Finning International posted net revenue of CDN $2.107 billion in the third quarter compared to $1.748 billion in the third quarter of 2021, a 20.5-percent increase for one of the world’s largest Caterpillar dealerships. Equipment rental increased from $68 million in Q321 to $79 million in the recently concluded quarter, a 16.2-percent hike. Product support revenues were the big gainers, at $1.209 billion in the third quarter compared to $932 million in Q321, a 29.7-percent boost. Used equipment sales also increased from $83 million to $96 million, a 15.7-percent jump. New equipment sales increased from $631 million to $679 million, a 7.6-percent incline.
“We continued our strong execution and demonstration of significantly expanded earnings capacity in the third quarter,” said Scott Thomson, outgoing president and CEO of Finning. “This resulted in EPS of $3.01 and return on invested capital of 18.3 percent, including a 22.7-percent return on invested capital in our South American business, over the last four quarters. The long-term improvements we made to our business provide Finning with a solid foundation to successfully navigate a dynamic global business environment and elevate performance through all stages of the economic cycle. Our strong performance is a testament to the talented and capable global teams working at Finning."
“Our strong execution and supply chain management enabled us to capitalize on continued momentum in our end markets in the third quarter and meet growing demand from our customers,” said incoming president and CEO Kevin Parkes. “While demand conditions remain constructive, we are closely monitoring leading indicators and customer activity levels and continue to operate with a mid-cycle approach to our cost structure and capital investments. Looking ahead, our strong equipment backlog, product support growth strategy, and disciplined operational execution give us confidence that we will finish the year strongly and continue that momentum into 2023.”
In Finning’s Canada operations, net revenue increased by 33 percent from the third quarter of 2021, with higher revenues across all sectors and lines of business, driven by strong market conditions in Western Canada.
New equipment sales in Western Canada leaped 52 percent, primarily driven by mining deliveries in the oil sands. Canada achieved 11.7-percent EBIT as a percentage of net revenue up 130 basis points from Q321, driven by improved operating leverage from productivity initiatives. Canada’s equipment backlog increased by approximately 25 percent from the end of the second quarter, reflecting broad-based strength in order intake.
Around the world
In South America operations, net revenue increased 5 percent year over year as growth in product support was partially offset by lower new equipment sales. Product support revenue jumped 24 percent, largely driven by strong demand for component exchanges, equipment overhauls and fleet maintenance in Chilean mining.
New equipment sales dropped 23 percent because of lower sales in construction and mining in Chile. Construction activity slowed, impacted by higher equipment prices, and increased interest rates, prompting some customers to postpone purchasing decisions. South America’s equipment backlog increased by about 25 percent sequentially from the end of the second quarter, including Finning’s first order for a new large-scale data center project in Chile.
In U.K. and Ireland operations net revenues increased by 27 percent year over year. New equipment sales jumped 19 percent, driven by HS2 deliveries and strong construction demand. Product support revenue rose 38 percent, reflecting robust construction machine utilization as well as a contribution from Hydraquip, which Finning acquired in March of this year.
In Western Canada, Finning expects market activity to remain healthy, commodity prices to remain constructive. In the construction sector, federal and provincial governments’ infrastructure programs and private sector investments in natural gas, carbon capture, utilization and storage, and various power projects are expected to continue driving demand for construction equipment and product support, heavy rentals, and prime and standby electric power generation.
Finning is No. 21 on the RER 100.
Headquartered in Surrey, British Columbia, Canada, Finning provides Caterpillar equipment, parts, services, and rental in Western Canada, Chile, Argentina, Bolivia, the United Kingdom, and Ireland.
