ROBERT BEUTEL Executive Chairman

Transcription

1 2016 ANNUAL GENERAL MEETING May 11, 2016

2 ROBERT BEUTEL Executive Chairman 2

3 FORWARD-LOOKING STATEMENTS Today s discussion may contain forward-looking statements that involve assumptions and estimates that may not be realized and other risks and uncertainties. These statements relate to future events or future performance and reflect management s current expectations and assumptions which are based on information currently available to the Company s management. The forward-looking statements include but are not limited to: (i) the ability of the Company to meet contractual obligations through cash flow generated from operations, (ii) the expectation that customer support revenues will grow following the warranty period on new machine sales and (iii) the outlook for There is significant risk that forward-looking statements will not prove to be accurate. These statements are based on a number of assumptions, including, but not limited to, continued demand for Strongco s products and services. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward looking statements. The inclusion of this information should not be regarded as a representation of the Company or any other person that the anticipated results will be achieved and investors are cautioned not to place undue reliance on such information. These forward-looking statements are made as of the date of this presentation, or as otherwise stated and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. Additional information, including the Company s financial statements, Management s Discussion and Analysis, and Annual Information Form, may be found on SEDAR at sedar.com. 3

4 2015 YEAR-END FINANCIAL SUMMARY ($ MILLIONS, EXCEPT PER SHARE AMOUNTS) Year Ended December Revenues $474.3 $498.3 Gross Profit $82.7 $86.3 Operating Income (Loss) Before Real Estate Gains in 2014 ($1.5) $4.3 EBITDA $24.7 $43.0 Net Income (Loss) ($7.4) $0.9 Basic and Diluted Earnings (Loss) Per Share ($0.56) $0.07 Equipment Inventory $199.0 $226.3 Equipment Notes Payable $180.3 $

5 STRATEGIC OBJECTIVES Focus on what we do best: Fully optimize our allocation of talent and resources Profitability without revenue growth: Achieve better performance, even in difficult markets Financial certainty: Accelerate improvements to inventory and debt levels and other de-risking initiatives to achieve the financial stability over the long term 5

6 INDUSTRY LEADERSHIP AND MAJOR BRANDS Leading equipment manufacturers with globally recognized brands CONSTRUCTION 83.4% customer satisfaction score for Strongco s Volvo customers in

7 2015 AWARD-WINNER Volvo Construction Equipment Highest Retail Finance, Canada Highest Retail Volume, Canada Volvo Customer Solutions (Large Market) Highest OTC Fill Rate 7

8 DAVID WOOD Vice President and CFO 8

9 2015 REVENUES 2015 REVENUES ($ millions) $498.3 $71.0 $474.3 $89.3 $427.3 $ Canada U.S. 9

10 2015 REVENUE BREAKDOWN BY CATEGORY EQUIPMENT SALES RENTALS PRODUCT SUPPORT $326.5 $44.4 $ % $307.5 $54.9 $252.6 $30.4 $4.8 $ % $25.3 $5.5 $141.4 $141.5 $21.1 $27.9 $ % $113.6 $ Canada U.S. Canada U.S. Canada U.S. 10

11 2015 GROSS PROFIT 2014: $86.3M % OF REVENUES % 2015: $82.7M Q Q4 2015: Additional $4.5 million reserve for aged equipment inventory reduced gross profit from $87.2 million, or 18.4% of revenues, to $82.7 million or 17.4% of revenues. 11

12 2015 EXPENSES ($ MILLIONS) Year Ended December Operating Expenses $82.6 $81.3 As a % of Revenue 17.4% 16.3% Weaker Cdn$ Lease Costs SAP Depreciation Expense Reduction $2.1 $0.5 ($3.2) $81.3 $1.9 $ Before the impact of the weaker Canadian dollar, operating expenses were down year-over-year, despite incremental lease costs from sale/leaseback of facilities in 2015 and depreciation of new computer system. 12

13 2015 EARNINGS ($ MILLIONS, EXCEPT PER SHARE AMOUNTS) Year Ended December Operating Income (Loss) Before Real Estate Gains in 2014 ($1.5) $4.3 Gain on Sale/Leaseback of Real Estate $8.7 Impairment of Intangible Asset $1.8 Interest Expense $8.6 $11.1 Earnings (Loss) Before Tax ($10.1) $0.1 Net Earnings (Loss) ($7.4) $0.9 Earnings (Loss) Per Share ($0.56) $

14 IMPROVED INVENTORY MANAGEMENT & BALANCE SHEET Dec EQUIPMENT INVENTORY $226.3M EQUIPMENT NOTES PAYABLE $197.8M 12% $27.3M 9% $17.5M Dec $199.0M $180.3M 14

15 Q BALANCE SHEET TOTAL EQUIPMENT INVENTORY ($000s) TOTAL EQUIPMENT NOTES ($000s) Q Q Q Q Q Q Q Q Q Q Q Q

16 2016 Q1 RESULTS SUMMARY ($ MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended March Revenues $109.7 $112.6 Gross Profit $21.1 $21.2 Operating Income (Before Restructuring Provision) $2.5 $2.1 EBITDA $6.6 $8.3 Interest Expense $1.8 $3.1 Net Loss ($0.9) ($0.8) Basic and Diluted Loss Per Share ($0.07) ($0.06) Equipment Inventory $176.7 $207.5 Equipment Notes Payable $154.0 $

17 CAPEX LARGELY COMPLETE CAPEX ($ millions) $0.7 $0.3 $9.0 $5.9 $33.6 $10.1 $6.0 $ E Major Capital Expenditures 2011 to 2015: New Acheson Branch $10.7 million New Fort McMurray Branch $18.7 million New Saint-Augustin Branch $8.9 million Upgrade Edmonton Crane Branch $1.2 million Renovations Mississauga Branch $1.4 million New Dealer Management System (SAP ) $17.1 million 17

18 KEY REGIONS ALBERTA Economic activity expected to remain depressed throughout 2016 New development in the oil sands region severely curtailed Demand for heavy equipment and cranes expected to remain weak Strongco making adjustments to the cost structure with layoffs and other reductions, and focusing on operating efficiencies and sales execution 18

19 KEY REGIONS ONTARIO Overall air of caution impacting purchasing decisions for heavy equipment Low oil prices and weak Canadian dollar should benefit manufacturing, leading to improved confidence, new investment and increased demand No significant government infrastructure plans announced; few large projects over the near term 19

20 KEY REGIONS QUEBEC Charbonneau Commission report issued in late 2015; however, construction activity remains low Turcot Interchange and Champlain Bridge the only large infrastructure projects in the province Mining activity and related demand for heavy equipment in the northern regions expected to remain low 20

21 KEY REGIONS ATLANTIC CANADA & NORTHEASTERN U.S. Heavy equipment markets remain soft in Atlantic Canada; weak oil prices impacted demand for equipment in Newfoundland Further, modest improvements in heavy equipment markets, as U.S. economy continues to grow Residential construction and forestry markets in Northeastern U.S. expected to remain active 21

22 CUSTOMER SUCCESS STORY: BLUEBIRD CONTRACTING Customer Ken Kirk, Vice President Company BlueBird Contracting A Trotter Morton Group Location Offices in Calgary and Edmonton, AB Core Business Earthworks and Demolition Strongco Customer > 20 years Equipment High-Profile Projects Aged VOLVO Excavators (EC330 and EC460) Decommissioning Lafarge Concrete Plant, Bow River Flood Rehabilitation, Calgary Stampede Grounds, Calgary Zoo Currie Barracks Urban Development, Calgary 22

23 CUSTOMER SUCCESS STORY: BLUEBIRD CONTRACTING 23

24 CUSTOMER SUCCESS STORY: HUB EQUIPMENT Customer Joe Cuzzolino, Rental Operations Manager Company HUB Equipment Location Toronto, ON Core Business Construction Equipment Sales & Rentals Strongco Customer > 25 years Equipment VOLVO A40 Articulated Hauler High-Profile Project 2016 Highway 407 Extension Phase 2 24

25 CUSTOMER SUCCESS STORY: HUB EQUIPMENT 25

26 ROBERT BEUTEL Executive Chairman 26

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