Finning International Inc T.FTT

Finning Delivers Record First Quarter Results

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Finning International Inc. Delivers Record First Quarter Results FINNING INTERNATIONAL INC ("FTT-T;FINGF-L0") - Delivers Record First Quarter Results Three months ended Mar 31 ($ millions, except EPS data) 2002 2001 Revenue 771.5 728.9 EBIT 63.8 47.5 Net Income 30.7 17.3 Basic EPS $0.40 $0.23 Diluted EPS $0.39 $0.23 Cash Flow after Working Capital Changes 178.9 106.0 Finning International Inc. reported record first-quarter revenue of $771.5 million, up $42.6 million, or 5.9%, from the first quarter of 2001. Earnings Before Interest and Taxes (EBIT) for the quarter reached $63.8 million, up $16.3 million or 34.4% higher than the same period last year. Net income for the quarter rose 77.2% or $13.4 million to a record $30.7 million. Basic EPS for the quarter increased 73.9% to $0.40. The results for the quarter included one-time gains on property disposals. Excluding these gains and goodwill amortization, normalized net income was a record high $23.1 million (2001: $20.7 million) and normalized Basic EPS was $0.30 (2001: $0.27). Cash flow after working capital changes was $178.9 million for the first quarter, up significantly from $106.0 million in the first quarter 2001 reflecting improved working capital productivity. Doug Whitehead, President and CEO of Finning International Inc. said: "In the first quarter of 2002, Finning continued to deliver strong financial results despite uncertain economic conditions. Our focus on operating and asset efficiencies, coupled with global diversification have resulted in the quarter over quarter improvement. Finning Chile and Finning U.K. both reported strong year over year performance. Finning Canada was slightly lower than the previous year's record first quarter, reflecting a softening in the oil and gas sector. Hewden Stuart, which we acquired January 26, 2001, returned a lower EBIT than last year, but has met our expectations for performance for the first quarter of 2002. In addition, there were a number of other important events during the quarter, including: * In January, we closed sale/leaseback on 19 of our Canadian properties for net proceeds of approximately $77 million. This reflected our strategy of monetizing or divesting non-core assets. * Finning (UK) announced plans to consolidate its Materials Handling facilities at Spalding and Cannock into one new National Materials Handling centre to be located in the Cannock area. This is the first in a series of restructuring opportunities in the UK and Canada that were financially provided for in the fourth quarter of 2001. * In February, we announced a 40% increase in our quarterly dividend to $0.07 per share from $0.05 per share. This increase, the first since 1995, reflects management's confidence in the future growth of revenues and earnings for the company. * In March, we sold the remaining 20% interest in a parcel of our Great Northern Way property for $8.5 million. * Subsequent to quarter end, we announced the acquisition of 100% of Diperk, the dealer for two Caterpillar-manufactured product lines, Perkins Engines and F.G. Wilson in Chile, as well as our intention to acquire a 35% interest in Maxim Power Corp., a Calgary-based independent power producer. Both these acquisitions will allow us to take advantage of growth opportunities in the worldwide trend towards distributed power generation. Looking forward for the balance of 2002, economic conditions remain uncertain. We are confident, however, that we will exceed the level of profitability that we achieved in 2001." Rick Mahler, Executive Vice President and CFO of Finning noted: "We were able to deliver record results while continuing to improve our balance sheet. Assets were reduced a further $118 million from year-end 2001 due partly to the sale/leaseback of our Canadian properties, but also reflecting continued improvement in our working capital. As a result, our average operating return on assets of 8.9% and our total debt to equity ratio of 0.70 continued to improve from December 2001 results of 8.5% and 0.87, respectively." Complete financial statements and management discussion and analysis can be accessed at www.finning.com Finning International Inc. sells, rents, finances and provides customer support services for Caterpillar equipment and engines, and complementary equipment, in Western Canada, the U.K. and Chile. The corporation's Head Office is located in Vancouver, B.C., Canada. Finning International Inc. (www.finning.com) is a widely held, publicly traded corporation, listed on the Toronto Stock Exchange (symbol FTT). This report contains forward-looking statements and information, which reflect the current view of Finning International Inc. with respect to future events and financial performance. Any such forward-looking statements are subject to risks and uncertainties and Finning's actual results of operations could differ materially from historical results or current expectations. Finning assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein do not materialize. Refer to Finning's annual report, management information circular, annual information form and other filings with the Ontario Securities Commission and Toronto Stock Exchange for further information on risks and uncertainties that could cause actual results to differ materially from forward-looking statements contained in this report. INTERIM CONSOLIDATED STATEMENTS OF INCOME & RETAINED EARNINGS (C$ thousands except per share amounts) (unaudited) Three months ended Mar 31 2002 2001 Revenue New mobile equipment $ 177,171 $ 184,468 New power and energy systems 56,091 58,960 Used equipment 87,119 86,353 Equipment rental 175,985 135,511 Operating leases 23,795 22,603 Customer support services 249,812 237,261 Finance and other 1,596 3,759 Total revenue 771,569 728,915 Cost of sales 547,739 525,848 Gross profit 223,830 203,067 Selling, general and administrative expenses 169,766 150,024 Other expenses/(income) (Note 3) (9,752) 3,600 Earnings before interest, taxes, amortization of goodwill and non-controlling interests (EBITA) 63,816 49,443 Finance cost and interest on other indebtedness 20,380 20,648 Income before provision for income taxes 43,436 28,795 Provision for/(recovery of) income taxes 8,753 5,115 Non-controlling interests 3,947 4,372 Net income before amortization of goodwill 30,736 19,308 Amortization of goodwill - 1,963 Net income available to shareholders 30,736 17,345 Retained earnings, beginning of period 590,588 521,569 Dividends on common shares (5,343) (3,766) Premium on repurchase of common shares - (5,747) Retained earnings, end of period $ 615,981 $ 529,401 Gross profit as a percentage of revenue 29.0% 27.9% EBITA as a percentage of revenue 8.3% 6.8% Net income as a percentage of revenue 4.0% 2.4% Earnings per share (EPS) Basic EPS $0.40 $0.23 Diluted EPS $0.39 $0.23 Basic EPS before amortization of goodwill $0.40 $0.26 Diluted EPS before amortization of goodwill $0.39 $0.25 Weighted average number of shares outstanding 76,084,934 75,491,674 INTERIM CONSOLIDATED BALANCE SHEETS (C$ thousands) (unaudited) March 31 December 31 2002 2001 ASSETS Current assets Accounts receivable and other $ 530,071 $ 513,599 Inventories On-hand equipment 364,872 418,672 Parts and supplies 242,035 237,557 Current portion of instalment notes receivable 67,927 67,350 Total current assets 1,204,905 1,237,178 Finance assets Instalment notes receivable 71,126 70,468 Equipment leased to customers 238,653 233,375 Total finance assets 309,779 303,843 Rental equipment 764,312 776,832 Land, buildings and equipment (Note 1) 239,517 312,359 Future income taxes 4,378 2,825 Goodwill (Note 2) 397,247 405,744 Total assets $2,920,138 $3,038,781 LIABILITIES Current liabilities Short-term debt $ 184,036 $ 372,360 Accounts payable and accruals 799,014 758,009 Income tax payable 11,108 11,364 Current portion of long-term debt 168,427 132,986 Total current liabilities 1,162,585 1,274,719 Long-term debt 504,875 540,756 Future income taxes 19,271 22,443 Total liabilities 1,686,731 1,837,918 Non-controlling interests 425,000 425,000 SHAREHOLDERS' EQUITY Share capital (Note 4) 220,289 212,122 Retained earnings 615,981 590,588 Cumulative currency translation adjustments (27,863) (26,847) Total shareholders' equity 808,407 775,863 Total liabilities, non-controlling interests and shareholders' equity $2,920,138 $3,038,781 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (C$ thousands) (unaudited) Three months ended Mar 31 2002 2001 OPERATING ACTIVITIES Net income $ 30,736 $ 17,345 Add Depreciation 78,883 65,988 Amortization of goodwill - 1,963 Future income taxes (4,279) 1,120 Other items (9,752) 3,753 Non-controlling interests distribution 3,947 4,372 99,535 94,541 Changes in working capital items Accounts receivable and other (29,754) (20,666) Inventories - On-hand equipment 51,176 (50,877) Inventories - Parts & supplies (4,989) (10,855) Instalment notes receivable (1,224) 13,505 Accounts payable and accruals 63,869 69,714 Income taxes 242 10,633 Cash provided after changes in working capital items 178,855 105,995 Rental equipment, net of disposals (51,741) (35,524) Equipment leased to customers, net of disposals (23,494) (4,832) Cash flow from operating activities 103,620 65,639 INVESTING ACTIVITIES Net cash from divestments of land, buildings and equipment 4,987 5,043 Proceeds from Canadian property sale leaseback (Note 1) 77,049 - Acquisitions Aggregate purchase price - (729,112) Assumed debt - (110,493) Less: Initial investment in Hewden - 218,050 Cash provided by/(used for) investing activities 82,036 (616,512) FINANCING ACTIVITIES Issued (repayment) of long-term debt 1,428 (7,410) Non-controlling interests - 425,000 Non-controlling interests distribution (3,947) (4,372) Issue of common shares on exercise of stock options 8,167 1,948 Repurchase of common shares - (7,262) Dividends paid (5,343) (3,766) Currency translation adjustments 2,363 (22,258) Cash provided by/(used for) financing activities 2,668 381,880 Decrease/(Increase) in short-term debt 188,324 (168,993) Short-term debt at beginning of period 372,360 398,208 Short-term debt at end of period $ 184,036 $ 567,201 Cash flows include the following elements Interest paid $ 12,165 $ 17,134 Income taxes paid $ 9,615 $ 9,178 Finning's Q1/02 Shareholder/Analyst Conference Call will be held this day, April 24, 2002, at 3:30 p.m. EST. Dial-in numbers: 1-877-888-3490 (within North America only) 416-695-9757 (Toronto area and overseas) TEL: [phone] Finning International Inc. FAX: [phone] Anthony Guglielmin, Vice President and Corporate Treasurer Email: [e-mail] INET : www.finning.com ______________________________________ ___________________________________________________________________ (c) Market News Publishing Inc. Tel:[phone] All rights reserved. Fax:[phone] MarketbyFax(tm) - To get the NEWS as it happens, call [phone]. © 2002 StockHouse.com | Disclaimer