FORWARD LOOKING INFORMATION This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws, and are subject to risks and uncertainties that could cause actual results to differ. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. The forward-looking statements and information are based on certain key expectations and assumptions made by Cervus, including expectations and assumptions concerning the results of its due diligence review of the businesses proposed to be acquired by Cervus and the ability to the various approvals required. Additional detail about the material factors and/or assumptions employed to arrive at forward-looking information, as well as the material risk factors that may affect actual results, are contained in the MD&A section of our most recent quarterly filing which is available on the SEDAR website at www.sedar.com. Although Cervus believes that the expectations and assumptions on which such forward-looking statements and information are reasonable, undue reliance should not be placed on the forward looking statements and information as Cervus can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Cervus undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. The Presentation is intended for educational and informational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually. The reader should consult with a lawyer, accountant and other professionals in respect of contents hereof. 2
LEADING EQUIPMENT DEALERSHIP INTEGRATOR TRANSPORTATION AGRICULTURE • • History of successful Diversification: different integration and operations product line, same business model • Stable cash flow • Profitability plan: operational • Opportunistic growth: efficiency, market share acquisitions, service efficiency, growth, P&S parts & service (P&S) 3
CUSTOMER BASE IS CONSOLIDATING • Larger farms, larger fleets need larger dealers • Growth by acquisition – Succession, consolidation trends • Organic growth – Economies of scale, service optimization • Backed by strong, leading OEMs • Multiple barriers to entry 4
PROFITABILITY VIA SCALE AND DIVERSITY 1 4 8 1 22 12 1 13 6 9 5 2 5 A G R I C U L T U R A L C O N S T R U C T I O N T R A N S P O R T A T I O N & I N D U S T R I A L 35 11 18 64 DEALERSHIPS DEALERSHIPS DEALERSHIPS DEALERSHIPS 5
SEGMENTED OPERATIONAL RESULTS 6
C&I MARKET DYNAMICS AND OUTLOOK Historical and Forecast Oil Prices • Tracks AB and SK (WTI, USD) general economy $120 • Recovery of oil and $100 gas industry a major $80 factor $60 • Ongoing focus: $40 $20 – Expense Historical High Base Low management $0 – Parts and service efficiency Historical values source from U.S. Energy Information Administration. Forecast values source from Alberta Energy Regulator. Revised July 2017. 7
AGRICULTURE MARKET DYNAMICS • Increasing scale of Net Farm Income operations 140 14 120 12 • Installed base requires 100 10 regular repair and 80 8 maintenance 60 6 • More favorable 40 4 20 2 dynamics in Canada 0 0 • Factors: weather, FX, 2010 2011 2012 2013 2014 2015 2016 $B $M U.S. Canada commodity prices, farm income, input costs Stats Canada, Economic Research Service 8
AGRICULTURE OUTLOOK Positive Indicators • Average crop yield, (above) average quality • Forecast average 2017 net farm worth: $2.8M • FCC 2017 forecast: 7% increase equipment sales Growth Potential • Service efficiency • Parts & service sales growth 9
TRANSPORTATION MARKET DYNAMICS • Equipment population PACCAR: Class 8 Truck Units Sold growth (000s) • Installed base requires 300 regular repair and 250 maintenance 200 150 • Factors: 100 – SK: cyclical, tracks oil 50 & gas 0 – ON: manufacturing, import/export, FX 10
TRANSPORTATION OUTLOOK 2016 Revenue Parts & service • High aftermarket volume • 2016: 30% increase in service bays Targets Aftermarket Equipment • Service efficiency and growth • Market share growth • Profitability plan: cost reduction 11
FOCUSING ON OPERATIONS • Product support solutions – after sales – Parts, service, rental, training, precision agriculture • Consistent processes and systems • Performance delivery – Market share > OEM average – Inventory turnover > 3x – Product support absorption > 100% – Workforce efficiency: total billable ratio 72% – ROIC 15% 12
READY FOR THE RIGHT OPPORTUNITY Acquisitions strategy • Good fit with existing operations • Higher value, streamlined operations with proven track record • Lower value, fixer-uppers with opportunities to add value Effective integration • Service playbook - apply from day one • Consistent process and systems integration • Leadership readiness 13
INVESTMENT HIGHLIGHTS • 10-15% annualized growth rate target • Agriculture: stable cash flow, positive outlook • ON Transportation: profitability plan • Western Canada: upside potential with improving resource prices • Strengthened balance sheet – Long Term Debt/Equity from 52% in Q3 2016 to 28% in Q3 2017 • Sustainable dividend 14
ANNUAL FINANCIAL RESULTS Gross Profit ($millions) Revenue ($millions) 225 1200 800 150 400 75 0 2012 2013 2014 2015 2016 2016 2017 0 YTD YTD 2012 2013 2014 2015 2016 2016 2017 Q3 Q3 YTD YTD Q3 Q3 15
ANNUAL FINANCIAL RESULTS $millions FY FY (except per share amounts) 2016 2015 EBITDA ($millions) Income (loss) attributable to 60 shareholders 23.7 (27.4) 50 Adjusted profit 1 13.3 10.8 40 Net EPS (basic) (1.77) 1.51 30 Adjusted net EPS (basic) 2,3 0.69 0.86 20 Total assets 476.9 629.8 10 Long-term liabilities 43.0 148.6 Total liabilities 436.5 263.0 0 2012 2013 2014 2015 2016 1 The Company calculates adjusted earnings as income attributed to shareholders adjusted to exclude the impact of: settlements with the Canada Revenue Agency, unrealized foreign currency gains and losses, acquisition and integration costs, and gains and losses on the sale of real estate; 2 Adjusted basic earnings per share is calculated as adjusted earnings divided by the weighted average shares outstanding during the period; 3 These financial measures are identified and defined within our year end Management’s Discussion and Analysis under the section “Non - IFRS Financial Measures” . 16
YTD FINANCIAL RESULTS $millions Nine Nine (except per share Months Months EBITDA amounts) Ended Ended (nine months ended 9/30, $millions) EBITDA ($millions) 9/30/2017 9/30/2016 50 Income attributable to shareholders 16.2 15.0 40 Adjusted income 1 10.4 14.7 30 EPS (diluted) 0.91 0.98 20 Adjusted EPS (diluted) 2,3 0.63 0.88 Total assets 513.1 556.9 10 Long-term liabilities 63.3 79.8 0 Total liabilities 349.9 289.8 1 The Company calculates adjusted income as income attributed to shareholders adjusted to exclude the impact of: unrealized foreign currency gains and losses and gains and losses on the sale of real estate; 2 Adjusted basic earnings per share is calculated as adjusted earnings divided by the weighted average shares outstanding during the period; 3 These financial measures are identified and defined within our year end Management’s Discussion and Analysis under the section “Non -IFRS Financial Measures” . 17
TSX:CERV Key Financial Information (as at December 31, 2017) Share price $15.04 Shares outstanding 15.6 million Market capitalization $238 million Quarterly dividend $0.07 Yield 1.86% Institutional ownership ~35% Insider ownership ~27% Key Financial Ratios (for the year ended December 31, 2016) Net debt 1,2 /EBITDA 1.10 Long term debt 1 /total capitalization 0.28 Payout ratio 3 0.41 ROE 3 5.1% 1 ‘Long term debt’ (long term debt, finance lease obligations, liabilities associated with assets held for sale and debenture payable); 2 Net debt is ‘Long term debt’ less cash and cash equivalents; 3 Adjusted earnings were used to calculate these ratios, please see the 2016 Annual Report for Non-IFRS Financial Measures disclaimer 18
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