Climate Technologies Investor Update

Transcription

1 Climate Technologies Investor Update Tom Bettcher Executive Vice President February 8, 2008 Safe Harbor Statement Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the remainder of the year and Emerson undertakes no obligation to update any such statement to reflect later developments. Information on factors that could cause actual results to vary materially from those discussed today is available in our most recent Annual Report on Form 10-K as filed with the SEC. Non-GAAP Measures In this presentation we will discuss some non-gaap measures (denoted with an *) in talking about our company s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or is available at our website under the investor relations tab.

2 Climate Technologies Summary CAGR Sales $3.0B $3.4B $3.6B 9.0% Earnings $0.45B $0.52B $0.54B 9.0% % of Sales 14.9% 15.3% 14.9% 2007 Sales by Market Solutions & Other 13% Aftermarket 15% 16% Refrigeration 18% 38% Residential HVAC Global Manufacturing Facilities United States & Canada Europe Asia Latin America % Best Cost ~40% 2007 Sales by Geography Europe Asia ROW 16% 17% Commercial HVAC 10% 57% United States

3 Emerson Climate Technologies Product Overview Condensing Units Thermostats Compressors Gas Heating Valves Electronics Emerson Retail Solutions Motors Valves E2 Controller Remote Monitoring Project Management

4 Global Scroll Sales Growth Continues To Be Strong And Penetrate New Applications Sales ($B) $ CAGR: 14% 2012T ~$3B $ $1.8B $2.0 $1.5 Refrigeration $1.0 Commercial A/C $0.5 $0.0 Res. A/C (Legacy) Res. A/C (Next Gen)

5 2008 U.S. Unitary Market Outlook 8 Pieces (Ms) 6 (9%) (~5%) Exports Light Commercial 4 Replacement E New Construction New Construction & Replacement Market Challenges Continue

6 2008 Regional Outlook US & Canada Stable Europe Weakening Asia-Pacific Strong Latin America Strong Middle East & Africa Strong Underlying* Sales Growth % % %

7 Emerson Climate Technologies Key Messages Global Demand for Energy Responsible Products Continues to Benefit Our Products & Solutions UltraTech Communicating System Asia Air Conditioning Developments Integration of Electronics into Core Products Adds Value and Increases Differentiation Supermarket Refrigeration Innovations Services & Solutions Are a Key Growth Initiative Retail Solutions Opportunities Global Presence Provides Balanced Portfolio and Enables Development of Regional & Global Solutions

8 Responsible Energy Usage Is A Major Industry Driver Global Sources of Carbon Dioxide Other Industrial 23% 25% Energy Efficiency Lower Energy Costs Reduce Emissions Alternate Energy Sources Fewer Power Plants Transport 24% 10% 18% Residential Buildings Refrigerant Impact Global Warming Potential Refrigerant Containment Commercial Buildings

9 Emerson s s UltraTech Communicating System Advances HVAC Modulated Compressor Thermostat Furnace Control Air Conditioner Gas Furnace Unitary Control ClimateTalk Air Handler Control Emerson Variable Speed Motor Driving The Industry To High-End Systems With 15+% Higher Energy Efficiency

10 UltraTech Communicating System s Benefits Match User Needs OEMs Contractors Homeowners Differentiation Ease of Installation Lower Energy Costs Speed To Market Higher Sales/Profits Quality Verification Diagnostics Higher Sales/Profits Increased Comfort Peace Of Mind

11 Package System Before And After Communications Installation Heat Pump System Before Communications No No. of Tstat Wires No. of Wire Terminations Auto Configuration After Communications 4 33 Yes

12 Normal Adoption Suggests 10% Of Market Will Be Communicating In 2012 HVAC Systems 100% 80% 60% 99% 75% Not Communicating 40% 20% 0% 15% 10% Opportunity Communicating Increased Adoption Creates Higher Value Sales For OEMs And Drives Increased Emerson Content

13 Emerson Climate Technologies Key Messages Global Demand for Energy Responsible Products Continues to Benefit Our Products & Solutions UltraTech Communicating System Asia Air Conditioning Developments Integration of Electronics into Core Products Adds Value and Increases Differentiation Supermarket Refrigeration Innovations Services & Solutions Are a Key Growth Initiative Retail Solutions Opportunities Global Presence Provides Balanced Portfolio and Enables Development of Regional & Global Solutions

14 China 2009 Efficiency Standard Creates Tremendous Opportunity China Residential Regulations 3 Horsepower Market Transition 2.3M+ Piece Market Current 2009 Level 1 12 SEER 1 1 Level 2 Level SEER 3 3 Level 3 Level 5 4 X4 9 SEER 5 5X Over 90% Of Today s Systems Do Not Meet New Efficiency Standard

15 New China Developed Copeland Scroll Is Ready For China Market Transition New China Developed Copeland Scroll Competitive Rotary Delta Efficiency % Sound (dba) (5 dba) Weight (lbs) (15%) Vibration 2 4 (50%) Emerson Is Ready With Technology And Capacity For The Transition

16 Emerson 3 Horsepower Compressor Sales This slide has been omitted

17 Emerson Provides Multiple Solutions For Asia s s Residential Needs Conventional Splits Single Evaporator Central A/C Multi Evaporator 1-2 Tons x 5 ± 4 5 ºF 100% Good Low Compressor Room Comfort Energy Usage Humidity Control Aesthetics ~5 Tons x 1 ± ºF 60-70% Best High

18 Copeland Digital Compressors Offer Simple, Efficient, And Reliable Modulation Asia Multi-Evap Modulation System Market $B $6 $4 $2 16% 19% $ Building Industry Acceptance Educate Real Estate Developers Build Design Institute Relationships Support OEMs with Design Services

19 Emerson Provides Multiple Solutions For Asia s s Residential Needs Conventional Splits Single Evaporator Central A/C Multi Evaporator 1-2 Tons x 5 ± 4 5 ºF 100% Good Low Compressor Room Comfort Energy Usage Humidity Control Aesthetics ~5 Tons x 1 ± ºF 60-70% Best High

20 Modulation Technologies For Central AC Market Variable Frequency Inverter Emerson Digital Scroll System 5x Electronic Hardware x 3x Valves x Complex Oil Management Simple Yes Electromagnetic Interference No

21 Emerson Climate Technologies Key Messages Global Demand for Energy Responsible Products Continues to Benefit Our Products & Solutions UltraTech Communicating System Asia Air Conditioning Developments Integration of Electronics into Core Products Adds Value and Increases Differentiation Supermarket Refrigeration Innovations Services & Solutions Are a Key Growth Initiative Retail Solutions Opportunities Global Presence Provides Balanced Portfolio and Enables Development of Regional & Global Solutions

22 Electronics Drive Significant Benefits For Retail Store Applications Retrofit Solution PerformanceAlert New Equipment Solution Intelligent Store Discus Intelligent Store Solution Standard Discus Compressor Advanced Protection Diagnostics 44 Diagnostic Codes Integrates Functionality of 6 Separate Devices INCREASING VALUE Enables Facility Management Remote Monitoring

23 U.S. Supermarket System Trends Centralized Rack Systems Large Centralized Refrigeration System Located In Machine Room Significant Piping Required To Transport Refrigerant 100% 80% 60% Centralized Distributed Scroll Systems 40% Numerous Smaller Systems Located Near Refrigerated Cabinets Either In Shopping Area Or On Roof Lower Refrigerant Charge Needed 20% 0% Distributed Distributed Scroll Systems Technology And Usage Are Growing

24 Distributed Architecture & Digital Scroll Compressor Creates Winning Combination Benefit Less Refrigerant Charge Lower Energy Consumption Precise Control Increased Reliability Distributed Architecture Digital Scroll Compressor

25 Emerson Climate Technologies Key Messages Global Demand for Energy Responsible Products Continues to Benefit Our Products & Solutions UltraTech Communicating System Asia Air Conditioning Developments Integration of Electronics into Core Products Adds Value and Increases Differentiation Supermarket Refrigeration Innovations Services & Solutions Are a Key Growth Initiative Retail Solutions Opportunities Global Presence Provides Balanced Portfolio and Enables Development of Regional & Global Solutions

26 Retail Solutions Applies Facility Knowledge Throughout Lifecycle 5. Retrofit 1.Design 4. Operations 2. Construction 3. Start Up

27 Emerson Retail Solutions Is A Leading Supplier Of Facility Management Systems And Solutions This slide has been omitted

28 Emerson Delivers Broad Solution For Heritage Stores In India This slide has been omitted

29 Emerson Climate Technologies Key Messages Global Demand for Energy Responsible Products Continues to Benefit Our Products & Solutions UltraTech Communicating System Asia Air Conditioning Developments Integration of Electronics into Core Products Adds Value and Increases Differentiation Supermarket Refrigeration Innovations Services & Solutions Are a Key Growth Initiative Retail Solutions Opportunities Global Presence Provides Balanced Portfolio and Enables Development of Regional & Global Solutions

30 Integrated Global Scroll Manufacturing Network Lebanon Missouri Ohio Louisiana China Missouri N. Ireland Thailand Mexico Belgium High Volume Scroll Manufacturing on 3 Continents Over $1B Invested in Global Scroll Manufacturing Capacity Integrated Supply Chain for Global Cost Savings & Risk Reduction In Depth Audit Process to Share Best Practices & Ensure Quality

31 International Compressor and Controls Research & Development Capabilities Xi an, Ohio China Karad, India Czech Republic Suzhou, China Pune, India Belgium Service Multiple Products & Regions In Each Location Utilize Global Resources to Swarm Projects with Speed & Quality Leverage Proximity to Customers, Plants, and Suppliers Cumulative of $0.5 Billion Spent on Scroll Compressor R&D

32 Emerson Climate Technologies Summary This slide has been omitted

33 Emerson Climate Technologies Key Messages Global Demand for Energy Responsible Products Continues to Benefit Our Products & Solutions Integration of Electronics into Core Products Adds Value and Increases Differentiation Services & Solutions Are a Key Growth Initiative Global Presence Provides Balanced Portfolio and Enables Development of Regional & Global Solutions Reported Sales Growth Underlying Sales Growth* EBIT Margin % 1% 14.9% 2008E 5-8% 3-6% Basis Pts