Dover Corporation · NYSE:DOV
Dover — Investor Day (November 2010)
103 slides from Dover's investor day presentation, Nov 15, 2010
Slide 1: 2010 Dover Day Investor Conference
2010 Dover Day Investor Conference November 15, 2010
Slide 2: Forward Looking Statements
Forward Looking Statements 2 We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties. We caution everyone to be guided in their analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause
Slide 3: Dover Day 2010 Agenda
Dover Day 2010 Agenda Dover Day 2010 Agenda 3
Slide 4: Bob Livingston, President and CEO
Bob Livingston President and Chief Executive Officer
Slide 5: 2010 Review - Strong Performance in a Recovering Economy
2010 Review - Strong Performance in a Recovering Economy 2010 - Strong Performance Revenues up > 20% All segments grew Sizable recovery in Electronic Technologies and Fluid Solutions Segment margins ^ 16% Estimated EPS up over 70% Estimated free cash flow around 10% of revenue 55th straight year of
Slide 6: Positioning for Growth
Positioning for Growth Maintaining advantaged Dover business model Maintaining advantaged Dover business model Strategic Focus Areas 3 What we said last year........... Capturing the Benefits of Common Ownership Disciplined Capital Allocation
Slide 7: Positioning for Growth - Five Key Growth Spaces
Positioning for Growth - Five Key Growth Spaces 4 60% of 2010 Revenue & 70% of 2010 Segment Earnings Energy Product Identification Refrigeration & Food Service Equipment Communication Components Fluid Solutions
Slide 8: Tailwinds
Increased living standards Infrastructure build-out Manufacturing/LCC capabilities International/ BRIC growth Global energy demand Increased demand, depleting resources Renewable energy technologies Emerging market growth Sustainability Energy efficiency Environmentally friendly products Recycling C
Slide 9: Positioning for Growth - Historical Perspective
Positioning for Growth - Historical Perspective 6 10% 11% 6% 6% 4% 4-Year CAGR's* $1 B Growth spaces have performed well over the last five years * Includes organic & acquisition growth Profitable Growth - Margins Improved 220bps
Slide 10: Positioning for Growth - A Look Forward
Positioning for Growth - A Look Forward 7 5- 6% 5 -7% 8 -10% 10-12% 5 - 7% $1.2 B * Includes only organic growth Profitable Growth - Margins Expected to Improve 130 - 190bps (2010 -2013) 3-Year CAGR's* Expectations for solid organic growth
Slide 11: Dover's Revenue Outlook - Total Company
Dover's Revenue Outlook - Total Company 8 6 - 8% $9 B Will achieve 7% revenue growth at the mid- point of our forecast * Includes organic & acquisition growth through 2010 and only organic growth thereafter Segment Margins Expected to Improve 105 - 195 bps (2010 to 2013) 3-Year CAGR's*
Slide 12: Market Success - Knowles
Market Success - Knowles 9 Relentless focus on improving technology Provide unparalleled service 1,000,000,000th SiSonic(tm) shipped Capacity expansion and productivity activities have enabled SiSonic(tm) production volumes to keep pace with demand
Slide 13: Market Success - DEK
11 Leveraging our technology into new spaces Provide unparalleled service Solar Bookings as a % of Total DEK Bookings Market Success - DEK
Slide 14: Diversified End-Markets
12 Diversified End-Markets Based on Q3 2010 revenue Based on estimated 2010 full year revenue Asia is fastest growing region in 2010 Quarterly revenue surpasses Europe in Q3 Developing markets are focus areas of growth Businesses spread across economic cycles
Slide 15: Economic Cycle Business Diversity
13 Economic Cycle Business Diversity Mid Cycle Early Cycle Late Cycle
Slide 16: Expanding Margins
Expanding Margins Significant segment margin expansion Each segment has displayed significant margin expansion Focus on productivity including supply chain Strategic pricing Portfolio shaping 14
Slide 17: Productivity
Productivity Operational Excellence Safety Quality Productivity Supply chain Lean Facility consolidation Shared Facilities Regional support centers Shared manufacturing centers Strategic Pricing Price for value delivered 15 Lean Event at Blackmer Shared Manufacturing in Suzhou, China
Slide 18: Global Supply Chain Initiative - Recap
Global Supply Chain Initiative - Recap Milestones achieved Several waves completed, 6%-7% savings will be achieved Significantly reduced supplier count, consolidated spend Implemented rigorous supplier criteria Established Asian procurement office Early stages of a long term process Change managemen
Slide 19: Global Supply Chain Initiative - Update
Global Supply Chain Initiative - Update 17 Total Annual Spend: $4B Currently being addressed Opco unique or specialized parts, materials and services Estimated 2010 savings Estimated 2011 incremental savings Will be addressed in the future
Slide 20: Conclusion - Financial Goals - Next Three Years
Conclusion - Financial Goals - Next Three Years 18 GROWTH Grow 6% - 8% organically, complemented by acquisition growth of 3% - 5% Total shareholder return in the top quartile of our peer companies MARGIN Expand segment margin to 17% - 18% by 2013 CASH FLOW Generate free cash flow of 10% of revenue
Slide 21: Bill Spurgeon, Fluid Management
Bill Spurgeon President and Chief Executive Officer
Slide 22: Fluid Management
EnergyLeading component and service supplier serving:Oil & gas drilling and production Gas processing and transmissionTurbine power generation Fluid SolutionsSpecialty fluid handling productsPumps and compressorsVehicle fueling componentsHazardous fluid handling componentsQuick disconnect couplings
Slide 23: Fluid Management Performance Update
Fluid Management Performance Update 3 Performance Update Improving revenue and margins Record margins with 35% year-over-year conversion Approaching record 2008 levels DFM sales up 28% overall and Asia sales up 43% year-over-year YoY working capital down 90 bps to 14.4% of sales Recent Trends NA dri
Slide 24: Fluid Management Market Overview
Fluid Management Market Overview 4 4 Growing energy demand Increasing challenges to extract oil & gas Maturing fields, declining production rates Extractions in harsher environments Work force demographics, need for remote monitoring Sustainability Increasing regulation and customer needs Infrastruc
Slide 25: Market Driver: Drilling Technology
Market Driver: Drilling Technology 5 Advanced technology used in horizontal drilling harvests hard to reach oil and gas fields 90% of horizontal rig drill bits utilize PDC inserts US Synthetic bit inserts help increase productivity Quartzdyne sensors enable drillers to control mud pressures- saving
Slide 26: Market Driver: Demand and Depletion
Market Driver: Demand and Depletion 6 World energy demand continues to grow Depletion rates are accelerating - increasing demand for artificial lift technology Output from existing fields will drop two thirds by 2030 Advancements in artificial lift, monitoring & automation required to maintain/impro
Slide 27: Market Driver: Core Industrial Growth
Market Driver: Core Industrial Growth 7 Largest markets: Oil & Gas, Water/Waste Water, Chemicals/Hygenic/General Industrial Dover Pump Solutions Group (PSG) well positioned Providing complete pump portfolio for distributors and end customers Pursuing acquisitions to address product portfolio gaps Af
Slide 28: Fluid Management Outlook
Fluid Management Outlook 8 Energy Fluid Solutions Revenue Revenue GrowthStrategies Growth in ME and Latin AmericaRemote monitoring and automationAcquisitions- Target products and geographiesLeanNew Product Development Growth in BRIC marketsEnvironmental compliance NPDAcquisitions- adjacent products
Slide 29: Fluid Management Growth Strategies
Fluid Management Growth Strategies 9 Global Expansion BRIC Middle East New Products for Growth Enhance productivity and profitability Environmental and safety requirements Value Creating Acquisitions Operational Excellence Safety Supply Chain Lean Talent Development
Slide 30: Growth Strategy: Global Expansion
Growth Strategy: Global Expansion 10 Investing in emerging markets to accelerate growth (2010-2013 organic CAGR 22.8% projected) BRIC countries will continue to invest at a faster rate reaching 28% of GFI by 2013 Aligning operations with local markets Targeting acquisition growth in emerging markets
Slide 31: Global Expansion: Commercial & Retail Fueling
Global Expansion: Commercial & Retail Fueling 11 Significant infrastructure growth Rapidly accelerating energy demand - drives need for more fueling operations Increased environmental regulations & safety compliance (vapor recovery, spill containment, over fill prevention, etc.) Growing demand for g
Slide 32: Innovation & New Products for Growth
Innovation & New Products for Growth 12 Energy & Efficiency Improvements Environmental Protection Safety Remote Monitoring & Automation OPW Total Vapor Solution Cook/Windrock Auto Balance System Wilden ProFlo X(tm) AODD Pumps Norris Production Solutions Plunger Enhanced Chamber Lift Profit improveme
Slide 33: Innovative Products: Waukesha Magnetic Bearings
Innovative Products: Waukesha Magnetic Bearings Product: Magnetic bearing system for large motor- driven compressor which provides remote monitoring, diagnostics and tuning capability Results: 34% savings in initial investment cost (no building, oil-free bearing system) 24% savings in maintenance ex
Slide 34: Value Creating Acquisitions
Value Creating Acquisitions 14 Focus areas of Artificial Lift, Power Generation, and Pumps Criteria for DFM Strategic Acquisitions: Strong market position in adjacent spaces Differentiated technology, leading brands Customer focused, value added solutions Complementary to DFM, tangible cost and reve
Slide 35: Operational Excellence
Operational Excellence 15 Emphasis on Safety Improving working environment Reduce workers' comp costs Supply Chain Savings Reducing costs Rationalizing suppliers Upgraded procurement teams & processes Lean Lean leadership development & training Productivity gains = margin improvement Combined Griswo
Slide 36: Summary: Well Positioned to Grow
Summary 16 Well Positioned to Grow 2%-3% 6%-8% 2%-3% 1% 1% Fluid Management Revenue Outlook CAGR 7%- 9% $2.1B Organic Growth of 7 - 9% New Product Development Global Expansion Continued Margin Expansion Operational Excellence Strategic Pricing Talent Development Value Creating Acquisitions
Slide 37: Ray Hoglund, Engineered Systems
Ray Hoglund President and Chief Executive Officer
Slide 38: Engineered Systems
Engineered ProductsLeading suppliers of:Commercial food service/display equipmentRefrigeration and cooling systemsFood packaging equipment Product IdentificationWorldwide suppliers of industrial marking & coding systems serving:Food & beverageCosmetics Engineered Systems 2 2010E REVENUE ^ $7.0B Phar
Slide 39: Engineered Systems Performance Update
Engineered Systems Performance Update Performance Update Improving revenue and margin trends Both acquisition and organic growth Margins benefit from prior year restructuring efforts and volume growth Hill PHOENIX delivers record results Working capital 18.3% of sales Engineered Systems record sales
Slide 40: Engineered Systems Outlook
Engineered Systems Outlook 4 4 CAGR 9%- 11% CAGR 5%- 7% $1.8B $1.2B
Slide 41: Engineered Systems Strategic Focus
Engineered Systems Strategic Focus Capitalize on Market Trends Traceability (supply chain efficiency, food safety) Sustainability (eliminating waste/cost, reducing GHG emissions) Expand in Growing Markets BRIC Operational Excellence Safety Lean Strategic Pricing Talent Development Tuck In and Adjace
Slide 42: Engineered Systems Market Detail
Engineered Systems Market Detail DES Customers Include Sophisticated Multi Nationals in Food, Consumer Staples and Industrial Goods 6
Slide 43: Engineered Systems Market Overview
Engineered Systems Market Overview 7 7
Slide 44: Market Drivers
Market Drivers Global population CAGR: ~1.2% (70 million people per year) Global GDP per capita CAGR: ~7.5% Growth Multiple: + Food Beverages Household Products Pharmaceuticals Cosmetics Industrial Goods 2004-09 Population Growth +22M +36M +87M people U.S + Europe Brazil China India 0.9% per year 0.
Slide 45: Tailwinds and Growth Drivers
Tailwinds and Growth Drivers 9 Retail Equipment/Food Service Equipment Drivers: Population Growth = 1.2% CAGR Rising Standards of Living Increased Governmental Regulation Channel Convergence Shift to eco-friendly technologies $38 Billion Global Market Non-Food Ultra Low Temp $1.1B Walk-In Coolers $1
Slide 46: Customer Expansion
"Customer Expansion" Benefiting from Channel Convergence 10 Walgreens moves into perishable foods Roll-out in 100 stores in 2011 2000 potential remodels
Slide 47: Investing in Organic Growth - Hill PHOENIX
Investing in Organic Growth 11 11 Hill PHOENIX - Case Division Plant II 320,000 Sq. Ft. - Production Started May 1, 2010 Dedicated Facility For Door Cases & Service Parts Sales Revenue Generated $105M Door Cases & $18M Service Parts Investment Dollars - $10M
Slide 48: Innovation & Growth - Hill PHOENIX
Innovation & Growth - Hill PHOENIX 12 95% Reduction in Refrigerant Less than 150 lbs to operate a typical medium temp system Potential to reach 0% leak rate Patent protected "multi-channel" heat exchanger Modular "plug and play" construction $20 - 30M Annual Sales Potential Second Nature(r) Compact
Slide 49: New Market Growth - Unified Brands
New Market Growth - Unified Brands Intek Steamer Simple, reliable Energy Star Expands and completes our steamer oven product offering 13 Intek Steamer - Target Market K-12 School Systems
Slide 50: Innovation & Growth - SWEP
Innovation & Growth - SWEP SWEP Sweeps 2010 Frost & Sullivan Europe Market Share Leadership Award 40% of the European brazed plate heat exchanger market Increased product resistance to corrosion Eight new products in 2009 ISO14001 certified Products for environmentally-friendly refrigerants; higher
Slide 51: Tailwinds and Growth Drivers - Marking and Coding
Drivers: Population Growth = 1.2% CAGR Rising Standards of Living Increased Food/Pharma Safety Regulation $4.8 Billion Market Tailwinds and Growth Drivers Marking and Coding Bar Coding 15 Product Identification Logistics 4% Graphics 3% Foods 36% Other Industrials 24% Beverages 20% Cosmetics 5% Pharm
Slide 52: Investing in Organic Growth - Product Identification
Investing in Organic Growth - Product Identification 16 New Research & Engineering buildings: Qualification laboratories R&E laboratories December 2010 completion date
Slide 53: Innovation & Growth: Product Identification
Innovation & Growth: Product Identification 17 9232 Printer New ink circuit Cartridge driven Easy access for repair Low Additive consumption (-20%) New print module Better performances Speed (+20%) Start up 'All' inks New User interface 7 inch Color Touch screen New ergonomics Predictive maintenance
Slide 54: Direction: PID-Expand System Level Offering
Direction: PID-Expand System Level Offering Document printing Photo/ID Graphics Postal Textile Comm. Printing Ceramic IJ & other print head technologies Labels/receipts Inks/ chemistry Data collection/ information services Automated ID printing / decorative printing Components & Consumables System I
Slide 55: Track & Trace - Line Layout
Track & Trace - Line Layout PIDG Solutions 19
Slide 56: Summary: Engineered Systems Revenue Outlook
Summary 20 2%-3% 1% 1% Engineered Systems Revenue Outlook Portfolio Management For Accretive Growth Acquisitions - Bolt-on and new markets Expand company boundaries (market scope) DES Performance Model - An Operational Excellence System Strategy development Best Practices - Lean, strategic pricing,
Slide 57: Thomas Giacomini, Industrial Products
Thomas Giacomini President and Chief Executive Officer 1
Slide 58: Industrial Products
Industrial Products 2 2010E REVENUE ^ $7.0B Industrial Products (26%) Electronic Technologies (20%) Fluid Management (23%) Engineered Systems (31%) Material Handling Mobile Equipment
Slide 59: Industrial Products Performance Update
Industrial Products Performance Update 3 Performance Update Profitable organic revenue growth Revenue up 12% through Q3 Earnings up 76% through Q3 Gross margin improved by 350 bps Y/Y Restructuring benefits achieved - sustainable Gross margins 250 bps over 2008 (peak revenue) 50% YTD Earnings Levera
Slide 60: Industrial Products Strategic Focus
Industrial Products Strategic Focus Clear growth plan Focused investment areas Core markets New product development Global expansion Operational excellence Providing marketplace wins Driving margin expansion 4
Slide 61: Industrial Products Outlook: Platforms
Industrial Products Outlook: Platforms 5 CAGR 2%- 4% CAGR 7%- 9% $1.2B $1.5B
Slide 62: Industrial Products: Key Strategic Focus Areas
Industrial Products: 4 Key Strategic Focus Areas 6 6 Market Size and Growth Rates based on external sources and company estimates Focus Area Market Mid-Term Growth Rates Estimated at 5%
Slide 63: Growth Space: Commercial Aerospace
Growth Space: Commercial Aerospace 7
Slide 64: Growth Space: Commercial Aerospace
Growth Space: Commercial Aerospace Exceptional applications engineering and test capabilities Certified facilities with specialized manufacturing processes Proprietary / highly engineered systems with high entry barriers - heavily regulated Key platform driven; beginning 5-7 year upturn Gross Margin
Slide 65: Growth Space: Waste & Recycling
Growth Space: Waste & Recycling 9
Slide 66: Growth Space: Waste & Recycling
Growth Space: Waste & Recycling 10 Leading position for Dover Increasing waste levels from global consumption trends Growth rates higher in developing economies Favorable recycling equipment demands Increased automation requirements and environmental regulations Emerging technology opportunities Gre
Slide 67: Growth Focus: New Product Development
Growth Focus: New Product Development 11 Winch Gearbox Growth Space Olympus Winch: Brushless Motor Technology Game changing advancement Electric replacing hydraulic Lighter weight (more than 50%) Severe duty applications - defensible Commercial & Military markets Commercial Aerospace Sargent Special
Slide 68: Growth Focus: New Product Development - Waste & Recycling
Growth Focus: New Product Development 12 Waste & Recycling Next Generation Automated Vehicle Enhances safety / Productivity Improved ergonomics Significant end user value Enhances ESG's leading market position Strong DIP Pipeline through 2013: Consolidated New Product Revenue $250M+
Slide 69: Global Opportunities
Global Opportunities 13 Geographic Footprint Strong operating company market positions VSG acquisition success in China Leveraging current operations in China, Brazil, and India Operating company synergy Joint Sales and Marketing efforts for common customers Leveraging Dover scale Regional Headquart
Slide 70: Operational Excellence: Competitive Advantage
Operational Excellence: Competitive Advantage Safety commitment Supply chain wins Large metals and transportation spends Faster, more flexible production Facility investments / consolidations Enhancing operational efficiency DIP coordinated continuous improvement Segment-wide tools and measures Stra
Slide 71: Summary: A New Dover Industrial Products
Summary 15 A New Dover Industrial Products 2008-2009 restructure promises intact 50% 2010 YTD volume leverage Clear growth plan Focused investment areas New products: $150M+ Global expansion: $100M+ Operational Excellence - sustainable competitive advantage Providing marketplace wins Further margin
Slide 72: Dave Van Loan, Electronic Technologies
Dave Van Loan President and Chief Executive Officer
Slide 73: Electronic Technologies
Communication ComponentsHigh-end sound and high- frequency signal initiation, transmission, reception and conversion componentsMicrophones and receiversFilters, oscillators, switches Electronic Assembly and TestAssembly, repair, and test equipment for semiconductors and electronic circuit boardsTest
Slide 74: Electronic Technologies Performance Update
Electronic Technologies Performance Update 3 Performance Update Improving revenue and margin trends Bookings have continued to grow YTD Margins benefiting from prior restructuring and structural changes to business MEMS microphone demand remains strong Handset growth is driving demand for components
Slide 75: Electronic Technologies Strategic Focus
Electronic Technologies Strategic Focus 4 New products for our core markets Position in front of growth tailwinds - take advantage of semicon upturn while diversifying our end markets and improving flexibility Expanding the core Pursue technology applications in adjacent markets: Solar + Sensors + H
Slide 76: Electronic Technologies Market Overview
Electronic Technologies Market Overview 5 CAGR 8-10% CAGR 11-13% $1.2B $.8B
Slide 77: Electronic Technologies Market Detail: Revenue by End Market
Electronic Technologies Market Detail 6 Comparison of Revenue by End Markets 2000 2010 (CHART) Other 2.5% Alternative Energy 2.8% Industrial 12.3% PC's/ Servers 7.7% Telecom Infrastructure 16.7% Consumer Electronics 26.2% Medical 16.1% Military/ Space 14.3%
Slide 78: Electronic Technologies Market Detail: Revenue by Product Category
Electronic Technologies Market Detail 7 DET 2010 Revenue by Product Category Equipment 20% Components & Recurring Revenue 80%
Slide 79: Electronic Technologies Market Detail: Revenue by Product Category
Electronic Technologies Market Detail 8 DET 2010 Revenue by Product Category Non-Semi Components & Recurring Revenue 70% Non-Semi Equipment 13% Semiconductor Component & Recurring Revenue Semiconductor Equipment 7% 10%
Slide 80: Tailwinds and Growth Drivers - Mobile Communications
Tailwinds and Growth Drivers - Mobile Communications Market growth ~ 7-8% Multi-mic adoption growing at ~ 10-13% annually SiSonic mobile share growing to 24%+ Other applications include headsets, gaming 9 Main Microphone Noise Cancelling Microphone Knowles Unit Growth
Slide 81: Tailwinds and Growth Drivers - Mobile Infrastructure
Tailwinds and Growth Drivers - Mobile Infrastructure Smart Phones have turned the promise of 3G into a reality... 10 ....new devices and form factors will further accelerate this trend... The Electronics Industry Report - Prismark 2010 The Mobile Internet Report, Morgan Stanley Research, Dec. '09
Slide 82: Tailwinds and Growth Drivers - Alternative Energy
Tailwinds Growth Drivers - Alternative Energy Cell Making Equipment Market Turnover in 2009: ~$600M CAGR +30% China fastest growing production base Germany highest installed base Top 5 customers: First Solar, Suntech, Q-Cells, Sharp, JA Solar 11 Lux Research 3/2010 GW
Slide 83: Tailwinds and Investment Spending - Sensors
Tailwinds and Investment Spending - Sensors 12
Slide 84: Tailwinds and Investment Spending - Consumer Optics
Tailwinds and Investment Spending - Consumer Optics and the Human / Machine Interface 13 (CHART) 5MP and higher Cameras are our focus Platforms 36% of the Market by 2013 CAGR: 43%
Slide 85: Growing DET M&A Focus
Growing DET 14 M&A Focus Knowles is a leading acoustics technology company, with multiple adjacent market opportunities. CMP and Vectron are both positioned in the $2B high frequency communications components space. Targeted companies include both private and public enterprises. Vectron and our SenG
Slide 86: Summary: Electronic Technologies Revenue Outlook
Summary 15 Electronic Technologies Revenue Outlook Tailwinds, Innovation and M&A will Propel Growth Sustainable trends Increased dependence on mobile communications Constant demand for bandwidth Focus on alternative energy Innovation Material Deposition - Solar Saw Filters - Sensors MEM's - Human In
Slide 87: Jim Moyle, Global Supply Chain
Jim Moyle Vice President - Global Supply Chain
Slide 88: Global Supply Chain Initiative - Recap Mission
Global Supply Chain Initiative - Recap Mission Exercise collective clout to capture the benefits of common ownership What We Said Identify key suppliers Forge supplier alliances Standardize sourcing processes Provide data analysis tools Increase BCC/LCC sourcing Train and develop procurement profess
Slide 89: What We Did In 2010
What We Did In 2010 Generated significant reduction in supplier base Created strategic alliances with key suppliers Developed Sourcing Organization Created Asian Procurement Group Designed Data Warehouse Implemented disciplined sourcing process Achieved $35M savings in 2010 Expect incremental saving
Slide 90: Where We Are: Current Projects Status
Projects Spending($B) Completed In Process Office Supplies, Copiers & Printers, Telecom X ? Transportation X ? Motors X ? Castings X ? Plastics X ? Metals X ? Health & Welfare Benefits X ? Travel X ? Technology X ? Utilities & Energy X ? Hydraulics X ? Printed Circuit Boards X ? Refrigeration Compon
Slide 91: Successful Transportation Initiative
Major win for Dover: $20M - $25M savings/year Significant carrier base reductions achieved 90+% Reduction in Carrier Base Will Result in Tremendous Reduction in Administrative Burden 5 Successful Transportation Initiative
Slide 92: Significant Reduction of Global Metals Supply Base
90+% Reduction in Supply Base North America (24) Europe (6) $20M - $25M Savings/Yr. Incumbents used previously by Dover Op Co's = 300+ Researched & Contacted = 600 Attended Presentations = 200 Submitted Profiles = 130 Site Visits Conducted = 65 Negotiations Conducted = 45 Suppliers Chosen = 30 Price
Slide 93: What We're Doing - Summary
What We're Doing - Summary Pushing forward into Travel, Hydraulics, PCBs, Refrigeration, Technology and Utilities in 2011 Continuing to develop and train the organization Leveraging Collective Clout to extract the Benefits of Common Ownership 30% of $4B spend addressed to date Total Spend - $4B Coll
Slide 94: Brad Cerepak, CFO
Brad Cerepak Vice President and Chief Financial Officer
Slide 95: 2010 ... A Great Year
1.5 Experienced significant end-market rebound in several core markets Continued focus on strengthening our businesses Focused on margin improvement and operational efficiency Expanded segment margins approx 400bps over 2009 Accelerated productivity and lean initiatives including supply chain Invest
Slide 96: Mid Q4 Update
No surprises Business levels are as anticipated coming out of Q3 Normal seasonal patterns Full-year EPS guidance of $3.50-$3.55 remains unchanged Cash flow generation is strong What's new Pipeline continues to mature, deal flow is strong $0.02 - $0.03 EPS impact of deal costs expected in Q4 (not in
Slide 97: 2011 ... A Framework For Earnings Growth
2011 Initial Thoughts Comments Sales growth Organic (%) 6% - 8% Acquisition (%) Announced as closed Goal: 3% - 5% Segment margin (%) Up 50 - 90 bps from 2010 Interest expense Down slightly from 2010 Debt refinancing Corporate expense Flat with 2010 Comp & Pension CapEx Up slightly from 2010 Tax rate
Slide 98: Three Year Outlook
5 2011 - 2013 Comments Annual Organic Sales Growth % 6 - 8% Longer term: 4 - 5% Annual Acquisition Sales Growth % Announced as closed Longer term: 3 - 5% Annualized Segment Margin Improvement 35 - 65 bps Sustainable Tax Rate 29% - 30% Annual Capex Spend 2.2% - 2.4% of revenue Free Cash Flow Generati
Slide 99: Margin Expansion
Margin Expansion 6 2009 - 2010 margin expansion largely driven by restructuring efforts Significant cost take out across all segments Benefits from supply chain and restructuring Strategic pricing programs Looking forward Focus on productivity and costing down Supply chain continues to make an impac
Slide 100: Capital Allocation Priorities
Estimated cumulative cash flow (3-years, $B) Cash flow from operations $2.6 Capital expenditures (0.5) Free Cash Flow* 2.1 Change in net debt 0.1 Total $2.2 7 Internal projects to expand markets, develop products and boost productivity Return cash to shareholders through the continuation of our long
Slide 101: Bob Livingston, President and CEO
Bob Livingston President and Chief Executive Officer
Slide 102: Conclusion - Financial Goals - Next Three Years
Conclusion - Financial Goals - Next Three Years 2 GROWTH Grow 6% - 8% organically, complemented by acquisition growth of 3% - 5% Total shareholder return in the top quartile of our peer companies MARGIN Expand segment margin to 17% - 18% by 2013 CASH FLOW Generate free cash flow of 10% of revenue
Slide 103: Questions
QUESTIONS NY PALACE * NOV 15 p poveR Pe INVESTOR CONFERENCE