Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll Rand — Sanford Bernstein Strategic Decisions Conference (May 2007)
34 slides from Trane Technologies's conference presentation, May 31, 2007
Slide 1: Ingersoll Rand
Ingersoll Rand Sanford Bernstein Strategic Decisions Conference
Slide 2: Safe Harbor
Safe Harbor Today’s presentation includes forward looking statements that involve risks. Please refer to Form 10Q for the year ending March 31, 2007 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, cash position 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 ($6.5 Billion revenues) Pumps Bearings Drills Dresser-Rand Road Development Bobcat, Utility and Attachments in process Ma
Slide 6: Sale to Volvo Construction AB of Sweden
Sale to Volvo Construction AB of Sweden $1.3 Billion net proceeds Completed April 30, 2007 Record substantial earnings gain on sale in 2Q Net cash proceeds $1.05 Billion Sale of Road Development Business Reinvesting Cash Proceeds
Slide 7: Exploring Strategic Alternatives for Bobcat and Construction-Related Businesses
Exploring Strategic Alternatives for Bobcat and Construction-Related Businesses Businesses included Bobcat: Compact Equipment Utility Equipment: Portable Power products Attachments for Construction Equipment 2006 Revenues: $2.6 Billion Explore alternatives Sale of businesses Spin-off to shareholders
Slide 8: 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 9: Ingersoll Rand Ongoing Business Segments
Ingersoll Rand Ongoing Business Segments Three Core Segments. Club Car Moved to Industrial Technologies Transport Refrigeration Stationary Refrigeration Mechanical Security Electronic and Biometric Security Systems Integration Access control Air Systems Tools and Fluid Power Club Car Bobcat Utility
Slide 10: A Balanced, Global Growth Portfolio
A Balanced, Global Growth Portfolio Diversified Product and Geographic Mix; Growth in High Potential Markets Climate Control Technologies 40% Security Technologies 28% Industrial Technologies 32% 2006 Pro Forma Revenues Excludes Road Development, Bobcat, Utility and Attachments North America 62% Eur
Slide 11: Powerful Market Leading Brands
#1 N. America lock and door hardware #1 Worldwide golf cars #1 N. America remote display cases #1 N. American service provider #1 Worldwide transport refrigeration #1 N. America air compressors, air tools Powerful Market Leading Brands #1 or #2 in Major Markets
Slide 12: 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 13: Dramatic Growth
Dramatic Growth Innovation Recurring Revenue Acquisitions 2006 and 2007 Growth Initiatives
Slide 14: Market-Defining Innovations
Market-Defining Innovations Innovation Across Our Businesses
Slide 15: 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 16: 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 17: 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 18: 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 2007 Grow 2x GDP in Developed Countries Grow 20% to 25% in Developing World
Slide 19: 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 Target 4-6% Organic Growth 8-12% Overall Growth
Slide 20: 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 21: Manufacturing Efficiency Gained from Restructuring and Operational Excellence
Manufacturing Efficiency Gained from Restructuring and Operational Excellence 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Total Manufacturing Square Feet (Millions) Revenue Per Square Foot Doubled Revenues Per Square Foot
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: Operating Margin
Operating Margin 5.1% 7.6% 9.5% 11.9% 12.9% 12.6% 15% Target
Slide 24: Earnings Per Share
Earnings Per Share As Reported Continuing Operations Minus Discontinued Legacy Costs Annual Change $.38 $.88 $1.48 $2.28 $2.99 $3.20 130% 68% 54% 31% 7% 12% to 15% Target Growth CAGR 53%
Slide 25: ROIC
14.2% ROIC 13.0% 14.0% 8.3% 8.6% 9.8% Improving the Way We Leverage Our Capital Target 15%
Slide 26: Available Cash Flow
Available Cash Flow $ Millions * Excluding restructuring $850 Million Target for 2007 $618* $687* $630 $804 $784 $760
Slide 27: Dividend Growth
Dividend Growth Enhancing Shareholder Value 22% 30% 6% 19% $0.00 $0.05 $0.10 $0.15 $0.20 Per Share of Class A Common Stock $0.34 $0.36 $0.44 $0.57 $0.68 Quarterly Amount YOY Growth
Slide 28: Share Repurchase - 2006
Share Repurchase - 2006 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 14% New repurchase program authorized for $2 Billion in December 2006 Repurchase increa
Slide 29: Cash Deployment and Investment Priorities
Cash Deployment and Investment Priorities Supplement organic growth Expect to make value creating acquisitions in 2007 Will not relax criteria No unrelated businesses $4 Billion repurchase authorization $2 Billion complete by 3Q 2007 Timing of second $2 Billion based on timing of divestitures and ac
Slide 30: Total Return to Shareholders
2002-2006 2002-May 2007 Ingersoll Rand S&P 500 S&P Industrial Machinery 103% 26% 74% Ingersoll Rand S&P 500 S&P Industrial Machinery 153% 37% 90% Total Return to Shareholders
Slide 31: Total Return to Shareholders
Total Return to Shareholders 2002 to May 2007 44% 68% 91% 91% 132% 142% 153% 191%
Slide 32: P/E Ratio
P/E Ratio P/E Below Peer Group 13.9x 15.0x 15.8x 16.4x 16.9x 18.2x 18.6x 19.2x Price Earnings Ratio Based on Projected 2007 Earnings
Slide 33: Opportunity Ahead
Opportunity Ahead 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 businesses Increased investments for growth and operational excellence Well positioned to deliver Cons
Slide 34: I am Ingersoll Rand
am Ingersoll Rand Inspiring Progress™
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