James Hardie Industries plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Investor Presentation (March 2007)
30 slides from James Hardie Industries's investor presentation, Mar 16, 2007
Slide 1: James Hardie: A Growth Focused Company
James Hardie Annual net sales US$1,488m Total assets US$1,445m Operations in North America, Asia Pacific and Europe 3,100 employees Market cap US$3.2 billion ASX S&P 100 company NYSE listing Note: Net sales and total assets are at 31 March 2006. Total assets at 31 December 2006 were US$1,410m. A Gro
Slide 2: Focused on Fiber Cement - Investment Attributes
Focused on Fiber Cement Growth focused Sustainable competitive advantage Unique proprietary technology Strong financial performance, cash flows and balance sheet1 Track record of outperforming US housing market Investment Attributes Investment Attributes 1 Excluding asbestos provision
Slide 3: First to Develop Fiber Cement
First to Develop Fiber Cement James Hardie pioneered development of fiber cement technology in the 1980s James Hardie pioneered development of fiber cement technology in the 1980s Superior Durability Fire Resistant High Impact Resistant Moisture Resistant Termite Proof
Slide 4: Industry Leadership and Profitable Growth
Industry Leadership and Profitable Growth Aggressively grow primary demand for fiber cement Secure differentiated position Generate strong top line growth Win high shares of large segments Sustain attractive margins Strategy
Slide 5: Unique Technology and Scale
Unique Technology and Scale Unique plant engineering and proprietary process technology and product formulations - significant investment in R&D Superior capital cost efficiency Low cost manufacturer Only national producer of fiber cement in each key geographic market Excellent plant economies of sc
Slide 6: Business Portfolio FY2006
Business Portfolio FY 20061 Total Identifiable Assets# Sales EBIT2,# USA Fiber Cement Established high growth/high return 79% 82% 95% Asia Pacific Fiber Cement Established high return 16% 16% 12% Other Potential growth opportunities (Pipes, Europe) 5% 2% (7%)2 1 At and for the fiscal year ended 31 M
Slide 7: Revenue Growth Streams
Revenue Growth Streams Exterior products Siding Soffit Fascia Trim Interior products 1/4 inch backerboard Hardiebacker 500(r) Total sales compound annual growth rate of 27% (FY02 - FY06) USA Fiber Cement
Slide 8: Superior Product Performance
Superior Product Performance Fiber Cement is more durable than wood and engineered wood Fiber Cement Superior Durability Moisture Resistant Fire Resistant Weather Resistant Termite Proof Resists Warping Resists Cracking Resists Rotting Holds Paint Longer ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Engineered Wo
Slide 9: Superior Product Performance - (continued)
Superior Product Performance - (continued) Fiber Cement looks and performs better than vinyl Vinyl Fire Resistant Hail Resistant Resists Warping Resists Buckling Color Lasts Longer Dimensional Stability Can Be Repainted ? ? ? ? ? ? ? ? ? ? ? ? ? ? Fiber Cement USA Fiber Cement
Slide 10: Exterior Products - Siding
Exterior Products - Siding Continuing to increase share of siding sales Estimated terminal share 35% Bsf = billions square feet NAHB Sources: Builder Practices Report - Siding Usage/Exterior Wall Finish In New Construction Consumer Practices Report - Siding Usage/Exterior Wall Finish In Repair & Rem
Slide 11: Interior Products
Interior Products Net sales growing strongly - CAGR* 26% (FY02-FY06) Leading position in 1/4" segment - technology advantage for floor applications Hardiebacker 500(r) is driving penetration on wall applications Greenboard replacement Growing segment Majority of sales via repair and remodelling segm
Slide 12: Interior Products (continued)
Interior Products (continued) Product Life Cycle 1/4" Volume Growth 1/2" Volume Growth Growth by Product Primary product (1/4") still growing at healthy pace. 1/2" product growing even faster Market Share Growth fuelled by strong market and stronger JHBP penetration Other JHBP Other JHBP Other JHBP
Slide 13: Largest Fiber Cement Producer in North America
Largest Fiber Cement Producer in North America Flat Sheet Plants Flat Sheet Plants Capacity (mmsf) Fontana, California Fontana, California 180 Plant City, Florida Plant City, Florida 300 Cleburne, Texas Cleburne, Texas 500 Tacoma, Washington Tacoma, Washington 200 Peru, Illinois Peru, Illinois 560 W
Slide 14: Low Cost Fiber Cement Producer
Low Cost Fiber Cement Producer USA Fiber Cement CAPITAL COST PER UNIT OF CAPACITY (US$/SF) 0.1 0.15 0.2 0.25 0.3 0.35 0.4 FY91 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY05 FY06 FY07 $US / SF PRODUCTION CAPACITY PER LINE 60 100 150 200 300 0.1 50.1 100.1 150.1 200.1 250.1 300.1 350.1 1990 1994 1998 2
Slide 15: Divisions Organizational Structure
USA Fiber Cement Divisions Organizational Structure West Markets (incl. AK, HI) North Markets (incl. Can) South Markets Interiors North West 0 500 1,000 1,500 2,000 2,500 MMSF FY02 FY03 FY04 FY05 FY06 South West JHBP USA - Total Business Mix FY06 Volume = 2.1bsf North South Interiors
Slide 16: Divisions - Southern and Western Divisions
USA Fiber Cement Divisions - (continued) Southern and Western Divisions High builder penetration High brand awareness Primary growth positioned around wood, vinyl, brick and stucco conversions Expansion into rural markets Significant opportunity in R&R segment Incremental revenue opportunity with co
Slide 17: Divisions - Northern Division
USA Fiber Cement Divisions Northern Division Approx. 50% of new housing sales Accounts for 25% of USA Fiber Cement sales Penetrating regions where vinyl is dominant siding material Focus on majority color penetration Estimated terminal share of 30%
Slide 18: ColorPlus Model
ColorPlus(r) Model Higher quality products with higher revenue stream Strategy designed to reduce 'on the wall' cost and close gap with vinyl siding Supply of pre-painted exterior products Reduce supply chain costs Installer education Channel increases revenue base and gains incremental volume End-u
Slide 19: ColorPlus Model - (continued)
ColorPlus(r) Model - (continued) Mechanics of model in place Color plant network 20 colors and 20 products by market Channel is reset and developing Base level logistics capability Value priced ColorPlus(r) in July 2006 USA Fiber Cement
Slide 20: Average Net Sales Price
Average Net Sales Price Average price growth driven by mix and price increases 360 380 400 420 440 460 480 500 520 540 560 580 600 FY00 FY01 FY02 FY03 FY04 FY05 FY06 9mths FY07 US$ / mmsf USA Fiber Cement
Slide 21: Top-Line Growth
USA Fiber Cement Top-Line Growth 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 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Volume (mmsf) / Starts (000's Units) $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 Revenue (US$M) JH Volu
Slide 22: EBIT and EBIT Margin
USA Fiber Cement *Excludes restructuring and other operating expenses of US$12.6 million in Q3 FY02 EBIT and EBIT Margin* 0 20 40 60 80 100 120 FY01 FY02 FY03 FY04 FY05 FY06 YTD FY07 EBIT US$M 0 5 10 15 20 25 30 35 EBIT MARGIN % EBIT EBIT/Sales
Slide 23: Growth in Revenue Per Employee
Growth in Revenue Per Employee $552 $495 $48 $115 $153 $166 $251 $250 $329 $298 $354 $326 $381 $367 $413 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Revenue # of Employees Revenue Per Employee US$
Slide 24: New Housing Construction Downturn
New Housing Construction Downturn Key sales determinants Level of new housing construction activity Level of repair and remodeling activity Market development program effectiveness Price improvement New housing 70% of USA Fiber Cement sales (repair and remodel 30%) Business model adjusted down, but
Slide 25: Asia Pacific Fiber Cement
Asia Pacific Fiber Cement Australia, New Zealand, Philippines FY06 net sales US$242m FY06 EBIT US$42m Higher value differentiated products Lower delivered cost Shift to growth model Philippines focus on profitability
Slide 26: High Growth and Attractive Returns - Long Term Financial Targets
High Growth and Attractive Returns Targeted Long Term Financial Targets Target1 9 Mths FY07 Actual FY06 Actual FY05 Actual FY04 Revenue Growth > 15% p.a. 8% 23% 23% 25% EBIT Margin > 15% p.a 22%* 21%* 19%* 18% Return on Capital Employed > 15% p.a 29%* 32%* 24% 23% 1 Long term target excludes asbesto
Slide 27: Summary
Summary We have a strong, well established, growth focused and high return business We have a sustainable competitive advantage Our model for continued strong growth is based on: Large market opportunity Superior value proposition Proprietary and/or protected technology Upsides due to current R&D in
Slide 28: Endnotes - Definitions
Endnotes DEFINITIONS Financial Measures - US GAAP equivalents EBIT and EBIT margin - EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We believe EBIT and EBIT margin to be relevant and useful information as these are the primary measures used by o
Slide 29: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos provision, SCI and other related expense, and impairment of roofing plant - EBIT and EBIT margin excluding asbestos provision, SCI and other related expense, and impairment of roofing plant are not measures of financial performan
Slide 30: Disclaimer
Disclaimer Disclaimer This Management Presentation contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to sha
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