James Hardie Industries plc (JHX) Earnings Call Transcript & Summary

Good day, and welcome to the James Hardie Industries plc 2021 Annual General Meeting. Today's conference is being recorded. Please note that media is not permitted to ask questions and should direct any questions to James Brennan-Chong at investor.relations@jameshardie.com.au after the meeting. At this time, I'd like to turn the conference over to Mr. Mike Hammes. Thank you. Please go ahead, sir.

Hello. My name is Mike Hammes. I'm the Chairman of the Board of James Hardie Industries, and I would like to welcome you all to the company's 2021 Annual General Meeting. As the appointed time has arrived and the necessary quorum is present, I declare this meeting open. As announced on the 2nd of August 2021 in the company's notice of the AGM, this year's meeting is being held at James Hardie's corporate headquarters in Dublin in line with previous years. However, physical attendance is limited to those personally legal -- persons legally required to attend the meeting to meet the quorum requirements to hold the meeting. Due to the COVID-19-related restrictions and for the safety of [ all of us ], I'm attending and chairing the AGM from Chicago via the teleconference facility available to all shareholders. I am joined on the teleconference by Dr. Jack Truong, the CEO; Jason Miele, the CFO; and Joe Blasko, the General Counsel and Corporate Secretary in Chicago. I'm also joined virtually by fellow Board members, David Harrison, Persio Lisboa, Anne Lloyd, Dr. Nozari, Rada Rodriguez, Suzanne Rowland, Dean Seavers, Nigel Stein and Harold Wiens. We are also joined in the teleconference by Iain Burnet, Robert Bruning and Tim Rahall, representatives of the company's external auditors, Ernst & Young. Finally, I welcome you, our proxy holders. I would like now to explain how we are running the meeting today. In order to run the meeting as efficiently as possible in line with public health guidelines, my Chairman's address will not be read out today but is publicly available on the ASX website. This meeting will give holders the opportunity to express to the Board and our management their views of the resolutions, which are the subject of this meeting, and through me, ask any questions, which we will take at the end of the meeting instead of after each resolution. We welcome an open discussion and expression of views as long as it is relevant to the business of the meeting and respects the views of others. We will allow all holders to speak and ask questions at the end of this meeting. However, unless you have appointed yourself as a proxy for the meeting, you will not be able to vote on the resolutions at this meeting. And your vote, as submitted on your voting instruction form, cannot be changed. The notice of the meeting describes how proxy holders who hold undirected proxies but are unable to attend the meeting can instruct the company regarding their voting directions. We allow proxy holders to do so until the earlier of the commencement of voting on the resolutions set out in the notice of the meeting or 30 minutes after the commencement of the meeting. As Chairman, I note that I have the sole authority to preserve order and regulate the procedures and conduct the meeting. Consistent with the approach taken in prior years, voting on the resolutions will be conducted by way of a poll once each of the resolutions have been put at the meeting. All holders and proxy holders who are eligible to vote have been provided with a voting card to complete. Holding cards will be collected at the end of the meeting. A number of documents are available for inspection at the back of the meeting room in Dublin and at our company office in Sydney. These include the minutes of the previous AGM, a copy of the registers required to be available for inspection under Irish law and the documents referred to in the notice of the meeting. Business of the meeting. Now let's turn to the business of the meeting. The agenda for this meeting was included in the notice of the meeting. I'll proceed on the basis that the notice of the meeting, including the agenda, is taken as read to the meeting. The AGM materials included a form which holders of James Hardie CUFS could use to send through questions. The questions received were specific in nature that have been dealt with directly. More general questions related to the business can be raised at the end of this meeting. And as mentioned earlier, we'll take questions on all resolutions from holders and proxy holders participating via teleconference altogether at the end of the meeting. [Operator Instructions] Please address your question -- questions related to a resolution to me so I can direct them to the most appropriate person to answer. If a holder or proxy holder has asked 2 questions on a resolution, I'll give priority to questions from other holders or proxy holders on that resolution before inviting the original holder to ask any further questions, again limited to 2 at a time. I remind the meeting that only holders of James Hardie shares and holders of James Hardie CUFS or their nominated proxies are entitled to speak at this meeting. If other shareholders on the conference -- on the teleconference have questions, I would ask that they direct their inquiries to the Investor Relations team following the meeting. Contact information for the Investor Relations team is available on our website. There are 8 resolutions for consideration at this meeting. The Board believes they are all in the best interest of shareholders and recommends you vote in favor of each resolution. The full text of each resolution is set out in the notice of the meeting. Voting on each resolution will be conducted by way of a poll once each resolution has been put to the meeting. The aggregate results of the votes on each resolution will be announced to the ASX following the final tabulation of the results. Resolution #1. Resolution 1 is to receive and consider the financial statements and report for the year ended March 31, 2021, in accordance with the requirements of the Irish Companies Act of 2014. This resolution will also involve a review by James Hardie shareholders of the affairs of the company. I now present to the meeting for its consideration and lay before the company's shareholders the company's Irish statutory financial statements for financial year ended the 31st of March 2021, including the consolidated and individual financials together with the reports of the directors and the external auditors thereon. To assist a review of the affairs of the company, I refer you to fiscal year '21 Q1 to Q4 and fiscal year '22 Q1 inclusive press releases made by the company on the 11th of August 2020, also made on 10th of November 2020, and the 9th of February 2021, the 18th of May of 2021 and the 10th of August of 2021. I also refer you to the remuneration report for the year ended 31st of March 2021, which will be separately put to an advisory vote. The full year consolidated group results for the year ended the 31st March 2021 reflected record growth globally as our group adjusted EBIT increased to 29% -- increased 29% to USD 629 million. And group adjusted NOPAT increased 30% to USD 458 million. In addition, group operating cash flow increased 74% to USD 787 million in fiscal year '21. I now put Resolution 1 as set out in the notice of the meeting to the vote of the meeting as an ordinary resolution. I'll now ask the company secretary, Mr. Joe Blasko, to read the proxy votes submitted for this resolution. Joe?

Thank you, Mike. With regards to Resolution 1, the proxy results are as follows: for, 349,697,396; against, 361,777; open, 96,587; abstain, 5000, 474,000 -- I'm sorry, 5,474,965; excluded, 0.

Thank you, Joe. We'll now move on to Resolution 2. This resolution is to receive and consider the rem report, remuneration report for the year ended 31st of March 2021. We voluntarily produce a remuneration report to give shareholders an opportunity to better understand the company's remuneration framework. The full text of Resolution 2 is set out in the notice of the meeting. I now put Resolution 2 as set out in the notice of the meeting to a vote of the meeting as an ordinary resolution. And I'll ask the company secretary to read the proxy votes submitted for this resolution. Joe?

Thanks, Mike. Proxy results for Resolution 2 are as follows: for, 338,394,133; against, 11,450,710; open, 96,242; sustained, 5,689,640; excluded, 0.

Thank you, Joe. We'll now move to Resolutions 3a, b, c and d. These resolutions ask shareholders to consider the election of directors. Each is a separate resolution. The full text of resolutions 3a, b, c and d is set out in the notice of the meeting. Suzanne Rowland and Dean Seavers were appointed by the Board in February 2021, and each of them are required to stand for election at this meeting. The initial terms of the current Class 3 directors, Andrea Joosen, Michael Hammes and Persio Lisboa, shall expire at the conclusion of the 2021 AGM. Andrea Joosen is not seeking reelection, and therefore, will retire from office when their term expires at the conclusion of this meeting. Michael Hammes and Persio Lisboa are retiring by rotation to 2021 AGM and offer themselves for reelection. The Board on the recommendation of the Nominating and Governance Committee believes it is in the interest of shareholders that Suzanne Rowland, Dean Seavers, Michael Hammes and Persio Lisboa be elected as directors of the company. The notice of the meeting also includes information about the candidates. I now put Resolutions 3a, b, c and d as set out in the notice of the meeting to separate votes of the meeting as ordinary resolutions. And I ask Joe Blasko, the company's secretary to read the proxy votes submitted for these resolutions. Joe?

Thank you. With regards to Resolution 3a, the proxy results are as follows: for, 350,539,057; against, 4,636,901; open, 96,992; sustained, 357,775; excluded, 0. With regards to Resolution 3b, the proxy results are as follows: for, 348,299,396; against, 6,864,546; open, 99,961; abstain, 366,822; excluded, 0. With regards to Resolution 3c, the proxy results are as follows: 337 million -- sorry, for, 337,006,220; against, 18,109,576; open, 102,033; sustained, 412,896; excluded, 0. Finally, Resolution 3d, proxy results are as follows: for, 353,481,333; against, 1,661,480; open, 101,536; sustained, 386,985; excluded, 0.

Thank you, Joe. We'll now move on to Resolution 4. This resolution asks shareholders to authorize the Board to fix the remuneration of the company's external auditors for the financial year ending March 31, 2022. This resolution is required because Irish law requires shareholders to fix or authorize the Board to fix the remuneration of the auditors for the current year at the AGM. The full text of Resolution 4 is set out in the notice of the meeting. I now put Resolution 4 as set out in the notice of the meeting to a vote of the meeting as an ordinary resolution. And I'll ask Joe to read the proxy votes submitted for this resolution. Joe?

Thanks, Mike. In regard to Resolution 4, the proxy results are as follows: for, 353,416,986; against, 1,784,829; open, 99,463; abstain, 329,447; excluded, 0.

Thank you, Joe. Moving on now to Resolution 5. The resolution asks shareholders for approval to amend and restate the James Hardie Industries Equity Plan for 2001, or 2001 EIP, and issue equity securities under it. The 2001 EIP was originally approved in 2001 AGM and was reapproved most recently by shareholders with certain amendments at the 2011 AGM. Only selected employees of the company, including the CEO, are eligible to receive equity incentives under the 2001 EIP. A copy of the proposed changes to the 2001 EIP is available on our website and at the back of the room in Dublin. The full text of Resolution 5 is set out in the notice of the meeting. I now put Resolution 5 as set out in the notice of the meeting to a vote of the meeting as an ordinary resolution. And Joe, what were the results of the proxy vote so far submitted on this resolution?

With regard to Resolution 5, the proxy results are as follows: for, 340,175,287; against, 14,848,703; open, 93,514; abstain, 401,241; excluded, 111,980.