Electrical Products Group Conference

Transcription

1 Electrical Products Group Conference David Farr Chairman and CEO May 20, 2015 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 and subsequent reports 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 Evolution of Emerson s Businesses For Long-Term Value Creation Electronics & Telecom Motors Controls 12% 15% 7% 1990 Other 7% $7.6B 17% HVAC 24% Industrial Automation 18% Appliance & Tools Appliance & Tools HVAC Motors 14% 16% % $15.5B 19% Controls Electronics & Telecom 21% 20% Industrial Automation Commercial & Residential Solutions Climate Technologies Network Power 16% 20% % $24.5B 20% Management 36% Industrial Automation Revenue $7.6B $15.5B $24.5B GP % 34% 36% 41+% We have Rebalanced Our Business Portfolio Over the Years to Focus on Delivering Better Growth, Customer Solutions, Profitability, Returns, Cash Flow to Our Shareholders -- We Are in the Middle of Doing it Again for the Next Generation 2

3 Emerson Has Built a Strong Software and Solutions Capability Upon Our World Class Business Offering Increasing and Sustaining Value to Customers Key Enablers Strong Market Presence / Knowledge Engineering & Development Capital Investments Centers of Excellence Business Group Synergies Acquisitions Enriched Business Models & Services (Big Data and Internet of Things Based Services, Enhanced Customer Experience) Value Added Services & Solutions (Diagnostics, Analytics, Preventative / Predictive MRO) Software & Systems (Control and Enterprise Level Systems) Electronics, Smart Sensors, Embedded Technology (On-board Sensors, Performance Monitoring Electronics, etc.) Instrumentation & Components (Valves, Sensors, Regulators, Drives, Compressors, etc.) Past Present Future Emerson s Strong Technology Based Products Offering Provides a Solid Foundation For Our Software, Diagnostic, Control, and Solutions Business 3

4 Business Platforms Provide Products, Software Capabilities, and Solutions Through the Entire Customer Value Chain Management Climate Technologies Network Power Industrial Automation Comm. & Res. Solutions Enriched Business Models Developing Pervasive Sensing Launching ComfortGuard, Retail, Residential, Transport Solutions Exploring Options Launching Grind2Energy Value Added Services & Solutions Exploring Options Software & Systems Exploring Options Electronics, Smart Sensors, Embedded Technology Instrumentation & Components All Business Platforms Are Constantly Improving Their Solutions Offering While Continuing to Build on Our Technology Based Hardware Foundation 4

5 Management Services and Software Solve Our Customers Toughest Challenges -- Creating A Sustainable Value Proposition Customer Challenges Industry Opportunity Emerson Solutions Management I Energy and Environment Industrial facilities consume ~50% of the world s total energy Pervasive Sensing and Energy Advisor Software drive 5-10% energy savings and many Embedded Software Industry Applications Packages II Safety and Reliability Unplanned downtime costs industrial firms $50B annually Reliability Solutions drives top quartile performance III Project Execution and Speed 65% of projects >$1B exceed planned execution time by 50% Collaboration tools and software reduce automation schedule by up to 30% plus many others acquired / developed over last 15 years Emerson s Leading Technologies and Industry Expertise Create Unique Solutions that Deliver Business Results and Sustainable Value Propositions 5

6 Wireless is a Key Technology to Enable New Customer Solutions and Value Propositions MONITORING Point Monitoring Application Monitoring Pervasive Sensing Remote Monitoring Wireless Control Management 2015 Bookings: ~$350M WELLHEADS 10+ Wells 100+ Wells Wells in Fields PROCESS PLANT PRODUCTS AND SYSTEMS / CONTROL 1-3 Applications in Plant 10 Applications in Plant 100+ Applications in Project Scope SECURITY Foundational to Wireless Beginning

7 Pervasive Sensing and Control is a Strategy to Go After All Industrial Applications -- For Operational Efficiency and Safety Management Monitoring / iops Safety Control Reliability Energy Employee Safety Network Infrastructure Notification, Response Tracking Batch, Inventory, Tracking, Blending, Mass Balance Predictive Diagnostics, Vibration Monitoring, Oil Quality Steam Trap Monitoring, Energy Advisor Personal Tracking, Operator Tracking and Simulation Pervasive Sensing Global Companies Need Increased Efficiency, Environmental Safety, and Energy Management -- Utilizing Their Broad Sensor and Field Intelligence to Bring Increased Value With Fewer People 7

8 Pervasive Sensing and Expertise Create New Solutions to Energy Challenges / Savings Singapore Government Driving Energy Efficiency Programs Jurong Island Steam Management Management Combines Expert Analysis with Pervasive Sensing to Deliver Insights -- A Total Solution Analytics Cellular Network $150M Energy Savings Potential Wireless Gateways 1,900 Olympic Swimming Pools Water Savings 450 Kilotons CO2 Emissions Avoided ~$15B Global Opportunity for Pervasive Sensing Technologies and Solutions 8

9 Energy Advisor Software Provides Real- Time Energy Management Solutions Energy Advisor Software Monitors, Targets, and Reports Energy Performance Management Energy Insights Enable Customers to Achieve Operational Performance Improvements Energy Advisor Components Insights turn customers largest variable cost into a controllable expense 5-10% estimated industrial energy savings through best practices Monitor Target Report $15-30M savings for typical 250M bbl / day refineries 9

10 Climate Technologies Services and Software Solve Our Customers Toughest Challenges -- Government Regulations Customer Challenges Industry Opportunity Emerson Solutions Climate Technologies I Connectivity / Communication Capability Home automation market expected to reach $11B by 2017 Mobile control of home comfort II High HVAC Lifecycle Costs Lifetime HVAC repair costs $1,500+ per system Sensors and real-time monitoring service III Energy, Maintenance Cost and Perishable Costs $8B / Yr is spent on refrigeration energy $3B / Yr perishable food is lost Reduce energy and maintenance cost by $40K / Site / Year Reduce perishable shrink by $15K / Site / Year Alarms Site Manager IV Refrigerated Marine / Trucking Container: Asset Management Each year, 75M tons of food travels on refrigerated containers Reduce cargo damage: Equipment failure 90% Reduce claims by 70% Temperature Service 10

11 Emerson Climate Technologies Total Solution / Service Evolution and Beyond 2010 Enriched Business Leverage System and Component Intellectual Property to Deliver Unmatched Efficiency, Reliability, and Ease of Maintenance Climate Technologies 2003 Enterprise Control Controls Total Building - HVAC, Lighting, Refrigeration, Etc System Control Controls Discrete Systems 1995 Discrete Control Control at Component Level Components and Sensors Most Efficient, Reliable Compressors, System Protectors, and Condensing Units Condensing Units Mechanical System Controls Refrigeration Compressors HVAC Compressors

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13 Efficiency Standards & Refrigerant Regulations Driving Widespread Industry Change: A Growth Opportunity Commercial HVAC Working Committee With Emerson Representation DOE Rulemaking Climate Technologies 1 12% Improvement 30% Improvement 30% Systems Affected 2 90% Systems Obsoleted Today Commercial Refrigeration 40 DOE Energy 20 % Efficiency 0 EPA Refrigerants % of Market Reach-In (35%) Today % Low GWP Blend Propane Today 2018 Ice Machine 40% (17%) Low GWP Blend Propane 100% Walk-In (37%) Today 2017 Today 2017 Low GWP Blend Supermarket CA Title 24 (25%) % Low GWP Blend CO 2 Today 2018 Today 2018 Today 2018 Emerson Works Closely with Customers to Develop Innovative Solutions to Deal with a Huge Commercial Industry Dynamic / Transformation 13

14 Emerson ProAct Transport Solution Provides Actionable Insights & Operational Efficiency for Cold Chain Customers Sensors & Controls ProAct Transport Solution 16 Software Applications Without ProAct TM Infrastructure / Data Housing Shipping Costs - Example Margin Capital Handling Energy Maint. Overhead +7% Margin Improvement With ProAct TM With ProAct TM Business: Actual Customer Value Greatly Expanded Our Transport Solutions In the Last 3 Years -- Marine, Trucking and Container Solutions Climate Technologies Fleet size - 5,000 refrigerated containers 28,000 shipments per year Distributing perishables to retail Challenges: $1M per year in damaged shipments Lack of asset tracking Emerson ProAct TM Transport Solution: 5,000 modems plus GPS & connectivity ~$500K savings in handling costs $ K savings in fleet reduction with improved asset management $3.5-$4.5M total savings over 5 years 14

15 Network Power Services and Software Solve Our Customers Toughest Challenges Customer Challenges Industry Opportunity Emerson Solutions Network Power I IT asset and capacity management for complexity and flexibility Lack of inventory visibility leads to inefficient management of IT assets, including software Improved capacity planning timeframe from weeks to hours Reduced time to identify stranded capacity by up to 50% II Limited Capital to Support Business Initiatives, and capacity ~70% of budget spent on operational activities OpEx exceeding budget Reduced OpEx by up to 30% by improved thermal and power management LIFE Remote Diagnosis III Data Center uptime and reliability are critical Cost of unplanned outage averages $8,000 / min.* Improved time to resolve outages by up to 40% Improved services provisioning times by up to 25% Project Performance Maintain *Ponemon Institute s 2013 survey 15

16 Emerson Network Power Data Center Solutions Organization -- Strategy to Add More Value and Services Network Power Power Switching and Controls UPS Systems Heat Rejection Thermal Management Generator Surge Suppression & Fire Control Power Distribution Client IT Servers, Storage and Network Infrastructure Management Data Center Solutions (DCS) Business Formed to Facilitate the Hardware / Software Integration and Solutions Orientation 16

17 Network Power The Broadening / Deeper Trellis Platform The Trellis TM platform is a real-time infrastructure optimization platform for data centers. A. Battery Monitoring B. Facilities Monitoring C. Critical Power Management D. Power Monitoring E. Remote Access Management DSView F. Comprehensive, Integrated Platform - Trellis C D B A F E The Trellis TM platform enables the unified management of the data center s IT and facilities infrastructure. It combines the physical layer and the application layer into one holistic solution. The Value of the Trellis TM Platform is Its Ability to Improve the Change Management, Improve Accuracy and Response Time, Improve Availability Through Reduced Downtime, Help to Control Costs, and Improve Visibility 17

18 Software Solutions Are Targeted At Multiple Needs Within the Data Center and Remote Centers Network Power Single Platform (Spans Product Family) Integrated and Site Based Trellis TM Platform Express Trellis TM Software as a Service (SaaS) Point Solutions Thermal Management Critical Power Monitoring Inventory Capacity Management Workflow Trellis TM Family of Products Offers Both Point and Broad Entry Points 18

19 The Trellis TM Platform Provided The University of Cambridge a Solution to Their Fragmented Server Room Problems Customer Environment Fragmented campus system with 200 server rooms in 120 departments Inefficient user setup Lack of visibility into environment process standardization High resource (power and thermal) usage Solution(s) Provided Trellis Platform. Power and thermal systems Success Factors Reduced carbon footprint by 30% and improved Power Usage Effectiveness (PUE) to 1.2 from a high value of 3 Reduced IT energy costs by 40% Network Power By Deploying the Trellis TM Platform, the University of Cambridge Will Gain Real-time Insights Into Power, Thermal Management and IT Equipment to Help Them Manage Capacity and Increase Efficiencies Across the University 19

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