Finning International (FTT) Q2 2025 earnings summary

Executive summary

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

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

• Product support revenue grew 5% year-over-year, led by mining and power systems, and is up 7% year-to-date.

• Adjusted EPS rose 5% year-over-year to $1.01, driven by lower finance costs and share repurchases, despite higher LTIP expenses.

• SG&A margin was 15.5%, reflecting cost discipline, restructuring actions, and a $16 million increase in LTIP expense due to a 44% share price rise.

Financial highlights

• Adjusted EBIT was $215 million, up 6% year-over-year, but margin declined to 8.3% due to higher LTIP expense.

• Free cash flow usage was $164 million, reflecting higher inventory to support increased customer activity.

• Working capital to sales ratio improved to 26.4% year-over-year.

• Consolidated adjusted ROIC held at 18.7%; net debt to adjusted EBITDA at 1.6x.

• Gross margin improved by 40 basis points to 23.7%, driven by a higher proportion of product support revenue.

Outlook and guidance

• Optimism for the second half of 2025, with strong backlog and continued momentum in mining and power systems, especially in Chile and for data centers.

• Expectation of ongoing cost and capital efficiency initiatives, with further SG&A reductions anticipated and annual savings of over $20 million in Canada.

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

• UK & Ireland construction demand expected to stay soft, but growth anticipated in used equipment and power systems.