Finning International Inc. · TSX:FTT
Finning International — Investor Presentation (September 2017)
20 slides from Finning International's investor presentation, Sep 19, 2017
Slide 1: Investor Presentation
INVESTOR PRESENTATION Scott Thomson, President and CEO Chad Hiley, CHRO, Finning International; SVP HR, Finning Canada Mauk Breukels,VP Investor Relations Montreal, Toronto September 19-20, 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 28.00 Unrivalled service for nearly 85 years Market Cap 4.7B Diversified customer base S&P/DBRS rating BBB(+/high) Annual dividend / share 0.76 12,000 employees Dividend yield 2.7% 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: Talent – Strengthened Leadership Team
Talent – Strengthened Leadership Team (1) Employees in Green 9-Box (%) Women in Leadership Roles (%) 100% 30% 25% 78% 75% 75% 25% 80% 22% 70% 20% 66% 19% 20% 60% 56% 48% 51% 15% 12% 40% 10% 7% 20% 5% 0% 0% Canada UK & Ireland South America Consolidated Canada(2) UK & Ireland South America 2014 2016
Slide 6: 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 transformation Processes and systems Invested Profitable market share EBIT Capital Foundational Prior
Slide 7: 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 8: Parts Supply Chain Improvement
Parts Supply Chain Improvement Parts Inventory ($ millions) Parts Turns (times) 750 3.8 3.6 700 3.4 3.2 650 3.0 2.8 600 2.6 2.4 550 2.2 500 2.0 2013 2014 2015 2016 Q2 2017 2013 2014 2015 2016 Q2 2017 From 2013 to Q2 2017 Key Improvement Drivers Parts Turns 0.9 times Centralized inventory managemen
Slide 9: 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 (1) New equipment preparation New Equipment Inventory ($m) New Equipment Turns (times)
Slide 10: Innovate – Digital Strategy
Innovate – Digital Strategy Customer Benefits Valuable insights and visibility Increased fleet uptime Lower owning and operating costs Improved equipment performance Omni-channel choice Finning Opportunities Deeper customer and market insights Additional revenue growth opportunities
Slide 11: Digital Strategy – Financial Projections
Digital Strategy – Financial Projections Digital Revenue Projections ($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 S
Slide 12: Strong Balance Sheet and Capital Allocation Flexibility
Strong Balance Sheet and Capital Allocation Flexibility Redemption Long-Term Debt Profile Capital Allocation Priorities Announced Maturity within 5 years, $C millions 6.02% due Jun 2018 Dividends Debt reduction 3.232% due Jul 2020 Targeted investment in technology 3.98% due Jan 2022 Discipli
Slide 13: Key Takeaways
Key Takeaways Positioned for profitable and capital efficient growth Reduced cost structure Improved capital discipline Positive free cash flow 2017 priorities Global equipment supply chain Product support growth Rental transformation Profitable market share Strategic focus on di
Slide 14: Appendix
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Slide 15: Product Support – Canada Mining Opportunities
Product Support – Canada Mining Opportunities Mining Truck Large Dozer 797 D11 & D10 Oil sands Non-mining 45% 45% Canada Product Support Revenue YTD 2017(1) At Dec 2016 Population(1) 316 788 Other mining Customers 6 15+ 10% (1) 6 months ended June 30, 2017 1st replacement of large ~2 years/ ~1.5 yea
Slide 16: Product Support – South America Mining Opportunities
Product Support – South America Mining Opportunities Non-mining Mining Truck Large Dozer 20% 797 D11 & D10 South America Product Support Revenue YTD 2017(1) At Dec 2016 Population(1) 211 394 Mining 80% Customers 5 25+ (1) 6 months ended June 30, 2017 1st replacement of large ~2.5 years/ ~4 years/ 79
Slide 17: Significant Infrastructure Opportunities
Significant Infrastructure Opportunities Announced Government Infrastructure Spending C$ billions US$ billions £ billions / € billions British Columbia 24.5 (2017-2019) Chile 61 (2017-2020) UK 300 (2017-2021) Alberta 32.8 (2017-2020) Argentina 48 (2017-2020) Ireland 38 (2017-2021) Saskatchewan 1.6 (
Slide 18: 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 19: 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 20: Performance Solutions
Performance Solutions Revenue Growth Predictive analytics drive improved CAGR (2013 – 2016) 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 Custome
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