TD Engineering & Construction Conference March 26, 2014 - - PowerPoint PPT Presentation
TD Engineering & Construction Conference March 26, 2014 - - PowerPoint PPT Presentation
TD Engineering & Construction Conference March 26, 2014 FORWARD-LOOKING STATEMENTS Statements and information herein that are not historical facts are "forward-looking information". Words such as plans, intends,
FORWARD-LOOKING STATEMENTS
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 2013 contained in the 2013 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
- r 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.
INVESTMENT HIGHLIGHTS
Market Leading Brands And Position Product Support Provides Stability Superior Financial Track Record Strong Balance Sheet Growth Opportunities In Diversified Segments 45 Year Dividend Record, 25 Of Consecutive Growth Focus on Operational Excellence
DEALER NETWORK
35 Toromont CAT Branches
History of Successful Consolidation
>250 Brands >28,000 Items
37 Stores Serving 13,600 Customers
Newfoundland & Labrador Ontario Nunavut
Musselwhite Meadowbank Porcupine Voisey’s Bay Victor Detour Lake 2 2 3 3 4 4 5 5 6 6
Manitoba
Toromont CAT Mine Site Branches 1. Agnico Eagle 2. Goldcorp 3. DeBeers 4. Detour Gold 5. Goldcorp 6. Vale 7. Baffinland Toromont CAT Branches
DEDICATED TEAM DELIVERS SPECIALIZED EQUIPMENT AND MUCH MORE
Remote mine sites contributed $750MM
- ver past decade
1 Mary River 7 7
+2,400 Members 72 Locations
IN NEWFOUNDLAND & LABRADOR, ONTARIO, MANITOBA AND NUNAVUT
Equipment Group
GROWTH FUELED BY:
- Diverse Markets Served by Extensive Branch Network
- Mining, Battlefield, Power Systems, Sitech Mid Canada
- Broadened Product Offerings (e.g., MaK, MwM, Metso, Trimble/Sitech)
- Increased Population and Larger Equipment Fuels Product Support
GROWTH IN REVENUE
Revenue presented is based on trailing 12 months. Installed units based on management estimates for Toromont CAT.
5000 10000 15000 20000 25000 200 400 600 800 1,000 1,200 1,400 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Estimated Installed Base (Units) Revenue ($'000,000)
Product Support Sales Equipment Sales Rental Estimated Installed Base
REVENUES BY MARKET SEGMENT
1
GOOD DIVERSITY WITH EMPHASIS ON INFRASTRUCTURE
* Based on total sales for three years ended Dec. 31/13
Product Range Market Share Parts & Service Construction Power Systems Mining
ORGANIC GROWTH
How Will
The Equipment Group
Continue to Grow?
GROWING INFRASTRUCTURE DEFICIT
$130 B
79 % infrastructure
ffailing
8
The Greater Toronto and Hamilton Area is one of the fastest-growing regions in North America.
by 2031
9 million people
79%
Of infrastructure
f a i l i n g
National infrastructure deficit, growing at $2B annually Canadian physical infrastructure has outlived its life expectancy
Windsor Essex Parkway - $1.6B Hwy 407 Public transit (Toronto, Ottawa, Kitchener) Pan-Am Games investment Renewable Energy Development
Ontario Newfoundland & Labrador Manitoba Nunavut
Lower Churchill - $7.4B ExxonMobil Hebron Project - $14B Husky Graving Dock Construction Keeyask Generating Station - $6.2B Conawapa Hydro Power (longer term) - $10.2B Bipole III - $3.2B East Side Hwy Initiative - $3.0B Bakken Oil Field Development Iqaluit Airport Potential significant infrastructure requirements to support mining and other initiatives
INFRASTRUCTURE MAJOR PROJECTS
25 50 75 100 125 150 175 200 2007 2008 2009 2010 2011 2012 2013 R12 Revenue ($millions)
Light Equipment Heavy Equipment Power Generation Rent with a Purchase Option Rental - Used
RENTAL MARKET
Equipment Group
HEAVY RENT LIGHT EQUIPMENT POWER GENERATION
Total market - $1.2B F’13 revenue - $161
RENTAL MARKET OPPORTUNITY
Rental Revenues $ Millions
R’12 Revenues to Dec. 31/13 * Market Size based on internal management estimates 11
SUBSTANTIAL ROOM FOR CONTINUED GROWTH Strategies:
- Continued investment
- Process refinement
- One new Battlefield
location per year
MINING OPPORTUNITIES
CAT 6060FS Diesel Shovel Loads 795F AC Truck
- Good diversity of commodities in Toromont territories
- Gold has been a significant contributor
- Opportunities in chromite & iron ore projects
- Significant increase in installed base increases product support opportunity
- Broadest product offering in segment
Resource Industries
GROWTH IN MINING INSTALLED BASE
SUBSTANTIAL INCREASE IN MINING EQUIPMENT INSTALLED BASE CREATES INCREASED PRODUCT SUPPORT OPPORTUNITY
Replacement value based on current pricing. Installed units based on management estimates.
Resource Industries
PRODUCT SUPPORT
Technician recruitment continues
200 400 600 800 1000 1200 $- $50 $100 $150 $200 $250 $300 $350 $400 $450
Dec '03 Jun '04 Dec '04 Jun '05 Dec '05 Jun '06 Dec '06 Jun '07 Dec '07 Jun '08 Dec '08 Jun '09 Dec '09 Jun '10 Dec '10 Jun '11 Dec '11 Jun '12 Dec '12 Jun '13 Dec '13
Number of Technicians Trailing 12 month Product Support Revenues ($MM)
Product Support Revenues Number of Technicians
EXPANDED PRODUCT SUPPORT OFFERING
Largest opportunity
- Potential to capture $100M
increase in Parts sales
- Older machine population
looks for alternate parts
- ptions
- Toromont has many solutions
to provide good value options
- Focused marketing
approaches being developed
2nd largest and expanding
- pportunity
- Targeting through specialized
services more efficiently done by dealer
- Trained technicians more
difficult to find in certain areas
- Dealer skill sets compliment
customer technicians skills
Larger customers who do not want to own facilities or hire technicians
- MARC agreements can take
many forms tailored to customer requirements
- Customers want to focus on
core business rather than machinery
- Risk adverse customers looking
for fixed cost predictability
15
16
EQUIPMENT MANAGEMENT SOLUTIONS ADVANCING
Increasing focus on EM and
CM (condition monitoring) solutions
Provides further opportunity
for differentiation and customer service
Toromont CAT currently has
2,800 contracted service agreements in place (PMs and MARCs)
COMPLEMENTARY PRODUCTS SUPPLEMENT GROWTH
Machine Control & Guidance Systems Mobile Crushing & Screening Products
- 2,000
4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2008 2009 2010 2011 2012 2013 Revenue ($000's)
- 1,000
2,000 3,000 4,000 5,000 6,000 7,000 8,000 2008 2009 2010 2011 2012 2013 Sales ($000's)
POWER SYSTEMS
ELECTRIC POWER Industrial Engine Sales to OEMS COMMERCIAL Marine Power Systems Growing Market for Renewables Office Towers Health Care Data Centres Prime Power Peak Shaving Stand-by Remote Communities Mine Sites
18
Rental Opportunity
POWER SYSTEMS GROWTH OPPORTUNITIES
Increasing share of higher investment in CHP & alternative energies (MWM) Large power plants for remote mine sites (MaK) Natural gas-fueled distributed power (District Energy) Expanded products – UPS & Switch Gear LNG – transportation & remote power generation Rental – industrial, commercial & special events
TOROMONT BUSINESS UNITS
FOCUSED ON MARKET SHARE GROWTH
Broadest product line in the industry Over 250 CAT equipment models represented Equipment sales – new and used (est. $350MM segment) Heavy rents will also generate used opportunity Product support – significant parts opportunity
CIMCO SUMMARY:
100 year history Strong industrial customer
base
Leader in recreational
systems
AR AL FL KY CT
Revenue Split
(2013)
WI IL TN MS GA SC NC IN OH PA NY ME VT NH RI VA VW MI DE MD MO TX NJ MA
100 YEARS OF SERVING REFRIGERATION MARKETS
22
US Sales Coverage 400 Mile Sales Ring
SERVICE ACCOUNT MANAGERS CIMCO OFFICES
DIVERSE INDUSTRIAL CUSTOMERS:
EXCELLENT 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
EXPAND TERRITORIES AND CUSTOMERS
Expand U.S. footprint by building product support network – secured
largest food services refrigeration CSA in U.S. – and adding points of presence (service and sales offices)
Add to Canadian service locations Penetrate new customer accounts (new technologies)