Finning International Inc. · TSX:FTT
Finning International — Investor Day (December 2004)
17 slides from Finning International's investor day presentation, Dec 14, 2004
Slide 1: Investor Day
Investor Day December 14, 2004 Wayne Bingham Executive Vice President and Chief Financial Officer
Slide 2: Outline
Outline Third quarter 2004 review 2005 outlook Macro assumptions - guidance “$60 million by ’06” program Corporate governance Long-term incentive program
Slide 3: Record Q3 Earnings
Record Q3 Earnings Record revenue and earnings Basic Earnings per Share (C$) Strong performance in 0.60 0.56 South America and Canada 0.50 0.48 0.46 Improving trend at Hewden 0.40 UK dealership – 0.30 order book growing 0.20 2002 2003 2004 3rd Quarter
Slide 4: 2005 Outlook
2005 Outlook Continuation of commodity cycle Strong growth driven by new equipment & customer service New equipment revenue up 16% in ’05 Customer service revenue up 16% in ’05 Substantially exited the lease business Rental revenue up by 1–2% in ’05 Overall revenue up by ~10% Strong
Slide 5: 2005 Outlook (cont'd)
2005 Outlook (cont’d) Strong Alberta and BC economies Oil sands expansion continues Numerous BC mining opportunities CAT commitment re: UK dealership market share and DBSi South America replacement cycle is ahead of us Hewden driving efficiencies in an improving market environment Impr
Slide 6: 2005 Guidance Assumptions
2005 Guidance Assumptions Excludes any DSU costs for vesting Foreign exchange – 1.25 Income tax rate 20-23%
Slide 7: 2005 Guidance
2005 Guidance 2005 guidance Consolidated revenue growth 8% - 11% EPS growth 12% - 15% (over 2004 normalized guidance, adjusted for LTIP) FX impact – $0.09/share Pension – $0.07/share
Slide 8: Cost Savings Program "$60M by '06"
Cost Savings Program “$60M by ’06” Broad portfolio of projects Hewden initiatives Asset reduction Company-wide savings Disciplined process Project management approach Six Sigma Aligned with CAT and their resources 90 projects totaling $60M of savings identified to date Further pr
Slide 9: Projects Underway
Projects Underway In 2005 In 2006 In 2007 All Projects Cumulative Cumulative Cumulative Cumulative Cumulative Cumulative number of cost number of cost number of cost All figures in C$ millions projects savings projects savings projects savings Finning Canada 28 $7 44 $12 44 $12 Finning UK 2 $1 5 $4
Slide 10: Project Pipeline
Project Pipeline Numerous projects in the pipeline will be added to portfolio Areas being investigated include: Global purchasing and supply chain Health care and benefits Pension costs Global insurance Global shared services
Slide 11: Asset-Related Initiatives
Asset-Related Initiatives Target total asset reduction of $200M Cost reduction through reduced interest expense as a result of debt repayment Asset-related initiatives include: Dispositions of non-core assets (properties and non-core assets) Working capital improvements
Slide 12: Program Management Office
Program Management Office Oversees and coordinates the support component of program management Activities include: Risk and issue management Communications and change management Financial tracking Deliverable tracking Schedule reporting Status and progress monitoring Project Manage
Slide 13: Program Management Office
Program Management Office 1. Value EXECUTIVE GOVERNANCE 2. Resources 3. Timing 4. Benefits 5. Etc. PMO PMO PMO PMO PMO N AT I O N N TER AL FII Initiatives I NME NT A L IG Customer Reqs Business Ideas PORTFOLIO Project Scorecards $ A Project CAT Issues/Risks Project B Strategy C Status ANALYZE PICK P
Slide 14: Corporate Governance
Corporate Governance In full compliance with new corporate governance guidance of TSX Ranked No. 1 by Canadian Business Magazine in 2003 and 2004 Ranked No. 2 by Globe & Mail in 2004 Process initiated to comply with MI 52-109 (Bill 198) Well advanced and will be ready for full CEO/CFO cert
Slide 15: Investor Day: Additional Information
Investor Day December 14, 2004 Additional Information
Slide 16: Example – DSU Vesting
Example – DSU Vesting 1. Share price exceeds $33.87 for 10 consecutive days 2. Next vesting hurdle of the 2002 DSU’s achieved 3. 68,800 notional units vest (275,200 * 25%) 4. Expense of $2.3M recorded (68,800 * $33.87) 5. Going forward, these vested units will be marked to market and the value will
Slide 17: Performance Vesting DSU's
Performance Vesting DSU’s 2002 DSUs 2003 DSUs 2004 DSUs Grant Price 26.05 26.95 29.38 25% 28.66 achieved Q2-03 29.65 achieved Q3-03 32.32 achieved Q2-04 50% 31.26 achieved Q3-03 32.34 achieved Q2-04 35.26 75% 33.87 35.04 38.19 100% 36.47 37.73 41.13 # Granted 275,200 423,820 118,100 EPS impact of ea