gary henry capital markets day 2004 residential...

Residential ConstructionGary Henry Capital Markets Day 2004

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Agenda

• Hart & Cooley Overview

• Market Overview

• Strategies for Growth

• Summary


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Hart & Cooley – The Industry Leader

• Largest manufacturer of residential air distribution in the U.S.

• Growth through acquisition and organic growth

Revenues

$308m

1999 Acquisition Current

+$100m

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Hart & Cooley – Leading Brands

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Manufacturing & Distribution Locations

Manufacturing Facility

ASCD Shared FacilityDistribution Center

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Types of Residential Products

Gas Vent30% Mkt. Share

#1

Flex Duct14% Mkt. Share

#2

Registers51% Mkt. Share

#1Gutter Protection47% Mkt. Share

#1

Chimney Vent4% Mkt. Share

#3

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Replacement$49m (16%)

NewConstruction$257m ( 84%)

New Construction vs. Refurbishment Sales

SOURCE: Hart & Cooley Statistics

Our Sales – Breakdown 2004

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Residential Market Trends

• Flexible duct is replacing steel ductwork

• “Higher energy efficiency standards” create opportunities for new products

• Drive for improved “Indoor Air Quality” will create niche markets

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Agenda


• Market Overview


• Summary

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Distribution Channels

Four Paths to Market

ResidentialWholesale

CommercialWholesale Retail Hearth

& Home

• 76% of sales

• Manage the relationships with contractors

• 14% of sales

• Recent productline expansion

• 8% of sales

• Controlled growth

• 2% of sales

• Growth market

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Leading Market Share

$1.2 Billion Market

Source: Hart & Cooley

H&C Inc. 25%

Ductmate 3%

Durodyne 4%

Others 9%

Atco 14%

Selkirk 10%

Duravent 6%

Continental 1%Shoemaker 1% Lima 1%

U.S. Aire 3%Tru-Aire 1%

Metal Fab 4%

Thermaflex 6%

Quietflex 4%

JPL 3%Dundas-Jaffine 2%

Teleflow 2%

Further consolidation opportunities

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Agenda



• Summary

• Market Overview

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Grow Distribution Network

• Largest network of HVAC wholesalers (over 4,500)

• Strong position with large, national distributors

• Strategic regional distribution centers

• Expansion into new markets

Strategy #1

Leveraging distribution network

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Expand Product Range

• Unique ability to “package” products– Systems Supply

Strategy #2

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• Focus on new product development– $4.7m in newly launched products

Strategy #2

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• Product ranges– Further expansion of product lines into adjacent

spaces with Bolt-on acquisitions– Three potential opportunities

currently under review

Strategy #2

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Acquisition Philosophy

• Justification for acquisition

• Operational due diligence process

• Identifying synergies

• Developing integration plan

• Implementing plan post acquisition

Pre-acquisition activities

Strategy #2

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Acquisition Philosophy

• When acquisition completed, Hart & Cooley:– Installs Tomkins performance management framework– Implements synergies and integration plan– Rationalizes both manufacturing and products

• Ensure complete and successful integration

• H&C Managers compensated on success of acquisition

Post-acquisition activities

Strategy #2

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• Significant manufacturing presence in Mexico

• Continued product and manufacturing rationalization

• Focus on lean manufacturing

• Establish manufacturing presence in China

Continue to Improve Manufacturing EfficiencyStrategy #3

ChinaChina

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Agenda



• Summary

• Market Overview

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Largest player in the residential market

Market Leader, Positioned for Growth

Comprehensive product line

Strongest distribution network

Low cost producer

Positioned for future growth

In Summary

9% CAGR last 5 years

Residential ConstructionGary Henry Capital Markets Day 2004

gary henry capital markets day 2004 residential...

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