Finning International Inc. · TSX:FTT

Finning International — Investor Presentation (February 2005)

23 slides from Finning International's investor presentation, February 2005

  1. Slide 1: Wayne Bingham, Executive Vice President and CFO

    Wayne Bingham Executive Vice President and CFO

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation contains forward-looking statements and information which reflect the current view of Finning International Inc. ("Finning" or the "Company") with respect to future events and financial performance. Any such forward-looking statements are subject to risks

  3. Slide 3: Presentation Agenda

    Presentation Agenda ƒ Company Profile ƒ Corporate Strategies ƒ Financial Performance ƒ 2005 Outlook and Growth Opportunities ƒ Summary 3

  4. Slide 4: Finning International Inc.

    Finning International Inc. ƒ Incorporated 1933 in Vancouver, BC ƒ Largest Caterpillar dealer in the world ƒ Sell new and used equipment and engines ƒ Provide parts and service ƒ Equipment rental ƒ Focused on three key geographies: Western Canada, UK, South America ƒ 12,000 employees 4

  5. Slide 5: Investment Performance

    Investment Performance ƒ Public since 1969 (TSX:FTT) ƒ Investment grade credit: BBB+ / BBB (high) ƒ $3 billion market capitalization ƒ Growing dividends ƒ Increased four times since 2001 ƒ Current yield 1.1% ƒ Exemplary corporate governance standards ƒ Ranked No. 1 by Canadian Business Magazine in 2

  6. Slide 6: Investment Performance

    Investment Performance Relative Price Performance (FTT vs. S&P/TSX Comp. Index) Dec 31, 1999 – Dec 31, 2004 300 Finning International Inc. 250 200 150 S&P/TSX Composite Index 100 50 31-Dec-99 31-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 6

  7. Slide 7: Strategy

    Strategy ƒ Leverage Caterpillar relationship ƒ Diversify by: ƒ Geography ƒ Industry served ƒ Revenue stream ƒ Grow parts, service, and rentals ƒ Enhances earnings stability and predictability ƒ Pursue prudent growth ƒ Organic growth plus strategic acquisitions ƒ Set and achieve challenging, but real

  8. Slide 8: Geographic Diversification and Balance

    Geographic Diversification and Balance Revenue EBIT* Assets 29% 36% 39% 17% 20% 31% 23% 26% 13% 21% 28% 17% Canada UK South America Hewden 9 months to Sept 30, 2004 *Excludes corporate and other expenses 8

  9. Slide 9: End Market Diversification New Equipment Deliveries

    End Market Diversification New Equipment Deliveries* Construction Forestry 27% 8% Power Petroleum 20% 6% Other 11% Mining 28% 9 * New equipment deliveries for 9 months ended Sept. 30, 2004

  10. Slide 10: Revenue Diversification

    Revenue Diversification Revenue = $2.5B Revenue = $4B Rental Rental Finance 7% 46% 24% 55% Finance 5% 1% Parts and Service Parts and 34% Service 30% Equipment Equipment 45% 54% 2000 2004 LTM* 10 * 12 months to Sept. 30, 2004

  11. Slide 11: Attractive Revenue Growth

    Attractive Revenue Growth $billions 5 1 3% 4.1 R= 4 CAG 3.6 3.2 3.2 3 2.5 2.2 2 1 0 1999 2000 2001 2002 2003 2004 9 months annualized 11

  12. Slide 12: Basic Earnings per Share

    Basic Earnings per Share $2.0 2 3% R= CAG 1.72 1.71 $1.5 1.37 1.22 0.95 $1.0 0.75 $0.5 $0.0 1999 2000 2001 2002 2003 2004 9 months actual 12

  13. Slide 13: Normalized Earnings per Share

    Normalized* Earnings per Share $2.0 2 4% R= CAG 1.75 1.66 1.54 $1.5 1.33 0.95 $1.0 0.75 $0.5 $0.0 1999 2000 2001 2002 2003 2004 9 months actual *Excludes items not reflective of ongoing earnings 13

  14. Slide 14: Earnings Headwinds

    Earnings Headwinds Negative Year over Year Impact on Earnings: 2003 2004(f) 2003-2004 combined Foreign Exchange* $0.20 $0.18 $0.38 Pension Expense $0.06 $0.09 $0.15 $0.53 per share *Mainly USD/CAD but also GBP/CAD 14

  15. Slide 15: Cost Savings Program "$60M by '06"

    Cost Savings Program “$60M by ’06” ƒ Broad portfolio of projects ƒ Hewden initiatives ƒ Asset reduction ƒ Company-wide savings ƒ Disciplined process ƒ Project management approach ƒ Six Sigma ƒ Aligned with CAT and their resources ƒ 90 projects totaling $60M of savings identified to date ƒ Further pr

  16. Slide 16: 2005 Outlook

    2005 Outlook ƒ Broad economic growth drives infrastructure spending ƒ Strong commodity markets ƒ Large and growing fleet in market areas drives growing parts & service revenues ƒ Future growth through organic growth & acquisition ƒ Focus on efficiency 16

  17. Slide 17: Record Order Backlog

    Record Order Backlog C$ millions 900 800 700 600 500 400 300 200 100 0 J F M A M J J A S O N D J F M A M J J A S O N D 2003 2004 17

  18. Slide 18: Opportunities in Canada

    Opportunities in Canada ƒ Oil Sands – $5-6B opportunity ƒ Mining – expansions, openings ƒ Petroleum – record well completions ƒ Infrastructure – Alberta & BC ƒ Pipelines – arctic gas and westbound oil ƒ General construction - very strong ƒ Foresty – industry recovery & pine beetle ƒ 2010 Olympics in

  19. Slide 19: Opportunities in South America

    Opportunities in South America ƒ Mining - $1.5B opportunity ƒ Economic recovery stimulating infrastructure projects and general construction ƒ Increased oil & gas drilling activity in Argentina ƒ Future development of reserves in Bolivia ƒ potential pipeline 19

  20. Slide 20: Opportunities in the U.K.

    Opportunities in the U.K. ƒ £180B infrastructure plan provides strong growth platform ƒ Growing order backlog ƒ Profitability initiatives ƒ DBSi implementation - CAT support ƒ Optimize integration of Lex Harvey ƒ CAT market share project ƒ New management team and structure 20

  21. Slide 21: Hewden Opportunities

    Hewden Opportunities ƒ Significant performance improvement ƒ EBIT improvements through: ƒ Focus on professional market ƒ Consolidated purchasing power ƒ Hub & spoke network implementation ƒ Business process redesign / back-office integration ƒ Sale of non-core assets ƒ Synergies with Finning UK 21

  22. Slide 22: Power Systems Opportunities

    Power Systems Opportunities ƒ Goal to double revenues to $1B by 2008 ƒ Growing global demand for gas field compression and distributed power ƒ Granted UK distribution rights for Perkins Engines effective Dec/04 ƒ $50M additional revenue annually, minimal start-up costs, accretive to earnings 22

  23. Slide 23: Summary

    Summary ƒ Reliable and growing earnings stream ƒ Diversified (geographies & customers) ƒ Large, growing parts & service component ƒ Growth ƒ Organic (from existing service areas) ƒ Prudent M&A transactions to supplement ƒ Maintain conservative financial position ƒ Don’t “bet the farm” ƒ To take adva

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