Ingersoll Rand Inc. · NYSE:IR
Ingersoll Rand — Gardner Denver — Investor Day (November 2011)
66 slides from Ingersoll Rand's investor day presentation, Nov 7, 2011
Slide 1: 2011 Analyst Day
Exhibit 99.2 2011 Analyst November Denver Gardner Denver 7, 2011 Day
Slide 2: Safe Harbor Disclosure
Safe All statements provides unknown Company. Factors costs to These looking 2person Denver Gardner time ofHarbor and the statements that in that statements. statements, aavailability risks, statements the These “safe are the could Disclosure Company’s those events uncertainties, harbor” known refle
Slide 3: Analyst Day Agenda
Analyst Business Welcome/Introductions Industrial Engineered •Break Closing Meeting Michael Chris Duane Barry 12:30 12:45 1:30 2:30 3:30 4:30 35:00 Denver Gardner Gardner Financial Business pm Celtruda, Pennypacker, Pennypacker pm Morgan, Day Remarks M End update Products Denver update update Larsen
Slide 4: Gardner Denver Video
Gardner Denver Video
Slide 5: Strategic update
Strategic update
Slide 6: Gardner Denver Company Overview
~$2.4B(1) Leading New, Growing, Strong Focused Early 6(1) Denver Gardner Company operationally stages track Denver brands on profitable global superior of record estimates transformation and Overview Company focused on technologies aftermarket cash analyzing (see andteam with note earnings toopportu
Slide 7: A global leader in compressed air and gas, vacuum and fluid transfer
A global We Energy 7Gardner serve Medical Denver leader a wideinMining range compressed ofTransportation industries air and with gas, Food efficient vacuum & Beverage &and reliable fluid products transfer technologies
Slide 8: Two Engineered Product segments
Two 2011 Engineered THOMAS NASH WELCH EMCO Industrial ~$1.2B ~$1.1B HOFFMAN GARDNER BOTTARINI GD CHAMPION A ROBUSCHI® MAKO CompAir 8(1) Denver Gardner Gardner great Company Belliss business Sales WHEATON portfolio Products Denver by & Products DENVER estimates segments Morcom segments(1) ofProduct G
Slide 9: Highly diversified end markets and geography
Highly End Paper Auto Printing Environment Chemical Mining Food Transportation Medical/ Industrial Upstream Downstream 2010 Geographic Canada United Latin Europe Asia Other Visibility 9(1) Denver Gardner Company Markets(1) 16% Svcs Revenue America & (7%) (2)%) 7% States diversified 35% & 4% Beverage
Slide 10: Exposed to multiple phases of the economic cycle
Exposed Early (1-18 THOMAS WELCH Mid GARDNER GD Late CompAir NASH EMCO •A 10 Denver Gardner Aftermarket OEM Industrial Engineered Infrastructure Gardner Cycle Cycle Cycle months) WHEATON toDenver (18-36 (36+ air multiple DENVER packages compressors projects months) months) Product phases of the econ
Slide 11: Current end market status
Current End U.S. E.U. -Oil China/Asia OEM Strong Well China Generally, Stable 11 Denver Gardner Capacity Rig&market Industrial servicing count, applications Gas softening, ... growth end cautionary favorable utilization Pacific /market crude Indicator in and Production APAC Americas /drilling nat dy
Slide 12: Simple, focused 5-point strategy
Simple, 1. Strategy 2. 3. 4. 5. •2011 Good 12 Denver Gardner Announced Targeting Double-digit Strengthened 3>30% Selective Strong Aftermarket Organic Innovative Selective Margin successful Progress strategic of focused results expansion sales growth … 40-45% 10% acquisitions Robuschi products new du
Slide 13: Organic growth and backlog
Organic ($’s Keys ~10% ~$600 $554 $395 Backlog ~20% ’11E(1) ~$2.5B ‘10 $2,060 ‘09 $1,570 •Orders Good (1) 13 Denver Gardner Aftermarket Leading Diverse Growing Higher Company into momentum millions) organic growth growth end brands emerging estimates markets growth end &going technologies markets ..
Slide 14: Expanding presence in emerging markets
Expanding Real ‘10 Eurozone 5% 8% 9% 10% 0% 4% 3% 2% •Key Source: 14 Denver Gardner Advanced Emerging ‘11 points GDP ‘12 The U.S. growth presence regarding economies industrial World Japan (%) Bank, inChina 2012+ countries will emerging The continue India outlook Global will markets Russia experienc
Slide 15: Large aftermarket opportunity
Large Aftermarket Key Goal 40-45% ‘10 31% ‘09 29% ‘08 •26% Higher 15 Denver Gardner Large Big Remote Extended Design growth opportunity aftermarket margin, installed in monitoring warranty proprietary drivers as % less base in of opportunity cyclical pressure sales and capabilities features service
Slide 16: Innovative new product launches
A more Voice Value 2011 Hoffman PZ-2400 Quantima Goal: PERFORMANCE HORSEPOWER 2400 PACKAGE LIGHTER 30% FOOTPRINT SMALLER 20% 16 Denver Gardner product ~10% of proposition innovative customer Drilling Revolution Compressor oflaunches annual Pump based differentiates Company revenues across on custome
Slide 17: Strong track record on selective acquisitions
24Jetting Engineered Twentieth TCM Water •GEOQUIP INNOVATIVE SYLTONE NASH vakuum ILMVAC TODO AIR TAMROTOR 2011 BOTTARINI Wittig 1996 THOMAS Chaparral Elmo Invincible CHAMPION LAMSON CompAir HOFFMAN Industrial ROBUSCH Bellis BEST Strong 17 Denver Gardner Butterworth CRS acquisitions RELIEF Rietschle
Slide 18: IPG committed margin goal
IPG “14 321+150 10 Committed Goal 14% 3Q11 13.1% 2Q11 11.7% 1Q11 11.3% 4Q10 10.1% 3Q10 9.4% 2Q10 8.6% 1Q10 8.3% 4Q09 7.5% 3Q09 6.8% 2Q09 2.5% 1Q09 2.0% (2) 18 Denver Gardner Restructuring Productivity Low Quarters Adjusted xMargin bps 14” Cost ofto Country of margin Expansion Operating continued inv
Slide 19: EPG margin expansion
321+50 EPG Last 24.5% 3Q11 23.6% 2Q11 23.3% 1Q11 22.9% 4Q10 24.0% 3Q10 2Q10 1Q10 16.0% 4Q09 20.9% 3Q09 17.8% 2Q09 19.7% 1Q09 19.5% “New” ~28.5% Expanding (2) 19 Denver Gardner Restructuring Productivity Low Adjusted bps Peak Margin Cost Peak of margin already Country Operating Expansion Expansion(2)
Slide 20: Strategy supported by The Gardner Denver Way
Strategy Organic Margin Selective Innovative Aftermarket High Innovation RESOURCES COMMITMENT VALUE EMPLOYEES SHAREHOLDERS CUSTOMERS Execution 20 Denver Gardner Velocity expansion growth supported acquisitions requires products growthsuperior by The Gardner human resources Denver Way
Slide 21: Building a new, operationally focused team
Building Operationally Policy Operating Clear Continuous New, team SF 21 driving operationally accountability deployment a rhythms high improvement transformation focused performance focused team management culture
Slide 22: Financial Update
Financial Update
Slide 23: Financial highlights
Favorable Margin Ability Strong Track Focused 23 Denver Gardner record cash to expansion onmanage dynamics delivering generation of financial on accretive through goals insuperior diverse and within results M&A uncertain balance end reach cash ... active markets sheet and times ... “The earnings pip
Slide 24: A decade of strong financial performance
A decade ($’s Revenue 17% $1,895 $1,215 $379 19% $3.28 $1.37 $0.60 21% 2010 $202 2005 $115 2000 $31 Strong 24 Denver Gardner inCAGR millions) track DEPS of financial record Cash performance
Slide 25: Record 2011 financial outlook
Revenue ~400 1.2 ~$300 $202 ~60% ~$5.25 $3.28 2011 2010 $1.9B ~$2.4B ~25% A (1) 25 Denver Gardner record Company x financial Net bps year DEPS Income estimates on outlook Cash key financial (1) (see note metrics on p. 66)
Slide 26: Segment outlook 2011
2011 Industrial Double-digit, ~15% ~$1.2B $1.1B Good 2011E 2010 ~40% ~$1.1B $0.8B Rev ~35% Strong (1) 26 Denver Gardner Company segment progress incremental growth performance Products estimates global outlook ... onled margin margins Group by growth by(1) both (see Energy expansion Engineered note
Slide 27: Internal operating goals
Internal Operating 2011 •3Q Good 27 Denver Gardner Grow Margin FCF Increase Lean YTD progress progress Conversion cost 2long Comment expansion xROIC goals GDP structure term YTD + operating +• +ROIC Revenue /... +-••more •DEPS 16.8% 86% ~19% goals toup upSG&A do29% 74% to sales
Slide 28: Lean cost structure and variable cost
Lean Variable ~$2.0B SG&A Total •Significant 28 Denver Gardner European Low Shared cost costs Cost ~$0.4B Denver ~$1.6B Service structure opportunities footprint Country 20% Cost 80% Centers Sourcing ... >3,000 remain ... multi ...employees ~$1B functional buy
Slide 29: Prepared for economic volatility
Prepared Strong (23)% Headcount Closed Footprint One 71% + Operating Cautiously 29 Denver Gardner 450ERP bps reduction track 8 plants for Margins optimistic record economic / 2,700 onon cost volatility employees macro reductions economy since ... contingency 2008 plans in the works since April 2011
Slide 30: Strong cash generation
Strong ($’s Cash $278 FCF CFOA $211 $202 FCF% 2011E ~$250 ~$300 Operating AR Inv AP Working W/C 2008 Capex Dep. Reinvest. Disciplined (1) 30 Denver Gardner Company 360 285 $388 inas & $169 $237 2009 Flow millions) Reinvestment $41 143% cash Amor. % 290 226 Capital $326 Ratio Working Sales 2009 2008
Slide 31: Disciplined capital deployment
Disciplined Organic Return Option Financial Cash -Selective Inorganic Balance Drive Maintain Capital Clear Returns Acquisitions Focused 31 Denver Gardner ~2%to Capex Dividend Debt Strong Strategic Synergies from return metrics value of to creep/ Expenditures Deployment meet exceed <growth organic ba
Slide 32: 2012 tailwinds and headwinds
2012 ’11 ’~$5.25 Tailwinds: + –Headwinds: Positioned (1) 32 Denver Gardner 12 Tough Macro Late Aftermarket Accretive Margin Orders Strength Reduced Company DEPS(1) DEPS earnings cycle comparisons uncertainty momentum expansion in to share M&A infrastructure Energy deliver estimates growth momentum c
Slide 33: Industrial Products Group
Industrial Products Group
Slide 34: Industrial Products Group overview
BOTTARINI Quantima CHAMPION hydrovane CompAir Compressors Key Industrial Power G P Petrofac Transportation HYUNDAI GE B GARDNER Elmo GD HOFFMAN R H LAMSON Wastewater Food Mining AIR Nestle PROTECTS CeresPower Coca-Cola A Gardner 34lowers OBUSCHI RAINGER ~$1.2B Belliss Applications LIQUIDE and Rietsc
Slide 35: Industrial strategy
Industrial Strategy 1. 2. 3. 4. •5. Simple, Gardner 35 Value Strengthen Custom Leverage Reduce Centrifugal High Low Oil Robuschi #Expand Footprint Aftermarket Organic Innovative Selective Margin 1 priority free cost, speed engineering focused Denver 2012+ lead product /Engineered Products improvemen
Slide 36: IPG revenue
IPG ($’s Revenue $1,058 ‘08 Rev •Keys Well (1) Gardner 36Global Emerging Operational Custom Oil Company ‘09 in Organic positioned free tomillions) $1,023 ‘10 organic Denver channel (1) and Engineered ’11E markets Growth estimates excellence oil $1,100 for growth less management global presence techn
Slide 37: Investing in aftermarket
Third AIR A Investing Developing 3rd Managed National CHAMPION Availability GOOD Locations 4,000+ Walmart sears Sam’s PEPBOYS Savings Building Gardner 37Gardner party Party RELIEF party CLUB YEAR Made Denver Save contracts repair centrifugal Locomotive care inDenver repair crankshaft based 5aftermar
Slide 38: Custom engineered packages
Custom ~$500MM Global Adapting Attractive Investing ~2 Repositioning Winning Gardner 38 x increase growth Engineered Denver in and in global Market aregional high in integrating and Asia infrastructure value, reorganizing Packages relationships Pacific high coreorders growth compressor build team wi
Slide 39: Innovation: Quantima
Innovation ~$500MM Quantima Innovative Great ~$300MM REVOLUTION H -High Energy Technology Gardner 39 Active Variable 2HOFFMAN No High Permanent Direct Self stage, gearbox Speed enclosed customer efficiency savings drive magnetic Denver high speed and Market inAmerican drives magnet ... high speed co
Slide 40: Video
Video
Slide 41: Innovation: The Dragon and Airgen
Innovation “The ~$500MM Localized Rapid ~30% Airgen Value Adapting ~$120MM airgen Gardner Dragon” engineered cost prototyping ABlower Denver Gardner solutions range savings Market for emerging ofDenver side ... with industrial tolaunched meet channel comparable markets Product needs screw blower 2Q’
Slide 42: Oil-free and oil-injected product strategy
Oil Power Market ~$1B 300 DH 2-Stage DRYCLON 2/3-Stage QUANTIMA Synergy Package VA/VE New High 5Innovation 175 Investing Gardner 10free single 200 350 15 “low Speed [kW] 20 Oil air 100 525 Denver to Re-design to Oil pressure” stage 25 L-Range isFree Technology offer 700 the Less 30water Screws 35 87
Slide 43: Selective acquisitions: Robuschi
Selective Strong Robox ROBUSCHI Complimentary Large Diverse Well “The Large, Enabler Aftermarket Low Channel Accretive Gardner 43 cost run Gardner installed 300,000 brand evolution for customer Denver leverage business acquisitions country inlower currently year ROBOX and Denver base sq.ft. product
Slide 44: IPG operating margin positions
IPG Operating ~ ‘09 5% 9% 10 “14 321+ Positions (1) Gardner 44 12% Restructuring Productivity Low 150 consecutive Company ‘10 xmargin 14” bps cost ’11E(1) Denver IPG enabled annually Margin(2) country expansion estimates to ...qtrs .’12E deliver reduce Lean, byon of sourcing the margin no Capex (see
Slide 45: Low cost country sourcing
1Low New 15 2China Localizing Combine Global Targeting Gardner 45Global Leveraging team cost global distribution sourcing members Denver Sourcing global country doubling simple leader Global team spend sourcing in parts hub Team for ofChina Commodity spend sourcing for established and Established hi
Slide 46: The Sedalia, MO case study
The Sedalia, Blower Timeline 2009 Investment $12MM -2010 2011 +10% Results ~25% share ~40% ~80% Complete Gardner 46 Value Largest Manufacturing 320,000 250 5Operational Capital SMED, Lessons Enhanced SGardner & employees factory cycle inventory market stream Visual & MO Denver investment IPG and SIO
Slide 47: Margin expansion: screw compressors and portables
Margin 30+ Screw Portables New, SSE E123NG E12 Marine Standard Gearbox Integrated “Thermostaltic ~20% Gardner 47 Legacy global cost compressors expansion Denver Version OEM with savings Airend designs valve” ...and Designs value improved engineering performance
Slide 48: Break
Break
Slide 49: Engineered Products Group
Engineered Products Group
Slide 50: Engineered Products Group overview
Engineered •GD BAKER Schlumberger A Gardner 50 Pressure On/Off Industrial Oil $1B+ GARDNER & Gas global Denver HUGHES Shore pumping Pumps Products • Auto VALE leader Drilling DENVER •& H&P •Chemical Group TEIJIN Power Industrial in •pumps Inc Mining NASH Generation PETROBRAS Processing and &Afluid P
Slide 51: Engineered strategy
Engineered Strategy 1. 2. 3. 4. •5. Focused Gardner 51 Thomas Emerging Fluid Develop Expand Supply Footprint Aftermarket Organic Innovative Selective Margin end Denver 2012+ growth chain, capacity geographic liquids, improvement products growth reduction replacement markets Products acquisitions pro
Slide 52: EPG revenue
Organic $960 ~$1.1B Revenue(1) ‘08 Rev •Keys Well (1) Gardner 52 Aftermarket Upstream Infrastructure Supply International Company ‘09 positioned $795 to ‘10 organic Growth Denver chain $755 & ’11E estimates ... downstream expansion ... projects for growth pressure incapacity, EPG future (see ...pump
Slide 53: Energy market: oil and gas prices and rig count
Energy Oil $150 $20 Henry 1/2/01 WTI Oil/Gas Pre-2009 Liquids Strong Global 4,000 US Canada International 2003 New Projecting Shale Favorable Source: Gardner 53 &$18 Crude Oil record $140 2004 liquids 3,500 Gas Hub 1/2/02 upside Rig market Spears’ and prices $16 Denver Price rig energy growth Prices
Slide 54: The shale opportunity
Theshale United Lower ’04-’08: ’09-today: Significant US 3-5 Shale China, International Investing Source: Gardner 54 years global fundamentals Argentina, 48 States Energy Denver Hydraulic the in states Energy shale increase capacity key markets Information shale opportunity toMexico, pricing fractur
Slide 55: International shale headlines
International Lane Field Eurasia H&P Baker BAKER Gardner 55 Awarded Energy Hughes Hughes, Drilling Denver HUGHES headlines Poland Fractures FlexRig4M® Schlumberger, Company Schlumberger and its Schlumberger Limited First Contract H&PUnconventional H&P and ... for “as Schlumberger Deliver Inc Drillin
Slide 56: Independent research on pressure pumping
Independent Spears Key Pressure ~15,000 $30B Frac ~20% Aftermarket International Strong Source: Gardner 56 take-aways horsepower North of Pressure fundamentals Spears’ Denver new pumping fleet American /research just horizontal fluid pumps Drilling Pumping growing getting isends the drive upgraded r
Slide 57: Upstream pressure pumping
Upstream Pressure Pump Significant Aftermarket On/Off-shore 100+ The Manufacturing New Pumping A Gardner 57leader market Industry offshore yrs & Denver in fluid-end pumping of Perfected. leader energy global capacity experience repair standard Drilling pump inwith products Quincy, pressure manufactu
Slide 58: The Tulsa Transformation Video
THE TULSA Video Gardner 58 Denver TRANSFORMATION
Slide 59: Investing in Tulsa and Fort Worth
Investing Tulsa, Current Lean Significant Aftermarket Ft. New High Gardner 59 Worth, Worth pumps Marcellus production ROIC OK investment Denver in upgrade TX lead projects well &Marcellus fluid shale time ... servicing tolow program ends ... World reduction aftermarket ~2 cost Shale year capacity cl
Slide 60: Pump and fluid end continuous innovation
Pump Fluid Continuous YWS Evolving Enhanced Ultra Pumps -Heavy Pipeline Gardner 60 Twist Well Weight GWS: Super Stainless High Drilling light ends 2003 & service pressure duty In, GWS: Barnet Denver of fluid reduction design technology service Yweight steel new GWS Innovation frac Drilling end pump
Slide 61: Offshore pumping
Offshore Pumping •EMPIRE 1250FT -BUILDING Record Great Gardner 61 43PZ 10,000 16,000 6,000+ “Surf pumps 2400 progress and performance Denver ft psi drilling Perfected. STATE sold Launched in Vertical Horizontal Turf” Pressure thefor Bakken pump first offshore land in new ‘10 update / Shale shale pum
Slide 62: Winning in emerging markets
Winning 2x Brazil 75,000 ~130 NASH metso VALE PETROBRAS Boshan, 150,000 ~300 CHINA Strong Gardner 62 revenue employees growth local A Sq NATIONAL Sq China Denver in Gardner Ftin emerging Ft end presence stand 2011 advanced inmarkets Mining Denver alone PETROLEUM markets in high manufacturing with ..
Slide 63: Exposure to growth in medical, lab and environmental markets
Exposure A THOMAS Oxygen Blood -Growth Product Innovation EMCO Global Strong Floating Energy Becoming Significant Gardner 63 Environmental Lab/Life Medical... Gardner analyzer growth movement Bridge WHEATON opportunities translation concentrator Denver Production/Storage/Offloading toSciences aDenve
Slide 64: Closing Remarks / Q&A
Closing Remarks/ Q&A
Slide 65: 2011 Analyst Day
2011 Analyst November Gardner Denver 7, 2011 Day
Slide 66: Presentation notes on adjusted income and estimates
•Presentation Income, Adjusted information aforementioned consistent assessing Gardner 66Note 2: 1:Adjusted Denver Adjusted Company net management with to notes income both financial financial believes Operating Operating estimates management is performance. net models the measures income Margins no