Bullboard - Stock Discussion Forum Finning International Inc T.FTT

Alternate Symbol(s): FINGF

Finning International Inc. is a Canada-based caterpillar dealer. The Company provides caterpillar equipment, parts, services, and performance solutions in Western Canada, Chile, Argentina, Bolivia, the United Kingdom, and Ireland. The Company’s segments include Canada, South America, UK & Ireland, and Other. It sells, rents and provides parts and services for equipment and engines to customers... see more

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Post by retiredcf on May 24, 2022 10:24am

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Caterpillar Investor Day Highlights for Finning and Toromont TD Investment Conclusion

Earlier this week, Caterpillar (not covered) hosted an Investor Day focused on services, technology, and sustainability.

At a high level, we believe that the sessions underlined what a strong OEM partner Finning and Toromont have in Caterpillar and highlighted some interesting growth opportunities for both Caterpillar and its dealers.

Caterpillar is increasingly confident in its ability to double service revenue to US$28bln in 2026 vs. US$14bln in 2016 and is leveraging technology to drive services growth.

Building the services business has many strategic benefits: 1) it creates value for customers by increasing asset utilization; and 2) it should improve profitability over the cycle and reduce business cyclicality for both Caterpillar and its dealers.
Connected Machines: Caterpillar has a critical mass of >1.2mm connected machines, which enables the collection of billions of data points, such as fuel consumption, uptime, equipment health, and productivity. Connectivity enables condition monitoring, which can turn unplanned failures into planned overhauls, and Caterpillar has ~10x as many analytic failure models in production today vs. 2019. Caterpillar is currently sending >400,000 prioritized service events (PSEs) to dealers annually. The company generated US$1bln of dealer parts sales based on PSEs in 2021 and is targeting to increase that to US$2bln by late-2023.
Ecommerce: Caterpillar dealers generate >US$2bln of annual parts sales via ecommerce, and the company is starting to place QR codes on its machines/ engines to make it easier for smaller customers, who have been slower to convert to ecommerce, to have confidence that they are buying the right part online. A Caterpillar study found that dealers generate 24% more parts sales on average when they convert a customer from buying over-the-counter to ecommerce.
Customer Value Agreements: More than 50% of all equipment sold is delivered with a CVA, and machines sold with a CVA typically generate ~30% more parts sales. Caterpillar offers a wide range of CVAs, up to and including a job- site solution CVA, whereby Caterpillar and the dealer monitor and manage the maintenance of an asset based on a fixed cost-per-hour.
Autonomy: Caterpillar has the largest autonomous truck fleet in the world, including >525 machines, and 11 autonomous mining customers across 20 sites. Caterpillar believes that its competitive advantages in autonomy include productivity/speed, scalability, deep machine integration, and more frequent software upgrades. The company started with the field retrofit of existing trucks but is now seeing a shift to factory-installed autonomy on new machines, and Caterpillar has won seven out of eight greenfield autonomous mining sites since 2019. The economics of autonomy are improving, such that it is accessible to smaller mine sites, with <20 trucks and quarry/aggregates customers. Caterpillar's autonomous product line-up now extends beyond haul trucks to include dozers, drills, water trucks and compactors.