Cervus Equipment — Investor Presentation (August 2019)
18 slides from Cervus Equipment's investor presentation, August 2019
Slide 1: People. Power. Service: Cervus Equipment
People. Power. Service: CERVUS EQUIPMENT
Slide 2: Forward Looking Information
FORWARD LOOKING INFORMATION This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws, and are subject to risks and uncertainties that could cause actual results to differ. The use of any of the words "expect", "anticipate"
Slide 3: Who We Are
WHO WE ARE VISION To be the leading full-service dealer of best-in-class, business-to-business equipment brands. Customers, employees, shareholders and manufacturers will choose us first. MISSION To enable our customers’ success by providing practical and reliable equipment solutions and support.
Slide 4: Founding Principles
FOUNDING PRINCIPLES • We succeed when our customers’ business thrives • We are focused on business to business solutions • Our employees are owners • Our scale enables superior customer experience • Our leading original equipment manufacturers are trusted partners
Slide 5: A History of Growth
A HISTORY OF GROWTH Organic and Acquisition Growth $1,400 $1,200 Annual Revenue ($ millions) $1,000 $800 $600 $400 $200 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Same Store Revenue Revenue from acquisitions in the preceeding 12 months
Slide 6: Scale Is Critical for Our Customers
SCALE IS CRITICAL FOR OUR CUSTOMERS • Larger farms, larger fleets need larger dealers • Our Scale allows us to invest in meeting emerging customer expectations • Organic growth and Acquisitive Growth • Our Customers value the services that our scale provides • Our OEMs value the customer support sca
Slide 7: Performance Has Brought Opportunity
PERFORMANCE HAS BROUGHT OPPORTUNITY
Slide 8: Leading Equipment Dealership Integrator
LEADING EQUIPMENT DEALERSHIP INTEGRATOR AGRICULTURE TRANSPORTATION • History of successful • Diversification: different integration and operations product line, same business model • Stable cash flow • Building on 2018 success, • Opportunistic growth: growing market share acquisitions, service effic
Slide 9: Cervus Market Positioning
CERVUS MARKET POSITIONING Industry Leading OEMs • Our manufacturers are innovators; our equipment is market leading Our Customers rely on our delivery of parts and service • Our equipment population requires parts and service support across market cycles Balance Sheet Strength • Low leverage provide
Slide 10: Agriculture Market Dynamics
AGRICULTURE MARKET DYNAMICS • Increasing scale of operations • Installed base requires regular repair and maintenance • More favourable dynamics in Canada • Factors: weather, FX, commodity prices, farm income, input costs
Slide 11: Transportation Market Dynamics
TRANSPORTATION MARKET DYNAMICS • Equipment population growth • Installed base requires regular repair and maintenance • Factors: • SK: cyclical, tracks oil & gas • ON: manufacturing, import/export, foreign exchange impacts
Slide 12: Segmented Operational Results
SEGMENTED OPERATIONAL RESULTS % GROSS SALES BY SEGMENT (YEAR ENDED DECEMBER 31, 2018)
Slide 13: Accelerating Operational Performance
ACCELERATING OPERATIONAL PERFORMANCE Increase in Service Department GM% from 2015 reflecting effectiveness of Service Optimization Service Profitability 6.00% Growth through process- 5.00% 4.00% based optimization of our 3.00% service departments 2.00% 1.00% 0.00% 2015 2016 2017 2018 Change in GM% S
Slide 14: Accelerating Operational Performance
ACCELERATING OPERATIONAL PERFORMANCE Record Year to Date 2018 Performance In Ontario Transportation Net Income Ontario Transportation $4,000,000 • Changes implemented $3,000,000 in 2017 have aligned processes $2,000,000 $1,000,000 • Increased productivity has been achieved $0 while reducing costs -$
Slide 15: Annual Financial Results
ANNUAL FINANCIAL RESULTS Revenue ($millions) Gross Profit ($millions) 1400 225 1200 1000 150 800 600 75 400 200 0 0 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018
Slide 16: Continued Areas of Focus
CONTINUED AREAS OF FOCUS • Customer Solutions Growth • Parts, service, rental, training, precision agriculture • Consistent processes and systems • Continued acceleration of operational performance • Market share above OEM average • Inventory turnover > 3x • Product support absorption > 100% • ROIC
Slide 17: TSX:CERV Key Financial Information
TSX:CERV Key Financial Information (as at July 31, 2019) Share price $11.09 Shares outstanding 15.4 million Market capitalization $172 million Quarterly dividend (Increased to $0.11 for Q1 2019) $0.11 Dividend Yield at July 31, 2019 share price 3.97% Institutional ownership ~31% Insider ownership ~2
Slide 18: Why Cervus?
WHY CERVUS? • Scale to lead the delivery of services • Operational upside • Annuity of parts & service on base of equipment population • Market leading, globally recognized OEMs • Dealer consolidation will continue
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