Canadian Caterpillar dealer and rental house Finning International increased new equipment sales in the first quarter as customer orders remained strong across all regions despite economic uncertainty.
New equipment orders increased to C$835 million (US$597.4 million), up 7.2% year over year, as new equipment sales rose 42% YoY in South America and showed strength compared with used sales in other global markets, including Canada, Finning President and CEO Kevin Parkes said during the company’s May 13 earnings call.
However, he said, “The orders received in Canada are especially encouraging, providing us with a good level of confidence in our outlook for new equipment for the rest of the year and for product support opportunities for years to come. Order intake in the construction segment was up relative to order intake in Q1 2024.”
By the numbers
Finning increased new equipment sales, equipment backlog and net revenue in Q1, despite a decline in global used-equipment sales and equipment rental revenue, as well as a slowdown in the Canadian market due to lower construction demand and fewer rental conversions, according to the company earnings presentation.
Finning reported the following in Q1:
- Used equipment sales declined 26.5% YoY to $71.6 million;
- Equipment rental revenue slipped 2.7% YoY to $51.5 million;
- Canadian new equipment sales fell 14.3% YoY to $240.4 million;
- Canadian used equipment sales slumped 31% YoY to $42.9 million;
- Canadian equipment rental revenue remained flat at $33.6 million;
- Net revenue climbed 7.2% YoY to $1.8 billion;
- Gross profit rose 5% YoY to $446.5 million; and
- Equipment backlog rose 40% YoY to a record $2 billion
Tariffs have had minimal operational impact so far, with customer activity and spending remaining steady, while efforts continue to strengthen the resilience of Finning’s Canadian business, Parkes said.
“In recent, changing, tariff-related announcements by the U.S., Canada and other countries globally, it has introduced a level of uncertainty, cost and complexity to operating for many businesses,” he said. “To date, the direct impact of announced and implemented tariffs to thinning has been limited and largely centered on our Canadian business.”
Flashback
Finning International also agreed to sell its mobile refueling business, 4Refuel, to affiliates of H.I.G. Capital for approximately $450 million, to realign the business, Parkes said. The deal includes $330 million in cash at closing, a $50 million promissory note, and up to $20 million contingent on future performance, with the sale expected to close in the third quarter, according to a May 8 Finning release.
Finning and its partners have also agreed to sell Compression Technology (ComTech) for $40 million, also including leases and debt, to an unnamed third-party, with closing expected in the second quarter, according to the release. Earlier this year, Finning determined ComTech no longer fit its strategic focus, Greg Palaschuk, executive vice president and CFO, said during the earnings call.
Market outlook
“Overall, we are encouraged with a strong start to the year and remain confident and committed to the execution of our strategy,” Palaschuk said.
“We are excited about the future as we sharpen our focus and allocate resources to growth opportunities in areas such as product support, addressable market, power generation and rental,” he said. “We also plan to invest in future adoption of technology, like autonomy and our digital capabilities to enable growth and improve customer outcomes.”
MARKET REACTION: Shares of Finning International [OTCPK:FINGF] were up 13.78% or $4.16 from market open to $34.35 as of market close on May 13. It has a market capitalization of $4.08 billion.
Editor’s note: All figures have been converted to U.S. dollars.
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