Operating System TransformationLeveraging FP&A Across a Multi-Industrial

Organization

Emmanuel CapraisVice President – Strategic & Financial PlanningITT Inc.

Holding Company Conglomerate

Integrated Operating Company

A Brief History of ITT• Founded in 1920

• Holding Company Mentality

• Diverse Set of Businesses

• Continuous Acquisitions…

• Divestitures and Spin-offs

• “New” ITT

From a Holding to an Integrated Operating Company

From a Holding to an Integrated Operating Company

New ITT – A 100-Year-Old Startup

• Organized Around 4 Value Centers

• Increased FOCUS

• Build on Strengths and Solid Foundation

• Drive Operational Improvement

• New Finance Operating System

Focus Areas to Turn Around Motion Technologies

1. Building the Finance Team for the Future

• Performance Management & Restructuring

• Promoting Hidden Jewels

• Recruiting Outside Talent With Proven Operational Skills

• Building Capabilities and Developing High Potentials

FP&A at the Heart of the Finance Operating System

FP&A Team Embedded in the Business & Focused on Efficient Decision-Making

FP&A at the Heart of the Finance Operating System

Focus Areas to Turn Around Motion Technologies

2. Making a Strong Friction Business Even Stronger

• Build On A Solid Growth Engine

• Leverage Worldwide Production Capabilities

• Supply Base Rationalization & Optimization

• Drive Efficient Processes Through a Waste Hunting Mindset

• Promote Accountability and Build a True Meritocracy

• Focus on Fixed Costs

Expand Margins By Profitable Growth and Lean Cost Structure

Focus Areas to Turn Around Motion Technologies

3. Turning a Shock Absorber Loss-Maker into a Growth Platform

• Improve Customer & Operational Metrics

• Address Cost Structure

• Improve Commercial Performance

• Drive Manufacturing & Administrative Efficiencies

• Continuously Restructure Even When Growing

FP&A at the Heart of the Finance Operating System

Expand Margins by Driving Efficiencies & Cost Structure

FP&A at the Heart of the Finance Operating System

FP&A Helps the Organization to Focus & Drive Accountability

Focus Areas to Turn Around Motion Technologies

4. How Did FP&A Contribute?

• A Different Way to Look at Financial Statements

• Cost Structure Deep Dive

• Enhancing Profitability Through Target Costing

• Defining Turnaround Strategy & Metrics Order Backlog Analysis Machine Efficiency Improvement New Products & Platforms Costing Action Register Monitoring Finance Leads by Example

FP&A

Data

StrategyBusiness

Insight Generation Value

Creation

Strategic Support

Global FP&A: From Reporting to Driving Performance

Transforming into an Integrated Operating Company

1. How Is The FP&A In The Field Contributing?• It All Starts With Data

• Partnering With Business Leaders

• Understanding & Leveraging Business Drivers

• Building Knowledge & Driving Accountability

• Prioritizing Focus Areas with Biggest Impact

• Translating Weekly Progress Reviews into Accurate Forecasts

• Driving Formal Operational Reviews (Financial & Productivity)

Building FP&A Capabilities Is Key to Efficiency

FP&A at the Heart of the Finance Operating SystemSEP

Week 1KONI Group

Week 1 SEP MTD Budget 6+6FCST PY vs BDG vs FCST vs PY

*TURNOVER ( wo IC)Koni Group 1,892$ 11,278$ 10,888$ 11,656$ 10,245$ +$390 ($378) +$1,033

Koni Holland 681$ 3,403$ 3,489$ 3,481$ 3,002$ ($86) ($79) +$401Koni Czech Republic 600$ 3,000$ 1,907$ 2,631$ 1,977$ +$1,093 +$369 +$1,023

1 Koni China 144$ 787$ 1,431$ 1,298$ 1,179$ ($644) ($511) ($392)Koni USA 456$ 3,842$ 4,021$ 3,975$ 3,817$ ($179) ($133) +$25

Koni France 57$ 473$ 258$ 497$ 270$ +$215 ($24) +$203Central -45 $ -226 $ -217 $ -226 $ -$ ($10) +$0 ($226)

Intercompany 503$ 2,800$ 1,787$ 2,727$ 2,389$ +$1,013 +$74 +$412

*ORDER IN TAKEKoni Group 2,248$ 10,532$ 11,560$ 11,967$ 11,088$ ($1,028) ($1,435) ($557)

Koni Holland 655$ 3,277$ 3,593$ 3,450$ 3,457$ ($316) ($172) ($180)Koni Czech Republic 536$ 2,682$ 2,522$ 2,682$ 2,151$ +$160 +$0 +$531

Koni China 85$ 578$ 1,233$ 1,912$ 859$ ($655) ($1,335) ($282)Koni USA 914$ 3,522$ 3,954$ 3,522$ 4,304$ ($432) +$0 ($782)

Koni France 57$ 473$ 258$ 402$ 317$ +$215 +$71 +$156Central -$ -$ -$ -$ -$ +$0 +$0 +$0

*OPERATING Koni Group 1,933$ 1,933$ 1,471$ 2,173$ 1,459$ +$462 ($240) +$474INCOME Koni Holland 340$ 340$ 259$ 418$ 125$ +$82 ($78) +$216

Koni Czech Republic 884$ 884$ 403$ 881$ 403$ +$481 +$3 +$481Koni China 251$ 251$ 400$ 384$ 377$ ($148) ($133) ($126)Koni USA 457$ 457$ 447$ 490$ 403$ +$10 ($33) +$54

Koni France 47$ 47$ 7$ 47$ 0$ +$41 +$0 +$47Central -47 $ -47 $ -43 $ -47 $ 151$ ($4) +$0 ($198)

OI% 17.1% 17.1% 13.5% 18.6% 14.2% 3.6% -1.5% 2.9%

KONI Group Flash Data SEP Week 1

BHFM REFRESH

WEEK 1 WEEK 2 WEEK 3 MTD BUDGET PY Value % Value %

WORKING DAYS Days 5 4 5 14 25 24 -10 -42% -10 -40%

HEADCOUNT Total FTE 498 498 500 499 512 504 -13 -3% -5 -1%Direct FTE 195 196 198 196 198 208 -2 -1% -12 -6%

of which Direct Paint/ Pack FTE 29 29 30 29 15 16 14 94% 13 82%Indirect Manufacturing FTE 188 187 187 187 196 176 -9 -4% 12 7%

Other. Indirect FTE 116 116 116 116 119 120 -3 -2% -5 -4%

SALES Total Sales K$ 1,585 1,525 1,590 4,699 10,694 10,253 -5995 -56% -5554 -54%Outside Sales K$ 1,076 1,090 1,151 3,317 8,312 7,377 -4995 -60% -4060 -55%

Intercompany Sales K$ 509 435 438 1,382 2,382 2,876 -1000 -42% -1494 -52%

Output Warehouse Total u 18,232 17,744 17,249 53,225 82,269 76,872 -29044 -35% -23647 -31%Daily Average u/d 3,907 4,095 3,234 3,713 3,335 3,203 378 11% 510 16%Daily Average per person u/d/h 20.8 21.8 17.2 19.8 17.7 16.2 2 11% 4 22%

Output Assembly Total u 15,975 15,461 16,476 47,912 82,269 77,087 -34357 -42% -29175 -38%

Daily Average u/d 3,423 3,568 3,089 3,343 3,335 3,212 7 0% 131 4%Daily Average per person u/h 18.2 19.0 16.4 17.8 17.7 16.3 0 0% 2 9%

June Week 3 UnitACTUAL FULL MONTH

VARIANCES

VS bdg VS. py

Plant: All

BY DETAILS

PPV-$ Budget -$ -$ -$ 19,570$

-$ Act/Fcst -$ -$ -$ -$

-$ Variance -$ -$ -$ (19,570)$

86,628$ Budget 27,016$ 28,289$ 31,324$ 29,285$

71,917$ Act/Fcst 12,305$ 28,289$ 31,324$ -$

(14,711)$ Variance (14,711)$ 0$ -$ (29,285)$

19,360$ Budget 6,050$ 6,050$ 7,260$ 5,747$

40,279$ Act/Fcst -$ 17,184$ 23,094$ -$

20,919$ Variance (6,050)$ 11,134$ 15,834$ (5,747)$ Restructuring

27,551$ Budget -$ 12,523$ 15,028$ 11,897$

24,499$ Act/Fcst 6,131$ 8,349$ 10,019$ -$

(3,053)$ Variance 6,131$ (4,174)$ (5,009)$ (11,897)$ 2,505$ Budget -$ -$ 2,505$ 1,983$

-$ Act/Fcst -$ -$ -$ -$

(2,505)$ Variance -$ -$ (2,505)$ (1,983)$ 10,019$ Budget -$ -$ 10,019$ 7,931$

24,499$ Act/Fcst 6,131$ 8,349$ 10,019$ -$

14,480$ Variance 6,131$ 8,349$ 0$ (7,931)$ 2,505$ Budget -$ -$ 2,505$ 1,983$

-$ Act/Fcst -$ -$ -$ -$

(2,505)$ Variance -$ -$ (2,505)$ (1,983)$

3 Additional PPV Challenge 0.4% GSS/ Material Savings E. van der Zande

4 3 FTE Tube Cutting Machine Restructuring J. den Haan

1 KHT GSS/ Material Savings E. van der Zande

2 Normal PPV 2.0% GSS/ Material Savings E. van der Zande

5 0.5 FTE Material Flow Pilot Line 4 Restructuring J. den Haan

6 2 FTE Improvement Operator Efficiency/ Quality Restructuring J. den Haan

7 0.5 FTE 6S Improvements Restructuring J. den Haan

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ACTIONREGISTER

BACKLOG

FP&A at the Heart of the Finance Operating System

Op. Income Bridge

Backlog / Sales

Product Mix

Quality

Purchasing Performance

Added Value Variation

Efficiency

Headcount Absenteeism

Breaking Down Variable & Fixed Costs To Track Breakeven Point

Linking Key Performance Indicators With Financial Statements

Granularity Allows Management To Understand Major Variances And Link KPIs With P&L

Breaks Down P&L Line Items And Provides Understanding Of Drivers & Costs / Revenue Evolution

Contributor To Explain Performance, Drive Execution And Ultimately Achieve Targets

Strategic Plan

Operating Plan Budget Forecasts

/ Outlooks

Global FP&A: From Reporting to Driving Performance

Transforming into an Integrated Operating Company

2. How Is Headquarters FP&A Contributing?• Headquarters Leading by Example to Drive Change

• Facilitating Focused Operational Reviews

• Direct Support to Senior Leadership for Decision Making

• Driving Returns With Prioritized Capital Allocation

• Proactively Engaging in Projects to Improve Operations

• Measuring Execution & Improving Forecast Cycle

A Global FP&A Team Ready to Help

FP&A Compelling Vision - 5 Pillars

Track & Drive

Performance

Contribute to

Efficient

Resource

Allocation

Support Efficient

Decision Making

Manage &

Develop FP&A

Team

Champion a High-

Performing

Culture

Define & Analyze

Performance Drivers

Provide Insights,

Challenge the Status

Quo

Facilitate Financial

Reviews & Drive Focus

Track & Improve

Forecasts

Manage Target-setting

process, Build

Budgets

Optimize CapEx &

Working Capital

Analyze Returns &

Help Prioritize

Provide Insightful and

Ad-Hoc Analytics

Support Active

Portfolio Management

Optimize FP&A Team

Strategy

Develop Analytical

Skills & Business

Acumen

Recruit, Develop &

Lead Global FP&A

Talent

Leverage Continuous

Improvement Mindset

& Best Practices

Drive the Right Level

of Accountability

Foster Data-Driven

Discussions

Enterprise-Wide Team

Player

Impeccable Character Bold Thinking Collective Know-How

1 2 3 4 5

Support External

Financial

Communication

Embedded Business Partner Driving Performance

Partner

FP&A Leadership Principles

Dive Deep

• Operate At All Levels• Connect With The Details• Understand the Business• Data Driven Decision Making

Be Curious

• Listen to Understand• Seek Diverse Perspectives• Challenge, Then Commit• Be Skeptical But an Enabler

Deliver Results

• Highest Standards & Integrity• Execute And Never Settle• Drive Accountability & Performance• Fire up Operational Levers

Drive Efficiency

• Bias For Impactful Actions• Productivity Obsession• Accomplish More With Less• Invent & Simplify

Business

Building an FP&A Team Around Clear Principles

THANK YOU