 Q3
FY14 MANAGEMENT PRESENTATION 28 February 2014
Exhibit 99.4 |
| Q3
FY14 MANAGEMENT PRESENTATION 28 February 2014
Exhibit 99.4 |
 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, invitation memoranda and
prospectuses, in media releases and other written materials and in oral statements made by the
company's officers, directors or employees to analysts, institutional investors, existing and
potential lenders, representatives of the media and others. Statements that are not historical facts are forward-looking
statements and such forward-looking statements are statements made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995.
Examples of forward-looking statements include:
•
statements about the company's future performance;
•
projections of the company's results of operations or financial condition;
•
statements regarding the company's plans with respect to the introduction of new products, product
lines and businesses; •
statements regarding the company's plans, objectives or goals, including those relating to
strategies, initiatives, competition, acquisitions, dispositions and/or its products;
•
expectations concerning the costs associated with the suspension, closure, opening or expansion of
operations at any of the company's plants and future plans with respect to any such plants;
•
expectations regarding the extension or renewal of the company's credit facilities including changes
to terms, covenants or ratios; •
expectations concerning dividend payments and share buy-backs;
•
statements concerning the company's corporate and tax domiciles and structures and potential changes
to them, including potential tax charges; •
statements regarding tax liabilities and related audits, reviews and proceedings;
•
statements as to the possible consequences of proceedings brought against the Company and certain of
its former directors and officers by the Australian Securities and Investments Commission
(ASIC); •
statements regarding the possible consequences, value, impact or effect of the Settlement Deed
resolving the legal proceedings brought by the New Zealand Ministry of Education against two
of the company's New Zealand subsidiaries; •
expectations about the timing and amount of contributions to Asbestos Injuries Compensation Fund
(AICF), a special purpose fund for the compensation of proven Australian asbestos-related
personal injury and death claims; •
expectations concerning indemnification obligations;
•
expectations concerning the adequacy of the company's warranty provisions and estimates for future
warranty-related costs; •
statements regarding the company's ability to manage legal and regulatory matters (including but not
limited to product liability, environmental, intellectual property and competition law
matters) and to resolve any such pending legal and regulatory matters within current estimates and in
anticipation of certain third-party recoveries; and
•
statements about economic conditions, such as changes in the US economic or housing recovery or
changes in the market conditions in the Asia Pacific region, the levels of new home
construction and home renovations, unemployment levels, changes in consumer income, changes or
stability in housing values, the availability of mortgages and other financing, mortgage and other
interest rates, housing affordability and supply, the levels of foreclosures and home resales,
currency exchange rates, and builder and consumer confidence. |
 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 not the exclusive means of identifying such statements. Readers are
cautioned not to place undue reliance on these forward-looking statements and all such forward-looking statements are qualified in their entirety by
reference to the following cautionary statements.
Forward-looking statements are based on the company's current expectations,
estimates and assumptions and because forward-looking statements address future
results, events and conditions, they, by their very nature, involve inherent risks
and uncertainties, many of which are unforeseeable and beyond the company's control.
Such known and unknown risks, uncertainties and other factors may cause actual
results, performance or other achievements to differ materially from the anticipated
results, performance or achievements expressed, projected or implied by these
forward-looking statements. These factors, some of which are discussed under “Risk
Factors”
in Section 3 of the Form 20-F filed with the Securities and Exchange Commission
on 27 June 2013, include, but are not limited to: all matters relating to or
arising out of the prior manufacture of products that contained asbestos by current
and former James Hardie subsidiaries; required contributions to AICF, any shortfall
in AICF and the effect of currency exchange rate movements on the amount recorded
in the company's financial statements as an asbestos liability; governmental loan
facility to AICF; compliance with and changes in tax laws and treatments;
competition and product pricing in the markets in which the company operates; the
consequences of product failures or defects; exposure to environmental, asbestos,
putative consumer class action or other legal proceedings; general economic and
market conditions; the supply and cost of raw materials; possible increases in
competition and the potential that competitors could copy the company's products;
reliance
on
a
small
number
of
customers;
a
customer’s
inability
to
pay;
compliance
with
and
changes
in
environmental
and
health
and
safety
laws;
risks
of
conducting
business internationally; compliance with and changes in laws and regulations; the
effect of the transfer of the company's corporate domicile from The Netherlands to
Ireland, including changes in corporate governance and any potential tax benefits
related thereto; currency exchange risks; dependence on customer preference and
the
concentration
of
the
company's
customer
base
on
large
format
retail
customers,
distributors
and
dealers;
dependence
on
residential
and
commercial
construction
markets; the effect of adverse changes in climate or weather patterns; possible
inability to renew credit facilities on terms favourable to the company, or at all;
acquisition
or
sale
of
businesses
and
business
segments;
changes
in
the
company's
key
management
personnel;
inherent
limitations
on
internal
controls;
use
of
accounting estimates; and all other risks identified in the company's reports filed
with Australian, Irish and US securities agencies and exchanges (as appropriate). The
company cautions you that the foregoing list of factors is not exhaustive and that
other risks and uncertainties may cause actual results to differ materially from those
referenced the company's forward-looking statements. Forward-looking
statements speak only as of the date they are made and are statements of the company's
current expectations concerning future results, events and conditions. The company
assumes no obligation to update any forward-looking statements or information
except as required by law.
3
DISCLAIMER (CONTINUED) |
 •
Overview and Operating Review –
Louis Gries, CEO
•
Financial Review –
Matt Marsh, CFO
•
Questions and Answers
4
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
this
document
starting
on
page
48.
The
company
presents
financial
measures
that
it
believes
are
customarily used by its Australian investors. Specifically, these financial measures, which are
equivalent to or derived from certain US GAAP measures
as
explained
in
the
definitions,
include
“EBIT”,
“EBIT
margin”,
“Operating
profit
before
income
taxes”
and
“Net
operating
profit”.
The
company
may
also
present
other
terms
for
measuring
its
sales
volumes
(“million
square
feet”
or
“mmsf”
and
“thousand
square
feet”
or
“msf”);
financial
ratios (“Gearing ratio”, “Net interest expense cover”, “Net interest paid
cover”, “Net debt payback”, “Net debt (cash)”); and Non-US GAAP financial
measures (“EBIT excluding asbestos, asset impairments, ASIC expenses and New Zealand product
liability”, “EBIT margin excluding asbestos, asset impairments,
ASIC
expenses
and
New
Zealand
product
liability”,
“Net
operating
profit
excluding
asbestos,
asset
impairments,
ASIC
expenses,
New
Zealand product liability and tax adjustments”, “Diluted earnings per share excluding
asbestos, asset impairments, ASIC expenses, New Zealand product liability and tax
adjustments”, “Operating profit before income taxes excluding asbestos, asset impairments and New Zealand product liability”,
“Effective tax rate on earnings excluding asbestos, asset impairments, New Zealand product
liability and tax adjustments”, “Adjusted EBITDA”, “General
corporate
costs
excluding
ASIC
expenses,
intercompany
foreign
exchange
gain
and
recovery
of
RCI
legal
costs”
and
“Selling,
general
and
administrative
expenses
excluding
New
Zealand
product
liability”).
Unless
otherwise
stated,
results
and
comparisons
are
of
the
3
rd
quarter
and
nine
months
of
the
current
fiscal
year
versus
the
3
rd
quarter
and
nine
months
of
the
prior
fiscal
year.
AGENDA |
 OVERVIEW AND OPERATING REVIEW
Louis Gries, CEO |
 GROUP
OVERVIEW
1
6
Net operating profit reflects:
1
Comparisons
are
of
the
3
rd
quarter
and
nine
months
of
the
current
fiscal
year
versus
the
3
rd
quarter
and
nine
months
of
the
prior
fiscal
year
USA and Europe Fibre Cement EBIT margins, excluding asset impairments of 20.2% and
21.4% for the quarter and nine months ended 31 December 2013,
respectively, are within target EBIT margin range Q3
Q3
%
9 Months
9 Months
%
FY 2014
FY 2013
Change
FY 2014
FY 2013
Change
Net operating profit
92.2
31.5
286.3
115.0
Net operating profit excluding asbestos, asset
impairments, ASIC expenses, New Zealand product
liability and tax adjustments
43.7
26.7
64
152.0
109.4
39
Diluted earnings per share excluding asbestos, asset
impairments, ASIC expenses, New Zealand product
liability and tax adjustments (US cents)
10
6
67
34
25
36
US$ Millions
•
Higher sales volumes and average net sales price in the USA and Europe Fibre
Cement segment
•
Higher gross profit and EBIT in the Asia Pacific Fibre Cement segment, partially
offset by the depreciation of local currencies versus the US dollar
|
 7
USA and Europe Fibre Cement results reflected:
•
Higher sales volume due to increased activity in new construction
market and increased market penetration
•
Higher average net sales price
•
Improved production costs due to economies of scale
•
Higher input costs
•
Increased idle facility costs as a result of the company's refurbishment
of production capacity at its Fontana, California plant
1
USA AND EUROPE FIBRE CEMENT 3
rd
QUARTER SUMMARY
1
Comparisons
are
of
the
3
rd
quarter
of
the
current
fiscal
year
versus
the
3
rd
quarter
of
the
prior
fiscal
year
2
During
the
second
quarter
of
FY2014,
the
company
refined
its
methodology
for
calculating
average
net
sales
price
in
both
the
USA and Europe and
Asia Pacific Fibre Cement segments to exclude ancillary products
that have no impact on fibre cement sales volume, which is measured and
reported in million square feet (“mmsf”). As the revenue contribution of these ancillary
products has been increasing, the company believes the refined methodology
provides
an
improved
disclosure
of
average
net
sales
price,
in
line
with
the
company's
primary
fibre
cement
business,
which
is
a
key
segment
performance
indicator.
The
company
has
restated
average
net
sales
price
in
the
prior
periods
to
conform
with
the
current
quarter
and
half
year
calculation
of
average
net
sales
price.
Readers
are
referred
to
the
“Five
Year
Financial
Summary”
on
the
company's Investor
Relations website at
http://www.ir.jameshardie.com.au/jh/results_briefings.jsp
for
the
refined
comparative
average
net
sales
price
for
the
periods
FY2009 through FY2013 using this revised methodology.
1
2 |
 3rd Quarter Result
Net Sales
up
17% to US$262.6
million
Sales Volume
up
11% to 389.2 mmsf
Average Price
up
5% to US$659 per msf
EBIT
up
75% to US$53.1 million
EBIT Margin
up
6.7 pts to 20.2%
8
1
Comparisons
are
of
the
3
rd
quarter
of
the
current
fiscal
year
versus
the
3
rd
quarter
of
the
prior
fiscal
year
2
Prior period amounts have been restated to conform with current year refined methodology for
calculating the change in average net sales price 3
Excludes
asset
impairments
charges
of
US$5.8
million
in
the
3
rd
quarter
of
the
prior
fiscal
year
1
USA AND EUROPE FIBRE CEMENT
2
3
3 |
 Nine
Months Result Net Sales
up
17% to US$839.4
million
Sales Volume
up
14% to 1,263.5 mmsf
Average Price
up
3% to US$651 per msf
EBIT
up
44% to US$179.8 million
EBIT Margin
up
3.9 pts to 21.4%
9
1
Comparisons are of the nine months of the current fiscal year versus the nine
months of the prior fiscal year 2
Prior period amounts have been restated to conform with current year refined
methodology for calculating the change in average net sales price 3
Excludes
asset
impairments
charges
of
US$5.8
million
in
the
nine
months
of
the
prior
fiscal
year
1
USA AND EUROPE FIBRE CEMENT
2
3
3 |
 1
Excludes
asset
impairment
charges
of
US$14.3
million
in
4
th
quarter
FY12,
US$5.8
million
in
3
rd
quarter
FY13
and
US$11.1
million
in
4
th
quarter
FY13
10
Quarterly EBIT and EBIT Margin
¹
EBIT
EBIT Margin
USA AND EUROPE FIBRE CEMENT
0
5
10
15
20
25
30
35
0
10
20
30
40
50
60
70
80
FY09
FY10
FY11
FY12
FY13
FY14 |
 Rolling 12 month average of seasonally adjusted estimate of housing starts by US
Census Bureau 11
USA FIBRE CEMENT
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
Top Line Growth
JH Volume
Housing Starts
JH Revenue |
 12
Average Net Sales Price (US dollars)
US$651
USA AND EUROPE FIBRE CEMENT
1
Prior period amounts have been restated to conform with current year refined
methodology for calculating average net sales price 1
550
590
630
670
FY09
FY10
FY11
FY12
FY13
Q3 YTD FY14 |
 ASIA
PACIFIC
FIBRE
CEMENT
3
rd
QUARTER
SUMMARY
1
13
1
Comparisons
are
of
the
3
rd
quarter
of
the
current
fiscal
year
versus
the
3
rd
quarter
of
the
prior
fiscal
year
2
Prior period amounts have been restated to conform with current year refined
methodology for calculating the change in average net sales price
Asia Pacific Fibre Cement results reflected:
•
Higher
average
net
sales
price
in
local
currencies
•
Slight increase in sales volume constrained by a reported 4.8% reduction
in the repair and remodel market
•
Depreciation of local currencies against US$
2 |
 3rd Quarter
Result ¹
Net Sales
down
6% to US$90.6 million
Sales Volume
up/flat
Slight increase to 100.3mmsf
from 100.2mmsf
Average Price
²
up
6% to A$963 per msf
EBIT
³
up
11% to US$21.3 million
A$ EBIT
³
up
21% to A$22.8 million
EBIT Margin
³
up
3.5 pts to 23.5%
14
ASIA PACIFIC FIBRE CEMENT
1
Comparisons
are
of
the
3
rd
quarter
of
the
current
fiscal
year
versus
the
3
rd
quarter
of
the
prior
fiscal
year
2
Prior
period
amounts
have
been
restated
to
conform
with
current
year
refined
methodology
for
calculating
the
change
in
average
net
sales
price
3
Excludes
New
Zealand
product
liability
benefit
of
US$4.2
million
and
expense
of
US$7.5
million
in
the
3
rd
quarter
of
the
current
fiscal
year
and
3
rd
quarter
of
the
prior
fiscal
year,
respectively |
 Nine
Months Result Net Sales
1% to US$278.0 million
Sales Volume
up
4% to 310.3 mmsf
Average Price
up
4% to A$937 per msf
EBIT
up
11% to US$64.5 million
A$ EBIT
up
21% to A$68.2 million
EBIT Margin
up
2.4 pts to 23.2%
15
1
Comparisons are of the nine months of the current fiscal year versus the nine
months of the prior fiscal year 2
Prior
period
amounts
have
been
restated
to
conform
with
current
year
refined
methodology
for
calculating
the
change
in
average
net
sales
price
3
Excludes New Zealand product liability expenses of US$0.7 million and US$13.2
million in the nine months of the current fiscal year and nine months of the
prior fiscal year, respectively 1
3
3
ASIA PACIFIC FIBRE CEMENT
2
3
down |
 16
USA and Europe Fibre Cement
•
The US operating environment continues to reflect an increasing number of housing
starts •
The company is continuing with its plan to expand production capacity through new
capital investments and re-commissioning of idled facilities in future
periods •
Full year FY14 EBIT margin is expected to be above 20%, absent major adverse
external factors
Asia Pacific Fibre Cement
•
In Australia, approvals for detached homes continues to increase, however the
repair and remodel market continues to decline. Thus, business is expected
to track in line with any growth in the detached housing market, and be
impacted by positive/negative movements in the repair and remodel
market •
In New Zealand, the housing market continues to improve, particularly in the
Auckland and Christchurch areas
GROUP OUTLOOK |
 17
MANUFACTURING CAPACITY EXPANSION
USA and Europe Fibre Cement
•
The company continues to refurbish its Fontana, California plant at a cost of US$37.9 million to
date. The company intends recommencement of production with a nominal capacity of 250 mmsf
in the fourth quarter of fiscal 2014
•
A fourth sheet machine and ancillary facilities at the Plant City, Florida location approved, with an
estimated investment of US$65 million with nominal capacity of 300 mmsf
•
A third sheet machine and ancillary facilities at the Cleburne, Texas location approved, with an
estimated investment of US$37 million with nominal capacity of 200 mmsf
•
Plant City and Cleburne expansions are expected to be commissioned by the first half of fiscal
2015
Asia Pacific Fibre Cement
•
In Q1 FY2014, James Hardie acquired the previously-leased land and buildings at its existing
Carole Park (Brisbane) plant and is expanding production capacity at the site at an estimated
investment of A$89 million
•
New production capacity on-track to be fully operational in first half of fiscal year 2015
1
Nominal capacities are based on production of 5/16’’ HardieZone 10 product, without regard
to actual or anticipated product mix 1
1
1 |
 FINANCIAL REVIEW
Matt Marsh, CFO |
 •
Earnings impacted by:
•
Higher volumes and average net sales price in local currencies
•
Higher EBIT and EBIT margins in all major business units
•
A benefit from asbestos adjustments of US$126.2 million during the nine month
period primarily as a result of the 14% depreciation of the A$/US$ spot
exchange rate at 31 December 2013 versus 31 March 2013
•
Favorable movement in the accounting provision for legacy product liability claims
in New Zealand,
resulting
in
a
benefit
of
US$4.2
million
and
expense
of
US$0.7
million
for
the
quarter
and
nine months ended 31 December 2013, respectively
•
Increase of US$31.5 million in capital expenditure to US$73.3 million for the nine
months ended 31 December 2013 when compared to the prior corresponding
period 19
HIGHLIGHTS
•
Increase in net operating cash flow to US$254.7 million for the current nine month
period compared to US$83.3 million in the prior corresponding period
•
The company today announced a 125 year anniversary special dividend of US28.0 cents
per share (approximately US$125 million) in recognition of the company's 125
year anniversary |
 20
RESULTS –
Q3
Net sales and gross profit both favorably
impacted by:
Higher sales volumes; and
Higher average net sales prices in local
currencies
Primarily due to a decrease in legacy New
Zealand product liability settlements
Partially offset by higher corporate costs
Asbestos adjustments were impacted by
depreciation in the Australian dollar exchange
rate against the US dollar when compared to
the prior corresponding period end
SG&A expenses decreased:
Highlights:
US$ Millions
Q3 '14
Q3 '13
% Change
Net sales
353.2
320.4
10
Gross profit
121.5
96.2
26
SG&A expenses
(53.8)
(59.7)
10
Research & development expenses
(8.7)
(9.9)
12
Asset impairments
-
(5.8)
Asbestos adjustments
35.8
11.7
EBIT
94.8
32.5
Net interest (expense) income
(0.4)
2.1
Other income
1.2
0.5
Income tax expense
(3.4)
(3.6)
6
Net operating profit
92.2
31.5 |
 21
1
Includes AICF SG&A expenses and AICF interest income
RESULTS –
Q3 (CONTINUED)
US$ Millions
Q3 '14
Q3 '13
% Change
Net operating profit
92.2
31.5
Asbestos:
Asbestos adjustments
(35.8)
(11.7)
Other asbestos
¹
(0.2)
(2.9)
93
Asset impairment
-
5.8
ASIC expenses
-
0.1
New Zealand product liability (benefit) expenses
(4.2)
7.5
Asbestos and other tax adjustments
(8.3)
(3.6)
Net operating profit excluding asbestos, asset
impairments, ASIC expenses, New Zealand
product liability and tax adjustments
43.7
26.7
64
Highlights:
Legacy New Zealand product liability
moved from a US$7.5 million
expense in the prior corresponding
quarter to a US$4.2 million benefit in
the current quarter, driven by
favorable settlements during the
current quarter
Asbestos adjustments driven by the
effect of foreign exchange rate
movements
Net operating profit excluding
asbestos, asset impairments, ASIC
expenses, and New Zealand product
liability increased 64% |
 22
RESULTS –
NINE MONTHS
Net sales and gross profit both favorably
impacted by:
Higher sales volumes; and
Higher average net sales prices in
local currencies
R&D expenses decreased during the nine
months primarily as a result of the
completion of certain core projects
Asbestos adjustments at 31 December
2013 were impacted by foreign exchange
rate movements
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
% Change
Net sales
1,117.4
994.5
12
Gross profit
380.9
317.5
20
SG&A expenses
(162.5)
(160.6)
(1)
Research & development expenses
(25.1)
(27.8)
10
Asset impairments
-
(5.8)
Asbestos adjustments
126.2
14.5
EBIT
319.5
137.8
Net interest (expense) income
(0.7)
2.3
Other income
1.4
1.2
17
Income tax expense
(33.9)
(26.3)
(29)
Net operating profit
286.3
115.0
Highlights: |
 23
1
Includes AICF SG&A expenses and AICF interest income
RESULTS –
NINE MONTHS (CONTINUED)
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
% Change
Net operating profit
286.3
115.0
Asbestos:
Asbestos adjustments
(126.2)
(14.5)
Other
asbestos
¹
(1.0)
(4.4)
77
Asset impairments
-
5.8
ASIC expenses
-
0.5
New Zealand product liability expenses
0.7
13.2
(95)
Asbestos and other tax adjustments
(7.8)
(6.2)
(26)
Net operating profit excluding asbestos, asset
impairments, ASIC expenses, New Zealand
product liability and tax adjustments
152.0
109.4
39
Diluted earnings per share excluding asbestos,
asset imparments, ASIC expenses, New Zealand
product liability and tax adjustments (US cents)
34.4
24.9
38
Highlights:
Improved headline net operating profit
driven by higher net sales and gross profit
Asbestos adjustments driven by the effect
of foreign exchange rate movements
Legacy New Zealand product liability
expenses for the nine months decreased
compared to the prior corresponding
period due to:
Reduced number of new claims
Favorable settlements during 3
rd
quarter of current fiscal year
Excluding asbestos, asset impairments,
ASIC expenses, and New Zealand
product liability, net operating profit
increased 39% |
 1
Research and development expenses include costs associated with research projects
that are designed to benefit all business units. These costs are recorded in
the Research and Development segment rather than attributed to individual business units
2
Refer slide 44 for further information
24
SEGMENT EBIT –
Q3
Adjusted USA and Europe Fibre
Cement EBIT margin increased
6.7 percentage points to 20.2%
Adjusted Asia Pacific Fibre
Cement EBIT margin increased
3.5 percentage points to 23.5%
General corporate costs were
higher compared to the prior
corresponding quarter primarily
due to an increase in salary and
compensation expenses
US$ Millions
Q3 '14
Q3 '13
% Change
USA and Europe Fibre Cement exluding asset
impairments
53.1
30.4
75
Asia Pacific Fibre Cement, excluding New Zealand
product liability expenses
21.3
19.2
11
Research & Development
1
(6.4)
(6.8)
6
Total segment EBIT excluding asset
impairments and New Zealand product liability
expenses
68.0
42.8
59
General corporate costs excluding ASIC expenses
2
(12.8)
(8.1)
(58)
Total EBIT excluding asbestos, asset
impairments, ASIC expenses and New Zealand
product liability expenses
55.2
34.7
59
Asbestos adjustments
35.8
11.7
AICF SG&A expenses
(0.4)
(0.5)
20
Asset impairments
-
(5.8)
ASIC expenses
-
(0.1)
New Zealand product liability benefit (expenses)
4.2
(7.5)
Total EBIT
94.8
32.5
Highlights: |
 25
SEGMENT EBIT –
NINE MONTHS
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
% Change
USA and Europe Fibre Cement excluding asset
impairments
179.8
124.7
44
Asia Pacific Fibre Cement excluding New Zealand
product liability
64.5
58.2
11
Research & Development
¹
(18.0)
(19.1)
6
Total segment EBIT excluding asset
impairments and New Zealand product liability
226.3
163.8
38
General
corporate
costs
excluding
ASIC
expenses
2
(30.9)
(19.8)
(56)
Total EBIT excluding asbestos, asset
impairments, ASIC expenses and New Zealand
product liability
195.4
144.0
36
Asbestos adjustments
126.2
14.5
AICF SG&A expenses
(1.4)
(1.2)
(17)
ASIC expenses
-
(0.5)
New Zealand product liaiblity expenses
(0.7)
(13.2)
95
Total EBIT
319.5
137.8
Highlights:
Adjusted USA and Europe Fibre
Cement EBIT margin increased 3.9
percentage points to 21.4%
Adjusted Asia Pacific Fibre Cement
EBIT margin increased 2.4
percentage points to 23.2%
General corporate costs were
higher compared to the prior
corresponding period primarily due
to an increase in salary and
compensation expenses.
Additionally, the prior period was
favourably impacted by a number of
non-recurring items.
1
Research and development expenses include costs associated with research projects that are designed to
benefit all business units. These costs are recorded in the Research and Development segment rather than attributed to individual
business units 2
Refer slide 45 for further information |
 •
Unfavourable
impact
from
translation
of
Asia
Pacific
results
–
Q314
vs
Q313
•
Favorable
impact
on
corporate
costs
incurred
in
Australian
dollars
–
Q314
vs
Q313
•
Favourable
impact
from
translation
of
asbestos
liability
balance
–
31
December 2013 vs 31 March 2013
26
Earnings
Balance Sheet
N/A
N/A
CHANGES IN A$ VERSUS US$ |
 27
1
Includes AICF SG&A expenses and AICF interest income
INCOME TAX EXPENSE –
Q3
US$ Millions
Operating profit before income taxes
95.6
35.1
Asbestos:
Asbestos adjustments
(35.8)
(11.7)
Other asbestos
¹
(0.2)
(2.9)
Asset impairments
-
5.8
New Zealand product liability (benefit) expenses
(4.2)
7.5
Operating profit before income taxes excluding asbestos,
asset imparments and New Zealand product liability
55.4
33.8
Income tax expense
(3.4)
(3.6)
Asbestos related and other tax adjustments
(8.3)
(3.6)
Income tax expense excluding tax adjustments
(11.7)
(7.2)
Effective tax rate excluding asbestos, asset impairments,
New Zealand product liability and tax adjustments
21.1%
21.3%
Q3 '14
Q3 '13
Highlights:
Income tax expense excluding
asbestos-related and other tax
adjustments for the quarter increased
due to higher taxable earnings.
Effective tax rate excluding asbestos,
asset impairments, New Zealand
product liability, and tax adjustments
decreased slightly compared to the
prior corresponding quarter
Asbestos related and other tax
adjustments include additional interest
receivable from the ATO of US$15.4
million in connection with finalization of
the RCI 1999 Amended Assessment
|
 28
1
Includes AICF SG&A expenses and AICF interest income
INCOME TAX EXPENSE –
NINE MONTHS
Highlights:
Effective tax rate excluding
asbestos, asset impairments,
New Zealand product liability
and tax adjustments
decreased due to an increase
in taxable earnings relative to
recurring tax adjustments
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
Operating profit before income taxes
320.2
141.3
Asbestos:
Asbestos adjustments
(126.2)
(14.5)
Other asbestos
(1.0)
(4.4)
Asset impairments
-
5.8
New Zealand product liability expenses
0.7
13.2
Operating profit before income taxes excluding asbestos,
asset impairments and New Zealand product liability
193.7
141.4
Income tax expense
(33.9)
(26.3)
Asbestos related and other tax adjustments
(7.8)
(6.2)
Income tax expense excluding tax adjustments
(41.7)
(32.5)
Effective tax rate excluding asbestos, asset impairments,
New Zealand product liability and tax adjustments
21.5%
23.0%
1 |
 29
1
Certain reclassifications have been reflected in the prior period to conform with
current period presentation CASHFLOW
1
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
EBIT
319.5
137.8
Non-cash items:
Asbestos adjustments
(126.2)
(14.5)
Asset impairments
-
5.8
Other non-cash items
51.2
52.3
Net working capital movements
24.3
30.8
Cash Generated By Trading Activities
268.8
212.2
Tax payments, net
(22.9)
(85.0)
Change in other non-trading assets and liabilities
13.4
145.9
Change in asbestos-related assets & liabilities
(1.0)
(4.4)
Payment to the AICF
-
(184.1)
Interest paid
(3.6)
(1.3)
Net Operating Cash Flow
254.7
83.3
Purchases of property, plant & equipment
(68.5)
(41.8)
Proceeds from sale of property, plant & equipment
0.6
0.5
Acquisition of business
(4.1)
-
Common stock repurchased and retired
(5.1)
-
Dividends paid
(163.6)
(166.4)
Proceeds from issuance of shares
15.1
20.8
Tax benefit from stock options exercised
1.1
0.9
Effect of exchange rate on cash
1.3
(3.2)
Movement In Net Cash
31.5
(105.9)
Beginning Net Cash
153.7
265.4
Ending Net Cash
185.2
159.5 |
 30
CAPITAL EXPENDITURE
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
% Change
USA and Europe Fibre Cement (including
Research and Development)
48.3
34.1
42
Asia Pacific Fibre Cement
25.0
7.7
Total
73.3
41.8
75
•
In Q1 FY14, the company completed the purchase of the previously-leased land and buildings at
Carole Park, Brisbane plant and commenced projects to increase the plant’s production
capacity •
The company continues to refurbish its Fontana, California plant at a cost of US$37.9 million to
date. The company intends recommencement of production in the fourth quarter of fiscal 2014
•
Capital expenditures include capital assets of US$4.8 million related to the fibreglass window
business acquisition. |
 Objectives
•
To optimize JHX capital structure with a view towards a target net debt position in the range of
1-2 times Adjusted EBITDA
1
Strategy
•
While reinvesting in R&D and capacity expansion required for growth;
•
Provide
consistent
dividend
payments
with
the
payout
ratio
of
50-70%
of
NPAT
excluding
asbestos,
•
More
aggressive
approach
to
share
buy
back
program
together
with
possible
use
of
special
dividends
Framework
31
Capital Management Framework
1
Adjusted EBITDA is defined as EBITDA excluding asbestos
•
Manage capital efficiency within a prudent and rigorous financial policy
Ensure sufficient liquidity to support financial obligations and execute strategy
Minimize
cost
of
capital
while
taking
into
consideration
current
and
future
industry,
market
and
economic risks and conditions
•
Strong cash flow generation expected to continue, and grow
Fund CAPEX and reinvestment in the company
Maintain flexibility to capitalize on market and strategic opportunities
|
 32
CAPITAL MANAGEMENT AND DIVIDENDS
Dividends
•
Declared in US currency and will be paid on 30 May 2014 with a record date of 21
March 2014 •
On 14 November 2013, the company announced an ordinary dividend of US8.0 cents per
security, up from US5.0 cents per security in the prior corresponding
fiscal year. The dividend was declared in US currency and will be paid on
28 March 2014 •
Share Buybacks
•
The company announced today a 125 year anniversary special dividend of US28.0 cents
per security in recognition of the company's 125 year anniversary
•
Effective from and including FY14, dividend payout ratio increased from between 30%
and 50% to between 50% and 70% of annual NPAT excluding asbestos
adjustments An ordinary dividend of US13.0 cents per security and a special
dividend of US24.0 cents per security were paid on 26 July 2013 from FY13
earnings. Total dividends paid was US$163.6 million •
In May 2013, the company announced a new share buyback program to acquire up to 5%
of its issued capital during the following 12 months
•
As of today, the Company repurchased a total of 1,139,214 shares of its
common stock, with an aggregate cost of A$13.6 million (US$12.2 million), at
an average market price of A$11.94 (US$10.75) |
 33
At 31 December 2013:
DEBT
•
Weighted
average
remaining
term
of
debt
facilities
was
2.3
years
at
31
December
2013,
down
from 3.1 years at 31 March 2013
•
On 14 February 2014, US$50.0 million of the unutilized credit facility expired.
The company intends to replace the expired credit facility in the near
future •
James Hardie remains well within its financial debt covenants
•
Net cash of US$185.2 million compared to net cash of US$153.7 million at 31 March
2013 US$ Millions
Total facilities
405.0
Gross debt
-
Cash
185.2
Net cash
185.2
Unutilised facilities and cash
590.2 |
 34
New Zealand Product Liability claims:
•
Since FY02 James Hardie NZ subsidiaries have been joined to product liability
claims that relate to buildings primarily constructed from 1998 to
2004 •
These claims often involve multiple parties and allege losses due to excessive
moisture penetration
•
At 31 December 2013 and 31 March 2013, the total provision for these matters
collectively, net of estimated third-party recoveries was US$11.6
million and US$15.2 million, respectively •
The company recognized a benefit of US$4.2 million in the current quarter due to
favourable activity in the three months ended 31 December 2013. For the nine
months, the company recognized
an
expense
of
US$0.7
million
to
reflect
the
movements
in
the
provisions
for
new
and existing claims during the current fiscal year
New Zealand Ministry of Education (MOE) representative action:
•
On
16
April
2013,
the
MOE
filed
a
‘representative
action’
against
two
James
Hardie
NZ
subsidiaries and other parties
•
On 23 December 2013, the company finalized a commercial settlement with the
MOE. The settlement did not have a material adverse effect on the company's
financial position, results of operations or cash flows
NZ PRODUCT LIABILITY CLAIMS AND NZ MOE REPRESENTATIVE ACTION |
 35
ASBESTOS FUND –
PROFORMA (UNAUDITED)
•
Year to date claims experience of liable entities is adverse relative to the 31 March 2013
actuarial forecast for FY2014 and relative to the prior corresponding period. Specifically, both
primary claims and cross-claims (from other defendants) are tracking higher for
mesothelioma •
Readers
are
referred
to
Note
7
of
the
company's
31
December
2013
Condensed Consolidated
Financial Statements for further information on asbestos claims experience
A$ millions
AICF
cash
and
investments
-
31
March
2013
128.1
Insurance and cross-claim recoveries
18.8
Interest and investment income
3.4
Proceeds from loan facility
25.3
Claims paid
(104.6)
Operating costs
(3.2)
Other
1.6
AICF
cash
and
investments
-
31
December
2013
69.4 |
 36
•
Management notes the range of analysts’
forecasts for net operating profit excluding
asbestos for the year ending 31 March 2014 is between US$189 million and US$202
million
•
Management expects full year earnings excluding asbestos, asset impairments, ASIC
expenses, New Zealand product liability and tax adjustments to be between
US$190 million and US$200 million
•
Guidance is dependent on, among other things, housing industry conditions in the US
continuing to improve and an average exchange rate of approximately
US$0.89/A$1.00 applies for the balance of the year ending 31 March 2014
•
Although US housing activity has been improving for some time, market conditions
remain somewhat uncertain and some input costs remain volatile
•
Management is unable to forecast the comparable US GAAP financial measure due to
uncertainty regarding the impact of actuarial estimates on
asbestos-related assets and liabilities in future periods
FY2014 GUIDANCE
1
Analysts’
forecasts as of 10 February 2014
1 |
 37
•
Net
operating
profit
excluding
asbestos,
asset
impairments,
ASIC
expenses,
New
Zealand
product liability and tax adjustments was US$43.7 million and US$152.0 million,
for the quarter and nine months, respectively
•
The 3
quarter results reflected:
•
Higher volume in the USA and Europe Fibre Cement segment and higher average
net
sales
prices
in
local
currencies,
in
both
the
USA
and
Europe
and
the
Asia
Pacific Fibre Cement segments
•
Higher EBIT margins, with USA and Europe Fibre Cement excluding asset
impairments, up 6.7 percentage points to 20.2% and Asia Pacific Fibre Cement
EBIT margin excluding New Zealand product liability up 3.5 percentage
points to 23.5%
•
Ongoing investment in production capacity expansion of the Fontana, California
plant and additional expansion projects at the Cleburne, Texas and Plant
City, Florida plants •
Announced a special dividend of US28.0 cents per security in recognition of all
the company's 125 year anniversary
•
Dividends of US$163.6 million paid in July 2013 and the FY2014 first half dividend
of US$35.5 million to be paid in March 2014
SUMMARY
rd |
 QUESTIONS |
 APPENDIX |
 40
1 Excludes
asset
impairments
charges
of
US$5.8
million
in
the
3
rd
quarter
and
nine
months
of
the
prior
fiscal
year.
2 Asia Pacific Fibre Cement EBIT excludes New Zealand product benefit
of US$4.2 million and expense US$7.5 million in Q3 ‘14 and Q3 ‘13,
respectively and US$0.7 million and US$13.2 million in nine months FY14 and nine
months FY13, respectively FINANCIAL SUMMARY
US$ Millions
% Change
% Change
Net Sales
USA and Europe Fibre Cement
262.6
$
224.5
$
17
839.4
$
714.6
$
17
Asia Pacific Fibre Cement
90.6
95.9
(6)
278.0
279.9
(1)
Total Net Sales
353.2
$
320.4
$
10
1,117.4
$
994.5
$
12
EBIT -
US$ Millions
USA and Europe Fibre Cement
53.1
$
30.4
$
75
179.8
$
124.7
$
44
Asia Pacific Fibre Cement
21.3
19.2
11
64.5
58.2
11
Research & Development
(6.4)
(6.8)
6
(18.0)
(19.1)
6
General corporate costs excluding
asbestos and ASIC expenses
(12.8)
(8.1)
(58)
(30.9)
(19.8)
(56)
Total EBIT excluding asbestos, asset
imparments, ASIC expenses and
New Zealand product liability
55.2
$
34.7
$
59
195.4
$
144.0
$
36
Net interest expense excluding AICF
interest income
(1.0)
(1.3)
23
(3.1)
(3.3)
6
Other income
1.2
0.5
1.4
1.2
17
Income tax expense excluding tax
adjustments
(11.7)
(7.2)
(63)
(41.7)
(32.5)
(28)
Net operating profit excluding
asbestos, asset impairments, ASIC
expenses, New Zealand product
liability and tax adjustments
43.7
$
26.7
$
64
152.0
$
109.4
$
39
Q3 '14
Q3 '13
9 Months
FY 2014
9 Months
FY 2013
2
1 |
 41
KEY RATIOS
9 Months
FY2014
9 Months
FY2013
9 Months
FY2012
EPS (Diluted)
34c
25c
25c
EBIT/ Sales (EBIT margin)
17.5%
14.5%
16.5%
Gearing Ratio
(13.4)%
(13.9)%
(2.0)%
Net Interest Expense Cover
63.0x
43.6x
25.9x
Net Interest Paid Cover
65.1x
110.8x
25.1x
Net Debt Payback
-
-
-
1
1
2
2
2
Excludes
asbestos
adjustments,
asset
impairments,
AICF
SG&A
expenses,
AICF
interest
income,
ASIC
expenses,
New
Zealand
product
liability
and
tax adjustments
Excludes asbestos adjustments, asset impairments, AICF SG&A expenses, ASIC
expenses, New Zealand product liability 1
2 |
 42
1
Excludes
asset
impairments
charges
of
US$5.8
million
in
the
3
rd
quarter
of
the
prior
fiscal
year
2
Excludes New Zealand product benefit of US$4.2 million and expense US$7.5 million
in Q3 FY14 and Q3 FY13, respectively EBITDA –
Q3
US$ Millions
Q3 '14
Q3 '13
% Change
EBIT
USA
and
Europe
Fibre
Cement
1
53.1
30.4
75
Asia
Pacific
Fibre
Cement
2
21.3
19.2
11
Research & Development
(6.4)
(6.8)
6
General corporate excluding ASIC expenses
(12.8)
(8.1)
(58)
Depreciation and Amortisation
USA and Europe Fibre Cement
13.5
14.7
(8)
Asia Pacific Fibre Cement
2.1
2.6
(19)
Total EBITDA excluding asbestos, asset impairments,
ASIC expenses and New Zealand product liability
expenses
70.8
52.0
36
Asbestos adjustments
35.8
11.7
AICF SG&A expenses
(0.4)
(0.5)
20
Asset impairments
(5.8)
ASIC expenses
-
(0.1)
New Zealand product liability benefit (expenses)
4.2
(7.5)
Total EBITDA
110.4
49.8 |
 43
1
Excludes asset impairments charges of US$5.8 million in the nine months of the
prior fiscal year 2
Excludes New Zealand product expenses of US$0.7 million and expense US$13.2 million
in the nine months FY14 and nine months FY13, respectively
EBITDA –
NINE MONTHS
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
% Change
EBIT
USA and Europe Fibre Cement
179.8
124.7
44
Asia Pacific Fibre Cement
64.5
58.2
11
Research & Development
(18.0)
(19.1)
6
General corporate excluding ASIC expenses
(30.9)
(19.8)
(56)
Depreciation and Amortisation
USA and Europe Fibre Cement
40.1
40.6
(1)
Asia Pacific Fibre Cement
6.1
7.4
(18)
Total EBITDA excluding asbestos, asset imparments,
ASIC expenses and New Zealand product liability
241.6
192.0
26
Asbestos adjustments
126.2
14.5
AICF SG&A expenses
(1.4)
(1.2)
(17)
Asset impairments
-
(5.8)
ASIC expenses
-
(0.5)
New Zealand product liability expenses
(0.7)
(13.2)
95
Total EBITDA
365.7
185.8
97
1
2 |
 44
GENERAL CORPORATE COSTS –
Q3
US$ Millions
% Change
Stock compensation expense
4.6
3.1
(48)
Other costs
8.2
5.0
(64)
General corporate costs excluding ASIC
expenses
12.8
8.1
(58)
ASIC expenses
-
0.1
General corporate costs
12.8
8.2
(56)
Q3 '14
Q3 '13 |
 45
GENERAL CORPORATE COSTS –
NINE MONTHS
US$ Millions
9 Months
FY 2014
9 Months
FY 2013
% Change
Stock compensation expense
8.3
8.7
5
Other costs
22.6
19.3
(17)
General corporate costs excluding ASIC
expenses, recovery of RCI legal costs and
intercompany foreign exchange gain
30.9
28.0
(10)
ASIC expenses
-
0.5
Recovery of RCI legal costs
-
(2.7)
Intercompany foreign exchange gain
-
(5.5)
General corporate costs
30.9
20.3
(52) |
 46
NET INTEREST (EXPENSE) INCOME
US$ Millions
Q3 '14
Q3 '13
9 Months
FY 2014
9 Months
FY 2013
Gross interest expense
(1.0)
(0.9)
(3.0)
(2.5)
Interest income
0.2
0.1
0.4
0.7
Realised loss on interest rate swaps
(0.2)
(0.5)
(0.5)
(1.5)
Net interest expense excluding AICF interest income
(1.0)
(1.3)
(3.1)
(3.3)
AICF interest income
0.6
3.4
2.4
5.6
Net interest (expense) income
(0.4)
2.1
(0.7)
2.3 |
 47
TOTAL US HOUSING STARTS |
 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
Definitions
Non-financial Terms
ABS
–
Australian Bureau of Statistics
AFFA
–
Amended and Restated Final Funding Agreement
AICF
–
Asbestos Injuries Compensation Fund Ltd
ASIC
–
Australian Securities and Investments Commission
ATO
–
Australian Taxation Office
NBSK –
Northern Bleached Soft Kraft; the company's benchmark grade of pulp
Legacy
New
Zealand
product
liability
benefit
(expenses)
(“New
Zealand
product
liability”)
–
Expenses
arising
from
defending and resolving claims in New Zealand that allege poor building design,
inadequate certification of plans, inadequate construction review and
compliance certification and deficient work by sub-contractors 48
ENDNOTES |
 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
statements under US GAAP, the following table cross-references each non-US
GAAP line item description, as used in Management’s Analysis of Results
and Media Release, to the equivalent US GAAP financial statement line item
description used in the company's condensed consolidated financial
statements: 49
Management's Analysis of Results and
Consolidated Statements of Operations
Media Release
and Other Comprehensive Income (Loss)
(US GAAP)
Net sales
Net sales
Cost of goods sold
Cost of goods sold
Gross profit
Gross profit
Selling, general and administrative expenses
Selling, general and administrative expenses
Research and development expenses
Research and development expenses
Asbestos adjustments
Asbestos adjustments
EBIT
*
Operating income (loss)
Net interest income (expense)*
Sum of interest expense and interest income
Other income (expense)
Other income (expense)
Operating profit (loss) before income taxes*
Income (loss) before income taxes
Income tax (expense) benefit
Income tax (expense) benefit
Net operating profit (loss)*
Net income (loss)
*- Represents non-U.S. GAAP descriptions used by Australian companies.
ENDNOTES (CONTINUED) |
 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 –
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)
plus
shareholders’
equity
Net interest expense cover
–
EBIT divided by net interest expense (excluding loan establishment fees)
Net interest paid cover
–
EBIT
divided
by
cash
paid
during
the
period
for
interest,
net
of
amounts
capitalised
Net debt payback
–
Net debt (cash) divided by cash flow from operations
Net debt (cash)
–
Short-term and long-term debt less cash and cash equivalents
Return on capital employed
–
EBIT divided by gross capital employed
50
ENDNOTES (CONTINUED) |
 EBIT
and
EBIT
margin
excluding
asbestos,
asset
impairments,
ASIC
expenses
and
New
Zealand
product
liability
–
EBIT
and
EBIT
margin
excluding
asbestos,
asset
impairments,
ASIC
expenses
and
New
Zealand
product
liability
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 included these financial measures to
provide investors with an alternative method for assessing its operating results in a manner that
is focussed on the performance of its ongoing operations and provides useful
information regarding its financial condition and results of operations.
Management uses these non-US GAAP measures for the same purposes
51
NON-US GAAP FINANCIAL MEASURES
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2014
FY 2013
FY 2014
FY 2013
EBIT
$ 94.8
$ 32.5
$ 319.5
$ 137.8
Asbestos:
Asbestos adjustments
(35.8)
(11.7)
(126.2)
(14.5)
AICF SG&A expenses
0.4
0.5
1.4
1.2
Asset impairments
-
5.8
-
5.8
ASIC expenses
-
0.1
-
0.5
New Zealand product liability (benefit) expenses
(4.2)
7.5
0.7
13.2
EBIT excluding asbestos, asset impairments, ASIC
expenses and New Zealand product liability
55.2
34.7
195.4
144.0
Net sales
$ 353.2
$ 320.4
$ 1,117.4
$ 994.5
EBIT margin excluding asbestos, asset
impairments, ASIC expenses and New Zealand
product liability
15.6%
10.8%
17.5%
14.5% |
 Net
operating
profit
excluding
asbestos,
asset
impairments,
ASIC
expenses,
New
Zealand
product
liability
and
tax adjustments
–
Net operating profit excluding asbestos, asset impairments, ASIC expenses, New
Zealand product liability and tax adjustments is not a measure of financial
performance under US GAAP and should not be considered to be more meaningful
than net operating profit. Management has included this financial measure to provide investors with
an alternative method for assessing its operating results in a manner that is
focussed on the performance of its ongoing operations. Management uses this
non-US GAAP measure for the same purposes 52
NON-US GAAP FINANCIAL MEASURES (CONTINUED)
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2014
FY 2013
FY 2014
FY 2013
Net operating profit
$ 92.2
$ 31.5
$ 286.3
$ 115.0
Asbestos:
Asbestos adjustments
(35.8)
(11.7)
(126.2)
(14.5)
AICF SG&A expenses
0.4
0.5
1.4
1.2
AICF interest income
(0.6)
(3.4)
(2.4)
(5.6)
Asset impairments
-
5.8
-
5.8
ASIC expenses
-
0.1
-
0.5
New Zealand product liability (benefit) expenses
(4.2)
7.5
0.7
13.2
Asbestos and other tax adjustments
(8.3)
(3.6)
(7.8)
(6.2)
Net operating profit excluding asbestos, asset
impairments, ASIC expenses, New Zealand
product liability and tax adjustments
$ 43.7
$ 26.7
$ 152.0
$ 109.4 |
 Diluted
earnings
per
share
excluding
asbestos,
asset
impairments,
ASIC
expenses,
New
Zealand
product
liability and tax adjustments
–
Diluted earnings per share excluding asbestos, asset impairments, ASIC expenses, New
Zealand product liability and tax adjustments is not a measure of financial performance under US GAAP
and should not be considered to be more meaningful than diluted earnings per share. Management
has included this financial measure to provide investors with an alternative method for
assessing its operating results in a manner that is focussed on the performance of its ongoing
operations. Management uses this non-US GAAP measure for the same purposes 53
NON-US GAAP FINANCIAL MEASURES (CONTINUED)
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2014
FY 2013
FY 2014
FY 2013
Net operating profit excluding asbestos, asset
impairments, ASIC expenses, New Zealand
product liability and tax adjustments
$ 43.7
$ 26.7
$ 152.0
$ 109.4
Weighted average common shares outstanding -
Diluted (millions)
445.2
440.3
444.2
439.0
Diluted earnings per share excluding asbestos,
asset impairments, ASIC expenses, New
Zealand product liability and tax adjustments
(US cents)
10
6
34
25 |
 Effective
tax
rate
excluding
asbestos,
asset
impairments,
New
Zealand
product
liability
and
tax
adjustments
–
Effective tax rate on earnings excluding asbestos, asset impairments, New Zealand
product liability 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. Management has included this financial measure to provide
investors with an alternative method for assessing its operating results in
a manner that is focussed on the performance of its ongoing operations. Management
uses this non-US GAAP measure for the same purposes
54
NON-US GAAP FINANCIAL MEASURES (CONTINUED)
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2014
FY 2013
FY 2014
FY 2013
Operating profit before income taxes
$ 95.6
$ 35.1
$ 320.2
$ 141.3
Asbestos:
Asbestos adjustments
(35.8)
(11.7)
(126.2)
(14.5)
AICF SG&A expenses
0.4
0.5
1.4
1.2
AICF interest income
(0.6)
(3.4)
(2.4)
(5.6)
Asset impairments
-
5.8
-
5.8
New Zealand product liability (benefit) expenses
(4.2)
7.5
0.7
13.2
Operating profit before income taxes excluding asbestos, asset
impairments and New Zealand product liability
$ 55.4
$ 33.8
$ 193.7
$ 141.4
Income tax expense
(3.4)
(3.6)
(33.9)
(26.3)
Asbestos-related and other tax adjustments
(8.3)
(3.6)
(7.8)
(6.2)
Income tax expense excluding tax adjustments
(11.7)
(7.2)
(41.7)
(32.5)
Effective tax rate
3.6%
10.3%
10.6%
18.6%
Effective tax rate excluding asbestos, asset impairments,
New Zealand product liability, and tax adjustments
21.1%
21.3%
21.5%
23.0% |
 Adjusted 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. Not all companies calculate Adjusted EBITDA in the same manner
as James Hardie has
and,
accordingly,
Adjusted
EBITDA
may
not
be
comparable
with
other
companies.
Management
has
included
information concerning Adjusted EBITDA because it believes that this data is commonly used by
investors to evaluate the ability of a company's earnings from its core business operations to
satisfy its debt, capital expenditure and working capital requirements
55
NON-US GAAP FINANCIAL MEASURES (CONTINUED)
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2014
FY 2013
FY 2014
FY 2013
EBIT
$ 94.8
$ 32.5
$ 319.5
$ 137.8
Depreciation and amortisation
15.6
17.3
46.2
48.0
Adjusted EBITDA
$ 110.4
$ 49.8
$ 365.7
$ 185.8 |
 General
corporate
costs
excluding
ASIC
expenses,
intercompany
foreign
exchange
gain
and
recovery
of
RCI
legal costs –
General corporate costs excluding ASIC expenses, intercompany foreign exchange
gain and recovery of RCI legal costs is not a measure of financial
performance under US GAAP and should not be considered to be more
meaningful
than
general
corporate
costs.
Management
has
included
these
financial
measures
to
provide
investors
with
an alternative method for assessing its operating results in a manner that is
focussed on the performance of its ongoing operations and provides useful
information regarding its financial condition and results of operations. Management uses
these non-US GAAP measures for the same purposes
56
NON-US GAAP FINANCIAL MEASURES (CONTINUED)
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2013
FY 2013
General corporate costs
$ 12.8
$ 8.2
$ 30.9
$ 20.3
Excluding:
ASIC expenses
-
(0.1)
-
(0.5)
Intercompany foreign exchange gain
-
-
-
5.5
Recovery of RCI legal costs
-
-
-
2.7
General corporate costs excluding ASIC
expenses, intercompany foreign exchange
gain and recovery of RCI legal costs
$ 12.8
$ 8.1
$ 30.9
$ 28.0
FY 2014
FY 2014 |
 Selling,
general
and
administrative
expenses
excluding
New
Zealand
product
liability
–
Selling,
general
and
administrative expenses excluding New Zealand product liability is not a measure of
financial performance under US GAAP and should not be considered to be more
meaningful than selling, general and administrative expenses. Management has
included these financial measures to provide investors with an alternative method for assessing its
operating results in a manner that is focussed on the performance of its ongoing
operations and provides useful information regarding its financial condition
and results of operations. Management uses these non-US GAAP measures
for the same purposes 57
NON-US GAAP FINANCIAL MEASURES (CONTINUED)
Q3
Q3
9 Months
9 Months
US$ Millions
FY 2013
FY 2013
Selling, general and administrative expenses
$ 53.8
$ 59.7
$ 162.5
$ 160.6
Excluding:
New Zealand product liability benefit (expenses)
4.2
(7.5)
(0.7)
(13.2)
Selling, general and administrative expenses
excluding New Zealand product liability
$ 58.0
$ 52.2
$ 161.8
$ 147.4
Net Sales
$ 353.2
$ 320.4
$ 1,117.4
$ 994.5
Selling, general and administrative expenses as a
percentage of net sales
15.2%
18.6%
14.5%
16.1%
Selling, general and administrative expenses
excluding New Zealand product liability as a
percentage of net sales
16.4%
16.3%
14.5%
14.8%
FY 2014
FY 2014 |
 Q3
FY14 MANAGEMENT PRESENTATION 28 February 2014 |