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Electrical Products Group ConferenceDavid Farr
Chairman and CEO
May 20, 2015
Non-GAAP Measures
In this presentation we will discuss some non-GAAP measures (denoted with an *) in talking about our company’s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or is available at our website www.emerson.comunder the investor relations tab.
Safe Harbor Statement
Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the remainder of the year and Emerson undertakes no obligation to update any such statement to reflect later developments. Information on factors that could cause actual results to vary materially from those discussed today is available in our most recent Annual Report on Form 10-K and subsequent reports as filed with the SEC.
21%
20%
19%
16%
14%
10%
Evolution of Emerson’s Businesses For Long-Term Value CreationEvolution of Emerson’s Businesses For Long-Term Value Creation
2
36%
20%
20%
16%
8%
$24.5B
2014
ProcessControls
IndustrialAutomation
Electronics & Telecom
HVAC
ProcessManagement
IndustrialAutomation
NetworkPower
ClimateTechnologies
Commercial &Residential Solutions
We have Rebalanced Our Business Portfolio Over the Years to Focus on Delivering Better Growth, Customer Solutions, Profitability, Returns, Cash Flow to Our Shareholders -- We Are in the Middle of Doing it Again for the Next Generation
1990 2000 2014Revenue $7.6B $15.5B $24.5B
GP % 34% 36% 41+%
2000
$15.5B
24%
18%
17%
15%
12%
7%7%
$7.6B
IndustrialAutomation
1990
HVAC
ProcessControls
Motors
Other Motors
Appliance & Tools
Appliance & Tools
Electronics & Telecom
Emerson Has Built a Strong Software and Solutions Capability Upon Our World Class Business Offering
Emerson Has Built a Strong Software and Solutions Capability Upon Our World Class Business Offering
3
Instrumentation & Components (Valves, Sensors, Regulators, Drives, Compressors, etc.)
Electronics, Smart Sensors, Embedded Technology(On-board Sensors, Performance Monitoring Electronics, etc.)
Software & Systems(Control and Enterprise Level Systems)
Emerson’s Strong Technology Based Products Offering Provides a Solid Foundation For Our Software, Diagnostic, Control, and Solutions Business
Value Added Services & Solutions(Diagnostics, Analytics, Preventative /
Predictive MRO)
Increasing and Sustaining Value to Customers
Past
Enriched Business Models & Services(Big Data and Internet of Things
Based Services, Enhanced Customer Experience)
Present Future
Key Enablers• Strong Market Presence /
Knowledge• Engineering &
Development• Capital Investments• Centers of Excellence• Business Group
Synergies• Acquisitions
Business Platforms Provide Products, Software Capabilities, and Solutions Through the Entire Customer Value Chain
Business Platforms Provide Products, Software Capabilities, and Solutions Through the Entire Customer Value Chain
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Enriched Business Models
Value Added Services & Solutions
Software & Systems
Electronics, Smart Sensors, Embedded Technology
Instrumentation & Components
Process Management
Climate Technologies
Network Power
Industrial Automation
Comm. & Res. Solutions
All Business Platforms Are Constantly Improving Their Solutions Offering While Continuing to Build on Our Technology Based Hardware Foundation
Exploring Options
Exploring Options
Exploring Options
Launching ComfortGuard,
Retail, Residential, Transport Solutions
Launching Grind2Energy
Developing Pervasive Sensing
Process Management Services and Software Solve Our Customers’ Toughest Challenges -- Creating A Sustainable Value Proposition
Process Management Services and Software Solve Our Customers’ Toughest Challenges -- Creating A Sustainable Value Proposition
Emerson’s Leading Technologies and Industry Expertise Create Unique Solutions that Deliver Business Results and Sustainable Value Propositions
Industry Opportunity
EmersonSolutions
65% of projects >$1B exceed planned execution time by 50%
Collaboration tools and software reduce automation schedule by up to 30%
Industrial facilities consume ~50% of the world’s total energy
PervasiveSensing and Energy Advisor Software drive 5-10% energy savings
Unplanned downtime costs industrial firms $50B annually
Reliability Solutions drives top quartile performance
5
Project Execution and Speed
Energy andEnvironment
Safety and Reliability
Process Management
…and many Embedded Software Industry Applications Packages
…plus many others acquired / developed over last 15 years
I
II
III
CustomerChallenges
2008Beginning 2009 2010 2011 2012 2013 2014 2015
Pervasive SensingRemote MonitoringWireless Control
10+Wells
100+Wells
1000+Wells in Fields
100+Applications in Project Scope
PROCESS PLANT
SECURITY
WELLHEADS
MONITORING
10Applications in
Plant
1-3Applications in
Plant
PointMonitoring
ApplicationMonitoring
PRODUCTS AND SYSTEMS / CONTROL
Foundational to Wireless
4 6 8 12 16 25 32 37
Wireless is a Key Technology to Enable New Customer Solutions and Value Propositions
Wireless is a Key Technology to Enable New Customer Solutions and Value Propositions
6
2015 Bookings:~$350M
Process Management
Pervasive Sensing and Control is a Strategy to Go After All Industrial Applications --For Operational Efficiency and Safety
Pervasive Sensing and Control is a Strategy to Go After All Industrial Applications --For Operational Efficiency and Safety
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Net
wor
kIn
fras
truc
ture
Process Safety
Notification, Response Tracking
Reliability
Predictive Diagnostics,
Vibration Monitoring, Oil Quality
Energy
Steam Trap Monitoring,
Energy Advisor
EmployeeSafety
Personal Tracking, Operator
Tracking and Simulation
Global Process Companies Need Increased Efficiency, Environmental Safety, and Energy Management -- Utilizing Their Broad Sensor and Field
Intelligence to Bring Increased Value With Fewer People
Pervasive Sensing
Monitoring / iOPs
Process Management
Process Control
Batch, Inventory, Tracking, Blending,
Mass Balance
Pervasive Sensing and Expertise Create New Solutions to Energy Challenges / SavingsPervasive Sensing and Expertise Create New Solutions to Energy Challenges / Savings
Combines Expert Analysis with Pervasive Sensingto Deliver Insights -- A Total Solution
Cellular Network
Wireless Gateways
Analytics
Singapore Government Driving Energy Efficiency Programs
Jurong Island Steam Management
450 Kilotons CO2Emissions Avoided
1,900 Olympic Swimming Pools Water Savings
$150M Energy SavingsPotential
~$15B Global Opportunity for Pervasive Sensing Technologies and Solutions
8
Process Management
Energy Advisor Software Provides Real-Time Energy Management SolutionsEnergy Advisor Software Provides Real-Time Energy Management Solutions
Energy Advisor Software Monitors, Targets, and Reports Energy Performance
Monitor Target Report
Energy Insights Enable Customers to Achieve Operational
Performance Improvements
• Insights turn customers’ largest variable cost into a controllable expense
• 5-10% estimated industrial energy savings through best practices
• $15-30M savings for typical 250M bbl / day refineries
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Process Management
Energy AdvisorComponents
Climate Technologies Services and Software Solve Our Customers’ Toughest Challenges -- Government Regulations
Climate Technologies Services and Software Solve Our Customers’ Toughest Challenges -- Government Regulations
Home automation market expected to reach $11B by 2017
Mobile control of home comfort
$8B / Yr is spent on refrigeration energy$3B / Yr perishable food is lost
Reduce energy and maintenance cost by $40K / Site / Year
Reduce perishable shrink by $15K / Site / Year
Lifetime HVAC repair costs $1,500+ per system
Sensors and real-time monitoring service
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Connectivity / Communication Capability
Energy, Maintenance Cost and Perishable Costs
High HVAC Lifecycle Costs
Alarms SiteManager
Temperature Service
Each year, 75M tons of food travels on refrigerated containers
Reduce cargo damage: Equipment failure 90%Reduce claims by 70%
RefrigeratedMarine / Trucking Container: Asset Management
Climate Technologies
Industry Opportunity
EmersonSolutions
CustomerChallenges
I
II
III
IV
Emerson Climate Technologies Total Solution / Service EvolutionEmerson Climate Technologies Total Solution / Service Evolution
Enriched Business
Enterprise Control
System Control
Discrete Control
Components and Sensors
Leverage System and Component Intellectual Property to Deliver Unmatched Efficiency, Reliability, and Ease of Maintenance
Controls Total Building - HVAC, Lighting, Refrigeration, Etc.
Controls Discrete Systems
Control at Component Level
Most Efficient, Reliable Compressors, System Protectors, and Condensing Units
HVAC CompressorsRefrigeration CompressorsMechanical System ControlsCondensing Units
1960 - 95
1995
2000
2003
2010
…and Beyond
Climate Technologies
Efficiency Standards & Refrigerant Regulations Driving Widespread Industry Change: A Growth Opportunity
Efficiency Standards & Refrigerant Regulations Driving Widespread Industry Change: A Growth Opportunity
02040
(37%)(35%) (17%) (25%)
Today 2017
SupermarketCA Title 24
Walk-InIce MachineReach-In
Today 2018
DOE Energy
EPA Refrigerants
Low GWP BlendCO2
Low GWP Blend
Propane
Low GWP Blend
Propane
Low GWP Blend% of
Market
% Efficiency
2012 2013
100%
40%
100% 50%
Today 2017 Today 2017
Today 2018 Today 2018 Today 2018
2015 2016 2017 2018 2019Today
Working CommitteeWith Emerson Representation DOE Rulemaking
21 30% Improvement90% Systems Obsoleted
12% Improvement30% Systems Affected
Emerson Works Closely with Customers to Develop Innovative Solutions to Deal with a Huge Commercial Industry Dynamic / Transformation
Commercial HVAC
Commercial Refrigeration
13
Climate Technologies
Emerson ProAct™ Transport Solution Provides Actionable Insights & Operational Efficiency for Cold Chain Customers
Emerson ProAct™ Transport Solution Provides Actionable Insights & Operational Efficiency for Cold Chain Customers
ProAct™ Transport Solution Actual Customer Value16 Software Applications
Infrastructure / Data Housing
Without ProAct With ProAct
+7% Margin Improvement With ProActTM
Greatly Expanded Our Transport Solutions In the Last 3 Years --Marine, Trucking and Container Solutions
Sensors & Controls
Shipping Costs - Example
Overhead
Maint.Energy
HandlingCapitalMargin
Climate Technologies
Business: Fleet size - 5,000 refrigerated containers 28,000 shipments per year Distributing perishables to retail
Challenges: $1M per year in damaged shipments Lack of asset tracking
Emerson ProActTM Transport Solution: 5,000 modems plus GPS & connectivity ~$500K savings in handling costs $500-750K savings in fleet reduction
with improved asset management $3.5-$4.5M total savings over 5 years
Without ProActTM With ProActTM
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Network Power Services and Software Solve Our Customers’ Toughest ChallengesNetwork Power Services and Software Solve Our Customers’ Toughest Challenges
Lack of inventory visibility leads to inefficient management of IT assets, including software
Improved capacity planning timeframe from weeks to hours Reduced time to identify stranded capacity by up to 50%
Cost of unplanned outage averages $8,000 / min.*
Improved time to resolve outages by up to 40%
Improved services provisioning times by up to 25%
~70% of budget spent on operational activities OpEx exceeding budget
Reduced OpEx by up to 30% by improved thermal and power management
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IT asset and capacity management for complexity and flexibility
Data Center uptime and reliability are critical
Limited Capital to Support Business Initiatives, and capacity
*Ponemon Institute’s 2013 survey
Network Power
Project
Maintain
LIFE™ Remote Diagnosis
Performance
Industry Opportunity
EmersonSolutions
CustomerChallenges
I
II
III
Emerson Network Power Data CenterSolutions Organization -- Strategy to Add More Value and Services
Emerson Network Power Data CenterSolutions Organization -- Strategy to Add More Value and Services
Data Center Solutions (DCS) Business Formed to Facilitate the Hardware / Software Integration and Solutions Orientation
16
Power Switching and Controls
UPS Systems
Heat Rejection
Thermal Management
Generator
Surge Suppression & Fire Control
Power Distribution
Client IT Servers, Storage and Network
Infrastructure Management
11
2233
44
55
66
88
77
99
Network Power
The Broadening / Deeper Trellis™ PlatformThe Broadening / Deeper Trellis™ Platform
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A. Battery MonitoringB. Facilities Monitoring C. Critical Power Management D. Power Monitoring E. Remote Access Management – DSViewF. Comprehensive, Integrated Platform - Trellis
The TrellisTM platform enables the unified management of the data center’s IT and facilities infrastructure. It combines the physical layer and the application layer into one holistic solution.
The Value of the TrellisTM Platform is Its Ability to Improve the Change Management Process, Improve Accuracy and Response Time, Improve
Availability Through Reduced Downtime, Help to Control Costs, and Improve Visibility
The TrellisTM platform is a real-time infrastructure optimization platform for data centers.
Network Power
A
B
C
D
EF
Software Solutions Are Targeted AtMultiple Needs Within the Data Center and Remote Centers
Software Solutions Are Targeted AtMultiple Needs Within the Data Center and Remote Centers
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TrellisTM Family of Products Offers Both Point and Broad Entry Points
Single Platform(Spans Product
Family)
Integrated andSite Based TrellisTM Platform Express
TrellisTM Software as a Service (SaaS)
Point Solutions ThermalManagement
CriticalPower Monitoring Inventory Capacity
Management Workflow
Network Power
Customer Environment
Success Factors
• Fragmented campus system with 200 server rooms in 120 departments
• Inefficient user setup
• Lack of visibility into environment process standardization
• High resource (power and thermal) usage
• Trellis™ Platform.• Power and thermal
systems
• Reduced carbon footprint by 30% and improved Power Usage Effectiveness (PUE) to 1.2 from a high value of 3
• Reduced IT energy costs by 40%
Solution(s) Provided
By Deploying the TrellisTM Platform, the University of Cambridge Will Gain Real-time Insights Into Power, Thermal Management and IT Equipment to Help
Them Manage Capacity and Increase Efficiencies Across the University
The TrellisTM Platform Provided The University of Cambridge a Solution to Their Fragmented Server Room Problems
The TrellisTM Platform Provided The University of Cambridge a Solution to Their Fragmented Server Room Problems
19
Network Power