James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Non-Deal Roadshow (September 2016)
49 slides from James Hardie Industries's roadshow presentation, Sep 1, 2016
Slide 1: Investor Presentation September/October 2016
For personal use only INVESTOR PRESENTATION SEPTEMBER/OCTOBER 2016
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS For personal use only 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 an
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (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 sim
Slide 4: Note to the Reader
NOTE TO THE READER For personal use only As of 30 June 2016, the Company changed its reportable operating segments. Previously, the Company reported on three operating segments: (i) North America and Europe Fiber Cement, (ii) Asia Pacific Fiber Cement, and (iii) Research and Development. As of 30 Ju
Slide 5: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
USE OF NON-GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY For personal use only This Management Presentation includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (US GAAP). These fina
Slide 6: Agenda
AGENDA For personal use only • Strategic Focus and Business Overview • North America Fiber Cement • International Fiber Cement • Capital Management Framework • Guidance • Appendix PAGE 6
Slide 7: Our Strategic Focus
OUR STRATEGIC FOCUS For personal use only Our strategy is to aggressively grow market demand for fibre cement and our overall market share, and to be sustainable and profitable throughout the business cycle by: • diversifying our sales across end markets and geographies • promoting value-added produ
Slide 8: A Growth Focused Company
A GROWTH FOCUSED COMPANY For personal use only • Annual net sales US$1.9b • Total assets US$2.0b • Strong cash generation • Operations in North America, Asia Pacific and Europe • 3,257 employees • Market cap US$7.6b (approx) • S&P/ASX 100 company • NYSE ADR listing Market capitalization as at 18 Aug
Slide 9: World Leader in Fiber Cement
WORLD LEADER IN FIBER CEMENT For personal use only Geographic Mix¹ Net Sales International 22% North America 78% EBIT ² International 20% North America 80% 1 All percentages are as at 30 June 2016 ² EBIT – excludes research and development, asbestos-related expenses and adjustments and New Zealand w
Slide 10: Group Overview 1st Quarter FY17 Results
GROUP OVERVIEW 1st QUARTER FY17 RESULTS Adjusted Net Operating Profit1 Adjusted Diluted EPS1 For personal use only 1st Qtr 1st Qtr US$66.7M 5% US15 cents 7% Adjusted EBIT 2 Net Operating Cash Flow 1st Qtr 1st Qtr US$97.6M 9% US$115.1M 109% Adjusted EBIT Margin % 2 1st Qtr 20.4% 0.5 pts 1 Excludes As
Slide 11: Key Themes 1st Quarter FY17 Results
KEY THEMES 1st QUARTER FY17 RESULTS For personal use only • Higher volumes and strong net sales growth in all operating segments1 • Q1 FY17 North America Fiber Cement EBIT margin of 25.5% • Q1 FY17 International Fiber Cement EBIT margin of 23.2% • Commissioned Plant City sheet machine during Q1 FY17
Slide 12: Creating a Sustainable and Differentiated Advantage
CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE For personal use only Research & Development: Significant and consistent investment • US$29.5m spent on Research & Development in FY16 • US$424.3m spent on Research & Development since 2000 James Hardie Siding Products History of Fiber Cement Subst
Slide 13: 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 14: 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 15: 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 15
Slide 16: North America Fiber Cement Segment
NORTH AMERICA FIBER CEMENT SEGMENT For personal use only North America Plant Locations • Largest fiber cement producer in North America Tacoma, WA • 2,391 employees • 9 manufacturing plants¹ Peru, IL • 2 research and development Reno, NV facilities Pulaski, VA Fontana, CA Summerville, Waxahachie, SC
Slide 17: North America Fiber Cement Summary
NORTH AMERICA FIBER CEMENT SUMMARY For personal use only Volume Q1'17 • Steady growth in R&R and new construction markets Net Sales US$370.3M • Market penetration momentum continues to improve 15% • Q1 FY16 included adverse impact from price increase Sales Volume 548.4 mmsf on 1 March 2015 16% • Ove
Slide 18: Aggressively Growing Demand for Our Products
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS For personal use only North America Fiber Cement Top Line Growth1 3,000 $1,600 2,800 $1,500 JH Volume (mmsf), Starts (000s Units) 2,600 $1,400 2,400 $1,300 2,200 $1,200 $1,100 Revenue (US$M) 2,000 $1,000 1,800 $900 1,600 $800 1,400 $700 1,200 $600 1,000 $
Slide 19: Achieving the Right Value for Our Products
ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS For personal use only North America Fiber Cement 710 Average Net Sales Price 666 669 665 670 641 638 630 US$ per MSF 625 630 616 590 550 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Q1'17 • Price essentially flat due to maintaining current strategic pricing levels an
Slide 20: North America Delivering Strong Returns
NORTH AMERICA DELIVERING STRONG RETURNS For personal use only Quarterly EBIT and EBIT Margin1 100 30 90 25 80 70 20 EBIT Margin 60 EBIT US$M 50 15 40 10 30 20 5 10 0 0 FY12 FY13 FY14 FY15 FY16 FY17 EBIT EBIT/Sales Q1 FY17 EBIT Margin 25.5%. Above target range of 20%-25% 1 Excludes asset impairment c
Slide 21: International Fiber Cement Summary
INTERNATIONAL FIBER CEMENT SUMMARY For personal use only Volume Q1'17 • Volume increased 6%, excluding the Australian Pipes Net Sales US$102.9M business 2% • Strong volume growth in the Australian and New Zealand Sales Volume 124.5 mmsf businesses 2% Sales Volume 124.5 mmsf Price 1 Excluding 6% • Fa
Slide 22: International Delivering Strong Returns
INTERNATIONAL DELIVERING STRONG RETURNS International Fiber Cement Segment For personal use only Quarterly EBIT and EBIT Margin1 30 25 20 15 10 5 0 Q1 FY2012 Q1 FY2013 Q1 FY2014 Q1 FY2015 Q1 FY2016 Q1 FY2017 EBIT EBIT Margin 1 EBIT and EBIT margin excludes New Zealand weathertightness claims PAGE 22
Slide 23: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Disciplined Capital Liquidity and Funding For personal use only Management Allocation • Conservative leveraging of • Strong margins and operating • Invest in R&D and capacity balance sheet within 1-2 times expansion to support organic adjusted
Slide 24: FY2017 Guidance
FY2017 GUIDANCE For personal use only • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2017 is between US$264 million and US$285 million¹ • Management expects full year Adjusted net operating profit to be between US$260 mill
Slide 25: Appendix
For personal use only APPENDIX
Slide 26: USA Marketplace
USA MARKETPLACE For personal use only PAGE 26
Slide 27: Australia & New Zealand Marketplace
AUSTRALIA & NEW ZEALAND MARKETPLACE For personal use only PAGE 27
Slide 28: Australia, New Zealand & Philippines Core Markets
AUSTRALIA, NEW ZEALAND & PHILIPPINES CORE MARKETS For personal use only Ceilings and partitions Exterior cladding Philippines Australia General purpose flooring Interior walls New Zealand Australia PAGE 28
Slide 29: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months Ended 30 June US$ Millions Q1'17 Q1'16 % Change Net Sales North America Fiber Cement $ 370.3 $ 322.9 15 International Fiber Cement 102.9 101.2 2 Other Businesses 4.5 4.2 7 Total Net Sales $ 477.7 $ 428.3 12 EBIT North America Fiber Cement $ 94.6 $
Slide 30: North America Fiber Cement – Year Results Overview
NORTH AMERICA FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY12 FY13 FY14 FY15 FY16 Net Sales 834 914 1,084 1,225 1,335 US$m Sales Volume 1,313 1,468 1,673 1,822 1,969 mmsf EBIT US$m¹ 162 166 235 290 352 EBIT Margin %¹ 19 18 22 24 26 1Excludes asset impairment charges of US$14.3 mill
Slide 31: International Fiber Cement – Year Results Overview
INTERNATIONAL FIBER CEMENT – 5 YEAR RESULTS OVERVIEW For personal use only FY12 FY13 FY14 FY15 FY16 Net Sales 404 397 400 418 379 US$m Sales Volume 412 414 441 484 481 mmsf EBIT US$m¹ 90 75 86 90 79 EBIT Margin %¹ 22 19 22 22 21 1Excludes New Zealand weathertightness claims of US$5.4 million , US$13
Slide 32: Results – 1st Quarter FY17
RESULTS – 1st QUARTER FY17 Net sales increased 12% For personal use only Three Months Ended 30 June • Higher volume in all operating segments3 • Higher average net sales price in International Fiber US$ Millions Q1'17 Q1'16 % Change Net sales 477.7 428.3 12 Cement segment • Adversely impacted by str
Slide 33: North America Input Costs
NORTH AMERICA INPUT COSTS For personal use only • The price of NBSK pulp remained relatively flat compared to pcp • Cement prices continue to rise, up 5% compared to pcp • Gas prices are down 20% compared to pcp • Freight prices are down 12% compared to pcp • Electricity prices are down 4% compared
Slide 34: Segment EBIT – 1st Quarter FY17
SEGMENT EBIT – 1st QUARTER FY17 For personal use only North America Fiber Cement North America Fiber Cement EBIT summary 100 94.6 91.0 • EBIT increased by 4% when compared to pcp 80 • Driven by favorable volume, partially offset by slightly US$ Millions 67.4 60 lower average net sales price, higher
Slide 35: Segment EBIT – 1st Quarter FY17
SEGMENT EBIT – 1st QUARTER FY17 For personal use only Other Businesses Other Businesses summary (5) • EBIT loss improved by 30% when compared to pcp US$ Millions (2.0) • Driven by higher gross profit in Windows business (1.4) Q1 EBIT (0.8) 0 FY15 FY16 FY17 R&D summary Research and Development (10) •
Slide 36: Changes in AUD vs. USD
CHANGES IN AUD vs. USD For personal use only As Reported Excluding Translation Impact 1 Translation Impact 2 3 Months 3 Months 3 Months US$ Millions % Change % Change $ (Unfav)/Fav % FY17 FY16 FY17 Net sales $ 477.7 $ 428.3 12% $ 481.7 13% (4.0) 1% Gross profit 176.8 157.6 12% 178.2 13% (1
Slide 37: Income Tax
INCOME TAX For personal use only Three Months Ended 30 June 27.1% estimated adjusted effective tax rate (ETR) for the year US$ Millions Q1’17 Q1’16 • Adjusted income tax expense and adjusted ETR for the Operating profit before taxes 111.0 81.3 quarter increased due to changes in geographical mix of
Slide 38: Cashflow
CASHFLOW For personal use only • Increase in net operating cash flow: US$ Millions Q1'17 Q1'16 1 Change (%) Favorable change in working capital due to Net Income 87.1 60.0 45 1 increased sales and normal variation related to Adjustment for non-cash items 7.5 23.8 (68) timing in AR4 and AP4 Operati
Slide 39: Capital Expenditure
CAPITAL EXPENDITURE For personal use only • Q1 FY17 CAPEX spend of US$17.8 million down slightly compared to pcp • North America capacity projects: Commissioned new sheet machine at Plant City facility during the quarter Nearing completion of the sheet machine at Cleburne facility • Began constr
Slide 40: Liquidity Profile
LIQUIDITY PROFILE For personal use only Debt Profile • Corporate debt structure US$ Millions US$500 million revolving credit facility, with a December 2020 maturity US$325 million 8 year senior unsecured notes2 $250 1 US$75 million re-offering of the 2023 senior unsecured notes issued at 103%
Slide 41: Asbestos Claims Data
ASBESTOS CLAIMS DATA For personal use only Claims Received • Claims received were 1% below actuarial estimates and 11% higher than pcp 156 154 139 • Claims reporting for mesothelioma: 3% lower than pcp 1% lower than actuarial estimates • Claims reporting for non-mesothelioma: Q1 FY16 Q1 FY17 Act
Slide 42: Definitions and Other Terms
DEFINITIONS AND OTHER TERMS For personal use only This Management Presentation forms part of a package of information about the company’s results. It should be read in conjunction with the other parts of this package, including the Management’s Analysis of Results, Media Release and Condensed Consol
Slide 43: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Financial Measures – US GAAP equivalents This document contains financial statement line item descriptions that are considered to be non-US GAAP, but are consistent with those used by Australian companies. Because the company prepares its Condense
Slide 44: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only EBIT – Earnings before interest and taxes EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales Sales Volumes mmsf – million square feet, where a square foot is defined as a standard square foot of 5/16” thickness msf – thousan
Slide 45: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Financial Measures – US GAAP equivalents Adjusted EBIT US$ Millions Three months ended 30 June FY17 FY16 EBIT $ 117.8 $ 84.5 Asbestos: Asbestos adjustments (20.6) 4.5 AICF SG&A expenses 0.4 0.5 Adjusted EBIT 97.6 89.5 Net sales $ 477.7 $ 428.3 Adj
Slide 46: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted diluted earnings per share Three months ended 30 June FY17 FY16 Adjusted net operating profit (US$ millions) $ 66.7 $ 63.3 Weighted average common shares outstanding - 447.3 447.4 Diluted (millions) Adjusted diluted earnings per share (US
Slide 47: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES For personal use only Adjusted EBITDA US$ Millions Three months ended 30 June FY17 FY16 EBIT $ 117.8 $ 84.5 Depreciation and amortization 19.5 18.2 Adjusted EBITDA $ 137.3 $ 102.7 Adjusted selling, general and administrative expenses ("Adjusted SG&A") US$ Millions Thre
Slide 48: Financial Summary
FINANCIAL SUMMARY For personal use only Three Months Ended 30 June US$ Millions Q1'17 Q1'16 % Change Net Sales North America Fiber Cement $ 370.3 $ 322.9 15 International Fiber Cement 102.9 101.2 2 Other Businesses 4.5 4.2 7 Total Net Sales $ 477.7 $ 428.3 12 EBIT North America Fiber Cement $ 94.6 $
Slide 49: September/October 2016
For personal use only INVESTOR PRESENTATION SEPTEMBER/OCTOBER 2016
James Hardie Industries — Non-Deal Roadshow (September 2016) on 6ix