Finning International Inc. · TSX:FTT
Finning International — Investor Presentation (April 2005)
24 slides from Finning International's investor presentation, April 2005
Slide 1: April 2005 Update
Wayne Bingham Executive Vice President and CFO Tom Merinsky Vice President Investor Relations April 2005 Update
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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
Slide 3: Presentation Agenda
Presentation Agenda Company Profile Corporate Strategies Financial Performance 2005 Outlook and Growth Opportunities Summary 3
Slide 4: Finning International Inc.
Finning International Inc. Incorporated 1933 in Vancouver, BC Largest Caterpillar dealer in the world Sell new and used equipment and engines Provide parts and service Equipment rental Focused on three key geographies: Western Canada United Kingdom South America 12,000 employees
Slide 5: Investment Performance
Investment Performance Public since 1969 (TSX:FTT) Investment grade credit: BBB+ / BBB (high) $3 billion market capitalization Growing dividends Increased five times since 2001 Current yield 1.3% Exemplary corporate governance standards Ranked No. 1 by Canadian Business Magazine in 2
Slide 6: Investment Performance
Investment Performance Relative Price Performance (FTT vs. S&P/TSX Comp. Index) Dec 31, 1999 – Dec 31, 2004 300 Finning International Inc. 250 200 150 S&P/TSX Composite Index 100 50 31-Dec-99 31-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 6
Slide 7: Corporate Strategy
Corporate Strategy Leverage Caterpillar relationship Diversify by: Geography Industry served Revenue stream Grow parts, service, and rentals Enhances earnings stability and predictability Pursue prudent growth Organic growth plus strategic acquisitions Set and achieve challenging
Slide 8: Geographic Diversification and Balance
Geographic Diversification and Balance Revenue EBIT* Assets 29.1% 37.5% 42.8% 16.5% 19.1% 29.4% 23.9% 25.1% 11.1% 20.9% 27.0% 17.6% Canada UK South America Hewden As at December 31, 2004 *Excludes corporate and other expenses 8
Slide 9: End Market Diversification
End Market Diversification New Equipment Deliveries* Mining Other 28% 9% Petroleum 7% Forestry 9% Construction Power 27% 20% * New equipment deliveries for 12 months ended December 31, 2004 9
Slide 10: Revenue Diversification
Revenue Diversification Revenue = $2.5B Revenue = $4.2B Rental Rental Finance 7% 46% 24% 55% Finance 5% 1% Parts and Service Parts and 34% Service 30% Equipment Equipment 45% 54% 2000 2004 As at December 31, 2004 10
Slide 11: Attractive Revenue Growth
Attractive Revenue Growth $billions 5 1 4% 4.2 R= 4 CAG 3.6 3.2 3.2 3 2.5 2.2 2 1 0 1999 2000 2001 2002 2003 2004 11
Slide 12: Basic Earnings per Share
Basic Earnings per Share $2.0 1 4% R= CAG 1.72 1.71 1.45 $1.5 1.37 0.95 $1.0 0.75 $0.5 $0.0 1999 2000 2001 2002 2003 2004 12
Slide 13: Normalized Basic EPS
Normalized* Basic EPS $2.0 1 8% R= CAG 1.75 1.75 1.66 1.54 $1.5 0.95 $1.0 0.75 $0.5 $0.0 1999 2000 2001 2002 2003 2004 *Excludes items not reflective of ongoing earnings 13
Slide 14: Earnings Headwinds
Earnings Headwinds Negative Year over Year Impact on Earnings: 2003 2004 2003-2004 combined Foreign Exchange* $0.20 $0.18 $0.38 Pension Expense $0.06 $0.09 $0.15 $0.53 per share *Mainly USD/CAD but also GBP/CAD 14
Slide 15: Cost Savings Program
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 16: 2004 Operating Highlights
2004 Operating Highlights Very strong market conditions in 2004 Record revenue levels = $4.2B (up 16% from ’03) Order book doubles from Dec ’03 ($420M to $835M) Record results at Finning (Canada) & Finning South America Hewden results continue to improve Finning (UK) - challenging ‘04, b
Slide 17: Outlook
Outlook Strong commodity markets Broad economic growth drives infrastructure spending Large and growing fleet in market areas drives increasing parts & service revenues Future growth through organic growth & acquisition Focus on efficiency 17
Slide 18: Canada - Outlook
Canada - Outlook Excellent business outlook - Mining (oil sands, metals & coal) - General construction - Conventional oil & gas - Forestry - Pipelines Order backlog up three-fold vs. prior year New & used equipment inventory and rental fleet at high levels to manage extended equipment supply t
Slide 19: South America - Outlook
South America - Outlook Mining - $1.5B opportunity 2004 sales-mix was dominated by lower margin new equipment sales EBIT margins set to improve after new-equipment warranty period Large future parts & service opportunity - requires investment and pressures EBIT margins through ’05 (absolute
Slide 20: FINSA; Mining Trucks – Unit Sales
FINSA; Mining Trucks – Unit Sales 795’s – 797’s in Chile & Argentina 80 Forecast 60 40 20 0 93 95 97 99 01 03 05 07 09 11 19 19 19 19 20 20 20 20 20 20 20
Slide 21: UK Dealership - Outlook
UK Dealership - Outlook Outlook positive – order backlog up 67% from March ‘04 “Moving Closer to the Customer” program being implemented - Management team changes - Regional structure being implemented CAT market study and strategic plan - double market share - increase dealer profitability to
Slide 22: Hewden - Outlook
Hewden - Outlook Operating at plan levels to-date in 2005, markets still very competitive Customer Facing Project “One Hewden” strategy launched with customers in February Operational management team changes finalized in March Completion of first 11 rental centres (hubs) on schedule for la
Slide 23: Power Systems - Outlook
Power Systems - Outlook Engine business: “Yellow Line” & “Blue Line” Applications: Electric power generation, marine, industrial, on-highway trucks, oil & gas Goal to double revenues to $1Bn by ‘08 Growing global demand for “green” distributed power applications Granted UK distribution rig
Slide 24: Consolidated Outlook
Consolidated Outlook Strong growth driven by new equipment sales and growing customer service & parts revenues Strong BC, Alberta & Chilean economies support general construction equipment markets Major expansion & fleet replacement opportunities in oil sands and mining CAT price increases e
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