Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Merger or Acquisition (August 2005)
23 slides from Johnson Controls International's merger presentation, Aug 25, 2005
Slide 1: Johnson Controls Acquisition of York International Investor Presentation
Johnson Controls Acquisition of York International Investor Presentation August 25, 2005
Slide 2: Forward-looking statements
Forward-looking statements Johnson Controls has made forward-looking statements in this document pertaining to the planned acquisition of York by Johnson Controls, Inc. that are based on preliminary data and are subject to risks and uncertainties. Such statements include expected synergies, pro- for
Slide 3: Speakers
Speakers JohnM. John M.Barth Barth JohnsonControls Johnson Controls Chairmanand Chairman andChief ChiefExecutive ExecutiveOfficer Officer StephenA. Stephen A.Roell Roell JohnsonControls Johnson Controls ViceChairman Vice Chairmanand andExecutive ExecutiveVice VicePresident President C.David C. David
Slide 4: A new chapter in our success story
A new chapter in our success story ■ Johnson Controls to acquire York International -- the largest independent supplier to the global heating/cooling market ■ Acquisition provides – New technology – New customers – Expanded access to growing geographic markets – Large installed base which yields a h
Slide 5: Strategic rationale
Strategic rationale ■ Increases the rate of our future organic sales growth in the buildings market – Bundle controls/HVAC&R equipment – Doubles our service network ■ Enlarges our addressable market – A growing, $200 billion global building environments industry – Even higher growth rates, especiall
Slide 6: Transaction overview
Transaction overview ■ Johnson Controls will acquire York for $56.50 per share – Transaction value of approximately $3.2 billion (including debt) ■ All cash transaction ■ York’s Board of Directors has unanimously recommended that York shareholders vote in favor of the transaction ■ Transaction expec
Slide 7: Financial performance Johnson Controls
Financial performance Johnson Controls Sales Sales Net Net Income Income % 13% 6% 18 R1 GR organic C AG CA 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004: 58th Consecutive increase 2004: 14th Consecutive increase 30 consecutive years of divid
Slide 8: Acquisition philosophy
Acquisition philosophy At At Johnson Johnson Controls… Controls… ■ Acquisitions are not considered growth, rather as a platform for incremental growth ■ Successful acquisition history ■ Strategic rationale – New technology – All three businesses – New customers – All major world regions – New geogra
Slide 9: Overview of Johnson Controls - Controls business
Overview of Johnson Controls - Controls business 2005E Revenue: $5.9 billion 2005E Operating income: $310 million* 31,300 employees Business 2005 2005 Sales Sales (est.) (est.) by by line line of of business Business description description business The Controls Group is a major worldwide su
Slide 10: Overview of York International
Overview of York International 2005E Revenue: $4.9 billion* 2005E Operating income: $185 million* 24,000 employees Business Business description 2005 description 2005 year-to-date year-to-date revenue revenue breakout breakout York is a global leader in heating, ventilating, air- Equipment c
Slide 11: Powerful combination
Powerful combination The combination of Johnson Controls and York will produce a number of important benefits: Competing in a larger, and growing, $200 billion global market Increases capability for even faster growing service market Improves global reach Complementary capabilities that enab
Slide 12: Global building environments market
Global building environments market $200 $200 billion billion global global market market York products JCI products Fire Air-cooled chiller Chiller 7% Security 20% HVAC / Mechanical services HVAC controls 44% Screw compressor Air-handler unit 12% HVAC / Mechanical equipment and installation 17% Ins
Slide 13: Service opportunity
Service opportunity $130 billion global market Rapidly growing markets – Both Johnson Controls and York services revenue up double digits in 2005 year-to-date Highly fragmented – No competitor has more than 5% of the global building services market Technical Technicalservices servicesfor… for…
Slide 14: Improves Johnson Controls global reach
Improves Johnson Controls global reach Johnson Johnson Controls Controls and and York York Combined Combined revenues* revenues* More than 500 sales/service R0W 9% offices EMEA Americas Serving more than 125 countries 38% 53% Expanded presence – China – Central Europe – South America *JCI cont
Slide 15: Highly complementary capabilities
Highly complementary capabilities Capabilities JCI York Combined ■ HVAC&R equipment design capability Product Design ■ Controls design capability ■ Bundled HVAC&R/Controls system Manufacturing ■ Capability to factory-mount controls & Distribution ■ Local distribution networks ■ Mechanical (HVAC&R) s
Slide 16: Transaction summary
Transaction summary Transaction value: $3.2 billion (Including assumption of debt) Price per share: $56.50 - cash Multiple: 12x York EBITDA (2005 estimates*) Earnings impact: Modestly accretive in fiscal 2006 Expected closing: December 2005 *2005 First Call consensus estimates 15
Slide 17: Financing strategy
Financing strategy ■ Initially finance with $2.8 billion in commercial paper ■ Issue term debt to replace acquisition-related commercial paper issuance – Well distributed maturity profile – Fixed/floating target ratio of 50/50 – Blended all-in interest rate of approximately 5.25% ■ Strong cash flows
Slide 18: Synergies from the transaction
Synergies from the transaction Cost synergies $175M Administrative functions Manufacturing footprint Purchasing economies of scale Efficiencies in the services business Lower global effective tax rate Revenue synergies $100M+ Bundle JCI controls onto York HVAC equipment Sell York HVAC
Slide 19: Financial targets
Financial targets Acquisition of York will help us reach our long-term targets Sales growth >10% Earnings growth 10 to 15% ROIC 15 to 16% Debt / cap 35 to 40% Fiscal Fiscal 2006 2006 guidance guidance will will be be provided provided on on October October 11, 11, 2005 2005 18
Slide 20: Johnson Controls and York
Johnson Controls and York ■ Creates unique and strong position in global building environments industry -- $11 billion in sales ■ Leverages Johnson Controls manufacturing expertise ■ Provides end-to-end capabilities to enhance service growth ■ Proven integration process resulting in meaningful cost
Slide 21: Improves balance of Johnson Controls businesses
Improves balance of Johnson Controls businesses 2005E Sales 2005E Sales (pro (pro forma) forma) Johnson Controls Johnson Controls Combined Combined Batteries Controls Batteries 10% 21% 9% Controls/HVAC 32% Automotive Automotive 69% 59% 2005E Operating 2005E Operating income income (pro (pro forma) f
Slide 22: An even stronger, more diversified Johnson Controls
An even stronger, more diversified Johnson Controls “ New ” Seating/Interiors Controls Battery ■ Market leadership in three businesses – Customer focus – Systems integration and services – Innovation – Operational excellence – Global ■ Financial strength to support growth strategies for each busines
Slide 23: Appendix
Appendix ■ GAAP reconciliation Controls 2005 Estimate Reconciliation Group ($ in millions) GAAP Operating Income Nine Months Ended June 30, 2005 $128 Restructuring Costs 51 Estimated Fourth Quarter Operating Income 131 2005 Estimated Non-GAAP Operating Income $310 22
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