JP Morgan. Conference

Transcription

1 JP Morgan Diversified ifi Industries Conference June 5, 2012

2 Safe Harbor Statements in this presentation that are not historical are considered forward- looking statements t t and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in Actuant s Securities and Exchange Commission filings. All estimates of future performance are as of March 21, Actuant s inclusion of these estimates or targets in the presentation is not an update, confirmation, affirmation or disavowal of the estimates or targets. In this presentation certain non-gaap financial measures may be used. Please refer to the supplemental schedules included at the end of this presentation or the second quarter fiscal 2012 earnings press release statements on the Investors section of Actuant s website ( for a reconciliation to the appropriate GAAP measure. 2

3 Actuant Overview Diversified Industrial Business Focused on Profitable Growth Fiscal 2012 TTM Revenue $1.6B Founded d in 1910 Four segments - leading niche market positions Continuous improvement culture Cash flow focused Disciplined acquisition & integration strategy Engineered Solutions 34% Electrical 20% ROW 15% Industrial 26% Energy 20% Significant diversification End markets Geographies Customers Europe 32% North America 53% Fiscal 2012 TTM ended February 29,

4 Industrial High Force Hydraulics Industry leader Global distribution network Sales $120 33% Sales Trend Core Sales Change 40% Vast array of end market applications $100 20% 22% 23% 19% 30% 20% MRO & General Industrial $80 15% 13% 11% 10% Mining, i rail, energy, agriculture, marine, aerospace, defense, power generation, shipbuilding, workholding. $60 $40-7% Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 0% -10% Special Project/ Infrastructure Energy 15% Mining 15% Infrastructure 15% Other 5% Europe 30% ROW 25% General Industrial 50% North America 45% 4

5 Energy MRO and Critical Connections Joint Integrity Global oil & gas and power generation MRO product, rental and technical services for safety critical joints Critical Linkages Highly engineered, custom designed dynamic umbilicals, rope and slings Mission critical applications Sales $90 $80 $70 $60 $50 $40 $30 Sales Trend Core Sales Change 40% 27% 30% 28% 22% 20% 12% 10% 4% 5% 0% -7% -10% -11% -14% -20% Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Capital Projects 15% Alt Energy 15% Refinery MRO 15% Industrial 10% O&G MRO 30% Aero & Defense 5% Exploration 5% Other 5% Europe 35% ROW 25% North America 40% 5

6 Electrical Connect & Manager Power Harsh environments Solar Inverters Marine OEM and aftermarket Industrial medical, theatrical, etc. Retail electrical tools & supplies Power transformation Low voltage transformers for varied end markets data centers, medical, etc. Electric utility switch gears Sales $90 $80 $70 $60 $50 $40 $30 Sales Trend Core Sales Change 20% 14% 15% 9% 10% 7% 7% 5% 2% 3% 0% 0% -2% -5% -9% -10% Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Ind OEM 15% Solar 15% Marine 20% Comm. Const 10% Utility 5% Resi. Const. 5% Retail 25% Other 5% NA 75% Europe 20% ROW 5% 6

7 Engineered Solutions Motion Control Leader position & motion control Sales Sales Trend Europe / ROW truck cab-tilt Automotive convertible top Patient handling Emission control air valves Power transmission agriculture drivelines and flexible shafts Severe-duty vehicle instrumentation & displays $150 $130 $110 $90 $70 $50 16% 43% 37% 22% 25% 9% Core Sales Change Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12-2% 0% 50% 40% 30% 20% 10% 0% -9% -10% -20% Auto 15% Specialty Vehicles 15% Medical 5% Other 10% Europe 40% Ag 25% Truck 30% NA 55% ROW 5% 7

8 Three Key Takeaways for Investors 1. Growth focused Diverse early /mid /late cycle exposures Growth + Innovation initiative Acquisition capital deployment 2. Improved financial flexibility to fund growth Recent refinancing i / convertible bond actions Untapped revolver and record free cash flow 3. Predictable financial track record above prior peak financial performance 8

9 Growth Trends F' 2010 F' 2011 F' 2012 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Core Sales Growth -21% -3% +17% +18% +14% +13% +14% +10% +7% +8% Op.Profit Margin Growth (1) (450) Diluted EPS Growth (2) -53% +91% +59% +82% +71% +43% +46% +61% +39% +43% (1) Year-over-year basis point change from continuing i operations, excluding fiscal 2010 restructuring t charges. (2) Year-over-year change from continuing operations, excluding fiscal 2010 restructuring charges and income tax adjustments. 9

10 Evolution: Added Growth + Innovation Developing Long Term Sustainable Process Building on robust M&A and operational excellence processes G+I focused on sustainable core growth process Three key areas of interest Innovation/new product development Emerging markets Leveraging common customers and most attractive market segments Commitment to successful execution Investing in skills and R&D Growth + Innovation Disciplined Acquisitions AIM Operational Excellence (LEAD) ROIC Focused Business Model Portfolio Management Leadership Growth councils, metrics and compensation 10

11 Focused on Underlying Secular Growth Trends Energy Demand Global Infrastructure Key Trends Food/Farm Productivity Natural Resources / Sustainability Global power generation Emerging market build-out Population growth and oil & gas maintenance Transportation Affluence / protein diets Mining / resources New installations Bridges, tunnels Biofuels Emission reduction Demanding technology & solutions Rail Agriculture equipment methods (deep water, oil Renewables (solar, wind) sands, natural gas) Construction equipment Efficient seeding technology Energy efficiency Alternative energy (nuclear, wind, solar) Joint Integrity solutions Nuclear maintenance tools Pipeline connectors Heavy lift rope / slings Seismic exploration cables Key Products / Technology Integrated solutions heavy lift technologies Hydraulic cylinders Concrete tensioning i Truck cab-tilt & latch Instrumentation & controls PTO drivelines Flexible shafts Solar inverters EGR and other air flow Mining safety & productivity High efficiency transformers 11

12 Consistent Execution of Business Model 12

13 Cash Flow Focused Driver of incentive compensation Combined Management Measure ( CMM ) bonus plan Performance based stock compensation Asset light business model (Assemblers with cap ex < 2% of sales) Working capital focus Allocate capital based on ROIC 300% 140% 120% 100% 80% Free Cash Flow Conversion Trend 298% 254% 186% 137% 114% 121% 132% 116% 123% 127% 100% Expect 2012 Free Cash Flow of $170-$175M $175M 13

14 Acquisitions - Another Growth Driver Criteria Niche exposure to strategic secular growth markets Recurring revenue replacement or service Objectives Deploy Annual Free Cash Flow On Average Maintain leverage within X Net Debt / EBITDA range Track Record Acquisitio on Criteria Emerging market presence Cost and sales synergies Leadership in niche market Pre-2009 $940M Sizable acquisitions include 2009 $235M 2010 $45M 2011 $313M 2012 YTD $33M Attractive EBITA ROIC returns Strong management teams 14

15 Recent Acquisitions Headquarters: Perth, Australia Headquarters: Sao Paulo, Brazil Financials: Annual Revenue ~$20M Financials: Annual Revenue ~$13M Offering: Mooring, rigging & towing design, sale and rental. Rope and related products. Offering: Instrument panels, gauges, tachometers, speedometers, pressure gauges and senders. Served Markets: Oil & Gas (>50%); marine, mining, defense Served Markets: Primarily agriculture & industrial Energy/Cortland globalization: Asia Pacific growth opportunities in key energy and mining markets Gorgon and other LNG fields provide opportunity to leverage increased shipping activity and mooring requirements in the region Strong management team with significant technical expertise Emerging market growth with a focus on favorable secular markets (ag & construction) Maxima technology to accelerate Turotest s growth as customers increase content per vehicle Expand relationship with key global strategic customers such as CAT, CNH and AGCO providing improved technology and local production & technical support Mooring Design and Installation Cyclone Mooring Instrument Panels 15

16 Fiscal 2012 Second Quarter Snapshot Great quarter with results solidly above expectations Core growth of 8% with double digit core growth in three of four segments (up from 7% in Q1) Year-over-year operating profit margin expansion of 190 basis points EPS from continuing operations increased 43% to $0.43 Exceeded prior peak sales, earnings and cash flow on TTM basis. (i n mil l ions, except per shar e amounts) Q2 F'2012 Sales $378 Core Growth 8% EBITDA $63 Margin 16.6% Diluted EPS $0.43 Y-O-Y increase 43% Free Cash Flow $33 Net Debt/EBITDA 1.6X Results Reflect Solid Market Demand and Strong Execution 16

17 Solid Capital Structure Supports Growth (US $ in millions) Capital Structure at 2/29/12 Capital Structure Detail 02/29/2012 $600M Revolver $57 Term Loan % Senior Notes (due 2017) % Convertible Bonds 118 Cash (58) Net Debt $467 Total Shareholder' Equity 957 Total Capitalization $1,424 Net Debt / Capitalization 33% Net Debt / Pro forma EBITDA 1.6X Recent Actions Credit rating upgrades Moody s upgraded from Ba2 to Ba1 S&P upgraded from BB to BB+ Recent Refinancing: Par call notice on our 2% Convertible Bonds initiated (tender offer concluded April 26, 2012). No EPS impact as shares already included in diluted EPS count. $300 million of 5.625% 2022 Senior Notes issued Tender initiated for existing $250 million 6.875% 2017 Senior Notes (tender offer concludes May 27, 2012) Net Debt/EBITDA leverage forecasted at 1.0X by end of fiscal 2012 (long-term target zone is X net debt/ebitda) Ample Capacity to Fund Growth 17

18 Fiscal 2012 Outlook (as of March 21, 2012) (US$ in millions except EPS, continuing ops) Full Year E Change Sales $1,445 $1,600-1, % Diluted EPS $1.68 $ % 3rd Quarter E Change Sales $393 $ % Diluted EPS $0.51 $ % Full Year Assumptions: Full year core sales growth of 5-8% Industrial +8 to 10% Energy +15 to 20% Electrical +5 to 10% Engineered Solutions down 3-6% Key FX assumptions ~$1.30/1 and ~ $1.55/1 Margin expansion of ~100 basis points ~ 23% effective tax rate Excludes future acquisitions, share repurchases 2012 Free Cash Flow Forecast of $ Million 18

19 Track Record of Consistent Growth $2,000 $1,600 $1,200 $800 $400 $727 $585 $461 $463 ($ in millions except per share data. Fiscal years ended August 31) F EPS $400 $300 $200 $100 $0 $87 $84 $90 $106 EBITDA $144 $181 $260 $228 $171 $185 $244 Sales $1,600- $1,625 $1,446 $1,445 $1, $967 $1,041 $1,118 $1,161 $280- $ F Free Cash Flow $2.50 $1.98- $170- $200 $1.81 $1.94 $2.08 $158 $2.00 $148 $151 $175 $150 $1.68 $145 $150 $1.50 $1.44 $1.19 $1.08 $102 $85 $1.00 $0.92 $0.94 $100 $50 $0.70 $47 $56 $0.60 $0.51 $25 $0.50 $50 $ F $ F Demonstrated Track Record of Profitable Growth ( reflect discontinued operations for European Electrical; 2012 Guidance as of March 21, 2012) Note: EBITDA, EPS and FCF exclude discontinued operations, cumulative effect of changes in accounting, extraordinary charges, refinancing/debt extinguishment, net gains on business divestitures, tax gains and other special items. EBITDA and EPS also exclude impairment and restructuring charges. 19

20 Questions? Diversified End Markets, Customers & Geography Niche Market Leadership Positions Continuous Improvement Culture Experienced Leadership Team and Strong Insider Ownership Disciplined Acquisition & Integration Strategy Cash Flow / ROIC Focused 20

21 Supplemental Data

22 Actuant s European Presence Industrial Northern Europe / IS focused North America 53% Europe - Industrial 8% Europe Energy 7% Europe - Engineered Solutions 13% Energy North Sea / Norway Exposure with maintenance services Umbilical / Seismic majority of related assets (e.g. ROV) exported to emerging markets Engineered Solutions ROW 15% Europe - Electrical 4% Automotive nearly half of volumes exported to other markets Estimated 20% of European trucks exported to emerging markets Electrical l solar and leisure marine Exposure to European Industrial/Consumer Demand Approximates < 25% of Revenue 22

23 What s Different Now Significantly Different Environment from the Great Recession Significantly lower leverage, no near term maturities and ample revolver capacity No/limited inventory correction most notably in vehicle markets Portfolio management Broader Energy exposure European Electrical divestiture / acquisition of Mastervolt Weasler addition (40% aftermarket) Launch of Growth + Innovation initiative Limited downside in markets that have not yet recovered (e.g. Electrical) $40 million of permanent cost taken out completed 23

24 Reconciliation of Non-GAAP Measures (US$ in millions except EPS) EBITDA Q2 Q Net Earnings $7.9 $32.2 Net Financing Costs $8.2 $7.8 Income Tax Expense $6.2 $9.6 Depreciation & Amortization $12.9 $13.1 Discontinued Operations $14.2 $0.0 Adjusted EBITDA $49.4 $62.7 Free Cash Flow Q2 Q Cash From Operations $13.8 $31.5 Capital Expenditures ($4.2) ($4.8) PP&E Divestitures $0.2 $1.9 Other $1.4 $4.6 Free Cash Flow $11.2 $