Cervus Equipment — Investor Presentation (August 2020)
20 slides from Cervus Equipment's investor presentation, August 2020
Slide 1: Cervus Equipment Investor Presentation – August 2020
Cervus Equipment Investor Presentation – August 2020
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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: Non-GAAP Measures
NON-GAAP MEASURES In this presentation, Cervus has used the terms Absorption, Gross Profit Dollar Growth, Return on Invested Capital (ROIC) and free cash flow, which do not have any standardized meaning under IFRS ("Non-GAAP Measures"). Since Non-GAAP financial measures do not have a standardized me
Slide 4: Who We Are: Vision, Mission, Strategic Goal
WHO WE ARE VISION To be the leading full-service equipment solutions provider. MISSION To advance our customers success by providing practical and intelligent equipment solutions and support. STRATEGIC GOAL Cervus Equipment is a solutions provider – 50/50 Equipment Sales and Product Support 4
Slide 5: 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 5
Slide 6: 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 2019 Same Store Revenue Revenue from acquisitions in the preceding 12 months 6
Slide 7: Scale Is Critical for Our Customers
SCALE IS CRITICAL FOR OUR CUSTOMERS • Larger farms, larger fleets value 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 sc
Slide 8: Why Cervus: Leading International Diversified Equipment Solutions Provider
WHY CERVUS: LEADING INTERNATIONAL DIVERSIFIED EQUIPMENT SOLUTIONS PROVIDER The largest John Deere, Canada Peterbilt Truck and Clark Forklift dealers in Canada Australia and New Zealand 8
Slide 9: Why Cervus: Best Positioned Dealership in Our Sector
WHY CERVUS: BEST POSITIONED DEALERSHIP IN OUR SECTOR LARGEST DIVERSIFIED DEALER 63 Locations Size and scale - People, Customer Base, Capabilities, 540 Service Bays Locations, Inventories (equipment/parts), Cycles 538 Technicians WORLD-LEADING BRANDS >180 Mobile Service Trucks John Deere and Peterbil
Slide 10: Five Year Objective: Targeting 50/50
FIVE YEAR OBJECTIVE: TARGETING 50/50 Developing our Product Support Delivery Whole Product $1 billion Goods Support $1 billion $1 billion 2019 Equipment Absorption 5 Year 50/50 Product Cervus NIBT Margin Potential Support 50/50 NIBT NIBT • Wholegoods sales growth is based on • Acquisitions turbochar
Slide 11: 2024 Financial and Operational Targets
2024 FINANCIAL AND OPERATIONAL TARGETS 11 Please refer to our Forward Looking Statements & Non-GAAP Measures disclosures
Slide 12: Financial Performance: Absorption
FINANCIAL PERFORMANCE: ABSORPTION Sustained profitability through the down cycle Definition of Absorption: Absorption 118% 113% 110-115% 110-115% 108% Product Support gross profit dollars* 103% 99% 98% 95-100% 95% Dealership Operating Costs** 93% 88% 87% 83% 80-85% 78% 2019 Actual 2024 Target 2019 A
Slide 13: Financial Performance: Product Support Gross Profit Dollars
FINANCIAL PERFORMANCE: PRODUCT SUPPORT GROSS PROFIT DOLLARS Growing consistent cash flow across cycles Product Support Gross Profit Growth 20% Definition of Product Support Growth Target: 110-115% 110-115% 15% in Product Support Gross Profit $ 10% 100-105% Annual Growth Target 8%-10% 95-100% 95-100%
Slide 14: Financial Performance: ROIC and Inventory Turns
FINANCIAL PERFORMANCE: ROIC AND INVENTORY TURNS Growing the consistent cash flow across cycles ROIC 2024 Target – 20% Inventory Turns: 12.0 TTM COGS 10.0 110-115% 110-115% Inventory Turns Avg. Inventory 8.0 100-105% Five Year Average ROIC – 8.4% 6.0 95-100% 95-100% ROIC: 4.0 3.6 3.4 3.5 3.5 2.5 2.7
Slide 15: Agriculture: Mix and Margin
AGRICULTURE Mix and Margin Whole Goods Parts Service Gross Margin by Revenue Type 0-10% 30-35% 60-65% Overall Pre-Tax Adjusted Return on Sales (1) 85% 15% Whole Goods 2019 YE (0.1%) Product Support Revenue Revenue High Performance 3.5-5% Percentage of total Percentage of total revenue (1) Pre-Tax Ad
Slide 16: Transportation: Mix and Margin
TRANSPORTATION Mix and Margin Whole Goods Parts Service Gross Margin by Revenue Type 2-5% 25-30% 60-65% Overall Pre-Tax Adjusted Return on Sales (1) 63% 37% Whole Goods 2019 YE 1.0% Product Support Revenue Revenue High Performance 2.5-3.0% Percentage of total Percentage of total revenue (1) Pre-Tax
Slide 17: Industrial: Mix and Margin
INDUSTRIAL Mix and Margin Whole goods Parts Service Gross Margin by Revenue Type 10-22% 35-36% 58-60% Overall Pre-Tax Adjusted Return on Sales(1) 48% 52% Whole Goods 2019 YE 2.4% Product Support Revenue Revenue High Performance 4.0-5.0% Percentage of total Percentage of total revenue (1) Pre-Tax Adj
Slide 18: What Makes a Successful Dealership
WHAT MAKES A SUCCESSFUL DEALERSHIP Key Success Factors CUSTOMER EXPERIENCE Employees, service, culture, innovation and technology BALANCED MARKET SHARE FINANCIAL SUSTAINABILITY & PRODUCT SUPPORT Absorption sustains operations through the bottom of the cycle. Build Machine Population to drive growth
Slide 19: Innovation and Technology: Key to Our Success
INNOVATION AND TECHNOLOGY: KEY TO OUR SUCCESS Intelligent Equipment Solutions • Machine Integration • Data in-motion • Performance data • In-field/on-site data • Health Monitoring • Productivity/Quality OPERATIONS EQUIPMENT • Diagnostics/Alerts • Yield/Logistics • Remote Programming • Conditions/Cli
Slide 20: Why Invest in Cervus?
WHY INVEST IN CERVUS? Market Upside as Cycles Turn • Ag is experiencing lowest demand in 10 years. Upside as cycle turns. Operational Opportunities as We Drive Organic Performance • Delivering performance of existing operations by targeting absorption and Product Support growth. Conservative Balance
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