James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Deutsche Bank Depositary Receipts Virtual Investor Conference 2016
36 slides from James Hardie Industries's conference presentation, Mar 11, 2016
Slide 1: Deutsche Bank Depositary Receipts Virtual Investor Conference Presentation
For personal use only DEUTSCHE BANK DEPOSITARY RECEIPTS VIRTUAL INVESTOR CONFERENCE PRESENTATION MARCH 2016
Slide 2: Disclaimer
DISCLAIMER For personal use only This Investor 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
Slide 3: Disclaimer (continued)
DISCLAIMER (continued) For personal use only 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 id
Slide 4: Agenda
AGENDA For personal use only • Global Strategy and Business Overview • North America and Europe Fiber Cement • Asia Pacific Fiber Cement • Capital Management Framework • Appendix In this Investor Presentation, the company may present financial measures, sales volume terms, financial ratios, and Non-
Slide 5: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.7b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,178 employees • Market cap US$5.4b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 19 Feb
Slide 6: Building a Portfolio of Products and Brands
BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS For personal use only Primary Products Trim / Commercial Interior Walls / Soffit Backerboard Siding Flooring Fascia Exteriors Ceilings U.S. & Europe Asia Pacific Brand Portfolio PAGE 6
Slide 7: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales Asia Pacific 20% North America and Europe 80% EBIT ² Asia Pacific 19% Employees¹ • 2,269 in North America and Europe • 909 in Asia Pacific North America and Europe 81% 1 All percentages are as at 31 December 2015 and number
Slide 8: Driving Category and Market Share Gains
DRIVING CATEGORY AND MARKET SHARE GAINS For personal use only North America External Cladding Share¹ 7% 7% 18% Fiber Cement 7% Vinyl Wood (including engineered wood) Stucco Brick Stone 12% Other (aluminium etc) 28% 21% 35/90 Plan • Grow fiber cement share to 35% of the exterior cladding market again
Slide 9: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$31.7m spent on Research & Development in FY15 • US$394.8m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 10: Delivering Superior Product Performance
DELIVERING SUPERIOR PRODUCT PERFORMANCE For personal use only Fiber cement is more durable than wood and engineered wood, looks and performs better than vinyl, and is more cost effective and quicker to build with than brick Fiber Cement Vinyl Engineered Wood Fire resistant ? ? Hail resistant ? ?
Slide 11: North America and Europe Fiber Cement Segment
NORTH AMERICA AND EUROPE FIBER CEMENT SEGMENT For personal use only USA Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,269 employees • 9 manufacturing plants¹ Reno, NV Peru, IL • 2 research and development facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, S
Slide 12: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only North America and Europe Fiber Cement Revenue up 8% YTD on 7% volume growth. Continuing to outpace U.S. housing starts growth 1Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau PAGE 12
Slide 13: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only North America and Europe Fiber Cement 2+% gross price annual increase, partially offset by the strengthening US dollar and product mix PAGE 13
Slide 14: US Input Costs
US INPUT COSTS For personal use only Quarterly US Input Costs 1,200 10 • The price of NBSK pulp decreased by 9 1,000 ~9% compared to pcp 8 Cement, Gas and Electric Prices 7 800 6 • Cement prices continue to rise, up 8% Pulp Prices 600 5 compared to pcp 4 400 3 • Gas prices are down more than 20% 200
Slide 15: North America and Europe: Delivering Strong Returns
NORTH AMERICA AND EUROPE: DELIVERING STRONG RETURNS For personal use only YTD EBIT Margin up 340 bps to 25.1% 1 Excludes asset impairment charges of US$14.3 million in 4th quarter FY12, US$5.8 million in 3rd quarter FY13 and US$11.1 million in 4th quarter FY13 PAGE 15
Slide 16: Asia Pacific Fiber Cement Segment
ASIA PACIFIC FIBER CEMENT SEGMENT For personal use only Asia Pacific Plant Locations • 909 employees • 4 manufacturing plants across Australia, New Zealand and the Philippines • 1 research and development facility 9 Months 9 Months FY16 FY15 Net Sales A$354.8m A$325.3m EBIT A$83.0m A$77.3m EBIT Marg
Slide 17: Asia Pacific: Delivering Strong Returns
ASIA PACIFIC: DELIVERING STRONG RETURNS Asia Pacific Fiber Cement Segment For personal use only Average Net Sales Price Quarterly EBIT and EBIT Margin1 30 30 1020 A$1,018 25 25 1000 980 20 20 EBIT US$M EBIT Margin 960 940 15 15 920 900 10 10 880 5 5 860 840 0 0 820 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 18: The Asbestos Injuries Compensation Fund (AICF)
THE ASBESTOS INJURIES COMPENSATION FUND (“AICF”) • Up to 1987, former Australian James Hardie companies were involved in the manufacture and distribution of a variety of For personal use only products containing asbestos, including building products, pipes, brake linings and installation products. •
Slide 19: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH For personal use only Strong Financial Disciplined Capital Liquidity and Funding Management Allocation • Strong margins and operating • Invest in R&D and capacity • Conservative leveraging of cash flows expansion to support organic balance sheet within 1-2 time
Slide 20: Summary
SUMMARY For personal use only • Clear market leader with manufacturing and competitive advantages supported by an annual R&D spend of around US$30m, combined with in-house product development and technical expertise • Targeting North America & Europe Fiber Cement Segment EBIT margins of between 20%-
Slide 21: Appendix
For personal use only APPENDIX
Slide 22: U.S. Marketplace
U.S. MARKETPLACE For personal use only PAGE 22
Slide 23: Australia & New Zealand Marketplace
AUSTRALIA & NEW ZEALAND MARKETPLACE For personal use only PAGE 23
Slide 24: North America and Europe Fiber Cement – Year Results Overview
NORTH AMERICA AND EUROPE FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 814 862 951 1,128 1,277 US$m Sales Volume 1,248 1,332 1,489 1,697 1,850 mmsf Average Price 648 642 626 652 675 US$ per msf ² EBIT US$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17
Slide 25: Asia Pacific Fiber Cement – Year Results Overview
ASIA PACIFIC FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY11 FY12 FY13 FY14 FY15 Net Sales 353 376 370 366 380 US$m Sales Volume 408 392 394 417 456 mmsf Average Price 906 906 901 930 942 A$ per msf1 EBIT US$m2 79 86 75 83 90 EBIT Margin %2 23 23 20 23 24 1During the second quarter
Slide 26: Key Ratios
KEY RATIOS For personal use only Nine Months Ended 31 December 9 Months 9 Months 9 Months FY16 FY15 FY14 EPS (Diluted)1 (US Cents) 41c 37c 34c EBIT/ Sales (EBIT margin)2 20.7% 17.9% 17.5% Gearing Ratio 1 27.7% 20.3% (13.4)% Net Interest Expense Cover2 14.7x 49.6x 63.0x Net Interest Paid Cover2 20.1x
Slide 27: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only 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 Fin
Slide 28: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only 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 Consolidate
Slide 29: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS EBIT – Earnings before interest and taxes For personal use only 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 s
Slide 30: 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 For personal use only US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has included these fin
Slide 31: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only 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 p
Slide 32: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only 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 fina
Slide 33: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only 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 e
Slide 34: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only 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 profitabil
Slide 35: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted selling, general and administrative expenses – Adjusted selling, general and administrative expenses (“Adjusted SG&A”) is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than selling
Slide 36: Deutsche Bank Depositary Receipts Virtual Investor Conference Presentation
For personal use only DEUTSCHE BANK DEPOSITARY RECEIPTS VIRTUAL INVESTOR CONFERENCE PRESENTATION MARCH 2016
James Hardie Industries — Deutsche Bank Depositary Receipts Virtual Investor Conference 2016 on 6ix