Investor Presentation October 2012 Forward Looking Statement This - - PowerPoint PPT Presentation

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Investor Presentation October 2012 Forward Looking Statement This - - PowerPoint PPT Presentation

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Investor Presentation October 2012 Forward Looking Statement This presentation contains certain forward-looking statements. Forward looking statements relate to future events or the Corporations future performance, and are based on

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SLIDE 1

Investor Presentation

October 2012

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SLIDE 2

Forward Looking Statement

  • This presentation contains certain forward-looking statements. Forward

looking statements relate to future events or the Corporation’s future performance, and are based on management’s current expectations and assumptions regarding the business and anticipated financial results of the Corporation. Forward looking statements involve known and unknown risks, uncertainties and other factors beyond the Corporation’s control which may affect the Corporation’s business, or cause management’s expectations and assumptions to prove incorrect. As a result, actual results of operations could differ materially from those anticipated or implied by forward-looking statements. There can be no assurance any forward-looking statement will materialize.

  • You can find a discussion of risks and uncertainties pertaining to the

Corporation and its business and other factors that could cause financial results to fluctuate in our regulatory filings on SEDAR at www.sedar.com. The Corporation assumes no obligation to publicly update or revise its forward-looking statements to reflect new information, events or circumstances, except as required by law.

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SLIDE 3

Wajax Core Businesses 2011 Revenue and EBIT

50% 25% 25% 47% 31% 22%

Revenue EBIT

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SLIDE 4

2011 Revenue by Region

> 40,000 Customers

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117 Branches

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SLIDE 5

2011 Revenue by Market

13% 11% 11% 9% 14% 16% 9% 4% 6% 7%

Industrial/ Commercial Construction Forestry Transportation Mining Oil Sands Government and Utilities Other Metal Processing Oil & Gas

44% Direct to Resource Markets

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SLIDE 6

2012 Team of 2,800

36% 36% 28%

Equipment

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Power Systems Industrial Components

By Division By Role

Other 32% Service Technicians 36% Sales Professionals 32%

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SLIDE 7

Investment Considerations

  • Dividend Objective: Payout of at least 75% of earnings*
  • Current Monthly Dividend:

$0.27 per share ($3.24 annualized)

  • Yield:

6.75% - 7.2% (based on $45-$48 stock price)

  • Target Leverage:

1.5 – 2.0X Debt-to-EBITDA

  • Average Annual ROIC:

17.4%

  • last 5 years (tax effected)
  • Market Cap:

~$750 million

  • No shareholder holds ≥ 10% of issued shares

* Subject to the Corporation’s financial condition, economic outlook and capital requirements. 7

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SLIDE 8

Creating Value For Shareholders

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Wajax Strategy Earnings Growth

  • Focus on organic growth: base business and new opportunities
  • Tuck-under acquisitions
  • Ensure capacity meets growth requirements
  • Manage debt within 1.50-2.0X Debt/EBITDA range

Debt Capacity for Growth Maintain 75% Dividend Base Business

  • Executional

Excellence New Opportunities

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SLIDE 9

50% of 2011 Revenue

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SLIDE 10

Wajax Equipment Revenue and Growth Priorities

33% 31% 16% 13% 7%

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2011 Revenue Mix Growth Priorities 1) Continue to grow market share in existing categories:

  • Focus: Construction and

Material Handling

  • Continued sales force

effectiveness improvements 2) Expand Mining 3) Build Rotating Products division 4) Grow aftermarket contribution 5) Selected product line extensions and tuck-under acquisitions.

Crane/ Utility Forestry Material Handling

Mining Construction

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SLIDE 11
  • Building on our leadership

position in Hitachi mining shovels 1) Expand infrastructure in Ontario and Eastern Canada 2) New products and services

Hitachi

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Wajax Equipment Product Offering Growth Strategies

Grow Mining

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SLIDE 12

$500 Million*

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Wajax Equipment Product Offering Growth Strategies

  • Representing Fletcher

mining effective Q4 2012

  • Testing selected

underground mining lines new to North American market from YMZ/Zanam

  • Representing new entry

to market in 2014 for drilling equipment

  • Reviewing additional

mining opportunities in equipment, parts and service

  • Provide product with

excellent quality and cost effectiveness

  • Can generate 2X original

costs in parts and service

  • ver 10-year lifetime

$400 Million* $200 Million*

(*Estimated Canadian market size relevant to expected Wajax offering)

Now: Haul Trucks Future: Underground and Drilling

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SLIDE 13

Wajax Equipment Developing the Rotating Products Division

29% 71%

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Plant and Field Services

Estimated Oil Sands Market(1) $1.8B

Products, Parts and Services

(1) Wajax Addressable Products and Services

Wajax Strategy 1) Grow revenue in an expanding array of oil sands products and services

  • Primary focus: products,

parts and services in slurry systems

  • Secondary focus: selective

provisioning of plant and field services

  • Current market share <1%

2) Focus on oil sands markets first and then expand to other Canadian markets

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SLIDE 14

Wajax Equipment Developing the Rotating Products Division

Estimated EBIT margins in Rotating Products are greater than 7% for overall Equipment division Slurry Pumps Parts and Service Engineering Support Field Services

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  • Deliver technologically

superior product at lower cost through exclusive vendor relationships

  • Deliver targeted

turnaround/shutdown maintenance services

  • Design custom

approaches to increase plant maintenance efficiency

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SLIDE 15

25% of 2011 Revenue

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SLIDE 16

Wajax Power Systems Revenue and Growth Priorities

53% 24% 23%

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2011 Revenue Mix Growth Priorities 1) Establish Wajax as one of Canada’s leaders in commercial EPG 2) Expand our success in Off-Highway mechanical drive systems 3) Maintain our position in On-Highway

Off-Highway Mechanical Drive Systems

Electric Power Generation (EPG)

On-Highway

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SLIDE 17

Wajax Power Systems Building Our EPG Business

49% 44% 7%

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Wajax Strategy 1) Currently #3 in the market 2) Lever advantages:

  • National footprint
  • Diverse product portfolio
  • Building a world-class team

3) Focus for Wajax

  • Large projects capability

(>$7M/5MW)

  • Continued success in

standby and prime diesel, rental and gas

Diesel Prime

Gas Continuous

Diesel Standby

Estimated Canadian Market Size(1) $880M

(1) Wajax Addressable Segments

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SLIDE 18

Wajax Power Systems Génératrice Drummond

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The 68,000 sq. ft. Génératrice Drummond facility opened in the summer of 2012 and will be used to support continued strength in the Quebec market and as a national integration center. Establishing an Infrastructure to Drive EPG

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SLIDE 19

Applications

  • Oil and gas exploration and servicing (e.g., fracking)
  • Other Off-Highway applications (e.g., marine)

Growth Strategies

  • Leverage product technology advancements by MTU and Allison
  • Expansion of aftermarket capabilities
  • Marine opportunities – e.g., Gov’t of Canada ship building

Allison MTU

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Wajax Power Systems Product Offering Growth Strategies

Mechanical Drive Systems

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SLIDE 20

25% of 2011 Revenue

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SLIDE 21

Wajax Industrial Components Revenue Mix and Growth Priorities

52% 30% 17% 1%

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2011 Revenue Mix Growth Priorities 1) Expand Engineering and Repair Service 2) Expand branch network

  • Organic growth
  • Acquisitions

3) Improve efficiencies

  • Supply chain
  • Inventory management
  • E-commerce

Other Process Equipment

Hydraulics Bearings and Power Transmission

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SLIDE 22

Wajax Industrial Components Building our Engineering and Repair Services

25% 25% 28% 22%

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Wajax Strategy 1) Wajax current share estimated at 4%

  • Driven by strength in

hydraulics 12% market share 2) Build services capability:

  • Engineering design and

fabrication services

  • Shop repairs
  • Field Repairs
  • Reliability services

3) National branch network

  • Consider selected

acquisitions to accelerate growth

Instrumentation

Pumps Bearings and Power Transmission

Estimated Canadian Market Size(1) $1.4B

Hydraulics

(1) Wajax Addressable Products/Services

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SLIDE 23

Process Equipment Hydraulics

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Wajax Industrial Components Product Offering Growth Strategies

Bearings and Power Transmission EBIT margins on Engineering and Repair Services sales are greater than overall Industrial Components EBIT margin target of 7% Gate Valve Power Unit

  • Fort McMurray
  • Project Value: $125K

Pillow Block Bearings Sludge Pump

  • Toronto
  • Project Value: $86K
  • Sept-Iles
  • Project Value: $520K
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SLIDE 24

2012 Q2 YTD Results

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SLIDE 25

2011 2012

$744.7 $638.0

Revenue

($ Millions)

Q2 YTD Consolidated Revenue and Earnings

+17%

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2011 2012

$2.13 $1.77

Earnings

($ Per Share)

+20%

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SLIDE 26

Q2 YTD Segment Earnings

2011 2012

$23.1 $28.8

2011 2012

$11.0 $13.0

2011 2012

$15.3 $15.1 +25%

  • 1%

+18%

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7.3%* 7.5%* 9.9%* 8.5%* 6.4%* 6.9%*

$ Millions

Equipment Industrial Components Power Systems

* EBIT percentage Revenue Increase: 21% Revenue Increase: 15% Revenue Increase: 10%

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SLIDE 27

2012 Outlook

  • Slightly more cautious regarding outlook for the

remainder of 2012.

  • Quoting in most markets remains buoyant.
  • Expect results for full year 2012 will be

modestly higher than the previous year.

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SLIDE 28