Finning International Inc. · TSX:FTT

Finning International — Investor Presentation (September 2015)

17 slides from Finning International's investor presentation, Sep 8, 2015

  1. Slide 1: Investor Presentation

    INVESTOR PRESENTATION Scott Thomson, President & CEO Steve Nielsen, EVP & CFO Mauk Breukels, VP Investor Relations & Corporate Affairs New York, Toronto September 8-9, 2015

  2. 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

  3. Slide 3: Finning International Overview

    Finning International Overview  World’s largest Caterpillar dealer  We sell, rent and provide parts and service for Caterpillar equipment and engines Yukon The Northwest  Serving customers for over 80 years and delivering value to public Territories shareholders for over 45 years  Operating in 7

  4. Slide 4: Economic Growth by Region

    Economic Growth by Region GDP Growth Forecast (1) 3.8% 3.6% 2014A 3.2% 3.1% 3.0% 2.6% 2015E 2.3% 2.4% 2.3% 1.9% 2.6% 1.7% 2016E 1.1% 0.8% 2015E 0.4% 0.4% (1 Year Ago) Western Canada Chile Argentina U.K. Credit Rating  AAA  AA–  CCC+  AAA (S&P) (2) Macro  Oil & gas  Copper  Political  Coal Ch

  5. Slide 5: Business Environment

    Business Environment Canada South America Mining (oil sands, copper, coal) Mining (copper)  Customers under pressure to minimize capital and operating  New projects are being delayed expenditures  Customers are focused on reducing operating costs while  Postponing non-production activities (e.g.

  6. Slide 6: Finning Update

    Finning Update 1 Challenging macro environment; great territories and strong long-term business model  Weak and volatile commodity prices create challenging current business environment  High-quality territories with great long-term opportunities  Diverse customer base  Product support business

  7. Slide 7: Highly Diversified Business Anchored by Product Support

    Highly Diversified Business Anchored by Product Support Large Installed South Ameria Base 32% High-quality territories with long-term UK & Ireland opportunities 15% Canada 53% Product Support 10-Year CAGR ~11% (2004-2014) Product 2014 revenue Support Forestry 3% New Petroleum Equipment Other* 5% 9%

  8. Slide 8: Operational Priorities

    Operational Priorities Strong Alignment with Caterpillar Operational Priorities Service Excellence Asset Utilization  Drives lowest equipment owning and operating costs  Optimizes footprint and distribution of activities  Maximizes equipment uptime and improves customer loyalty  Maximizes return

  9. Slide 9: Taking Action – Safe, Engaged, Inspired Team

    Taking Action – Safe, Engaged, Inspired Team Category Actions Statistics  Global best practices TRIF(1) 2013 2014 % Change  Aligned on Life Saving Rules Finning Int’l 0.99 0.75 25% Focus on  Pre-task hazard assessment for all jobs Canada 1.69 1.16 31% Safety  Highest personal protective equipmen

  10. Slide 10: Taking Action – Cost Reductions

    Taking Action – Cost Reductions Workforce reductions Canada EBIT Margin(1) NAVIGATING DOWNTURN 10.0% Decisive actions to reduce cost structure  Headcount 14% in Canada from mid-2014; 8.0% and maintain profitability during lower 8% in FINSA from mid-2013 peak 8.0% 7.5% market activity  Workforce

  11. Slide 11: Taking Action – Asset Utilization & Capital Discipline

    Taking Action – Asset Utilization & Capital Discipline Canada Facilities Map Capital Discipline ($ millions)(1) Facility Closures YT 200 Branch NT Depot The Cat Rental Store 150 Hay River Fort Nelson Finning Locations 100 BC AB Tumbler Ridge 50 Whitecourt Edson Drayton Valley Squamish Hinton Edmonto

  12. Slide 12: Strong Free Cash Flow & Balance Sheet

    Strong Free Cash Flow & Balance Sheet Free Cash Flow ($ millions) Net Debt to Invested Capital (%) 500 ($37) $441 $483 400 53 52 51 51 50 300 48 47 200 43 41 41 100 39 36 35 0 31 -100 -200 -300 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q1/12 Q2/12 Q3/12 Q4/1

  13. Slide 13: Capturing Strategic & Financial Opportunities

    Capturing Strategic & Financial Opportunities Category Details  Completed acquisition of Saskatchewan dealership, effective July 1, 2015  Contiguous territory that creates growth opportunities and benefits for customers and employees Acquisition  ~$240 million purchase price funded with cash  Im

  14. Slide 14: Appendix

    FInniNnG APPENDIX

  15. Slide 15: Acquisition of Saskatchewan Dealership

    Acquisition of Saskatchewan Dealership Transaction Summary  Effective July 1, 2015  Purchase price ~$240 million, subject to post-closing working capital adjustments; funded with cash  Immediately accretive to EPS; 2016 EPS accretion: $0.07 to $0.09  Free cash flow positive Compelling Strategic

  16. Slide 16: Canada Parts Supply Chain Transformation

    Canada Parts Supply Chain Transformation Progress Update Network Optimization Update  16 branches receiving direct shipment from Spokane  Parts turns improved by 0.7 times from Dec 2012 to June 2015  Successfully transitioning the Saskatchewan business; integration and growth activities on plan 

  17. Slide 17: Construction Opportunities in Western Canada

    Construction Opportunities in Western Canada Infrastructure Opportunities Location Completion Estimated Cost ($B) British Columbia LNG - Pacific Northwest/PETRONAS Lelu Island 2019 10.0 Site C Dam - Clean Energy Project Ft. St. John 2020 8.8 George Massey Tunnel Replacement Project Lower Mainland 20

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