Cessna Business Update

Transcription

1 Cessna Business Update November 29, 2006

2 Welcome to Wichita Air Capital of the World 1

3 Today s Agenda Overview Industry and Sales Update Managing Growth Summary Jack Pelton Roger Whyte Ron Alberti Jack Pelton 2

4 Mission To be the premier supplier of aircraft and related services for business, personal, utility and flight training To be a model organization within the communities we serve in terms of quality, profitability, corporate responsibility, people and product development Cessna means value, dependability and an exceptional customer experience - across design, sales, production, delivery and service - around the world Taking Care of Customers Is Taking Care of Business 3

5 68% Business Overview 2006E Citations 6% Single Engine 3% Caravan 3% Used Aircraft 15% Parts, Service & Other 5% CitationShares ~$4.1 Billion A Global Leader in General Aviation 4

6 Business Strategies Develop and deliver customer-focused products Provide superior aftermarket services Strengthen fractional jet ownership business Drive operational readiness, reduce costs and improve productivity Create a Lean Enterprise 5

7 Cessna Aircraft Product Range Step-Up Strategy 65-75% of Citation Sales Are Repeat Purchases $1.7M $2.5M $4.2M $5.7M $6.7M CJ3 $8.0M CJ4 $8.1M Encore+ $11.6M XLS+ $15.5M Sovereign $20.1M Citation X $220K $326K $448K CJ1+ CJ2+ Mustang Caravan Cessna Pilot Centers - Foundation for Bringing Customers into the Cessna Family 6

8 Cessna Industry Leader Bombardier 18% Gulfstream 5% New Cessna Jets Launched CJ1/CJ1+ CJ2 CJ3 Encore XLS Sovereign Citation 53% Raytheon 22% Dassault 2% Source: GAMA and Cessna estimates Percentage Jets Shipped Light and Midsize,

9 Sustaining Leadership Continued emphasis on key customer satisfaction drivers Strong commitment to new product development Prudent investments to support growth: upgrading systems (SAP) and capex Further leverage of lean and Textron Six Sigma in the factory and across the business Focus on talent development Investing for the Future 8

10 Business Performance Units Citation Deliveries $B Revenues E 2007E E 2007E 20% 15% 10% 11% Margin 13% % % 45% 40% 35% 30% 25% ROIC 33% ~40% >40% 5% E 2007E 20% 15% 17% E 2007E 9

11 Today s Agenda Overview Industry and Sales Update Managing Growth Summary Jack Pelton Roger Whyte Ron Alberti Jack Pelton 10

12 Business Jets - A Growth Industry Economic expansion Cycles becoming longer with less severe troughs New model introductions Entry-level jets Expanding customer solutions Fractional and card programs Global market development Replacement cycle opportunities Commercial airline environment 11

13 Corporate Profits A Key Driver of Jet Demand $B Units 1,400 Real Corporate Profits (8 Q Shift) 1,400 1,200 Jet Shipments 1,200 1,000 1, Source: Global Insight, Cessna estimates 12

14 Used Citations for Sale as % of Fleet 20% 15% 10% 5% Source: JetNet, Amstat, Cessna estimates 13

15 Citation Order Mix 50% 40 % International Average E International Orders Forecasted to Remain Strong Note: Excludes North America and fractional 14

16 New Products Drive Growth Certified in Citation Mustang $2.5M Citation CJ1+ $4.2M Citation CJ2+ $5.7M Backlog: ~$650M Citation CJ3 $6.7M Backlog: ~$160M Citation XLS $11.6M Backlog: ~$430M Citation Sovereign $15.5M Backlog: ~$930M Note: Backlog as of Q Backlog: ~$1.9B Backlog: ~$2.2B 15

17 Industry Forecasts Honeywell Rolls Royce Midsize Light (including VLJ) Significant Growth and Record Deliveries Forecasted Source: Honeywell, Rolls Royce 16

18 NBAA jet orders worth over $1B New product announcements Citation CJ4 Citation XLS+ Large cabin concept mockup displayed to gather further customer feedback Upgrades to legacy products Customer Support CJ series MSG3 program 1Q07 Global field service engineers increased by more than 10% Received Albert Ueltschi Humanitarian Award for the Cessna Citation Special Olympics Airlift Strong Customer Orders Record Breaking Show 17

19 Citation CJ4 Fully integrated Collins Pro Line 21 avionics Advanced avionics diagnostic system New standard integrated cabin management system Newly engineered, moderately swept wing New Williams International FJ44-4A electronically controlled (FADEC) engines 101 total orders as of October 20 $7.995 million First Flight: 1H08 Deliveries: 1H10 Upward Extension to the Single-pilot-certified Citation Family 18

20 Citation XLS+ Fully integrated Collins Pro Line 21 avionics New Pratt & Whitney PW545C electronically controlled (FADEC) engines Exterior and interior restyling $ million Certification: 1Q08 Deliveries: 4Q08 World s Best Selling Business Jet Adds Latest Technologies 19

21 25 Business Jet Competitive Landscape Eclipse 500 Price $ Millions 5 CJ1+ CJ2+ Premier 1A CJ3 H-400XP CJ4* Encore(+*) Lear 40XR Lear 45XR Hawker 750* Lear 60XR Sovereign Challenger 300 Hawker 4000 Citation X Falcon 50EX G200 0 Honda Honda Diamond Piper Piper Adam Grob Adam Grob Swearingen Mustang Phenom 100 * Phenom 300 * XLS(+*) G150 Hawker 900XP* Legacy 600 Eclipse Cessna Raytheon Bombardier Dassault Gulfstream Embraer * In development Cessna Is Well-Positioned for Continued Leadership Source: B&CA and company press releases 20

22 Large Cabin Concept Research studies continue to confirm a significant loyal Citation customer base to support large cabin family All specifications on proof-of-concept mockup subject to change Nine passengers and two pilots Flat floor with refreshment area and walk-in baggage compartment 4,000 nm range at 459 ktas (NBAA IFR) Full fuel payload of 1,950 lbs Max speed of 488 ktas 82 interior cabin width Avionics and engine remain unspecified at this stage Evaluating Business Case for Larger Citation 21

23 Today s Agenda Overview Industry and Sales Update Managing Growth Summary Jack Pelton Roger Whyte Ron Alberti Jack Pelton 22

24 Managing Growth Fostering a proactive safety culture Developing talent Driving Lean across the business Leveraging global opportunities Strengthening supplier relationships 23

25 Lean Vision Textron Lean Enterprise with integrated systems driving simplification with common purpose and direction Structured lean Textron Production System that drives continuous improvement and timely removal of waste Lean capability and technical support on the manufacturing floor to solve problems at the point of impact Lean culture emphasizing personal accountability for improvement Employee safety Customer satisfaction: quality, reliability and delivery Productivity, cycle time and growth capacity Margins, ROIC and shareholder value 24

26 Manufacturing Footprint Wichita Independence Columbus Chihuahua, Mexico (2006) Wichita, KS Independence, KS Columbus, GA Chihuahua, Mexico 25

27 Independence, KS Current scope Single engine and Mustang production Celebrated 10 th anniversary and 7,000 th delivery ~1,000 employees Added 116,000 s.f. for Mustang Building Foundation to Support Growth 26

28 Globalization Objectives Deliver an exceptional customer experience - not constrained by geographic boundaries Expand customer base and industry leadership by promoting general aviation globally and generating new demand Capitalize on global talent and lower costs through outsourcing and strategic partnerships Longer-term View, Balancing Opportunity and Risk, to Effectively Develop the Cessna Brand Around the World 27

29 Textron Aerospace de Mexico Cost effectively expanding capacity, while minimizing risks associated with distance and outsourcing Focusing U.S. resources on assemblies requiring higher complexity Celebrated grand opening Sept Current scope Wire harnesses Sheet metal assembly >140 employees and 65,000 s.f. Leveraging Global Opportunities for Growth 28

30 Strengthening Supplier Relationships Promoting awareness, understanding and capability Enhancing supplier capacity and flow Sharing knowledge, processes and tools Developing stronger relationships through world-class processes Becoming Our Suppliers Customer of Choice 29

31 Today s Agenda Overview Industry and Sales Update Managing Growth Summary Jack Pelton Roger Whyte Ron Alberti Jack Pelton 30

32 Cessna Develop and deliver customer-focused products Provide superior after-market services Strengthen fractional jet ownership business Drive operational excellence Sure Thing. 31

33 Forward-Looking Information Certain statements in this report and other oral and written statements made by Textron from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: [a] changes in worldwide economic and political conditions that impact interest and foreign exchange rates; [b] the interruption of production at Textron facilities or Textron s customers or suppliers; [c] Textron's ability to perform as anticipated and to control costs under contracts with the U.S. Government; [d] the U.S. Government's ability to unilaterally modify or terminate its contracts with Textron for the Government's convenience or for Textron's failure to perform, to change applicable procurement and accounting policies, and, under certain circumstances, to suspend or debar Textron as a contractor eligible to receive future contract awards; [e] changes in national or international funding priorities and government policies on the export and import of military and commercial products; [f] the adequacy of cost estimates for various customer care programs including servicing warranties; [g] the ability to control costs and successful implementation of various cost reduction programs; [h] the timing of certifications of new aircraft products; [i] the occurrence of slowdowns or downturns in customer markets in which Textron products are sold or supplied or where Textron Financial offers financing; [j] changes in aircraft delivery schedules or cancellation of orders; [k] the impact of changes in tax legislation; [l] the extent to which Textron is able to pass raw material price increases through to customers or offset such price increases by reducing other costs; [m] Textron s ability to offset, through cost reductions, pricing pressure brought by original equipment manufacturer customers; [n] Textron's ability to realize full value of receivables and investments in securities; [o] the availability and cost of insurance; [p] increases in pension expenses related to lower than expected asset performance or changes in discount rates; [q] Textron Financial s ability to maintain portfolio credit quality; [r] Textron Financial s access to debt financing at competitive rates; [s] uncertainty in estimating contingent liabilities and establishing reserves to address such contingencies; [t] performance of acquisitions; [u] the efficacy of research and development investments to develop new products; [v] bankruptcy or other financial problems at major suppliers or customers that could cause disruptions in Textron s supply chain or difficulty in collecting amounts owed by such customers; and [w] Textron s ability to execute planned dispositions. 32

34 Cessna Business Update November 29, 2006