James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY2019 Earnings Presentation
40 slides from James Hardie Industries's earnings presentation, Aug 10, 2018
Slide 1: Q1 FY19 Management Presentation
Exhibit 99.4 Q1 FY19 MANAGEMENT PRESENTATION 10 August 2018
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 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 and Exchange Commission,
Slide 3: Cautionary Note on Forward-Looking Statements (continued)
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS (continued) 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 i
Slide 4: Note to the Reader
NOTE TO THE READER As of 30 June 2018, the Company changed its reportable operating segments. Previously, the Company reported on four operating segments: (i) North America Fiber Cement, (ii) International Fiber Cement, (iii) Other Businesses, and (iv) Research and Development. As of 30 June 2018, t
Slide 5: Use of Non-GAAP Financial Information; Australian Equivalent Terminology
USE OF NON-GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY 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 financial measures are des
Slide 6: Agenda
AGENDA • Overview and Operating Review – Louis Gries, CEO • Financial Review – Matt Marsh, EVP and CFO • Questions and Answers PAGE 6
Slide 7: Overview and Operating Review
OVERVIEW AND OPERATING REVIEW Louis Gries, CEO
Slide 8: Group Overview
GROUP OVERVIEW Adjusted Net Operating Profit 1 Adjusted Diluted EPS 1 1st Qtr 1st Qtr US$79.9 M 29% US18 cents 29% Adjusted EBIT 2 Net Operating Cash Flow 1st Qtr 1st Qtr US$107.1 M 21% US$113.3 M 36% Adjusted EBIT Margin % 2 1st Qtr 16.5% 0.9 pts • North America Fiber Cement segment - exteriors gro
Slide 9: North America Fiber Cement Summary
NORTH AMERICA FIBER CEMENT SUMMARY Q1'19 Volume Net Sales US$433.8 M • Slightly positive PDG in exteriors 10% • Marginal growth in interiors Price Sales Volume 591.0 mmsf • Favorably impacted by annual change in our strategic 5% pricing effective April 2018 and product mix Average Price US$725 per m
Slide 10: North America Fiber Cement EBIT Margin
NORTH AMERICA FIBER CEMENT Q1 FY19 EBIT Margin % up 440 bps to 24.7% compared to pcp and remaining in higher end of our target range PAGE 10
Slide 11: North America Fiber Cement
NORTH AMERICA FIBER CEMENT • FY19 strategic price increase effective April 2018 • US housing conditions remain favorable • Overall, satisfied with price positioning 1 Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau PAGE 11
Slide 12: Asia Pacific Fiber Cement Summary
ASIA PACIFIC FIBER CEMENT SUMMARY Q1'19 Volume Net Sales US$117.1 M • Driven primarily by strong performance in our Australian and 15% Philippines businesses • Volume growth in all regions above underlying market growth Sales Volume 138.0 mmsf 15% EBIT Average Price US$753 per msf • Strong results i
Slide 13: Asia Pacific Fiber Cement (USD)
ASIA PACIFIC FIBER CEMENT (USD) Australia • Continued market penetration and strong growth above the market index • EBIT favorably impacted by volume, partially offset by higher pulp and freight costs New Zealand • Higher net sales driven by higher volume • EBIT adversely impacted by plant performan
Slide 14: Europe Building Products Summary
EUROPE BUILDING PRODUCTS SUMMARY 1 Volume Q1’19 • Increase driven by acquisition of Fermacell in April 2018 Net Sales US$95.4 M Price Sales Volume 209.6 mmsf • Decrease due to product mix • Fiber Gypsum has a lower average net sales price compared to Fiber Cement Average Price US$397 per msf Net Sal
Slide 15: Financial Review
FINANCIAL REVIEW Matt Marsh, EVP and CFO
Slide 16: Results – 1st Quarter FY19
RESULTS – 1st QUARTER FY19 Net sales increased 28%, US$143.3 million Three Months Ended 30 June • The acquired Fermacell business in Europe contributed net US$ Millions Q1'19 Q1'18 % Change sales of US$86.2 million Net sales 651.0 507.7 28 • Higher average net sales price and volumes in North Gross
Slide 17: Changes in AUD vs. USD
CHANGES IN AUD vs. USD Excluding Translation As Reported Translation Impact 2 Impact 1 US$ Millions Q1 FY19 Q1 FY18 % Change Q1 FY19 % Change $ (Unfav)/Fav % Net Sales $ 651.0 $ 507.7 ttt 28% $ 643.8 ttt 27% 7.2 ttt 1% Gross Profit 221.1 169.0 ttt 31% 219.4 ttt 30% 1.7 ttt 1% Adjusted EBIT 107.1 88.
Slide 18: North America Input Costs
NORTH AMERICA INPUT COSTS Quarterly US Input Costs 1,400 10 • Freight market prices up 29% compared to pcp 9 1,200 8 • The price of NBSK pulp up 20% compared to pcp 1,000 7 6 800 5 • Gas prices up 9% compared to pcp 600 4 Pulp Pulp Prices($) 400 3 • Cement prices up 2% compared to pcp 2 200 Cement,
Slide 19: Segment EBIT – 1st Quarter FY19
SEGMENT EBIT – 1st QUARTER FY19 North America Fiber Cement North America Fiber Cement EBIT summary 120 107.2 • EBIT increased 34% compared to pcp 100 94.6 79.8 • Increase primarily driven by higher average net sales 80 60 price and higher volumes Q1 EBIT 40 US$ US$ Millions • North America margins c
Slide 20: Segment EBIT – Europe Building Products
SEGMENT EBIT – 1st QUARTER FY19 Europe Building Products Europe Building Products EBIT summary 2 • EBIT impacted by costs associated with acquisition: 1 0.8 (0.2) (4.6) 0 • US$8.7 million of transaction and integration costs; and FY17 FY18 FY19 -1 • US$7.3 million in inventory fair value adjustment
Slide 21: Segment EBIT – R&D and General Corporate
SEGMENT EBIT – 1st QUARTER FY19 R&D • On strategy to invest ~2-3% of net sales • Increased spend from overall increase in number of projects General Corporate Costs • Increase driven by: • Non-recurring gain of US$3.4 million in the prior year from the sale of a storage building near our Fontana fac
Slide 22: Income Taxes
Income Taxes • How ETR is calculated under US GAAP changed in Q1 FY19 • Recorded a net deferred tax asset of US$1,164.8 million arising from all previous intragroup transfers, including an internal restructuring which took place in Q4 FY18 to align certain intangible assets with our US business • Ef
Slide 23: Income Tax
INCOME TAX Three Months Ended 30 June 17.1% estimated adjusted effective tax rate for the year US$ Millions Q1’19 Q1’18 • Adjusted income tax expense decreased driven by Operating profit before taxes 121.5 77.1 a reduction in the US statutory corporate tax rate 1 (25.1) 4.2 Asbestos adjustments foll
Slide 24: Cashflow
CASHFLOW 1 Change US$ Millions FY19 FY18 Increase in net operating cash flow (%) • Increase in net income, primarily due to underlying business unit Net Income 90.6 57.4 58 Adjustment for non-cash items 26.5 33.9 (22) performance 1 Operating working capital 2 30.6 10.0 • Favorable movements in inven
Slide 25: Capital Expenditures
CAPITAL EXPENDITURES Q1 FY19 CAPEX spend of US$73.6 million increased US$25.5 million compared to pcp • North America capacity projects: Completed the start-up at our Summerville facility Completed and commissioned our greenfield expansion in Tacoma, which continues to start-up as planned Comm
Slide 26: Financial Management Supporting Growth
FINANCIAL MANAGEMENT SUPPORTING GROWTH Strong Financial Disciplined Capital Liquidity and Funding Management Allocation • Conservative leveraging of balance Strong margins and operating • Invest in R&D and capacity • sheet at a target within 1-2 times cash flows expansion to support organic growth A
Slide 27: Liquidity Profile at June 2018
LIQUIDITY PROFILE AT 30 JUNE 2018 Strong balance sheet Debt Profile US$182.7 million cash Millions US$1,066.9 million net debt 3 US$2501 US$500 million revolving credit facility available US$500 Corporate debt structure €400 / €400 / US$400 million 4.75% senior unsecured notes maturing 2 2 U
Slide 28: FY2019 Guidance
FY2019 GUIDANCE • Management notes the range of analysts’ forecasts for net operating profit excluding asbestos for the year ending 31 March 2019 is between US$313 million and US$358 million • Management expects full year Adjusted net operating profit to be between US$300 million and US$340 million
Slide 29: Questions
(@) sames Hardie QUESTIONS
Slide 30: Appendix
(@) sames Hardie APPENDIX
Slide 31: Financial Summary
FINANCIAL SUMMARY Three Months Ended 30 June US$ Millions Q1'19 Q1'18 % Change Net Sales North America Fiber Cement$ 433.8 $ 393.1 10 Asia Pacific Fiber Cement 117.1 101.6 15 Europe Building Products 95.4 9.2 Other Businesses 4.7 3.8 24 Total Net Sales $ 651.0 $ 507.7 28 EBIT North America Fiber Cem
Slide 32: Asbestos Claims Data
ASBESTOS CLAIMS DATA • Claims received were 13% below actuarial estimate and 14% lower than pcp • Claims reporting for mesothelioma: • 14% below actuarial estimates • 17% lower than pcp • Average claim settlement was 5% below actuarial estimates and 21% higher than pcp: Average claim settlement si
Slide 33: Depreciation and Amortization
DEPRECIATION AND AMORTIZATION US$ Millions Three Months Ended 30 June Q1'19 Q1'18 Depreciation and amortization North America Fiber Cement$ 18.1 $ 17.1 Asia Pacific Fiber Cement 3.1$ 3.1 Europe Building Products 4.7 - Other Businesses 0.6 0.5 Research and Development 0.3 0.4 General Corporate 1.3 0.
Slide 34: Non-US GAAP Financial Measures and Terms
NON-US GAAP FINANCIAL MEASURES AND TERMS 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 St
Slide 35: Non-US GAAP Financial Measures – US GAAP Equivalents
NON-US GAAP FINANCIAL MEASURES 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 Consolidated Financial Stateme
Slide 36: Non-US GAAP Financial Measures – Adjusted EBIT
NON-US GAAP FINANCIAL MEASURES Financial Measures – US GAAP equivalents Adjusted EBIT US$ Millions Three Months Ended 30 June Q1'19 Q1'18 EBIT $ 131.9 $ 84.0 Asbestos: Asbestos adjustments (25.1) 3.9 AICF SG&A expenses 0.3 0.4 Adjusted EBIT $ 107.1 $ 88.3 Net sales $ 651.0 $ 507.7 Adjusted EBIT marg
Slide 37: Europe Building Products Segment Adjusted EBIT excluding acquisition costs
NON-US GAAP FINANCIAL MEASURES Europe Building Products Segment Adjusted EBIT excluding costs associated with the acquisition US$ Millions Three Months Ended 30 June Q1'19 EBIT $ (4.6) Inventory fair value adjustment 7.3 Transaction Costs 7.2 Integration Costs 1.5 Europe Building Products Segment Ad
Slide 38: Adjusted Diluted EPS and Adjusted Effective Tax Rate
NON-US GAAP FINANCIAL MEASURES Adjusted diluted earnings per share Three Months Ended 30 June Q1'19 Q1'18 Adjusted net operating profit (US$ Millions) $ 79.9 $ 61.7 Weighted average common shares outstanding - 443.0 441.6 Diluted (millions) Adjusted diluted earnings per share (US cents) 18 14 Adjust
Slide 39: Adjusted EBITDA excluding Asbestos and Adjusted SG&A
NON-US GAAP FINANCIAL MEASURES Adjusted EBITDA excluding Asbestos US$ Millions Three Months Ended 30 June Q1'19 Q1'18 EBIT $ 131.9 $ 84.0 Depreciation and amortization 28.1 21.8 Adjusted EBITDA $ 160.0 $ 105.8 Asbestos: Asbestos adjustments (25.1) 3.9 AICF SG&A expenses 0.3 0.4 Adjusted EBITDA exclu
Slide 40: Q1 FY19 Management Presentation
Q1 FY19 MANAGEMENT PRESENTATION 10 August 2018
James Hardie Industries — Q1 FY2019 Earnings Presentation on 6ix