Finning International (TSE:FTT) executives told investors the company delivered “another strong year” in 2025, citing growth across all three regions, expanding product support revenue, and improved capital efficiency. On the company’s fourth-quarter call, President and CEO Kevin Parkes and CFO David Primrose highlighted a record equipment backlog, stronger free cash flow, and continued progress against targets laid out at the company’s 2023 Investor Day.
Full-year momentum and record backlog
Management said 2025 revenue rose 7% to CAD 10.6 billion, with product support revenue up 8% to “almost CAD 6 billion.” Parkes noted product support activity remained strong in mining, with Canada and South America up 10% and 5% year-over-year, respectively. The company also reported a record equipment backlog of CAD 3.1 billion at year-end, up 20% from December 2024.
Fourth-quarter results: higher revenue, strong cash flow, and balance sheet improvement
Primrose reported fourth-quarter revenue of CAD 2.7 billion, up 6% from the prior year, with gains across all regions. Results included a CAD 22 million write-off tied to decommissioning certain technology assets as the company evaluates business needs and aligns with Caterpillar’s digital and technology strategy.
Excluding the write-off, Primrose said adjusted EBIT was down 2% year-over-year, while adjusted EPS of CAD 1 rose 3%, reflecting higher earnings in Canada and the impact of share repurchases. He also noted higher long-term incentive plan (LTIP) expense of CAD 21 million in the quarter, compared with a CAD 3 million recovery in Q4 2024.
Cash generation was a key focus. Finning produced free cash flow of CAD 642 million in Q4 and “nearly CAD 550 million” for the year. The company’s net debt-to-adjusted EBITDA ratio declined to 1.2 times at year-end from 1.7 times a year earlier. Invested capital turns improved to 2.34 times, and consolidated adjusted return on invested capital was 19.2%, up 130 basis points from Q4 2024.
By the numbers: equipment, product support, and backlog drivers
In the quarter, new equipment sales increased 9%, driven by higher construction and power and energy deliveries. Used equipment sales fell 23%, which management attributed to large conversions of mining rental equipment with purchase options in Canada in Q4 2024 that did not repeat this quarter. Product support revenue rose 8%, led by mining activity in Canada.
Order intake was described as strong, particularly in Canada where it rose nearly 50% from Q4 2024. Primrose said Finning secured multiple large mining orders and had “over 50 ultra-class trucks” plus “over 20 other large mining trucks” in Canada’s backlog. In power and energy, backlog support included a “large data center order” in the UK and Ireland and multiple gas compression orders in Canada.
- Equipment backlog: CAD 3.1 billion at year-end, up 20% year-over-year
- Q4 product support: up 8% overall; Canada up 12%
- Q4 new equipment: up 9%; used equipment down 23%
- Q4 free cash flow: CAD 642 million; net debt/adjusted EBITDA 1.2x
Regional performance and outlook: Canada improving, Chile dynamic, UK&I mixed
South America: In functional currency, new equipment sales rose 4% and product support revenue increased 5%, driven by construction activity in Chile. Adjusted EBIT margin was 10.4%, down 50 basis points due to lower product support margins. Parkes described Chile as a “dynamic environment,” pointing to significant ultra-class truck deliveries over the past two years and fleet reorganization as miners retire older equipment. Management said the longer-term outlook remains positive, supported by global copper demand, strong copper prices, and customer investment interest, while near-term activity could moderate as mine plans and fleets are adjusted. The company also flagged ongoing labor market challenges.
Argentina was repeatedly discussed as an emerging opportunity. Parkes said Finning is “carefully positioning” the business to capture potential growth in oil and gas and mining, while being mindful of historical operating challenges and volatility. He told analysts he expects activity to start showing up in backlog and order intake “through the course of this year,” adding the company has existing facilities in the region and expects much of the incremental requirement to be “investing in people and tooling on-site.”
Canada: New equipment sales increased 2%, supported by construction, while rental revenue rose 10% amid improving conditions. Product support revenue grew 12% on strong mining demand. Adjusted EBIT margin improved 60 basis points to 8.1%, helped by lower SG&A margin and a richer product support mix. Management said the outlook for Western Canada is improving, citing order intake trends and recent resource and infrastructure-related announcements, though executives cautioned on timing and magnitude.
UK and Ireland: New equipment sales climbed 21% in functional currency on strong power and energy project deliveries. Product support revenue was flat, as lower construction utilization was offset by power and energy activity. Adjusted EBIT margin declined to 4.6% due to the higher proportion of new equipment. Adjusted ROIC rose to 20.1%, which Primrose said primarily reflected pension asset optimization. Management expects construction equipment demand to remain soft alongside low projected GDP growth, while power and energy contribution is expected to increase, particularly tied to data center demand for primary and backup power generation.
Strategy progress, capital plans, and growth themes for 2026
Parkes said the company delivered on the 2023 Investor Day objectives for full-cycle resilience, highlighting invested capital turns within the 2.3–2.5 target range and SG&A margin reduced to 15%, below the 17% target. He also pointed to progress on sustainable growth pillars, including used equipment revenue up 31% since Investor Day and power and energy revenue up 41% with backlog up over 70%.
Management emphasized ongoing technician hiring and capacity expansion to support product support growth. Parkes said Finning added 225 new technicians across regions and expanded workshop capacity. He also discussed a services commitment in Canada designed to improve responsiveness and build customer loyalty.
For 2026, Primrose said Finning expects net capital and net rental fleet expenditures to be greater than CAD 350 million, including plans to build the rental fleet as the Canadian construction market improves and to make selected operational efficiency investments such as warehouse improvements in Edmonton and implementing case and workforce management in Canada.
On capital allocation, management reiterated the importance of returning capital to shareholders through dividends and buybacks, noting the company has been repurchasing shares under its NCIB, while also emphasizing that capital allocation remains dynamic based on free cash flow expectations, capital spending, inventory needs, and potential M&A considerations.
About Finning International (TSE:FTT)
Finning International Inc is a dealer and distributor of heavy-duty machinery and parts of the Caterpillar brand. The company sells and rents Caterpillar machinery to the mining, construction, petroleum, forestry, and power system application industries. Finning International further provides parts and services for equipment and engines to its customers via its owned distribution network and buys and sells used equipment domestically and internationally after reconditioning or rebuilding the machinery.
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