James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q4 FY2012 Earnings Presentation
59 slides from James Hardie Industries's earnings presentation, May 22, 2012
Slide 1: Q4 FY12 Management Presentation
Exhibit 99.4 Q4 FY12 MANAGEMENT PRESENTATION 21 May 2012
Slide 2: Disclaimer
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, invitation
Slide 3: Agenda
AGENDA Overview and Operating Review – Louis Gries, CEO Financial Review – Russell Chenu, 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 secti
Slide 4: Operating Review
OPERATING REVIEW Louis Gries, CEO
Slide 5: Group Overview
1 GROUP OVERVIEW The net operating result excluding asbestos, ASIC expenses, asset impairments and tax adjustments for the full year increased 20% to US$140.4 million The 4th quarter and full year results include an income tax benefit of US$485.2 million resulting from RCI’s successful appeal of the
Slide 6: USA and Europe Fibre Cement – 4th Quarter Result
USA AND EUROPE FIBRE CEMENT 1 4th Quarter Result Net Sales up 12% to US$220.7 million Sales Volume up 14% to 351.2 mmsf Average Price down 2% to US$628 per msf 2 EBIT down 5% to US$36.4 million EBIT Margin 2 down 3.0 pts to 16.5% 1 Comparisons are of the 4th quarter of the current fiscal year versus
Slide 7: USA and Europe Fibre Cement – Full Year Result
USA AND EUROPE FIBRE CEMENT 1 Full Year Result Net Sales up 6% to US$862.0 million Sales Volume up 7% to 1,331.8 mmsf Average Price down 1% to US$647 per msf 2 EBIT up 1% to US$162.7 million EBIT Margin 2 down 0.8 pts to 18.9% 1 Comparisons are of the full year of the current fiscal year versus the
Slide 8: USA and Europe Fibre Cement – Average Net Sales Price
USA AND EUROPE FIBRE CEMENT Average Net Sales Price (US dollars) 680 US$647 640 600 560 520 480 440 400 360 FY06 FY07 FY08 FY09 FY10 FY11 FY12 8
Slide 9: USA and Europe Fibre Cement – EBIT and EBIT Margin
USA AND EUROPE FIBRE CEMENT EBIT and EBIT Margin 1 140 35 120 30 100 25 80 20 60 15 40 10 20 5 0 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 EBIT EBIT Margin 1 Excludes impairment charges of US$45.6 million in Q4 FY08 and US$14.3 million in Q4 FY12 9
Slide 10: USA and Europe Fibre Cement – Primary Growth Performance
USA AND EUROPE FIBRE CEMENT Primary Growth Performance 30% 20% 10% 0% -10% -20% -30% -40% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 %JHBP Growth (sdft) NC/R&R Growth Rolling 4Qtr - JHBP Growth (sdft) Ro
Slide 11: Asia Pacific Fibre Cement – 4th Quarter Result
ASIA PACIFIC FIBRE CEMENT 1 4th Quarter Result Net Sales down 2% to US$88.6 million Sales Volume down 8% to 94.1 mmsf Average Price up 1% to A$891 per msf EBIT down 26% to US$14.3 million EBIT Margin down 5.3 pts to 16.1% 1 Comparisons are of the 4th quarter of the current fiscal year versus the 4th
Slide 12: Asia Pacific Fibre Cement – Full Year Result
ASIA PACIFIC FIBRE CEMENT 1 Full Year Result Net Sales up 6% to US$375.5 million Sales Volume down 4% to 392.3 mmsf Average Price flat at A$916 per msf EBIT up 1% to US$80.3 million EBIT Margin down 1.1 pts to 21.4% 1 Comparisons are of the full year of the current fiscal year versus the full year o
Slide 13: Group 4th Quarter Summary
th 1 GROUP 4QUARTER SUMMARY USA and Europe Fibre Cement results reflected: Demand stabilising at levels above last year Lower average net sales price and higher fixed manufacturing and organisational costs, partially offset by higher sales volume, some lower input costs and improved plant performanc
Slide 14: Total USA Housing Starts – US Census
TOTAL USA HOUSING STARTS US CENSUS – U.S. Housing Starts Calendar Quarters Source: US Census Bureau - New Privately-Owned Housing Units Started 14
Slide 15: Group Outlook
GROUP OUTLOOK United States While some encouraging industry data points emerged during the final quarter of the 2012 financial year, the company is planning for the market to be up only slightly over the prior year Pulp and freight costs are expected to remain at elevated levels when compared to his
Slide 16: Group Outlook – Key Priorities
GROUP OUTLOOK Key Priorities The company’s key medium term priorities in the US are: Grow primary demand and exterior cladding market share – with focus on repair and remodel and non-metro markets Increase market penetration of our ColorPlus ® and Trim products Continue to rollout our job pack distr
Slide 17: Financial Review
FINANCIAL REVIEW Russell Chenu, CFO
Slide 18: Overview
OVERVIEW Highlights Strong net operating cash flow and the favourable ATO decision has enabled a further reduction in net debt from US$40.4 million at 31 March 2011 to a net cash position of US$265.4 million at 31 March 2012 1 10 February 2012 decision of the High Court of Australia to deny ATO’s ap
Slide 19: Consequences of Changes A$ versus US$
CONSEQUENCES OF CHANGES A$ VERSUS – US$ Earnings Balance Sheet Favourable impact from translation of Asia Pacific results – Q4 FY12 vs Q4 FY11 N/A Unfavourable impact on corporate costs incurred in Australian dollars – Q4 FY12 vs Q4 FY11 N/A Unfavourable impact from translation of asbestos liability
Slide 20: Results Q4
RESULTS Q –4 US$ Millions Q4 '12 Q4 '11 % Change Net sales 309.3 288.4 7 Gross profit 95.6 96.9 (1) SG&A expenses (48.9) (43.0) (14) Research & development expenses (8.8) (8.4) (5) Impairment charge (14.3) - - Asbestos adjustments (31.0) 5.3 - EBIT (7.4) 50.8 - Net interest expense (3.7) (1.1) - Oth
Slide 21: Results Q4 (Continued)
RESULTS Q – 4 (CONTINUED) US$ Millions Q4 '12 Q4 '11 % Change Net operating profit (loss) 480.7 (1.8) - Asbestos: Asbestos adjustments 31.0 (5.3) - 1 Other asbestos (0.6) (1.4) 57 Tax (benefit) expense related to asbestos (2.6) 6.3 - adjustments ASIC related expenses 0.1 0.7 (86) Asset impairments (
Slide 22: Results Full Year
RESULTS F –ULL YEAR US$ Millions FY 2012 FY 2011 % Change Net sales 1,237.5 1,167.0 6 Gross profit 407.0 391.9 4 SG&A expenses (191.0) (173.4) (10) Research & development expenses (30.4) (28.0) (9) Impairment charge (14.3) - - Asbestos adjustments (15.8) (85.8) 82 EBIT 155.5 104.7 49 Net interest ex
Slide 23: Results Full Year (Continued)
RESULTS F –ULL YEAR (CONTINUED) US$ Millions FY 2012 FY 2011 % Change Net operating profit (loss) 604.3 (347.0) - Asbestos: Asbestos adjustments 15.8 85.8 (82) Other asbestos1 (0.5) (2.1) 76 Tax (benefit) expense related to asbestos (2.7) 6.9 - adjustments ASIC related expenses (recoveries) 1.1 (7.6
Slide 24: Segment Net Sales Q4
SEGMENT NET SALES Q4– US$ Millions Q4 '12 Q4 '11 % Change USA and Europe Fibre Cement 220.7 197.7 12 Asia Pacific Fibre Cement 88.6 90.7 (2) Total 309.3 288.4 7 24
Slide 25: Segment Net Sales Full Year
SEGMENT NET SALES FULL – YEAR US$ Millions FY 2012 FY 2011 % Change USA and Europe Fibre Cement 862.0 814.0 6 Asia Pacific Fibre Cement 375.5 353.0 6 Total 1,237.5 1,167.0 6 25
Slide 26: Segment EBIT – Q4
SEGMENT EBIT– Q4 US$ Millions Q4 ’12 Q4 ’11 % Change USA and Europe Fibre Cement 36.4 38.5 (5) Asia Pacific Fibre Cement 14.3 19.4 (26) 1 Research & development (5.5) (6.1) 10 Total segment EBIT excluding asset impairments 45.2 51.8 (13) General corporate excluding asbestos and ASIC expenses (6.7) (
Slide 27: Segment EBIT – Full Year
SEGMENT EBIT– FULL YEAR US$ Millions FY 2012 FY 2011 % Change USA and Europe Fibre Cement 162.7 160.3 1 Asia Pacific Fibre Cement 80.3 79.4 1 Research & development 1 (20.7) (20.1) (3) Total segment EBIT excluding asset impairments 222.3 219.6 1 General corporate excluding asbestos and ASIC expenses
Slide 28: Income Tax Expense Q4
INCOME TAX EXPENSE Q4– Q4 '12 Q4 '11 US$ Millions Operating (loss) profit before income taxes (7.6) 50.6 Asbestos: Asbestos adjustments 31.0 (5.3) Other asbestos 1 (0.6) (1.4) Asset impairments 14.3 - Operating profit before income taxes excluding asbestos and asset impairments 37.1 43.9 Income tax
Slide 29: Income Tax Expense Full Year
INCOME TAX EXPENSE FULL – YEAR US$ Millions FY 2012 FY 2011 Operating profit before income taxes 151.1 96.6 Asbestos: Asbestos adjustments 15.8 85.8 1 (0.5) (2.1) Other asbestos Asset impairments 14.3 - Operating profit before income taxes excluding asbestos and asset impairments 180.7 180.3 Income
Slide 30: Cashflow
CASHFLOW 1 US$ Millions FY 2012 FY 2011 EBIT 155.5 104.7 Non-cash items: Asbestos adjustments 15.8 85.8 Other non-cash items 73.0 51.0 Net working capital movements 82.1 (21.4) Cash Generated By Trading Activities 326.4 220.1 Tax refunds (payments), net 238.1 (38.7) Change in other non-trading asset
Slide 31: Dividend
DIVIDEND The company announced today an ordinary dividend of US38.0 cents per security The full year dividend is US42.0 cents per security The full year dividend is at the top end of the dividend payout ratio of 20% to 30% announced by the company in May 2011 The company intends to make further dist
Slide 32: Debt
DEBT At 31 March 2012 US$ Millions Total facilities 280.0 Gross debt - Cash 265.4 Net debt (cash) (265.4) Unutilised facilities and cash 545.4 Net cash of US$265.4 million compared to net debt of US$40.4 million at 31 March 2011 Weighted average remaining term of total facilities was 0.9 years at 31
Slide 33: Legacy Issues Update
LEGACY ISSUES UPDATE ATO – RCI successful in its appeal of the 1999 disputed amended tax assessment On 22 August 2011, the Full Federal Court upheld RCI’s appeal, ordered that RCI’s objection be allowed in full and awarded RCI costs The ATO filed an application for special leave to appeal the Full F
Slide 34: Legacy Issues Update (Continued)
LEGACY ISSUES UPDATE (CONTINUED) ASIC Proceedings The High Court of Australia delivered its judgment in the appeals and cross appeals against the December 2010 decision of the New South Wales Court of Appeal on 3 May 2012 James Hardie did not appeal the NSW Court of Appeal’s decision, so it was not
Slide 35: Updated Actuarial Estimate
UPDATED ACTUARIAL ESTIMATE Updated actuarial report completed as at 31 March 2012 Discounted central estimate increased to A$1.580 billion from A$1.478 billion As per AFFA, a contribution of approximately US$184.1 million would have been due to AICF in July 2012. However, an early contribution of US
Slide 36: Asbestos Compensation Funding Arrangements
ASBESTOS COMPENSATION FUNDING ARRANGEMENTS Net accounting liability under AFFA A$ millions (except where stated) 31-Mar-12 31-Mar-11 Central Estimate – Discounted 1,580.1 1,477.6 Discounting and inflation allowance (267.0) (113.3) Provision for claims handling costs of AICF 44.3 55.2 Other US GAAP a
Slide 37: Updated Actuarial Estimate
UPDATED ACTUARIAL ESTIMATE 37
Slide 38: Asbestos Compensation Funding Arrangements
ASBESTOS COMPENSATION FUNDING ARRANGEMENTS AICF holdings at 31 March 2012 A$62.5 million – cash and short-term investments (A$59.9 million at 31 March 2011) Net claims paid full year FY 2012: KPMG AICF AICF Actuarial A$ Millions Full Year Full Year Estimate For 2012 2011 FY 2012* Claims Paid 88.2 95
Slide 39: Key Ratios
KEY RATIOS * FY2012 FY 2011 FY 2010 1, 3 EPS (Diluted) 32.1c 26.7c 30.5c Dividend Paid per share 4.0c N/A N/A 1, 3 Return on Shareholders’ Funds 10.9% 10.0% 13.3% 2, 3 Return on Capital Employed 20.4% 19.7% 17.4% EBIT/ Sales (EBIT margin)2 15.3% 15.8% 18.6% 1 Gearing Ratio -24.5% 3.2% 10.9% Net Inte
Slide 40: Summary
SUMMARY 1 Net operating profit, excluding asbestos, asset impairments, ASIC expenses and tax adjustments for the 4th quarter and full year was US$32.1 million and US$140.4 million, respectively Full year results reflected: Moderately improved US and slowing Asia Pacific operating environments Higher
Slide 41: Questions
CO) James Hardie QUESTIONS
Slide 42: Appendix
CO) James Hardie APPENDIX
Slide 43: Global Strategy
GLOBAL STRATEGY 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 compet
Slide 44: USA Fibre Cement – Top Line Growth
USA FIBRE 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 $0 JH Volume Housing Starts JH Revenue Rolling 12 month average of seasonally adjusted estimate of housing sta
Slide 45: General Corporate Costs Q4
GENERAL CORPORATE COSTS Q4 – US$ Millions Q4 '12 Q4 '11 % Change Stock compensation expense 2.7 2.3 (17) Other costs 4.0 2.7 (48) General corporate costs excluding ASIC expenses 6.7 5.0 (34) ASIC related expenses 0.1 0.8 88 General corporate costs 6.8 5.8 (17) 45
Slide 46: General Corporate Costs Full Year
GENERAL CORPORATE COSTS FULL– YEAR US$ Millions FY 2012 FY 2011 % Change Stock compensation expense 11.1 11.3 2 Other costs 21.7 22.5 4 General corporate costs excluding ASIC expenses and domicile change related costs 32.8 33.8 3 ASIC related expenses (recoveries) 1.1 (8.7) - Domicile change related
Slide 47: EBITDA – Q4
EBITDA –Q4 US$ Millions Q4 ’12 Q4 ’11 % Change EBIT USA and Europe Fibre Cement 36.4 38.5 (5) Asia Pacific Fibre Cement 14.3 19.4 (26) Research & development (5.5) (6.1) 10 General corporate excluding asbestos, ASIC expenses and asset impairments (6.7) (5.0) (34) Depreciation and Amortisation USA an
Slide 48: EBITDA – Full Year
EBITDA –FULL YEAR FY 2012 FY 2011 % Change US$ Millions EBIT USA and Europe Fibre Cement 162.7 160.3 1 Asia Pacific Fibre Cement 80.3 79.4 1 Research & development (20.7) (20.1) (3) General corporate excluding asbestos, ASIC expenses and asset impaiments (32.8) (35.6) 8 Depreciation and Amortisation
Slide 49: Capital Expenditure
CAPITAL EXPENDITURE US$ Millions FY 2012 FY 2011 % Change USA and Europe Fibre Cement 29.1 40.4 (28) Asia Pacific Fibre Cement 6.7 9.9 (32) Total 35.8 50.3 (29) 49
Slide 50: Net Interest Expense
NET INTEREST EXPENSE US$ Millions Q4 ’12 Q4 ’11 FY 2012 FY 2011 Gross interest expense (0.8) (2.0) (3.7) (5.2) Interest income 0.3 0.1 0.5 0.4 Realised loss on interest rate swaps (4.3) (1.1) (7.5) (3.9) Net interest expense excluding AICF interest income (4.8) (3.0) (10.7) (8.7) AICF interest incom
Slide 51: 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 Consolidated Financial Statements. Definitions Non-financ
Slide 52: Endnotes (Continued)
ENDNOTES (CONTINUED) 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 foot of 5/16” thickness. Financial Ratios Gearing Ratio – Net debt (cash) divide
Slide 53: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos, asset impairments and ASIC expenses– EBIT and EBIT margin excluding asbestos, asset impairments and ASIC expenses are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EB
Slide 54: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Net operating profit excluding asbestos, asset impairments, ASIC expenses and tax adjustments– Net operating profit excluding asbestos, asset impairments, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should n
Slide 55: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Non-US GAAP Financial Measures (continued) Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses and tax adjustments– Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses and tax adjustments is not a meas
Slide 56: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) Effective tax rate excluding asbestos, asset impairments and tax adjustments– Effective tax rate excluding asbestos, asset impairments and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meanin
Slide 57: Non-US GAAP Financial Measures (Continued)
NON-US GAAP FINANCIAL MEASURES (CONTINUED) 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. No
Slide 58: 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 m
Slide 59: Q4 FY12 Management Presentation
Q4 FY12 MANAGEMENT PRESENTATION 21 May 2012
James Hardie Industries — Q4 FY2012 Earnings Presentation on 6ix