Finning International Inc.

Thank you for standing by. This is the conference operator. Welcome to the Flinning International Inc. Second quarter, 2025, investor call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Analysts who wish to join the question queue may press star then one on the 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 David Primrose, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Finning's second quarter earnings call. Joining me on today's call is Kevin Parks, our President and Chief Executive Officer. Following our remarks, we will open the line to questions. This call is being webcast on the investor relations section at finning.com. We have also provided a set of slides on our website that we will reference. An audio file of this call and the accompanying slides 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 nine and 10 for important disclosures about forward-looking information, as well as currency and specified financial measures, including non-GAAP financial measures. Please note that 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. In addition, as previously announced on June 30th, 2025, we successfully completed the sales of ForRefuel and Comtek. ForRefuel and Comtek's operating results were previously reported as part of our Canadian operations and are now presented as discontinued operations. Unless otherwise noted, this presentation reflects the results of continuing operations. Kevin, over to you.

Thank you, Dave, and good morning, everyone. Thank you for joining us today. The positive momentum we generated in 2024 and in the first quarter of 2025 continued with another strong quarter of results. These results reflect the commitment of our team to discipline the execution of our strategy and the diversity and health of our end markets and regions. I'm excited to have the support of Dave in his new role of executive vice president and chief financial officer. Dave's 36 years of operating experience at Finning demonstrates his commitment to our company and our customers. His contribution to our business across most of our functions, including leading two of our regions, makes him a great partner to support me and our deal of principles to drive growth and focus on cost and capital optimization. We are looking forward to the continued progress executing our strategy under Dave's financial leadership. I would also like to take a moment to thank Greg Palastruk for his leadership as CFO over the past five years and his contribution to Finning for the last 11 years as he moves on to his new endeavor. Consistent with prior quarters, I'll provide a brief review of key highlights from the execution of our strategy before turning the call over to Dave who will provide more detail on the results in the quarter. Please turn to slide two. We continue to build on strong Q1 2025 results, sequentially growing revenue by 6% from the first quarter to $2.6 billion. We believe the diversity of our business positions us well for all market conditions and provides resilience and stability for our earnings, particularly in times of market uncertainty. Our new equipment backlog grew to 3 billion at the end of June, the fifth consecutive quarter of backlog growth and a new record. We are encouraged by this increase given we delivered nearly $1 billion of new equipment in the quarter and the highest quarterly delivery amount in the past 10 years. This record level of backlog provides confidence for our business and future product support opportunities. Order intake outpaced deliveries in all regions, particularly pleasing was Canada with orders of more than 80% of the same quarter last year with strong orders in all segments, including construction where orders almost doubled. We also saw strong order activity from several mining customers as well as in the power sector related to gas compression. In South America, similarly, we saw strong mining sector order intake complemented by power from both oil and gas and prime power segments. In the UK and Ireland, we are seeing improving orders from construction customers and steady power sector growth activity. Moving to product support. Q2 product support revenue grew in all regions, reflecting our efforts in Q1 to re-energize sales efforts in improving market conditions. In Canada, product support revenues were 4% led by mining. Mining product support revenues improved year over year by 10% and 3% sequentially from the first quarter. As I've spoken about on the last couple of calls, we remain committed to supporting our customers to achieve lower production costs through stronger partnerships, planning and execution. In South America, product support revenues were up 4% in functional currency on strong mining activity. We again added over 100 technicians in the quarter to help support our customers, including as we ramp up our capabilities to deliver on the new equipment awards we announced in May 2024. In the UK and Ireland, product support revenues were 1% in functional currency on improved power segment activity levels, similar to last quarter as we continue to support a growing population of power systems equipment in the region. Maximizing product support remains a key focus for our regions. During the second quarter, we also continued our solid progress on improving the resilience of our business to strengthen our earnings capacity with strong cost and capital control. SG&A margin was .5% in the quarter and included a meaningful increase in long-term incentive plan expense, given the 44% share price appreciation. We also took further action in Canada to streamline our organisation structure with expected annual future savings of over $20 million. We remain relentlessly focused on driving efficiency in our operations, while building capabilities, coverage and capacity to drive loyalty and growth. Invested capital turns were approximately 2.3 times this quarter and have steadily improved since the beginning of 2024, demonstrating our focus on improving capital velocity and growing our business. From a sustainable growth perspective, we continue to see strong growth in our power systems business and improvement in our rental revenues. Our power systems backlog now exceeds $1 billion, reflecting a diversified mix of prime power packages, oil and gas related equipment orders and data centre standby packages to be delivered through 2027. Relative last June, our power equipment backlog is of 88%. Power systems product support revenues also continues a steady growth trajectory as population builds. Revenue in our used equipment segment decreased this quarter, mostly due to large one-off packages last year. Used equipment margins have however improved in 2025 as the market inventory levels have normalised. This is generally in line with the expectations we outlined during the third quarter results last year. Rental revenue increased 4% with a 10% increase in Canada relative to Q2 2024, including solid activity in heavy rentals despite the more challenging construction market. Our new rental leadership team are making solid progress as the coverage and fleet changes we made last year are improving utilisation levels in each of our rental businesses in Canada. We remain committed to growing this line of business in the long term. Before I turn the call over to Dave, I'd like to provide a few comments from each of our regions. In South America, the team continues to execute well across all countries and across sectors. We continue to see solid activity levels in our mining business with new -for-class truck deliveries and support equipment awards added to our backlog in the quarter. Customers are actively managing in their equipment fleets, adding new equipment while maximising the utilisation of their existing aging fleets. We expect continued growth for our mining business, albeit not in a linear fashion as mines build specific optimisation and growth plans. We will also continue to focus on renewables in the construction sector, with mining contract activity levels strong. Our power systems business remains active in South America, particularly in oil and gas and in the data centre market. In the UK and Ireland, the team continues to operate resiliently in a tough market. While the construction segment continues to show signs of improvement from a quoting standpoint, equipment utilisation levels are still subdued. Our power systems business in the UK and Ireland continues to see strong quoting activity from prime power and data centre applications, while at the same time, product support revenues in power are robust. We continue to leverage digital tools, as mentioned on the last call, to drive productivity improvements as we execute, repair and rebuild work. In Canada, the team is focused on capturing growth opportunities in the market, driving product support growth through adding technicians and sales coverage remains a priority. Activity levels in power systems have been solid, supported by well servicing and gas compression and market demand. Construction activities remains on the slower side of our expectations, but we are relentlessly looking for ways to add value to our customers, whether through machine rebuilds or targeted component sales. Our mining business continues to perform well and activity levels are robust, despite some weakness in certain commodities. We added over 20 auto class mining trucks to backlog this quarter and quoting activity remains strong. Overall, we remain optimistic for the second half of 2025, with the strong first half behind us and lots of opportunity in front of us and continued momentum in the execution of our strategy. With that, I'll hand it back to Dave.