Finning International (FTT) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was $2.6 billion, flat year-over-year, with a 5% increase in product support revenue across all regions and a record equipment backlog of $3.0 billion, up 6% sequentially, driven by large mining orders in Canada and strong power systems activity.

• Sale of 4Refuel and ComTech completed, with results restated as discontinued operations; focus sharpened on core dealership operations and portfolio optimization.

• SG&A margin was 15.5%, impacted by a $16 million increase in long-term incentive plan expense due to a 44% share price rise; annual savings of over $20 million expected in Canada from restructuring.

• Adjusted EBIT was $215 million (8.3% margin), with Adjusted EPS from continuing operations up 5% to $1.01, driven by share repurchases and higher regional earnings despite higher LTIP expense.

• Free cash flow from continuing operations was a use of $164 million, mainly due to higher inventory to support increased customer activity.

Financial highlights

• Product support revenue grew 5% year-over-year, now 56% of total revenue; new equipment sales were nearly $1.0 billion, flat year-over-year, while used equipment sales declined due to prior-year one-time deals.

• Gross profit margin improved to 23.7% (up 40 bps year-over-year), with gross profit at $619 million, up 2% year-over-year.

• SG&A margin was 15.5%, up 50 bps year-over-year, reflecting higher LTIP expense.

• Adjusted ROIC from continuing operations was 18.7%; net debt to Adjusted EBITDA at 1.6x.

• Working capital to sales ratio improved to 26.4% year-over-year; invested capital turnover at 2.28x.

Outlook and guidance

• South America outlook supported by strong copper demand, high prices, and robust mining investment, but faces labor cost pressures and union negotiations in Chile.

• Canada outlook is mixed; infrastructure and resource development may accelerate, but timing is uncertain; focus remains on cost and working capital management.

• UK & Ireland expects soft construction demand due to low GDP growth, but stable product support and strong power systems quoting activity.

• SG&A savings of over $20 million annually expected from organizational streamlining; continued investment in rental, used, and power businesses.

• Adjusted ROIC expected to improve post-sale of 4Refuel and ComTech, with proceeds allocated to share repurchases, debt repayment, and core operations investment.