Ingersoll Rand Inc. · NYSE:IR
Ingersoll Rand — Gardner Denver — Investor Presentation (March 2010)
32 slides from Ingersoll Rand's investor presentation, Mar 12, 2010
Slide 1: Investor Presentation March 2010: The Gardner Denver Way
Investor Presentation March 2010 The Gardner Denver Way
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure All of the statements made by Gardner Denver in this presentation or made orally in connection with it, other than historical facts, are forward-looking statements. As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectation
Slide 3: Agenda
AGENDA Building The New Gardner Denver 1 2 3 Transforming the Execution Update Future Growth Company Operational Excellence 3
Slide 4: Gardner Denver Today
Gardner Denver Today 2009 Revenues $1.8 B % of revenues outside U.S. > 67% Global ranking in major products #1 or #2 Manufacturing facilities worldwide 40 Market capitalization $2.2 B 4
Slide 5: Successful Acquisition-Driven Growth Strategy
IN THE PAST Successful Acquisition-Driven Growth Strategy... (Actual Revenues $M) 2,500 2,000 Other 1,500 Asia 1,000 Europe 500 US 0 99 00 01 02 03 04 05 06 07 08 09 5
Slide 6: Built a Well-Diversified Business
Built a Well-Diversified Business Revenues By Industries Served (2) Revenues By Geography (2) Industrial Manufacturing 28% Other 6% United States Other 9% 32% Latin America 4% Paper 2% Canada 3% Printing 2% Environment 3% Asia Food and 16% Downstream Beverage Energy 5% 14% Chemical 5% Mining and Ups
Slide 7: Market Outlook Snapshot
Market Outlook Snapshot Six Economic Indicator months Today Outlook ago U.S. Industrial Production Stable to positive E.U. Industrial Production Stable to positive Oil and Gas Aftermarket improving China growth Positive Rig count Pulling rigs from storage OEM applications Improving 7
Slide 8: Realigned Operations in 2009: Two Focused Operating Segments
REALIGNED OPERATIONS IN 2009: Two Focused Operating Segments Segment Key Products Top Industries Served Industrial Products • Compressors (>50 psi) • Manufacturing Group • Blowers (<50 psi, vacuum) • Transportation • Mining / Construction • Energy 58% of revenues Engineered Products • Reciprocating
Slide 9: Conditions Right for a Transformation
Conditions Right for a Transformation • Last 10 years primary focus on external growth – 22 acquisitions • Significant integration, rationalization Conditions and margin expansion opportunities right for • New CEO in 2008 transformation – Expertise in operational excellence • Economic slowdown – Add
Slide 10: A New Way Forward: The Gardner Denver Way
A NEW WAY FORWARD The Gardner Denver Way ny CUSTOMERS pa om catre C gO aM oIM T E T U M ... L E A NV T Innovative High Velocity From a SHAREHOLDERS EMPLOYEES good company... RESOURCES 10
Slide 11: Our Vision for The New Gardner Denver
Our Vision for The New Gardner Denver Greater organic growth CUSTOMERS C O Operational excellence E M U IM L T A M V E N T Improved profitability Innovative High Velocity and cash flow SHAREHOLDERS EMPLOYEES RESOURCES Improved return on invested capital 11
Slide 12: Agenda
A G E N D A Building The New Gardner Denver 1 2 3 Transforming the Execution Update Future Growth Company The Gardner Denver Way 12
Slide 13: Improve Margins: Major Restructuring Projects
#1 IMPROVE MARGINS Major Restructuring Projects Moving Forward 2010 Completed Completion CompAir administration integration Salaried staff reductions Facility rationalizations Hanover, MD Louisville, KY Piqua, OH Tulsa, OK Assembly Gloucester, UK Puchheim, Germany Ocala, FL Sheboygan, WI Implement S
Slide 14: Case Study: Rationalization in Germany
#1 IMPROVE MARGINS Case Study: Rationalization in Germany • Merging Puchheim, Germany plant 48% reduction in into Memmingen facility manufacturing floor space • Created efficient cells (sq. ft.) • 108 manpower reduction 128,500 • 22% inventory reduction 67,000 Puchheim Memmingen Before After 15
Slide 15: Delivering Significant Cost Savings
#1 IMPROVE MARGINS Delivering Significant Cost Savings Annual Savings Expected $70M $65M • Reduced manpower by $40M 2,100 or 25% since Sep-08 2009 2010 Future years Invested nearly $70M to realize these savings 16
Slide 16: Expand Margins in Industrial Products Group
#1 IMPROVE MARGINS Expand Margins in Industrial Products Group Adjusted Operating Margins (1) 14% • Integrated CompAir 10.3% • Closed 5 facilities 8.8% • Reduced 7.5% 6.7% material costs • Ongoing operational improvements 2.3% 1.8% 2007 2008 Q109 Q209 Q309 Q409 2014 Goal (1)See note on slide 33 Goal
Slide 17: Strong Balance Sheet and Growing Free Cash Flow
#2 EXPAND CASH FLOW Strong Balance Sheet and Growing Free Cash Flow Strong Balance Sheet Growing Free Cash Flow * (December 31, 2009) $M $300 • Excellent liquidity – $109.7M cash Cash Flow $200 – $291.9M unused credit • Debt to total capitalization of 26% Free cash flow $100 • Upgraded from “BB-” to
Slide 18: Gardner Denver Remains Solidly Profitable Despite Headwinds
IN SUMMARY Gardner Denver Remains Solidly Profitable ... Despite Economic Headwinds Revenues Adjusted DEPS (1) ($ M) ($) $2.0B $3.54 $1.8B $2.40 2008 2009 2008 2009 (1)See note on slide 33 Transformation will lead to new peak earnings 20
Slide 19: Agenda
A G E N D A Building The New Gardner Denver 1 2 3 Transforming the Execution Update Future Growth Company The Gardner Denver Way 21
Slide 20: Powerful New Culture Will Drive Growth
Powerful New Culture Will Drive Growth Past Future • Product focus • Customer focus • Medium innovation • High innovation • Primary growth • Balanced growth – Acquisitions – Organic and acquisitions • Top down culture • Inclusive culture • Profitable • Highly profitable 22
Slide 21: Five Point Growth Strategy
Five Point Growth Strategy 5. Margin improvement 4. Selective acquisitions 3. Innovative products 2. Aftermarket growth 1. Organic growth 23
Slide 22: Innovative Products: Quantima Case Study
A CLOSER LOOK AT GROWTH INITIATIVES Innovative Products: Quantima Case Study Product • CompAir Quantima Compressor Innovations • No gear box, no oil, no mechanical bearings, no friction The customer • Murray Goulburn Co-operative Co. Ltd. Results • Energy use 3 35% • Service cost 3 64% • Annualized
Slide 23: Growth Potential in Aftermarket
A CLOSER LOOK AT GROWTH INITIATIVES Growth Potential in Aftermarket (% of total sales) Today Future 25-30% 40-45% Aftermarket Aftermarket • Broaden direct service capabilities • Enhance product offering • Design in proprietary features • Higher margin revenue growth 25
Slide 24: Aftermarket Growth: Vacuum Pumps Case Study
A CLOSER LOOK AT GROWTH INITIATIVES After Market Growth: Vacuum Pumps Case Study Existing Product • Nash CL has a large installed base – Recognized reliability – Product design leads to durability in harsh environments • Requires a constant flow of liquid to operate ECO-FLOTMTechnology Developed • N
Slide 25: Driving >$120M Operating Margin Expansion With Zero Top Line Growth
RESULTS WE EXPECT Driving >$120M Operating Margin Expansion With Zero Top Line Growth Industrial Products Group Adjusted Operating Margin (1) 1/3 14% Impact • Adds $120-$125 1/3 million to operating income Sourcing • Adds $1.62-$1.68 to 1/3 DEPS Productivity 2.0% Restructuring “14 by 14” 1H 2009 Goa
Slide 26: Gardner Denver 3-5 Years Out
Gardner Denver 3-5 years out • Higher margins in both segments • Aftermarket growth reduces revenue cyclicality • Expanded share in target markets served • Inventory turns improve 2-3 times • Higher ROIC • Balanced growth – organic and acquisitions 28
Slide 27: Wide Range of Growth Initiatives Underway
Wide Range of Growth Initiatives Underway 29
Slide 28: Building The New Gardner Denver
Building The New gardner Denver 30
Slide 29: Why Invest in Gardner Denver
Why Invest in Gardner Denver • Leading position in served market segments • Building a new, high performance company • Delivering > $120 M margin improvements with zero top line growth • Multi-year profit improvement program ahead 31
Slide 30: The Gardner Denver Way
Investor Presentation March 2010 The Gardner Denver Way
Slide 31: Presentation Notes
Presentation Notes • Note 1: Adjusted Operating Income, Adjusted Operating Margins, Adjusted Net Income and Adjusted DEPS are financial measures that are not in accordance with US GAAP. Adjusted Operating Income, Adjusted Operating Margins and Adjusted DEPS excludes the net impact of expenses incurr
Slide 32: Significant Operating Margin Improvement Opportunities
Significant Operating Margin Improvement Opportunities GDI Industrial Products ($ in millions, except per share data) Group 1H 2009 annualized segment revenues $1,017 1H 2009 annualized segment adjusted operating income (1) $20 As a percent of revenues (adjusted operating margin (1)) 2.0% Target IPG