Finning Reports Strong Third-Quarter Results
November 10, 2010
Growth in All Finning Operations Fuels Strong Third Quarter Results.
Q3 2010 Highlights (from continuing operations):
- Basic EPS of $0.36 was up 140% from Q3 2009 and up 71% from Q2 2010.
- EBIT of $88 million, increased by 87% over Q3 2009 and 32% over Q2 2010.
- Higher revenues and a lower cost structure yielded significant operating leverage; EBIT margin improved to 7.2% compared to 4.7% in Q3 2009 and 6.2% in Q2 2010.
- On-track to meet permanent cost reduction targets.
- Consolidated order backlog increased for fourth consecutive quarter to $1.2 billion.
Finning International Inc. reported strong third quarter 2010 results driven by robust top-line growth and improved EBIT margins. Finning achieved third quarter 2010 revenue of $1.2 billion, a 21% increase over Q3 2009. Earnings before interest and income taxes (EBIT) increased by 87% from Q3 2009 to $88 million, and basic earnings per share (EPS) grew by 140% to $0.36 compared to $0.15 in the same quarter of last year. Q3 2010 results included net non-operational charges of $0.05 per share ($0.02 per share in Q3 2009).
"Our equipment backlog climbed by 21% to $1.2 billion and product support business increased by 17% as all our operations captured strong growth opportunities in their respective markets. Continued margin recovery in Canada underpins the decision we have made to proceed with the construction of a new oil sands service facility in Fort McKay, Alberta," said Mike Waites, Finning International Inc. president and CEO. "This investment in our product support capability will further solidify our leadership position in mining and our ongoing commitment to deliver superior services to our customers."
"As markets continue to recover, our commitment to generate sustainable operating leverage from efficiency and productivity initiatives is demonstrating results. We are achieving improvements in operating margin and continued to make solid progress towards lowering SG&A expenses as a percentage of revenue during the quarter," continued Mike Waites. "The successful execution of our strategic initiatives and our enhanced focus on operational excellence is transforming Finning into a stronger organization. With the improved operating leverage and strong balance sheet, we remain well-positioned to capitalize on further growth opportunities and generate a solid return on equity for our shareholders."
"The outlook for the second half of 2010 is shaping up to be better than we had originally expected with the third quarter being an exceptionally strong quarter," said Dave Smith, EVP and chief financial officer of Finning International Inc. "Led by higher than anticipated product support and new equipment revenues, we now expect revenues from continuing operations for the full year to be about equal to 2009 despite a $900 million lower backlog going into 2010. As markets recover and our cost structure is reduced, we are producing higher operating leverage which is expected to result in moderately better EBIT performance compared to 2009."
Consistent with the Company's long-term strategic focus on key growth markets, the new facility in Fort McKay will build on Finning's strong commitment to serve its customers and will capitalize on robust demand in mining. Finning has developed a mining support infrastructure in central and northern Alberta that is unmatched in the industry. The new 16-bay facility, an investment of approximately $110 million, will further expand the Company's strong product support capabilities. Construction of the new building is expected to commence in Q2 2011, with completion by the end of 2012.
For the complete results: View Finning Q3 Results