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Edited Transcript of FTT.TO earnings conference call or presentation 6-Nov-18 2:00pm GMT

Q3 2018 Finning International Inc Earnings Call

CALGARY Dec 12, 2018 (Thomson StreetEvents) -- Edited Transcript of Finning International Inc earnings conference call or presentation Tuesday, November 6, 2018 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* L. Scott Thomson

Finning International Inc. - CEO, President & Non-Independent Director

* Mauk Breukels

Finning International Inc. - VP of IR & Corporate Affairs

* Steven M. Nielsen

Finning International Inc. - Executive VP & CFO

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Conference Call Participants

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* Cherilyn Radbourne

TD Securities Equity Research - Analyst

* Derek Spronck

RBC Capital Markets, LLC, Research Division - Analyst

* Jacob Jonathan Bout

CIBC Capital Markets, Research Division - MD of Institutional Equity Research

* Mark Begert

Raymond James Ltd., Research Division - Associate

* Michael Doumet

Scotiabank Global Banking and Markets, Research Division - Analyst

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Presentation

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Operator [1]

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Thank you for standing by. This is the conference operator. Welcome to the Finning International Third Quarter 2018 Conference Call and Webcast. (Operator Instructions) The conference is being recorded.

I would now like to turn the conference over to Mauk Breukels, Vice President, Investor Relations and Corporate Affairs. Please go ahead, sir.

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Mauk Breukels, Finning International Inc. - VP of IR & Corporate Affairs [2]

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Well, thank you, operator, and thanks everyone for joining us. On the call with me today are, Scott Thomson, President and CEO; Steve Nielsen, CFO; and Anna Marks, Senior Vice President, Corporate Controller. Following the remarks by Scott and Steve, we will open up the line to questions. An audio file of this conference call will be archived at finning.com.

Before I turn it over to Scott, I want to remind everyone that some of the statements provided during this call and information on the slides is forward-looking. This forward-looking information is subjected to risks, uncertainties and other factors as discussed in our annual information form under key business risks and forward-looking information, and in our MD&A under risk factors and management and forward-looking disclaimer. Please treat this information with caution, as Finning's actual results, performance and achievements could differ materially from current expectations. Except as required by law, we do not undertake any obligation to update this information.

Scott, over to you.

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [3]

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Good morning. I would like to start with a few notable highlights in the quarter. We delivered strong operating performance in Canada in Q3. Canada's return on invested capital is now at 16%, up 400 basis points over last year. We continue to make solid progress towards our goals to deliver 20% return on invested capital over time. Our equipment backlog remains healthy at $1.5 billion. In Canada, September order intake was the highest monthly intake in 2018.

Chile's equipment markets continue to recover. Our new equipment sales in Chile more than doubled from last year. And we expect significant equipment deliveries in Q4, particularly in Canada. This will drive strong free cash flow for the remainder of the year.

I will now turn to a review of our regions. In Canada, we are seeing solid demand for equipment and product support across all sectors, and our order intake and backlog remain strong. We are pleased with the recent announcement that LNG Canada is proceeding. We expect the related earthmoving, pipeline and gas compression activity to generate $500 million in incremental revenues over a multiyear time frame.

The project status of Trans Mountain is disappointing, but we are encouraged that customers who ordered equipment for this pipeline have kept their machines, which is indicative of strong activity levels, and we believe the project will ultimately proceed. Before I close off on Canada, I want to reflect on a fatality, which occurred a few weeks ago in Saskatchewan. We lost an employee in an incident on a customer site. Our heart goes out to his family. Safety is a core value at Finning and our whole organization is impacted by this tragedy. Our commitment to the health and safety of our employees remains unwavering. The investigation is ongoing, and we will share our learnings around the company and continue to keep safety top of mind in all we do.

In South America, Chile's results were overshadowed by Argentina's performance. As you know, the peso devalued significantly in Q3, and Argentina's economy has weakened. As a result, our revenue in Argentina dropped sharply in Q3, with construction new equipment sales down almost 80% from Q3 2017. We are taking the necessary steps to right size our operations, costs and capital in Argentina to align with lower activity levels. During the quarter, we had negative EBIT in Argentina, which weighed on FINSA's results. With a right-sized cost base, we expect to return to profitability in Argentina in Q4.

In contrast, activity levels in Chile remain robust. The government's policies have strengthened business confidence and Chile's Central Bank forecast GDP growth of 4% to 4.5% this year. In the third quarter, we sold 30% more new construction equipment than last year. And we are encouraged by the government's commitment to investing in the country's future through their infrastructure agenda. In addition, copper production is up over last year, and the copper commission is forecasting increased copper production again next year. At current prices, copper mining is profitable, and a -- and large mining equipment is back at work. As customers are generally running aged equipment fleets, we expect significant replacement demand over the next few years. We had a meaningful increase in sales of new equipment in Q3 and continue to see strong quoting activities in mining. We subscribe to the view that global demand for copper will outstrip supply in the medium term. As long as U.S., China trade and tariffs do not disrupt, we believe mining in Chile will continue to recover.

Our technology investments in South America this year are expected to improve working capital velocity and reduce costs. We should start seeing benefits next year. With the technology spend behind us and an anticipated pickup in equipment replacement, we expect profitability in South America to improve significantly in 2019 with the objective of returning to historical EBIT margins in relatively short order.

I am also pleased with the ongoing progress we are making with the implementation of our digital agenda. Today, 26% of our -- of parts outside of service jobs are ordered online. This is up 5 percentage points since last year. We now have 68% of all machines connected globally. This is up 10 percentage points over last year, and we are on plan to connect 80% of machines by the end of 2019. Digital's incremental revenue and lower cost to serve contribute to the bottom line. We have now reached the tipping point where our investment in digital is accretive to EBIT, a year earlier than we planned.

Looking ahead, with the exception of Argentina, we are pleased with the end market activity and the outlook for our regions. End market demand in Chile, Canada and the U.K. remain strong, and we expect that to continue through 2019. At the same time, we are keeping a close eye on the macro developments that have the potential to reduce global GDP and impact customer activity.

For the balance of 2018, we expect a sequential increase in revenues and gross profits, albeit at lower margins due to significant new equipment sales in Q4, principally driven by mining deliveries in Canada. Losses in Argentina in Q3 reduced our EPS this quarter by about $0.03. Our actions to date have stabilized Argentina and will result in improved EBIT margin in South America relative to Q3. We expect a strong finish to the year, both from an earnings and free cash flow perspective. Given the strong delivery of free cash flow in Q4 and the discrepancy between the current stock price and the fundamental value of our shares, we plan to repurchase up to $100 million of our stock before the end of the year.

I will now turn it over to Steve.

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Steven M. Nielsen, Finning International Inc. - Executive VP & CFO [4]

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Thank you, Scott. Our third quarter results reflected strong performance in Canada and the U.K. and Ireland, continued market recovery in Chile and extremely challenging economic conditions in Argentina. Adjusted earnings per share of $0.45 was up 35%, and adjusted EBIT of $123 million was up 23% from the prior year on a 14% increase in revenues. We adjusted our results for 2 significant items: First, following a review of our investment in Energyst, we determined that this investment no longer fits in our business strategy. As a result, we reported a $30 million or $0.18 per share write-off of our investment in Energyst.

Second, the negative tax impact of the sharp and rapid devaluation of the Argentine peso amounted to $20 million or $0.12 per share in the third quarter. This was comprised of $0.02 cash tax, as we communicated during our second quarter earnings call and $0.10 of noncash tax as a consequence of the non-controllable revaluation of deferred tax balances, which principally represent book tax timing differences.

Moving to regional highlights, in Canada, strong customer activity continued across all sectors. New equipment sales were up 62%, driven by large mining deliveries and increased demand in construction and gas compression. Product support revenues were up 10%, with favorable market conditions in construction and oil and gas as well as higher volume of component rebuilds in mining. Rental revenues increased by 8% year-over-year, and were up 35% sequentially. Although there is still work to do, our rental strategy is working. We are achieving better pricing, utilization has improved and customer loyalty scores are moving higher.

EBIT in Canada was up 37%, and EBIT margin improved by 90 basis points to 8.6% despite a shift in revenue mix to a higher proportion of new equipment sales. SG&A as a percentage of revenue declined by 230 basis points, reflecting the leverage of incremental revenues on fixed costs and disciplined spending. Return on invested capital of 16% improved by 400 basis points from last year, driven by higher profitability and improved invested capital turns.

Our results in South America were negatively impacted by challenging economic conditions in Argentina, including the significant devaluation of the Argentine peso and reduced government spending. In functional currency, South America's total revenues were down 3%, and EBIT was down 25% due to a 56% decline in revenue in Argentina and the resulting EBIT loss. The negative EBIT margin in Argentina reduced South America's overall EBIT margin to 6.7% in the quarter. Profitability in Chile however remains solid and in line with the expectations. Due to significantly lower profitability in Argentina, we do not expect to achieve the previously communicated EBIT margin target of 8.5% in South America in 2018.

We completed some rightsizing in Argentina earlier this year. And as Scott mentioned, we are taking additional actions to align with lower activity levels and manage our currency exposure. As an example, we have moved almost $50 million of our inventory into Chile. In Chile, we are encouraged by continued recovery in equipment markets. Our new equipment sales more than doubled from the third quarter of last year, driven by improved demand in all sectors, but most notably in mining.

In the U.K. and Ireland, we saw strong activity in power systems, steady levels of product support and improved margins in most lines of business. Revenues were up 10% in functional currency, and EBIT margin increased by 160 basis points to 5.1%. Return on invested capital was up 110 basis points from the third quarter of last year to 14%, driven by higher profitability. We are closely monitoring the latest developments on Brexit, but we have not seen any impact on activity levels. Our equipment order intake and backlog remain strong, particularly in the industrial and electric power segments. And large infrastructure projects such as HS2 and Heathrow are expected to provide further opportunities.

In the fourth quarter, we expect sales momentum to continue across our regions, resulting in higher revenues and gross profits, albeit at lower margins due to a higher proportion of new equipment sales in the revenue mix. We remain focused on advancing our supply chain and e-commerce initiatives to drive capital efficiencies. Working capital to sales of 26.7% improved by 190 basis points from the same quarter last year. And invested capital turnover of 2.14x was the highest since 2012. Free cash flow was a use of $49 million, mostly due to higher inventory purchases to meet demand. Our backlog is up by about 65% from a year ago, and new equipment sales increased by almost 35% from the third quarter of last year. While we continue to experience long lead times, on some equipment and parts, we have maintained working capital efficiencies. We expect significant equipment deliveries in the fourth quarter to generate strong free cash flow.

I will now turn it back to Mauk for Q&A.

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Mauk Breukels, Finning International Inc. - VP of IR & Corporate Affairs [5]

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Operator, that concludes our remarks. Before we go to the Q&A, we request everyone on the line that as a courtesy to your colleagues, you ask no more than 2 questions when it is your turn. Please go to the end of the queue if you have more questions. Operator, can you please open up the lines?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from the Cherilyn Radbourne from TD Securities.

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Cherilyn Radbourne, TD Securities Equity Research - Analyst [2]

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In terms of the business opportunity that you outlined related to LNG Canada, I assume that there is an earthmoving piece that's relatively short term in terms of the timing. And then kind of an engine piece that's a little bit more back-end-loaded, so maybe you can speak to just the cadence of that opportunity a little bit? And remind us how PLM functions as we think about the pipeline portion.

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [3]

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Right, great question. You're right. There is a lot of earthmoving when you have to make site prep, for example, and we've got a lot of our good customers have -- are going to be involved in that business. And you should go no further than looking at what Chevron has done down that road in Kitimat. You see the amount of diggers and earthmoving equipment. So there is a big component, but it's relatively short-lived. And so the long-term -- well and then the other relatively short-lived, and I'm talking multiyear period, but relatively -- is pipeline and that is through PLM. So we have a 25% interest in PLM. And that has served us well given all the pipeline activity through North America over the last few years. And so that pipeline equipment will be sold through PLM, and then we will -- Finning will provide the product support so good opportunity there.

And then lastly, in the long-term nature of this is the engines and the rebuilds and the product support that comes with that. And the engines come in twofolds. One, is gas compression. So all of the engines that customers like Enerflex sell, from a gas compression would come from us. And that's good both upfront and product support revenue. And then second, the emerging business opportunity that I'm really excited about is the frac rebuilds. And you've heard me talk a lot about frac trucks and the progress that CAT has made over time in terms of increasing the content. So engines, pumps, transmissions, flow iron. And all of that has to be rebuilt, and we've got a great facility with OEM that helps us do that.

So we actually started a lot of that unrelated to LNG, with Joel and the team on the power systems team have done a great job capturing that opportunity with 2 or 3 big frac companies. And I think that opportunity will only grow as you think about the amount of fracking that's going to have to be done to feed those trains for Shell.

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Cherilyn Radbourne, TD Securities Equity Research - Analyst [4]

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Great. And then switching gears, I wanted to ask, in Argentina, how do you sort of downsize that business to current business conditions while also staying nimble to capture the Vaca Muerta opportunity?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [5]

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That's a great question, because I believe Vaca Muerta is a significant opportunity for us. In fact, we're here in Chicago with CAT, with our board, and had dinner with a lot of the CAT folks last night. And Jim Umpleby sits on the board of Chevron and they're actually active down there right now. And so we were just catching up on the opportunity. And it is a massive opportunity. It's Permian-like, Eagle Ford-like opportunity. And so the challenge here is we need to have the right size cost structure, and that's primarily in the mining and the construction side, but we really have to focus on developing and being first mover in the Vaca Muerta.

And so we're not going to let that opportunity get away from us. We're going to really think about segmenting our business. When you think about what's happened here in Argentina, it's interesting as we've segmented the market, a lot of the downturn would have been mining, right. And so a couple of the mining customers have shut off -- set up -- sorry, shut up shop and gone away, and we've seen a real decline in product support through this little transition period. And then obviously, you haven't had a lot of the construction infrastructure spend that we were expecting, and that's driven the sales down. But, in no means does our rightsizing Argentina take my focus away from the Vaca Muerta.

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Operator [6]

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Our next question is from Jacob Bout with CIBC.

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Jacob Jonathan Bout, CIBC Capital Markets, Research Division - MD of Institutional Equity Research [7]

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First question on CAT. Talk about any supply chain challenges for the third quarter. And then with the pricing increases that they're talking about in January 2019, any impact on demand at all?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [8]

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So the supply chain or lead time issues, and parts availability issues, have been well documented. And we've worked really well with CAT to address some of those issues, and they're getting better. And if you look at some of our inventory levels in Canada, we've had to add some inventory. Fortunately our inventory turns have stayed pretty consistent. And our sales to invested capital has actually increased. I think we've been able to manage that well. We've seen -- I might not get these numbers exactly right, but I think year-to-date in Canada our new equipment revenue is up 49%, right. So a big increase in revenue, and we've been able to hold market share, which is I think another significant accomplishment.

Where it has impacted us a little bit is on the rental fleet. I think we said in earlier quarters, we were about a quarter late on loading into our rental fleet. And so you saw in the second quarter rental revenues were relatively light year-over-year. I think what was pleasing to us this quarter is we've got the fleet. And our rental revenues sequentially are up 35%, relative to the second quarter. So -- and now as we are here in the fourth quarter, I know I can see the delivery schedule. We've got a pretty robust delivery schedule till the end of the year. So I actually feel pretty good about where we are with equipment, inventory and deliveries. As it relates to the price increases that CAT announced, I think, this is just normal course of business that we deal with all the time, so not something that I'm concerned about at all.

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Jacob Jonathan Bout, CIBC Capital Markets, Research Division - MD of Institutional Equity Research [9]

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And the strong new equipment sales that we saw in Canada, can you just talk a bit about the sustainability of some of these big numbers that we've seen? Was there a few mining contracts that boosted results or?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [10]

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Not really. I mean it was broad-based. We've seen broad-based across all sectors. I guess the one area that was a little weak was power systems on the gas side, which you can see with -- based on where that's tracking. But other than that, it was broad-based, support. And I think it's going to continue into Q4, as you think -- actually, I think we're going to see a little bit more mix towards new equipment in Q4, and the backlog's strong. Just to put it into perspective, September order intake was the strongest month of the year in Canada. And so we're feeling pretty good about the backlog right now.

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Operator [11]

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Our next question is from Michael Doumet with Scotiabank.

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Michael Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [12]

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So I mean, it looks like we're seeing a lot of strength in mining across your geographies. I mean the fleet in Canada and Chile are also pretty old as well, and utilization rates are higher. Presumably, replacement demand should continue through 2019. So I'm just wondering with lower WCS and copper prices and increased concerns around commodities, I mean is there a sense that customers are being somewhat more cautious now? Or how are you reading the market there?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [13]

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Yes, I think you've got 2 big trends that are happening in both Canada and Chile. As on Canada, I think there's been a real deferral of overburden removal over the last 4, 5 years. And we've got our customers trying to catch up and that's resulting in a lot of contractor demand, which -- a lot of demand from our customers, so that's I think, a helpful interplay. The Western Canadian Select differential, the $50, is impactful and we need to watch it. It doesn't impact all of our customers equally, and so I think there's still a number of our customers that have upgraders that allow them to avoid some of that impact. I know others like Cenovus and MEG get hit pretty hard on it. But I think some of our other customers have been able to mitigate that pretty effectively.

And so I don't suspect -- I think oil sands is going to continue, and that is a really competitive market given that differential. And we have to be really thoughtful with helping our customers navigate through it. And so -- and we're doing that. So there's lots of work with our customers to make sure that these are win-win and they're competitive going forward.

In Chile, a little bit of a different story, trucks parked, new activity, copper production up, equipment aged, which is resulting in fleet renewals and trucks going back to work. If you look year-to-date, our product support is 13% up, year-to-date in Chile, which is -- that's a good healthy number. And we're starting to see some quoting, you've seen strong new equipment demand. So I feel good about that.

That being said, copper prices and commodity prices do have an impact. And so when you see copper price down 15% or 16%, and you hear all the noise around Trump, tariff, China, I'm sure the -- our customers are sitting there, being thoughtful about that. And I'm hopeful we get through all that. I know Chile is increasingly cost-competitive, 35% of the world's copper demand. And I think we all feel good about the demand-supply dynamics for copper long-term. But you do have to navigate through the short-term impacts of lower commodity prices.

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Michael Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [14]

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That's good color. Just maybe on one of the comments you made around overburden removal. Is your sense that we're sort of caught up at this point? Or is there activity there that you think moves into 2019?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [15]

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No I think there's a lot of activity continued on overburden removal and rebuild activity.

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Michael Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [16]

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Okay. And just on Argentina, I missed (inaudible) I just want to make sure that I understood your comments in the prepared remarks. So you're reducing the cost structure there, you're expecting profitability in Q4. It looks like your downsizing to the current demand level without maybe leaving too much room for a recovery, and that's ex oil and gas. I'm not sure if I'm reading that correct as well. And then you're expecting margins on -- in South America to return to sort of normal levels, sometime early in 2019, is -- what I read from your comments, just some color there and I just want to make sure my comments are right.

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [17]

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Sure. Yes. So, when we look at -- I mean, we've done a great job. The team has done -- in South America, has done a great job keeping that 8.5% type margin for the last 4 years. And this quarter with an 80% decline in unit sales in Argentina, we actually lost money in Argentina, negative EBIT. I think it had about a $0.03 impact on the overall results. And so that brought the margin for FINSA down. If you'd excluded that, Chile's -- would've posted the same result they always posted, or approximately there. So I actually feel good about the Chilean market.

So then the question is how do you improve Argentina. And it's complex because I do think the government there is doing the right things. You do have Vaca Muerta but you also have to recognize you have to profitable. And so, one, we've moved a lot of inventory out, given the reduction in sales, to Chile in order of $50 million. And we are going through a rationalization process of cost. And just keeping the flexibility to respond to demand when it comes, but getting to the point where we're not unprofitable in Argentina. And we think we'll get to that point in the fourth quarter where it be unprofitable -- it will be stabilized so we won't be losing money and then as we go into 2019, we'll, one, both improve in Chile given the technology spend that's behind us and improve in Argentina to see much higher profitability than what you've seen this year based on this.

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Michael Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [18]

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Okay, no that's helpful. And maybe just one last question as it relates to free cash flow expectations for 2018. I mean, you commented that Q4 is going to be a good free cash flow quarter, but just to get a view on the year.

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [19]

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Yes, so we -- you've seen us in the last 5 years, it's kind of been a pretty similar story. Q1 is very -- a free cash outflow. Q2 and Q3 are kind of stable and then Q4 is strong free cash flow delivery. And that's the seasonality of our business. And we told you at the start of the year we're going to be free cash flow positive, revenue's grown a little bit more than we expected. I think we're growing at 14% relative to what I thought was 10%, but our sales to invested capital has stayed the same or improved. And so our expectation is that we deliver positive free cash flow for the full year.

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Operator [20]

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Our next question is from Derek Spronck with RBC.

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Derek Spronck, RBC Capital Markets, LLC, Research Division - Analyst [21]

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Just on Argentina, are you able to kind of size the overall contribution of Argentina to your consolidated revenue and EBIT?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [22]

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Well, we should be able to. Sorry, I can't -- maybe I can't do it off the top of my head, but it was a $300 million business --$250 million, $300 million business and it went up to $500 million revenue. And we're now back down to that kind of $250 million to $300 million. The other comment I made was EBIT loss $0.03 impact, so hopefully that gives you some guideline. And then the third thing I said was Chile and Bolivia were relatively consistent year-over-year from a profitability perspective, yet you see the FINSA results this quarter, which I think our EBIT margin was 6.7%, so those 3 numbers hopefully will allow you to triangulate to the overall impact.

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Derek Spronck, RBC Capital Markets, LLC, Research Division - Analyst [23]

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Okay. That's helpful. And I guess -- part of it, but you indicated previously that you feel that -- and hopefully I'm quoting you correctly, that there's $100 million cost opportunity that you could drive out of the business going forward. Any progress on that front? And is that broad-based? Is it a broad-based opportunity or is there anything specific that you're targeting?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [24]

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I think what we said with our Investor Day is we thought we would get to 18% SG&A. And what I'm actually -- we're now 6 or 7 months into it, and I'm pretty pleased with where we're heading. And I look at the Canadian SG&A results, and again, I'm not going to get this exactly right, but I think there's a 200 basis-point improvement year-over-year, we're around 19%. And the next phase of this is process improvement, data driving better decision-making, e-commerce, which is a lower cost to serve, significantly lower cost to serve. Now we want to do that in the context of an omnichannel approach but as we move more parts online that will reduce cost structure and I think that all leads you to a more leaner and agile company that can get to that 18% SG&A. And if we can do that, I mean I think that's a big part of driving the ROIC in Canada to that 20% level, and at the same time, providing more competitive services and win-win propositions for our customers.

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Operator [25]

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(Operator Instructions) Our next question is from Mark Begert with Raymond James.

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Mark Begert, Raymond James Ltd., Research Division - Associate [26]

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Just out of curiosity, when you guys talk about Finning's fundamental value, how are you thinking about that? And like what sort of things do you guys look at when thinking about the fundamental value of the company?

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L. Scott Thomson, Finning International Inc. - CEO, President & Non-Independent Director [27]

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Yes, so probably not unlike what you do. We think about the discounted cash flow value. We think about the growth opportunities that we have in front of us. And essentially, we look at various ways to allocate capital. And there's -- we've talked about this at length. You can invest organically, which we have been doing. You can do acquisitions, which you saw us do some of that, or you can repurchase your own company, which I think, essentially is like buying another CAT dealer. And as I said, we kind of do a little bit of all 3. It seems right now in the short term, you've got a little bit of an equity disruption that's driving down the share price, it's disconnected from where we think it should be. So it's a great time to buy our own stock and move forward from a smart capital allocation perspective.

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Operator [28]

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This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Breukels for any closing remarks.

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Mauk Breukels, Finning International Inc. - VP of IR & Corporate Affairs [29]

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Well, thank you very much, operator. That concludes our call. Thank you, everyone, for listening.

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Operator [30]

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This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.