Exhibit 99.1
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Exhibit 99.1
INVESTOR PRESENTATION
FEBRUARY 2015
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DISCLAIMER
This Investor Presentation contains forward-looking statements. James Hardie Industries plc (James Hardie or 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, 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 companys 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 companys future performance;
projections of the companys results of operations or financial condition;
statements regarding the companys 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 or closure of operations at any of the companys plants and future plans with respect to any such plants; expectations concerning the costs associated with the significant capital expenditure projects at any of the companys plants and future plans with respect to any such projects; expectations regarding the extension or renewal of the companys credit facilities including changes to terms, covenants or ratios; expectations concerning dividend payments and share buy-backs; statements concerning the companys 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; 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 companys warranty provisions and estimates for future warranty-related costs; statements regarding the companys 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.
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DISCLAIMER (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 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 companys 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 companys 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 26 June 2014, 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 companys 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 companys products; reliance on a small number of customers; a customers 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 companys 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 companys 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 companys key management personnel; inherent limitations on internal controls; use of accounting estimates; and all other risks identified in the companys 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 in the companys forward-looking statements. Forward-looking statements speak only as of the date they are made and are statements of the companys 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.
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AGENDA
Global Strategy and Business Overview
USA & Europe Fiber Cement
Asia Pacific Fiber Cement
Capital Management Framework
Group Outlook and Guidance
Appendix
In this Investor 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. 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 volume (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 pay back, Net debt (cash)); and Non-US GAAP financial measures (Adjusted EBIT, Adjusted EBIT margin, Adjusted net operating profit, Adjusted diluted earnings per share, Adjusted operating profit before income taxes, Adjusted effective tax rate on earnings, Adjusted EBITDA, and Adjusted selling, general and administrative expenses. Unless otherwise stated, results and comparisons are of the second quarter and half year of the current fiscal year versus the second quarter and half year of the prior fiscal year.
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GLOBAL STRATEGY
Industry Leadership and Profitable Growth
Introduce differentiated products to deliver a sustainable competitive advantage
Aggressively grow demand for our products in targeted market segments
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A GROWTH FOCUSED COMPANY
Annual net sales $ US1.7+b
Total assets $ US2.0b
Strong cash generation
Operations in North America, Asia Pacific and Europe
3,140 employees
Market cap US $4.5b (approx)
S&P/ASX 100 company
NYSE ADR listing
Market capitalization as at 16 January 2015. Total assets as at 30 September 2014. Annual net sales equal 2QFY15 net sales annualised. Total assets exclude asbestos compensation
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GROUP OVERVIEW
Three Months and Half Year ended 30 September
Q215 Q214 Change 1H15 1H14 Change
Adjusted EBIT (US$ millions) 85.1 72.7 17% 156.3 140.2 11%
Adjusted EBIT Margin % 19.3 18.5 0.8 pts 18.2 18.3(0.1) pts
Adjusted Net Operating Profit 65.4 56.3 16% 115.5 108.3 7%
Net operating cash flow 34.1 175.4(80)%
Adjusted Diluted EPS (US cents) 15 13 15% 26 24 8%
Dividends per share1 (US cents) 8 8 -
1 Dividends declared per share
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Q215 & 1H15SUMMARY AND KEY THEMES
Group net sales increased 12% for both the quarter and half year compared to last year
Group adjusted net operating profit increased 16% for the second quarter 2015 and 7% for the half year 2015 compared to pcp1
US housing market remains below our expectations at the beginning of the fiscal year
Higher volumes and net sales prices across our USA and Europe and Asia Pacific Fiber Cement segments
Improved plant performance across our US business in Q2 relative to Q1 of fiscal 2015
Continuing to invest in high returning organic growth:
Investing in organization capability, product and marketing development activities
Continuing to invest in capacity expansion across our US and Australian businesses
We continue to expect our full year USA and Europe Fiber Cement segment EBIT margin to remain within our target range of 20% to 25% First half ordinary dividend of US8.0 cents per security announced
1 Prior corresponding period(s)
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WORLD LEADER IN FIBER CEMENT
USA & Europe
Tacoma
RENO
MISSION VIEJO
FONTANA
WAXAHACHIE
CLEBURNE
CHICAGO
PERU
PULASKI
SUMMERVILLE
PLANT CITY
HOMG KONG
MANILA
PERTH
PERTH
ADELAIDE
MELBOURNE
BRISBANE
SYDNEY
AUCKLAND
CHRISTCHURCH
DUBLIN
Asia Pacific
JHX Manufacturing Operations
JHX Manufacturing Operations Production Suspended
JHX Sales Office
Net Sales
Geographic Mix¹
Asia Pacific 24%
USA and Europe 76%
EBIT ²
Asia Pacific 26%
USA and Europe 74%
1 All percentages are for the 2nd quarter ended 30 September 2014
² EBIT excludes research and development, asbestos-related items, New Zealand weathertightness claims and general corporate costs
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CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE
Research & Development: Significant and consistent investment $ US33.1m spent on Research & Development in FY14 $ US363.1m spent on Research & Development since 2000
History of Fiber Cement Substrate Development
James Hardie
Siding Products
7th ENGINEERED FOR CLIMATE
6th MODIFIED THICKNESS TECHNOLOGY
5th COLORPLUS TECHNOLOGY
3rd SUBSTRATE COMPOSITION
2nd PRIMER ADDED
1st FIBER-CEMENT SUBTRATE
THE JAMES HARDIE INNOVATION PATH
Product Generations
Generic Fiber-Cement
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DELIVERING SUPERIOR PRODUCT PERFORMANCE
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
Fire resistant Hail resistant Resists warping Resists buckling Lasting color Dimensional stability Can be repainted
Vinyl
Engineered Wood
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BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS
Soffit
Trim / Fascia
Backerboard
Primary Products
Siding
Commercial Exteriors
Flooring
Interior Walls / Ceilings
U.S. & Europe
Brand Portfolio
Asia Pacific
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USA AND EUROPE FIBER CEMENT SEGMENT
USA Plant Locations
Tacoma, WA Reno, NV Fontana, CA
Waxahachie, TX
Cleburne, TX
Peru, IL
Pulaski, VA
Summerville, SC
Plant City, FL
Largest fiber cement producer in North America
2,100 employees
9 manufacturing plants¹
2 research and development facilities
2Q FY15 2Q FY14
Net Sales US$335.4m US$298.7m
EBIT US$74.8m US$67.3m
EBIT Margin 22.3% 22.5%
¹ Production was suspended at the Summerville plant in November 2008
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DRIVING CATEGORY AND MARKET SHARE GAINS
North America External Cladding Market Share
North America Wood-Look Market Size
4.7BSF
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other
Stucco
Masonry
Wood
Vinyl
Fiber Competitors
James Hardie
Fiber Cement Share: 17%
Wood
Vinyl
James Hardie
Fiber Competitors
Source: Internal estimates based on NAHB product usage data adjusted for regional market intelligence
Source: Internal estimates based on NAHB product usage data adjusted for regional market intelligence
35/90 Plan
Grow fiber cement share to 35% of the exterior cladding market against other wood-looking siding alternatives
Maintain JHXs category share at 90%
Currently:
JHX wins ~90% of the fiber cement category, while fiber cement used in ~17% of the total market
Current estimate is wood-look siding (Wood, Vinyl and Fiber Cement) is 60-65% of total market.
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AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS
USA Fiber Cement
Top Line Growth
Volume (mmsf) / Starts (000s Units)
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
JH Volume
Housing Starts
JH Revenue
Revenue (US$M)
Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau
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ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS
USA and Europe Fiber Cement
Average Net Sales Price
710 670 630 590 550
635
FY10 FY11 FY12 FY13 FY14 1H15
679
US$ per MSF
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USA AND EUROPE: DELIVERING STRONG RETURNS
Quarterly EBIT and EBIT Margin1
EBIT US $M
EBIT Margin
80 70 60 50 40 30 20 10 0
35 30 25 20 15 10 5 0
FY09 FY10 FY11 FY12 FY13 FY14 FY15
EBIT
EBIT Margin
1 Excludes asset impairment charges of $ US14.3 million in 4th quarter FY12, US $5.8 million in 3rd quarter FY13 and $ US11.1 million in 4th quarter FY13
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ASIA PACIFIC FIBER CEMENT SEGMENT
Asia Pacific Plant Locations
Manila
Brisbane (2)
Sydney Auckland
985 employees
5 manufacturing plants across Australia, New Zealand and the Philippines
1 research and development facility
2Q FY15 2Q FY14
Net Sales US$105.0m US$93.3m
EBIT US$25.7m US$22.1m
EBIT Margin 24.5% 23.7%
EBIT and EBIT margin excludes New Zealand weathertightness claims
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ASIA PACIFIC: DELIVERING STRONG RETURNS
Asia Pacific Fiber Cement Segment
Average Net Sales Price
Quarterly EBIT and EBIT Margin1
A $ MSF
A $959
EBIT US M$
1000 960 920 880 840
FY10 FY11 FY12 FY13 FY14 Q1 FY15 Q2 FY15
30 25 20 15 10 5 0
FY10 FY11 FY12 FY13 FY14 FY15
30 25 20 15 10 5 0
EBIT
EBIT
EBIT Margin
1 EBIT and EBIT margin excludes New Zealand weathertightness claims
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TARGETTING THE RIGHT PRODUCT INTO THE RIGHT MARKET
Asia Pacific Core Markets
Ceilings and partitions
Philippines
Interior walls
New Zealand
Exterior cladding
Australia
General purpose flooring
Australia
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FINANCIAL MANAGEMENT SUPPORTING GROWTH
Strong Financial Management
Strong margins and operating cash flows
Strong governance and transparency
Investment-grade financial management
Disciplined Capital Allocation
Investing in R&D and capacity expansion to support organic growth
Maintain ordinary dividends within the defined payout ratio
Consider other shareholder returns when appropriate
Maintain flexibility for accretive and strategic inorganic opportunities
Liquidity and Funding
~$500 million of bank facilities, 37% liquidity as of Q215
2.75 year weighted average debt maturity
Executing strategy to extend maturities
Conservative leveraging of balance sheet within 1-2 times adjusted EBITDA target
1
2
3
Financial management consistent with an investment grade credit. Ability to withstand market cycles and other unanticipated events.
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FY2015 OUTLOOK AND GUIDANCE
USA and Europe Fiber Cement Outlook
The US housing market recovery remains uncertain in the short-term, however, our view remains unchanged on the medium and longer-term outlook
Due to the slower then expected recovery, we will defer the planned commissioning of a number of our capacity expansion programs, although we still remain committed to investing $600 million in additional manufacturing capacity through fiscal 2017 ahead of an anticipated medium to longer-term recovery
Asia Pacific Fiber Cement Outlook
Our expectation is that net sales across our Asia Pacific businesses will continue to deliver improved results in line with growth in the local housing markets of the regions in which we operate
FY2015 Guidance1
Management expects full year Adjusted net operating profit to be between $ US205 million and $ US235 million assuming, among other things, housing industry conditions in the United States continue to improve at a more moderate level than originally assumed at the beginning of the year, and that an exchange rate at or near current levels is applicable for the remainder of the fiscal year
1Management 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
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APPENDIX
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JHX KEY RATIOS
Half Year ended 30 September
1H15 1H14 1H13
EPS (Diluted)1 (US Cents) 26c 24c 19c
EBIT/ Sales (EBIT margin)2 28.1% 18.3% 16.2%
Gearing Ratio1 21.5%(9.5)%(6.4)%
Net Interest Expense Cover2 96.3x 66.8x 54.7x
Net Interest Paid Cover2 200.7x 77.9x 109.3x
Net Debt Payback 1.1yrs
1 Excludes asbestos adjustments, AICF SG&A expenses, AICF interest income, New Zealand weathertightness claims and tax adjustments
2 Excludes asbestos adjustments, AICF SG&A expenses, and New Zealand weathertightness claims
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USA AND EUROPE FIBER CEMENT 5 YEAR RESULTS OVERVIEW
FY10 FY11 FY12 FY13 FY14
Net Sales 828 814 862 951 1,128
US$m
Sales Volume 1,304 1,248 1,332 1,489 1,697
mmsf
Average Price 632 648 642 626 652
US$ per msf ²
EBIT US$m¹ 209 160 163 163 237
EBIT Margin %¹ 25 20 19 17 21
1Excludes asset impairment charges of $ US14.3 million and $ US16.9 million in FY12 and FY13, respectively
2During the second quarter of FY14, the company refined its methodology for calculating average net sales price in both the USA and Europe and Asia Pacific Fiber Cement segments to exclude ancillary products that have no impact on fiber cement sales volume, which is measured and reported in million square feet (mmsf). As the revenue contribution of these ancillary products been increasing, the company believes the refined methodology provides an improved disclosure of average net sales price, in line with the companys 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 calculation of average net sales price.
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ASIA PACIFIC FIBER CEMENT 5 YEAR RESULTS OVERVIEW
FY10 FY11 FY12 FY13 FY14
Net Sales 297 353 376 370 366
US$m
Sales Volume 390 408 392 394 417
mmsf
Average Price 886 906 906 901 930
A$ per msf ²
EBIT US$m¹ 59 79 86 75 83
EBIT Margin %¹ 20 23 23 20 23
1Excludes New Zealand product liability expenses of $ US5.4 million , US $13.2 million and $ US1.8 million in FY12, FY13 and FY14, respectively
2During the second quarter of FY14, the company refined its methodology for calculating average net sales price in both the USA and Europe and Asia Pacific Fiber Cement segments to exclude ancillary products that have no impact on fiber 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 companys primary fiber 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 calculation of average net sales price.
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RESULTS FOR THE 2nd QUARTER
Three Months ended 30 September
US$ Millions Q2 15 Q2 14% Change
Net sales 440.4 392.0 12
Gross profit 150.9 133.1 13
SG&A expenses (60.8) (53.8) (13)
Research & development expenses (8.0) (7.4) (8)
Asbestos adjustments 63.5 (4.1)
EBIT 145.6 67.8
Net interest expense (0.9) (0.4)
Other income 0.1
Income tax expense (17.5) (15.6) (12)
Net operating profit 127.2 51.9
Summary
Net sales increased 12%, favorably impacted by:
Higher sales volumes; and
Higher average net sales prices in local currencies
Gross profit margin increased 30 bps impacted by:
Higher average net sales prices and volumes
Partially offset by higher market prices for raw materials and production inefficiencies at our Fontana plant
SG&A expenses increased primarily due to:
Higher headcount as we invest in our organizational capability
Higher product and marketing development activities
Between EBIT and net operating profit:
Interest expense increased related to our debt position
Income tax expense increased on account of higher earnings
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GROSS PROFIT GROUP
Gross Margin (US$M)
160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 -
33.3
111.3
34.3
150.9
35.0
34.0
33.0
32.0
31.0
30.0
29.0
28.0
27.0
Gross Margin (%)
Q2 FY13
Q2 FY14
Q2 FY15
Gross profit has remained strong throughout the past three years
Price has improved as we continue to execute on pricing strategies and the reduction of pricing inefficiencies
Production costs continue to increase in line with the higher market prices for pulp, gas and silica raw materials
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INCOME TAX
Three Months and Half Year ended 30 September
Q215 Q214 1H15 1H14
Operating profit before taxes 144.7 67.5 190.3 224.6
Asbestos:
Asbestos adjustment1 (63.5) 3.9 (41.2) (91.2)
NZ weathertightness claims 2.3 0.3 1.0 4.9
Adjusted net operating profit 83.5 71.7 150.1 138.3
before taxes
Adjusted income tax expense (18.1) (15.4) (34.6) (30.0)
Adjusted effective tax rate 21.7% 21.5% 23.1% 21.7%
Income tax expense (17.5) (15.6) (34.2) (30.5)
Income taxes paid 16.0 12.3
Income taxes payable 5.5 7.4
23.1% estimated adjusted effective tax rate (ETR)
Adjusted income tax expense and adjusted ETR increased due to changes in geographical mix of earnings
Income taxes are paid and payable in Ireland, the U.S., Canada, New Zealand and the Philippines
Income taxes are not currently paid or payable in Europe (excluding Ireland) or Australia due to tax losses which are available to offset future taxable income.
Australian tax losses primarily result from deductions relating to contributions to AICF
1 Includes AICF SG&A expenses and AICF interest expense, net
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CASHFLOW
(US$ Millions) 1H15 1H14 Change (%)
EBIT 196.0 224.7 (13)
Asbestos related1 1 (42.5) (92.9) (54)
Annual AICF contribution (113.0) -
Depreciation & Amortization 34.1 30.6 11
Working Capital 14.3 36.8 (61)
Other non-cash items (54.8) (23.8)
Cash Flow from Operations 34.1 175.4 (81)
Capital Expenditures (159.5) (44.5)
Free Cash Flow (125.4) 130.9
Dividends Paid (355.9) (163.6)
Net proceeds from long-term debt 380.0 -
Free Cash Flow after Financing Activities (101.3) (32.7)
First half cash flow from operations reflect our $ US113.0 million contribution to AICF
Higher working capital
Inventory increase since year end
Receipt in the prior year of significant other receivables
Higher capital expenditure for capacity expansion projects
$ US380 million debt position as of Q215
1 Includes Asbestos Adjustments and changes in asbestos-related assets and liabilities
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LIQUIDITY PROFILE
Debt Maturity Profile1
$0
$50
$190
$100
$40
$125
FY15 FY16 FY17 FY18 FY19 FY20
Liquidity Profile HY FY15
Cash US$60.5 million
Total Combined Facilities US$505.0 million
Drawn Facilities ac US$380380.0 million
Undrawn Facilities US$125.0 million
Weighted Average Interest Rate of Bank Facilities 1.5%
Fixed / Floating Interest Ratio 33% fixed
Weighted Average Term 2.75 years
Strong balance sheet position:
$60.5 million of cash
$505 million of debt facilities
37% liquidity as of Q215
As of Q215, we had net bank debt of $ US319.5 million compared to net cash of $ US167.5 million at Q414
Net Debt within target range of 1-2 times EBITDA excluding asbestos
We remain in compliance with all restrictive debt covenants contained within our credit facility agreements
1 Debt maturities as follows: $ US50 million in Q416, $ US190 million in Q117, US $100 million in Q118, $ US40 million in Q419 and $ US120 million in Q120.
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HY FY15 GLOBAL CAPEX SPEND AND KEY PROJECTS
Capital Budget
Project
Progress during 1H15
Plant City, Florida4th sheet machine and ancillary facilities US$65.0 million Key engineering work on track
Expected to complete construction FY16
Cleburne, Texas3rd sheet machine and ancillary facilities US$37.0 million Key engineering work on track
Expected to complete construction FY16
Expansion is on track
Carole Park, QueenslandCapacity expansion project A$89.0 million ? Equipment installation underway
Expected to complete construction FY16
Tacoma, WashingtonLand purchase for future expansion US$27.9 million ? Purchase completed September 2014
Design of facility and assessment of capabilities underway
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USA AND EUROPE FIBER CEMENT PLANT CAPACITY
Plant Capacity
Flat Sheet Plant Capacity (mmsf)
Plants operating
Cleburne, Texas 466
Additional capacity by mid calendar year 2015 200
Peru, Illinois 560
Plant City, Florida 300
Additional capacity by mid calendar year 2015 300
Pulaski, Virginia 600
Reno, Nevada 300
Tacoma, Washington 200
Waxahachie, Texas 360
Fontana, California1 250
Plant suspended
Summerville, South Carolina1 190
Flat Sheet Total 3,726
¹ Production was suspended at the Summerville plant in November 2008, it is anticipated the plant will be re-commissioned during the current cycle.
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US INPUT COSTS
Quarterly US Input Costs
Discussion:
Input costs are up significantly over the prior year
The price of NBSK pulp is at a three-year peak
The cost of gas for industrial users has nearly doubled since 2013
We are engaged in effective sourcing strategies to reduce the impact of increasing market prices
The information underlying the table above is sourced as follows:
Pulp Cost per ton from RISI
Gas Cost per thousand cubic feet for industrial users from US Energy Information Administration
Electric Cost per thousand kilowatt hour for industrial users from US Energy Information Administration
Cement Relative index from the Bureau of Labor Statistics
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ASBESTOS FUND PROFORMA (unaudited)
Claims Data
For the quarter and half year ended 30 September 2014, we note the following related to asbestos claims:
Claims received during Q215 and 1H15 were 19% and 10% above actuarial estimates, respectively
Claims received during Q215 and 1H15 were 12% and 5% higher than the prior corresponding periods, respectively
The higher reported mesothelioma claims experience noted during FY14 has continued into 1H15
Average claim settlement for the half year is down 6% versus the prior corresponding period and down 16% versus actuarial estimates
A$ millions
AICF cash and investments31 March 2014 65.5
Contribution to AFFA by James Hardie 119.9
Insurance recoveries 23.4
Loan Repayments (51.0)
Interest expense, net 0.6
Claims paid (68.0)
Operating costs (2.3)
Other 1.5
AICF cash and investments30 September 2014 89.6
On 15 September 2014, the Company and the NSW Government were notified by AICF that it would enter into discussions concerning an approved payment scheme (APS)
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DEFINITIONS AND OTHER TERMS
This Investor Presentation forms part of a package of information about the companys results. It should be read in conjunction with the other parts of this package, including the Managements Analysis of Results, Media Release and 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 companys benchmark grade of pulp
Legacy New Zealand weathertightness claims (New Zealand weathertightness claims) 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.
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DEFINITIONS AND OTHER TERMS
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 Condensed Consolidated Financial Statements under US GAAP, the following table cross-references each non-US GAAP line item description, as used in Managements Analysis of Results and Media Release, to the equivalent US GAAP financial statement line item description used in the companys Condensed Consolidated Financial Statements:
Managements Analysis of Results and Media Release
Net sales
Cost of goods sold Gross profit
Selling, general and administrative expenses Research and development expenses Asbestos adjustments EBIT*
Net interest income (expense)* Other income (expense)
Operating profit (loss) before income taxes* Income tax (expense) benefit Net operating profit (loss)*
Consolidated Statements of Operations and Other Comprehensive Income (Loss) (US GAAP)
Net sales
Cost of goods sold Gross profit
Selling, general and administrative expenses Research and development expenses Asbestos adjustments Operating income (loss)
Sum of interest expense and interest income Other income (expense) Income (loss) before income taxes
Income tax (expense) benefit
Net income (loss)
*- Represents non-U.S. GAAP descriptions used by Australian companies.
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DEFINITIONS AND OTHER TERMS
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 adjusted for asbestos and AICF related items 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
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INVESTOR PRESENTATION
FEBRUARY 2015