Toromont Industries Ltd. · TSX:TIH
Toromont Industries — Investor Presentation (September 2015)
41 slides from Toromont Industries's investor presentation, Sep 10, 2015
Slide 1: Investor Presentation September 2015
September, 2015 Investor Presentation
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements and information herein that are not historical facts are "forward-looking information". Words such as “plans”, “intends”, “outlook”, “expects”, “anticipates”, “estimates”, “believes”, "likely", “should”, "could", "will", "may" and similar expressions often ident
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS Market Leading Brands And Position Product Support Provides Stability Superior Financial Track Record Focus on Operational Excellence Strong Balance Sheet Growth Opportunities In Diversified Segments 47 Year Dividend Record, 26 Of Consecutive Growth 3
Slide 4: Multiple Growth Platforms
MULTIPLE GROWTH PLATFORMS: EQUIPMENT GROUP Construction Industries Resource Industries CIMCO 4
Slide 5: Organic Growth Delivers Returns
ORGANIC GROWTH DELIVERS RETURNS 1,800 180 1,600 160 1,400 140 Net Income ($MM) 1,200 120 Revenue ($MM) 1,000 100 800 80 600 60 400 40 Total Sales 200 20 NET INCOME 0 0 Act 05 Act 06 Act 07 Act 08 Act 09 Act 10 Act 11 Act 12 Act 13 Act 14 ► Organic growth delivered 9% annual earnings increase on 6% a
Slide 6: How Will the Equipment Group Continue to Grow?
HOW WILL THE EQUIPMENT GROUP CONTINUE TO GROW? Mining Power Systems Construction Parts & Service Market Share Product Range ORGANIC GROWTH 6
Slide 7: Strong Dealer Network
STRONG DEALER NETWORK Equipment Group 7 Toromont CAT Mine Site Branches Meadowbank Mary River +2,600 Members Nunavut 1. Agnico Eagle 1 DEDICATED TEAM 2. Goldcorp 3. DeBeers DELIVERS 4. Detour Gold 6 5. Goldcorp Voisey’s SPECIALIZED 6. Vale Bay Newfoundland 7. Baffinland Manitoba & Labrador EQUIPMENT
Slide 8: Toromont CAT Branch Network
TOROMONT CAT BRANCH NETWORK Hamilton Branch Total # of techs Total Sq. Ft. Total Sq. ft. owned Employees Toromont Cat Total 1,907 888 1,013,862 952,400 Number of facilities 34 24 Average Size 29,820 Total Book Value ($MM) 102 Facilities Capex past 5 years ($MM) 19 8
Slide 9: Diverse Markets Served
DIVERSE MARKETS SERVED Large & Local Contractors (37%) Large Contractor Other 22% 20% Other 10% Road Construction Quarry & Aggregates 5% Infrastructure 14% Equipment Services 6% Local Contractor Utilities 15% 4% Commercial Residential Industrial Building 3% 6% Mining 3% Excavation & 26% Earthmoving
Slide 10: Steady Growth in Revenue
STEADY GROWTH IN REVENUE GROWTH FUELED BY: ► Expanded Markets and New Branches ► Expanded Service Offerings ► Increased Population and Larger Equipment Fuels Product Support 1,250 30,000 25,000 1,000 20,000 Estimated Installed Base (Units) Revenue ($millions) 750 15,000 500 10,000 250 5,000 0 0 2002
Slide 11: Battlefield Branch Network
BATTLEFIELD BRANCH NETWORK Stoney Creek Branch & Head Office Total # of techs Total Sq. Ft. Total Sq. ft. Employees owned Battlefield Total 745 170 374,436 271,511 Number of facilities 41 30 Average Size 9,130 Total Book Value ($MM) 50 Facilities Capex past 5 years ($MM) 14 11
Slide 12: Diverse Markets
DIVERSE MARKETS Rental and sales mix Estimated rental market opportunity Source: Mgmt 2014/15 estimates Source: 2014 actual results DIVERSE RENTAL & COMPLEMENTARY OPPORTUNITIES 12
Slide 13: Substantial Infrastructure Deficit
SUBSTANTIAL INFRASTRUCTURE DEFICIT Equipment Group 79 % infrastructure ffailing $130 B 79% f a i l i n g Of infrastructure 9 million people National infrastructure deficit, The Greater Toronto and Hamilton Canadian physical infrastructure growing at $2B annually Area is one of the fastest-growing ha
Slide 14: Infrastructure Commitment Federal
INFRASTRUCTURE COMMITMENT FEDERAL Indications point to continued robust investment levels 14
Slide 15: Infrastructure Commitment Ontario
INFRASTRUCTURE COMMITMENT ONTARIO 15
Slide 16: Rental Market
RENTAL MARKET Equipment Group 225 200 175 150 R12 Revenue ($millions) 125 100 75 50 HEAVY RENT LIGHT EQUIPMENT POWER GENERATION 25 0 2007 2008 2009 2010 2011 2012 2013 2014 Q2 ‘15 Light Equipment Heavy Equipment Power Generation Rent with a Purchase Option Rental - Used 16
Slide 17: Rental Market Opportunity
RENTAL MARKET OPPORTUNITY Equipment Group 1,200 $1,130 Total market* Toromont revenue 1,000 Rental Revenues $ Millions $850 800 Significant 600 growth opportunity 400 $200 200 $80 $185 $147 17% 16% 0 $26 13% $12 15% Battlefield Heavy Rent Power Total ($ Millions) Battlefield Heavy Rent Power Total F
Slide 18: Mining Opportunities
Resource Industries MINING OPPORTUNITIES ► Good diversity of commodities in Toromont territories ► Gold has been a significant contributor ► Opportunities continue – albeit tight market ► Significant increase in installed base increases product support opportunity ► Large geography in safe jurisdict
Slide 19: Growth in Mining Installed Base
Resource Industries GROWTH IN MINING INSTALLED BASE 1,600.0 1400 1300 1,400.0 1200 Current Replacement Value of Fleet ($MM) 1100 1,200.0 1000 Installed Base (Units) 1,000.0 900 800 800.0 700 600 600.0 500 400 400.0 300 200.0 200 100 0.0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q
Slide 20: Product Support
PRODUCT SUPPORT Equipment Group $550 1200 $500 $450 1000 $400 Trailing 12 month Product Support Revenues ($MM) Number of Technicians 800 $350 $300 600 $250 $200 400 $150 $100 200 $50 $- 0 Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun '03 '04 '04 '05
Slide 21: Expanded Product Support Offering
EXPANDED PRODUCT SUPPORT OFFERING Largest opportunity 2nd largest and expanding Larger customers who do not ► Potential to capture $100M opportunity want to own facilities or hire increase in Parts sales ► Targeting through technicians ► Older machine population specialized services more ► MARC agre
Slide 22: Equipment Management Solutions Advancing
EQUIPMENT MANAGEMENT SOLUTIONS ADVANCING ► Increasing focus on EM and CM (condition monitoring) solutions ► Provides further opportunity for differentiation and customer service ► Toromont CAT currently has 2,500 contracted service agreements in place (PMs and MARCs) 22
Slide 23: Complementary Products Supplement Growth
COMPLEMENTARY PRODUCTS SUPPLEMENT GROWTH Machine Control & Guidance Systems Mobile Crushing & Screening Products 14,000 40,000 12,000 35,000 30,000 10,000 Revenue ($000's) 25,000 Sales ($000's) 8,000 20,000 6,000 15,000 4,000 10,000 2,000 5,000 - - 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2
Slide 24: Power Systems Growth Opportunities
POWER SYSTEMS GROWTH OPPORTUNITIES ► Increasing share of higher investment in CHP & alternative energies (MWM) ► Large power plants for remote mine sites (MaK) ► Natural gas-fueled distributed power (District Energy) ► Expanded products – Toshiba UPS & Switch Gear offering, Gorman pumps 4% ► Rental
Slide 25: Growing Platform in Manitoba
GROWING PLATFORM IN MANITOBA Four locations : ► Elie ► Portage la Prairie ► Neepawa Manitoba ► Brandon 84 employees including 34 technicians Consolidates former: Proforma 2014 revenues: • $94 million 25
Slide 26: Expanded Product Lines
EXPANDED PRODUCT LINES Former Toromont Cat Ag + Former Ag West + Former Canpro + Attachments Comprehensive Product Offering Matched with Technology: Comprehensive Support Network 26
Slide 27: 100 Years of Serving Refrigeration Markets
100 YEARS OF SERVING REFRIGERATION MARKETS Revenue Split (2014) Recreational 19% Product Support 47% Industrial 34% ► 100 year history ► Strong industrial customer US Sales base Coverage ► Leader in recreational systems 400 Mile Sales Ring Note: Total of 22 CIMCO locations not reflected in map above
Slide 28: Excellent Growth Opportunities
EXCELLENT GROWTH OPPORTUNITIES EXPAND MARKETS – TECHNOLOGY & VALUE-ADDED SERVICES ► Increase application of Eco Chill into Industrial Applications ► Expand scope of work – related HVAC, automation & bldg controls ► Application of heat pump systems ► Develop of Ammonia/CO2 solutions EXPAND TERRITORIE
Slide 29: Delivering Results
DELIVERING RESULTS 29
Slide 30: High Performance Capital Management
HIGH PERFORMANCE CAPITAL MANAGEMENT Return on Opening Net Debt-to-Capitalization Ratio Shareholders’ Equity (%) (%) 29.9 9.1 28.9 25.7 23.0 21.6 21.5 20.6 18.9* 18.7 18.9 17.5 15.5 0.32 0.31 0.30 0.26 0.25 9.1 0.16 0.17 0.13 0.05 0.06 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 * Exc
Slide 31: A Decade of Cash Generation 2005-2014
A DECADE OF CASH GENERATION 2005-2014 Dividends Investment in 20% Working Capital 18% ► Continuing Ops “Cash earnings” of $1.3 billion Acquisition 3% Property Plant & Equipment ► 58% reinvested Buybacks 3% 13% ► 23% returned ► FCF = 57% of NI Other Net Investment 19% in Rental Equipment 24% Note: Hi
Slide 32: A Decade of Investment
A DECADE OF INVESTMENT 60.0 30.0 Plant 50.0 Rentals 25.0 Battlefield Toromont CAT CIMCO 20.0 40.0 15.0 30.0 10.0 20.0 5.0 10.0 - - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 18.0 1600 18000000 16.0 16000000 Information Technology 1400 Technica
Slide 33: Balance as a Virtue
BALANCE AS A VIRTUE Dividends* 20% Working Capital 18% Acquisition 3% Buybacks PP&E 3% 13% Other 19% Rentals 24% 33
Slide 34: Sustained Growth in Dividends Since 1989
SUSTAINED GROWTH IN DIVIDENDS SINCE 1989 Annual Dividends Per Share (Cents) Ten Year CAGR 15.5% 0.70 47 Year Dividend 0.60 Record, 26 Of 0.50 Consecutive Growth 0.40 Dividends Per Share $ 0.30 0.20 0.10 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Note: Historic pro forma based
Slide 35: Growth and Profitability Across the Cycle
GROWTH AND PROFITABILITY ACROSS THE CYCLE Net Earnings from Continuing Operations(1) ($ millions) $142.2 $133.2 $119.5 $123.0 $102.7 $73.6 $76.7 $59.4 2008 2009 2010 2011 2012 2013 2014 LTM Note: LTM net earnings for the twelve months ended June 30, 2015. (1) Net earnings presented on a continuing o
Slide 36: Growth and Profitability Throughout the Cycle
GROWTH AND PROFITABILITY THROUGHOUT THE CYCLE Pro Forma Net Earnings from Continuing Operations 133.2 (Millions) 119.5 123.0 102.7 82.2 76.7 73.6 59.4 52.3 40.3 42.6 37.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 36
Slide 37: Q2 Results
Q2 RESULTS $ millions except EPS 2015 2014 % Change REVENUES 484.5 415.6 17 OPERATING INCOME 51.7 39.9 30 NET EARNINGS 36.4 28.9 26 EPS (BASIC) 0.47 0.37 27 37
Slide 38: Experienced Management
EXPERIENCED MANAGEMENT EXECUTIVE TEAM SCOTT J. MEDHURST 27 years with Toromont President and Chief Executive Officer 27 year career Randy B. Casson Paul R. Jewer David A. Malinauskas President Executive Vice President President Construction Industries & Chief Financial Officer CIMCO 38 years with To
Slide 39: Equity Ownership
EQUITY OWNERSHIP OWNERSHIP: Units $MM % Board 2,573,015 $ 73.4 3.3 Senior Management 1,356,874 38.7 1.7 Employees (ESOP) 908,897 28.0 1.3 TOTAL 4,838,786 $ 140.1 6.3 Balances as at December 31, 2014 with closing price $28.51 Units include shares and DSUs, both of which are purchased EQUITY OWNERSHIP
Slide 40: The Financial Way Forward
THE FINANCIAL WAY FORWARD Consistent Focus: ► Manage Working Capital ► Invest in our Core Assets ► Expand our Rental Fleet ► Invest in our People and Technologies ► Increasing Dividends 40
Slide 41: Proven Steady Growth
Proven Steady Growth September 10, 2015
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