James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q2 FY2023 Earnings Presentation
34 slides from James Hardie Industries's earnings presentation, Nov 8, 2022
Slide 1: Q2 FY23 Management Presentation
Q2 FY23 MANAGEMENT PRESENTATION 8 November 2022
Slide 2: Cautionary Note on Forward-Looking Statements
James Hardie Q2 FY23 Results CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This Management Presentation contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. James Hardie Industries plc (the “Comp
Slide 3: Agenda
James Hardie Q2 FY23 Results AGENDA • Strategy and Operations Update Aaron Erter CEO • Q2 FY23 Financial Results • Closing • Questions and Answers Jason Miele CFO Page 3
Slide 4: Strategy and Operations Update
STRATEGY AND OPERATIONS UPDATE
Slide 5: Strategy is unchanged and continues to drive profitable global growth
James Hardie Q2 FY23 Results STRATEGY IS UNCHANGED AND CONTINUES TO DRIVE PROFITABLE GLOBAL GROWTH 1 Market to Homeowners to Create Demand 2 Penetrate and Drive Profitable Growth in Existing and New Segments 3 Commercialize Global Innovations by Expanding Into New Categories Continued Execution and
Slide 6: Insights on our global strategy
James Hardie Q2 FY23 Results INSIGHTS ON OUR GLOBAL STRATEGY Marketing to homeowners in North America & APAC to make Long Term Strategic Plan James Hardie the brand of choice Deliver superior value to customers, contractors, builders and homeowners We must also focus on Long Term Strategic Ena
Slide 7: A Global Growth Company
James Hardie Q2 FY23 Results A GLOBAL GROWTH COMPANY Global Global Operating Global Global Adj. Net Sales Cash Flow Adj. ROCE2 Net Income 10 Year CAGR 3 Year Avg FY22 vs FY121 Avg. FY18-FY22 10 Year CAGR 11% 3x 36% 16% 1 Comparison of average Global Operating Cash Flow FY20-FY22 and FY10-FY12 2 Retu
Slide 8: Efficient investment in organic growth
James Hardie Q2 FY23 Results EFFICIENT INVESTMENT IN ORGANIC GROWTH Adjusted ROCE FY18-FY22 A track record of efficient and effective investment in organic growth that will continue 51% 50% across the critical enablers of our global strategy: 40% 40% 32% 31% Capacity Expansion 30% 28% 20% Innova
Slide 9: Capital Allocation Framework
James Hardie Q2 FY23 Results CAPITAL ALLOCATION FRAMEWORK 1• Invest in Organic Growth − Capacity Expansion − Innovation − Targeted Demand Creation Global Adj. ROCE1 2• Maintain Flexible Balance Sheet − Maintain leverage2 below 2.0x 36% 3• Deploy Excess Capital to Shareholders − Share Buyback 1 5 Yea
Slide 10: Share buyback announced
James Hardie Q2 FY23 Results SHARE BUYBACK ANNOUNCED • As part of our continued focus on deploying excess capital to shareholders, management announces the replacement of our unfranked ordinary dividend with an on-market share buyback program to acquire up to: US$200 million through 31 October 2023
Slide 11: Operations Update
James Hardie Q2 FY23 Results OPERATIONS UPDATE North America APAC Europe First Half Execution (in US$) First Half Execution (in A$) First Half Execution (in €) Net Sales +23% vs pcp Net Sales +8% vs pcp Net Sales +2% vs pcp EBIT +15% vs pcp EBIT -3% vs pcp EBIT -43% vs pcp Second Half Ou
Slide 12: Q2 FY23 Financial Results
) 7) 5 =) @) Lu cc — <t O 2 <x ]a re ~m N > re N oO
Slide 13: Global Results
James Hardie Q2 FY23 Results GLOBAL RESULTS Q2 FY23 6 Months FY23 • All 3 regions are simultaneously executing on the 1,173.6 mmsf 2,376.9 mmsf Global Strategy Sales Volume -1% +2% • 10% increase in Q2 FY23 Global Net Sales US$997.6 M US$1,998.5 M Net Sales − The unfavorable change in foreign exchan
Slide 14: North America Summary
James Hardie Q2 FY23 Results NORTH AMERICA SUMMARY Q2 FY23 6 Months FY23 • 18% increase in Q2 FY23 Net Sales led by robust 810.7 mmsf 1,634.4 mmsf Price/Mix growth Sales Volume − Continued execution in driving High Value Product penetration +4% +8% with our customers Price/Mix +14% +15% − ColorPlus™
Slide 15: APAC Summary
James Hardie Q2 FY23 Results APAC SUMMARY Q2 FY23 6 Months FY23 • 7% increase in Q2 FY23 Net Sales driven by strong 155.9 mmsf 306.1 mmsf Price/Mix growth of +11% Sales Volume − 4% decline in volumes due to slowing demand in Australia as labor -4% -3% constrained housing market activity Price/Mix +1
Slide 16: Europe Summary
James Hardie Q2 FY23 Results EUROPE SUMMARY Q2 FY23 6 Months FY23 • 2% decline in Q2 FY23 Net Sales 207.0 mmsf 436.4 mmsf − 14% decline in volumes as housing activity slowed Sales Volume -14% -10% − Strong Price/Mix growth of +12% Price/Mix +12% +12% • €4.4 million of Q2 FY23 EBIT at an EBIT Margin
Slide 17: Closing
CLOSING
Slide 18: Full Year Fiscal Year 2023 Guidance
James Hardie Q2 FY23 Results FULL YEAR FISCAL YEAR 2023 GUIDANCE Management adjusts full year FY23 Adjusted Net Income1 guidance, due to decline in volume expectations, to: US$650 million and US$710 million a 10% increase at the mid point relative to FY22 North America Guidance – Full Year FY23 Net
Slide 19: James Hardie – A Global Growth Company
James Hardie Q2 FY23 Results JAMES HARDIE – A GLOBAL GROWTH COMPANY Strong Growth Opportunities Experienced Management Team Brand of Choice Strong Balance Sheet & Cash Generation Innovation Pipeline Attractive Returns Integrated Localized Supply Chain Premium Products and Services Multi-Segment Focu
Slide 20: Questions
QUESTIONS
Slide 21: Appendix
APPENDIX
Slide 22: Building Sustainable Communities: Environmental, Social and Governance
James Hardie Q2 FY23 Results BUILDING SUSTAINABLE COMMUNITIES: ENVIRONMENTAL, SOCIAL AND GOVERNANCE Communities Environment Reduction in Scope 1 and Scope 2 greenhouse gas 75% of employees hired locally 21% intensity 1 (MT CO2e/$ revenue) in CY21 GOAL: 40% by 2030 Reduction in landfill waste intensi
Slide 23: Driving a Higher Value Product Mix – Average Net Sales Price
James Hardie Q2 FY23 Results DRIVING A HIGHER VALUE PRODUCT MIX – AVERAGE NET SALES PRICE North America APAC Average Net Sales Price Average Net Sales Price 1000 1,300 893 921 1,211 1,219 900 1,200 814 1,111 A$ per MSF US$ per MSF 1,100 1,056 800 1,027 745 718 725 992 1,000 700 900 600 800 500 700 F
Slide 24: General Corporate Costs / Research & Development
James Hardie Q2 FY23 Results GENERAL CORPORATE COSTS RESEARCH & DEVELOPMENT 80 20 17.5 65.2 16.7 60 51.7 15 US$ millions US$ millions 40 10 9.1 29.7 8.3 28.0 20 5 0 0 FY23 FY22 FY23 FY22 Q2 6 Months Q2 6 Months • Q2 corporate costs decreased 6% vs pcp • Q2 R&D increased 10% vs pcp • Driven primarily
Slide 25: Operating Cash Flow / Capital Expenditures
James Hardie Q2 FY23 Results OPERATING CASH FLOW CAPITAL EXPENDITURES 1,000 350 310.1 300 727.6 750 664.3 250 1 US$ Millions US$ Millions 200 205.7 500 150 357.5 108.1 264.6 100 38.1 250 50 104.4 70.0 0 0 H1 FY23 H1 FY22 H1 FY23 H2 FY22 Non Capacity Capacity Half year TTM • Half year operating cash
Slide 26: Liquidity Profile
James Hardie Q2 FY23 Results LIQUIDITY PROFILE Corporate debt structure • €400 million (US$392.0 million)2 3.625% senior unsecured notes, maturing 2026 (callable since October 2021) • US$400 million 5.00% senior unsecured notes maturing 2028 (callable in January 2023) 2 • US$600 million unsecured RC
Slide 27: Depreciation and Amortization
James Hardie Q2 FY23 Results DEPRECIATION AND AMORTIZATION Page 27
Slide 28: Asbestos Claims Data
James Hardie Q2 FY23 Results ASBESTOS CLAIMS DATA First Half ended 30 September 2022: • Average claim settlement was 8% below actuarial estimates and 3% below pcp • Number of claims settled were 17% above actuarial estimates • Claims received were 3% above actuarial expectations and 7% above pcp • N
Slide 29: Non-GAAP Financial Measures
James Hardie Q2 FY23 Results NON-GAAP FINANCIAL MEASURES This Management Presentation forms part of a package of information about the company’s results. It should be read in conjunction with the other parts of this package, including the Management’s Analysis of Results, Media Release and Condensed
Slide 30: Non-GAAP Financial Measures
James Hardie Q2 FY23 Results NON-GAAP FINANCIAL MEASURES Page 30
Slide 31: Non-GAAP Financial Measures
James Hardie Q2 FY23 Results NON-GAAP FINANCIAL MEASURES Europe Building Products Segment EBIT and EBITDA US$ Millions Three and Six Months Ended 30 September 6 Months 6 Months Q2'23 Q2'22 FY23 FY22 Europe Building Products Segment EBIT $ 4.5 $ 16.7 $ 16.6 $ 33.0 Europe Building Products Segment net
Slide 32: Non-GAAP Financial Measures
James Hardie Q2 FY23 Results NON-GAAP FINANCIAL MEASURES Page 32
Slide 33: Non-GAAP Financial Measures
James Hardie Q2 FY23 Results NON-GAAP FINANCIAL MEASURES Page 33
Slide 34: Q2 FY23 Management Presentation
Q2 FY23 MANAGEMENT PRESENTATION 8 November 2022
James Hardie Industries — Q2 FY2023 Earnings Presentation on 6ix