Finning International last week reported record third-quarter revenue of CD $1.5 billion (about U.S. $1.24 billion) for 2008, an increase of 10.1 percent compared with the third quarter of 2007. Earnings on continuing operations were $103.4 million in the third quarter of 2008, a decrease of 5.9 percent compared with the same period last year. Third-quarter net income from continuing operations was $64.8 million or $0.37 diluted earnings per share, a 5-percent increase compared with the same period last year.
“Finning operates in two of the strongest heavy equipment areas in the world where the demand for mining and heavy construction equipment continues to be good,” said Mike Waites, Finning’s president and CEO. “We continued to execute our strategy of providing a good service and solutions offering to our customers and building our product support business. Revenues continued to grow at attractive rates in the third quarter. On a consolidated basis, new equipment and engine sales were up 12 percent and parts and service revenues were up 15 percent compared with the same period last year.”
Finning’s order backlog has grown to CD $2 billion, a new record, providing good revenue visibility for 2009 and into 2010.
“The backlog reflects continued solid demand from mainly our mining, oil sands, and power systems customers,” added Waites. “Many of these mining customers are low cash-cost producers whose mines are expected to continue operating notwithstanding lower commodity prices. In addition, the cash cost of our oil sands customers are well below current oil prices. In recent weeks, financial markets have been volatile and investor interest has been focused on credit availability and the financial strength of companies.”
Finning has in place committed lines of credit through 2011, Waites said, and expects strong cash flow generation in the fourth quarter.
Finning’s revenues from continuing operations in the third quarter were CD $1.5 billion, up 10.1 percent from the third quarter of 2007, driven by continued strong equipment sales and demand for customer support services. Revenue growth in Canada and South America was driven primarily by strong demand from mining customers.
The company made a net investment in rental assets of CD $68.0 million in the third quarter of 2008, which was $70.9 million lower than the same period in 2007 because of lower demand and utilization. Gross profit for the third quarter of 2008 was lower compared with the same period last year in absolute terms, but increased as a percentage of revenue due to a revenue mix shift towards higher margined customer support services as well as an increase in margins from customer support services. The rental business continued to experience lower margins.
Rental volume in Canada in the third quarter was CD $81.3 million (about U.S. $66.1 million), down slightly from $82.4 million in the third quarter last year. Canadian rental volume for the first nine months was CD $215 million (about U.S. $174.8 million), compared with $216.5 million for the same period in 2007.
Finning’s equipment rental volume on a worldwide basis was $187.6 million for the third quarter (U.S. $152.6 million), down from $207.5 million for the same period last year. For the nine-month period, worldwide rental volume was $540.2 million, compared with $593.2 million for the same period last year.
Based in Vancouver, B.C., Canada, Finning, the Caterpillar dealer for Western Canada, the U.K., Argentina, Bolivia, Chile and Uruguay, is No. 10 on the RER 100.
