Industries
2011 EPG
Kirk Hachigian, Chairman and CEO
Dave Barta, CFO
D S
Dan
Swenson, VP IR
Material in this presentation contains "forward-looking
"for ard looking statements" within
ithin the meaning of the safe harbor pro
provisions
isions of
the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent
only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our
control. It is possible that our actual results and financial condition may differ, possibly materially, from the
anticipated results and the financial condition indicated in these forward-looking statements. For us, particular
uncertainties
t i ti that
th t could
ld cause our actual
t l results
lt to
t be
b materially
t i ll different
diff
t than
th those
th
expressed
d in
i our forward-looking
f
d l ki
statements include: market and economic conditions, competitive pressures, volatility of raw material, transportation
and energy costs, our ability to develop and introduce new products, our ability to implement revenue growth plans
and cost-reduction programs, mergers and acquisitions and their integration, implementation of manufacturing
rationalization programs, changes in mix of products sold, changes in financial markets including currency exchange
rate fluctuations, political developments, and changes in legislation and regulations (including changes in tax laws).
For a discussion of some of the risks and important factors that could affect our future results and financial condition,
see "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010
and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our
Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
A reconciliation of any non-GAAP financial measure included in this presentation to the most directly comparable
GAAP measure can be accessed in the “Investors” section of the Cooper Industries website,
www.cooperindustries.com.
This is a copyrighted presentation of Cooper Industries plc and is intended for the exclusive use of the participating
audience. No other use of this presentation may be made without the express written consent of Cooper Industries.
2
Recent Milestones
¾Tools JV Established
¾Asbestos Trust Completed
¾US Pension 94% Funded
¾Excellent CAP Structure
¾Sh
¾Share
C
Countt D
Down/Dividend
/Di id d Up
U
eco d Core
Co e G
Growth:
o t
¾Record
– Vitality Index
– International Sales
Exited Crisis In Terrific Shape
3
Dynamic Global Markets
¾ Emerging Markets
¾ Unemployment
¾ Energy/Electrical Demand
¾ US/Europe
US/E rope Deficits
¾ Energy Efficiency/Green
¾ Political Instability
¾ Transforming
T
f
i Technologies
T h l i
¾ Inflation
¾ Natural Disasters
Opportunities Outweighing Risks
4
Electrical Revenue History*
-22%
($ In Billions)
-11%
Well Positioned For Next Growth
G
Cycle
C
* Excludes Tools
5
Operating Margin History*
-390bps
390bps
-210bps
210bps
New Business Model More Resilient To
Global Cycles
* Excludes Tools And Restructuring
6
Earnings Per Share History*
$3 75-$3 90
$3.75-$3.90
Return to Record EPS in Two Years!
* Diluted, From Continuing Operations And Adjusted for Split, Excluding Unusual Items
7
Free Cash Flow To Income*
FCF as a % of Sales
10.8%
12.5%
%
9 5%
9.5%
10.4%
7.5%
8.6%
10.3% 11.6% 11.7%
12.0%
7.7%
$344
$314
$428
$384
$383
$490 $535
$682
$761
$633
$607 $600M+
Strong Cash Flow In Up And Down Cycles
* Recurring Income From Continuing Operations
8
Net Debt To Total Capitalization*
43.9%
10.9%
Conservative Capital Structure Allows Strategic
Flexibility
* Net Debt: Total Debt Less Cash And Investments
9
Debt Profile
Amo nt
Amount
Eff Rate
Eff.
D e Date
Due Date
$ 325 3.55%
Nov ‘12
300
300 5 56%
5.56%
Apr ‘15
Apr 15
250 2.38%
Jan ‘16
300
300 5 75%
5.75%
Jul ‘17
Jul 17
250 3.88%
Dec ‘20
$ 1,425
$ 1,425 Long Term Debt
Long Term Debt
11
Other Misc Debt
‐
Commercial Paper
Commercial Paper
(1,008)
$ 428
Placed
Dec ‘10
Cash and Investments
Net Debt ‐ 3/31/2011
Well Termed and Attractive Rates
10
Five Year Capital Allocation History
$3 9B
$3.9B
Fund Strategic
Growth
$563
Capital Expenditures
$1,068
Acquisitions
$275
Debt Retirement
$806
Dividends
$1,440
Share Repurchases
Reward
Shareholders
2006-2010
$2.2B Cash Returned To Shareholders In Last 5
Years… While Funding Strategic Growth
11
Next 5 Years Priorities
¾ Drive Core Growth Of 6% To 9% Over The
Cycle
¾ Pursue Bolt-On Acquisitions That
Complement The Core
¾ Leverage
e e age Incremental
c e e ta Co
Core
eG
Growth
o t Att A
Minimum Of 25%
¾ Target
T
100% C
Cash
hC
Conversion
i
Distractions Behind Us, Focused on Growth
12
Cooper Portfolio In Great Shape
E&SS
Power CrouseSystems Hinds
Industrial
Commercial
Safety
Int’l.
Commercial
Wiring
Devices
Utility
U.S.Int’l.Intl.
Industrial
U.S.
U.S.
Li hti
Lighting
Utility
EPG
100%
Electrical
59% Industrial/Utility
35% Commercial/Res
39%
International
Large,
g , Global,, Healthy
y End-Markets
Target 6 – 9% Core Growth
Based On FY2010, Excluding Tools
13
Why Cooper?
GROWTH
¾100% Electrical/
Balanced End Markets
+
EFFICIENCY
¾ Rapidly Rescalable
=
LOW RISK
¾Slow Steady Growth =
Double Digit EPS Growth
¾ Low CAP Exp
Requirements
¾Secure Dividend
¾Embedded Technology
¾Endless Productivity/
VAVE
¾Disciplined Capital
Deployment
¾Critical Global Macro
Trends
¾Price to Offset Material
Inflation
¾Global Customer Base
¾Strong Sustainable Cash
Flow
¾Access to Emerging
Markets
¾$140B Served Market!
Low Risk … Well Managed … Predictable, Steady Returns
14
Long-Term Global Trends
Electricity Demand /
Utility Grid Upgrade
Global Infrastructure
Conservation / “Green” /
Energy Efficiency
Safety / Protection /
M
Mass
Notification
N tifi ti
Uniquely Positioned To Penetrate Key Global Trends
15
Oil & Gas Opportunity
Crouse
e-Hinds
¾
¾
¾
¾
¾
Lighting
Enclosures
Fitti
Fittings
Plugs & Receptacles
Cable Glands
Safety
¾
¾
¾
¾
Fire Protection
Notification
Signals & Alarms
Emergency
Lighting
B-Line
e
P d t
Products
¾
¾
¾
¾
¾
Cable Tray
B lt d Framing
Bolted
F
i
Strut
Grating
Pipe Hangers
A
Acquisitions
i iti
¾
¾
¾
¾
¾
¾
¾
¾
MTL
Pauluhn
Hyundai
Iluram
MEDC
Hernis
Raxton
Redapt
¾ GS Metals
Gl b l Opportunity
Global
O
t it
¾ Sales Alignment
¾ P
Project
j t
Coordination
¾ Regional
R i
l Strategies
St t i
¾ Key Account
Targets
Capitalize On ONE COOPER Strategy
16
Cooper Petrochemical Portfolio
Lighting
Instrumentation
CCTV
Signals, Alarms
& Surveillance
Connectivity
Motor
M
t C
Controls
t l
& Distribution
Fittings & Glands
Comprehensive Product Solutions For
Global Petrochemical Applications
Wireless
Enclosures &
Structures
17
Cooper Upstream and Midstream Portfolio
Lighting
Instrumentation
CCTV
Signals, Alarms
& Surveillance
Connectivity
Motor
M
t C
Controls
t l
& Distribution
Fittings & Glands
Wireless
Enclosures &
Structures
Comprehensive Product Solutions For
Global Oil & Gas Applications
18
Portfolio Evolution
Core
Growth
Strong Brands
Strong Cash Flow
High
g Growth/Global/
High Margin
Less Working Capital
Lighting
Cable Tray
Fuses
Transformers
Expl Proof
Expl-Proof
LED
Interconnect
Smart Grid
Capacitors
Electronics
Safety
Strong Core Portfolio…Emerging Platforms Provide
Access To High Growth, More Profitable Global Markets
19
Portfolio Summary
T
Technology
y/Specifica
ation/Globa
al
High
Tools
Low
Slow
C
Core
G
Growth
th
~60% Of Portfolio Now Positioned In Faster
Growth/Higher Technology/Global Markets
Fast
20
Electrical Businesses Market Size
Energy & Safety Solutions
Power Systems
$1,150+/$
,
million
Market Size: $40B
Crouse-Hinds
$850+/- million
Market Size: $28B
Safety
$
$500+// million
Market Size: $8B
Based on FY2010
Electrical Products Group
Lighting
$1,050+/- million
Market Size: $10B
Bussmann
$550+/ million
$550+/Market Size: $24B
B-Line
B
Line
$350+/- million
Market Size: $19B
Wiring Devices
$300+/- million
Market Size: $17B
$140B+ Served Market Opportunity
21
Cooper Business Model
Customer Loyalty
Innovation
Globalization
Revenue Growth
EPS Growth
Cash Flow
Cas
o
Talent Development
Op. Excellence
M&A
Focused And Proven Business Model
22
Heavy Investment During The Downturn
Innovation
Globalization
¾ Cooper Technology
C
Center
(H
(Houston))
¾ LED Innovation Center
(PeachTree City, GA)
¾ Saudi Arabia Shared
M
Manufacturing
f t i Facility
F ilit
¾ Customer Loyalty
Programs
¾ New Product Vitality
At All-Time
All Time High
¾ China Bussmann/CWD
Factories
Customer Loyalty
¾ C3 Customer Portal
¾ Romania Mfg.
Positioned Business For Long Term
Performance
23
Customer Loyalty
Cooper
Connection
Global Sales
Excellence
Strategic
Pricing
Loyalty
Initiatives
Marketing
Communication
Vertical
Markets
Product Mgmt.
Leadership
Technology
Center/Training
Building
B
ildi Upon
U
A Legacy
L
Of Innovation,
I
ti
Service And Expertise
24
Innovation - Product Vitality
New Product % of Sales
¾ LED Innovation Center in Peachtree
City, GA
– Reduced New Product Time To Market
– Leverage Across Cooper Businesses
¾ Cooper Ranked #1 Industrial Innovator*
* From The Patent Board’s April
p 2011 Industrial Component
p
Supplier Patent Scorecard
New Product Leadership Drives Organic Growth
And Margin Expansion
25
Investment In Research & Development
Vitality
R&D Spend
R&D
% Of
Sales
Vitality A Function Of People, Process And
Investment
26
Patent Board Rankings
Ranked #1 In Most Recent Patent Board Rankings
For Industrial Components and Fixtures
27
Why International Focus
FASTER
GDP
GROWTH
LOW COST
MFG/
SOURCING
COOPER
COMPETITIVENESS
GLOBAL
CUSTOMER
MIGRATION
((EPC/
ELECTRONICS)
INNOVATION /TALENT
- M&A
- R&D
- IT
Fundamental Component Of Cooper Business Model
28
Globalization Investments
+9%
+17%
-20%
+22%
Iluram
+16%
+5%
Mount Eng.
Cybectec
Apex
NX Mid East
Xian Fuse
N. Africa
Saudi Mfg
Hernis
MEDC
CC Europe
CBE Europe
Polaron
Romania Mfg
Australia NX
China NX
Capacitor JV
NX SE Asia
Hyundai
Cyme
WD China
Turkey NX
Korea NX
Save Fuse
NX Russia
NX India
MTL
Digital China
Spain NX
MX Mfg Plan
China HQ
NX Japan
Nature
Clarity
Xian Mfg
Brazil BD
2005
2006
2004
2007
2008
2009
2010
Years Of Steady Investment In Global Expansion
Acquisition
Organic
NX
29
Enhanced Global Footprint
Manufacturing:
¾ Australia
¾ Brazil
¾ Canada
¾ China
¾ Colombia
¾ France
¾ Germany
¾ Greece
¾ Hungary
¾ India
¾ Korea
¾ Mexico
¾ Norway
¾ Romania
¾ Saudi Arabia
¾ Spain
¾ Switzerland
S
¾ Sweden
¾ Singapore
¾ Taiwan
¾ United Kingdom
¾ United States
MANUFACTURING
SALES
Manufacture In 22 Countries – Sell In over 100
30
Enhanced Competitive Position
9
Core Productivity Program
9
Enhanced
Global
Footprint
9
New Enterprise System
Aggressively Transformed Company’s
Company s “Operating
Operating System”
System …
Significant Upside Still Exists
31
Operational Excellence
Strategic
Imperative
Ongoing
Productivity from
MVP/Lean/VAVE
Programs
Fully Leverage
Global Strategic
Sourcing &
Supply Chain
Optimize Global
Footprint
Area Of
Focus
Benefit
¾ Accelerate Growth
Safety
Service & Quality
Inventory &
Payables
Lead Times
Direct/Indirect
Di
t/I di t
Material & Labor
Costs
Local Manufacturing
for Local Markets
¾ Improve Employee
Safety
¾ Increase Customer
Service & Loyalty
¾ Ongoing Cost Out &
Elimination Of Waste
¾ Reduce Working
C it l
Capital
¾ Record Productivity
& Safety
Strong Foundation For Continuous Improvement
And Growth
32
Footprint Rationalization
2000 – 2008
22+ Sites
2009 – 2010
18 Sites
2011 & Beyond
TBD
Evaluate Footprint On Continuous Basis
33
Operations Summary
¾ Shift
Shifted
d To
T A Common
C
ERP System
S t
And
A d More
M
Centralized
C t li d
Business Model – Standard Tools, Processes & Controls
¾ Rigor And Cadence Applied To Common Metrics: Safety,
Safety
Quality, Productivity And Inventory
¾ Core Productivity Program Generating Significant Benefits
– Margins, Customer Service, Cash Flow
¾ Upside With Lean,
Lean Value Engineering And Reduced
Complexity
g Footprint
p
Much More Competitive
p
Than
¾ Manufacturing
2001 / 2002 – More Work To Do
¾ Global Supply Chain Sourcing – Flexibility And Low Cost
Still Additional Opportunity In Lean, Value
Engineering And Complexity
34
Rapid Adjustment To Economic Cycles
FY 2008
vs.
FY 2009
¾Operating Working Capital
23%
¾ Inventory
25%
¾SG&A*
16%
¾ COS*
21%
¾ Headcount
Headcount*
10%
Rapid
p Response
p
To 22% Revenue Decline…EPS
Down 30%
From 4Q 2009 Earnings Conference Call Presentation
* Normalized For Impact Of Acquisitions And Excluding Unusual Items – Includes Tools
35
Acquisition Core Strategy
Acquisition Focus Areas
Platforms Technology
gy
¾ Strengthen The “Core”
¾ Specification/Technology
Driven Businesses
¾ Enhance Global Footprint
Globalization
¾ Strong Balance Sheet
¾ Talented Management
Executing A Consistent And Disciplined Strategy
36
2004 - 2011 M&A Activity
S
Summary*
*
> 1,300 targets
identified in over
50 countries
100+ Deals
Presented
> $15B in
Revenue
¾ Closed 34 Deals Across All 7
Divisions
Screening
¾ 17 International Deals in 7
Countries
Diligence
¾ Executed On 11 Strategic
Growth Platforms
¾ Strengthened The Core
34
Closed
Deals
Execution
*Includes 1 Transaction (Filtronic) For Tools
¾ Specification / Technology
Driven Businesses
¾ Enhanced Our Global
Footprint
Proven Process And Discipline Capability In M&A
37
Platform Priorities
Bussmann
B
Transportation
Bussmann
B
Electrical
Bussmann
B
Electronics
Cooper
C
Connectivity
Crouse-Hinds
Instrumentation
Crouse-Hinds
Industrial EX
Power Systems
Global Products
Power Systems
Utility Automation
Lighting
Controls
Lighting
LED
Cooper Safety
Fire/Mass Notif.
Cooper Architectural &
Safety Lighting
Highest Impact, Largest Market Opportunities;
Focus Primarily On Industrial / Utility
38
Acquiring Around Global Trends
Electricity Demand/
Utility Grid Upgrade
¾ EAS / Utility
Automation
¾ LED
¾ Lighting Controls
¾ CPS Global
¾ Buss Electronics
Green /
Energy Efficiency
• 2006 - Cannon
• 2007 - Cybectec
• 2008 - Cyme
• 2010 - Eka Systems
• 2004 - RSA
• 2007 - io Lighting
• 2007 - Clarity
• 2009 - IMS
• 2011 - Ilumitron
• 2005 - Novitas
• 2007 - Polaron
• 2007 - PCI
• 2009 - Transpower
• 2010 - Apex Controls
• 2007 - Nature
• 2005 - Save Fuse
Global
Infrastructure
¾ Safety/Notification
Safety / Protection /
Notification
• 2004 - MEDC
• 2006 - Wheelock
• 2007 - MadahCom
• 2007 - Roam Secure
• 2010 - Hernis
• 2010
0 0 - Mount
ou t Engineering
g ee g
¾ Crouse-Hinds EX/
Instrumentation/
• 2007 - Hyundai
• 2008 - MTL
• 2009 - Pauluhn
• 2010 - Iluram
¾ Airport Lighting
• 2008 - Transtech
¾ Buss Transportation
• 2007 - Sure Power
• 2007 - Omnex
• 2006 - G&H
• 2007 - WPI
¾ Interconnect
¾ Buss Electrical
¾ B-Line
Penetrating Key Global Trends
• 2006 - Xian
• 2007 - GS Metals
39
Five Year Cash Allocation History
$3 9B
$3.9B
Maintained 10%+ ROIC*
Cap Ex
Acquisitions
Debt Retirement
Dividend
Share
B b k
Buybacks
Up 57% Over 5 Years
Repurchased 35 Million
Shares At $41 Avg
Avg. Price
2006 - 2010
Multiple Paths To Shareholder Value Creation
* Invested Capital = Net Debt + Shareholders Equity
40
Total Shareholder Return
Peer Group
p
Avg.
S&P 500
All The Pieces In Place For Consistent
Consistent, Sustainable
Long-Term Shareholder Returns
Peer Group: Acuity; Danaher; Dover; Eaton; Emerson; Hubbell; Illinois Tool Works; Snap-On; Ingersoll-Rand; Newell Rubbermaid; Parker-Hannifin; Pentair; Stanley Black & Decker; SPX; Thomas & Betts
41
Based on calendar year end 2010
End Market Outlook
End Market
% of Sales
Industrial
34%
Utility
25%
Resi/Other
13%
Commercial
28%
International
39%
2010
2011
2012
2013
2014
Markets Recovering…Driving Growth Over The Cycle
Percentages Based On FY2010 Results Excluding Tools
42
CBE Investments In Growth
Innovation
Customer Loyalty
–Cooper Connection
–Tech Center
–Web Redesign/C3/CRM
–Vitality Index At Record High
–Expanded Engineering
–LED/RF
LED/RF Pl
Platforms
tf
Globalization
–Global NX Structure
–Local Products/Markets
–17 Acq. Outside U.S.
Revenue Growth
EPS Growth
Cash Flow
M&A
Talent Development
–Global/Diverse Teams
–Expanded Commercial
Resources/Engineering/BD
Operational
p
Excellence
–Lean/MVP/VAVE
–SAP
–LCC Mfg/Global Sourcing
–12 Growth Platforms
–34 Deals In 7 Years
–Balance Sheet Capacity
Well Positioned For Continued Strong Performance
43
Shareholder Value Creation
Great Portfolio
¾100% Electrical
¾Diverse End Markets
¾Access To Key Global Trends
¾Global Capabilities
¾Technology Driven
Capital Allocation
¾Fund The Core
¾Disciplined M&A
¾G
¾Great
Capital
C i l Structure
S
¾Share Counts Down/Dividend Up
¾Pension Funded
B i
Business
M d l/E
Model/Execution
ti
¾Rapidly Scalable
¾St
¾Strong
Cash
C h Flow
Fl
¾Endless Growth
Opportunities
¾Focused On The Right
Business Initiatives
¾Performance Based Culture
All The Pieces In Place For Consistent, Sustainable
Long-Term Shareholder Returns
44
Industries
2011 EPG
Questions & Answers