James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q3 FY2015 Earnings Presentation
50 slides from James Hardie Industries's earnings presentation, Feb 23, 2015
Slide 1: Q3 FY15 Management Presentation
Exhibit 99.4 Q3 FY15 MANAGEMENT PRESENTATION 20 February 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 se
Slide 5: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 6: Key Themes
KEY THEMES • Group net sales increased 10% and 11% for the quarter and nine months, respectively, compared to pcp¹ • Group adjusted net operating profit increased 11% for the quarter and 8% for the nine months compared to pcp¹ • Higher volumes across our USA and Europe and Asia Pacific Fiber Cement
Slide 7: Group Overview
GROUP OVERVIEW Three and Nine Months Ended 31 December 9 Months 9 Months Q3'15 Q3'14 Change Change FY15 FY14 Adjusted EBIT (US$ millions) 66.9 55.2 21% 223.2 195.4 14% Adjusted EBIT Margin % 17.2 15.6 1.6 pts 17.9 17.5 0.4 pts Adjusted Net Operating Profit 48.6 43.7 11% 164.1 152.0 8% Net operating
Slide 8: USA and Europe Fiber Cement Quarter Summary
rd USA AND EUROPE FIBER CEMENT 3 QUARTER SUMMARY rd 3 Quarter Results Nine Months Result Net Sales Up 12% to US$294.5 million Net Sales Up 13% to US$951.4 million Sales Up 10% to 426.9 mmsf Sales Up 9% to 1,375.6 mmsf Volume Volume Average Up 2% to US$675 per msf Average Up 4% to US$678 per msf Pric
Slide 9: USA and Europe Fiber Cement Quarterly EBIT and EBIT Margin
USA AND EUROPE FIBER CEMENT 1 Quarterly EBIT and EBIT Margin 80 35 70 30 60 25 50 20 40 15 30 10 20 10 5 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 EBIT EBIT Margin PAGE 9
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 678 670 652 648 642 632 626 630 609 597 588 590 558 550 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 YTD FY15 PAGE 11
Slide 12: Asia Pacific Fiber Cement Quarter Summary
rd ASIA PACIFIC FIBER CEMENT 3 QUARTER SUMMARY rd 3 Quarter Results Nine Months Result Net Sales Up 4% to US$93.9 million Net Sales Up 6% to US$294.2 million Sales Volume Up 16% to 116.8 mmsf Sales Volume Up 10% to 342.2 mmsf Average Price Down 4% to A$929 per msf Average Price FLAT At A$940 per msf
Slide 13: FY15 Global Capex Spend and Key Projects
FY15 GLOBAL CAPEX SPEND AND KEY PROJECTS Nine Months FY15 Project Description Spend th Plant City, Florida - 4 sheet machine and ancillary facilities US$38.5 million rd Cleburne, Texas - 3 sheet machine and ancillary facilities US$19.9 million Carole Park, Queensland - Capacity expansion project US$
Slide 14: FY2015 Outlook and Guidance
FY2015 OUTLOOK AND GUIDANCE USA and Europe Fiber Cement Outlook • The Company expects our performance in the fourth quarter of fiscal 2015 to be consistent with our results for the first nine months of fiscal 2015 • However, there is uncertainty due to the continued variability in the short term eco
Slide 15: Financial Review
FINANCIAL REVIEW Matt Marsh, CFO
Slide 16: Group Results
GROUP RESULTS • Earnings impacted by: • Higher sales volumes across all business units • Higher average sales prices across the USA and Europe Fiber Cement segment • Higher input costs for both the quarter and nine months • Higher production costs for the nine months across our network, partially mi
Slide 17: Results for the 3rd Quarter
rd RESULTS FOR THE 3 QUARTER Summary Three Months Ended 31 December Net sales increased 10%, favorably impacted by: • Higher sales volumes; and US$ Millions Q3 '15 Q3 '14 % Change • Higher average net sales price in the USA and Europe Fiber Net sales 388.4 353.2 10 Cement segment Gross profit 135.2
Slide 18: Results for the Quarter (continued)
rd RESULTS FOR THE 3 QUARTER (continued) Summary Three Months Ended 31 December Asbestos adjustments were due to: • 7% change in the AUD / USD exchange rate from beginning to US$ Millions Q3 '15 Q3 '14 % Change ending balance sheet date for the period compared to a 4% change Net operating profit 107
Slide 19: Results – Nine Months
RESULTS – NINE MONTHS Summary Nine Months Ended 31 December Net sales increased 11%, favorably impacted by: 9 Months 9 Months • Higher sales volumes; and US$ Millions % Change FY15 FY14 • Higher average net sales prices in local currencies Net sales 1,245.6 1,117.4 11 Gross profit margin increased 1
Slide 20: Results – Nine Months (continued)
RESULTS – NINE MONTHS (continued) Nine Months Ended 31 December Summary Asbestos adjustments were due to: 9 Months 9 Months • 11% change in the AUD / USD exchange rate from the beginning US$ Millions % Change FY15 FY14 to the ending balance sheet date compared to a 14% change in Net operating profit
Slide 21: Gross Profit - Group
GROSS PROFIT - GROUP 160.0 36.0 34.8% 140.0 35.0 $135.2 34.0 120.0 33.0 100.0 $96.2 32.0 80.0 31.0 30.0% 60.0 30.0 40.0 29.0 20.0 28.0 - 27.0 Q3 FY13 Q3 FY14 Q3 FY15 • Gross profit continues to remain strong, and consistent with the prior three year trend • Price has improved as we continue to execu
Slide 22: US Input Costs
US INPUT COSTS Discussion: • Input costs are up significantly over the prior year, and beginning to flatten out or decrease • The price of NBSK pulp remains near a three- year peak • The cost of gas and electric for industrial users decreased to slightly above its historical four year average • We a
Slide 23: Segment EBIT – Quarter and Nine Months
rd SEGMENT EBIT – 3 QUARTER and NINE MONTHS US & Europe Fiber Cement US and Europe Fiber Cement EBIT summary: 250 206.3 200 179.8 • Quarter and nine month EBIT increased by 20% and 15%, 150 124.7 respectively, when compared to pcp Q3 EBIT 100 9 Months • The increase was driven by volume and price, p
Slide 24: Segment EBIT – R&D and General Corporate Costs
rd SEGMENT EBIT – 3 QUARTER and NINE MONTHS Research and Development R&D summary: (25) (19.1) (19.7) (20) (18.0) • Continued broadly inline with historic trend (15) • Fluctuations reflect normal variation and timing in number of Q3 EBIT (10) 9 Months R&D projects in process at any given period (6.8)
Slide 25: Changes in AUD vs. USD
CHANGES IN AUD vs. USD Earnings Balance Sheet • Unfavorable impact from translation of Asia Pacific results N/A • Favorable impact on corporate costs incurred in Australian dollars N/A • Favorable impact from translation of asbestos liability balance PAGE 25
Slide 26: Income Tax
INCOME TAX Three and Nine Months ended 31 December • 23.6% estimated adjusted effective tax rate (ETR) for the year 9 Months 9 Months Q3’15 Q3’14 FY15 FY14 • Adjusted income tax expense and adjusted ETR Operating profit before taxes 124.7 95.6 315.0 320.2 increased due to changes in geographical mix
Slide 27: Cashflow
CASHFLOW 9 Months FY 9 Months FY (US$ Millions) Change (%) • Adjusted EBIT increased US$27.8 million 2015 2014 compared to pcp EBIT 263.6 286.3 (8) 1 1 (94.8) (129.5) (27) Asbestos related • Cash flow from operations includes US$113.0 Annual AICF contribution (113.0) - million contribution to AICF p
Slide 28: CAPEX
CAPEX CAPEX Spend 9 Months - FY15• Continuing to invest in capacity expansion in the U.S. and Australia • Construction on brownfield capacity projects nearing completion: $65.4 $86.7 • Plant City, FL • Cleburne, TX • Carole Park, Australia $88.9 • Opportunistic land purchases completed at Tacoma (US
Slide 29: 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 Strong margins and ~$590 million of bank expansion to support organic facilities, 44% liquidity as operating cash flows growth of Q3’15 Strong g
Slide 30: Liquidity Profile
Liquidity Profile Debt Maturity Profile1 • Strong balance sheet position: $225 • $62.3 million of cash • $590 million of bank debt facilities $150 • 44% liquidity as of Q3’15 $125 • As of Q3’15, we had net debt of US$327.7 million $50 compared to net cash of US$167.5million at Q4’14 $40 $0 • Subsequ
Slide 31: 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 • For the nine months, New Zealand weathertightness moved from an expense of US$0.7 million to a benefit of US$4.2 million. The benefit was largely
Slide 32: Asbestos Fund – Proforma (unaudited)
ASBESTOS FUND – PROFORMA (unaudited) Claims Data • For the quarter and nine months ended 31 December 2014, we note the following related to asbestos claims: A$ millions • Claims received during both Q3’15 and nine months AICF cash and investments -31 March 2014 65.5 were 11% above actuarial estimate
Slide 33: Summary
SUMMARY • Group net sales increased 10% and 11% for the quarter and nine months respectively, when compared to the prior corresponding periods • Group adjusted net operating profit increased 11% for the quarter and 8% for the nine months when compared to the prior corresponding periods • Higher volu
Slide 34: Questions
(@) sames Hardie QUESTIONS
Slide 35: Appendix
(@) sames Hardie APPENDIX
Slide 36: Financial Summary
FINANCIAL SUMMARY Three and Nine Months ended 31 December 9 Months 9 Months US$ Millions Q3 '15 Q3 '14 % Change % Change FY15 FY14 Net Sales USA and Europe Fiber Cement $ 294.5 $ 262.6 12 $ 951.4 $ 839.4 13 Asia Pacific Fiber Cement 93.9 90.6 4 294.2 278.0 6 Total Net Sales $ 388.4 $ 353.2 10 $ 1,24
Slide 37: Key Ratios
KEY RATIOS 9 Months Ended 31 December 9 Months FY15 9 Months FY14 9 Months FY13 1 EPS (Diluted) (US Cents) 37c 34c 25c 2 EBIT/ Sales (EBIT margin) 17.9% 17.5% 14.5% 1 Gearing Ratio 20.3% (13.4)% (13.9)% 2 Net Interest Expense Cover 49.6x 63.0x 43.6x 2 Net Interest Paid Cover 106.3x 65.1x 110.8x Net
Slide 38: EBITDA – Quarter
rd EBITDA – 3 QUARTER Three Months ended 31 December US$ Millions Q3'15 Q3'14 % Change EBIT USA and Europe Fiber Cement $ 63.5 $ 53.1 20 1 Asia Pacific Fiber Cement 23.5 21.3 10 Research & Development (6.1) (6.4) 5 General corporate excluding asbestos and ASIC expenses (14.0) (12.8) (9) Depreciation
Slide 39: EBITDA – Nine Months
EBITDA – NINE MONTHS Nine Months ended 31 December 9 Months 9 Months US$ Millions % Change FY15 FY14 EBIT USA and Europe Fiber Cement $ 206.3 $ 179.8 15 1 Asia Pacific Fiber Cement 69.9 64.5 8 Research & Development (19.7) (18.0) (9) General corporate excluding asbestos and ASIC expenses (33.3) (30.
Slide 40: Net Interest (Expense) Income
NET INTEREST (EXPENSE) INCOME Three and Nine Months Ended 31 December 9 Months 9 Months US$ Millions Q3 FY15 Q3 FY14 FY15 FY14 Gross interest expense $ (2.1) $ (1.0) $ (4.8) $ (3.0) Capitalised interest 0.4 0.6 Interest income 0.1 0.2 0.4 0.4 Realised loss on interest rate swaps (0.4) (0.2) (0.7) (0
Slide 41: 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 42: 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 Condensed Consolidated Financial
Slide 43: 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 44: Non-US GAAP Financial Measures
NON-US GAAP FINANICAL 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 45: Non-US GAAP Financial Measures
NON-US GAAP FINANICAL 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 46: Non-US GAAP Financial Measures
NON-US GAAP FINANICAL 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 47: Non-US GAAP Financial Measures
NON-US GAAP FINANICAL 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 48: Non-US GAAP Financial Measures
NON-US GAAP FINANICAL 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 49: Non-US GAAP Financial Measures
NON-US GAAP FINANICAL 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 50: Q3 FY15 Management Presentation
Q3 FY15 MANAGEMENT PRESENTATION 20 February 2015
James Hardie Industries — Q3 FY2015 Earnings Presentation on 6ix