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__AnalystPresentation_Nov2008_Webcast_FINAL
 

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    __AnalystPresentation_Nov2008_Webcast_FINAL __AnalystPresentation_Nov2008_Webcast_FINAL Presentation Transcript

    • Analyst Day Components Segment Charleston, SC November 12, 2008
    • Agenda Welcome 8:00 a.m. to 9:45 a.m. – Presentations / Q and A 9:45 a.m. to 10:00 a.m. – Break 10:00 a.m. to 12:00 p.m. – Presentations / Q and A 12:00 p.m. to 12:45 p.m. – Lunch / exhibits 12:45 p.m. to 3:00 p.m. – Turbocharger plant tour 1
    • Disclosure Regarding Forward-Looking Statements & non-GAAP Financial Measures This presentation contains certain forward-looking information. Any forward-looking statement involves risk and uncertainty. The Company’s future results may be affected by changes in general economic conditions and by the actions of customers and competitors. Actual outcomes may differ materially from what is expressed in any forward-looking statement. A more complete disclosure about forward- looking statements begins on page 3 of our 2007 Form 10-K, and it applies to this presentation. This presentation contains certain non-GAAP financial measures such as earnings before interest and taxes (EBIT). Please refer to our website (www.cummins.com) for the reconciliation of those measures to GAAP financial measures. 2
    • Analyst Day Components Segment: Components Group Rich Freeland, President Charleston, SC November 12, 2008
    • Presenters Rich Freeland - President, Components Jim Lyons - Vice President & President, Cummins Turbo Technologies Ray Amlung - Vice President & General Manager, Cummins Fuel Systems Joseph Saoud - Vice President & President, Cummins Filtration Srikanth Padmanabhan - Vice President & General Manager, Cummins Emissions Solutions 4
    • Components Overview Who we are Purpose Growth drivers Technology leadership Improving financials 5
    • Who we are Four distinct business units Cummins Turbo Technologies Cummins Fuel Systems Cummins Filtration Cummins Emission Solutions 6
    • Purpose Differentiate Cummins engines Revenue growth Earnings growth opportunity Technology leadership Large captive customer – provides scale Long aftermarket annuity Synergies between Components business 7
    • Components Segment Business Unit Revenue Q308 LTM - $3.2B 2011 - $6.0B Filtration Turbos Turbos 28% 31% Filtration 33% 38% Fuel Systems Fuel Systems 9% 14% Emission Emission Solutions 17% Solutions 30% 8
    • Bridging the Revenue Growth Components Segment Revenue $7.0 6.0 0.1 0.5 $6.0 1.0 $5.0 1.2 $4.0 $B 3.2 $3.0 $2.0 $1.0 $0.0 2008 LTM Emission Turbos Filtration Fuel Systems 2011 Solutions 9
    • Components Revenue by Marketing Territory Q308 LTM 2011 Other AsiaPac 2% Other AsiaPac 6% India 2% India 2% China 12% China 5% EMEA 17% EMEA 26% Latin America 5% Latin N America N America America 4% 62% 57% 10
    • Global Customers 11
    • Long-term Trends Tougher global emission standards Demand for fuel efficiency 12
    • Tougher Global Emission Standards Off- highway 2011-14 Europe 2009 China US / 2011 Canada 2010 Australia 2008 India Mexico Brazil 2010 2008 2009 13
    • Components Segment Sales EBIT $600 $7,000 $540 GR R $6,000 AG $6,000 CA $500 C 3% 5% $5,000 2 3 $400 $ Millons $ Millons $4,000 $3,253 $300 $3,000 $222 $200 $2,000 $2,000 $89 $100 $1,000 $0 $0 2005 Q308 2011 2005 Q308 2011 LTM LTM 14
    • Components Segment EBIT Percent 9% 9.0% 8.0% 6.80% 7.0% 6.0% 5.30% 5.0% 4.7% 4.5% 4.0% 2005 2006 2007 Q308 LTM 2011 15
    • Summary Components group is well positioned to grow Technology leadership creates a significant advantage Demonstrating progress toward 9% EBIT target 16
    • Analyst Day Components Segment: Turbo Technologies Jim Lyons, President Charleston, SC November 12, 2008
    • Turbo Technologies Overview Who we are Competitive advantages Technology leadership Improving financials 18
    • Cummins Turbo Technologies Sales Trends By Marketing Territory $2.5 Brazil Other 3% 3% India 2.00 5% $2.0 N America 45% China 12% $1.5 $B 1.02 $1.0 0.86 0.61 0.52 $0.5 Europe 32% $0.0 2005 2006 2007 Q3'08 2011 Q308 LTM $1,023M LTM 19
    • Bridging the Revenue Growth $2.1 2.0 $1.9 $1.7 $1.5 $B $1.3 $1.1 1.0 $0.9 $0.7 $0.5 2008 LTM Market New CMI Aftermarket New Market 2011 Share Engine Products Growth Platforms Existing Customers 20
    • Creating Sustainable Earnings Growth Turbo Technologies is well positioned to capture long-term growth trends Technology leadership creates a significant advantage Improving operating margins 21
    • Benefits of Turbocharging Increased engine efficiency Fuel economy Engine performance Meet emission requirements 22
    • Competitive Advantages Focused on commercial diesel applications Cummins is only turbo manufacturer with in-house engine division 23
    • Advantage of Technology Leadership Industry-leading Variable Geometry Turbo Thermal management Exhaust Gas Recirculation control Exhaust braking Modulating Two-stage for Light Duty Applications Enables emissions to be met Good transient response/driveability Controls IP Integrated packaging to minimize space claim 24
    • Reward for Technology Leadership Gaining Market Share Benefiting from Cummins engine share gains Leveraging Cummins relationships globally Demonstrated capability to develop technology for multiple OEMs CTT projecting revenue growth of 25% through 2011 compared to global turbo market size growth of 8% 25
    • Financial Performance Improving Focus on operational efficiency Productivity gains Cost reduction Increasing capacity and output in low cost regions Global sourcing Pricing improvements for value of technology leadership 26
    • Financial Performance Improving Growth in OE business over last 4 years is delivering aftermarket growth Leveraging global distribution network to maximize aftermarket opportunity Well positioned in emerging markets 27
    • Summary Exciting growth opportunities Industry leading technology Improving operating margins 28
    • Analyst Day Components Segment: Fuel Systems Ray Amlung, Vice President & General Manager Charleston, SC November 12, 2008
    • Overview Who we are Fuel Systems technology Growth drivers Growth opportunities Earnings growth 30
    • Fuel Systems Business Design, develop, manufacture and remanufacture leading-edge fuel systems Partner with Scania JV’s for the HPI and XPI fuel systems Sharing of development and capital expenses Currently limiting XPI sales to Cummins and Scania 31
    • Cummins Fuel Systems Sales Trends By Marketing Territory $0.6 0.5 China $0.5 Latin America 3% 0.45 2% 0.4 0.4 $0.4 EMEA 16% 0.3 $B $0.3 $0.2 $0.1 N. America $0.0 79% 2005 2006 2007 Q3'08 2011 LTM 32
    • Fuel System Types Unit Injector Common Rail System System Injector Injector High Pressure Fuel Pump Common Rail Fuel Pump 33
    • Fuel System Technology Fuel system capability is a key for current and future emission standards Injection pressure is the key feature Cummins Fuel Systems provides the highest injection pressure available in the industry today 34
    • Spray Quality is Critical 35
    • Growth Drivers Global adoption of tougher emission standards Focus on fuel economy improvements Trend for bigger truck engines in developing countries Technical complexity of modern fuel systems which drives higher share in the aftermarket 36
    • Growth Opportunities Cummins growth • Mid-range and heavy-duty growth in China • Expanding down into Cummins mid-range engines Continued growth of remanufactured fuel systems Sales to additional U.S. and European engine manufacturers 37
    • Earnings Growth Operations efficiency Material cost reduction Fixed cost reduction as transition to XPI is completed Continued growth of high margin aftermarket business 38
    • Summary Industry leading technology Significant growth occurring in XPI JV Consistently improving operating margins 39
    • Break
    • Analyst Day Components Segment: Filtration Joseph Saoud, President Charleston, SC November 12, 2008
    • Overview Who we are Growth drivers Sustainable earnings growth Summary 42
    • Leading Technologies in Emissions Insulated Tubes Soot Air Systems ULSD Fuels Low Ash Oils High Pressure Fuel System Filter Crankcase Coolant Systems Biodiesel 43
    • Cummins Filtration Global Locations 160 Countries 160 Countries 5,600 Employees 5,600 Employees 21 Manufacturing Facilities 21 Manufacturing Facilities 14 Distribution Centers 14 Distribution Centers 3 Technology Centers 3 Technology Centers 30,000+ Points of Sale 30,000+ Points of Sale Office Location Distribution Center Sales Office Manufacturing Facility Joint Venture 44
    • Cummins Filtration Sales Trends By Marketing Territory $1.8 1.7 Other AsiaPac 13% $1.6 China India 1% N America $1.4 1% 55% 1.2 $1.2 Latin 1.1 America 1.0 1.0 $1.0 12% $B $0.8 $0.6 $0.4 EMEA $0.2 22% $0.0 2005 2006 2007 Q3'08 2011 Q308 LTM LTM = non-strategic businesses exited 45
    • Bridging the Revenue Growth $1.9 1.7 $1.7 $1.5 $1.3 1.2 $B $1.1 $0.9 $0.7 $0.5 2008 LTM New Products Global Inflation 2011 and Platforms Aftermarket Growth 46
    • Growth through New Products and New Engine Platforms New Products As a result of tougher emissions standards • Added content • Added value Focus on air filtration New engine platforms 47
    • Growth through Aftermarket Growth of OE First Fit leads to sustainable aftermarket growth Patented technology leads to sustainable aftermarket growth Focus on Emerging Markets World class delivery and customer support 48
    • Sustainable Earnings Growth Aftermarket growth Leveraging Cummins global growth Continuous improvement 49
    • Summary Cummins Filtration is well positioned for growth New technologies, engine integration and the aftermarket will sustain earnings growth Relentless focus on being low cost producer 50
    • Analyst Day Components Segment: Emission Solutions Srikanth Padmanabhan, President Charleston, SC November 12, 2008
    • Overview Who we are Growth drivers Why engine OEMs choose CES Technology/Systems integration Earnings improvement 52
    • Cummins Emission Solutions Sales Trends By Marketing Territory $2.0 1.80 Asia Pac $1.8 1% $1.6 Europe N America $1.4 28% 71% $1.2 $B $1.0 $0.8 0.55 $0.6 0.45 $0.4 0.15 $0.2 0.10 $0.0 2005 2006 2007 Q3'08 2011 LTM 53
    • Bridging the Revenue Growth $2.0 $1.8 $1.6 $1.4 $1.2 $B $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 2008 LTM Increased New Markets Market Growth - 2011 Content Existing Markets 54
    • Emission Solutions Sales Trends By Marketing Territory $2.0 1.80 Asia Pac $1.8 1% $1.6 Europe N America $1.4 28% 71% $1.2 $B $1.0 $0.8 0.55 $0.6 0.45 $0.4 0.15 $0.2 0.10 $0.0 2005 2006 2007 Q3'08 2011 LTM 55
    • Creating Sustainable Earnings Growth Cummins Emission Solutions is well-positioned to capture long-term growth trends Technology leadership creates a significant advantage Improving operating margins 56
    • Long-term Growth Trends Global adoption of tougher emission standards New markets (Emerging markets) New applications (off highway) More content (DPF + SCR) Focus on fuel economy improvements Delivering very high levels of NOx reduction Reducing system back pressure (dP) significantly Reducing regeneration fuel consumption 57
    • Tougher Emission Standards Off- highway 2011-14 Europe 2009 China US / 2011 Canada 2010 Australia 2008 Brazil India Mexico 2009- 2010 2008 2011 58
    • Function of Aftertreatment Emissions reduction Particulate matter – soot and unburned hydrocarbons Oxides of Nitrogen (NOx) Acoustic performance Sociability No odor, smoke Unregulated emissions 59
    • Aftertreatment System Architecture EPA ‘02 EPA ‘07 EPA ‘10 Fuel Injection NOX Diesel SCR DOC Particulate Catalyst Filter Urea Doser NH3 Slip Cat Engine & Cooled EGR Aftertreatment Urea Controls 60
    • Why Do Engine OEMs Choose Us? Component Technology excellence and system integration capabilities Proven technology – reliability and durability Developing new products for future emissions regulations Full-system provider 61
    • Component Technology Excellence Filters and Substrates Aftertreatment Controls Packaging Dosers 62
    • System Integration Capability Application Platform Subsystems Rules, Tools, Technology Technology Technology Core Technology Substrates Thermal Science & Vehicle and Powertrain Aftertreatment System Coatings Fluid Mechanics Packaging Installation Hardware Materials & Catalysts Integration Integration Urea Dosing Hydrocarbon Dosing Mechanical Design Electronics Control Algorithms Applied Mechanics Sensors Wiring Harness Acoustics Regeneration Technology Assembly/DFMA Electronic Controls 63 63
    • Emission Systems in Production & Development Successfully introduced on-highway aftertreatment for: EPA 2004 Euro 4 EPA 2007 Euro V We are currently developing new products for: EPA 2010 Global Euro IV / V / VI platform Light Duty Diesel platform Tier4 / Stage IIIB off-highway 64
    • Improving Financial Performance Operational excellence Content addition Emerging markets growth 65
    • Summary Exploding market in a ten-year window Worldwide industry leading technology and system integration capabilities Improving operating margins 66
    • Thank You for Your Interest in Cummins We will now take your questions. Contact Information: Dean Cantrell Director – Investor Relations (812) 377-3121 Investor_Relations@Cummins.com www.cummins.com 67
    • Appendix
    • Components Segment Q3 2008 LTM New products launched Revenue by Product Industry leading technology Filtration Capacity expansion Turbocharger 38% 31% Grow with CMI and non- CMI engine volumes Leverage global distribution to grow aftermarket Fuel Systems 14% Q3 2008 LTM Segment Data Emission Sales: $3.3 billion Solutions 17% EBIT: $222 million EBIT Margin: 6.8% 69
    • Components – Historical Performance Sales Segment EBIT $3,500 $250 $3,253 $222 $2,932 $3,000 $200 $2,500 $2,281 $153 $2,000 $150 $2,000 $1,783 $M $M $107 $1,500 $89 $100 $84 $1,000 $50 $500 $0 $0 2004 2005 2006 2007 Q3'08 2004 2005 2006 2007 Q3'08 LTM LTM 70
    • Components Segment Revenue by Customer Revenue by Geography Other AsiaPac 6% China India 5% 2% Latin America CMI First Fit 4% Aftermarket 33% 35% North America 57% EMEA 26% Other OEM's First Fit 32% Q3 2008 LTM Sales: $3.3 Billion 71
    • Revenue by Marketing Territory Cummins Turbo Technologies Q308 LTM 2011 Other AsiaPac Other AsiaPac China China 3% 3% 10% 12% India 4% India Latin America 5% 3% Latin America North America 3% 45% North America 59% EMEA 21% EMEA 32% 72
    • Revenue by Marketing Territory Cummins Fuel Systems Q308 LTM 2011 China China Latin America 9% 3% Latin America 2% 2% EMEA EMEA 5% 16% North America North America 79% 84% 73
    • Revenue by Marketing Territory Catalytic Exhaust Q308 LTM 2011 China Other AsiaPac 2% 2% China 21% India EMEA 1% 28% Latin America 6% North America 61% North America 68% EMEA 11% 74
    • Revenue by Marketing Territory Cummins Filtration Q308 LTM 2011 Other AsiaPac China 4% Other AsiaPac 4% 13% India 2% China Latin America India 1% 8% 1% Latin America 8% North America North America 55% 57% EMEA 25% EMEA 22% 75
    • Cummins Turbo Technologies Revenue by Customer Revenue by Geography Other AsiaPac China 3% Aftermarket 12% 25% CMI First Fit India 35% 5% Latin America North America 3% 45% Other OEM's First Fit EMEA 32% 40% Q3 2008 LTM Sales: $1,023 Million 76
    • Cummins Turbo Technologies Market Share / Competition North America Europe Other Other CMI 1% 10% MHI 17% 14% MHI CMI 30% 5% Honeywell Borg Honeywell 23% Warner 27% 41% Borg Warner 32% 77
    • Cummins Turbo Technologies Main Customers Major Operations Cummins Guarulhos, Brazil Fiat Power Train Charleston, South Carolina Volvo Wuxi, China Scania Huddersfield, England Daimler Dewas, India Pithampur, India Dongfeng Cummins Engine Co First Auto Works, China CNHTC, China Weifang Diesel, China Tata Motors, India 78
    • Cummins Turbo Technologies Product Offering Variable Geometry Variable Geometry Fixed Geometry Waste Gate Turbo Compound Pneumatic Electric HX20-25-27W HE400V HE300Ve HX35/40 HP72 Power turbine HX30/40W HX50-55 HE500V HE400Ve HX50/55W HP841 Power turbine HY55V HE500Ve 79 HX82-83 HX60W
    • Cummins Fuel Systems Revenue by Customer Revenue by Geography China Latin America 3% 2% Aftermarket 26% EMEA 16% Other CMI First Fit OEM's First 65% Fit 9% North America 79% Q3 2008 LTM Sales: $451 Million 80
    • Cummins Fuel Systems Major Operations Main Customers Cummins Columbus, Indiana Scania Ciudad Juarez, Mexico Komatsu El Paso, Texas Wuhan, China Södertälje, Sweden 81
    • Cummins Filtration Revenue by Customer Revenue by Geography CMI First Fit Other AsiaPac 6% 13% China India 1% 1% Other Latin America OEM's First 8% Fit 35% North America 55% Aftermarket 59% EMEA 22% Q3 2008 LTM Sales: $1,227 Million 82
    • Cummins Filtration Revenue by Application Coolant / Industrial Chemicals Air Intake 4% Silencers Systems 3% 22% Exhaust Systems 20% Intank Filters 4% Hydraulic Filters 5% Water Filters 3% Lube Filters 22% Fuel Filters/FWS Q3 2008 LTM Sales: $1,227 Million 83
    • Cummins Filtration Market Share / Competition North America Europe CMI CMI Donaldson 4% 9% 9% Clarcor M&H 8% 28% Luberfiner Other 4% 50% Other Mahle 75% Donalson 10% 3% 84
    • Cummins Filtration Main Customers Major Operations International Daman, India Paccar/Kenworth Pune, India Case/Case New Holland Kilsyth & Scoresby, Australia Deere Sao Paulo, Brazil Volvo/Novabus Quimper, France Freightliner / Western Star Pietermaritzburg, South Africa Komatsu Johannesburg, South Africa Cummins Shanghai, China Distributors San Luis Potosi, Mexico Kyungki-Do, Korea Singapore Multiple US locations in Tennessee, Iowa , Wisconsin and Ohio 85
    • Cummins Filtration Global Locations Mechelen and Rumst, Belgium Filtration Rugby, UK Filtration Kyungki-Do, Korea Filtration Lake Mills, IA Filtration Tokyo, Japan Findlay, OH Filtration Quimper, France LDA/Specialty Filtration Filtration Nashville, TN Filtration Corporate Cookeville, TN Shanghai, China Filtration Cummins Filtration Daman, India Shanghai Fleetguard San Luis Potosi, Mexico Exhaust Filtration Xiangfan, China Xiangfan Fleetguard Exhaust Sao Paulo, Pune, India Brazil Fleetguard Filtrum JV Filtration, 160 Countries Exhaust Singapore, 5,600 Employees Filtration 21 Manufacturing Facilities Johannesburg, 14 Distribution Centers South Africa Filtration Kilsyth and Scoresby, Pietermaritzburg, 3 Technology Centers Australia South Africa 30,000+ Points of Sale Filtration, Coolant & Exhaust Filtration Office Location Distribution Center Sales Office Manufacturing Facility Joint Venture 86
    • Cummins Emission Solutions Revenue by Customer Revenue by Geography Aftermarket China Other AsiaPac 3% 2% 2% Other OEM's First Fit 29% EMEA 28% CMI First Fit North America 68% 68% Q3 2008 LTM Sales: $552 Million 19
    • Cummins Emission Solutions Revenue by Application Retrofit 3% SCR 32% DPF 65% 20
    • Cummins Emission Solutions Market Share - Europe Market Share – N. America Other 11% Other Cummins 22% Donaldson 26% 4% Tenneco 10% Cummins 55% Emcon Emcon Eberspaecher 20% 22% 20% Tenneco 10% 21
    • Cummins Emission Solutions Main Customers Major Operations International Mineral Point, Wisconsin Paccar/Kenworth Darlington, England Volvo/BlueBird/Novabus Pretoria, South Africa Freightliner / Western Star Columbus, Indiana Distributors Stoughton, Wisconsin 22
    • Thank You for Your Interest in Cummins We will now take your questions. Contact Information: Dean Cantrell Director – Investor Relations (812) 377-3121 Investor_Relations@Cummins.com www.cummins.com 23