James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2014)
54 slides from James Hardie Industries's investor day presentation, Sep 24, 2014
Slide 1: External Environment
EXTERNAL ENVIRONMENT Matthew Marsh 24 September 2014 Exhibit 99.1
Slide 2: Slide 2
Slide 3: 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 4: Slide 4
Slide 5: Forward-looking statements cautionary notes
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 6: Slide 6
Slide 7: Agenda
4 AGENDA • U.S. Economic Indicators • Housing Market Overview • Market Opportunity for James Hardie
Slide 8: Slide 8
Slide 9: U.S. Economic Indicators Improving
5 U.S. ECONOMIC INDICTORS IMPROVING
Slide 10: Consumer Confidence Index
160 140 120 Consumer Confidence Index nna 2 7 o o 12 ® JamesHardie
Slide 11: GDP and Consumer Confidence
6 GDP AND CONSUMER CONFIDENCE Source: Conference Board, Morgan Stanley Research. Note: Gray shading denotes period of recession as determined by the NBER Source: Bureau of Economic Analysis, Morgan Stanley Research. Note: Gray shading denotes periods of recession as determined by the NBER • U.S. in
Slide 12: Housing Affordability Index and Mortgage Delinquencies
Housing Atfordabilty Index and Average Mortgage Rate Percent of Balance 90+ Days Delinquent by Type of Loan 14% = ‘ 12% 0 3 10% 1a : 8% ‘le ; 0% is : “ — ie ° ™% =a rt tert ne Qf Sle) —nrenge mora re ate Se, Pret oe ees ® JamesHardie
Slide 13: US Consumer Credit Is Strengthening
Source: Federal Reserve Board, Morgan Stanley Research. Note: The financial obligations ratio (FO R) includes auto lease payments, consumer debt payments, rental payments on tenant-occupied property, payments on mortgage debt, homeowners’ insurance and property tax payments. 7 US CONSUMER CREDIT IS
Slide 14: Household Balance Sheet and Mortgage Yields
(Son) 16000, 14000 12000 10000 Household Balance Sheot Home mortgages Nonravolving credit Rovolving erecit Effective Yield on All Outstanding Mortgages vs 30-Year Fixed-Rato ‘ink Morigage Rate room FRU 10% —etmcve Yes NN 8% 6% 4% 39% 2% 0% 90 94 98 02 06 10 14 ® JamesHardie
Slide 15: US Consumer Balance Sheets Are Healthier
8 US CONSUMER BALANCE SHEETS ARE HEALTHIER Source: Bureau of Economic Analysis Source: US Federal Reserve • Roughly 75% of the household balance sheet is in mortgages… • … and 30-year fixed-rate mortgage rate at historical lows – meaning the bulk of average household’s balance sheet is locked in at
Slide 16: Housing Market Overview
9 HOUSING MARKET OVERVIEW
Slide 17: ‘000 1400 3,000 2000
‘000 1400 3,000 2000
Slide 18: Home Prices and Inventories
10 HOME PRICES AND INVENTORIES Home prices have stabilized and are beginning to rise slowly… …while inventories of new and existing homes are near historic lows Source: National Association of Realtors Source: McGraw Hill Financial Existing & New Home Inventories S&P/Case-Schiller U.S. National Home
Slide 19: New construction and R&R growth
30.0% 20.0% 10.0% - 0.0% 10.0% 20.0% 30.0% 40.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 —New Construction Addressable Starts YoY Growth R&R Projects Yo Growth ® JamesHardie
Slide 20: Indicators Suggest Market Is in Recovery
11 INDICATORS SUGGEST MARKET IS IN RECOVERY Single-family new construction and multifamily starts growing at a faster rate than the repair and remodel segment Sources: Dodge New Construction Forecast and James Hardie Internal Management Estimates
Slide 21: Forecasted New Construction Starts 2015 and 2016
2015 Forecasted New Construction Starts ('000s) 2016 Forecasted New Construction Starts (1000s) ey 1,600 1,500 ican ees = 11400 1.200 4,300 4,100 44200 2,000 4,100 oo 14000 900 ‘800 Dodge FannieMae ‘Freddie Mac NAHB Po Dodge NAHE, ® JamesHardie
Slide 22: New Construction Starts Heading Back Towards ~1.5 Million
12 NEW CONSTRUCTION STARTS HEADING BACK TOWARDS ~1.5 MILLION STARTS PER YEAR • Variation in forecasting starts between different organization exists • New starts growth forecast 2015 range: 20% and 33% • New starts growth forecast for 2016 range: 15% and 16%
Slide 23: Homeownership Rate and Household Formation
Homeownership Rate Household formation vs Housing Starts = a 2% om baal : iii ee Mar65 Mar71 Mer77 Mer83.Mar-89 Mar-95 MerO1 Mar-O7 Mar-t3 Market Reatst at et ® JamesHardie
Slide 24: Underlying Demand for New Houses
13 • Low household formation numbers over the past five years will drive homebuilder demand going forward • First-time homebuyers in a difficult position – student debt, job market, etc. • Tougher credit qualification requirements Formations vs. Starts Homeownership Rate UNDERLYING DEMAND FOR NEW HO
Slide 25: Young adults living with parents
% of al 1834 yoars olds ving with thee parents 2 x» am 2278 2 = 228 2.228 n 2.175 2175 = = 2.128 "2128 992 198 1860 1992 1985 1962 200% 2008 2007 2010 2018 2025 os 2.028 55 60 65 70 75 80 85 90 95 00 05 10 ® JamesHardie
Slide 26: Pent-Up Demand for Housing
Source: Housing Trends: Increase Demand by Jay Taylor, Wyatt Investment Research and Deutsche Bank Research 14 PENT UP DEMAND FOR HOUSING % of 18-34 year olds living at home Number of people 16 and older per household • Pent-up demand for housing • Almost 1/3 of 18-34 year olds now living with their
Slide 27: Housing starts history
00% 2900.0 1000.9 00.0 2 4 G = rH @ E S 8
Slide 28: Underlying Supply for New Houses
15 UNDERLYING SUPPLY FOR NEW HOUSES LIKELY TO DRIVE NEW CONSTRUCTION STARTS • Average number of starts since 1959 has been ~1.5M starts per year • 2013 starts aligned with previous “trough” years • Current starts still has room to expand over the next several years
Slide 29: JamesHardi
rr JamesHardi
Slide 30: Existing Home Sales Remain Above Normal Levels
Source: Commerce Department , National Association of Realtors, Metrostudy Analysis 16 EXISTING HOME SALES REMAIN ABOVE NORMAL LEVELS 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 SF Home Sales, 1968-April 2014 (SAAR Thousands) SF New Home Sales SF Existing Home Sales 45 year average 4.18 mi
Slide 31: Home sales history
HAD AV aw AO AD gD oh gh 2 o&& O od ok 5 oO O dd ok © BD DV vd PX LYM MP EP DB BS GP LP Sh OM GP BPS Sh Sh SP GPP NY SSG SF FGF FS SH Ww Ee Ee ¥ wt JamesHardie
Slide 32: New Home Sales Have Lost Share
Source: Commerce Department, National Association of Realtors, Metrostudy Analysis 17 WHILE HOME SALES ARE AT HIGH LEVELS, NEW HOME SALES HAVE LOST SHARE 0% 5% 10% 15% 20% 25% 30% 45 year average 17% (1/6) New Home Share of Total SF Home Sales
Slide 33: Slide 33
Slide 34: Supplies Remain Below Normal
Source: Commerce Department, National Association of Realtors, Metrostudy Analysis 18 SUPPLIES REMAIN BELOW NORMAL 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 New and Existing SF Months' Supply, 1982-April 2014 New Home Months' Supply Existing SF Months' Supply 30 Yr Ave 7.2 50 Yr Ave 6.1
Slide 35: US R&R siding projects and growth
1,650,000 1,600,000 1.450,00 1,400,000 1,350,000 1.300,00 US RAR Siding Project (et Side) Yor Growth igh sde) ® JamesHardie
Slide 36: Repair & Remodel Compared to New Construction
19 REPAIR & REMODEL COMPARED TO NEW CONSTRUCTION IS LESS VOLATILE, AND GROWING Repair & Remodel Market • Repair & Remodel market is less volatile and currently as big as new construction • Year-over-Year growth ranges from -8% to +8% • Forecasted to grow 3% in 2015 and 3+% in the medium-term Sources
Slide 37: ~-PERFORMANGE
~-PERFORMANGE = ® JamesHardie
Slide 38: Market Opportunity
20 MARKET OPPORTUNITY
Slide 39: Market share by product
Other 3% Stucco 80% Masonry 70% = Wood 60% Vinyl 50% i Fiber Competitors 40% m James Hardie 30% 20% Fiber 10% + Fiber Cement Share: 17% Competitors 0% ® JamesHardie
Slide 40: North America Market Overview
21 NORTH AMERICA MARKET OVERVIEW North America Market Share by Product • JHX wins ~90% of the fiber cement category, while fiber cement used in ~17% of the total market • Current estimate is wood-look siding (Wood, Vinyl and Fiber Cement) is 60-65% of total market. North America Wood-Look Market Siz
Slide 41: Wood-Look as % of Market
Wood-Look as % of Market 100% 90% 80% ox 68% 68% gs 28 ee ane sure sm 40% 30% 20% 10% o% vod FYOS-—sFYO6-~=—sFVO7,—s FYOS- Ss FYO.SsFYIO.—SsFYAL.—SsFVAZ_—sFVABFYAB mmm Wood-Look as % of Market. ©~— —Average FYO4-FYI4 ® JamesHardie
Slide 42: Wood-Look Share of Total Market
22 WOOD-LOOK SHARE OF TOTAL MARKET Wood-look products continue to maintain ~ 2/3rds of the of the wall against stone, stucco, and brick Source: Internal estimates based on NAHB product usage data adjusted for regional market intelligence
Slide 43: Product usage by region
Product Usage% 200% 80% 60% 40% 20% 0% 10% cl Northeast Midwest 75% SouthEast ‘SouthCentral 62% = Other © stucco = Brick/stone 4 Fiber Cement = Wood = Vinyl ® JamesHardie
Slide 44: Wood-Look Siding Share
23 WOOD-LOOK SIDING SHARE Growth opportunity varies by region, vinyl & wood in the north, wood and competitive cement in the south and west Internal estimates based on NAHB product usage data adjusted for regional market intelligence
Slide 45: Vinyl share
Viv! Share Vinyl vs starts (Growth over prior ate)
Slide 46: Vinyl Continues to Underperform
24 VINYL CONTINUES TO UNDERPERFORM Vinyl’s Weaker Market Position Vinyl Under Performing vs. Starts Source: Internal estimates based on NAHB product usage data adjusted for regional market intelligence
Slide 47: Slide 47
Slide 48: Competitive Fiber Cement
25 COMPETITIVE FIBER CEMENT Competitive Fiber Cement competitors appear to be optimizing their businesses instead of ramping up idle capacity Nichiha • Announced restricted shipping radius to local market • Performance concerns in harsh climates; High reject rate Allura • Elementia Corp, parent comp
Slide 49: Slide 49
Slide 50: Summary
26 • U.S. economic indicators improving .. Broader economy in recovery • Recovering housing market • New construction growth below historic levels … pent up demand and below normal supplies should support new construction starts heading towards 1.5M • Wood look siding is greater than ~2/3 of the cla
Slide 51: Slide 51
Slide 52: Questions
QUESTIONS
Slide 53: James Hardie
(@)) samesardie
Slide 54: James Hardie
(@) samesHardie
James Hardie Industries — Investor Day (September 2014) on 6ix