Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Investor Day (December 2009)
69 slides from Illinois Tool Works's investor day presentation, Dec 11, 2009
Slide 1: ITW Overview: End Market Perspectives
ITW Overview: End Market Perspectives David Speer, Chairman & CEO December 11, 2009
Slide 2: Today's Topics
Today’s • Review of Economic Trends and ITW Actions Topics • End Market and Geographic Diversification: Imperative During Recessionary Periods • Economic Trend Outlook—2010 • ITW Segment Overview • Today’s Key Takeaways •Q&A
Slide 3: Review of Economic Trends and ITW Actions
Review of Economic Trends and ITW Actions
Slide 4: Review of Economic Trends – 2008-2009
Review of Economic Trends – 2008-2009 2008 ITW Mid Most Recent Investor Meeting 2009 2009 Industrial Nov. ‘08: -8.2% June ‘09: -15.1% Oct. ‘09: -7.8% Production ISM Nov. ‘08: 36.2% June ‘09: 44.8% Nov. ‘09: 53.6% NA Auto ‘09 Forecast Updated ‘09 Forecast Updated ‘09 Forecast Builds +/- 11 million +/
Slide 5: ITW Actions
ITW Actions • Positive margin progression due to decentralized approach to restructuring – Q1: $33 million – Q2: $65 million – Q3: $31 million • Modest improvements in end markets: i.e., NA Automotive and NA Construction • Lower raw material costs also improved margins • Several one-time adjustments
Slide 6: End Market and Geographic Diversification: Imperative During Recessionary Periods
End Market and Geographic Diversification: Imperative During Recessionary Periods
Slide 7: End Market Diversification
End Market Diversification 1999 Revenues: $8.7 Billion 2009 Revenues (F): $13.8 Billion
Slide 8: Geographic Diversification
Geographic Diversification 1999 2009(F) 2013(F)
Slide 9: Geographic Diversification: 2008 Sales by Country
Geographic • US 42% Diversification • France 7% 2008 Sales by • Germany 6% Country • UK 6% • Canada 4% • China 4% • Australia 4% • Spain 2% • Italy 2% • Mexico 2% Percent of 2008 Total Company Revenues
Slide 10: Economic Trend Outlook—2010
Economic Trend Outlook—2010
Slide 11: Economic Trend Outlook – 2010: GDP Projections
Economic Trend Outlook – 2010 IHS Global Insight GDP projections: • World: 2.6% • U.S.: 2.1% • EuroZone: 0.9% • Asia Pacific: 5.0% • China: 10.1%
Slide 12: Economic Trend Outlook – 2010: Industrial Production
Economic Trend Outlook – 2010 IHS Global Insight Industrial Production projections: • World: 5.2% • U.S.: 3.1% • EuroZone: 4.0% • Asia Pacific: 10.8% • China: 13.1%
Slide 13: Key End Market Outlook – 2010
Key End Market Outlook – 2010 Full Year Source 2010 US Housing Starts 675k/716k ITW/NAHB 9.5 million to 10.0 NA Auto Builds ITW/CSM million/10.5 million Euro Auto Builds 16.0 million/16.5 million ITW/CSM Asian Auto Builds 32.0 million/34.0 million ITW/CSM
Slide 14: ITW Segment Overview
ITW Segment Overview
Slide 15: ITW Reporting Segments
ITW • Transportation Reporting • Industrial Packaging Segments • Food Equipment • Power Systems & Electronics • Construction Products • Polymers & Fluids • Decorative Surfaces • All Other
Slide 16: Total Company Revenues
Total Company Revenues Revenues 2009 (F)
Slide 17: Transportation
Transportation
Slide 18: Transportation
Transportation • Components, fasteners, fluids and polymers for transportation-related applications as well as truck remanufacturing and parts and service • Businesses in 22 countries represent $2.1 billion of revenues • 2008 revenues: 6% • 2009(F) revenues: -12%
Slide 19: Transportation Worldwide Revenues 2009(F)
Transportation Worldwide Revenues 2009(F) 14% Auto OEM/Tiers 14% Truck Remanufacture/Parts and Service 57% Auto Aftermarket 15% Other
Slide 20: Transportation Revenues by Geography
Transportation Worldwide Revenues 2009(F) North America EMEA Asia/Pacific and Other By Geography
Slide 21: Transportation 2009 Trends
Transportation • North America 2009 Trends – Full-year auto builds of 8.5 million represents a 32% decline vs. build of 12.6 million in 2008 – Our penetration with New Domestics continues to grow at rapid rate • Europe – Full-year auto builds of 15.9 million for European OEM’s represents a 25% decre
Slide 22: Transportation 2010 Growth Assumptions
Transportation • 2010 worldwide base revenues: 8% to 10% – Auto OEM grows at fastest rate: 2010 Growth 12% to 14% Assumptions – Auto Aftermarket at more modest rate: 5% to 7% – Truck remanufacture grows slightly in 2010 • North America – Full-year Detroit 3 and New Domestics auto builds: 9.5 to 10.0
Slide 23: Industrial Packaging
Industrial Packaging
Slide 24: Industrial Packaging
Industrial • Steel, plastic and paper products used for bundling, shipping and protecting Packaging transported goods • Businesses in 39 countries represent $1.9 billion of revenues • 2008 revenues: 8% • 2009(F) revenues: -28%
Slide 25: Industrial Packaging Worldwide Revenues 2009(F)
Industrial Packaging Worldwide Revenues 2009(F) 25% 26% General Industrial Primary Metals Food & Beverage Construction Other 12% 25% 12%
Slide 26: Industrial Packaging Revenues by Geography
Industrial Packaging Worldwide Revenues 2009(F) North America 43% EMEA 39% Asia/Pacific and Other 18% By Geography
Slide 27: Industrial Packaging 2009 Trends
Industrial • North America primary metals markets Packaging decreased 47% through Q3 vs. year to date 2008 2009 Trends • North America building materials market declined 30% to 40% for first nine months vs. prior-year periods • Base revenues declined in Europe (-27%) and Asia (-17%) during 2009 as m
Slide 28: Industrial Packaging 2010 Growth Assumptions
Industrial • 2010 worldwide base revenues: 6% to 8% Packaging • Developed markets (North America and 2010 Growth Western Europe) forecasted to expand 0% to 5% as metals, and general industrial Assumptions markets remain flat with some growth expected late in 2010 • Emerging markets (Asia Pacific/Lat
Slide 29: Food Equipment
Food Equipment
Slide 30: Food Equipment
Food • Commercial food equipment and related Equipment service • Businesses in 23 countries represent $1.9 billion of revenues • 2008 revenues: 10% • 2009(F) revenues: -13%
Slide 31: Food Equipment Worldwide Revenues 2009(F)
Food Equipment Worldwide Revenues 2009(F) 12% Food Institutional/Restaurants Service 53% 35% Food Retail
Slide 32: Food Equipment Revenues by Geography
Food Equipment Worldwide Revenues 2009(F) North America 51% EMEA 44% Asia/Pacific and Other 5% By Geography
Slide 33: Food Equipment 2009 Trends
Food • Worldwide Base Revenues (F): -9% Equipment – Equipment North America: -17% as 2009 Trends customers delay purchases – Equipment International: -11% – Service Revenues: flat…good performance vs. 2008 comps • Service platform at 35% of total revenue vs. 32% in 2008 – Service footprint to expand
Slide 34: Food Equipment 2010 Growth Assumptions
Food • 2010 worldwide base revenues: 2% to 4% Equipment • Continued soft equipment demand in 2010 Growth North America and Europe per institutional/restaurant customers Assumptions • Modest market growth and continued penetration gains in Asia • Service revenues grow 2% to 4%
Slide 35: Power Systems & Electronics
Power Systems & Electronics
Slide 36: Power Systems & Electronics
Power • Designer and manufacturer of arc welding Systems & equipment, consumables, and accessories for a wide array of industrial and commercial Electronics applications • Businesses in 23 countries represent $1.6 billion of revenues • 2008 revenues: 5% • 2009(F) revenues: -32%
Slide 37: Power Systems & Electronics Worldwide Revenues 2009(F)
Power Systems & Electronics Worldwide Revenues 2009(F) 20% General Industrial 27% Electronics 5% Fabrication Shipbuilding 5% Airline Construction 12% 6% Energy MRO 7% 10% Other 8%
Slide 38: Power Systems & Electronics Revenues by Geography
Power Systems & Electronics Worldwide Revenues 2009(F) 55% North America EMEA 17% Asia/Pacific and Other 28% By Geography
Slide 39: Power Systems & Electronics 2009 Trends
Power • Worldwide base revenues expected to be Systems & -32% for the full year Electronics • Welding Businesses: 2009 Trends – Market conditions remain challenging as cap ex spending weakens – Worldwide Base Revenues: -33% • North America: -36% • International: -23% • Electronic Component Assembly
Slide 40: Power Systems & Electronics 2010 Growth Assumptions
Power • 2010 worldwide base revenues: 3% to 5% Systems & • Welding Businesses: 3% to 5% Electronics – Continued soft demand for equipment 2010 Growth worldwide Assumptions • Electronic Component Assembly Businesses: 6% to 9% – Expect continued gradual recovery • Aircraft Ground Support Equipment Bus
Slide 41: Construction Products
Construction Products
Slide 42: Construction Products
Construction • Designer and manufacturer of construction Products fastening systems and truss products for the commercial, residential and remodeling/rehab sectors • Businesses in 29 countries, revenues $1.5 billion • 2008 revenues: -4% • 2009(F) revenues: -23%
Slide 43: Construction Products Worldwide Revenues 2009(F)
Construction Products Worldwide Revenues 2009(F) 6% 24% Residential 36% Renovation Commercial Other 34%
Slide 44: Construction Products Revenues by Geography
Construction Products Worldwide Revenues 2009(F) 33% North America EMEA 36% Asia/Pacific and Other 31% By Geography
Slide 45: Construction Products 2009 Trends
Construction • U.S. residential housing starts: -31% Products • U.S. commercial construction: -43% 2009 Trends • U.S. renovation/remodeling: -8% • European residential housing starts: -11% • European commercial construction: -8% • European renovation/remodeling: -4%
Slide 46: Construction Products 2010 Growth Assumptions
2010 worldwide base revenues: 8% to 10% Construction Products • U.S. (2010 forecast) – Residential: 17% 2010 Growth – Commercial: -4%. Assumptions – Renovation: 1% • Europe (2010 forecast) – Residential: -3% – Commercial: -8% – Renovation: -1% • Asia/Pacific (2010 forecast) – Australia/New Zealand r
Slide 47: Polymers & Fluids
Polymers & Fluids
Slide 48: Polymers & Fluids
Polymers • Adhesives, sealants, lubrication and cutting & Fluids fluids, and janitorial and sanitation supplies • Businesses in 36 countries, revenues $1.2 billion • 2008 revenues: 33% • 2009(F) revenues: -8%
Slide 49: Polymers & Fluids Worldwide Revenues 2009(F)
Polymers & Fluids Worldwide Revenues 2009(F) General Industrial 29% Construction 31% MRO Automotive Aftermarket Auto OEM/Tiers Electronics 4% 14% Other 5% 11% 6%
Slide 50: Polymers & Fluids Revenues by Geography
Polymers & Fluids Worldwide Revenues 2009(F) North America 31% EMEA 47% Asia/Pacific and Other 22% By Geography
Slide 51: Polymers & Fluids 2009 Trends
Polymers • General Industrial markets – Wind, solar, rail and petrochemical industries & Fluids continued to demonstrate growth 2009 Trends – Maintenance and repair markets suffered from overall economic decline and inventory reduction in distributorships • OEM market – Very mixed with discretionary
Slide 52: Polymers & Fluids 2010 Growth Assumptions
Polymers • 2010 worldwide base revenues: 8% to 10% & Fluids • Increased market penetration, new products 2010 Growth and lower raw material costs will allow continued margin improvement in base Assumptions business • Investments in BRIC countries will show increasing returns in 2010 • Overall global
Slide 53: Decorative Surfaces
Decorative Surfaces
Slide 54: Decorative Surfaces
Decorative • Decorative surfacing materials for Surfaces countertops, flooring, furniture and other applications • Businesses in 10 countries, revenues $1.0 billion • 2008 revenues: -1% • 2009(F) revenues: -19%
Slide 55: Decorative Surfaces Worldwide Revenues 2009(F)
Decorative Surfaces Worldwide Revenues 2009(F) 17% Commercial 22% Renovation 61% Residential
Slide 56: Decorative Surfaces Revenues by Geography
Decorative Surfaces Worldwide Revenues 2009(F) North America EMEA Asia/Pacific and Other By Geography
Slide 57: Decorative Surfaces 2009 Trends
Decorative • U.S. commercial construction starts (Dodge Surfaces data) forecast to drop 43% in 2009 2009 Trends • Key Decorative Surfaces end markets expected to drop more than the average: – Stores -52% – Hotels -56% – Offices -51% • U.S. new residential construction reached bottom in 1st half • Th
Slide 58: Decorative Surfaces 2010 Growth Assumptions
Decorative • 2010 worldwide base revenues: -2% to -4% – N. America -10% Surfaces – Europe Flat 2010 Growth – Asia 5% Assumptions • U.S commercial construction starts in key Decorative Surfaces end market segments remain negative: – Stores -5% – Hotels -14% – Offices -9% • U.S new residential constru
Slide 59: All Other
All Other
Slide 60: All Other
All Other • All other operating segments include equipment and related software for test and measurement, paint spray equipment, finishing equipment, plastic reclosable packaging, plastic consumables, plastic and metal fasteners • Businesses in 35 countries represent $2.8 billion in revenues • End m
Slide 61: All Other Worldwide Revenues 2009(F)
All Other Worldwide Revenues 2009(F)
Slide 62: All Other Revenues by Geography
All Other Worldwide Revenues 2009(F) 54% North America EMEA 31% Asia/Pacific and Other 15% By Geography
Slide 63: All Other 2009 Trends
All Other • Test & Measurement: 2009 Trends – Base revenues: -15% – Weakness experienced broadly across all geographic territories and end user markets – Equipment-related revenues negatively impacted by significant reductions in customer capital spending – Service and aftermarket consumables were l
Slide 64: All Other 2009 Trends
All Other • Finishing: 2009 Trends – 2009 base revenues: -32% – Industrial production declines in US and Europe contribute to base revenue weakness – Capital equipment spending in automotive and other industries fell significantly in 2009 • Global Appliance/Industrial Plastics: – 2009 base revenues:
Slide 65: All Other 2010 Growth Assumptions
All Other • Test & Measurement: – 2010 worldwide base revenues: 2% to 4% 2010 Growth – Overall market activity stabilizes, but no Assumptions meaningful improvement expected until the latter part of the year – New product introductions help to stimulate equipment revenues – Application of Toolbox in
Slide 66: All Other 2010 Growth Assumptions
All Other • Finishing: – 2010 worldwide base revenues: 5% to 7% 2010 Growth – Strong growth from emerging markets and Assumptions automotive refinish businesses – Business in developed markets up slightly: new products and markets – Profitability increased from 2009 restructuring efforts • Global Ap
Slide 67: Today's Key Takeaways
Today’s Key Takeaways
Slide 68: Key Takeaways
Key • 2010 total company base revenues Takeaways expected to grow 6% to 8% even as we face muted recovery next year • Base revenue growth next year will be aided by our global automotive and polymers & fluids businesses, two traditionally higher margin ITW businesses • Restructuring programs from la
Slide 69: Q&A
Q&A