Finning International Inc. · TSX:FTT
Finning International — CIBC Whistler Institutional Investor Conference 2017
19 slides from Finning International's conference presentation, Jan 26, 2017
Slide 1: Investor Presentation
INVESTOR PRESENTATION Scott Thomson, President and CEO CIBC Whistler Institutional Investor Conference January 26, 2017
Slide 2: Forward Looking Information
Forward Looking Information This report contains statements about the Company’s business outlook, objectives, plans, strategic priorities and other statements that are not historical facts. A statement Finning makes is forward-looking when it uses what the Company knows and expects today to make a s
Slide 3: Finning Overview
Finning Overview Largest Caterpillar dealer Market Statistics(1) - FTT (TSX) Share price 26.15 Unrivalled service for nearly 85 years Market Cap 4.4B Diversified customer base S&P/DBRS rating BBB(+/high) Annual dividend / share 0.73 11,900 employees Dividend yield 2.8% Financial Statistics -
Slide 4: Strategic Direction
Strategic Direction PURPOSE We believe in partnering and innovating to build and power a better world VISION Leveraging our global expertise and insight, we are a trusted partner in transforming our customers’ performance Page 4
Slide 5: Profitable and Capital Efficient Growth
Profitable and Capital Efficient Growth GROWTH 2017 Priorities Digital strategy E-commerce Equipment supply chain Connected assets ROIC Product support Performance solutions Rental strategy Processes and systems Invested Profitable market share EBIT Capital Foundational Priorities
Slide 6: Develop
Develop SAFETY - Prevention of Significant Incidents Global standards for critical operations TRIF TIF TRIF 2013 vs 2016 Total Total Recordable Injury Incident COMMUNITY - STEM ↓ 33 % Frequency Frequency Working with non-profit strategic partners Advancing youth-focused STEM (science, technology,
Slide 7: Perform: 3-Year Commitments Scorecard
Perform: 3-Year Commitments Scorecard Operational Priorities 2013 Commitments 2016 Outcome Assuming no industry change Parts turns 0.7 times Supply Chain Inventory turns 0.5 - 0.9 times Equipment turns 0.6 times Equipment sales 36%(1) Service EBIT $60M Service Excellence EBIT $
Slide 8: Strong Free Cash Flow and Balance Sheet
Strong Free Cash Flow and Balance Sheet Free Cash Flow by Quarter ($ millions) Net Debt to Adjusted EBITDA(1) Dividend as % of FCF 2.5 40% 38% 2013 2014 2015 2016E $441 $483 $325 >$300 35% 2.0 400 2.0 1.7 30% 23% 24% 300 25% 1.5 1.3 20% 200 1.0 15% 10% 100 0.5 5% 0 0.0 0% 2013 2014 2015 2013 2014 20
Slide 9: Upcycle Value Proposition
Upcycle Value Proposition Resilient Business Model Upcycle Growth Drivers Stable product support business Reduced cost structure Successful execution of operational priorities Working capital improvements Strong free cash flow generation Product support opportunities Profitable service
Slide 10: Parts Supply Chain Improvement
Parts Supply Chain Improvement Part Inventory ($ millions) Parts Turns (times) 750 3.5 700 3.0 650 600 2.5 550 500 2.0 2013 2014 2015 Q3 2016 2013 2014 2015 2016 E From 2013 to 2016 Key Improvement Drivers Parts Turns 0.7 times Centralized inventory management Customer Loyalty 13 points Simplifi
Slide 11: Equipment Supply Chain Transformation
Equipment Supply Chain Transformation Simplify Reduce Improve accuracy quoting, sales, Improve Forecast Sales NEP(1) Invoice invoice to and planning and attachment execution cash cycle processes Days of Inventory New Equipment Inventory ($m) New Equipment Turns (times) 800 3.5 750 3.0 700 2.5 Equipm
Slide 12: Product Support – Canada Mining Opportunities
Product Support – Canada Mining Opportunities Mining Truck Large Dozer 797 D11 & D10 Non-mining Oil sands 50% 40% Canada Product Support Revenue(2) At Dec 2016 Population(1) 316 788 Other mining 10% Customers 6 15+ 1st replacement of large ~2 years/ ~1.5 years/ Product Support Sweet Spot components
Slide 13: Product Support – South America Mining Opportunities
Product Support – South America Mining Opportunities Non-mining Mining Truck Large Dozer 20% 797 D11 & D10 South America Product Support Revenue(2) At Dec 2016 Population(1) 211 394 Mining 80% Customers 5 25+ 1st replacement of large ~2.5 years/ ~4 years/ 797 Age Profile components 15,000 hours 18,0
Slide 14: Innovate: Digital Strategy
Innovate: Digital Strategy Customer Benefits Valuable insights and visibility Increased fleet uptime Lower owning and operating costs Improved equipment performance Omni-channel choice Finning Opportunities Deeper customer and market insights Additional revenue growth opportunities L
Slide 15: E-Commerce: Omni-Channel Choice
E-Commerce: Omni-Channel Choice E-COMMERCE - Parts(1) Online Parts Revenue Projections % of total Customer Parts Share(2) 11 points 30% up 10 Transaction Cost points (1) Caterpillar study covering 11,700 e-commerce and integrated 20% procurement customers between 2010-2014 (2) Parts purchases from F
Slide 16: Connected Assets
Connected Assets Insights drive improved equipment performance, market visibility, and lower costs Connected Assets Projections % of total population(3) 100% 80% 60% Drive Enable Parts Share(1) Performance 40% Solutions ~10 points(2) 20% (1) Parts purchases from Finning as a percentage of total part
Slide 17: Performance Solutions
Performance Solutions Revenue Growth Predictive analytics drive improved CAGR (2013 – 2016E) maintenance and increased productivity Technology to maximize machine productivity on ~15 % job sites CASE STUDY UK - Large Quarrying Customer Performance Metrics Customer Benefits Key Data & Services Custom
Slide 18: Financial Projections
Financial Projections Digital Revenue Projections ($m) Digital Spend Projections ~80% SG&A / ~20% Capitalized ($m) Connected 150 Assets 60 15% 50 E-commerce 60% 100 40 Digital Revenue Drivers 30 50 20 Performance Solutions 25% 10 0 0 2017 2019 2017 2019 EPS EPS $(0.02) Accretive Success Based Fundin
Slide 19: Key Takeaways
Key Takeaways Resilient business model Successful execution Reduced cost structure Improved capital discipline Strong free cash flow 2017 priorities Global equipment supply chain Product support growth Rental transformation Profitable market share Positioned for profitable and
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