Finning Reports 2014 Q3 Results
November 13, 2014
Q3 2014 HIGHLIGHTS
- Revenues of $1.7 billion declined by 6% as a result of lower new equipment sales in Canada and South America compared to very strong deliveries last year in Canada.
- Product support revenues grew by 4% to record levels, driven primarily by higher parts sales in Canada.
- Consolidated EBIT(1)(2) of $114 million declined by 16% and EBIT margin was 6.8%, primarily due to a $12 million non-cash, non-recurring write-off of ERP costs in South America. EBIT was also negatively impacted by severance costs incurred globally and labour disruption costs in South America that totaled approximately $9 million, which was significantly higher than severance costs of $4 million in the third quarter of 2013.
- Basic EPS(2) was $0.33 per share. Negative impact of Chile tax changes was $0.04 per share. ERP write-off was $0.06 per share. Severance and strike costs totaled $0.04 per share this quarter. Higher effective tax rate in Argentina was $0.03 per share.
- The Company generated $109 million in free cash flow(1) in Q3 and reflects continued focus on improving working capital(1) efficiencies throughout the organization.
- Invested capital(1) of $3.3 billion was unchanged compared to Q3 of last year. Invested capital turnover(1), inventory turns(1) and working capital to sales ratio(1) improved from Q3 2013, reflecting progress on improving capital efficiencies in Canada, as well as inventory reduction in South America in response to weak demand. Canada's invested capital turnover improved to 2.15 times in the third quarter of 2014 from 1.95 times in the third quarter of 2013.
- Canada's return on invested capital (ROIC) improved to 16.8% from 15.9% in Q3 of last year; however, the consolidated ROIC declined to 15.4% from 15.8% in Q3 2013, as a higher ROIC in Canada has been offset by lower ROIC in South America due to reduction in activity levels and the ERP write-off.
For the complete results: View Q3 Results