacity expansion plans aligned to current forecast and our target utilization rate – Fontana: Ramp-up currently on track – Plant City Trim: Construction complete Q4FY15 – Cleburne: Construction complete Q1FY16 – Next Capacity Addition: – Summerville FY17 – Future Capacity Additi
Slide 20: Summary
20 Capacity planning is sliding scale relative to market and share growth but base thought process is the same. The forecast has been reduced in response to slower than expected US housing recovery Capacity headwinds: – Construction cost increase – offset partially by Brown Field, and Design efficie
Slide 21: Questions
QUESTIONS
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