James Hardie Industries plc 6-K, filed Feb 14, 2023
James Hardie Industries plc (JHX)
6-K
2023-02-14
For: 2022-12-31
View Original
Added on
April 06, 2026
About this 6-K
James Hardie Industries plc filed this 6-K on February 14, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the Month of February 2023
1-15240
(Commission File Number)
JAMES HARDIE INDUSTRIES plc
(Translation of registrant’s name into English)
Europa House, Second Floor
Harcourt Centre
Harcourt Street, Dublin 2, D02, WR20, Ireland
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F..X.... Form 40-F.........
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Not Applicable
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Not Applicable
TABLE OF CONTENTS
2
Forward-Looking Statements
This Form 6-K 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 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, 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 company’s 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 company’s plants and future plans with respect to any such projects;
•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;
•uncertainty from the discontinuance of LIBOR and transition to any other interest rate benchmark;
•statements regarding the effect and consequences of the COVID-19 public health crisis;
•statements regarding tax liabilities and related audits, reviews and proceedings;
•statements regarding the possible consequences and/or potential outcome of legal proceedings brought against us and the potential liabilities, if any, associated with such proceedings;
•expectations about the timing and amount of contributions to AICF, a special purpose fund for the compensation of proven Australian asbestos-related personal injury and death claims;
•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 or housing market conditions in the regions in which we operate, including but not limited to, 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.
3
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 17 May 2022, 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 funding and the effect of currency exchange rate movements on the amount recorded in the Company’s financial statements as an asbestos liability; 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; compliance with and changes in environmental and health and safety laws; risks of conducting business internationally; compliance with and changes in laws and regulations; currency exchange risks; dependence on customer preference and the concentration of the Company’s customer base; dependence on residential and commercial construction markets; the effect of adverse changes in climate or weather patterns; use of accounting estimates; risk and uncertainties arising out of the COVID-19 public health crisis, including the impact of COVID-19 on our business, sales, results of operations and financial condition and all other risks identified in the Company’s 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 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.
4
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| Results for Announcement to the Market | ||||||||
ASX Cover 31 December 2022 | ||||||||
| Media Release | ||||||||
| Management’s Analysis of Results | ||||||||
| Management Presentation | ||||||||
| Condensed Consolidated Financial Statements | ||||||||
| JHX Announces Global Leadership Appointment | ||||||||
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| James Hardie Industries plc | ||||||||
Date: 14 February 2023 | By: /s/ Aoife Rockett | |||||||
Aoife Rockett | ||||||||
Company Secretary | ||||||||
6
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| Results for Announcement to the Market | ||||||||
ASX Cover 31 December 2022 | ||||||||
| Media Release | ||||||||
| Management’s Analysis of Results | ||||||||
| Management Presentation | ||||||||
| Condensed Consolidated Financial Statements | ||||||||
| JHX Announces Global Leadership Appointment | ||||||||
7
Exhibit 99.1
James Hardie Industries plc Europa House 2nd Floor, Harcourt Centre Harcourt Street, Dublin 2, D02 WR20, Ireland T: +353 (0) 1 411 6924 F: +353 (0) 1 479 1128 | |||||
14 February 2023
The Manager
Company Announcements Office
Australian Securities Exchange Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
Results for Announcement to the Market
James Hardie announced today its results for the 3rd quarter and nine months ended 31 December 2022 and has filed the following documents with the ASX:
| • | ASX Cover Sheet | ||||
| • | Media Release | ||||
| • | Management’s Analysis of Results | ||||
| • | Management Presentation | ||||
| • | Condensed Consolidated Financial Statements | ||||
Copies of these documents are available on James Hardie’s investor relations website at
https://ir.jameshardie.com.au/.
| Yours faithfully | ||
James Brennan-Chong | ||
| Director of Investor Relations and Market Intelligence | ||
This announcement has been authorized for release by the Board of Directors of James Hardie Industries plc.
James Hardie Industries plc is a limited liability company incorporated in Ireland with its registered office at
Europa House 2nd Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20, Ireland.
Europa House 2nd Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20, Ireland.
Directors: Anne Lloyd (Chairperson, USA), Peter-John Davis (Aus), Persio Lisboa (USA), Renee Peterson (USA),
Rada Rodriguez (Sweden), Suzanne B. Rowland (USA), Nigel Stein (UK), Harold Wiens (USA).
Rada Rodriguez (Sweden), Suzanne B. Rowland (USA), Nigel Stein (UK), Harold Wiens (USA).
Chief Executive Officer and Director: Aaron Erter (USA)
Company number: 485719
ARBN: 097 829 895
Exhibit 99.2
Results for Announcement to the Market
James Hardie Industries plc
ARBN 097 829 895
Nine Months Ended 31 December 2022 | ||||||||||||||
| Key Information | Nine Months Ended 31 December | |||||||||||||
FY 2023 US$M | FY 2022 US$M | Movement | ||||||||||||
| Net Sales From Ordinary Activities | 2,859.3 | 2,646.5 | Up | 8% | ||||||||||
| Profit From Ordinary Activities After Tax Attributable to Shareholders | 430.6 | 406.9 | Up | 6% | ||||||||||
| Net Profit Attributable to Shareholders | 430.6 | 406.9 | Up | 6% | ||||||||||
| Net Tangible Assets per Ordinary Share | US$2.76 | US$2.05 | Up | 35% | ||||||||||
Dividend Information
•On 8 November 2022, the Company announced the replacement of ordinary dividends with a share buyback program
•The FY2022 second half ordinary dividend ("FY2022 second half dividend") of US30.0 cents per security was paid to CUFS holders on 29 July 2022.
Movements in Controlled Entities during the nine months Ended 31 December 2022
The following entity was created: James Hardie Fiber Cement Europe GmbH (29 June 2022).
The following entities were dissolved: SNC Parc 3 (30 June 2022) and James Hardie France SAS (1 July 2022).
Associates and Joint Venture Entities
FELS Recycling GmbH (51%); Aplicaciones Minerales S.A. (28%)
Review
The results and information included within this Report have been prepared using US GAAP and have been subject to an independent review by external auditors.
Results for the Third Quarter and Nine Months Ended 31 December 2022 | |||||
| Contents | |||||
| 1. | Media Release | ||||
| 2. | Management's Analysis of Results | ||||
| 3. | Management Presentation | ||||
| 4. | Condensed Consolidated Financial Statements | ||||
James Hardie Industries plc is incorporated under the laws of Ireland with its corporate seat in Dublin, Ireland. The liability of members is limited. The information contained in the above documents should be read in conjunction with the James Hardie 2022 Annual Report which can be found on the company website at https://ir.jameshardie.com.au/.
Media Release 14 February 2023 |  | ||||
Exhibit 99.3
James Hardie Industries Announces Third Quarter
Fiscal Year 2023 Results
Fiscal Year 2023 Results
Global Net Sales declined 4% to US$860.8 Million for the Third Quarter
Adjusted Net Income declined 16% to US$129.2 Million for the Third Quarter
Adjusts Fiscal Year 2023 Adjusted Net Income Guidance Range
to US$600 Million and US$620 Million
to US$600 Million and US$620 Million
James Hardie Industries plc (ASX: JHX; NYSE: JHX), the world’s #1 producer and marketer of high- performance fiber cement and fiber gypsum building solutions, today announced results for its third quarter fiscal year 2023, the three-month period ending 31 December 2022.
Third Quarter Fiscal Year 2023 Highlights, Compared to Third Quarter Fiscal Year 2022, as applicable:
•Global Net Sales declined 4% as Global Volumes declined 11%, partially offset by Price/Mix growth in all three regions as we delivered value added solutions to our customers
•Global Adjusted EBIT decreased 19% to US$165.4 million, with an Adjusted EBIT margin of 19.2%
•North America Fiber Cement Segment Net Sales remained flat at US$645.4 million and EBIT declined 5% to US$174.1 million, with an EBIT margin of 27.0%
•Asia Pacific Fiber Cement Segment Net Sales decreased 13% to A$171.2 million and EBIT decreased 21% to A$42.3 million, with an EBIT margin of 24.7%
•Europe Building Products Segment Net Sales increased 4% to €101.2 million and EBIT decreased 86% to €1.5 million, with an EBIT margin of 1.5%
Speaking to the results, James Hardie CEO Aaron Erter said, “Our team executed in the face of significant challenges to deliver strong financial results in fiscal year 2023. The team’s performance is reflected in strong Price/Mix growth in all three regions, including North America Price/Mix growth of +10%, Asia Pacific Price/Mix growth of +6% and Europe Price/Mix growth of +14%. The team’s success in driving high value product growth is underpinned by our superior value proposition. We are homeowner focused, customer and contractor driven, providing the entire value chain with world class products and services.”
Speaking to adjusting to the dynamic market conditions, Mr. Erter stated, “We are managing quickly and decisively to accelerate our competitive advantages through this market downturn and we view this time as an opportunity. We are focused on five key areas: (i) continued strong execution of our strategy, (ii) driving profitable volume share gain, (iii) effectively balancing our manufacturing network, (iv) optimizing SG&A for the current market environment and (v) continuing to invest in profitable growth.
We have made adjustments to our manufacturing networks in all three regions. We did this by reducing our shifts and changing shift patterns. We believe we will achieve a lower unit cost based on our adjustments while providing flexibility to ramp up as we see signs of housing market recovery.
Media Release: James Hardie - Third Quarter Ended 31 December 2022 | 1 | |||||||
Media Release 14 February 2023 | | ||||
We also reduced SG&A headcount to ensure alignment with our strategic needs. In addition, we have lowered our discretionary SG&A spend in the second half of FY23 compared to the first half. We continue to significantly invest in strategic growth initiatives, and believe we are entering FY24 at the appropriate SG&A spend level. We will continue to strategically invest in growth initiatives, including adding the right talent, and investing in marketing to all members of our value chain. Regarding marketing, the adjustments we have made are to better balance our investments across our various mediums and audiences with a focus on targeted conversions and share gain, while continuing to increase brand awareness.
Most importantly we remain aggressive, and we are laser focused on driving profitable volume share gain in every region and segment we do business in.
We are being agile and adaptive in responding to significant changes in market conditions, but we are also being thoughtful and focused on where we can accelerate our competitive advantages. We have the right solutions that our customers are seeking coupled with a team dedicated to delivering differentiated results.”
Third Quarter Fiscal Year 2023 Results Compared to Third Quarter Fiscal Year 2022 Results
Global: Global Net Sales declined 4% to US$860.8 million, while Global Adjusted EBIT decreased 19% to US$165.4 million. Global Adjusted Net Income decreased 16% to US$129.2 million. Global Adjusted EBIT margin of 19.2% was achieved through continued operational improvements and the delivery of a high value product mix offset by high input costs, reduced volumes and our ongoing investment in growth initiatives.
North America Fiber Cement Segment: Net Sales remained flat at US$645.4 million. Volumes declined 10%, adversely impacted by the new construction housing market slowing sharply as well as a softer repair and remodel market. However, this was offset by ongoing execution of our high value product mix strategy that delivered Price/Mix growth of +10%, which was underpinned by robust ColorPlus™ volume growth of +18%. LEAN manufacturing initiatives continued to generate improved performance across the North American manufacturing network. However, lower volumes and high input costs led to a 5% decline in EBIT to US$174.1 million. The EBIT margin contracted 140 basis points to 27.0%.
Asia Pacific Fiber Cement Segment: Net sales decreased 13% to A$171.2 million. Volumes declined by 19% and were adversely impacted by softening demand as well as customers reducing inventory levels in Australia and New Zealand. Execution of our high value product mix strategy led to Price/Mix growth of +6%. EBIT decreased 21% to A$42.3 million, at an EBIT margin of 24.7%.
Europe Building Products Segment: Net Sales increased +4% to €101.2 million. Volumes declined 10%, as the housing market remained weak throughout our European markets. However, this was more than offset by strong Price/Mix growth of +14%. EBIT decreased 86% to €1.5 million, with an EBIT margin of 1.5%. The EBIT margin declined by 920 basis points, primarily due to restructuring costs, the impact of inflation on key input costs as well as reduced volumes.
Capital Resources
Operating cash flow generation of US$432.1 million in the first nine months of fiscal year 2023 was driven by profitable organic sales growth, partially offset by an increase in working capital. Working capital increased by US$54.2 million primarily due to increased inventory levels globally and lower accounts payable balances, partially offset by lower accounts receivable.
Media Release: James Hardie - Third Quarter Ended 31 December 2022 | 2 | |||||||
Media Release 14 February 2023 | | ||||
James Hardie Chief Financial Officer, Jason Miele, stated, “Our Capital Allocation Framework was updated in November 2022 and matches who we are: a growth company. The number one and primary focus of our Capital Allocation Framework is to invest in organic growth; our 5-year average Adjusted ROCE of 36% is proof that investing in our growth should be our number one use of capital. As announced in November, we return excess capital to shareholders via a share buyback rather than a dividend as it provides a growth company the optimal flexibility to ensure investment in organic growth is prioritized, while maintaining financial strength and flexibility through cycles. Through these cycles we will target an average leverage ratio below 2.0x. In December, we commenced our share buyback program, and during the quarter we bought back 1.6 million shares for total consideration of US$31.2 million.”
Sustainability
At James Hardie, we are all committed to Building Sustainable Communities and we recognize that keeping environmental and social considerations at the core of everything we do is fundamental to our success.
Commenting on sustainability, Mr. Erter said: “The decisions we make each day must be environmentally and socially responsible to create sustainable value for homeowners, our customers and our investors. The Company’s sustainability progress reflects the efforts of our global team, whose passion and commitment drives the success of our business outcomes in a sustainable way.”
For more on our commitment to Sustainability including our goals, see our FY22 Sustainability Report at https://www.jameshardie.com/why-hardie/sustainability
Outlook and Earnings Guidance | ||
Based on our lower than expected second half volume results in both North America and APAC and restructuring charges incurred in the second half, management has lowered the fiscal year 2023 Adjusted Net Income guidance range. The updated 2023 Adjusted Net Income guidance range is US$600 million to US$620 million, changed from the prior range of US$650 million and US$710 million. The comparable prior year Adjusted Net Income for fiscal year 2022 was US$620.7 million.
James Hardie’s guidance is based on current estimates and assumptions and is subject to several known and unknown uncertainties and risks.
Media Release: James Hardie - Third Quarter Ended 31 December 2022 | 3 | |||||||
Media Release 14 February 2023 | | ||||
Key Financial Information | ||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | ||||||||||||||||||||||||||||||
| Group (US$ millions) | |||||||||||||||||||||||||||||||||||
| Net Sales | 860.8 | 900.0 | (4)% | 2,859.3 | 2,646.5 | 8% | |||||||||||||||||||||||||||||
| Adjusted EBIT | 165.4 | 204.1 | (19%) | 592.3 | 590.3 | —% | |||||||||||||||||||||||||||||
| Adjusted EBIT Margin (%) | 19.2 | 22.7 | -3.5 pts | 20.7 | 22.3 | -1.6 pts | |||||||||||||||||||||||||||||
| Adjusted Net Income | 129.2 | 154.1 | (16%) | 459.3 | 443.2 | 4% | |||||||||||||||||||||||||||||
| Operating Cash Flow | 432.1 | 553.3 | (22%) | ||||||||||||||||||||||||||||||||
| North America Fiber Cement (US$ millions) | |||||||||||||||||||||||||||||||||||
| Net Sales | 645.4 | 644.9 | —% | 2,136.1 | 1,857.3 | 15% | |||||||||||||||||||||||||||||
| EBIT | 174.1 | 183.3 | (5%) | 578.7 | 535.1 | 8% | |||||||||||||||||||||||||||||
| EBIT Margin (%) | 27.0 | 28.4 | -1.4 pts | 27.1 | 28.8 | -1.7 pts | |||||||||||||||||||||||||||||
| Asia Pacific Fiber Cement (A$ millions) | |||||||||||||||||||||||||||||||||||
| Net Sales | 171.2 | 196.5 | (13%) | 582.4 | 577.2 | 1% | |||||||||||||||||||||||||||||
| EBIT | 42.3 | 53.6 | (21%) | 149.7 | 164.6 | (9%) | |||||||||||||||||||||||||||||
| EBIT Margin (%) | 24.7 | 27.3 | -2.6 pts | 25.7 | 28.5 | -2.8 pts | |||||||||||||||||||||||||||||
| Europe Building Products (€ millions) | |||||||||||||||||||||||||||||||||||
| Net Sales | 101.2 | 97.6 | 4% | 314.0 | 305.5 | 3% | |||||||||||||||||||||||||||||
| EBIT | 1.5 | 10.4 | (86%) | 17.3 | 38.1 | (55%) | |||||||||||||||||||||||||||||
| EBIT Margin (%) | 1.5 | 10.7 | -9.2 pts | 5.5 | 12.5 | -7.0 pts | |||||||||||||||||||||||||||||
Further Information | ||
Readers are referred to the Company’s Condensed Consolidated Financial Statements and Management’s Analysis of Results for the third quarter ended 31 December 2022 for additional information regarding the Company’s results, including information regarding income taxes, the asbestos liability and contingent liabilities.
Media Release: James Hardie - Third Quarter Ended 31 December 2022 | 4 | |||||||
Media Release 14 February 2023 | | ||||
Management Briefing for Analysts, Investors and Media | ||
James Hardie will conduct a teleconference and audio webcast for analysts, investors, and media on Tuesday 14 February 2023, 9:00am Sydney, Australia time (Monday 13 February 2023, 5:00pm New York City, USA time). Analysts, investors, and media can access the management briefing via the following:
All participants wishing to join the webcast, please use the following link:
https://edge.media-server.com/mmc/p/uk82i4ue
All participants wishing to join the teleconference will need to pre-register by navigating to:
https://s1.c-conf.com/diamondpass/10028036-61ap3z.html
Once registered, you will receive a calendar invite with dial-in numbers and a unique PIN which will be required to join the call.
Webcast Replay: Will be available after the Live Webcast concludes at https://ir.jameshardie.com.au
Use of Non-GAAP Financial Information; Australian Equivalent Terminology | ||
This Media Release includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (GAAP), such as Adjusted net income and Adjusted EBIT. These non-GAAP financial measures should not be considered to be more meaningful than the equivalent GAAP measure. Management has included such 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 excludes the impact of certain legacy items, such as asbestos adjustments. Additionally, management uses such non-GAAP financial measures for the same purposes. However, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company’s competitors and may not be directly comparable to similarly titled measures of the Company’s competitors due to potential differences in the exact method of calculation. The Company is unable to forecast the comparable US GAAP financial measure for future periods due to, amongst other factors, uncertainty regarding the impact of actuarial estimates on asbestos-related assets and liabilities in future periods. For additional information regarding the non-GAAP financial measures presented in this Media Release, including a reconciliation of each non-GAAP financial measure to the equivalent GAAP measure, see the section titled “Non-GAAP Financial Measures” included in the Company’s Management’s Analysis of Results for the third quarter ended 31 December 2022.
In addition, this Media Release includes financial measures and descriptions that are considered to not be in accordance with GAAP, but which are consistent with financial measures reported by Australian companies, such as EBIT and EBIT margin. Since the Company prepares its Condensed Consolidated Financial Statements in accordance with GAAP, the Company provides investors with definitions and a cross- reference from the non-GAAP financial measure used in this Media Release to the equivalent GAAP financial measure used in the Company's Condensed Consolidated Financial Statements. See the section titled “Non- GAAP Financial Measures” included in the Company’s Management’s Analysis of Results for the third quarter ended 31 December 2022.
Media Release: James Hardie - Third Quarter Ended 31 December 2022 | 5 | |||||||
Media Release 14 February 2023 | | ||||
Forward-Looking Statements | ||
This Media Release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of James Hardie to be materially different from those expressed or implied in this release, including, among others, the risks and uncertainties set forth in Section 3 “Risk Factors” in James Hardie’s Annual Report on Form 20-F for the fiscal year ended 31 March 2022; changes in general economic, political, governmental and business conditions globally and in the countries in which James Hardie does business; changes in interest rates; changes in inflation rates; changes in exchange rates; the level of construction generally; changes in cement demand and prices; changes in raw material and energy prices; changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. James Hardie assumes no obligation to update or correct the information contained in this Media Release except as required by law.
This media release has been authorized by the James Hardie Board of Directors.
END
Investor/Media/Analyst Enquiries:
James Brennan-Chong
Director of Investor Relations and Market Intelligence
| Telephone: | +61 2 9638 9205 | |||||||
| Email: | media@jameshardie.com.au | |||||||
James Hardie Industries plc is a limited liability company incorporated in Ireland with its registered office at Europa House, 2nd Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20, Ireland
Media Release: James Hardie - Third Quarter Ended 31 December 2022 | 6 | |||||||
Fiscal 2023 Three and Nine Months Ended 31 December 2022 |  | ||||
Exhibit 99.4
| Management’s Analysis of Results | ||
This Management’s Analysis of Results forms part of a package of information about James Hardie Industries plc’s results. It should be read in conjunction with the other parts of this package, including the Media Release, the Management Presentation and the Condensed Consolidated Financial Statements. Except as otherwise indicated in this Management’s Analysis of Results, James Hardie Industries plc is referred to as “JHI plc.” JHI plc, together with its direct and indirect wholly-owned subsidiaries, are collectively referred to as “James Hardie,” the “Company,” “we,” “our,” or “us.” Definitions for certain capitalized terms used in this Management’s Analysis of Results can be found in the section titled “Non-GAAP Financial Measures.”
This Management’s Analysis of Results includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures should not be considered to be more meaningful than the equivalent GAAP measures. Management has included such measures to provide investors with an alternative method for assessing its financial condition and operating results in a manner that is focused on the performance of its ongoing operations. These measures exclude the impact of certain legacy items, such as asbestos adjustments, or significant non-recurring items, such as asset impairments, restructuring expenses, as well as adjustments to tax expense. In addition, management provides an adjusted effective tax rate, which excludes the tax impact of the special pre-tax items (items listed above) and special tax items. Management believes that this non-GAAP tax measure provides an ongoing effective rate which investors may find useful for historical comparisons and for forecasting and is an alternative method of assessing the economic impact of taxes on the Company, as it more closely approximates payments to taxing authorities. Management uses such non-GAAP financial measures for the same purposes. These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company’s competitors and may not be directly comparable to similarly titled measures of the Company’s competitors due to potential differences in the exact method of calculation. For additional information regarding the non-GAAP financial measures presented in this Management’s Analysis of Results, including a reconciliation of each non-GAAP financial measure to the equivalent GAAP measure, see the section titled “Non-GAAP Financial Measures.” In addition, this Management’s Analysis of Results includes financial measures and descriptions that are considered to not be in accordance with GAAP, but which are consistent with financial measures reported by Australian companies. Since James Hardie prepares its condensed consolidated financial statements in accordance with GAAP, the Company provides investors with definitions and a cross-reference from the non-GAAP financial measure used in this Management’s Analysis of Results to the equivalent GAAP financial measure used in the Company's Condensed Consolidated Financial Statements. See the section titled “Non-GAAP Financial Measures.”
These documents, along with an audio webcast of the Management Presentation on 14 February 2023, are available from the Investor Relations area of our website at ir.jameshardie.com.au
Investor/Media/Analyst Inquiries:
James Brennan-Chong
Director of Investor Relations and Market Intelligence
Telephone: | +61 2 9638 9205 | |||||||
Email: | media@jameshardie.com.au | |||||||
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 1 | |||||||
| CONSOLIDATED RESULTS | | ||||
| Overview | ||
James Hardie Industries plc is a world leader in the manufacturing of fiber cement building solutions, and a market leader in fiber gypsum and cement-bonded boards in Europe. Our fiber cement building materials include a wide-range of products for both external and internal use across a broad range of applications. We have four reportable segments: North America Fiber Cement, Asia Pacific Fiber Cement, Europe Building Products and Research and Development.
| 3rd Quarter Financial Highlights | ||
| US$ Millions (except per share data) | Three Months Ended 31 December | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FY23 | FY22 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 860.8 | $ | 900.0 | (4%) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross margin (%) | 33.6 | 35.8 | (2.2 pts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| EBIT | 162.9 | 202.2 | (19%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| EBIT margin (%) | 18.9 | 22.5 | (3.6 pts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBIT1 | 165.4 | 204.1 | (19%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBIT margin (%)1 | 19.2 | 22.7 | (3.5 pts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 100.1 | 135.4 | (26%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Net income1 | 129.2 | 154.1 | (16%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per share - diluted | $ | 0.22 | $ | 0.30 | (27%) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted earnings per share - diluted1 | $ | 0.29 | $ | 0.35 | (17%) | |||||||||||||||||||||||||||||||||||||||||||||||||||
1 See section titled “Non-GAAP Financial Measures" for a reconciliation to the equivalent GAAP measure | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Overall, the third quarter consolidated results were impacted by the continued challenging global macro environment conditions and weakened housing market.
•Net sales decreased 4% to US$860.8 million driven by a volume decrease of 11% as global housing market activity continues to remain constrained. This decrease was partially offset by a Price/Mix growth of 7% as the Company remains focused on executing its global strategy of driving high value products through our customers.
•Adjusted EBIT decreased 19% to US$165.4 million with an adjusted EBIT margin of 19.2% due to lower gross margin of 2.2 percentage points and higher SG&A expenses. The continued challenging global macro environment conditions and high input costs that included significant inflationary pressures, impacted all of our segment results for the quarter. Additionally, the Company incurred approximately US$6.0 million of restructuring charges related to better aligning our business with the economic environment.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 2 | |||||||
| OPERATING RESULTS | | ||||
| North America Fiber Cement Segment | ||
Operating results for the North America Fiber Cement segment were as follows:
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | |||||||||||||||||||||||||||||||||
| Volume (mmsf) | 700.5 | 776.8 | (10%) | 2,334.9 | 2,296.7 | 2% | ||||||||||||||||||||||||||||||||
| Fiber cement net sales | 645.4 | 644.9 | —% | 2,136.1 | 1,857.3 | 15% | ||||||||||||||||||||||||||||||||
| Gross profit | (5%) | 10% | ||||||||||||||||||||||||||||||||||||
| Gross margin (%) | (1.9 pts) | (1.8 pts) | ||||||||||||||||||||||||||||||||||||
| EBIT | 174.1 | 183.3 | (5%) | 578.7 | 535.1 | 8% | ||||||||||||||||||||||||||||||||
| EBIT margin (%) | 27.0 | 28.4 | (1.4 pts) | 27.1 | 28.8 | (1.7 pts) | ||||||||||||||||||||||||||||||||
Q3 FY23 vs Q3 FY22
Net sales were flat as our 10% growth in Price/Mix was offset by a 10% decrease in volumes. The new construction housing market has experienced a sharp decline in activity and the repair and remodel market has also softened. The growth in our Price/Mix resulted from the continued execution of our strategy to drive a high value product mix combined with our strategic pricing increases.
Gross margin decreased as a result of the following components:
| Higher average net sales price | 6.2 | pts | |||
| Higher production and distribution costs | (8.1 | pts) | |||
| Total percentage point change in gross margin | (1.9 | pts) | |||
Higher production and distribution costs resulted from significant inflationary pressures across almost all categories, with the largest impacts being increased costs of pulp, cement and labor.
SG&A expenses decreased 5% primarily due to lower employee costs. SG&A expenses as a percentage of sales decreased 0.5 percentage points.
EBIT margin decreased 1.4 percentage points to 27.0%, primarily driven by a lower gross margin.
Nine Months FY23 vs Nine Months FY22
Net sales increased 15%, primarily on the strength of our Price/Mix growth of 13%. Our Price/Mix growth resulted from the continued execution of our strategy to drive a high value product mix combined with our January and June 2022 strategic price increases.
Gross margin decreased as a result of the following components:
| Higher average net sales price | 7.3 | pts | |||
| Higher production and distribution costs | (9.1 | pts) | |||
| Total percentage point change in gross margin | (1.8 | pts) | |||
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 3 | |||||||
| OPERATING RESULTS | | ||||
Higher production and distribution costs resulted from significant inflationary pressures across almost all categories, with the largest impacts being increased costs of pulp, freight, cement, labor and natural gas.
SG&A expenses increased 15% primarily driven by higher investment in marketing. As a percentage of sales, SG&A expenses were flat.
EBIT margin decreased 1.7 percentage points to 27.1%, driven by lower gross margin.
| Asia Pacific Fiber Cement Segment | ||
The Asia Pacific Fiber Cement segment is comprised of the following regions: (i) Australia; (ii) New Zealand; and (iii) the Philippines.
Operating results for the Asia Pacific Fiber Cement segment in US dollars were as follows:
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | |||||||||||||||||||||||||||||||||
| Volume (mmsf) | 125.7 | 154.4 | (19%) | 431.8 | 471.0 | (8%) | ||||||||||||||||||||||||||||||||
| Fiber cement net sales | 112.3 | 143.3 | (22%) | 399.4 | 429.5 | (7%) | ||||||||||||||||||||||||||||||||
| Gross profit | (23%) | (11%) | ||||||||||||||||||||||||||||||||||||
| Gross margin (%) | (0.6 pts) | (1.4 pts) | ||||||||||||||||||||||||||||||||||||
| EBIT | 27.6 | 39.1 | (29%) | 102.5 | 122.4 | (16%) | ||||||||||||||||||||||||||||||||
| EBIT margin (%) | 24.7 | 27.3 | (2.6 pts) | 25.7 | 28.5 | (2.8 pts) | ||||||||||||||||||||||||||||||||
Operating results for the Asia Pacific Fiber Cement segment in Australian dollars were as follows:
| A$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | |||||||||||||||||||||||||||||||||
| Volume (mmsf) | 125.7 | 154.4 | (19%) | 431.8 | 471.0 | (8%) | ||||||||||||||||||||||||||||||||
| Fiber cement net sales | 171.2 | 196.5 | (13%) | 582.4 | 577.2 | 1% | ||||||||||||||||||||||||||||||||
| Gross profit | (14%) | (3%) | ||||||||||||||||||||||||||||||||||||
| Gross margin (%) | (0.6 pts) | (1.4 pts) | ||||||||||||||||||||||||||||||||||||
| EBIT | 42.3 | 53.6 | (21%) | 149.7 | 164.6 | (9%) | ||||||||||||||||||||||||||||||||
| EBIT margin (%) | 24.7 | 27.3 | (2.6 pts) | 25.7 | 28.5 | (2.8 pts) | ||||||||||||||||||||||||||||||||
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 4 | |||||||
| OPERATING RESULTS | | ||||
Q3 FY23 vs Q3 FY22 (A$)
Net sales decreased 13%, driven by lower volume of 19%, partially offset by Price/Mix growth of 6%. The decline in volumes is driven by inventory reductions by customers in Australia and New Zealand combined with continued market weakness in both countries. The growth in Price/Mix resulted from price increases across all markets and the continued execution of our high value product mix strategy.
The decrease in gross margin can be attributed to the following components:
| Higher average net sales price | 3.9 | pts | |||
| Higher production and distribution costs | (4.5 | pts) | |||
| Total percentage point change in gross margin | (0.6 | pts) | |||
Higher production and distribution costs resulted from significant inflationary pressures across almost all categories, with the largest impacts being increased costs of pulp, energy and freight costs.
SG&A expenses increased 5%, primarily driven by higher employee and marketing costs. As a percentage of sales, SG&A expenses increased 2.0 percentage points.
EBIT margin of 24.7% decreased 2.6 percentage points, driven by lower gross margin and higher SG&A expenses.
Nine Months FY23 vs Nine Months FY22 (A$)
Net sales increased 1%, driven by Price/Mix growth of 9%, offset by lower volumes of 8%. The decline in volumes is primarily attributable to softening of housing markets in Australia and New Zealand and customers reducing their inventory positions. The growth in Price/Mix was attributable to price increases across all markets and the continued execution of our high value product mix strategy.
The decrease in gross margin can be attributed to the following components:
| Higher average net sales price | 5.1 | pts | |||
| Higher production and distribution costs | (6.5 | pts) | |||
| Total percentage point change in gross margin | (1.4 | pts) | |||
Higher production and distribution costs resulted from significant inflationary pressures across almost all categories, with the largest impacts being increased costs of pulp and freight costs.
SG&A expenses increased 16%, primarily driven by higher employee costs and travel expenses. As a percentage of sales, SG&A expenses increased 1.4 percentage points.
EBIT margin of 25.7% decreased 2.8 percentage points, driven by lower gross margin and higher SG&A expenses.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 5 | |||||||
| OPERATING RESULTS | | ||||
| Europe Building Products Segment | ||
The Europe Building Products segment is comprised of: (i) Europe Fiber Cement; and (ii) Europe Fiber Gypsum.
Operating results for the Europe Building Products segment in US dollars were as follows:
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | |||||||||||||||||||||||||||||||||
| Volume (mmsf) | 200.2 | 223.2 | (10%) | 636.6 | 710.7 | (10%) | ||||||||||||||||||||||||||||||||
| Fiber cement net sales | 14.5 | 15.8 | (8%) | 50.1 | 57.7 | (13%) | ||||||||||||||||||||||||||||||||
Fiber gypsum net sales1 | 88.6 | 96.0 | (8%) | 273.7 | 302.0 | (9%) | ||||||||||||||||||||||||||||||||
| Net sales | 103.1 | 111.8 | (8%) | 323.8 | 359.7 | (10%) | ||||||||||||||||||||||||||||||||
| Gross profit | (30%) | (27%) | ||||||||||||||||||||||||||||||||||||
| Gross margin (%) | (6.1 pts) | (5.2 pts) | ||||||||||||||||||||||||||||||||||||
| EBIT | 1.4 | 11.9 | (88%) | 18.0 | 44.9 | (60%) | ||||||||||||||||||||||||||||||||
| EBIT margin (%) | 1.5 | 10.7 | (9.2 pts) | 5.5 | 12.5 | (7.0 pts) | ||||||||||||||||||||||||||||||||
1Also includes cement bonded board net sales | ||||||||||||||||||||||||||||||||||||||
Operating results for the Europe Building Products segment in Euros were as follows:
| € Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | |||||||||||||||||||||||||||||||||
| Volume (mmsf) | 200.2 | 223.2 | (10%) | 636.6 | 710.7 | (10%) | ||||||||||||||||||||||||||||||||
| Fiber cement net sales | 14.4 | 13.8 | 4% | 48.7 | 48.9 | —% | ||||||||||||||||||||||||||||||||
Fiber gypsum net sales1 | 86.8 | 83.8 | 4% | 265.3 | 256.6 | 3% | ||||||||||||||||||||||||||||||||
| Net sales | 101.2 | 97.6 | 4% | 314.0 | 305.5 | 3% | ||||||||||||||||||||||||||||||||
| Gross profit | (22%) | (17%) | ||||||||||||||||||||||||||||||||||||
| Gross margin (%) | (6.1 pts) | (5.2 pts) | ||||||||||||||||||||||||||||||||||||
| EBIT | 1.5 | 10.4 | (86%) | 17.3 | 38.1 | (55%) | ||||||||||||||||||||||||||||||||
| EBIT margin (%) | 1.5 | 10.7 | (9.2 pts) | 5.5 | 12.5 | (7.0 pts) | ||||||||||||||||||||||||||||||||
1Also includes cement bonded board net sales | ||||||||||||||||||||||||||||||||||||||
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 6 | |||||||
| OPERATING RESULTS | | ||||
Q3 FY23 vs Q3 FY22 (€)
Net sales increased 4% due to a 14% growth in Price/Mix, partially offset by a 10% decrease in volumes. The volume decrease was due to lower fiber gypsum volumes as housing market activity declined. Price/Mix growth was driven by our strategic price increases.
The decrease in gross margin is attributable to the following components:
| Higher average net sales price | 8.7 | pts | |||
| Higher production and distribution costs | (14.8 | pts) | |||
| Total percentage point change in gross margin | (6.1 | pts) | |||
Higher production and distribution costs resulted from continued inflationary pressures on the cost of freight and gypsum, as well as restructuring costs to align the business with the changes in the economic environment.
SG&A expenses increased 24% primarily due to higher employee costs and marketing as we continue to position ourselves for long-term growth. In addition, the prior year included a favorable impact of reversing a bad debt allowance. As a percentage of sales, SG&A expenses increased 2.9 percentage points.
EBIT margin of 1.5% decreased 9.2 percentage points primarily driven by lower gross margin and higher SG&A expenses.
Nine Months FY23 vs Nine Months FY22 (€)
Net sales increased 3% due to a 13% growth in Price/Mix driven by our strategic price increases, partially offset by a 10% decrease in volumes. The volume decrease resulted from both lower fiber gypsum and fiber cement volumes as housing market activity decreased.
The decrease in gross margin is attributable to the following components:
| Higher average net sales price | 7.6 | pts | |||
| Higher production and distribution costs | (12.8 | pts) | |||
| Total percentage point change in gross margin | (5.2 | pts) | |||
Higher production and distribution costs resulted from significant inflationary pressures across almost all categories, with the largest impacts being increased costs of natural gas, freight, paper and gypsum.
SG&A expenses increased 14% primarily due to higher employee and marketing costs. As a percentage of sales, SG&A expenses increased 1.6 percentage points.
EBIT margin of 5.5% decreased 7.0 percentage points primarily driven by lower gross margin and higher SG&A expenses.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 7 | |||||||
| OPERATING RESULTS | | ||||
| General Corporate | ||
Results for General Corporate were as follows:
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change % | 9 Months FY23 | 9 Months FY22 | Change % | |||||||||||||||||||||||||||||||||
| General Corporate SG&A expenses | $ | 29.9 | $ | 21.7 | 38 | $ | 81.6 | $ | 86.9 | (6) | ||||||||||||||||||||||||||||
| Asbestos: | ||||||||||||||||||||||||||||||||||||||
| Asbestos adjustments loss (gain) | 2.2 | 1.6 | 38 | (19.5) | (10.8) | 81 | ||||||||||||||||||||||||||||||||
| AICF SG&A expenses | 0.3 | 0.3 | — | 1.0 | 0.9 | 11 | ||||||||||||||||||||||||||||||||
| General Corporate costs | $ | 32.4 | $ | 23.6 | 37 | $ | 63.1 | $ | 77.0 | (18) | ||||||||||||||||||||||||||||
General Corporate SG&A expenses for the quarter increased US$8.2 million driven by unfavorable movements in foreign exchange and higher New Zealand weathertightness legal expenses. For the nine month period, General Corporate SG&A expenses decreased US$5.3 million primarily due to lower stock compensation expenses driven by a lower stock price and lower marketing costs, partially offset by higher employee costs.
Asbestos adjustments primarily reflect the non-cash foreign exchange re-measurement impact on asbestos related balance sheet items, driven by the change in the AUD/USD spot exchange rate from the beginning balance sheet date to the ending balance sheet date, for each respective period. In addition, these amounts are partially offset by gains and losses on foreign currency forward contracts related to future AICF payments.
Readers are referred to Note 6 of our 31 December 2022 condensed consolidated financial statements for further information on asbestos.
| Interest, net | ||
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change % | 9 Months FY23 | 9 Months FY22 | Change % | |||||||||||||||||||||||||||||||||
| Gross interest expense | $ | 11.1 | $ | 11.3 | (2) | $ | 32.0 | $ | 32.6 | (2) | ||||||||||||||||||||||||||||
| Capitalized interest | (2.0) | (0.5) | 300 | (4.4) | (1.2) | 267 | ||||||||||||||||||||||||||||||||
| Interest income | (0.6) | — | 100 | (1.1) | (0.1) | NM | ||||||||||||||||||||||||||||||||
| Net AICF interest income | (1.5) | (0.2) | 650 | (2.5) | (0.5) | 400 | ||||||||||||||||||||||||||||||||
| Interest, net | $ | 7.0 | $ | 10.6 | (34) | $ | 24.0 | $ | 30.8 | (22) | ||||||||||||||||||||||||||||
| NM = not meaningful | ||||||||||||||||||||||||||||||||||||||
Interest, net for the three and nine month periods decreased primarily due to higher capitalized interest related to our capital expansion projects; and higher net AICF interest income driven by higher interest rates and higher AICF investments.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 8 | |||||||
| OPERATING RESULTS | | ||||
| Income Tax | ||
Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change | 9 Months FY23 | 9 Months FY22 | Change | ||||||||||||||||||||||||||||||
| Income tax expense (US$ Millions) | 55.9 | 56.2 | (1%) | 168.6 | 162.4 | 4% | |||||||||||||||||||||||||||||
| Effective tax rate (%) | 35.8 | 29.3 | 6.5 pts | 28.1 | 28.5 | (0.4 pts) | |||||||||||||||||||||||||||||
Adjusted income tax expense1 (US$ Millions) | 27.8 | 39.2 | (29%) | 118.9 | 115.7 | 3% | |||||||||||||||||||||||||||||
Adjusted effective tax rate1 (%) | 17.7 | 20.3 | (2.6 pts) | 20.6 | 20.7 | (0.1 pts) | |||||||||||||||||||||||||||||
1Includes tax adjustments related to the amortization benefit of certain US intangible assets, asbestos, and other tax adjustments | |||||||||||||||||||||||||||||||||||
The effective tax rate for the quarter increased 6.5 percentage points primarily due to asbestos and other tax adjustments and a change in the geographical mix of earnings. The Adjusted effective tax rate for the quarter decreased 2.6 percentage points primarily due to a change in geographic mix of earnings.
For the nine month period, the effective tax rate decreased 0.4 percentage points primarily due to a change in geographical mix of earnings, partially offset by asbestos and other tax adjustments. The Adjusted effective tax rate decreased 0.1 percentage points, primarily due to a change in the geographical mix of earnings.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 9 | |||||||
| OPERATING RESULTS | | ||||
| Net Income | ||
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | Change % | 9 Months FY23 | 9 Months FY22 | Change % | |||||||||||||||||||||||||||||||||
| EBIT | ||||||||||||||||||||||||||||||||||||||
| North America Fiber Cement | $ | 174.1 | $ | 183.3 | (5) | $ | 578.7 | $ | 535.1 | 8 | ||||||||||||||||||||||||||||
| Asia Pacific Fiber Cement | 27.6 | 39.1 | (29) | 102.5 | 122.4 | (16) | ||||||||||||||||||||||||||||||||
| Europe Building Products | 1.4 | 11.9 | (88) | 18.0 | 44.9 | (60) | ||||||||||||||||||||||||||||||||
| Research and Development | (7.8) | (8.5) | 8 | (25.3) | (25.2) | — | ||||||||||||||||||||||||||||||||
General Corporate1 | (29.9) | (21.7) | (38) | (81.6) | (86.9) | 6 | ||||||||||||||||||||||||||||||||
| Adjusted EBIT | 165.4 | 204.1 | (19) | 592.3 | 590.3 | — | ||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||
Adjusted interest, net1 | 8.5 | 10.8 | (21) | 26.5 | 31.3 | (15) | ||||||||||||||||||||||||||||||||
| Other (income) expense | (0.1) | — | 100 | (12.4) | 0.1 | NM | ||||||||||||||||||||||||||||||||
Adjusted income tax expense2 | 27.8 | 39.2 | (29) | 118.9 | 115.7 | 3 | ||||||||||||||||||||||||||||||||
| Adjusted net income | $ | 129.2 | $ | 154.1 | (16) | $ | 459.3 | $ | 443.2 | 4 | ||||||||||||||||||||||||||||
1.Excludes Asbestos-related expenses and adjustments 2.Includes tax adjustments related to the amortization benefit of certain US intangible assets, asbestos and other tax adjustments NM = not meaningful | ||||||||||||||||||||||||||||||||||||||
Adjusted net income for the quarter of US$129.2 million decreased 16%, primarily due to the lower EBIT in all three operating regions, and higher general corporate costs partially offset by lower adjusted income tax expense.
Adjusted net income for the nine month period of US$459.3 million increased 4%, primarily driven by higher earnings in North America and the US$8.9 million gain, net of tax, on sale of land in Europe, partially offset by lower EBIT in the Asia Pacific and Europe regions.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 10 | |||||||
| OTHER INFORMATION | | ||||
| Cash Flow | ||
| US$ Millions | Nine Months Ended 31 December | |||||||||||||||||||||||||
| FY23 | FY22 | Change | Change % | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 432.1 | $ | 553.3 | $ | (121.2) | (22) | |||||||||||||||||||
| Net cash used in investing activities | 517.4 | 171.4 | 346.0 | 202 | ||||||||||||||||||||||
| Net cash used in financing activities | 37.3 | 417.3 | (380.0) | (91) | ||||||||||||||||||||||
Significant sources and uses of cash during the first nine months of fiscal year 2023 include:
•Cash provided by operating activities:
◦Net income, adjusted for non-cash items, of US$632.0 million;
◦Working capital increased by US$54.2 million, primarily due to higher inventory and lower accounts payable, partially offset by lower accounts receivable; and
◦Asbestos claims paid of US$90.2 million.
•Cash used in investing activities:
◦Capital expenditures of US$450.7 million, includes A$84.2 million for land purchased in Melbourne, Australia and North America capacity expansion project spend of US$187.5 million; and
◦AICF net investments of US$76.4 million.
•Cash used in financing activities:
◦Dividend payment of US$129.6 million;
◦Repurchase of shares under the share buyback program of US$31.2 million; and
◦US$130.0 million in net drawdowns on our revolving credit facility.
| Capacity Expansion | ||
As previously announced, we are investing in a transformational global capacity expansion program, including brownfield and greenfield expansions in all three regions. We continue to review the macro-economic conditions and the impacts on the housing markets we do business in as we plan and execute this global capacity expansion program.
During fiscal year 2023, we expect to complete the following assets/facilities:
North America
•Trim finishing capacity in Prattville, Alabama
•ColorPlus® finishing capacity in Westfield, Massachusetts
Asia Pacific
•Brownfield expansion in Carole Park, Australia
In addition, during fiscal year 2023, we expect to:
North America
•Purchase land for a future Greenfield site in the USA
•Continue construction of Sheet Machines #3 and #4 in Prattville, Alabama, executing against our original construction timeline
Asia Pacific
•Begin construction of our Greenfield site in Melbourne, Victoria
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 11 | |||||||
| OTHER INFORMATION | | ||||
Europe
•Purchase land for a future Greenfield site in Europe
•Continue brownfield expansion of the fiber gypsum facility in Orejo, Spain
We continue to estimate the total investment to be between US$1.6 billion to US$1.8 billion.
| Liquidity and Capital Allocation | ||
Our cash position decreased US$15.0 million, from US$125.0 million at 31 March 2022 to US$110.0 million at 31 December 2022. We also have US$422.6 million of available borrowing capacity under our revolving credit facility at 31 December 2022.
During fiscal year 2023, we will contribute A$160.4 million to AICF in quarterly installments. Total payments of A$119.8 million have been made through 3 January 2023.
Based on our existing cash balances, together with anticipated operating cash flows and unutilized credit facilities, we anticipate we will have sufficient funds to meet our planned working capital and other expected cash requirements for the next twelve months.
| Capital Management | ||
Our Capital Allocation framework prioritizes the use of free cash flow as follows:
•Invest in organic growth
•Maintain a flexible balance sheet
•Deploy excess capital to shareholders via a share buyback program
For the three months ended 31 December 2022, we repurchased a total of 1.6 million shares for a total of US$31.2 million for an average per share price of US$19.34.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 12 | |||||||
| NON-GAAP FINANCIAL TERMS | | ||||
| Financial Measures - GAAP equivalents | ||
This document contains the financial statement line item EBIT, which is considered to be non-GAAP, but is consistent with the term used by Australian companies. Because we prepare our condensed consolidated financial statements under GAAP, the equivalent GAAP financial statement line item description used in our condensed consolidated financial statements is Operating income (loss).
EBIT – Earnings before interest and tax.
EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales.
| Non GAAP Financial Terms | ||
This Management’s Analysis of Results includes certain financial information to supplement the Company’s condensed consolidated financial statements which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These financial measures are designed to provide investors with an alternative method for assessing our performance from on-going operations, capital efficiency and profit generation. Management uses these financial measures for the same purposes. These financial measures include:
| • | Adjusted EBIT; | ||||||||||
| • | Adjusted EBIT margin; | ||||||||||
| • | Adjusted interest, net; | ||||||||||
| • | Adjusted net income; | ||||||||||
| • | Adjusted diluted earnings per share; | ||||||||||
| • | Adjusted income before income taxes; | ||||||||||
| • | Adjusted income tax expense; and | ||||||||||
| • | Adjusted effective tax rate | ||||||||||
These financial measures are or may be non-GAAP financial measures as defined in the rules of the U.S. Securities and Exchange Commission and may exclude or include amounts that are included or excluded, as applicable, in the calculation of the most directly comparable financial measures calculated in accordance with GAAP. These financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with the Company’s condensed consolidated financial statements prepared in accordance with GAAP. In evaluating these financial measures, investors should note that other companies reporting or describing similarly titled financial measures may calculate them differently and investors should exercise caution in comparing the Company’s financial measures to similar titled measures by other companies.
| Definitions | ||
AFFA – Amended and Restated Final Funding Agreement
AICF – Asbestos Injuries Compensation Fund Ltd
Sales Volume
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. | |||||
Price/Mix – The percentage growth in revenue attributable to price increases and shift in mix of products sold. Price/Mix is calculated as the Net Sales growth percentage less the Volume growth percentage.
Working Capital – The working capital calculation used in our cash provided by operating analysis includes the change in: (1) Accounts and other receivables, net; (2) Inventories; and (3) Accounts payable and accrued liabilities.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 13 | |||||||
| NON-GAAP FINANCIAL MEASURES | | ||||
| Financial Measures - GAAP equivalents | ||
Adjusted EBIT
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | 9 Months FY23 | 9 Months FY22 | |||||||||||||||||||||||
| EBIT | $ | 162.9 | $ | 202.2 | $ | 610.8 | $ | 600.2 | ||||||||||||||||||
| Asbestos: | ||||||||||||||||||||||||||
| Asbestos adjustments loss (gain) | 2.2 | 1.6 | (19.5) | (10.8) | ||||||||||||||||||||||
| AICF SG&A expenses | 0.3 | 0.3 | 1.0 | 0.9 | ||||||||||||||||||||||
| Adjusted EBIT | $ | 165.4 | $ | 204.1 | $ | 592.3 | $ | 590.3 | ||||||||||||||||||
| Net sales | 860.8 | 900.0 | 2,859.3 | 2,646.5 | ||||||||||||||||||||||
| Adjusted EBIT margin | 19.2% | 22.7% | 20.7% | 22.3% | ||||||||||||||||||||||
Adjusted interest, net
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | 9 Months FY23 | 9 Months FY22 | |||||||||||||||||||||||
| Interest, net | $ | 7.0 | $ | 10.6 | $ | 24.0 | $ | 30.8 | ||||||||||||||||||
| AICF interest income, net | (1.5) | (0.2) | (2.5) | (0.5) | ||||||||||||||||||||||
| Adjusted interest, net | $ | 8.5 | $ | 10.8 | $ | 26.5 | $ | 31.3 | ||||||||||||||||||
Adjusted net income
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | 9 Months FY23 | 9 Months FY22 | |||||||||||||||||||||||
| Net income | $ | 100.1 | $ | 135.4 | $ | 430.6 | $ | 406.9 | ||||||||||||||||||
| Asbestos: | ||||||||||||||||||||||||||
| Asbestos adjustments loss (gain) | 2.2 | 1.6 | (19.5) | (10.8) | ||||||||||||||||||||||
| AICF SG&A expenses | 0.3 | 0.3 | 1.0 | 0.9 | ||||||||||||||||||||||
| AICF interest income, net | (1.5) | (0.2) | (2.5) | (0.5) | ||||||||||||||||||||||
Tax adjustments1 | 28.1 | 17.0 | 49.7 | 46.7 | ||||||||||||||||||||||
| Adjusted net income | $ | 129.2 | $ | 154.1 | $ | 459.3 | $ | 443.2 | ||||||||||||||||||
1Includes tax adjustments related to the amortization benefit of certain US intangible assets, asbestos, and other tax adjustments | ||||||||||||||||||||||||||
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 14 | |||||||
| NON-GAAP FINANCIAL MEASURES | | ||||
Adjusted diluted earnings per share
Three and Nine Months Ended 31 December | ||||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | 9 Months FY23 | 9 Months FY22 | |||||||||||||||||||||||
| Adjusted net income (US$ millions) | $ | 129.2 | $ | 154.1 | $ | 459.3 | $ | 443.2 | ||||||||||||||||||
Weighted average common shares outstanding - Diluted (millions) | 445.9 | 446.3 | 445.9 | 446.1 | ||||||||||||||||||||||
| Adjusted diluted earnings per share | $ | 0.29 | $ | 0.35 | $ | 1.03 | $ | 0.99 | ||||||||||||||||||
Adjusted effective tax rate
| US$ Millions | Three and Nine Months Ended 31 December | |||||||||||||||||||||||||
| Q3 FY23 | Q3 FY22 | 9 Months FY23 | 9 Months FY22 | |||||||||||||||||||||||
| Income before income taxes | $ | 156.0 | $ | 191.6 | $ | 599.2 | $ | 569.3 | ||||||||||||||||||
| Asbestos: | ||||||||||||||||||||||||||
| Asbestos adjustments loss (gain) | 2.2 | 1.6 | (19.5) | (10.8) | ||||||||||||||||||||||
| AICF SG&A expenses | 0.3 | 0.3 | 1.0 | 0.9 | ||||||||||||||||||||||
| AICF interest income, net | (1.5) | (0.2) | (2.5) | (0.5) | ||||||||||||||||||||||
| Adjusted income before income taxes | $ | 157.0 | $ | 193.3 | $ | 578.2 | $ | 558.9 | ||||||||||||||||||
| Income tax expense | 55.9 | 56.2 | 168.6 | 162.4 | ||||||||||||||||||||||
Tax adjustments1 | (28.1) | (17.0) | (49.7) | (46.7) | ||||||||||||||||||||||
| Adjusted income tax expense | $ | 27.8 | $ | 39.2 | $ | 118.9 | $ | 115.7 | ||||||||||||||||||
| Effective tax rate | 35.8% | 29.3% | 28.1% | 28.5% | ||||||||||||||||||||||
| Adjusted effective tax rate | 17.7% | 20.3% | 20.6% | 20.7% | ||||||||||||||||||||||
1Includes tax adjustments related to the amortization benefit of certain US intangible assets, asbestos, and other tax adjustments | ||||||||||||||||||||||||||
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 15 | |||||||
| FORWARD-LOOKING STATEMENTS | | ||||
This Management’s Analysis of Results 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 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, 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 Company’s 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 Company’s plants and future plans with respect to any such projects;
▪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;
▪uncertainty from the discontinuance of LIBOR and transition to any other interest rate benchmark;
▪statements regarding the effect and consequences of the COVID-19 public health crisis;
▪statements regarding tax liabilities and related audits, reviews and proceedings;
▪statements regarding the possible consequences and/or potential outcome of legal proceedings brought against us and the potential liabilities, if any, associated with such proceedings;
▪expectations about the timing and amount of contributions to AICF, a special purpose fund for the compensation of proven Australian asbestos-related personal injury and death claims;
▪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 or housing market conditions in the regions in which we operate, including but not limited to, 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 17 May 2022, 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 funding and the effect of currency exchange rate movements on the amount recorded in the Company’s financial statements as an asbestos liability; 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; compliance with and changes in environmental and health and safety laws; risks of conducting business internationally; compliance with and changes in laws and regulations; currency exchange risks; dependence on customer preference and the concentration of the Company’s customer base; dependence on residential and commercial construction markets; the effect of adverse changes in climate or weather patterns; use of accounting estimates; risk and uncertainties arising out of the COVID-19 public health crisis, including the impact of COVID-19 on our business, sales, results of operations and financial condition and all other risks identified in the Company’s 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 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.
Management's Analysis of Results: James Hardie - 3rd Quarter Fiscal Year 2023 | 16 | |||||||
Q3 FY23 MANAGEMENT PRESENTATION 14 February 2023
Page 2 James Hardie Q3 FY23 Results CAUTIONARY NOTE ON FORWARD‐LOOKING STATEMENTS This Management Presentation contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 media releases and other written materials and in oral statements made by the Company’s officers, directors or employees to analysts, institutional investors, representatives of the media and others. 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. These forward‐looking statements are based upon management's current expectations, estimates, assumptions and beliefs concerning future events and conditions. Readers are cautioned not to place undue reliance on any forward‐ looking statements. Forward‐looking statements are necessarily subject to risks, uncertainties and other factors, many of which are unforeseeable and beyond the Company’s control. Many factors could cause actual results, performance or achievements to be materially different from those expressed or implied in this Management Presentation, including, among others, the risks and uncertainties set forth in Section 3 “Risk Factors” in James Hardie’s Annual Report on Form 20‐F for the year ended 31 March 2022; changes in general economic, political, governmental and business conditions globally and in the countries in which the Company does business, including the impact of COVID‐19; changes in interest rates; changes in inflation rates; changes in exchange rates; the level of construction generally; changes in cement demand and prices; changes in raw material and energy prices; changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. James Hardie assumes no obligation to update or correct the information contained in this Management Presentation except as required by law. This Management Presentation includes financial measures that are not considered a measure of financial performance under generally accepted accounting principles in the United States (GAAP). These financial measures are designed to provide investors with an alternative method for assessing our performance from on‐going operations, capital efficiency and profit generation. Management uses these financial measures for the same purposes. These financial measures are or may be non‐GAAP financial measures as defined in the rules of the U.S. Securities and Exchange Commission and may exclude or include amounts that are included or excluded, as applicable, in the calculation of the most directly comparable financial measures calculated in accordance with GAAP. These non‐GAAP financial measures should not be considered to be more meaningful than the equivalent GAAP measure. Management has included such 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 excludes the impact of certain legacy items, such as asbestos adjustments. Additionally, management uses such non‐GAAP financial measures for the same purposes. However, these non‐GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company’s competitors and may not be directly comparable to similarly titled measures of the Company’s competitors due to potential differences in the exact method of calculation. For additional information regarding the non‐GAAP financial measures presented in this Management Presentation, including a reconciliation of each non‐GAAP financial measure to the equivalent GAAP measure, see the slide titled “Non‐GAAP Financial Measures” included in the Appendix to this Management Presentation. In addition, this Management Presentation includes financial measures and descriptions that are considered to not be in accordance with GAAP, but which are consistent with financial measures reported by Australian companies, such as operating profit, EBIT and EBIT margin. Since the Company prepares its Consolidated Financial Statements in accordance with GAAP, the Company provides investors with definitions and a cross‐reference from the non‐GAAP financial measure used in this Management Presentation to the equivalent GAAP financial measure used in the Company’s Consolidated Financial Statements. See the section titled “Non‐GAAP Financial Measures” included in the Appendix to this Management Presentation. CAUTIONARY NOTE ON FORWARD‐LOOKING STATEMENTS USE OF NON‐GAAP FINANCIAL INFORMATION; AUSTRALIAN EQUIVALENT TERMINOLOGY
Page 3 James Hardie Q3 FY23 Results AGENDA • Q3 FY23 Financial Results • Strategy and Operations Update • Questions and Answers Aaron Erter CEO Jason Miele CFO
Q3 FY23 FINANCIAL RESULTS
Page 5 James Hardie Q3 FY23 Results • All 3 regions are simultaneously executing on the Global Strategy • 4% decrease in Q3 FY23 Net Sales • 19% decrease in Q3 FY23 Adjusted EBIT • 16% decrease in Q3 FY23 Adjusted Net Income • 8% increase in YTD Net Sales and a 4% increase in YTD Adjusted Net Income • Restructuring − Global head count reduction of approximately 6% − Restructuring charges of US$6.0 million in the third quarter GLOBAL RESULTS M M M M M M M % % 1 Excludes asbestos related expenses and adjustments 2 Excludes asbestos related expenses and adjustments, and tax adjustments mmsf -2% US$2,859.3 +8% Adjusted EBITDA Margin1 24.3 -3.0 pts US$592.3 US$860.8 -4% -19% -11% All changes presented are versus prior corresponding period Operating Cash Flow Adjusted Net Income2 Adjusted EBIT1 Sales Volume Net Sales Q3 FY23 1,026.4 -16% US$165.4 mmsf US$129.2 9 Months FY23 3,403.3 -1.7 pts 25.1 FLAT US$459.3 +4% US$432.1 -22%
Page 6 James Hardie Q3 FY23 Results NORTH AMERICA SUMMARY • Flat Q3 FY23 Net Sales − 10% decline in volumes offset by 10% Price/Mix growth − Continued execution in driving High Value Product penetration with our customers − ColorPlus® volumes +18% • 5% decrease in Q3 FY23 EBIT with an EBIT Margin of 27.0% − Lower volumes − Execution of LEAN manufacturing − Inflationary pressures for key raw materials including pulp, natural gas, labor and cement − Lower SG&A through optimization while still significantly investing in growth • 15% increase in YTD Net Sales and an 8% increase in YTD EBIT M M M M % % % % Q3 FY23 700.5 mmsf -10% mmsf +2% 27.1 -1.7 pts EBITDA Margin 31.9 -1.1 pts +10%Price/Mix US$645.4 +13% Sales Volume Net Sales EBIT Margin EBIT 27.0 -1.4 pts US$174.1 -5% FLAT All changes presented are versus prior corresponding period 31.5 -1.8 pts US$2,136.1 +15% US$578.7 +8% 9 Months FY23 2,334.9
Page 7 James Hardie Q3 FY23 Results M M M M % % % % Q3 FY23 -19% EBIT Margin 24.7 Price/Mix -2.6 pts +6% EBIT A$42.3 -21% Net Sales A$171.2 -13% Sales Volume 125.7 mmsf 25.7 -2.8 pts 28.0 9 Months FY23 431.8 mmsf -8% 27.4 A$582.4 +1% +9% -2.8 pts A$149.7 -9% EBITDA Margin -2.1 pts All changes presented are versus prior corresponding period APAC SUMMARY • 13% decline in Q3 FY23 Net Sales − 19% decline in volumes due to decelerating housing markets and reduction of customer inventories in Australia and New Zealand − Strong Price/Mix growth of +6% − Continued execution in driving High Value Product penetration • 21% decline in Q3 FY23 EBIT at an EBIT Margin of 24.7% − Inflationary pressures across almost all categories, with the largest impacts from pulp, energy and freight costs • 1% increase in YTD Net Sales and a 9% decline in YTD EBIT
Page 8 James Hardie Q3 FY23 Results M M M M % % % % Net Sales +4% €101.2 +14% EBITDA Margin 8.6 -8.7 pts EBIT EBIT Margin 1.5 Price/Mix Q3 FY23 Sales Volume 200.2 mmsf -10% 11.9 -6.9 pts 9 Months FY23 636.6 mmsf -10% €314.0 +3% €17.3 -55% Fiber Gypsum Net Sales Fiber Cement Net Sales All changes presented are versus prior corresponding period +13% 4% FLAT 4% 3% 5.5 -7.0 pts-9.2 pts €1.5 -86% EUROPE SUMMARY • 4% increase in Q3 FY23 Net Sales − 10% decline in volumes as housing activity slowed − Strong Price/Mix growth of +14% • €1.5 million of Q3 FY23 EBIT at an EBIT Margin of 1.5% − Inflationary pressures on the cost of freight and gypsum − €3.6 million of restructuring costs, reducing EBIT Margin by 350 basis points • 3% increase in YTD Net Sales and a 55% decline in YTD EBIT
Page 9 James Hardie Q3 FY23 Results CAPITAL ALLOCATION AND GUIDANCE Management adjusts full year FY23 Adjusted Net Income1 guidance to: US$600 million And US$620 million Framework • Invest in Organic Growth • Maintain Flexible Balance Sheet • Deploy Excess Capital to Shareholders Q3 Actions • Initiated previously announce SBB • Purchased 1.6 million shares for total consideration of US$31.2 million James Hardie’s guidance is based on current estimates and assumptions and is subject to a number of known and unknown uncertainties and risks, including those related to the COVID‐19 pandemic and set forth in our Media Release in “Forward‐Looking Statements.” 1 Fiscal Year 2023 Adjusted Net Income excludes asbestos related expenses and adjustments FULL YEAR FISCAL YEAR 2023 GUIDANCECAPITAL ALLOCATION
STRATEGY AND OPERATIONS UPDATE
Page 11 James Hardie Q3 FY23 Results FY23 OPERATIONAL UPDATE Significant inflation impacting operations in all three regions Rapid, unexpected deceleration of housing markets Strong execution of our strategy in all three regions $ US Single Family New Construction Calendar 2022 Growth Outlook1 Dec ‘21 +6% Jan ‘23 ‐11% 1. Average of 7 data providers and their growth forecasts for Calendar 2022 made in December of 2021 and June of 2022. January 2023 figure represents actual decrease in SFNC starts per US Census data released on 19 January 2023 2. Average of 3 data providers and their growth forecasts/estimates for Calendar 2022 made in December of 2021, June of 2022 and January of 2023 US Repair & Remodel Calendar 2022 Growth Outlook2 Jun ‘22 ‐1% +5%+11% Dec ‘21 +6% Jan ‘23 ‐1% Jun ‘22 1
Page 12 James Hardie Q3 FY23 Results FY23 OPERATIONAL UPDATE Strong Financial Results Despite Market Headwinds • Global Net Sales to be a record • Global Volume to be 2nd best fiscal year result ever • Adjusted Net Income to be second highest ever achieved Global FY23 Full Year Expected Results • Highest ever average net sales price in every region • Record Net Sales result in every region • In NA and APAC EBIT Margin range of 25% to 30% Regional FY23 Full Year Expected Results
Page 13 James Hardie Q3 FY23 Results MANAGING DECISIVELY TO ACCELERATE OUR COMPETITIVE ADVANTAGES Continue Strong Execution of Our Strategy Drive Profitable Volume Share Gain Effectively Balance Our Manufacturing Network Optimize SG&A for Current Market Environment Continue to Invest in Profitable Growth
Page 14 James Hardie Q3 FY23 Results Europe North AmericaAPAC DRIVE PROFITABLE VOLUME SHARE GAIN Laser‐Focused on Driving Profitable Volume Share Gains Penetrate underfloor heating market via Therm25 innovation Penetrate Plank market with Hardie® VL Plank product Penetrate multifamily Panel market with Hardie® Architectural Panels Continue to penetrate the Repair & Remodel segment Drive continued share gains in Single Family New Construction Be opportunistic with our capacity and strategically target underserved segments and regions Leverage strong market position in all APAC regions Continue to penetrate the ANZ modern look market leveraging the Hardie® Architectural Collection Increase penetration in Single Family New Construction and Repair & Remodel segments
Page 15 James Hardie Q3 FY23 Results DRIVE PROFITABLE VOLUME SHARE GAIN – NORTH AMERICA NEW CONSTRUCTION Aggressively Driving Profitable Volume Share Gain 1. JH Estimates Secured contracts with 24 of the top 25 national builders Leveraging our best‐in‐class products and solutions to meet our changing customers needs Key Accomplishments~35%1 of James Hardie Volume is New Construction vs ~65%1 R&R Deploying largest and most knowledgeable sales team in the category Leverage tactical pricing as necessary Continue to convert competitive siding materials and substrates Named vendor of the year by 4 customers/builders
Page 16 James Hardie Q3 FY23 Results EFFECTIVELY BALANCE OUR MANUFACTURING NETWORK Leveraging Embedded HMOS Discipline Globally Effectively Balance Our Manufacturing Organization to Better Align Supply With Demand APACNorth America Europe Deliver a lower cost per unit Retain flexibility to adjust production upwards as market conditions warrant Leverage our localized supply chain to minimize costs and ensure timely delivery of products and solutions
Page 17 James Hardie Q3 FY23 Results OPTIMIZE SG&A WHILE CONTINUING TO INVEST STRATEGICALLY Optimize SG&A for Current Market Environment APACNorth America Europe Invest in marketing and sales support strategically to effectively reach all members of the value chain: Homeowners, Contractors, Homebuilders and our Customers Optimize marketing and sales investment to target conversions and share gain while increasing brand awareness Invest in talent capability in alignment with market conditions Continue to Strategically Invest in Growth Initiatives
Page 18 James Hardie Q3 FY23 Results HOW WE ARE MANAGING OUR BUSINESS Net Price EBIT Margin North America APAC Europe 25+% Cost Per Unit SG&A 25+% Mid Single Digits Volume Growth Above Market Growth Above Market Growth Above Market
Page 19 James Hardie Q3 FY23 Results JAMES HARDIE – A GLOBAL GROWTH COMPANY Homeowner Focused, Customer and Contractor Driven™ 1 Comparison of average Global Operating Cash Flow FY20‐FY22 and FY10‐FY12 2 Return on Capital Employed calculated as Adjusted EBIT / Adjusted Gross Capital Employed Strong Growth Opportunities Brand of Choice Innovation Pipeline Integrated Localized Supply Chain Multi‐Segment Focus Experienced Management Team Strong Balance Sheet & Cash Generation Attractive Returns Premium Products and Services Responsible Corporate Citizen Global Net Sales 10 Year CAGR 11% 16% Global Adj. Net Income 10 Year CAGR 3x Global Operating Cash Flow 3 Year Avg FY22 vs FY121 Global Adj. ROCE2 Avg. FY18‐FY22 36%
QUESTIONS
APPENDIX
Page 22 James Hardie Q3 FY23 Results BUILDING SUSTAINABLE COMMUNITIES: ENVIRONMENTAL, SOCIAL AND GOVERNANCE 80% of raw materials sourced within 150 miles of manufacturing facilities 75% of employees hired locally 65% of our products are shipped within 500 miles of manufacturing facilities Total Recordable Incident Rate below industry average (TRIR) 1.22 TRIR Environment Zero Harm Communities 1 Intensity measured from a 2019 baseline Further information can be found in our FY22 Sustainability Report 3.8 Industry Average VS Reduction in Scope 1 and Scope 2 greenhouse gas intensity 1 (MT CO2e/$ revenue) in CY21 GOAL: 40% by 2030 21% Reduction in landfill waste intensity 1 (MT/$ revenue) in CY21 GOAL: 50% by 2030 47% Million additional 1 cubic feet of water recycled in CY21 GOAL: 20M cubic feet by 20303.87
Page 23 James Hardie Q3 FY23 Results DRIVING A HIGHER VALUE PRODUCT MIX – AVERAGE NET SALES PRICE 718 725 745 814 893 921 916 500 600 700 800 900 1000 FY19 FY20 FY21 FY22 Q1 FY23 Q2 FY23 Q3 FY23 U S$ p er M SF North America Average Net Sales Price 992 1,027 1,056 1,111 1,211 1,219 1,219 700 800 900 1,000 1,100 1,200 1,300 FY19 FY20 FY21 FY22 Q1 FY23 Q2 FY23 Q3 FY23 A$ p er M SF APAC Average Net Sales Price 306 311 312 342 378 387 397 200 250 300 350 400 450 FY19 FY20 FY21 FY22 Q1 FY23 Q2 FY23 Q3 FY23 € pe r M SF Europe Average Net Sales Price
Page 24 James Hardie Q3 FY23 Results GENERAL CORPORATE COSTS • Q3 corporate costs increased 38% vs pcp • Driven primarily by FX losses, legal costs, employee costs and stock compensation • Q3 R&D decreased 8% vs pcp RESEARCH & DEVELOPMENT 29.9 21.7 81.6 86.9 0 20 40 60 80 100 FY23 FY22 U S$ m ill io ns Q3 9 Months 7.8 8.5 25.3 25.2 0 10 20 30 FY23 FY22 U S$ m ill io ns Q3 9 Months
Page 25 James Hardie Q3 FY23 Results 1 OPERATING CASH FLOW CAPITAL EXPENDITURES • YTD total capex of US$450.7 million • North America capacity expansion project spend of US$187.5 million • A$84.2 million for land purchased in Melbourne • YTD operating cash flows decreased 22% vs last year • Working capital increased by US$54.2 million, primarily due to increased inventory levels and lower accounts payable balances, partially offset by lower accounts receivable U S$ M ill io ns 432.1 553.3 636.5 661.8 0 250 500 750 FY23 FY22 9 Months TTM 163.2 104.8 287.5 69.7 450.7 174.5 0 100 200 300 400 500 9 Month FY23 9 Month FY22 U S$ M ill io ns Non Capacity Capacity
Page 26 James Hardie Q3 FY23 Results LIQUIDITY PROFILE 2 1 Incremental liquidity of up to US$250 million may be accessed via an accordion feature, which is provided for under the terms of the syndicated RCF agreement, but not credit approved. Do not anticipate accessing accordion feature 2 Based on exchange rate as of 31 December 2022 3 Leverage ratio is based on bank covenant definition 1.0x 0.8x 0.9x 31 Dec 2020 31 Dec 2021 31 Dec 2022 Net Leverage Ratio3 Corporate debt structure • €400 million (US$425.7 million)2 3.625% senior unsecured notes, maturing 2026 (callable since October 2021) • US$400 million 5.00% senior unsecured notes maturing 2028 (callable in January 2023) • US$600 million unsecured RCF, maturing December 2026 Net leverage and liquidity • 0.90x leverage ratio3 at 31 December 2022 • US$532.6 million of liquidity at 31 December 2022
Page 27 James Hardie Q3 FY23 Results DEPRECIATION AND AMORTIZATION US$ Millions Q3 FY23 Q3 FY22 9 Months FY23 9 Months FY22 Depreciation and amortization North America Fiber Cement 32.1$ 29.3$ 94.1$ 83.9$ Asia Pacific Fiber Cement 3.2 3.1 9.2 9.8 Europe Building Products 7.4 7.4 20.6 22.6 Research and Development 0.3 0.3 1.2 0.9 General Corporate 0.5 1.1 1.5 2.3 Total Depreciation and amortization 43.5$ 41.2$ 126.6$ 119.5$ Three and Nine Months Ended 31 December
Page 28 James Hardie Q3 FY23 Results Nine months ended 31 December 2022: • Average claim settlement was 8% below actuarial estimates and 4% below pcp • Number of claims settled were 11% above actuarial estimates • Claims received were 4% above actuarial expectations and 10% above pcp • Net cash outflow was flat against actuarial expectations ASBESTOS CLAIMS DATA 1 Average claim settlement is derived as the total amount paid divided by the number of non‐nil claims
Page 29 James Hardie Q3 FY23 Results 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 Financial Measures – GAAP Equivalents This document contains the financial statement line item EBIT, which is considered to be non‐GAAP, but is consistent with the term used by Australian companies. Because we prepare our consolidated financial statements under GAAP, the equivalent GAAP financial Statement line item description used in our condensed consolidated financial statements is Operating income (loss). Definitions EBIT – Earnings before interest and tax EBIT margin – EBIT margin is defined as EBIT as a percentage of net sales Price/Mix – The percentage growth in revenue attributable to price increases and shift in mix of products sold. Price/Mix is calculated as the Net Sales growth percentage less the volume growth percentage. Working Capital – The working capital calculation used in our cash provided by operating analysis includes the change in: (1) Accounts and other receivables, net; (2) Inventories; and (3) Accounts payable and accrued liabilities. Sales Volume 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 Non‐financial Terms AFFA – Amended and Restated Final Funding Agreement AICF – Asbestos Injuries Compensation Fund Ltd NON‐GAAP FINANCIAL MEASURES
Page 30 James Hardie Q3 FY23 Results NON‐GAAP FINANCIAL MEASURES Adjusted EBIT and Adjusted EBITDA US$ Millions Q3'23 Q3'22 9 Months FY23 9 Months FY22 EBIT 162.9$ 202.2$ 610.8$ 600.2$ Asbestos: Asbestos adjustments loss (gain) 2.2 1.6 (19.5) (10.8) AICF SG&A expenses 0.3 0.3 1.0 0.9 Adjusted EBIT 165.4$ 204.1$ 592.3$ 590.3$ Net sales 860.8 900.0 2,859.3 2,646.5 Adjusted EBIT margin 19.2% 22.7% 20.7% 22.3% Depreciation and amortization 43.5 41.2 126.6 119.5 Adjusted EBITDA 208.9$ 245.3$ 718.9$ 709.8$ Adjusted EBITDA Margin 24.3% 27.3% 25.1% 26.8% Three and Nine Months Ended 31 December US$ Millions Q3'23 Q3'22 9 Months FY23 9 Months FY22 North America Fiber Cement Segment EBIT 174.1$ 183.3$ 578.7$ 535.1$ North America Fiber Cement Segment net sales 645.4 644.9 2,136.1 1,857.3 North America Fiber Cement Segment EBIT margin 27.0% 28.4% 27.1% 28.8% Depreciation and amortization 32.1 29.3 94.1 83.9 North America Fiber Cement Segment EBITDA 206.2$ 212.6$ 672.8$ 619.0$ North America Fiber Cement Segment EBITDA Margin 31.9% 33.0% 31.5% 33.3% North America Fiber Cement Segment EBIT and EBITDA Three and Nine Months Ended 31 December
Page 31 James Hardie Q3 FY23 Results NON‐GAAP FINANCIAL MEASURES US$ Millions Q3'23 Q3'22 9 Months FY23 9 Months FY22 Asia Pacific Fiber Cement Segment EBIT 27.6$ 39.1$ 102.5$ 122.4$ Asia Pacific Fiber Cement Segment net sales 112.3 143.3 399.4 429.5 Asia Pacific Fiber Cement Segment EBIT margin 24.7% 27.3% 25.7% 28.5% Depreciation and amortization 3.2 3.1 9.2 9.8 Asia Pacific Fiber Cement Segment EBITDA 30.8$ 42.2$ 111.7$ 132.2$ Asia Pacific Fiber Cement Segment EBITDA Margin 27.4% 29.5% 28.0% 30.8% Asia Pacific Fiber Cement Segment EBIT and EBITDA Three and Nine Months Ended 31 December
Page 32 James Hardie Q3 FY23 Results NON‐GAAP FINANCIAL MEASURES
Page 33 James Hardie Q3 FY23 Results NON‐GAAP FINANCIAL MEASURES
Q3 FY23 MANAGEMENT PRESENTATION 14 February 2023
Exhibit 99.6
James Hardie Industries plc
Condensed Consolidated Financial Statements
as of and for the Three and Nine Months Ended 31 December 2022
F-1
James Hardie Industries plc
Index
| Page | |||||
F-2
James Hardie Industries plc
Condensed Consolidated Balance Sheets
| (Millions of US dollars) | (Unaudited) 31 December 2022 | 31 March 2022 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 110.0 | $ | 125.0 | |||||||
| Restricted cash and cash equivalents | 5.0 | 5.0 | |||||||||
| Restricted cash and cash equivalents - Asbestos | 28.4 | 141.9 | |||||||||
| Restricted short-term investments - Asbestos | 122.0 | 119.7 | |||||||||
| Accounts and other receivables, net | 286.2 | 398.4 | |||||||||
| Inventories | 371.4 | 279.7 | |||||||||
| Prepaid expenses and other current assets | 67.7 | 43.2 | |||||||||
| Insurance receivable - Asbestos | 7.2 | 7.9 | |||||||||
| Workers’ compensation - Asbestos | 2.9 | 3.2 | |||||||||
| Total current assets | 1,000.8 | 1,124.0 | |||||||||
| Property, plant and equipment, net | 1,744.2 | 1,457.0 | |||||||||
| Operating lease right-of-use-assets | 57.6 | 57.8 | |||||||||
| Finance lease right-of-use-assets | 2.3 | 2.3 | |||||||||
| Goodwill | 190.3 | 199.5 | |||||||||
| Intangible assets, net | 152.7 | 162.8 | |||||||||
| Restricted long-term investments - Asbestos | 56.9 | — | |||||||||
| Insurance receivable - Asbestos | 29.9 | 37.8 | |||||||||
| Workers’ compensation - Asbestos | 16.8 | 18.6 | |||||||||
| Deferred income taxes | 753.5 | 819.2 | |||||||||
| Deferred income taxes - Asbestos | 295.1 | 360.1 | |||||||||
| Other assets | 7.5 | 4.1 | |||||||||
| Total assets | $ | 4,307.6 | $ | 4,243.2 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 396.5 | $ | 458.0 | |||||||
| Accrued payroll and employee benefits | 91.2 | 116.6 | |||||||||
| Operating lease liabilities | 17.8 | 12.5 | |||||||||
| Finance lease liabilities | 0.9 | 1.1 | |||||||||
| Accrued product warranties | 5.2 | 6.7 | |||||||||
| Income taxes payable | 15.6 | 9.5 | |||||||||
| Asbestos liability | 120.4 | 132.9 | |||||||||
| Workers’ compensation - Asbestos | 2.9 | 3.2 | |||||||||
| Other liabilities | 25.0 | 29.4 | |||||||||
| Total current liabilities | 675.5 | 769.9 | |||||||||
| Long-term debt | 988.1 | 877.3 | |||||||||
| Deferred income taxes | 91.2 | 86.9 | |||||||||
| Operating lease liabilities | 60.1 | 63.1 | |||||||||
| Finance lease liabilities | 1.5 | 1.5 | |||||||||
| Accrued product warranties | 31.4 | 31.0 | |||||||||
| Income taxes payable | 2.3 | 2.3 | |||||||||
| Asbestos liability | 826.1 | 1,010.8 | |||||||||
| Workers’ compensation - Asbestos | 16.8 | 18.6 | |||||||||
| Other liabilities | 46.9 | 48.9 | |||||||||
| Total liabilities | 2,739.9 | 2,910.3 | |||||||||
| Commitments and contingencies (Note 8) | |||||||||||
| Shareholders’ equity: | |||||||||||
Common stock, Euro 0.59 par value, 2.0 billion shares authorized; 444,246,402 shares issued and outstanding at 31 December 2022 and 445,348,933 shares issued and outstanding at 31 March 2022 | 231.4 | 232.1 | |||||||||
| Additional paid-in capital | 232.8 | 230.4 | |||||||||
| Retained earnings | 1,160.1 | 892.4 | |||||||||
| Accumulated other comprehensive loss | (56.6) | (22.0) | |||||||||
| Total shareholders’ equity | 1,567.7 | 1,332.9 | |||||||||
| Total liabilities and shareholders’ equity | $ | 4,307.6 | $ | 4,243.2 | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
James Hardie Industries plc
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
| Three Months Ended 31 December | Nine Months Ended 31 December | ||||||||||||||||||||||
| (Millions of US dollars, except per share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net sales | $ | 860.8 | $ | 900.0 | $ | 2,859.3 | $ | 2,646.5 | |||||||||||||||
| Cost of goods sold | 571.2 | 577.5 | 1,877.3 | 1,687.3 | |||||||||||||||||||
| Gross profit | 289.6 | 322.5 | 982.0 | 959.2 | |||||||||||||||||||
| Selling, general and administrative expenses | 115.1 | 109.0 | 361.3 | 342.3 | |||||||||||||||||||
| Research and development expenses | 9.4 | 9.7 | 29.4 | 27.5 | |||||||||||||||||||
Asbestos adjustments loss (gain) | 2.2 | 1.6 | (19.5) | (10.8) | |||||||||||||||||||
| Operating income | 162.9 | 202.2 | 610.8 | 600.2 | |||||||||||||||||||
| Interest, net | 7.0 | 10.6 | 24.0 | 30.8 | |||||||||||||||||||
| Other (income) expense | (0.1) | — | (12.4) | 0.1 | |||||||||||||||||||
| Income before income taxes | 156.0 | 191.6 | 599.2 | 569.3 | |||||||||||||||||||
| Income tax expense | 55.9 | 56.2 | 168.6 | 162.4 | |||||||||||||||||||
| Net income | $ | 100.1 | $ | 135.4 | $ | 430.6 | $ | 406.9 | |||||||||||||||
| Income per share: | |||||||||||||||||||||||
| Basic | $ | 0.22 | $ | 0.30 | $ | 0.97 | $ | 0.91 | |||||||||||||||
| Diluted | $ | 0.22 | $ | 0.30 | $ | 0.97 | $ | 0.91 | |||||||||||||||
| Weighted average common shares outstanding (Millions): | |||||||||||||||||||||||
| Basic | 445.4 | 445.2 | 445.4 | 444.7 | |||||||||||||||||||
| Diluted | 445.9 | 446.3 | 445.9 | 446.1 | |||||||||||||||||||
| Comprehensive income, net of tax: | |||||||||||||||||||||||
| Net income | $ | 100.1 | $ | 135.4 | $ | 430.6 | $ | 406.9 | |||||||||||||||
| Currency translation adjustments | 30.4 | (1.0) | (34.6) | (19.6) | |||||||||||||||||||
| Comprehensive income | $ | 130.5 | $ | 134.4 | $ | 396.0 | $ | 387.3 | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
James Hardie Industries plc
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended 31 December | |||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | |||||||||||||||
| Cash Flows From Operating Activities | |||||||||||||||||
| Net income | $ | 430.6 | $ | 406.9 | |||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 126.6 | 119.5 | |||||||||||||||
| Lease expense | 16.4 | 16.4 | |||||||||||||||
| Deferred income taxes | 66.5 | 78.9 | |||||||||||||||
| Stock-based compensation | 9.3 | 12.9 | |||||||||||||||
Asbestos adjustments gain | (19.5) | (10.8) | |||||||||||||||
| Excess tax benefits from share-based awards | (0.2) | (3.2) | |||||||||||||||
| Gain on sale of land | (12.7) | — | |||||||||||||||
| Other, net | 15.0 | 13.4 | |||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts and other receivables | 99.5 | 1.4 | |||||||||||||||
| Inventories | (99.3) | (54.8) | |||||||||||||||
| Lease assets and liabilities, net | (12.6) | (15.5) | |||||||||||||||
| Prepaid expenses and other assets | (29.0) | 0.8 | |||||||||||||||
| Insurance receivable - Asbestos | 4.3 | 6.6 | |||||||||||||||
| Accounts payable and accrued liabilities | (54.4) | 33.5 | |||||||||||||||
| Claims and handling costs paid - Asbestos | (90.2) | (92.0) | |||||||||||||||
| Income taxes payable | 5.9 | 6.6 | |||||||||||||||
| Other accrued liabilities | (24.1) | 32.7 | |||||||||||||||
| Net cash provided by operating activities | $ | 432.1 | $ | 553.3 | |||||||||||||
| Cash Flows From Investing Activities | |||||||||||||||||
| Purchases of property, plant and equipment | $ | (450.7) | $ | (174.5) | |||||||||||||
| Proceeds from sale of property, plant and equipment | 14.1 | — | |||||||||||||||
| Capitalized interest | (4.4) | (1.2) | |||||||||||||||
| Purchase of restricted investments - Asbestos | (76.4) | (21.8) | |||||||||||||||
| Proceeds from restricted investments - Asbestos | — | 26.1 | |||||||||||||||
| Net cash used in investing activities | $ | (517.4) | $ | (171.4) | |||||||||||||
| Cash Flows From Financing Activities | |||||||||||||||||
| Proceeds from credit facilities | $ | 270.0 | $ | 320.0 | |||||||||||||
| Repayments of credit facilities | (140.0) | (270.0) | |||||||||||||||
| Debt issuance costs | — | (2.1) | |||||||||||||||
| Proceeds from issuance of shares | 0.1 | 0.2 | |||||||||||||||
| Repayment of finance lease obligations and borrowings | (0.8) | (0.8) | |||||||||||||||
| Shares repurchased | (31.2) | — | |||||||||||||||
| Dividends paid | (129.6) | (461.8) | |||||||||||||||
| Taxes paid related to net share settlement of equity awards | (5.8) | (2.8) | |||||||||||||||
| Net cash used in financing activities | $ | (37.3) | $ | (417.3) | |||||||||||||
| Effects of exchange rate changes on cash and cash equivalents, restricted cash and restricted cash - Asbestos | $ | (5.9) | $ | (7.4) | |||||||||||||
| Net decrease in cash and cash equivalents, restricted cash and restricted cash - Asbestos | (128.5) | (42.8) | |||||||||||||||
| Cash and cash equivalents, restricted cash and restricted cash - Asbestos at beginning of period | 271.9 | 318.4 | |||||||||||||||
| Cash and cash equivalents, restricted cash and restricted cash - Asbestos at end of period | $ | 143.4 | $ | 275.6 | |||||||||||||
| Non-Cash Investing and Financing Activities | |||||||||||||||||
| Capital expenditures incurred but not yet paid | $ | 36.0 | $ | 34.9 | |||||||||||||
| Supplemental Disclosure of Cash Flow Activities | |||||||||||||||||
| Cash paid to AICF | $ | 54.8 | $ | 124.2 | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
James Hardie Industries plc
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
| Three Months Ended 31 December 2022 | |||||||||||||||||||||||||||||||||||
| (Millions of US dollars) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||
| Balances as of 30 September 2022 | $ | 232.3 | $ | 231.7 | $ | 1,089.3 | $ | — | $ | (87.0) | $ | 1,466.3 | |||||||||||||||||||||||
| Net income | — | — | 100.1 | — | — | 100.1 | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 30.4 | 30.4 | |||||||||||||||||||||||||||||
| Stock-based compensation | 0.1 | 2.0 | — | — | — | 2.1 | |||||||||||||||||||||||||||||
| Shares repurchased | — | — | — | (31.2) | — | (31.2) | |||||||||||||||||||||||||||||
| Shares cancelled | (1.0) | (0.9) | (29.3) | 31.2 | — | — | |||||||||||||||||||||||||||||
Balances as of 31 December 2022 | $ | 231.4 | $ | 232.8 | $ | 1,160.1 | $ | — | $ | (56.6) | $ | 1,567.7 | |||||||||||||||||||||||
| Nine Months Ended 31 December 2022 | |||||||||||||||||||||||||||||||||||
| (Millions of US dollars) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||
Balances as of 31 March 2022 | $ | 232.1 | $ | 230.4 | $ | 892.4 | $ | — | $ | (22.0) | $ | 1,332.9 | |||||||||||||||||||||||
| Net income | — | — | 430.6 | — | — | 430.6 | |||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (34.6) | (34.6) | |||||||||||||||||||||||||||||
| Stock-based compensation | 0.3 | 3.2 | — | — | — | 3.5 | |||||||||||||||||||||||||||||
| Issuance of ordinary shares | — | 0.1 | — | — | — | 0.1 | |||||||||||||||||||||||||||||
| Dividends declared | — | — | (133.6) | — | — | (133.6) | |||||||||||||||||||||||||||||
| Shares repurchased | — | — | — | (31.2) | — | (31.2) | |||||||||||||||||||||||||||||
| Shares cancelled | (1.0) | (0.9) | (29.3) | 31.2 | — | — | |||||||||||||||||||||||||||||
Balances as of 31 December 2022 | $ | 231.4 | $ | 232.8 | $ | 1,160.1 | $ | — | $ | (56.6) | $ | 1,567.7 | |||||||||||||||||||||||
| Three Months Ended 31 December 2021 | |||||||||||||||||||||||||||||
| (Millions of US dollars) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||
| Balances as of 30 September 2021 | $ | 232.0 | $ | 232.0 | $ | 882.9 | $ | (25.2) | $ | 1,321.7 | |||||||||||||||||||
| Net income | — | — | 135.4 | — | 135.4 | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | (1.0) | (1.0) | ||||||||||||||||||||||||
| Stock-based compensation | 0.1 | 2.1 | — | — | 2.2 | ||||||||||||||||||||||||
| Issuance of ordinary shares | — | 0.1 | — | — | 0.1 | ||||||||||||||||||||||||
| Dividends declared | — | — | (178.1) | — | (178.1) | ||||||||||||||||||||||||
Balances as of 31 December 2021 | $ | 232.1 | $ | 234.2 | $ | 840.2 | $ | (26.2) | $ | 1,280.3 | |||||||||||||||||||
F-6
James Hardie Industries plc
Condensed Consolidated Statements of Changes in Shareholders' Equity (continued)
(Unaudited)
| Nine Months Ended 31 December 2021 | |||||||||||||||||||||||||||||
| (Millions of US dollars) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||
Balances as of 31 March 2021 | $ | 231.4 | $ | 224.6 | $ | 611.4 | $ | (6.6) | $ | 1,060.8 | |||||||||||||||||||
| Net income | — | — | 406.9 | — | 406.9 | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | (19.6) | (19.6) | ||||||||||||||||||||||||
| Stock-based compensation | 0.7 | 9.4 | — | — | 10.1 | ||||||||||||||||||||||||
| Issuance of ordinary shares | — | 0.2 | — | — | 0.2 | ||||||||||||||||||||||||
| Dividends declared | — | — | (178.1) | — | (178.1) | ||||||||||||||||||||||||
Balances as of 31 December 2021 | $ | 232.1 | $ | 234.2 | $ | 840.2 | $ | (26.2) | $ | 1,280.3 | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-7
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements
1. Organization and Significant Accounting Policies
Nature of Operations
James Hardie Industries plc ("JHI plc") manufactures and sells fiber cement, fiber gypsum and cement-bonded building products for interior and exterior building construction applications, primarily in the United States, Australia, Europe, New Zealand and the Philippines.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles ("GAAP") for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in the Company’s Annual Report on Form 20-F for the fiscal year ended 31 March 2022 from which the prior year balance sheet information herein was derived. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expense, and related disclosures. Actual results could differ from those estimates.
The condensed consolidated financial statements represent the financial position, results of operations and cash flows of JHI plc and its wholly-owned subsidiaries and variable interest entity (“VIE”). Unless the context indicates otherwise, JHI plc and its direct and indirect wholly-owned subsidiaries and VIE (as of the time relevant to the applicable reference) are collectively referred to as “James Hardie”, the “James Hardie Group” or the “Company”. All intercompany balances and transactions have been eliminated in consolidation. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of the results for the interim periods presented.
The Company has recorded on its condensed consolidated balance sheets certain foreign assets and liabilities, including asbestos related assets and liabilities under the terms of the Amended and Restated Final Funding Agreement (“AFFA”), that are denominated in foreign currencies and subject to translation (foreign entities) or remeasurement (Asbestos Injuries Compensation Fund (“AICF”) entity and Euro denominated debt) into US dollars at each reporting date. Unless otherwise noted, the Company converts foreign currency denominated assets and liabilities into US dollars at the current spot rate at the end of the reporting period; while revenues and expenses are converted using an average exchange rate for the period. The Company records gains and losses on its Euro denominated debt which are economically offset by foreign exchange gains and losses on loans between subsidiaries, resulting in a net immaterial translation gain or loss which is recorded in the Selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.
Summary of Significant Accounting Policies
During the first quarter of fiscal year 2023, the Company reclassified its Restricted Short-Term Investments - Asbestos from available for sale to held to maturity ("HTM") due to AICF's ability and intent to hold these securities to maturity. At the time of the reclassification, the fair value of the investments were carried at fair value. Subsequently, these investments are carried at amortized cost.
Other than noted above, there were no changes to our significant accounting policies as described in our Annual Report on Form 20-F for the fiscal year ended 31 March 2022.
F-8
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
Earnings Per Share
Basic earnings per share ("EPS") is calculated using net income divided by the weighted average number of common shares outstanding during the period. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares calculated using the treasury method that would have been outstanding if the dilutive potential common shares, such as restricted stock units, had been issued.
Basic and dilutive common shares outstanding used in determining net income per share are as follows:
| Three Months Ended 31 December | Nine Months Ended 31 December | ||||||||||||||||||||||
| (Millions of shares) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Basic common shares outstanding | 445.4 | 445.2 | 445.4 | 444.7 | |||||||||||||||||||
| Dilutive effect of stock awards | 0.5 | 1.1 | 0.5 | 1.4 | |||||||||||||||||||
| Diluted common shares outstanding | 445.9 | 446.3 | 445.9 | 446.1 | |||||||||||||||||||
There were no potential common shares which would be considered anti-dilutive for the three and nine months ended 31 December 2022 and 2021.
Potential common shares of 0.7 million and 0.4 million for the three and nine months ended 31 December 2022, respectively and 0.6 million and 0.5 million for the three and nine months ended 31 December 2021, respectively, have been excluded from the calculation of diluted common shares outstanding as they are considered contingent shares which are not expected to vest.
2. Revenues
The following represents the Company's disaggregated revenues:
| Three Months Ended 31 December 2022 | |||||||||||||||||||||||
| (Millions of US dollars) | North America Fiber Cement | Asia Pacific Fiber Cement | Europe Building Products | Consolidated | |||||||||||||||||||
| Fiber cement revenues | $ | 645.4 | $ | 112.3 | $ | 14.5 | $ | 772.2 | |||||||||||||||
| Fiber gypsum revenues | — | — | 88.6 | 88.6 | |||||||||||||||||||
| Total revenues | $ | 645.4 | $ | 112.3 | $ | 103.1 | $ | 860.8 | |||||||||||||||
| Three Months Ended 31 December 2021 | |||||||||||||||||||||||
| (Millions of US dollars) | North America Fiber Cement | Asia Pacific Fiber Cement | Europe Building Products | Consolidated | |||||||||||||||||||
| Fiber cement revenues | $ | 644.9 | $ | 143.3 | $ | 15.8 | $ | 804.0 | |||||||||||||||
| Fiber gypsum revenues | — | — | 96.0 | 96.0 | |||||||||||||||||||
| Total revenues | $ | 644.9 | $ | 143.3 | $ | 111.8 | $ | 900.0 | |||||||||||||||
| Nine Months Ended 31 December 2022 | |||||||||||||||||||||||
| (Millions of US dollars) | North America Fiber Cement | Asia Pacific Fiber Cement | Europe Building Products | Consolidated | |||||||||||||||||||
| Fiber cement revenues | $ | 2,136.1 | $ | 399.4 | $ | 50.1 | $ | 2,585.6 | |||||||||||||||
| Fiber gypsum revenues | — | — | 273.7 | 273.7 | |||||||||||||||||||
| Total revenues | $ | 2,136.1 | $ | 399.4 | $ | 323.8 | $ | 2,859.3 | |||||||||||||||
F-9
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
| Nine Months Ended 31 December 2021 | |||||||||||||||||||||||
| (Millions of US dollars) | North America Fiber Cement | Asia Pacific Fiber Cement | Europe Building Products | Consolidated | |||||||||||||||||||
| Fiber cement revenues | $ | 1,857.3 | $ | 429.5 | $ | 57.7 | $ | 2,344.5 | |||||||||||||||
| Fiber gypsum revenues | — | — | 302.0 | 302.0 | |||||||||||||||||||
| Total revenues | $ | 1,857.3 | $ | 429.5 | $ | 359.7 | $ | 2,646.5 | |||||||||||||||
The process by which the Company recognizes revenues is similar across each of the Company's reportable segments. Fiber cement and fiber gypsum revenues are primarily generated from the sale of siding and various boards used in external and internal applications, as well as accessories. Fiber gypsum revenues also includes the sale of cement-bonded boards in the Europe Building Products segment.
3. Cash and Cash Equivalents, Restricted Cash and Restricted Cash - Asbestos
The following table provides a reconciliation of Cash and cash equivalents, Restricted cash and Restricted cash - Asbestos reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:
| 31 December | 31 March | ||||||||||
| (Millions of US dollars) | 2022 | 2022 | |||||||||
| Cash and cash equivalents | $ | 110.0 | $ | 125.0 | |||||||
| Restricted cash | 5.0 | 5.0 | |||||||||
| Restricted cash - Asbestos | 28.4 | 141.9 | |||||||||
| Total cash and cash equivalents, restricted cash and restricted cash - Asbestos | $ | 143.4 | $ | 271.9 | |||||||
Restricted cash relates to an insurance policy which restricts the cash from general corporate purposes.
Restricted cash - Asbestos is restricted to the settlement of asbestos claims and for the payment of the operating costs of AICF.
4. Inventories
Inventories consist of the following components:
| 31 December | 31 March | ||||||||||
| (Millions of US dollars) | 2022 | 2022 | |||||||||
| Finished goods | $ | 264.8 | $ | 187.3 | |||||||
| Work-in-process | 21.1 | 16.2 | |||||||||
| Raw materials and supplies | 93.9 | 82.1 | |||||||||
| Provision for obsolete finished goods and raw materials | (8.4) | (5.9) | |||||||||
| Total inventories | $ | 371.4 | $ | 279.7 | |||||||
F-10
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
5. Long-Term Debt
| 31 December | 31 March | ||||||||||
| (Millions of US dollars) | 2022 | 2022 | |||||||||
| Senior unsecured notes: | |||||||||||
Principal amount 3.625% notes due 2026 (€400.0 million) | $ | 425.7 | $ | 446.4 | |||||||
Principal amount 5.000% notes due 2028 | 400.0 | 400.0 | |||||||||
| Total | 825.7 | 846.4 | |||||||||
| Unsecured revolving credit facility | 170.0 | 40.0 | |||||||||
| Unamortized debt issuance costs: | (7.6) | (9.1) | |||||||||
| Total Long-term debt | $ | 988.1 | $ | 877.3 | |||||||
| Weighted average interest rate of Long-term debt | 4.6 | % | 4.2 | % | |||||||
| Weighted average term of available Long-term debt | 4.2 years | 5.0 years | |||||||||
Fair value of Senior unsecured notes (Level 1) | $ | 766.9 | $ | 845.1 | |||||||
As of 31 December 2022, the Company had a total borrowing base capacity under the revolving credit facility of US$600.0 million with outstanding borrowings of US$170.0 million, and US$7.4 million of issued but undrawn letters of credit and bank guarantees. These letters of credit and bank guarantees relate to various operational matters including insurance, performance bonds and other items, leaving the Company with US$422.6 million of available borrowing capacity under the revolving credit facility.
At 31 December 2022, the Company was in compliance with all of its covenants contained in the senior unsecured notes and the unsecured revolving credit facility agreement.
6. Asbestos
In February 2007, the Company's shareholders approved the AFFA, an agreement pursuant to which the Company provides long-term funding to AICF.
Asbestos Adjustments Loss (Gain)
The Asbestos adjustments loss (gain) included in the condensed consolidated statements of operations and comprehensive income comprise the following:
| Three Months Ended 31 December | Nine Months Ended 31 December | ||||||||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Effect of foreign exchange on Asbestos net liabilities | $ | 16.4 | $ | 3.5 | $ | (42.7) | $ | (24.4) | |||||||||||||||
| (Gain) loss on foreign currency forward contracts | (13.4) | (2.3) | 21.8 | 14.3 | |||||||||||||||||||
| Other | (0.8) | 0.4 | 1.4 | (0.7) | |||||||||||||||||||
Asbestos adjustments loss (gain) | $ | 2.2 | $ | 1.6 | $ | (19.5) | $ | (10.8) | |||||||||||||||
F-11
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
Claims Data
The following table shows the activity related to the numbers of open claims, new claims and closed claims during each of the past five years and the average settlement per settled claim and case closed:
Nine Months | ||||||||||||||||||||
| Ended | For the Years Ended 31 March | |||||||||||||||||||
| 31 December 2022 | 2022 | 2021 | 2020 | 2019 | 2018 | |||||||||||||||
| Number of open claims at beginning of period | 365 | 360 | 393 | 332 | 336 | 352 | ||||||||||||||
| Number of new claims | ||||||||||||||||||||
| Direct claims | 302 | 411 | 392 | 449 | 430 | 422 | ||||||||||||||
| Cross claims | 121 | 144 | 153 | 208 | 138 | 140 | ||||||||||||||
| Number of closed claims | 450 | 550 | 578 | 596 | 572 | 578 | ||||||||||||||
| Number of open claims at end of period | 338 | 365 | 360 | 393 | 332 | 336 | ||||||||||||||
| Average settlement amount per settled claim | A$305,000 | A$314,000 | A$248,000 | A$277,000 | A$262,000 | A$253,000 | ||||||||||||||
Average settlement amount per case closed 1 | A$272,000 | A$282,000 | A$225,000 | A$245,000 | A$234,000 | A$217,000 | ||||||||||||||
| Average settlement amount per settled claim | US$209,000 | US$232,000 | US$178,000 | US$189,000 | US$191,000 | US$196,000 | ||||||||||||||
Average settlement amount per case closed 1 | US$186,000 | US$208,000 | US$162,000 | US$167,000 | US$171,000 | US$168,000 | ||||||||||||||
1 The average settlement amount per case closed includes nil settlements. | ||||||||||||||||||||
Under the terms of the AFFA, the Company has rights of access to actuarial information produced for AICF by the actuary appointed by AICF, which is currently KPMG Actuarial. The Company’s disclosures with respect to claims statistics are subject to it obtaining such information, however, the AFFA does not provide the Company an express right to audit or otherwise require independent verification of such information or the methodologies to be adopted by the approved actuary. As such, the Company relies on the accuracy and completeness of the information provided by AICF to the approved actuary and the resulting information and analysis of the approved actuary when making disclosures with respect to claims statistics.
The following is a detailed rollforward of the Net Unfunded AFFA liability, net of tax, for the nine months ended 31 December 2022:
| (Millions of US dollars) | Asbestos Liability | Insurance Receivables | Restricted Cash and Investments | Other Assets and Liabilities | Net Unfunded AFFA Liability | Deferred Tax Assets | Income Tax Payable | Net Unfunded AFFA Liability, net of tax | |||||||||||||||||||||||||||||||||||||||
Opening Balance - 31 March 2022 | $ | (1,143.7) | $ | 45.7 | $ | 261.6 | $ | (1.1) | $ | (837.5) | $ | 360.1 | $ | 43.9 | $ | (433.5) | |||||||||||||||||||||||||||||||
Asbestos claims paid1 | 89.4 | — | (89.4) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Payment received in accordance with AFFA | — | — | 54.8 | — | 54.8 | — | — | 54.8 | |||||||||||||||||||||||||||||||||||||||
| AICF claims-handling costs incurred (paid) | 0.8 | — | (0.8) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| AICF operating costs paid - non claims-handling | — | — | (1.0) | — | (1.0) | — | — | (1.0) | |||||||||||||||||||||||||||||||||||||||
| Insurance recoveries | — | (4.3) | 4.3 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Movement in income tax payable | — | — | — | — | — | (30.8) | (9.3) | (40.1) | |||||||||||||||||||||||||||||||||||||||
| Other movements | — | — | 0.7 | (0.5) | 0.2 | (0.5) | — | (0.3) | |||||||||||||||||||||||||||||||||||||||
| Effect of foreign exchange | 107.0 | (4.3) | (22.9) | 0.7 | 80.5 | (33.7) | (4.1) | 42.7 | |||||||||||||||||||||||||||||||||||||||
Closing Balance - 31 December 2022 | $ | (946.5) | $ | 37.1 | $ | 207.3 | $ | (0.9) | $ | (703.0) | $ | 295.1 | $ | 30.5 | $ | (377.4) | |||||||||||||||||||||||||||||||
F-12
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
___________
1Claims paid of US$89.4 million reflects A$130.8 million converted at the average exchange rate for the period based on the assumption that these transactions occurred evenly throughout the period.
AICF Funding
During fiscal year 2023, the Company will contribute A$160.4 million to AICF in quarterly installments. Total payments of A$119.8 million have been made through 3 January 2023.
For the nine months ended 31 December 2022, the Company did not provide financial or other support to AICF that it was not previously contractually required to provide.
Restricted Investments
AICF invests its excess cash in time deposits, which are classified as HTM investments and the carrying value materially approximates the fair value for each investment. The following table represents the investments entered into as of 31 December 2022:
| Date Invested | Maturity Date | Interest Rate | A$ Millions | |||||||||||||||||
| August 2022 | 15 February 2023 | 3.35% | 50.0 | |||||||||||||||||
| April 2022 | 5 April 2024 | 2.75% | 54.0 | |||||||||||||||||
| January 2022 | 25 January 2024 | 1.41% | 30.0 | |||||||||||||||||
| January 2022 | 25 January 2023 | 0.79% | 100.0 | |||||||||||||||||
| October 2021 | 6 October 2023 | 0.60% | 30.0 | |||||||||||||||||
7. Derivative Instruments
The Company uses derivatives for risk management purposes and does not engage in speculative activity. A risk management objective for the Company is to mitigate interest rate risk associated with the Company’s external credit facilities and foreign currency risk primarily with respect to forecasted transactions denominated in foreign currencies. The determination of whether the Company enters into a derivative transaction to achieve these risk management objectives depends on a number of factors, including an evaluation of the extent to which derivative instruments will achieve such risk management objectives of the Company.
Foreign Currency Forward Contracts
The Company’s foreign currency forward contracts are valued using models that maximize the use of market observable inputs including interest rate curves and both forward and spot prices for currencies and are categorized as Level 2 within the fair value hierarchy.
The following table sets forth the total outstanding notional amount and the fair value of the Company’s foreign currency forward contracts:
| Fair Value as of | |||||||||||||||||||||||||||||||||||
| (Millions of US dollars) | Notional Amount | 31 December 2022 | 31 March 2022 | ||||||||||||||||||||||||||||||||
| Derivatives not accounted for as hedges | 31 December 2022 | 31 March 2022 | Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | 293.0 | $ | 251.0 | $ | 2.4 | $ | 10.3 | $ | 2.0 | $ | 1.9 | |||||||||||||||||||||||
F-13
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
The following table sets forth the gain and loss on the Company’s foreign currency forward contracts recorded in the Company's condensed consolidated statements of operations and comprehensive income as follows:
| Three Months Ended 31 December | Nine Months Ended 31 December | ||||||||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Asbestos adjustments (gain) loss | $ | (13.4) | $ | (2.3) | $ | 21.8 | $ | 14.3 | |||||||||||||||
| Selling, general and administrative (income) expenses | (0.6) | 3.6 | 4.0 | (2.0) | |||||||||||||||||||
| Total (gain) loss | $ | (14.0) | $ | 1.3 | $ | 25.8 | $ | 12.3 | |||||||||||||||
8. Commitments and Contingencies
Legal Matters
The Company is involved from time to time in various legal proceedings and administrative actions related to the normal conduct of its business, including general liability claims, putative class action lawsuits and litigation concerning its products.
Although it is impossible to predict the outcome of any pending legal proceeding, management believes that such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows, except as they relate to asbestos and New Zealand weathertightness claims as described in these condensed consolidated financial statements.
New Zealand Weathertightness Claims
Since fiscal year 2002, the Company’s New Zealand subsidiaries have been joined in a number of weathertightness claims in New Zealand that relate to residential buildings (single dwellings and apartment complexes) and a small number of non-residential buildings, primarily constructed from 1998 to 2004. The claims often involve multiple parties and allege that losses were incurred due to excessive moisture penetration of the buildings’ structures. The claims typically include allegations of poor building design, inadequate certification of plans, inadequate construction review and compliance certification and deficient work by sub-contractors.
Historically, the Company’s New Zealand subsidiaries have been joined to these claims as one of several co-defendants, including local government entities responsible for enforcing building codes and practices, resulting in the Company’s New Zealand subsidiaries becoming liable for only a portion of each claim. In addition, the Company’s New Zealand subsidiaries have had access to third-party recoveries to defray a portion of the costs incurred in resolving such claims.
Currently pending are two claims filed on behalf of multiple plaintiffs in 2015 against the Company and/or its subsidiaries as the sole defendants, each of which alleges that the New Zealand subsidiaries’ products were inherently defective. The Company believes it has substantial factual and legal defenses to these claims and is defending the claims vigorously.
Cridge, et al. (Case Nos. CIV-2015-485-594 and CIV-2015-485-773), In the High Court of New Zealand, Wellington Registry (hereinafter the “Cridge litigation”). From August to December 2020, the trial of phase one of the Cridge litigation was held in Wellington, New Zealand solely to determine whether the Company’s New Zealand subsidiaries had a duty to the plaintiffs and breached that duty. In August 2021, the Wellington High Court issued its decision finding in favor of the Company on all claims (the “Cridge Decision”). In September 2021, plaintiffs filed a notice of appeal of the trial court’s decision, and
F-14
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
subsequently the appellate court held a hearing in August 2022. The Company anticipates the appellate court will issue its decision during calendar year 2023. As of 31 December 2022, the Company has not recorded a reserve related to the Cridge litigation as the chance of loss remains not probable following the Cridge Decision.
Waitakere, et al. (Case No. CIV-2015-404-3080), In the High Court of New Zealand, Auckland Registry (hereinafter the “Waitakere litigation”). The trial in the Waitakere litigation is scheduled to begin May 2023 in Auckland, New Zealand. As of 31 December 2022, the Company has not recorded a reserve related to the Waitakere litigation as the chance of loss is not probable and the amount of loss, if any, cannot be reasonably estimated.
The resolution of one or more of the litigation matters by way of a court decision or settlement has the potential to impact the accounting treatment regarding the probability of a potential loss and the Company’s ability to reasonably estimate a reserve with regards to the other litigation matters discussed above. Furthermore, an adverse judgement in one or more of these litigation matters could have a material adverse impact on our consolidated financial position, results of operations or cash flows.
Environmental
The operations of the Company, like those of other companies engaged in similar businesses, are subject to a number of laws and regulations on air, soil and water quality, waste handling and disposal. The Company’s policy is to accrue for environmental costs when it is determined that it is probable that an obligation exists and the amount can be reasonably estimated.
9. Income Taxes
Income taxes payable represents taxes currently payable which are computed at statutory income tax rates applicable to taxable income derived in each jurisdiction in which the Company conducts business. During the nine months ended 31 December 2022, the Company paid taxes, net of refunds, of US$89.1 million.
Income tax expense differs from the statutory rate primarily due to the Company’s mix of pre-tax income by jurisdiction, foreign taxes on domestic income and foreign exchange on asbestos.
Deferred income taxes include net operating loss carry-forwards. At 31 December 2022, the Company had tax loss carry-forwards in Australia, New Zealand, Europe and the US of approximately US$70.3 million that are available to offset future taxable income in the respective jurisdiction. The Company establishes a valuation allowance against a deferred tax asset if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
The Australian tax loss carry-forwards primarily result from current and prior year tax deductions for contributions to AICF. James Hardie 117 Pty Limited, the performing subsidiary under the AFFA, is able to claim a tax deduction for its contributions to AICF over a five-year period commencing in the year the contribution is incurred. At 31 December 2022, the Company recognized a tax deduction of US$103.1 million (A$150.4 million) for the current year relating to total contributions to AICF of US$722.5 million (A$1,002.8 million) incurred in tax years 2019 through 2023.
F-15
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
10. Stock-Based Compensation
Total stock-based compensation expense consists of the following:
| Three Months Ended 31 December | Nine Months Ended 31 December | ||||||||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Liability Awards | $ | 0.5 | $ | (0.3) | $ | — | $ | 8.2 | |||||||||||||||
| Equity Awards | 3.8 | 2.2 | 9.3 | 12.9 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 4.3 | $ | 1.9 | $ | 9.3 | $ | 21.1 | |||||||||||||||
As of 31 December 2022, the unrecorded future stock-based compensation expense related to outstanding equity awards was US$33.1 million and will be recognized over an estimated weighted average amortization period of 2.1 years.
11. Segment Information
The Company reports its operating segment information in the format that the operating segment information is available to and evaluated by the Chief Operating Decision Maker. The North America Fiber Cement segment manufactures fiber cement interior linings, exterior siding products and related accessories in the United States; these products are sold in the United States and Canada. The Asia Pacific Fiber Cement segment includes all fiber cement products manufactured in Australia and the Philippines, and sold in Australia, New Zealand, Asia, the Middle East and various Pacific Islands. The Europe Building Products segment includes fiber gypsum and cement-bonded boards manufactured in Europe and fiber cement product manufactured in the United States that is sold in Europe. The Research and Development segment represents the cost incurred by the research and development centers. General Corporate primarily consist of Asbestos adjustments loss (gain), officer and employee compensation and related benefits, professional and legal fees, administrative costs and rental expense on the Company’s corporate offices. The Company does not report net interest expense for each segment as the segments are not held directly accountable for interest expense.
F-16
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
Operating Segments
The following is the Company’s operating segment information:
| Net Sales | ||||||||||||||||||||||||||
| Three Months Ended 31 December | Nine Months Ended 31 December | |||||||||||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
| North America Fiber Cement | $ | 645.4 | $ | 644.9 | $ | 2,136.1 | $ | 1,857.3 | ||||||||||||||||||
| Asia Pacific Fiber Cement | 112.3 | 143.3 | 399.4 | 429.5 | ||||||||||||||||||||||
| Europe Building Products | 103.1 | 111.8 | 323.8 | 359.7 | ||||||||||||||||||||||
| Worldwide total | $ | 860.8 | $ | 900.0 | $ | 2,859.3 | $ | 2,646.5 | ||||||||||||||||||
| Operating Income | ||||||||||||||||||||||||||
| Three Months Ended 31 December | Nine Months Ended 31 December | |||||||||||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
| North America Fiber Cement | $ | 174.1 | $ | 183.3 | $ | 578.7 | $ | 535.1 | ||||||||||||||||||
| Asia Pacific Fiber Cement | 27.6 | 39.1 | 102.5 | 122.4 | ||||||||||||||||||||||
| Europe Building Products | 1.4 | 11.9 | 18.0 | 44.9 | ||||||||||||||||||||||
| Research and Development | (7.8) | (8.5) | (25.3) | (25.2) | ||||||||||||||||||||||
| Segments total | 195.3 | 225.8 | 673.9 | 677.2 | ||||||||||||||||||||||
| General Corporate | (32.4) | (23.6) | (63.1) | (77.0) | ||||||||||||||||||||||
| Total operating income | $ | 162.9 | $ | 202.2 | $ | 610.8 | $ | 600.2 | ||||||||||||||||||
Research and development expenditures are expensed as incurred and are summarized by segment in the following table. For the three and nine months ended 31 December 2022, Research and development segment operating income also includes Selling, general and administrative expenses of US$0.4 million and US$1.6 million, respectively. For the three and nine months ended 31 December 2021, Research and development segment operating income also includes Selling, general and administrative expenses of US$0.8 million and US$3.3 million, respectively.
| Research and Development Expenses | ||||||||||||||||||||||||||
| Three Months Ended 31 December | Nine Months Ended 31 December | |||||||||||||||||||||||||
| (Millions of US dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
| North America Fiber Cement | $ | 1.3 | $ | 1.3 | $ | 3.5 | $ | 3.8 | ||||||||||||||||||
| Asia Pacific Fiber Cement | 0.3 | 0.4 | 1.0 | 1.1 | ||||||||||||||||||||||
| Europe Building Products | 0.4 | 0.3 | 1.2 | 0.7 | ||||||||||||||||||||||
| Research and Development | 7.4 | 7.7 | 23.7 | 21.9 | ||||||||||||||||||||||
| Worldwide total | $ | 9.4 | $ | 9.7 | $ | 29.4 | $ | 27.5 | ||||||||||||||||||
F-17
James Hardie Industries plc
Notes to Condensed Consolidated Financial Statements (continued)
12. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss is comprised of the following at 31 December 2022:
| (Millions of US dollars) | Cash Flow Hedges | Pension Actuarial Loss | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||
Balance at 31 March 2022 | $ | 0.2 | $ | (0.3) | $ | (21.9) | $ | (22.0) | ||||||||||||||||||
| Other comprehensive loss | — | — | (34.6) | (34.6) | ||||||||||||||||||||||
Balance at 31 December 2022 | $ | 0.2 | $ | (0.3) | $ | (56.5) | $ | (56.6) | ||||||||||||||||||
13. Capital Management
On 8 November 2022, the Company announced a share buyback program to acquire up to US$200 million of its outstanding shares through October 2023. Below is the activity under this program:
| In Millions, except price per share | Total Number of Shares Purchased | Average Price Paid per Share (US$) | Total Number of Shares Purchased as Part of Publically Announced Program | Maximum Dollar Value of Shares That May Yet be Purchased Under the Program (US$) | ||||||||||
| 1 December 2022 - 31 December 2022 | 1.6 | $19.34 | 1.6 | $168.8 | ||||||||||
All shares repurchased were subsequently cancelled by the Company and are no longer available for issuance.
F-18
Media Release 10 February 2023 | Exhibit 99.7  | ||||
James Hardie Industries Announces Global Leadership Appointment
Farhaj Majeed appointed as Chief Human Resources Officer (CHRO)
James Hardie Industries plc (ASX: JHX; NYSE: JHX), the world’s #1 producer and marketer of high-performance fiber cement and fiber gypsum building solutions, today announces the appointment of Farhaj Majeed as Chief Human Resources Officer (CHRO). Farhaj will assume the role effective February 20, he will report directly to Chief Executive Officer Aaron Erter and will serve on the Executive Leadership team. Farhaj will lead all aspects of James Hardie’s People, Talent & Rewards, DEI and Culture strategy.
Mr. Majeed joins James Hardie with a tremendous career spanning over 20 years in a variety of global and regional HR experiences with top tier companies such as Kraft Foods, Mondelez International, Abbott Laboratories and, most recently with Whirlpool Corporation where he led the Europe and MEA region as VP & CHRO, EMEA. Farhaj has held several leadership roles and led HR teams in North America, Europe, Asia and the Middle East.
Commenting on the appointment of Farhaj Majeed, CEO Aaron Erter said, “Farhaj is a strategic and results driven global HR leader with vast knowledge and experience to help continue to develop our most important asset, our people. Our organization around the world will benefit from his rich experience.”
“It’s an honor to join James Hardie, a company with a rich heritage,” said Farhaj Majeed. “It’s also an exciting time to continue to drive a purpose & values driven organization, and contribute to the growth of our people and business.”
Mr. Majeed holds a Masters of Business Administration from the Institute of Business Management with an emphasis on Human Resources and Marketing.
James Hardie Industries
James Hardie (ASX: JHX; NYSE: JHX) is a world leader in fiber cement home siding and exterior design solutions. Hardie® products offer long-lasting beauty and endless design possibilities with trusted protection and low maintenance. As the world’s #1 producer and marketer of high-performance fiber cement and fiber gypsum building solutions, James Hardie offers siding and accessories for every style. Hardie® products are non-combustible and stand up to weather and time while empowering homeowners and building professionals to achieve the home of their dreams. The company pioneered the technology of fiber cement building products made from sustainable raw materials and continues to invest in innovation to transform the industry. James Hardie operates with an inclusive company culture, and an unwavering commitment to Zero Harm. The company proudly employs a diverse global workforce of more than 5,000 employees across operations in North America, Europe, and Asia Pacific.
For more information and media resources, visit JamesHardie.com and JamesHardie.com/about-us/media-resources./about-us/media-resources. For investor information, please visit ir.jameshardie.com.au.
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Media Release 10 February 2023 | | ||||
Forward-Looking Statements | ||
This Media Release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of James Hardie to be materially different from those expressed or implied in this release, including, among others, the risks and uncertainties set forth in Section 3 “Risk Factors” in James Hardie’s Annual Report on Form 20-F for the fiscal year ended March 31, 2022; changes in general economic, political, governmental and business conditions globally and in the countries in which James Hardie does business; changes in interest rates; changes in inflation rates; changes in exchange rates; the level of construction generally; changes in cement demand and prices; changes in raw material and energy prices; changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. James Hardie assumes no obligation to update or correct the information contained in this Media Release except as required by law.
This media release has been authorized by Mr. Aaron Erter, Chief Executive Offer.
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Investor/Media/Analyst Enquiries:
James Brennan-Chong
Director of Investor Relations and Market Intelligence
Telephone: | +61 2 9638 9205 | |||||||
Email: | media@jameshardie.com.au | |||||||
James Hardie Industries plc is a limited liability company incorporated in Ireland with its registered office at Europa House, 2nd Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20, Ireland
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