Finning reports Q2 2025 results, equipment backlog increases to $3 billion

Core Insights - Finning International Inc. reported solid Q2 2025 results, with a revenue of $2.6 billion, consistent with the previous year, and a 5% increase in product support revenue [7][4][3] - The company achieved a record equipment backlog of $3 billion, reflecting a 6% increase from the previous quarter, driven by large mining equipment orders in Canada [7][4] - The sale of 4Refuel and ComTech was completed ahead of schedule, allowing the company to focus on core dealership operations and improve return on invested capital [4][32] Financial Performance - Q2 2025 revenue was $2,609 million, with product support revenue at $1,469 million, up 5% from Q2 2024 [8][6] - New equipment sales were nearly $1 billion, while used equipment sales decreased by 43% to $83 million [6][8] - Adjusted EBIT for Q2 2025 was $215 million, with an adjusted EBIT margin of 8.3%, down from 8.5% in Q2 2024 [7][8] Operational Highlights - The SG&A margin was 15.5%, reflecting strong cost and capital discipline, despite a $16 million increase in long-term incentive plan compensation expenses due to a 44% share price increase [7][8] - Free cash flow from continuing operations was a use of $164 million, primarily due to higher inventory levels [7][8] - The company is focused on maximizing product support and driving full-cycle resilience to improve return on invested capital [5][4] Regional Performance - In South America, revenue increased by 5%, driven by strong mining deliveries in Chile, while EBIT margin was 10.1%, down 30 basis points [16][23] - Canada operations showed mixed outlooks, with expectations for infrastructure development supporting construction sector activity [28][29] - UK & Ireland operations are expected to remain soft due to low GDP growth, but demand for power systems is strong [31][30] Strategic Developments - The company appointed Rob Atkinson to the Board of Directors, bringing over 30 years of leadership experience in the global mining industry [19][20] - Finning is focused on streamlining operations and achieving annual SG&A savings of over $20 million through organizational changes [35][34] - The company plans to invest strategically in core dealership operations to support future growth opportunities [36][34]