Shares of Finning International experienced a sharp decline on Tuesday morning, despite the company surpassing expectations in several key metrics during its third quarter. The exceptional performance in Canada and South America contributed to the positive results.
At 9:56 a.m. ET, shares were trading at 34.96 Canadian dollars ($25.52), marking a 6.8% decrease.
As a reputable industrial equipment dealer in Canada, specializing in Caterpillar products, Finning International announced late Monday that its earnings per share had increased by 9% to C$1.07.
This impressive growth exceeded the consensus estimate of a rise to C$1.00, as reported by the analyst forecasts on FactSet.
According to analyst Michael Doumet’s report for Scotiabank, these better-than-expected results were achieved despite a challenging comparative third quarter of 2022. This period benefited from deferred product support in the previous quarter due to supply chain delays.
The company witnessed a net revenue increase from C$2.11 billion to C$2.44 billion, in line with the analyst forecast for a rise to C$2.45 billion. Notably, Finning International’s new equipment segment experienced a substantial revenue rise of 28% to C$870 million, while its largest segment, product support, reached revenue of C$1.36 billion, a 13% increase.
Conversely, revenue from the used equipment segment declined by 25% to C$72 million.
Although consolidated backlog decreased by approximately 5% quarter-over-quarter to C$2.3 billion due to orders in South America, strong Canadian deliveries and reduced U.K. and Ireland backlog levels mitigated this decrease, according to Steve Hansen of Raymond James.
Hansen emphasized that despite the decline, backlog levels remain near record highs.
In conclusion, Finning International showcased robust performance in the third quarter, outperforming expectations. The company’s results were driven by its operations in Canada and South America, despite challenges within the broader industry.
