INVESTOR
PRESENTATION JULY 2015
Exhibit 99.4 |
PAGE DISCLAIMER 2 FORWARD-LOOKING STATEMENTS This Investor Presentation contains forward-looking statements. James Hardie Industries plc (the company) may from time to time make forward-
looking statements in its periodic reports filed with or furnished to the Securities
and Exchange Commission, 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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PAGE DISCLAIMER (continued) 3 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 21 May 2015, 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 company 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 favorable 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 regulatory 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. |
PAGE AGENDA Global Strategy and Business Overview USA & Europe Fiber Cement Asia Pacific Fiber Cement Capital Management Framework Group Outlook and Guidance Appendix 4 In this Investor Presentation, the company may present financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures included in the Definitions and other terms 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 payback, 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 fourth quarter and full year of the current fiscal year versus the fourth quarter and full year of the prior fiscal year |
PAGE Industry Leadership and Profitable Growth Introduce differentiated products to deliver a sustainable competitive advantage Aggressively grow demand for our products in targeted market segments 5 GLOBAL STRATEGY |
PAGE Annual net sales US$1.66b Total assets US$2.0b Strong cash generation Operations in North America, Asia Pacific and Europe 3,178 employees Market cap US$6.3b (approx) S&P/ASX 100 company NYSE ADR listing Market capitalization as at 24 June 2015. Total assets and employees as at 31 March 2015. Annual net sales for full year ended 31 March 2015.
Total assets exclude asbestos compensation
A GROWTH FOCUSED COMPANY
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PAGE GROUP OVERVIEW 7 |
PAGE Group net sales increased 9% and 11% for the quarter and full year, respectively, compared to pcp¹ Group adjusted net operating profit increased US$12.0 million to US$57.3 million for the quarter and US$24.2 million to US$221.4 million for the full year, when compared to pcp¹ Announced dividends of a second half ordinary for US27.0 cents per security and a fiscal year 2015 special dividend of US22.0 cents per security Higher volumes and average net sales price
across our USA and Europe and Asia
Pacific
Fiber Cement segments Results driven by strong primary demand growth and the continued focus across our plants on
operational management and cost management across the Company
Our full year USA and Europe Fiber Cement segment EBIT margin came in at 22.4% compared to 21.0% in the pcp, within our target range of 20% to 25% Continuing to invest in high-return organic growth by: Investing in capacity expansion across our US and Australian businesses Investing in primary demand growth programs and organizational capability FY15 AND Q4 RESULTS - KEY THEMES 8 1 Prior corresponding period(s) |
PAGE 9 WORLD LEADER IN FIBER CEMENT USA & Europe Asia Pacific JHX Sales Office JHX Manufacturing Operations Production Suspended JHX Manufacturing Operations 1 All percentages are for the full year ended 31 March 2015 ² EBIT excludes research and development, asbestos-related items, New Zealand weathertightness claims and non-recurring stamp duty
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PAGE Research & Development: Significant and consistent investment
US$31.7m spent on Research & Development in FY15 US$394.8m spent on Research & Development since 2000 10 CREATING A SUSTAINABLE AND DIFFERENTIATED ADVANTAGE History of Fiber Cement Substrate Development James Hardie Siding Product |
PAGE 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 Vinyl Engineered Wood Fire resistant Hail resistant Resists warping Resists buckling Lasting color Dimensional stability Can be repainted 11 DELIVERING SUPERIOR PRODUCT PERFORMANCE |
PAGE Siding Primary Products Soffit Trim / Fascia Backerboard Commercial Exteriors Flooring Interior Walls / Ceilings Brand Portfolio U.S. & Europe Asia Pacific BUILDING A PORTFOLIO OF PRODUCTS AND BRANDS 12 |
PAGE ¹ Production was suspended at the Summerville plant in November 2008 USA Plant Locations USA AND EUROPE FIBER CEMENT SEGMENT Tacoma, WA Reno, NV Fontana, CA Waxahachie, TX Cleburne, TX Summerville, SC Plant City, FL Pulaski, VA Peru, IL 13 Largest fiber cement producer in North America 2,267 employees 9 manufacturing plants¹ 2 research and development facilities FY15 FY14 Net Sales US$1,277m US$1,128m EBIT US$286m US$237m EBIT Margin (US$) 22.4% 21.0% |
PAGE Rolling 12 month average of seasonally adjusted estimate of housing starts by US Census Bureau
AGGRESSIVELY GROWING DEMAND FOR OUR PRODUCTS
14 USA Fiber Cement Top Line Growth |
PAGE USA and Europe Fiber Cement ACHIEVING THE RIGHT VALUE FOR OUR PRODUCTS 15 Executing on pricing strategy
~4% increase realized in FY15 |
PAGE USA AND EUROPE: DELIVERING STRONG RETURNS 16 EBIT Margins remain within our 20% to 25% target range 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 |
PAGE 941 employees 5 manufacturing plants across Australia, New Zealand and the Philippines 1 research and development facility EBIT and EBIT margin excludes New Zealand weathertightness claims 17 ASIA PACIFIC FIBER CEMENT SEGMENT Asia Pacific Plant Locations FY15 FY14 Net Sales A$435m A$392m EBIT A$103m A$89m EBIT Margin (A$) 23.6% 22.6% |
1
EBIT and EBIT margin excludes New Zealand weathertightness claims ASIA PACIFIC: DELIVERING STRONG RETURNS Asia Pacific Fiber Cement Segment 18 PAGE |
PAGE Ceilings and partitions Philippines Exterior cladding Australia General purpose flooring Australia New Zealand Interior walls 19 TARGETTING THE RIGHT PRODUCT INTO THE RIGHT MARKET Asia Pacific Core Markets |
PAGE FINANCIAL MANAGEMENT SUPPORTING GROWTH 20 1 2 3 Strong Financial Management Disciplined Capital Allocation Liquidity and Funding Strong margins and operating cash flows Strong governance and transparency Investment-grade financial management Investing in R&D and capacity expansion to support organic growth Maintain ordinary dividends within the defined payout ratio Flexibility for: Accretive and strategic inorganic opportunities Withstand market cycles Consider further shareholder returns when appropriate ~$590 million of bank facilities, 64% liquidity as of Q415 2.4 year weighted average maturity of bank facilities Completed the sale of US$325 million 8 year 5.875% senior unsecured notes Conservative leveraging of balance sheet within 1-2 times adjusted EBITDA target Financial management consistent with an investment grade credit. Ability to withstand market cycles and other unanticipated events. |
PAGE US & Europe Fiber Cement Fiscal year 2016 addressable markets broadly in line with fiscal year 2015 growth rates, with some improvement in the US new construction compared to fiscal year 2015 1 McGraw Hill Construction US Residential Starts forecasted to be between 1.1 million and 1.2 million 2 Repair and Remodel Market continues to grow between 3% and 4% compared to prior corresponding period Input costs expected to be broadly flat in fiscal year 2016, though commodity prices remain highly variable Average sales price expected to rise between 2% and 3%, subject to changes in product mix Segment EBIT margins within target range of 20% to 25% Asia Pacific Fiber Cement Asia Pacific businesses will continue to deliver improved results in line with growth in the local housing and alterations and additions markets of the regions in which we operate Balance Sheet Conservative leveraging of balance sheet. Gearing to be within 1-2 times adjusted EBITDA, with corresponding interest expense FY16 KEY PLANNING ASSUMPTIONS 21 1 Addressable starts reflect multi-family low and single family homes. It excludes multi-family high.
2 FY15 new construction starts were 1.0 million. |
APPENDIX |
PAGE 1 Excludes asbestos adjustments, AICF SG&A expenses, AICF interest income, New Zealand weathertightness claims, tax adjustments and
non-recurring stamp duty 2
Excludes asbestos adjustments, AICF SG&A expenses, New Zealand
weathertightness claims and non-recurring stamp duty KEY
RATIOS 23
2015 2014 2013 EPS (Diluted) 1 (US Cents) 50c 44c 32c Dividend Paid per share 88c 45c 43c Return on Shareholders Funds 1 14.6% 48.1% 34.9% Return on Capital Employed 2 28.6% 23.8% 17.2% EBIT/ Sales (Adjusted EBIT margin) 2 18.3% 16.9% 13.7% Gearing Ratio 1 20.5% (19.4%) (12.9%) Net Interest Expense Cover 2 34.2x 63.2x 39.3x Net Interest Paid Cover 2 66.1x - - Net Debt Payback 1.0x - - Full Year Ended 31 March |
PAGE FY11 FY12 FY13 FY14 FY15 Net Sales US$m 814 862 951 1,128 1,277 Sales Volume mmsf 1,248 1,332 1,489 1,697 1,850 Average Price US$ per msf ² 648 642 626 652 675 EBIT US$m¹ 160 163 163 237 286 EBIT Margin %¹ 20 19 17 21 22 24 1 Excludes asset impairment charges of US$14.3 million and US$16.9 million in FY12 and FY13, respectively
2 During the second quarter of FY14, the company refined its methodology for calculating average net sales price in both the USA and Europe and
Asia Pacific Fiber Cement segments to exclude ancillary products that
have no impact on fiber cement sales volume, which is measured and reported in mmsf. As the revenue contribution of these ancillary products has been increasing, the company believes the refined methodology provides an improved disclosure of average net sales
price, in line with the companys primary fibre cement business, which is a key
segment performance indicator. The company has restated average net sales price in the prior periods to conform with the current calculation of average net sales price.
USA AND EUROPE FIBER CEMENT
5 YEAR RESULTS OVERVIEW |
PAGE FY11 FY12 FY13 FY14 FY15 Net Sales US$m 353 376 370 366 380 Sales Volume mmsf 408 392 394 417 456 Average Price A$ per msf 1 906 906 901 930 942 EBIT US$m 2 79 86 75 83 90 EBIT Margin % 2 23 23 20 23 24 25 ASIA PACIFIC FIBER CEMENT 5 YEAR RESULTS OVERVIEW 1 2 During 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 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. Excludes New Zealand weathertightness claims of US$5.4 million , US$13.2 million , US$1.8 million and US$4.3 million in FY12, FY13,
FY14 and FY15, respectively
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PAGE Summary Net sales increased 9%, favorably impacted by: Higher sales volumes Higher average net sales prices in local currencies in both the USA and Europe and Asia Pacific Fiber Cement segments Gross profit margin increased 380 bps impacted by: Economies of scale through increased volume Improved plant performance Higher average net sales price in the USA and Europe Partially offset by higher input costs SG&A expenses increased primarily due to: Higher compensation and discretionary expenses Higher realized losses on foreign currency transactions caused by the strengthening of the US dollar Non-operating expenses: Interest expense increased related to our debt position Income tax benefit decreased primarily driven by a reduction in the unfavorable asbestos adjustments compared to the prior corresponding quarter RESULTS FOR THE 4 QUARTER 26 th US$ Millions Q4 '15 Q4 '14 % Change Net sales 411.3 376.4 9 Gross profit 152.5 125.5 22 SG&A expenses (68.8) (61.9) (11) Research & development expenses (7.6) (8.0) 5 Asbestos adjustments (63.5) (322.0) 80 EBIT 12.6 (266.4) Net interest expense (4.0) (0.4) Other (expense) income (1.0) 1.2 Income tax benefit 20.1 78.8 Net operating profit 27.7 (186.8) Three Months Ended 31 March |
PAGE 1 Includes AICF SG&A expenses and AICF interest income, net RESULTS FOR THE 4 QUARTER (continued) 27 Summary Asbestos adjustments reflects: A US$111.3 million unfavorable movement in the underlying actuarial valuation Offset by a US$47.8 million favorable exchange rate difference as the AUD/USD exchange rate decreased 7% compared to a 3% increase in the pcp The New Zealand weathertightness benefit reflects: Favorable claims settlements A higher rate of claim resolution, fewer open claims and a continued reduction in the number of new claims received Adjusted net operating profit increased 26%, largely due to: 41% increase in operating segment adjusted EBIT An increase in adjusted income tax expense of US$5.7 million Other expense of US$2.2 million and gross interest expense of US$4.0 million US$ Millions Q4 '15 Q4 '14 % Change Net operating profit (loss) 27.7 (186.8) Asbestos: Asbestos adjustments 63.5 322.0 80 Other asbestos ¹ 0.2 0.2 - New Zealand weathertightness claims (0.1) 1.1 Non-recurring stamp duty 4.2 - Asbestos and other tax adjustments (38.2) (91.2) Adjusted net operating profit 57.3 45.3 26 th Three Months Ended 31 March |
PAGE RESULTS FULL YEAR 28 Summary Net sales increased 11%, favorably impacted by: Higher sales volumes; and Higher average net sales prices in the USA and Europe and Asia Pacific Fiber Cement segments Gross profit margin increased 100 bps impacted by: Higher volumes and average net sales prices Partially offset by higher input cots SG&A expenses increased primarily due to: Higher compensation and discretionary expenses Higher realized losses on foreign currency transactions caused by the strengthening of the US dollar Non-operating expenses: Interest expense increased due to the use of our debt facilities Other expenses reflect the impact of unrealized foreign exchange and interest rate swap losses Income tax expense increased primarily due to a reduction in the unfavorable asbestos adjustments and a non-recurring favorable tax adjustment in the prior period. . US$ Millions FY15 % Change Net sales 1,656.9 1,493.8 11 Gross profit 578.8 506.4 14 SG&A expenses (245.5) (224.4) (9) Research & development expenses (31.7) (33.1) 4 Asbestos adjustments 33.4 (195.8) EBIT 335.0 53.1 Net interest expense (7.5) (1.1) Other (expense) income (4.9) 2.6 Income tax (expense) benefit (31.3) 44.9 Net operating profit 291.3 99.5 Full Year Ended 31 March FY14 |
PAGE 1 Includes AICF SG&A expenses and AICF interest income, net RESULTS FULL YEAR (continued) 29 Summary Asbestos adjustments reflect: A US$144.7 million favorable exchange rate difference as the AUD/USD exchange rate decreased 17% compared to a 12% decrease in the pcp. A US$111.3 million unfavorable movement in the underlying actuarial valuation New Zealand weathertightness moved from an expense to a benefit due to: Favorable claims settlements Higher rate of claim resolution, fewer open claims and a continued reduction in the number of new claims received Adjusted net operating profit increased 12%, largely due to: 20% increase in operating segment adjusted EBIT US$14.6 million increase in adjusted tax expense Other expense of US$7.5 million and gross interest expense of US$5.8 million US$ Millions FY15 FY14 % Change Net operating profit 291.3 99.5 Asbestos: Asbestos adjustments (33.4) 195.8 Other asbestos 1 1.1 (0.8) New Zealand weathertightness claims (4.3) 1.8 Non-recurring stamp duty 4.2 - Asbestos and other tax adjustments (37.5) (99.1) 62 Adjusted net operating profit 221.4 197.2 12 Full Year Ended 31 March |
PAGE GROSS PROFIT - GROUP 30 Gross profit margins remain strong, expanding above primary demand growth rates Price improvements continue as we execute on pricing strategies and reduce pricing inefficiencies Production costs are higher as a result of the higher market prices for pulp, gas and silica raw materials, however, as we continue to focus on cost management and operational excellence, plant performance remains on a positive trend line $101.8 $152.5 31.2% 37.1% 28.0 29.0 30.0 31.0 32.0 33.0 34.0 35.0 36.0 37.0 38.0 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 Q4 FY13 Q4 FY14 Q4 FY15 |
PAGE 1 Includes Asbestos adjustments, AICF SG&A expenses and AICF interest expense, net
2 Excludes tax effects of Asbestos and other tax adjustments 23.7% adjusted effective tax rate (ETR) for the year Adjusted income tax expense and adjusted ETR increased due to a higher proportion of taxable earnings in jurisdiction with higher tax rates The difference between adjusted income tax expense and income tax expense decreased primarily due to lower asbestos and other tax adjustments Income taxes are paid and payable in Ireland, the US, Canada, New Zealand and the Philippines Income taxes are not currently paid or payable in Europe (excluding Ireland) or Australia due to tax losses. Australian tax losses primarily result from deductions relating to contributions to AICF INCOME TAX 31 Q415 Q414 FY15 FY14 Operating profit (loss) before taxes 7.6 (265.6) 322.6 54.6 Asbestos: Asbestos adjustments 1 63.7 322.2 (32.3) 195.0 NZ weathertightness claims (0.1) 1.1 (4.3) 1.8 Non-recurring stamp duty 4.2 - 4.2 - Adjusted net operating profit before taxes 75.4 57.7 290.2 251.4 Adjusted income tax expense 2 (18.1) (12.4) (68.8) (54.2) Adjusted effective tax rate 24.0% 21.5% 23.7% 21.6% Income tax benefit (expense) 20.1 78.8 (31.3) 44.9 Income taxes paid 35.6 11.6 Income taxes payable 1.8 5.4 Three Months and Full Year Ended 31 March |
PAGE 1 CASHFLOW 32 Net income increased US$191.8 million compared to prior year Cash flow from operations includes US$113.0 million contribution to AICF paid in Q215 Higher use of working capital primarily driven by accounts payable and inventory: Interest payable on senior unsecured notes Inventory as the result of: FY15 Fontana plant commissioning Inventory build for the anticipated demand in FY16 Capital expenditures include plant capacity expansions and land and building purchases at Tacoma and Rosehill facilities US$397.5 million gross debt position as of Q415 1 Includes Asbestos Adjustments and changes in asbestos-related assets and liabilities
2 Includes capitalized interest and proceeds from sale of property, plant and equipment
(US$ Millions)
FY 2015 FY 2014 Change (%) Net Income 291.3 99.5 Asbestos related 1 (33.0) 194.1 Annual AICF contribution (113.0) - Depreciation & Amortization 70.9 61.4 15 Working Capital (12.8) 31.3 Other non-cash items (23.9) (63.5) (62) Cash Flow from Operations 179.5 322.8 (44) Capital Expenditures 2 (277.9) (114.7) Acquisition of a business - (4.1) Free Cash Flow (98.4) 204.0 Dividends Paid (390.1) (199.1) (96) Net proceeds from long-term debt 389.1 - Share related activities (3.6) 12.8 Free Cash Flow after Financing Activities (103.0) 17.7 |
PAGE FY15 KEY GLOBAL CAPEX PROJECTS 33 Project Description Full Year FY15 Plant City, Florida - 4 sheet machine and ancillary facilities th US$46.4 million Cleburne, Texas - 3 rd sheet machine and ancillary facilities US$24.7 million Carole Park, Queensland - Capacity expansion project US$36.2 million Tacoma, Washington - Land and buildings US$28.3 million Rosehill, New South Wales - Land and buildings US$37.5 million Total capacity expansion spend US$173.1 million |
PAGE CAPEX 34 Continuing to invest in capacity expansion in the US and Australia Construction on brownfield capacity projects nearing completion: Plant City, FL Cleburne, TX Carole Park, Australia Opportunistic land purchases completed at Tacoma (US) and Rosehill (Australia) sites Maintenance and other CAPEX consistent with historical trend $65.8 $107.3 $103.1 Land and Buildings Capacity Maintenance & Other CAPEX Spend - Full Year FY15 |
PAGE US INPUT COSTS Discussion: Input costs have generally trended higher than the prior year The price of NBSK pulp reached its peak during the year, but has trended down slightly during the fourth quarter The cost of gas and electric for industrial users increased above their historical four year average in the current year We are engaged in effective sourcing strategies to reduce the impact of increasing market prices 35 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 Quarterly US Input Costs 0 200 400 600 800 1,000 1,200 0 1 2 3 4 5 6 7 8 9 10 PULP GAS ELECTRIC CEMENT |
PAGE ASBESTOS COMPENSATION SUMMARY Updated actuarial report completed as at 31 March 2015 Undiscounted and uninflated central estimate increased to US$1.566 billion from US$1.547 billion
Total contributions of US$113.0 million were made to AICF during FY2015 from our FY2014 free
cash flow From the time AICF was established in February 2007, we have contributed A$718.1 million to the
fund* *As at 31 March 2015 36 |
PAGE ASBESTOS FUND PRO FORMA 37 Claims Data For the quarter and full year ended 31 March 2015, we note the following related to asbestos claims: Claims received during the full year were 9% above actuarial estimates and the prior period corresponding period The higher reported mesothelioma claims experience noted during FY14 has continued for the current full year Average claim settlement is flat for the full year, compared to the prior corresponding period Actual dollars paid in compensation was 4% above the full year actuarial estimate 1 Average claim settlement is derived as the total amount paid divided by the number of non-nil
claim 2 This actuarial estimate is a
function of the assumed experience by disease type and the relative mix of settlements assumed by disease type. Any variances in the assumed mix of settlements by disease type will have an impact on the average claim settlement experience.
FY15 FY14 % Change Claims received 665 608 (9) Actuarial estimate for the period 610 540 (13) Difference in claims received to actuarial estimate (55) (68) 19 Average claim settlement (A$) 254,000 253,000 Actuarial estimate for the period (A$) 289,000 262,000 (10) Difference in claims paid to actuarial estimate 35,000 9,000 Full Year Ended 31 March 1 2 |
PAGE ASBESTOS CASH MOVEMENTS FOR FULL YEAR ENDED 31 MARCH A$ millions AICF cash and investments - 31 March 2014 65.5 Contribution to AFFA by James Hardie 119.9 Insurance recoveries 33.2 Loan Drawdowns 17.7 Loan Repayments (51.0) Interest income, net 1.6 Claims paid (154.3) Operating costs (4.7) Other 1.0 AICF cash and investments - 31 March 2015 28.9 On 1 July 2015, James Hardie contributed A$81.1m to AICF in accordance with the AFFA.
38 |
PAGE DEFINITIONS AND OTHER TERMS Definitions Non-financial Terms AFFA Amended and Restated Final Funding Agreement AICF Asbestos Injuries Compensation Fund Ltd NBSK Northern Bleached Soft Kraft; the company's 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 39 |
PAGE 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 Consolidated Financial Statements under US GAAP, the following table cross-references each non-US GAAP line item description, to the equivalent US GAAP financial statement line item description used in the companys Condensed Consolidated Financial Statements: 40 Management's Discussion and Analysis of Results and Media Release Consolidated Statements of Operations 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-US GAAP descriptions used by Australian companies |
PAGE 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 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 41 |
PAGE Adjusted EBIT and Adjusted EBIT margin Adjusted EBIT and Adjusted EBIT margin 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 focused 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.
NON-US GAAP FINANCIAL MEASURES
42 US$ Millions Q4 FY15 Q4 FY14 FY15 FY14 EBIT 12.6 $ (266.4) $ 335.0 $ 53.1 $ Asbestos: Asbestos adjustments 63.5 322.0 (33.4) 195.8 AICF SG&A expenses 0.6 0.7 2.5 2.1 New Zealand weathertightness claims (0.1) 1.1 (4.3) 1.8 Non-recurring stamp duty 4.2 - 4.2 - Adjusted EBIT 80.8 57.4 304.0 252.8 Net sales 411.3 $ 376.4 $ 1,656.9 $ 1,493.8 $ Adjusted EBIT margin 19.6% 15.3% 18.3% 16.9% Three Months and Full Year Ended 31 March |
PAGE Adjusted net operating profit Adjusted net operating profit 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 focused on the performance of its ongoing operations. Management uses this non-US GAAP measure for the same purposes. NON-US GAAP FINANCIAL MEASURES 43 US$ Millions Q4 FY15 Q4 FY14 FY15 FY14 Net operating profit 27.7 $ (186.8) $ 291.3 $ 99.5 $ Asbestos: Asbestos adjustments 63.5 322.0 (33.4) 195.8 AICF SG&A expenses 0.6 0.7 2.5 2.1 AICF interest income, net (0.4) (0.5) (1.4) (2.9) New Zealand weathertightness claims (0.1) 1.1 (4.3) 1.8 Non-recurring stamp duty 4.2 - 4.2 - Asbestos and other tax adjustments (38.2) (91.2) (37.5) (99.1) Adjusted net operating profit 57.3 $ 45.3 $ 221.4 $ 197.2 $ Three Months and Full Year Ended 31 March |
PAGE Adjusted diluted earnings per share Adjusted diluted earnings per share 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 focused on the performance of its ongoing operations. Management uses this non-US GAAP measure for the same purposes. 44 NON-US GAAP FINANCIAL MEASURES Q4 FY15 Q4 FY14 FY15 FY14 Adjusted net operating profit (US$ millions) 57.3 $ 45.3 $ 221.4 $ 197.2 $ Weighted average common shares outstanding - Diluted (millions) 446.4 445.8 446.4 444.6 Adjusted diluted earnings per share (US cents) 13 10 50 44 Three Months and Full Year Ended 31 March |
PAGE Adjusted effective tax rate on earnings Adjusted effective tax rate on earnings 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 focused on the performance of its ongoing operations. Management uses this non-US GAAP measure for the same purposes. 45 NON-US GAAP FINANCIAL MEASURES US$ Millions Q4 FY15 Q4 FY14 FY15 FY14 Operating profit before income taxes 7.6 $
(265.6) $ 322.6 $ 54.6 $ Asbestos: Asbestos adjustments 63.5 322.0 (33.4) 195.8 AICF SG&A expenses 0.6 0.7 2.5 2.1 AICF interest expense, net (0.4) (0.5) (1.4) (2.9) New Zealand weathertightness claims (0.1) 1.1 (4.3) 1.8 Non-recurring stamp duty 4.2 - 4.2 - Adjusted operating profit before income taxes 75.4 $ 57.7 $ 290.2 $ 251.4 $ Income tax benefit (expense) 20.1 $
78.8 $
(31.3) $ 44.9 $
Asbestos-related and other tax adjustments
(38.2) (91.2) (37.5) (99.1) Adjusted income tax (expense) (18.1) $ (12.4) $ (68.8) $ (54.2) $ Effective tax rate (264.5%) 29.7% 9.7% (82.2%) Adjusted effective tax rate 24.0% 21.5% 23.7% 21.6% Three Months and Full Year Ended March |
PAGE 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 companys earnings from its core business operations to satisfy its debt, capital expenditure and working capital requirements NON-US GAAP FINANCIAL MEASURES 46 US$ Millions Q4 FY15 Q4 FY14 FY15 FY14 EBIT 12.6 $ (266.4) $ 335.0 $ 53.1 $ Depreciation and amortization 18.9 15.2 70.9 61.4 Adjusted EBITDA 31.5 $ (251.2) $ 405.9 $ 114.5 $ Three Months and Full Year Ended 31 March |
PAGE Adjusted selling, general and administrative expenses Adjusted selling, general and administrative expenses 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 focused 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. NON-US GAAP FINANCIAL MEASURES 47 US$ Millions Q4 FY15 Q4 FY14 FY15 FY14 Selling, general and administrative expenses 68.8 $ 61.9 $ 245.5 $ 224.4 $ Excluding: New Zealand weathertightness claims benefit (expense) 0.1 (1.1) 4.3 (1.8) AICF SG&A expenses (0.6) (0.7) (2.5) (2.1) Non-recurring stamp duty (4.2) - (4.2) - Adjusted selling, general and administrative expenses 64.1 $ 60.1 $ 243.1 $ 220.5 $ Net Sales 411.3 $ 376.4 $ 1,656.9 $ 1,493.8 $ Selling, general and administrative expenses as a percentage of net sales 16.7% 16.4% 14.8% 15.0% Adjusted selling, general and administrative expenses as a percentage of net sales 15.6% 16.0% 14.7% 14.8% Three Months and Full Year Ended 31 March |
INVESTOR
PRESENTATION JULY 2015 |