Finning to acquire Kramer Cat® dealership in Saskatchewan
VANCOUVER, BRITISH COLUMBIA AND REGINA, SASKATCHEWAN – Finning International Inc. (TSX: FTT) today announced it has reached an agreement to purchase the operating assets of the Cat dealership of Kramer Ltd. for approximately $230 million, subject to working capital adjustments. In 2014, the acquired dealership business generated approximately $275 million in revenue. Finning will become the approved Cat dealer in Saskatchewan in July of this year, subject to customary closing conditions. After a remarkable 70 years of service in Saskatchewan, the Kramer family has decided to retire from the equipment dealership business.
This acquisition combines complementary capabilities, customer bases and highly skilled employees across Finning’s territory in British Columbia, Alberta, Yukon, Northwest Territories and part of Nunavut with Kramer’s presence in Saskatchewan.
“Expanding Finning’s Western Canadian operations into Saskatchewan is a great strategic fit and represents a compelling growth opportunity for our company, employees, customers and shareholders,” said Scott Thomson, president and CEO of Finning International. “We have great respect for the Kramer family legacy and everything they have achieved. We will build on their strong heritage by growing the business, providing our customers with a terrific experience, and contributing to communities in Saskatchewan. This acquisition is also a testament to our current Finning employees in Canada who have worked tirelessly to put us in the strategic and financial position to make this opportunity possible."
“It’s been an honour to lead the Kramer Cat dealership for the past 23 years and I am proud of our organization’s many accomplishments,” said Tim Kramer president of Kramer Ltd. “Having spent considerable time with members of the Finning team, I am confident Finning will be a great addition to the province of Saskatchewan and our employees are joining a successful Canadian business that cares about its employees, customers and the community.”
The two companies already share common customers who operate across these adjacent territories and will benefit from the continuity and support of a single dealer. Customers will also benefit from improved equipment and parts availability, world-class product support and access to Finning’s extensive branch network of 50 locations.
For Finning, Saskatchewan is a highly attractive growth opportunity that diversifies its revenue base into sectors such as potash and uranium. The acquisition will be funded with cash and will be immediately accretive to earnings per share.
Joining Finning is a talented and dedicated team of 475 Kramer employees with a deep understanding of the local market and well-established customer relationships throughout the province at parts, sales and service locations in Estevan, Kindersley, Battleford, Regina, Saskatoon, Swift Current and Tisdale in addition to Cat Rental Stores in Regina and Saskatoon.
“This is a historic day for Finning. We are passionate about keeping our employees safe, enabling our customers’ success and building communities. With that in mind, we are pleased to appoint Tony de Sousa as the executive to lead the Saskatchewan operations. In addition to his impressive experience, Tony brings a genuine commitment to developing our people, growing our business and serving our customers,” said Juan Carlos Villegas, president of Finning Canada and COO of Finning International.
Tony de Sousa will be based in the Saskatchewan headquarters, which will remain in Regina and he and his family will move from Edmonton to Regina. He has been with Finning for 39 years and has extensive senior leadership experience in sales, service and operations.
“I’ve known Tim Kramer for many years and have tremendous respect for the business he, Don and the entire Kramer family have built in Saskatchewan,” said Tony de Sousa, VP Saskatchewan for Finning. “I’d like to extend a heartfelt welcome to Kramer employees to the Finning family. I’m looking forward to learning from their experience, customer relationships and understanding of the local market.”
Finning International Inc. is the world's largest Caterpillar equipment dealer delivering unrivalled service to customers for over 80 years. Finning sells, rents and services equipment and engines to help customers maximize productivity. Headquartered in Vancouver, B.C., the Company operates in Western Canada, Chile, Argentina, Bolivia, Uruguay, as well as in the United Kingdom and Ireland.
As the Caterpillar dealer in Saskatchewan, Kramer sells, rents and provides service to diverse market segments across the province. Founded in 1944, Kramer employs approximately 475 people, including approximately 160 mechanics, and operates seven dealership operations in Regina, Saskatoon, Estevan, Swift Current, North Battleford, Kindersley and Tisdale, as well as rental locations in Regina and Saskatoon.
Hilary Anaka, Finning Canada
Investor Conference Call
Management will discuss this transaction during Q1 2015 Investor Call on Wednesday, May 6 at 11:00 a.m. Eastern Time. Dial-in numbers: 1-800-766-6630 (within Canada and the U.S.) or 416-340-8527 (Toronto area and overseas). The call will be webcast live and subsequently archived at www.finning.com. Playback recording will be available at 1-800-408-3053 until May 13, 2015. The pass code to access the playback recording is 2002822 followed by the number sign.
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: expectations with respect to the economy and associated impact on the Company’s financial results; expected revenue; expected free cash flow; EBIT margin; ROIC; market share growth; expected results from service excellence action plans; anticipated asset utilization; inventory turns and parts service levels; the expected target range of the Company’s net debt to invested capital ratio; and the expected timing and financial impact from the proposed acquisition of the operating assets of the Caterpillar dealership in Saskatchewan. 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 May 6, 2015. 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 Caterpillar’s products and Caterpillar’s 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 revenues occur; Finning’s ability to reduce costs in response to slowing activity levels; Finning’s ability to attract sufficient skilled labour resources to meet growing product support demand;
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, availability 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. Refer in particular to the Outlook section of this MD&A. 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.
Finning cautions readers that the risks described in 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 hereof. 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.