Itt Inc. · NYSE:ITT
Itt — Merger or Acquisition (July 2011)
43 slides from Itt's merger presentation, Jul 11, 2011
Slide 1: Form 10 Filings Overview
July 11, 2011 FORM 10 FILINGS OVERVIEW ITT Engineered for Life
Slide 2: Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forwar
Slide 3: On-Track to Meet End of Year Goal to Complete Separation
On-Track to Meet End of Year Goal to Complete Separation Form 10 Overview Initial Form 10’s Filed – July 11, 2011 Form 10’s Only Applicable to Water Co & Defense Co Robust Disclosure of Businesses and Future Strategies for Each Spin Company Preliminary Capital Structures Reflected in Pro Forma Adjus
Slide 4: Capital Allocation Overview
Capital Allocation Overview Three Balanced, Attractive Companies 4 Larger Portion of Legacy Net Liabilities No Debt Strong Cash Flow High Growth Industries Debt Strong Cash Flow High Growth Industry New ITT Co Water Co Defense Co Strong Stable Business Stable Industry Strong Cash Flow Debt US Salari
Slide 5: Pro Forma Capital Allocation Overview
Pro Forma Capital Allocation Overview 5 Balanced Capital Structures to Achieve 3 Attractive Companies [1] Assumes repayment of current ITT debt, using proceeds from Water Co and Defense Co dividend. [2] Reflects long-term liabilities. [3] Excludes $310M of debt expected to be raised in connection wi
Slide 6: Form 10 Financial Statement Overview
Form 10 Financial Statement Overview Only Applicable to Water Co and Defense Co Historical Financial Statements: 2008 - 2010 Annual Periods and Q1 2011 & Q1 2010 Reflects Historical Ownership of Assets & Liabilities Assumed Allocation of Historical Corporate Costs Pro Forma Financial Statements: Yea
Slide 7: Form 10 Financial Statement Flow Chart
Form 10 Financial Statement Flow Chart Water Co Form 10 Historical Data Defense Co Form 10 Historical Data FY 2008-2010 Q1 2011 & Q1 2010 FY 2010 and Q1 2011 Income Statement Q1 2011 Balance Sheet + + = = Form 10 Pro Forma Form 10 Pro Forma • Expected Debt Issuance by Water Co & Defense Co and Cash
Slide 8: New ITT Co Financial Statements Flow Chart
New ITT Co Financial Statements Flow Chart Water Co Form 10 Historical Data +/- = 8 Water Co Discontinued Operations ITT 2010 10-K Discontinued Operations = New ITT Co Continuing Historical Data +/- = New ITT Co Continuing Pro Forma Data Defense Co Form 10 Historical Data +/- = Defense Co Discontinu
Slide 9: Next Steps
Next Steps SEC Review of Water Co and Defense Co Form 10’s Expected Updates to Form 10’s • Future Quarterly Updates • Finalization of Capital Structures Issuance of New Water Co and Defense Co Debt Settlement of ITT Debt Execution of Separation Agreements IRS Ruling and Tax Opinion from
Slide 10: Introducing the New ITT
ITT July 11, 2011 Introducing the New ITT
Slide 11: Safe Harbor
Safe Harbor 11 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 199
Slide 12: ITT Value Proposition
ITT Value Proposition Attractive Niches Robust Growth Profile Management Team Credibility Management Team Credibility Portfolio Mgmt Expertise Portfolio Mgmt Expertise ITT Management System ITT Management System Focus on Shareholder Value Focus on Shareholder Value Highly Engineered Products & App
Slide 13: ITT Overview
ITT Overview TOTAL REVENUE & ORGANIC REVENUE GROWTH $2.2 $1.8 $1.9 $1.8 8.4% -13.5% 15.0% 9.0% 2007 2008 2009 2010 -20% -10% 0% 10% 20% 30% Revenue Organic Revenue Growth OPERATING OVERVIEW 13 +5% Average Annual Organic Revenue Growth (2007-2010) History of Strong Cash Flow Generation Ample Li
Slide 14: Diversified & Balanced
Diversified & Balanced 14 END MARKETS CYCLES & AFTERMARKET Early & Mid Cycle 60% OEM & Platforms 45% Aftermarket 30% Late Cycle 40% Projects 25% Automotive 25% Energy & Mining 19% Aerospace & Defense 16% Industrial Processing 18% General Industrial 16% Rail, Bus, Truck & Trailer 6% 2010 Data EMERGIN
Slide 15: Strong End Market Participation
Strong End Market Participation General Industrial 16% Rail, Bus, Truck & Trailer 6% Aerospace & Defense 16% Industrial Processing 18% Energy & Mining 19% Automotive 25% Control Technologies Interconnect Solutions Motion Technologies Industrial Process Diversified, Connected & Attractive 15
Slide 16: Truly Global
Truly Global North America* Latin America* Europe, Middle East & Africa* Asia Pacific* * 2010 Revenue Data 16 Manufacturing and Assembly Facilities 13% 37% 6% 44% 75% Developed 25% Emerging New ITT – July 11, 2011 Motion Technologies Barge, Italy 2,000 employees Barge, Italy Frankfurt, Germany Hebro
Slide 17: New ITT Leadership
New ITT – July 11, 2011 Denise Ramos CEO Operational Leaders Leadership, Experience and Vision Functional Leaders Jenny Schiavone Communications Robert Pagano President Industrial Process William Taylor President Interconnect Solutions Andrew Jones Interim President Motion Technologies Munish Nanda
Slide 18: Anticipated Board of Directors
Anticipated Board of Directors Frank T. MacInnis - ITT Chairman Elect Chairman and Former Chief Executive Officer, EMCOR Group, Inc. An ITT director since 2001, Chairman-elect MacInnis currently serves on the boards of The Williams Companies and ComNet Communications. Curtis J. Crawford, Ph.D. - Pre
Slide 19: Heritage of Disciplined Value Creation
Heritage of Disciplined Value Creation 19 1839-1926 First pump made in Seneca Falls, NY , 1839 – Gould Pumps established in 1926 – Merged with ITT in 1997 and part of IP 1960-1977 The Conglomerate Years … CEO Harold Geneen Acquired +350 companies 1979-1995 CEO Rand Araskog … In 1995 ITT split into t
Slide 20: Industrial Process – Overview
New ITT – July 11, 2011 Oil & Gas 25% Chemical 24% Mining 15% Power 8% General Industry & Other 28% 24% 9% 28% 26% 13% Industrial Process – Overview 704 816 719 694 2007 2008 2009 2010 Revenues ($M) Revenue by End Market Portfolio Valves Service Parts Baseline Pumps 20
Slide 21: Motion Technologies – Overview
Motion Technologies – Overview 495 562 491 548 2007 2008 2009 2010 Revenues ($M) Revenue by Region Portfolio 21 Operational Highlights +20% 2010 Organic Orders Strong Aftermarket Won Ford’s 1st Global Platform Solution Invested in Low Cost Region Footprint Expanded Portfolio of Rail Product Offering
Slide 22: Interconnect Solutions – Overview
Interconnect Solutions – Overview Revenues ($M) Revenue by Region 70% Harsh Environment 30% Specialized Applications Latin America 2% Middle East & Africa 3% Transportation Defense Aerospace Industrial 2010 $413M 426 453 341 413 2007 2008 2009 2010 22 Portfolio Operational Highlights +27% 2010 Organ
Slide 23: Control Technologies – Overview
Control Technologies – Overview 160 322 243 275 2007 2008 2009 2010 Revenues ($M) Revenue by Region Asia Pacfic 12% Europe 15% North America 71% Other 2% 40% Industrial Products Aero Components Aero Valves & Actuators 60% Aerospace Products 23 ~30% Aftermarket 2010 Data Portfolio Operational Highlig
Slide 24: We Are ITT
We Are Global Specialists in the Engineering and Manufacture of Critical Components that Drive a Diverse Array of Key Industries. We Create Enduring Impacts by Providing Highly Customized Solutions to the Hardest Technical Challenges that Our Valued Customers Face. We Are Leaders in Attractive Niche
Slide 25: Appendix
July 11, 2011 ITT Appendix
Slide 26: Net Asbestos Overview
Net Asbestos Overview Net Liability Reflects 10-Year Projection ~$16M Projected Average Annual Net Cash Outflows, After-Tax, Over Next 5 Years* ~$32M-$39M Projected Average Annual Net Cash Outflows, After-Tax, Over the Remaining Projected 5 Years* 26 * Data derived from 2010 ITT 10-K disclosure on a
Slide 27: Revenue change reconciliation by segment
27 (unaudited) ($ Millions) (A) (B) (C) (D) (E) = B+C+D (F) = E / A Revenue Revenue % Change Acquisition / Divestitures FX Contribution Change % Change 2010 12M 2010 12M 2009 2010 vs. 2009 2010 vs. 2009 12M 2010 12M 2010 Adj. 10 vs. 09 Adj. 10 vs. 9 New ITT Co 1,924 1,788 136 8% (4) 19 151 8% Indust
Slide 28: Water Co. Overview
July 11, 2011 Water Co. Overview
Slide 29: Safe Harbor Statement
29 Safe Harbor Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform
Slide 30: Water Co. Overview
July 11, 2011 30 Water Co. Overview • Leading positions in attractive markets across the water industry • Among the largest equipment and service providers in water and wastewater • Global distribution channel with established brands • Leading transport, treatment and test capabilities • Global scal
Slide 31: Water Industry Supply Infrastructure
31 Water Industry Supply Infrastructure Water Sources •Oceans •Lakes & River •Groundwater Irrigation 70% World Water Use •Crop Irrigation •Livestock Watering •Turf Irrigation Industrial Water 20% World Water Use •Light Industry •Oil & Gas, Power •Food & Beverage Building Services 10% World Water Use
Slide 32: Water Co. Strengths
July 11, 2011 32 Water Co. Strengths Leading global brands and channels Culture of innovation and strong applications expertise Large installed base drives strong aftermarket revenue Diverse customer base and product portfolio Disciplined productivity providing multi-year margin expansion opportunit
Slide 33: Water Co. Management Team
July 11, 2011 33 Water Co. Management Team Experienced management team with a demonstrated track record of growth and productivity execution Steve Loranger Executive Chairman Gretchen McClain CEO Mike Kuchenbrod WWW operating Unit Chris McIntire Analytics operating unit Ken Napolitano RCW operating
Slide 34: Water Co. Revenue Profile
34 Public Utility 40% Industrial 35% Commercial 13% Residential 9% Agriculture 3% Transport 44% Building Services 22% Treatment 12% Industrial Water 15% Test 4% Irrigation 3% Water Co. Revenue Profile Balanced portfolio Revenues ($B) Revenue by Geography (2010) Europe 39% United States 35% Other 15%
Slide 35: Acquisitions Broaden Our Reach
35 Acquisitions Broaden Our Reach • High single-digit organic growth • 2011 strategic focus • Geographic expansion • Leverage distribution • Invest in global rental expansion • High single-digit organic growth • Strategic focus • Geographic expansion – US and Asia • Expand capabilities • Leverage di
Slide 36: Defense Co Overview
Defense Co Overview July 11, 2011
Slide 37: Defense Co Safe Harbor
37 Defense Co Safe Harbor Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward‐looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform
Slide 38: Defense Co Overview
38 Defense Co Mission‐critical systems, sub‐systems and components for diverse customer needs – Cost‐efficient, platform‐agnostic product and service offerings Portfolio and investment priorities well aligned with U.S. DoD, FAA, NASA/NOAA, intelligence community, and global security priorities and t
Slide 39: Defense Co Technology Priorities
39 Defense Co Electronic Warfare / Electronic Warfare / Electronic Protection Electronic Protection Autonomy Autonomy Data to Decisions Data to Decisions Cyber Science & Cyber Science & Technology Technology Protection of systems and extension of capabilities across the electro‐magnetic spectrum • N
Slide 40: Defense Co Competitive Advantages
40 Defense Co Competitive Advantages Premier operating performance Attractive positions in long‐term growth areas including integrated electronic warfare, information exploitation, navigation and surveillance More diversified than most first‐tier suppliers Significant positions in non‐DoD markets (A
Slide 41: Defense Co Management & Governance
Defense Co Management & Governance Ralph F. Hake ‐ Chairman David F. Melcher Christina A. Gold John J. Hamre, Ph.D. Paul J. Kern Steven R. Loranger *9 Total Board Members Anticipated David F. Melcher CEO Mike Wilson Information Systems Chris Young Geospatial Systems Chris Bernhardt Electronic System
Slide 42: Defense Co Consolidated
Defense Co Consolidated 2008 2010 Revenue ($M) Revenue ($M) Op. Income ($M) Op. Income ($M) Production revenue decline partially offset by growth in services Maturity of major production programs drives margin improvement – Translated to margin high‐point in 2010 – Shift in revenue mix towards servi
Slide 43: Defense Co 2010 Revenue Segmentation
43 Defense Co Defense Co 2010 Revenue Segmentation Customers Customers Products vs. Services Products vs. Services Cost Plus vs. Fixed Price Cost Plus vs. Fixed Price Products 61% Services 39% Cost Plus 48% Fixed Price 52% ~27% Outside U.S. Armed Services Army Other Navy Air Force International (inc