North America Investor Presentation Keith Gordon, Managing Director - PowerPoint PPT Presentation

North America Investor Presentation Keith Gordon, Managing Director & Chief Executive Officer Ian Testrow, President Emeco Canada March 2011

Emeco 2011 Interim Results  Overview  Financials  Strategy & Outlook  Canada Overview  Appendices Picture: Komatsu 830E-AC 240 tonne dump truck being prepared for rent in Queensland, Australia

Overview

Summary Strong activity in all core markets driving improved financial performance Highlights  Strong operating performance in all regions (87.6% average utilisation)  New debt facility established with extended maturities  Further investment in large mining fleet  Refocusing business on 3 core mining markets now largely complete Improving financial performance  Normalised operating NPAT of $29.5M  ROC (R12) 11.2% at Dec-10 (Dec-09: 6.4%, Jun-10: 8.3%)  One-off special dividend of 5.0c funded from capital release Looking forward…  Balance sheet capacity supports value accretive growth  Positive commodity fundamentals in key operating regions  Procurement strategy to meet organic growth opportunities 4

Financial summary Maintaining focus on shareholder returns  Normalised NPAT of $29.5M, up 116.9% PCP  Statutory NPAT of $24.1M o Discontinued operations delivered $0.6M profit o One-off impairment of Indonesian debtor $6.0M  Significant balance sheet capacity to pursue growth o $231.0M facilities headroom  Improving earnings quality - ROC 11.2% (Dec-10)  Interim dividend of 2.0c per share, fully franked, in line with policy  Special dividend of 5.0c per share, fully franked funded from capital release 5

Rental fleet utilisation Consistently high fleet utilisation in all regions  High enquiry levels from customers Average Equipment Utilisation by WDV 100 % 31 Dec - 87.1%  High utilisation of existing fleet providing 95 % opportunities to further invest 87.6% Avg 90 % 83% Avg  85 % Queensland fleet was not materially 78% Avg 78% Avg 80 % affected by extreme weather events 70% Avg 75 % 68% Avg  Major fleet redeployments in NSW 70 % successfully completed 65 % 60 %  - Utilisation by A$ value Canadian mining fleet achieved high 55 % utilisation through the freeze period 50 % 45 %  Customers continue to use Emeco’s rental 40 % model for many varied reasons Dec-07 Feb-08 Apr-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Aug-10 Oct-10 Dec-10 Jun-08 Jun-09 Jun-10 Note: Utilisation defined as % of fleet rented to customers (measured by written down value) 6

Equipment Continuing to grow the large mining fleet June 09 June 10 Dec 10 Civil Fleet Civil Fleet Civil Fleet 8% 9% 16% WDV: Small Mining Jun-09: $623M 45% Large Large Mining Small Mining Jun-10: $572M Small Mining Large Mining 36% 55% Dec-10: $557M Mining 24% 47% 60% Civil Fleet Civil Fleet 17% 29% Small Small Mining Civil Fleet Mining Small Mining 55% Number of 41% 46% 52% Machines: Large Mining Jun-09: 1,120 Large Mining 28% Jun-10: 927 19% Large Dec-10: 909 Mining 13% Notes: Civil defined as <70 tn artic trucks and related small ancillary equipment; Small mining defined as <150 tn trucks and related mining equipment; 7 Large mining defined as 190+ tn trucks and related mining equipment.

Customers Leveraged to bulk commodities and gold with significant exposure to production cycle Diversified global Customer composition differs by market commodity exposure Australia Indonesia Canada 9% 100% 100% 100% 18% 7% 75% 75% 75% 9% 50% 50% 50% 21% 9% 25% 25% 25% 9% 18% 0% 0% 0% Thermal Coal Coking Coal Gold Zinc Oil Sands Iron Ore SMALL LARGE Civil Other Note: Commodity percentages and customer composition based on 1H11 revenue 8

Safety performance Our customers value Emeco’s OH&S systems & practices 12.0 10.0 LTI FR (per million hrs) 8.0 6.0 4.0 2.0 - Dec-08 Feb-09 Mar-09 Apr-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Dec-09 Feb-10 Mar-10 Apr-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Dec-10 Jan-09 May-09 Nov-09 Jan-10 May-10 Nov-10 Jan-11 Note: LTIFR measured as number of LTI incidents per million man hours 9

Business unit returns Positive trend in ROFE across all core markets Investment of incremental capital can deliver acceptable returns R12 at Jun-08 24.0% 25.0% 23.4% R12 at Jun-09 R12 at Jun-10 20.0% R12 at Dec-10 17.6% 16.6% R6 at Dec-10 15.0% 14.0% 15.0% 13.0% 10.0% 8.8% 5.0% 0.0% GROUP AUS RENTAL (ex VIC) INDONESIA CANADA Represents impact on Indonesian ROFE including one-off debtor impairment ($7.9M pre-tax) Represents R6 ROFE at 31 Dec 2010 Notes: Graph represents operating results; ROFE calculated as R12 EBIT divided by Funds Employed for the period (except where stated R6); Funds Employed defined as average ‘Equity plus Net Debt less Goodwill’ for the period; Group ROFE includes total corporate costs, business unit EBIT excludes corporate cost allocation. 10

Financials

Earnings Trough earnings in 1H10 with earnings momentum continuing from 2H10 into 1H11… A$ Millions 1H10 2H10 1H11 Var Var Operating Operating Normalised $ % Revenue 208.5 235.9 253.6 45.1 21.6 EBITDA 82.5 107.9 115.0 32.5 39.4 margin (%) 39.6 45.7 45.4 - 5.8 EBIT 32.1 51.5 54.7 22.6 70.1 margin (%) 15.4 21.8 21.6 - 6.2 NPAT 13.6 27.5 29.5 15.9 116.6 Avg. Invested Capital 1,023.2 1,005.0 950.9 (72.3) (7.1) R12 ROC (%) 6.4% 8.3% 11.2% - 4.8 Notes: Table represents operating results; P&L “1H11 Normalised” excludes one -off Indonesian debtor impairment $6.0M post tax; ROC calculated as R12 EBIT divided by average Invested Capital for the period; Invested Capital defined as average ‘Equity plus Net Debt’ for the period. 12

Earnings composition Improving capital turnover and consolidation of margins Earnings & Margins Rental Revenue EBITDA EBIT 350 80.0% 50.0% Margin Margin 140 45.0% 70.0% 300 120 40.0% 60.0% CAPITAL TURNOVER 250 35.0% 100 50.0% 30.0% 200 80 A$M A$M 40.0% 25.0% 150 60 20.0% 30.0% 15.0% 100 40 20.0% 10.0% 20 50 10.0% 5.0% 0 0.0% 0 0.0% 1H08 2H08 1H09 2H09 1H10 2H10 1H11 1H08 2H08 1H09 2H09 1H10 2H10 1H11 Aus Rental Indonesia Canada REVENUE:WDV  Long term positive trend in EBITDA margin due to increased rental contribution and growth in large  Rental revenue returning to pre financial crisis mining fleet levels on smaller invested capital base  Higher R&M, labour costs and used equipment pricing  Focus on orientating the fleet to deliver was somewhat offset by improving rental rates consistent revenue across the cycle  Building capability to support organisational and  Growth in maintenance revenue strategic initiatives increasing corporate costs Note: Graphs represent operating results 13

Cash flow $57.8M capital released through inventory reductions and civil fleet disposals 1H11 Cash Flow 140 33.8 120 24.0 100 80 A$m 77.6 (5.0) 60 (85.0) 40 (11.3) 34.1 20 ( 12.8 ) 21.3 0 Operating Working Sales & Parts Disposals Rental Capex Other Capex Cash flow Dividends Free Cash flow Cash flow Capital inventory before Shareholder Return Note: Cash flow includes rental capex funded by finance lease totalling $21.2M which is excluded in statutory cash flow. 14

Balance sheet & borrowings Balance sheet capacity positions Emeco for growth Net Debt & Facility Headroom 700 600  Reducing debt profile given strong operating cash 500 flow & capital release 400 A$M 300 200  Conservative gearing of 1.15x (Net Debt:EBITDA) 100 below target range of 1.5x – 2.0x 0 1H09 2H09 1H10 2H10 1H11 Net Debt Total facility limit  Blended maturity profile (3 and 5 year) provides Gearing flexibility and reduces refinance risk 3.0 2.5 Net debt:EBITDA  Facilities headroom and strong operating cash 2.0 flow provides capacity to invest in growth 1.5 opportunities 1.0 0.5 0.0 1H09 2H09 1H10 2H10 1H11 Notes: Net debt comprises senior debt plus finance leases less cash; Gearing defined as Net debt:R12 EBITDA. 15

Capital management Capital release program and excess franking credits supports one-off fully franked special dividend  Returning $31.6M to shareholders by way of special dividend o Funded from $33.4M capital released in 1H11 from underperforming assets o Balance of $60.0M capital release target to be reinvested for growth in 2H11  21.7% of surplus franking credits at Dec-10 to be distributed via special dividend  Special dividend has negligible impact on gearing at Dec-10 on a pro-forma basis, moving from 1.15x to 1.28x (Net debt:EBITDA)  Capital return does not limit future growth prospects given balance sheet capacity and strong operating cash flows 16