Finning International (FTT) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 EPS of $1.02 (up 2% YoY) and record free cash flow of $330 million, with net revenue of $2.6 billion (up 3% YoY) and total revenue of $2.9 billion (up 5% YoY), reflecting strong execution of strategic priorities and cost control.

• Used equipment sales surged 57% YoY, while new equipment sales rose 3% YoY; product support revenue increased 0.4% YoY and 8% sequentially.

• Equipment backlog reached $2.2 billion, up 11% sequentially, with strong order intake and strategic wins across all regions.

• SG&A as a percentage of net revenue at an all-time low of 16.2%, reflecting strong cost control.

• Continued focus on product support, used equipment strategy, and working capital velocity to drive sustainable growth.

Financial highlights

• EBIT was $228 million (down 5% YoY), with EBIT margin at 8.6%; gross profit was $652 million, flat YoY, and gross margin declined to 24.7% from 25.6% YoY.

• Free cash flow reached $330 million, a Q2 record, up from $31 million YoY.

• Net debt to adjusted EBITDA was 1.8x at quarter-end.

• Inventory turns (dealership) at 2.44x; working capital to net revenue at 29.5%.

• Dividend of $0.275/share declared for Q3 2024.

Outlook and guidance

• Expect improving product support growth rates, greater working capital velocity, and substantial free cash flow in H2 2024.

• 2024 net capital and rental fleet expenditures now guided to $220–$270 million, down from prior $290–$340 million.

• Construction activity is bottoming out in Canada and the UK, with optimism for incremental improvement in the fall.

• Mining and power systems outlook remains strong, with significant quoting and tender activity in South America and robust demand in oil & gas and backup power.

• UK & Ireland: Construction demand to remain soft; focus on used equipment and power systems.