What Finning International (FTT) Said on Its Q3 Earnings Call

Key Points

• Revenue and EPS grew, but margins narrowed: Third-quarter revenue rose 7% to more than CAD 3 billion and EPS increased 3% to CAD 1.20, while EBIT margin fell to 8% from 8.5%.
• Backlog reached a record CAD 4.1 billion: Orders exceeded deliveries, with about half of the backlog tied to mining and roughly one-third to power and energy. A major Canadian data-center backup-power order added to the backlog, with delivery expected by the end of 2027.
• Demand varied by region as Finning invests for growth: Canadian new equipment sales rose 55%, while South American new equipment sales fell 35% in functional currency. The company plans to focus investment on people and inventory, with potential additional spending on power-generation rental equipment.

Finning International TSE: FTT reported higher third-quarter revenue and earnings as equipment deliveries and product support grew, while its equipment backlog climbed to a record CAD 4.1 billion.

Revenue rose 7% from a year earlier to more than CAD 3 billion, the second consecutive quarter above that threshold. Earnings per share increased 3% to CAD 1.20 from CAD 1.17, reflecting higher earnings and the benefit of share repurchases, Executive Vice President and Chief Financial Officer David Primrose said.

President and CEO Kevin Parkes said the backlog reflects customer optimism across Finning’s markets and represents future opportunities to service equipment. “That is the foundation of product support growth, greater resilience, and long-term value creation,” he said.

Growth Outpaces Earnings as Margins Narrow

Third-quarter earnings before interest and taxes, or EBIT, rose 1% to CAD 243 million, while EBIT margin fell to 8% from 8.5% a year earlier. Gross profit margin declined 20 basis points to 21.5%, reflecting lower product support margins.

New equipment sales increased 11%, led by mining deliveries in Canada and construction deliveries across all regions. Product support revenue rose 7%, marking its 10th consecutive quarter of year-over-year growth, while rental revenue increased 27%. Used equipment sales fell 28%, primarily because of a large Chilean mining order in the prior-year quarter.

Primrose said long-term incentive plan expense was CAD 14 million, or approximately CAD 0.08 per share, compared with CAD 10 million, or CAD 0.06 per share, a year earlier. The increase reflected share price appreciation.

Free cash flow was CAD 70 million, as collections offset inventory investments. Net debt was 1.6 times adjusted EBITDA at the end of September, and adjusted return on invested capital was 18.8%.

Canadian Demand and Data Center Order Bolster Backlog

Finning’s backlog rose 7% from the second quarter and 42% from September 2025 as orders continued to exceed deliveries. About half was tied to mining, roughly one-third to power and energy, and the remainder to construction, Primrose said.

Canadian new equipment sales rose 55%, led by mining, while product support grew 12%, with double-digit growth across all sectors. Canadian EBIT margin declined to 7.8% from 8.7%, partly because of the higher mix of new equipment sales and lower product support margin.

Parkes said roughly two-thirds of the decline in Canadian product support margin was structural, including a greater share of business from larger customers and work the company had not previously pursued. He described tariffs and the time needed to bring new technicians up to speed as more transient factors.

Finning added a major Canadian data center backup-power order to its backlog, including Caterpillar generator sets and a product support contract. Parkes said the systems will be packaged at Finning’s Red Deer facility, with delivery expected by the end of 2027.

The company is also evaluating primary and bridging power opportunities. Parkes said speed to market and execution certainty are important to customers, and that Finning is developing a modular bridging-power offering that could serve multiple projects. He said data center demand provides potential upside but is not required for future earnings growth.

Regional Outlook and Investment Plans

In South America, new equipment sales fell 35% in functional currency because of lower mining and power and energy deliveries, while product support revenue grew 1%. EBIT margin rose to 10% from 9.7%, helped by a higher proportion of product support revenue.

Parkes said some orders shifted from the third quarter into the fourth, but South American order intake was encouraging. He also cited project delays and weather in Chile, along with oil and gas and mining delays in Argentina. Primrose said Argentina currently accounts for roughly 10% of South American revenue.

In the U.K. and Ireland, new equipment sales rose 8% and product support revenue increased 4% in functional currency. Primrose said construction sentiment was improving, although Finning expects demand to remain soft alongside low projected GDP growth. Power generation quoting activity remains strong, he said.

Parkes said Finning’s growth investments are principally in people and inventory. He expects construction rental investment to move toward a steady state but said spending on power generation rental equipment could increase. The company recently acquired JF Hunt Power in the U.K. and is also considering acquisition opportunities in specialty rental and adjacent repair services, he said.

About Finning International (TSE:FTT)

Finning is the world's largest Caterpillar dealer. Headquartered in Surrey, British Columbia, we sell and rent Caterpillar equipment and provide parts, service and performance solutions in Western Canada, Chile, Argentina, Bolivia, the United Kingdom, and Ireland. Since 1933, we have delivered unrivalled customer service and are committed to solving our customers' toughest challenges.

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