VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 8, 2013) - Finning International Inc. (TSX:FTT) -
Q1 2013 HIGHLIGHTS
Finning International Inc. reported quarterly revenues of $1.6 billion, an 8% increase over Q1 2012. Strong revenue growth in South America more than offset lower revenues from Canada and the UK and Ireland. Product support revenues grew by 13% over Q1 2012, reaching a new record. Quarterly earnings before finance costs and income taxes (EBIT) rose by 21% to $117 million. Quarterly EBIT margin was 7.4% compared to 6.6% in Q1 2012, resulting from improved EBIT margin in Canada. Basic earnings per share (EPS) increased by 16% from Q1 of last year to $0.43. First quarter results included severance costs of approximately $4 million or $0.02 per share, and reflected the adoption of the amendments to International Accounting Standard (IAS) 19, which reduced results by approximately $0.02 per share in both 2013 and 2012.
"Our ability to grow revenues during heightened economic uncertainty clearly demonstrates the benefit of our broad end-market and geographic diversification, as well as our product support capabilities. As expected, slower activity in mining translated into lower order intake. However, our backlog remains solid, and high machine utilization levels are expected to continue driving strong product support revenues in 2013," said Mike Waites, president and CEO of Finning International Inc. "Our priorities for the year ahead remain unchanged. We are executing on operational excellence initiatives with rigour and discipline to achieve sustainable improvements in our operating profitability. Based on our capabilities to generate strong free cash flow and our expectation for earnings growth, we are pleased to increase our quarterly dividend by 9% to 15.25 cents per share."
Consolidated 2013 revenues are expected to be flat to up 10% over 2012, driven by product support revenues which benefit from a full year's contribution from the expanded mining product line. For 2013, earnings are expected to grow at a higher rate than revenue. The Company's net debt to total capital ratio is projected to decline to the 35-45% target range by the end 2013.
The Company aims to improve operating profitability through advancing operational excellence. The Company targets to achieve EBIT margin of 9-10% and ROE exceeding 18%, on a consistent basis. The timing of the achievement of the EBIT margin target will depend on the Company's ability to successfully execute its operational excellence strategy and may also be influenced by market conditions.
Q1 2013 FINANCIAL SUMMARY
C$ millions, except per share amounts (unaudited) | Three months ended Mar 31 | ||||
2013 | 2012(6) | % change | |||
Revenue | 1,584 | 1,472 | 8 | ||
Earnings before finance costs and income taxes (EBIT) | 117 | 97 | 21 | ||
Net income | 73 | 64 | 14 | ||
Basic EPS | 0.43 | 0.37 | 16 | ||
Earnings before finance costs, income taxes, depreciationand amortization (EBITDA)(1) | 169 |
145 |
17 |
||
Free cash flow(1)(2) | (93 | ) | (223 | ) | 58 |
Q1 2013 HIGHLIGHTS BY OPERATION
Canada
South America
United Kingdom and Ireland
CORPORATE AND BUSINESS DEVELOPMENTS
Dividend
The Board of Directors has approved a 9% increase in the quarterly dividend to $0.1525 per share from $0.14 per share, payable on June 6, 2013 to shareholders of record on May 23, 2013. This dividend will be considered an eligible dividend for Canadian income tax purposes. In addition, the Company has increased its target dividend payout ratio to 25-35% from 25-30%.
SELECTED CONSOLIDATED FINANCIAL INFORMATION | ||||||||
(C$ millions, except per share amounts) | ||||||||
Three months ended March 31 | ||||||||
Revenue | 2013 | 2012(6) | % change | |||||
New equipment | 643.9 | 631.4 | 2 | |||||
Used equipment | 60.1 | 73.4 | (18 | ) | ||||
Equipment rental | 93.0 | 91.2 | 2 | |||||
Product support | 761.3 | 675.0 | 13 | |||||
Other | 26.2 | 0.8 | n/m | |||||
Total revenue | 1,584.5 | 1,471.8 | 8 | |||||
Gross profit | 497.9 | 444.5 | 12 | |||||
Gross profit margin(3) | 31.4 | % | 30.2 | % | ||||
SG&A | (382.3 | ) | (347.2 | ) | (10 | ) | ||
SG&A as a percentage of revenue | (24.1 | )% | (23.6 | )% | ||||
Equity earnings | 2.8 | 1.9 | ||||||
Other income (expenses) | (1.3 | ) | (2.4 | ) | ||||
EBIT | 117.1 | 96.8 | 21 | |||||
EBIT margin(4) | 7.4 | % | 6.6 | % | ||||
Net income | 73.4 | 64.3 | 14 | |||||
Basic earnings per share (EPS) | 0.43 | 0.37 | 16 | |||||
EBITDA(1) | 169.3 | 144.8 | 17 | |||||
Free Cash Flow(1)(2) | (93.4 | ) | (222.7 | ) | 58 | |||
Mar 31, 13 | Dec 31, 12 | |||||||
Total assets | 5,194.4 | 5,118.0 | ||||||
Total shareholders' equity | 1,623.2 | 1,566.6 | ||||||
Net debt to total capital ratio(5) | 51.1 | % | 50.0 | % |
n/m = not meaningful as percentage change is significantly larger or not applicable |
To download Finning's complete Q1 2013 results in PDF, please open the following link: http://media3.marketwire.com/docs/FinningQ113results.pdf
To download the CEO and CFO certification letters once they have been filed on SEDAR, please open the following link: http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00001068
Q1 2013 RESULTS INVESTOR CALL
Management will hold an investor conference call on Thursday, May 9 at 11:00 am Eastern Time. Dial-in numbers: 1-866-226-1793 (anywhere within Canada and the U.S.) or (416) 340-2218 (for participants dialing from Toronto and overseas).
The call will be webcast live and subsequently archived at www.finning.com. Playback recording will be available at 1-800-408-3053 from 1:00 pm Eastern Time on May 9 until May 15. The pass code to access the playback recording is 4463383 followed by the number sign.
ABOUT FINNING
Finning International Inc. (TSX:FTT) is the world's largest Caterpillar equipment dealer delivering unrivalled service to customers for 80 years. Finning sells, rents and services equipment and engines to help customers maximize productivity. Headquartered in Vancouver, B.C., the Company operates in Western Canada, Chile, Argentina, Bolivia, Uruguay, as well as in the United Kingdom and Ireland.
Footnotes
Forward-Looking Disclaimer
This report contains statements about the Company's business outlook, objectives, plans, strategic priorities and other statements that are not historical facts. A statement Finning makes is forward-looking when it uses what the Company knows and expects today to make a statement about the future. Forward-looking statements may include words such as aim, anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, project, seek, should, strategy, strive, target, and will. Forward-looking statements in this report include, but are not limited to, statements with respect to: expectations with respect to the economy and associated impact on the Company's financial results; expected revenue and SG&A levels and EBIT growth; anticipated generation of free cash flow (including projected net capital and rental expenditures), and its expected use; anticipated defined benefit plan contributions; the expected target range of the Company's Debt Ratio; the impact of new and revised IFRS that have been issued but are not yet effective. All such forward-looking statements are made pursuant to the 'safe harbour' provisions of applicable Canadian securities laws.
Unless otherwise indicated by us, forward-looking statements in this report describe Finning's expectations at May 8, 2013. Except as may be required by Canadian securities laws, Finning does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from the expectations expressed in or implied by such forward-looking statements and that Finning's business outlook, objectives, plans, strategic priorities and other statements that are not historical facts may not be achieved. As a result, Finning cannot guarantee that any forward-looking statement will materialize. Factors that could cause actual results or events to differ materially from those expressed in or implied by these forward-looking statements include: general economic and market conditions; risks associated with the conduct of business in foreign jurisdictions; foreign exchange rates; commodity prices; the level of customer confidence and spending, and the demand for, and prices of, Finning's products and services; Finning's dependence on the continued market acceptance of Caterpillar's products and Caterpillar's timely supply of parts and equipment; Finning's ability to continue to improve productivity and operational efficiencies while continuing to maintain customer service; Finning's ability to manage cost pressures as growth in revenues occur; Finning's ability to reduce costs in response to slowing activity levels; Finning's ability to attract sufficient skilled labour resources to meet growing product support demand; Finning's ability to negotiate and renew collective bargaining agreements with satisfactory terms for Finning's employees and the Company; the intensity of competitive activity; Finning's ability to realize expected benefits of acquisitions; Finning's ability to raise the capital needed to implement its business plan; regulatory initiatives or proceedings, litigation and changes in laws or regulations; stock market volatility; changes in political and economic environments for operations; the integrity, reliability, and availability of information technology and the data processed by that technology; expected operational benefits from the new ERP system. Forward-looking statements are provided in this report for the purpose of giving information about management's current expectations and plans and allowing investors and others to get a better understanding of Finning's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this report are based on a number of assumptions that Finning believed were reasonable on the day the Company made the forward-looking statements. Refer in particular to the Outlook section of the MD&A. Some of the assumptions, risks, and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this report are discussed in the Company's current Annual Information Form (AIF) in Section 4.
Finning cautions readers that the risks described in the AIF are not the only ones that could impact the Company. Additional risks and uncertainties not currently known to the Company or that are currently deemed to be immaterial may also have a material adverse effect on Finning's business, financial condition, or results of operations.
Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Finning therefore cannot describe the expected impact in a meaningful way or in the same way Finning presents known risks affecting its business.
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