CIBC Whistler Institutional Investor Conference Mauk Breukels, VP Investor Relations & Corporate Affairs                  ...
Forward Looking InformationThis report contains statements about the Company’s business outlook, objectives, plans, strate...
Finning International Inc. (TSX:FTT)                                              Revenue by Region (LTM*) World’s larges...
Unique Value Proposition Strong market positions                   Product Support Revenue   Copper mining in Chile     ...
Outlook Expect constructive business conditions in key markets   Mining to remain active supported by relatively strong ...
Revenue Drivers Product support growth New products and services    Bucyrus - complete suite of mining products; full y...
Driving Value Operational excellence focus    Supply chain management    Service productivity and profitability    SG&...
2013 Financial Outlook                                      $ Billions             Revenue Revenue                       ...
Summary Sustainable competitive advantage Continued focus on operational excellence Operating with caution Driving val...
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Cibc whistler conference v5 final

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Cibc whistler conference v5 final

  1. 1. CIBC Whistler Institutional Investor Conference Mauk Breukels, VP Investor Relations & Corporate Affairs January 24, 2013
  2. 2. Forward Looking InformationThis 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 isforward-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 reportinclude, 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&Alevels 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 the Company’s Debt Ratio; the impact of new and revised IFRS that have been issued but are not yet effective; growth prospects for the former Bucyrusbusiness acquired by the Company in Finning’s dealership territories (Bucyrus) and the competitive advantages of the business being acquired; expected future financial and operatingresults generated from Bucyrus; anticipated benefits and synergies of Bucyrus; and the expected impact of Bucyrus on Finning’s earnings. All such forward-looking statements are madepursuant 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 January 24, 2013. 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 resultscould 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 otherstatements 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 resultsor events to differ materially from those expressed in or implied by these forward-looking statements include: general economic and market conditions; foreign exchange rates; commodityprices; 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 ofCaterpillar’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 maintaincustomer service; Finning’s ability to manage cost pressures as growth in revenues occur; Finning’s ability to reduce costs in response to slowing activity levels; Finning’s ability to attractsufficient skilled labour resources to meet growing product support demand; Finning’s ability to negotiate and renew collective bargaining agreements with satisfactory terms for Finning’semployees and the Company; the intensity of competitive activity; Finning’s ability to successfully integrate the distribution and support business formerly operated by Bucyrus; Finning’sability 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 politicaland economic environments for operations; the integrity, reliability, and availability of information technology and the data processed by that technology; expected operational benefits fromthe 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 investorsand 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 anyother 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 orthat 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, otherbusiness 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 unusualitems 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 presentsknown risks affecting its business.All amounts in this presentation are in Canadian dollars unless otherwise noted 2
  3. 3. Finning International Inc. (TSX:FTT) Revenue by Region (LTM*) World’s largest Caterpillar dealer:  New equipment and engines sales UK & Ireland 14%  Used equipment sales Canada South America  Products support / parts and service 34% 52%  Equipment rental Main industries:  Mining (oil sands, copper, coal)  Construction  Power systems Key statistics:  Market cap ~ $4.5 billion  Revenue (LTM*) = $6.7 billion  15,200 employees* Last twelve months ended Sep 30, 2012 3
  4. 4. Unique Value Proposition Strong market positions Product Support Revenue  Copper mining in Chile 10 year CAGR ~11% $ Billions  Oil sands in Canada 3.0 2.7 Investment in product support 2.4 2.5 capacity and capability 2.1  Canada: OEM, COE, 2.0 1.9 1.9 Fort McKay 1.6 1.7  South America: La Negra 1.5 1.3 1.2 Truck Shop and PDC, 1.1 1.0 Antofagasta CRC 1.0  UK & Ireland: Damar 0.5 Resilient product support business driven by growing 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM* installed equipment population Recession * Last twelve months ended September 30, 2012 4
  5. 5. Outlook Expect constructive business conditions in key markets  Mining to remain active supported by relatively strong oil and copper prices Uncertain outlook for equipment sales  Customers becoming more cautious Expect continued strong demand for product support  Large and aging equipment population  Robust level of equipment utilization Operating with caution  Taking prudent steps to manage business with more conservatism 5
  6. 6. Revenue Drivers Product support growth New products and services  Bucyrus - complete suite of mining products; full year contribution  CAT 795 electric drive truck  UK & Ireland Power Systems - Damar, Komptech  Chile - truck dump bodies Market share growth 6
  7. 7. Driving Value Operational excellence focus  Supply chain management  Service productivity and profitability  SG&A improvements Financial priorities  Operating leverage  Sequential EBIT margin expansion  Committed to 9-10%  Sustain strong ROE  Drive return on investments made  ROE target: >18%  Strengthen balance sheet  Grow dividends 7
  8. 8. 2013 Financial Outlook $ Billions Revenue Revenue 8.0 6.7 5.9  Flat to 10% growth 6.0 5.7 5.6 4.9 4.3 4.5 4.6 over 2012 4.0 3.2 3.6 3.8  10 year CAGR ~ 8% 2.0 Earnings per share 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM*  Earnings to grow at 2.0 $ Basic EPS Recession higher rate than revenue 1.57 1.76 1.6 1.51  10 year CAGR ~8% 1.32 1.38 1.2 1.06 0.91 0.92 Balance sheet 0.86 0.86 0.8 0.73  Net debt to total capital 0.4 ratio within 35-45% 0.0 by end of 2013 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM* * Last twelve months ended September 30, 2012 Results from continuing operations 8
  9. 9. Summary Sustainable competitive advantage Continued focus on operational excellence Operating with caution Driving value in slow growth environment 9
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