GE Infrastructure William Woodburn President & CEO
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GE Infrastructure William Woodburn President & 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." The world is experiencing dynamic shifts in: •Population • Life expectancy • Energy usage & stress • Availability of clean water …all of which increase global tension 2 GE Privileged 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. 3 GE Privileged Source: CSIS February 2005 Medical technologies may allow today’s children to live until age 120. 4 GE Privileged Source: CSIS February 2005 The energy needs of this growing population will spike usage by 60% 5 GE Privileged Source: GE Energy February 2005 Nearly half of the world’s population will be water-stressed in the future The population explosion will put even more pressure on this valuable resource 6 GE Privileged February 2005 Source: The World Bank GE is structured to address these dynamic changes GROWTH ENGINES Infrastructure Healthcare Transportation NBC Universal Commercial Consumer Energy Finance Finance Consumer Advanced Materials Equipment Services Insurance And Industrial CASH GENERATORS 7 GE Privileged February 2005 GE’s Global Research Center •4 Global Research Centers Global Research Center •2,500 technologists worldwide Niskayuna, NY •Technical Disciplines John F. Welch Technology Centre > Chemistry >Computer Science Bangalore, India > Mechanics >Materials > Physics >Biology China Technology Center > Electrical >Mathematics Shanghai, China Global Research -Europe8 Munich, GermanyGE Privileged February 2005 GE Infrastructure-$5B in 2005 Technology focused on solving emerging global market needs. Infrastructure Water & Process GE Fanuc Security Sensing Technologies Automation Structured to provide global customer solutions 9 GE Privileged February 2005 Water strategy Segmentation Investment Value creation Total market GE Growth Focus 1.9X revenue What we bought $360B 10X EBITDA $50B 9 Great distribution Betz, 9 Ind’l. Svcs. 12% Strong technology $8 Ionics 9 Competent team Industrial Glegg, Equipment 8% services Ionics $13 Key Profit + Segments Membranes 8% Osmonics What we bring $10 Ionics 9 Global distribution Chemicals 4% Betz 9 Services $14 9 More technology Desalination 12% Ionics $5 9 Financing CM% >40% 9 Public policy Growth rate +10% 9 More leadership In the game … with scale 10 GE Privileged February 2005 GE Infrastructure Water & Process Technologies The GE difference… Differentiating Technology • Imagination Breakthrough Technology Commercial • 2,200+ Sales and Service People Engineers Offering • Game-changing commercial offering GE’s competitive advantages drive our growth. 11 GE Privileged February 2005 Aligned with customers to drive growth The The Value To Customers… Platform $2.1 B •We Optimize Total System Performance Equipment •We Safeguard Customer Assets From Corrosion, Fouling and Scaling Filtration •We Protect The Environment Through Water and Energy Chemicals Conservation 12 GE Privileged February 2005 Creating technology that improves our world. Water Purification Desalination Waste Treatment Water Reuse Pathogen Plant Optimization Protection Air Quality 13 GE Privileged 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 14 GE Privileged February 2005 Mobile Water & NDT Mobile Water technology • Incorporation of filtration technologies within rapidly deployable mobile fleet • Global service network Non-Destructive Testing technology • Diagnostics and imaging software • Predictive models • Corrosion prevention solutions 15 GE Privileged February 2005 We continue to build excellence with our field sales team. $1.5B Revenue in 2004 What Our 2,200 Service Reps Do … • Perform Field Analytics • Troubleshoot Plant Systems 80% • Prescribe Treatment Solutions Recurring • Live on the Customer Site What Our Customers Get … • Typical Contracts ~1 year • Expert Technical Service, 24 X 7 • Customer Pays On Chem Usage … Average $60K / Year • Continuous Performance Monitoring • Detailed Performance Reporting • Optimized Performance of Costly Fixed Assets 16 GE Privileged February 2005 Our commercial offering represents a paradigm shift in the industry. Optimize System Safeguard Protect the Performance Assets Environment • Broad array of solutions • Scale + on-site reliability + reputation Build, Own, Operate or Maintain 17 Result: $160MM Service Contract GE Privileged February 2005 Today’s Water Scarcity 18 GE Privileged February 2005 Desalination Opportunity Growth Projections 2005 Market Segmentation $14.1B 14% CAGR Americas 10% Projected Asia Growth 25% Range 65% $9.2B 9% CAGR EMEA $4.3B Industrial 40% 60% Municipal 2005 2014 19 GE Privileged February 2005 Ionics Business Segments Segment Revenue % Description Operations • Long term outsourcing & emergency services • ~500 trailers/12 regeneration centers 50% • Build – Own – Operate facilities for industrial/muni consumption • ~200 facilities/$4.2B backlog • Water purification equipment to Equipment 40% diversified industrial & muni customers • Leader in desalination & zero liquid discharge Consumer & • Home water purifiers Instruments 10% • Analytical instruments for measuring impurities in water 20 GE Privileged February 2005 Ionics Opportunity Leading Mobile Fleet of ultra purity vehicles Global leader in Desalination • 3,000 Installed Base • $4.2 B backlog Desal Scale 40 Trucks 500 Trucks GE: 1 MGD Ionics: 25 MGD Synergies Synergies • Ionics 60 person sales team turbo- • GE Capital financing capabilities charged with GE Industrial team of > 2,200 • Advanced technology & cost execution capabilities • GE Capital financing capabilities • GE scale / reputation 21 GE Privileged February 2005 Ionics – Trinidad Desal Plant 22 GE Privileged February 2005 Why We Like Desal 9 Large, high-growth segment 9 GE Commercial Finance opportunity 9 Technology drives lower Cost Trinidad Desal Plant Example Ionics Year 1 Year 3 GE + Ionics $16 56% 42% $12 $10 $8 26% 9% OM ROE OM ROE 23 GE Privileged February 2005 GE’s Water Platform Water Services Pre-GE Post-GE $2.8 Revenue ~10% ($B) $2.1 organic $1.6 growth Polymers Membranes/Filtration '05E '07F Rev. growth 7% 12/40% 10+% Desalination Path to OM % 12% ~18% ~20% 20% % services ~50% ~75% ~80% ROTC IROIC ~3% ~50+% On strategy … business with breadth, diversity & real scale 24 GE Privileged Ionics pending February 2005 Global Security Industry Market Op Growth Profit ROTC $160 Billion Current Segments ($26 B) Facility Security 7% H H residential, commercial, enterprise Homeland 8% H H transportation & 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 • Deliver excellence in customer service • Integrate and streamline operations • Maintain technology leadership 25 GE Privileged February 2005 Security strategy Segmentation Investment Value creation Total market GE Growth Focus $160B 2.3x revenue What we bought 13.4x EBITDA 9 Technology leaders $40B 9 Distribution/Market Ion Track Homeland 15% access $10 InVision 9 Installed base Facility 4% Interlogix Key Profit $5 Edwards Segments + Enterprise 10% Interlogix What we bring $25 9 Global distribution 9 Services CM% >40% 9 Technology synergies Growth rate +13% 9 GE leadership Quickly becoming a major player 26 in targeted segments GE Privileged February 2005 GE Infrastructure Security The GE difference… New Markets • Creating new market opportunities with technology • Developing Imagination New Solutions & Breakthrough new products Technology Services • Delivering a broad set of security solutions & services GE’s advanced science & engineering drive our growth 27 GE Privileged February 2005 Protecting Facilities & the Home StreetLab: Narcotics & • ID management bio-detection • Access control Home Security: • Digital video Wireless systems & self monitoring • Fire detection • Intrusion detection VideoIQ: Intelligent video identifies human • Integrated data centers activity 28 GE Privileged February 2005 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