Caterpillar dealer Finning reported CDN $1.949 billion in fourth quarter 2021 revenue compared to $1.666 billion in the fourth quarter of 2020, a 17-percent year-over-year increase. EBITDA was $241 million in fourth quarter 2021 compared to $185 million the previous year, a 30.3-percent leap.
In Canadian operations, net revenue increased 19 percent year over year, driven primarily by significantly higher product support revenue and strong used equipment sales. Product support revenue jumped 17 percent, reflecting strong rebuild activity in construction and increased spend in the mining sector. In the fourth quarter of 2021, used equipment sales jumped 84 percent compared to Q420, with higher used equipment sales to mining and construction customers, reflecting Finning’s strategic focus on rebuilds and resale in response to strong customer demand and constrained supply of new equipment.
Canadian rental revenue increased 22 percent from the fourth quarter of 2020, fulfilling customer equipment needs in a tight supply environment. Also, Finning’s heavy rental fleet was highly utilized in British Columbia to support flood mitigation and infrastructure repair work.
In Finning’s South America operations – Argentina, Bolivia and Chile – net revenue increased by 21 percent in the fourth quarter compared to the fourth quarter of 2020. New equipment sales jumped 68 percent, driven by deliveries to Chilean mining customers and improved demand for construction equipment to support mining infrastructure and general construction projects. Product support revenue increased by 10 percent, with higher activity across all sectors.
In Finning’s United Kingdom and Ireland operations, net revenue dropped 1 percent compared to the fourth quarter of 2020, reflecting timing of power systems project deliveries. Revenues from the construction sector increased 26 percent year over year and EBIT jumped 16 percent.
Finning expects strong commodity prices and broad-based economic growth in western Canada in 2022, with robust demand for equipment and product support across all sectors.
Finning’s Full Year Rocks
For the full year, net revenue was $6.696 billion compared to $5.768 billion in 2020, a 16.1-percent hike. Equipment rental increased from $196 million in 2021 to $235 million in 2021, a 19.9-percent leap. Product support was $3.728 billion in 2021 compared to $3.473 billion in 2020, a 7.3-percent increase.
Full year new equipment sales totaled $2.189 billion in 2021 compared to $1.671 billion in 2020, a 31-percent hike.
“Our employees should be proud of the strong results we achieved in 2021, driven by successful execution to deliver on our strategic plan and improve our earnings capacity,” said Scott Thomson, Finning International president and CEO. “We posted annual adjusted EPS of $2.18 and exceeded our mid-cycle EPS and ROIC targets two quarters ahead of schedule, all while our revenue remained below pre-pandemic levels for the year. Across the business, we saw tremendous momentum in capturing product support opportunities and winning major equipment deals as market activity returned to pre-pandemic levels by the end of the year.
“We expect upcycle demand conditions from the start of 2022 to be supported by ongoing economic growth and strength in commodity prices. We expect supply constraints to persist, and our global teams have been proactively purchasing inventory, sourcing used equipment, and offering rebuilds and rental options to meet strong customer demand. Our 2021 performance sets a strong foundation to capture upcycle opportunities as we remain focused on executing on our strategic plan to grow product support, reduce costs, and reinvest free cash flow to compound our earnings. We continue to target mid-teens and above EPS growth during this sustained upcycle.”
