Proven Steady Growth November 2012 Forward-Looking Statements - - PowerPoint PPT Presentation

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Proven Steady Growth November 2012 Forward-Looking Statements - - PowerPoint PPT Presentation

Proven Steady Growth November 2012 Forward-Looking Statements Statements and information herein that are not historical facts are "forward-looking information". Words such as plans, intends, outlook, expects,


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Proven Steady Growth

November 2012

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SLIDE 2

Statements and information herein that are not historical facts are "forward-looking information". Words such as “plans”, “intends”, “outlook”, “expects”, “anticipates”, “estimates”, “believes”, "likely", “should”, "could", "will", "may" and similar expressions often identify forward-looking information and statements. Forward looking statements and information may include, without limitation, statements regarding the operations, business, financial condition, liquidity, expected financial results, performance, obligations, market conditions, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Toromont and its business units. Forward-looking information and statements contained herein are based on, among other things, Toromont management's current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic, industry and regulatory environments in which Toromont operates or which could affect its activities, Toromont's ability to attract and retain customers as well as Toromont's operating costs and raw materials supply. By their nature, forward-looking information and statements, and the factors upon which they are based, are subject to risks and uncertainties which may be beyond Toromont's ability to control or predict. Actual results or events could differ materially from those expressed or implied by forward-looking information and statements. Factors that could cause actual results or events to differ from current expectations include, among others: business cycle risk, including general economic conditions in the countries in which Toromont operates; risk of commodity price changes including precious and base metals; risk of changes in foreign exchange rates, including the Cdn$/US$ exchange ate; risk of the termination of distribution or original equipment manufacturer agreements; risk of equipment product acceptance and availability of supply; risk of increased competition; credit risk related to financial instruments; risk of additional costs associated with warranties and maintenance contracts; interest rate risk on financing arrangements; risk of availability of financing; risk of environmental regulation. Additional information on these factors and other risks and uncertainties that could cause actual results or events to differ from current expectations can be found in the “Risks and Risk Management” and “Outlook” section of Toromont’s annual MD&A for 2011 contained in the 2011 Toromont Annual Report. Other factors, risks and uncertainties not presently known to Toromont or that Toromont currently believes are not material could also cause actual results or events to differ materially from those expressed or implied by forward- looking information and statements. Forward-looking information and statements contained herein about prospective results of operations, financial position or cash flows are presented for the purpose of assisting Toromont's shareholders in understanding managements' current view regarding those future outcomes and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on the forward-looking information and statements contained herein, which are given as of the date of this document, and not to use such information and statements for anything other than their intended purpose. Toromont disclaims any obligation or intention to update or revise any forward-looking information or statement, whether the result of new information, future events or otherwise, except as required by applicable law.

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Forward-Looking Statements

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SLIDE 3

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Market Leading Brands & Position Solid Growth Opportunities in Diverse Markets Product Support Enhances Stability Strong Balance Sheet 43 Years of Dividends – 23 of Consecutive Growth

Investment Strengths

Track Record of Superior Financial Performance

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SLIDE 4

The Equipment

4

The Equipment Group

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SLIDE 5

Dealer Network

Toromont CAT Mine Site Branches 1. Agnico Eagle 2. Goldcorp 3. DeBeers 4. Detour Gold 5. Goldcorp 6. Vale Toromont CAT Branches

Newfoundland & Labrador Ontario Nunavut

Musselwhite Meadowbank Porcupine Voisey’s Bay Victor Detour Lake 1 2 3 4 5 6

Manitoba

EQUI QUIPMENT G GROUP UP

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37 Toromont CAT Branches History of Successful Consolidation >250 Brands >28,000 Items 38 Stores Serving 13,600 Customers Equipment Sales by Segment*

*5 year average New Equipment Sales

21% 20% 18% 16% 6% 4% 15%

Power Large Contractor Local Contractor Mining Quarry Agriculture Other

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SLIDE 6

Growth Fueled by: Expanded Markets and New Branches

Mining, Battlefield, Power Systems, Sitech Mid Canada

Broadened Product Offerings (e.g., MaK, Metso, Trimble/Sitech) Increased Population and Larger Equipment Fuels Product Support

6

Revenue Growth Trends

EQUI QUIPMENT G GROUP UP

Revenue presented is based on trailing 12 months. Installed units based on management estimates for Toromont CAT.

5000 10000 15000 20000 25000 200 400 600 800 1,000 1,200 1,400 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q3'12 R12 Estimated Installed Base (Units) Revenue ($'000,000) Rental Equipment Sales Product Support Sales Estimated Installed Base

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SLIDE 7

Product Support

Ten consecutive quarters of year-over-year growth Added 99 technicians in first nine months of 2012 Toromont CAT Absorption ratio an important measure of sustainability

Product support absorption equals Toromont CAT product support gross profit divided by direct and indirect expenses total for Toromont CAT

75 80 85 90 95 100 105 $- $100,000,000 $200,000,000 $300,000,000 $400,000,000 Toromont CAT Product Support Absorption Coverage (%) Trailing 12 month Product Support Revenues Equipment Group Toromont CAT Product Support Absorption % Coverage EQUI QUIPMENT G GROUP UP

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SLIDE 8

Growth in Mining Installed Base

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EQUI QUIPMENT G GROUP UP

Substantial Increase in Mining Equipment Installed Base Creates Increased Product Support Opportunity

Replacement value based on Nov. 2012 pricing. Installed units based on management estimates.

100 200 300 400 500 600 700 800 900 1000 1100 0.0 200.0 400.0 600.0 800.0 1,000.0 1,200.0 1,400.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mining Installed Base (Units) Current Replacement Value of Fleet ($CDN) Other Underground Mining Trucks Shovels Number of Units

($MM’s)

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SLIDE 9

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Investment Has More than Doubled in Our Territory Over Past 5 Years

Canadian Exploration Expenditures

Source: Natural Resources Canada

2011$3.9 Billion (total Canada) 46%

Manitoba Nunavut Newfoundland & Labrador Ontario

EQUI QUIPMENT G GROUP UP

Mineral Exploration Investment Hits Record Billion Dollar Level

March 5, 2012 1:00 PM Investment in mineral exploration in Ontario in 2011 surpassed $1 billion for the first time, driving economic activity and creating jobs. Ontario leads all Canadian jurisdictions in mineral exploration, with 26 per cent of the country's exploration investment activity located within the province. Ministry of Northern Development and Mines

  • ntario.ca/north

Exploration Expenditures A Leading Indicator

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SLIDE 10

Diverse Mining Opportunity

10 CAT 6060FS Diesel Shovel Loads 795F AC Truck

EQUI QUIPMENT G GROUP UP

Total Revenue by Commodity Served

Gold, 47% Nickel, 15% Copper, 8% Diamonds 5% Zinc, 2% Others, 12% Mining Contractors 11%

Good diversity of commodities in Toromont territories Gold has been the significant contributor (65% in ‘12) Opportunities continue to include Gold, with added potential for significant chromite and iron ore

4 yr average Contribution to Toromont CAT Revenues

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Newfoundland & Labrador Ontario Nunavut Manitoba

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Management Estimates 45+ New Projects and Transformational Expansions on Visible Horizon

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Large Prospect Mine Sites 1. Mary River, Baffinland Iron Mines 2. Meliadine, AEM 3. Hollinger, Goldcorp Inc 4. Marathon PGM, Stillwater Mining 5. Ring of Fire, Cliffs Natural Resources 6. Hammond Reef, Osisko Mining 7. Rainy River Resources Toromont CAT Select Branches

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Large Prospect Mine Sites

EQUI QUIPMENT G GROUP UP 6 5 4 3 2

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SLIDE 12

12 12

Toromont acquired BUCY distribution assets Aug 1 - $13.5 million Secures distribution of key products (shovels) plus other opportunities

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SLIDE 13
  • Windsor Essex Parkway - $1.6B
  • Hwy 407
  • Pan-Am Games investment

13 Ontario Newfoundland & Labrador Manitoba Nunavut

  • Lower Churchill - $7.4B
  • Hebron - $6B plus
  • Bipole III - $3.2B
  • Keeyask Generating Station - $5.6B
  • East Side Hwy Initiative - $3.0B
  • Potential significant infrastructure

requirements to support mining and

  • ther initiatives

EQUI QUIPMENT G GROUP UP

Significant Major Projects on top of Infrastructure Sustainment Programs

Infrastructure Major Projects

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Core Construction Markets

Good diversity of markets Has sustained long-term growth Continued population influx in southern Ontario requires continued investment Aging infrastructure demands investment Investment in energy infrastructure contributing to construction opportunity Momentum seen in 3P projects Focused on market share growth

Broadest product line in the industry

Over 250 CAT equipment models represented

Equipment sales Heavy rents will also generate used opportunity Product support – significant parts opportunity 14

Eyes are on increasing government debt, however sustaining investment in infrastructure expected to continue

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EQUI QUIPMENT G GROUP UP

Growth opportunities: Gain increasing share of higher investment in CHP & alternative energies (MWM) Large power plants for remote mine sites (MaK) Natural gas-fueled distributed power Expanded products – UPS & Switch Gear

Power Systems

Growing Market for Renewables Office Towers Data Centres Industrial Engine Sales to OEMS

Prime Power Peak Shaving Stand-by

Commercial Electric Power

Marine Power Systems Remote Communities Mine Sites

Based on 2012 Revenue Contribution

41% 19% 3% 7% 29% Electric Power Industrial Marine Rental & Used Product Support

42%

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Complementary Products Supplement Growth

16 Machine Control & Guidance Systems Mobile Crushing & Screening Products

  • 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 2008 2009 2010 2011 2012F Sales ($000's)

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2008 2009 2010 2011 2012F Revenue ($000's)

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Rental Market

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Growth Opportunities:

Heavy Rent

Increased rental fleet and gain market share Expand products and locations

Light Equipment Power Generation

Improve delivery model

Diverse Rental Opportunity

25 50 75 100 125 150 175 200 2007 2008 2009 2010 2011 Q3'12 R12 Revenue ($millions) Light Equipment Heavy Equipment Power Generation Rent with a Purchase Option Rental - Used R12

R12

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SLIDE 18

18

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AR AL

19

FL KY CT

North American Market Leader in Industrial Refrigeration Global market leader in Recreational Ice Applications

Revenue Split

(2011)

Recreational

28%

Product Support

44%

Industrial

28%

WI IL TN MS GA SC NC IN OH PA NY ME VT NH RI VA VW MI

SERVICE ACCOUNT MANAGERS

DE

CIMCO OFFICES

MD MO TX NJ MA

100 Years of Serving Refrigeration Markets

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SLIDE 20

Diverse Market Opportunity

  • Significant increase in recent bookings generated by food processing

and distribution network – more than just the Maple Leaf order

  • Other areas of business also contributed

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20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 R12 Bookings ($'000's) Food Processing & Handling Cold Storage Mining Other Recreation

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Industrial Refrigeration

  • Diverse customers serving diverse markets
  • Market leading engineering capabilities & expertise
  • Food & beverage processing, cold storage, food distribution, HVAC, IPC &

mining applications

Diverse Industrial Customers

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SLIDE 22

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 2007 2008 2009 2010 2011 Q3 '12 R12 $'000's Bookings (R12) Backlog Equipment Sales (R12) Product Support (R12)

Bookings Contribute to Good Backlogs

  • CIMCO has good backlogs due to rising industrial bookings
  • Product support revenues contribute to stability
  • Growing U.S. product support a particular area of focus

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RInC Program Announced RInC Program Ends

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Recreational Facilities

  • Market leading engineering

capabilities & expertise

  • ECO CHILL has become a strong

differentiator

  • 4,500 installed facilities worldwide
  • Official NHL rink provider for

12 years

  • Marquee Winter Olympic

installations: Vancouver, 2010 & Calgary,1988

  • Strong product support network

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Core Markets

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SLIDE 24

Growth Opportunities

Expand Markets – Technology & Value-Added Services

  • Increase application of Eco Chill into Industrial Applications
  • Expand scope of work – related HVAC, automation & bldg controls
  • Application of heat pump systems
  • Develop of Ammonia/CO2 solutions – 4 projects executed in ’12

Expand Territories and Customers

  • Expand U.S. footprint by building product support network – secured

largest foodservices refrigeration CSA in U.S.

  • Add to Canadian service locations
  • Penetrate new customer accounts (new technologies)

Increase Product Support

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Delivering Results

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0.48 0.41 0.47 0.45 0.42 0.36 0.19 0.05

  • 0.06

0.21

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

High Performance Capital Management

(Consolidated)

0.00 0.10 0.20 0.30 0.40 0.50

26 (%)

18.9*

Return on Opening Shareholders’ Equity

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Dividends Per Share (Cents)

  • Superlative returns on equity
  • Sustained growth in dividends since 1989
  • Solid balance sheet with net debt-to-equity
  • f 0.49:1 at September 30/12
  • DBRS upgrade to BBB (High) in ‘11
  • Disciplined focus on returns on capital

employed throughout organization

(%) Net Debt-to-Equity Ratio

0.15

* Excludes goodwill, intangibles and transaction costs

Note: Historic pro forma based on Butterfly proportion 56.4% 2011

10 Year CAGR – 16.4% 28.9**

* * Continuing operations

17.1 12.9 17.5 18.7 18.9 20.6 21.6 21.5 15.5 8.5

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

9.1

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27

Growth and Profitability Throughout the Cycle

Pro Forma Net Earnings from Continuing Operations

(Millions)

37.5 32.6 26.7 40.3 42.6 52.3 82.2 73.6 59.4 102.7 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 76.7

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28 Pre-Tax Income % to Revenues

Profitable Results Delivered Through All phases of the Economic Cycle

Notes: Peer Group includes Finning, Wajax and Strongco Toromont and Peer Group ratios exclude impacts reported as unusual items

Return on Average Capital Employed %

Consistent Execution Delivers Results

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Toromont Continuing Operations Peer Group 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Toromont Continuing Operations Peer Group

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29

367.3

Revenue

$ millions except EPS

44.3

Operating Income

30.9

Net Earnings

0.40

EPS (Basic)

415.0 47.0 32.7 0.43

2012 2011

13 6 6 7

% Change

Financial Performance – Q3

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30

973.5

Revenue

$ millions except EPS

Continuing operations basis

100.0

Operating Income

68.5

Net Earnings

0.89

EPS (Basic)

1,076.1 108.5 75.6 0.99

2012 2011

11 9 10 11

% Change

Financial Performance – YTD

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Market Leading Brands & Position Solid Growth Opportunities in Diverse Markets Product Support Enhances Stability Strong Balance Sheet 43 Years of Dividends – 23 of Consecutive Growth

Investment Strengths

Track Record of Superior Financial Performance

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Proven Steady Growth

November 2012