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, reflecting strong execution of strategic priorities and cost control.

• Net revenue grew 3% YoY to $2.6 billion, led by robust used equipment and higher new equipment sales.

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

• Used equipment sales surged 57% YoY, while product support revenue increased 0.4% from a strong prior year.

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

Financial highlights

• EBIT was $228 million in Q2 2024, with margin at 8.6%; EBIT fell 5% YoY, mainly from lower margins in used and rental equipment.

• Free cash flow reached a record $330 million in Q2 2024.

• Gross profit was $652 million, flat YoY; gross margin was 24.7% versus 25.6% in Q2 2023.

• Net debt to adjusted EBITDA at 1.8x at end of June 2024.

• Equipment backlog increased 11% sequentially to $2.2 billion, with South America at an all-time high.

Outlook and guidance

• Expect product support growth rates to improve in H2 2024, supported by technician hiring, rebuilds, and expanded sales coverage.

• Anticipate substantial free cash flow generation in H2 2024, with continued focus on working capital velocity and cost reduction.

• 2024 net capital and rental fleet expenditures now expected at $220–$270 million, down from prior guidance.

• Market outlooks remain positive for mining in Chile, energy sector in Canada, and power systems in all regions.

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