Oem tour oct 24, 2012 final_new

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Oem tour oct 24, 2012 final_new

  1. 1. Investor Presentation OEM Remanufacturing October 24, 2012
  2. 2. Investor PresentationMauk Breukels, VP Investor Relations October 24, 2012
  3. 3. 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 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 proposedtransaction between the Company and Caterpillar to acquire the distribution and support business formerly operated by Bucyrus in Finning’s Canadian dealership territory; growth prospectsfor the former Bucyrus business being acquired by the Company in Finning’s dealership territories (Bucyrus) and the competitive advantages of the business being acquired; expected futurefinancial and operating results generated from Bucyrus; anticipated benefits and synergies of Bucyrus; the expected financing structure for the Bucyrus transaction in Finning (Canada); andthe expected impact of Bucyrus 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 October 24, 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 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 attract sufficient skilled labour resources to meet growing product supportdemand; 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 toimplement its business plan; regulatory initiatives or proceedings, litigation and changes in laws or regulations; stock market volatility; changes in political and economic environments foroperations; the integrity, reliability, and availability of information technology and the data processed by that technology; operational benefits from the new ERP system. Forward-lookingstatements 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 betterunderstanding 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 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 3
  4. 4. Finning International Inc. (TSX:FTT) World’s largest Caterpillar dealer Canada 53%  3 regions, 7 countries Yukon The Northwest  15,000 employees Territories Key industries South America Fort McMurray British  Mining (oil sands, copper, coal) 33% Columbia Alberta Edmonton  Construction Bolivia  Power systems Antofagasta Vancouver (head office) Chile Market cap ~ $4.0 billion Argentina Uruguay Santiago Revenue UK & Ireland  FY2011 = $5.9 billion 14% United  YTD ended Jun 30, 2012 = 3.2 billion Ireland Kingdom Cannock Quarterly dividend = $0.14 per share 4
  5. 5. Investor PresentationAndy Fraser, President, Finning Canada October 24, 2012
  6. 6. Finning Canada Revenue Profile Revenue Product Support Revenue New Equipment Sales by Line of Business by Industry by Industry Rental Other* Other Used Forestry 8% Power Systems 5%Equipment 1% 3% 8% Petroleum 5% 11% Power Systems New Mining 12% Equipment Construction 34% Mining 45% 27% Product 64% Support 42% Construction 35% * Includes petroleum, forestry and other sectors YTD ending June 30, 2012 6
  7. 7. Oil Sands Mining Fleet Growth Additional CAT Caterpillar Units Total Units Finning’sEquipment Type at Jun 30, 2012 at Jun 30, 2012 Market Share Units Projected 2012 to 2016*400 Ton Trucks (797) 250 278 88% 147320 – 340 Ton Trucks (future 795F/MT5500) 131240 Ton Trucks (793) 158 182 87% 67100 – 200 Ton Trucks (777-789) 408 416 98% 158Ultra Large Tractors (D11 & D10) 293 322 91% 165Large Tractors (D8 & D9) 255 287 89% 80Ultra Large Graders (24) 90 90 100% 69Large Graders (16) 85 86 99% 40Total 1,539 1,792 726 Projections include the existing projects and their expansions, as well as contractor equipment for: Syncrude (Base & Aurora), Suncor (Steepbank & Millennium), Shell/Albian (Muskeg River & Jackpine), CNRL (Horizon), Exxon/Imperial (Kearl), Suncor (Fort Hills)* Includes units projected from June 30, 2012 to the end of 2016 7
  8. 8. Mining Product Support Infrastructure OEM - component remanufacturing facility (Edmonton) COE - equipment assembly and rebuild facility (Red Deer) New oil sands service facility (Fort McKay)  16 bays; 160,000 sq. ft.  $110 million investment: 2011 and 2012  To be completed by end of 2012 Parts distribution center (Edmonton) Two parts warehouses (Mildred Lake and Fort McMurray)  $59 million inventory; 20,900 line items New Fort McKay oil sands service facility Multiple field service locations Over 200 fully equipped field service trucks Three oil sands branches 850+ regional employees 8
  9. 9. Summary Solid core business  Sustainable product support growth – large and aging equipment population Focus on disciplined execution  Driving operational excellence 2012 priorities  Improve operating profitability  Successfully integrate Bucyrus  Focus on working capital and free cash flow 2013 tailwinds  Expanded product offering - Bucyrus  Fort McKay oil sands facility operational  Product support opportunities 9
  10. 10. Investor PresentationCraig Priddle, President & CEO, OEM Remanufacturing October 24, 2012
  11. 11. Vital Statistics Division of Finning International  Primary focus is Finning Canada product support 325,000 square foot purpose built “5 Star” facility 700 employees  86% employee engagement score (2011 employee survey) Three shift operation  3rd shift added March 2011 Fully integrated facility  Investments in inspection, salvage and testing technologies 11
  12. 12. The Reman Business ModelEnd-of-life Advanced salvage New part Assemblecomponent technology content and test Return end-of-life components to same as new condition in a manufacturing environment Profitability consistent with traditional product support business 12
  13. 13. Value Proposition Reman components reduce equipment owning and operating costs  Typically 50% to 75% the cost of new components Critical customer requirements  Availability  Quality and reliability  Cost efficiency  Supporting services Finning Canada mining and heavy construction focus COE partnership  Strong relationship, highly complementary 13
  14. 14. Operational Excellence at OEM Strategic focus on operational excellence 6 Sigma & Lean Manufacturing  Long term goal is a continuous improvement culture  Ongoing focus on waste reduction Standard Operating Procedures  Document best practices  Establish baseline for improvement OEM University  Formalized training to support growth  Train to standard operating procedures 14
  15. 15. Large Component Production Forecast(Units) Engines Powertrain20162015201420132012 0 1,000 2,000 3,000 4,000 5,000 6,000 15
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