Ingersoll Rand Inc. · NYSE:IR
Ingersoll Rand — Gardner Denver — Investor Presentation (November 2008)
41 slides from Ingersoll Rand's investor presentation, Nov 10, 2008
Slide 1: Investor Presentation November 2008
Investor Presentation November 2008
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure All of the statements made by Gardner Denver in this presentation or made orally in connection with it, other than historical facts, are forward-looking statements. As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectation
Slide 3: Gardner Denver: Entering a New Era
Gardner Denver: Entering a New Era Future New high- performance era: Gardner Denver Way Prior to 1998 Primarily U.S. industrial and upstream oil and gas focused Company 1998 - 2008 Diversified into global markets
Slide 4: Agenda
Agenda Built a global player Impressive track record Moving forward in a New Way
Slide 5: A Stronger Company: From
A Stronger Company From: A narrow geographic, industry focus Cyclical U.S. concentration
Slide 6: A Stronger Company: To
A Stronger Company To: A diversified, innovative global manufacturer Growing Global Innovative Diversified Financially strong No end market segments greater than 30 percent (1) Doubled revenues outside Americas to 58 percent (1) An industry leader in primary served markets 15.9% CAGR DEPS last 10 ye
Slide 7: Key Driver: Successful Acquisition Record
Key Driver: Successful Acquisition Record Acquisitions last 10 years 22 Number of acquisitions outside U.S. 9 Accretive within first year ALL A powerful integration machine
Slide 8: Blowers Highlight our Success in Acquisitions: Before
Blowers Highlight our Success in Acquisitions Before: 1994 50 25 15 10 7 5 3 1 3.0 1.5 1.0 0.7 0.5 0.3 0.2 0.06 Bar PSI 100 500 1000 3000 10,000 100,000 cfm 175 875 1750 5250 17,500 175,000 m 3/hr 3 15 30 90 300 3000 m 3/min - -0.5 - -2.5 - -5.0 - -7.3 - -9.8 - -13.3 - -13.8 - -14.7 - -0.03 - -0.15
Slide 9: Blowers Highlight our Success in Acquisitions: After
Blowers Highlight our Success in Acquisitions 50 25 15 10 7 5 3 1 3.0 1.5 1.0 0.7 0.5 0.3 0.2 0.06 Bar PSI 100 500 1000 3000 10,000 100,000 cfm 175 875 1750 5250 17,500 175,000 m 3/hr 3 15 30 90 300 3000 m 3/min - -0.5 - -2.5 - -5.0 - -7.3 - -9.8 - -13.3 - -13.8 - -14.7 - -0.03 - -0.15 - -0.3 - -0.5
Slide 10: Built a Well-Diversified Business
United States Europe Asia Canada Latin America Other 804547 887318 351831 66204 107019 105756 Built a Well-Diversified Business Industrial Manufacturing Upstream Energy Downstream Energy Transportation Medical Environment Chemical Food and Beverage Printing Paper Automotive Services Other Mining and
Slide 11: The Broadest Product Range
Loading Arms Well Stimulation Pumps Well Drilling Pumps Industrial Compressors Mobile Blowers Industrial Blowers Liquid Ring Pumps Specialty Components to OEMs The Broadest Product Range Compressor & Vacuum Products Segment Dresser Inc. SIHI/Sterling Fluid Systems Gardner Denver Ingersoll-Rand Atlas
Slide 12: Two Strong Growth Platforms
Two Strong Growth Platforms Volume moderating Plant rationalizations ? savings Organic growth in 2007 was 5% (Q3 YTD 2008 7%) ~$13.0B (3) 10% Outlook: growth moderating Organic growth in 2007 was 16% (Q3 YTD 2008 (3%)) ~$2.0B (3) 19% Compressor and Vacuum Products 80% of Q3 YTD 2008 revenues Fluid T
Slide 13: Developed Powerful Competitive Advantages
Developed Powerful Competitive Advantages Global presence Unmatched product breadth Relationship with customers Reputation for product quality Powerful competitive advantages
Slide 14: Agenda
Agenda Built a global player Impressive track record Moving forward in a New Way
Slide 15: Results Demonstrate Success of Strategy
Results Demonstrate Success of Strategy Revenues ($B) 2001 2007 East 0.4 1.9 Q3 YTD 2008: +10% 5X DEPS ($) 2001 2007 East 0.7 3.8 Q3 YTD 2008*: +15% (7) 5X Operating Income(4) ($M) 2001 2007 East 38.3 291.5 Q3 YTD 2008*: +9% (7) 7X (5) (6) * Operating income, as adjusted to exclude the impact of exp
Slide 16: Productivity Has Grown Steadily
Productivity Has Grown Steadily FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 data 213 213 208 233 250 234 261 288 Sales / employee ($'000's)
Slide 17: Impressive Improvements in Inventory Turns
Impressive Improvements in Inventory Turns Inventory Turnover Target 7 to 8 turns Will free up $90M cash (3) Add 1.3 points to Pre-tax ROIC (3,9) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 DSO 79.2 77.6 65.7 80.7 70.5 71 66 64.2 62.5 57.2 55 59.7 Inventory Turnover 3.15 4.02 4.
Slide 18: Pre-tax ROIC Continues to Improve
Pre-tax ROIC (9) Continues to Improve FY02 FY03 FY04 FY05 FY06 FY07 data 0.1 0.09 0.11 0.13 0.19 0.22 Peer Median (10) 17%
Slide 19: Outstanding Cash Flow
Outstanding Cash Flow (2) 2004 2005 2006 2007 LTM East 20 36 41 48 45 West 76 115 167 182 259 North 45.9 46.9 45 43.9 Cash Flow (2) Capital Expenditures Free cash flow Powerful cash generation engine $M
Slide 20: Agenda
Agenda Built a global player Impressive track record Moving forward in a New Way
Slide 21: The New Gardner Denver
The New Gardner Denver Past Future Focus Product Customer Innovation Medium High Organic growth Medium High Culture Top down Inclusive Performance Profitable Highly profitable From a good company to a great company
Slide 22: The Gardner Denver Way
The Gardner Denver Way Customers Shareholders Employees Innovative High velocity R e s o u r c e s P e r c e i v e d v a l u e C o m m i t m e n t An evolution in process
Slide 23: Strategy Going Forward
Strategy Going Forward 2 Innovative products 3 1 The Gardner Denver Way Selective acquisitions 4 Margin improvement 5 $
Slide 24: Organic Growth: A Long Runway for Growth
Customer value 1. ORGANIC GROWTH A Long Runway for Growth In Existing Market Segments Faster growing market segments Focused on share gains through differentiation Modified distribution model
Slide 25: Aftermarket Growth: Renewed Aftermarket Emphasis
2. AFTERMARKET GROWTH Renewed Aftermarket Emphasis Develop direct service capabilities Enhance product retention offering Recapture legacy business Modify distribution model Increase prices on proprietary parts Develop OEM aftermarket
Slide 26: Innovative Products: New Product Development Activities
3. INNOVATIVE PRODUCTS New Product Development Activities Proactive Service Connecting with the product and customer after the sale Remote monitoring: wireless capture/analysis of real-time data Cargo Monitoring Geographic fencing Wireless sensors monitor tank openings Flare Gas Recovery Liquid ring
Slide 27: Innovative Products: Quantima Revolutionary New Design
3. INNOVATIVE PRODUCTS QuantimaTM - Revolutionary New Design Concept CompAir product launched in April 2008 Most efficient oil-free compressor on the market Q-LifeTM service contract over lifetime Will not be sold without service contract Continuous condition monitoring
Slide 28: Selective Acquisitions: Latest Acquisition - CompAir
4. SELECTIVE ACQUISITIONS Growth Continues in 2008: Latest Acquisition - CompAir The Company One of top 10 manufacturers of compressed air systems (3) UK-based competitor to Gardner Denver Revenues ~$454M, 6 manufacturing facilities worldwide The Transaction ~$348M in cash and assumed net debt Close
Slide 29: Strategic Rationale: A Perfect Fit
4. SELECTIVE ACQUISITIONS Strategic Rationale: A Perfect Fit 1 Complementary product lines Oil-free compressor technologies High-pressure breathing air, CNG and rotary vane compressors Expands geographic diversification 75% of CompAir revenue in Europe / Asia (11) Expands Gardner Denver revenue outs
Slide 30: Strategic Rationale: A Perfect Fit (Margins)
4. SELECTIVE ACQUISITIONS Strategic Rationale: A Perfect Fit Significant margin expansion opportunities Synergies in purchasing, administrative, ERP, and manufacturing Financially attractive CompAir grew 10% in FY 2008 (11) Accretive to GDI earnings of $0.10 - $0.15 by 2009 (12) 3 4 $ East 0.061 0.1
Slide 31: Positive Impact of CompAir Acquisition on Key Metrics
4. SELECTIVE ACQUISITIONS Positive Impact of CompAir Acquisition on Key Metrics Before After Revenues (1) $1.9B ? >$2.3B Revenues outside Americas (1) 51% ? 58% Ranking in compressor market (3) - - Europe #5 ? #2 - - Asia #6 ? #4 Debt / total capital (12) 19% ? 33% (3) Company estimates
Slide 32: Margin Improvement: Operating Margin Opportunities
5. MARGIN IMPROVEMENT A Closer Look At Operating Margin Improvement Opportunities (13) Long-term target CVP segment operating margin: 14.5% Resulting incremental operating income: $39M Incremental after-tax earnings (14): $27M Potential increase in DEPS: $0.50 As a percent of revenues (operating mar
Slide 33: Lean Transformation - Case Study
Results 5. MARGIN IMPROVEMENT Lean Transformation - Case Study Gardner Denver Drum, Bradford, UK $100k inventory reduction 60% space reduction 114% productivity improvement Before Flow After
Slide 34: Roadmap for Executing the Gardner Denver Way
Time 2008 2009 5. MARGIN IMPROVEMENT Roadmap for Executing the Gardner Denver Way Building the foundation Initiate mobilization Phase #1 Transformation Lean methods and tools Continuous improvement in lean metrics Standardization, stabilization and sustainability Phase #2 Expansion Maintain levels o
Slide 35: A Closer Look at Operating Efficiency Improvements
5. MARGIN IMPROVEMENT A Closer Look at Operating Efficiency Improvements Time Frame Long term (multi-year) Short term (multi-quarter) Low High Channel Development Quality Improvements Innovation Labor Productivity Low Cost Country Sourcing Facility Consolidation Opportunity
Slide 36: Priorities 2008 - 2009
Priorities 2008 - 2009 Implement the Gardner Denver Way Execute on CompAir integration plan Manage through global economic situation Drive cash flow (2) Selectively pursue strategic acquisitions
Slide 37: Why Invest in Gardner Denver
Why Invest in Gardner Denver A global, diversified company Broad offering of leading products Impressive track record 10 year DEPS growth of 15.9%, acquisition expertise Strong cash engine outstanding cash flow (2) throughout the cycle The Gardner Denver Way moving to a high-performance model, enhan
Slide 38: Investor Presentation November 2008
Investor Presentation November 2008
Slide 39: Significant Operating Margin Improvement Opportunities
Significant Operating Margin Improvement Opportunities The Company's long-term target of 14.5 percent operating margin in the CVP segment has the potential to yield approximately $0.50 in additional DEPS ($ in millions, except per share data) GDI Compressor & Vacuum Products Segment 2007 revenues $1
Slide 40: Non-GAAP Items
Non-GAAP Items
Slide 41: Presentation Notes
Presentation Notes Note 1: Proforma for the CompAir acquisition, based on Gardner Denver's 2007 revenues and CompAir's revenues for the twelve months ended March 31, 2008 Note 2: From operating activities Note 3: Company estimates Note 4: Segment operating income (defined as income before interest e
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