Finning International Inc. · TSX:FTT
Finning International — Investor Presentation (September 2003)
31 slides from Finning International's investor presentation, Sep 29, 2003
Slide 1: Investor Presentation London September 29, 2003
We will be Caterpillar’s best global business partner, providing unrivalled services that earn customer loyalty. INVESTOR PRESENTATION London September 29, 2003 Doug Whitehead, President and Chief Executive Officer Wayne Bingham, EVP and Chief Financial Officer
Slide 2: Presentation Overview
2 Presentation Overview • Company Profile • Investment Highlights • Financial Review • Strategies/Growth Opportunities • Summary All figures are in Canadian dollars unless noted otherwise
Slide 3: Finning International Inc.
Company Profile 3 Finning International Inc. • Incorporated in 1933 - head office Vancouver, B.C., Canada • Profitable every year since incorporation • Caterpillar’s largest dealer worldwide • Focused on three key geographies: Western Canada, the U.K. and South America • Over 11,000 highly skilled e
Slide 4: What Does Finning Do?
Company Profile 4 What Does Finning Do? • Sell new equipment (95% is Caterpillar) and engines • Sell used equipment • Provide ongoing equipment maintenance and repair • Sell parts and components • Rent and lease equipment • Finance equipment • Insure equipment
Slide 5: What Does Finning Really Do?
Company Profile 5 What Does Finning Really Do? • We are in the productivity business • We develop customized solutions that boost our customers’ return on investment • We lower customers’ total owning and operating costs over the equipment life • We minimize customers’ risk of owning and operating e
Slide 6: Caterpillar Dealers
Company Profile 6 Caterpillar Dealers • “Strong independently owned dealer organization is key to long term success” • 180 dealers worldwide • Exclusive right to represent Caterpillar in defined geographic areas • Most are privately owned • Most operate in one specific geographic area
Slide 7: Western Canada
Company Profile 7 Western Canada 1933 – founded CAT dealer in British Columbia 1977 - CAT dealer in Yukon 1989 - acquired CAT dealer in Alberta and the Northwest Territories 2002 Revenue: $1.27 billion Employees: 2,500 Branches: 34 Key Industry Segments: mining, forestry, construction, oil & gas, go
Slide 8: United Kingdom
Company Profile 8 United Kingdom 1983 - acquired two CAT dealers in the U.K. 1997 - acquired the remaining CAT dealer in the U.K. 2001 - acquired Hewden Stuart Plc., rental equipment and services business 2003 - acquired Lex Harvey, largest independent material handling company in the U.K. 2002 Reve
Slide 9: South America
Company Profile 9 South America 1993 - acquired CAT dealer in Chile 2003 - acquired CAT dealers in Argentina, Uruguay and Bolivia 2002 Revenue (pro-forma): $560 million Employees: 2,300 Branches: 24 Key Industry Segments: mining, oil & gas, construction, agriculture, forestry, fishing Growth Opportu
Slide 10: Investment Highlights
Investment Highlights 10 Investment Highlights • Prudent and consistent growth • Organic growth complemented by strategic geographic expansion • Growing rental, parts and service businesses provide increased earnings stability and predictability • Regional, product and end market diversification len
Slide 11: Long Term Revenue Growth
Investment Highlights 11 Long Term Revenue Growth Organic growth complemented by acquisitions Hewden 20 Year CAGR of 11.9% (U.K.) C$ millions 2001 3,500 10 Year CAGR of 12.9% H. Leverton (U.K.) 3,000 1997 2,500 Gildemeister (Chile) 1993 R. Angus 2,000 Argentina/Bolivia/ Lex Harvey (Canada) 1989 Urug
Slide 12: Long Term Share Growth
Investment Highlights 12 Long Term Share Growth 20 year CAGR of 13.1% 1400 1200 1000 S&P 500 800 Finning International Inc. 600 400 200 S&P TSX Index 0 Aug-83 Aug-85 Aug-87 Aug-89 Aug-91 Aug-93 Aug-95 Aug-97 Aug-99 Aug-01 Aug-03 Note: 10 year CAGR of 14.1%
Slide 13: 5 Year Share Price Performance
Investment Highlights 13 5 Year Share Price Performance Relative Price Performance Finning International Inc. vs. Peers vs. S&P/TSX Index August 28, 1998 to August 29, 2003 275 250 225 200 175 150 125 100 75 50 28-Aug-98 28-Aug-99 28-Aug-00 28-Aug-01 28-Aug-02 28-Aug-03 Finning International Inc. Ca
Slide 14: International Diversification and Balance
Investment Highlights 14 International Diversification and Balance FINNING FINNING FINNING HEWDEN POWER & (CANADA) (UK) LTD.** SOUTH AMERICA* STUART ENERGY SYSTEMS Revenue Revenue Revenue Revenue Revenue (32%) (25%) (14%) (19%) (10%) * South America includes pro-forma Argentina, Bolivia and Uruguay;
Slide 15: End Market Diversification
Investment Highlights 15 End Market Diversification Serving a number of different industries New Equipment* Construction Plant Hire Petroleum 15% (rental) 4% 8% Other 10% Mining 33% Power 21% Forestry 9% * New equipment deliveries for 2002
Slide 16: Revenue Diversification
Investment Highlights 16 Revenue Diversification 100% 90% 80% Total Revenue 70% 60% 50% 40% 56.6% 30% 38.6% 20% 10% 0% 1997 1998 1999 2000 2001 2002 Jun-03 Finance Rental Parts and Service Equipment
Slide 17: Gross Profit Stability
Investment Highlights 17 Gross Profit Stability 100% 80% Total Gross Profit 60% 81.2% 69.3% 40% 20% 0% 1997 1998 1999 2000 2001 2002 Jun-03 Finance Rental Parts and Service Equipment
Slide 18: Corporate Governance
Investment Highlights 18 Corporate Governance • Finning is in full compliance with the new proposed corporate governance guidelines of the Toronto Stock Exchange • Ranked 5th of 270 companies in Canada in the October 2002 study in the Globe and Mail Report on Business on corporate governance • In 20
Slide 19: 2003 Highlights
Financial Review 19 2003 Highlights • Record first half year revenue • Cashflow and earnings remain strong • Acquired Caterpillar dealerships in Argentina and Uruguay (effective January 1) and Bolivia (effective April 1) • Acquired Lex Harvey, leading independent materials handling solutions provide
Slide 20: Year to Date 2003 Results
Financial Review 20 Year to Date 2003 Results (C$ in millions except per share data) 2003 2002 Change • Revenue (Mils) $1,735.3 $1,569.0 + 11% • Net Income (Mils) $67.3 $65.4 + 3% • Earnings per share $0.87 $0.86 + 1% • Return on Equity 15.2% 15.8% -0.6% pts • Normalized EPS $0.82 $0.75 + 9% ROE 15.
Slide 21: Net Income/Cash Flow
Financial Review 21 Net Income/Cash Flow 600 500 400 $million 300 200 100 0 1998 1999 2000 2001 2002 Net Income Cash Flow after working capital changes
Slide 22: Working Capital / Sales
Financial Review 22 Working Capital /Sales Continued operational improvement 40% 36.7% 35% 30.5% 30% 25% 21.8% 17.1% 18.5% 20% 16.4% 15% 10% 5% 0% 1998 1999 2000 2001 2002 Jun-03* * Annualized sales
Slide 23: Return on Equity
Financial Review 23 Return on Equity Increasing ROE 20% 15.7% 15.2% 14.1% 15% 10.5% 8.7% 10% 5% 0.5% 0% 1998 1999 2000 2001 2002 June 2003* * 12 months rolling
Slide 24: Consolidated Debt / Equity
Financial Review 24 Consolidated Debt / Equity Reduced Leverage 1.9 1.67 1.7 1.5 1.29 1.3 1.04 1.1 0.87 0.9 0.76 0.7 0.58 0.5 1998 1999 2000 2001 2002 Jun-03 Equity includes shareholders’ equity and non-controlling interest 2000 ratio excludes Hewden investment and related debt
Slide 25: Vision
Strategies/Growth Opportunities 25 Vision We will be Caterpillar’s best global business partner, providing unrivalled services that earn customer loyalty
Slide 26: Strategic Criteria
Strategies/Growth Opportunities 26 Strategic Criteria Growth +15% per year Market Share +30% ROE +20%
Slide 27: Finning's Formula for Future Growth
Strategies/Growth Opportunities 27 Finning’s Formula for Future Growth • Continue to lever Caterpillar’s world renowned brand name • Solve difficult customer problems • Command strong regional market shares • Maximize parts, service, rental revenue • Clear financial expectations/metrics throughout t
Slide 28: Positioned for Growth
Strategies/Growth Opportunities 28 Positioned for Growth Canada • Oil Sands - $87 Billion in announced project • Arctic Gas Pipeline - $50 Billion project South America • World’s low cost copper region • Oil, gas, gold resources abound United Kingdom • £180 Billion Infrastructure Program General • E
Slide 29: Further U.K. Commitment
Strategies/Growth Opportunities 29 Further U.K. Commitment Lex Harvey acquisition - May 2003 • Largest independent materials handling company in the U.K. • Annual revenue approximately $200 million • Purchase price $220 million • Fleet of 12,000 machines; 960 employees • Moves Finning (UK) materials
Slide 30: What's Worked Over 70 Years?
Summary 30 What’s Worked Over 70 Years? • A narrow business focus - CAT products • Adding real value for customers • Simple systems, metrics, procedures • Supporting employees with a “Can Do” attitude • Diversifying geographically; by revenue source; and by end market • Making bold, but well timed a
Slide 31: Disclaimer
31 Disclaimer 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 and uncertai
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