Food Equipment: A Growth Platform Presentation

Food Equipment:
A Growth Platform
Scott Santi, Vice Chairman
John McDonough, President,
Food Equipment North America
December 8, 2008
Today’s Topics
• Business Overview
• Major End Markets
• Core Product Lines
• Key Growth Strategies
•Q&A
Business Overview
ITW Food Equipment Group
13% of total ITW revenues—2008(F)
ITW Food Equipment Group
• Commercial Food Equipment and Related Services
• 55 businesses in 22 countries represent $2
$2.1
1 billion in
total revenues
• 2007 Revenues: +27%
• 2008(F) Revenues: +10%
ITW Food Equipment Group
• Revenue by Category
11%
Food Service
30%
59%
Service
Food Retail
ITW Food Equipment Group
• Revenue by Region
Major End Markets
ITW Food Equipment Group
• Revenue by End Market
Institutions
18%
Food Retail
7%
47%
12%
Food Service
Chains
I d Restaurants
Ind.
R
Other Food Service
16%
Institutions
•
•
•
•
•
•
Colleges/Universities
Schools
Healthcare
Lodging/Casinos
Canteens/Catering Cos.
Government
Food Service Chains
• Full Service restaurants
–
–
–
–
Family Style
Ethnic
Seafood
Steak
• Quick Serve Chains
–
–
–
–
–
Burger
Chicken
Sandwich
Ethnic
Bakery Cafes
• Pubs
P b &T
Taverns
Independent Restaurants
• Independents
• Restaurant Groups
Other Food Service
• Air Catering
• Marine
– Cruise
– Offshore
– Shipyards
• Transportation
• Misc./Other
Marine
Food Retail
•
•
•
•
•
•
•
Supermarkets
Mass Merchandisers
Membership Clubs
Hyper Marches
Convenience Stores
Petroleum / Convenience
G
Grocers
Core Product Lines
ITW Food Equipment Group
• Revenue by Product Line
3%
13%
Service
30%
14%
W
Warewash
h
Cooking/Baking
Food Processing
Refrigeration
19%
21%
Other
Warewash
• North America
• International
Cooking/Baking
• North America
• International
Food Processing
• North America
• International
Refrigeration
• North America
• International
Service
• North America
• International
Billed Services
Service
Contracts
• Parts
P t (OTC)
• Installations
• Other
•
•
ITW Food Equipment Group
Performance Since Premark Acquisition
Total
Revenues
Op.
Margins
20%
15%
10%
5%
0%
(
($500)
)
ITW Toolbox Impact - Hobart Germany
80/20
Innovation
MRD
USa
2000
2008
PLS
In-Lining
Operating Margins: <5.0 %
Segmentation
Operating Margins: ~20.0%
• ITW Tool Box Implementation Drives:
– Significant Core Business Profitability Improvement
– Customer Driven Innovation/Organic Growth
ITW Toolbox Impact - Hobart France
80/20
MRD
USa
2000
2008
PLS
In-Lining
Segmentation
Operating Margins: 14%
Operating Margins: (5.0%)
•
•
•
•
•
80% reduction in SKUs
Refocused on “80” products and geographies
St
Streamlined
li d sales
l and
d admin
d i processes
Segmented business by core served markets
Targeted growth in direct service contracts
Key Growth Strategies
Key Growth Strategies
• Customer-Driven Innovation
• Service as a Growth Platform
• Geographic Expansion/Emerging Market Growth
• Targeted Product Category Additions
Customer-Driven Innovation:
MBM/Hobart Combi
• The Opportunity:
• Operators focused on production efficiencies
» Simplicity
p y of operation
p
/ ease of replication
p
» Process solutions vs. discrete pieces of
equipment
• Often used with other “vertical” platforms
» Combi
» Chiller
» Holding/transport carts
• The User
User-Driven
Driven Solution:
• Bar code scanning to deliver ease of replication
» Oven recipes embedded in food company bar
codes
» Recipes programmed on-site;
on site; onboard label
printer
• Interchangeable racking across platforms
Customer-Driven Innovation:
3000 Series Slicer
• The Opportunity:
• A core industry product with long-unmet needs
–
–
–
–
True ease off use and
T
d ease off cleaning
l
i
Reliable slice quality (chain specification)
Improved yield (shrink management)
Operator productivity
• The User-Driven Solution:
• Nine (9) patent-pending innovations, including:
–
–
–
–
–
Removable knife (ease of cleaning)
Knife geometry (slice quality and yield)
Product tray presentation (slice quality and yield)
Simplified controls interface (ease of use)
Efficiency enhancers on automatic (productivity)
Customer-Driven Innovation:
Somat eCorect
• The Opportunity:
• Escalating waste management costs
» Weight and/or volume fees vary by municipality
• Demand for cost
cost-effective
effective sustainability solutions
» Majority of foodservice waste is compostable
»Food waste; cardboard; compostable
disposables
• The User
User-Driven
Driven Solution:
• Zero-environmental impact waste elimination
» 8:1 reduction of waste into soil-grade mulch in 24hours
» Mulch can be used, donated or sold
» No water, enzymes, bio-filters or ventilation needed
» Complements use of pulpers in high volume
applications
»Pulpers
p
reduce waste volume by
y 80% to a
wet pulp
»eCorect further reduces weight (70%) and
volume (55%)
• Saves energy; supplies; hauling fees; labor
Service as a Growth Platform
Service Progression (2000-2008)
– Created separate business units to provide focus
– Identified core Hobart equipment and service customers
» Focused on service quality and field efficiencies
» Targeted field operations against this profile of
accounts
» Built in-depth tech training programs around this core
– In-depth USa projects to simplify field and back-office
processes
– Since acquisition:
q
» Revenue growth:
2x
» Income growth:
4x
» Current worldwide operating margin %: mid-20’s
Service as a Growth Platform
• Building a Global Service Platform
• Current Status
– Expanding International footprint:
» US, Canada, Mexico, Brazil; Puerto Rico; Columbia
» UK, France, Germany, Benelux
» Australia, Japan, Hong Kong, China, Korea
– U
Unique
que Value
a ue Proposition
opos t o
» Factory-owned service arm
» 1700 Hobart technicians in the United States alone
» Actively manage total ownership experience for customers
– Adding user-driven product and service offerings to grow base
» Multi-brand and full-store service agreements for select customers
» Water treatment and grease management products (US and
Canada)
» Installation services
Service as a Growth Platform
• Service Growth Opportunities Going Forward:
• Currently serve less than 20% of ITW-installed
ITW installed base
– Additional share of ITW-installed base
– Active trials of full-kitchen service in select accounts underway
– Evaluate coverage of non-ITW-installed base
• Recent acquisitions enhance service platform
–
–
&
((UK, Ireland, France))
(France)
Emerging Markets
• History:
• Have been successfully selling US/European equipment to
Western-style hotels, large restaurants, institutions and employee
dining facilities for years
• Have an established manufacturing and service presence to
support these activities
• Targeted Growth Initiatives
• Currently
Cu e t y building
bu d g localized
oca ed marketing
a et g co
competence/capabilities
pete ce/capab t es in
these regions
• Focusing on penetrating select key end markets in key
g g p
geographies
• Expanding our service coverage
Recent Acquisitions: Horis
• Revenue @ acquisition:
$225 million
• Acquisition closed January 2007
• Strategic
St t i Attraction
Att ti
• Complementary positions with Hobart France
» Cooking, Refrigeration
» Restaurants and Institutions
» New projects focus vs. Renewals (replacements)
• Attractive direct service business
• Current Status
• M
Manufacturing
f t i toolbox
t lb implementation
i l
t ti iin ffullll swing
i
• Targeting service margin improvements
• Detailed market segmentation process was
initiated in earlyy 2008
• Operating margin improvements on track with
acquisition plan
Recent Acquisitions: Avery Berkel
• Revenue @ Acquisition:
$80 million
• Scales; Slicers; Wrappers
• 95% revenues emanate from Europe
p
• Acquisition closed September 2007
• Strategic Attraction
• Strong brand recognition
• Attractive direct service business
• Well positioned range of premium to value-line
products
• Current
C
t Status
St t
• Toolbox implementation is well underway
• Leveraging growth opportunities across Europe
• Exploring global platform development opportunities
with Hobart
• Operating margin improvements on track
w/acquisition plan
Food Equipment: A Growth Platform
• Significant Future Growth Potential:
– Relatively small existing ITW share position
• G
Global Food Equipment market estimate: $22
$ - $26
$ billion
• Market still highly fragmented
– Lots of Room to Grow:
•
•
•
•
Customer Driven Innovation
Service as a Growth Platform
Geographic Expansion/Emerging Market Growth
N
New
P
Product
d tC
Category
t
Additi
Additions
– Direct Service Capabilities
• A highly leveragable differentiating advantage
QUESTIONS