Ge Aerospace · NYSE:GE
Ge Aerospace — General Electric — Merger or Acquisition (May 2018)
26 slides from Ge Aerospace's merger presentation, May 21, 2018
Slide 1: Wabtec and GE Transportation to Merge: Accelerating the Future of Transportation
Wabtec and GE Transportation to Merge Accelerating the Future of Transportation May 21, 2018 Exhibit 99.2
Slide 2: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction between GE and Wabtec, Transportation Systems Holdings Inc., a wholly owned subsidiary of GE created for the transaction (“SpinCo”), will file with the SEC a registration statement on Form S-4/S-1 containing a pr
Slide 3: Participants in the Solicitation
PARTICIPANTS IN THE SOLICITATION This communication is not a solicitation of a proxy from any investor or security holder. GE, Wabtec, SpinCo, their respective directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of prox
Slide 4: Caution Concerning Forward-Looking Statements
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS This communication contains “forward-looking” statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act
Slide 5: Today's Presenters
Today’s Presenters Timothy Wesley VP of Investor Relations Albert Neupaver Executive Chairman Raymond Betler President and Chief Executive Officer Patrick Dugan Chief Financial Officer Rafael Santana President and Chief Executive Officer
Slide 6: Diversified, Global Leader in Transportation and Logistics
Diversified, Global Leader in Transportation and Logistics Wabtec’s Freight and Transit Components Combined With GE Transportation’s Locomotive Manufacturing/Service Capabilities; Strong Cultural Fit . . . Seamless Integration Electronics and Digital Technologies Leading to Autonomous Operations Pos
Slide 7: Structure & Consideration
Structure & Consideration The transaction is valued at approximately $11.1 billion1. When adjusted for the net tax benefit of $1.1 billion accruing to the combined company, the transaction value is $10 billion. Wabtec existing shareholders to own 49.9% of the combined entity $2.9B cash payment to GE
Slide 8: Compelling financial logic
Compelling financial logic GE Transportation revenue / adj. EBIT expected to grow at double-digit CAGR from 2017A to 2019E as cycle rebounds from trough levels; ~50% of 2018E to 2020E total revenue already in backlog (~$18B in backlog, including ~1,800 new and ~1,000 modernized locomotives; $3.6B in
Slide 9: Business Overview
OY Wabtec CORPORATION // BUSINESS OVERVIEW
Slide 10: Merger of two transportation industry leaders
Merger of two transportation industry leaders Comprehensive portfolio and leading positions in freight car products, locomotive electronics, brakes, heat exchangers; leader in transit components, systems Successful financial track record; diversified revenue Strong aftermarket presence in core marke
Slide 11: Driving efficiency & productivity for customers
Driving efficiency & productivity for customers Portfolio spans ecosystem … port, yard, rail network Proven outcomes … ~10% fuel savings, 10%+ increase in network velocity, ~40% increase in rail volume Maintain & upgrade fleet through asset lifecycle ~70% installed base under service contract ~13x g
Slide 12: Attractive point in cycle, well positioned for industry rebound
Attractive point in cycle, well positioned for industry rebound GE Fleet Age Pyramid Contractual Coverage AC EVO AC4400 Dash 9 Dash 8 Dash 7 ~900 units Avg. 3 yrs ~7,900 units Avg. 5 yrs ~1,300 units Avg. 8 yrs ~4,800 units Avg. 10 yrs ~4,400 units Avg. 15 yrs ~2,200 units Avg. 20 yrs ~1,600 units A
Slide 13: GE Transportation Financial Trajectory
Note: Adjusted figures represent non-GAAP metrics 1 Excludes synergies and purchase price amortization. GE Transportation Financial Trajectory GE Transportation is poised to benefit from cyclical tailwinds – including reduction in parked locomotives – that Wabtec is already seeing in its business 20
Slide 14: GE Transportation competitive strengths
GE Transportation competitive strengths Note: Adjusted figures represent non-GAAP metrics Leading global freight rail provider with a 23K locomotive installed base across both developed and emerging markets Growing services business with $13B backlog drives recurring revenues and mitigates cycles Co
Slide 15: Strategic Rationale
OY Wabtec CORPORATION III STRATEGIC RATIONALE
Slide 16: Strategic Rationale
Strategic Rationale Diversified, Global Leader in Transportation and Logistics 1 Electronics and Digital Technologies Leading to Autonomous Operations Recurring Revenue Growth in High-Margin Aftermarket and Services Highly Compelling Pro Forma Financial Profile . . . Attractive Point in Cycle 2 3 4
Slide 17: Diversified, global leader in transportation and logistics
Diversified, global leader in transportation and logistics Combined Entity1 Revenue by Segment Revenue by Geography + FY17A Sales: FY17A Sales: 1 Complementary Portfolios with Focus on Transportation Industry . . . Poised for Seamless Integration Note: Based on 2017A financial information ¹ Assumes
Slide 18: Electronics and digital technologies leading to autonomous operation
Trip Optimizer: 7-13% # in fuel savings; ~200M gallons of fuel saved/year Smart HPT: Incremental 5-8% fuel saved by automatically managing locomotive consist Locotrol Distributed Power: Enables operation of long, heavy and fuel-efficient trains. Fuel Savings #3%; Crew savings #25% Movement Planner:
Slide 19: Recurring Revenue Growth in High-Margin Aftermarket and Services
Recurring Revenue Growth in High-Margin Aftermarket and Services Combined entity will be a leading global freight and transit rail provider with installed base of >23,000 locos and content on virtually all locomotives and freight cars in NAFTA, enabling significant opportunities for aftermarket part
Slide 20: Highly compelling pro forma financial profile
Note: Adjusted figures represent non-GAAP metrics 1 Defined as operating cash flow minus capex. Highly compelling PRO FORMA FINANCIAL PROFILE … Attractive point in cycle 4 Transaction creates a ~$8B revenue company with significant scale, higher margins and strong cash flow Approximately $250M of ru
Slide 21: Significant Operating Synergy Potential and Tax Benefit Drive Value Creation
Significant Operating Synergy Potential and Tax benefit Drive Value Creation Experienced Cross-Functional Team To Drive Seamless Integration and Synergies 5 Key Areas of Opportunity – Operating Synergies Run-rate to be achieved by Year 4 Total cost to achieve is ~$75M, mostly incurred during first t
Slide 22: Strong Free Cash Flow Profile Enabling Rapid Deleveraging
Strong Free Cash Flow Profile Enabling Rapid Deleveraging Wabtec remains committed to paying its quarterly 12c per share dividend to all shareholders Top priority for deployment of excess cash will be debt reduction to achieve target leverage levels Wabtec expects to remain investment grade Wabtec h
Slide 23: Substantial value creation for shareholders
Substantial value creation for shareholders Based on unaffected Wabtec share price as of April 19, 2018 (US$ in billions) Note: Adjusted figures represent non-GAAP metrics. 1 Based on Wabtec undisturbed share price of $83.79 on 19-Apr-2018 and Wabtec fully diluted share count. 2 Based on estimated t
Slide 24: Perspectives on Transaction Value
Perspectives on Transaction Value (US$ in billions) Note: Wabtec current EV / adj. EBITDA based on IBES estimates. Adjusted figures represent non-GAAP metrics. 1 Based on Wabtec undisturbed share price of $83.79 on 19-Apr-2018 and Wabtec fully diluted share count. Transaction Multiples 2019E EV¹ / A
Slide 25: Wabtec + GE Transportation: Accelerating the Future of Transportation
WABTEC + GE TRANSPORTATION Accelerating The Future Of Transportation + Shareholders Customers Employees Complementary strengths will enable combined company to deliver through the transportation cycle and be best positioned for long-term growth in an improving industry environment Expanded suite of
Slide 26: CORPORATION
CORPORATION IQA