emerson electricl 2009 Annual Investor Conference_Monser
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Transcript of emerson electricl 2009 Annual Investor Conference_Monser
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Ed Monser Chief Operating Officer February 6, 2009
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 www.emerson.com under the investor relations tab.
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.
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Strategic Imperatives Actions
Strengthen Business Platforms
- Major Growth Initiatives will help keep us within the 5-7% zone – we have refreshed the list of growth initiatives to optimize the growth of the company.
- Service and Solutions Growth - Acquisitions will be key – we must look outside our
current served market to grow – Adjacent Space. - We are changing the mix of our business – in the
right way. - Our Business Platforms are being valued globally –
we are starting to look like one integrated company.
Pursue Technology Leadership
- Develop more game-changing products and technologies through efficient Portfolio Management and proper allocation of resources.
- Now is the time to invest in technology for a competitive advantage!
- Develop a strong offering of Responsible and Efficient Energy Products and Solutions.
- Customer involvement throughout the entire process.
Executing These Four Strategic Imperatives Will Be Key in the 2009 and 2010 Recessionary Periods to Drive a Strong, Outperforming, Recovery
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Strategic Imperatives Actions
Globalize Assets - Take care of mature markets, but emerging markets play an ever increasing role in our success.
- Our geographic mix presence allows continued growth.
- Reposition assets to drive profitability improvements and to better serve our customers.
Drive Business Efficiency
- Price actions must stay ahead of material inflation. - Fix the complexity crisis – kill products and purge
data. - We must improve on-time delivery performance to
exceed customer expectations. - Continue to improve Trade Working Capital, generate
strong Operating Cash Flow, and manage Capital Expenditures.
- ROTC improvement will continue to be a key indicator of success.
Executing These Four Strategic Imperatives Will Be Key in the 2009 and 2010 Recessionary Periods to Drive a Strong, Outperforming, Recovery
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Operating Performance
Regionalization of Business – Labor/Restructuring
– Supply Chain
– Customer Support/Shared Services
– Engineering
Operating Performance Targets
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Actions Yielded 2.3% Points Of Improvement Since 2003
17.0%+
15.9%
15.0%
16.4%
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Need to Continue to Improve Capital Efficiency – Trade Working Capital Needs Be <15% and We Still Have Opportunities to Improve Fixed Assets
US$B % to Sales
TWC % to Sales
Fixed Assets % to Sales
17.9%
14.1% 15.0%
11.5%
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US$B
10.4%
21.8%
Free Cash Flow
18%-20% ROTC
$2.5-2.7B
11.0-11.5%
% to Sales
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Operating Performance
Regionalization of Business – Labor/Restructuring
– Supply Chain
– Customer Support/Shared Services
– Engineering
Operating Performance Targets
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US & Canada
Mexico & Latin America
Europe
Middle East & Africa
Asia Pacific
2003 2006 2008
Sales $8.2B $11.3B $12.2B Employees 41K 44K 42K Locations 142 118 100
2003 2006 2008 Sales $2.8B $3.9B $5.7B Employees 22K 24K 24K Locations 70 80 70
2003 2006 2008 Sales $0.5B $0.9B $1.2B Employees 18K 21K 22K Locations 36 37 37
2003 2006 2008 Sales $0.4B $0.7B $1.2B Employees 0.6K 0.5K 0.7K Locations 2 2 2
2003 2006 2008 Sales $1.7B $2.9B $4.5B Employees 25K 46K 52K Locations 40 38 46
2003 2006 2008 Total Sales $13.6B $19.7B $24.8B Total Employees 107K 136K 141K Total Locations 290 275 255
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Global and Regional Mode Teams – Development of the Global Strategies by Mode, Competitive Tension
and the Selection and Performance of the Carrier Base
Intercontinental Ocean and Air Programs – Operational Movement of Intercontinental Freight
North America Trucking Program – Canada, US and Mexico – Operational Movement of Domestic Freight
Digitizing of the Supply Chain Electronic Connectivity Between Emerson/Trading Partners – Electronic System to System Transactional Data for Operating
Programs – Audit Payment of Freight Bills
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48 Divisions Participating in the Program – Savings Increased from $0.9M to $13.0M Since 2004 – Transit Times have Improved from 36 Days to 24 Days – Container Utilization has Increased from 60% to 91%
Total Ocean Savings Average Ocean Transit Times - Asia To United States
$M
Days
Program Expands to Air Freight in 2009
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Global and Regional Mode Teams – Development of the Global Strategies by Mode, Competitive Tension
and the Selection and Performance of the Carrier Base
Intercontinental Ocean and Air Programs – Operational Movement of Intercontinental Freight
North America Trucking Program – Canada, US and Mexico – Operational Movement of Domestic Freight
Digitizing of the Supply Chain Electronic Connectivity Between Emerson/Trading Partners – Electronic System to System Transactional Data for Operating
Programs – Audit Payment of Freight Bills
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Automates the Domestic Load Tendering Process Reduced Leakage of eSourcing Savings by 28% in 2008
Emerson Contract Load Control Center (Schneider Logistics)
Shipper
Portal
1 2 3 4 5
Emerson Routing Guide
Emerson Managed eSourcing Event
Reduces Ethical Concerns and Provides Valuable Data for
On-Boarding
13 Divisions Participating in 2008
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Global and Regional Mode Teams – Development of the Global Strategies by Mode, Competitive Tension
and the Selection and Performance of the Carrier Base
Intercontinental Ocean and Air Programs – Operational Movement of Intercontinental Freight
North America Trucking Program – Canada, US and Mexico – Operational Movement of Domestic Freight
Digitizing of the Supply Chain Electronic Connectivity Between Emerson/Trading Partners – Electronic System to System Transactional Data for Operating
Programs – Audit Payment of Freight Bills
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2007 Pilot in Laredo Provided Proof of Concept
Targeted 10%+ Cost Savings Reduce Transit Times by 20% Optimize Freight and Increase Utilization Provide Visibility by Part Number Reduce Inventory by +10%
Ensure Trade Compliance/ Ethics
Establishes a Reliable Logistics Network
Across the Southern Border
2009-2010: Complete Laredo, McAllen, El Paso and Calexico
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Cluj ~60
India 1272
Mexico City ~140
Dubai ~320
Pune ~1,300
Xi’an ~130
Buenos Aires ~70
Future Shared Services Locations
Sao Paulo
Calgary
Toronto New Delhi
Manila ~2,700
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Regionalization of Non-Customer Facing Positions Allows for Highly Skilled Labor at Very Competitive Costs
Employees
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29
124
228
Employees
IT Marketing Finance/ Accounting Admin./Logistics
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IT Marketing Finance/ Accounting Admin./Logistics
8
59
149
Employees
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2,054
IT Marketing Finance/ Accounting Admin./Logistics
Employees
2,713
2,985
Customer Service
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80,000 sq ft of Office Space/ 50,000 sq ft Manufacturing & Warehouse Space
Opened in January 2009
Dubai Facility Provides Middle East and Africa Customers with Faster Service and Lower Cost Advantages
Climate Technologies
Process Management
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High Cost Best Cost
7,200
8,500
5,000
Number of Engineers
51%
49%
70%
30%
57%
43%
Engineering Investment $M
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Engineering Site Multifunctional Engineering/Manufacturing Site
Key Global Engineering and Design Sites
St. Louis, MO 300
Austin, TX 200 Marshalltown, IA 200
Sidney, OH 300
Columbus, OH 200
Chanhassen, MN 200
Manila, Philippines 700
Shenzhen, China 1500
Pune, India 550
Suzhou, China
200
Cluj, Romania
80
Xi’an, China
70
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We are Using the Economic Downturn to Focus on Getting Strategic Investments Done – We’ll be Ready to Grow as Markets Return
Sales $M Engineers +21%
Engineers +26% Sales
+32% Engineers
+38% Sales
+74% Engineers
+26% Sales
2003 Engineers 2008 Engineers
2003 Sales 2008 Sales
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Add Resources to Drive Future Sales to 5-7% Underlying Growth Improve Productivity and Operational Costs to Achieve 17%+ OP
Restructuring People and Facilities to
Align with Market Demand
Best Cost Production 39% to 68% since 2000
Implementing Global Supply Chain Projects
to Realize Savings Best Cost Sourcing
18% to 43% since 2000
Investing in Regional Centers to Develop
New Products >4,000 Best Cost Engineers
Adding 100+ in 2009T
Developing Regional Shared Services for Highly Productive Customer Support 7 Sites/~4,700 People 4 New Sites in 2009T
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Operating Performance
Regionalization of Business – Labor/Restructuring
– Supply Chain
– Customer Support/Shared Services
– Engineering
Operating Performance Targets
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