James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q3 FY2011 Earnings Presentation
36 slides from James Hardie Industries's earnings presentation, Mar 1, 2011
Slide 1: Investor Presentation February/March 2011
Investor Presentation February/March 2011
Slide 2: Disclaimer
Disclaimer This Management's Analysis of Results 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 United States Securities and Exchange Commission on Forms 20-F and 6-K, in the annual report
Slide 3: Agenda
3 Business overview USA and Europe Fibre Cement Asia Pacific Fibre Cement Group Outlook Summary Appendix Agenda 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 section o
Slide 4: James Hardie - a world leader in fibre cement
4 James Hardie - a world leader in fibre cement USA Fibre Cement Products Siding Soffit Fascia Trim Backerboard Asia Pacific Fibre Cement Products Residential siding Commercial exteriors Flooring Ceiling and internal walls
Slide 5: Fibre Cement - superior product performance
5 Fibre cement is more durable than wood and engineered wood, and looks and performs better than vinyl, and cheaper and quicker to build with than brick Vinyl Fire resistant Hail resistant Resists warping Resists buckling Colour lasts longer Dimensional stability Can be repainted ? ? ? ? ? ? ? ? ? ?
Slide 6: James Hardie: a growth focused company
6 Annual net sales US$1.2b Total assets US$1.3b Net debt US$57.8m Operations in North America, Asia Pacific and Europe 2,500 employees Market cap US$2.8b S&P/ASX 100 company NYSE listing Note: Net sales (annualised), total assets and net debt are at 31 December 2010. Total assets exclude asbestos co
Slide 7: 3rd Quarter FY11 Results - Group Overview
3rd Quarter FY11 Results - Group Overview The net operating result excluding asbestos, ASIC expenses and tax adjustments for the 3rd quarter ended December 2010 decreased 30% to US$21.0 million The 3rd quarter operating result reflects the seasonal slowdown and continuing difficult conditions in the
Slide 8: Business portfolio
8 Business portfolio At and for the nine months ended 31 December 2010 * EBIT - Excludes Research and Development EBIT and Asbestos-related items USA and Europe Fibre Cement Asia-Pacific Fibre Cement 67% 33% 75% 25% 70% 30% Volume Sales EBIT*
Slide 9: The USA business - largest fibre cement producer in North America
9 Flat Sheet Plants Capacity (mmsf) Plants operating at February 2011 Cleburne, Texas 500 Peru, Illinois 560 Plant City, Florida 300 Pulaski, Virginia 600 Reno, Nevada 300 Tacoma, Washington 200 Waxahachie, Texas 360 Plants suspended at February 2011 Blandon, Pennsylvania1 200 Fontana, California1 1
Slide 10: US siding market - Exterior products
US siding market - Exterior products Note: 1) Market and share figures reflect siding only; exclude fascia, soffits & trim; data reflects Repair & Remodel and New Construction markets, combined. 2) Siding volumes exclude waste factors, a change from previously reported numbers. Sources: NAHB Builder
Slide 11: USA and Europe Fibre Cement EBIT and EBIT Margin
USA and Europe Fibre Cement * Excludes impairment charges of US$45.6 million in Q4 FY08 11 EBIT and EBIT Margin* EBIT EBIT Margin
Slide 12: USA Fibre Cement housing starts
USA Fibre Cement Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 12
Slide 13: Average Net Sales Price
Average Net Sales Price US$ per MSF USA and Europe Fibre Cement US$656 13
Slide 14: US housing starts data provide little evidence that a recovery is underway
14 US housing starts data provide little evidence that a recovery is underway Total USA Housing Starts - US Census Bureau
Slide 15: Response to US housing downturn
15 Focus on primary demand growth and cost management Business re-set to balance supply and demand production suspended at Blandon PA (October 2007), Summerville SC plants and Fontana CA (November 2008) corporate-wide review of activities, projects and cost-saving opportunities changes made to SG&A
Slide 16: Product Leadership Example - ColorPlus
16 ColorPlus(r) Collection (pre-painted siding and trim): Driving growth against vinyl in Northern USA Launched in Western and Southern USA FY07 Higher quality products with higher revenue stream Strategy designed to reduce 'on the wall' cost and close gap with vinyl siding Supply of pre-painted ext
Slide 17: Product Leadership Example - HardieZone System
17 17 7th Generation versus 2nd Generation generic fibre cement The HardieZone(tm) System represents a logical extension of Hardie technology Product Leadership Example - HardieZone(tm) System
Slide 18: Asia Pacific Fibre Cement
18 Five manufacturing plants in Asia Pacific Net sales US$349.7m EBIT US$80.0m Higher value differentiated products Lower delivered cost Shift to growth model Asia Pacific Fibre Cement Asia Pacific manufacturing facilities. Net Sales and EBIT as at 31 December 2010 and annualised.
Slide 19: Asia Pacific Fibre Cement - examples
19 Asia Pacific Fibre Cement - examples General purpose flooring Exterior cladding Philippines Australia New Zealand Australia Ceilings and partitions Interior walls
Slide 20: Group Strategy
20 Group Strategy Overall Group Strategy The company remains focused on: Delivering primary demand growth Continuing to shift to a higher value product mix Achieving its zero to landfill objective Building the operational strength and flexibility to deliver and sustain earnings in a low demand envir
Slide 21: Group Outlook
Group Outlook 21 United States Market environment likely to remain challenging No evidence that a recovery in the residential housing construction market is underway Pressure on input costs - particularly pulp While unemployment remains high and consumer confidence low, the company remains wary abou
Slide 22: Global strategy
22 Aggressively grow demand for our products in targeted market segments Grow our overall market position while defending our share in existing market segments Offer products with superior value to that of our competitors Introduce differentiated products to deliver a sustainable competitive advanta
Slide 23: Summary
We have a strong, well-established, growth-focused 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 protected technology Ongoing commitment to Research and Development
Slide 24: Appendix
@sames Hardie Appendix
Slide 25: Legacy Issues Update
Legacy Issues Update 25 ATO - 1999 Disputed Amended Assessment James Hardie's initial appeal dismissed in September 2010 Appeal to full bench of the Federal Court expected to be heard in 2011 Charge of US$345.2 million effective 1 September 2010 (no impact to net operating cash flow for the nine mon
Slide 26: Key Ratios
Key Ratios 1 Excludes asbestos adjustments, AICF SG&A expenses, AICF interest income, gain or impairment on AICF investments, tax benefits related to asbestos adjustments, ASIC expenses and tax adjustments 2 Excludes asbestos adjustments, AICF SG&A expenses and ASIC expenses 3 EPS, Dividend Paid per
Slide 27: USA and Europe Fibre Cement Primary Growth Performance
USA and Europe Fibre Cement Primary Growth Performance All market and market share figures are management estimates. 27
Slide 28: Guidance
28 Guidance Management anticipates FY11 full year earnings excluding asbestos, ASIC expenses and tax adjustments to be in the range of US$105 million to US$115 million Management cautions the outlook remains uncertain with US operating environment remaining challenging, Australian conditions moderat
Slide 29: Endnotes
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 Statements. Definitions
Slide 30: Financial Ratios
Financial Ratios Gearing Ratio - Net debt (cash) divided by net debt (cash) plus shareholders' equity. Net interest expense cover - EBIT divided by net interest expense. Net interest paid cover - EBIT divided by cash paid during the period for interest, net of amounts capitalised. Net debt payback -
Slide 31: Non-US GAAP Financial Measures
Non-US GAAP Financial Measures EBIT and EBIT margin excluding asbestos and ASIC expenses - EBIT and EBIT margin excluding asbestos and ASIC expenses are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. James Hardie has
Slide 32: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Net operating profit excluding asbestos, ASIC expenses and tax adjustments - Net operating profit excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningfu
Slide 33: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments - Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be mo
Slide 34: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Effective tax rate excluding asbestos and tax adjustments - Effective tax rate excluding asbestos and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than effective tax rate. The com
Slide 35: Non-US GAAP Financial Measures (continued)
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 of profitability or liq
Slide 36: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) General corporate costs excluding ASIC expenses and domicile change related costs - General corporate costs excluding ASIC expenses and domicile change related costs is not a measure of financial performance under US GAAP and should not be considered to be
James Hardie Industries — Q3 FY2011 Earnings Presentation on 6ix