Barclays Capital 2009 CEO Energy/Power Conference
September 2009
Disclosure
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain
forward-looking statements so long as such information is identified as forward-looking and is
accompanied by meaningful cautionary statements identifying important factors that could
cause actual results to differ materially from those projected in the information.
The use of words such as “may”, “might”, “will”, “should”, “expect”, “plan”, “outlook”,
“anticipate”, “believe”, “estimate”, “project”, “intend”, “future”, “potential” or “continue”, and
other similar expressions are intended to identify forward-looking statements.
All of these forward-looking statements are based on estimates and assumptions by our
management that, although we believe to be reasonable, are inherently uncertain. Forward-
looking statements involve risks and uncertainties, including, but not limited to, economic,
competitive, governmental and technological factors outside of our control, that may cause our
business, industry, strategy or actual results to differ materially from the forward-looking
statements.
These risks and uncertainties may include those discussed in the Company’s most recent
filings with the Securities and Exchange Commission, and other factors which may not be
known to us. Any forward-looking statement speaks only as of its date. We undertake no
obligation to publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise, except as required by law.
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Company Overview
Dresser-Rand - Global Supplier of Energy Solutions
Over 90% of bookings for the twelve months ended 6/30/09 of $2.2
billion from oil and gas infrastructure spending
Compression is needed at every stage of the oil and gas production
cycle – upstream, midstream and downstream
A leading provider of rotating equipment / largest installed base /
industry leading alliances
Aftermarket
Parts and
Services
New Units
55%
45%
2008 Sales By
Business Segment
2008 Revenues By
Destination
North
America
Asia Pacific
11%
41%
Latin
America
Europe
Middle
East /Africa
25%
11%
12%
4
Extensive Global Presence
Shanghai,
PRC
Kemanan,
Terengganu, Malaysia
Cilegon,
Banten, Indonesia
Naroda, India
Kongsberg, Norway
Spijkenisse,
The Netherlands
Oberhausen,
Germany
Peterborough
Cambridgeshire U.K.
Le Havre,
France
Genoa, Italy
Campinas - SP, Brazil
Maracaibo, Edo.
Zulia Venezuela
Edmonton, Alberta
Canada
Seattle, WA
Rancho
Dominguez, CA
Chula Vista, CA
Tulsa, OK
Midland, TX
Houston, TX
Baton Rouge, LA
Chesapeake, VA
Naperville, IL
Hamilton, OH
Horsham, PA
Olean, NY
Wellsville, NY
Painted Post, NY
WW Headquarters
Regional Centers
Kuala Lumpur, Malaysia
Houston, Texas
Le Havre, France
Houston, Texas, USA
Service Centers (35)
Global Operations (12)
Olean, New York
Wellsville, New York
Painted Post, New York
Burlington, Iowa
Houston, Texas
Kuala Lumpur, Malaysia
Burlington, IA
Bielefeld,
Germany
Port Harcourt
Nigeria
Mayport, FL
Chirchik,
Uzbekistan
Angola
Africa
Aberdeen,
Scotland, U.K.
Le Havre, France
Oberhausen, Germany
Bielefeld, Germany
Kongsberg, Norway
Naroda, India
Shanghai, China
Peterborough, UK
Louisiana, MO
Jena, LA
Sarnia, Ontario
Kiefer, OK
Abu Dhabi
UAE
Baroda, India
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Recognized for lowest Total Cost of Ownership
Able to obtain price premiums over competition
D-R’s Technology often offers unique cost saving solutions
others cannot. Example: Gazprom’s Portovaya Station
Head station for the Nord Stream pipeline
Installed compression capacity of 354 MW - - unparalled
in Russia
DRC technology provides the best solution in terms of
total number of installed units, operational flexibility and
operating cost
Strong Value Proposition and Selling Strategy
D-R Technology & Business Processes --
Source of Sustainable Competitive Advantage
6
Most Client Alliances in Industry ~ 50
Validation of Dresser-Rand’s Value Proposition
7
Solid Revenue and Income Growth
Backlog End of Period
($ in Millions)
Bookings
($ in Millions)
Sales
($ in Millions)
Operating Income
($ in Millions)
8
Outstanding First Half 2009 Performance
($ in Millions)
9
1H 09
1H 08
Change
Sales
$1,115.0
$905.0
23%
Operating Income
$160.3
$122.4
31%
- Settlement / (Curtail. Amend.)
1.3
(5.4)
Adjusted Operating Income
$161.6
$117.0
38%
- Adjusted Margin %
14.5%
12.9%
Interest Expense - net
(15.4)
(14.0)
Other (Expense) Income, net
0.9
3.0
Net Income
$94.8
$73.9
- Settlement / (Curtail. Amend.)
0.8
(3.6)
Adjusted Net Income
$95.6
$70.3
36%
Diluted EPS
$1.16
$0.86
- Adjusted EPS
$1.17
$0.82
43%
Business Model Characteristics
~ ½ revenues tied to new build-out – cyclical
Flexible manufacturing model to effectively meet rapid
demand swings
~ ½ revenues tied to installed base – cycle independent
~ 75% operating income from aftermarket (installed
base)
Strong value proposition
Low capital intensity
Strong Relative Performance in Both Up and Down
Cycles
10
New Units - Flexible Manufacturing Model
Highly absorbed internally at cycle bottoms
Able to flex capacity to meet cycle peaks
Flexibility Through Supply Chain Management
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($ in Millions)
2001
2008
08 vs. '01
Sales
$877
$2,195
2 1/2 X
Operating Income
$21
$338
16 X
- % of Sales
2.4%
15.4%
Employees
6,084
6,400
5%
Manufacturing Footprint ( Sq. Ft.)
~ 3.9 M
~ 4.0 M
Small
Change
Dependable Aftermarket
(Revenue $ in Millions)
DRC Captures ~ 10% of Market Opportunity
~10% CAGR past 8 years
Key Initiatives:
Sales Entitlement Model
Leverage Alliances
Expand Service Centers
Added 11 since ’05 IPO
Technology Leadership
Applied Technology
’09 bookings $107
Acquisitions
Tuthill, Gimpel, Peter
Brotherhood, Arrow,
Enginuity, Compressor
Renewal Services
New leadership team
Implemented growth strategy
12
Aftermarket Bookings – 1st Six Months
($ in Millions)
Significant reduction in order
flow from one NOC
Adjusting for NOC shortfall,
1H 09 bookings slightly
higher than 1H 08
Stronger U.S. dollar ~ $(34)
$508
$482
13
Unique Low Capital Intensity Business Model
NWC as a % of LTM Sales
Custom-engineered equipment
~12 to 15 month cycle time
Customer advance payments and
progress payments finance
working capital
2009 ~ 1 ½ to 2% of sales
Manufacturing strategy allows
for low capital expenditures
Aftermarket segment low
capital intensity
Capex as a % of Sales
* Reflects acquisition from Ingersoll Rand in 2004
Period
Ended
*
14
Strong Balance Sheet
7 3/8% Notes Mature 2014
No Revolver Borrowings / $271
Used for Letters of Credit
Net debt to total capital 14%
Total debt $370
Net debt $169
Liquidity at 6/30/09 = $460
Cash $201
Revolver Availability $259
Net Debt to Adjusted EBITDA
Net Debt to Capital
15
Outlook
Current Market Conditions
New unit bookings remain sluggish
Believe client delays in placing orders are temporary
Steady flow of inquiries
Continue to expect new unit bookings for the full year to
be in the range of $700 million to $1.1 billion
Visibility to many projects
Aftermarket bookings expected to be consistent with 2008
One NOC client significantly reduced order flow 1H09
Recovery expected in traditional markets,
augmented by emerging market opportunities
17
Traditional Market Opportunities
Offshore production / FPSO (100+ next 5 yrs.)
Tracking ~ 60 LNG projects (more than 20 FLNG)
Awarded world’s 1st FLNG project
Peter Brotherhood acquisition / Samsung Techwin
Upstream
Midstream
Downstream
Pipelines & storage (growth in Asia, China, India, US)
Coal bed methane & shale opportunities
Acquisitions strengthen position (Arrow; Enginuity;
Compressor Renewal Services)
Refining – 200,000 bpd ~ $50MM opportunity
Expansions e.g., Saudi Aramco Jubail & Yanbu
Process upgrades, environmental compliance,
energy conservation, difficult crudes
Chemical (Asia, India & Middle East)
18
Emerging Market Opportunities
ICS - “Only-In-Class” - DATUM derivative
technology / close coupled motor / proprietary
separation technology
1st commercial order – topside Petrobras P-18
Subsea
CAES
CO2 Sequestration
Experience & Technology - Only operating installation
in North America
Potential to combine with wind and solar
Government incentives and “Green” incentives
Tracking ~ 20 projects (100 MW ~ $50MM opportunity)
DRC has a significant amount of installed horsepower
worldwide compressing CO2
Opportunity involving coal-fired power plants
Potential for carbon tax or Cap & Trade incentives
Ramgen supersonic compressor technology
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Summary
Believe we have sustainable competitive advantages: Technology,
Alliances, Installed Base, Service Network
Believe we are very well positioned for difficult economy
DRC Business Model Characteristics:
Steady high margin aftermarket
Flexible manufacturing model
Results:
Ability to meet significant New Unit demand swings with
minimal disruption
Good performance even in down markets
Low capital intensity
2009 Operating Income expected to be $320 to $360 million
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www.dresser-rand.com
info@dresser-rand.com
