TSX:FTT - Post Discussion
Post by
retiredcf on Aug 04, 2022 1:14pm
RBC
Finning International Inc.
Q2 results well ahead of forecasts; H2 outlook implies growth well above prior guidance
TSX: FTT | CAD 27.70 | Outperform | Price Target CAD 47.00
Sentiment: Positive
Initial take: Positive – Finning reported Q2 2022 Net Revenue and earnings above RBC/consensus forecasts. Q2 Net Revenue was $2,004MM (+18% YoY; cons: $1,913MM), while Adjusted EBIT was $190MM (+39% YoY; RBC/cons: $146MM/$161MM). Backlog exiting Q2 was $2,135MM (+56% YoY; +4% QoQ), of which ~70% is expected to be delivered in 2022 (balance in 2023). We note that the backlog reflects a growing proportion of mining orders. We believe that the strong increase in inventory (at $2,228MM; +36% YoY & +6% QoQ) positions the company well to deliver on its backlog & drive continued Product Support growth.
H2/22 guidance implies full year 2022 EPS growth of +30%-35% YoY (prior guidance as of Q1/2022 was for full-year EPS growth of "above mid-teens" YoY) – Finning expects demand conditions to remain favourable for the remainder of 2022, underpinned by the company's large/diverse backlog and continued growth in Product Support (over the last four quarters, the Product Support business is +14% YoY vs. the prior year period). The company is projecting "above mid-teens" EPS growth YoY in H2/22 (vs. current consensus at +8% YoY growth for H2/22). The company delivered +52% YoY Adjusted EPS growth in H1/22. Taking H1 actuals and H2 guidance together implies full-year 2022 EPS of ~$2.85-$2.90 (+30-35% YoY; assumes +15%-20% for H2/22 to align with "above mid-teens" growth).
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