Third Quarter 2003 Results October 22, 2003 - PowerPoint PPT Presentation

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Third Quarter 2003 Results October 22, 2003

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Named Supplier of the Year by Lowe's Home Improvement Warehouse. First among 25,000 vendors ... Outlook Gradual Improvement. Climate Control Similar ... – PowerPoint PPT presentation

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Title: Third Quarter 2003 Results October 22, 2003


1
Third Quarter2003 ResultsOctober 22, 2003
2
Safe Harbor
Forward looking statements that involve risks.
Please refer to June 30, 2003 Form 10-Q for
details on factors that influence results.
3
Third-Quarter Diluted EPS
2003
Guidance
Actual
  • Continuing Ops. .74 - .79 .88
  • Discontinued Ops.
  • Operations (.04) (.06)
  • Gain on Sale - .06
  • .70 - .75 .88

Net income increased by 73
4
Third-Quarter 2003 Results
  • Activity levels improved, some key markets
    sluggish
  • Outgrowing end markets by share gains and
    recurring-revenue growth
  • Strong operating performance in third quarter
  • Operating margins improved to 9.8
  • Organic revenue up 8
  • Increased revenues in all four sectors

Progress in executing strategy
5
Third-Quarter 2003
IR is a global industrial enterprise with market
leading brands We are dedicated to driving
Shareholder Value by achieving
Dramatic Growth ...
by focusing on innovative solutions for our
customers
Operational Excellence ...
by pursuing continuous improvement in all our
operations
Dual Citizenship ...
by bringing together the talents, energy and
enthusiasm of all IR people
6
Dramatic Growth
  • Delivering innovative products and solutions
  • Growing recurring revenue
  • Leveraging bolt-on acquisitions

Organic revenue growth of 8 in challenging
environment
7
Innovation Magnum Refrigerated Container
  • Hamburg Sud purchased 1,000 additional units
  • Orient Overseas purchased 800 Magnum units

8
Innovation Bobcat Compact Equipment
9
Innovation Nirvana Air Compressor
  • Air Solutions orders up 14 despite depressed
    industrial markets
  • Shipped 800 Nirvana units year to date
  • Customer solution that delivers bottom-line
    results

Creating customer demand
10
Productivity Solutions Titanium
32 increased sales
11
Recurring Revenue Total Ingersoll-Rand
664
Millions
574
542
2003 3Q
2002 3Q
2001 3Q
Reported, including Engineered Solutions
16 Growth compared to 2002
12
Recurring Revenue Hussmann
4,900
of National Service Contracts
2003 3Q
Recurring revenue comprised 34 of sales
13
Recurring Revenue Air Solutions
11,750
of AirCare Contracts
8,500
3,447
1,039
2002 Year end
2001 Year end
2000 Year end
2003 3Q
48 of Air Solutions revenues came from
aftermarket
14
Acquisition of IAS Industries
  • Security systems integrator
  • Access control
  • Closed circuit television
  • Alarm monitoring systems
  • 8 offices throughout U.S.
  • 27 million revenues in 2002
  • Integrated into IRs Electronic Technologies
    Corporation and Interflex businesses

Provide customers with complete security solutions
15
Operational Excellence
  • Restructuring on target for full-year EPS of
    0.25
  • Managing costs and inventories
  • Improving working-capital management
  • Maintaining high customer-service levels

16
Operational Excellence Lean Branch Initiative
  • Capture and establish best-practice branch
    procedures
  • Focused on three areas
  • Back-office consolidation
  • Technician productivity
  • Parts sourcing
  • Operating earnings improved 45 year-over-year

Target to reach 15 operating margin during 2004
17
Operational Excellence Security and Safety
  • Named Supplier of the Year by Lowes Home
    Improvement Warehouse
  • First among 25,000 vendors
  • Criteria Product innovation, merchandising,
    on-time deliveries and quality
  • Most-preferred lock by professional builders,
    remodelers and architects

Recognition from large customers and end users
18
Dual Citizenship IR Retail Solutions
65 million sales on target to reach 85 90
million goal
19
Dual Citizenship
  • IR Works and Supplier Solutions
  • Focused on enterprise-wide cross selling
    opportunities and sales to key suppliers
  • 2002 total 6.2 million
  • YTD 2003 revenues 28 million
  • Full-year goal 40 million

Dual citizenship fueling revenue growth
20
Third-Quarter 2003
  • A successful quarter
  • Exceeded earnings target
  • Demonstrating value of innovation and operational
    excellence
  • Building a stronger company able to perform
    well in all market conditions

We are executing our strategy
21
Third Quarter 2003 Results
millions, except Diluted Earnings/Share (EPS)
Revenues 2,519.5 Operating Income 224.3 Margin
8.9 Interest Expense (42.4) Other
Expense (3.7) Earnings before taxes, continuing
operations 178.2 Taxes, continuing
operations (24.9) Earnings after taxes,
continuing operations 153.3 Discontinued
operations, net of tax 1.3 Net Earnings
154.6 EPS Diluted Continuing
Operations 0.88 Discontinued Operations - 0.8
8
22
Revenues Continuing Operations
2003 Q3 Results Year-over-year change
27
9
3
1
Latin America
Asia Pacific
North America
Europe
Excludes Dresser-Rand Buyouts
Revenue gains in all geographic regions
23
Climate Control
  • Hussmann
  • Revenues flat (ex. currency)
  • Continuing restraint in capital spending by U.S.
    supermarket chains
  • Recurring revenue up 19
  • Thermo King
  • Revenues up 8 (ex. currency)
  • Key drivers
  • Worldwide truck, trailer and bus
  • Recurring revenues
  • Operating margin improvement
  • Revenue growth
  • Price improvement
  • Productivity programs

Millions
684
639
Operating Margins
9.8
6.5
2003 2002
24
Air and Productivity Solutions
Millions
  • Air Solutions
  • Revenue up 10 (6 ex. currency)
  • New products and services
  • Strong recurring revenues
  • Productivity Solutions
  • Revenues up 6
  • Margin improvement
  • Revenue growth
  • New products
  • Operational improvements

348
321
Operating Margins
7.6
3.3
2003 2002
25
Dresser-Rand
Millions
  • Revenues up 64
  • 35 ex. buyouts
  • Strong recurring-revenue growth of 31
  • Strong operational improvement
  • Profit improvement program on-track
  • Offset by non-recurring charges

379
231
Operating Margins
3.9
1.6
2003 2002
26
Infrastructure
Millions
  • Revenues improved by 11 (7 ex. currency)
  • Bobcat revenue growth of 19 (15 ex. currency)
  • Growth in new products
  • Improving North American markets
  • Improved rental account activity
  • IR branded revenues up 7 (4 ex. currency)
  • Club Car gained market share in a soft market

692
624
Operating Margins
9.8
7.2
2003 2002
27
Security and Safety
Millions
  • Revenues grew by 6 (5 ex. currency)
  • Strong growth of 20 in worldwide solutions
    business
  • Margin improvement
  • North America volume
  • Favorable product mix
  • Cost control

417
394
Operating Margins
21.2
18.0
2003 2002
28
Manage for CashWorking Capital as a of
Revenues
  • Working Capital
  • A/R Inventory - A/P

Continuing Operations
15
11.7
10.6
10.7
2002
10
Working Capital of Revenues
6.0
5
9.9
9.8
8.6
2003
0
Q1
Q2
Q3
Q4
Improved working capital management
Quarterly revenues annualized. Excludes asset
securitization program. Restated for Discontinued
Operations
29
Balance Sheet Indicators
Q3 2003
Q3 2002
Total Debt Debt to Capital Capital Expenditures
2.4 B 36.3 24.4 M
3.4 B 48.1 26.3 M
30
Outlook Gradual Improvement
  • Climate Control Similar pattern to third
    quarter
  • Hussmann Display cases remain weak, service
    growth
  • Thermo King Upward growth trajectory
  • Industrial Solutions Slow growing end markets,
    growing through new products and service gains
  • Dresser-Rand Operating margin improvement
  • Infrastructure
  • Bobcat Strong fourth quarter
  • Road Machinery and Portable Power Modest growth
  • Club Car Usual seasonally slow fourth quarter
  • Security Safety Double-digit growth in
    electronic solutions, modest growth in
    traditional hardware, strong operating margins of
    18 to 19

Forecast 4 to 5 organic revenue growth for 4Q
31
2003 Earnings Outlook Fourth Quarter
Fourth Quarter EPS Continuing Operations 0.86 -
0.94 Discontinued Operations Legacy Cost
(0.06) CDSOA 0.13 0.15 Total 0.93 -
1.03
Fourth quarter EPS 0.93 - 1.03
32
2003 Earnings Outlook Full Year
Full Year EPS Continuing Operations 3.21 -
3.29 Discontinued Operations Legacy Cost
(0.14) CDSOA 0.13 - 0.15 Total
Operations 3.20 - 3.30 Gain on Sale of
Businesses 0.37 Full year 3.57 - 3.67
Improved Outlook
33
Third-Quarter Successes
  • Positive quarter with strong progress toward
    long-range plan
  • Organic revenue growth 8 above 4 - 6 target
  • Improved operating margins move toward 15 goal
  • Strengthened balance sheet 36 debt/capital low
    end of target range of 35 - 40
  • On track for full-year earnings and cash-flow
    targets

Executing our strategy
34
Proven source. Proven solutions.
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