Finning australia investor presentation final

Finning australia investor presentation final

• 1.
  Investor Presentation Sydney, Australia Mauk Breukels, VP Investor Relations March 1, 2012
• 2.
  Forward Looking Information Thisreport 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 statement about the future. Forward-looking statements may include words such as aim, anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, project, seek, should, strategy, strive, target, and will. Forward-looking statements in this report include, but are not limited to, statements with respect to: expectations with respect to the economy and associated impact on the Company’s financial results; expected revenue and SG&A levels and EBIT growth; anticipated generation of free cash flow (including projected net capital and rental expenditures), and its expected use; anticipated defined benefit plan contributions; the expected target range of Debt Ratio; the impact of new and revised IFRS that have been issued but are not yet effective; the expected timetable for completion of the proposed transaction between the Company and Caterpillar to acquire the distribution and support business formerly operated by Bucyrus in Finning’s dealership territories (the Bucyrus transaction); growth prospects for the former Bucyrus business being acquired by the Company and the competitive advantages of the business being acquired; expected future financial and operating results generated from the Bucyrus transaction; anticipated benefits and synergies of the Bucyrus transaction; the expected financing structure for the Bucyrus transaction; and the expected impact of the Bucyrus transaction on Finning’s earnings. All such forward-looking statements are made pursuant to the ‘safe harbour’ provisions of applicable Canadian securities laws. Unless otherwise indicated by us, forward-looking statements in this report describe Finning’s expectations at March 1, 2012. Except as may be required by Canadian securities laws, Finning does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from the expectations expressed in or implied by such forward-looking statements and that Finning’s business outlook, objectives, plans, strategic priorities and other statements that are not historical facts may not be achieved. As a result, Finning cannot guarantee that any forward-looking statement will materialize. Factors that could cause actual results or events to differ materially from those expressed in or implied by these forward-looking statements include: general economic and market conditions; foreign exchange rates; commodity prices; the level of customer confidence and spending, and the demand for, and prices of, Finning’s products and services; Finning’s dependence on the continued market acceptance of Caterpillar’s products and Caterpillar’s timely supply of parts and equipment; Finning’s ability to continue to improve productivity and operational efficiencies while continuing to maintain customer service; Finning’s ability to manage cost pressures as growth in revenues occur; Finning’s ability to attract sufficient skilled labour resources to meet growing product support demand; Finning’s ability to negotiate and renew collective bargaining agreements with satisfactory terms for Finning’s employees and the Company; the intensity of competitive activity; Finning’s ability to successfully integrate the distribution and support business formerly operated by Bucyrus after that transaction closes; Finning’s ability to raise the capital needed to implement its business plan; regulatory initiatives or proceedings, litigation and changes in laws or regulations; stock market volatility; changes in political and economic environments for operations; the integrity, reliability, and availability of information technology and the data processed by that technology; operational benefits from the new ERP system. Forward-looking statements are provided in this report for the purpose of giving information about management’s current expectations and plans and allowing investors and others to get a better understanding of Finning’s operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose. Forward-looking statements made in this report are based on a number of assumptions that Finning believed were reasonable on the day the Company made the forward-looking statements. Refer in particular to the Outlook section of the MD&A. Some of the assumptions, risks, and other factors which could cause results to differ materially from those expressed in the forward- looking statements contained in this report are discussed in the Company’s current Annual Information Form (AIF) in Section 4. Finning cautions readers that the risks described in the AIF are not the only ones that could impact the Company. Additional risks and uncertainties not currently known to the Company or that are currently deemed to be immaterial may also have a material adverse effect on Finning’s business, financial condition, or results of operations. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Finning therefore cannot describe the expected impact in a meaningful way or in the same way Finning presents known risks affecting its business. All amounts in this presentation are in Canadian dollars unless otherwise noted 2
• 3.
  Finning International Inc.(TSX:FTT)  World’s largest Caterpillar dealer Finning Canada  3 regions, 7 countries 50%  Over 13,500 employees Yukon The Northwest Territories  Industries Finning South America  Mining (including oil sands in Alberta) 36% British Fort McMurray Columbia Alberta  Construction Edmonton Bolivia  Power systems Vancouver (head office) Antofagasta  Petroleum / oil & gas Chile Argentina  Other: forestry, pipelines Uruguay Santiago Finning UK  Market cap ~ $5.0 billion and Ireland 14%  2011 revenue = $5.9 billion United Kingdom  2011 EBIT = $380 million Ireland Cannock  Quarterly dividend = $0.13 per share 3
• 4.
  Value Proposition Caterpillar Equipment + Finning Service = Customer Value Proven Reliability Unmatched Capabilities First with Customers  World’s largest Caterpillar dealer operating in some of most resource-rich territories  Unmatched product support capability and customer relationships  Focused on operational excellence, fiscal discipline and high performance culture  Well-positioned to capture growth opportunities  Strong cash generating business model 4
• 5.
  2011 Revenue Profile Revenueby Line of Business New Equipment Sales by Industry ($) Other Forestry 2% Petroleum 2% Product New 8% Support Equipment Mining 41% 49% 36% Power Systems 19% Rental Construction 6% Used 33% Equipment 4% 5
• 6.
  Meeting Our Commitments Record 2011 revenue performance  Revenue up 29% to $5.9 billion  Strong backlog at $1.5 billion  Robust market conditions in most sectors  Focused on improving operating leverage  Streamlined, more efficient cost structure and ongoing productivity improvements (majority of ERP* related costs in Canada are expected to be eliminated by mid 2012)  On-track to achieve 9-10% EBIT margin target in 2013  Investing to strengthen competitive advantage  New ERP system  Disciplined capital spending on product support infrastructure  Technical training * Enterprise Resource Planning system 6
• 7.
  Bucyrus Distribution Business Excellent strategic fit  Mining solutions provider, strong market share in South America and Canada  Significant product support growth opportunities  Attractive return on investment  Estimated FY2012 revenue ~$700 million (transaction to close in Q2)  Expected to be accretive to 2012 EPS  Projected EBIT margin ~8% within 2 to 3 years  Working with Caterpillar to ensure seamless integration 7
• 8.
  Capturing Growth Growth withinall our existing markets  Mining  Oil sands: fleet replacement, capital spending on new projects  Chile mining investment ~US$ 67 billion over next 5 years  Mining equipment population expected to grow by ~50% over next 5 years  Heavy construction – infrastructure projects  Power systems – demand for energy Growth with Caterpillar  New businesses (e.g. truck bodies)  New products (e.g. 795F electric drive truck)  Global power systems 8
• 9.
  Cash Engine forGrowth Strong cash flow from operations EBITDA ~ $500 - 800M per year* Cash for Growth Disciplined capital spending  Dividends Enhanced focus on ~ $100M per year*  Reduce debt working capital management  Acquisitions Net rental additions ~ $100-$150M per year* * Averages over economic cycle 8
• 10.
  2012 Priorities  Improveoperating profitability (EBIT margin)  Canada: fix remaining ERP issues and eliminate temporary costs  South America: balance growth with efficiencies  UK and Ireland: sustain significant improvement in results  Integrate the Bucyrus distribution business into each region  Maintain a strong balance sheet 10
• 11.
  Market Outlook  Macro-economicuncertainty has not impacted our business and outlook  Healthy market conditions in most sectors: actively quoting and taking orders  Monitoring end markets, staying close to customers  Canada  Stable commodity cycle supports mining growth  Healthy demand from construction and power systems  South America  Ongoing strength in mining driven by record investments  Solid growth in construction and power systems as public and private investments in infrastructure and energy are expected to continue  UK & Ireland  Fragile economy  Focus on core businesses where outlook remains encouraging 11
• 12.
  Summary  Focused ondisciplined execution of our strategy  Margin expansion  Investing in capabilities and capacity  Capturing growth  People, safety and high-performance culture  Acquisition of Bucyrus distribution business drives long term value for customers, employees and shareholders  Solid 2012 outlook; on track to achieve 9-10% EBIT margin in 2013 12