Finning reports Q2 2025 results, equipment backlog increases to $3 billion

Executive Summary

• Finning International Inc. reported second quarter 2025 financial results, with revenue of $2.6 billion, flat compared to the prior year, driven by a 5% increase in product support.
• The company achieved a record equipment backlog of $3.0 billion, an all-time high, which includes over $1.0 billion in power systems orders, while new equipment sales reached nearly $1.0 billion in the quarter.
• Adjusted Earnings Per Share (EPS) from continuing operations rose 5% to $1.01, and Adjusted ROIC from continuing operations was 18.7%, despite a free cash flow use of $164 million due to higher inventory levels.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Revenue: $2,609 million (vs $2,599 million).
  • New Equipment Revenue: $982 million (vs $979 million).
  • Used Equipment Revenue: $83 million (vs $146 million, -43%).
  • Equipment Rental Revenue: $73 million (vs $70 million, +4%).
  • Product Support Revenue: $1,469 million (vs $1,401 million, +5%).
  • Gross Profit: $619 million (vs $606 million).
  • Gross Profit Margin: 23.7% (vs 23.3%).
  • SG&A: $404 million (vs $391 million).
  • SG&A Margin: 15.5% (vs 15.0%).
  • EBIT: $203 million (vs $220 million).
  • EBIT Margin: 7.8% (vs 8.5%).
  • Adjusted EBIT: $215 million (vs $220 million).
  • Adjusted EBIT Margin: 8.3% (vs 8.5%).
  • Net Income from Continuing Operations: $126 million (vs $137 million).
  • Basic EPS: $0.94 (vs $0.97).
  • Adjusted EPS: $1.01 (vs $0.97, +5%).
  • Free Cash Flow from Continuing Operations: $(164) million (vs $323 million).
• Operational Metrics:
  • Equipment Backlog: $3.0 billion at June 30, 2025 (all-time high), up 6% from March 31, 2025.
  • Adjusted ROIC from Continuing Operations: 18.7%.
  • Invested Capital Turnover from Continuing Operations: 2.28 times.
  • Inventory from Continuing Operations: $3,066 million.
  • Inventory Turns from Continuing Operations: 2.58 times.
  • Net Debt to Adjusted EBITDA Ratio: 1.6 times.
• Segment Performance:
  • South America: Revenue increased 5%; EBIT was $96 million (Adjusted EBIT margin 10.1%).
  • Canada: Revenue decreased 3%; Adjusted EBIT was $125 million (Adjusted EBIT margin 9.4%). Incurred $11 million in severance costs related to headcount reductions in non-revenue generating positions.
  • UK & Ireland: Revenue decreased 6%; EBIT was $17 million (Adjusted EBIT margin 5.2%).
  • Corporate/Other: Adjusted EBIT loss of $23 million, primarily due to higher long-term incentive plan compensation expenses linked to a 44% share price increase.
• Strategic Actions & Dispositions:
  • Sold interests in ComTech and 4Refuel; results restated as discontinued operations.
  • Repurchased 2.0 million shares at an average cost of $53.70 per share (~1.5% of public float).
  • Board approved a quarterly dividend of $0.3025 per share, payable September 4, 2025.
  • Streamlining actions in Canada expected to result in annual SG&A savings of over $20 million.
• Outlook:
  • South America: Positive outlook for Chile driven by copper demand and brownfield expansions; cautious on labor costs and union negotiations.
  • Canada: Mixed outlook for Western Canada; focus on infrastructure and mining fleet renewal.
  • UK & Ireland: Soft construction demand expected; strong quoting activity in power systems/data centers.
  • Global: Caution regarding tariff uncertainty and indirect economic impacts.

Notable Quotes

• “We are pleased to see the results of the consistent execution of our strategy, which coupled with the geographic and end market diversity of our business, led to another solid quarter of results... We also built our backlog to a record level of $3 billion... Our strong cost and capital discipline continued... And lastly, we completed the sale of 4Refuel and ComTech ahead of plan, which we expect will improve our return on invested capital and allow us to continue to sharpen focus on our core dealership operations,” said Kevin Parkes, President and CEO.
• “Our focus on strategy execution continues to strengthen and we will continue to maximize product support, drive full-cycle resilience and grow our used, rental and power businesses to improve our return on invested capital,” said Mr. Parkes.