Finning International Inc. · TSX:FTT
Finning International — Investor Presentation (November 2002)
28 slides from Finning International's investor presentation, Nov 22, 2002
Slide 1: Investor Presentation London
We will be Caterpillar’s best global business partner, providing unrivalled services that earn customer loyalty. INVESTOR PRESENTATION London November 22, 2002 Doug Whitehead, President and Chief Executive Officer Tony Guglielmin, Vice President and Corporate Treasurer
Slide 2: Agenda
1 AGENDA • Company Profile • Financial Review • Strategies/Growth Opportunities • Summary All figures are in Canadian dollars unless noted otherwise
Slide 3: Finning International Inc.
Company Profile 2 Finning International Inc. • Canadian-based international company incorporated in 1933 - largest dealer of Caterpillar equipment • Sell, rent and provide parts, service and financing for Caterpillar machines and engines, and complimentary equipment • Focused on three key geographie
Slide 4: Investment Highlights
Company Profile 3 Investment Highlights • Prudent and consistent growth - Organic growth - Strategic geographic expansion • Earnings stability through - Regional, product and end customer segment diversification - Less volatile finance, rental, parts and service businesses • Conservative financial m
Slide 5: Long Term Revenue Growth
Company Profile 4 Long Term Revenue Growth Organic growth complemented by acquisitions C $ m illio ns Hewden 3,500 (U.K.) H. Leverton 3,000 (U.K.) 20 Year CAGR of 12.4% 2,500 Gildemeister 10 Year CAGR of 14.3% (Chile) 2,000 R. Angus Hewden 1,500 (Canada) UMS 1,000 Chile U.K. 500 Canada 0 82 84 86 88
Slide 6: Long Term Share Growth
Company Profile 5 Long Term Share Growth 20 year CAGR of 14.1% 1800 1600 1400 S&P 500 1200 1000 Finning International Inc. 800 600 400 200 S&P/TSX Index 0 Oct-82 Oct-84 Oct-86 Oct-88 Oct-90 Oct-92 Oct-94 Oct-96 Oct-98 Oct-00 Oct-02 Note: 10 year CAGR of 15.4%
Slide 7: International Diversification and Balance
Company Profile 6 International Diversification and Balance FINNING FINNING FINNING HEWDEN POWER & (CANADA) (UK) LTD. CHILE S.A. STUART ENERGY SYSTEMS Revenue Revenue Revenue Revenue Revenue (36%) (21%) (13%) (18%) (12%)
Slide 8: Industry Diversification
Company Profile 7 Industry Diversification Serving a number of different industries New Equipment Rental Heavy Construction Construction Plant Hire 12% Petroleum 13% (rental) 7% 11% Other 20% Other 9% Mining 34% Power 20% Light Forestry Construction 7% 67%
Slide 9: Gross Profit Stability
Company Profile 8 Gross Profit Stability 100% 80% 60% 82.6% 40% 69.3% 20% 0% 1997 1998 1999 2000 2001 Sep 2002 YTD Finance Rental Parts and Service Equipment
Slide 10: Vision
Company Profile 9 Vision We will be Caterpillar’s best global business partner, providing unrivalled services that earn customer loyalty.
Slide 11: Corporate Governance
Company Profile 10 Corporate Governance • Finning is in full compliance with the new proposed corporate governance guidelines of the Toronto Stock Exchange • Ranked 5th of 270 companies in Canada in October 2002 study in the Globe and Mail Report on Business on corporate governance • Ranked 3rd best
Slide 12: Year-to-Date 2002
Financial Review 11 Year-to-Date 2002 Sept 30 Sept 30 2002 2001 Change Ï Revenue (Mils) $2,359.8 $2,378.0 0.8% Net Income (Mils) $101.0 $76.1 Ï 32.7% Earnings per share $1.32 $1.00 Ï 32.0% EPS (normalized) $1.19 $1.09 Ï 9.2% EBITDA $446.7 $427.2 Ï 4.6%
Slide 13: Net Income/Cash Flow
Financial Review 12 Net Income/Cash Flow 600 500 400 $million 300 200 100 0 1997 1998 1999 2000 2001 Sept 2002* Net Income Cash Flow after working capital changes *Last twelve months ended September 30, 2002
Slide 14: Working Capital / Sales
Financial Review 13 Working Capital /Sales Continued operational improvement 40% 36.7% 35% 30.5% 30% 25% 21.8% 20% 16.4% 15% 10.6% 10% 5% 0% 1998 1999 2000 2001 Sept 2002* *Last twelve months ended September 30, 2002
Slide 15: Return on Equity
Financial Review 14 Return on Equity Increasing ROE 20% 15.6% 14.1% 15% 8.7% 10.5% 10% 5% 0.5% 0% 1998 1999 2000 2001 Sept 2002* *Last twelve months ended September 30, 2002
Slide 16: Consolidated Debt / Equity
Financial Review 15 Consolidated Debt / Equity Reduced Leverage 1.9 1.66 1.67 1.7 1.5 1.29 1.3 1.04 1.1 0.87 0.9 0.68 0.7 0.5 1997 1998 1999 2000 2001 2002 Q3 Equity includes shareholders’ equity and non-controlling interest 2000 ratio excludes Hewden investment and related debt
Slide 17: Strategic Criteria
Strategies/Growth Opportunities 16 Strategic Criteria Growth +15% per year Market Share +30% ROE +20%
Slide 18: Finning's Formula
Strategies/Growth Opportunities 17 Finning’s Formula • Lever CAT’s world renowned brand name • Solve difficult customer problems • Drive to commanding market shares • Maximize parts, service, rental revenue • Leadership through clear financial expectations/metrics • Transfer formula to other geograp
Slide 19: Growth "Sweet Spots"
Strategies/Growth Opportunities 18 Growth “Sweet Spots” Western Canada • Oil Sands - $51 billion projects announced • Arctic Gas Pipeline - $50 billion project Chile • Copper - world low cost region Power and Energy Systems • Highest growth segment U.K. • U.K. Market - 30% share target (CAT committe
Slide 20: 2002 Achievements
Strategies/Growth Opportunities 19 2002 Achievements Western Canada Albian Sands Energy • 23 CAT 797 trucks - $100 million • Support equipment - $33 million • Maintenance and repair contract - $150 million Chile • Codelco Norte Division - $39 million Power and Energy Systems • Investment in Calgary-
Slide 21: Canadian Oil Sands/Pipeline
Strategies/Growth Opportunities 20 Canadian Oil Sands/Pipeline Oil Sands • $51 billion of announced projects • 10 year equipment industry revenue potential $3.5 billion (equipment $900 million/product support $2.6 billion) • Finning market share - above 70% bpd (million) Reserves (millions of barrel
Slide 22: Finning Oil Sands Current Activity
Strategies/Growth Opportunities 21 Finning Oil Sands Current Activity Market share for mining equipment: above 70% Total revenue: $240 million (2001) Total equipment in service: 300-325 mining class machines Total trucks in service: 797’s: 39 (excludes 23 for Albian) 793’s: 49 (plus additional 50 in
Slide 23: Chile Copper
Strategies/Growth Opportunities 22 Chile Copper World Copper Mine Production in 2001 Chile Other 34% Low-cost producer 36% US Canada 10% 5% Australia Indonesia 7% 8%
Slide 24: Finning Chile Mining Truck Opportunity
Strategies/Growth Opportunities 23 Finning Chile Mining 797 Truck Opportunity • Equipment industry Revenue Potential: $2.49 billion - Equipment Revenue (to 2006): $690 million (131 units) - Product Support Revenue (10 years): $1.8 billion • Market share for mining equipment: above 65%
Slide 25: U.K. Infrastructure Program
Strategies/Growth Opportunities 24 U.K. Infrastructure Program £180 billion Government Investment to 2011 16 Unallocated Investment 14 London Railways 12 Local Transport 10 Strategic Roads £bn Cash 8 6 4 2 0 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/2010
Slide 26: ROE Initiatives
Strategies/Growth Opportunities 25 ROE Initiatives • Synergistic geographic expansion - Hewden Stuart - Power Systems - Adjacent dealership territories • Continued asset reduction - Inventory - Receivables - Branch/depot rationalization - Lease land and buildings • Sales mix migration in favour of p
Slide 27: Summary
26 Summary • Strategic partnership with Caterpillar • Solid revenue and share price growth over the long run • Excellent global, industry and revenue stream diversification • Proven formula for creating shareholder value • Solid growth opportunities within existing territories • Clear ROE initiative
Slide 28: Disclaimer
27 Disclaimer 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 and uncertai
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