Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Investor Day (June 2011)
125 slides from Johnson Controls International's investor day presentation, Jun 27, 2011
Slide 1: Power Forward: 2011 Power Solutions Analyst Meeting
power /orward 2011 POWER SOLUTIONS ANALYST MEETING Controls
Slide 2: Forward-looking statement
Forward-looking statement Johnson Controls, Inc. has made forward-looking statements in this document pertaining to its financial results for fiscal 2011 and beyond that are based on preliminary data and are subject to risks and uncertainties. All statements, other than statements of historical fact
Slide 3: Steve Roell, Chairman and CEO
Steve Roell Chairman and Chief Executive Officer Johnson Controls 4
Slide 4: Power Solutions Analyst Day
Power Solutions Analyst Day Welcome to the world’s most sustainable corporate campus 5
Slide 5: Three world-class growth businesses
Johnson Controls Three world-class growth businesses Johnson Controls FY2011 $39.5B (est.) Automotive Power Solutions Building Efficiency Experience $6.0B $14.5B $19.0B Leading global provider Providing the highest Providing HVAC of systems and quality, lowest cost equipment, control systems compone
Slide 6: 2011 Segment Income (est.)
Johnson Controls Balanced earnings stream 2011 Segment Income (est.) Power Building Solutions Efficiency Automotive Experience 7
Slide 7: A track record of growth
Johnson Controls A track record of growth Revenue Net Income* $ billions $ millions $1,668** $39.5 $38.1 $1,402 $1,356 $34.6 $34.3 $1,252 $32.2 $28.5 $1,028 $27.5 $24.6 $857 $21.6 $19.3 $729 $17.9 $622 $16.7 $15.7 $572 $525 $535 $438 $311 * Excludes one-time and restructuring charges ** April 23, 20
Slide 8: Total shareholder return
Total shareholder return* 1-Year 3-Year 5-Year 10-Year JCI 31% 27% 8% 9% 14% Multi- 23% 7% 8% 9% Industry** S&P 500 15% 1% 3% 3% * As of June 17, 2011, stock price appreciation + re-invested dividends ** Multi-industry peer set of: DHR, DOV, EMR, ETN, HON, IR, ITT, ITW, MMM, TXT, UTX 9
Slide 9: Growth outpacing our underlying markets
Johnson Controls Growth outpacing our underlying markets Mid-term Annual Growth drivers Growth (est.). Emerging markets, especially China Strong and expanding backlogs Building Efficiency 10 – 15% Market share gains Automotive Experience 5 – 10%* Increased demand for energy efficiency / gree
Slide 10: Making substantial investments to support our growth
Making substantial investments to support our growth In addition to increased investments in Expanded sales and service force I.T. systems to improve productivity and profitability 11
Slide 11: Benefitting from investments
Benefitting from investments Organic growth Automotive: Incremental Sales Backlog* Building Efficiency Backlog $4.0B 5,500 Record +60% $5.1 billion +18% $2.5B 5,000 4,500 2010-12 2011-13 …plus more than $800 million 4,000 in additional new business Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 wins in 1H 2011 09 09 09
Slide 12: Automotive Experience: path to accelerated growth
Automotive Experience On a path to accelerated growth Building on our core … to deliver accelerated strengths … growth Global reach Vertical integration Cost leadership Strong emerging markets profile Technology and advanced product development Financial strength Targeting improved finan
Slide 13: Building Efficiency Strategic Roadmap
Building Efficiency Strategic Roadmap Renewed focus around four growth platforms … … to deliver our desired strategic outcomes Systems & Emerging Leadership position in global growth Services Markets markets Market share gains Margin expansion Energy Technology Differentiated leadership thro
Slide 14: Power Solutions Growth Roadmap
Power Solutions Our Growth Roadmap Aggressive investments targeted around three growth platforms… … leveraging our competitive advantages Seizing an expanding set of market opportunities 15
Slide 15: Well-positioned to take advantage of market opportunities
Power Solutions Well-positioned to take advantage of unprecedented market opportunities 16
Slide 16: Power Solutions Analyst Day June 27, 2011
Power Solutions Analyst Day June 27, 2011 May 2011
Slide 17: Agenda: Today's Discussion and Speakers (Morning)
Agenda Today’s Discussion and Speakers (Morning) Welcome & Introduction Steve Roell Power Solutions Overview Alex Molinaroli Core Business & Vertical Integration Allen Martin New Growth Opportunities Kim Metcalf-Kupres China & Other Emerging Markets Advanced Technologies Technology Overview Alex Mol
Slide 18: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 19: Power Solutions Growth History
Power Solutions Growth History ~$6B $1B United States Americas, Europe, Asia Global OE & Aftermarket OE & Aftermarket Private Label Regional Distribution Channels Johnson Controls Brands – 5,000 Employees 13,000 Employees Plants 12 30 Recycling 0 3 20 Analyst Day | June 27, 2011
Slide 20: Power Solutions Profile Today
Power Solutions Profile Today The world‘s largest provider of battery 2011 sales power solutions for the vehicle original ~$6 B equipment and aftermarket Europe Americas World-class customer base in the 26% automotive aftermarket Original equipment (OE) batteries 5% 69% Asia for the top automake
Slide 21: Power Solutions Profile Today
Power Solutions Profile Today 22 Analyst Day | June 27, 2011
Slide 22: Mission and Competitive Advantages
Power Solutions Mission and Competitive Advantages Mission Be the global leader providing battery power solutions for the vehicle original equipment and aftermarket and a leading global provider of advanced energy storage systems 23 Analyst Day | June 27, 2011
Slide 23: World-Class Customer Base
Power Solutions World-Class Customer Base Long-term relationships with strategic customers - Original Equipment manufacturers (OEs) - Branded distribution channels - Key private label partners Strong mix - 20% OE - 80% Aftermarket Differentiated relationships and services - Warranty support, c
Slide 24: Market Trends
Market Trends Drivers Expanding Energy Storage Consistent Themes – Intensifying Trends Tightening Environmental Regulations – Lead management and transportation – Fuel economy standards – CO2 reductions Commodity price volatility Accelerated global consumer acceptance of Start-Stop vehicles
Slide 25: Always a good business, becoming a growth business
Growth Opportunity A Recap from October Analyst Meeting Always a good business… ….Becoming a growth business NYC JCI Analyst Presentation, October 2010 26 Analyst Day | June 27, 2011
Slide 26: Our Growth Roadmap
Power Solutions Our Growth Roadmap Aggressive investments targeted around three growth platforms… … leveraging our competitive advantages Seizing an expanding set of market opportunities 27 Analyst Day | June 27, 2011
Slide 27: Agenda: Today's Discussion and Speakers (Morning)
Agenda Today’s Discussion and Speakers (Morning) Welcome & Introduction Steve Roell Power Solutions Overview Alex Molinaroli Core Business & Vertical Integration Allen Martin New Growth Opportunities Kim Metcalf-Kupres China & Other Emerging Markets Advanced Technologies Technology Overview Alex Mol
Slide 28: Allen Martin: Core Business & Vertical Integration
Power Solutions Core Business & Vertical Integration Allen Martin Vice President & General Manager Power Solutions, Americas Region Service: 27 Years 29 Analyst Day | June 27, 2011
Slide 29: Core Business & Vertical Integration
Core Business & Vertical Integration Overview & Growth Strategies Batteries for Starting, Lighting and Ignition (SLI) Design Engineering Manufacturing Distribution Collection Recycling 30 Analyst Day | June 27, 2011
Slide 30: Commercial Excellence
Commercial Excellence A Customer Satisfaction Culture Portfolio of world-class brands Best-in-class account management with strategic customers Expanding distribution channels in all geographies Providing differentiated products and services in core and adjacent markets 31 Analyst Day | June
Slide 31: Commercial Excellence Highlights
Commercial Excellence Highlights Customer Distribution Superior Brands Awards Growth AutoZone VARTA ® Powerzone ™ Portfolio of world class brands Extra Miler Award Dongfeng Honda Engine Co. Remarkable Quality Improvement General Motors Supplier of the Year (3 years) Interstate Battery Systems of
Slide 32: Operational Excellence
Operational Excellence We Are the Quality, Low Cost Producer Quality – Industry leading performance and reliability – Over 20% longer battery life Cost – Scale and efficiency benchmarks globally – Over $100M annual cost savings through Continuous Improvement Technology – Proprietary Powerframe
Slide 33: Powerframe Competitive Advantage
Powerframe ® Competitive Advantage Proprietary precision stamped grid Fleet Mile Test technology 30 Thousand Miles JCI PowerFrame Optimized grid design 29 Competitor A Sturdy outer frame 28 Competitor B True Strength 27 Structurally Strong: 26 Minimizes corrosion & premature failure 25 Pattern
Slide 34: Business Process Excellence
Business Process Excellence Investing in IT and Business Infrastructure Investing $200M+ in information technology and process re-engineering over next 3 years ↑ Control and cost reduction ↑ Market intelligence & speed to market ↑ Emerging markets infrastructure & growth ↑ Intellectual property ma
Slide 35: Vertical Integration Opportunity
Vertical Integration Opportunity Increasing Demand Increasing internal capacity from from Emerging Markets 15% to 50% of requirements for North America Industry Infrastructure Invest in other markets as core Technology Innovation Lead Price collection systems develop Aging & Volume Volatility
Slide 36: Vertical Integration: Continuing Strategic Importance
Vertical Integration Continuing Strategic Importance M 600 Lead-based batteries 90%+ of technology mix 500 through 2030 400 300 New vehicles entering the car parc largely 200 internal combustion engine (ICE) or 100 Start-Stop through 2020 0 Legend: Powertrain: ICE Start-Stop Baseline Battery Tec
Slide 37: Environmental Regulation Creating Sustainability Opportunities
Environmental Regulation Creating Sustainability Opportunities Heightened environmental regulations - EPA lowered US emission standards in 2008 with further restrictions on recycling facilities in 2010 - More stringent interpretations of handling and packaging requirements by US DOT - China is bec
Slide 38: Battery Recycling: Garcia, Mexico
Battery Recycling Our Growing Network Garcia, Mexico Began production in November 2010 – 132K MT capacity – Ability to expand to 176K MT $150M investment Serves Mexico and Southwest market in United States Created 250 jobs 39 Analyst Day | June 27, 2011
Slide 39: Battery Recycling: Florence, South Carolina
Battery Recycling Our Growing Network Florence, South Carolina First permit for a lead recycling facility in the U.S. in 25 years Construction is on schedule - 132K MT capacity - Start of production: June 2012 $180M investment Serves Mid-Atlantic and Southeast markets in United States Will
Slide 40: Summary: Core Growth
Summary Core Growth Significant growth potential Focus on Core business and vertical integration continue to drive strategic advantage, growth and profitability 41 Analyst Day | June 27, 2011
Slide 41: Agenda: Today's Discussion and Speakers (Morning)
Agenda Today’s Discussion and Speakers (Morning) Welcome & Introduction Steve Roell Power Solutions Overview Alex Molinaroli Core Business & Vertical Integration Allen Martin New Growth Opportunities Kim Metcalf Metcalf-Kupres Metcalf-Kupres China & Other Emerging Markets Advanced Technologies Techn
Slide 42: Kim Metcalf-Kupres: Emerging Markets & Technology Growth
Power Solutions Emerging Markets & Technology Growth Kim Metcalf-Kupres Vice President Global Sales, Marketing & Strategy Service: 17 years 43 Analyst Day | June 27, 2011
Slide 43: Growth Trends: Emerging Market Expansion
Growth Trends Emerging Market Expansion 600 520m 500 440m 400 Million Units 6% CAGR 300 Emerging Developed 200 1% 100 CAGR - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: CSM, JCI Analysis 44 Analyst Day | June 27, 2011
Slide 44: Opportunity Potential: Battery Markets by Country 2020
Opportunity Potential A View of Battery Markets by Country in 2020 Americas EMEA Asia Russia Canada W. Europe Ukraine United S. Korea Iran China States India Saudi Arabia Thailand Malaysia Indonesia Brazil Argentina Emerging*: 45M 52M 165M Total: 143M 158M 218M 45 Analyst Day | June 27, 2011
Slide 45: Prioritizing Opportunities
Prioritizing Opportunities Power Solutions Considerations Opportunity Prioritization Battery Market Framework Size through 2020 Network synergies Attractiveness Market maturity Competitive landscape Cost & complexity to enter Resources to support market entry 46 Analyst Day | June 27, 20
Slide 46: Emerging Market Growth Focus Today
Emerging Market Growth Focus Today Expand network to support Eastern Asia Europe market leadership South Become the America market leader in China Leverage current leadership position to grow as market develops 47 Analyst Day | June 27, 2011
Slide 47: Asia Network Growth
Asia Network Growth Korea - Acquired 90% of existing Korean joint venture - Integration complete - 4M unit expansion India - Johnson Controls technology Joint venture with Amara Raja ASEAN - Serving market with imports today - Exploring opportunities for future localization 48 Analyst Day | June 27,
Slide 48: China: A View Today and through 2020
China A View Today and through 2020 Demand Today Market Forecast 119 OE 110 Northern China AM 101 29 11 M units 93 27 85 26 76 25 68 24 Eastern China 59 23 13 M units 52 21 45 19 38 17 91 83 16 75 14 68 61 Western China 54 47 41 7 M units 35 25 29 Southern China 8 M units 2010 2011 2012 2013 2014 20
Slide 49: China Overview: Market Development Favors Johnson Controls
China Overview Market Development Favors Johnson Controls Conversion to Maintenance Free Batteries Is Widespread Chinese Battery Plant Closures Create Nearly Complete Opportunities for Responsible Providers 100% 30% 26% 22% 19% 17% 14% 2,000 1,500 86% China Lead-Acid 83% 81% 1,000 Battery Plants 75%
Slide 50: Regulation: Rising Standards Creating Opportunity
Regulation Rising Standards – Creating Opportunity Large-scale actions against questionable battery manufacturers and lead handlers – 200+ battery manufacturers shut down in Zhejiang – 4500+ enterprises being monitored Government actions and significant environmental investment requirements will
Slide 51: Power Solutions in China
Power Solutions in China Establishing a Market Leadership Position Chongqing Plant with start 30M units (30% market share) of production in 2012 Build integrated manufacturing network JCI Shanghai across China N Plant & HQ Be the benchmark for environmental E and health & safety performance Ch
Slide 52: Changxing Facility
Changxing Facility Latest Addition to Our World Class Manufacturing Network Now in production and shipping batteries 8 million battery capacity Proprietary PowerFrame® technology $150M investment State-of-the-art production equipment and processes 400,000 square feet facility 600 emplo
Slide 53: Progress Building Our China Network
Progress Building Our China Network Fuling County, Chongqing Municipality Changxing Facility -- Production Launching Now Western China Region 133,000 square meters Ground leveling underway Engineering design near completion Shanghai Facility Initial capacity for Johnson Controls in China S
Slide 54: South America Strategy for Growth
South America Strategy for Growth MAC Joint Venture in Columbia MAC completed in May - Supports Capacity Andean region 3m units Current market leader in Brazil - 34% share Well-positioned for growth - Maintenance free technology - Expanding capacity as market develops Capacity 7.5m units by 20
Slide 55: Growth Opportunity Areas: New Technology Opportunities
Growth Opportunity Areas New Technology Opportunities Powertrains COMBUSTION ENGINE START-STOP HEV, PHEV, EV Battery Categories SLI for Lower Advanced Battery for Advanced Battery for Vehicle Electrification Moderate Vehicle Electrification High Vehicle Electrification Market Potential $23B $72B A c
Slide 56: The Technology Opportunity: Start-Stop Forecast
The Technology Opportunity Rapid Adoption Is Exceeding OE Forecasts Global OEM Start-Stop Forecast 25 2010 View 20 2011 Plans Likely Additions Since 2010 over 15 40M incremental Start-Stop 10 vehicles have been confirmed for OE production 5 0 2011 2012 2013 2014 2015 2016 57 Analyst Day | June 27, 2
Slide 57: A Changing Business Landscape
A Changing Business Landscape Our Perspective on Technology Evolution Units Consumer value drives mainstream and large- scale adoption Technology creates new possibilities – Automakers respond to and failures meet minimum requirements Environmental regulations establish a demand baseline Time 58 Ana
Slide 58: Competition Across Powertrains in New Vehicles
Opportunity Areas Competition Across Powertrains in New Vehicles OEMs will offer a range EV of powertrain options to PHEV consumers HEV When one powertrain “wins”, the others “lose” Start- Stop Matching energy ICE storage technologies ICE also win or lose 2010 2020 Car Parc Car Parc Powertrain
Slide 59: Powertrain Adoption: Regional Differences
Powertrain Adoption Regional Differences Driving Patterns Gas Prices Regulations 27% CAFE: 35mpg (155 g/km) by EV 24% 2016 PHEV = 21% 16% $4~8 Gas Gov’t target of 1m PH/EV by HEV Start- 6% 6% 2015 Stop ICE 0-5,000 5K - 10K 10K-15K 15K-20K 20K-30K 30K+ Incentives to drive adoption 36% EV 28%
Slide 60: Future Market Scenarios
Future Market Scenarios Projected Powertrain Demand in New Vehicles 2010 2016 2020 1-3% 3-8% 8% 3-7% 3-8% EV 5-22% PHEV 5-22% 37% 52-55% HEV 52-55% 90% 70-92% 70 Start- 70-92% Stop 90% 44-46% 44-46% ICE Europe North America China Global Gas Average: 4$/gallon 6$/gallon** 8$/gallon Powertrain Premium
Slide 61: Growth through Technology: The Market Potential
Growth through Technology The Market Potential Energy Storage Opportunity Power Solutions will participate in the Automotive Segment ($B) across the spectrum of energy storage technologies $80 $72 $70 – Increasing system and $60 component complexity $50 – Ability to provide strategic $40 $39 custo
Slide 62: Summary – Morning Session
Summary – Morning Session Strategic Implications for Power Solutions Continued investment to support Core lead acid market – Focus on Commercial, Operational and Business Process Excellence – Vertical Integration Significant expansion in Emerging Markets – Focus on China – Growth in South America an
Slide 63: Agenda: Today's Discussion and Speakers (Morning)
Agenda Today’s Discussion and Speakers (Morning) Welcome & Introduction Steve Roell Power Solutions Overview Alex Molinaroli Core Business & Vertical Integration Allen Martin New Growth Opportunities Kim Metcalf-Kupres China & Other Emerging Markets Advanced Technologies Technology Overview Alex Mol
Slide 64: Applications: A Spectrum of Powertrains
Applications A Spectrum of Powertrains COMBUSTION ENGINE START-STOP HEV, PHEV, EV Conventional High Efficiency Morning Session Start-Stop Start Stop Advanced Start-Stop Mild HEV Afternoon HEV Session PHEV EV 65 Analyst Day | June 27, 2011
Slide 65: Current Trends: OEMs Exploring Options
Current Trends OEMs Exploring Options Production Plan in EU, Production Plan in China by Chinese Japan/Korea, & US, ~2016 OEMs and their JV partners, ~2016 All OEMs are developing a range of powertrains… 66 Analyst Day | June 27, 2011
Slide 66: Current Trends: Production Focus on Start-Stop
Current Trends Production Focus on Start-Stop Production in Europe, Japan & US & China Unit # Cumulative 2010~2016 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 Start-Stop HEV 50,000,000 PHEV 40,000,000 EV 30,000,000 20,000,000 10,000,000 0 Start-Stop HEV PHEV EV Source: Marklines.com, CSM
Slide 67: Agenda: Today's Discussion and Speakers (Morning)
Agenda Today’s Discussion and Speakers (Morning) Welcome & Introduction Steve Roell Power Solutions Overview Alex Molinaroli Core Business & Vertical Integration Allen Martin New Growth Opportunities Kim Metcalf-Kupres China & Other Emerging Markets Advanced Technologies Technology Overview Alex Mol
Slide 68: Craig Rigby: Technology Considerations
Power Solutions Technology Considerations Craig Rigby Vice President Global Product Engineering Service: 4 years 69 Analyst Day | June 27, 2011
Slide 69: Technology Fundamentals: Finding the Best Solution
Technology Fundamentals Finding the Best Solution Cleaner Cost Applications Effective Higher Performing Safer Energy Smarter Storage Systems Technologies More Reliable 70 Analyst Day | June 27, 2011
Slide 70: Applications: A Spectrum of Powertrains
Applications A Spectrum of Powertrains COMBUSTION ENGINE START-STOP HEV, PHEV, EV Conventional Engine cranking Basic electrical loads High Efficiency Larger electrical loads for accessories and component electrification Start-Stop Start Stop Low power recuperation Engine off-loads and restart Advanc
Slide 71: Systems: From Simple to Complex
Systems From Simple to Complex COMBUSTION ENGINE START-STOP HEV, PHEV, EV Battery is passive device Battery continuously Battery is integrated into vehicle powertrain used to start the engine: integrated and engaged in system and delivers propulsion Manages increasingly core vehicle operations deman
Slide 72: Energy Storage Technologies: Spectrum of Chemistries
Energy Storage Technologies A Spectrum of Energy Storage Chemistries 100,000 Power – Measure of electrical 10,000 output at a single Ultra Cap moment Cell Power Density (W/kg) – Supports engine 1,000 Li-ion cranking and other “short burst” requirements 100 Pb-Acid NiMH Energy – Measure of power
Slide 73: Technology Fit: Matching Attributes to Applications
Technology Fit Matching Attributes to Applications SLI Start-Stop HEV PHEV -EV 100,000 10,000 Ultra Cap Cell Power Density (W/kg) 1,000 Li-ion 100 Pb-Acid NiMH 10 1 0 20 40 60 80 100 120 140 160 180 200 Cell Energy Density (Wh/kg) 74 Analyst Day | June 27, 2011
Slide 74: Understanding High Efficiency ICE and Start-Stop Vehicles
Applications Understanding High Efficiency ICE and “Start-Stop” Vehicles Platform Efficiency + Engine Efficiency + Transmission Efficiency + Electrical System Efficiency – Aerodynamic shape – Direct injection and – Continuously – Variable charging strategies – Rolling resistance tires lean burn vari
Slide 75: Start-Stop Solution: Key Energy Storage Attributes
Start-Stop Solution Key Energy Storage Attributes The key energy storage attributes tend to work against each other… Cycling Reliable system charge/ recharge cycles over time Usable Charge Energy Acceptance Range of stored energy that can Rate of recharge to maximize be used to optimize the sy
Slide 76: Charge Acceptance Fundamentals
Charge Acceptance Fundamentals Charge acceptance in Start-Stop One attribute of energy storage (two others: cycling and usable energy) Battery charge acceptance allows system to capture braking energy Replenishes battery after a Start-Stop event Challenge Must balance improved charge accepta
Slide 77: Charge Acceptance: Potential Improvements
Charge Acceptance Potential Improvements Alternative technology must show value through improved fuel economy or reduced emissions Technology Advantages Challenges Carbon additives to Potential to increase charge Stimulates failure negative plate acceptance mechanisms No impact on package Pr
Slide 78: High Efficiency ICE & Start-Stop Key Performance Attributes
High Efficiency ICE & Start-Stop Key Performance Attributes Charge Usable Technology Cycling / Life Acceptance Energy System Cost SLI – Flooded Lead Acid EFB – Enhanced Flooded AGM – Sealed Lead Acid AGM + Carbon Plates AGM + Ultra Capacitors Li-Ion AGM provides best balance of attributes and aligns
Slide 79: A Closer Look at AGM
Power Solutions Technology A Closer Look at AGM Design Features Container is sealed and valve regulated Oxygen recombination cycle minimizes water loss Plates are kept under pressure for better performance AGM separator eliminates acid stratification negative plate negative grid AGM separato
Slide 80: Advanced Lead Acid Opportunities
Advanced Lead Acid Opportunities Putting it All Together Powertrain boosting Mild HEV In Market Major electrification 40V+ System High speed coasting White Change of mind Space In-motion Start-Stop Low speed coasting Recuperation Advanced Start-Stop Functions Passive boost In Market Room to Grow Eng
Slide 81: Agenda: Today's Discussion and Speakers (Morning)
Agenda Today’s Discussion and Speakers (Morning) Welcome & Introduction Steve Roell Power Solutions Overview Alex Molinaroli Core Business & Vertical Integration Allen Martin New Growth Opportunities Kim Metcalf-Kupres China & Other Emerging Markets Advanced Technologies Technology Overview Alex Mol
Slide 82: Power Solutions Analyst Day June 27, 2011
Power Solutions Analyst Day June 27, 2011 May 2011
Slide 83: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 84: Afternoon Focus: Growth through Technology
Afternoon Focus Growth through Technology Energy Storage For: High Efficiency Vehicles Start-Stop Vehicles xEVs Investment and growth across the technology spectrum 85 Analyst Day | June 27, 2011
Slide 85: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Tech
Slide 86: Eric Mitchell: Business Opportunity, Start-Stop & AGM
Power Solutions Business Opportunity: Start-Stop & AGM Eric Mitchell Vice President & General Manager Power Solutions, Europe, Middle East & Africa Service: 10 Years 87 Analyst Day | June 27, 2011
Slide 87: New Segment: Start-Stop Battery Market
New Segment Start-Stop Battery Market 100.00 Start-Stop Market - Global Expect continued 90.00 movement in estimates as 80.00 OE production plans change 70.00 Europe: Millions of Units 60.00 – Start-Stop rapidly growing Customer Orders and – 70% of OE volume 50.00 Third Party Data by Platform by
Slide 88: Observations: A European Perspective
Observations A European Perspective Demand was driven initially by European regulations Rapidly gaining widespread consumer acceptance – Low price premium – Less exotic technology – Immediate benefit of fuel savings – Enhanced resale value OEs are rapidly converting fleets – Embedding Start-St
Slide 89: Shifting Battery Requirements
Shifting Battery Requirements OE Forecasted Programs Europe North America 21% 40% 54% 61% 69% 75% 98% 24% 49% 57% 59% 93% 79% 76% 60% 51% 46% 43% 41% 39% 31% 25% 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Standard SLI Advanced Lead-Acid Our pipeline with OE Customers indicate strong
Slide 90: Competitive Landscape: Serving Today's Start-Stop Market
Competitive Landscape Serving Today’s Start-Stop Market Critical Success Factors High 2 1 AGM Product Energy & Process Global Storage R&D SLI Battery Technology Advanced Automotive Expertise Providers Battery (mostly regional) OE Sales & Vehicle Providers Program Systems Management Expertise Afterma
Slide 91: Start-Stop in the Aftermarket
Start-Stop in the Aftermarket Expanding Opportunity Aftermarket Implications New battery Start-Stop replacement protocols with Aftermarket Evolution to warranty implications Do-It-For-Me Models Increased system complexity and integration Battery locations that are unusual and difficult to find/acces
Slide 92: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 93: Jorge Guillen: Strategy for Start-Stop & AGM
Power Solutions Strategy for Start-Stop & AGM Jorge Guillen Vice President Power Solutions, Start-Stop Service: 15 Years 94 Analyst Day | June 27, 2011
Slide 94: Start-Stop Growth Strategy
Start-Stop Growth Strategy APPLY LEADING PRODUCT LONG-TERM ADVANCE & PROCESS TECHNOLOGY TECHNOLOGIES MARKET LEADER FOR FUTURE TODAY AGM BUILD ON LEVERAGE Start-Stop BRANDS & LONG TERM CHANNELS FOR GLOBAL OE FIRST-MOVER RELATIONSHIPS AFTER-MARKET LEAD Johnson Controls will invest $420M through 2015 i
Slide 95: Customer Relationships
Customer Relationships Building on a Proven Track Record Long-term relationships between Johnson Controls and OE customers – Proven ability to work across the globe and just in time Product development and engineering – Working to leverage technology to maximize Start-Stop potential – R&D on sys
Slide 96: Manufacturing Capacity and Expertise
Manufacturing Capacity and Expertise Applying Leading Product & Process Technology AGM Global Capacity Plan Represents expected 18 Approved production level per year 16 Expansions given timing of expansions Production Leverages IP and best Capacity 12 practice manufacturing approaches developed
Slide 97: Expanding Our AGM Network: Toledo, Ohio Plant
Expanding Our AGM Network Toledo, Ohio Plant Our 1st North American AGM facility will be located near Toledo, Ohio Annual capacity of 6 million batteries $138.5 million investment to convert our existing facility $25 million in tax credits and incentives from the State of Ohio, pending final
Slide 98: China Opportunities: AGM
China Opportunities AGM Start-Stop will be part of the China vehicle market Global OEs driving introduction – Leveraging AGM experience and expertise Johnson Controls is introducing Varta ® Start-Stop Production capacity planning now underway – Obtaining approvals for start-up capacity – Lon
Slide 99: Advancing Technology for the Future
Advancing Technology for the Future Unlocking the Full Potential of Start-Stop Maximize Start-Stop system potential with AGM technology – Operating temperature range, improve charge acceptance, process improvement and new manufacturing equipment – Number, size and placement of batteries – New chem
Slide 100: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 101: Start-Stop Recap
Start-Stop Recap APPLY LEADING PRODUCT LONG-TERM ADVANCE TECHNOLOGY & PROCESS MARKET LEADER TECHNOLOGIES FOR FUTURE TODAY AGM BUILD ON Start-Stop LEVERAGE LONG TERM BRANDS & CHANNELS FOR GLOBAL OE FIRST-MOVER RELATIONSHIPS AFTER-MARKET LEAD Maintaining Technology Market Leadership Innovation Large-s
Slide 102: Applications: A Spectrum of Powertrains
Applications A Spectrum of Powertrains COMBUSTION ENGINE START-S STOP HEV, PHEV, EV Conventional High Efficiency Morning Session Start-Stop Start Stop Advanced Start-Stop Mild HEV Afternoon Session HEV PHEV EV 103 Analyst Day | June 27, 2011
Slide 103: Technology Growth Opportunities
Technology Growth Opportunities Power Solutions’ Perspective Significant long-term growth opportunity Start-Stop adoption impacts xEVs Today’s investments required to participate in the industry as it matures Critical Requirements for xEVs: – Multiple technology paths – Automotive expertise
Slide 104: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 105: MaryAnn Wright: Technology Considerations for xEVs
Power Solutions Technology Considerations for xEVs MaryAnn Wright Vice President Technology & Innovation Service: 5 years 106 Analyst Day | June 27, 2011
Slide 106: Defining the xEVs: The Role of Energy Storage
Defining the xEVs The Role of Energy Storage HEV, PHEV, EV Vehicle Electrification Strategies Platform Efficiency + Engine Efficiency + Transmission Efficiency + Energy Storage Technology – Aerodynamic shape – Downsizing – Two sources of power – Power for engine boosting – Low Rolling resistance tir
Slide 107: The xEV Opportunity: Finding the Best Solution
The xEV Opportunity Finding the Best Solution Cleaner Cost Effective Demand for xEVs Higher Performing Safer Technology Competitive Smarter Landscape Landscape More Reliable 108 Analyst Day | June 27, 2011
Slide 108: The xEV Opportunity: Demand for xEVs
The xEV Opportunity Demand for xEVs and Energy Storage Technology Retail customers will shape market opportunity – Consumer economics key to widespread acceptance Near-term xEV growth will be driven by early adopters and fleets xEV adoption rate challenged by Start-Stop economics Large reven
Slide 109: Key Technical Dimensions: Energy Storage for xEVs
Key Technical Dimensions Energy Storage for xEVs Cleaner Chemistry Cost Effective Higher Performing Technology Format Safer Landscape Smarter More System Reliable Integration 110 Analyst Day | June 27, 2011
Slide 110: Technology Landscape: Cell Chemistry
Technology Landscape Cell Chemistry Cell Abuse Tolerance Specific Energy Calendar Life Cost Better than Baseline NCA SPINEL Baseline Performance NMC LFP Worse than Baseline Spectrum of li-ion chemistries with different characteristics 111 Analyst Day | June 27, 2011
Slide 111: Technology Landscape: Key Trends in Cell Chemistry
Technology Landscape Key Trends in Cell Chemistry NCA considerations LMO still in use, but typically – Excellent performance for energy and blended with NMC power LFP considerations – Additional system infrastructure required for – Currently the preferred chemistry in nascent abuse tolerance C
Slide 112: Technology Landscape: Cell Format
Technology Landscape Cell Format Packaging Manufacturing Efficiency Complexity Material Cost Durability Cylindrical Better than Baseline Prismatic Baseline Performance Pouch Worse than Baseline Spectrum of li-ion formats with different characteristics 113 Analyst Day | June 27, 2011
Slide 113: Technology Landscape: Key Trends in Cell Format
Technology Landscape Key Trends in Cell Format Cylindrical working in the market – Proven track record – Reduced space efficiency Prismatic gaining preference – Builds on footprint established in current HEVs set by NiMH batteries – Efficient space utilization • Minimizes overall package size •
Slide 114: Technology Landscape: Battery System Definition and Integration
Technology Landscape Battery System Definition and Integration HEV, PHEV, EV OEM Priorities – Understand impact of battery performance on vehicle dynamics – Controls and system integration to deliver reliability Battery is integrated into vehicle powertrain system and delivers propulsion Battery
Slide 115: Power Solutions Technology Strategy
Power Solutions Technology Strategy Gen1 Gen2 Gen3 Gen 1 Gen 2 Gen 3 and beyond Focus on modules to bundle technologies Technology Development / Discovery Project 1 – Groups of cells, electronics , thermal Systems management Continue with cylindrical Introduce prismatic NCA in appropriate NMC
Slide 116: Competitive Landscape: Economic Considerations
Competitive Landscape Economic Considerations ~$2450 per Pack System ~$1000 Cost Component ~$900 per Pack Cell Cost Component ~$400 ~$1450 ~$500 2025 Li-ion Cost Structure Today’s Li-ion Cost Structure Threshold for High Penetration The industry as a whole must achieve scale to compete with alternat
Slide 117: Competitive Landscape: Key Competitor Segments
Competitive Landscape Our View of the Key Competitor Segments Critical Success Factors Product & High 2 1 Research & Process Development Technology Automotive First Generation Automotive Expertise Battery Hybrid OE Sales & Vehicle Providers Leaders Program Systems (NiMH manufacturers) Management Exp
Slide 118: Summary: The xEV Opportunity
Summary The xEV Opportunity Retail consumers will ultimately drive large scale adoption Demand for xEVs Start-Stop will challenge large scale penetration in near term Even at low unit volume, significant revenue opportunity Nascent industry with multiple competing technology considerations T
Slide 119: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 120: First Mover Advantage: Johnson Controls-Saft
First Mover Advantage Johnson Controls-Saft Meadowbrook Li-ion plant launch Commercial pipeline - High-power energy storage applications viewed as a reliable technology solution - Production contracts with Daimler, BMW, Ford/Azure Transit Connect and BAIC Building Efficiency fleet electrificat
Slide 121: Progress: Meadowbrook Li-Ion Facility
Progress Meadowbrook Li-Ion Facility Building construction 99% complete Clean room protocols employed in design and operation Pack assembly has been operating and shipping since last fall Cell production is in launch process now Grand opening event later this summer 122 Analyst Day | June
Slide 122: Update: Johnson Controls-Saft
Update Johnson Controls-Saft We have taken steps to dissolve our existing joint venture with Saft – Fundamental disagreement about the future direction and appropriate scope of the joint venture – Joint Venture has not and cannot succeed because its scope is too limited Johnson Controls Rational
Slide 123: Power Solutions: Our Position and Growth Strategy
Power Solutions Our Position and Growth Strategy COMBUSTION ENGINE START-S STOP HEV, PHEV, EV Early Market Global Leader in First Mover Long-Term Term Market Leader Rapidly in Nascent Global Market Market Expanding Leader Segment Maintain & grow leadership position Maintain & grow leadership pos
Slide 124: Agenda: Today's Discussion and Speakers
Agenda Today’s Discussion and Speakers Technology Opportunities & Strategy – Start-Stop & AGM Introduction Alex Molinaroli Business Opportunity – Start-Stop & AGM Eric Mitchell PS Strategy for Start-Stop & AGM Jorge Guillen Wrap Up Alex Molinaroli Technology Opportunities & Strategy – xEVs Technolog
Slide 125: Power Solutions: Conclusion for Today
Power Solutions Conclusion for Today Confirming Guidance Sales $5.8 - $6B Segment Margin 13.6%-13.8% Mid-Term Expected annual increases – Sales 10% – 12% – Segment margin +100 basis points Key Growth Drivers Vertical Integration Emerging Markets – China Technology – AGM & Start-Stop 126