Finning International Inc. · TSX:FTT
Finning International — Scotiabank Transportation & Industrials Conference 2020
17 slides from Finning International's conference presentation, Nov 17, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Scott Thomson, President and CEO, Finning International Juan Pablo Amar, President, Finning South America Scotiabank Transportation & Industrials Conference November 17, 2020 See slides 16 & 17 for important information on forward-looking information and non-GAAP financial meas
Slide 2: Finning Overview
Finning Overview Largest Caterpillar dealer Market Statistics(1) - FTT (TSX) Share price 23.12 Unrivalled service since 1933 Market Cap 3.7M S&P/DBRS rating BBB(+*-/high) Diversified by geography, customer base, product and sector Annual dividend / share 0.82 ~12,000 employees Dividend yield
Slide 3: Finning Executive Team
Finning Executive Team Scott Thomson President & CEO June 2013 Global Functions Regional Operations Finance Digital Greg Palaschuk David Cummings Kevin Parkes EVP & CFO EVP & Chief Digital Officer Finning Canada, President March 2020 June 2013 January 2019 Legal Jane Murdoch Juan Pablo Amar General
Slide 4: Executing Our Strategy
Executing Our Strategy Accelerating growth in product support revenue Focus on Driving down cost base to improve competitiveness Improving Delivering solid free cash flow(1) to invest in opportunities that improve earnings capacity ROIC(1) through the cycle, return capital to shareholders, and
Slide 5: SG&A Journey - Improving Earnings Capacity
SG&A Journey - Improving Earnings Capacity Mid-Cycle Approach 2013 - 2019 Cost Savings SG&A Target Canada On track to achieve Mid-cycle Priority Value Drivers (PVDs) 33% >$100M 17% Revenue per employee Annualized, globally Consolidated SG&A as a & sq. ft. (‘000) ~1/3rd of workforce to percentage of
Slide 6: Q3 2020 Results
Q3 2020 Results vs Q3 2019 vs Q2 2020 Q3 2020 Financial Statistics ($ Millions) Net Revenue(1) Revenue 1,553 EBITDA(1) 215 $1.4B 21 % 8% Net Revenue 1,443 Net Income 88 EBIT 138 Basic EPS $0.54 Operational Highlights Adjusted EBITDA(1) Customer Loyalty Total Injury Frequency 13 % 52 % Q3/20 vs Q3/19
Slide 7: Q3 2020 Financial Results – Canada
Q3 2020 Financial Results – Canada Net Revenue EBITDA as % of Net Revenue Return on Invested Capital $ Millions Adjusted Adjusted(1), 4 Quarter Average 14.6% 978 12.8% 15.0% 10.6% 705 728 11.6% 10.8% Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 8.5% 4.0% 8.1% Adjusted EBIT
Slide 8: Q3 2020 Financial Results – UK & Ireland
Q3 2020 Financial Results – UK & Ireland Net Revenue EBITDA as % of Net Revenue Return on Invested Capital $ Millions Adjusted Adjusted, 4 Quarter Average 264 14.1% 8.3% 7.9% 236 161 4.9% 4.6% 3.9% Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 5.1% -1.0% 4.1% Adjusted EBIT
Slide 9: Q3 2020 Financial Results – South America
Q3 2020 Financial Results – South America Net Revenue EBITDA as % of Net Revenue Return on Invested Capital $ Millions Adjusted Adjusted, 4 Quarter Average 12.2% 577 11.2% 11.2% 11.3% 469 479 9.8% 9.0% Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 7.8% 5.1% 8.2% Adjusted EB
Slide 10: South America
South America Driving Improved Performance Efficiency Levers Restructuring largely completed Increased employee and facility productivity Monetized surplus inventory Branch network optimization Expect mining product support revenue to recover Leveraging system benefits and global capabil
Slide 11: Chile Copper Mining – Ultra Class Trucks
Chile Copper Mining – Ultra Class Trucks CAT Ultra Class Trucks(1) Teck QB2 Autonomy Population Average Age 794AC 320 Ton Support 5-year Product Trucks Years Electric Drive Equipment Support Agreement 224 11.5 Cu Teck QB2 Highlights(2) One of the world’s largest undeveloped copper resources, QB2 i
Slide 12: Finning Autonomy
Finning Autonomy 20%+ Productivity Improvement vs Imperial Oil Conventional Fleet Kearl (oil sands) SCALABLE ~100 trucks and 250+ auxiliary vs limited 797F scalability of competitors’ offering Fleet Size 22 trucks As at Sept 2020 INTEROPERABLE with conventional and competitors’ fleets Teck Highlan
Slide 13: Advanced Digital and e-Commerce Capabilities
Advanced Digital and e-Commerce Capabilities 80% CAT Assets Connected Technology – a great risk mitigator in a crisis in Finning territories Technology adoption by customers is accelerating Machine Condition Monitoring eCommerce on www.parts.cat.com Integrated Knowledge Centers (IKCs) Integr
Slide 14: Free Cash Flow, Balance Sheet, Capital Allocation
Free Cash Flow, Balance Sheet, Capital Allocation Free Cash Flow ($ Millions) Q3 2020 Highlights 700 578 600 Strong working capital management 500 483 441 Monetized surplus inventory in South America 370 400 325 Continue to expect net capex and rental fleet spend 300 in the $90-140 million ran
Slide 15: Q4 2020 and 2021 Considerations
Q4 2020 and 2021 Considerations Modest market recovery underway and expected to continue into 2021 Improved execution and cost discipline driving stronger performance in a slow recovery environment Strong EBITDA to free cash flow conversion provides capital allocation optionality Significant
Slide 16: Disclosures
Disclosures Forward-looking information This presentation includes “forward-looking information” (as defined in Canadian securities legislation) that is based on expectations, estimates and projections that we believe are reasonable as of the date of this presentation, but may ultimately turn out to
Slide 17: Disclosures
Disclosures Forward-looking information (continued) We caution readers that the risks described in the AIF and MD&A are not the only risks that could impact the company. We cannot accurately predict the full impact that COVID-19 will have on our business, results of operations, financial condition o
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