Enerpac Tool Group Corp. · NYSE:EPAC
Enerpac Tool — Actuant — Investor Day (October 2011)
49 slides from Enerpac Tool's investor day presentation, Oct 4, 2011
Slide 1: Actuant Annual Investor Day
Actuant Annual Investor Day Hilton New York October 4, 2011
Slide 2: Safe Harbor
Safe Harbor Statements in this presentation that are not historical are considered “forward-looking forward looking statements” and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in
Slide 3: Format / Agenda
Format / Agenda 10 00 10 45 10:00-10:45 W l Welcome /A Agenda d /F Formatt K Bauer K. B Opening Remarks M. Goldstein 10:45-11:15 10:45 11:15 Panel Discussion Segment Leaders T. Wozniak 11:15-12:00 Session 1 12:00-1:00 Buffet Lunch / Session 2 1:00-1:45 Session 3 1:45-2:30 Session 4 2 30 3 00 2:30-3:
Slide 4: Leadership Introductions
Leadership Introductions Arzbaecher CEO • Entire Leadership Team (“LT”) in NYC for quarterly meeting held Monday Boel Lampereur Goldstein Grissom Wozniak EVP CFO COO Human Resources • Organizational Changes in Past Corporate Development Year: – David Scheer – EVP, Electrical Kobylinski Industrial /
Slide 5: Table Attendees
Table Attendees Rotational Table Assignments Provided P o ided to Each Attendee (with name badge) Industrial Electrical Brian Kobylinski David Scheer Mark Sefcik Bill Axline Bob Arzbaecher E Energy E i Engineered d Solutions S l ti John Thomas Bill Blackmore Jan de Koning Jan Smit Andy Lampereur Mar
Slide 6: Opening Remarks
Opening Remarks Mark Goldstein- COO 6
Slide 7: Fiscal 2011 Highlights
Fiscal 2011 Highlights B ildi Building On O Our O Track T k Record R d off P Predictability di t bilit and d Strong Financial Performance • Robust free cash flow - $158 million representing 127% conversion of net earnings • Generated 56% increase in EPS from continuing operations to $1.68 • Signific
Slide 8: Continued Transformation
Continued Transformation Competencies - Expanding from the Core 2003-2008 Expansion: Growth + Innovation • Tripled sales and profits. Acquired nearly 25 businesses. Disciplined • LEAD / AIM processes for continuous Acquisitions improvement. AIM • Scalable S l bl management structure andd talent l up
Slide 9: G+I - We've Invested in Growth
G+I - We’ve Invested in Growth • Commitment and execution related to Total G+I Related Headcount Additions increased investments ԟ 90 positions added to drive Growth G + ES 22% Innovation Industrial ԟ $14 million product development / market 39% researchh / pressure test spendd Electrical 15% • More
Slide 10: Excited About Our Growth Prospects
Excited About Our Growth Prospects Key Trends Energy gy Demand Global Infrastructure Food Requirements q Natural Resources / • Global power generation • Emerging market build-out • Population growth Sustainability and oil & gas maintenance • Transportation • Affluence / protein diets • Mining / reso
Slide 11: Emerging Market Focus
Emerging Market Focus All Segments Increased Emerging Market Sales in 2011 • Duplicating successful China structure in India - consolidated facilities and India Country Leader ԟ Heavy-duty truck launch in late 2012 ԟ Multiple businesses expanding in I di India • Continued China penetration ԟ Enerpac
Slide 12: Continue to Pursue Attractive Acquisitions
Continue to Pursue Attractive Acquisitions Maintaining our o Disciplined Approach App oach to Acquisitions Niche exposure to faster growing • Acquisitions q remain a pprimaryy component of our business model end markets • Robust pipeline of potential acquisition Acquisitioon Criterria Cost and sales
Slide 13: In Summary…
In Summary… • Excited about the content and participants today • Hope you take away the following messages: – Well positioned to build our growth capabilities – Secular growth trends provide a broad array of opportunity – Strong talent and depth in organization – Embedded culture of continuous impro
Slide 14: Panel Discussion
Panel Discussion Addressing Two Often Asked Investor Questions • How H dod you source, evaluate l t andd iintegrate t t acquisitions? i iti ? – Brian Kobylinski – Bill Blackmore – Bill Axline – Ted Wozniak • How is the deployment of Growth + Innovation going within the segments? – Brian Kobylinski –
Slide 15: Table – Industrial Segment
Table 1 – Industrial Segment Brian Kobylinski – EVP Industrial / Energy Mark Sefcik – Enerpac Leader 15
Slide 16: Industrial Segment Snapshot
Industrial Segment Snapshot Sales $395M – 26% & 39% of ATU Revenue Financial Performance & EBITDA Sales (US $ in millions) EBITDA % (1) $450 35% Sales By Geography Sales By Market $400 $374 $393 30% Miningg Infrastruct. $350 $300 Europe Energy 10% 10% $300 $279 $287 30% 15% 25% Other $250 ROW 5% 25%
Slide 17: New Product Development
New Product Development • Examples E l include: i l d ԟ RC cylinder ԟ Steel hand pump • New N battery b tt poweredd pump pressure tested and near launch • Addressing safety and productivity in mining, other verticals 17
Slide 18: Integrated Solutions
Integrated Solutions • Globalization • Keyy account relationships • Expanding technical competencies • Core p product sale pull-through • Continues to position Enerpac as premium brand • Improving margins 18
Slide 19: Vertical Market Focused
Vertical Market Focused • Targeting markets possessing stronger than average growth prospectst • Working with distributors to gain g valuable voice of the end users • Leveraging customer’s focus on safety and productivity • Accelerating new product development activities 19
Slide 20: Table – Energy Segment
Table 2 – Energy Segment Jan de Koning – Hydratight Leader John Thomas – Cortland Leader Andy Lampereur - CFO 20
Slide 21: Energy Segment Snapshot
Energy Segment Snapshot Sales $295M – 19% & 23% of ATU Revenue Financial Performance & EBITDA Sales (US $ in millions) EBITDA % (1) $350 35% Sales By Geography Sales By Market $293 Exploration $300 Alt Energy $259 30% 5% 10% Indust. Indust A / Aero $236 $250 10% Defense Europe 5% $212 25% 35% Other
Slide 22: New Product Introductions
New Product Introductions • Consumer feedback accelerates modification of existing products for new markets • Products P d t andd test t t mechanisms h i to t supportt conversion i off wire i rope to t synthetics 22
Slide 23: Project Wins - Consultancy
Project Wins - Consultancy • Expanding natural gas opportunities • Customer llooking ki tto jjoint i t integrity industry leader for design andd technical t h i l competency 23
Slide 24: Driving Joint Integrity Expansion
Driving Joint Integrity Expansion • Continue to leverage safety and environmental focus • Driving legislation and technical requirements q 24
Slide 25: Table – Electrical Segment
Table 3 – Electrical Segment David Scheer – EVP,, Electrical Bill Axline – EVP, Global Customer Relationships (Mastervolt Integration Leader) Bob Arzbaecher - CEO 25
Slide 26: Electrical Segment Snapshot
Electrical Segment Snapshot Sales $300M * – 20% & 10% of ATU Financial Performance Revenue & EBITDA Sales (US $ in millions) EBITDA % (1) $400 20% Sales By Geography Sales By Market $360 $350 $329 Comm. Utility Const. 5% $300 $286 15% % 10% Resi.i Const. R C t 5% $242 $234 Marine $250 20% Other Euro
Slide 27: Execute Solar Growth Strategy
Execute Solar Growth Strategy • Focus on the core p competencies • Residential and small commercial applications • Keyy European p countries • New product technology (e.g. (e g transformerless) launches 27
Slide 28: Expanding Marine Penetration
Expanding Marine Penetration • Early wins support strategy • Beneteau-Marinco shore power • Land ‘n n Sea Sea- Mastervolt power electronics • West Marine- Mastervolt battery chargers g • Focus on system solutions 28
Slide 29: Expanding Core Markets
Expanding Core Markets • Significant voice of the consumer input • Features include lighting, lighting ease of alignment and locking mechanism • Success with alternative channels including high margin internet • Focus on additional products and site enhancements 29
Slide 30: Table – Engineered Solutions
Table 4 – Engineered Solutions Bill Blackmore – EVP, EVP Engineered Solutions Jan Smit – Power-Packer Leader Mark Goldstein - COO 30
Slide 31: Engineered Solutions - Snapshot
Engineered Solutions - Snapshot Sales $540M * – 35% & 28% of ATU Financial Performance Revenue & EBITDA Sales (US $ in millions) EBITDA % (1) $600 20% Sales By Geography Sales By Market $530 Industrial $500 $476 $473 RV 5% 5% 15% $391 Europe $400 45% $329 Ag/L&G Auto 20% $300 10% 20% Military / Defe
Slide 32: Secular Growth Market: Agriculture
Secular Growth Market :Agriculture • Weasler European market expansion – both OEM aandd aaftermarket O e a e • Advanced seeding technologies - cost saving for farmers 32
Slide 33: Leveraging Global Customers
Leveraging Global Customers • Global customers expanding into higher g ggrowth emerging markets • Leveraging relationships to sell existing and customized products 33
Slide 34: New Products
New Products • New pump technology saves fuel, eases installation s a a o aandd reduces educes noise • Customizing Gits airflow technologies g extending to off- highway and SCR applications pp 34
Slide 35: Closing Remarks
Closing Remarks Andy Lampereur – CFO Bob Arzbaecher - CEO
Slide 36: Consistency of Cash Flow Generation
Consistency of Cash Flow Generation $200 Free Cash Flow $151 $158 $150 $145 $150 Free Cash Flow Conversion Trend $100 300% 298% $50 254% $0 2008 2009 2010 2011 186% FCF Yield 140% (at August 31) 16% 14.2% 137% 132% 14% 120% 121% 116% 123% 127% 12% 114% 9.8% 10.4% 100% 10% 7.4% 100% 8% 6% 4% 80% 2% 2
Slide 37: Capital Structure as of August 31, 2011
Capital Structure as of August 31, 2011 (US $ in millions) Capital Structure Debt Maturities Capital Structure Detail 08/31/2011 2012 2013 2014 Beyond Total $600M Revolver $57 Term Loan 100 $600M Bank Revolver - - - 57 $ 57 6.875% Senior Notes (due 2017) 250 2.0% Convertible Bonds 118 Bank Term Loan
Slide 38: Stock Repurchase Program
Stock Repurchase Program • Authorized up to seven million shares, or 10% of ATU Class A common stock • Provides flexibility – Market M k t dislocations di l ti iin valuation l ti – Equity compensation dilution • Does not change primary capital deployment priorities of acquisition and organic growth
Slide 39: Balancing Growth and Cost
Balancing Growth and Cost F' 2010 F' 2011 Change Sales $1,161 $1,445 25% Core Growth 2% 13% EBITDA (1) $185 $244 32% M i Margins 15 9% 15.9% 16 9% 16.9% 100 b ps EPS (1) $1.08 $1.68 56% Headcount (2) 5,393 5,562 3% Continuing to Invest in Growth + Innovation while “Leaning” Operations and Back Offic
Slide 40: Track Record of Consistent Growth
Track Record of Consistent Growth ($ in millions except per share data. Fiscal years ended August 31) Sales EBITDA $400 $275- $2,000 $1,600- $295 $1,650 $300 $260 $1,446 $1,445 $244 $1 600 $1,600 $228 $1,274 $185 $1,118$1,161 $200 $181 $171 $1,200 $1,041 $144 $967 $106 $727 $87 $84 $90 $800 $100 $58
Slide 41: Frequently Asked Questions
Frequently Asked Questions • Help me understand your European exposure - where & what p y byy segment? specifically g • How do you get comfortable with your 2012 guidance in light of market uncertainty? • What are the upside opportunities and downside challenges to your 2012 guidance? • If we experi
Slide 42: Actuant's European Presence
Actuant’s European Presence Po tion of Actuant’s Portion Act ant’s 35% E European opean E Exposure pos e Consumed in Other Markets • Engineered Solutions – 45% Europe – Automotive – nearly half of volumes exported to other markets – Estimated 20% of European trucks exported to emerging markets • Ene
Slide 43: Fiscal 2011 Guidance Progression
Fiscal 2011 Guidance Progression Stronger Better core, core sales, EPS lower Weasler Robust Mastervolt & neutral to core plus commodity EPS $1.75 Mastervolt impact Stronger and lower $1 65 $1.65 $1 68 $1.68 core growth, tax $1.60 $1.60 lower interest & tax $1.60 $1.50 Fiscal 2011 $1.45 $1.48 $1.50 G
Slide 44: Opportunities & Challenges
Opportunities & Challenges What Are A e The What Could Co ld Present P esent Upsides? Challenges? • Balance sheet capacity – • Double dip recession acquisitions, stock repurchases & other growth investments ԟ Financial impact • Growth + Innovation successes ԟ Momentum from Growth + Innovation cultur
Slide 45: What's Different Now
What’s Different Now While Potential for Double Dip Exists Exists, Actuant is in Much Better Shape than 2009 • Lower leverage leverage, no near term maturities and ample revolver capacity • $40 million of permanent cost taken out completed • No/limited N /li it d iinventory t correction ti – mostt n
Slide 46: Summary: Why Invest in Actuant
Summary Why Invest in Actuant • Proven management team • Cash flow / ROIC business model • Clear strategy and goals • Mega trends provide a broad array of opportunities • Positioned to deliver profitable, sustainable growth & shareholder value Q estions ? Questions 46
Slide 47: Supplemental Financial Schedules
Supplemental Financial Schedules
Slide 48: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions except EPS) Net Earnings Excluding Special Items Diluted EPS Excluding Special Items 2010 2011 2010 2011 Diluted Earnings per Share (EPS) $ 0.35 $ 1.50 Net earnings $24 $111 Net of Tax Adjustments: Net off Tax Adjustments Discontinued Operations 0
Slide 49: Free Cash Flow / Cash Flow Conversion
Free Cash Flow / Cash Flow Conversion (US$ in millions) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 T t l EBITDA Total $87 $84 $90 $106 $145 $181 $228 $260 $171 $185 $244 Cash Interest (47) (30) (20) (12) (15) (23) (28) (35) (36) (27) (26) Cash Taxes (9) (14) (18) (21) (16) (28) (36) (48)