Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Investor Day (December 2008)
37 slides from Illinois Tool Works's investor day presentation, Dec 8, 2008
Slide 1: Food Equipment: A Growth Platform
Food Equipment: A Growth Platform Scott Santi, Vice Chairman John McDonough, President, Food Equipment North America December 8, 2008
Slide 2: Today's Topics
Today’s Topics • Business Overview • Major End Markets • Core Product Lines • Key Growth Strategies •Q&A
Slide 3: Business Overview
Business Overview
Slide 4: ITW Food Equipment Group: 13% of total ITW revenues
ITW Food Equipment Group 13% of total ITW revenues—2008(F)
Slide 5: ITW Food Equipment Group
ITW Food Equipment Group • Commercial Food Equipment and Related Services • 55 businesses in 22 countries represent $2 $2.1 1 billion in total revenues • 2007 Revenues: +27% • 2008(F) Revenues: +10%
Slide 6: ITW Food Equipment Group: Revenue by Category
ITW Food Equipment Group • Revenue by Category 11% Food Service Service 30% 59% Food Retail
Slide 7: ITW Food Equipment Group: Revenue by Region
ITW Food Equipment Group • Revenue by Region
Slide 8: Major End Markets
Major End Markets
Slide 9: ITW Food Equipment Group: Revenue by End Market
ITW Food Equipment Group • Revenue by End Market Institutions 18% Food Retail 7% Food Service 47% Chains 12% I d Restaurants Ind. R Other Food Service 16%
Slide 10: Institutions
Institutions • Colleges/Universities • Schools • Healthcare • Lodging/Casinos • Canteens/Catering Cos. • Government
Slide 11: Food Service Chains
Food Service Chains • Full Service restaurants – Family Style – Ethnic – Seafood – Steak • Quick Serve Chains – Burger – Chicken – Sandwich – Ethnic – Bakery Cafes • Pubs P b &T Taverns
Slide 12: Independent Restaurants
Independent Restaurants • Independents • Restaurant Groups
Slide 13: Other Food Service
Other Food Service • Air Catering • Marine – Cruise – Offshore – Shipyards • Transportation Marine • Misc./Other
Slide 14: Food Retail
Food Retail • Supermarkets • Mass Merchandisers • Membership Clubs • Hyper Marches • Convenience Stores • Petroleum / Convenience • Grocers G
Slide 15: Core Product Lines
Core Product Lines
Slide 16: ITW Food Equipment Group: Revenue by Product Line
ITW Food Equipment Group • Revenue by Product Line 3% 13% Service 30% W Warewash h 14% Cooking/Baking Food Processing Refrigeration 19% 21% Other
Slide 17: Warewash
Warewash • North America • International
Slide 18: Cooking/Baking
Cooking/Baking • North America • International
Slide 19: Food Processing
Food Processing • North America • International
Slide 20: Refrigeration
Refrigeration • North America • International
Slide 21: Service
Service • North America • Billed Services • Service Contracts • Parts P t (OTC) • Installations • Other • International
Slide 22: Performance Since Premark Acquisition
ITW Food Equipment Group Performance Since Premark Acquisition Total Op. Revenues Margins 20% 15% 10% 5% 0% ( ($500) )
Slide 23: ITW Toolbox Impact - Hobart Germany
ITW Toolbox Impact - Hobart Germany 80/20 USa MRD Innovation 2000 2008 PLS In-Lining Segmentation Operating Margins: ~20.0% Operating Margins: <5.0 % • ITW Tool Box Implementation Drives: – Significant Core Business Profitability Improvement – Customer Driven Innovation/Organic Growth
Slide 24: ITW Toolbox Impact - Hobart France
ITW Toolbox Impact - Hobart France 80/20 USa MRD 2000 2008 PLS In-Lining Segmentation Operating Margins: 14% Operating Margins: (5.0%) • 80% reduction in SKUs • Refocused on “80” products and geographies • Streamlined St li d sales l and d admin d i processes • Segmented business by core served mark
Slide 25: Key Growth Strategies
Key Growth Strategies
Slide 26: Key Growth Strategies
Key Growth Strategies • Customer-Driven Innovation • Service as a Growth Platform • Geographic Expansion/Emerging Market Growth • Targeted Product Category Additions
Slide 27: Customer-Driven Innovation: MBM/Hobart Combi
Customer-Driven Innovation: MBM/Hobart Combi • The Opportunity: • Operators focused on production efficiencies » Simplicity p y of operation p / ease of replication p » Process solutions vs. discrete pieces of equipment • Often used with other “vertical” platforms » Combi » Chiller » Holding/transpo
Slide 28: Customer-Driven Innovation: 3000 Series Slicer
Customer-Driven Innovation: 3000 Series Slicer • The Opportunity: • A core industry product with long-unmet needs – True ease off use and T d ease off cleaning l i – Reliable slice quality (chain specification) – Improved yield (shrink management) – Operator productivity • The User-Driven Solution:
Slide 29: Customer-Driven Innovation: Somat eCorect
Customer-Driven Innovation: Somat eCorect • The Opportunity: • Escalating waste management costs » Weight and/or volume fees vary by municipality • Demand for cost cost-effective effective sustainability solutions » Majority of foodservice waste is compostable »Food waste; cardboard; compostable dis
Slide 30: Service as a Growth Platform
Service as a Growth Platform Service Progression (2000-2008) – Created separate business units to provide focus – Identified core Hobart equipment and service customers » Focused on service quality and field efficiencies » Targeted field operations against this profile of accounts » Built in-depth t
Slide 31: Service as a Growth Platform
Service as a Growth Platform • Building a Global Service Platform • Current Status – Expanding International footprint: » US, Canada, Mexico, Brazil; Puerto Rico; Columbia » UK, France, Germany, Benelux » Australia, Japan, Hong Kong, China, Korea – U Unique que Value a ue Proposition opos t o » Fact
Slide 32: Service as a Growth Platform
Service as a Growth Platform • Service Growth Opportunities Going Forward: • Currently serve less than 20% of ITW-installed ITW installed base – Additional share of ITW-installed base – Active trials of full-kitchen service in select accounts underway – Evaluate coverage of non-ITW-installed base •
Slide 33: Emerging Markets
Emerging Markets • History: • Have been successfully selling US/European equipment to Western-style hotels, large restaurants, institutions and employee dining facilities for years • Have an established manufacturing and service presence to support these activities • Targeted Growth Initiatives • Cu
Slide 34: Recent Acquisitions: Horis
Recent Acquisitions: Horis • Revenue @ acquisition: $225 million • Acquisition closed January 2007 • Strategic St t i Attraction Att ti • Complementary positions with Hobart France » Cooking, Refrigeration » Restaurants and Institutions » New projects focus vs. Renewals (replacements) • Attractive d
Slide 35: Recent Acquisitions: Avery Berkel
Recent Acquisitions: Avery Berkel • Revenue @ Acquisition: $80 million • Scales; Slicers; Wrappers • 95% revenues emanate from Europep • Acquisition closed September 2007 • Strategic Attraction • Strong brand recognition • Attractive direct service business • Well positioned range of premium to valu
Slide 36: Food Equipment: A Growth Platform
Food Equipment: A Growth Platform • Significant Future Growth Potential: – Relatively small existing ITW share position • Global G Food Equipment market estimate: $22 $ - $26 $ billion • Market still highly fragmented – Lots of Room to Grow: • Customer Driven Innovation • Service as a Growth Platfor
Slide 37: Questions
QUESTIONS