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1. Company Snapshot

1.a. Company Description

Finning International Inc.sells, services, and rents heavy equipment, and power and energy systems in Canada, Chile, the United Kingdom, Argentina, and internationally.The company offers telehandlers, articulated trucks, asphalt pavers, backhoe loaders, cable assist vehicles, cable yarding systems, chip dozers, cold planers, compactors, dozers, drills, electric rope shovels, excavators, material handlers, motor graders, off-highway trucks, pipelayers, remixing transfer vehicle, road reclaimers, road wideners, skid steer and compact track loaders, tack distributors, track loaders, underground-hard rock, wheel loaders, wheel tractor-scrapers, and windrow elevators, as well as attachments.


It is also involved in electric power generation, marine power systems, oil and gas, and industrials.In addition, the company provides aftercare, customer training, fuel solutions, fluid analysis, financing, rebuilds, rentals, repair services, maintenance options, warranty, and other services, as well as product support including sales of parts and servicing of equipment.It serves agriculture, construction, forestry, governmental, mining, paving, pipeline, power systems, and snow removal industries.


The company was formerly known as Finning Ltd.and changed its name to Finning International Inc.in April 1997.


Finning International Inc.was incorporated in 1933 and is headquartered in Surrey, Canada.

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1.b. Last Insights on FTT

Finning International's recent performance was driven by a significant increase in its equipment backlog to $3 billion, indicating strong demand for its products. The company's strategic divestitures, including the sale of its interests in ComTech and 4Refuel, have allowed it to focus on core operations. Additionally, its estimated fair value is CA$84.41, suggesting potential for growth. The company's Q2 2025 earnings also beat EPS expectations, demonstrating operational resilience. These factors have contributed to a positive outlook for the company's short-term prospects.

1.c. Company Highlights

2. Finning International's Q3 Earnings Shine with 14% Revenue Growth

Finning International Inc.'s third-quarter revenue reached $2.8 billion, up 14% from Q3 2024, driven by growth across all regions and business lines. The company's product support revenue grew 9%, with a 7% increase in Canada, 6% in South America, and 2% in the U.K. and Ireland. Q3 EBIT was $240 million, up 25% from Q3 2024 adjusted EBIT, with EPS of $1.17, surpassing analyst estimates of $1.09. The company's equipment backlog stood at $2.9 billion, up 26% from September 2024, indicating a strong ordering environment.

Publication Date: Nov -16

📋 Highlights
  • Revenue Growth: Q3 revenue reached $2.8 billion, up 14% YoY, driven by growth across all regions and business lines.
  • Product Support Expansion: Product support revenue grew 9% YoY, with 7% in Canada, 6% in South America, and 2% in the U.K./Ireland.
  • EBIT and EPS Surge: Q3 EBIT rose 25% YoY to $240 million, and EPS increased 33% to $1.17, reflecting improved profitability.
  • Backlog Growth: Equipment backlog hit $2.9 billion (+26% YoY), with Power Systems backlog at $1 billion (+23% YoY) fueled by data centers and oil/gas projects.
  • Construction Momentum: Construction backlog surged 70% YoY (Canada) and 10% YoY (U.K.), signaling strong demand for 2025, supported by green shoots in quoting activity.

Business Line Performance

The Power Systems business saw a 5% increase in revenue over the last 12 months, with a 7% increase in product support revenue. The Power Systems backlog was nearly $1 billion, up 23% from September 2024. The company expects steady growth in mining activity levels in South America and Canada, driven by demand for minerals. In Canada, construction signs are improving, while in the U.K. and Ireland, construction remains subdued but shows green shoots in quoting activity.

Valuation and Growth Prospects

Finning's trailing 12-month revenue growth was 7%, with a product support revenue of $5.8 billion. With a P/E Ratio of 15.67 and an EV/EBITDA of 9.88, the market seems to have priced in moderate growth expectations. Analysts estimate next year's revenue growth at 2.5%. The company's focus on long-term growth, executing on product support opportunities, and its strong backlog position it for future success.

Operational Efficiency and Cost Control

The company improved its cost and capital efficiency, with an SG&A margin of 15% and invested capital turns of 2.3x. Management is optimistic about the long-term trends for the business and views the medium-term outlook as encouraging. The company is focused on maximizing product support, driving full-cycle resilience, and sustainably growing its population in end markets.

Regional Backlog and Opportunities

The construction backlog is up 70% year-over-year and 30% sequentially, indicating a strong ordering environment for next year. In the UK, backlog is up 10% versus last year, while in Canada, it's up 70%. The Power Systems backlog is $1 billion, with about half of it in the UK, 1/3 in Canada, and 10-15% in South America, driven by data center builds, oil and gas development, and power reliability solutions.

3. NewsRoom

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Finning International Inc (FINGF) Q3 2025 Earnings Call Highlights: Strong Revenue Growth and ...

Nov -12

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Finning reports Q3 2025 results

Nov -11

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Finning International Inc.'s (TSE:FTT) largest shareholders are retail investors with 54% ownership, institutions own 46%

Nov -06

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A Look At The Fair Value Of Finning International Inc. (TSE:FTT)

Oct -15

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At CA$64.06, Is It Time To Put Finning International Inc. (TSE:FTT) On Your Watch List?

Sep -30

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TSX Closer: 13 Records In 15 Days; National Bank Says Infrastructure Bull Market Flush With 'Nation-Building' Cash

Sep -11

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Finning International Second Quarter 2025 Earnings: EPS Beats Expectations, Revenues Lag

Aug -07

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

Aug -05

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.80%)

6. Segments

Product Support

Expected Growth: 4.83%

Finning International Inc.'s 4.83% growth in Product Support is driven by increasing demand for heavy equipment maintenance and repair services, expansion into new markets, and strategic partnerships. Additionally, investments in digital technologies and training programs have enhanced customer experience, leading to increased loyalty and retention.

New Equipment

Expected Growth: 4.83%

Finning International Inc.'s new equipment segment growth of 4.83% is driven by increasing demand from mining and construction industries, expansion into new markets, and strategic partnerships. Additionally, investments in digitalization and technology have improved operational efficiency, leading to higher sales and revenue growth.

Fuel and Other

Expected Growth: 4.65%

Finning International Inc.'s Fuel and Other segment growth of 4.65% is driven by increasing demand for heavy equipment and machinery in the mining and construction industries, coupled with rising commodity prices and government investments in infrastructure projects, leading to higher sales of fuel and other related products.

Used Equipment

Expected Growth: 4.65%

Finning International Inc.'s used equipment segment growth of 4.65% is driven by increasing demand from cost-conscious customers, expansion into new markets, and strategic partnerships. Additionally, the company's strong brand reputation, efficient logistics, and competitive pricing contribute to its growth. Furthermore, the rising need for refurbished equipment in the mining and construction industries also supports this growth.

Equipment Rental

Expected Growth: 4.65%

Finning International Inc.'s equipment rental segment growth of 4.65% is driven by increasing demand from mining and construction industries, expansion into new markets, and strategic partnerships. Additionally, the company's focus on fleet modernization, technology adoption, and cost optimization have improved operational efficiency, contributing to the growth.

7. Detailed Products

Caterpillar Heavy Equipment

Finning International Inc. is the largest dealer of Caterpillar heavy equipment, providing a wide range of machines and engines for construction, mining, and other industries.

Power Systems

Finning provides Caterpillar power systems, including generators, engines, and switchgear, for industrial, commercial, and residential applications.

Product Support

Finning offers a range of product support services, including maintenance, repair, and overhaul of Caterpillar equipment and engines.

Rental Equipment

Finning provides a rental fleet of Caterpillar equipment, including excavators, loaders, and generators, for short-term or long-term rentals.

Used Equipment

Finning sells used Caterpillar equipment, including excavators, dozers, and loaders, that have been inspected and certified.

Parts and Service

Finning provides genuine Caterpillar parts and service support, including maintenance, repair, and overhaul of equipment and engines.

8. Finning International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Finning International Inc. operates in a niche market with limited substitutes, but customers may still opt for alternative solutions, such as renting or leasing equipment.

Bargaining Power Of Customers

Finning International Inc.'s customers are largely dependent on the company's products and services, giving them limited bargaining power.

Bargaining Power Of Suppliers

Finning International Inc. relies on a few large suppliers, giving them some bargaining power, but the company's size and scale also provide it with negotiating power.

Threat Of New Entrants

The heavy equipment industry has high barriers to entry, making it difficult for new entrants to compete with established players like Finning International Inc.

Intensity Of Rivalry

The heavy equipment industry is highly competitive, with several established players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 51.75%
Debt Cost 8.05%
Equity Weight 48.25%
Equity Cost 12.08%
WACC 9.99%
Leverage 107.24%

11. Quality Control: Finning International Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Finning

A-Score: 6.4/10

Value: 5.3

Growth: 7.6

Quality: 5.4

Yield: 5.0

Momentum: 8.5

Volatility: 6.7

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Toromont

A-Score: 5.7/10

Value: 2.8

Growth: 6.4

Quality: 6.2

Yield: 2.0

Momentum: 7.0

Volatility: 10.0

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Applied Industrial Technologies

A-Score: 5.7/10

Value: 3.2

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

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Watsco

A-Score: 5.4/10

Value: 3.0

Growth: 6.9

Quality: 7.2

Yield: 6.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Core & Main

A-Score: 5.0/10

Value: 4.0

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

1-Year Total Return ->

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Pool

A-Score: 4.8/10

Value: 2.8

Growth: 6.9

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

74.48$

Current Price

74.48$

Potential

-0.00%

Expected Cash-Flows