Finning International Inc.

thank you for standing by this is the conference operator welcome to the Finning International Inc fourth quarter 2023 investor call and webcast as a reminder all participants are in listen-only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions analysts who wish to join the question queue may press star then one on their telephone keypad should you need assistance during the conference call You may signal an operator by pressing star, then zero. I would now like to turn the conference over to Greg Palaszczuk, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Finning's fourth quarter earnings call. Joining me on today's call is Kevin Parks, our President and CEO. Following our remarks today, we'll open the line to questions. This call is being webcast on the investor relations sections of Finning.com. We've also provided a set of slides that we'll be referencing during our prepared remarks. Slides are posted on the website. An audio file of the call and the accompanying presentation will be archived. Before I turn it over to Kevin, I want to remind everyone that some of the statements provided during this call are forward-looking. Please refer to slides 9 and 10 for important disclosures about forward-looking information, as well as currency and specified financial measures, including non-GAAP financial measures. Please note the forward-looking information is subject to risks, uncertainties, and other factors as discussed in our annual information form under key business risks and in our MD&A under risk factors and management and forward-looking information disclaimer. Please treat this information with caution as our actual results could differ materially from current expectations. Kevin, over to you.

Thank you, Greg, and good morning, everyone. Today I will speak about our 2023 performance, our fresh strategic priorities, which were presented at our investor day. Following my remarks, Greg will speak in more detail about our fourth quarter results. Please turn to slide two. I am very proud of our team. They delivered very strong results and performance in 2023. We achieved excellent growth in product support in all regions and won strategically important business. that sets the foundation for sustainable growth in future years. We delivered record earnings per share and further strengthened our earnings capacity. We also made good progress in growing our used rental and power assistance businesses. I'm grateful to our employees for their commitment and contribution to a record year. We are pleased with 17% growth year over year in product support revenue. We grew in all regions by capturing market share thoughtfully building our capacity and capabilities, and executing with discipline in a challenging environment. We increased our technical workforce by 7% in 2023 to nearly 5,500 technicians globally to support a growing number of product support contracts, strong demand for rebuilds, which were up 14% year over year. We also made targeted investments in our facilities to better serve our customers. In Canada, we opened a new state-of-the-art triple R facility in Kamloops. We have also centralised five parts warehouses in Edmonton into one, where we still have opportunity for more efficiencies, automation and velocity. In Chile, we are expanding our capabilities and optimising our mining services footprint in Antofagasta, relocating the service operation to our La Negra facilities, which some of you visited during our September investor tour. We have strengthened our earnings capacity by reducing our SG&A as a percentage of net revenue to 17.2% in 2023, despite persistent inflationary pressures. Our adjusted earnings per share increased by 20% year-over-year to an all-time high of $3.91. And our 2023 adjusted return on invested capital improved to 20%, led by South America. I would also like to acknowledge our team's resilience and dedication to our customers as we managed through some business challenges in the fourth quarter. This was particularly in Argentina, when the changing government led to significant disruption to our business, our employees and their families. Construction product support activity in Canada and the UK and Ireland was more challenging than we expected in the fourth quarter. We expect this to recover through 2024 as the operating environment improves. Whilst we achieved strong profitable growth over the last two years, free cash flow generation was challenging as we reinvested in growing our business and managed supply chain challenges to support our customers. To my comments earlier around strategically important wins, in 2023 we delivered 60 ultra-class trucks in Canada and Chile and 50 large mining trucks to contractors. We are pleased to end the year with positive free cash flow and a strong balance sheet. The majority of our inventory is high quality and has been committed to our customers. As growth rates moderate, improving our resilience and unlocking invested capital will be critical. In 2024, we will be working to increase our invested capital velocity, prioritize our cost and capital resources, and improve our free cash flow generation. We are building a culture of resilience through our global organizations. This includes an acute focus on inventory management with increased discipline, forecasting, and stocking, a review of low heroic activities and investments, which we started to implement in Q4, and greater priority and flexibility of our resources to ensure our cost structure becomes more variable over time. Importantly, improving customer service levels is a priority as we execute these plans. As I stated earlier, we've started to make progress growing our used rental and power systems as we continue to build capabilities in these strategically important areas. We achieved record used equipment sales in the fourth quarter and our power systems revenue was up 31% in 2023 compared to 2022, with all regions achieving double digit growth. We are pleased with our rental performance. Our primary focus is on Canada, where 2023 rental revenues were up 7% from 2022. As we look ahead, We continue to build a safe and secure company, which makes it easier for our teams to better serve our customers and empower our employees to drive customer loyalty. Our recent employee experience survey showed that our sustainable employee engagement score has improved since we last conducted this survey in 2021, with encouraging trends across all regions and job roles. Our focus in 2024 is on executing our strategic plans. cementing the new earnings power of the business by growing product support, building full cycle resilience by unlocking invested capital, and delivering sustainable growth in rental use and power systems. We expect the post-pandemic growth to moderate but remain positive, driven by a constructive commodity process, improving supply chain and market share opportunities. We are entering 2024 with a healthy equipment backlog and our workshops are busy. As we build on our 2023 results, we are confident in progress towards our investor day targets. I will now hand it back to Greg to provide a greater level of detail on our fourth quarter results.