Investor Day 2012

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Investor Day 2012

  1. 1. Investor Day Strategic OverviewMike Waites, President and CEO December 13, 2012
  2. 2. Executive TeamJuan Carlos Villegas Neil Dickinson Andy Fraser Marcello Marchese EVP and COO Managing Director President President Finning International Finning UK & Ireland Finning Canada Finning South America Dave Smith Rebecca Schalm EVP and CFO SVP, Human Resources Finning International Finning International 2
  3. 3. Unique Value Proposition Geographic and industry Product Support Revenue diversification 10 year CAGR ~11% $ Billions Strong market positions 3.0 2.7  Copper mining in Chile 2.4  Oil sands in Canada 2.5 2.1 Large installed equipment 2.0 1.9 1.9 base drives resilient product 1.6 1.7 support 1.5 1.3 1.2 Investment in product support 1.0 1.1 1.0 capacity and capability  Canada: OEM, COE, 0.5 Fort McKay  FINSA: La Negra Truck Shop 0.0 and PDC, Antofagasta CRC 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM*  UK & Ireland: Damar Recession * Last twelve months ended September 30, 2012 3
  4. 4. Strategy Map Mining Solutions Power Systems Ultimate Vision Providing unrivalled services that earn customer loyalty, we will be CAT’s best Global global business partner. Solutions S Provider T R Core/BCP Leadership Acquisition(s) A T SafetyIntermediate E Sales & Solutions GOperational OperationalExcellence I Excellence 5 x S Service & Parts C Operating Supply Chain Leverage Systems G R OShort-term W Solidify TFoundation High Performance/ H Disciplined Growth Balance Sheet Deleverage EBIT Improvement Engagement 4
  5. 5. Meeting our Commitments Targets Progress Bucyrus  Acquisition and transition Successful; accretive to EPSAchievements Canada business recovery  EBIT margin improvement From (0.3%) in Q3 2011 to 7.8% in Q3 2012 Revenue growth  12-15% including Bucyrus Up 19% YTD ending Sep 30, 2012 Return on Equity  >18% 21.9% LTM ended Sep 30, 2012 EBIT margin expansionRelentless Focus  9-10% in 2013 7.8% in Q3 2012 Free Cash Flow  Essentially break-even Expect modest net usage of cash in FY12 Net Debt to Total Capital  35 - 45% Expect above target range in 2012 5
  6. 6. 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, delaying some purchasing decisions Expect continued strong demand for product support  Large and aging equipment population  Robust level of equipment utilization 6
  7. 7. Revenue Drivers Product support growth New products and services  Bucyrus - full suite of mining products  CAT 795 electric drive truck  UK & Ireland Power Systems - Damar, Komptech  Chile - truck dump bodies New technologies  Remote condition monitoring  C175 engine  Gas fuel substitution Grow market share as equipment availability has improved 7
  8. 8. Driving Value Operational excellence focus  Supply chain management  Service productivity and profitability  SG&A improvements Priorities  Operating leverage  Sequential EBIT margin expansion  Committed to 9-10%  Sustain strong ROE  Drive return on investments made  Strengthen balance sheet 8
  9. 9. Summary Sustainable competitive advantage Continued focus on operational excellence Operating with caution Driving value in slow growth environment 9
  10. 10. Investor Day Financial OutlookDave Smith, EVP and CFO December 13, 2012
  11. 11. Financial Targets Earnings Growth Strengthen balance sheet  Sequential EBIT margin  Significant free cash flow expansion  Net debt to total capital  Committed to 9-10% target: 35-45% Drive return on invested Grow dividends capital  Consistent with  ROE target: >18% sustainable growth 2
  12. 12. EBIT Margin Journey Continue to improve operating leverage Fundamental shift to 20-30% higher profitability Reduction in volatility EBIT margin target 10 year EBIT margin range 5-8% 3
  13. 13. Balance Sheet Strong EBITDA to drive significant free cash flow Lower capex Improve working capital metrics Deleverage balance sheet – within target range in 2013 % Net Debt to Total Capital Ratio 60 50 Target 40 Range Bucyrus acquisition Investment in COE 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sep 4
  14. 14. Return on Invested Capital Improve return on assets Return on Equity  Significant investments % 24 over past few years  Bucyrus 21  ERP 18  Branch network, CRCs, PDCs 15  Digesting and making 12 these assets work 9  Improving working capital 6  Focus on asset performance by market segment and 3 line of business 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM* Target ROE consistently >18% * Last twelve months ended September 30, 2012 Periods prior to 2010 are adjusted to represent ROE under IFRS 5
  15. 15. Dividends Important component of total Annual Dividends shareholder return 0.60 $ 0.55 Committed to grow 0.51 0.50 dividends, consistent with 0.47 0.43 0.44 sustainable growth 0.40 0.36 10 year average payout ratio 0.30 0.28 ~30% 0.22 Current quarterly dividend 0.20 0.15 0.18 0.20 = $0.14 0.10 Current dividend yield ~2.5% 0.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6
  16. 16. 2013 Financial Outlook Revenue 8.0 $ Billions Revenue 6.7  Flat to 10% growth 6.0 4.9 5.7 5.6 5.9 4.6 over 2012 3.6 3.8 4.3 4.5 4.0 3.2  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 $ Basic EPS Recession 2.0 higher rate than revenue 1.76 1.57 1.51 1.6  10 year CAGR ~8% 1.32 1.38 1.2 1.06 Balance sheet 0.8 0.86 0.86 0.73 0.91 0.92  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 7
  17. 17. Key Financial Focus Areas Improve earnings growth and quality Drive return on invested capital Deleverage balance sheet Grow dividends 8
  18. 18. Investor Day Operational ExcellenceJuan Carlos Villegas, EVP and COO December 13, 2012
  19. 19. Strategy Map Mining Solutions Power Systems Ultimate Vision Providing unrivalled services that earn customer loyalty, we will be CAT’s best Global global business partner. Solutions S Provider T R Core/BCP Leadership Acquisition(s) A T SafetyIntermediate E Sales & Solutions GOperational OperationalExcellence I Excellence 5 x S Service & Parts C Operating Supply Chain Leverage Systems G R OShort-term W Solidify TFoundation High Performance/ H Disciplined Growth Balance Sheet Deleverage EBIT Improvement Engagement 2
  20. 20. Operational Excellence Customer Centric Operational Discipline Culture and Efficiency Maintain local customer focus Align organizational structure to strategy Consistently apply leading practices which add value Leverage expertise of Finning’s regions Share learning across organization Focus on margin expansion 3
  21. 21. Strategy Map - Operational ExcellenceIntermediate step in our strategy Safety Sales & Solutions OperationalOperational Excellence Service & Parts OperatingExcellence Leverage 5xS Supply Chain Systems 4
  22. 22. Safety  Strong safety performance = solid culture and competitive advantage  Employee opinion on safety scores – top 10% of global organizations  Good example of cultural change and best practices sharing  Embedded process and standardization Lost Time Injuries (LTI) per 200,000 work hours2.52.01.51.00.5 0 02 03 04 05 06 07 08 09 10 11 12 5
  23. 23. Sales and Solutions Enhanced focus on market segmentation and analysis Leveraging power systems leadership globally New businesses and solutions  Bucyrus  Truck dump bodies  Damar  Komptech  Technology services  Fintech  Finsight  Remote condition monitoring 6
  24. 24. Sales and Solutions – Bucyrus Update Transition plans well executed in all regions  Retained knowledge, capabilities and talent  Successful transfer to ERP platform  Finning used by CAT as best practice Making solid integration progress  Bundling equipment: recent deals in Chile and UK  Service business stronger than expected  Priority: working with CAT to further develop parts business  Accretive to earnings in first year Reviewing opportunities for operating synergies 7
  25. 25. Service and Parts Service productivity  Customer centric culture to be balanced with operating discipline  Leverage asset investments from past five years: La Negra, COE and Fort MacKay  Lean manufacturing applied to our business - Caterpillar Production System (CPS)  Capacity planning and equipment scheduling Global service productivity team  Application of shared learning and best practices  Experts from each region working together to enhance global performance Outcome: improved customer service and profitability 8
  26. 26. Supply Chain Building sustainable, efficient and consistent supply chain Standardized, rigorous processes with common metrics  Sharing leading practices across the regions  Regional leads are Global Supply Chain Council members  End-to-end processes include Caterpillar  Improving inventory planning process Sustainable benefits  Faster inventory turns while maintaining service levels  Shorter cash-to-cash cycle  Reduced working capital levels over business cycle  Improved asset utilization Improving customer service and satisfaction 9
  27. 27. Systems Continuous improvement of systems and processes  Leverage technology – applications and geography  Drive ERP business case benefits  Working capital and inventory management  Improved productivity  Integrate technologies  Condition monitoring  Safety  E-commerce business Phased implementation in UK & Ireland and South America Transfer experience and learning from Canada to other regions 10
  28. 28. Summary Operational excellence across all regions - key driver of sustainable improvement in operating profitability and customer loyalty Consistent processes transferable and scalable Focus on largest margin impacts  Supply chain  Service productivity  SG&A improvements Sharing best practices  Bucyrus integration  Global Supply Chain Council  Global Power Systems 11
  29. 29. Investor DayAndy Fraser, President, Finning Canada December 13, 2012
  30. 30. Finning Canada Revenue:  2011: $2.9 billion  YTD Sep 2012: $2.5 billion Northwest Territories EBIT:  2011: $170 million Yukon Western Canada  YTD Sep 2012: $162 million Industries:  Mining (including oil sands) Alberta  Construction Fort McMurray (4 branches + Fort McKay)  Power systems British Columbia Edmonton  Petroleum / oil & gas (OEM, PDC)  Forestry Red Deer Employees: ~5,800 Vancouver (COE) 2
  31. 31. Finning Canada Revenue Profile Revenue Product Support New Equipment by Line of Business Revenue by Industry Sales by Industry Rental Power Systems Other Used Forestry 8% 5%Equipment 8% 4% 5% Petroleum 11% Mining New 32% Equipment Construction Power Mining Systems 44% 27% Product 65% 12% Support 43% Construction 36% Product support for petroleum and forestry Other includes government and industrial is allocated among above key industries YTD ending September 30, 2012 3
  32. 32. Operational Excellence  Entering the phase of continuous improvement of systems and processes  Focus on ERP system optimization and ease of use  Enabling working capital efficiencies and improving asset performance  Driving supply chain initiatives  Improving forecasting capability for equipment and parts  Reducing uncommitted equipment inventory  Increasing inventory turns (new Spokane Caterpillar parts distribution center)  Improving service productivity  Introducing lean manufacturing approach (Caterpillar Production System)  Focus on improved service utilization through technology  People  Safety: LTIF* = 0.18  Employee engagement: record participation in 2012  Training: technical, safety, leadership  Organizational alignment to support operational excellence* Lost Time Injury Frequency - YTD ending September 30, 2012 4
  33. 33. Oil Sands Product Support Five oil sands branches New oil sands service facility (Fort McKay)  16 bays; 160,000 sq. ft.  $110M investment: 2011 and 2012  Operational in Q4 2012  Regional training centre New Fort McKay oil sands service facility Two parts warehouses (Mildred Lake and Fort McMurray) Parts distribution center (Edmonton) OEM - component remanufacturing facility (Edmonton) COE - equipment assembly and rebuild facility (Red Deer) Multiple field service locations; over 200 fully equipped field service trucks ~1,100 regional employees, including ~550 mechanics and apprentices Oil sands revenue: 2011 >$900 million; 2012 projected >$1 billion 5
  34. 34. Oil Sands Mining Fleet Growth Additional CAT Caterpillar Units Total Units Finning’sEquipment Type Units Projected at Jun 30, 2012 at Jun 30, 2012 Market Share Jun 2012 to 2017400 Ton Trucks (797) 250 278 90% 104320 – 340 Ton Trucks (795/MT5300) 131 10240 Ton Trucks (793) 158 182 87% 64100 – 200 Ton Trucks (777-789) 408 416 98% 157Ultra Large Tractors (D11 & D10) 293 322 91% 139Large Tractors (D9 & D8) 255 287 89% 70Ultra Large Graders (24) 90 90 100% 57Large Graders (16) 85 86 99% 46Total 1,539 1,792 647 Projections include existing projects and expansions, as well as contractor equipment for: Syncrude (Base & Aurora), Suncor (Steepbank & Millennium), Shell/Albian (Muskeg River & Jackpine), CNRL (Horizon), Exxon/Imperial (Kearl) 6
  35. 35. Construction and Power Systems Heavy construction  Continued investment in infrastructure  Alberta – ring roads, airports, LRT in Calgary and Edmonton  British Columbia – Evergreen Line Rapid Transit, Coquitlam to Vancouver; Interior to Lower Mainland (ILM) Transmission Project, Nicola to Coquitlam  Numerous pipeline projects in Western Canada through 2020 Forestry  US housing starts improving  Diversified markets Power systems  Petroleum / oil & gas  Slower activity due to lower well fracturing and servicing  EPG and rental power  Solid demand, particularly in mining  Strong customer value proposition with integrated product offering 7
  36. 36. Opportunities  Sustainable product support growth  Large and aging equipment population  Strong demand for component remanufacturing and machine rebuilds  Fort McKay oil sands facility to support producers and contractors  Oil sands remain active  Mining equipment population for existing projects expected to grow by ~40% over next 5 years  Drills, Shovels & Mining Systems*  Complete mining product offering  Significant product support opportunity  Solid demand from heavy construction and power systems  Gaining market share with improved equipment availability* Former Bucyrus business 8
  37. 37. 2013 Priorities – Consistent Execution Continue to improve operating profitability Drive operational excellence  Improve working capital performance  Increase service productivity Integrate and grow new Drills, Shovels & Mining Systems business Execute on Fort McKay – game changer Gain market power in construction and pipeline Operating with caution 9
  38. 38. Market Outlook Expect stable oil sands activity  Robust product support business, including component remanufacturing and machine overhaul  Producers taking more balanced view on capital projects and expansions Other mining  Solid demand from copper and thermal coal  Metallurgical coal customers remain cautious Favourable outlook for heavy construction in BC and Alberta  Significant infrastructure projects underway  Mining and energy related construction projects, including pipelines Oil & gas and forestry activity expected to be similar to 2012 10
  39. 39. Summary Key markets remain constructive  Capturing revenue opportunities in slow growth environment  Monitoring customer activity closely  Managing business with more conservatism Leveraging investments to deliver customer value  Growing parts and service business for Drills, Shovels & Mining Systems  Developing and training people Focus on rigorous and consistent execution  Driving operational excellence  Improving EBIT margin performance 11
  40. 40. Investor DayMarcello Marchese, President, Finning South America December 13, 2012
  41. 41. Finning South America US$ Millions Revenue Revenue: 2,400 2,245 2,141  2011: US$2.1 billion 2,000 1,622  YTD Sep 2012: US$1.7 billion 1,600 1,240 1,398 1,305 1,200  Chile – 76%, Argentina – 18%, 832 890 Bolivia – 4%, Uruguay – 2% 800 671 407 400 282 EBIT: 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM*  2011: US$195 million US$ Millions EBIT  YTD Sep 2012: US$161 million 220 216 200 195 Industries: 180 160 145  Mining (copper, gold) 140 118 139 134 120  Construction / general machinery 100 96 77 80  Power systems 60 43 65 40 29 Employees: ~7,500 20 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM* * Last twelve months ended September 30, 2012 2
  42. 42. FINSA Revenue Profile Revenue Product Support New Equipmentby Line of Business Revenue by Industry Sales by Industry UsedEquipment Rental Power Systems Power Other 2% 3% 6% Systems 3% Construction 13% 13% New Mining Equipment 39% 44% Product Support Mining Construction 51% 81% 45% Other incudes forestry, industrial, governmentYTD ending September 30, 2012 3
  43. 43. Operational Excellence  Strategic approach to supply chain management  Working capital initiatives – focus on inventory  End-to-end planning processes  Leveraging investment in product support infrastructure  Lean manufacturing approach (Caterpillar Production System)  Improved shop utilization/throughput  Expanded Component Rebuild Centre capacity  People and high-performance culture  Safety: LTIF* = 0.26  Employee engagement - 85% in 2012  Training - new technical training centre in Antofagasta* Lost Time Injury Frequency - YTD ending September 30, 2012 4
  44. 44. Chilean Mining  Chilean mining investment projected at ~US$ 70 billion over next 5 years*  Strong mining outlook balanced by industry growth challenges:  Shortages of skilled people  Environmental considerations (e.g. fresh water consumption)  Energy requirements  Strong and growing product support business  19 MARC and LPP contracts covering 60-70% of equipment population  Mining product support market share ~90%  Robust mining projects portfolio  Large and expanding machine population  Mining equipment market share 50-60%* Source: Cochilco 5
  45. 45. FINSA Mining Fleet Growth Additional CAT Caterpillar Units Total Units Finning’sEquipment Type Units Projected at Dec 31, 2012 at Dec 31, 2012 Market Share 2013 to 2017 Ultraclass Trucks Size (797-795) 232 571 41% 211 Large Mining Trucks (793 – 777) 879 1,390 63% 383 Large Wheel Loaders (994 – 992) 172 270 64% 55 Large Wheel Dozers (854 – 824) 149 267 56% 49 Track-Type Tractors (D11 – D9) 341 609 56% 99 Motor Graders (24 - 16) 168 273 62% 80 Underground 148 480 31% 120 Total 2,089 3,860 54% 997 6
  46. 46. Construction and Power Systems Growing demand from mining contractors in Chile Substantial private and government investment in infrastructure in Chile Significant opportunity to grow product support in construction and power systems as population of equipment and engines increasing  Construction product support market share ~60% Market segmentation strategy offers unique customer value proposition  Growing market share in various sub-segments (e.g. Compacto)  Service culture of innovation and technology  Remote condition monitoring services  Low-cost solutions for easy to repair failures Slow but stable business activity in Argentina  Meeting customer demand to greatest extent possible  Adjusted our business to align with decreased activity levels 7
  47. 47. Opportunities Mining growth supported by healthy copper prices  Mining equipment population expected to increase significantly over next 5 years Continued strong demand for product support Bucyrus  Unique opportunity to offer complete mining solution  Significant product support opportunity New products and businesses  795 electric drive truck  Fabrication of truck bodies  METSO mobile crushers  Technology products and services Solid demand from construction and power systems customers in Chile 8
  48. 48. 2013 Priorities – Consistent Execution Drive operational excellence Supply chain end-to-end integration Grow Bucyrus business Balance product support growth with efficiencies Manage the business with caution in light of macro- economic uncertainty 9
  49. 49. Market Outlook Positive long-term fundamentals as copper prices remain high by historical standards Expect Chilean mining to continue to be very active  Solid activity in existing operations  Continued strong demand for product support  Caution on new projects and expansions Positive outlook for construction and power systems in Chile, Bolivia and Uruguay  2013 – election year in Chile Economic environment in Argentina expected to remain largely unchanged 10
  50. 50. Summary Strong outlook for Chile  Mining investment presents big opportunities  Solid order intake and strong demand for product support  Infrastructure spend to support construction and power systems business Capturing growth opportunities with Bucyrus and 795 electric drive truck Driving operational excellence  Focus on supply chain  Leveraging product support capabilities Improving EBIT margin performance 11
  51. 51. Investor DayNeil Dickinson, Managing Director, Finning UK & Ireland December 13, 2012
  52. 52. Finning UK & Ireland Revenue: Finning Cat Cat Compact Dealers  2011: $831 million Ag Dealers  YTD Sep 2012: $684 million EBIT:  2011: $52 million  YTD Sep 2012: $40 million Segmented approach  Equipment Solutions  Power Systems Employees: ~1,800 2
  53. 53. Finning UK & Ireland Revenue Profile Revenue Product Support New Equipment by Line of Business Revenue by Industry Sales by Industry Waste, Industrial, Power Used Demolition Systems Rental Mining 7%Equipment 3% Industrial 7% Quarrying 7% 11% 3% New Power Systems Mining Power & Product Equipment 19% Energy Support 61% 38% 19% 29% Construction Marine 55% 7% Construction 31% Oil & Gas 3% YTD ending September 30, 2012 3
  54. 54. Clear Strategic Roadmap Trusted by Experts Expand Into Growing Markets Product Support Growth Beyond Core Solutions Specialised Provider C Engineering & Technology A Dominate Mining, Power & Core T Panorama & Operational S Grow & Develop All Makes Managed ExcellenceOperational Power Systems Services T ScopeExcellence + Sitech + Finning Profitable R Technologies Growth A Bucyrus MWM T Product Support + Reman Growth E BCP & Core Supply Chain + Agreements G Procurement Safety Simplified I Rollo Acquired #1 for Service & Solidify C UK Business Model Loyalty New Finning UK Foundation Leadership ‘Trusted’ Strategy EBIT% Improvement Programme Implemented CPS* & OPERATIONAL EXCELLENCE* Caterpillar Production System 4
  55. 55. Execution on Strategy in 2012 Acquired Damar - specialised engineering business; completed £7m anaerobic digestion plant Acquired Bucyrus – 6 shovels sold in year 1 Acquired distribution rights to Komptech products – total solution for recycling sector Established “Managed Services “ capability Caterpillar Gas (MWM) products added and Finning recognised as Perkins Gas Centre of Excellence for Western Europe and Scandinavia Finsight launched Recognised as leader in safety Continue to focus on higher margin / added value opportunities 5
  56. 56. Operational ExcellenceStrategic Focus Driving supply chain initiatives  Outsourced national distribution centre  Revised ordering processes - Lane 1 Focused on EBIT margin improvement  Focus on SG&A  Review procurement contracts  Defined benefit pension plan closed  Headcount rationalisation  Utility costs  Caterpillar Production System (CPS) – eliminating waste 6
  57. 57. Operational ExcellenceStrategic Focus People and high-performance culture  Safety – national award winners  Employee engagement - 82% in 2012  Training  “Developing Great Leaders” course  Finning Academy in top 100 UK schemes Market segmentation Customer loyalty / service productivity  Top 2 for Customer Loyalty in Caterpillar  Awarded Gold Service Excellence from Caterpillar  Finsight / Managed Services 7
  58. 58. Market Outlook 2013 Equipment Solutions – market size down 10%  Mining impacted by weak coal prices  Limited investment in quarry and aggregates  Government investment – rail and energy, possibly housing  Industrials slowing  Small machines – niche markets Power Systems – mixed growth  Oil & Gas  Increased product range in Gas Electric Power  Marine  Renewables / clean power 8
  59. 59. UK & Ireland OpportunitiesEquipment Solutions Mining and energy  Underground via Bucyrus  Legacy products  Tungsten mine Quarrying and industrial  Managed Services  Market share gains  Machine age increasing Waste and recycling  Komptech complementary products  Growth in Materials Recovery Facilities Plant hire and agriculture  Developing dealer network  Market share gains – 20,000 unit market 9
  60. 60. UK & Ireland OpportunitiesPower Systems Power and energy  Mission critical diesel – hospitals, data centres  Water treatment industry  Expanded capability and products Oil & Gas  North Sea resurgence  Flameproof technology  Managed services contracts - BP Marine  International opportunity  Offshore wind farms  Pleasure craft Industrial and Perkins  Center of Excellence for Perkins Gas  60% market share rock crushers – 1,500 engines 10
  61. 61. Global Power Systems 2012 ~ $1 billion revenue Global megatrends offer growth opportunities  Population growth and urbanisation  Electronic revolution / connectivity  Climate change  Renewables  Energy from waste  Fracking Caterpillar growth and focus  Expanded product line Finning skills and expertise  Leverage skills across the territories  Engineering, Procurement and Construction capability  Packaging / added value capability 11
  62. 62. 2013 Priorities – Consistent Execution Drive operational excellence  Focus on working capital improvements  Drive efficiencies through Caterpillar Production System (CPS)  High-performance culture and people Maintain outstanding customer loyalty Manage through periods of weak demand  Drive revenue opportunities  Tightly control SG&A costs  Reduce discretionary expenses (e.g. travel, overtime)  Sustain financial performance 12
  63. 63. Summary Drive maximum value from the strategic acquisitions Total focus on operational excellence  Deliver financial performance Build talent and high performance culture Stick to the strategy - Trusted by Experts  Focus on added value growth  Power Systems and product support growth  Diversified business 13
  64. 64. Investor Day SummaryMike Waites, President and CEO December 13, 2012
  65. 65. Business Conditions Market conditions and customer confidence vary by region  Canada – stable activity levels; uncertain outlook  South America – positive long-term fundamentals; solid outlook  UK & Ireland – challenging economic landscape; some pockets of strength Operating with caution  Monitoring business activity closely  Taking prudent steps to manage business with more conservatism  Reducing uncommitted inventory  Carefully managing new orders  Controlling SG&A expenses 2
  66. 66. 2013 Priorities – Consistent Execution Drive revenue in slow growth environment Focus on operational excellence  Supply chain management  Service productivity  SG&A improvements Improve operating profitability and return on invested capital  EBIT margin - sequential expansion  Leverage latest investments  Lower capex and disciplined net rental additions Strengthen balance sheet 3

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