Finning International Inc. (TSX: FTT) (“Finning”, “the Company”,
“we”, “our” or “us”) reported first quarter 2022 results today. All
monetary amounts are in Canadian dollars unless otherwise stated.
HIGHLIGHTSAll comparisons are to Q1 2021
results unless indicated otherwise.
- Q1 2022 EPS (1) was $0.59 per share,
representing a 68% increase from Q1 2021 Adjusted EPS (2)(4) of
$0.35 per share, and a 37% increase from Q1 2021 Basic EPS of $0.43
per share. Over the last four quarters, we generated EPS of $2.42
per share.
- Q1 2022 revenue of $2.0 billion and
net revenue (2) of $1.7 billion were up 22% and 18%, respectively,
from Q1 2021, driven by increased market activity in all operations
and strong execution of our product support growth strategy.
- All regions demonstrated improved
operating leverage compared to Q1 2021. Consolidated EBIT (1) was
up 51% and EBIT as a percentage of net revenue (2) was up 180 basis
points compared to Adjusted EBIT (3)(4) results in Q1 2021.
- Adjusted ROIC (1)(2)(4) of 17.0% was
up 700 basis points from Q1 2021 and up 60 basis points from Q4
2021, with increases in all regions driven by higher
profitability.
- Consolidated equipment backlog (2)
was $2.1 billion at March 31, 2022, up from $1.9 billion at
December 31, 2021 driven by upcycle demand conditions.
- Quarterly dividend was raised by 5%
to $0.236 per share, which marks 21 years of consecutive dividend
growth.
“We are pleased with the strong start to 2022 as our global
teams remain focused on capturing market opportunities in a
disciplined manner and executing on our plan to grow product
support, reduce costs, and reinvest free cash flow to compound our
earnings. Our Q1 2022 product support revenue was up significantly
across all our regions and market sectors compared to Q1 2021. We
continued to build a healthy inventory position to support backlog
delivery, grow our rebuild business, and provide used and rental
options to meet our customers’ needs as equipment availability
remained constrained. We are actively managing inflationary
pressures through our continued focus on productivity gains,
resulting in improved operating leverage in all regions compared to
Q1 2021.
The market outlook remains positive in all our regions,
supported by strong commodity prices, public and private sector
investment, and economic growth forecasts. With a very strong
equipment backlog, increasing arrival of inventory, and growing
demand for product support, we are ramping up for increased
activity for the remainder of the year and targeting above
mid-teens EPS growth in 2022,” said Scott Thomson, president and
CEO of Finning International.
Q1 2022 FINANCIAL SUMMARY
|
Quarterly Overview |
|
|
|
|
% change |
|
|
($ millions, except per share amounts) |
Q1 2022 |
|
Q1 2021 |
|
fav (unfav) |
|
|
Revenue |
1,953 |
|
|
1,596 |
|
|
22 |
% |
|
|
Net revenue |
1,736 |
|
|
1,469 |
|
|
18 |
% |
|
|
EBIT |
140 |
|
|
108 |
|
|
29 |
% |
|
|
EBIT as a percentage of net revenue |
8.1 |
% |
|
7.4 |
% |
|
|
|
|
EBITDA (1)(2) |
221 |
|
|
185 |
|
|
19 |
% |
|
|
EBITDA as a percentage of net revenue (2) |
12.7 |
% |
|
12.6 |
% |
|
|
|
|
Net income attributable to shareholders of Finning |
92 |
|
|
70 |
|
|
33 |
% |
|
|
EPS |
0.59 |
|
|
0.43 |
|
|
37 |
% |
|
|
Free cash flow (3) |
(303 |
) |
|
(20 |
) |
|
n/m (1) |
|
|
Q1 2022 EBIT and EBITDA by Operation |
|
|
South |
|
UK & |
|
|
|
Finning |
|
|
|
|
($ millions, except per share amounts) |
Canada |
|
America |
|
Ireland |
|
Other |
|
Total |
|
EPS |
|
|
EBIT / EPS |
80 |
|
|
65 |
|
|
14 |
|
|
(19 |
) |
|
140 |
|
|
0.59 |
|
|
EBIT as a percentage of net revenue |
9.1 |
% |
|
11.4 |
% |
|
5.0 |
% |
|
n/m |
|
8.1 |
% |
|
|
|
|
EBITDA |
127 |
|
|
88 |
|
|
24 |
|
|
(18 |
) |
|
221 |
|
|
|
|
|
EBITDA as a percentage of net revenue |
14.3 |
% |
|
15.4 |
% |
|
8.7 |
% |
|
n/m |
|
12.7 |
% |
|
|
|
|
Q1 2021 EBIT and EBITDA by Operation |
|
|
South |
|
UK & |
|
|
|
Finning |
|
|
|
|
($ millions, except per share amounts) |
Canada |
|
America |
|
Ireland |
|
Other |
|
Total |
|
EPS |
|
|
EBIT / EPS |
69 |
|
|
41 |
|
|
7 |
|
|
(9 |
) |
|
108 |
|
|
0.43 |
|
|
|
CEWS
support |
(10 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(10 |
) |
|
(0.05 |
) |
|
|
Return on Energyst |
— |
|
|
— |
|
|
— |
|
|
(5 |
) |
|
(5 |
) |
|
(0.03 |
) |
|
|
Adjusted EBIT / Adjusted EPS |
59 |
|
|
41 |
|
|
7 |
|
|
(14 |
) |
|
93 |
|
|
0.35 |
|
|
|
Adjusted
EBIT as a percentage of net |
|
|
|
|
|
|
|
|
|
|
|
|
|
revenue (2)(4) |
7.7 |
% |
|
8.6 |
% |
|
3.2 |
% |
|
n/m |
|
6.3 |
% |
|
|
|
|
Adjusted EBITDA (3)(4) |
105 |
|
|
61 |
|
|
17 |
|
|
(13 |
) |
|
170 |
|
|
|
|
|
Adjusted
EBITDA as a percentage of net |
|
|
|
|
|
|
|
|
|
|
|
|
|
revenue (2)(4) |
13.6 |
% |
|
12.8 |
% |
|
7.9 |
% |
|
n/m |
|
11.6 |
% |
|
|
|
Q1 INVESTED CAPITAL AND ROIC SUMMARYAll
comparisons are to Q1 2021 results unless indicated otherwise.
Invested capital (2) increased by about $450 million from Q4
2021, driven mostly by higher inventory and the acquisition of
Hydraquip (£70 million total consideration).
Inventory increased by $414 million from Q4 2021, reflecting
higher new equipment inventory to meet strong customer demand and
deliver a growing backlog and higher parts inventory in line with
strong product support volumes. As a result, Q1 2022 free cash flow
was a use of cash of $303 million compared to a use of cash of $20
million in Q1 2021.
Adjusted ROIC of 17.0% was up 60 basis points from Q4 2021, with
higher Adjusted ROIC in all regions, driven by improved
profitability.
|
Key Performance Measures |
|
|
|
|
|
($ millions, unless otherwise stated) |
Q1 2022 |
|
Q4 2021 |
|
|
Invested capital |
|
|
|
|
|
Consolidated |
3,777 |
|
|
3,326 |
|
|
|
Canada |
2,122 |
|
|
1,876 |
|
|
|
South America |
1,139 |
|
|
1,026 |
|
|
|
UK & Ireland |
448 |
|
|
381 |
|
|
|
South America (US dollars) |
912 |
|
|
809 |
|
|
|
UK & Ireland (UK pound sterling) |
273 |
|
|
222 |
|
|
|
Adjusted ROIC (%) |
|
|
|
|
|
Consolidated |
17.0 |
% |
|
16.4 |
% |
|
|
Canada |
17.4 |
% |
|
16.9 |
% |
|
|
South America |
21.7 |
% |
|
20.3 |
% |
|
|
UK & Ireland |
15.7 |
% |
|
14.8 |
% |
|
|
Invested capital turnover (2) (times) |
2.03 |
|
|
2.04 |
|
|
|
Inventory |
2,101 |
|
|
1,687 |
|
|
|
Inventory turns (dealership) (2) (times) |
2.66 |
|
|
3.09 |
|
|
|
Working capital to net revenue (2) ratio |
23.8 |
% |
|
22.9 |
% |
|
|
Net debt to Adjusted EBITDA ratio (2)(4) (times) |
1.6 |
|
|
1.1 |
|
|
All comparisons are to Q1 2021 results unless indicated
otherwise. All numbers, except ROIC, are in functional currency:
Canada – Canadian dollar; South America – USD; UK & Ireland –
UK pound sterling (GBP). These variances and ratios for South
America and UK & Ireland exclude the foreign currency
translation impact from the CAD relative to the USD and GBP,
respectively, and are therefore, considered to be specified
financial measures. We believe the variances and ratios in
functional currency provide meaningful information about
operational performance of the reporting segment.
Canada Operations
- Net revenue increased by 14% from
Q1 2021, driven by product support, as well as higher new equipment
and rental revenues. Used equipment sales were below Q1 2021 mostly
due to a large fleet of used mining equipment delivered in Q1 2021
and tight used equipment availability in Q1 2022.
- Product support revenue was up 18%
from Q1 2021, reflecting increased spending by our customers in the
mining sector and strong execution of our product support growth
strategy in construction.
- New equipment sales were up 11%
from Q1 2021, driven largely by mining deliveries.
- Rental revenue was up 54% from Q1
2021, reflecting strong customer demand in a constrained supply
environment in Q1 2022, compared to softer market conditions
including certain pipeline and construction work stoppages in Q1
2021.
- EBIT as a percentage of net revenue
was 9.1%, up 140 basis points from Adjusted EBIT as a percentage of
net revenue in Q1 2021, mostly due to higher equipment and rental
margins compared to Q1 2021.
- We have continued to support our customers in reaching their
emissions reduction targets by providing alternative fuel engines.
Since the beginning of 2021, we have sold 72 Caterpillar Tier 4 DGB
(Dynamic Gas Blending) engines in Western Canada, including the
orders we have received so far this year. These engines allow oil
& gas customers to substitute up to 85% of diesel with natural
gas and are capable of operating with up to 20% hydrogen blend,
resulting in significant cost savings and emissions reduction.
South America Operations
- Net revenue increased by 18% from
Q1 2021, with higher activity across all sectors, especially in
mining. New equipment sales were up 32% and product support revenue
increased by 14%, with construction product support up 31% from Q1
2021.
- SG&A as a percentage of net
revenue decreased 180 basis points from Q1 2021 due to a
streamlined cost structure and improved productivity.
- EBIT as a percentage of net revenue
was 11.4%, up 280 basis points year over year, driven by strong
operating leverage from an improved cost structure, combined with
higher margins in all lines of business compared to Q1 2021.
- Q1 2022 ROIC (2) was 21.7%, driven by a significant improvement
in profitability.
UK & Ireland Operations
- Net revenue increased by 35% from
Q1 2021, driven by new equipment deliveries to construction
customers, including HS2, and stronger product support activity in
all sectors. New equipment sales were up 63% and product support
revenue was up 10% from Q1 2021.
- Despite a higher proportion of new
equipment sales in the revenue mix compared to Q1 2021, EBIT as a
percentage of net revenue was 5.0%, up 180 basis points from Q1
2021, reflecting the benefit of various productivity initiatives as
well as operating leverage on strong revenue growth.
- Q1 2022 ROIC was 15.7%, driven by revenue growth and strong
profitability. An increase in invested capital from Q4 2021
reflects the acquisition of Hydraquip.
MARKET UPDATE AND BUSINESS OUTLOOKThe
discussion of our expectations relating to the market and business
outlook in this section is forward-looking information that is
based upon the assumptions and subject to the material risks
discussed under the heading “Forward-Looking Information Caution”
at the end of this news release. Actual outcomes and results may
vary significantly.
Canada Operations
Strong commodity prices and a combination of public and private
sector investment are expected to continue to support a healthy
demand environment across all sectors in Western Canada.
The federal and provincial governments’ infrastructure programs
and private sector investments in natural gas, carbon capture,
utilization and storage, and various power projects are expected to
drive demand for construction equipment and product support, heavy
rentals, and prime and standby electric power generation. We remain
focused on growing our product support market share in construction
by driving rebuilds and customer value agreements (CVAs), as well
as leveraging our digital platform CUBIQ™.
Healthy commodity markets, including base and precious metals,
oil, natural gas, metallurgical coal, lumber, uranium, and potash
provide a positive backdrop for mining activity in Western Canada
and support increased capital spending, including in the oil sands.
We expect the large and aging mining equipment population in our
territory to continue driving demand for product support, including
rebuilds, and opportunities for fleet renewals.
South America Operations
We expect a strong copper price, large and mature equipment
population, and declining ore grades to continue driving healthy
mining activity in Chile. We continue to closely monitor the
constitutional reform process and expect a moderate increase in
mining royalties. While the timing of investment decisions related
to greenfield and new expansion projects remains uncertain, we are
constructive about long-term copper mining growth in Chile. We are
in a great position to capture opportunities for new mining
equipment and autonomous solutions for brownfield expansions and
greenfield projects.
We expect robust activity in the Chilean construction sector to
be driven by growing demand for mining infrastructure and the
government’s infrastructure investment program.
In Argentina, we are benefitting from improved activity in
construction, oil and gas, and mining, however, the overall
business environment continues to be challenging. We remain focused
on managing fiscal, regulatory, and currency risks, including high
inflation and ARS devaluation.
UK & Ireland Operations
Ongoing HS2 construction activity, coupled with government
investments in other infrastructure projects, are expected to drive
strong demand for construction equipment and product support in the
UK. We are leveraging our digital solutions on the CUBIQTM platform
to continue capturing a large share of opportunities for the
remainder of HS2 Phase 1 and other construction projects.
We expect demand for our power systems business in the UK &
Ireland to remain strong, including in the data centre market,
which is projected to continue to grow over the next few years (5).
We have a solid backlog of power systems projects for deliveries in
2022 and are well positioned to capture further opportunities in
the growing data centre market.
Executing On Our Strategic Plan
Our market outlook remains positive. We expect upcycle demand
conditions in 2022 to be supported by strong commodity prices,
public and private sector spending, and economic growth forecasts
in all our regions.
Constraints in the global supply chain are expected to continue
impacting availability of new equipment and parts for most of the
year. To meet our customers’ needs in this environment, we continue
to offer rebuilds and rental options, and proactively source used
equipment. Our data-driven inventory forecasting and improved
supply chain efficiencies position us well to successfully navigate
industry-wide supply constraints.
Underpinned by backlog deliveries, growth in product support,
and strong market activity, we expect higher revenue and higher new
equipment mix for the remainder of the year compared to Q1 2022. We
are closely monitoring inflationary pressures, including further
price increases from our key suppliers in the second quarter, and
are working with customers to implement those changes. We remain
committed to delivering fixed cost reduction initiatives,
productivity gains, and strong operating leverage going forward. We
expect above mid-teens EPS growth in 2022 compared to 2021.
CORPORATE AND BUSINESS DEVELOPMENTS
Dividend
The Board of Directors has approved a 5% increase in the
quarterly dividend to $0.236 per share from $0.225 per share,
payable on June 9, 2022 to shareholders of record on May 26, 2022.
This dividend will be considered an eligible dividend for Canadian
income tax purposes.
Renewal of Share Repurchase Program
We have received approval from the Toronto Stock Exchange
("TSX") to renew our normal course issuer bid (“NCIB”) to purchase
for cancellation up to 8,000,000 of our common shares, representing
5.1% of the public float of 155,646,910 common shares as at May 5,
2022. As of May 5, 2022, Finning had a total of 156,217,581 common
shares issued and outstanding.
The NCIB, which will begin on May 13, 2022 and end no later than
May 12, 2023, will be conducted through the facilities of the TSX
or other Canadian marketplaces or alternative trading systems, if
eligible, and will conform to their rules and regulations.
Our Board of Directors believe that, from time to time, the
purchase by Finning of its common shares represents a desirable use
of its available cash to increase shareholder value.
The average daily trading volume of our common shares over the
six-month period ending April 30, 2022, as calculated in accordance
with TSX rules, was 373,403 common shares. Consequently, under TSX
rules, we will be allowed to purchase daily, through the facilities
of the TSX, a maximum of 93,350 common shares representing 25% of
such average daily trading volume, subject to certain exceptions
for block purchases. All shares purchased pursuant to the normal
course issuer bid will be cancelled.
Purchases under the normal course issuer bid will be made by
means of open market transactions or such other means as the TSX
may permit. The price to be paid by Finning for any common share
will be the market price at the time of acquisition, plus brokerage
fees, or such other price as the TSX may permit.
In connection with the NCIB, we will enter into an automatic
share purchase plan ("ASPP") with a designated broker. The ASPP
will allow for the purchase of shares under the NCIB at times when
we would ordinarily not be permitted to purchase shares due to
regulatory restrictions and customary self-imposed blackout
restrictions.
The ASPP will provide a set of standard instructions to the
designated broker to make purchases under the NCIB in accordance
with the limits and other terms set out in the ASPP. The designated
broker will determine the timing of these purchases in its sole
discretion based on purchasing parameters set by Finning and
subject to the rules of the TSX, applicable securities laws, and
the terms of the ASPP. The ASPP has been pre-cleared by the TSX and
will be implemented as of May 13, 2022. All purchases made under
the ASPP will be included in computing the number of shares
purchased and cancelled by Finning under the NCIB. Outside of
pre-determined blackout periods, shares may be purchased under the
NCIB based on management's discretion, in compliance with TSX
rules, and applicable securities laws.
Under the current NCIB, which expires on May 12, 2022, we
obtained approval to purchase up to 8,000,000 common shares. As of
May 5, 2022, we purchased and cancelled 6,443,088 common shares
under the current NCIB on the open market through the facilities of
the TSX and other Canadian marketplaces at a weighted average price
paid of $33.99 per common share (excluding commissions).
SELECTED CONSOLIDATED FINANCIAL INFORMATION
|
|
Three months ended March 31 |
|
|
|
|
|
|
|
% change |
|
|
($ millions, except per share amounts) |
2022 |
|
|
2021 |
|
|
fav (unfav) |
|
|
New equipment |
527 |
|
|
403 |
|
|
31 |
% |
|
|
Used
equipment |
79 |
|
|
103 |
|
|
(23 |
)% |
|
|
Equipment rental |
65 |
|
|
45 |
|
|
45 |
% |
|
|
Product
support |
1,027 |
|
|
887 |
|
|
16 |
% |
|
|
Net fuel and other |
38 |
|
|
31 |
|
|
25 |
% |
|
|
Net revenue |
1,736 |
|
|
1,469 |
|
|
18 |
% |
|
|
Gross profit |
490 |
|
|
407 |
|
|
20 |
% |
|
|
Gross
profit as a percentage of net revenue (2) |
28.2 |
% |
|
27.7 |
% |
|
|
|
|
SG&A
(1) |
(351 |
) |
|
(314 |
) |
|
(12 |
)% |
|
|
SG&A
as a percentage of net revenue (2) |
(20.2 |
)% |
|
(21.4 |
)% |
|
|
|
|
Equity
earnings of joint ventures |
1 |
|
|
- |
|
|
|
|
|
Other income |
— |
|
|
15 |
|
|
|
|
|
EBIT |
140 |
|
|
108 |
|
|
29 |
% |
|
|
EBIT as
a percentage of net revenue |
8.1 |
% |
|
7.4 |
% |
|
|
|
|
Adjusted
EBIT |
140 |
|
|
93 |
|
|
51 |
% |
|
|
Adjusted EBIT as a percentage of net revenue |
8.1 |
% |
|
6.3 |
% |
|
|
|
|
Net income attributable to shareholders of Finning |
92 |
|
|
70 |
|
|
33 |
% |
|
|
Basic
EPS |
0.59 |
|
|
0.43 |
|
|
37 |
% |
|
|
Adjusted EPS |
0.59 |
|
|
0.35 |
|
|
68 |
% |
|
|
EBITDA |
221 |
|
|
185 |
|
|
19 |
% |
|
|
EBITDA
as a percentage of net revenue |
12.7 |
% |
|
12.6 |
% |
|
|
|
|
Adjusted
EBITDA |
221 |
|
|
170 |
|
|
30 |
% |
|
|
Adjusted
EBITDA as a percentage of net revenue |
12.7 |
% |
|
11.6 |
% |
|
|
|
|
Free cash flow |
(303 |
) |
|
(20 |
) |
|
n/m |
|
To access Finning's complete Q1 2022 results, please visit our
website at
https://www.finning.com/en_CA/company/investors.htmlQ1 2022
INVESTOR CALLThe Company will hold an investor call on May
10, 2022 at 10:00 am Eastern Time. Dial-in numbers: 1-800-319-4610
(Canada and US), 1-416-915-3239 (Toronto area), 1-604-638-5340
(international). The investor call will be webcast live and
archived for three months. The webcast and accompanying
presentation can be accessed at
https://www.finning.com/en_CA/company/investors.html
ABOUT FINNINGFinning International Inc. (TSX:
FTT) is the world’s largest Caterpillar dealer delivering
unrivalled service to customers for nearly 90 years. Headquartered
in Surrey, British Columbia, we provide Caterpillar equipment,
parts, services, and performance solutions in Western Canada,
Chile, Argentina, Bolivia, the United Kingdom, and Ireland.
CONTACT INFORMATIONAmanda HobsonSenior Vice
President, Investor Relations and Treasury Phone:
604-331-4865Email: FinningIR@finning.com
https://www.finning.com
FOOTNOTES
(1) |
Earnings Before Finance Costs and
Income Taxes (EBIT); Basic Earnings per Share (EPS); Earnings
Before Finance Costs, Income Taxes, Depreciation and Amortization
(EBITDA); Selling, General & Administrative Expenses
(SG&A); Return on Invested Capital (ROIC); not meaningful
(n/m). |
|
|
(2) |
See “Description of Specified
Financial Measures and Reconciliations” later in this Earnings
Release. |
|
|
(3) |
These are non-GAAP financial
measures. See “Description of Specified Financial Measures and
Reconciliations” later in this Earnings Release. |
|
|
(4) |
Certain financial measures were
impacted by significant items management does not consider
indicative of operational and financial trends either by nature or
amount; these significant items are described starting on page 8 of
this Earnings Release. The financial measures that have been
adjusted to take into account these items are referred to as
“Adjusted measures”. |
|
|
(5) |
UK Data Center Market –
Investment Analysis and Growth Opportunities Publication
(2020-2025); Ireland Data Center Market – Growth, Trends and
Forecasts Publication (2020-2025) |
|
|
Description of Specified Financial Measures and
Reconciliations
Specified Financial Measures
We believe that certain specified financial measures, including
non-GAAP financial measures, provide users of our Earnings Release
with important information regarding the operational performance
and related trends of our business. The specified financial
measures we use do not have any standardized meaning prescribed by
GAAP and therefore may not be comparable to similar measures
presented by other issuers. Accordingly, specified financial
measures should not be considered as a substitute or alternative
for financial measures determined in accordance with GAAP (GAAP
financial measures). By considering these specified financial
measures in combination with the comparable GAAP financial measures
(where available) we believe that users are provided a better
overall understanding of our business and financial performance
during the relevant period than if they simply considered the GAAP
financial measures alone.
We use KPIs to consistently measure performance against our
priorities across the organization. Some of our KPIs are specified
financial measures.
There may be significant items that we do not consider
indicative of our operational and financial trends, either by
nature or amount. We exclude these items when evaluating our
operating financial performance. These items may not be
non-recurring, but we believe that excluding these significant
items from GAAP financial measures provides a better understanding
of our financial performance when considered in conjunction with
the GAAP financial measures. Financial measures that have been
adjusted to take into account these significant items are referred
to as “Adjusted measures”. Adjusted measures are specified
financial measures and are intended to provide additional
information to readers of the Earnings Release.
Descriptions and components of the specified financial measures
we use in this Earnings Release are set out below. Where
applicable, quantitative reconciliations from certain specified
financial measures to their most directly comparable GAAP financial
measures (specified, defined, or determined under GAAP and used in
our consolidated financial statements) are also set out below.
Adjusted basic EPS
Adjusted basic EPS excludes the after-tax per share impact of
significant items that we do not consider to be indicative of
operational and financial trends either by nature or amount to
provide a better overall understanding of our underlying business
performance. The tax impact of each significant item is calculated
by applying the relevant applicable tax rate for the jurisdiction
in which the significant item occurred. The after-tax per share
impact of significant items is calculated by dividing the after-tax
amount of significant items by the weighted average number of
common shares outstanding during the period.
A reconciliation between basic EPS (the most directly comparable
GAAP financial measure) and Adjusted basic EPS can be found on page
9 of this Earnings Release.
EBITDA, Adjusted EBITDA, and Adjusted EBIT
EBITDA is defined as earnings before finance costs, income
taxes, depreciation, and amortization. We use EBITDA to assess and
evaluate the financial performance of our reportable segments. We
believe that EBITDA improves comparability between periods by
eliminating the impact of finance costs, income taxes,
depreciation, and amortization.
Adjusted EBIT and Adjusted EBITDA exclude items that we do not
consider to be indicative of operational and financial trends,
either by nature or amount, to provide a better overall
understanding of our underlying business performance.
EBITDA is calculated by adding depreciation and amortization to
EBIT. Adjusted EBITDA is calculated by adding depreciation and
amortization to Adjusted EBIT.
The most directly comparable GAAP financial measure to EBITDA,
Adjusted EBITDA, and Adjusted EBIT is EBIT.
A reconciliation from EBIT to EBITDA, Adjusted EBIT, and
Adjusted EBITDA for our consolidated operations is as follows:
|
3 months
ended |
2022 |
|
2021 |
|
|
2020 |
|
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
EBIT |
140 |
|
157 |
150 |
137 |
108 |
|
|
108 |
|
138 |
|
52 |
|
|
Depreciation and amortization |
81 |
|
84 |
80 |
78 |
77 |
|
|
77 |
|
77 |
|
78 |
|
|
EBITDA |
221 |
|
241 |
230 |
215 |
185 |
|
|
185 |
|
215 |
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT |
140 |
|
157 |
150 |
137 |
108 |
|
|
108 |
|
138 |
|
52 |
|
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
|
— |
— |
— |
(10 |
) |
|
(14 |
) |
(37 |
) |
(64 |
) |
|
|
Return on our
investment in Energyst |
— |
|
— |
— |
— |
(5 |
) |
|
— |
|
— |
|
— |
|
|
|
Severance
costs |
— |
|
— |
— |
— |
— |
|
|
— |
|
— |
|
42 |
|
|
|
Facility closures,
restructuring costs, |
|
|
|
|
|
|
|
|
|
|
|
|
|
and impairment losses |
— |
|
— |
— |
— |
— |
|
|
— |
|
— |
|
9 |
|
|
Adjusted
EBIT |
140 |
|
157 |
150 |
137 |
93 |
|
|
94 |
|
101 |
|
39 |
|
|
Depreciation and amortization |
81 |
|
84 |
80 |
78 |
77 |
|
|
77 |
|
77 |
|
78 |
|
|
Adjusted EBITDA |
221 |
|
241 |
230 |
215 |
170 |
|
|
171 |
|
178 |
|
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The impact on provision for income taxes of significant items
was as follows:
|
3 months
ended |
2022 |
|
2021 |
|
($
millions) |
Mar 31 |
|
Mar 31 |
|
Significant
item: |
|
|
|
|
|
CEWS support |
— |
|
2 |
|
Provision for income taxes on significant item |
— |
|
2 |
|
|
|
|
|
|
|
A reconciliation from basic EPS to Adjusted basic EPS for our
consolidated operations is as follows:
|
3 months
ended |
2022 |
|
2021 |
|
|
($) |
Mar 31 |
|
Mar 31 |
|
Basic EPS |
0.59 |
|
0.43 |
|
|
Significant
items: |
|
|
|
|
|
CEWS support |
— |
|
(0.05 |
) |
|
|
Return on our
investment in Energyst |
— |
|
(0.03 |
) |
|
Adjusted basic EPS (1) |
0.59 |
|
0.35 |
|
(1) |
The per share impact for each quarter has been calculated using
the weighted average number of common shares outstanding during the
respective quarters; therefore, quarterly amounts may not add to
the annual or year-to-date total. |
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our Canadian operations is as follows:
|
3 months
ended |
2022 |
|
2021 |
|
|
2020 |
|
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
EBIT |
80 |
|
92 |
84 |
82 |
69 |
|
|
72 |
|
93 |
|
63 |
|
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
|
— |
— |
— |
(10 |
) |
|
(13 |
) |
(35 |
) |
(60 |
) |
|
|
Severance
costs |
— |
|
— |
— |
— |
— |
|
|
— |
|
— |
|
20 |
|
|
|
Facility closures,
restructuring costs, |
|
|
|
|
|
|
|
|
|
|
|
|
|
and impairment losses |
— |
|
— |
— |
— |
— |
|
|
— |
|
— |
|
5 |
|
|
Adjusted
EBIT |
80 |
|
92 |
84 |
82 |
59 |
|
|
59 |
|
58 |
|
28 |
|
|
Depreciation and amortization |
47 |
|
50 |
48 |
47 |
46 |
|
|
47 |
|
48 |
|
47 |
|
|
Adjusted EBITDA |
127 |
|
142 |
132 |
129 |
105 |
|
|
106 |
|
106 |
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our South American operations is as follows:
|
3 months
ended |
2022 |
|
2021 |
|
2020 |
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
EBIT |
65 |
|
59 |
58 |
51 |
41 |
|
41 |
40 |
2 |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs |
— |
|
— |
— |
— |
— |
|
— |
— |
17 |
|
|
Facility closures,
restructuring costs, |
|
|
|
|
|
|
|
|
|
|
|
|
|
and impairment losses |
— |
|
— |
— |
— |
— |
|
— |
— |
4 |
|
Adjusted EBIT |
65 |
|
59 |
58 |
51 |
41 |
|
41 |
40 |
23 |
|
Depreciation and amortization |
23 |
|
22 |
22 |
20 |
20 |
|
20 |
19 |
22 |
|
Adjusted EBITDA |
88 |
|
81 |
80 |
71 |
61 |
|
61 |
59 |
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our UK & Ireland operations is as follows:
|
3 months
ended |
2022 |
|
2021 |
|
2020 |
|
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
EBIT |
14 |
|
12 |
17 |
17 |
7 |
|
11 |
9 |
(5 |
) |
|
Significant
item: |
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs |
— |
|
— |
— |
— |
— |
|
— |
— |
4 |
|
|
Adjusted
EBIT |
14 |
|
12 |
17 |
17 |
7 |
|
11 |
9 |
(1 |
) |
|
Depreciation and amortization |
10 |
|
11 |
10 |
10 |
10 |
|
9 |
9 |
9 |
|
|
Adjusted EBITDA |
24 |
|
23 |
27 |
27 |
17 |
|
20 |
18 |
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our Other operations is as follows:
|
3 months
ended |
2022 |
|
|
2021 |
|
|
2020 |
|
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
EBIT |
(19 |
) |
|
(6 |
) |
(9 |
) |
(13 |
) |
(9 |
) |
|
(16 |
) |
(4 |
) |
(8 |
) |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
|
|
— |
|
— |
|
— |
|
— |
|
|
(1 |
) |
(2 |
) |
(4 |
) |
|
|
Return on our
investment in Energyst |
— |
|
|
— |
|
— |
|
— |
|
(5 |
) |
|
— |
|
— |
|
— |
|
|
|
Severance
costs |
— |
|
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
1 |
|
|
Adjusted
EBIT |
(19 |
) |
|
(6 |
) |
(9 |
) |
(13 |
) |
(14 |
) |
|
(17 |
) |
(6 |
) |
(11 |
) |
|
Depreciation and amortization |
1 |
|
|
1 |
|
— |
|
1 |
|
1 |
|
|
1 |
|
1 |
|
— |
|
|
Adjusted EBITDA |
(18 |
) |
|
(5 |
) |
(9 |
) |
(12 |
) |
(13 |
) |
|
(16 |
) |
(5 |
) |
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA to Free Cash Flow Conversion
EBITDA to free cash flow conversion is calculated as free cash
flow divided by EBITDA. We use EBITDA to free cash flow conversion
to assess our efficiency in turning EBITDA into cash.
Equipment Backlog
Equipment backlog is defined as the retail value of new
equipment units ordered by customers for future deliveries. We use
equipment backlog as a measure of projecting future new equipment
deliveries. There is no directly comparable GAAP financial measure
for equipment backlog.
Free Cash Flow
Free cash flow is defined as cash flow provided by or used in
operating activities less net additions to property, plant, and
equipment and intangible assets, as disclosed in our financial
statements. We use free cash flow to assess cash operating
performance, including working capital efficiency. Consistent
positive free cash flow generation enables us to re-invest capital
to grow our business and return capital to shareholders. A
reconciliation of free cash flow is as follows:
|
3 months
ended |
2022 |
|
2021 |
|
($
millions) |
Mar 31 |
|
Mar 31 |
|
Cash flow (used in) provided by operating activities |
(273 |
) |
|
12 |
|
|
Additions to
property, plant, and equipment and intangible assets |
(30 |
) |
|
(33 |
) |
|
Proceeds on disposal of property, plant, and equipment |
— |
|
|
1 |
|
|
Free cash flow |
(303 |
) |
|
(20 |
) |
|
|
|
|
|
|
Inventory Turns (Dealership)
Inventory turns (dealership) is the number of times our
dealership inventory is sold and replaced over a period. We use
inventory turns (dealership) to measure asset utilization.
Inventory turns (dealership) is calculated as annualized cost of
sales (excluding cost of sales related to the mobile refuelling
operations) for the last six months divided by average inventory
(excluding fuel inventory), based on an average of the last two
quarters. Cost of sales related to the dealership and inventory
related to the dealership are calculated as follows:
|
3 months
ended |
2022 |
|
2021 |
|
2021 |
|
2020 |
|
($
millions) |
Mar 31 |
|
Dec 31 |
|
Mar 31 |
|
Dec 31 |
|
Cost of sales |
1,463 |
|
|
1,465 |
|
|
1,189 |
|
|
1,248 |
|
|
Cost of
sales related to mobile refuelling operations |
(231 |
) |
|
(190 |
) |
|
(140 |
) |
|
(129 |
) |
|
Cost of sales related to the dealership |
1,232 |
|
|
1,275 |
|
|
1,049 |
|
|
1,119 |
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
2021 |
|
2020 |
|
($
millions) |
Mar 31 |
|
Dec 31 |
|
Mar 31 |
|
Dec 31 |
|
Inventory |
2,101 |
|
|
1,687 |
|
|
1,593 |
|
|
1,477 |
|
|
Fuel
inventory |
(11 |
) |
|
(9 |
) |
|
(3 |
) |
|
(3 |
) |
|
Inventory related to the dealership |
2,090 |
|
|
1,678 |
|
|
1,590 |
|
|
1,474 |
|
|
|
|
|
|
|
|
|
|
Invested Capital
Invested capital is calculated as net debt plus total equity.
Invested capital is also calculated as total assets less total
liabilities, excluding net debt. Net debt is calculated as
short-term and long-term debt, net of cash and cash equivalents. We
use invested capital as a measure of the total cash investment made
in Finning and each reportable segment. Invested capital is used in
a number of different measurements (ROIC, Adjusted ROIC, invested
capital turnover) to assess financial performance against other
companies and between reportable segments. Invested capital is
calculated as follows:
|
|
2022 |
|
2021 |
|
2020 |
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
Cash and cash equivalents |
(295 |
) |
|
(502 |
) |
(518 |
) |
(378 |
) |
(469 |
) |
|
(539 |
) |
(453 |
) |
(338 |
) |
|
Short-term debt |
804 |
|
|
374 |
|
419 |
|
114 |
|
103 |
|
|
92 |
|
217 |
|
158 |
|
|
Current portion of long-term
debt |
63 |
|
|
190 |
|
191 |
|
386 |
|
326 |
|
|
201 |
|
200 |
|
200 |
|
|
Non-current portion of long-term debt |
909 |
|
|
921 |
|
923 |
|
903 |
|
973 |
|
|
1,107 |
|
1,136 |
|
1,348 |
|
|
Net debt |
1,481 |
|
|
983 |
|
1,015 |
|
1,025 |
|
933 |
|
|
861 |
|
1,100 |
|
1,368 |
|
|
Total
equity |
2,296 |
|
|
2,343 |
|
2,320 |
|
2,252 |
|
2,244 |
|
|
2,206 |
|
2,184 |
|
2,127 |
|
|
Invested capital |
3,777 |
|
|
3,326 |
|
3,335 |
|
3,277 |
|
3,177 |
|
|
3,067 |
|
3,284 |
|
3,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Invested Capital Turnover
We use invested capital turnover to measure capital efficiency.
Invested capital turnover is calculated as net revenue for the last
twelve months divided by average invested capital of the last four
quarters.
Net Debt to Adjusted EBITDA Ratio
This ratio is calculated as net debt divided by Adjusted EBITDA
for the last twelve months. We use this ratio to assess operating
leverage and ability to repay debt. This ratio approximates the
length of time, in years, that it would take us to repay debt, with
net debt and Adjusted EBITDA held constant.
Net Revenue, Gross Profit as a % of Net Revenue,
SG&A as a % of Net Revenue, EBITDA as a % of Net Revenue, and
EBIT as a % of Net Revenue
Net revenue is defined as total revenue less the cost of fuel
related to the mobile refuelling operations in our Canadian
operations. As these fuel costs are pass-through in nature for this
business, we view net revenue as more representative than revenue
in assessing the performance of the business because the rack price
for the cost of fuel is fully passed through to the customer and is
not in our control. For our South American and UK & Ireland
operations, net revenue is the same as total revenue.
We use these specified financial measures to assess and evaluate
the financial performance or profitability of our reportable
segments. We may also calculate these financial measures using
Adjusted EBITDA and Adjusted EBIT to exclude significant items we
do not consider to be indicative of operational and financial
trends either by nature or amount to provide a better overall
understanding of our underlying business performance.
The most directly comparable GAAP financial measure to net
revenue is total revenue. The ratios are calculated, respectively,
as gross profit divided by net revenue, SG&A divided by net
revenue, EBITDA divided by net revenue, and EBIT divided by net
revenue. Net revenue is calculated as follows:
|
3 months
ended |
2022 |
|
2021 |
|
2020 |
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
Total revenue |
1,953 |
|
|
1,949 |
|
1,904 |
|
1,845 |
|
1,596 |
|
|
1,666 |
|
1,553 |
|
1,419 |
|
|
Cost of
fuel |
(217 |
) |
|
(175 |
) |
(156 |
) |
(140 |
) |
(127 |
) |
|
(115 |
) |
(110 |
) |
(84 |
) |
|
Net revenue |
1,736 |
|
|
1,774 |
|
1,748 |
|
1,705 |
|
1,469 |
|
|
1,551 |
|
1,443 |
|
1,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ROIC and Adjusted ROIC
ROIC is defined as EBIT for the last twelve months divided by
average invested capital of the last four quarters, expressed as a
percentage.
We view ROIC as a useful measure for capital allocation
decisions that drive profitable growth and attractive returns to
shareholders. We also calculate Adjusted ROIC using Adjusted EBIT
to exclude significant items that we do not consider to be
indicative of operational and financial trends either by nature or
amount to provide a better overall understanding of our underlying
business performance.
Working Capital & Working Capital to Net Revenue
Ratio
Working capital is defined as total current assets (excluding
cash and cash equivalents) less total current liabilities
(excluding short-term debt and current portion of long-term debt).
We view working capital as a measure for assessing overall
liquidity.
The working capital to net revenue ratio is calculated as
average working capital of the last four quarters, divided by net
revenue for the last twelve months. We use this KPI to assess the
efficiency in our use of working capital to generate net
revenue.
Working capital is calculated as follows:
|
|
2022 |
|
2021 |
|
2020 |
|
($
millions) |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
|
Total current assets |
4,030 |
|
|
3,619 |
|
3,620 |
|
3,416 |
|
3,319 |
|
|
3,214 |
|
3,261 |
|
3,416 |
|
|
Cash
and cash equivalents |
(295 |
) |
|
(502 |
) |
(518 |
) |
(378 |
) |
(469 |
) |
|
(539 |
) |
(453 |
) |
(338 |
) |
|
Total current assets in working capital |
3,735 |
|
|
3,117 |
|
3,102 |
|
3,038 |
|
2,850 |
|
|
2,675 |
|
2,808 |
|
3,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
2,647 |
|
|
2,155 |
|
2,156 |
|
1,942 |
|
1,817 |
|
|
1,623 |
|
1,717 |
|
1,735 |
|
|
Short-term debt |
(804 |
) |
|
(374 |
) |
(419 |
) |
(114 |
) |
(103 |
) |
|
(92 |
) |
(217 |
) |
(158 |
) |
|
Current
portion of long-term debt |
(63 |
) |
|
(190 |
) |
(191 |
) |
(386 |
) |
(326 |
) |
|
(201 |
) |
(200 |
) |
(200 |
) |
|
Total current liabilities in working capital |
1,780 |
|
|
1,591 |
|
1,546 |
|
1,442 |
|
1,388 |
|
|
1,330 |
|
1,300 |
|
1,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital |
1,955 |
|
|
1,526 |
|
1,556 |
|
1,596 |
|
1,462 |
|
|
1,345 |
|
1,508 |
|
1,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Information Disclaimer
This news release contains information that is forward-looking.
Information is forward-looking when we use what we know and expect
today to give information about the future. All forward-looking
information in this news release is subject to this disclaimer
including the assumptions and material risk factors referred to
below. Forward-looking information in this news release includes,
but is not limited to, the following: our plan to grow product
support, reduce costs, and reinvest free cash flow to compound our
earnings; our active management of inflationary pressures through
our continued focus on productivity gains; our positive market
outlook and expected increased activity for the remainder of the
year, targeting above mid-teens EPS growth in 2022 (assumes
continued strong commodity prices, public and private sector
investment, and economic growth forecasts; expectations that Tier 4
DGB engines will enable oil & gas customers to substitute up to
85% of diesel with natural gas and are capable of operating with up
to 20% hydrogen blend, resulting in significant cost savings and
CO2 emission reduction; all information in the section entitled
“Market Update and Business Outlook” regarding our expectations for
our Canada operations (based on assumptions of continued strong
commodity prices, public and private sector investment, a healthy
demand environment across all sectors in Western Canada, federal
and provincial government infrastructure programs and private
sector investments in natural gas, carbon capture, utilization and
storage, and power projects, and our ability to leverage CUBIQ™ and
drive continued success with construction rebuilds and customer
value agreements, and continued capital expenditures in mining,
including the oil sands), our expectations for our South America
operations (based on assumptions related to Chile of a continued
strong copper price, a projected increase in copper mining growth,
a moderate increase in mining royalties, our position to capture
opportunities for new mining equipment and autonomous solutions for
brownfield expansions and greenfield projects, and continued strong
demand for mining infrastructure and the government’s
infrastructure investment program), our expectations for our UK
& Ireland operations (based on assumptions of continued HS2
construction activity, continued government investments in
infrastructure projects, our ability to leverage CUIBIQ™ and
projections of continued growth in data centre market), our
continued positive market outlook and our expectations of upcycle
demand conditions in 2022, higher revenue and higher new equipment
mix for the remainder of the year compared to Q1 2022, and above
mid-teens EPS growth in 2022 compared to 2021 (based on assumptions
of continued strength in commodity prices, public and private
sector spending, forecasted economic growth in all our regions, and
that we will successfully manage industry-wide constraints in the
global supply chain and inflationary pressures including further
price increases from key suppliers in the second quarter, including
through successfully working with customers to implement those
changes); the Canadian income tax treatment of the quarterly
dividend; and our intention to purchase common shares under our
renewed NCIB for a further year effective May 13, 2022 and
implement an automatic share purchase plan with a designated broker
in connection with the renewed NCIB (no assurance is given as to
the number of common shares that may be purchased under the NCIB,
or if any will be purchased). All such forward-looking information
is provided pursuant to the ‘safe harbour’ provisions of applicable
Canadian securities laws.
Unless we indicate otherwise, forward-looking information in
this news release reflects our expectations at the date of this
news release. Except as may be required by Canadian securities
laws, we do not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events, or otherwise.
Forward-looking information, by its very nature, is subject to
numerous risks and uncertainties and is based on a number of
assumptions. This gives rise to the possibility that actual results
could differ materially from the expectations expressed in or
implied by such forward-looking information and that our business
outlook, objectives, plans, strategic priorities and other
information that is not historical fact may not be achieved. As a
result, we cannot guarantee that any forward-looking information
will materialize.
Factors that could cause actual results or events to differ
materially from those expressed in or implied by this
forward-looking information include: the impact and duration of the
COVID-19 pandemic and measures taken by governments, customers and
suppliers in response; general economic and market conditions,
including increasing inflationary cost pressure, and economic and
market conditions in the regions where we operate; foreign exchange
rates; commodity prices; the level of customer confidence and
spending, and the demand for, and prices of, our products and
services; our ability to maintain our relationship with
Caterpillar; our dependence on the continued market acceptance of
our products, including Caterpillar products, and the timely supply
of parts and equipment; our ability to continue to sustainably
reduce costs and improve productivity and operational efficiencies
while continuing to maintain customer service; our ability to
manage cost pressures as growth in revenue occurs; our ability to
negotiate satisfactory purchase or investment terms and prices,
obtain necessary regulatory or other approvals, and secure
financing on attractive terms or at all; our ability to manage our
growth strategy effectively; our ability to effectively price and
manage long-term product support contracts with our customers; our
ability to drive continuous cost efficiency in a recovering market;
our ability to attract sufficient skilled labour resources as
market conditions, business strategy or technologies change; our
ability to negotiate and renew collective bargaining agreements
with satisfactory terms for our employees and us; the intensity of
competitive activity; our ability to maintain a safe and healthy
work environment across all regions; our ability to raise the
capital needed to implement our business plan; regulatory
initiatives or proceedings, litigation and changes in laws or
regulations; stock market volatility; changes in political and
economic environments in the regions where we carry on business;
our ability to respond to climate change-related risks; the
occurrence of natural disasters, pandemic outbreaks, geo-political
events, acts of terrorism, social unrest or similar disruptions;
the availability of insurance at commercially reasonable rates and
whether the amount of insurance coverage will be adequate to cover
all liability or loss that we incur; the potential of warranty
claims being greater than we anticipate; the integrity, reliability
and availability of, and benefits from, information technology and
the data processed by that technology; our ability to protect our
business from cybersecurity threats or incidents; the actual impact
of the COVID-19 pandemic; and, with respect to our normal course
issuer bid, our share price from time to time and our decisions
about use of capital. Forward-looking information is provided in
this news release to give information about our current
expectations and plans and allow investors and others to get a
better understanding of our operating environment. However, readers
are cautioned that it may not be appropriate to use such
forward-looking information for any other purpose.
Forward-looking information provided in this news release is
based on a number of assumptions that we believed were reasonable
on the day the information was given, including but not limited to:
the specific assumptions stated above; that we will be able to
successfully manage our business through the current challenging
times involving the effects of the COVID-19 response, stretched
supply chains, competitive talent markets, inflationary pressures
and changing commodity prices, and successfully implement our
COVID-19 risk management plans; an undisrupted market recovery, for
example, undisrupted by COVID-19 impacts, commodity price
volatility or social unrest; the successful execution of our
profitability drivers; that our cost actions to drive earnings
capacity in a recovery can be sustained; that commodity prices will
remain at constructive levels; that our customers will not curtail
their activities; that general economic and market conditions will
continue to be strong; that the level of customer confidence and
spending, and the demand for, and prices of, our products and
services will be maintained; that present supply chain and
inflationary challenges will not materially impact large project
deliveries in our backlog; our ability to successfully execute our
plans and intentions; our ability to attract and retain skilled
staff; market competition will remain at similar levels; the
products and technology offered by our competitors will be as
expected; that identified opportunities for growth will result in
revenue; that we have sufficient liquidity to meet operational
needs; consistent and stable legislation in the various countries
in which we operate; no disruptive changes in the technology
environment and that our current good relationships with
Caterpillar, our customers and our suppliers, service providers and
other third parties will be maintained; sustainment of strengthened
oil prices and the Alberta government will not re-impose production
curtailments; quoting activity for requests for proposals for
equipment and product support is reflective of opportunities; that
there will be a moderate increase in mining royalties in Chile; and
strong recoveries in our regions, particularly in Chile and the UK.
Some of the assumptions, risks, and other factors, which could
cause results to differ materially from those expressed in the
forward-looking information contained in this news release, are
discussed in our current AIF and in our annual and most recent
quarterly MD&A for the financial risks, including for updated
risks related to the COVID-19 pandemic.
We caution readers that the risks described in the annual and
most recent quarterly MD&A and in the AIF are not the only ones
that could impact us. We cannot accurately predict the full impact
that COVID-19 will have on our business, results of operations,
financial condition or the demand for our services, due in part to
the uncertainties relating to the ultimate geographic spread of the
virus, the severity of the disease, the duration of the outbreak,
the steps our customers and suppliers may take in current
circumstances, including slowing or halting operations, the
duration of travel and quarantine restrictions imposed by
governments and other steps that may be taken by governments to
respond to the pandemic. Additional risks and uncertainties not
currently known to us or that are currently deemed to be immaterial
may also have a material adverse effect on our business, financial
condition, or results of operation.
Except as otherwise indicated, forward-looking information does
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 of this news release. 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. We therefore cannot describe the expected impact in a
meaningful way or in the same way we present known risks affecting
our business.
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