James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q1 FY2012 Earnings Presentation
47 slides from James Hardie Industries's earnings presentation, Aug 17, 2011
Slide 1: Q1 FY12 Management Presentation
Q1 FY12 MANAGEMENT PRESENTATION 16 August 2011
Slide 2: Forward-looking statements
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, invitation memoranda a
Slide 3: Agenda
Overview and Operating Review - Louis Gries, CEO Financial Review - Russell Chenu, CFO Questions and Answers 3 In this Management Presentation, James Hardie may present financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures included in the Definitions section of
Slide 4: Operating Review
OPERATING REVIEW Louis Gries, CEO
Slide 5: Group Overview
1st quarter operating results reflect the continuing difficult US operating environment, a softer residential construction market in Australia, higher freight and input costs (primarily pulp) partially offset by the higher value of the Asia Pacific businesses' currencies Net operating profit for the
Slide 6: USA and Europe Fibre Cement: 1st Quarter Result
1st Quarter Result* Net Sales down 6% to US$219.8 million Sales Volume down 6% to 332.4 mmsf Average Price up 1% to US$661 per msf EBIT down 14% to US$48.0 million EBIT Margin down 2.3 pts to 21.8% 6 USA AND EUROPE FIBRE CEMENT * Comparisons are of first quarter fiscal year 2012 versus first quarter
Slide 7: USA and Europe Fibre Cement: Average Net Sales Price
7 USA AND EUROPE FIBRE CEMENT Average Net Sales Price US$661
Slide 8: USA and Europe Fibre Cement: EBIT and EBIT Margin
* Excludes impairment charges of US$45.6 million in Q4 FY08 8 EBIT and EBIT Margin* EBIT EBIT Margin USA AND EUROPE FIBRE CEMENT
Slide 9: USA and Europe Fibre Cement: Primary Growth Performance
Primary Growth Performance All market and market share figures are management estimates. 9 USA AND EUROPE FIBRE CEMENT
Slide 10: Asia Pacific Fibre Cement: 1st Quarter Result
1st Quarter Result* Net Sales up 10% to US$93.8 million Sales Volume down 8% to 97.8 mmsf Average Price down 1% to A$903 per msf EBIT down 5% to US$21.1 million EBIT Margin down 3.4 pts to 22.5% 10 ASIA PACIFIC FIBRE CEMENT * Comparisons are of first quarter fiscal year 2012 versus first quarter fis
Slide 11: Group 1st Quarter Summary
USA and Europe Fibre Cement results reflected: A continuing difficult operating environment Higher freight and input costs (primarily pulp) Partially offset by lower SG&A expenses and higher average net sales price Asia Pacific Fibre Cement results reflected: Softer operating environments Lower sale
Slide 12: Total USA Housing Starts - US Census
12 There is no evidence of a sustainable recovery in US housing Month-to-month performance is more stable in FY12 TOTAL USA HOUSING STARTS - US CENSUS
Slide 13: Group Outlook
United States Weak recovery driven by low consumer confidence The flow of foreclosed homes into the market continues, house values continue to decline, credit conditions remain restrictive and the broader economic recovery remains relatively weak and uncertain Freight and input costs (particularly p
Slide 14: Group Outlook: Key Priorities
14 GROUP OUTLOOK Key Priorities The company's key medium term priorities in the US are: Grow primary demand and exterior cladding market share - with focus on repair and remodel and non-metro markets Increase market penetration of our ColorPlus(r) and Trim products Overall Group Strategy The company
Slide 15: Financial Review
FINANCIAL REVIEW Russell Chenu, CFO
Slide 16: Overview
Operations* 1st quarter operating results reflect the continued weak US housing construction sector and a slowing Australian housing construction market, partially offset by the appreciation of Asia Pacific businesses' currencies and lower SG&A expenses Strong net operating cash flow has enabled a f
Slide 17: Consequences of Changes - A$ versus US$
A$/US$ Exchange Rate Favourable impact from translation of Asia Pacific results - Q1 FY12 vs Q1 FY11 Unfavourable impact on corporate costs incurred in Australian dollars - Q1 FY12 vs Q1 FY11 Unfavourable impact from translation of asbestos liability balance - 30 June 2011 vs 31 March 2010 17 Earnin
Slide 18: Results - Q1
uss Q112 Qi11___% Change Net sales 313.6 318.4 @) Gross profit 108.2 1168 @ ‘SG&A expenses (45.5) (45.9) 1 Research & development expenses (7.0) (7.0) - Asbestos adjustments (38.2) 63.1 - EBIT 175 127.0 (86) Net interest expense (1.0) (1.4) 9 Other expense (1.5) (4.4) 66 Income tax expense (14.0) (1
Slide 19: Results - Q1 (continued)
19 RESULTS - Q1 (CONTINUED) 19 * Includes AICF SG&A, interest income and gain on investments
Slide 20: Net Sales - Q1
US$ Millions Qi'12 ait USA and Europe Fibre Cement 219.8 233.0 Asia Pacific Fibre Cement 93.8 85.4 Total 313.6 318.4 % Change (6) 10 (2) 20
Slide 21: Segment EBIT - Q1
1 Research & development includes "core" research & development expenses and administrative expenses, but excludes product development expenses 21 SEGMENT EBIT - Q1
Slide 22: Income Tax Expense - Q1
22 INCOME TAX EXPENSE - Q1 * Includes AICF SG&A, interest income and gain on investments
Slide 23: Cash Flow
USS Millions enn eam EBIT 75 127.0 Non-cash items: Asbestos adjustments 38.2 (63.1) Other non-cash items 187 22.41 Net working capital movements (25.9) (22.8) Cash Generated By Trading Activities 48.5 63.2 Tax payments (24.6) (19.7) Change in asbestos-related assets & liabilities, (0.1) (0.6) Deposi
Slide 24: Debt
Net debt decreased by US$13.5 million compared to net debt at 31 March 2011 Weighted average remaining term of total facilities was 1.7 years at 30 June 2011 down from 1.9 years at 31 March 2011 James Hardie remains well within its financial debt covenants 24 At 30 June 2011 DEBT
Slide 25: Legacy Issues Update
25 LEGACY ISSUES UPDATE ATO - 1999 Disputed Amended Assessment James Hardie's initial appeal dismissed in September 2010 Charge of US$345.2 million effective 1 September 2010 (no impact on net operating cash flow in FY11) The Full Federal Court appeal was heard in May 2011; decision awaited Either p
Slide 26: Legacy Issues Update (continued)
26 LEGACY ISSUES UPDATE (CONTINUED) ASIC Proceedings Court of Appeal judgement handed down on 17 December 2010 Company's appeal dismissed Non-executive directors' appeals upheld ASIC and one former executive granted special leave to appeal to the High Court of Australia Awaiting schedule for High Co
Slide 27: Asbestos Fund Update - Pro Forma
27 *In accordance with the Amended and Restated Final Funding Agreement ASBESTOS FUND UPDATE - PRO FORMA (UNAUDITED)
Slide 28: Key Ratios
1 Excludes asbestos adjustments, AICF SG&A expenses, AICF interest income, gain or impairment on AICF investments, tax benefits related to asbestos adjustments, ASIC expenses and tax adjustments 2 Excludes asbestos adjustments, AICF SG&A expenses and ASIC expenses 3 Includes restricted cash set asid
Slide 29: Summary
29 Net operating profit, excluding asbestos, ASIC expenses and tax adjustments for the 1st quarter decreased 3% to US$ 39.4 million The 1st quarter operating results reflect: Subdued US and slowing Australian housing construction markets Lower sales due to a favourable impact of US tax incentives av
Slide 30: Guidance
30 Challenges remain, with the operating environment in the US, in particular, still weak and uncertain and the Australian construction market softening Management anticipates FY12 full year earnings excluding asbestos, ASIC expenses and tax adjustments to be within the analysts' range of US$126 mil
Slide 31: A | @ James Hardie
A | @ James Hardie ~ i |
Slide 32: A | @ James Hardie
A | @ James Hardie ~ i |
Slide 33: Global Strategy
Aggressively grow demand for our products in targeted market segments Grow our overall market position while defending our share in existing market segments Offer products with superior value to that of our competitors Introduce differentiated products to deliver a sustainable competitive advantage
Slide 34: General Corporate Costs - Q1
34 GENERAL CORPORATE COSTS - Q1
Slide 35: EBITDA - Q1
EBITDA - Q1 EBIT USA and Europe Fibre Cement 48.0 56.1 (14) Asia Pacific Fibre Cement 214 224 6) Research & development (6.1) (5.0) (2) General corporate excluding asbestos and ASIC expenses (7.5) (8.3) 10 Depreciation and Amortisation USA and Europe Fibre Cement 132 12.9 2 Asia Pacific Fibre Cement
Slide 36: Capital Expenditure
CAPITAL EXPENDITURE USS Millons. ai12 Qi __% Change USA and Europe Fibre Cement 99 12.3 (20) Asia Pacific Fibre Cement 22 120 83 Total 12.4 13.5 (10) 36
Slide 37: Net Interest Expense
USS Millions Qi2 ait Gross interest expense (0.8) (1.4) Interest income 0.4 04 Realised loss on interest rate swaps (0.8) (0.4) Net interest expense excluding AICF interest income (1.8) (1.7) AICF interest income 05 06 Net interest expense (1.0) (1.4) 37
Slide 38: USA Fibre Cement: US Census housing starts
Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau 38 USA FIBRE CEMENT
Slide 39: Endnotes and Definitions
39 ENDNOTES 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 Consolidated Financial Statements. Definitio
Slide 40: Definitions: Sales Volumes and Financial Ratios
Sales Volumes mmsf - million square feet, where a square foot is defined as a standard square foot of 5/16" thickness. msf - thousand square feet, where a square foot is defined as a standard square foot of 5/16" thickness. Financial Ratios Gearing Ratio - Net debt (cash) divided by net debt (cash)
Slide 41: Non-US GAAP Financial Measures
Non-US GAAP Financial Measures EBIT and EBIT margin excluding asbestos and ASIC expenses- EBIT and EBIT margin excluding asbestos and ASIC expenses are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. Management has inc
Slide 42: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Net operating profit excluding asbestos, ASIC expenses and tax adjustments- Net operating profit excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningful
Slide 43: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments- Diluted earnings per share excluding asbestos, ASIC expenses and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be mor
Slide 44: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) Effective tax rate excluding asbestos and tax adjustments- Effective tax rate excluding asbestos and tax adjustments is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than effective tax rate. Manageme
Slide 45: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) 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 profitability or liquidity. No
Slide 46: Non-US GAAP Financial Measures (continued)
Non-US GAAP Financial Measures (continued) General corporate costs excluding ASIC expenses and domicile change related costs- General corporate costs excluding ASIC expenses and domicile change related costs is not a measure of financial performance under US GAAP and should not be considered to be m
Slide 47: Q1 FY12 Management Presentation
Q1 FY12 MANAGEMENT PRESENTATION 16 August 2011
James Hardie Industries — Q1 FY2012 Earnings Presentation on 6ix