Finning International Inc. (TSX: FTT) (“Finning”, “the Company”,
“we”, “our” or “us”) reported fourth quarter and annual 2021
results today. All monetary amounts are in Canadian dollars unless
otherwise stated.
HIGHLIGHTSAll comparisons are to Q4 and annual
2020 results unless indicated otherwise.
- Q4 2021 EPS(1) was $0.66 per share.
Annual 2021 basic EPS was $2.26 per share and Adjusted EPS(2)(4)
was $2.18 per share.
- Q4 2021 revenue of $1.9 billion and
net revenue(2) of $1.8 billion were up 17% and 14%, respectively,
from Q4 2020, with higher revenues in all lines of business driven
by strong market activity and solid execution.
- All regions demonstrated strong
operating leverage, with consolidated EBIT(1) up 67% compared to
Adjusted EBIT(3)(4) in Q4 2020. Q4 2021 EBIT as a percentage of net
revenue(2) reached 10.1% in both Canada and South America.
- For the full year 2021, EBIT
increased by 41% and Adjusted EBIT increased by 63% from 2020 on
15% higher gross profit. 2021 SG&A(1) as a percentage of net
revenue(2) was down 270 basis points from 2020, driving improved
earnings capacity.
- Adjusted ROIC(1)(2)(4) of 16.4% was
up 680 basis points from Q4 2020, with significant increases in all
regions. South America achieved a 20.3% ROIC(2).
- Annual 2021 free cash flow(3) was
$300 million, with net debt to Adjusted EBITDA(1) ratio (2)(4) of
1.1 at December 31, 2021, an improvement from 1.4 at December 31,
2020.
- Consolidated equipment backlog(2)
was $1.9 billion at December 31, 2021, up from $1.6 billion at
September 30, 2021, higher in all regions, particularly in Canada,
including a significant order from an oil sands operator.
“Our employees should be proud of the strong results we achieved
in 2021, driven by successful execution to deliver on our strategic
plan and improve our earnings capacity. We posted annual Adjusted
EPS of $2.18 and exceeded our mid-cycle EPS and ROIC targets two
quarters ahead of schedule, all while our revenue remained below
pre-pandemic levels for the year. Across the business, we saw
tremendous momentum in capturing product support opportunities and
winning major equipment deals as market activity returned to
pre-pandemic levels by the end of the year,” said Scott Thomson,
president and CEO of Finning International.
“We expect upcycle demand conditions from the start of 2022 to
be supported by ongoing economic growth and strength in commodity
prices. We expect supply constraints to persist, and our global
teams have been proactively purchasing inventory, sourcing used
equipment, and offering rebuilds and rental options to meet strong
customer demand. Our 2021 performance sets a strong foundation to
capture upcycle opportunities as we remain focused on executing on
our strategic plan to grow product support, reduce costs, and
reinvest free cash flow to compound our earnings. We continue to
target mid-teens and above EPS growth during this sustained
upcycle,” concluded Mr. Thomson.
Q4 2021 FINANCIAL SUMMARY
Quarterly Overview$ millions, except per share
amounts |
Q4 2021 |
|
Q4 2020 |
|
% change |
|
Revenue |
1,949 |
|
1,666 |
|
17 |
|
Net revenue |
1,774 |
|
1,551 |
|
14 |
|
EBIT |
157 |
|
108 |
|
46 |
|
EBIT as a percentage of net revenue |
8.9 |
% |
6.9 |
% |
|
EBITDA(2) |
241 |
|
185 |
|
31 |
|
EBITDA as a percentage of net revenue(2) |
13.6 |
% |
11.9 |
% |
|
Net income attributable to shareholders of Finning |
104 |
|
72 |
|
44 |
|
EPS |
0.66 |
|
0.45 |
|
47 |
|
Free cash flow |
148 |
|
292 |
|
(50 |
) |
Q4 2021 EBIT and EBITDA by Operation$ millions,
except per share amounts |
Canada |
|
South America |
|
UK & Ireland |
|
Corporate & Other |
|
Finning Total |
|
EPS |
EBIT / EPS |
92 |
|
59 |
|
12 |
|
(6 |
) |
157 |
|
0.66 |
EBIT as a percentage of net revenue |
10.1 |
% |
10.1 |
% |
4.3 |
% |
n/m(1) |
8.9 |
% |
|
EBITDA |
142 |
|
81 |
|
23 |
|
(5 |
) |
241 |
|
EBITDA as a percentage of net revenue |
15.5 |
% |
14.0 |
% |
8.3 |
% |
n/m |
13.6 |
% |
|
Q4 2020 EBIT and EBITDA by Operation$ millions,
except per share amounts |
Canada |
|
South America |
|
UK & Ireland |
|
Corporate & Other |
|
Finning Total |
|
EPS |
EBIT / EPS |
72 |
|
41 |
|
11 |
|
(16 |
) |
108 |
|
0.45 |
CEWS support |
(13 |
) |
- |
|
- |
|
(1 |
) |
(14 |
) |
(0.07) |
Adjusted EBIT / Adjusted EPS |
59 |
|
41 |
|
11 |
|
(17 |
) |
94 |
|
0.38 |
Adjusted EBIT as a percentage of net revenue(2)(4) |
7.7 |
% |
8.3 |
% |
3.7 |
% |
n/m |
6.1 |
% |
|
Adjusted EBITDA(3)(4) |
106 |
|
61 |
|
20 |
|
(16 |
) |
171 |
|
Adjusted EBITDA as a percentage of net revenue(2)(4) |
13.7 |
% |
12.2 |
% |
7.0 |
% |
n/m |
11.0 |
% |
|
Q4 2021 INVESTED CAPITAL AND ROIC SUMMARYAll
comparisons are to Q4 2020 results unless indicated otherwise.
- Excluding the impact of foreign
exchange, invested capital(2) increased by $269 million from
December 31, 2020 driven primarily by higher inventory to meet
strong customer demand. An increase in accounts receivables due to
an increase in sales activity in all operations was offset by
higher accounts payable, mainly in Canada and South America,
related to higher inventory purchases.
- Inventory increased by about $200
million from Q4 2020 reflecting recovery in market activity and
growing backlog. Inventory turns (dealership)(2) improved to 3.09
in Q4 2021 from 2.79 in Q4 2020 and working capital to net revenue
ratio(2) of 22.9% was down by 540 basis points from Q4 2020,
reflecting higher sales and improved supply chain
efficiencies.
- Adjusted ROIC of 16.4% was up 680
basis points from Q4 2020 with a significant increase in all
regions driven by improved profitability and higher invested
capital turnover.
Invested Capital and ROIC |
Q4 2021 |
Q4 2020 |
Invested capital ($ millions) |
|
|
Consolidated |
3,326 |
|
3,067 |
|
Canada |
1,876 |
|
1,819 |
|
South America (US dollars) |
809 |
|
731 |
|
UK & Ireland (UK pound sterling) |
222 |
|
188 |
|
Invested capital turnover(2) (times) |
2.04 |
|
1.68 |
|
Working capital to net revenue ratio |
22.9 |
% |
28.3 |
% |
Inventory ($ millions) |
1,687 |
|
1,477 |
|
Inventory turns (dealership) (times) |
3.09 |
|
2.79 |
|
Adjusted ROIC (%) |
|
|
Consolidated |
16.4 |
|
9.6 |
|
Canada |
16.9 |
|
10.5 |
|
South America |
20.3 |
|
12.9 |
|
UK & Ireland |
14.8 |
|
5.5 |
|
Q4 2021 HIGHLIGHTS BY OPERATIONAll comparisons
are to Q4 2020 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
- Net revenue increased by 19% from
Q4 2020, driven primarily by significantly higher product support
revenue and strong used equipment sales.
- Product support revenue was up 17%
from Q4 2020 reflecting strong rebuild activity in construction and
increased spend in the mining sector.
- Q4 2021 used equipment sales were
up 84% from Q4 2020, with higher used equipment sales to mining and
construction customers, reflecting our strategic focus on rebuilds
and resale in response to strong customer demand and constrained
supply of new equipment.
- Rental revenue was up 22% from Q4
2020, fulfilling customer equipment needs in a tight supply
environment. In addition, our heavy rental fleet was highly
utilized in British Columbia to support flood mitigation and
infrastructure repair work.
- EBIT as a percentage of net revenue
was 10.1%, up 240 basis points from Adjusted EBIT as a percentage
of net revenue in Q4 2020, reflecting improved equipment margins,
higher rental utilization, and lower SG&A as a percentage of
net revenue compared to Q4 2020.
- Q4 2021 Adjusted ROIC was 16.9%, up
640 basis points from Q4 2020, driven by significant improvement in
profitability coupled with 20% increase in invested capital
turnover.
- During Q4 2021, we received an
order from an oil sands operator to supply 20 Caterpillar 797F
off-highway trucks. This purchase is part of a multi-year agreement
focused on enhancing operational efficiency through equipment
refresh, maintenance, repair and rebuild practices. Delivered
through 2022, these trucks will replace aged competitive equipment
and are expected to enhance fuel efficiency, reduce carbon
footprint and improve emissions.
South America
- Net revenue increased by 21% from
Q4 2020. New equipment sales were up 68%, driven by deliveries to
Chilean mining customers and improved demand for construction
equipment to support mining infrastructure and general construction
projects. Product support revenue increased by 10%, with higher
activity across all sectors.
- EBIT as a percentage of net revenue
was 10.1%, up 180 basis points year over year, benefitting from
improved operating leverage. SG&A costs were comparable to Q4
2020 on 21% higher revenues reflecting a streamlined cost structure
and continued focus on driving efficiencies.
- Q4 2021 ROIC of 20.3% was the
highest since 2012, driven by significant improvements in both
profitability and invested capital turnover in 2021.
United Kingdom & Ireland
- Net revenue was 1% below Q4 2020
reflecting timing of power systems project deliveries. Revenue from
the construction sector was up 26% compared to Q4 2020, driven by
equipment deliveries to HS2 customers and higher product support
activity.
- EBIT was up 16% from Q4 2020,
driven primarily by an increase in gross profit with a higher
proportion of product support in the revenue mix and improved
rental utilization compared to Q4 2020. EBIT as a percentage of net
revenue was 4.3%.
- Q4 2021 ROIC was 14.8%, reflecting
strong revenue recovery, increased EBIT, and significant
improvements in capital efficiency.
Q4 2021 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
Strong commodity prices and broad-based economic growth in
Western Canada in 2022 are expected to create robust demand for
equipment and product support across all sectors.
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
equipment rentals, and prime and standby electric power generation.
Our focus remains on executing our strategy to capture product
support market share in construction. We are leveraging our digital
platform, CUBIQ™, and further building on our success with
construction rebuilds and customer value agreements (CVAs).
Healthy commodity markets, including base and precious metals,
oil, natural gas, metallurgical coal, lumber, uranium, and potash
provide a positive backdrop for activity in Western Canada. In the
oil sands, capital expenditures have begun to increase in response
to recovering demand. We expect the large and aging mining
equipment population in Western Canada to continue driving demand
for product support, including rebuilds, and opportunities for
fleet renewals.
South America
We expect a strong copper price to continue driving improved
mining activity in Chile in 2022. The projected increase in copper
production(5), large and mature equipment population, and declining
ore grades are expected to support growing demand for mining parts
and service, and fleet replacement.
We are closely monitoring the economic and constitutional reform
process in Chile, and our current outlook assumes 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 in the next mining upcycle.
Our positive outlook for the Chilean construction sector is
predicated on strong demand for mining infrastructure and the
government’s infrastructure investment program.
In Argentina, while we expect to benefit from improved activity
in construction, oil and gas, and mining, the overall business
environment in the country continues to be challenging. We remain
focused on managing fiscal, regulatory, and currency risks,
including high inflation and ARS devaluation expected in 2022.
UK & Ireland
Continued HS2 construction activity coupled with government
investments in other infrastructure projects are expected to drive
strong demand for construction equipment in the UK in 2022.
HS2 Phase 1, from London to Birmingham, is projected to require
approximately 1,500 units of heavy construction equipment,
representing a total industry opportunity of nearly £500 million
from 2021 to 2024. By the end of 2021, we had captured more than
£200 million of equipment orders for this project. Most Caterpillar
machines working on the HS2 project are supported by a range of
Finning customer value agreements, and our construction customers
have the option to benefit from our CUBIQTM platform and our
construction apps. We are well-positioned to continue capturing a
large share of opportunities for the remainder of HS2 Phase 1.
Strong demand for our power systems solutions, including in the
data centre market, is expected to continue. We have a solid
backlog of power systems projects for deliveries in 2022. Cloud
data centre capacity is projected to continue to grow over the next
few years(6), and with our successful track record of project
execution, we are well positioned to capture opportunities related
to this trend.
Upcycle and Shift to Growth
Our market outlook is positive in all our regions. We expect
upcycle demand conditions from the start of 2022 to be supported by
ongoing economic growth and strength in commodity prices. We expect
challenges in the global supply chain to persist, resulting in
longer lead times for equipment and parts in all regions and
driving strong demand for used equipment, rentals, and
rebuilds.
We have exceeded our mid-cycle EPS and ROIC targets two quarters
ahead of schedule, and we continue to proactively manage our
business with the objective of improving our earnings capacity and
compounding our earnings at each successive mid-cycle point. We
continue to target mid-teens and above EPS growth during this
sustained upcycle.
We continue to drive fixed cost reduction initiatives globally,
targeting further improvements across people, facilities, and
supply chain productivity, and we expect to make further progress
towards reducing our SG&A as a percentage of net revenue.
However, it will take us longer than the previously communicated
time frame of Q3 2021 to Q2 2022 to average 17% SG&A as a
percentage of net revenue over the four-quarter period. This is
primarily due to lower than projected new equipment deliveries in
the second half of 2021 as a result of constrained supply, and
higher than projected product support growth rates in Q4 2021, as
well as inflationary headwinds. We remain committed to delivering
fixed cost reduction initiatives, productivity gains, and strong
operating leverage going forward.
As we continue to make strategic investments in our facilities
network, digital platform, and rental fleet, our 2022 net capital
expenditures and net rental fleet additions are expected to be in
the range of $240 million to $280 million. We continue to advance
our M&A strategy and expect to deploy capital with an initial
focus on complementary businesses in the small to medium size range
that are aligned with our product support growth strategy, drive
improved outcomes for our customers, and deliver attractive rates
of return.
We are monitoring the spread of the Omicron variant in our
regions, particularly as it affects the staffing levels of our and
our customers’ operations. We are leveraging the COVID-19
mitigation protocols we developed at the beginning of the pandemic
and expect to successfully manage our day-to-day operations through
the Omicron wave.
CORPORATE AND BUSINESS DEVELOPMENTS
Dividend
The Board of Directors has approved a quarterly dividend of
$0.225 per share, payable on March 10, 2022 to shareholders of
record on February 24, 2022. This dividend will be considered an
eligible dividend for Canadian income tax purposes.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
$
millions, except per share amounts |
Three months ended December 31 |
Twelve months ended December 31 |
|
2021 |
|
2020 |
|
% changefav (unfav) |
2021 |
|
2020 |
|
% changefav (unfav) |
New
equipment |
562 |
|
500 |
|
13 |
|
2,189 |
1,671 |
|
31 |
|
Used
equipment |
124 |
|
93 |
|
33 |
|
409 |
308 |
|
33 |
|
Equipment rental |
68 |
|
49 |
|
39 |
|
235 |
196 |
|
20 |
|
Product
support |
982 |
|
877 |
|
12 |
|
3,728 |
3,473 |
|
7 |
|
Net fuel
and other |
38 |
|
32 |
|
20 |
|
135 |
120 |
|
12 |
|
Net revenue |
1,774 |
|
1,551 |
|
14 |
|
6,696 |
|
5,768 |
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
484 |
|
418 |
|
16 |
|
1,801 |
|
1,570 |
|
15 |
|
Gross
profit as a percentage of net revenue(2) |
27.3 |
% |
26.9 |
% |
|
26.9 |
% |
27.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
SG&A |
(328 |
) |
(324 |
) |
(1 |
) |
(1,266 |
) |
(1,245 |
) |
(2 |
) |
SG&A
as a percentage of net revenue |
(18.5 |
)% |
(20.9 |
)% |
|
(18.9 |
)% |
(21.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Equity
earnings of joint ventures |
1 |
|
- |
|
|
2 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income |
- |
|
14 |
|
|
15 |
|
115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses |
- |
|
- |
|
|
- |
|
(51 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT |
157 |
|
108 |
|
46 |
|
552 |
|
392 |
|
41 |
|
EBIT as
a percentage of net revenue |
8.9 |
% |
6.9 |
% |
|
8.2 |
% |
6.8 |
% |
|
Adjusted
EBIT |
157 |
|
94 |
|
67 |
|
537 |
|
328 |
|
63 |
|
Adjusted
EBIT as a percentage of net revenue |
8.9 |
% |
6.1 |
% |
|
8.0 |
% |
5.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to shareholders of Finning |
104 |
|
72 |
|
44 |
|
364 |
|
232 |
|
57 |
|
Basic
EPS |
0.66 |
|
0.45 |
|
47 |
|
2.26 |
|
1.43 |
|
58 |
|
Adjusted EPS |
0.66 |
|
0.38 |
|
71 |
|
2.18 |
|
1.14 |
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
241 |
|
185 |
|
31 |
|
871 |
|
700 |
|
24 |
|
EBITDA
as a percentage of net revenue |
13.6 |
% |
11.9 |
% |
|
13.0 |
% |
12.1 |
% |
|
Adjusted
EBITDA |
241 |
|
171 |
|
41 |
|
856 |
|
636 |
|
34 |
|
Adjusted
EBITDA as a percentage of net revenue |
13.6 |
% |
11.0 |
% |
|
12.8 |
% |
11.0 |
% |
|
Free cash flow |
148 |
|
292 |
|
(50 |
) |
300 |
|
870 |
|
(66 |
) |
|
Dec 31, 2021 |
Dec 31, 2020 |
|
|
|
|
Invested
capital |
3,326 |
|
3,067 |
|
|
|
|
Invested
capital turnover (times) |
2.04 |
|
1.68 |
|
|
|
|
Net debt
to Adjusted EBITDA ratio |
1.1 |
|
1.4 |
|
|
|
|
Adjusted ROIC |
16.4 |
% |
9.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
To access Finning's complete Q4 and annual 2021 results, please
visit our website at
https://www.finning.com/en_CA/company/investors.html
Q4 2021 INVESTOR CALLThe Company will hold an
investor call on February 9, 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) |
The Chilean Copper Commission
(Cochilco) - Proyección de la producción de cobre en Chile 2020 –
2031; DEPP 29/2020; Registro Propiedad Intelectual © N°
2020-A-10631 |
|
|
(6) |
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 |
2021 |
|
|
2020 |
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
EBIT |
157 |
150 |
137 |
108 |
|
|
108 |
|
138 |
|
52 |
|
94 |
|
Depreciation and amortization |
84 |
80 |
78 |
77 |
|
|
77 |
|
77 |
|
78 |
|
76 |
|
EBITDA |
241 |
230 |
215 |
185 |
|
|
185 |
|
215 |
|
130 |
|
170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT |
157 |
150 |
137 |
108 |
|
|
108 |
|
138 |
|
52 |
|
94 |
|
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 |
157 |
150 |
137 |
93 |
|
|
94 |
|
101 |
|
39 |
|
94 |
|
Depreciation and amortization |
84 |
80 |
78 |
77 |
|
|
77 |
|
77 |
|
78 |
|
76 |
|
Adjusted EBITDA |
241 |
230 |
215 |
170 |
|
|
171 |
|
178 |
|
117 |
|
170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The impact on provision for income taxes of significant items
was as follows:
|
3 months
ended |
2021 |
|
2020 |
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
— |
— |
2 |
|
4 |
10 |
16 |
|
— |
|
|
Severance
costs |
— |
— |
— |
— |
|
— |
— |
(10 |
) |
— |
|
|
Facility closures,
restructuring costs, |
|
|
|
|
|
|
|
|
|
|
|
|
and impairment losses |
— |
— |
— |
— |
|
— |
— |
(2 |
) |
— |
|
Provision
for income taxes on significant |
|
|
|
|
|
|
|
|
|
|
|
items |
— |
— |
— |
2 |
|
4 |
10 |
4 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from basic EPS to Adjusted basic EPS for our
consolidated operations is as follows:
|
3 months
ended |
2021 |
|
|
2020 |
|
($) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Basic EPS |
0.66 |
0.61 |
0.56 |
0.43 |
|
|
0.45 |
|
0.54 |
|
0.12 |
|
0.33 |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
— |
— |
(0.05 |
) |
|
(0.07 |
) |
(0.17 |
) |
(0.30 |
) |
— |
|
|
Return on our
investment in Energyst |
— |
— |
— |
(0.03 |
) |
|
— |
|
— |
|
— |
|
— |
|
|
Severance
costs |
— |
— |
— |
— |
|
|
— |
|
— |
|
0.20 |
|
— |
|
|
Facility closures,
restructuring costs, |
|
|
|
|
|
|
|
|
|
|
|
|
and impairment losses |
— |
— |
— |
— |
|
|
— |
|
— |
|
0.04 |
|
— |
|
Adjusted basic EPS (1) |
0.66 |
0.61 |
0.56 |
0.35 |
|
|
0.38 |
|
0.37 |
|
0.06 |
|
0.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The per share impact for each quarter has
been calculated using the weighted average number of common shares
outstanding during the respective quarters; therefore, quarterly
amounts may not add to the annual or year-to-date total.
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our Canadian operations is as follows:
|
3 months
ended |
2021 |
|
|
2020 |
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
EBIT |
92 |
84 |
82 |
69 |
|
|
72 |
|
93 |
|
63 |
|
60 |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
— |
— |
(10 |
) |
|
(13 |
) |
(35 |
) |
(60 |
) |
— |
|
|
Severance
costs |
— |
— |
— |
— |
|
|
— |
|
— |
|
20 |
|
— |
|
|
Facility closures,
restructuring costs, and |
|
|
|
|
|
|
|
|
|
|
|
|
impairment losses |
— |
— |
— |
— |
|
|
— |
|
— |
|
5 |
|
— |
|
Adjusted
EBIT |
92 |
84 |
82 |
59 |
|
|
59 |
|
58 |
|
28 |
|
60 |
|
Depreciation and amortization |
50 |
48 |
47 |
46 |
|
|
47 |
|
48 |
|
47 |
|
43 |
|
Adjusted EBITDA |
142 |
132 |
129 |
105 |
|
|
106 |
|
106 |
|
75 |
|
103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our South American operations is as follows:
|
3 months
ended |
2021 |
|
2020 |
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
EBIT |
59 |
58 |
51 |
41 |
|
41 |
40 |
2 |
38 |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
Severance
costs |
— |
— |
— |
— |
|
— |
— |
17 |
— |
|
|
Facility closures,
restructuring costs, and |
|
|
|
|
|
|
|
|
|
|
|
|
impairment losses |
— |
— |
— |
— |
|
— |
— |
4 |
— |
|
Adjusted
EBIT |
59 |
58 |
51 |
41 |
|
41 |
40 |
23 |
38 |
|
Depreciation and amortization |
22 |
22 |
20 |
20 |
|
20 |
19 |
22 |
22 |
|
Adjusted EBITDA |
81 |
80 |
71 |
61 |
|
61 |
59 |
45 |
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our UK & Ireland operations is as follows:
|
3 months
ended |
2021 |
|
2020 |
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
EBIT |
12 |
17 |
17 |
7 |
|
11 |
9 |
(5 |
) |
1 |
|
Significant
item: |
|
|
|
|
|
|
|
|
|
|
|
Severance costs |
— |
— |
— |
— |
|
— |
— |
4 |
|
— |
|
Adjusted
EBIT |
12 |
17 |
17 |
7 |
|
11 |
9 |
(1 |
) |
1 |
|
Depreciation and amortization |
11 |
10 |
10 |
10 |
|
9 |
9 |
9 |
|
10 |
|
Adjusted EBITDA |
23 |
27 |
27 |
17 |
|
20 |
18 |
8 |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from EBIT to Adjusted EBIT and Adjusted EBITDA
for our Other operations is as follows:
|
3 months
ended |
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
EBIT |
(6 |
) |
(9 |
) |
(13 |
) |
(9 |
) |
|
(16 |
) |
(4 |
) |
(8 |
) |
(5 |
) |
|
Significant
items: |
|
|
|
|
|
|
|
|
|
|
|
CEWS support |
— |
|
— |
|
— |
|
— |
|
|
(1 |
) |
(2 |
) |
(4 |
) |
— |
|
|
|
Return on our
investment in Energyst |
— |
|
— |
|
— |
|
(5 |
) |
|
— |
|
— |
|
— |
|
— |
|
|
|
Severance
costs |
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
1 |
|
— |
|
|
Adjusted
EBIT |
(6 |
) |
(9 |
) |
(13 |
) |
(14 |
) |
|
(17 |
) |
(6 |
) |
(11 |
) |
(5 |
) |
|
Depreciation and amortization |
1 |
|
— |
|
1 |
|
1 |
|
|
1 |
|
1 |
|
— |
|
1 |
|
|
Adjusted EBITDA |
(5 |
) |
(9 |
) |
(12 |
) |
(13 |
) |
|
(16 |
) |
(5 |
) |
(11 |
) |
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Cash flow provided
by (used in) operating |
193 |
|
212 |
|
8 |
|
12 |
|
|
317 |
|
340 |
|
319 |
|
(14 |
) |
|
|
activities |
|
|
|
|
|
|
|
|
|
|
Additions to
property, plant, and equipment |
|
|
|
|
|
|
|
|
|
|
|
and intangible assets |
(45 |
) |
(38 |
) |
(17 |
) |
(33 |
) |
|
(34 |
) |
(26 |
) |
(17 |
) |
(38 |
) |
|
Proceeds on
disposal of property, plant, and |
|
|
|
|
|
|
|
|
|
|
|
equipment |
— |
|
2 |
|
5 |
|
1 |
|
|
9 |
|
2 |
|
10 |
|
2 |
|
|
Free cash flow |
148 |
|
176 |
|
(4 |
) |
(20 |
) |
|
292 |
|
316 |
|
312 |
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
|
Dec 31 |
Sep 30 |
|
Cost of sales |
1,465 |
|
1,443 |
|
|
1,248 |
|
1,163 |
|
|
Cost of
sales related to mobile refuelling operations |
(190 |
) |
(170 |
) |
|
(129 |
) |
(124 |
) |
|
Cost of sales related to the dealership |
1,275 |
|
1,273 |
|
|
1,119 |
|
1,039 |
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
|
Dec 31 |
Sep 30 |
|
Inventory |
1,687 |
|
1,627 |
|
|
1,477 |
|
1,626 |
|
|
Fuel
inventory |
(9 |
) |
(6 |
) |
|
(3 |
) |
(2 |
) |
|
Inventory related to the dealership |
1,678 |
|
1,621 |
|
|
1,474 |
|
1,624 |
|
|
|
|
|
|
|
|
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:
|
|
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Cash and cash equivalents |
(502 |
) |
(518 |
) |
(378 |
) |
(469 |
) |
|
(539 |
) |
(453 |
) |
(338 |
) |
(260 |
) |
|
Short-term debt |
374 |
|
419 |
|
114 |
|
103 |
|
|
92 |
|
217 |
|
158 |
|
329 |
|
|
Current portion of long-term
debt |
190 |
|
191 |
|
386 |
|
326 |
|
|
201 |
|
200 |
|
200 |
|
200 |
|
|
Non-current portion of long-term debt |
921 |
|
923 |
|
903 |
|
973 |
|
|
1,107 |
|
1,136 |
|
1,348 |
|
1,381 |
|
|
Net debt |
983 |
|
1,015 |
|
1,025 |
|
933 |
|
|
861 |
|
1,100 |
|
1,368 |
|
1,650 |
|
|
Total
equity |
2,343 |
|
2,320 |
|
2,252 |
|
2,244 |
|
|
2,206 |
|
2,184 |
|
2,127 |
|
2,233 |
|
|
Invested capital |
3,326 |
|
3,335 |
|
3,277 |
|
3,177 |
|
|
3,067 |
|
3,284 |
|
3,495 |
|
3,883 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Total revenue |
1,949 |
|
1,904 |
|
1,845 |
|
1,596 |
|
|
1,666 |
|
1,553 |
|
1,419 |
|
1,558 |
|
|
Cost of
fuel |
(175 |
) |
(156 |
) |
(140 |
) |
(127 |
) |
|
(115 |
) |
(110 |
) |
(84 |
) |
(119 |
) |
|
Net revenue |
1,774 |
|
1,748 |
|
1,705 |
|
1,469 |
|
|
1,551 |
|
1,443 |
|
1,335 |
|
1,439 |
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
2021 |
|
|
2020 |
|
|
($
millions) |
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
|
Total current assets |
3,619 |
|
3,620 |
|
3,416 |
|
3,319 |
|
|
3,214 |
|
3,261 |
|
3,416 |
|
3,828 |
|
|
Cash
and cash equivalents |
(502 |
) |
(518 |
) |
(378 |
) |
(469 |
) |
|
(539 |
) |
(453 |
) |
(338 |
) |
(260 |
) |
|
Total current assets in working capital |
3,117 |
|
3,102 |
|
3,038 |
|
2,850 |
|
|
2,675 |
|
2,808 |
|
3,078 |
|
3,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
2,155 |
|
2,156 |
|
1,942 |
|
1,817 |
|
|
1,623 |
|
1,717 |
|
1,735 |
|
2,112 |
|
|
Short-term debt |
(374 |
) |
(419 |
) |
(114 |
) |
(103 |
) |
|
(92 |
) |
(217 |
) |
(158 |
) |
(329 |
) |
|
Current
portion of long-term debt |
(190 |
) |
(191 |
) |
(386 |
) |
(326 |
) |
|
(201 |
) |
(200 |
) |
(200 |
) |
(200 |
) |
|
Total current liabilities in working capital |
1,591 |
|
1,546 |
|
1,442 |
|
1,388 |
|
|
1,330 |
|
1,300 |
|
1,377 |
|
1,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital |
1,526 |
|
1,556 |
|
1,596 |
|
1,462 |
|
|
1,345 |
|
1,508 |
|
1,701 |
|
1,985 |
|
|
|
|
|
|
|
|
|
|
|
|
FORWARD-LOOKING INFORMATION CAUTION
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 expectation of upcycle
demand conditions from the start of 2022 (assumes ongoing economic
growth and strength in commodity prices), that supply constraints
will persist; our strong foundation to capture upcycle
opportunities; our strategic plan to grow product support, reduce
costs, and reinvest free cash flow to compound our earnings; our
target mid-teens and above EPS growth during this sustained
upcycle; delivery during 2022 on an oil sands operator’s order for
20 Caterpillar 797F off-highway trucks; our expectation that these
trucks will enhance fuel efficiency, reduce carbon footprint per
tonne and improve emissions; all information in the “Q4 2021 Market
Update and Business Outlook” section of this news release regarding
our expectations for Canada (based on assumptions of strong
commodity prices and broad-based economic growth 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 CVAs, and continued capital expenditures in the oil
sands), South America (based on assumptions related to Chile of a
continued strong copper price, a projected increase in copper
production, a moderate increase in mining royalties, a strong
demand for mining infrastructure and the government’s
infrastructure investment program), the UK & Ireland (based on
assumptions of continued government investments in infrastructure
projects and projections of continued growth in cloud data centre
capacity) and the upcycle and shift to growth (based on assumptions
of ongoing economic growth and strength in commodity prices and
that we will successfully mitigate the effects of persistent
challenges in the global supply chain, drive improved earnings
capacity and fixed cost reduction initiatives and manage our
day-to-day operations through the Omicron wave); and the Canadian
income tax treatment of the quarterly dividend. 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 in 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 and businesses
in response; general economic and market conditions and economic
and market conditions in the regions where we operate; foreign
exchange rates; commodity prices; the impact of changes in the UK’s
trade relationship with the European Union as a result of Brexit;
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 reduce costs in response to
slowing activity levels; 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; fluctuations in defined benefit pension
plan contributions and related pension expenses; 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; and 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 for the purpose of giving information about our
current expectations and plans and allowing 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, 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 increased
maintenance work by mining customers following the lessening of
COVID-19 restrictions and protocols will continue; 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 improve; 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
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 our AIF and in
our annual and most recent quarterly MD&A 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.
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