Finning International Inc. · TSX:FTT
Finning International — Investor Presentation (November 2003)
30 slides from Finning International's investor presentation, Nov 25, 2003
Slide 1: Investor Presentation – Montreal and Toronto, November 2003
We will be Caterpillar’s best global business partner, providing unrivalled services that earn customer loyalty. INVESTOR PRESENTATION Montreal -November 25, 2003 Toronto – November 26, 2003 Doug Whitehead, President and Chief Executive Officer Wayne Bingham, EVP and Chief Financial Officer
Slide 2: Presentation Overview
2 Presentation Overview • Company Profile • Corporate Strategies • Financial Review • Summary All figures are in Canadian dollars unless noted otherwise
Slide 3: Finning International Inc.
Company Profile 3 Finning International Inc. • Incorporated in 1933 - head office Vancouver, B.C., Canada • Profitable every year since incorporation • Caterpillar’s largest dealer worldwide • Focused on three key geographies: Western Canada, the U.K. and South America • Over 11,000 highly skilled e
Slide 4: What Does Finning Do?
Company Profile 4 What Does Finning Do? • Sell new equipment (95% is Caterpillar) and engines • Sell used equipment • Provide ongoing equipment maintenance and repair • Sell parts and components • Rent and lease equipment • Finance equipment • Insure equipment
Slide 5: What Does Finning Really Do?
Company Profile 5 What Does Finning Really Do? • We are in the productivity business • We develop customized solutions that boost our customers’ return on investment • We lower customers’ total owning and operating costs over the equipment life • We minimize customers’ risk of owning and operating e
Slide 6: Caterpillar Dealers
Company Profile 6 Caterpillar Dealers • “Strong independently owned dealer organization is key to long term success” • 180 dealers worldwide • Exclusive right to represent Caterpillar in defined geographic areas • Most are privately owned • Most operate in one specific geographic area
Slide 7: Western Canada
Company Profile 7 Western Canada 1933 – founded CAT dealer in British Columbia 1977 - CAT dealer in Yukon 1989 - acquired CAT dealer in Alberta and the Northwest Territories 2002 Revenue: $1.27 billion Employees: 2,500 Branches: 34 Key Industry Segments: mining, forestry, construction, oil & gas, go
Slide 8: United Kingdom
Company Profile 8 United Kingdom 1983 - acquired two CAT dealers in the U.K. 1997 - acquired the remaining CAT dealer in the U.K. 2001 - acquired Hewden Stuart Plc., rental equipment and services business 2003 - acquired Lex Harvey, largest independent material handling company in the U.K. 2002 Reve
Slide 9: South America
Company Profile 9 South America 1993 - acquired CAT dealer in Chile 2003 - acquired CAT dealers in Argentina, Uruguay and Bolivia 2002 Revenue (pro-forma): $560 million Employees: 2,300 Branches: 24 Key Industry Segments: mining, oil & gas, construction, agriculture, forestry, fishing Growth Opportu
Slide 10: Long Term Share Growth
Company Profile 10 Long Term Share Growth 20 year CAGR of 12.0% 1200 1000 800 Finning International Inc. 600 S&P 500 400 200 S&P/TSX Index 0 Oct-83 Oct-85 Oct-87 Oct-89 Oct-91 Oct-93 Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 Note: 10 year CAGR of 12.3%
Slide 11: 5 Year Share Price Performance
Company Profile 11 5 Year Share Price Performance Relative Price Performance Finning International Inc. vs. Peers vs. S&P/TSX Index November 13, 1998 to November 13, 2003 300 250 200 150 100 50 13-Nov-98 13-May-99 13-Nov-99 13-May-00 13-Nov-00 13-May-01 13-Nov-01 13-May-02 13-Nov-02 13-May-03 13-Nov
Slide 12: Corporate Governance
Company Profile 12 Corporate Governance Ø Finning is in full compliance with the new proposed corporate governance guidelines of the Toronto Stock Exchange Ø Ranked 4th of 207 companies in Canada in Globe and Mail Report on Business September 2003 study on corporate governance Ø Ranked Number 1 by C
Slide 13: Corporate Strategies
Corporate Strategies 13 Corporate Strategies • Maintain an excellent relationship with Caterpillar and marketing Caterpillar products and services • Diversify our marketing activities • By Geography • By Industry Segment • By Revenue Stream • Growing rental, parts and service businesses to provide i
Slide 14: Strategic Criteria
Corporate Strategies 14 Strategic Criteria Growth +15% per year Market Share +30% ROE +20%
Slide 15: Vision
Corporate Strategies 15 Vision We will be Caterpillar’s best global business partner, providing unrivalled services that earn customer loyalty
Slide 16: International Diversification and Balance
Corporate Strategies 16 International Diversification and Balance FINNING FINNING FINNING HEWDEN POWER & (CANADA) (UK) LTD.** SOUTH AMERICA* STUART ENERGY SYSTEMS Revenue Revenue Revenue Revenue Revenue (32%) (25%) (14%) (19%) (10%) * South America includes pro-forma Argentina, Bolivia and Uruguay;
Slide 17: End Market Diversification
Corporate Strategies 17 End Market Diversification Serving a number of different industries New Equipment* Construction Plant Hire Petroleum 15% (rental) 4% 8% Other 10% Mining 33% Power 21% Forestry 9% * New equipment deliveries for 2002
Slide 18: Revenue Diversification
Corporate Strategies 18 Revenue Diversification 100% 90% 80% 70% 60% 50% 40% 56.3% 30% 38.6% 20% 10% 0% 1997 1998 1999 2000 2001 2002 Sep-03 Finance Rental Parts and Service Equipment
Slide 19: Gross Profit Stability
Corporate Strategies 19 Gross Profit Stability 100% 80% 60% 80.7% 69.3% 40% 20% 0% 1997 1998 1999 2000 2001 2002 Sep-03 Finance Rental Parts and Service Equipment
Slide 20: Long Term Revenue Growth
Corporate Strategies 20 Long Term Revenue Growth Organic growth complemented by acquisitions Hewden 20 Year CAGR of 11.9% (U.K.) C$ millions 2001 3,500 10 Year CAGR of 12.9% H. Leverton (U.K.) 3,000 1997 2,500 Gildemeister (Chile) 1993 R. Angus 2,000 Argentina/Bolivia/ Lex Harvey (Canada) 1989 Urugu
Slide 21: Positioned for Internal Growth
Corporate Strategies 21 Positioned for Internal Growth Canada • Oil Sands - $87 Billion in announced project • Arctic Gas Pipeline - $50 Billion project South America • World’s low cost copper region • Oil, gas, gold resources abound United Kingdom • £180 Billion Infrastructure Program General • Equ
Slide 22: Finning's Formula for Future Growth
Corporate Strategies 22 Finning’s Formula for Future Growth • Continue to lever Caterpillar’s world renowned brand name • Solve difficult customer problems • Command strong regional market shares • Maximize parts, service, rental revenue • Clear financial expectations/metrics throughout the organiza
Slide 23: 2003 Highlights
Financial Review 23 2003 Highlights • Record third quarter revenues; record quarterly EPS • Completed acquisitions of Lex Harvey Materials Handling business and 3 South American CAT dealerships • Issued 200 million Sterling Eurobond - May 2003 • Strong backlog/order book • South America • Chile -- $
Slide 24: Year to Date 2003 Results
Financial Review 24 Year to Date 2003 Results (C$ in millions except per share data) 2003 2002 Sept YTD Sept YTD Change • Revenue $2,660.3 2,359.8 + 13% • Net Income $103.9 $101.0 + 3% • Earnings per share $1.35 $1.32 + 2% • Return on Equity 15.0% 15.9% -0.9% pts • Normalized EPS $1.33 $1.19 + 12% R
Slide 25: Net Income/Cash Flow
Financial Review 25 Net Income/Cash Flow 600 500 400 $million 300 200 100 0 1998 1999 2000 2001 2002 Net Income Cash Flow after working capital changes
Slide 26: Working Capital / Sales
Financial Review 26 Working Capital /Sales Operational improvement 40% 36.7% 35% 30.5% 30% 25% 21.8% 21.1% 20% 16.4% 17.1% 15% 10% 5% 0% 1998 1999 2000 2001 2002 Sep-03* * Annualized sales
Slide 27: Return on Equity
Financial Review 27 Return on Equity Increasing ROE 20% 15.7% 15.0% 14.1% 15% 10.5% 8.7% 10% 5% 0.5% 0% 1998 1999 2000 2001 2002 Sep-03* * 12-month rolling
Slide 28: Consolidated Debt / Equity
Financial Review 28 Consolidated Debt / Equity 1.9 1.67 1.7 1.5 1.29 1.3 1.04 1.1 0.87 0.9 0.73 0.7 0.58 0.5 1998 1999 2000 2001 2002 Sep-03 Equity includes shareholders’ equity and non-controlling interest 2000 ratio excludes Hewden investment and related debt
Slide 29: What's Worked Over 70 Years?
Summary 29 What’s Worked Over 70 Years? • A narrow business focus - CAT products • Adding real value for customers • Simple systems, metrics, procedures • Supporting employees with a “Can Do” attitude • Diversifying geographically; by revenue source; and by end market • Making bold, but well timed a
Slide 30: Disclaimer
30 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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