INVESTOR PRESENTATION - Finning...Forward Looking Information Page 2 This report contains statements...

INVESTOR PRESENTATION

CIBC Whistler Institutional Investor ConferenceJanuary 26, 2017

Scott Thomson, President and CEO

Forward Looking Information

This report contains statements about the Company’s business outlook, objectives, plans, strategic priorities and other statements that are not historical facts. A statement Finning makes is forward-looking when it uses what the Company knows and expects today to make a statement about the future. Forward-looking statements may include words such as aim, anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, project, seek, should, strategy, strive, target, and will. Forward-looking statements in this report include, but are not limited to, statements with respect to: delivery of improved results when demand normalizes; free cash flow; order backlog; results of operational improvements and restructuring actions; product support activity for the balance of the year; expectations that the Canadian operation will achieve its targeted cost savings by the end of the year and EBIT margin range; the Canadian operation’s improvement in profitability from alignment of the cost structure and operational excellence agenda; product support activity in mining in South America; cost savings from restructuring initiatives in the UK and Ireland operations; and transformation of the business model in the UK and Ireland operations to deliver a sustainable improvement in operating performance. All such forward-looking statements are made pursuant to the ‘safe harbour’ provisions of applicable Canadian securities laws.

Unless otherwise indicated by us, forward-looking statements in this report reflect Finning’s expectations at January 26, 2017. Except as may be required by Canadian securities laws, Finning does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from the expectations expressed in or implied by such forward-looking statements and that Finning’s business outlook, objectives, plans, strategic priorities and other statements that are not historical facts may not be achieved. As a result, Finning cannot guarantee that any forward-looking statement will materialize. Factors that could cause actual results or events to differ materially from those expressed in or implied by these forward-looking statements include: general economic and market conditions; foreign exchange rates; commodity prices; the level of customer confidence and spending, and the demand for, and prices of, Finning’s products and services; Finning’s dependence on the continued market acceptance of its products and timely supply of parts and equipment; Finning’s ability to continue to improve productivity and operational efficiencies while continuing to maintain customer service; Finning’s ability to manage cost pressures as growth in revenue occurs; Finning’s ability to reduce costs in response to slowing activity levels; Finning’s ability to attract sufficient skilled labour resources as market conditions, business strategy or technologies change; Finning’s ability to negotiate and renew collective bargaining agreements with satisfactory terms for Finning’s employees and the Company; the intensity of competitive activity; Finning’s ability to raise the capital needed to implement its business plan; regulatory initiatives or proceedings, litigation and changes in laws or regulations; stock market volatility; changes in political and economic environments for operations; the integrity, reliability and availability of, and benefits from, information technology and the data processed by that technology. Forward-looking statements are provided in this report for the purpose of giving information about management’s current expectations and plans and allowing investors and others to get a better understanding of Finning’s operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.

Forward-looking statements made in this report are based on a number of assumptions that Finning believed were reasonable on the day the Company made the forward-looking statements. Some of the assumptions, risks, and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this report are discussed in Section 4 of the Company’s current AIF and in the annual MD&A for the financial risks.

Finning cautions readers that the risks described in the MD&A and the AIF are not the only ones that could impact the Company. Additional risks and uncertainties not currently known to the Company or that are currently deemed to be immaterial may also have a material adverse effect on Finning’s business, financial condition, or results of operations.

Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date of this report. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Finning therefore cannot describe the expected impact in a meaningful way or in the same way Finning presents known risks affecting its business.

Monetary amounts are in Canadian dollars and from continuing operations unless noted otherwise

Largest Caterpillar dealer

Unrivalled service for nearly 85 years

Diversified customer base

11,900 employees

Finning Overview

Santiago

Bolivia

ArgentinaChile

Cannock

United Kingdom

IrelandBC AB

YT

Edmonton

Vancouverhead office

NWT

SK

NU

(1) At Jan 23, 2017

(4) See description of significant items in Q3/16 MD&A

(3) See description of non-GAAP financial measures in Q3/16 MD&A

(2) YTD Ended Sep 30, 2016

Financial Statistics - YTD 2016(2)

Revenue 4.1BEBITDA(3) 292MAdjusted EBITDA(3)(4) 348MEBIT(3) 147MAdjusted EBIT(3)(4) 203MEPS 0.33Adjusted EPS(3)(4) 0.60Free cash flow(3) 257MInvested capital(3) 2.9B

Product support

57%New

equipment32%

Used equipment

7%

Rental4%

Revenue by line of business(5)

Construction43%

Mining23%

Power Systems

18%

Government5%

Forestry3%

Other8%

New equipment sales by

industry(5)(6)

Canada51%

South America

32%

UK & Ireland17%

Revenue by region(5)

(5) YTD Ended Sep 30, 2016 (6) Other includes industrial and agriculture markets

Market Statistics(1) - FTT (TSX)Share price 26.15Market Cap 4.4BS&P/DBRS rating BBB(+/high)Annual dividend / share 0.73Dividend yield 2.8%

Strategic Direction

PURPOSE

We believe in partnering and innovating to build and power a better world

VISION

Leveraging our global expertise and insight, we are a trusted partner in transforming our customers’ performance

Profitable and Capital Efficient Growth

Safety

Talent

Community

Equipment supply chain

Product support

Rental strategy

Profitable market share

Digital strategy

E-commerce

Connected assets

Performance solutions

Processes and systems

2017 PrioritiesGROWTH

Foundational Priorities

ROIC

EBITInvestedCapital

Develop

SAFETY - Prevention of Significant Incidents

TRIF

Total Recordable Injury

Frequency

TIF

Total Incident Frequency

TALENT - Inclusiveness & Diversity

Working with non-profit strategic partners

Advancing youth-focused STEM (science, technology, engineering and mathematics) education

Helping prepare children for knowledge-based jobs of the future

COMMUNITY - STEM↓ 33 %

TRIF2013 vs 2016

35%

80%

0%

20%

40%

60%

80%

100%

2014 2016

Leadership Roles with Successors (%) Women in Leadership Roles (%)

Global standards for critical operations

20% 19%

7%

27%

22%

10%

0%

5%

10%

15%

20%

25%

30%

Canada UK & Ireland South America

2014 2016

(1) Canadian data excludes corporate head office, OEM Remanufacturing, and The Cat Rental Store

(1)

Perform: 3-Year Commitments Scorecard

Operational Priorities 2013 CommitmentsAssuming no industry change

2016 Outcome

Inventory turns Parts turns

Equipment turns

EBIT Service EBIT

Canada labour recovery

Footprint optimization

Facility utilization

Canada footprint

UK footprint

Core market share

Parts market share

Canada PS(2) revenue

Core market share

Parts market share

Canada PS revenue

Service Excellence

Supply Chain

Asset Utilization

Market Leadership

0.5 - 0.9 times

0.7 times

0.6 times

$40 - 60 M

$60M

4 points

~25%

~40%

2 - 4 points

2 - 4 points

10 - 15%

5 points

31%

above target

Equipment sales 36%(1)

(1) New equipment sales: 2013 to LTM ended Sep 30, 2016

Market share ↑ 5 points despite industry decline

(2) Power systems

Strong Free Cash Flow and Balance Sheet

23% 24%

38%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2013 2014 2015

Dividend as % of FCF

1.7

1.3

2.0

0.0

0.5

1.0

1.5

2.0

2.5

2013 2014 2015

Net Debt to Adjusted EBITDA(1)Free Cash Flow by Quarter ($ millions)

-300

-200

-100

0

100

200

300

400

Q1/

13

Q2/

13

Q3/

13

Q4/

13

Q1/

14

Q2/

14

Q3/

14

Q4/

14

Q1/

15

Q2/

15

Q3/

15

Q4/

15

Q1/

16

Q2/

16

Q3/

16

2013$441

2014$483

2016E>$300

2015$325

0 50 100 150 200 250 300 350

4.18% due Apr 2022

3.98% due Jan 2022

3.232% due Jul 2020

6.02% due Jun 2018

Long-Term Debt ProfileMaturity within 5 years, $C millions

Options Considered

Working capital efficiencies: smoothing inventory investment and monetization

Targeted investment in maintenance capex and innovation agenda

Rental investment flexible to market demand

(1) See description of non-GAAP financial measures in Q3/16 MD&A

UpcycleValue Proposition

Stable product support business

Successful execution of operational priorities

Strong free cash flow generation

~$1.6 Billion Free Cash Flow 2013 - 2016E

~35%Inventory reduction~65%

Driven by EBITDA

(2) LTM ended Sep 30, 2016

Reduced cost structure

Working capital improvements

Product support opportunities

Profitable service business

Innovative customer solutions

Resilient Business Model Upcycle Growth Drivers

2,908

1,850

3,144 3,207

1,000

1,500

2,000

2,500

3,000

3,500

2013 LTM 2016

Stable Product Support(1)

New Equipment Sales Product Support Revenue

(2)

(1) In functional currency, product support revenue was flat in Canada, down 20% in South America, and down 9% in the UK & Ireland (LTM 2016 vs 2013)

(4) Fixed SG&A costs, adjusted for significant items, excluding Saskatchewan operations

Reduced Cost StructureCanada (2014 – 2016E)

SG&A(4)

Workforce(3)

22%

25%

$m

(3) Excluding Saskatchewan operations acquired in 2015

Parts Supply Chain Improvement

2.0

2.5

3.0

3.5

2013 2014 2015 2016 E500

550

600

650

700

750

2013 2014 2015 Q3 2016

Parts Turns (times)Part Inventory ($ millions)

Centralized inventory management

Simplified and optimized network

Reduced network routes and touches

Increased direct shipments to customers

Key Improvement Drivers

Customer Loyalty

From 2013 to 2016

Parts Turns

13 points

0.7 times

Equipment Supply Chain Transformation

Forecast Sales NEP(1) Invoice

500

550

600

650

700

750

800

2013 2014 2015 Q32016

New Equipment Inventory ($m)

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014 2015 2016 E

New Equipment Turns (times)

(1) New equipment preparation

Reduce invoice to cash cycle

Improve execution

Simplify quoting, sales, and attachment processes

Improve accuracy and planning

Equipment Turns

↑ 0.1 times

Free Cash Flow

$30 million=

Days of Inventory

Product Support – Canada Mining Opportunities

Population(1) 316 788

Customers 6 15+

1st replacement of large components

~2 years/18,000 hours

~1.5 years/12,000 hours

Component exchange during life span 6-7 times 2-4 times

Expected life span before rebuild



Average annual product support

C$ 1.0-1.2M C$ 0.3-0.5M

Average age ofpopulation(1) ~12 years ~7 years

Purchase price US$ 5-7M US$ 1.2-2.4M

Rebuild as % of purchase price 60-70% 60-70%

Mining Truck797

Large DozerD11 & D10

(1) Includes rebuilt machines (2) 2016 Estimate

797 Age Profile

Popu

latio

n

Estimated age in 2016

At Dec 2016

Product Support Sweet Spot

Population average age

Expected life span≥

Oil sands50%

Other mining10%

Non-mining40%

Canada Product Support

Revenue(2)

Product Support – South America Mining Opportunities

Population(1) 211 394

Customers 5 25+

1st replacement of large components

~2.5 years/15,000 hours


Component exchange during life span 5-6 times 2-3 times

Expected life span before rebuild



Average annual product support

~US$ 1.1M ~US$ 0.33M

Average age ofpopulation(1) ~7 years ~6 years

Purchase price US$ 5-7M US$ 1.2-2.4M

Rebuild as % of purchase price 60-70% 60-70%

Mining Truck797

Large DozerD11 & D10

(1) Includes rebuilt machines (2) YTD ended Sep 30, 2016

797 Age Profile

Popu

latio

n

Estimated age in 2016

At Dec 2016

Mining80%

Non-mining20%

South America Product Support

Revenue(2)

Innovate: Digital Strategy

Customer Benefits

Valuable insights and visibility

Increased fleet uptime

Lower owning and operating costs

Improved equipment performance

Omni-channel choice

Finning Opportunities

Deeper customer and market insights

Additional revenue growth opportunities

Lower cost to serve

Deeper customer relationship and loyalty

Competitive advantage

E-Commerce: Omni-Channel Choice

(2) Parts purchases from Finning as a percentage of total parts opportunity

(1) Caterpillar study covering 11,700 e-commerce and integratedprocurement customers between 2010-2014

Customer Parts Share(2)

Transaction Cost

11 points

E-COMMERCE - Parts(1)

Online Parts Revenue (% of total)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2013 2014 2015 2016

CASE STUDYCanada - Top 10 Construction Customer

Online Parts Revenue Projections% of total

0%

10%

20%

30%

2016 2019 E

Benefits

Cost savings - customer and Finning

Analytics - improved visibility into customer needs

Customer loyalty

up 10points

Connected Assets

(1) Parts purchases from Finning as a percentage of total parts opportunity(2) Caterpillar study covering >37,000 connected customers vs 174,000

non-connected between 2010 and 2013

Drive Parts Share(1)

~10 points(2)

Enable Performance

Solutions

14%

40%

0%

10%

20%

30%

40%

50%

2013 2016

Connected Machines (%)

0%

10%

20%

30%

40%

50%

2013 2016

Parts Market Share

Connected

Customer Parts Share(1)

CAT machines (2013 vs 2016)

Connected + service contract

17 points

24 points

CASE STUDYBolivia - Connected Assets

Insights drive improved equipment performance, market visibility, and lower costs

Connected Assets Projections% of total population(3)

0%

20%

40%

60%

80%

100%

2015 2016 2017E 2018E 2019E

(3) Assumes constant numbers of active equipment population

Performance Solutions

Performance Metrics Customer Benefits

Operator events ↓ 23%

Fuel burn ↓ 13%

Carbon impact ↓ 575,000 CO2

Saleable product output ↑ 9.5%

Tonnes per hour ↑ 22%

Cost per tonne ↓ 31%

Mixed Fleet 100% Caterpillar

CASE STUDYUK - Large Quarrying Customer

Technology to maximize machine productivity on job sites

~15 %

Revenue GrowthCAGR (2013 – 2016E)Predictive analytics drive improved

maintenance and increased productivity

Key Data & Services Customer Benefits

Hours and location Tracking by job site and fleet; security Invoice automation

Utilization, fuel and production

Idle time and fuel consumption Asset optimization and fleet production

Machine health Preventative maintenance Lower operating costs

Training and site development

Operator training Haul road analysis

Data analytics Optimization recommendations Site & management performance reporting

Fatigue management Improved safety performance

Financial Projections

0

50

100

150

2017 2019

Digital Revenue Projections ($m)

E-commerce60%

Performance Solutions

25%

Connected Assets15%

Digital Revenue Drivers

0

10

20

30

40

50

60

2017 2019

Digital Spend Projections~80% SG&A / ~20% Capitalized ($m)

EPS Accretive

EPS $(0.02)

Success Based Funding

Resilient business model

Successful execution Reduced cost structure Improved capital discipline Strong free cash flow

2017 priorities Global equipment supply chain Product support growth Rental transformation Profitable market share

Positioned for profitable and capital efficient growth

Strategic focus on digital agenda

Key Takeaways

INVESTOR PRESENTATION - Finning...Forward Looking Information Page 2 This report contains statements...

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