TORONTO - Finning International Inc. (TSX:FTT) is looking to grow its service business and is on the hunt for potential acquisitions following a deal for Bucyrus earlier this year, chief executive Mike Waites said Thursday.
"There will be more dealerships coming Finning's way," Waites told an investor meeting.
"There's nothing imminent, I want to stress that today, but there will be more growth from acquisitions as we go forward."
In its outlook for 2013, the company said its Canadian and South American mining equipment operations are expected to provide the growth, while the forecast for the U.S. and Ireland is lower compared with 2012.
Finning said Thursday it expects revenue growth between zero and 10 per cent in 2013, while earnings are expected to grow at a higher rate than revenue.
The company also reiterated a commitment to improving operating profitability and driving towards a nine to 10 per cent margin on earnings before interest and taxes. Finning earned a 7.8 per cent margin for the third quarter of 2012.
"We are committed to grow earnings at a rate faster than revenues through improving the quality of our earnings and do it on a consistent basis," Finning chief financial officer Dave Smith said.
"We are committed to drive solid returns on invested capital and we are committed to deliver strong free cash flow and to deleverage the balance sheet. And we are committed to grow the dividend consistent with sustainable earnings."
Waites said the company's product support business, which is nearing $3 billion in annual revenue, has grown revenue at a compounded annual rate of 11 per cent over the last decade.
"These revenues are driven from an installed base of machines in our territory, so again we have good visibility on the revenues and growth going forward," he said.
Finning closed its US$465-million deal for the distribution and support businesses of the former Bucyrus from Caterpillar earlier this year.
The deal included a Caterpillar engine and equipment component remanufacturing plant in Edmonton, a mining and heavy equipment preparation and overhaul operation in Red Deer, Alta., and compression equipment repair shops in Western Canada.
The Bucyrus business, which also included operations in South America, had about $600 million in annual revenue and added about 900 employees to Finning.
For the nine months ended Sept. 30, Finning earned $232.2 million or $1.35 per share on $4.84 billion in revenue.
That compared with a profit of $188.8 million or $1.10 per share on $4.08 billion in revenue in the first nine months of 2011.
Finning shares were up 53 cents at $23.65 on the Toronto Stock Exchange at midday Thursday.
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