Proven Steady Growth
November 2012
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,
November 2012
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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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
The Equipment
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The Equipment Group
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
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
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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
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 $400,000,000 Toromont CAT Product Support Absorption Coverage (%) Trailing 12 month Product Support Revenues Equipment Group Toromont CAT Product Support Absorption % Coverage EQUI QUIPMENT G GROUP UP
Growth in Mining Installed Base
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EQUI QUIPMENT G GROUP UP
Substantial Increase in Mining Equipment Installed Base Creates Increased Product Support Opportunity
Replacement value based on Nov. 2012 pricing. Installed units based on management estimates.
100 200 300 400 500 600 700 800 900 1000 1100 0.0 200.0 400.0 600.0 800.0 1,000.0 1,200.0 1,400.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mining Installed Base (Units) Current Replacement Value of Fleet ($CDN) Other Underground Mining Trucks Shovels Number of Units
($MM’s)
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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
Exploration Expenditures A Leading Indicator
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
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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Toromont acquired BUCY distribution assets Aug 1 - $13.5 million Secures distribution of key products (shovels) plus other opportunities
13 Ontario Newfoundland & Labrador Manitoba Nunavut
requirements to support mining and
EQUI QUIPMENT G GROUP UP
Significant Major Projects on top of Infrastructure Sustainment Programs
Infrastructure Major Projects
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%
Complementary Products Supplement Growth
16 Machine Control & Guidance Systems Mobile Crushing & Screening Products
2,000 3,000 4,000 5,000 6,000 7,000 8,000 2008 2009 2010 2011 2012F Sales ($000's)
4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2008 2009 2010 2011 2012F Revenue ($000's)
Rental Market
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Growth Opportunities:
Heavy Rent
Increased rental fleet and gain market share Expand products and locations
Light Equipment Power Generation
Improve delivery model
Diverse Rental Opportunity
25 50 75 100 125 150 175 200 2007 2008 2009 2010 2011 Q3'12 R12 Revenue ($millions) Light Equipment Heavy Equipment Power Generation Rent with a Purchase Option Rental - Used R12
R12
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AR AL
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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
Diverse Market Opportunity
and distribution network – more than just the Maple Leaf order
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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
mining applications
Diverse Industrial Customers
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
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RInC Program Announced RInC Program Ends
Recreational Facilities
capabilities & expertise
differentiator
12 years
installations: Vancouver, 2010 & Calgary,1988
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Core Markets
Growth Opportunities
Expand Markets – Technology & Value-Added Services
Expand Territories and Customers
largest foodservices refrigeration CSA in U.S.
Increase Product Support
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0.48 0.41 0.47 0.45 0.42 0.36 0.19 0.05
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)
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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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
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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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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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
November 2012