Bullboard - Stock Discussion Forum Finning International Inc T.FTT

Alternate Symbol(s): FINGF

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... see more

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TSX:FTT - Post Discussion

Finning International Inc > TD

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Post by retiredcf on Mar 23, 2022 7:49am

TD

Currently have a $46.00 target. GLTA

Finning International Inc.

(FTT-T) C$39.36

Hydraquip Purchase Adds to U.K. Product Support Capabilities Event

Finning announced the acquisition of Hydraquip Hose & Hydraulics Ltd. and Hoses Direct Ltd. (Hydraquip) for £65mm/$108mm (before deferred contingent consideration). The company will fund the deal from cash on hand and existing credit facilities (Q4/21 net debt was $1.2bln, including leases, or ~1.4x TTM adjusted EBITDA).

Impact: SLIGHTLY POSITIVE

The transaction is not very material in a consolidated sense, representing ~1-2% of Finning's 2021 adjusted EBITDA, but we have characterized it as SLIGHTLY POSITIVE, as it is aligned with the company's strategy of driving product support growth by providing complementary products and services that help customers maximize uptime and reduce operating costs, and it should be immediately accretive to the U.K./Ireland's EBIT margin percentage, as well as to Finning's consolidated EPS and FCF. The purchase price corresponds to a 9.0x EV/EBITDA multiple, which is relatively in line with Finning at 8.8x (both multiples calculated based on 2021 adjusted EBITDA).
Hydraquip is the second-largest hydraulic hose replacement and repair company in the U.K., with ~270 employees serving more than 4,000 customers across a diverse range of industries, including construction, power systems, transportation, waste management, utilities, manufacturing, and materials handling, many of which are also served by Finning's U.K./Ireland operations.
Hydraquip generates ~60% of its revenue from on-site mobile hose services, including hose replacement, assembly and fitting, oil replenishment, and general hydraulic servicing, with 130 mobile service vans and trained technicians providing 24/7 coverage across the U.K. The other 40% of revenue is derived from the sale of hydraulic and fluid power products and parts across a network of 27 branches and online. In 2021, Hydraquip generated revenue of more than £26mm and Adjusted EBITDA of £7.2mm (~27-28% EBITDA margin). Hydraquip was founded in 1989 by Duncan MacBain, its current managing director.