Finning International Inc T.FTT

Alternate Symbol(s): FINGF

Industrials Industrial Distribution

Finning International Inc. provides caterpillar equipment, parts, services, and performance solutions. The Company’s segments include Canada, South America, UK & Ireland, and Other. The Canadian operations sell, service, and rent mainly caterpillar equipment and engines in British Columbia, Alberta, Saskatchewan, the Yukon Territory, the Northwest Territories, and a portion of Nunavut, and also provide mobile on-site refueling services in provinces of Canada, as well as in Texas, US. The Canadian operations’ markets include mining, construction, conventional oil and gas, forestry, and power systems. The South American operations sell, service, and rent mainly Caterpillar equipment and engines in Chile, Argentina, and Bolivia. The UK & Ireland operations sell, service, and rent mainly Caterpillar equipment and engines in England, Scotland, Wales, Northern Ireland, and the Republic of Ireland. The UK & Ireland operations’ markets include construction, power systems, and quarrying.

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Finning International Inc

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Post by retiredcfon Feb 09, 2022 8:25am

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Post# 34411512

TD

As this is a flash report, there's certainly potential for them to raise their current $45 target. GLTA

Finning International Inc.

(FTT-T) C$35.24

First Look: Big Q4/21 EPS Beat; Positive Outlook in All Regions Event

Finning reported Q4/21 EPS of $0.66, a meaningful beat vs. the Street/TDSI at $0.53/ $0.56. The conference call is at 10:00 a.m. ET. Dial-in: 1-800-319-4610.

Impact: POSITIVE

Beat Driven by Canada: The beat vs. our forecast was primarily due to higher- than-expected revenue in Canada and lower-than-expected corporate expenses.
Q4/21 Results: Net revenue of $1.8bln was up 14% y/y, driven by strong product support revenue and record used equipment sales in Canada, and higher new equipment deliveries in South America. EBIT of $157mm (8.9% margin) increased substantially vs. $94mm (6.1% margin) in Q4/20, reflecting very strong SG&A leverage (down 240bps as a % of revenue) and a 40bps improvement in the gross profit margin, as high utilization of the heavy equipment rental fleet in the aftermath of the B.C. flooding offset a slightly less favourable revenue mix.
Positive Outlook: Finning's outlook is positive across-the-board, and it expects upcycle demand conditions in 2022. Sequentially vs. Q3/21, the outlook improved in Canada, with oil sands capex starting to increase. Political uncertainty in Chile remains a risk, but Finning continues to assume a moderate increase in mining royalties. The Q4/21 backlog of $1.9bln is more than double that of Q4/20, and up 19% q/q, with increases in all regions, most notably in Canada, which booked an order for 20 CAT 797F trucks in the oil sands. Supply- chain constraints persist, resulting in longer lead-times for equipment/parts, which Finning is mitigating by offering used equipment, rental, and rebuild options. The company achieved its mid-cycle EPS and ROIC targets six months ahead-of- schedule and continues to target mid-teens+ EPS growth during the upcycle, which should drive upward estimate revisions, as the 2022 consensus estimate/ our forecast imply 7%/10% growth vs. 2021 adjusted EPS of $2.18. One minor negative is that constrained equipment supply, higher-than-expected product support growth, and inflationary headwinds will delay Finning's target to reduce SG&A to 17% of revenue (previously expected during Q3/21-Q2/22).
FCF/Capital Deployment: Free-cash-flow totaled $300mm in 2021, and Finning repurchased ~3% of its shares outstanding (average price of $32.81/share). The company is pursuing M&A, but largely with a focus on complementary businesses of small-to-medium-size.