EuroPall Initiative EuroPall Initiative EuroPall 2 • Realize additional SG&A savings and efficiency improvements – Streamline interdependent processes – Revamp common support functions • Reduce non-variable costs in manufacturing • Leverage pan-European infrastructure to maximize growth potential in Eastern Europe, MENA, and Africa • Establish European management center in Switzerland EuroPall 2 Launch October ‘08 12 12
European Management Center in Switzerland European Management Center in Switzerland Establish European management center in Fribourg, Switzerland to: • Centralize European leadership • Build European shared service center • Improve logistics planning and execution • Enhance sales channel management Future European Center – Future European Center – Fribourg, Switzerland Fribourg, Switzerland Why Fribourg? • Central location • Multi-lingual, productive workforce EuroPall 2 • Business-friendly environment Launch October ‘08 13 13
AsiaPall Initiative AsiaPall Initiative • Realize SG&A savings and efficiency improvements – Create pan-Asian (zone-based) organizational models for SG&A functions, and optimize spans and layers – Streamline “single function” and “interdependent business processes • Optimize non-manufacturing facilities footprint and reduce non-variable costs in manufacturing • Outsource select activities or offshore to lower cost “Centers of Excellence” • Leverage pan-Asian infrastructure to maximize growth in high potential geographies AsiaPall Launch Fall ‘09 14 14
Pricing Initiative Pricing Initiative • Optimize list prices (value-based pricing) – adjust list prices to align with “delivered value” to customers • Improve transaction pricing performance • Strengthen pricing infrastructure – Create Industrial and Life Sciences Pricing Offices to manage pricing strategy – Establish processes and develop tools, training modules, and incentive mechanisms to institutionalize price management • Test proposed pricing actions in select mini-markets Pricing Launched July ‘08 15 15
Regional Shared Services Initiative Regional Shared Services Initiative • Build lean organization (e.g., customer service centers) – hubs in WH, Europe and Asia • Improve customer service • Establish demand-driven service levels and provide cost-effective support to the two businesses • Streamline related transactional processes • Implement stringent budgetary process and driver-based allocations Regional Shared Services Launched August ‘07 16 16
Lean Manufacturing Initiative Lean Manufacturing Initiative • Position manufacturing in lower cost countries • Closed 7, and restructured 4, manufacturing sites • Improved productivity of installed manufacturing capacity • Expand manufacturing “pockets of excellence” by deploying lean tools • Expose process and product defects sooner to enhance quality and implement root cause solutions • Improve working capital by streamlining Pall Plant – manufacturing processes to reduce Work in Beijing, China Process (WIP) and finished goods inventory Lean Manufacturing Launched August ‘06 17 17
Bill of Materials (BOM) Sourcing Bill of Materials (BOM) Sourcing • Improve Gross Margin and Working Capital – Build center-led structure to leverage Pall’s total commodity spend – Bring spend under contract management through deployment of standard processes – Leverage e-procurement tools to ensure compliance with sourcing policies, reduce transaction costs • Ensure continuity of supply by protecting key supplier relationships through longer term contracts and developing contingency plans • Position Pall for growth in emerging economies by addressing “local content” requirements Bill of Materials Sourcing Launched August ‘07 18 18
Logistics Initiative Logistics Initiative • Realize savings and efficiency improvements – Deploy lean tools to drive process improvements across the 3 regions – Optimize global logistics footprint – Better leverage “global Pall” in freight negotiations and warehouse management – Reduce freight cost through alternative modes of transportation and consolidation of freight – Improve working capital by reducing redundant finished goods inventories • Enhance revenue through “Pre-Pay and Add” for outbound freight Logistics Launched August ‘07 19 19
Indirect Purchasing Initiative Indirect Purchasing Initiative • Lower non-BOM spend – Consolidate key spend categories under a center-led structure to realize “economies of scale” savings – Leverage Pall’s global spend when negotiating regional and global contracts – Partner with 3 rd party providers (e.g., global travel management) to leverage their efficiencies • Ensure greater spend compliance – Roll out electronic tools and standard processes – Match practices to policies Indirect Purchasing Launched August ‘07 20 20
Enterprise System Integration Initiative Enterprise System Integration Initiative Harmonize Enterprise Systems to: • Align with business needs • Convert divergent data streams into useful business intelligence faster • Spend less time mining data and more time leveraging information to drive business decisions • Support geographic expansion plans (through standardized business processes) • Reduce IT carbon footprint (through creation of Green Data Centers) Enterprise System Integration Launched February ‘08 21 21
Going from Good to Great Going from Good to Great Execute on a balanced portfolio of initiatives to drive steady improvement in revenue growth, profitability and capital efficiency Build a more efficient and cost-effective structure that supports high profitable growth Widen portfolio of enabling solutions to drive TFM Enable a greener future for Pall and our customers Continue to promote a rewarding work environment and culture that fosters ethical and productive behavior 22
Life Sciences Investor Day October 29, 2008 Ed Hoare SVP BioPharmaceuticals 1
Life Sciences FY2008 Total Sales $975.2 Medical $491.8 BioPharmaceuticals $483.4 Operating Profit $197.8 (amounts shown in millions) Western $469.5 $379.5 Hemisphere Europe 39% 48% 2007-2008 (YOY) Grow th Rate* 0.2% $126.2 2007-2008 (YOY) Grow th Rate* 8.4% 2007-2008 (YOY) Grow th Rate* 5.0% Asia 13% 2 *Growth rates in local currency 2
Major Successes Since Last 5-Year Plan Life Sciences Strategy Life Sciences Success Philosophy of Total Fluid Management (TFM) Total Fluid Management successfully applied and customized throughout LS Aligned and Vertically integrated: One Life Sciences Align the Organization Kleenpak TM Connector, Acrodose SM Platelets, & Cell Maintain Technological Leadership Therapy platforms Acquisition: GeneSystems Expand into Adjacent Spaces Medical Point of Use (POU) water filtration going Expand Filtration and Separation reach outside the hospital Biotech, Vaccines, Cell Therapy and Diagnostics High Growth Markets markets First LS Centers of Excellence in Asia (Bangalore & High Growth Regions Shanghai) Integrated systems for Increased 30% annuity on systems Annuity Sales 3 Life Sciences
Pall Life Sciences Business Outlook FY'08 Actual FY'09 Expectation FY'13 Expectation Actual Rates Medical 492 494 503 648 721 Growth (2) 3.5% 0.4% 2.3% 5.7% 8.0% (1) BioPharmaceuticals 483 509 534 698 782 Growth (2) 19.4% 5.3% 10.5% 7.6% 10.1% (1) Total Revenue 975 1,003 1,037 1,345 1,503 Growth (2) 10.8% 2.8% 6.4% 6.6% 9.0% (1) OP $ 198 206 216 308 372 OP Profit Margin 20.3% 20.6% 20.8% 22.9% 24.7% (1) 5-year CAGR FY’13 (2) Growth rates as reported 4
Life Sciences: Product Portfolio Management for Sustainable Competitive Advantage Medical BioSciences Diagnostics Diagnostics Patient Patient BioSciences Medical Medical BioSciences Research Research Drug Drug Safety and Delivery Delivery efficacy Discovery Discovery Drug Drug Production Production Drug Drug BioSciences Development Development BioPharm BioSciences BioSciences BioPharm 5
Pall Life Sciences: Aligned Global Organization Profitable $1.3 - 1.5 Billion Life Sciences Business by FY13 BioPharm Medical $7.8 B Core Market $6.8 B Core Market Opportunity FY’13 Opportunity FY’13 ► Process ► Transfusion Medicine – Biotech – Blood – Biologics (Vaccines) – Cell Therapy – Classic Pharmaceuticals – Veterinary Medicine ► Hospital – Infection Control ► Process Monitoring – Water ► Laboratory Tools – Critical Care ► Diagnostics – Surgical Smoke – Proteomics and Genomics – OEM Materials & Diagnostics Core Market: $9B Market Today - $14.6 B Opportunity by 2013 6
One Life Sciences Medical BioPharm Medical � PSM � PSM � PSM � Diagnostics BioSciences � Medical Device OEM � Lab 7
One Life Sciences Medical BioPharm Medical � PSM � PSM � Diagnostics � Medical Device OEM � Lab 8
Life Sciences: Aligned With Customers Medical BioPharm Diagnostics Diagnostics Patient Patient BioPharm Medical Medical Research Research Drug Drug Safety and Delivery Delivery efficacy Discoverys Discoverys Drug Drug Production Production Drug Drug BioPharm Development Development BioPharm BioPharm 9
BioPharm Market Overview FY’13 TFM Market Potential $ 10.0 B FY’13 Addressable Core Market Potential $7.8B Process Monitoring Laboratory Diagnostics / PSM Process FY’13 FY’13 FY’13 FY’13 Core Core Core Core Market Size Market Size Market Size Market Size $ 1.9 B $ 2.1 B $0.5 B $ 3.3 B Market CAGR 8% Market CAGR 5% Market CAGR 10% Market CAGR 5-12% 10
Process Market Overview – FY’13 Core Potential $3.3 B Biotech Vaccines Plasma Form Fill API FY’13 FY’13 FY’13 FY’13 FY’13 Core Core Core Core Core Market Size Market Size Market Size Market Size Market Size $ 340 M $ 425 M $ 1,888 M $ 362 M $ 316 M Market CAGR: Market CAGR: Market CAGR: Market CAGR: Market CAGR: 12% 12% 6% 5% 5% Filtration/vent Filtration/vent Filtration/vent Filtration/vent Filtration Applications Chromatography Chromatography Chromatography ---- ---- TFF TFF TFF ---- ---- Virus ---- Virus ----- ----- Disposable Disposable Disposable Disposable ----- PASS PASS PASS ----- ----- Lab Lab Lab Lab Lab Note: total potential includes smaller markets not shown 11
The Biotech Process Systems Opportunities Air, Water & Process Monitoring Air & Vent Media Media Filtration Cell Separation & Clarification UF/DF Chromatography steps DNA UF/DF Removal Virus Final Filtration Filtration 12 Filtration Only TFF Ultrafiltration/Microfiltration Depth Filtration Chromatography
BioTech & Vaccines Markets: Update on Total Fluid Management ► Improvement in Gross Margins ► Provide process engineering, system design, project management, testing – Increased sales of standards and validation capabilities for – Modularization of design engineered systems – Outsource software and – Cleanable design work to India – Single use • Enables greener processing ► FY13 revenue target – $170-190 M for Single use and Cleanable systems Total Fluid Management sm 13
Markets, Drivers and Opportunities Markets Drivers Opportunities ► Strong pipeline of new ► Total Fluid BioTech and Vaccines Monoclonal Antibodies Management, with & Recombinants Chromatography a critical component ► Increase in Generics & BioSimilars, especially ► Growth in India, China, in Asia Singapore, Korea ► CMO and new plant ► Cleanable and Single builds use Systems for new facilities ► Importance of Process Validation and time to ► Single use systems for market clinicals / process development and smaller ► Service and Validation support 14
NEW Process Monitoring Market Strategy New driver is the Process Analytical New Strategy: BioPharmaceutical Process ► ► Technology (PAT) initiative, Monitoring introduced by US FDA to enhance – Multiple Synergies drug product quality • BioPharmaceuticals: – Rapidly evolving technologies for Instruments and Services biological and microbiological monitoring • Medical: Hospital, QC, and – Market size: $1 – 2 B Diagnostics • Pall Industrial: Food & Beverage and Environmental New Initiatives: ► – Pall GeneSystems • Leverage with existing products and services. • GeneSystems: A Life Sciences Center of Excellence 15
NEW Molecular Diagnostics Market Strategy ► New driver: expanding ► New Strategy : Formation Molecular Diagnostics of new global team to Market leverage internal and external technologies – Rapidly evolving technologies for – Includes Genomics sample preparation and Proteomics – Market size: $500M ► New Initiatives: – GeneSystems synergy – Diagnostic Tools 16
Positioned for Growth in BioPharmaceuticals ► Maintain leadership in key markets for filtration &TFF ► Addition of new technology platforms to enhance TFM reach – Single use systems, Chromatography, Process monitoring, Diagnostics ► Regional growth in Asia 17
Life Sciences Investor Day October 29, 2008 Byron Selman SVP Medical 1
Medical Market Overview FY’13 Projected Market Size $6.8 Billion Hospital Transfusion Medicine Infection Control Blood (Direct and OEM) Cell Therapy FY’13 Market Size $ 2.5 B FY’13 Market Size $ 2.3 B FY’13 Market Size $ 2.0 B Market CAGR 2-3% Market CAGR 7-10% Market CAGR 3-5% 2
Markets, Drivers and Opportunities Markets Drivers Opportunities Blood - Transfusion ► Value added systems ► Tightening budgets ► Expand technologies into ► Global pricing under pressure new markets Cell Therapy ► Hope of stem cells to provide ► Develop tools to enable new treatments stem cell therapy Hospital ► Litigation costs and lack of ► Need for effective HAIs reimbursement for Healthcare preventative measures Associated Infections (HAIs) 3
Blood Transfusion Market Acrodose TM PL System, a Platform for Growth ► More efficient utilization of platelets, a by-product of whole blood collections thrown away every day ► Addressing a shrinking donor base caused by stringent donor screening requirements ► Further growth through enhancements and expansion into global markets Better Blood Center Economics: Apheresis versus Global Sales on Track Acrodose SM Platelets >30% annual growth since launch 2008 Blood Acrodose PL System Center Cost Sales Apheresis Platelet $253 FY’08 $10M Acrodose PL Platelet $155 FY’13 Est. $39-50 M 4
Cell Therapy Direction, Strategy & Initiatives ► New Direction: Initial focus on “cardiac” broadened to many cell therapy applications – Regenerative medicine, cord blood, vet medicine ► Balanced Strategy: Expand Cord Blood business to drive short term growth, cell harvest for long term growth ► Focused Initiatives: Cell Therapy Tools – Cell harvest – Cell preservation – Cell separation – Contamination control – Cell expansion – Closed system process 5
Cell Therapy Direction, Strategy & Initiatives ► New Direction: Initial focus on “cardiac” broadened to many cell therapy applications – Regenerative medicine, cord blood, vet medicine ► Balanced Strategy: Expand Cord Blood business to drive short term growth, cell harvest for long term growth ► Focused Initiatives: Cell Therapy Tools – Cell harvest – Cell preservation – Cell separation – Contamination control – Cell expansion – Closed system process FY08 Rev $6.5 M FY13 Rev Projected $44 – 64 M FY08 Rev $6.5 M FY13 Rev Projected $44 – 64 M 6
NEW Platform – Participate in Fast Growing Veterinary Medicine Market ► Commercial and companion veterinary medicine spending has doubled in the past 10 yrs ► There are >100,000 canine blood transfusions annually in the US alone ► Strategy: Total veterinary expenditures in billions for dog-owning households, 1991-2006 – Leverage Blood and Cell Therapy Total veterinary expenditures in billions for cat-owning households, 1991-2006 Technology to Drive Veterinary Medicine $20 – Leverage R&D in the animal health Expenditures (in billions) $16.1 market to human products $16 $11.6 ► Key Initiative: $12 – Expand our equine cell therapy product $7.0 $7.1 $8 $6.6 to small animal market $4.9 $4.0 $4 – Leverage existing technology platforms $2.0 (blood systems) $0 1991 1996 2001 2006 Journal of American Veterinary Medicine Association, January 2008 7
NEW Platform – Participate in Fast Growing Veterinary Medicine Market ► Commercial and companion veterinary medicine spending has doubled in the past 10 yrs ► There are >100,000 canine blood transfusions annually in the US alone ► Strategy: Total veterinary expenditures in billions for dog-owning households, 1991-2006 – Leverage Blood and Cell Therapy Total veterinary expenditures in billions for cat-owning households, 1991-2006 Technology to Drive Veterinary Medicine $20 – Leverage R&D in the animal health Expenditures (in billions) $16.1 market to human products $16 $11.6 ► Key Initiative: $12 – Expand our equine cell therapy product $7.0 $7.1 $8 $6.6 to small animal market $4.9 $4.0 $4 – Leverage existing technology platforms $2.0 (blood systems) $0 1991 1996 2001 2006 Journal of American Veterinary Medicine Association, January 2008 8
NEW Platform – Participate in Fast Growing Veterinary Medicine Market ► Commercial and companion veterinary medicine spending has doubled in the past 10 yrs ► There are >100,000 canine blood transfusions annually in the US alone ► Strategy: – Leverage Blood and Cell Therapy Technology to Drive Veterinary Medicine – Leverage R&D in the animal health market to human products ► Key Initiative: – Expand our equine cell therapy product to small animal market – Leverage existing technology platforms (blood systems) 9
NEW Platform – Participate in Fast Growing Veterinary Medicine Market ► Commercial and companion veterinary medicine spending has doubled in the past 10 yrs ► There are >100,000 canine blood transfusions annually in the US alone ► Strategy: – Leverage Blood and Cell Therapy Technology to Drive Veterinary Medicine – Leverage R&D in the animal health market to human products ► Key Initiative: – Expand our equine cell therapy product to small animal market – Leverage existing technology platforms Global Potential (blood systems) >$50 Million 10
Hospital Preventing Healthcare Associated Infections (HAIs) ► Direction: Deliver technology to improve patient cost and outcome The CDC estimates – New reimbursement practice put that in American more cost burden on hospitals hospitals alone, HAIs ► Strategy: Expand presence in account for an estimated anesthesia and infection prevention 1.7 million infections ► New Initiatives: Development of And 99,000 state-of-the-art technology with strong intellectual property in water associated deaths and gas filtration each year. www.cdc.gov/ncidod/dhqp/hai.html 11
Hospital Preventing Healthcare Associated Infections (HAIs) ► Direction: Deliver technology to improve patient cost and outcome – New reimbursement practice put more cost burden on hospitals ► Strategy: Expand presence in anesthesia and infection prevention ► New Initiatives: Development of state-of-the-art technology with strong intellectual property in water and gas filtration 12
Medical is Getting a Transfusion… Innovative Innovative Technologies Technologies This plan represents the resurgence of blood, establishment of cell Value Value therapy, and development Platforms Platforms of hospital business. Core Product Core Product Line Line 13
Pall Life Sciences: Aligned Global Organization Profitable $1.3 - 1.5 Billion Life Sciences Business by FY13 BioPharm Medical $7.8 B Core Market $6.8 B Core Market Opportunity FY’13 Opportunity FY’13 ► Process ► Transfusion Medicine – Biotech – Blood – Biologics (Vaccines) – Cell Therapy – Classic Pharmaceuticals – Veterinary Medicine ► Hospital – Infection Control ► Process Monitoring – Water ► Laboratory Tools – Critical Care ► Diagnostics – Surgical Smoke – Proteomics and Genomics – OEM Materials & Diagnostics Core Market: $9B Market Today - $14.6 B Opportunity by 2013 14
Pall Industrial Pall Industrial uniquely positioned to benefit from global environmental and market trends 2008 Investor Day October 29, 2008 Steve Chisolm Sr. Vice President, Pall Corporation 1
Pall Industrial Business Outlook Pall Industrial Business Outlook FY ‘09 FY ‘13 FY ’07 FY ‘08 Expectation Expectation Actual Actual Range (1) Range (2) ($ Million) Energy, Water & Process $1,045 1,060 $1,460 1,585 $822 $981 Technologies 6.6% 8.7% 8.4% 10.2% Local Currency Growth 9.8% 10.5% Aerospace & 321 � 421 � 331 460 255 307 Transportation Local Currency Growth 1.5% 14.7% 3.1% 6.1% 6.2% 7.9% 308 � 419 � Microelectronics 293 308 329 455 Local Currency Growth 12.2% - - 6.3% 6.2% 8.2% Total Revenue $1,370 $1,596 $1,669 1,720 $2,300 2,500 4.5% � Local Currency Growth 8.7% 9.0% 7.7% 7.6% 9.4% OP $ $204 $246 $264 300 $430 545 OP Profit Margin 14.9% 15.4% 15.8% 17.4% 18.7% 21.8% OP Profit $ Growth % YoY 35.5% 14.6% 11.8% 17.3% 20.6% (1) Fx Neutral to FY2008 2 (2) Five-Year CAGR – Fx Neutral to FY08
Municipal and Commercial Water Municipal and Commercial Water Major Global Drivers Major Global Drivers • Tighter standards in developed geographies Drinking water Drinking water regulations regulations • Emerging standards in developing geographies • Landfill leachate regulations being adopted in More stringent More stringent developing geographies waste water regulations waste water regulations and specification • Mandated waste water reuse in arid regions and specification • Often the only option in water-starved regions with growing populations Increased need Increased need for desalination for desalination • Membrane-based desalination a more energy-efficient and cost-effective solution 3
Municipal and Commercial Water Municipal and Commercial Water Market Health and Trends Market Health and Trends • Less than 1% of the planet’s water naturally suitable for Limited fresh Limited fresh drinking water supply water supply • Contaminants both naturally occurring and man-made • Uncertainty where the next drought will be, and whether Climate changes Climate changes a short or long-term condition require flexibility require flexibility • Requires ability to treat contaminated source, provide waste water reduction, and desalination Regulations Regulations • For example, US EPA surface water treatment rule “Long-Term 2” – small community compliance by 2011 on the rise on the rise Market Health Mini-market Expected CAGR 2009-2013 Municipal Drinking Water 6.0% - 8.0% Municipal Waste Water 6.0% - 8.0% Consumer / Commercial Water 6.0% - 6.5% Desalination 5.0% - 6.0% 4
Membrane Based Municipal Water Treatment Plants Membrane Based Municipal Water Treatment Plants Total Installed Capacity - Millions of Gallons per Day (MGD)* Total Installed Capacity - Millions of Gallons per Day (MGD)* 1MGD = $140K in annuities MGD 10000 9000 8000 7000 6000 6690 5000 4000 3000 2840 2000 1000 2350 550 560 0 1999 2006 2013 (Expected) Pall Installed Capacity Other Installed Capacity *Typical usage in a city the size of Nashville, TN is 50-75 MGD 5
Municipal and Commercial Water Municipal and Commercial Water Strategy Strategy • Municipal water Capitalize on Capitalize on • Standardized systems mature market drivers mature market drivers • Integration of microfiltration and reverse osmosis • Drinking water and waste water in E. Europe • Contaminated source treatment, waste water Focus on Focus on reduction, and desalination in Australia and other emerging geographies emerging geographies drought-stricken regions • Drinking water in SE Asia, China, and India • Drinking water Focus on Focus on emerging markets/ emerging markets/ • Waste water applications applications • Desalination 6
Municipal and Commercial Water Municipal and Commercial Water Enabling Environmental Sustainability Enabling Environmental Sustainability Pall water treatment systems: • Minimize the use of water • Maximize water processing treatment chemicals and minimize discharged waste • Allow municipal waste water reuse to protect the environment • Reduce cost and energy and preserve fresh water sources usage • Allow highly treated waste water to be re-injected to recharge aquifers and bank water 7
Energy and Industrial Manufacturing Major Global Drivers Major Global Drivers Global shift to alternative fuel and power generation sources • H 2 generation (gas/ gas separations) Rising • Non-fossil sources: growth in nuclear and wind power input costs • Alternative fossil sources: gasification of coal, waste and biomass Demand for chemicals, minerals, fuels and power increasing and becoming less cyclical Increased • Economic development in Latin America, MENA, demand India, China and Eastern Europe are driving demand for basic industrial inputs Increased demands on industrial producers to control solid, liquid and gas emissions drives innovation Environmental • Increased need for material and energy efficiency drives process re-engineering regulations • Regulatory requirements driving research and capital spend to meet environmental threats 8
Energy and Industrial Manufacturing Market Health and Trends Market Health and Trends • Continued investment in fossil based infrastructure to meet much of near-term demand growth Power generation • Non-fossil and alternative investments in nuclear, wind and emerging technologies opens new opportunities for profitable growth • New opportunities in H 2 production (gas/ gas Fuels separation), gas-to-liquids, biofuels and Canadian oil sands being exploited • Near term slowdown in WH and Europe may be offset Chemicals by continued strong demand in Asia • Increased energy and material input costs driving Industrial need for process efficiency manufacturing • Continued global growth at a rate faster than GDP 9
Energy and Industrial Manufacturing Strategy Strategy • Total Fluid Management—addressing • Licensor development and customers’ needs with a broad array process integration of technologies and services – Active collaboration with developers and licensors in the field of conventional – Fluid power and alternative energy – Process, utility and waste water • New product and application – Phase separation, particulate filtration, development purification and diagnostics – Enable customer innovation through new product and application development • Geographic development – Focusing on high growth regions – Building Pall infrastructure and expertise 10
Energy & Industrial Manufacturing Energy & Industrial Manufacturing Gas to Liquid (GTL) Market Opportunities 11
Energy and Industrial Manufacturing Initiatives to Enable Environmental Sustainability Initiatives to Enable Environmental Sustainability • Water treatment solutions enabling customers to reach “zero liquid discharge” requirements • Pall solutions enable many biofuel-based processes • Nuclear products reduce out-of-core radiation, lowering long-term exposure and operating costs • New, cleaner coal and biomass gasification processes enabled by Pall products and expertise • Fossil alternatives gas-to-liquids and Canadian oil sands 12
Microelectronics Major Global Drivers Major Global Drivers Digital desktop expands to the digital home • Personal video • Game consoles Consumer electronics Consumer electronics • Climate control/ energy production • Telephone, e-mail, television • Personal storage • Navigation systems incorporating microelectromechanical systems (MEMs) Industrial • Satellite radio Industrial • Impact sensors • High speed, high resolution printing • Diagnostics • Telemonitoring/ sensors Healthcare Healthcare - Portable ultrasound - Portable electrocardiograph 13 13
Microelectronics Market Health and Trends Market Health and Trends • “Game on” consoles have high semiconductor content Semiconductors Semiconductors • “Soft” market until 2010 • MEMs are a key growth area • Areal density Storage Storage • Nano-imprint lithography • Contamination control • Size “bigger is better” Displays Displays • Energy efficiency • Environmentally sustainable device • Digital speed Inkjet Inkjet • Replacing conventional printing press • Print resolution • CAGR 27% - 2013 Solar Solar • Traditional “tech” companies investing • Ideal application for TFM strategy 14
Microelectronics Strategy Strategy • Expand system business • Leverage inkjet expertise Semiconductors Semiconductors • Enhance COO/ OEE for OEM partners • Leverage semiconductor and lithography expertise • Sensitivity to contamination as critical as Storage Storage semiconductors • Convergence of semi and thin film head roadmaps • Deploy new products to enable next gen manufacturing processes Displays Displays • Leverage inkjet filtration expertise to service flexible displays • Finer filtration for nozzle protection • Larger format filter assemblies to increase printing Inkjet Inkjet speed • Filtration cost per liter optimization • Environmental elements for inkjet cartridges • Leverage semiconductor expertise to increase Solar Solar yields • Water recycling to increase plant output 15 • Asset protection of crystal pullers
Microelectronics Initiatives to Enable Environmental Sustainability Initiatives to Enable Environmental Sustainability • Water recovery from silicon ingot processing • Polyethylene glycol reclaim from ingot sawing process • Chemical filtration for all stages of solar manufacturing 16
Municipal and Commercial Water Energy and Industrial Manufacturing Municipal and Commercial Water Pall Industrial—uniquely positioned to benefit from global Pall Industrial—uniquely positioned to benefit from global economic, environmental and market trends economic, environmental and market trends Microelectronics 17
Pall Aerospace Pall Aerospace & Transportation & Transportation uniquely positioned to benefit from global environmental and market trends 2008 Investor Day October 29, 2008 Jim Western Sr. Vice President, Pall Corporation 1
Aerospace and Transportation Market Aerospace and Transportation Market Military Military Naval Military Military Naval Commercial Cruise & Leisure Commercial Cruise & Leisure Mobile OEM Mobile OEM 2
Aerospace and Transportation Major Global Drivers Major Global Drivers • Lowering the cost of ownership/ operation Asset protection Asset protection • Extending useful life • Extending operational capabilities • Regulation and awareness of – Quality of air we breathe Environmental Environmental – Quality of water we drink protection protection – Need to reduce harmful emissions – Need to clean up waste prior to disposal • Hostilities People and People and • Disasters and humanitarian relief nation protection nation protection • Homeland security Protecting people, environment and equipment provides significant opportunities. 3 3
Aerospace and Transportation Strategy Strategy Continue to grow the base • Expand OEM relationships • Focus on new programs and long term agreements Commercial Commercial • Average Annuity Value increases on New Aircraft aerospace aerospace Focus on key growth areas • Water– support military and relief opportunities • Engine Intake air protection opportunities • Fuels– focus on equipment and infrastructure needs for diesel and new hybrid fuels Military aerospace Military aerospace • Mobile equipment hydraulics & equipment & equipment Displace competitive products • Develop new filtration media • Exploit new materials and processes Move into adjacent spaces using Pall systems Transportation & Transportation & • Military and relief organization drinking water mobile equipment mobile equipment • Industrial waster water Position for geographic expansion • Middle East, Africa, Latin America and Asia 4 4
Aerospace and Transportation Market Health and Trends Market Health and Trends A&T growth expected to be at or greater than industry market 5 year CAGR • Aircraft fleets predicted to double over next 20 years (1) Commercial Commercial • Increased focus on passenger health and comfort 40 % Pall A/T Sales 40 % Pall A/T Sales • High fuel costs and pressure to reduce emissions driving changes towards more fuel efficient aircraft 3% to 5% Market CAGR* 3% to 5% Market CAGR* • Continued homeland security focus Military Military • Force deployment and support will continue in many regions 45% Pall A/T Sales 45% Pall A/T Sales • Opportunities in air and water filtration and separation for protection of people, equipment, and the environment 3% to 6% Market CAGR* 3% to 6% Market CAGR* • Focus on closed space air quality for passenger and operator comfort and safety Transportation Transportation • Equipment fuel efficiency and emissions regulations will 15% Pall A/T Sales 15% Pall A/T Sales demand new technologies • Long-life/lifetime filtration for fuel, lube and hydraulics will open 1% to 3% Market CAGR* 1% to 3% Market CAGR* up markets previously served by low cost, low technology solutions * Projected (1) Boeing/Airbus Forecast 5 5
Major Programs – Time to Market / Product Life Major Programs – Time to Market / Product Life Lockheed Joint Strike Fighter Airbus A380 Sikorsky BlackHawk Upgrade Bell /Augusta BA609 Boeing CH47F Airbus A 400M Transport Boeing 787 2001 2005 2009 2010 2015 2020+ $29.0M $39.0M $12.0M $9.0M Development Production & R&D Operations Estimated Annual Revenue 6
A&T Water—Protecting People and the Environment A&T Water—Protecting People and the Environment Australian Army United Kingdom Navy SAFE DRINKING WATER FROM ANY SOURCE Leveraging New Zealand Army proven microfiltration and reverse osmosis membranes Waste Water African and Asia 7
Aerospace and Transportation Initiatives to Enable Environmental Sustainability Initiatives to Enable Environmental Sustainability • Centrisep air cleaners are • Waste water treatment self-cleaning, eliminating filter systems prevent discharge of disposal pollutants into the environment • Fluid purifiers extend oil life • Incinerable, all plastic, filters negating disposal reduce landfill waste stream • Portable water systems • ‘Blow-by’ and diesel exhaust provide safe drinking water particulate filters help reduce and promote water recycling harmful vehicle emissions Air Recycle Water Fuel 8
Pall Asia Pall Asia Enabling growth, fostering innovation and achieving operational excellence 2008 Investor Day October 29, 2008 Jon Weiner Sr. Vice President, Pall Corporation
Pall Asia Sales—Industrial and Life Sciences Pall Asia Sales—Industrial and Life Sciences FY 2003 - FY 2008 5 Yr CAGR 12.6% FY 2003 - FY 2008 5 Yr CAGR 12.6% Sales $ 000’s $700,000 $600,000 LS PI $500,000 $400,000 $300,000 $200,000 $100,000 $0 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08 2 2
Pall Industrial Asia Sales by Country and by Market Pall Industrial Asia Sales by Country and by Market • Growth broadly FY '03 PI Asia Sales by Country FY '08 PI Asia Sales by Country distributed SEA India SEA, 18% 12% across Asia 2% India Japan • China, SEA, Oz/NZ, 3% 32% Japan, 12% India and 54% Australia Oz/NZ Korea among fastest 16% 10% growing China Korea China 19% 12% 10% • Japan remains largest single entity FY '03 PI Asia Sales by Market FY '08 PI Asia Sales by Market • MicroE role A&T A&T, 6% IM 7% IM dominant but 11% Water 13% decreasing 2% Water MEG MEG 4% • Energy, Water 41% 39% F&B 12% & Process F&B Tech expected 10% PGD to grow at 6% PGD F&C F&C accelerated rate 7% 21% 21% 3 3
Pall Life Sciences Asia Sales by Country and by Market Pall Life Sciences Asia Sales by Country and by Market FY '08 LS Asia Sales by Country FY '03 LS Asia Sales by Country • Japan continues to India India SEA dominate 9% 4% SEA Korea 7% 10% • Strong growth 9% Japan Korea Japan in China and Chi/Hkg 42% 10% 55% India—now 9% representing Chi/Hkg 21% of total LS OZ/NZ 12% business OZ/NZ 16% 17% • China and India FY '03 LS Asia Sales by Market FY '08 LS Asia Sales by Market growth attributed to BS BS BioPharm and 20% 17% BioSciences BP • India benefiting BP 44% from boom of 52% Med Med 39% biogeneric and 28% generic drug manufacturing 4
Enabling Growth within Asia Enabling Growth within Asia • Continuous improvement in key areas – Operational standardization – Supply chain and logistics consolidation – Compliance and oversight – Training and HR excellence • Expanding centers of excellence – Expanded manufacturing - China – Global PASS Engineering Center – Pune India – Water Engineering Center – Somersby, Australia – Global Proteomics Center – Bangalore, India – LS Technological Innovation Center – Shanghai, China • Pursuing opportunities to reduce costs while continuing to invest 5
Asia New Growth Drivers Asia New Growth Drivers Growth increasingly tied to demand in Asia • New middle class – accelerated growth in consumer spending for consumer electronics, beer and wine, automobiles and healthcare • Commodities shortage – economic growth has lead to shortages in energy, steel, mining, oil and gas, shipbuilding, chemicals and polymers, and water • “Green” technologies – Asia is fast becoming center for alternate energy technologies such as solar, nuclear, IGCC, wind and flue gas treatment Growth Drivers 6
Asia New Growth Drivers Asia New Growth Drivers The Middle Class Explosion The Middle Class Explosion Consumer Spending • China and India middle classes expected to quadruple over next decade, driving unprecedented spending Consumer China Europe Japan US spending projections (’08) Growth % <1 <1 <1 10.8 Total increase 333 32 15 68 ($ billion) Total spend 4.17 5.7 2.8 10.1 ($ trillion) Source: Newsweek India Consumer Spending • Average annual growth rate: 7.3% • In 2005, consumer spend $372 billion; expected to reach $1.5 trillion by 2025 Growth Drivers • Expected to surpass Germany in 2025 Middle Class Explosion 7
Asia’s Economic Growth Asia’s Economic Growth • By 2050, China is expected to overtake US as world’s largest economy • India to challenge US for number 2 spot The Largest Economies The Largest Economies $50,000 in 2050 in 2050 $45,000 $40,000 (US $ billion) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Germany China France India Japan Brazil Russia Italy US UK Source: GS BRICs Model Projections. 8 8
Asia New Growth Drivers Asia New Growth Drivers Consumers and Commodities – F&B Consumers and Commodities – F&B China is world’s largest producer of alcoholic beverages, including beer; markets growing at 15% per year Population Beer 10 year Beer Impact of 1 Required (millions) consumption/ change production additional number of new Country person (%) (million beer/ person breweries hectoliters) ($ million) China 1,300 21 110% 273 13 9 US 300 80 -5% 240 3 2 Germany 83 117 -12% 97 0.8 0 UK 60 100 0% 60 0.6 0 Each new brewery offers $1.5 M initial sales opportunity Each new brewery offers $1.5 M initial sales opportunity for Pall + $300K annual annuity potential. Growth Drivers for Pall + $300K annual annuity potential. Consumers & Commodities 9 F&B
Asia New Growth Drivers Asia New Growth Drivers Consumers and Commodities – Energy & IM Consumers and Commodities – Energy & IM Impact to Pall China’s steel industry is now the world’s largest, producing 38% of supply, and growing at 9.3% in ‘07/’08. Primary metals Production is also growing in India (Tata), Korea (Posco) and Taiwan (China Steel) and Japan (Nippon Steel) Fast growing market for new machinery sales Pulp and Paper and equipment upgrades Intense activities in Australia, China, India and Mining Indonesia (Gold, iron ore, coal, nickel and uranium) New production facilities create opportunities for Pall: machine tools / parts washing, water systems, Automotive / in plant hydraulic and lubrication systems, oil feed, water and oil recycle / reuse, and waste minimization 87% of the world’s shipbuilding occurs in Asia; Ship building S. Korea, Japan and China hold the top 3 spots Sources: World Steel. Assoc.; Lloyd's Register of Shipping, World Fleet Statistics. Growth Drivers Consumers & Commodities 10 10 Energy & IM
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