VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 13, 2014) - Finning International Inc. (TSX:FTT) reported first quarter 2014 results today (all monetary amounts are in Canadian dollars unless otherwise stated).
Q1 2014 HIGHLIGHTS
"Overall, we generated solid top-line growth and increased our order backlog by over 45 percent. Strength in Canada and the UK and Ireland offset market softness in South America," said Scott Thomson, president and chief executive officer of Finning International. "The market environment in South America is looking more challenging than we first thought and we expect that to continue through 2014. However, I am pleased that our team in South America is focused on what they can control, namely costs and invested capital. Costs were reduced significantly and profitability was maintained. For the remainder of the year, the team will be focused on reducing invested capital and costs to match current demand."
"In Canada, I was pleased with our revenue growth during the quarter but our profitability was impacted by higher new equipment sales in the revenue mix and a higher proportion of sales that were lower margin mining machines. While higher sales activity drove an increase in invested capital and negative free cash flow, we were still able to modestly improve capital efficiency. For the remainder of the year, we continue to expect significant free cash flow generation. We also recognize the importance of improving profitability in our Canadian operations and our operational excellence agenda is focused on reducing the cost structure and increasing the profitability margins in this region," continued Scott Thomson. "Reflecting the confidence we have in our ability to improve our operating performance and generate strong free cash flow, I am pleased to announce that we increased our annualized dividend by 10 cents or slightly more than 15 percent."
|Q1 2014 FINANCIAL SUMMARY|
|$ millions, except per share amounts||Three months ended Mar 31|
|Free cash flow(1)||(134)||(93)||(44)|
|$ millions||Q1 2014||Q4 2013|
|Return on invested capital(1)||15.4%||15.7%|
Q1 2014 HIGHLIGHTS BY OPERATION
United Kingdom & Ireland
CORPORATE AND BUSINESS DEVELOPMENTS
The Board of Directors has approved a $0.025 increase in the quarterly dividend to $0.1775 per share from $0.1525 per share, payable on June 12, 2014 to shareholders of record on May 29, 2014. This dividend will be considered an eligible dividend for Canadian income tax purposes.
Board of Directors nominations
On April 4, Finning announced that Marcelo Awad and Nicholas Hartery had been nominated to stand for election to the Company's Board of Directors at the Annual Meeting of Shareholders scheduled to be held on May 13, 2014. Mr. Awad is an experienced mining industry executive who was previously the president and chief executive officer of Antofagasta Minerals for over seven of his sixteen years with the company. Prior to joining Antofagasta Minerals, Mr. Awad spent eighteen years with Codelco in progressively senior positions in London and Chile. Mr. Hartery is Chairman of CRH plc, one of the world's leading building materials companies with operations in 35 countries, where he has been a non-executive director since 2004. From 2000 to 2008, Mr. Hartery was vice president of manufacturing and business operations for Dell Inc.'s Europe, Middle East and Africa operations.
|SELECTED CONSOLIDATED FINANCIAL INFORMATION|
|(C$ millions, except per share amounts)|
|Three months ended Mar 31|
|Gross profit margin||29.8%||32.0%|
|SG&A as a percentage of revenue||(23.2)%||(24.5)%|
|Equity earnings of joint venture and associate||0.7||2.8|
|Other income (expenses)||(0.8)||(2.1)|
|Free Cash Flow||(134.2)||(93.4)||(44)|
|Total shareholders' equity||1,951.0||1,857.8|
|Net debt to invested capital(1)||42.9%||40.8%|
|Return on invested capital(1)||15.4%||15.7%|
To download Finning's complete Q1 2014 results in PDF, please open the following link: http://media3.marketwire.com/docs/FinningQ114results.pdf
Q1 2014 RESULTS INVESTOR CALL
The Company will hold an investor call on Wednesday, May 14 at 11:00 am Eastern Time. Dial-in numbers: 1-800-766-6630 (anywhere within Canada and the U.S.) or 416-340-8527 (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 14 until May 21. The pass code to access the playback recording is 7182919 followed by the number sign.
Finning International Inc. (TSX:FTT) is the world's largest Caterpillar equipment dealer delivering unrivalled service to customers for over 80 years. Finning sells, rents and provides parts and services for 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.
(1) These financial metrics do not have a standardized meaning under IFRS, which are also referred to herein as generally accepted accounting principles (GAAP), and may not be comparable to similar measures used by other issuers. Management's Discussion and Analysis (MD&A) includes additional information regarding these financial metrics, including definitions, under the heading "Description of Non-GAAP and Additional GAAP Measures".
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; EBIT margin; ROIC; market share growth; expected results from service excellence action plans; anticipated asset utilization, inventory turns and parts service levels; the expected target range of the Company's net debt to invested capital ratio; and the expected target range of the Company's dividend payout ratio. 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 reflect Finning's expectations at May 13, 2014. 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; 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 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, availability and benefits from information technology and the data processed by that technology. 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 this 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 Section 4 of the Company's current AIF.
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.