morgan stanley laguna conference september 17,...
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MORGAN STANLEY LAGUNA CONFERENCE SEPTEMBER 17, 2015
Forward Looking Statements
Statements in this presentation that are not strictly historical, including any statements regarding events or developments that we believe or anticipate will or may occur in the future, are "forward-looking" statements within the meaning of the federal securities laws. There are a number of important factors that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors include, among other things, deterioration of or instability in the economy, the markets we serve and the financial markets, the impact of our restructuring activities on our ability to grow, contractions or growth rates and cyclicality of markets we serve, competition, our ability to develop and successfully market new and enhanced products and services and expand into new markets, the potential for improper conduct by our employees, agents or business partners, our ability to successfully identify, consummate and integrate appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to achieve the anticipated benefits of the Pall transaction, our ability to successfully consummate the separation of Danaher into two public companies and realize the anticipated benefits of that transaction, contingent liabilities relating to acquisitions and divestures, our compliance with applicable laws and regulations (including regulations relating to medical devices and the healthcare industry) and changes in applicable laws and regulations, our ability to effectively address cost reductions and other changes in the healthcare industry, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, risks relating to product, service and software defects, product liability, and recalls, risks relating to product manufacturing, the impact of our debt obligations on our operations and liquidity, our relationships with and the performance of our channel partners, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, labor matters, international economic, political, legal compliance and business factors, disruptions relating to man-made and natural disasters, security breaches or other disruptions of our information technology systems and pension plan costs. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our 2014 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter of 2015. These forward-looking statements speak only as of the date of this presentation and the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
Anticipated Capital Structure • Investment grade credit rating • Bias towards M&A
Company Characteristics • Diversified industrial growth company • Market leading positions and outstanding brands • Attractive margin profile • Tremendous free cash flow generation • Playbook to return to double digit EPS growth
Leadership • Jim Lico, President and CEO • Chuck McLaughlin, CFO
2014 Financials Revenue $6.0B* Gross Margin ~50% OP Margin High-Teens
Revenue Breakdown
High-quality diversified industrial growth company
NewCo Overview
*Reflects aggregate revenues from constituent businesses for the most recently completed fiscal year.
Gilbarco Veeder-
Root 25%
Automation & Sensors
25%
Specialty Industrial &
Matco 15%
T&M Instruments 35%
Gilbarco Veeder-Root
Customers Major and regional oil companies Service stations Local and long-haul trucking fleets
Growth Drivers Environmental and payment security regulations Increasing adoption of alternative fuels Larger fueling networks requiring
control/automation Fleet managers improving costs/efficiencies
Market Details Market Size ~$9B Growth Rate +LSD/MSD
2014 Financials Revenue ~$1.6B
Geographic Mix
Revenue Breakdown
NA EU
HGM ROW
9%
48%
20%
23%
Consumables/ServiceEquipment
35% 65%
Market leader in fueling and fleet management with adjacent growth paths
Overview
Well positioned to increase market share
$1.6B platform with high returns and growth
Adjacent market opportunities accelerate growth profile and provide additional M&A runway
Strong installed base and technology leadership provides opportunity to accelerate growth from EMV upgrade cycle in U.S.
2002 2004 2006 2008 2010 2012 2014
Building the GVR Platform
Deployed ~$1.0B of capital on 18 acquisitions since 2002 Improved growth potential 15+ years of retail petroleum build out <5 Years of expansion into telematics
Leading position in fuel management; Recent adjacent expansion into telematics
Adjacencies at GVR
Enhancing growth profile and expanding market opportunity
Position
Market Growth Rate +DD
Key Growth Drivers Low market penetration driving
increasing adoption Improve safety and reduce cost
from route & maintenance optimization
Position Indoor and Outdoor payment and
point-of-sale solutions
Market Growth Rate +LSD/MSD
Key Growth Drivers EMV regulations in the U.S.
driving conversion of legacy systems
Payment Telematics
EMV Upgrades
Outdoor payment terminal upgrade to EMV driven by liability shift from credit card companies Widespread data security breaches validate need for
enhanced card security and encryption Outdoor payment deadline is 2017
Significant growth driver over next 5 years
>$500M cumulative market opportunity
Partnership with VeriFone brings most secure and best encryption to market
EMV for outdoor payment expected to accelerate growth for next several years
Highly-fragmented ~$4B market growing double digits
Vehicle Driver Fleet Manager
Status and Exception Reporting
ROI Reporting
Installed tracking device
Tracks location Monitors driving safety Links to maintenance system
In-truck screen Receive orders and directions Complete proof of delivery Workforce management
Fleet Operator: Improved visibility and customer service, fuel efficiency, rapid ROI
Telematics
GVR Financial Evolution
Organic growth initiatives and M&A have driven mid-teens ROIC; additional runway
Revenue $420M
OP Margin ~5%
Revenue ~$550M
OP Margin HSD
18 Acquisitions: 1st Full Year Contribution
Revenue ~$630M
OP ~$300M
Revenue ~$1,600M
OP Margin >15%
Investment $1,400M
ROIC Mid-teens
2002 2014
+ + = ACQUISITIONS GROWTH/ IMPROVEMENT*
*Includes Veeder-Root
Summary
Well positioned to increase market share
$1.6B platform with high returns and growth
Adjacent market opportunities accelerate growth profile and provide additional M&A runway
Strong installed base and technology leadership provides opportunity to accelerate growth from EMV upgrade cycle in U.S.