Annual Investor Conference Sandy Cutler February 28, 2014 © 2014 Eaton. All Rights Reserved.. Eaton – A Premier Power Management Company • Record 2013 – The transformation is underway • Delivering near-term earnings growth • Strengthened long-term prospects © 2014 Eaton. All rights reserved. 2 Eaton is a leading global power management company… Electrical Cities & Buildings Fluid Information Technology Energy & Utilities Mechanical Industrial & Machinery Infrastructure Transportation Uniquely positioned to provide safe, reliable, efficient and sustainable power management solutions for our global customers © 2014 Eaton. All rights reserved. 3 …consisting of premier power management franchises ELECTRICAL INDUSTRIAL 2013 Sales: $13.5B 2013 Sales: $8.6B • Among the four largest global Electrical companies, with the scale and scope to compete globally • Hydraulics business that is among the three largest globally and serves a wide range of mobile and industrial customers • Comprehensive solutions from generation to the end user, with a portfolio of leading brands • Aerospace business serving global OEMs, airlines, and militaries with hydraulic power & motion control, fluid conveyance, fuel and engine solutions • Serving key markets including oil & gas, industrial, utility, commercial & residential construction, machinery and data centers • Vehicle business delivering solutions to the global commercial vehicle and passenger car markets focused on fuel efficiency, emissions and safety © 2014 Eaton. All rights reserved. 4 We have used an effective acquisition and divestiture program… We have completed 65 acquisitions and acquired $12B revenue since 2000…. # Acquisitions Electrical Acquired Revenue Hydraulics Aerospace Vehicle …and divested businesses with sales over $1.5B © 2014 Eaton. All rights reserved. 5 …to create a portfolio capable of delivering stronger growth and more consistent earnings 2013 Segment Sales 2013 Sales by Destination 2013 Cycle Sales 11% 17% 24% 29% 8% 50% 61% 14% 31% 26% 29% Electrical Aerospace Hydraulics Vehicle U.S. Int'l Developed Int'l Emerging © 2014 Eaton. All rights reserved. Early Mid Late No 6 We delivered record performance in 2013… • Record results • • • • • $22B sales 14.9% segment operating margin $3.3B EBITDA $2.3B of operating cash flow $4.13 operating EPS • Restoring balance sheet health with $1.3B lower debt than at the end of 2012 • Successfully integrating Cooper • Realized $115M operating synergies in 2013 • Increasing operating synergies in 2016 by another $35M, now $100M higher than originally planned © 2014 Eaton. All rights reserved. 7 …and generated outstanding returns for our shareholders Total Shareholder Return in 2013 44% 32% Eaton S&P 500 © 2014 Eaton. All rights reserved. 30% DJIA 8 Eaton – A Premier Power Management Company • Record 2013 – The transformation is underway • Delivering near-term earnings growth • Delivering on Cooper synergies • Driving revenue growth and margin expansion • Strengthened long-term prospects © 2014 Eaton. All rights reserved. 9 We have made substantial progress in the Cooper integration… Integration Process • Dedicated leaders representing all key functions managing an integration team of ~50 people • Enables the business unit leadership (the “run team”) to remain focused on delivering day-to-day results • A team of recognized leaders from legacy Eaton and legacy Cooper maximizes effectiveness and knowledge transfer while creating an enduring foundation • Proven frameworks and processes introduce best-practices throughout every stage of the integration progression The Cooper integration is leveraging learnings from prior acquisitions © 2014 Eaton. All rights reserved. 10 …resulting in Cooper synergies that exceed our initial expectations We have clear line-of-sight to realizing an additional $95M synergies in 2014 and another $150M in 2015 Synergy Profit ($M) 500 $475 $100M 400 $360 300 $210 200 $115 100 $40M 0 2013 2014 Current Plan 2015 2016 Original Plan Exceeding original integration plan by $40M in 2013 and $100M in 2016 Increasing 2015 and 2016 synergies by $10M and $35M respectively © 2014 Eaton. All rights reserved. 11 We have aligned our global resources to drive outgrowth in markets demanding cross-segment solutions… Electrical Hydraulics Aerospace Vehicle One Eaton Oil & Gas Machinery / OEM © 2014 Eaton. All rights reserved. Mining Government 12 …and are making it easier for customers to choose us to solve their biggest challenges • Aligning our Electrical and Hydraulics capabilities to service key verticals • Conducting technology days which highlight the increased scope of our technology, product, and application capabilities • Developing powerful apps to serve customers where ever and how ever they want to connect with us Investing in 2014 to drive higher revenue growth © 2014 Eaton. All rights reserved. 13 Recent Electrical product launches introduce new solutions for targeted end markets… 93E™ and 93PM™ • New generation of modular uninterruptible power supplies • Highly reliable power protection for medium-size data centers • Setting a new standard of efficiency in the most rapidly growing segment of the data center market Data Centers / IT Power XL™ Variable Frequency Drives • Variable frequency drive for pumps, fans, conveyors and other industrial motor applications • Adds depth to our controls and automation franchise WaveStream™ LED Power Xpert ® CXH • First LED solution for commercial fluorescent fixture market • Low voltage power distribution for IEC hazardous applications • Increased scope for design and creativity • ARMS technology reduces risk of arc flash during service • Provides superior optical performance and brightness control at a lower operating cost Machinery ©OEM Construction 2014 Eaton. All rights reserved. • Best-in-class maintenancefree life Oil & Gas 14 …and our latest Industrial innovations focus on driving efficiency and effectiveness Hydre-MAC Motor • Low-speed, high-torque direct drive motor • Drop-in replacement for easy substitution • Available globally through our distribution network Oil & Gas Electro-Hydraulic Steering Controls • Compatible with GPS and other satellite navigation systems • Enabler of responsive autoguidance systems Hydrodynamic Seals SmartAdvantageTM • Combined our bellow and hydrodynamic seal for Pratt & Whitney’s PurePower® engine • Cummins ISX15 engine with SmartTorque2 technology combined with Eaton Fuller AdvantageTM • Higher efficiency solution with a longer expected life • Improves fuel economy Agriculture © 2014 Eaton. All rights reserved. • 3%-6% fuel economy savings Aerospace Transportation 15 We are driving margin expansion through higher Cooper synergies, new product introductions, and operating leverage Segment Margin 20% • Realizing significant incremental synergies from 2012 acquisitions 15% 10% 5% 0% • Launching higher value products and services across our businesses • Operating leverage through volume growth • Improving productivity through EBS tools, training, and trimming marginal activity Executing our game plan - controlling our destiny © 2014 Eaton. All rights reserved. 16 Eaton – A Premier Power Management Company • Record 2013 – The transformation is underway • Delivering near-term earnings growth • Strengthened long-term prospects © 2014 Eaton. All rights reserved. 17 Our businesses have strong exposure to highgrowth markets driven by powerful megatrends 60% Percentage increase in global demand for energy in buildings projected by 2050 600% Percentage increase in the global LED lighting market projected by 2020 70% Percentage increase in construction work globally by 2025 70% Percentage increase in food production by 2050 necessary to feed a global population of 9 billion © 2014 Eaton. All rights reserved. 70% Percentage increase in liquid petroleum demand in NonOECD nations expected by 2040 150% Percentage increase in annual distances travelled by commercial aviation expected by 2030 18 Our growing investment in R&D is generating significant innovations R&D Expenditures 700 • Growing R&D spend, investing for future growth • Recognized among Top 100 Global Innovators in 2011, 2012, and 2013 by Thomson Reuters • Over 10,000 total patents owned with 1,200 issued in 2013 • Over 10,000 engineering personnel globally 600 400 300 200 100 2013 2012 2011 2010 2009 2008 2007 2006 2005 0 2004 $M 500 © 2014 Eaton. All rights reserved. 19 Our global innovation centers allow us to respond quickly and cost effectively to local needs Milwaukee, WI & Southfield, MI Shanghai Pune Prague • Expanded in 2013 • Established 2010 • Established in 2003 • Established 2012 • Milwaukee focuses on solid-state power management, control, and protection • Strategic relationships with eight leading universities • Our largest innovation center with over 1,000 engineering personnel • Partnership with the Czech Technical University • Focused on safe and efficient power systems and vehicle electrification technologies • Broad-based capabilities serving each of our businesses • Focused on energy efficient power distribution, industrial automation, IT power, and vehicle powertrain • Southfield focuses on solutions to optimize efficiency and enable use of alternative fueled vehicles • Strengths in modeling and simulation, controls and reliability, and embedded controls © 2014 Eaton. All rights reserved. 20 We have significantly grown our emerging market sales Notable Wins & Initiatives: Sales in Emerging Markets ADD IMAGE $5.3B Aerospace aftermarket and OEM wins in China, Brazil, and Indonesia $3.4B Consolidating Middle-East activity in Dubai regional HQ . 2010 2013 Targeting 30% of sales in emerging markets with $800M sales in the Middle East Electrical wins in the Jeddah, Saudi Arabia airport © 2014 Eaton. All rights reserved. Expansion of Jining, China facility doubles production capacity to serve new product wins 21 We have made solid progress towards achieving our 2010 – 2015 goals 2015 Goal Progress Through 2013 Cooper Impact 12% – 14% 17% + Percent of Sales in Emerging Markets 30% 24% - Operating EPS Growth 20% 14% + Free Cash Flow Margin 9% 8% + Segment Operating Margin 16% 17% 15% + Return on Invested Capital 15% 9% - Sales Growth © 2014 Eaton. All rights reserved. 22 Delivering on the potential of a transformed company Record 2013 – The transformation is underway Delivering near term earnings growth • Expect 14% operating EPS growth on 3% sales growth in 2014 • Realized $115M synergies from the Cooper integration in 2013 and expect an incremental $95M and $150M in 2014 and 2015 respectively • Investing in our front-end and innovation Strengthened long-term prospects • Created a platform capable of delivering higher and more consistent earnings growth • Leveraging the power of One Eaton, an integrated operating company united by the Eaton Business System © 2014 Eaton. All rights reserved. 23 © 2014 Eaton. All rights reserved. 24
© Copyright 2024 ExpyDoc
