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Safe Harbor. Today's presentation includes forward looking statements that involve risks. Please refer to Form 10Q for the quarter ending March 31, 2006 for details on factors that may influence results. . . 2. Strong Foundation for the Future. Diversified business portfolioIndustryGeographyR
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1. Sanford Bernstein Strategic Decisions Conference
3. Strong Foundation for the Future Diversified business portfolio
Industry
Geography
Recurring revenue
Dramatic growth
Operational excellence
Enterprise leverage
Strong balance sheet
4. Portfolio Transformation 2000 through 2005 Strategic review of prospects for all businesses
Strengthened core businesses
Improved marginal performers
Divested non-core operations ($3.3 Billion revenues)
Pumps
Bearings
Drills
Dresser-Rand
Made 60 bolt-on acquisitions since 2000 ($3 Billion revenues)
5. Ingersoll Rand Revenue by Business % of Total Revenue
6. 2005 Revenue $10.5 Billion
7. Ingersoll Rand Earnings Per Share
8. Available Cash Flow
10. Dramatic Growth Innovation ? • $335 Mil. revenues in 2005
Services and solutions ? • $2.2 Bil. in 2005
• 21% Total revenues
• 83% Increase since 2000
• 15% Growth in 1Q 2006
Bolt-on acquisitions ? • 60 Acquisitions since 2000,
$3.0 Bil. of revenues
• 15 Acquisitions in 2005, $300 Mil. of revenues
Globalization ? • China, India, Czech, Russia
11. Operational Excellence Continuous productivity gains ? Material costs, lean processes
Low-cost manufacturing ? China, India, Turkey, Czech
Tax planning ? 16.5% tax rate in 2006
Managing investment
Working capital ? < 10% of revenue
Capital expenditures ? ~ 1.7% of revenues in 2006
Strong Balance sheet ? Debt/cap 26.1%
Target 30% to 35%
Cash $825 Million
12. Cash Deployment Growth through bolt-on acquisitions ? $400 Million in 2006
New products and technologies, filling strategic voids
Expand geographic coverage
Accelerate growth of recurring revenue
Dividends - target 20% - 30% of 3 year average available cash flow
68% Increase over the past 2 years
Share buyback – $2 Billion authorized
Excellent value at current prices
$930 Million available for repurchase (March 31, 2006)
Target to purchase $800 Million in 2006
13. Financial Targets/Scorecard Financial Targets 2001 2002 2003 2004 2005
Consistent revenue growth
4-6% Organic (Neg.) 3% 5% 11% 9%
15% operating margin 5.1% 7.6% 9.5% 11.9% 12.9%
12% -15% EPS growth* (Neg.) 130% 68% 54% 31%
15% ROIC 8.6% 8.3% 9.8% 13.0% 14.0%
Annual available cash flow
of $800 Million+ $619M $687M $630M $804M $784M
14. Financial Comparisons
15. Price Earnings Ratio Based on 2006 EPS Estimates
16. Increase Investments for Growth by $80 Million in 2006 New product/new customer development
Expand geographic reach
Channel expansion
Recurring revenue growth
17. Expansion of auxiliary power unit (APU) for trucks
Engineering Center in Czech Republic
Cold chain expansion
India
China
Bus air conditioning for China Growth Investments - Climate Control Technologies
18. Growth Investments – Compact Vehicle Technologies Continued expansion of Bobcat line
Europe: New $23 Million expansion in the Czech Republic
China
Expansion of manufacturing capability
Branch expansion
19. Growth Investments – Construction Technologies New product development ? Milling machines, small pavers and attachments
Expansion of distribution in China
20. Growth Investments – Industrial Technologies New product development ? Expand Unigy and Nirvana concept, new portable impact tools
Expansion of air centers in Asia, Europe and Latin America
Grow channel worldwide for tool distribution, especially in developing markets
21. Growth Investments – Security Technologies New products focused on adding electronic capabilities to Schlage commercial and residential lock products
Expand product coverage and distribution channels in China, India, Korea and Australia
Expand residential lock business in Big Box customers and National Builders
22. Opportunity Completed record year 2005, expecting record 2006 earnings
Successfully executing sound long-term growth strategy
Well positioned to deliver
Consistent profitable growth
Strong cash flow
Deploying cash to generate value for shareholders
Diversified business portfolio and lean business model will dampen impact of future market cycles
23. 100th Anniversary of Stock Exchange Listing