Finning International Inc. · TSX:FTT
Finning International — Non-Deal Roadshow (June 2013)
33 slides from Finning International's roadshow presentation, Jun 25, 2013
Slide 1: Finning Canada Investor Tour
Finning Canada Investor Tour June 25-26, 2013
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: Strategic Overview
Finning Canada Investor Tour Strategic Overview Andy Fraser, President, Finning Canada June 25, 2013
Slide 4: Finning Canada
Finning Canada 2012 revenue = $3.3 billion 2012 EBIT = $231 million Northwest Territories Employees: ~6,000 Industries: Yukon Western Canada Mining (including oil sands) Construction Power systems Alberta Fort McMurray Petroleum / Oil & Gas (4 branches + Fort McKay) British Columbia Edmonton Forestr
Slide 5: 2012 Canada Revenue Profile
2012 Canada Revenue Profile Revenue Product Support New Equipment by Line of Business Revenue by Industry Sales by Industry Rental Power Systems Other Used Forestry 8% 6% Equipment 8% 4% 5% Petroleum 11% New Mining Equipment Construction Power (incl. oil sands) 44% 26% Mining Systems 32% Product 12%
Slide 6: Strategic Priorities
Strategic Priorities Advance operational excellence Leverage investments Fort McKay oil sands service facility Expanded mining product line (formerly Bucyrus) ERP system Grow market share in construction, forestry and power systems Improve EBIT Margin 6
Slide 7: Operational Excellence
Operational Excellence Key focus areas Supply chain Service efficiency SG&A cost management Focus on disciplined execution Organizational alignment 7
Slide 8: Culture of Accountability
Culture of Accountability Safety Lost time injury frequency (LTIF) = 0.14 in Q1/13 Employee engagement Record participation in 2012 Technical training Focus on compliance and discipline 8
Slide 9: Market Outlook
Market Outlook Mining Customers under pressure to reduce costs Soft market conditions for new equipment sales Product support expected to remain active Large installed machine population Good equipment utilization rates Full-year’s contribution from expanded mining product line Heavy construction an
Slide 10: Summary
Summary Providing superior customer service Driving operational excellence Focus on disciplined execution 10
Slide 11: Mining, Construction and Forestry
Finning Canada Investor Tour Mining, Construction and Forestry Dave Primrose, EVP, Mining, Construction and Forestry June 26, 2013
Slide 12: Construction and Forestry
Construction and Forestry Heavy Construction Continued investment in infrastructure Alberta: ring roads, airports, LRT’s British Columbia: Evergreen Line Rapid Transit - Coquitlam to Vancouver; Interior to Lower Mainland (ILM) Transmission Project - Nicola to Coquitlam Numerous pipeline projects in
Slide 13: Power Systems
Power Systems Petroleum / Oil & Gas Many idled drilling rigs Exploration, well servicing and production companies leveraging existing assets, driving demand for product support Natural Gas Low prices expected to curtail exploration Increased focus on producing more power using NG Desire to switch fr
Slide 14: Coal and Metals Mining
Coal and Metals Mining Two copper mines, Mt. Milligan and Red Chris, going into production in 2013 - 2014 Diamond mining activity continues strong as Dominion Diamond expands in NWT by purchasing Ekati Teck Coal proceeds with site development of Quintette Coal in north eastern BC Underground mining
Slide 15: Mining Support Capabilities
Mining Support Capabilities British Alberta Columbia Fort McMurray Fort McKay Tumbler Service Facility Ridge Prince George Edmonton OEM Component Tracker Parts Remanufacturing Distribution Centre Red Deer Centre of Excellence Calgary Caterpillar, Kamloops new Illinois equipment to assemble Sparwood
Slide 16: OEM Remanufacturing
OEM Remanufacturing 325,000 square foot purpose built “5 Star” facility Meets Caterpillar’s highest contamination control standards 530 employees, two shift operation Fully integrated facility Investments in inspection, salvage and testing technologies Reman components reduce equipment owning and op
Slide 17: Center of Excellence (COE)
Center of Excellence (COE) 1. Machine Overhauls / Rebuilds Overhauling equipment for its second life under various options – 45% to 75% of new price Finning - customer program CAT certified powertrain program CAT complete machine certification Support capabilities Component repairs Ready-to-go ‘modu
Slide 18: Center of Excellence (COE)
Center of Excellence (COE) D11 dozer with >82,000hrs 18
Slide 19: Expanded Mining Product Line
Expanded Mining Product Line Bucyrus acquisition meeting business case expectations Service on plan; parts ahead of plan Equipment sales slower, as expected Ongoing transition to genuine Caterpillar parts and components Expanded electric drive truck options with Unit Rig in addition to 795 Existing
Slide 20: Operational Excellence
Operational Excellence Supply Chain Global Supply Chain Council Improving forecasting and planning for equipment Leveraging Spokane Parts Distribution Center Service Excellence Customer-centric business balanced with operating discipline Leveraging scale and repeatable processes Caterpillar Producti
Slide 21: Strong Competitive Advantage
Strong Competitive Advantage Leading market position – broadest product line Product support capabilities Service culture Focus on operational excellence Enhancing customer service and loyalty Driving sustainable improvement in operating profitability 21
Slide 22: Oil Sands
Finning Canada Investor Tour Oil Sands Brent Davis, VP, Oil Sands June 26, 2013
Slide 23: Finning Oil Sands Locations
Finning Oil Sands Locations Athabasca River Imperial Fort Hills Oil Energy Shell CNRL Fort McKay Syncrude Exxon Mobil Service Facility Total E&P Shell/Albian Shell Syncrude 2 warehouses Fort McKay Syncrude Syncrude Mildred Lake Branch Suncor Fort McMurray Suncor Town Shop Branch Power Systems Branch
Slide 24: Oil Sands Revenue Growth
Oil Sands Revenue Growth Oil Sands Revenue Product Support New Equipment $ 2005 2006 2007 2008 2009 2010 2011 2012 Total revenue 2012: ~$1 billion 7-year CAGR (2005 to 2012) ~17% 24
Slide 25: 797 Population Growth
797 Population Growth 797 Population in Oil Sands at Year-End 300 250 250 200 150 100 50 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 25
Slide 26: 1st 797 – 100,000 Hours
2) pee > 2) < =) =) i) - 100, 1St 797
Slide 27: Oil Sands Product Support
Oil Sands Product Support ~1,100 regional employees, including ~550 mechanics and apprentices 5 branches, including new Fort McKay service facility 4 parts warehouses (Mildred Lake, Fort McMurray, 2 at Shell/Albian) Parts distribution center (Edmonton) OEM - component remanufacturing facility (Edmon
Slide 28: Fort McKay – Game Changer
Fort McKay – Game Changer Key stats 16 bays; 160,000 sq. ft. $110M investment: 2011 and 2012 Operational in Q4 2012; 24 x 7 in January 2013 ~120 employees Repair and maintenance facility Supports contractors and producers Regional training centre Capacity to rebuild 797 trucks Ramping up on plan 28
Slide 29: Operational Excellence
Operational Excellence Driving velocity, process, technology Velocity - capacity planning and equipment scheduling Bay scheduler – efficient planning Warehouse – staging, not stocking – parts as required Process - Caterpillar Production System (CPS) – make it visual Lean and operational efficiency I
Slide 30: Challenges
Challenges Level of commodity prices for new mines and expansions Customers focused on cost containment Pricing differential - pipeline capacity Environmental concerns Attracting and retaining technical labour 30
Slide 31: Building for the Future
Building for the Future Keyano FinnTech Program Customized Heavy Equipment Technician apprenticeship program (CAT, Finning, Keyano) $3.5M investment from CAT and Finning Launched in Feb 2012 Will graduate up to 48 2nd year apprentices per year First graduate class - end of 2013 31
Slide 32: Opportunities
Opportunities Significant product support opportunity Large and well-utilized equipment population Aging fleets drive demand for component remanufacturing and rebuild Expanded mining product line Equipment opportunity Future fleet replacement – 797’s 100,000 hours Future mine expansions and new proj
Slide 33: Priorities
Priorities Deliver superior customer service Drive efficiency and productivity Attract and retain technicians Capture product support opportunities 33
Finning International — Non-Deal Roadshow (June 2013) on 6ix