GE Infrastructure William Woodburn
Transcript of GE Infrastructure William Woodburn
GE Infrastructure
William WoodburnPresident & CEO
"This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects","anticipates","intends", "plans", "believes", "seeks", "estimates", "will" or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of GE. Forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from these expectations and assumptions due to changes in global political, economic, business, competitive, market, regulatory and other factors. We undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information, future developments or otherwise."
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February 2005
The world is experiencing dynamic shifts in:
• Population
• Life expectancy
• Energy usage & stress
• Availability of clean water
…all of which increase global tension
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February 2005
The world population will become grossly out of balance.
80% of the world’s population will be in countries least capable of supporting further growth…
… but 33 developed countries’ populations will shrink dramatically.
Source: CSIS
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February 2005Source: CSIS
Medical technologies may allow today’s children to live until age 120.
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February 2005Source: GE Energy
The energy needs of this growing population will spike usage by 60%
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February 2005
The population explosion will put even more pressure on this valuable resource
Source: The World Bank
Nearly half of the world’s population will be water-stressed in the future
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GE is structured to address these dynamic changes
GROWTH ENGINES
CASH GENERATORS
Commercial Finance
Advanced Materials ConsumerAnd Industrial
Infrastructure
ConsumerFinance
Equipment Services Insurance
NBC UniversalTransportationHealthcare
Energy
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February 2005
GE’s Global Research Center
•4 Global Research Centers
•2,500 technologists worldwide
•Technical Disciplines
> Chemistry> Mechanics> Physics> Electrical
Global Research CenterNiskayuna, NY
John F. Welch Technology Centre
Bangalore, India
China Technology CenterShanghai, China
Global Research -EuropeMunich, Germany
>Computer Science>Materials>Biology>Mathematics
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February 2005
GE Infrastructure-$5B in 2005
Security GE Fanuc AutomationSensingWater & Process
Technologies
Infrastructure
Structured to provide global customer solutions
Technology focused on solving emerging global market needs.
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February 2005
Chemicals$14
Desalination$5
Membranes$10
Equipment$13
Ind’l. Svcs.$8
Water strategyTotal market
$360B$50B
GE Growth Focus
Industrialservices
12%
8%
8%
12%
CM% >40%Growth rate +10%
What we bought
Great distributionStrong technologyCompetent team
Segmentation
Betz,Ionics
Glegg,Ionics
OsmonicsIonics
Ionics
4% Betz
What we bring
Global distributionServicesMore technologyFinancingPublic policyMore leadership
+
In the game … with scale
Investment Value creation
1.9X revenue10X EBITDA
Key ProfitSegments
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February 2005
GE InfrastructureWater & Process Technologies
The GE difference…
• Imagination Breakthrough Technology
• 2,200+ Sales and ServiceEngineers
• Game-changing commercialoffering
DifferentiatingTechnology
People CommercialOffering
GE’s competitive advantages drive our growth.
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February 2005
The Value To Customers…
• We Optimize Total System Performance
• We Safeguard Customer Assets From Corrosion, Fouling and Scaling
• We Protect The Environment Through Water and Energy Conservation
Filtration
Equipment
$2.1 B
The Platform
Aligned with customers to drive growth
Chemicals
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February 2005
Creating technology that improves our world. Water Purification
Desalination
Air Quality
Water Reuse
Waste Treatment
Pathogen Protection Plant Optimization
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February 2005
Desalination & Micro Biological Control
Desalination technology
• Energy efficient membranes
• Reduce equipment cost and footprint
• Improved energy recovery
• Integrate RO system design with renewable energy sources
Micro Biological Control technology
• RNA Testing applied to Industrial segments
• Environmentally friendly MB control techniques…UV, ozone and chlorine dioxide
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February 2005
Mobile Water technology
• Incorporation of filtration technologies within rapidly deployable mobile fleet
• Global service network
Mobile Water & NDT
Non-Destructive Testing technology
• Diagnostics and imaging software
• Predictive models
• Corrosion prevention solutions
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February 2005
What Our 2,200 Service Reps Do …• Perform Field Analytics
• Troubleshoot Plant Systems
• Prescribe Treatment Solutions
• Live on the Customer Site
What Our Customers Get …• Expert Technical Service, 24 X 7
• Continuous Performance Monitoring
• Detailed Performance Reporting
• Optimized Performance of Costly Fixed Assets
We continue to build excellence with our field sales team.
• Typical Contracts ~1 year
• Customer Pays On Chem Usage… Average $60K / Year
$1.5B Revenue in 2004
80%Recurring
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• Broad array of solutions
• Scale + on-site reliability + reputation
Optimize SystemPerformance
Protect the Environment
Safeguard Assets
Result: $160MM Service Contract
Build, Own, Operate or Maintain
Our commercial offering represents a paradigm shift in the industry.
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February 2005
Desalination Opportunity
2005 2014
Growth Projections
$4.3B
$14.1B
$9.2B
Industrial
Municipal60%
40%
10%
25%
65%
Americas
Asia
EMEA
14% CAGR
9% CAGR
ProjectedGrowthRange
2005 Market Segmentation
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February 2005
Ionics Business Segments
• Long term outsourcing & emergency services
• ~500 trailers/12 regeneration centers
• Build – Own – Operate facilities for industrial/muni consumption
• ~200 facilities/$4.2B backlog
40%
Operations
50%
• Water purification equipment to diversified industrial & muni customers
• Leader in desalination & zero liquid discharge
Equipment
10%
Revenue %
• Home water purifiersConsumer &Instruments
DescriptionSegment
• Analytical instruments for measuring impurities in water
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February 2005
Leading Mobile Fleet of ultra purity vehicles
40 Trucks 500 Trucks
Ionics Opportunity
Synergies• Ionics 60 person sales team turbo-
charged with GE Industrial team of > 2,200
• GE Capital financing capabilities
GE: 1 MGD Ionics: 25 MGD
Desal Scale
Global leader in Desalination• 3,000 Installed Base• $4.2 B backlog
• GE Capital financing capabilities
• Advanced technology & cost execution capabilities
• GE scale / reputation
Synergies
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February 2005
Why We Like DesalLarge, high-growth segment
GE Commercial Finance opportunity
Technology drives lower Cost
Trinidad Desal Plant Example
Ionics
GE + Ionics
OM ROE OM ROE
Year 1 Year 3
$10$8$12
$16
9%
42%
26%
56%
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GE’s Water PlatformPre-GE Post-GE
On strategy … business with breadth, diversity & real scale
Path to20%ROTC
Rev. growth 7% 12/40% 10+%OM % 12% ~18% ~20%% services ~50% ~75% ~80%IROIC ~3% ~50+%
$1.6
'05E '07F
$2.8
Membranes/FiltrationPolymers
Desalination
Revenue($B) $2.1
Water Services
~10%organic growth
Ionics pending
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Global Security Industry$160 Billion
Market OpGrowth Profit ROTC
Current Segments ($26 B)
Facility Security 7% H Hresidential, commercial, enterprise
Homeland 8% H Htransportation & defense solutions
Emerging Segments ($13 B)
Integrated Facility Mgmt. 7% M M
RFID / GPS Surveillance 12% M M
GE’s Robust Growth Strategy…• Acquire & build capabilities• Integrate and streamline operations
• Deliver excellence in customer service
• Maintain technology leadership
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Enterprise$25
Facility$5
Homeland$10
Security strategyTotal market
$160B
$40B15%
4%
10%
CM% >40%Growth rate +13%
What we bought
Technology leadersDistribution/Market accessInstalled base
Segmentation
Ion TrackInVision
InterlogixEdwards
Interlogix What we bring
Global distributionServicesTechnology synergiesGE leadership
+
Quickly becoming a major playerin targeted segments
Investment Value creation
2.3x revenue13.4x EBITDA
Key ProfitSegments
GE Growth Focus
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GE InfrastructureSecurity
NewMarkets
NewTechnology
Solutions &Services
The GE difference…
• Creating new market opportunities with technology
• Developing Imagination Breakthrough new products
• Delivering a broad set of security solutions & services
GE’s advanced science & engineeringdrive our growth
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Protecting Facilities & the Home
StreetLab:Narcotics & bio-detection
VideoIQ:Intelligent videoidentifies humanactivity
• ID management
• Access control
• Digital video
• Fire detection
• Intrusion detection
• Integrated data centers
Home Security:Wireless systems &self monitoring
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Winning with technology
• EntryScan systems used in TSA & Amtrak security trials
• XRD – GE has the first new bomb detection technology certified by TSA since 1994
• GE technology protected attendees of the Olympics, DNC & RNC, and the reopened Statue of Liberty
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Protecting Commerce
• Partnership with All Set Marine Security
• Adapting GE’s Supra technology to track cargo & detect container access
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SupraRecurring Revenue Services Business
Generating High CM/OM
Sea Container
Linking existing technology to open new markets
AutomotiveAccess and Video Integration
Creates Unique Solution$750MM Opportunity
Sea ContainerUnique technology & Service Model
$1B Opportunity
Automotive
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NPI: Balance technology development
Link ExistingTechnology
4 IBs
Resi Auto Sea Containers
New/NewTechnology
4 IBs
Time: 6months + 6 months Time: 2-3 years
MMW Imaging / Weapons Detection
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Finding threats before they are realized
- Explosives
- Weapons
- Biological & chemical threats
Imagine…
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Human Threat DetectionMillimeter-Wave/VideoIQ
Advanced detection and
analytical technologies to
identify potential threats
in open spaces
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Human Threat DetectionMillimeter-Wave
Advanced detection and
analytical technologies
to pinpoint hard-to-
identify threats
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Advanced ScreeningWhat we Imagined
• Trace detection
• CT
• XRD
• QR
• Biometric
• Intelligent Video Technologies
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Integrated Multi-Sensor CheckpointScreening Technologies Under Development
5
2 3
4 1
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Bio Detection
Mobile and site-based solutions
for rapid detection and
identification of biological and
chemical threats
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Growth
Organic- Technology drives NPI, Market reach
Acquisitions- InVision
- Edwards
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Rounding Out the Platform
Strategic
- Edwards provides fire capabilities & positions GE as a leader
- InVision builds explosives detection capability
Leveraging GE Scale- Cross-selling within Edwards
- Technology leverage in CT for InVision
- GE’s global distribution reach
- Integration focus on technology, cost & organic growth
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February 2005
Edwards OverviewFire Systems Benefits
• Government mandated
• 12-15 months earlier in specification
• Backbone of every building system
• Fire: $5B industry
• Integrated Facility Mgmt: $10B
Why Edwards?
• Channel strength
• Technology leader
• Complementary product portfolio
• Synergy opportunities with GE
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February 2005
Edwards Overview
Fire CCTVBuildingControls
AccessControl
Intrusion
GE Synergies
• Utilize Edwards channel partners to sell through Security products
– Video, access control CCTV, trace detection
• Expand Edwards in Europe/ China through GE’s Security business
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InVision
• Technology leader in explosive detection technologies
• Synergies with GE Healthcare & CT
• Rich pipeline of Imagination Breakthrough products
•Closed acquisition 4Q04
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$650M
~$2B
~$4B
2002 2005 2007
Shaping the future
Tripled Security RevenuesFrom ’02-’05
• InVision + Edwards add ~$0.9B revenue
• Organic growth driven by technology & geographic expansion
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February 2005
Infrastructure($ in billions)
'04 '05E
Rev.
OP
~$0.6
~$0.9$3.4
~$5.1 • Strong organic growth … 3X GDP– Expanded distribution– NPIs– Globalization
• Building service capability … CSA model for customer efficiency
• Drive revenue synergy– Water … services & equipment– Security … homeland security +
fire– Sensors & GE Fanuc… technology
Great growth momentum … building global platforms
50%+
35%+
Dynamics