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Finning Reports Record Earnings in Q4 and FY2012


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© Marketwire 2013
2013-02-13 15:03:02 -

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/13/13 -- Finning International Inc. (TSX:FTT) -


Q4 2012 HIGHLIGHTS

--  Revenue of $1.8 billion was roughly on par with the record set in Q4
    2011. Lower revenues in Canada and the UK & Ireland were partly offset
    by the highest-ever revenue from South America.

--  EBIT grew by 40% to a new quarterly record of $150 million and included
    a $9.7 million gain on the sale of property in Canada. Consolidated EBIT
    margin rose for the fifth consecutive quarter to 8.4%, driven primarily
    by EBIT margin improvement in Canada.

--  Basic EPS of $0.61 surpassed the previous quarterly earnings record by
    24%.

--  The Company generated $245 million in free cash flow in Q4 2012. 



Finning International Inc. reported fourth quarter revenues of $1.8 billion, 2% below the record levels in Q4 2011, as lower new equipment sales were partly offset by 11% growth in product support. South America posted record revenues across most lines of business, while revenues in Canada and the UK & Ireland decreased compared to Q4 2011. Quarterly earnings before finance costs and income taxes (EBIT) rose to a new record of $150 million. Quarterly EBIT margin continued to show sequential improvement over the last five quarters and reached 8.4% compared to 5.9% in Q4 2011. Basic earnings per share (EPS) increased by 49% from Q4 of last year to $0.61, an all-time high for the Company. Backlog declined from $1.4 billion at the end of September to $1.2 billion at the end of December primarily due to strong deliveries. While some customers remain cautious making purchasing decisions, order intake in Q4 was 42% higher compared to Q3 2012.


For the full year 2012:

--  Finning achieved record annual revenues of $6.6 billion which grew by
    12% over 2011. New equipment sales increased by 7% to $3.1 billion - the
    highest level in Finning's history. Product support revenues also
    reached a new record, climbing by 18% to $2.8 billion.

--  The Company reported 31% EBIT growth over the prior year to a record-
    setting $496 million, and demonstrated sequential EBIT margin expansion
    throughout 2012. Annual EBIT margin improved to 7.5% from 6.4% in 2011,
    driven primarily by EBIT margin recovery in Canada. EBITDA of
    $709million was also at record levels.

--  Basic EPS increased to $1.96 from $1.51 in 2011 and was 25% higher than
    the previous annual earnings record reported in 2007.

--  Return on equity of 23.5% was the strongest in Finning's history.

--  The Company successfully executed on the acquisition and integration of
    the Bucyrus distribution and support business, which contributed
    incremental earnings of approximately $0.09 per share in 2012. 



"We had an outstanding 2012 marked by numerous strategic achievements and record financial performance. Canada significantly improved operating profitability and expanded product support capabilities in the oil sands with the opening of a new service facility in Fort McKay. South America eclipsed previous records across the board; and, our UK and Ireland team enhanced our power systems capabilities with two strategic acquisitions. In addition, we are capitalizing on opportunities with mining customers following the successful Bucyrus acquisition," said Mike Waites, president and CEO of Finning International Inc.


"We enter 2013 uniquely positioned to deliver improved profitability. With the benefit of a full year with Bucyrus and continued product support growth from the expanding and aging machine population, we expect flat to ten percent revenue growth in 2013 over 2012. Having delivered sequential improvement in our operating performance, we expect continued progress in 2013 to drive higher EBIT margin, solid earnings growth and continued strong return on invested capital," continued Mr. Waites. "I am confident that by leveraging our 80-year heritage of superior customer service with our focus on advancing operational excellence we will drive additional value to our shareholders."


###PRECONTENT2###

CORPORATE AND BUSINESS DEVELOPMENTS


Dividend


The Board of Directors has approved a quarterly dividend of $0.14 per share, payable on March 14, 2013 to shareholders of record on February 28, 2013. This dividend will be considered an eligible dividend for Canadian income tax purposes.


CEO Planned Retirement and Transition Plan for 2013


On January 8, Finning announced that Mike Waites has decided to retire in 2013 and will not seek re-election as a director at Finning's 2013 annual meeting of shareholders. Mr. Waites will continue to serve as president and CEO until a replacement is appointed in order to facilitate an effective transition of responsibilities. As part of the company's succession process, the Board of Directors has retained an executive search firm to assist with the process of selecting a successor to Mr. Waites and is considering qualified internal and external candidates.

###PRECONTENT3###

To download Finning's complete Q4 and annual 2012 results in PDF, please open the following link: media3.marketwire.com/docs/FinningQ412results.pdf : media3.marketwire.com/docs/FinningQ412results.pdf

To download the CEO and CFO certification letters once they have been filed on SEDAR, please open the following link: www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00 .. : www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00 ..

Q4 AND ANNUAL 2012 RESULTS INVESTOR CALL


Management will hold an investor conference call on Wednesday, February 13 at 11:00 am Eastern Time. Dial-in numbers: 1-866-226-1793 (anywhere within Canada and the U.S.) or (416) 340-2218 (for participants dialing from Toronto and overseas).


The call will be webcast live and subsequently archived at www.finning.com. Playback recording will be available at 1-800-408-3053 from 1:00 pm Eastern Time on February 13 until February 20. The pass code to access the playback recording is 4463383 followed by the number sign.


ABOUT FINNING


Finning International Inc. (TSX:FTT) is the world's largest Caterpillar equipment dealer delivering unrivalled service to customers for 80 years. Finning sells, rents and services equipment and engines to help customers maximize productivity. Headquartered in Vancouver, B.C., the Company operates in western Canada, Chile, Argentina, Bolivia, Uruguay, as well as in the United Kingdom and Ireland.

###PRECONTENT4###

Forward-Looking Disclaimer


This report contains statements about the Company's business outlook, objectives, plans, strategic priorities and other statements that are not historical facts. A statement Finning makes is forward-looking when it uses what the Company knows and expects today to make a statement about the future. Forward-looking statements may include words such as aim, anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, project, seek, should, strategy, strive, target, and will. Forward-looking statements in this report include, but are not limited to, statements with respect to: expectations with respect to the economy and associated impact on the Company's financial results; expected revenue and SG&A levels and EBIT growth; anticipated generation of free cash flow (including projected net capital and rental expenditures), and its expected use; anticipated defined benefit plan contributions; the expected target range of the Company's Debt Ratio; the impact of new and revised IFRS that have been issued but are not yet effective; growth prospects for the former Bucyrus business acquired by the Company in Finning's dealership territories (Bucyrus) and the competitive advantages of the business being acquired; expected future financial and operating results generated from Bucyrus; anticipated benefits and synergies of Bucyrus; and the expected impact of Bucyrus on Finning's earnings. All such forward-looking statements are made pursuant to the 'safe harbour' provisions of applicable Canadian securities laws.


Unless otherwise indicated by us, forward-looking statements in this report describe Finning's expectations at February 12, 2013. Except as may be required by Canadian securities laws, Finning does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.


Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from the expectations expressed in or implied by such forward-looking statements and that Finning's business outlook, objectives, plans, strategic priorities and other statements that are not historical facts may not be achieved. As a result, Finning cannot guarantee that any forward-looking statement will materialize. Factors that could cause actual results or events to differ materially from those expressed in or implied by these forward-looking statements include: general economic and market conditions; foreign exchange rates; commodity prices; the level of customer confidence and spending, and the demand for, and prices of, Finning's products and services; Finning's dependence on the continued market acceptance of Caterpillar's products and Caterpillar's timely supply of parts and equipment; Finning's ability to continue to improve productivity and operational efficiencies while continuing to maintain customer service; Finning's ability to manage cost pressures as growth in revenues occur; Finning's ability to reduce costs in response to slowing activity levels; Finning's ability to attract sufficient skilled labour resources to meet growing product support demand; Finning's ability to negotiate and renew collective bargaining agreements with satisfactory terms for Finning's employees and the Company; the intensity of competitive activity; Finning's ability to successfully integrate the distribution and support business formerly operated by Bucyrus; Finning's ability to raise the capital needed to implement its business plan; regulatory initiatives or proceedings, litigation and changes in laws or regulations; stock market volatility; changes in political and economic environments for operations; the integrity, reliability, and availability of information technology and the data processed by that technology; expected operational benefits from the new ERP system. Forward-looking statements are provided in this report for the purpose of giving information about management's current expectations and plans and allowing investors and others to get a better understanding of Finning's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.


Forward-looking statements made in this report are based on a number of assumptions that Finning believed were reasonable on the day the Company made the forward-looking statements. Refer in particular to the Outlook section of the MD&A. Some of the assumptions, risks, and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this report are discussed in the Company's current Annual Information Form (AIF) in Section 4.


Finning cautions readers that the risks described in the AIF are not the only ones that could impact the Company. Additional risks and uncertainties not currently known to the Company or that are currently deemed to be immaterial may also have a material adverse effect on Finning's business, financial condition, or results of operations.


Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Finning therefore cannot describe the expected impact in a meaningful way or in the same way Finning presents known risks affecting its business.



Contacts:

Finning International Inc.

Mauk Breukels

Vice President, Investor Relations and Corporate Affairs

(604) 331-4934
mauk.breukels@finning.com :

www.finning.com

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