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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K
__________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 4, 2012
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DOVER CORPORATION
(Exact Name of Registrant as Specified in Charter)
__________________
Delaware (State or other Jurisdiction of Incorporation) | 1-4018 (Commission File Number) | 53-0257888 (I.R.S. Employer Identification No.) |
3005 Highland Parkway Downers Grove, Illinois 60515 (Address of Principal Executive Offices) |
(630) 541-1540
(Registrant’s telephone number, including area code)
(Former Name or Former address, if Changed Since Last Report)
__________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
□ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
□ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
□ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
□ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
On June 4, 2012, Dover Corporation (the “Company”) is hosting an investor meeting at the New York Hilton in New York, New York. The meeting includes a presentation concerning existing and emerging technologies, both internally developed and acquired. The presentation will include in depth technology discussions related to the handset, pump, refrigeration and artificial lift markets. The presentation being given to investors has been posted on the Company's website (http://www.dovercorporation.com), and the investor meeting will be webcast for investors not attending in person. The presentation materials, together with access to the webcast, can be found on the home page of the website. The investor meeting will also be made available for replay on the website in the Investor Information section. We have attached as Exhibit 99.1 a copy of the presentation materials.
Item 9.01 Financial Statements and Exhibits.
(a) | Financial statements of businesses acquired. Not applicable. |
(b) | Pro forma financial information. Not applicable. |
(c) | Shell company transactions. Not applicable. |
(d) | Exhibits. The following exhibit is furnished as part of this report: 99.1 Dover Corporation's Technology Day, New York, New York Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 4, 2012 | DOVER CORPORATION | ||
(Registrant) | |||
By: | /s/ Joseph W. Schmidt | ||
Joseph W. Schmidt, Senior Vice President, | |||
General Counsel & Secretary | |||
EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Dover Corporation's Technology Day, New York, New York Presentation. |
Forward Looking Statements We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties. We caution everyone to be guided in their analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. We would also direct your attention to our website, www.dovercorporation.com, where considerably more information can be found. 2
Today’s Agenda 3 Time Topic Presenter Noon – 1:00 Registration, Lunch & Product Fair 1: 00 – 1:10 Opening Comments B. Livingston 1:10 – 1:50 Energy Artificial Lift B. Spurgeon D. Newman 1:50 – 2:50 Engineered Systems Pumps Refrigeration Equipment T. Giacomini D. Douglas B. Johnson 2:50 – 3:45 Working Break with Product Demos 3:45 – 4:30 Communication Components Acoustic Products J. Niew M. Adell 4:30 – 5:10 Closing / Q&A Management Team 5:15 – 7:30 Cocktails & Dinner Del Frisco’s 6th & 49th
Technology Day New York, NY - June 4, 2012 Bob Livingston President & Chief Executive Officer
Dover’s Business Model 5 Positioning for Growth Maintaining advantaged Dover business model Maintaining advantaged Dover business model Strategic Focus Areas Capturing the Benefits of Common Ownership Disciplined Capital Allocation
Developing products to meet the needs of developing economies Artificial Lift technology gaining traction outside NA International/ BRIC growth Global energy demand Acquired technology expands Artificial Lift offerings Focus on delivering productivity to energy producers Sustainability Technology focused on energy efficiency Green solutions important to refrigeration customers Consumer product safety Zero leak technology Technology in food grade refrigerants Leading technology in communication components Audio quality drives customer decisions Harmonization of speaker/receiver/ mic functionality Communications Tailwinds – Positioning for Growth 6
2011 Revenue $1.4 Billion 2011 Revenue $3.1 Billion Our Segments & Served End-Markets 7 2011 Revenue $1.6 Billion 2011 Revenue $1.9 Billion Fluid Solutions Industrial Refrigeration & Food Equipment Drilling Production Downstream Handsets Medical & Life Sciences Aerospace/Industrial/Military Fast Moving Consumer Goods Industrial Electronics Telecom/Other
Our Growth Spaces 2011 Revenue Energy Product ID Refrigeration & Food Equip. Comm. Components Fluids 8 $5.9 B We continue to invest in our five growth spaces • Growth spaces represented 74% of 2011 revenue • Today’s presenting companies represent over 40% of growth space revenue • Diverse served end-markets, unique characteristics, broad geographical scope • Internal innovation and acquired technology driving success
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F Growth Through Technology and Innovation 9 Revenue of Today’s Presenting Companies Note: 2002 – 2012 Organic CAGR ~ 12% $3.5B
Growth Through Technology and Innovation 10 Technology and innovation are a key differentiator • Innovation and product development are owned at the company level • Customer needs drive innovation decisions • Mass customization a theme across many companies Strong track record of recognizing emerging technologies and growing competitive advantage through continued investment in R&D and scale • Example: Knowles – 5th generation of MEMs microphone Will acquire complimentary technology to grow a market position, geography or expand verticals served • Rod pumps, top drives and progressive cavity pumps for Artificial Lift • Speakers & receivers broaden handset suite of products and provide opportunity to create full audio solutions for OEM’s • Recent acquisition in refrigeration equipment provides exciting leading-edge energy efficient technology • Pump acquisitions diversify customer base
Summary 11 Our track record of success is based on: • Core technological advantages • Leading brands in the markets we serve • Commitment to industry leadership through innovation • Strong focus on the customer Our deep understanding of the customer and our exceptional capabilities in providing solutions that help us win Our technologies and innovative products are enablers for our customers to win We strive to understand our customers’ needs better than our competitors, and that’s where our winning starts.
Technology Day New York, NY - June 4, 2012 Bill Spurgeon President & CEO – Dover Energy
Dover Energy DOVER 2011 REVENUE $8.0B Printing & Identification (20%) Energy (24%) 21% 51% 28% Dover Energy Revenue by End Markets Drilling Production Downstream Communication Technologies (17%) Engineered Systems (39%) Key Brands Drilling Production Downstream 13
Market Drivers 14 ‘20 ‘10 165 Existing Production A dditional Production Oil & Gas Production (Mboed) Emerging markets drive demand growth Aging wells and unconventional plays increase the need for artificial lift Reserve replenishment costs are rising • Increasing role of unconventional oil • Regulatory environment • Logistical challenges Significant Investment Is Needed In Crude Supply To Maintain Existing Production And Meet Future Demand Global Energy Supply / Demand Source: GE / Dover Energy analysis ~100 65 140 Gas Oil
Our Technologies Help Customers Achieve Their Objectives 15 We continue to invest and advance technologies that add customer value Customer Objectives Our Technologies Recent Acquisitions in bold Artificial Lift Systems Automation High Performance PDC Cutters Extensive Applications Knowledge Precision Transducers For HPHT applications Products & Services For Enhanced Oil Recovery Artificial Lift Systems For Heavy Oil Production High Performance PDC Cutters Precision Transducers For HPHT applications Automation Condition Monitoring & Predictive Diagnostic Systems ‘Zero Harm’ Technologies – Transporting Hazardous Materials Emission Reduction Technologies Increase Production Rate & Efficiency Reserve Replenishment & Additions Risk Reduction
Dover Energy Animation 16
Artificial Lift – Attractive Growth Space In Dover Energy 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F NA Rig Count 2002-’12 CAGR 8.5% 17 Recent acquisitions: Harbison Fischer, Oil Lift 2011, and PCS 2012 Revenue Note: 2002-2012 Organic CAGR ~16% $1B
Technology Day New York, NY - June 4, 2012 Dan Newman President – Norris Production Solutions
Key Messages Shale and other unconventional resources are altering energy investment strategies and increasing focus in the Americas. Aging wells around the world are driving demand for artificial lift. Customers increasingly value broader artificial lift solutions and expertise. We are well-positioned with technologies from recent acquisitions and global strategies to capitalize on these market dynamics. 19
Artificial Lift Market Overview North America 57% South America 10% EurAsia 16% Mid East and Africa 4% Asia Pacific 13% Artificial Lift Market 2011 ($8.7B) Rod Lift/PCP/Plunger/Gas Market ($4.0B) Plunger Lift 3% Gas Lift 4% PCP 8% Other 4% Rod Lift 30% ESP 49% Hydraulic 2% 8-10% Forecast CAGR 2011-2015 *Spears OMR 2011, Internal Estimates, World Oil, LEK 2010, Spears ALS Market Study Our Served Market 20
Artificial Lift Solutions Approach Build broad offering of artificial lift technologies that add customer value Acquire technologies to drive: • International growth • Penetration of new markets Expand automation technology to lower operating costs for customers and improve asset performance 21
Artificial Lift - Business Evolution 22 Coiled Rod Solutions Gas Lift Valves Rod Lift Plunger Lift From Artificial Lift Products to Comprehensive offering with leading brands Coiled Rods Automation & Topside Monitoring Service Rigs Field Service Down Hole Controls Sinker Bar Down Hole PC Pumps Oil and Gas Conditioning Systems Down Hole Pumps PCP Top Drive 2001 2009 2012
Wireless Monitoring Automatio n Equipment Motor Valve Flow Meter Downhole Equipment Plunge r Arriva l Senso r Liquid Level Monitoring Automatio n Equipment Flow Meter Pressure Monitoring Wellhead Valves Wireless Monitoring Broad Offering Of Artificial Lift Technologies Well Service Equipment & Artificial Lift Services Well Site Control Plunger Lift Coiled Rod Coiled Rod Trailer Rapid Service Rig X-celerator injector PCP Downhole Pump Rod, Coiled or Conventiona l Power Unit Top Drive Guides Rod Lift Downhole Pump Rods and couplings Guides Gas Lift Valves Mandrels 23 PRODUCT BREADTH Rod Lift PCP Plunger Lift Gas Lift Well Site Control Well Service Sucker Rods Rod Pumps Accessories Design Software Drive Head PC Pumps Drive Rods Coiled Rod Plungers Automation Motor Valves Design Software Valves Mandrels Nitrogen Services Valves Flow Control Tank Monitors Separators Automation Equipment RSRs TMX ALS Services Lubricator/C atcher
Technology and Operational Advantage Over Competition 24 Our Technology Competition Our Advantage Sucker Rods Weatherford, Tenaris Quality, reliability, performance and availability Strong design and application engineering Downhole Pumps Lufkin – Quinn Pumps, Weatherford Quality, reliability Application and Solutions engineering PC Pump Drive Heads Weatherford, Kudu Leak proof design - Environmentally safe Lowest cost to operate and maintain Plunger Lift Systems Weatherford Strong automation Broadest solution offering Combined strengths of two industry leaders
Solutions for Complete Production Life Cycle of a Well 25 Generate Revenues Through Well’s Production Cycle XSPOC [Theta] RodstarD [Theta] Xrod [Theta] Rod pump System [HF, Norris] PCP [Oil Lift, AOT] Gas Lift [PCS] Plunger Lift [FB, PCS] Surface Equipment [Norriseal, CPSC] Service Equipment [C-Tech] Plungers [FB] Pump Parts [HF] NPS Services Monitor and Report In Situ Diagnostics System Design Leading Brand Product Supply Repair and Replace Installation TMX [C-Tech] RSR [C-Tech] NPS Services Dynostar [Theta] iLevel [FB] iChem [FB] 4000 Controller [PCS] RODDIAG[Theta] XDIAG[Theta] Smart Plunger [PCS] Well Kickoff: Nitrogen Generation High Initial Production Free Flowing Well Declining Production PCS Introduce Artificial Lift: PCP, Rod Lift, Gas Lift Continued Decline Norris, HF, Oil Lift, PCS Change lift method to match optimize production and minimize operating cost Continued Decline Norris, HF, Oil Lift, PCS Typical Liquid Rich Shale Well Production Cycle Eventual Abandonment
Oil Lift and PCS Acquisitions 26 Oil Lift Technologies PCS Technology Top Drives, Progressing Cavity Pump (PCP), Rod Lock BOP Gas Lift, Nitrogen Generation, Plunger Lift, Automation, Products Offering Strategic Rationale Provides an integrated offering in the relatively sizable and fast-growing PCP market Enables international growth Helps to build a solution platform for global revenue growth Expands our portfolio into gas lift products and nitrogen generation; High quality proprietary solutions with patents on key product technologies Increase exposure to high growth shale plays Early Reports Immediately expanded international presence in Australia and Oman Growth opportunities identified in South America Integration underway – positive customer response
Acquired Technology Drives International Growth Acquired technology (Oil Lift) immediately opened opportunity in Australia Market Opportunity Significant Coal bed methane reserves ~1,500 wells drilled during the last five years with plans to add another 18,000 by 2020 to meet LNG commitments All wells require artificial lift – rapidly growing PCP market Service element provides pull thru opportunity Our Growth Previously, minimal revenues into Australia PCP technology allowed immediate expansion into growing coal bed methane market in Australia – driven by LNG Developed strong relationship with major players Opportunity to pull through our other products – coiled rod, drive rods and accessories 18 Potential Projects 27
Acquired Technology Drives International Growth Acquired and existing technologies give access to developing heavy oil markets in Oman and Middle East Market Opportunity Light oil reserves depleting quickly Estimates as high as 971 billion barrels of heavy oil deposits in Middle East Growing heavy oil production in Oman, Egypt and Kuwait. Heavy oil production recovery techniques require artificial lift Our Growth Addition of PCP technology combined with coiled rod and services enables us to provide complete solution Coiled rod plant built to help provide product for a growing market – Opened Q3 2011. Services offered through Norris Production Solutions - Middle East providing pull through of other artificial lift products. 28
Acquired Technology Drives Penetration in New Markets 29 Nitro2Go™ Nitrogen Generation delivers faster fluid recovery and faster first gas sales. Ideal for kicking off new fracs and unloading wells affected by adjacent fracking Rapid fluid recovery of 2,000+ Barrels per day Quicker and more economical than liquid nitrogen and swabbing Significantly increasing the number of units over the next three years Economic Case Nitrogen Generation technology helps increase penetration in shale markets To Recover 1,200 barrels per day PCS Nitro2Go Swab Rig PCS Advantage Fluid Recovery Rate (barrels per day) 1,200 160 Fluid Recovery Required 1,200 1,200 Days Required 1 7.5 6.5 days faster Rate/Day ($) $6,500 $1,800 TOTAL COST $6,500 $13,500 52% cost savings Case Study: PCS Nitro2Go Economic Advantage
Acquired Technology Drives Penetration in New Markets 30 Gas lift technology prevalent in shallow offshore, international and shale markets Market Opportunity Gas lift used more prevalently internationally Shallow offshore plays utilize gas lift routinely as artificial lift Our Growth Use our existing sales channel to grow PCS gas lift internationally Additional technology acquisition opportunities available System design through proprietary OPTIpod software and on site installation and training Continue to drive growth in shale plays North America 29% EurAsia 19% MEA 2% Asia Pacific 33% South America 18% Gas Lift Market: $385 M Offshore (GOM) Onshore Source: Spears OMR2011, LEK 2010 study, Internal estimates US market 50:50 onshore to offshore application
Automation Reduces Operating Costs 31 Smart systems optimize production so customers get the most from wells The 3DSO™ Plunger Arrival Sensor ensures optimal plunger lift operations and optimal production 3-D technology detects the plunger in multiple axes, eliminating false arrivals Long-term durability and maintenance-free operation Patent pending Example: Shale gas well on plunger lift Inaccurate Arrival Measurement 3DSO Arrival Sensor PCS Advantage Production 300 mmcf/d 400 mmcf/d 33% increase with optimized production Gas Value $2/mmcf $2/mmcf Maintenance due to failure $500/operator visit Maintenance Free Maintenance free operation ensures limited downtime and fewer operator visits Time down 2 days None Value production $1200 or 600 Mmcf Lost None
Automation Reduces Operating Costs 32 Accurate and reliable chemical injection reduces production costs Economic Case Continuous Injection FB iChem Pump Volume 4 gal / day 4 gal / day Cost $8 / gal $8 / gal Pumping Days 120 days 100 days Injection Points 150 150 Total Chemical Cost per year $576,000 $480,000 Difference Saved $96,000 or 17% on Chemicals Alone each year Case Study: Rocky Mountain Midstream Operator Methanol injection when temperature below 40°F Continuous injection pump used across the field for 4 months The iChem Solar Injection Pump improves our customers’ sustainability while reducing maintenance and operating expenses. Eliminates legacy pneumatic pumps and protects against chemical leaks Controller provides remote and logical automation control - Eliminates “just in case” over injection of chemical Synergistic combination of our pump technology and artificial lift application knowledge
Automation Reduces Operating Costs 33 Efficient, dependable tank level measurement for the Oil and Gas industry Economic Case Reduce frequency of fluid hauls from well Tank overflow avoidance Eliminates $23k on average of remediation cost for overflow Environmental benefit Operator Productivity Operators avoid manual tank measurement, save 250hrs/yr; effort applied to well improvements The iLevel facilitates health and safety initiatives while providing real time, accurate fluid production information A synergistic combination of Dover technologies - leverages OPW magnetostrictive level measurement technology in well site application Reduces overflow events and provides a pathway for automatic well shut in Protects people and environment “I estimate conservatively that we have lowered our overhead cost to this well by approximately 42%” –Wyoming Operator using iLevel
Faster Deployment of Automation Solution and reduced operating cost 34 Complete gas well pad automation offering provides maximum well control and optimization capabilities 5. Pad control 1. Plunger Control 2. Gas Measurement 3. Chemical Injection 4. Tank Monitoring Automation Technology Complete gas well pad automation offering Single provider for equipment and field service on gas well automation and plunger system Technology designed for easy integration allowing for faster well start up Reducing project risk through faster deployment FB/ PCS FB FB FB/PCS PCS
Summary Artificial lift – attractive growth space within energy segment Aging wells and unconventional plays – drive artificial lift growth Broad, integrated technologies help us drive: International Growth Penetration of new markets We are well positioned to deliver global, comprehensive solutions to meet our customers’ needs 35
Technology Day New York, NY - June 4, 2012 Tom Giacomini President & CEO – Dover Engineered Systems
Dover Engineered Systems 37 DOVER 2011 REVENUE $8.0B Printing & Identification (20%) Energy (24%) 25% 39% 36% Dover Engineered Systems Revenue by End Markets Fluid Solutions Refigeration & Food Equipment Industrial Communication Technologies (17%) Engineered Systems (39%) Key Brands Fluid Solutions Refrigeration and Food Equipment Industrial * Based upon 2012 forecast including acquisitions
Our Technologies Help Customers Achieve Their Objectives Increased Efficiency Sustainability Consumer Product Safety 38 Automation technology: • Smart and Adaptable Industrial Production Equipment • Fast and Mobile Vehicle Lift Technology Broad Portfolio of Pump Technologies and Application Expertise Provides Best Solution for Customers Energy Efficient Air Distribution System (ADS) for Pumps Environmentally Friendly CO2 Refrigeration Technology Industry Leading Energy Efficiency in Refrigeration Recycling Equipment Customer Objectives Our Technologies Food Safety: • Precise and Reliable Commercial Refrigeration Solutions • Food Equipment Providing Packaging Integrity for Food and Beverage Applications.
Pumps 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 39 Revenue Recent Acquisitions: Neptune 2008, Red Screw 2011 and Quattroflow & Maag 2012 Note: 2002-2012 Organic CAGR ~7% $600M
Refrigeration 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 40 Revenue Recent Acquisitions: Tyler and Barker 2009, Advansor 2011 Note: 2002-2012 Organic CAGR ~7% $1.2B
Technology Day New York, NY - June 4, 2012 Dean Douglas President – Pump Solutions Group
Key Messages The positive displacement (“PD”) pump market is an attractive $8B+ space within the broader pump market PD pumps are a key process technology for transfer of valuable fluids; serving diverse end markets, applications & technologies We have a strong portfolio of leading brands and technologies Well positioned for growth across geographies & verticals; and for margin expansion 42
Global Pump Market 43 Centrifugal Positive Displacement 20% 51% 29% $8.2B Americas 20% Asia 40% EMEA 40% 17% 11% 13% 6% 3% 3% 8% 11% 9% 4% 4% 11% O&G Chemical W/WW Specialty Pump Mining Hygienic Maritime Residential Construction Building Power Gen Metal Mfg. Pulp Paper Other GLOBAL PUMP MARKET $41B Source: European Industrial Forecasting LTD
0 20 40 60 80 100% Di ap hr ag m $1.9 PC / Sc re w $1.7 Ge ar $1.4 Pi st on $1.2 Lo be $0.7 Pe ris ta lti c $0.6 Va ne $0.6 Positive Displacement Pumps Positive Displacement market is attractive • Global • Diversified; Energy, Chemical, Hygienic, W/WW • Technology gaining broader acceptance 44 PD Pump Market 7% CAGR $8.2B Positive Displacement Pump Market 10 2017 11.3 2016 10.8 2015 10.1 2014 9.4 2013 8.7 2012 8.2 2011 7.3 Revenue ($B) ASIA AMERICAS EMEA Source: Frost & Sullivan PD pumps are technology of choice for high-value fluids • Dangerous chemicals, highly viscous materials, shear sensitive and abrasive fluids • Reliable, efficient, constant flow, self priming, forgiving technology 5 0
Our Pumps Position A leading designer & manufacturer of positive displacement pumps & systems Diversified Markets: Chemical, Energy, Hygienic, W/WW, Transport, Military/Marine Global Brands: Wilden, Maag, Blackmer Strong margins and lean operations Doing business in more than 100 countries 1700+ Employees 45
Where We Are 46 • 8 countries • 15 global locations • 860 channel partners • 7 training centers Headquarters Operations Training Centers Headquarters Downers Grove, USA Grand Rapids, USA Shanghai, China Grand Terrace, USA North Wales, USA Charlotte, USA Norfolk, USA Auxerre, France Kamp-Lintfort, Germany Oberglatt, Switzerland Rozzano, Italy Tianjin, China Chennai, India Singapore Grossosthelm, Germany
Successfully Executing Our Strategy Ongoing strategic objectives... Build global footprint, emphasizing emerging markets Grow portfolio of PD pump technologies Increase systems and packaging capabilities Capitalize on operating synergies Build best-in-class operations ... with recent successes Built and expanded China and India presence with existing brands (e.g. Wilden) and acquisitions (e.g. Maag, Redscrew) Established position in Brazil Acquired Maag leading gear pump brand Acquired Redscrew, Quattroflow, and Envirogear Enhanced customized system integration via Maag Restructured sales model to run parallel vertical market and distributor approaches Consolidated multiple manufacturing facilities (will continue) ’08 – ’11 EBIT CAGR 8%, EBIT Margin % increased by 280 bps Developed foundational elements for lean, supply chain 47
Technology Expansion 48 Priority for portfolio expansion Technology in current portfolio Opportunity to expand 2 3 4 5 6 7 8 9 Vertical markets size ($B) (2012) 0 20 40 60 80 100 Pump technology share of PD market (%) Vane Screw Diaphragm Peristaltic Gear Lobe Piston Chemicals Others Hygienic Energy 0 1 Progressive Cavity Internal External • Targeted Acquisitions • Launch internal gear offering (Maag) • Organic new product development • Improve energy efficiency of products W/WW
New Technology 49 Innovation: Only screw compressor fully integrated into PTO (Power Take off) specially designed for truck transfer Efficient, light weight, compact design Cost Benefit: More loading yield, ease of installation, less maintenance Truck unloading / loading for Dry Bulk transfer Meets Euro 6 standards Globalization opportunity (Brazil) Innovation: Unique 4 piston - diaphragm seal- less design provides shear sensitive operation Key configuration option includes disposable (“single use”) technology Cost Benefit: Reduces cost of decontamination and cleaning while also improving purification yields of filtration systems Pharmaceutical / Bio-Pharma, Life Sciences Large opportunity globalize in U.S. Leveraging disposal technology into the Chemical market Innovation: Engineered gear profile and seal design provides high reliability and performance Allows for challenging application penetration (high pressures, high temp, high viscosity) Cost Benefit: Improves yield output, lower maintenance and downtime cost Chemical & Pharmaceutical markets Extrusion processes (plastic and rubber markets Transfer highly corrosive, abrasive, caustic fluid Screw Compressor Markets Piston Diaphragm Pump Markets External Gear Pump Markets
Technology Competitive Advantage 50 Key Market Drivers Key Technology Advantages Large customers in Chemical Industry driving “Green Initiatives” to reduce energy and emissions Example: Dow Chemical globally moving to reduce plant compressed air consumption by 15% New Air Distribution System (ADS) increases energy efficiency On average, 30% less energy consumed versus traditional technologies Only pump on the market with an advanced ADS made from chemically resistant plastic materials Air Distribution System
Vertical Market Penetration 51 Leverage and tailor application expertise / tech support “Best” technology solution for discrete applications Deep market segmentation, opportunity prioritization Chemical Energy Hygienic PSG product locations Vertical vs. regional channel management Develop End-User Intimacy (Corporate Alliances) Acquisition enabler Understanding Customer Needs Allows Us to Offer the Best Solutions PSG product locations PSG product locations
Hygienic Solution Selling 52 From Batch to In-Line Formulation, the “just in time” for toothpaste manufacturing Increase facility production yields worldwide Improved precision of formulation, reducing waste, and process downtime Changed toothpaste production from “batch” manufacturing to “in-line formulation” 1st attempt with progressive cavity positive displacement pumps proved unsatisfactory due to wear issues Hygienic team advised Colgate to replace progressive cavity pumps with Mouvex® Eccentric Disc Sanitary technology Mouvex ® maintains constant flow despite pump wear, changes in viscosity, and back pressure; a combination of performance that other pumps are unable to match Mouvex® has been placed in Colgate plants in the USA, Thailand, China, Brazil, and Argentina. May 2012, we received our largest order to date for this process, 27 pumps ($100K+) for Brazil Customer Need Colgate 1st Attempt Our Solution The Result
Globalization Emerging Markets 53 Strong Sales growth especially in Asia-Pacific Investing to grow pumps business in emerging markets Maag & Red Screw accelerating China growth Expanding Shanghai manufacturing facility Driving share gain in chemical, energy, hygienic verticals Adding resources in MEA to accelerate channel development and growth Investing in Center of Excellence for “European” product Evaluating broader go-to-market strategy in Brazil ASIA EMEA Americas
Globalization China 54 Accelerating Growth in China Strengthen Business Development, Engineering, and Marketing capabilities Shanghai facility expansion from 3,600 m2 to 11,200 m2 • Localizing Neptune, Almatec, Blackmer, and Maag product mfg Overview Location • Lingang, Pudong District of Shanghai, China Facility • 11,200 m2 (~120,000 ft2) – factory, warehouse, office, training center maag Shanghai
Strengthen Foundation 55 On-time delivery 90%+ across all facilities Implemented DES Lean Enterprise, Op-Co Lean teams and continuous improvement programs in all facilities Leverage manufacturing footprint to drive margin expansion Lean Enterprise Supply Chain Acquisition Integration Integrate newly acquired technologies into the product portfolio Rapidly integrate acquisitions into the vertical market development teams 5% material cost reduction achieved through leveraging Dover Strategic Sourcing Initiative (DSSI) Building the foundation for product localization and supply chain development in emerging markets
Acquisition Integration 56 • Adds to PSG Technology portfolio Innovative external gear PD pump technology Market leader in Plastics/Polymer and Extrusion segment of Chemical market Cross selling opportunities Strategic Rationale Key Value Drivers Lean implementation Switzerland, Germany, and Italy Supply chain productivity (DSSI) Market expansion, cross selling opportunities Facility consolidation 7 Multi-discipline integration teams established Operational and facility consolidation in process Established Lean Manufacturing teams, evaluation underway Supply Chain teams established, identified suppliers implementing DSSI best practices Common KPI, scorecard and financial processes established Sales task force established and go-to market alternative development underway Integration Update (50 Days)
Summary 57 Changing “Shape” of Business Continue to outgrow market organically; while building stable of brands through acquisitions Grow sales outside US & Europe (currently 35%), before acquisitions Shift from 20% to 40% direct sales by 2015 through vertical market strategy Develop more balanced product offering across key end markets Strategy Five Strategic Priorities for Growth 1. Expand our product offering of PD and complementary pump technologies 2. Globalize our technologies, and drive growth through well established sales channels 3. Leverage pump technologies and customer/application knowledge to drive growth in key vertical markets 4. Build our global footprint by enhancing product localization capabilities in emerging markets & geographies 5. Capitalize on operating efficiencies and synergies
Technology Day New York, NY - June 4, 2012 Bill Johnson President – Hill Phoenix
Key Messages Capitalize on advantaged positions • Refrigerated Systems – Technology • Cases – Scale • Specialty Cases – Merchandising and Flexibility Expand in higher margin domestic segments through our superior customer value proposition • Tuck-in acquisitions in specific spaces or to gain access to technology Apply portfolio of advanced energy saving and sustainable technologies to grow internationally 59
Raising the Bar 60 CO2 Systems
Key Investment Highlights and Growth Opportunities 61 Broadest range of products and services Best in class products and services Long-standing customer relationships Recognized brand synonymous with superior technology A Leader… …in an Attractive Industry… …with Compelling Growth Opportunities Projected North America market growth of 4-6% annually through 2015* Solid platform for international growth “Green” and food safety legislation is a growth opportunity Established on the highest value-added part of refrigeration value chain Macro trends toward energy efficiency, food safety, and green initiatives provide strong and consistent tailwinds Inherently low industry cyclicality Highly engineered and custom product offering * Source: Company estimates
What’s Down the Road? 62 Customers Facing Margin Pressure and Rising Energy Costs Commercial electricity prices up 4% per year since 2000 Grocery store EBITDA and utilities costs both typically single-digit percent of sales Installing door cases a simple way for grocers to limit refrigeration energy use • Energy savings up to 60% of an open case Payback for door cases and close the case retrofits typically ~3 years • Energy efficiency an attractive economic value ... and Increasing Regulatory Intervention DOE imposing max energy limits across remote and plug-in refrigeration systems • 40% increase in efficiency required by end of 2012 EPA and other bodies regulating use of HCFC and HFC refrigerants Stringent food safety regulations drive customers toward door cases, smart valves and new refrigerants
Raising the Bar – Glass Door System 63 IP protected, integrated frame design – “heart of energy reduction” benefit Infinity edge “wall of glass” door design – aesthetically pleasing and best in energy (low and medium temperature) 30%+ energy benefit over competitors’ best- in-class offerings Will “tip” merchandisers reluctance to close traditionally open medium temperature cases Allows us to control costs on the largest historically sourced component of a door case … a “win-win”
PureView Low Temp Door and Frame System 64 • Insulation and Integration are over-arching design features for door and frame • Complexity removed from frame to easy access front raceway
PureView Low Temp Frame Elements Designed for Value Unlike traditional cases, our PureView door system consists of insulated frame members integral to the manufacturing process Any component that is in the cold zone is now an insulated member … making us the only manufacturer in the industry who can say this Improved merchandising capabilities with Infinity Edge technology 65
PureView Low Temp Frame System Designed for Value Metal door supports (aluminum extrusions) added to exterior of frame No direct contact with refrigerated interior. LED light rods are quick- connect for easy removal Electrical accessories have been removed from the mullions and made easily accessible in the front raceway 66
Competitive Advantage … Annual Energy *Regions and kWH costs as defined by the Bureau of Labor Statistics Competitor A = $121 Competitor B = $157 Competitor C = $173 Competitor A = $86 Competitor B = $113 Competitor C = $124 Competitor A = $92 Competitor B = $120 Competitor C = $132 Competitor A = $109 Competitor B = $141 Competitor C = $156 67 Savings ($ per Door by Region)
New Refrigeration Products Creating Superior Customer Value 68 Our Total Solution • Low Energy Door • Low Energy Door Frame • ECM Fan motors • Clearvoyant/Other LED’s • NRG High Efficiency Coil As compared to competitor “Best In Class” offering (5-door case example) Regional Retail Store – 56,000 Sq. ft. 135 Low Temp Door Openings Hill Phoenix Competitor A 50 10 -30%+ 0 Kwh/Day 20 40 30 39 60 Opex / year ($000s) A 42 44 40 20 0 HP 28 216 We Win <5 year payback for the incremental cost Our Total Solution 30%+ More Energy-Efficient than Next Best Offering in Market Example: Driving Value for Retailers and HP Competitor B Competitor C B C Increased share Increased revenue Improved margins Customer Wins $10K +
Medium Temp Door & Frame System Designed for Value Over-sized Infinity Edge door More glass, less frame Premium, elegant offering Largest door in the industry Available for all medium temp applications Single or B-swing Same accessible front raceway as Low Temp 69
A Strong Position in Advanced Refrigeration Technology 70 Hill PHOENIX • Key Technology: C02, Secondary Glycol & Direct Expansion Advansor by Hill PHOENIX • Key Technology: C02 Systems • Location: Denmark Second Nature Technology At the forefront in “Green Technology” Systems Lowest Refrigerant Charge Systems in the industry Higher Energy efficiency compared to traditional technology Greenest portfolio of systems product offerings in the global market place Advansor Acquisition Strengthens our position in advanced refrigeration systems New technology perfected in Europe transferred to North America Positions us well for global expansion Solidifies our position as a technology leader Integra Configuration System Engineer-in-a-box that configures and selects Bill of Material > 95% Allows any user to configure same systems all over the world Consistent rules-based component selection and pricing controls Full product portfolio can be configurable allowing easy technology transfer …continuing the path of technology-based global expansion
Develop Global Systems Design Platform 71 (Hours vs. Weeks) Generate Spec Quote Design Detailed Europe South America India China North America INTEGRA Rules-based design at time of quote --- 15 years cumulative development Value Proposition Limited Global Engineering resources required Local manufacturing Localized design Superior lead time Time: 2 Weeks Time: 1 Day Industry Norm Process Hill PHOENIX Process Generate Spec Quote Design Detailed Systems Design North America Future markets
The Closed Refrigerant Cycle…Driving CO2 Systems HFCs R404A, R134a, R507, R407 HCFCs R22 CFCs R12, R502 Natural refrigerants CO2, NH3, hydrocarbons Kyoto Protocol Global warming Technical issues Local safety Montreal Protocol Ozone depletion Current Day Drivers European Commission plans adaption of the Danish model Tax on HFC Ban on HFC’s possible Scarcity of fluorine may be an issue in future (10 years) 72
CO2 … A Sustainable Solution – HFC Reduction 73 Advansor CO2 Booster System 100% HFC HFC Primary Only (60 - 70% HFC Reduction) ZERO HFC SNMT2LX CO2 Cascade System DX SYSTEM
HP Refrigeration Technology Development MORE LESS MORE En er gy E ff ic ie nc y Size of Bubble Indicates Relative Total Cost of Ownership GREEN 2010 • LT CO2 DX • MT CO2 Secondary 2009 •CO2 DX Cascade •MT Glycol Secondary 2006 • LT CO2 Secondary • MT Glycol Secondary 2008 • LT CO2 Secondary • MT Compact Chiller 2012 •CO2 Transcritical 1994 • Standard Low Temp • MT Glycol Secondary 74
Advanced Refrigeration Technology 75 Significant addition to the Second Nature product family Provides rapid expansion of Transcritical CO2 Booster technology in North America Positions Hill PHOENIX as a global leader in installed CO2 systems
Energy of CO2 Transcritical Booster Systems vs. Conventional HFC Systems 76 CO2 Booster Systems use carbon dioxide as the only refrigerant. CO2 is a “natural refrigerant” and is harmless to the environment. Compared to conventional HFC direct expansion systems, the CO2 booster system is more efficient at low ambient temperatures but less efficient at high ambient temperatures. MIN. CONDENSING CO2 BOOSTER SYSTEM EFFICIENCY LINES CROSS ≈ 50-60°F AMBIENT TEMP. EE R , E N ER G Y EF FI CI EN CY R A TI O CO2 SYSTEM MORE EFFICIENT HFC SYSTEM MORE EFFICIENT CONVENTIONAL HFC SYSTEM COOLER AMBIENT TEMPERATURE WARMER
World Energy Map – CO2 Booster Systems 77 CO2 Booster solutions CO2 Subcritical cascade CO2 Booster solutions Enhanced CO2 Booster solutions Current CO2 portfolio covers the world
CO2 Systems in North America A Leader in Applied Technology With 50+ CO2 systems installed SNLT2 CO2 LT Secondary installations SNLTX2 & SNMT2LX CO2 Cascade Installations 1st System Installation More projects anticipated 78 LEGEND Installation Locations
Summary … Hill PHOENIX Continues to Build on its Strengths 79 Meeting the Dynamic Needs of Today’s World Sustainability Evolving Customer Demands Energy Leadership Distributed Refrigeration Systems Coolgenix™ Case Technology Second Nature® Technologies – CO2 and Secondary Fluids Climate Keeper™ Advansor Transcritical CO2 Booster Systems Clearvoyant™ LED Lighting PURE VIEW LT and MT Doors Enviroguard™ NRG ™ Coil Smart Valves ™
Summary 80 Key Message Capitalize on advantaged positions Refrigerated Systems –Technology Cases – Scale Specialty Cases - Merchandising and Flexibility Expand in higher margin domestic segments through our superior customer value proposition Tuck-in acquisitions in specific spaces or to gain access to technology Changes in “Shape" of Business Increased revenue Increased margins Increased share International footprint Apply portfolio of advanced energy saving and sustainable technologies to grow internationally
Technology Day New York, NY - June 4, 2012 Jeff Niew President & CEO – Dover Communication Technologies
On stage In-ear Audio, Fit For a Smartphone On the phone Pro audio sound : Designed for the ear : Discrete packaging : Best signal to noise ratio In-ear audio technology designed for musicians, paired with your mobile music MEMS microphones raising the bar on accessories, matching the performance of smartphones 82
Communication Technologies 83 Communication Technologies (17%) Printing & Identification (20%) Energy (24%) Engineered Systems (39%) 31% 18% 17% 15% 19% Handsets Life Sciences Aerospace / Industrial Military Telecom / Other Key Brands Revenue by Key Market DOVER 2011 REVENUE $8.0B
Key Messages The smartphone market has, and will continue to, experience high growth Our customers view audio technology as a differentiator Knowles and Sound Solutions have unmatched scale and offer best-in-class audio technologies We are uniquely positioned to meet future audio requirements 84
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F Knowles Acoustics and Sound Solutions 85 Revenue Sound Solutions acquired in 2011 Note: 2005 – 2012 Organic CAGR ~ 39% $1.2B
2005 2006 2007 2008 2009 2010 2011 2012F Knowles Acoustics & Sound Solutions – Attractive Growth Platform 40% 38% 21% Total Acoustic Share KA AAC Other 86 Source: Credit Suisse & Knowles estimates Market Represents: MEMs Mics ECM Mics Speakers Receivers (6)
Knowles & Sound Solutions Key Application Areas 87 Consumer Electronics • MP3 players • Navigation • Compact/Video cameras • Portable DVD • Dictaphones Mobile Phones All segments • Basic • Feature • Smartphones Computing • Tablets • Notebooks • Netbooks
Handset Market Overview Market Dynamics • Smartphones fastest growing segment (4X) of the handset market • 3G and smart phone use penetrating emerging markets Growth Drivers • Higher network /data rates (LTE/4G tech) enabling new applications with higher speeds • Combination of carrier push with subsidies for smartphone upgrade and consumer pull as purchasing power increases (developed economies) • Feature phone and smart phone global penetration Audio Drivers • Voice as human interface device (Siri, other) • Handsets replacing video cameras with high performance audio recording capabilities • Increased performance of audio output 88
0 200 400 600 800 1,000 1,200 1,400 2012 2013 2014 2015 Other (8+) Apple Samsung Nokia Smartphone Market share (units in millions) 89 Source: Gartner & Knowles estimates Note: Overall handset market will see ~ 7.5% CAGR 2010 - 2015, and grow to over 2.2 billion units annually by 2015
SIRI 90
Market Illustrations 91 MEMS Microphone MEMS Microphone Balanced Armature Receivers Speaker / Speaker Box Receiver MEMS Microphone
Handset Content Evolution and Rising Component ASP 92 PAST PRESENT FUTURE ENTRY FEATURE SMART PHONE •1 ECM •1 MFD < $1 •1 ECM •1 RCVR/MFD < $1 •1 SiSonic/ECM •1 MFD/RCVR < $1 •1 SiSonic •1 RCVR •1-2 SiSonic •1 RCVR •1 SPKR •1 ECM •1 MFD < $1 ~ $1 ~ $2 •1 SiSonic •1 RCVR •1 SPKR •1-2 SiSonic •1 RCVR • 1 SPKR •2-4 SiSonic •1 RCVR •1 Speaker Box $1 - $2 $2 - $3 $4 - $5 TECHNOLOGY ECM = Electret Condenser Microphone MFD = Multifunction Device RCVR = Receiver SPKR = Speaker SiSonic ~ MEMS Mic
Supporting Market Opportunities: R&D Spending for Knowles 93 2007 2008 2009 2010 2011 2012E R&D Spend (averaging 6% - 7% of Revenue) * * * Includes Sound Solutions
Sound Solutions Technologies 94
Market Needs Market Needs and Technology 95 Product Technology N’Bass Silicone Speaker Speaker Box Manufacturing Technology Full Automation High Flex Automation Semi Automation More Output Integrated Design Increased Bass
N’Bass – “Enhanced Bass” A unique sound enhancing technology increasing the acoustic performance in small mobile devices Mobile device designers want: • More audio performance from the same (or smaller) form factor Mobile users want: • More bass • Louder output New Speaker/Receiver Technologies 96
How N’Bass works • N’Bass increases the virtual back volume of a speaker box, generating more low frequency output, without increasing the size With N’Bass, mobile designers benefit from same form factor Mobile users hear more bass New Speaker/Receiver Technologies = + Speaker Back Volume Speaker Back Volume = + BASS BASS 97
Silicone Speaker Ultra-high excursion membrane • Louder speakerphone Higher compliance • Better bass Robust and reliable design • Consistent performance over phone lifetime • Water resistant New Speaker/Receiver Technologies 98
Moving Up the Value Chain Speaker Core Speaker Box Integrated Speaker Box w/Technology Enhancement Pe rf or m an ce & V al ue Integration Audio output for the phone Integrated by phone manufacturer Integrated audio package for the phone manufacturer ‘Known’ acoustic performance Reduces phone manufacturing variability 99
Silicone combined with N‘Bass™ Technology is the ideal combination for portable audio applications Silicone Speaker N’Bass Speaker Box w/Technology Enhancement Integrated Speaker Box System 100
Manufacturing concepts: Pre-Acquisition High Volume Automation 40M Pcs per line / year 20 employees per line 2M Pcs per employee / year Semi Automated Manufacturing 5M Pcs per line / year 80 employees per line 60k Pcs per employee / year 101 Manufacturing Gap • Modular • Flexible set up • Faster ramp up compared to HV lines • High Reuse of Equipment
High Flexible Automation Manufacturing Concepts: Post-Acquisition 102 13M Pcs per line / year 40 employees per line 325k Pcs per employee / year High Volume Automation 40M Pcs per line / year 20 employees per line 2M Pcs per employee / year Semi Automated Manufacturing 5M Pcs per line / year 80 employees per line 60k Pcs per employee / year
Summary Sound Solutions has an intimate understanding of “user case” applications and requirements Expert in design of high performance speakers and receivers for use in extremely small spaces Pipeline is full with differentiated next generation speaker and receiver technologies Breadth of manufacturing technologies and capabilities are unmatched 103
Micro-Acoustic & Human Interface Products Michael Adell President
MEMS Microphone Technology 105
Innovation Driven by Market and End User Needs 106 Voice and VOIP Communication Audio/Video Recording Voice based UI D if fe re nt ia te d In du st ri al D es ig n Small Size High Signal/Noise Ratio High Dynamic Range Packaging MEMS ASIC Market Needs Product Technology Innovation Focused on developing products to enhance end user experience and enable new features
Improving User Experience Through Multi-microphone Technologies 107 Record in Stereo Enjoy in Stereo Cancel Noise Clearer Signal Noise Reduction Stereo Recording
Innovation 108 Increasing performance while reducing cost and size Packaging Innovation MEMS Innovation 3.5X size reduction High Performance ASIC Innovation 5X size reduction • Lower noise • Lower current • High dynamic range
Knowles Unique Position 109 ASIC MEMS Packaging All in-house/integrated design and manufacturing capability of key components High volume manufacturing capability Rapid conversion of innovation to mass production 3 Billionth SiSonic™ Shipped May 2012 1 Billionth SiSonic™ Shipped August 2009
Competitive Advantage Summary Vertical Integration • MEMS, ASIC, Package Design • We control our Design and IP Scale • 3 Billion Units Shipped to date; Nearest Competitor shipped < 200M • Absolute R&D Spending exceeds rest of the market Rapid improvement in performance while reducing cost and size 110 Knowles Competitor A Competitor B 0.9mm2 1.1mm2 1.2mm2 MEMS Smallest Size Advantage
Integrated Acoustic Solutions … to outstanding Acoustic System Solutions From best-in-class stand-alone Acoustic components … 111 Speakers Receivers Microphones Acoustic Design Mechanical Design System Solution “Algorithm”
Integrated Acoustic Solutions– Market and Customer Drivers Improving user experience drives more demanding acoustic performance – larger acoustic content • Components integrated into acoustic modules with high performance Industrial design (thin, curved, ….) requires component integration Faster time to market for handsets requires fewer components, assembled faster 112
Summary Smartphone market is strong Audio: a key differentiator Knowles offers scale and best-in-class audio components We are uniquely positioned to deliver the next generation of integrated acoustic solutions 113
Closing 115 Q & A