Construction Technologies Chris Vasiloff
Jan 12, 2016
Construction Technologies
Chris Vasiloff
2
Agenda
• Construction Technologies Business Background
• Utility Equipment
• Road Development
• Attachments
• Other Recurring Revenue
– Used Equipment (Remarketing)
– Parts & Service
• Global Growth
• Operational Excellence
• Take Aways / Wrap Up
3
Construction Technologies Products
Utility Equipment
Utility Equipment
Road Development
Road Development
AttachmentsAttachments
4
Performance Highlights
• Operating income growth of 15%+ Since 2001
• Stronger channel makeup
• Stronger geographic balance
• More recurring revenue contribution
0.0
50.0
100.0
150.0
200.0
250.0
2001 2002 2003 2004 2005 2006F
Revenue Index Operating Income Index
5
Sector Strategic Focus
• Expand the Portfolios of our Growth Businesses– Utility Equipment– Road Development– Attachments
• Continue Building Cycle Resistance– Building recurring revenue
Company stores Remarketing/lifecycle management
– Geographic expansion ESA Asia Pacific
– Operational excellence IRBOS
Utility Equipment
7
Continuing the Transformation
Diversify • Expand • Innovate
2003 2004 2005 2006
UTILITY EQUIPMENT
2001 2002
PORTABLE POWER
2000
PORTABLE COMPRESSOR DIVISION
8
Exc
avat
or
8 -
16 T
Wh
eel L
oad
er <
100
HP
Lo
ader
Bac
kho
e
Uti
lity
TL
B
Cra
wle
r D
oze
r
Ski
d S
teer
Lo
ader
Tra
ck S
kid
Lo
ader
Min
i Exc
avat
or
<8
T
Air
Co
mp
ress
or
1 D
rum
Co
mp
acti
on
Gen
erat
or
Set
Lig
ht
Pla
nt
Excavator 8 - 16 T
Wheel Loader <100 HP
Loader Backhoe
Utility TLB
Crawler Dozer
Skid Steer Loader
Track Skid Loader
Mini Excavator <8 T
Air Compressor
1 Drum Compaction
Generator Set
Light Plant
Contractor Buying Tendencies
Very Likely Likely Probably
If I bought this . . .
How likely am I to buy this?
9
Continuing the Transformation
20112007
Continued Investment in Emerging Markets
New Multi-Utility Vehicle (MUV)
Expanded Concrete Portfolio
Diversify • Expand • Innovate
Road Development
11
Accomplishments
• China– Re-established channels
– Introducing next generation of paver technology
• India Export Program commenced and successful
• Added compaction success in Russia – growth at 50%
• Operating margins back to mid teens
• Compaction manufacturing launched in Europe
12
Portfolio Expansion Opportunities
• Current global served market is $2.7B
• Closely adjacent products targeted for business expansion will increase served market by 33%.
– Milling $400M
– Concrete $250M
– Stabilizers/Reclaimers $250M
• Significant customer overlap in purchases with current Road Development product portfolio
68% Milling39% Concrete Paving75% Stabilizers/reclaimers
of customers who purchased
also purchased a product in a category currently served by Road Development
PA
VE
RS
- H
IGH
WA
Y C
LA
SS
PA
VE
RS
- C
OM
ME
RC
IAL
DD
LA
RG
E (
OV
ER
5 T
ON
)
DD
SM
AL
L (
UP
TO
5 T
ON
)
SD
LA
RG
E (
OV
ER
8 T
ON
)
SD
SM
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L (
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R 8
TO
N)
BE
LT
PL
AC
ER
RO
AD
WID
EN
ER
DIS
TR
IBU
TO
R
PL
AN
ER
/MIL
L M
AC
H
CO
NC
RE
TE
PA
VE
R
CU
RIN
G M
AC
HIN
E
PO
T H
OL
E P
AT
CH
ER
RE
CL
AIM
ER
/ST
AB
IL
WIN
DR
OW
EL
EV
AT
OR
BR
OO
M
CH
IP S
PR
EA
DE
R
PAVERS - HIGHWAY CLASS 100% 24% 41% 46% 31% 21% 15% 11% 10% 18%
PAVERS - COMMERCIAL 13% 100% 11% 46%
DD LARGE (OVER 5 TON) 47% 23% 100% 44% 37% 26% 14% 11%
DD SMALL (UP TO 5 TON) 21% 36% 17% 100% 18% 16% 11%
SD LARGE (OVER 8 TON) 13% 13% 16% 100% 29% 11%
SD SMALL (UNDER 8 TON) 14% 28% 100%
BELT PLACER 60% 13% 60% 45% 56% 32% 100% 24% 20% 33% 36% 20% 38%
ROAD WIDENER 65% 18% 65% 48% 60% 36% 23% 100% 28% 29% 20% 17% 40% 11%
DISTRIBUTOR 34% 38% 27% 45% 24% 100% 23% 11%
PLANER/MILL MACH 45% 17% 41% 39% 33% 22% 11% 11% 16% 100% 13% 15% 26%
CONCRETE PAVER 14% 12% 16% 22% 18% 100% 11%
CURING MACHINE 32% 38% 36% 55% 36% 41% 21% 93% 100% 21% 23%
POT HOLE PATCHER 14% 16% 12% 15% 100% 13%
RECLAIMER/STABIL 26% 11% 25% 22% 56% 38% 14% 13% 16% 100% 25%
WINDROW ELEVATOR 87% 13% 80% 47% 58% 11% 28% 22% 16% 22% 100% 44% 11%
BROOM 11% 15% 16% 14% 100%
CHIP SPREADER 37% 21% 35% 32% 36% 25% 46% 11% 40% 100%
If I Purchased This...
What's the liklihoodI purchased this?
13
20112007
Entering Milling Machine WW Market
New Compaction Product Base in
Europe
Commercializing Advanced Technology
Continued Investment in Emerging Markets
Enter Concrete Paving Market ??
Significant Additional Upside Opportunities
Attachments
15
Carriers
16
Product Offering
Compact Attachments Heavy AttachmentsHydraulic Demolition
Attachments
Industrial Grapples Buckets Pallet Forks Light Range Breakers Compaction Wheels Angle Brooms Plate Compactors Sweepers And more!
Buckets Quick Couplers Rippers Thumbs Grapples Compaction Wheels Specialty Buckets And more!
• Light, Medium, and Heavy Range Breakers
• Demolition Processors, Crushers, and Pulverizers
• Transverse Cutting Heads
• Excavator Mounted Rock Drills
• Plate Compactors
• Shears
• And more!
Committed To Expanding The Product Portfolio
17
Worldwide Attachment Opportunity
Compact Attachments Hydraulic Demolition Attachments
Market Size $ 0.8 BCurrent Share: Strong
Market Size $ 1.9 BCurrent Share: Strong
Heavy Attachments
Market Size $ 2.0 BCurrent Share: Now Entering
Total Global Market $4.7 B
Share gains available in all segments Highly fragmented competitive landscape Building off of strong Bobcat and Montabert product offerings Margin opportunities are very high
Leverage Current Position To Grow Rapidly In Adjacent Segments
LA3%
NA57%
AP16%
ESA24%
LA 2%
NA36%
AP24%
ESA38%
ESA27%
AP40%
NA30%
LA3%
18
Heavy AttachmentsHydraulic
Demolition Attachments
Compact Attachments (includes light range breakers)
BYOB, Landscaping, HOWA, Residential Construction, Utility
Construction, Agriculture
Heavy/Road Construction, Bridge
Building, Sewer Contractor
Demolition, Quarries, Mining,
Recycling, Waste/ Scrap
Bobcat
IR Road
IR Utility
IRES
IR Attachments
IR Road
IR Utility
IR Attachments
Products
Brands
Channels(OEM’s/Rental included in all)
CustomerSegments
Channel Channel CustomerFocus On
AttachmentsBrand
AttachmentsBrand
IR Attachments
-Specialty Dealers
*Ingersoll Rand includes Tramac and Montabert (on a migration path)
Channel / Brand Strategy
19
Attachment Growth Plan
$1 Billion Sales Revenue By 2011
$115 M
$142 M
$110 M
$231 M
$402 M
Heavy Attachments
Acquisitions
Compact Attachments – Ingersoll Rand ChannelCompact Attachments –
Bobcat Channel
Hydraulic Demolition Attachments
20
Building Recurring Revenue
Company Store Expansion
Further Integration of Ingersoll Rand Financial Services (IRFS) Solution
Continued Growth in Remarketing
Retail Business is Inherently Less Cyclical
21
Retail Revenues
Revenue Growth
-10%
0%
10%
20%
30%
40%
2000 2001 2002 2003 2004 2005
22
North America• Utility Plus• Road• Bobcat
Global Expansion
European Served AreaGermany (6 locations)• FrankfortBranch Conversion• Holland - ZouterwoudeRoad/Utility/Bobcat• France – Lyon• Russia – Moscow• United KingdomRoad/Utility• Spain – BilbaoBobcat• Hungary – Budapest
Asia PacificChina• Co-Owned / DIBIndia• Chennai, Lucknow
Dhanbad, Vadodara, Pune, Kochi, Chandigarh
Branch Conversion/
Expansion• Seoul, Korea• Singapore
Latin AmericaBobcat of Chile• New Branches
To expand our reach to new customers and markets, while leveraging our central HQ team
23Global Website
Electronic Condition Report
Database Information
Webcam
Enhanced Sales Tool Information Management
User Friendly
Sales Tools
Used Equipment Technology Enablement
24
2005 2011Forecast
Remarketing – Source of Equipment
2%8%
35%
7%24%
24%
3%
5%
26%
16% 30%
20%
Lifecycle Trades NRA TradesWholesale Buy/Trades AuctionRental fleet Other
25
Lifecycle Management
Sell New Equipment
Trade in and Sell Used Equipment
IRFS Tool KitAttachments Parts, Service & Rental
26
2006 2011
Revenue Composition 2006 & 2011 Forecast
CAGR 12+%
Parts16%
Service2%
Rental3%
Used Equipment
5%
Attachments7%
Completes67% Parts
17%
Service2%
Rental3%
Used Equipment
7%
Attachments11%
Completes60%
27
Geographic Growth – Global Markets
Well Positioned For Growth in Key Emerging Markets
Significant Upside in Mature Markets as Primary Channel Position Can be Established
China 2006FGDP Growth: 9%
India 2006FGDP Growth: 8%
Russia 2006F GDP Growth: 6%
28
Limited portfolio
Few large customers
Direct sales, Agents
Project based selling
Expanded portfolio
Diverse markets, customer segments
Multiple channels, mix model
Finance, rental, support, solutions
1995 - $26 Mil.
81%
19%
2006 - $58 Mil.
78%22%
2008 - $76 Mil.
Drills
CT
India Changing Business Model
Revenue
29
Regional Channel Progression
Today 5-Year Look
• Channel Development to Company Owned Store model
• Expanded Portfolio
• Market Creation
30
Geographic Revenue 2006 – 2011 Forecast
2006
2006 - 2011Less Dependence on US Economy
LA4%
AP16%
ESA25%
ESA30%
LA4%
AP19%
NorthAmerica
55%
2011
NorthAmerica
47%
31
Operational Excellence: Montabert Lean Deployment
LeaderFabricationMaintenanceMethodsPlanningControl Dept.Facilitator
Project #1 Project #2 Project #3 Project #4
Workload Nov. ’05Vs. Capacity
Efficiency Improvement
Capacity Increase
Project Summary
over a total of 14 machine
tools
Trend – November 2005 to May 2006
+ 132 Hr/m+ 37.1%
+ 114 Hr/m+ 7.9%
+ 277 Hr/m+ 47.9%
+ 273 Hr/m+ 12.5%
+ 796 Hr/m+ 17.4%
+ 18.8 Pts +18.4 Pts + 24.5 Pts + 5.9 Pts + 12.9 Pts
109% 127% 122% 135% 129%
Bottom Line Impact of $5 Million / Year
32
Begin implementation of processes at other
IRES locations
Operational Excellence: Channel Lean Activities
Complete May 22-25
JuneMay July August September October
Yard RedesignRental Dept. Processes
Service Layout &
Processes
Parts Layout & Fulfillment
Sales & Admin. Depts.
Facility Layout
Analysis
Break Ground
2006 – 2011 SG&A Improvement 24%
33
Directional Summary
• Utility Equipment– Continue momentum– Enter new ground engaging and light equipment markets
• Road Development– Growth from a solid financial foundation– Enter new segments – compaction in Europe/milling globally
• Attachments– Utilize brand and channel approaches– Enter heavy segment
• Recurring revenue growth– Remarketing expansion– Company store expansion (Parts & Service)
• Geographic growth
Earnings Capability Through CyclesStrong Financial Performance vs. the Industry