Finning International Inc. · TSX:FTT

Finning International — Q3 2020 Earnings Presentation

17 slides from Finning International's earnings presentation, Nov 6, 2020

1. Slide 1: Investor Presentation

   INVESTOR PRESENTATION Greg Palaschuk, EVP and CFO Amanda Hobson, SVP Investor Relations and Treasury November 6, 2020 See slides 16 & 17 for important information on forward-looking information and non-GAAP financial measures in this presentation. Monetary amounts referred to in this presentation ar

2. Slide 2: Finning Overview

   Finning Overview  Largest Caterpillar dealer Market Statistics(1) - FTT (TSX) Share price 22.39  Unrivalled service since 1933 Market Cap 3.6B S&P/DBRS rating BBB(+*-/high)  Diversified by geography, customer base, product and sector Annual dividend / share 0.82  ~12,000 employees Dividend yield

3. Slide 3: 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

4. Slide 4: 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

5. Slide 5: Net Revenue

   Q3 2020 Net Revenue Net Revenue by Line of Business $ Millions Key Revenue Drivers 1,819 (254)  Majority of new equipment sales decline driven by challenging market conditions in Canada (and Q3 2019 had large mining equipment deliveries) 8 (18)  Product support more resilient, the year over (110)

6. Slide 6: Adjusted EBITDA

   Q3 2020 Adjusted EBITDA Adjusted EBITDA $ Millions Q3 2020 Highlights 204 (72 )  Improved quality of inventory supporting margin 47 (2) 1 178 realization  Revenue mix shift to product support  Limited low-margin mining deliveries  Successful execution of global cost initiatives and continued dis

7. Slide 7: 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

8. Slide 8: 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

9. Slide 9: 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

10. Slide 10: 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

11. Slide 11: Q4 2020 and 2021 Considerations

    Q4 2020 and 2021 Considerations  Key commodity prices have recovered to constructive levels Modest Market  Product support activity continues to improve Recovery  Significant mining and infrastructure projects underpin 2021 revenue outlook  Planning for revenue recovery and purchasing inventory;

12. Slide 12: Sustainability Has Been a Long-Term Priority for Finning

    Sustainability Has Been a Long-Term Priority for Finning E Reducing GHG emissions from facilities and fleets, enhancing waste management, and minimizing potential risks from spills Safety and health Fostering a culture of safety and health, promoting meaningful Inclusion and diversity S inclusion of

13. Slide 13: Sustainability – Performance Highlights

    Sustainability – Performance Highlights ENVIRONMENT PEOPLE & COMMUNITIES GHG Emissions 2019 vs 2017 Leveraging Technology CANADA TOTAL New electronic job hazard assessment (eJHA) tool is -8.6% -7.5% supported by satellite- 30% 6% enabled communication devices so employees can use it in remote locati

14. Slide 14: 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  Machine Condition Monitoring  eCommerce on www.parts.cat.com  Integrated Knowledge Centers (IKCs)  Integrated Procurement  Marketing Automation  24/7 Ca

15. Slide 15: Finning Autonomy

    Finning Autonomy 20%+ Productivity Improvement vs Imperial Oil Conventional Fleet Kearl (oil sands) SCALABLE ~100 trucks and 250+ auxiliary 797F vs limited from competition Fleet Size 22 trucks As at Sept 2020 INTEROPERABLE with conventional and competitors’ fleets Teck  Highland Valley Copper (Can

16. Slide 16: Disclosures

    Disclosures Forward-looking information This presentation includes “forward-looking information” (as defined in applicable 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

17. Slide 17: Disclosures

    Disclosures Non-GAAP financial measures This presentation includes certain “non-GAAP financial measures”, which are called out the first time they are used. The non-GAAP financial measures do not have a standardized meaning under International Financial Reporting Standards (IFRS) and therefore may n

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