Finning International, the Vancouver-based parent company of Finning Cat, the world’s largest Caterpillar dealer, reports a 6 percent decrease in revenue for the first quarter of 2017, but a 37 percent increase in earnings before interest, tax, depreciation and amortization (EBITDA) compared to the same period in 2016.
Net income fared even better, with a 218 percent increase to $47 million (Canadian) and earnings per share of $0.28, compared to $0.09 in 2016.
“Our first quarter results provide a solid start to the year, reflecting strong execution to advance our operational priorities and the positive impact of a reduced cost base across our operations. While total revenues declined from last year, product support increased and profitability improved,” says Scott Thomson, president and CEO of Finning International. “Despite an encouraging increase in equipment backlog, we expect new equipment markets to remain soft and competitive in the near term. Given continued uncertainty in our territories, we maintain our expectation that 2017 revenue will be essentially flat relative to last year.”
Highlights from the Q1 report include:
♦ Earnings before finance costs and income taxes (EBIT) reached $86 million, a 92 percent increase compared to Q1 2016
♦ Free clash flow decrease of $76 million
♦ Canada reported the highest profitability six quarters due to “stronger product support revenues and a reduced cost structure.”
♦ South America reported the highest EBIT since Q4 2015 because of strong new equipment sales in Argentina and product support in Chile.
♦ Lower costs and higher revenues (in functional currency) created improved performance in the UK & Ireland.
♦ Equipment backlog increased 60 percent compared to Q4 2016 to more than $700 million, due to improved order intake in Canada.
“Despite continued top line pressures, each of our regions is achieving meaningful progress in working capital efficiencies, driven in large part by improvement in our equipment supply chain,” Thomson says. “This gives me confidence in our ability to demonstrate a significantly improved return on invested capital when demand recovers.”