Q2 2026 Finning International Inc Earnings Call

August 6, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the Finning International, Inc., second quarter 2026, investor call and webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Finning International Inc.'s Q2 2026 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 their telephone keypad. Should you need assistance during the conference call, you may reach 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.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Finning International Inc.'s Q2 2026 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 their telephone keypad. Should you need assistance during the conference call, you may reach 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.

Speaker #1: 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.

Speaker #1: Should you need assistance during the conference call, you may reach 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.

Speaker #1: Please go ahead.

Speaker #2: 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 CEO.

David Primrose: Thank you, operator. Good morning, everyone, and welcome to Finning's Q2 earnings call. Joining me on today's call is Kevin Parkes, our President and CEO. Following our remarks, we will open the line to questions. This call is being webcast on the investor relations section of finning.com. We have also provided a set of slides on our website that we will reference, and 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.

David Primrose: Thank you, operator. Good morning, everyone, and welcome to Finning's Q2 earnings call. Joining me on today's call is Kevin Parkes, our President and CEO. Following our remarks, we will open the line to questions. This call is being webcast on the investor relations section of finning.com. We have also provided a set of slides on our website that we will reference, and 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.

Speaker #2: Following our remarks, we will open the line to questions. This call is being webcast on the Investor Relations section of finning.com. We have also provided a set of slides on our website that we will reference and an audio file of this call and the accompanying slides will be archived.

Speaker #2: 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.

Speaker #2: 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 the forward-looking information disclaimer.

David Primrose: 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, unless otherwise noted, this presentation reflects the results of continuing operations only. Kevin, over to you.

David Primrose: 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, unless otherwise noted, this presentation reflects the results of continuing operations only. Kevin, over to you.

Speaker #2: Please treat this information with caution as our actual results could differ materially from current expectations. In addition, unless otherwise noted, this presentation reflects the results of continuing operations only.

Speaker #2: Kevin, over to you.

Speaker #3: Thank you, Dave, and good morning, everyone. Thank you for joining us, and thank you to our teams our customers and Caterpillar for your hard work, trust, and partnership.

Kevin Parkes: Thank you, Dave, and good morning, everyone. Thank you for joining us, and thank you to our teams, our customers, and Caterpillar for your hard work, trust, and partnership. Strong strategic execution delivered record quarterly EPS of CAD 1.22, up 21% year over year. Revenues exceeded CAD 3 billion for the first time, and product support grew year on year for the ninth consecutive quarter, growing 11%. Even with record new equipment deliveries, which were up 34%, backlog remains strong at CAD 3.8 billion, driven by strategically significant mining orders in Chile and gas compression orders in Canada. Quoting activity and fleet enhancement discussions are increasing in Chile and Argentina. Oil sands production, pipeline activity, and infrastructure build in Canada are gaining momentum. Market share gains across all regions give us confidence in future backlog growth. Most importantly, the machine and engine population continues to grow across our territories.

Speaker #3: Strong strategic execution delivered record quarterly EPS of $1.22, up 21% year over year. Revenues exceeded $3 billion for the first time, and product support grew year on year for the ninth consecutive quarter, growing 11%.

Speaker #3: And even with record new equipment deliveries, which were up 34%, backlog remained strong at $3.8 billion. Driven by strategically significant mining orders in Chile, and gas compression orders in Canada.

Kevin Parkes: Even with record new equipment deliveries, which were up 34%, backlog remains strong at CAD 3.8 billion, driven by strategically significant mining orders in Chile and gas compression orders in Canada. Quoting activity and fleet enhancement discussions are increasing in Chile and Argentina. Oil sands production, pipeline activity, and infrastructure build in Canada are gaining momentum. Market share gains across all regions give us confidence in future backlog growth. Most importantly, the machine and engine population continues to grow across our territories.

Speaker #3: Quoting activity and fleet enhancement discussions are increasing in Chile and Argentina. Oil sands production pipeline activity and infrastructure building Canada are gaining momentum. And market share gains across all regions give us confidence in future backlog growth.

Speaker #3: Most importantly, the machine and engine population continues to grow across our territories. That installed base is the engine for future product support growth, and the clearest line of sight to long-term value creation.

Kevin Parkes: That installed base is the engine for future product support growth and the clearest line of sight to long-term value creation. As in prior quarters, my prepared remarks will focus on the long-term earning potential we are building. Dave will cover off quarterly results in more detail. Please turn to slide two. Our performance across our three strategic pillars of our strategy is fundamentally increasing our EPS potential. Product support revenue reached CAD 6.2 billion on a last 12-month basis. In the quarter, product support was up 11% year over year, led by 19% growth in Canada. Canadian product support is growing across every sector, supported by larger mining population, rebuild activity, and increased contracted labor penetration. Indeed, customer value agreements with labor grew by 70% in the quarter, enabled by a deliberate strategic investment in capacity, including a 20% increase in technicians year over year.

Speaker #3: As in prior quarters, my prepared remarks will focus on the long-term earning potential we are building. Dave will then cover off quarterly results in more detail.

Speaker #3: Please turn to slide 2. Our performance across our three strategic pillars of our strategy is fundamentally increasing our EPS potential. Product support revenue reached $6.2 billion on our last 12-month basis, in the quarter product support was up 11% year over year, led by 19% growth in Canada.

Kevin Parkes: Product support revenue reached CAD 6.2 billion on a last 12-month basis. In the quarter, product support was up 11% year-over-year, led by 19% growth in Canada. Canadian product support is growing across every sector, supported by larger mining population, rebuild activity, and increased contracted labor penetration. Indeed, customer value agreements with labor grew by 70% in the quarter, enabled by a deliberate strategic investment in capacity, including a 20% increase in technicians year-over-year.

Speaker #3: Canadian product support is growing across every sector, supported by larger mining population, rebuild activity, and increased contracted labor penetration. Indeed, customer value agreements with labor grew by 70% in the quarter, enabled by a deliberate strategic investment in capacity, including a 20% increase in technicians year over year.

Speaker #3: Our rental businesses are also gaining momentum in each region, with revenue up 19% led by Canada. Strategic fleet investments are allowing us to capture improving end-market demand while growing with new customers and growing our population.

Kevin Parkes: Our rental businesses are also gaining momentum in each region with revenue up 19% led by Canada. Strategic fleet investments are allowing us to capture improving end market demand while growing with new customers and growing our population. At the same time, our cost and capital discipline continue to anchor our resilient operating model. We are investing in building capacity and capability to create long-term growth while maintaining strong operational leverage. SG&A as a percentage of revenue was 14.5% on a last 12-month basis, down by 120 basis points from 12 months of Q2 2025. Invested capital turns increased to 2.35 times. These are not just efficiency metrics. They are proof points that our operating model is more resilient, more scalable, and more capable of compounding earnings.

Speaker #3: At the same time, our cost and capital discipline continue to anchor our resilient operating model. We are investing in building capacity and capability to create long-term growth, while maintaining strong operational leverage.

Kevin Parkes: We are investing in building capacity and capability to create long-term growth while maintaining strong operational leverage. SG&A as a percentage of revenue was 14.5% on a last 12-month basis, down by 120 basis points from 12 months of Q2 2025. Invested capital turns increased to 2.35 times. These are not just efficiency metrics. They are proof points that our operating model is more resilient, more scalable, and more capable of compounding earnings.

Speaker #3: SG&A is a potentially revenue was $14.5% on our last 12-month basis, down by 120 basis points from 12 months of Q2 2025. Invested capital turns increased to $2.35 times, and these are not just efficiency metrics.

Speaker #3: They are proof points that our operating model is more resilient, more scalable, and more capable of compounding earnings. Before I hand back to Dave, I want to talk about a long-term opportunity.

Kevin Parkes: Before I hand back to Dave, I want to talk about a long-term opportunity for power for data centers in Western Canada, and specifically Alberta. We are working with operators, power producers, and government on primary bridging and backup solutions. This is a generational power opportunity for Canada, Alberta, and Finning. It fits directly with our core strategy of building an installed base in our operating territories and supporting it over its lifecycle by converting that population into long-term product support growth. I also want to say that this is not new territory for us. Our UK and Ireland dealership has been supporting the build, maintenance, and operation of data centers for more than a decade, developing a trusted capability and deep application experience. That capability is showing up in the numbers.

Speaker #3: For power, for data centers in Western Canada, and specifically Alberta. We are working with operators, power producers, and government on primary bridging and backup solutions.

Speaker #3: This is a generational power opportunity for Canada, Alberta, and Finning. And it fits directly with our core strategy of building an installed base in our operating territories and supporting it over its lifecycle by converting that population into long-term product support growth.

Kevin Parkes: It fits directly with our core strategy of building an installed base in our operating territories and supporting it over its lifecycle by converting that population into long-term product support growth. I also want to say that this is not new territory for us. Our UK and Ireland dealership has been supporting the build, maintenance, and operation of data centers for more than a decade, developing a trusted capability and deep application experience. That capability is showing up in the numbers.

Speaker #3: I also want to say that this is not new territory for us. Our UK and Ireland dealership has been supporting the build, maintenance, and operation of data centers for more than a decade.

Speaker #3: Developing a trusted capability and deep application experience. That capability is showing up in the numbers. And power and energy new equipment sales in our UK and Ireland business are up 38% year to date, supported by a healthy product backlog.

Kevin Parkes: Power and energy new equipment sales in our UK and Ireland business are up 38% year to date, supported by a healthy product backlog. Turning to Canada, while we are encouraged about the generational opportunity for data center builds in Western Canada, our incumbent power and energy business is also building momentum ahead of any data center contribution. Sales are up 63% year to date, and our backlog is up more than 100% compared to Q2 2025. This is primarily driven by gas compression as the oil and gas outlook improves following significant business development announcements in the quarter. It is clear power is becoming a larger strategic platform for Finning, and it strengthens the same installed base and product support flywheel that underpins our long-term earnings potential and growth. To close, Q2 demonstrates the power of the strategy.

Kevin Parkes: Power and energy new equipment sales in our UK and Ireland business are up 38% year-to-date, supported by a healthy product backlog. Turning to Canada, while we are encouraged about the generational opportunity for data center builds in Western Canada, our incumbent power and energy business is also building momentum ahead of any data center contribution.

Speaker #3: Turning to Canada, while we are encouraged about the generational opportunity, for data center builds in Western Canada, our incumbent power and energy business is also building momentum ahead of any data center contribution.

Speaker #3: Sales are up 63% year to date, and our backlog is up more than 100% compared to Q2 2025. This is primarily driven by gas compression as the oil and gas outlook improves following significant business development announcements in the quarter.

Kevin Parkes: Sales are up 63% year-to-date, and our backlog is up more than 100% compared to Q2 2025. This is primarily driven by gas compression as the oil and gas outlook improves following significant business development announcements in the quarter. It is clear power is becoming a larger strategic platform for Finning, and it strengthens the same installed base and product support flywheel that underpins our long-term earnings potential and growth. To close, Q2 demonstrates the power of the strategy.

Speaker #3: It is clear power is becoming a larger strategic platform for Finning, and it strengthens the same installed base and product support firewall that underpins our long-term earning potential and growth.

Speaker #3: To close, Q2 demonstrates the power of the strategy. We are growing the installed base, we are converting that growth into product support, and we are maintaining discipline, cost, and capital execution.

Kevin Parkes: We are growing the installed base, we are converting that growth into product support, and we are maintaining disciplined cost and capital execution. We are building a more resilient operating model, and the combination is the foundations of our earnings growth potential and the reason why we remain highly optimistic about Finning's long-term future. With that, I'll hand the call back to Dave.

Speaker #3: And we are building a more resilient operating model, and the combination forms the foundation of our earnings growth potential and the reason why we remain highly optimistic about Finning's long-term future.

Speaker #3: With that, I'll hand the call back to Dave.

Speaker #2: Thank you, Kevin. I'll now turn to slide 3. Our Q2 revenue of $3.1 billion was up 20% compared to Q2 2025, primarily driven by strong new equipment deliveries across all regions and continued product support growth, particularly in Canada.

David Primrose: Thank you, Kevin. I will now turn to slide three. Our Q2 revenue of CAD 3.1 billion was up 20% compared to Q2 2025, primarily driven by strong new equipment deliveries across all regions and continued product support growth, particularly in Canada. Exceeding CAD 3 billion in quarterly revenue for the first time in our history helped to drive record EPS and reflects continued execution momentum. We are pleased with our growth across our diversified end markets. New equipment deliveries accelerated in all regions, increasing our installed population and creating a base for future product support opportunities. Product support revenue also continued to grow, supported by robust mining activity and an improving construction sector. EBIT was CAD 249 million, up 16% compared to Q2 2025 adjusted EBIT. An EPS of CAD 1.22 was up 21% compared to Q2 2025 adjusted EPS of CAD 1.01.

Speaker #2: Exceeding $3 billion in quarterly revenue for the first time in our history, helped to drive record EPS and reflects continued execution momentum. We are pleased with our growth across our diversified end markets.

David Primrose: We are pleased with our growth across our diversified end markets. New equipment deliveries accelerated in all regions, increasing our installed population and creating a base for future product support opportunities. Product support revenue also continued to grow, supported by robust mining activity and an improving construction sector. EBIT was CAD 249 million, up 16% compared to Q2 2025 adjusted EBIT. An EPS of CAD 1.22 was up 21% compared to Q2 2025 adjusted EPS of CAD 1.01.

Speaker #2: New equipment deliveries accelerated in all regions increasing our installed population and creating a base for future product support opportunities. Product support revenue also continued to grow, supported by robust mining activity and an improving construction sector.

Speaker #2: EBIT was $249 million, up 16% compared to Q2 25 adjusted EBIT, and EPS of $1.22 was up 21% compared to Q2 25 adjusted EPS of $1.01.

Speaker #2: Long-term incentive plan expense was $21 million this quarter, or approximately $0.13 per share of EPS impact, driven by continued strong share price appreciation. This compares to LTIP expense of $25 million or approximately $0.13 per share of EPS impact in Q2 25.

David Primrose: Long-term incentive plan expense was CAD 21 million this quarter, or approximately CAD 0.13 per share of EPS impact, driven by continued strong share price appreciation. This compares to LTIP expense of CAD 25 million, or approximately CAD 0.13 per share of EPS impact in Q2 2025. Our balance sheet and capital efficiency remain strong. Free cash flow was CAD +15 million, with increased collections from higher revenues largely offsetting investments in working capital to support growth. Net debt to adjusted EBITDA was 1.6 times at the end of June. Invested capital turns were 2.35 times, and adjusted return on invested capital from continuing operations was 19%, all within our target ranges. On slide four, we show changes in our revenue by line of business compared to Q2 2025 and the composition of our equipment backlog by market sector.

Speaker #2: Our balance sheet and capital efficiency remain strong. Free cash flow was a positive $15 million with increased collections from higher revenues, largely offsetting investments in working capital to support growth.

David Primrose: Free cash flow was CAD +15 million, with increased collections from higher revenues largely offsetting investments in working capital to support growth. Net debt to adjusted EBITDA was 1.6 times at the end of June. Invested capital turns were 2.35 times, and adjusted return on invested capital from continuing operations was 19%, all within our target ranges. On slide four, we show changes in our revenue by line of business compared to Q2 2025 and the composition of our equipment backlog by market sector.

Speaker #2: Net debt to adjusted EBITDA was $1.6 times at the end of June, invested capital turns were $2.35 times, and adjusted return on invested capital from continuing operations was $19%, all within our target ranges.

Speaker #2: On slide 4, we show changes in our revenue by line of business compared to Q2 25 and the composition of our equipment backlog by market sector.

Speaker #2: New equipment sales were up 34%, driven by increased mining deliveries in Canada and South America as well as construction deliveries in all regions. Used equipment sales were up 18%, primarily driven by increased activity in the Canadian construction business.

David Primrose: New equipment sales were up 34%, driven by increased mining deliveries in Canada and South America, as well as construction deliveries in all regions. Used equipment sales were up 18%, primarily driven by increased activity in the Canadian construction business. Rental revenue was up 19%, reflecting improving construction and power and energy activity across all regions. Product support revenue was up 11%, primarily driven by strong activity in Canada, where product support was up 19%, led by mining. Despite the record level of new equipment sales in the quarter, equipment backlog remained at record levels of CAD 3.8 billion at 30 June 2026, in line with 31 March 2026, and up 26% from June last year, and up 22% from December 2025. Order intake continued to outpace deliveries in the quarter.

Speaker #2: Rental revenue was up 19%, reflecting improving construction and power and energy activity across all regions. Product support revenue was up 11%, primarily driven by strong activity in Canada where product support was up 19%, led by mining.

David Primrose: Product support revenue was up 11%, primarily driven by strong activity in Canada, where product support was up 19%, led by mining. Despite the record level of new equipment sales in the quarter, equipment backlog remained at record levels of CAD 3.8 billion at 30 June 2026, in line with 31 March 2026, and up 26% from June last year, and up 22% from December 2025. Order intake continued to outpace deliveries in the quarter.

Speaker #2: Despite the record level of new equipment sales in the quarter, equipment backlog remained at record levels of $3.8 billion at June 30, 26, in line with March 31, 26, and up 26% from June last year, and up 22% from December 2025.

Speaker #2: Order intake continued to outpace deliveries in the quarter. Power and energy benefited from oil and gas activity in Canada, while mining was supported by strong activity in South America.

David Primrose: Power and energy benefited from oil and gas activity in Canada, while mining was supported by strong activity in South America. Backlog remains well diversified by market sector, with approximately half in mining, about one-third in power and energy, and the remainder in construction. Backlog strength continues to provide confidence in future product support opportunities. Turning to our EBIT performance on slide five. Gross profit margin was 21.3%, down 240 basis points compared to Q2 2025, reflecting lower product support margins on strong volume growth and a higher proportion of new equipment revenue in the sales mix. SG&A margin was 13.3%, down 220 basis points from Q2 2025. This demonstrates continued cost discipline through the growth cycle and also reflects a higher mix of new equipment sales.

Speaker #2: Backlog remains well diversified by market sector, with approximately half in mining, about one-third in power and energy, and the remainder in construction. Backlog strength continues to provide confidence in future product support slide 5.

David Primrose: Turning to our EBIT performance on slide five. Gross profit margin was 21.3%, down 240 basis points compared to Q2 2025, reflecting lower product support margins on strong volume growth and a higher proportion of new equipment revenue in the sales mix. SG&A margin was 13.3%, down 220 basis points from Q2 2025. This demonstrates continued cost discipline through the growth cycle and also reflects a higher mix of new equipment sales.

Speaker #2: Gross profit margin was 21.3%, down 240 basis points compared to Q2 25, reflecting lower product support margins on strong volume growth and a higher proportion of new equipment revenue in the sales mix.

Speaker #2: SG&A margin was 13.3%, down 220 basis points from Q2 25. This demonstrates continued cost discipline through the growth cycle and also reflects the higher mix of new equipment sales.

Speaker #2: EBIT margin was 8%, down 30 basis points from Q2 25 adjusted EBIT margin, reflecting lower product support margins and higher new equipment revenue mix, importantly EBIT dollars increased 16% year over year.

David Primrose: EBIT margin was 8%, down 30 basis points from Q2 2025 adjusted EBIT margin, reflecting lower product support margins and higher new equipment revenue mix. Importantly, EBIT dollars increased 16% year over year. Q2 EBIT margin was 9.7% in South America, 8.3% in Canada, and 6.2% in the UK and Ireland. Looking ahead, we will continue to seek opportunities to reduce costs, improve efficiency, enhance operating leverage, and strengthen resilience to drive higher earnings capacity. Moving to our South America results and outlook, which are summarized on slide six. In functional currency, new equipment sales were up 35% from Q2 2025 due to higher construction and mining deliveries in Chile. Product support revenue was up 3%, driven by higher mining activity in Chile and also increased revenue in all sectors in Argentina.

Speaker #2: Q2 EBIT margin was 9.7% in South America, 8.3% in Canada, and 6.2% in the UK and Ireland. Looking ahead, we will continue to seek opportunities to reduce costs, improve efficiency, enhance operating leverage, and strengthen resilience to drive higher earnings capacity.

Speaker #2: Moving to our South America results and outlook, which are summarized on slide 6. In functional currency, new equipment sales were up 35% from Q2 25 due to higher construction and mining deliveries in Chile.

David Primrose: Moving to our South America results and outlook, which are summarized on slide six. In functional currency, new equipment sales were up 35% from Q2 2025 due to higher construction and mining deliveries in Chile. Product support revenue was up 3%, driven by higher mining activity in Chile and also increased revenue in all sectors in Argentina.

Speaker #2: Product support revenue was up 3%, driven by higher mining activity in Chile and also increased revenue in all sectors in Argentina. EBIT margin of 9.7% was down 40 basis points from Q2 25 adjusted EBIT margin, primarily driven by the higher proportion of equipment revenue in the mix and also lower product support margin, partially offset by lower SG&A margin.

David Primrose: EBIT margin of 9.7% was down 40 basis points from Q2 2025 adjusted EBIT margin, primarily driven by the higher proportion of equipment revenue in the mix and also lower product support margin, partially offset by lower SG&A margin. Adjusted return on invested capital of 23.5% was down 240 basis points, impacted by working capital investments supporting growth and the resulting increase in average invested capital. In Chile, our longer-term outlook remains positive, underpinned by growing global demand for copper, strong copper prices, capital deployment into large-scale brownfield expansions under supportive government priorities, and customer confidence to invest in greenfield projects. We are continuing to see a broad-based level of quoting, tender, and award activity for mining equipment, product support, and technology solutions. Some of these awards hit our order backlog in Q2, while others are expected to be finalized in Q3 and beyond.

Speaker #2: Adjusted return on invested capital of 23.5% was down 240 basis points, impacted by working capital investments supporting growth and the resulting increase in average invested capital.

Speaker #2: In Chile, our longer-term outlook remains positive, underpinned by growing global demand for copper, strong copper prices, capital deployment into large-scale brownfield expansions under supportive government priorities, and customer confidence to invest in greenfield projects.

David Primrose: In Chile, our longer-term outlook remains positive, underpinned by growing global demand for copper, strong copper prices, capital deployment into large-scale brownfield expansions under supportive government priorities, and customer confidence to invest in greenfield projects. We are continuing to see a broad-based level of quoting, tender, and award activity for mining equipment, product support, and technology solutions. Some of these awards hit our order backlog in Q2, while others are expected to be finalized in Q3 and beyond.

Speaker #2: We are continuing to see a broad-based level of quoting tender and award activity for mining equipment, product support, and technology solutions. Some of these awards hit our order backlog in Q2, while others are expected to be finalized in Q3 and beyond.

Speaker #2: In the near term, we continue to expect some moderation in product support activity levels and a more stabilized labor environment through 2028. In the Chilean construction sector, we continue to see healthy demand from large contractors supporting mining operations, and we expect infrastructure construction activity to remain steady.

David Primrose: In the near term, we continue to expect some moderation in product support activity levels and a more stabilized labor environment through 2028. In the Chilean construction sector, we continue to see a healthy demand from large contractors supporting mining operations, and we expect infrastructure construction activity to remain steady. In power and energy, activity remains strong in the industrial and the data center markets. In Argentina, the outlook is increasingly positive and quoting activity remains high. We are diligently monitoring what is a dynamic operating environment to ensure we are best positioned to capture opportunities, particularly in oil and gas and mining as they arise. Turning to Canada on slide seven. New equipment sales were up 33% from Q2 2025, with strong sales across all market sectors, led by mining and continued market share gains in construction.

David Primrose: In the near-term, we continue to expect some moderation in product support activity levels and a more stabilized labor environment through 2028. In the Chilean construction sector, we continue to see a healthy demand from large contractors supporting mining operations, and we expect infrastructure construction activity to remain steady. In power and energy, activity remains strong in the industrial and the data center markets.

Speaker #2: In power and energy, activity remains strong in the industrial and the data center markets. In Argentina, the outlook is increasingly positive and quoting activity remains high.

David Primrose: In Argentina, the outlook is increasingly positive and quoting activity remains high. We are diligently monitoring what is a dynamic operating environment to ensure we are best positioned to capture opportunities, particularly in oil and gas and mining as they arise. Turning to Canada on slide seven. New equipment sales were up 33% from Q2 2025, with strong sales across all market sectors, led by mining and continued market share gains in construction.

Speaker #2: We are diligently monitoring what is a dynamic operating environment to ensure we are best positioned to capture opportunities particularly in oil and gas and mining as they arise.

Speaker #2: Turning to Canada, on slide 7. New equipment sales were up 33% from Q2 25, with strong sales across all market sectors led by mining and continued market share gains in construction.

Speaker #2: Used equipment sales were up 25%, reflecting increased activity in the construction sector in line with overall market activity. Rental revenue was up 22%, driven by improving construction and power and energy activity.

David Primrose: Used equipment sales were up 25%, reflecting increased activity in the construction sector in line with overall market activity. Rental revenue was up 22%, driven by improving construction and power and energy activity. Product support revenue was up 19%, reflecting strong demand across all sectors and particularly in mining. EBIT margin of 8.3% was down 110 basis points, driven by lower product support margin and increased equipment sales mix, partially offset by improved SG&A margin. Return on invested capital from continuing operations was 18%, up 170 basis points, driven by higher profitability and improved capital efficiency over the last 12 months. Our outlook for Western Canada remains positive. Mining activity continues to strengthen, with customers actively looking to increase production and fleet capacity through both performance and investment. In power and energy, oil and gas activity remains strong and backlog is increasing.

Speaker #2: Product support revenue was up 19%, reflecting strong demand across all sectors and particularly in mining. EBIT margin of 8.3% was down 110 basis points driven by lower product support margin and increased equipment sales mix, partially offset by improved SG&A margin.

Speaker #2: Return on invested capital from continuing operations was 18%, up 170 basis points, driven by higher profitability and improved capital efficiency over the last 12 months.

David Primrose: Return on invested capital from continuing operations was 18%, up 170 basis points, driven by higher profitability and improved capital efficiency over the last 12 months. Our outlook for Western Canada remains positive. Mining activity continues to strengthen, with customers actively looking to increase production and fleet capacity through both performance and investment. In power and energy, oil and gas activity remains strong and backlog is increasing.

Speaker #2: Our outlook for Western Canada remains positive. Mining activity continues to strengthen, with customers actively looking to increase production and fleet capacity through both performance and investment.

Speaker #2: In Power and Energy, oil and gas activity remains strong, and backlog is increasing. Data centre sentiment continues to grow, supported by recent announcements, although the timing remains uncertain pending project approvals.

David Primrose: Data center sentiment continues to grow, supported by recent announcements, although the timing remains uncertain pending project approvals. Construction sector activity continues to improve, with customer demand increasing ahead of anticipated major project confirmations. We expect this to have a positive impact on new, used, and rental revenue while remaining cautious with respect to the exact timing and magnitude of future projects. Our focus remains on building resilience by managing costs and invested capital levels while driving productivity improvements through the growth cycle. Please turn to slide eight for our results in the UK and Ireland. In functional currency, new equipment sales were up 34% from Q2 2025, driven by delivery of delayed sales from Q1, as mentioned last quarter. Product support revenue was down 2% due to lower activity in both construction and power. We expect the product support business to remain stable in the short and mid-term.

Speaker #2: Construction sector activity continues to improve with customer demand increasing ahead of anticipated major project confirmations. We expect this to have a positive impact on new, used, and rental revenue, while remaining cautious with respect to the exact timing and magnitude of future projects.

Speaker #2: Our focus remains on building resilience by managing costs and invested capital levels while driving productivity improvements through the growth cycle. Please turn to slide 8 for our results in the UK and Ireland.

David Primrose: Our focus remains on building resilience by managing costs and invested capital levels while driving productivity improvements through the growth cycle. Please turn to slide eight for our results in the UK and Ireland. In functional currency, new equipment sales were up 34% from Q2 2025, driven by delivery of delayed sales from Q1, as mentioned last quarter. Product support revenue was down 2% due to lower activity in both construction and power. We expect the product support business to remain stable in the short and mid-term.

Speaker #2: In functional currency, new equipment sales were up 34% from Q2 25, driven by delivery of delayed sales from Q1 as mentioned last quarter. Product support revenue was down 2% due to lower activity in both construction and power, we expect the product support business to remain stable in the short and mid-term.

Speaker #2: EBIT margin of 6.2% was up 100 basis points, driven by robust SG&A control on higher revenues. Adjusted return on invested capital of 21.6% was up 320 basis points year over year, reflecting the higher profitability achieved during the quarter and optimization of the pension assets.

David Primrose: EBIT margin of 6.2% was up 100 basis points, driven by robust SG&A control on higher revenues. Adjusted return on invested capital of 21.6% was up 320 basis points year over year, reflecting the higher profitability achieved during the quarter and optimization of the pension assets. In terms of outlook, market sentiment and construction is improving, we continue to expect demand to remain soft in line with low projected GDP growth. We continue to expect a growing contribution from power and energy as we execute our strategy. Quoting activity remains strong, driven by healthy demand for both primary and backup power generation solutions. I'll now turn it back to Kevin for some closing remarks.

David Primrose: EBIT margin of 6.2% was up 100 basis points, driven by robust SG&A control on higher revenues. Adjusted return on invested capital of 21.6% was up 320 basis points year-over-year, reflecting the higher profitability achieved during the quarter and optimization of the pension assets. In terms of outlook, market sentiment and construction is improving, we continue to expect demand to remain soft in line with low projected GDP growth. We continue to expect a growing contribution from power and energy as we execute our strategy. Quoting activity remains strong, driven by healthy demand for both primary and backup power generation solutions. I'll now turn it back to Kevin for some closing remarks.

Speaker #2: In terms of outlook, market sentiment in construction is improving, but we continue to expect demand to remain soft in line with low projected GDP growth.

Speaker #2: We continue to expect a growing contribution from power and energy as we execute our strategy. Quoting activity remains strong, driven by healthy demand for both primary and backup power generation solutions.

Speaker #2: I'll now turn it back to Kevin for some closing remarks.

Speaker #1: Thank you, Dave. Before I close, I wanted to talk about the leadership transition in South America and recognize my colleague Juan Pablo Omar, who will be retiring later this year.

Kevin Parkes: Thank you, Dave. Before I close, I wanted to talk about the leadership transition in South America and recognize my colleague, Juan Pablo Amar, who will be retiring later this year. For more than 30 years, Juan Pablo has made an enormous contribution to our business. His loyalty, flexibility, and commitment to our company, customers, and employees has been inspiring. Under his leadership, our South American business has more than doubled by many metrics, and importantly, he has positioned our business for the next phase of growth. He has had critical investments in our team, facilities, and capabilities to ensure our business is ready to support our customers as they embark on their growth plans. I feel lucky to have had his support for the past four years and wish him well in his retirement.

Speaker #1: For more than 30 years, Juan Pablo has made an enormous contribution to our business. His loyalty, flexibility, and commitment to our company customers and employers has been inspiring.

Speaker #1: Under his leadership, our South American business has more than doubled by many metrics, and importantly, he has positioned our business for the next phase of growth.

Speaker #1: He has led critical investments in our team, facilities, and capabilities, to ensure our business is ready to support our customers as they embark on their growth plans.

Speaker #1: I feel lucky to have had the support for the past four years and wish him well in his retirement. He will continue to support me and the new team led by Sebastian Reich to ensure we have an effective and energized transition.

Kevin Parkes: He will continue to support me and the new team, led by Sebastian Reich, to ensure we have an effective and energized transition. To close, we are pleased with the continued execution of our strategy and the results we are generating. We are committed to growing our product support business by growing population and building new capacity and capabilities. We are excited about the more transformative opportunities we have in Argentina, power generation, and rental. With that, we'll open for questions.

Speaker #1: To close, we are pleased with the continued execution of our strategy and the results we are generating. We are committed to growing our product support business by growing population and building new capacity and capabilities.

Speaker #1: And we are excited about the more transformative opportunities we have in Argentina power generation and rental. With that, we'll open for questions.

Speaker #3: Thank you. We will now begin the question and answer session. Analysts wish to join the question queue, may press star then one on the telephone keypad.

Operator: Thank you. We will now begin the question and answer session. Analysts who wish to join the question queue may press star then one on the telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Cherilyn Radbourne with TD Cowen. Please go ahead.

Speaker #3: You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.

Speaker #3: The first question comes from Sherilyn Radborn with TD Cohen. Please go ahead.

Speaker #4: Thanks very much and good morning. I do want to quickly wish Juan Pablo our very best on his retirement.

Cherilyn Radbourne: Thanks very much, and good morning. I do want to quickly wish Juan Pablo our very best on his retirement.

Kevin Parkes: Thank you.

Speaker #1: Thank you.

Speaker #4: Kevin, the Kevin, the prospects for energy egress in Western Canada have shifted in a fairly short period of time. So I was hoping you could spend a bit more time addressing that opportunity, set for thinning, and also sort of the timing and scale of a corresponding production response.

Cherilyn Radbourne: Kevin, the prospects for energy egress in Western Canada have shifted in a fairly short period of time. I was hoping you could spend a bit more time addressing that opportunity set for Finning and also sort of the timing and scale of a corresponding production response.

Speaker #1: Yeah. So I mean, undoubtedly, it's been a good summer for positive sentiment and collaborative announcements between the federal and provincial government in Alberta. And so that's really encouraging.

Kevin Parkes: Yeah. Undoubtedly, it's been a good summer for positive sentiment and collaborative announcements between the federal and provincial government in Alberta. That's really encouraging, and I think that built on an already improving sentiment and outlook from the major producers in Alberta. I think that there's a long way to go. There's a lot more discussions to happen, some critical hurdles or agreements to overcome, and some infrastructure to build out as well before we see any kind of real meaningful growth in production in the region. It's a tailwind, and I expect miners, the oil sands producers, and energy producers to be organizing themselves around that positive outlook for more production in Western Canada. We're seeing some of that just in general confidence and sentiment today.

Speaker #1: And I think that built on an already improving sentiment and outlook from the major producers in Alberta. I think that there is a there's a long way to go.

Speaker #1: There's a lot more discussions to happen. There's some critical hurdles or agreements to overcome. And some infrastructure to build out as well before we see any kind of real meaningful growth in production, in the region.

Speaker #1: But I expect I mean, it's a tailwind, and I expect miners, the oil sands producers, and energy producers to be organizing themselves around that positive outlook for more production in Western Canada.

Speaker #1: And we're seeing some of that just in general confidence and sentiment today. I'd point to our gas compression business being a good example of that, but also we delivered a truck a week into the in Canada in the quarter, and we expect that to continue from our very healthy backlog.

Kevin Parkes: I point to our gas compression business being a good example of that. Also, we delivered a truck a week in Canada in the quarter, and we expect that to continue from our very healthy backlog. We're seeing some of that immediately, I guess, Cherilyn, in our backlog and how we deliver that, like Dave mentioned about strong gas compression sales in the quarter. It's more an incremental and positive improvement right now rather than a step change in production and impact on our company.

Speaker #1: And so we're seeing some of that immediately, I guess, Sherilyn, in our backlog and how we deliver that. Like Dave mentioned about strong gas compression sales in the quarter.

Speaker #1: And so it's more an incremental and positive improvement right now rather than a step change in production and impact on our company.

Speaker #4: And related to that, as we think about the labor that will be needed to support nation building infrastructure, do you think the government needs to be doing more on that front in addition to expediting the approval process?

Cherilyn Radbourne: Related to that, as we think about the labor that will be needed to support nation-building infrastructure, do you think the government needs to be doing more on that front in addition to expediting the approval process?

Speaker #1: 100%. And I've had some of those conversations with the major projects office. There's a lot of positive momentum, but it's companies like Finning that supply the equipment and the labor and the talent to really make the projects happen.

Kevin Parkes: 100%. I've had some of those conversations with the major projects office. There's a lot of positive momentum, but it's companies like Finning that supply the equipment and the labor and the talent to really make the projects happen. We have been recruiting, as we've said, a technician a day. That's still going very well. Our technician base, not including OEM, is up 20% in Canada year to date. We are encouraged by our ability to attract talent in the marketplace, and we are kind of preempting the projects. Any confidence that the government can provide or the market can provide in terms of what they think that demand will actually look like, will help us to organize ourselves even more effectively.

Kevin Parkes: 100%. I've had some of those conversations with the major projects office. There's a lot of positive momentum, but it's companies like Finning that supply the equipment and the labor and the talent to really make the projects happen. We have been recruiting, as we've said, a technician a day. That's still going very well. Our technician base, not including OEM, is up 20% in Canada year-to-date. We are encouraged by our ability to attract talent in the marketplace, and we are kind of preempting the projects. Any confidence that the government can provide or the market can provide in terms of what they think that demand will actually look like, will help us to organize ourselves even more effectively.

Speaker #1: We have been recruiting, as we've said, a technician a day. That's still going very well. Our technician base not including OEM is up 20% in Canada, year to date.

Speaker #1: And so we are encouraged by our ability to attract talent in the marketplace, and we're kind of preempting the projects. But any confidence that the government can provide, and the market can provide, in terms of what they think that demand will actually look like, will help us to organize ourselves even more effectively.

Speaker #1: I think the most important thing to say about that, Sherilyn, is that we're doing it anyway because of our opportunity and our ambition to increase dramatically increase our the percentage of labor that we have at working on and around our machines anyway.

Kevin Parkes: I think the most important thing to say about that, Cherilyn, is that we're doing it anyway because of our opportunity and our ambition to dramatically increase the percentage of labor that we have working on and around our machines anyway. We have a market share opportunity ahead of us anyway, which we're getting after. That gives us momentum in the recruitment, the training that's required, that we can lever up and down as the demand materializes.

Speaker #1: So we have a market share, opportunity, ahead of us anyway. Which we're getting after. And that gives us momentum in the recruitment, the training, that's required that we can lever up and down as the demand as the demand materializes.

Speaker #2: Well, I would add there, Sherilyn, is I mean, we're certainly supportive to any government initiatives there. But in the meantime, like Kevin said, we've had very good success in Western Canada.

David Primrose: What I would add there, Cherilyn, is we're certainly supportive to any government initiatives there. In the meantime, like Kevin said, we've had very good success in Western Canada. We have a very strong brand in the employment market, and we've doubled down even further this year with the various trade schools all across Western Canada. The team's had very good success to date.

Speaker #2: We have a very strong brand in the employment market, and we've doubled down even further this year with the various trade schools all across Western Canada.

Speaker #2: So the teams have very good success to date.

Speaker #4: Thank you for the time.

Operator: Thank you for the time.

Cherilyn Radbourne: Thank you for the time.

Speaker #1: Thanks, Sherilyn.

Kevin Parkes: Thanks, Cherilyn.

Speaker #3: The next question comes from Devin Dodge with BMO Capital Markets. Please go ahead.

Operator: The next question comes from Devin Dodge with BMO Capital Markets. Please go ahead.

Speaker #5: All right. Thanks. Good morning, guys. For data center-related projects in Western Canada, would Finning consider internalizing the packaging of that power system? I know Finning has done some of that work in the past, but I'm not sure if the capacity is available to do that work at the scale required for the opportunities in front of you.

Devin Dodge: All right. Thanks. Good morning, guys.

Kevin Parkes: Good morning.

Devin Dodge: For data center-related projects in Western Canada, would Finning consider internalizing the packaging of that power system? I know Finning has done some of that work in the past, but I am not sure if the capacity is available to do that work at the scale required for the opportunities in front of you. I am just wondering if that approach would differ between prime and backup power?

Speaker #5: And just wondering if that approach would differ between prime and backup power.

Speaker #1: Yeah. So the answer to that question is absolutely yes. We are totally committed to packaging the data center requirement in our territory. We have a fantastic facility that requires minimal investment to move that forward.

Kevin Parkes: Yeah. The answer to your question is absolutely yes. We are totally committed to packaging the data center requirement in our territory. We have a fantastic facility that requires minimal investment to move that forward. You have been following us for a long time, Devin, and you probably remember our investment in Calicut and the facilities we have in the Red Deer region. We feel well-positioned that we can build that capability and capacity relatively quickly and without a major investment. We think it is critical to participate in all aspects of the data center opportunity, including controlling the quality and the velocity of packaging, particularly as it relates to cold weather in Alberta.

Speaker #1: You've been following us for a long time, Devin, and you've probably remember our investment in Collicut and the facilities we have in the Red Deer region.

Speaker #1: And so we feel well positioned that we can build that capability and capacity relatively quickly and without a kind of major investment. And we think it's critical to participate in all aspects of the data center opportunity.

Speaker #1: Including controlling the quality and the velocity of packaging, particularly as it relates to cold weather in Alberta; and being associated with, and working with, that package as it goes through build and delivery, and commissioning, and ultimately to participate in and partner with the product support opportunity, which is really the big opportunity for us as we look forward.

Kevin Parkes: Being associated and working with that package as it goes through build and deliver and commissioning, and ultimately to participate and to partner with the product support opportunity, which is really the big opportunity for us as we look forward. From a packaging perspective, there is no real material difference between prime and backup from a packaging perspective. Obviously, there is a demonstrable difference as it relates to lifecycle product support in a prime application. I think that was the second part of your question, but forgive me if I got it wrong.

Speaker #1: From a packaging perspective, there's no real difference material difference between prime and backup from a packaging perspective. But obviously, there's a demonstrable difference as it relates to life cycle product support in a prime application.

Speaker #1: I think that was the second part of your question, but forgive me if I got it wrong.

Speaker #5: Yeah. No, that was great. Thanks for that. Second question, product support margins. They're compressed in both Canada and South America. Just wondering if you could provide a framework for how much of the margin pressure was related to mix versus maybe some cost inefficiencies to accommodate the transient.

Devin Dodge: Yeah. No, that was great. Thanks for that. Second question. Product support margins, they compressed in both Canada and South America. Just wondering if you could provide a framework for how much of the margin pressure was related to mix versus maybe some cost inefficiencies to accommodate the growth that may be more transient.

Speaker #1: Yeah. I mean, we would put I'd put it down to three aspects, actually, Devin. And you've hit on two. Certainly, mix within mix. I mean, we've seen about a 3%.

Kevin Parkes: Yeah. I would put it down to three aspects actually, Devin, and you have hit on two. Certainly mix within mix. We have seen about a 3% product support shift in Canada, specifically to our larger customers. When you normalize that 3% product support at a more normalized product support rate, you account for about half of the difference. There is also the second point that you raised is very valid and fair. As you grow a technician a day, there are some training and productivity ramp-ups that you need to work on. There is a little bit of a drag there. Something that might take you 100 hours might take you 110, for example. There is one other one, which is an aggressive approach to product support growth in commodities that are less proprietary and to that end, more competitive.

Speaker #1: Product support shifted in Canada, specifically to our larger customers. So, when you normalize that 3% product support at a more normalized product support rate, you'd account for about half of the difference.

Speaker #1: The second point that you raised is also very valid and fair. As you grow, adding a technician a day, there is some training and a productivity ramp-up that you need to work on.

Speaker #1: And so there is a little bit of a drag there and something that might take you 100 hours, might take you 110, for example.

Speaker #1: And then there's one other one which is an aggressive approach to product support growth in commodities that are more less proprietary and to that end more competitive.

Speaker #1: But they offer us great opportunity to grow our business at a healthy what is still a healthy margin, but it will have an overall impact on the overall product support margins.

Kevin Parkes: They offer us great opportunity to grow our business at a healthy, what is still a healthy margin. It will have an overall impact on the overall product support margins. The last one, really, which is more transient than the others, is just the impact of tariffs on heavy steel products, which impacts us due to the proportion of our business, which is mining. We're managing through that with our customers because we do see it as transient. The others, we'll work through, but we see that continuing for a while as we improve productivity. We're not going to stop aggressively going after market share. We do see improvement in product support in construction and power. It's just not growing as fast as mining, which is a nice problem to have.

Speaker #1: And the last one really, which is more transient than the others, is just the impact of tariffs on heavy steel products, which impacts us due to the proportion of our business, which is mining.

Speaker #1: So, we're managing through that with our customers because we do see it as transient. The others, we'll work through, but we see that continuing for a while as we improve productivity.

Speaker #1: We're not going to stop aggressively going after market share. And we do see improvement in product support in construction and power. It's just not growing as fast as mining, which is a nice problem to have.

Speaker #1: They're all growing, but one's growing really substantially, which is just having an impact on the margin in the near term.

Kevin Parkes: They're all growing, but one's growing really substantially, which is just having an impact on the margin in the near term.

Speaker #5: And what I would add to that, Devin, is in Canada, they had a remarkable 19% product support growth. All three segments: mining, construction, and power were double-digit, but mining led the way.

David Primrose: What I would add to that, Devin, is in Canada, they had a remarkable 19% product support growth. All three segments, mining, construction, and power, were double-digit, but mining led the way, their growth was even higher. Again, that mix plays into that.

Speaker #5: So their growth was even higher. So again, that mix plays into that. Yeah, for sure. Thanks for that. I'll turn it over.

Devin Dodge: Yeah, for sure. Thanks for that. I'll turn it over.

Speaker #1: Thanks, Devin.

Kevin Parkes: Thanks, Devin.

Speaker #3: The next question comes from Steve Hansen with Raymond James. Please go ahead.

Operator: The next question comes from Steve Hansen with Raymond James. Please go ahead.

Speaker #6: Yeah, good morning, guys. Thanks for the time. Congrats on the product support growth. It's great to see it's hard to think back in '24 wasn't that long ago when it was a little more difficult.

Steve Hansen: Yeah, good morning, guys. Thanks for the time. Congrats on the product support growth. It's great to see. It's hard to think back in 2024 wasn't that long ago when it was a lot more difficult. I just want to dig into a little bit more. I think you've referenced your desire to grow your labor share on the machines a couple of times now in recent calls, I just wanted to get maybe a sense or some sort of framework to think about that. Do you have an ability to grow that share by 5%, by 20%? Do you have a sense for just sort of putting some bookends around what the growth opportunity could be over the next period of time?

Speaker #6: I just want to dig into a little bit more. I think you've referenced your desire to grow your labor share on the machines. A couple of times now in recent calls.

Speaker #6: And I just wanted to get maybe a sense or some sort of framework to think about that. Do you have an ability to grow that share by 5%, by 20%?

Speaker #6: Do you have a sense for just sort of putting some bookends around what the growth opportunity could be over the next period of time?

Speaker #1: Yeah. So I think it's different in the different regions, but specifically targeting Canada, we would have a lower market share of labor on the supporting caterpillar equipment.

Kevin Parkes: Yeah. I think it's different in the different regions, but specifically targeting Canada. We would have a lower market share of labor on the supporting Caterpillar equipment. I would say that there's line of sight to doubling that in Canada. We're on the way to that, and that effort is being well-received. As I mentioned to Cherilyn, we've totally reengineered our apprenticeship program because we grew out of the last one with the partner we were using. We reengineered that. We were very focused on one college. We're now working with multiple colleges to help us expedite and expand our apprenticeship programs. I would say it's a doubling, we'll continue the effort, and then we'll recalibrate at that point in time.

Speaker #1: I would say that there's line of sight to doubling that in Canada. And we're on the way we're on the way to that. And that effort is being well received.

Speaker #1: And as I mentioned to Sherilyn, we've totally re-engineered our apprenticeship program because we grew out of the last one of the partner we were using.

Speaker #1: So we've re-engineered that. We were very focused on one college, and we're now working with multiple colleges to help us expedite and expand our apprenticeship programs.

Speaker #1: So I would say it's a doubling, and then we'll continue the effort, and then we'll recalibrate at that point in time. In South America, we have a relatively high market share.

Kevin Parkes: In South America, we have a relatively high market share, given the contracts in mining and the proportion of our business in South America, which is mining. The opportunity there is just the increased population. You notice we have added to backlog in the quarter. We talked about a moderating growth environment for a few quarters here in South America. I am encouraged by the backlog out in Q1 with Alumbrera and then the significant win in Q2. Again, that put the backlog up 40% quarter over quarter here in South America. A lot of the proportion of that population is under some kind of contract with Finning. There is an opportunity to maintain our market share in labor in South America, but just the volume of trucks that are under contract is going to increase in Chile and in Argentina.

Speaker #1: Given the contracts in mining and the proportion of our business in South America, which is mining, the opportunity there is just the increased population in notice we've added to backlog in the quarter.

Speaker #1: We talked about a moderating growth in my environment for a few quarters here in South America. And I'm encouraged by the backlog adding Q1 with Alhambrera.

Speaker #1: And then the significant win in Q2 here that put the backlog up 40% quarter over quarter here in South America. And a lot of the proportion of that population is under some kind of contract with Finland.

Speaker #1: And so, there's an opportunity to maintain our product and our market share in labor in South America, but just the volume of trucks that are under contract is going to increase in Chile and in Argentina.

Speaker #1: So and then in the UK, it's the growth there. We have relatively high market share as major customers of outsourced product support over a decade.

Kevin Parkes: In the UK, the growth there, we have relatively high market share as major customers have outsourced product support over a decade. Where we are seeing the big growth opportunity in the UK is in our servicing contracts. We are seeing that in Canada, too, but the number of machines that are under a service contract with Finning labor is increasing dramatically in Canada and in the UK. That is where the drivers are coming from.

Speaker #1: But where we're seeing the big growth opportunity in the UK is in our servicing contract. We're seeing that in Canada too, but the number of machines that are under service contract with Finning labor is increasing dramatically in Canada and in the UK.

Speaker #1: And so that's where the drivers are coming from.

Speaker #6: That's really great color. Thanks. And just one quick follow-up. And a smaller line of your business in rental, but it has demonstrated some solid growth here of late.

Steve Hansen: That is really great color. Thanks. Just one quick follow-up in a smaller line of your business in rental, but it has demonstrated some solid growth here of late. If I think back to the 2023 Investor Day down south, I think you had started to prioritize some growth there. That was subsequently pulled back from an expectation standpoint, but it does feel like now your commitment to growing that business, I guess in partnership with Cat, has come back to the fore here. Maybe just give us a sense for where you are viewing that business today and where it stands and where you want to take it here in the next year or two. Thanks.

Speaker #6: And so I think back to the '23 Investor Day, down south, I think you had started to prioritize some growth there. That was subsequently pulled back from an expectation standpoint, but it does feel like now your commitment to growing that business, I guess in partnership with CAD, has come back to the fore here.

Speaker #6: Maybe just give us a sense for where you're viewing that business today and where it stands and where you want to take it here in the next year or two.

Speaker #6: Thanks.

Speaker #1: Yeah, good question, Steve. I mean, just to be clear, we've never pulled back from it under my leadership. I'm committed to rental. I think it's a great business.

Kevin Parkes: Yeah, good question, Steve. Just to be clear, we have never pulled back from it under my leadership. I am committed to rental. I think it is a great business. It is a different business, and it needs to be effectively run. The pullback which you are alluding to, which is fair, was more market conditions in 2023 and 2024 that did not support aggressive growth. Back again to Sherilyn's question around what are the impacts you are seeing on the more positive sentiment, particularly in Western Canada. It is across the board, right? It is in gas and pressure, it is in new trucks in the oil sands, it is in rental projects for enablement and things like that. Actually, the vast majority of our rental business is in construction in Canada today. That is where the big proportion of our business is. That business actually was up 60% in the quarter, 50% year to date.

Speaker #1: It's a different business, and it needs to be effectively run. The pullback, which you're alluding to, which is fair, was more market conditions in '23 and '24 that didn't support aggressive growth.

Speaker #1: Back again to Sherilyn's question around how he's what are the impacts you're seeing on the more positive sentiment, particularly in Western Canada? It's across the board, right?

Kevin Parkes: Back again to Sherilyn's question around what are the impacts you are seeing on the more positive sentiment, particularly in Western Canada. It is across the board, right? It is in gas and pressure, it is in new trucks in the oil sands, it is in rental projects for enablement and things like that. Actually, the vast majority of our rental business is in construction in Canada today. That is where the big proportion of our business is. That business actually was up 60% in the quarter, 50% year-to-date.

Speaker #1: It's in gas compression. It's in new trucks in the oil sands. It's in rental projects for enablement and things like that. So actually, the vast majority of our rental business is in construction in Canada today. That's where the big proportion of our business is.

Speaker #1: And that business actually was up 60% in the quarter 50% year to date. And so that's heavy rents and rental services. So that we're really encouraged by that.

Kevin Parkes: That's heavy rents and rental services. That, we're really encouraged by that. We've got a big. Similar to your question around service, let's double it, then we'll have a calibration and see what the next steps is. Doubling would be the ambition from the outset. I would say that in Canada and UK specifically, we're super encouraged by the opportunity in power rentals. It complements our business well. It supports the need for reliable power generation. It supports the opportunity to bridge to more permanent power generation for mines, for communities, for data centers. We're seeing really healthy growth in terms of our power rental business. That business is up 25% year to date in the UK, 20-ish% in Canada year to date.

Kevin Parkes: That's heavy rents and rental services. That, we're really encouraged by that. We've got a big. Similar to your question around service, let's double it, then we'll have a calibration and see what the next steps is. Doubling would be the ambition from the outset. I would say that in Canada and UK specifically, we're super encouraged by the opportunity in power rentals. It complements our business well. It supports the need for reliable power generation. It supports the opportunity to bridge to more permanent power generation for mines, for communities, for data centers. We're seeing really healthy growth in terms of our power rental business. That business is up 25% year-to-date in the UK, 20-ish% in Canada year-to-date.

Speaker #1: And we've got a big similar to your question around service, then let's double it and then we'll have a calibration and see what the next steps is.

Speaker #1: But doubling would be the ambition from the outset. And I would say that in Canada, and UK specifically, we're super encouraged by excuse me, super encouraged by the opportunity in power rentals.

Speaker #1: It complements our business for reliable power generation. It supports the opportunity to bridge to more permanent power generation for mines, for communities, and for data centers.

Speaker #1: And so we're seeing really healthy growth in terms of our power rental business. That business is up 25% year to date in the UK.

Speaker #1: At 20-ish percent in Canada, year to date. So not seeing the kind of really great product growth levels that we're seeing in construction right now, but moving along really, really nicely.

Kevin Parkes: Not seeing the really great growth levels that we're seeing in construction right now, but moving along really nicely. The rental figure that Dave mentioned as well previously, that includes some pretty big declines in mining rentals, because that's lumpy, right? We rent for 9 months or a year or 18 months, then they come off rent, we don't necessarily or typically they get bought. The customer purchases the rental units. No, I think our rental performance is extremely encouraging right now. We're really committed to it. We believe it can make a meaningful contribution to our EPS. I would suggest that in Q2, the EPS contribution, I'm not going to share it, but the EPS contribution from rental to the Canadian business was very helpful.

Speaker #1: So and the rental figure that Dave mentioned as well previously, that includes some pretty big declines in mining rentals because that's lumpy, right? We rent for nine months or a year or 18 months, and then they come off rent and we don't necessarily have or they typically they get bought.

Speaker #1: The customer purchases the rental units. So no, I think our rental performance is extremely encouraging right now. We're really committed to it. And we believe it can make a meaningful contribution to our EPS and I would suggest that in Q2, the EPS contribution I'm not going to share it, but the EPS contribution from rental service from rental to the Canadian business was very helpful.

Speaker #6: That's really good color. Appreciate the time.

Steve Hansen: That's really good color. Appreciate the time.

Speaker #1: Thank you, Steve.

Kevin Parkes: Pleasure.

Speaker #2: Once again, if any analysts have a question, please first start, then one on your telephone keypad. The next question comes from Chris Jefferson with CIBC.

Operator: Once again, if any analysts have a question, please press star then one on your telephone keypad. The next question comes from Chris Jeffries with CIBC. Please go ahead.

Speaker #2: Please go ahead.

Speaker #7: Hi, thanks for taking my question. I was just wondering on the power side in Alberta, when it comes to data centers, we've seen a little bit of movement with the AESO coming up with updated guidelines back in June.

Chris Jeffries: Hi, thanks for taking my question. I was just wondering on the power side in Alberta, when it comes to data centers, we've seen a little bit of movement with the AESO coming out with the updated guidelines back in June, and there's a comment in there about bridging capabilities. I'm just wondering how you're thinking about the prime power opportunity with some of the changes and announcements coming out of the AESO in the past month or two.

Krista Friesen: Hi, thanks for taking my question. I was just wondering on the power side in Alberta, when it comes to data centers, we've seen a little bit of movement with the AESO coming out with the updated guidelines back in June, and there's a comment in there about bridging capabilities. I'm just wondering how you're thinking about the prime power opportunity with some of the changes and announcements coming out of the AESO in the past month or two.

Speaker #7: And there's a comment in there about bridging capabilities. And I'm just wondering how you're thinking about the prime power opportunity with some of the changes and announcements coming out of the AESO in the past month or two.

Speaker #1: Yeah. So, I mean, I would describe the situation as evolving. Right now, as you mentioned, it's kind of quick, quick, slow, quick, quick.

Kevin Parkes: Yeah. I would describe the situation as evolving right now, as you mentioned. It's kind of quick, slow, quick. We're trying to stay across all of that opportunity, and make sure that we're ready to support the opportunities for prime bridging or backup power. Clearly, prime power has a higher value creation for Finning. We're super focused in that area and working with customers behind the meter. I think that the first opportunity probably is going to be backup, as there is some capacity in the grids. I think as it moves forward, the opportunity will probably shift to bridging power whilst permanent capacity is constructed and built. As it relates to the permanent power, that's the kind of crown jewel. That's where we're really focused on participating in that prime power generation.

Speaker #1: And we're trying to stay across all of that opportunity and make sure that we're ready to support the opportunities for prime, bridging, or backup power.

Speaker #1: Clearly, prime power has a higher value creation for Finland. So we're super focused in that area. And I'm working with customers behind the meter.

Speaker #1: I think that the first opportunity probably is going to be coming, is going to be backup, as there is some capacity in the grids.

Speaker #1: But then I think as it moves forward, the opportunity will probably shift to bridging power. Whilst permanent capacity is constructed and built. And then as it relates to the permanent power, that's the kind of crown jewel.

Speaker #1: That's where we're really focused on participating in that prime power generation. But as you know, there are multiple ways you can produce that power.

Kevin Parkes: As you know, there are multiple ways you can produce that power. There's already been some announcements that support the build of new gas-fired power generation. We think the opportunity in and around that to bridge and to participate in the resiliency of that behind the fence power generation is super exciting. Right now, it doesn't feature in our financials and our more than 100% growth that we're seeing in our power generation business today is in prime power, is in gas, and is in gas compression.

Speaker #1: There's already been some announcements. That support the build of new gas-fired power generation. But we think that we think the opportunity in and around that to bridge and to participate in the resiliency of that behind-the-fence power generation is super exciting.

Speaker #1: And right now, it doesn't feature in our financials. And our more than 100% growth that we're seeing in our power generation business today is in prime power, it's in gas, and it's in gas compression.

Speaker #7: Okay. Thank you for the color there. And then maybe just to follow on, as we think of the backup opportunity and we see some of these data center projects be announced, like Project Greenlight, would that be a one-for-one backup to prime power solution?

Chris Jeffries: Okay. Thank you for the color there. Maybe just to follow on, as we think of the backup opportunity and we see some of these data center projects be announced, like Project Greenlight, would that be a one-for-one backup to prime power solution, or would you not necessarily need that level of replication? Thank you.

Krista Friesen: Okay. Thank you for the color there. Maybe just to follow on, as we think of the backup opportunity and we see some of these data center projects be announced, like Project Greenlight, would that be a one-for-one backup to prime power solution, or would you not necessarily need that level of replication? Thank you.

Speaker #7: Or would you not necessarily need that level of replication? Thank you.

Speaker #1: Yeah. There's not a we try to give some examples of how it might play. But in terms of the one-for-one to help shape and model, it's a very dynamic, as I mentioned previously, it's evolving and dynamic.

Kevin Parkes: Yeah. No. We tried to give some examples of how it might play out, in terms of the one for one to help shape and model it's very dynamic. As I mentioned previously, it's evolving and dynamic. There certainly isn't a one-for-one relationship between prime and backup if you're providing prime power generation. Because when you're building prime generation, you're building in a level of redundancy. It's not like the grid goes off and you have to back it up. If you've got 10 gas engines, the likelihood that all 10 go down at once is very low. You've always got some redundancy in the system. No, it's not one for one. There will be backup generation opportunities. There'll be some bridging opportunities while that prime power is being constructed and built. You know that you've got diesel backing up grids.

Speaker #1: There certainly is no one-for-one relationship between prime and backup if you're providing prime power generation. Because when you're building prime generation, you're building in a level of redundancy.

Speaker #1: It's not like the grid goes off and you have to back it up. If you've got ten engines, ten gas engines, the likelihood that all ten go down at once is very low.

Speaker #1: And so you've always got some redundancy in the system. So no, it's not one-for-one. There will be backup generation opportunities. And there'll be some bridging opportunities why that prime power why that prime power is being constructed and built.

Speaker #1: But no, that you've got diesel backing up grids, when you've got behind the meter bring your own power, there's an element of redundancy built into those projects which reduces the doesn't reduce it to zero, but it reduces the need for the proportion of backup generation you need.

Kevin Parkes: When you've got behind the meter, bring your own power, there's an element of redundancy built into those projects, which doesn't reduce it to zero, but it reduces the need for the proportion of backup generation you need. There's also the fact different types of data centers that have different latency and productivity requirements, right? There's different data center use cases that are less critical and require less backup generation.

Speaker #1: There's also the fact that different types of data centers that have different latency and productivity requirements, right? So there's different data center use cases that require that are less critical.

Kevin Parkes: There's also the fact different types of data centers that have different latency and productivity requirements, right? There's different data center use cases that are less critical and require less backup generation.

Speaker #1: And so require less backup generation.

Speaker #7: Thank you. I appreciate the comments on that.

Chris Jeffries: Thank you. Appreciate the comments on that.

Krista Friesen: Thank you. Appreciate the comments on that.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Mr. Primrose for any closing remarks. Please go ahead.

Speaker #2: This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Primrose for any closing remarks. Please go ahead.

Speaker #1: Thank you, operator. And yeah, thanks everyone for joining. Kevin and I are in Santiago, Chile today. And we appreciate you joining us. And we look forward to joining you in November when Kevin and I will be in Dublin with the UK and Ireland team for that call.

David Primrose: Thank you, operator. Thanks everyone for joining. Kevin and I are in Santiago, Chile today, and we appreciate you joining us, and we look forward to joining you in November when Kevin and I will be in Dublin with the UK and Ireland team for that call. Thank you again and have a safe day.

Speaker #1: So thank you again and have a safe day.

Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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