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New Products

New Products. January 12, 2005. Profile. CUNO is a world leader in the design, manufacture and marketing of a comprehensive line of filtration products and systems for the separation, clarification and purification of liquids and gases.

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New Products

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  1. NewProducts January 12, 2005

  2. Profile CUNO is a world leader in the design, manufacture and marketing of a comprehensive line of filtration products and systems for the separation, clarification and purification of liquids and gases. Founded in 1912 Manufacturing in 7 countries Technology-based company Over 2,200 employees worldwide Large aftermarket business Public company since 1996

  3. Meriden Headquartered in Meriden 3

  4. Stafford Springs - Mfg. Enfield - Mfg. Meriden - HQ - R&D - Mfg. “Roots”/major operations in Connecticut 4

  5. Connecticut Presence • 926 Employees in CT (@ 12/31/04) • 94 jobs added in 2004 • Annual CT Payroll - $70M+ (2004) • Re-invested over $65M in CT facilities since 1998 • Total RD&E spending in CT over $60M since 1998 • Purchase over $28M annually from CT suppliers • Corporate commitment to Workforce Development • Successful partnership w/Asnuntuck Community College • Valuable support from CBIA, DOL, DECD CUNO has made significant commitment to CT operations 5

  6. Business Model New Products Operational Execution 3 Core Businesses Aftermarket Emphasis Business Model enables superior performance

  7. 1999 2000 2001 2002 2003 2004 Sales $220.6 $243.1 $244.4 $258.2 $288.2 $351.6 Gross Profit $96.6 $104.5 $108.4 $115.8 $131.0 $157.3 Gross Margin 43.8% 43.0% 44.3% 44.8% 45.5% 44.7% Operating Profit $23.7 $27.9 $30.4 $34.9 $40.2 $49.5 Operating Margin 10.7% 11.5% 12.4% 13.5% 14.0% 14.1% Net Income $14.8 $17.5 $20.0 $23.0 $26.8 $33.1 Net Profit Margin 6.7% 7.2% 8.2% 8.9% 9.3% 9.4% EPS $0.91 $1.05 $1.20 $1.36 $1.58 $1.93 (Diluted) Financial Performance $ Millions except EPS Note: 2002 - 2004 include favorable impact of FAS 142 • 2004 was sixth consecutive record year

  8. Stock Performance Performance Comparison +283% Peers +87% R2000 +80% NASDAQ +76% $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 Since Spin-off (9/16/96 – 1/7/05) $56.52 $15 97 98 99 00 01 02 03 04 Stock price has outpaced markets

  9. Selected for 5th consecutive year based on superior financial performance and favorable Corporate Governance rating

  10. Growth Strategy

  11. Growth Strategy Develop New Products • High value-added, . . . high margin products • Patented, proprietary technology • Focus on specialty filtration applications with large aftermarket potential • RD&E: 5% of Sales; high “yield” • “Pipeline” over $1B in market potential New Products driving top-line growth/bottom-line results

  12. Markets

  13. Sales Mix – Markets 2004 Healthcare Fluid Processing 27% 25% 48% Potable Water $352M Well established, strong/balanced business mix

  14. Fluid Processing $1.4 billion market growing at 1-3% • Growing recognition of need for filtration • Requirements for cleaner, safer fluids • Drive to reduce operating costs • Segments • General Industrial • Paint/Coatings • Electronics • Chemical/Petrochemical Target critical filtration needs

  15. Healthcare$1.1 billion market growing at 8-10% • Healthcare cost containment • Increased R&D spending • Segments • Pharmaceutical • Biological • Bio-Processing • Life Sciences/Genomics • Food/Beverage Focusing on emerging Healthcare markets

  16. Potable Water$3.0 billion market growing at 8-10% • Increased water safety concerns • EPA mandated drinking water standards • Food safety and quality • Segments • Residential • Food Service • Custom Engineered Products (CEP) Potable Water has significant global growth potential

  17. Key Success Factors?

  18. Key Success Factors • Effective Business Model • Clear/consistent Strategy • Emphasis on “Execution”

  19. Key Success Factors • Effective Business Model • Aggressive Re-investment Program • Technology/New Products • People

  20. Key Success Factors • Effective Business Model • Aggressive Re-investment Program • Performance-Based Culture

  21. Organization Development Performance Management Work Environment Performance-Based Culture Employee Development Pay for Performance Recruiting/Retention Programs/Processes in place to drive a Performance-Based Culture

  22. Key Success Factors • Effective Business Model • Aggressive Re-investment Program • Performance-Based Culture • Experienced Management Team

  23. Outlook

  24. CUNO Business Outlook - Fiscal 2005 • Assuming relatively stable global macroeconomic conditions • Maintaining aggressive investment programs • “Business Model” should enable continued strong performance • New Products should contribute to growth and improved profitability Optimistic about performance outlook in fiscal 2005

  25. Outlook $ Millions Sales Potable Water • Up 28% in 2004; - up 26% in local currency • Expect 28-30% growth in 2005 - 12-14% ex. PentaPure $170 ’00-’04 CAAGR 14.0% $133 $120 $107 $102 ’00 ’01 ‘02 ’03 ‘04 Healthcare $94 $81 $65 $70 ’00-’04 CAAGR 10.6% • Up 16% in 2004; - up 9% in local currency • Expect 9-11% growth in 2005 $63 ’00 ’01 ‘02 ’03 ‘04 Fluid Processing $88 ’00-’04 CAAGR 3.4% $79 $75 $72 $69 • Up 18% in 2004; - up 11% in local currency • Expect 6-8% growth in 2005 ’00 ’01 ‘02 ’03 ‘04 Double-digit Sales growth expected in 2005

  26. Business will need to speak up

  27. Major Challenges?

  28. Major Challenges • Global competition

  29. Major Challenges • Global competition • “Wal-Martization . . . ”

  30. Major Challenges • Global competition • “Wal-Martization . . . ” • Develop/Protect intellectual property (IP)

  31. Major Challenges • Global competition • “Wal-Martization . . . ” • Develop/Protect intellectual property (IP) • Workforce development . . . Talent retention

  32. Major Challenges • Global competition • “Wal-Martization . . . ” • Develop/Protect intellectual property (IP) • Workforce development . . . Talent retention • Cost of doing business in CT! Given global competitive environment, increasingly difficult for CT manufacturers . . .

  33. How Can CBIA Help?

  34. How Can CBIA Help? • Increase funding for Employee Training/ Development

  35. How Can CBIA Help? • Increase funding for Employee Training/ Development • Enhance R&D tax credit regulations

  36. How Can CBIA Help? • Increase funding for Employee Training/ Development • Enhance R&D tax credit regulations • Reduce Tax burden on CT manufacturers

  37. How Can CBIA Help? • Increase funding for Employee Training/ Development • Enhance R&D tax credit regulations • Reduce Tax burden on CT manufacturers • Address (i.e. reduce) rising costs • Healthcare • Taxes • Workers compensation • Energy All required to improve CT’s competitiveness

  38. Forward-Looking Statements This presentation contains statements relating to future events and the predicted performance of CUNO Incorporated, which may constitute forward-looking statements, as defined under the Private Securities Litigation Act. The Company recommends that you review the Company’s press releases and SEC Filings for the specific risks and uncertainties which may cause the actual results to materially differ from those expressed by such forward-looking statements. CUNO undertakes no obligation to release publicly revisions to the forward-looking statements to reflect new events or circumstances.

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