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Finning Posts Robust Q4 and Full Year Volume and Profit

Vancouver, B.C.-based Finning International, the world’s largest Caterpillar dealer and a major rental player, posted record 2007 annual volume of CD $5.7 billion (about U.S. $5.6 billion), a 17-percent year-over-year increase that included increases in all of its operations. The company said its new equipment order backlog is a robust $1.7 billion.

EBITDA for the fourth quarter was $112.2 million, a 33.7-percent boost from the same period in 2006. Fourth-quarter net income from continuing operations was $705 million or $0.39 per diluted share, a 34.5-percent rise compared with the same period a year ago.

“2007 was another very good year for Finning,” said Doug Whitehead, president and CEO of Finning International. “We achieved record annual results and diluted earnings per share, from continuing operations, increased 18.3 percent over 2006 levels and return on equity totaled 16.8 percent. Business continued to be strong in the fourth quarter and our large order backlog provides good visibility into what we expect will be a very busy 2008.”

“Despite the pressure of the significantly stronger Canadian dollar relative to the U.S. dollar, Finning’s profitability improved in 2007,” said Mike Waites, executive vice president and chief financial officer of Finning International. “EBIT as a percentage of revenue increased to 8.0 percent up from 7.3 percent last year, after adjusting for the 2006 impact of gains from the sale of real estate. This improvement occurred despite a shift in revenue mix to a greater proportion of lower margin, new equipment sales compared to higher margin parts and service revenues. In addition, in the fourth quarter, our operations generated significantly improved cash flow, after changes in working capital, totaling $221 million compared to $79 million in 2006.”

EBIT from Finning’s Canadian reporting segment of $69.3 million in the fourth quarter of 2007 was 24.6-percent higher than the fourth quarter of 2006. The increase in 2007 was primarily the result of higher new equipment sales and strong deliveries in the mining sector.

EBIT for Finning’s South American operations in the fourth quarter of 2007 of $28.2 million was 4.1-percent lower than the 2006 fourth quarter, reflecting the negative impact of foreign currency translation caused by a stronger Canadian dollar relative to the U.S. dollar. However, in local currency, EBIT for the fourth quarter of 2007 was 11.0-percent higher than the same period in 2006, reflecting strong volumes in all lines of business.

Rental revenues increased over 2006 as a result of strong customer demand in this sector and a corresponding increased investment in the rental fleet and in the Cat Rental Store operations. Finning (Canada) increased the number of the company’s Cat Rental Stores in operation in Western Canada to 34 at Dec. 31, 2007, compared with 29 stores at Dec. 31, 2006. All rental categories continue to generate strong returns.

Finning is No. 13 on the RER 100.

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