Jefferies 2011 Global Industrial and A&D Conference

Transcription

1 Jefferies 2011 Global Industrial and A&D Conference August 11, 2011 Andy Lampereur, EVP & CFO Karen Bauer, Investor Relations

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 June 16, 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 third quarter fiscal 2011 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 2011 TTM Revenue en e $1.5B (1) Founded d in 1910 Four segments - leading niche market positions Significant diversification End markets Geographies Customers Continuous improvement culture ROIC / cash flow focused Disciplined acquisition & integration strategy t Engineered Solutions 36% Europe 3 Electrical 20% ROW 1 Industrial 2 Energy 19% North America 50% 3 (1) TTM Sales as of May 31, 2011 pro forma for Mastervolt and Weasler

4 Industrial Segment Sales High force hydraulic tools and integrated C S l Ch $120 solutions Industry leader Global distribution network Vast array of end market applications MRO & General Industrial Mining, i rail, energy, agriculture, marine, aerospace, defense, power generation, shipbuilding, workholding. Infrastructure Sales By End Market $100 $80 $60 $40-34% -3-30% -7% 20% 33% 22% Core Sales Change 1 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q % 23% 30% 20% 10% 0% -10% -20% -30% -40% Energy 1 Infrastructure 10% Mining 10% Other General Id Industrial til 60% Sales By Geography Europe 30% ROW 2 4 NA 4

5 Energy Segment Joint Integrity Global oil & gas and power generation markets MRO product, rental and technical services for safety critical joints Critical Linkages Highly engineered, custom designed dynamic umbilicals, l rope and slings Mission critical applications $80 $70 $60 $50 $40 $30 $20 Sales 3% -11% -12% -14% -11% Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11-7% 4% Sales By End Market Industrial Alt Energy 10% 10% Capital Project 1 Core Sales Change Exploration Aero /Defense Other 30% 22% 20% 10% 0% -10% -20% Refinery MRO 20% O&G MRO 30% Sales By Geography Europe 3 ROW 2 5 NA 40%

6 Electrical Segment Harsh environments Solar Inverters Marine OEM and aftermarket Industrial medical, theatrical, etc. Retail electrical tools & supplies Brand, SKU management, logistics Power transformation Low voltage transformers for varied end markets data centers, medical, etc. Electric utility switch gears Sales $100 $80 $60 $40 $20 $0-33% -21% -20% -9% 9% 7% 2% Core Sales Change Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11-2% Sales By End Market OEM 1 Solar 1 Marine 20% Comm. Const 10% 3% Utility Resi. Const. Other Retail 2 Sales By Geography NA 70% Europe 2 ROW 6

7 Engineered Solutions Segment Sales Core Sales Change Market leading solutions for position and $140 43% motion control 37% Europe / ROW truck cab-tilt Agriculture / L&G drivelines Automotive convertible top Patient handling $60 Emission control diesel air flow valves -4-37% Severe-duty electronic display & $40 instrumentation Flexible shafts and steel cable & assemblies $120 $100 $80-18% 16% 22% 2 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Sales By End Market Auto 20% Truck 30% Ag/L&G 20% Other 10% RV 9% 50% 40% 30% 20% 10% 0% Industrial Military Medical -10% -20% -30% -40% -50% Sales By Geography Europe 4 7 NA 4 ROW 10%

8 8 Business Model

9 Three Key Takeaways for Investors 1. Solid momentum across the portfolio Diverse early /mid /late cycle exposures Growth + Innovation initiative 2. Ample financial flexibility Cash flow / liquidity to fund growth initiatives Acquisition capital deployment 3. Predictable financial track record 9

10 Results Demonstrate Benefit of Diversity Continuing Momentum In Both Sales and Margins (US$ in millions) F' 2010 F' 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Core Sales Growth -21% -3% +17% +18% +14% +13% +14% Op. Profit Margin Growth (1) (450) Diluted EPS Growth (2) -53% +91% +59% +82% +71% +43% +46% (1) Year-over-year basis point change from continuing i operations, excluding restructuring t & impairment i charges 10 First Half Core Decline / Second Half Improvement (2) Year-over-year change from continuing operations, excluding restructuring, impairment and debt extinguishment charges and income tax adjustments

11 Growth + Innovation Initiative Developing Long Term Sustainable Process Initiative launched in late fiscal 2010 Process-driven, Treacy G+I model used as a framework Incorporated into LEAD Establishing management systems (including compensation), o tools and metrics Building organizational competency Launched segment growth councils Primary Focus: Emerging g markets and secular growth drivers 11

12 Acquisition Overview Citeia Criteria Niche exposure to fastergrowing end markets Focus on well-run businesses with strong management teams (vs. turn-arounds) Provide additional business diversity Key Component s Financial Target Leverage maintained within X Net Debt / EBITDA range Track Record ROIC focus - EBITA return key metric for valuation 2005 $457M 2006 $129M 2007 $163M 2008 $110M 2009 $235M 2010 $45M 2011 YTD $310M Continued financial discipline proved our willingness to walk away many times in the past 12

13 Acquisition History By Segment Industrial Energy Engineered Solutions Electrical 13

14 Weasler Engineering Inc. Snapshot Sales by End Market (Annual Revenue $85M) Lawn & Turf 9% Grain Handling 1 Hay & Forage 18% Other Niche Ag. 7% N.A. Aftermarket & Service Parts 32% Industrial 7% Europe Aftermarket 8% Europe OEM 4% Drivelines NA and Metric Sizes, Constant Velocity Diversifies Engineered Solutions segment with attractive agriculture exposure Driveline products provide critical linkage between equipment and implements/attachments Differentiated product features and robust product development, testing & quality lab 40% of revenue is spares / aftermarket Gearbox Torque Limiter NA leadership position in articulating drivelines and growing European presence Strong management team 14

15 Drive Train Applications Hay Balers Forage Harvesters Trenchers Mower Conditioners Wheel Loader Grain Augers Rotary Mowers Many Others Diverse Implement Applications Agriculture g Implement OEMs Full line Deere, CNH, etc Short line Kuhn, MacDon, etc Lawn & Turf Deere, Toro, etc Others trenching, sprayers, diggers, etc Replacement demand OEM dealer network Retail Tractor Supply, Farm & Fleet, etc Distributors & service shops 15

16 Weasler Integration Update Attractive secular trends Global population, protein diet, bio fuels, productivity focus Developing global growth strategy European market 2X size of North America Leverage global customer relationships across Actuant portfolio New product development Customized applications Product extensions system outsourcing Leverage technology with Elliott flexible shafts LEAD immersion / LCC Sourcing 16

17 Ample Capacity to Fund Growth Capital Structure (US $ in millions) Capital Structure Detail 5/31/2011 $600M Revolver $0 Term Loan /8% Senior Notes (due 2017) 250 2% Convertible Bonds 118 Cash (69) Net Debt $399 Total Shareholder' Equity 878 Total Capitalization $1,277 Entire $600 million revolver available at end of fiscal Q3. Including Weasler acquisition ($155M), leverage just under 2X by fiscal year end. Fiscal 2011 free cash flow forecast of $ million Net Debt / EBITDA 1.7X Net Debt / Capitalization 31% Target Leverage 1.5X - 2.5X Net Debt/EBITDA 17

18 Cash Flow Focused Assemblers vs. vertical manufacturers (cap ex < 2% of sales) Advanced engineering & technology Logistics expertise Quality/customer value Working capital focus Allocate capital based on ROIC Combined Management Measure ( CMM ) bonus plan 300% 140% 120% 100% 80% 298% Free Cash Flow Conversion Trend 100% 137% 114% 121% 116% 132% 123% 254% 186% ~120% F See supplemental financial schedules for calculation Free Cash Flow Expected to be 11 th Year of >100% Conversion of Net Earnings

19 Fiscal 2011 Third Quarter Recap EPS increased 46% to $0.51 from $0.35 last year (1) Strong double digit it core growth of +14% Accelerating growth in both Energy and Industrial segments Operating profit margins increased 140 basis points y-o-y (1) Robust free cash flow of $69 million Deployed $155 million of capital to acquire Weasler, Inc just after quarter end Q3 F'2011 Sales $393 Core Growth 14% EBITDA $71 Margin 18.0% Diluted EPS $0.51 Y-O-Y increase (1) 46% Free Cash Flow $69 (1) Excludes fiscal 2010 restructuring costs 19 Results Reflect Improved Market Demand and Strong Execution

20 Fiscal 2011 Guidance Update (as of June 16, 2011) (US$ in millions except EPS) Fourth Quarter Full Year Change Fiscal Change Q from PY 2011 from PY Sales $390 - $ % $1,430-$1,440 23% - 24% Diluted EPS (1) $ $ %-5 $ $ % - 53% Assumptions: Fourth quarter core sales growth of approximately 8-9% European truck and auto summer shut downs Weasler revenue included in Q4; EPS neutral due to transaction costs and purchase accounting Excludes future acquisitions Full year free cash flow of $140-$150 million 20 (1) Continuing operations, excluding prior year restructuring and tax items.

21 Fiscal 2012 Initial Outlook (as of June 16, 2011) (US$ in millions except EPS) Fiscal Fiscal Change Sales $1,430-$1,440 $1,600-$1,650 12% - 1 Diluted EPS $ $1.65 $ $ % - 21% 21 Assumptions: Full year core sales growth of 5-8% Key FX rates approximately $1.4/1 and $1.6/1 Carryover acquisition revenue of approximately $100 million Margin expansion of basis points ~2 effective tax rate Shares outstanding million Excludes future acquisitions Free cash flow $155 - $165 million

22 Predictable Financial Track Record ($ in millions except per share data. Fiscal years ended August 31) $2,000 $1,600 $1,200 $800 $400 $2.50 $2.00 $1.50 $1.00 $0.50 $727 $585 $461 $463 Sales $1,600- $1,650 $1,446 $1,430- $1,440 $1,274 $967 $1,041 $1,118 $1, F2012 F EPS $1.44 $1.19 $0.92 $0.70 $0.60 $0.51 $1.81 $1.94 $0.94 $ F2012 F Free Cash Flow $155- $140-$165 $148 $151 $150 $145 $150 $1.60- $1.65 $400 $300 $200 $100 $0 $200 $150 $100 $50 $87 $84 $90 $106 EBITDA $144 $181 $260 $228 $171 $185 $235- $240 $280- $300 $1.80- $2.00 $50 $25 $85 $47 $56 $102 $ F 2012 F $ F2012 F Demonstrated Track Record of Profitable Growth ( reflect discontinued operations for European Electrical; 2011 and 2012 Guidance as of June 16, 2011) 22 Note: Adjusted EBITDA, adjusted 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. Adjusted EBITDA and adjusted EPS also exclude impairment and restructuring charges.

23 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 23

24 Supplemental Data

25 Reconciliation of Non-GAAP Measures Net Earnings Excluding Special Items (US$ in millions except EPS) Diluted EPS Excluding Special Items Q3 Q Q3 Q Net earnings $21.8 $36.4 Net of Tax Adjustments Diluted Earnings per Share (EPS) $ 0.30 $ 0.49 Discontinued Operations $1.9 $2.0 Net of Tax Adjustments: Tax adjustments $0.6 - Discontinued Operations Restructuring Charge $1.1 - Restructuring Charge Net earnings excluding special items $25.4 $38.4 Tax adjustments 0.01 Diluted EPS excluding special items $ 0.35 $ 0.51 EBITDA Q3 Q Net Earnings $21.8 $36.4 Net Financing Costs $7.8 $7.9 Income Tax Expense $3.7 $11.4 Depreciation & Amortization $11.2 $12.9 Discontinued Operations $6.5 $2.0 EBITDA $51.0 $70.6 Adjustments To EBITDA: Restructuring Charge $1.4 - Adjusted EBITDA $52.4 $70.6 Free Cash Flow Q3 Q Adjusted EBITDA $52.4 $70.6 Cash Interest ($2.8) ($2.1) Cash Taxes ($2.2) ($11.9) Capital Expenditures ($6.4) ($6.5) PWC/Other $5.2 $19.3 Free Cash Flow $46.2 $69.4