Construction Technologies

Chris Vasiloff

2

Agenda

• Construction Technologies Business Background

• Utility Equipment

• Road Development

• Attachments

• Other Recurring Revenue

– Used Equipment (Remarketing)

– Parts & Service

• Global Growth

• Operational Excellence

• Take Aways / Wrap Up

3

Construction Technologies Products

Utility Equipment

Utility Equipment

Road Development

Road Development

AttachmentsAttachments

4

Performance Highlights

• Operating income growth of 15%+ Since 2001

• Stronger channel makeup

• Stronger geographic balance

• More recurring revenue contribution

0.0

50.0

100.0

150.0

200.0

250.0

2001 2002 2003 2004 2005 2006F

Revenue Index Operating Income Index

5

Sector Strategic Focus

• Expand the Portfolios of our Growth Businesses– Utility Equipment– Road Development– Attachments

• Continue Building Cycle Resistance– Building recurring revenue

Company stores Remarketing/lifecycle management

– Geographic expansion ESA Asia Pacific

– Operational excellence IRBOS

Utility Equipment

7

Continuing the Transformation

Diversify • Expand • Innovate

2003 2004 2005 2006

UTILITY EQUIPMENT

2001 2002

PORTABLE POWER

2000

PORTABLE COMPRESSOR DIVISION

8

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Excavator 8 - 16 T

Wheel Loader <100 HP

Loader Backhoe

Utility TLB

Crawler Dozer

Skid Steer Loader

Track Skid Loader

Mini Excavator <8 T

Air Compressor

1 Drum Compaction

Generator Set

Light Plant

Contractor Buying Tendencies

Very Likely Likely Probably

If I bought this . . .

How likely am I to buy this?

9

Continuing the Transformation

20112007

Continued Investment in Emerging Markets

New Multi-Utility Vehicle (MUV)

Expanded Concrete Portfolio

Diversify • Expand • Innovate

Road Development

11

Accomplishments

• China– Re-established channels

– Introducing next generation of paver technology

• India Export Program commenced and successful

• Added compaction success in Russia – growth at 50%

• Operating margins back to mid teens

• Compaction manufacturing launched in Europe

12

Portfolio Expansion Opportunities

• Current global served market is $2.7B

• Closely adjacent products targeted for business expansion will increase served market by 33%.

– Milling $400M

– Concrete $250M

– Stabilizers/Reclaimers $250M

• Significant customer overlap in purchases with current Road Development product portfolio

68% Milling39% Concrete Paving75% Stabilizers/reclaimers

of customers who purchased

also purchased a product in a category currently served by Road Development

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PAVERS - HIGHWAY CLASS 100% 24% 41% 46% 31% 21% 15% 11% 10% 18%

PAVERS - COMMERCIAL 13% 100% 11% 46%

DD LARGE (OVER 5 TON) 47% 23% 100% 44% 37% 26% 14% 11%

DD SMALL (UP TO 5 TON) 21% 36% 17% 100% 18% 16% 11%

SD LARGE (OVER 8 TON) 13% 13% 16% 100% 29% 11%

SD SMALL (UNDER 8 TON) 14% 28% 100%

BELT PLACER 60% 13% 60% 45% 56% 32% 100% 24% 20% 33% 36% 20% 38%

ROAD WIDENER 65% 18% 65% 48% 60% 36% 23% 100% 28% 29% 20% 17% 40% 11%

DISTRIBUTOR 34% 38% 27% 45% 24% 100% 23% 11%

PLANER/MILL MACH 45% 17% 41% 39% 33% 22% 11% 11% 16% 100% 13% 15% 26%

CONCRETE PAVER 14% 12% 16% 22% 18% 100% 11%

CURING MACHINE 32% 38% 36% 55% 36% 41% 21% 93% 100% 21% 23%

POT HOLE PATCHER 14% 16% 12% 15% 100% 13%

RECLAIMER/STABIL 26% 11% 25% 22% 56% 38% 14% 13% 16% 100% 25%

WINDROW ELEVATOR 87% 13% 80% 47% 58% 11% 28% 22% 16% 22% 100% 44% 11%

BROOM 11% 15% 16% 14% 100%

CHIP SPREADER 37% 21% 35% 32% 36% 25% 46% 11% 40% 100%

If I Purchased This...

What's the liklihoodI purchased this?

13

20112007

Entering Milling Machine WW Market

New Compaction Product Base in

Europe

Commercializing Advanced Technology

Continued Investment in Emerging Markets

Enter Concrete Paving Market ??

Significant Additional Upside Opportunities

Attachments

15

Carriers

16

Product Offering

Compact Attachments Heavy AttachmentsHydraulic Demolition

Attachments

Industrial Grapples Buckets Pallet Forks Light Range Breakers Compaction Wheels Angle Brooms Plate Compactors Sweepers And more!

Buckets Quick Couplers Rippers Thumbs Grapples Compaction Wheels Specialty Buckets And more!

• Light, Medium, and Heavy Range Breakers

• Demolition Processors, Crushers, and Pulverizers

• Transverse Cutting Heads

• Excavator Mounted Rock Drills

• Plate Compactors

• Shears

• And more!

Committed To Expanding The Product Portfolio

17

Worldwide Attachment Opportunity

Compact Attachments Hydraulic Demolition Attachments

Market Size $ 0.8 BCurrent Share: Strong

Market Size $ 1.9 BCurrent Share: Strong

Heavy Attachments

Market Size $ 2.0 BCurrent Share: Now Entering

Total Global Market $4.7 B

Share gains available in all segments Highly fragmented competitive landscape Building off of strong Bobcat and Montabert product offerings Margin opportunities are very high

Leverage Current Position To Grow Rapidly In Adjacent Segments

LA3%

NA57%

AP16%

ESA24%

LA 2%

NA36%

AP24%

ESA38%

ESA27%

AP40%

NA30%

LA3%

18

Heavy AttachmentsHydraulic

Demolition Attachments

Compact Attachments (includes light range breakers)

BYOB, Landscaping, HOWA, Residential Construction, Utility

Construction, Agriculture

Heavy/Road Construction, Bridge

Building, Sewer Contractor

Demolition, Quarries, Mining,

Recycling, Waste/ Scrap

Bobcat

IR Road

IR Utility

IRES

IR Attachments

IR Road

IR Utility

IR Attachments

Products

Brands

Channels(OEM’s/Rental included in all)

CustomerSegments

Channel Channel CustomerFocus On

AttachmentsBrand

AttachmentsBrand

IR Attachments

-Specialty Dealers

*Ingersoll Rand includes Tramac and Montabert (on a migration path)

Channel / Brand Strategy

19

Attachment Growth Plan

$1 Billion Sales Revenue By 2011

$115 M

$142 M

$110 M

$231 M

$402 M

Heavy Attachments

Acquisitions

Compact Attachments – Ingersoll Rand ChannelCompact Attachments –

Bobcat Channel

Hydraulic Demolition Attachments

20

Building Recurring Revenue

Company Store Expansion

Further Integration of Ingersoll Rand Financial Services (IRFS) Solution

Continued Growth in Remarketing

Retail Business is Inherently Less Cyclical

21

Retail Revenues

Revenue Growth

-10%

0%

10%

20%

30%

40%

2000 2001 2002 2003 2004 2005

22

North America• Utility Plus• Road• Bobcat

Global Expansion

European Served AreaGermany (6 locations)• FrankfortBranch Conversion• Holland - ZouterwoudeRoad/Utility/Bobcat• France – Lyon• Russia – Moscow• United KingdomRoad/Utility• Spain – BilbaoBobcat• Hungary – Budapest

Asia PacificChina• Co-Owned / DIBIndia• Chennai, Lucknow

Dhanbad, Vadodara, Pune, Kochi, Chandigarh

Branch Conversion/

Expansion• Seoul, Korea• Singapore

Latin AmericaBobcat of Chile• New Branches

To expand our reach to new customers and markets, while leveraging our central HQ team

23Global Website

Electronic Condition Report

Database Information

Webcam

Enhanced Sales Tool Information Management

User Friendly

Sales Tools

Used Equipment Technology Enablement

24

2005 2011Forecast

Remarketing – Source of Equipment

2%8%

35%

7%24%

24%

3%

5%

26%

16% 30%

20%

Lifecycle Trades NRA TradesWholesale Buy/Trades AuctionRental fleet Other

25

Lifecycle Management

Sell New Equipment

Trade in and Sell Used Equipment

IRFS Tool KitAttachments Parts, Service & Rental

26

2006 2011

Revenue Composition 2006 & 2011 Forecast

CAGR 12+%

Parts16%

Service2%

Rental3%

Used Equipment

5%

Attachments7%

Completes67% Parts

17%

Service2%

Rental3%

Used Equipment

7%

Attachments11%

Completes60%

27

Geographic Growth – Global Markets

Well Positioned For Growth in Key Emerging Markets

Significant Upside in Mature Markets as Primary Channel Position Can be Established

China 2006FGDP Growth: 9%

India 2006FGDP Growth: 8%

Russia 2006F GDP Growth: 6%

28

Limited portfolio

Few large customers

Direct sales, Agents

Project based selling

Expanded portfolio

Diverse markets, customer segments

Multiple channels, mix model

Finance, rental, support, solutions

1995 - $26 Mil.

81%

19%

2006 - $58 Mil.

78%22%

2008 - $76 Mil.

Drills

CT

India Changing Business Model

Revenue

29

Regional Channel Progression

Today 5-Year Look

• Channel Development to Company Owned Store model

• Expanded Portfolio

• Market Creation

30

Geographic Revenue 2006 – 2011 Forecast

2006

2006 - 2011Less Dependence on US Economy

LA4%

AP16%

ESA25%

ESA30%

LA4%

AP19%

NorthAmerica

55%

2011

NorthAmerica

47%

31

Operational Excellence: Montabert Lean Deployment

LeaderFabricationMaintenanceMethodsPlanningControl Dept.Facilitator

Project #1 Project #2 Project #3 Project #4

Workload Nov. ’05Vs. Capacity

Efficiency Improvement

Capacity Increase

Project Summary

over a total of 14 machine

tools

Trend – November 2005 to May 2006

+ 132 Hr/m+ 37.1%

+ 114 Hr/m+ 7.9%

+ 277 Hr/m+ 47.9%

+ 273 Hr/m+ 12.5%

+ 796 Hr/m+ 17.4%

+ 18.8 Pts +18.4 Pts + 24.5 Pts + 5.9 Pts + 12.9 Pts

109% 127% 122% 135% 129%

Bottom Line Impact of $5 Million / Year

32

Begin implementation of processes at other

IRES locations

Operational Excellence: Channel Lean Activities

Complete May 22-25

JuneMay July August September October

Yard RedesignRental Dept. Processes

Service Layout &

Processes

Parts Layout & Fulfillment

Sales & Admin. Depts.

Facility Layout

Analysis

Break Ground

2006 – 2011 SG&A Improvement 24%

33

Directional Summary

• Utility Equipment– Continue momentum– Enter new ground engaging and light equipment markets

• Road Development– Growth from a solid financial foundation– Enter new segments – compaction in Europe/milling globally

• Attachments– Utilize brand and channel approaches– Enter heavy segment

• Recurring revenue growth– Remarketing expansion– Company store expansion (Parts & Service)

• Geographic growth

Earnings Capability Through CyclesStrong Financial Performance vs. the Industry