Allegion Plc · NYSE:ALLE
Allegion — Investor Presentation (November 2013)
36 slides from Allegion's investor presentation, Nov 18, 2013
Slide 1: Equity Roadshow Presentation
Exhibit 99.1 Equity Roadshow Presentation November 2013 PROPRIETARY AND CONFIDENTIAL
Slide 2: Safe Harbor
Safe Harbor This presentationincludes “forward-lookingstatements,” which are statements that are not historical facts, including statements that relate to the mix of and demand for our products, trends and performance of the markets in which we operate, the proposed spinoff of the commercial and res
Slide 3: Transaction Overview
Transaction Overview Ticker ALLE Exchange NYSE Exchange ratio 1 share of Allegion for every 3 shares of Ingersoll Rand Expected number of shares 96.2mm th November 11 Record date declared th November 18 When issued trading date nd November 22 Record date st December 1 Distribution of Allegion shares
Slide 4: Company Overview
XXX XXX XXX XXX Company Overview 4 PROPRIETARY AND CONFIDENTIAL
Slide 5: Overview
Overview Annual revenue ~$2B+, EBITDA ~$400m Leading global provider of security solutions that help keep people safe where they live, work and visit Well-positioned in attractive security industry Strong growth drivers and ability to compete worldwide Organic and M&A growth opportunities We create
Slide 6: Investment Highlights
Investment Highlights Robust portfolio of industry leading products and brands Teams of global experts driving innovation and customer solutions Positioned for organic and acquisition-led growth Industry-leading financial performance and strong cash flow Broad distribution with over 7,000 channel pa
Slide 7: Robust Security Industry Growth Drivers
Robust Security Industry Growth Drivers New construction commercial verticals improving Institutional verticals stabilizing, driving increased opportunities Macro-economic Single-family and multi-family starts continue recovery Large installed base supports replacement demand Geographic expansion op
Slide 8: Overview of Allegion's Key Markets
Overview of Allegion’s Key Markets Electronic Security: Access Control Mechanical Security: Locks North RoW America 14% North 20% RoW 35% America 35% Western Europe 23% Asia Pacific 43% EMEIA 30% 1 1 Est. $2.2 billion market Est. $21-23 billion market 2 3 Long-term growth rate : 6-7% Long-term growt
Slide 9: Key Allegion Products
Key Allegion Products Residential Commercial & Institutional Secure the Door Secure the Door Exit Devices Electronic Locks Mechanical Locks Handlesets Key Systems Deadbolts Electronic Locks Home Intelligence Readers Hinges Credentials Protect the Door Electronic Strikes Door Kick Plates Frame Lock G
Slide 10: Leading Brands with Strong Global Market Positions
Leading Brands with Strong Global Market Positions Market Leading Brands Allegion’s Market Position #1 in North America (Commercial and Residential) 1 #1 in Italy #2 in France 2 #3 in U.K. 3 #2 in Germany #3 in China Market-leading positions across the portfolio 1 Source: Databank – Cerved Group; 2
Slide 11: Diverse Revenue Base
Diverse Revenue Base Revenue by Product Category (2012 ~$2B) Balanced portfolio Award winning product designs Opportunity for extension into emerging markets leveraging Allegion strengths (brand, channel, product) Combining product breadth and Revenue by Geography (2012 ~$2B) depth with functionalit
Slide 12: Global Presence with Robust Network of Channel Partners
Global Presence with Robust Network of Channel Partners Allegion Wholesaler Distribution Systems Retail / OEM Integrator Big Box E- Distribution / Retail Comm Developer / End user National Builders End User Consumer Recognized End Users Developed network of more than 7,000 channel partners 12 PROPRI
Slide 13: Seasoned Management Team and Strong Board Leadership
Seasoned Management Team and Strong Board Leadership Board of Directors David Kirk Michael Martin Carla Cico Petratis Hachigian Chesser Welch III Director Chairman Lead Director Chair of Chair of Audit Chair of Compensation and Finance Corporate Governance David Petratis and CEO & Chairman Nominatin
Slide 14: Strategic Priorities
Strategic Priorities 14 PROPRIETARY AND CONFIDENTIAL
Slide 15: Overview of Allegion Growth Strategy
Overview of Allegion Growth Strategy Expand In Core Markets Opportunistic Innovation in Existing Acquisitions and New Product Categories Growth in Emerging Operational Excellence Markets 15 PROPRIETARY AND CONFIDENTIAL
Slide 16: Expand In Core Markets
Expand In Core Markets Strong institutional presence: education, healthcare, Vertical Markets government Expand in commercial: office, hospitality, multi-family Grow electronic security solutions Portfolio expansion Product Portfolio Channel development (locksmith and wholesaler) Fill out product se
Slide 17: Innovation in Existing and New Product Categories
Innovation in Existing and New Product Categories Key Recent Product Launches – Electronic Security Schlage Touchscreen Interflex eVayo CISA eSigno Deadbolt Lock Platform Platform Schlage AD/CO Electronic Products aptiQ Credential and Reader Platform Strong pipeline of new product innovation 17 PROP
Slide 18: Innovation in Existing and New Product Categories (cont'd)
Innovation in Existing and New Product Categories (cont’d) Key Recent Product Launches – Mechanical Security Von Duprin Concealed Everest Key Systems Continuous Hinge LS/FS Series Steel Doors Vertical Cable System and Frames Strong pipeline of new product innovation 18 PROPRIETARY AND CONFIDENTIAL
Slide 19: Growth in Emerging Markets
Growth in Emerging Markets Market Market China Fundamentals Strategies Rising standards of Expand distribution living Enhance product Continued portfolio Latin America urbanization Develop local Increasing safety channel support demands Localize product Opportunity to and supply chains shape industr
Slide 20: Operational Excellence
Operational Excellence Value Stream Approach – End to End Waste Out Front End Integrated Supply/Ops Functional Sales Excellence Human Resources Customer Care Plan Supply Build Deliver Invoice Service Engineering Growth/Value Information Tech Improved customer delivery time Growth, Productivity, Empl
Slide 21: Opportunistic Acquisitions
Opportunistic Acquisitions Platforms Strategy Utilize strong free cash flow to fund acquisitions Target acquisition profile: Emerging markets Broadens product portfolio Expands geographic footprint Emerging technology Provides synergy opportunities Expand product Provides solid returns on portfolio
Slide 22: Financial Overview
Financial Overview 22 PROPRIETARY AND CONFIDENTIAL
Slide 23: Strong Track Record of Financial Performance
Strong Track Record of Financial Performance Solid historical performance Industry dynamics support stable and consistent growth Robust pipeline of organic growth opportunities EBITDA margins have remained resilient through past economic cycles Margin improvement opportunities in Europe and Asia Pac
Slide 24: Solid Growth and Margin Expansion
Solid Growth and Margin Expansion Revenue ($M) Revenue Growth (YOY) 2011 2012 Pricing 2.3% 2.3% Volume / Product mix (1.3)% 0.3% FX 1.7% (1.3)% Total 2.7% 1.3% Adjusted Operating Income & Margin ($M)¹ Expanding operating margin Operational excellence initiatives Price and productivity offsetting inf
Slide 25: Industry-Leading Financial Performance
Industry-Leading Financial Performance 2012A EBITDA Margins¹ Best-in-class margin profile Note: EBITDA margins represent a historical, non-GAAP measure for each company. Peer margins per public filings and company investor documents ¹ EBITDA defined as operating income plus D&A; excludes restructuri
Slide 26: Overview of 2013 Year-to-date Performance
Overview of 2013 Year-to-date Performance Revenue ($M) 9 Months 2013 Revenue Growth vs. 9. Months 2012 September ’13 YTD Volume / product mix 2.4% Pricing 1.5% FX (0.3)% Acquisitions / divestitures (0.8)% Total 2.8% Adjusted Operating Income & Margin ($M)¹ 17.4% Adj EBITDA¹ $310 $302 Adj EBITDA %¹ 2
Slide 27: Strong Cash Conversion and Cash Flow Generation
Strong Cash Conversion and Cash Flow Generation Free Cash Flow¹ and Conversion ($mm) Consistent cash generation and conversion % of EBITDA — Free cash flow conversion close to 100% — Maintain high conversion ratio as business grows Capital Expenditures and % of Sales ($mm) Minimal capital expenditur
Slide 28: Well Capitalized Balance Sheet and Strong Liquidity Position
Well Capitalized Balance Sheet and Strong Liquidity Position Proforma Capital Structure and Leverage Key Financial Policies 2.75-3.25x range of unadjusted debt x LTM / EBITDA ($mm) Amount EBITDA¹ Leverage Maintain leverage over time with Cash and Cash Equivalents $100 cash generation utilized to gro
Slide 29: Investment Highlights
Investment Highlights Robust portfolio of industry leading products and brands Teams of global experts driving innovation and customer solutions Positioned for organic and acquisition-led growth Industry-leading financial performance and strong cash flow Broad distribution with over 7,000 channel pa
Slide 30: Appendix
Appendix 30 PROPRIETARY AND CONFIDENTIAL
Slide 31: Overview of Business Segments
Overview of Business Segments Americas EMEIA Asia-Pacific Security products & solutions in Security products & solutions in 15+ years in Asia-Pacific region 30+ countries in the Americas ~85 countries Security products & solutions in 300+ sales people, 100+ 7 production sites across Europe ~14 count
Slide 32: Corporate Timeline & History of Allegion
Corporate Timeline & History of Allegion 1920 1942 1974 1996 2000 2001 2008 Schlage wins the first Steelcraft Doors, Ingersoll Rand acquires Schlage, Acquires Acquires Acquires Acquires patents granted for established in 1927, including Von Duprin, and LCN Steelcraft Interflex Kryptonite XceedID the
Slide 33: Allegion Management Team
Allegion Management Team David Petratis Chairman, President and CEO Former Chairman, President and CEO of Quanex Building Products Corporation Member of the board of directors at the University of California, Irvine Graduate School of Management, the California State (Fullerton) Quality Advisory Boa
Slide 34: Allegion Management Team
Allegion Management Team Tracy Kemp Vice President, Chief Information Officer Former Vice President Information Technology for the Ingersoll Rand Security Technologies and Residential Solutions sectors 23 years of experience in information technology and telecommunications Bachelor’s degree in compu
Slide 35: Allegion Management Team
Allegion Management Team Barbara Santoro Senior Vice President, General Counsel & Secretary Former Vice President of Corporate Governance and Secretary of Ingersoll Rand Member of the American Bar Association, the American Corporate Council Association and the Society of Corporate Secretaries and Go
Slide 36: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation ($mm) LTM Sept. 30 9 months ended Sept. 30 Full-Year 2013 2013 2012 2012 2011 2010 Revenue $2,089.1 $1,542.9 $1,500.4 $2,046.6 $2,021.2 $1,967.7 Net Income $80.3 $21.6 $160.9 $219.6 $218.1 $191.8 Adjustments to arrive at operating income