Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll Rand — Investor Day (May 2015)
97 slides from Trane Technologies's investor day presentation, May 13, 2015
Slide 1: Analyst and Investor Day
Analyst and Investor Day , May 13, 2015
Slide 2: Agenda: 2015 Analyst and Investor Meeting
Agenda: 2015 Analyst and Investor Meeting Overview Mike Lamach Business Operating System Todd Wyman & Paul Camuti John Evans Gary Michel Dave Regnery Q&A Break: 15 Minutes Sustainability & Energy Efficiency Manlio Valdés Randy Newton Ray Pittard Jeff Watson Q&A Climate Didier Teirlinck Industrial Ro
Slide 3: Safe Harbor
Safe Harbor This presentation includes “forward-looking statements,” which are statements that are not historical facts, including statements that relate to the mix of and demand for our products, performance of the markets in which we operate, our share repurchase program including the amount of sh
Slide 4: Overview
Overview Mike Lamach Chairman and CEO 2015 Investor and Analyst Conference
Slide 5: Our Model to Deliver Shareholder Value
Our Model to Deliver Shareholder Value Sustainable, Profitable Growth and Shareholder Value Accelerating Operational Balanced Revenue Growth Excellence Capital Allocation Well positioned in both Strong, recognized brands Leading market shares geographic and end markets 4
Slide 6: Employee Commitment, Engagement and Development Critical to Change Culture
Employee Commitment, Engagement and Development Critical to Change Culture Employee Engagement Score • Top-quartile performance for peer group and overall manufacturing companies • High participation rate at 95% Satisfaction Satisfaction • Improved on every survey dimension Pride • 95% retention of
Slide 7: Distinguished Safety Performance Due to Rigor, Engagement of Employees
Distinguished Safety Performance Due to Rigor, Engagement of Employees Total Recordable Incident Rate Lost Time Incident Rate 0.40 2.00 World Class Performance World Class Performance 0.30 1.50 1.00 0.20 0.50 0.10 0.00 0.00 Focus and Positive Outcomes are Continuing Year-Over-Year Year-Over-Year Q1
Slide 8: Our Business Operating System is Standard Framework for How We Operate
Our Business Operating System is Standard Framework for How We Operate Longevity Multi-year Performance Trend Over 5 Years Foundation of our commitment Top Top Top Top to operational excellence and Quartile Quartile Quartile Quartile growth excellence Revenue EPS TSR Employee Growth Growth Engagemen
Slide 9: Value Stream Expansion Offers Significant Opportunity to Grow and Expand Margins
Value Stream Expansion Offers Significant Opportunity to Grow and Expand Margins Product Growth Team-Led Value Streams Product Sales Force Engineering & Supply Capability & Management Technology Chain Channel Strategy Idea Customer & Launch Value Analytics Value Stream Discipline • Rigorous analytic
Slide 10: Ingersoll Rand Possesses Expertise to Address Pressing World Challenges
Ingersoll Rand Possesses Expertise to Address Pressing World Challenges Energy Consumption Urbanization Food & Water Scarcity Climate Change Industrial Productivity & Efficiency 9
Slide 11: Much Progress… More Opportunity Ahead
Much Progress… More Opportunity Ahead • Strong momentum and further upside ‒ Attractive end markets ‒ Leading brands and growth through innovation ‒ Substantial position in developing markets with significant potential • Excellent management team executing consistently on strategy • Value creation m
Slide 12: Business Operating System (BOS)
Business Operating System (BOS) A systematic way to grow and improve execution Paul Camuti SVP, Innovation and Chief Technology Officer Todd Wyman SVP, Global Operations & Integrated Supply Chain 2015 Investor and Analyst Conference
Slide 13: Premier Performance
Premier Performance Engaged Employees Delighted Customers Confident Shareholders 12
Slide 14: Operational Excellence
Operational Excellence Ingersoll Rand Business Operating System (BOS) Goal Deployment Process Functional Excellence Value Stream Transformation Common Systems 13
Slide 15: Maturing our Business Operating System
Maturing our Business Operating System Delivering Functional Excellence PRODUCT GLOBAL INTEGRATED MANAGEMENT SUPPLY CHAIN Product Development Process: generated or • Strategic Analytic Capabilities • Materials Playbook improved 60+ products • Generating, Developing and • Environmental, Health & over
Slide 16: Value Stream Evolution
Value Stream Evolution Customer Value Customer Quote Cash Value Streams 2011 – 2013 Separation of Results Cost of Delivery Inventory Safety Incident Leverage Employee Poor Quality Turns Rates Engagement 15
Slide 17: Value Stream Expansion
Value Stream Expansion Expanding the opportunity to grow margins Customer Value Customer Ideation Quote Cash Value Streams 2011 – 2013 16
Slide 18: Product Growth Team-Led Value Streams
Product Growth Team (PGT)-Led Value Streams Common Goals: To grow market share and expand margins Product Growth Team-Led Value Streams Product Engineering Global Integrated Management and Technology Supply Chain • Strategy and analytics • Engineering excellence • Manufacturing and • Customer experi
Slide 19: Transformation Opportunities
Transformation Opportunities Opportunity Opportunity 2014 Accomplishments 100% 100% • Average PGT revenue growth 4x the rest of 2015 80% Ingersoll Rand • All PGT-led value streams met 2014 2016 ? margin expansion goals and exceeded company 60% 2015 ~30% average • Strong double-digit labor ~20% produ
Slide 20: Business Operating System (BOS) in Action
Business Operating System (BOS) in Action Reaping Encouraging Results Commercial HVAC Power Tools Residential HVAC NA/EMEA Product Management Product Management Product Management • Strategic analytic • Portfolio management • Market segmentation capabilities • Generating, developing Engineering Glob
Slide 21: Power Tools
Power Tools Application of BOS Tools John Evans President, Power Tools 2015 Investor and Analyst Conference
Slide 22: Ingersoll Rand Power Tools
Ingersoll Rand Power Tools A Leading Industrial Power Tools Business • Provider of premium power tools and products to global customers • Broad vertical market coverage • Outstanding brand equity and reputation for quality and reliability • Strong performance since formation in late 2013 Applied Pow
Slide 23: We Applied the BOS to our Strategy
We Applied the BOS to our Strategy Analysis and Data-Driven Decision Making • Analytics revealed a portfolio of product groups with varying levels of competitiveness • We identified the most attractive markets in which to compete - and made strategic choices on how to provide differentiated value to
Slide 24: We Applied the BOS to our Strategy
We Applied the BOS to our Strategy Analysis and Data-Driven Decision Making • Analytics revealed a portfolio of product groups with varying levels of competitiveness • We identified the most attractive markets in which to compete - and made strategic choices on how to provide differentiated value to
Slide 25: Transforming our Key Value Stream
Transforming our Key Value Stream • We identified an opportunity to profitably grow revenue by improving delivery leadtimes • We systematically applied the BOS playbook to deliver significant improvement …improving customer We reduced cycle time for 75% of our COGS footprint… experience 25 point gai
Slide 26: Residential HVAC
Residential HVAC Application of BOS Tools Gary S. Michel SVP and President, Residential HVAC 2015 Investor and Analyst Conference
Slide 27: Residential HVAC
Residential HVAC Multiple brands, channels, plants and customer buying behaviors Manufacturing Portfolio Channels to Market Customers Tyler, Texas Heating/Cooling Dealer Sales Single Family (Ducted/Ductless) Offices Replacement Trenton, New Jersey (Owner, Non-Owner Controls Independent Occupied) For
Slide 28: Strategic Priorities
Strategic Priorities A Product for every home 75% of portfolio new since 2011 Compelling Brand Total Market Differentiated Experience Solutions Solutions • Channel improvements • Operational excellence • Nexia diagnostics and • Total market focus controls • Segmented offerings • Energy efficiency le
Slide 29: Ingersoll Rand Project BOS
Ingersoll Rand Project BOS Common system of capabilities for successful project execution Project Management Portfolio Management Process New Technology New Product Process Development Ingersoll Rand Project Portfolio Management (Resource Management) Ingersoll Rand Product Development Process Produc
Slide 30: Ingersoll Rand Product Development Process
Ingersoll Rand Product Development Process Product development rigor = Product launch success On time, below cost, delighted customers, competitive differentiation Product Development Process 14/16 SEER Competitively serving opening price point Residential Variable Speed Redefining high efficiency 2
Slide 31: Variable Speed Product Development Rigor
Variable Speed Product Development Rigor Data-driven choices, executed precisely for competitive differentiation and delighted customers Technology Production Testing & Commercialization Integration Preparation Simulation Process • Streamlined • 80 field trial units • Early field trial product desig
Slide 32: Results
Results A home run for homeowners, contractors and Ingersoll Rand Homeowners • Home energy efficiency savings • Precision comfort maintained within one-half of one degree • Quietest, most reliable variable speed offering in industry Dealers/Contractors • Fast, easy to install and service • Dealer di
Slide 33: Streamlined Design of Variable Speed Product
Streamlined Design of Variable Speed Product Which system would you rather build and service? Competitor A Trane TruComfort Competitor B American Standard AccuComfort 32
Slide 34: Summary
Summary Leveraging Business Operating System to create value for homeowners, channel partners and business Profitable growth and margin expansion 14/16 SEER Competitively serving opening price point would recommend Variable Speed to family and friends • “This is a kick ass machine” Residential Var
Slide 35: Trane Light Commercial Unitary
Trane Light Commercial Unitary Focus on Product Growth Team Led Value Streams Dave Regnery President, HVAC Commercial North America, Europe and Middle East (EMEA) 2015 Investor and Analyst Conference
Slide 36: Applying Product Growth Teams
Applying Product Growth Teams Teaming product management, supply chain and engineering to work towards General / Strategic Management the same goals • Grow market share • Increase margin Product Management Value of Product Growth Teams Use customers’ buying processes and Engineering segmentation to
Slide 37: Trane LCU Portfolio
Introduction to Light Commercial Unitary North America Light Commercial Rooftop market is ~$1.7B with long term historical growth rate of 4% Voyager™ Market Size by Tonnage 30% Office & Big Trane LCU Portfolio Box Stores 3 to 12.5 Tons 70% 12.5 to 25 Tons Precedent™ Small Retail & Restaurants Value
Slide 38: Light Commercial Unitary Product Growth Team Standard Work
Light Commercial Unitary Product Growth Team Standard Work Business Operating System (BOS) in action POWER TOOLS Production Preparation Market Segmentation Visual Management Process (3P) • Conduct detailed • Guide for the goal • Helps ensure constant quantitative and deployment and flow and consiste
Slide 39: Successes Due to Product Growth Team Alignment and Standard Work
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Lynn Haven Creating a model line • TAKT attainment 29% increase • Reduced floor space by 65% • Plant output increased 10%; year-over-year labor was flat
Slide 40: Successes Due to Product Growth Team Alignment and Standard Work
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Managing for Daily Improvement Standard work and visual management • Actions are aligned and synchronized across functions • Allows for rapid problem so
Slide 41: Successes Due to Product Growth Team Alignment and Standard Work
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Large Metro Area Improving speed of time to fill QUOTE LEAD TIME <= 15 MIN • Applying operational excellence to sales process was a critical milestone •
Slide 42: Successes Due to Product Growth Team Alignment and Standard Work
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Fulfillment Center Stocking local inventory • Local empowerment makes best decision for the customer • Product availability is critical for customers wh
Slide 43: Product Growth Team-Led Value Streams is All About Profitable Share Growth
Product Growth Team-Led Value Streams is All About Profitable Share Growth Steady Light Commercial Unitary market share and revenue growth from 2012-2014 Revenue Growth Double Digit Margin Enhancement +200 basis points Market Share Steady Growth 42
Slide 44: Product Growth Teams are the Next Generation of Operational Excellence
Product Growth Teams are the Next Generation of Operational Excellence • Product Growth Teams are fueling growth and margin enhancements • This concept is easy to understand, but requires disciplined execution and is difficult to competitively replicate • The concept drives a differentiated customer
Slide 45: Sustainability and Energy Efficiency
Sustainability and Energy Efficiency Environmental Regulations Manlio Valdés President, Compressed Air Systems and Services 2015 Investor and Analyst Conference
Slide 46: Today's Regulatory Environment
Today’s Regulatory Environment Macro-economic trends driving increase in regulations Greenhouse Gas Energy Efficiency Refrigerants Emissions Active and engaged beyond compliance • Company subject matter experts participate in international codes and standards committees and regulatory bodies in Chin
Slide 47: Applying BOS to Address Regulations
Applying BOS to Address Regulations Tools to translate and make data-driven decisions around regulations Modeling & Customer Insights Innovation Portfolio Simulation Design for Networks of Precision Machining Sustainability Excellence • Understanding developing regulatory framework and areas where w
Slide 48: Applying BOS for Greater Leverage
Applying BOS for Greater Leverage Portfolio Commonality Examples • Network Of Excellence • Centrifugal expertise in gas - Compression compression applicable to - Refrigeration engineered centrifugal and - Heat exchange applied HVAC businesses • Precision Manufacturing • Critical tolerance control to
Slide 49: Opportunities Beyond "The Box"
Opportunities Beyond “The Box” System Efficiency Service & Lifecycle Efficiency • Regulatory environment sets • Services ensure “as designed” system minimum standards at component performance level only • Capabilities and expertise to design • Real efficiency gains at systems and install, commission
Slide 50: Regulation Inspired Innovation
Regulation Inspired Innovation Randy Newton Vice President Enterprise Engineering 2015 Investor and Analyst Conference
Slide 51: Demand for Energy Efficiency
Demand for Energy Efficiency Portfolio of highly efficient products allow differentiation in the marketplace to address key markets Commercial Building Expected Residential Energy Use Energy Use by 2025* Misc. 4% Plug Loads 19% Space Other HVAC Heating Home 40% 44% Usage 47% Lighting 37% Space Cooli
Slide 52: Global Opportunities
Global Opportunities Demand for sustainable growth 75% of infrastructure globally that will exist in 2050 has yet to be built In India, 85% of buildings that will exist in 2050 have yet to be built We will see a 70-85% increase in our urban population in the next 35 years The growing and urbanizing
Slide 53: Our Path Forward
Our Path Forward Leveraging our strengths Refrigerants Energy Management & Services • 36 invention disclosures in past 2 years • 13 expected patents New Products & Services Technology 52
Slide 54: Comfortable, Sustainable, Efficient Environments
Comfortable, Sustainable, Efficient Environments A world of sustainable progress and enduring results Growing Urbanization Growing Population Drive for Competitiveness Innovation 53
Slide 55: Sustainability and Energy Efficiency: Transport Refrigeration
Sustainability and Energy Efficiency Transport Refrigeration Ray Pittard President, Transport Solutions 2015 Investor and Analyst Conference
Slide 56: Macro Global Trends
Macro Global Trends External factors that impact Transport Refrigeration Urbanization China cold chain infrastructure Food Waste due to Spoilage Emerging countries excess of 50% food spoilage Traceability within the Cold Chain Food Safety & Security Environmentally-driven Legislation EPA & Euro engi
Slide 57: Focus on Sustainability and Energy Efficiency in Transport Refrigeration
Focus on Sustainability and Energy Efficiency in Transport Refrigeration Thermo King products and technology address these critical trends European Union (E.U.) Anti-idling Laws F-gas Regulation Auxiliary Power First to offer truck and Units (APU) trailer customers choices resulting in dramatic on w
Slide 58: In-Depth Review: NA Trailer Market
In-Depth Review: NA Trailer Market Complex environment in North America • North America Trailer business - Large, profitable and growing • Regulatory challenges in REGULATION transportation CUSTOMER VALUE - EPA Mandated Tier IV Final COMPETITORS Emissions - Not voluntary for OEMs • Customers were fr
Slide 59: Example: Precedent Portfolio
Example: Precedent™ Portfolio Solve customer need to meet emission standards but also address economic issues with fuel and operational efficiency Resulted in the development of the Precedent portfolio roadmap and a two-tier product strategy to: • Drive significant fuel savings for customer value an
Slide 60: What's Next?
What’s Next? Remain the leader in efficiency for future generation platforms • Transport industry is going through similar +2020 situation with new E.U. emissions standards • We plan to leverage tools, strategic thinking and learnings from NA to develop our next Next Generation Products for generati
Slide 61: VRF Markets and Opportunity for Trane
VRF Markets and Opportunity for Trane Variable Refrigeration Flow Systems Jeff Watson Vice President, Product Management and Marketing HVAC Commercial, North America 2015 Investor and Analyst Conference
Slide 62: Overview of HVAC Systems and Services within Commercial Applications
Overview of HVAC Systems and Services within Commercial Applications Applied - Chilled-Water, Air-Handling Variable Air Volume (VAV) System 61
Slide 63: Overview of HVAC Systems and Services within Commercial Applications
Overview of HVAC Systems and Services within Commercial Applications Unitary - Rooftop Variable Air Volume (VAV) System 62
Slide 64: Overview of HVAC Systems and Services within Commercial Applications
Overview of HVAC Systems and Services within Commercial Applications Variable Refrigerant Flow (VRF) System 63
Slide 65: Overview of VRF Global Market Growth
Overview of VRF Global Market Growth VRF is one of the fastest growing product lines in North America VRF Sales by Geography 4% Total HVAC Equipment 5% VRF Growth Rate Market (North America 2014 vs 2013 2014) +$4.8B Asia Pacific +11% 27% EMEA +9% $400M VRF 64% N. America +23% $1.6B Applied L. Americ
Slide 66: Commercial Applications
Commercial Applications Recommended HVAC system applications by vertical Data Lrg. Sm. Small K-12 Centers Medical Warehouse Hotels Office Office Retail Retail Applied Unitary VRF 65
Slide 67: System Comparisons
System Comparisons Good Poor Feature Applied VRF Unitary Life Cycle Cost Applied System Strength Efficiency ? Simultaneous Heating/Cooling VRF System Retrofit (No A/C) Strength Unitary First Cost System Strength Safety Applied Humidity Control System Strength Ventilation Selecting the right system t
Slide 68: Trane is Well Positioned for Success with VRF
Trane is Well Positioned for Success with VRF • We believe Trane is the trusted systems partner because we advise customers on how to pick the right system to meet their facility goals • In addition to product, our strength is local and regional design, controls and service capabilities to help owne
Slide 69: Climate Segment Update
Climate Segment Update Didier Teirlinck Executive Vice President, Climate Segment 2015 Investor and Analyst Conference
Slide 70: An Unmatched Strategic Position
An Unmatched Strategic Position • A $10B group of six growth-oriented SBUs led by high-performing leaders and teams • Trane and Thermo King are world leaders in HVAC and refrigerated transportation • An outstanding network of global operations, channels and employees • Stronger together with BOS lin
Slide 71: We are in Structurally Attractive Markets
We are in Structurally Attractive Markets • Our base markets are growing on the strength of secular global drivers: energy efficiency, urbanization, food and pharmaceutical safety, regulation and others • Short-term cyclicality reverts to long-term growth in HVAC and transport markets North America
Slide 72: The Market Outlook is Favorable
The Market Outlook is Favorable • North America has turned the corner; solid growth in high growth markets including China and Southeast Asia • Strength in non-residential and residential HVAC markets; transport positive Regional HVAC+R Outlook Trends North America • United States Non-Residential co
Slide 73: We are Making Smart Growth Decisions
We are Making Smart Growth Decisions • We are investing to meet customer needs for energy efficiency, reliability, customer experience, and smart, connected systems • We are allocating our resources and people to a short list of critical strategic initiatives • We are using the BOS to define and exe
Slide 74: The FRIGOBLOCK Acquisition is on Track
The FRIGOBLOCK Acquisition is on Track • Closed the acquisition on March 4, 2015 • Integration is proceeding to plan; deep engagement from all functions and work streams • Company values and culture are a strong fit with Ingersoll Rand • Technology and engineering leverage remains promising Integrat
Slide 75: We Will Deliver Strong Financial Results
We Will Deliver Strong Financial Results • We have been executing to our plan • We have aggressive but achievable targets for revenue and operating margin Revenue Drivers • Global market growth • Share growth 13-14% 12.2% • VRF and HVAC Parts expansion • Energy service • Service and contracting Oper
Slide 76: Industrial Segment Update
Industrial Segment Update Robert Zafari Executive Vice President, Industrial Segment 2015 Investor and Analyst Conference
Slide 77: Our Businesses are in Leading Positions
Our Businesses are in Leading Positions • A $3.3B group of five growth-oriented Strategic Business Units • Ingersoll Rand, ARO and Club Car are #1 or #2 brands in their core markets • World-class engineered and mission-critical products, systems and services • Balanced across industries, geographic
Slide 78: We are in Structurally Attractive Markets
We are in Structurally Attractive Markets • Leveraging a large array of growing industrial segments worldwide • Demanding industrial customers understand and pay for value Industrial Segment Revenue Distribution by Vertical Market 2014 FY Manufacturing 18% Golf & Turf 11% Oil 7% Industrial Gas 6% Po
Slide 79: The Market Outlook is Moderately Favorable
The Market Outlook is Moderately Favorable • Regional balance enables focus on multiple higher growth regions • End market distribution limits cyclical exposure and creates opportunity Regional Industrial Outlook Trends North America • Moderate worldwide growth in manufacturing Latin America • Slowe
Slide 80: Growth Driven by Industrial Megatrends
Growth Driven by Industrial Megatrends • Key initiatives address five durable industrial megatrends • Investments advance the Industrial segment’s four fundamental strategies • BOS defines the execution of segment growth programs Industrial Megatrends Smart Connected Expert Reliability Efficiency Sa
Slide 81: We are Executing on the Cameron Acquisition
We are Executing on the Cameron Acquisition Integration Growth • Functional integration actions complete • Strong plant air activity, especially in North • Synergies on track America • Brand, product, and channel survey in • Engineered air down in 2015, recovery 2016 progress at the country level •
Slide 82: We Will Deliver Profitable Growth
We Will Deliver Profitable Growth • Industrial continues journey for revenue and operating margin growth • Clear levers to drive revenue and operating margin gains Revenue Drivers 15-16% • Global market growth • Share growth 14.8% • State-of-the-art products and technologies • New services across al
Slide 83: Financial Summary
Financial Summary Sue Carter Senior Vice President and CFO 2015 Investor and Analyst Conference
Slide 84: Adjusted Operating and EBITDA Margins Show Steady Improvements in Operating Performance
Adjusted Operating and EBITDA Margins Show Steady Improvements in Operating Performance 13.6% $12.9 12.0% 12.3% $11.9 $12.0 $12.3 11.6% 8.7% 9.2% 9.6% 11.0% 2011 2012 2013 2014 2011 2012 2013 2014 Revenue $, Bil. Operating Margin EBITDA 83
Slide 85: Balancing Capital Allocation Alternatives Creates Shareholder Value
Balancing Capital Allocation Alternatives Creates Shareholder Value Balance Sheet • BBB Rating • No debt maturities until 2018 Organic Investment Competitive • New Product Dev. Dividend • BOS expansion • Peer group payout • CAPEX=Depreciation • 28% dividend Shareholder CAGR, 2011-15 Value M&A Share
Slide 86: Organic Investment
Organic Investment Capital Expenditures ($M) • Continuing investments in New $242 $234 ~$250 Product Development and Business Operating System • Modest future CAPEX needs - Minimal “Bricks and Mortar” • Significant ongoing investment in ERP system 2013 2014 2015 - 2016F Annually ERP Spend Note: Data
Slide 87: Debt Maturity Profile
Debt Maturity Profile No near term maturities $, Mil 750 700 Putable Annually 500 500 350 300 306 300 150 125 8 8 8 8 8 8 8 8 8 8 8 37 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2043 2044 86
Slide 88: Strong Dividend Growth
Strong Dividend Growth Adjusted EPS Annual Dividend Per Share $1.16 $3.33 $1.00 $2.67 $2.57 $0.84 $2.08 $0.64 $0.43 2011 2012 2013 2014 2011 2012 2013 2014 2015F • $1.16 per share dividend for 2015 • 2015 dividend increased by 16% from 2014 • 28% dividend CAGR 2011 to 2015 87
Slide 89: Share Repurchase
Share Repurchase Avg. Shares outstanding, Mil Share Repurchase, $M 1,375 339 1,200 311 1,162 298 Allegion 274 270 Distribution 840 250 2011 2012 2013 2014 2015F 2011 2012 2013 2014 2015F 36.3 18.4 21.8 23.0 #Shares Purchased, Mil. • New authorization in 2014 of $1.5B ; ~$900 Million remaining • ~98M
Slide 90: M&A Framework
M&A Framework • Maintaining disciplined process; pipeline built from strategic plan • Leverage existing businesses products, technologies and geographies • Accretive to EBITDA, EPS and ROIC first full year of ownership • Best talent on integration teams • Will not overpay Cameron Centrifugal Compres
Slide 91: Balanced Future Cash Deployment
Balanced Future Cash Deployment 100% Share Repurchases 80% M&A or Share Rep. Acquisitions 60% Dividends Debt Paydown 40% 20% 0% 2011 2012 2013 2014 2015 Future 90
Slide 92: Free Cash Flow
Free Cash Flow $ Millions ~950 to 1,000 860 810 2013 2014 2015 Target Excludes restructuring, one-time spin costs and refinancing premium Long term goal 1X net income 91
Slide 93: Full-Year 2015 Forecast
Full-Year 2015 Forecast Y-O-Y Adjusted Revenue Operating Change Margin Climate ‒ Reported 2% to 3% 12.5% to ‒ Organic--ExFX 4% to 5% 13.5% Industrial ‒ Reported 13% to 14% ‒ Organic 14.5% to 4% to 5% 15.5%* FX[-3%]and Cameron[+12%] Total Reported 4% to 5% 11% to 12%* Organic 4% to 5% *Includes Camer
Slide 94: Changes From Prior 2014 to 2016 forecast
Changes From Prior 2014 to 2016 forecast • GDP Growth - Slower than expected Asia and South America • 17% drop in Euro vs $ - Revenue drag offset by acquisitions - ($0.25) impact on EPS • Lower than expected inflation • End markets - US Institutional recovery just beginning - Stronger Thermo King No
Slide 95: Ingersoll Rand Targets 2013 to 2016
Ingersoll Rand Targets 2013 to 2016 Nov 2013 Forecast May 2015 Forecast Revenue Growth 4% to 5% 4% to 5% Operating Income Growth 13% to 15% 13% to 15% Operating Margin Change 85 bps to 100 bps 85 to 100 bps Adjusted EPS 15% to 20% CAGR 15% to 20% CAGR Based on 24-26% tax rate Based 24-26% tax rate B
Slide 96: Ingersoll Rand
Ingersoll Rand Total Shareholder Return % Change* 423 • Strong and liquid balance sheet • Cash flow to fund future growth 308 • Improving financial performance - Margins 222 - Working capital management 165 - ROIC • Balanced capital allocation based on creating shareholder value S&P 500 Peer Group P
Slide 97: Ingersoll Rand
GY Ingersoll Rand Inspiring Progress™