Agenda: 2015 Analyst and Investor Meeting Overview Mike Lamach Business Operating System Todd Wyman & Paul Camuti John Evans Gary Michel Dave Regnery Q&A Break: 15 Minutes Sustainability & Energy Efficiency Manlio Valds Randy…
Overview Mike Lamach Chairman and CEO 2015 Investor and Analyst Conference
Our Model to Deliver Shareholder Value Sustainable, Profitable Growth and Shareholder Value Accelerating Operational Balanced Revenue Growth Excellence Capital Allocation Well positioned in both Strong, recognized brands…
Employee Commitment, Engagement and Development Critical to Change Culture Employee Engagement Score Top-quartile performance for peer group and overall manufacturing companies High participation rate at 95% Satisfaction…
Distinguished Safety Performance Due to Rigor, Engagement of Employees Total Recordable Incident Rate Lost Time Incident Rate 0.40 2.00 World Class Performance World Class Performance 0.30 1.50 1.00 0.20 0.50 0.10 0.00…
Our Business Operating System is Standard Framework for How We Operate Longevity Multi-year Performance Trend Over 5 Years Foundation of our commitment Top Top Top Top to operational excellence and Quartile Quartile Quartile…
Value Stream Expansion Offers Significant Opportunity to Grow and Expand Margins Product Growth Team-Led Value Streams Product Sales Force Engineering & Supply Capability & Management Technology Chain Channel Strategy Idea…
Ingersoll Rand Possesses Expertise to Address Pressing World Challenges Energy Consumption Urbanization Food & Water Scarcity Climate Change Industrial Productivity & Efficiency 9
Much Progress More Opportunity Ahead Strong momentum and further upside Attractive end markets Leading brands and growth through innovation Substantial position in developing markets with significant potential Excellent management…
Business Operating System (BOS) A systematic way to grow and improve execution Paul Camuti SVP, Innovation and Chief Technology Officer Todd Wyman SVP, Global Operations & Integrated Supply Chain 2015 Investor and Analyst Conference
Premier Performance Engaged Employees Delighted Customers Confident Shareholders 12
Operational Excellence Ingersoll Rand Business Operating System (BOS) Goal Deployment Process Functional Excellence Value Stream Transformation Common Systems 13
Maturing our Business Operating System Delivering Functional Excellence PRODUCT GLOBAL INTEGRATED MANAGEMENT SUPPLY CHAIN Product Development Process: generated or Strategic Analytic Capabilities Materials Playbook improved 60+…
Value Stream Evolution Customer Value Customer Quote Cash Value Streams 2011 2013 Separation of Results Cost of Delivery Inventory Safety Incident Leverage Employee Poor Quality Turns Rates Engagement 15
Value Stream Expansion Expanding the opportunity to grow margins Customer Value Customer Ideation Quote Cash Value Streams 2011 2013 16
Product Growth Team (PGT)-Led Value Streams Common Goals: To grow market share and expand margins Product Growth Team-Led Value Streams Product Engineering Global Integrated Management and Technology Supply Chain Strategy and…
Transformation Opportunities Opportunity Opportunity 2014 Accomplishments 100% 100% Average PGT revenue growth 4x the rest of 2015 80% Ingersoll Rand All PGT-led value streams met 2014 2016 margin expansion goals and exceeded…
Business Operating System (BOS) in Action Reaping Encouraging Results Commercial HVAC Power Tools Residential HVAC NA/EMEA Product Management Product Management Product Management Strategic analytic Portfolio management Market…
Power Tools Application of BOS Tools John Evans President, Power Tools 2015 Investor and Analyst Conference
Ingersoll Rand Power Tools A Leading Industrial Power Tools Business Provider of premium power tools and products to global customers Broad vertical market coverage Outstanding brand equity and reputation for quality and reliability…
We Applied the BOS to our Strategy Analysis and Data-Driven Decision Making Analytics revealed a portfolio of product groups with varying levels of competitiveness We identified the most attractive markets in which to compete - and…
We Applied the BOS to our Strategy Analysis and Data-Driven Decision Making Analytics revealed a portfolio of product groups with varying levels of competitiveness We identified the most attractive markets in which to compete - and…
Transforming our Key Value Stream We identified an opportunity to profitably grow revenue by improving delivery leadtimes We systematically applied the BOS playbook to deliver significant improvement improving customer We reduced…
Residential HVAC Application of BOS Tools Gary S. Michel SVP and President, Residential HVAC 2015 Investor and Analyst Conference
Residential HVAC Multiple brands, channels, plants and customer buying behaviors Manufacturing Portfolio Channels to Market Customers Tyler, Texas Heating/Cooling Dealer Sales Single Family (Ducted/Ductless) Offices…
Strategic Priorities A Product for every home 75% of portfolio new since 2011 Compelling Brand Total Market Differentiated Experience Solutions Solutions Channel improvements Operational excellence Nexia diagnostics and Total…
Ingersoll Rand Project BOS Common system of capabilities for successful project execution Project Management Portfolio Management Process New Technology New Product Process Development Ingersoll Rand Project Portfolio…
Ingersoll Rand Product Development Process Product development rigor = Product launch success On time, below cost, delighted customers, competitive differentiation Product Development Process 14/16 SEER Competitively serving opening…
Variable Speed Product Development Rigor Data-driven choices, executed precisely for competitive differentiation and delighted customers Technology Production Testing & Commercialization Integration Preparation Simulation…
Results A home run for homeowners, contractors and Ingersoll Rand Homeowners Home energy efficiency savings Precision comfort maintained within one-half of one degree Quietest, most reliable variable speed offering in industry…
Streamlined Design of Variable Speed Product Which system would you rather build and service Competitor A Trane TruComfort Competitor B American Standard AccuComfort 32
Summary Leveraging Business Operating System to create value for homeowners, channel partners and business Profitable growth and margin expansion 14/16 SEER Competitively serving opening price point would recommend Variable Speed…
Trane Light Commercial Unitary Focus on Product Growth Team Led Value Streams Dave Regnery President, HVAC Commercial North America, Europe and Middle East (EMEA) 2015 Investor and Analyst Conference
Applying Product Growth Teams Teaming product management, supply chain and engineering to work towards General / Strategic Management the same goals Grow market share Increase margin Product Management Value of Product Growth Teams…
Introduction to Light Commercial Unitary North America Light Commercial Rooftop market is 1.7B with long term historical growth rate of 4% Voyager Market Size by Tonnage 30% Office & Big Trane LCU Portfolio Box Stores 3 to…
Light Commercial Unitary Product Growth Team Standard Work Business Operating System (BOS) in action POWER TOOLS Production Preparation Market Segmentation Visual Management Process (3P) Conduct detailed Guide for the goal Helps…
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Lynn Haven Creating a model line TAKT attainment 29% increase Reduced floor space…
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Managing for Daily Improvement Standard work and visual management Actions are…
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Large Metro Area Improving speed of time to fill QUOTE LEAD…
Successes Due to Product Growth Team Alignment and Standard Work Standard tools applied throughout the value stream deliver customer value Example: Fulfillment Center Stocking local inventory Local empowerment makes best decision…
Product Growth Team-Led Value Streams is All About Profitable Share Growth Steady Light Commercial Unitary market share and revenue growth from 2012-2014 Revenue Growth Double Digit Margin Enhancement +200 basis points Market…
Product Growth Teams are the Next Generation of Operational Excellence Product Growth Teams are fueling growth and margin enhancements This concept is easy to understand, but requires disciplined execution and is difficult to…
Sustainability and Energy Efficiency Environmental Regulations Manlio Valds President, Compressed Air Systems and Services 2015 Investor and Analyst Conference
Todays Regulatory Environment Macro-economic trends driving increase in regulations Greenhouse Gas Energy Efficiency Refrigerants Emissions Active and engaged beyond compliance Company subject matter experts participate in…
Applying BOS to Address Regulations Tools to translate and make data-driven decisions around regulations Modeling & Customer Insights Innovation Portfolio Simulation Design for Networks of Precision Machining Sustainability…
Applying BOS for Greater Leverage Portfolio Commonality Examples Network Of Excellence Centrifugal expertise in gas - Compression compression applicable to - Refrigeration engineered centrifugal and - Heat exchange applied HVAC…
Opportunities Beyond The Box System Efficiency Service & Lifecycle Efficiency Regulatory environment sets Services ensure as designed system minimum standards at component performance level only Capabilities and expertise to design…
Regulation Inspired Innovation Randy Newton Vice President Enterprise Engineering 2015 Investor and Analyst Conference
Demand for Energy Efficiency Portfolio of highly efficient products allow differentiation in the marketplace to address key markets Commercial Building Expected Residential Energy Use Energy Use by 2025* Misc. 4% Plug Loads 19%…
Global Opportunities Demand for sustainable growth 75% of infrastructure globally that will exist in 2050 has yet to be built In India, 85% of buildings that will exist in 2050 have yet to be built We will see a 70-85% increase…
Our Path Forward Leveraging our strengths Refrigerants Energy Management & Services 36 invention disclosures in past 2 years 13 expected patents New Products & Services Technology 52
Comfortable, Sustainable, Efficient Environments A world of sustainable progress and enduring results Growing Urbanization Growing Population Drive for Competitiveness Innovation 53
Sustainability and Energy Efficiency Transport Refrigeration Ray Pittard President, Transport Solutions 2015 Investor and Analyst Conference
Macro Global Trends External factors that impact Transport Refrigeration Urbanization China cold chain infrastructure Food Waste due to Spoilage Emerging countries excess of 50% food spoilage Traceability within the Cold Chain…
Focus on Sustainability and Energy Efficiency in Transport Refrigeration Thermo King products and technology address these critical trends European Union (E.U.) Anti-idling Laws F-gas Regulation Auxiliary Power First to offer truck…
In-Depth Review: NA Trailer Market Complex environment in North America North America Trailer business - Large, profitable and growing Regulatory challenges in REGULATION transportation CUSTOMER VALUE - EPA Mandated Tier IV…
Example: Precedent Portfolio Solve customer need to meet emission standards but also address economic issues with fuel and operational efficiency Resulted in the development of the Precedent portfolio roadmap and a two-tier product…
Whats Next Remain the leader in efficiency for future generation platforms Transport industry is going through similar +2020 situation with new E.U. emissions standards We plan to leverage tools, strategic thinking and learnings…
VRF Markets and Opportunity for Trane Variable Refrigeration Flow Systems Jeff Watson Vice President, Product Management and Marketing HVAC Commercial, North America 2015 Investor and Analyst Conference
Overview of HVAC Systems and Services within Commercial Applications Applied - Chilled-Water, Air-Handling Variable Air Volume (VAV) System 61
Overview of HVAC Systems and Services within Commercial Applications Unitary - Rooftop Variable Air Volume (VAV) System 62
Overview of HVAC Systems and Services within Commercial Applications Variable Refrigerant Flow (VRF) System 63
Overview of VRF Global Market Growth VRF is one of the fastest growing product lines in North America VRF Sales by Geography 4% Total HVAC Equipment 5% VRF Growth Rate Market (North America 2014 vs 2013 2014) +4.8B Asia Pacific…
Commercial Applications Recommended HVAC system applications by vertical Data Lrg. Sm. Small K-12 Centers Medical Warehouse Hotels Office Office Retail Retail Applied Unitary VRF 65
System Comparisons Good Poor Feature Applied VRF Unitary Life Cycle Cost Applied System Strength Efficiency Simultaneous Heating/Cooling VRF System Retrofit (No A/C) Strength Unitary First Cost System Strength Safety…
Trane is Well Positioned for Success with VRF We believe Trane is the trusted systems partner because we advise customers on how to pick the right system to meet their facility goals In addition to product, our strength is local…
An Unmatched Strategic Position A 10B group of six growth-oriented SBUs led by high-performing leaders and teams Trane and Thermo King are world leaders in HVAC and refrigerated transportation An outstanding network of global…
We are in Structurally Attractive Markets Our base markets are growing on the strength of secular global drivers: energy efficiency, urbanization, food and pharmaceutical safety, regulation and others Short-term cyclicality reverts to…
The Market Outlook is Favorable North America has turned the corner; solid growth in high growth markets including China and Southeast Asia Strength in non-residential and residential HVAC markets; transport positive Regional HVAC+R…
We are Making Smart Growth Decisions We are investing to meet customer needs for energy efficiency, reliability, customer experience, and smart, connected systems We are allocating our resources and people to a short list of critical…
The FRIGOBLOCK Acquisition is on Track Closed the acquisition on March 4, 2015 Integration is proceeding to plan; deep engagement from all functions and work streams Company values and culture are a strong fit with Ingersoll Rand…
We Will Deliver Strong Financial Results We have been executing to our plan We have aggressive but achievable targets for revenue and operating margin Revenue Drivers Global market growth Share growth 13-14% 12.2% VRF and HVAC…
Industrial Segment Update Robert Zafari Executive Vice President, Industrial Segment 2015 Investor and Analyst Conference
Our Businesses are in Leading Positions A 3.3B group of five growth-oriented Strategic Business Units Ingersoll Rand, ARO and Club Car are 1 or 2 brands in their core markets World-class engineered and mission-critical products,…
We are in Structurally Attractive Markets Leveraging a large array of growing industrial segments worldwide Demanding industrial customers understand and pay for value Industrial Segment Revenue Distribution by Vertical Market 2014…
The Market Outlook is Moderately Favorable Regional balance enables focus on multiple higher growth regions End market distribution limits cyclical exposure and creates opportunity Regional Industrial Outlook Trends North America…
Growth Driven by Industrial Megatrends Key initiatives address five durable industrial megatrends Investments advance the Industrial segments four fundamental strategies BOS defines the execution of segment growth programs Industrial…
We are Executing on the Cameron Acquisition Integration Growth Functional integration actions complete Strong plant air activity, especially in North Synergies on track America Brand, product, and channel survey in Engineered air…
We Will Deliver Profitable Growth Industrial continues journey for revenue and operating margin growth Clear levers to drive revenue and operating margin gains Revenue Drivers 15-16% Global market growth Share growth 14.8%…
Financial Summary Sue Carter Senior Vice President and CFO 2015 Investor and Analyst Conference
Balancing Capital Allocation Alternatives Creates Shareholder Value Balance Sheet BBB Rating No debt maturities until 2018 Organic Investment Competitive New Product Dev. Dividend BOS expansion Peer group payout…
Organic Investment Capital Expenditures (M) Continuing investments in New 242 234 250 Product Development and Business Operating System Modest future CAPEX needs - Minimal Bricks and Mortar Significant ongoing investment in ERP…
M&A Framework Maintaining disciplined process; pipeline built from strategic plan Leverage existing businesses products, technologies and geographies Accretive to EBITDA, EPS and ROIC first full year of ownership Best talent on…
Free Cash Flow Millions 950 to 1,000 860 810 2013 2014 2015 Target Excludes restructuring, one-time spin costs and refinancing premium Long term goal 1X net income 91
Full-Year 2015 Forecast Y-O-Y Adjusted Revenue Operating Change Margin Climate Reported 2% to 3% 12.5% to Organic--ExFX 4% to 5% 13.5% Industrial Reported 13% to 14% Organic 14.5% to 4% to 5% 15.5%* FX[-3%]and…
Changes From Prior 2014 to 2016 forecast GDP Growth - Slower than expected Asia and South America 17% drop in Euro vs - Revenue drag offset by acquisitions - (0.25) impact on EPS Lower than expected inflation End markets - US…
Ingersoll Rand Targets 2013 to 2016 Nov 2013 Forecast May 2015 Forecast Revenue Growth 4% to 5% 4% to 5% Operating Income Growth 13% to 15% 13% to 15% Operating Margin Change 85 bps to 100 bps 85 to 100 bps Adjusted EPS 15% to 20%…
Ingersoll Rand Total Shareholder Return % Change* 423 Strong and liquid balance sheet Cash flow to fund future growth 308 Improving financial performance - Margins 222 - Working capital management 165 - ROIC Balanced capital…
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