Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll Rand — Citibank 2007 Industrial Manufacturing Conference
30 slides from Trane Technologies's conference presentation, Mar 7, 2007
Slide 1: Citibank 2007 Industrial Manufacturing Conference
Citibank 2007 Industrial Manufacturing Conference March 2007
Slide 2: Safe Harbor
Safe Harbor Today’s presentation includes forward looking statements that involve risks. Please refer to Form 10K for the year ending December 31, 2006 for details on factors that may influence results.
Slide 3: Strong Foundation for the Future
Strong Foundation for the Future Diversified business portfolio Industry Geography Recurring revenue Dramatic growth Operational excellence Enterprise leverage Strong balance sheet and cash generation Positioned to Deliver Solid Financial Results in All Economic Cycles
Slide 4: Where We Were
Where We Were Heavy Machinery Deep Cyclical Engineered Products Product-centric Match GDP Growth Change Averse Low Tech Disconnected Businesses Happy to Be Good Old Ingersoll Rand
Slide 5: Portfolio Transformation 2000 through 2007
Portfolio Transformation 2000 through 2007 Strategic review of prospects for all businesses Strengthened core businesses Improved marginal performers Divested non-core operations ($4 Billion revenues) Pumps Bearings Drills Dresser-Rand Road Development – Announced Feb. 2007 Made 65 bolt-on acquisiti
Slide 6: Where We Are Going
Where We Are Going Heavy Machinery Deep Cyclical Engineered Products Product-centric Match GDP Growth Change Averse Low Tech Disconnected Businesses Diversified Industrial Balanced Across the Cycle Commercial Businesses Customer Focused Outpacing Market Growth Change Culture Innovative, Visionary Le
Slide 7: Dramatic Growth, Operational Excellence, Dual Citizenship
Dramatic Growth ... Operational Excellence ... Dual Citizenship ... by focusing on innovative solutions for our customers by pursuing continuous improvement in all our operations by leveraging enterprise-wide strengths Ingersoll Rand is a global diversified enterprise with market leading brands We a
Slide 8: Substantial Upgrade of Business Portfolio
62% 38% 57% 43% % of Total Revenue * Primarily Pumps, Dresser-Rand, Drills, and Underground Mining Equipment Substantial Upgrade of Business Portfolio Higher Growth and Lower Cycles Automotive Components Road Development *Mining & Process Security Technologies Industrial Technologies (Utility Equipm
Slide 9: Sale to Volvo Construction AB of Sweden
Sale to Volvo Construction AB of Sweden $1.3 Billion net proceeds Target completion for transaction second quarter of 2007 Record substantial earnings gain on sale Net cash proceeds to exceed $900 Million Continued reinvestment in core business for innovation and consistent growth Bolt on acquisitio
Slide 10: Sale of Road Development
Sale of Road Development $725 Million revenues for full year 2006 Major product lines include: Asphalt paving equipment Compactors Milling machines Material handling equipment Road Development earnings in 2007 reported in discontinued operations
Slide 11: Segment Reporting Structure 2007
Construction Technologies Compact Vehicle Technologies Compact Vehicle Technologies Segment Reporting Structure 2007 After Sale of Road Development $ Millions Construction Technologies Segment Eliminated Utility Equipment and Attachment Results Reported in Compact Vehicle Technologies Segment Road D
Slide 12: Powerful Market Leading Brands
#1 N. America lock and door hardware #1 Worldwide golf cars #1 N. America air compressors, air tools #1 Worldwide compact equipment #1 N. America remote display cases #1 N. American service provider #1 Worldwide transport refrigeration Powerful Market Leading Brands #1 or #2 in Major Markets
Slide 13: A Balanced, Global Growth Portfolio
N. America 62% Europe 25% A Balanced, Global Growth Portfolio Diversified Product and Geographic Mix; Growth in High Potential Markets Latin America 4% Asia 9% Compact Vehicle Technologies 31% Climate Control Technologies 30% Security Technologies 21% Industrial Technologies 18% 2006 Pro Forma Reven
Slide 14: Dramatic Growth
Dramatic Growth Innovation Recurring Revenue Acquisitions 2006 and 2007 Growth Initiatives
Slide 15: Market-Defining Innovations
Market-Defining Innovations Innovation Across Our Businesses
Slide 16: Innovation
Innovation Net Revenue from Innovation $ Millions Over $1.3 Billion in 2006 Revenues from Products Introduced Over the Last 3 Years $225 $335 $300 $200
Slide 17: Recurring Revenue
Recurring Revenue Recurring Revenue More than Doubled Since 2000 $ Millions 21% % of Total $1,190 16% $1,323 $1,455 $1,705 $2,173 $2,413 $1,908 11% Growth in 2006
Slide 18: Acquisitions
Acquisitions More than 65 acquisitions since 2000; added more than $3 billion in revenues Continuing progress in 2006 ZEKS compressed-air treatment technologies BOC Edwards low-pressure air business Geith attachments Expanding into New Products and Markets
Slide 19: Increase Investments for Growth in 2006 and 2007
Increase Investments for Growth in 2006 and 2007 New product/new customer development Expand geographic reach Channel expansion Recurring revenue growth Completed $80 Mil. program in 2006, additional investment in Grow 2x GDP in Developed Countries Grow 20% to 25% in Developing World
Slide 20: Annual Revenues
Annual Revenues Demonstrating Growth Across Our Businesses 13.9% $9,394 12.3% $10,547 YOY Growth 8.8% $8,249 $7,389 $7,583 2.6% 8.2% $11,409
Slide 21: Operational Excellence
Operational Excellence Reduce costs Improve processes Increase efficiency Institutionalize a continuous-improvement culture Focus On Reducing Working Capital and CAPEX A Simple Story; a Complex Effort:
Slide 22: Operational Excellence
Operational Excellence Expanding Lean Six Sigma Positive impact on operations Reduce costs, working capital and CAPEX Formalized business operating system Continuous improvement Repeatable results across business processes Optimize processes using lean methods and Six Sigma tools Significant change
Slide 23: Earnings Per Share
Earnings Per Share Cyclical Machinery Diversified Industrial Target 12%- 15% Annual Growth -$1.00 -$0.50 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 OO O6 O7 2007 Forecast $3.50-$3.60 $4.50 EPS
Slide 24: Improved Available Cash Flow
$762 Improved Available Cash Flow $ Millions * Excluding restructuring Total $2.7 Billion (2001 – 2004) Total $304 Million (1991 - 1994) $90 $143 $687* $618* $630 $804 $38 $33 $784 $900 Million Target for 2007
Slide 25: ROIC
ROIC 13.0% 14.0% 8.3% 8.6% 9.8% Improving the Way We Leverage Our Capital Target 15% 14.2%
Slide 26: Revenues: Enterprise Growth Initiatives
Revenues $ Millions $35 $135 $285 $400 $550 $750 Target Dual Citizenship Enterprise Growth Initiatives
Slide 27: Dividends and Share Repurchase
Dividends and Share Repurchase 13% Increase in quarterly dividends in 2006, 90% increase over last three years Completed $2 Billion repurchase first authorized in 2004 Purchased 2.6 Million shares in October 2006 Purchased 51 Million shares since start of program, reduced outstanding share count by
Slide 28: Cash Deployment
Cash Deployment $ Millions Balanced Approach to Cash Deployments 2006 Target Actual Acquisitions $400 - $600 $122 Share Buyback 600 - 400 1,096 Subtotal $1,000 $ 1,218 R&D and Engineering 150 - 170 175 Growth Investments 80 77 Total $1.2 Billion $1.5 Billion Acquisitions $400 - $600 Share Buyback 60
Slide 29: Opportunity Ahead
Opportunity Ahead Completed record year in 2006, expecting record revenues, EPS and cash flow in 2007 Diversified business portfolio and lean business model to dampen impact of market cycles Deploying cash to generate value for shareholders Additional purchasing power from sale of Road Development I
Slide 30: I am Ingersoll Rand
am Ingersoll Rand Inspiring Progress™
Ingersoll Rand — Citibank 2007 Industrial Manufacturing Conference on 6ix