Finning International Inc.

Mauk Breukels – Vice President-Investor Relations and Corporate Affairs L. Scott Thomson – President and Chief Executive Officer Dave S.

Smith – Executive Vice President and Chief Financial Officer Juan Carlos Villegas – Executive Vice President and Chief Operating Officer

Ross P. Gilardi – Bank of America Merrill Lynch Cherilyn Radbourne – TD Securities Peter Prattas – Cantor Fitzgerald Canada Corp.

Benoit Poirier – Desjardins Securities, Inc. Bert Powell – BMO Capital Markets (Canada) Sara O’Brien – RBC Capital Markets Kam Mangat – Salman Partners, Inc.

John P. Novak – Connor, Clark & Lunn Investment Management Ltd.

Well, thank you, operator, and thanks to everyone for joining us. On the call with me today are Scott Thomson, President and CEO; Dave Smith, Executive Vice President and CFO; Juan Carlos Villegas, our newly appointed President of Finning Canada and COO; and Donna-Marie Bergerman, Director of External Reporting.

Juan Carlos is on the line with us today from Edmonton. As usual, there is a set of slides which accompany today’s remarks and they are available on our website finning.com.

The slides and an audio file of this conference call will be archived at finning.com as well. Today, Scott will start with his remarks, Dave will provide a summary of the financial results for the third quarter and Juan Carlos will provide the market update for each of the regions.

Following the remarks by Scott, Dave and Juan Carlos, we will open up the line to questions. Before I turn the call over to Scott, I want to remind everyone that some of the statements provided during this call and the information in the slides that accompany the call and in the press release is forward-looking.

This forward-looking information is subject to risks and uncertainties as discussed in the company’s Annual Information Form under Key Business Risks. Please treat this information with caution, as Finning’s actual results could differ materially from current expectations.

Our forward-looking disclaimer statement is on Slide 2 and is part of our quarterly releases and filings. Finning does not accept any obligation to update this information.

Scott, over to you.

Good morning, everyone, and thank you for joining us. It has been a busy time in the business with significant progress and exciting developments.

Before getting into our third quarter results, I want to spend a few minutes on some recent news namely the executive changes we announced this morning as well as the tentative Alberta Union agreement we reached last week. I’ll start with the executive leadership team announcement.

As stated in the press release, I’ve asked Andy Fraser and Juan Carlos to take on new responsibilities to capitalize on their leadership strengths and address Finning’s key priorities. Andy is moving to a new role as EVP, Customer and External Relations.

Effective immediately, Juan Carlos will become President of Finning Canada. In his new role, Andy will provide senior level leadership to strengthen relationships with key stakeholders, particularly customers and Caterpillar.

Given the importance of safety at Finning, I’ve also asked him to provide strategic oversight and leadership to our safety efforts across our operations. I believe that Andy’s extensive operating experience, passion for safety and ability to build strong relationships with key customers and partners make him the ideal leader for this newly created role.

Given that Juan Carlos has been working closely with Andy on the work already underway in Canada, I am confident in a smooth transition in leadership responsibilities. Juan Carlos will be based in Edmonton and his primary focus will be on the Canadian business.

Given his experience and knowledge, I will continue to seek his council on operational matters in his COO capacity. However, both Marcello and Neil, the Group Presidents of our South American and European operations respectively, will report directly to me.

This reporting change will free Juan Carlos up to focus his efforts in Canada. This is an exciting change that aligns our structure to provide support in key areas of the business that are important for our continued success while maintaining our momentum with the operational excellence agenda underway in Canada.

I would like to thank Andy for his contribution as President of Canada over the last few years. He entered the business at a challenging time in Finning’s history and he has put the foundation in place for Juan Carlos and the Canadian team to build upon.

The second item worthy of an update is the tentative agreement with the Alberta Union. It’s a credit to Andy, his team and the union leadership that we’ve been able to come to this agreement.

It is important to note that this is still subject to ratification. Nonetheless, it is a positive step forward in the process and speaks to the constructive relationship that we will continue to foster with our union.

We will update you further on the vote outcome before the end of the year. I’ll now turn to our third quarter results.

Our performance was very much in line with our expectations. Equipment deliveries were up, EBIT margins remained flat and we generated strong free cash flow and strength in our balance sheet.

The quarter demonstrates the strength of Finning’s business model. We’ve seen revenue and profit warnings in the mining sector throughout the year, but Finning has continued to perform inline with our expectations.

Our diverse footprint and resilient product support business provides a solid and profitable revenue stream when equipment sales soften. In Canada, we had a strong quarter for equipment delivery.

While strong new equipment sales put pressure on gross profit margins, we were able to maintain our EBIT margins sequentially. In mining, we see some weakness in product support as customers’ defer maintenance.

However, order intake in the quarter was encouraging. In South America, mining customers remained cautious with their capital expenditures.

The good news is that we were recently awarded the significant mining contract, which Juan Carlos will provide some detail on shortly. The product support business in South America continues to be resilient with an 11% increase in revenues in the quarter relative to last year.

This revenue stream will offset some of the weakness associated with the expected reduction in new equipment deliveries in 2014. The team is taking action to align our cost structure to the current business environment with headcount reductions in Q3.

In the UK and Ireland, the economy has been soft, but is showing signs of improvement. The team is doing a good job of capitalizing on opportunities and delivering consistent results.

We expect to see strong equipment deliveries into Q4. So despite a challenging environment, overall business performance was solid.

There are number of encouraging factors that give me confidence looking ahead. First, we proactively addressed our cost structure in FINSA to ensure we are well positioned and we will continue to take actions as required.

Second, we have won some very significant mining contracts recently both in Canada and South America. And finally, I expect that we will finish the year with a stronger balance sheet.

These factors give me confidence heading into the balance of the year and looking forward to 2014. Lastly, let me spend a minute on our perspective going forward.

Our objective is long-term value creation. As the CEO of Finning, I intend to expand the focus from revenue and earnings growth to profitable growth with a focus on capital efficiency.

Improving the return on capital for the business will be a primary focus for me going forward. In order to improve in this dimension, we will not only need to increase revenues, but also manage our cost and capital, and this is particularly important in an uncertain economic environment.

Going forward, we will spend significant effort on improving working capital performance and ensuring the capital we spend is necessary for the improving health of the business. In order to improve our return on capital, we must sharpen our focus on the inputs to that equation.

Optimizing our supply chain, service profitability and improved asset utilization will in turn strengthen customer loyalty and financial performance. In addition, increased market share will ensure the long-term growth profile of the business and allow us to capture additional product support business in the years to come.

This must all be accomplished while maintaining our safety and employee commitments, continuously improving our safety and performance and ensuring that we have engaged employees, who feel part of a winning team; is fundamental to our continued success as a company. We have a significant amount to do in the years ahead, but the opportunity is tremendous and we have started the journey.

I look forward to sharing more details with you in December during our Investor Meeting. I will now turn it over Dave to review the financial results.

Thanks, Scott, and good morning, everyone. I’ll begin my remarks today by talking about the highlights of the third quarter and comparing our results sequentially to the prior quarter.

This is meant to provide you with a sense of how the year is unfolding and the progress we are making in each of our operations. I’ll then discuss briefly our quarterly results compared to last year.

Slide 5 shows how Q3 results are trending sequentially. Considering the macroeconomic environment, this was a solid quarter for us particularly in Canada.

On a consolidated basis, our revenues were 10% from Q2 driven by a $163 million increase in new equipment sales in Canada. In addition to significant mining deliveries in Canada, which included new shovels, we also saw growth in construction and forestry sales compared to the second quarter.

Partly offsetting this growth was a 13% decline in new equipment sales in South America, where mining and construction activity was slower compared to the second quarter. In UK and Ireland, new equipment sales were softer as well reflecting continued slow economic conditions.

Product support revenues were similar to the previous quarter and remained at healthy level despite cost containment measures by mining customers, which resulted in deferral of some repairs and reduced demand for rebuilds and component. On balance, the year is progressing inline with our expectations and we are maintaining our revenue guidance for 2013.

We expect another strong quarter of new equipment deliveries in Q4 to support a modest increase in our annual revenues over 2012, albeit at the very low end of a previously stated range of 0% to 10%. Now turning to our EBIT performance.

Sequentially EBIT increased by $13 million or 11% from the second quarter. As I just mentioned, we had some large mining deliveries in Q3, which reduced our gross profit margin on new equipment and led to a shift in the revenue mix.

As a result, we saw a gross profit margin decline about 3 percentage points. On the other hand, SG&A expenses were 3% lower than in Q2 in both absolute dollars and as a percentage of revenue, which was aided by a positive swing in FX rate.

As a result, our EBIT margin remained relatively unchanged compared to the second quarter. Basic EPS was $0.50 and this compares to $0.48 in the second quarter, which was aided by a tax benefit of about $0.03 a share.

Let me move on to free cash flow and the balance sheet and please turn to Slide 6. We expected to generate strong free cash flow and we delivered on that.

The $163 million of free cash flow in Q3 was driven by improved cash flow from operations and lower working capital spent largely due to reduced new equipment inventory, particularly in Canada. We expect continued reduction in new equipment inventory and strong collection to support significant cash flow generation in the fourth quarter.

Our net debt to total capital ratio declined to 48% at the end of September from 51% at the end of June. We are on track to reduce it further by the end of 2013, when we expect to be at approximately 45%, which is at the high end of our target range.

Now, I will provide you with a brief summary of our performance this quarter relative to the third quarter of last year, which you can find on Slide 7. When we look year-over-year, revenues increased by 12% again driven by Canada, while revenues in South America and the UK and Ireland were essentially flat.

Product support grew by 14% and was higher in all operation with about half that increase driven by the expanded mining product line or the former Bucyrus business. This was particularly true in Canada, where the expanded mining product line contributed an incremental $46 million to product support.

New equipment sales were also up 8%. Strong new equipment deliveries in Canada more than offset lower volumes in South America and the UK and Ireland.

It’s worth nothing that foreign exchange translation had a $50 million positive impact on revenues year-over-year due to a 4.4% weaker Canadian dollar relative to the U.S. dollar.

Gross profit rose by only 5% as gross profit margin declined to 29% from 31% in Q3 of last year. The gross profit margin in Canada was lower impacted by a shift in revenue mix to new equipment sales and the higher proportionate mining equipment within the sales mix.

In addition, part sales from our expanded mining product, which carry a lower margin contributed to a lower gross profit margin compared to the third quarter of last year. South America and the UK and Ireland partly offset this decline with higher gross profit margin reflecting more product support in their revenue mix compared to the third quarter of last year.

Turning to SG&A. Our SG&A costs were higher by about $10 million on a $186 million increase in revenue.

The volume related increases in Canada were offset by operational improvement in supply chain, particularly in freight and warehousing. Other notable items that impacted SG&A in the third quarter included severance costs related to workforce reduction across all our operations as we’re optimizing cost structure to the current business environment.

Since the end of 2012, we’ve reduced our workforce by about 450 people. We also recorded a loss provision on power systems contract in South America and we had operating expenses associated with the former Bucyrus business in Canada, which was not part of the Canadian operations in Q3 of last year.

Our EBIT rose 10% year-over-year, driven by the improved performance in Canada. The EBIT margin was 7.6% down slightly from 7.8% in Q3 of 2012.

This was primarily due to the reduced gross profit margin, partly offset by lower SG&A costs relative to sales. Net income and basic EPS were up 6% from last year as the improved EBIT results were partly offset by an increase in the effective tax rate due to foreign exchange impacts in Argentina.

To sum it all up, considering the softness in mining in all our territories and slowing construction activity in South America, Q3 was a solid quarter for us. We continue to benefit from our resilient product support business, which has grown by 13% on a year-to-date basis, including the contribution from the expanded mining product line, and importantly, the quality of our earnings and our financial position have improved significantly compared where we were last year.

Optimizing our cost structure remains a key focus area in all our operations. It is directly tied to our operational excellence initiatives to improve service efficiency, asset utilization and supply chain.

As we continue to make progress in these areas, we can expect to see improved cost structure and better profit pull through. And on that note, Juan Carlos, I’ll turn it over to you.

Thank you, Dave. I will start off by saying that I am very enthusiastic to be taken on the role of Finning Canada President.

This is an exciting time in our business and most especially exciting times for Finning Canada. Andy and the team have been working hard to get us where we are at today, especially on the execution of our operational excellence agenda.

Also Andy and the team have been moving our relationship with the union forward, as reflected by the recent tentative agreement with the union leadership that if ratified will be a significant step towards building a new chapter in our relationship, which I am personally committed to continue to foster. I have been working closely with Andy and the Canada team and as well as Caterpillar, so I am quite clear on the work we have ahead of us and what success is in Finning Canada.

Some of the issues are complex and will take time to solve to get us to the desired state, but I believe in the Canadian operations’ tremendous potential. I truly expect that our operational excellence agenda will put us on a solid path toward a strong and profitable future.

I will focus on the five priorities we have set; market share, supply chain, service excellence, asset utilization and talent. I’m really eager to take on this opportunity and I have tremendous confidence in the Canadian leadership team and all of our employees to deliver in our objectives.

I look forward to making the move to Edmonton by using my experience to support the effort underway and I am committed to stay in the role for how long is needed to get us to all this journey and when the time comes, leave an even more solid team behind with a very strong foundation as I did in FINSA. With that, I will now turn in to the third quarter and provide a market update for each of the regions in which we operate.

Let me start with Finning Canada, my new home, where we had a very strong quarter for new equipment sales, deliveries and order intake. I will provide a few comments on each of our segments.

In mining, producers in the oil sands continued to focus in reducing operating cost, this means that they are buying fewer machines and reducing repairs and maintenance expense. Despite the uncertain environment in the oil sands, we have just awarded – been awarded a major deal with a producer for the mining expansion project.

We will be delivering 19 797 trucks plus two 7495 shovels and 20 units of support equipment in 2014 and 2015. these are not included in our Q3 backlog.

We also have for delivery in the fourth quarter 11 midsized trucks for oil sands customers. This speaks about activity.

In the copper mining business, activity has slowed as well, but there are machine sales opportunities and we are very actively bidding on them. Existing population is running normally.

While we are talking about mining; let me comment on our expanded mining product line. On October 1, we celebrated the one-year mark with the new business and it continues to do well.

We are operating above plan with the strong part sales and a healthy maintenance and repair business and we continue to capture new opportunities as we’ve just heard. In the heavy construction and forestry sector, we see an increase in capital expenditures over last year.

We achieved growth in new equipment sales in this sector and we are continuing to increase market share in the building construction and core products. I am very pleased with the progress; our customer solutions team is doing a great job, tracking each segment on customer loyalty by branch and customers.

In our power system business, we see conventional oil remaining weak, while gas compressor and electric power generators are becoming a stronger. The power system team has done a great job of contributing to the overall reduction of our equipment inventory.

I’m also very pleased with the progress we are making with respect to our supply chain initiative. With Caterpillar’s new distribution center in Spokane, we are beginning to optimize our rising and are already seeing our parts service levels and turns to improve, as well as cost.

There is much more room for improvement still. 2014 should be the year most of this benefit would show.

To close on Canada, demand for rental equipment remained a strong across all segments throughout the territory. Now moving to South America, let’s just start with mining.

In FINSA, mining equipment sales have been a strong throughout the year. In fact, 2013 will be our strongest year ever for new equipment sales to the mining sector.

However, there are a number of headwinds, which are impacting mining activity in South America. Copper producers are not really concerned about the price of the copper at this time.

Nevertheless, they are concerned about higher cost of labor, energy, as well as water, and what could become a less competitive scenario for copper producers. As a result, our outlook is conscious, coming from a record year, as mining customers are investing less aggressively than before.

Rental projects are not proceeding as quickly as in the past and brownfield project expansions are reviewed more carefully. Overall, we do expect equipment replacement and growth of the machine population to continue, but of the slower rate in the short-term.

Despite the slow growth environment, we are working on new opportunities and we’ve recently had a significant win with Codelco, as we announced early this week, this is an order for 10 797 trucks with a 10-year maintenance contract. We expect to deliver four of these trucks before year-end and the balance in 2014.

With respect to the expanded mining product line in FINSA, we had some bumps in the road, as I explained it before. We have continued to stay focused on improving our performance and I believe we are more clear on what we have to start executing to regain ground.

As I mentioned, we have a good success in Canada and the team is now – is refocusing in South America to move this business to a more positive contribution as well. The slowdown in mining activity in Chile, especially greenfield activity has impacted equipment sales in power systems and construction.

The machine utilization levels and product support activity in these sectors have been reduced, compared to 2012, similarly to the oil sands contractor situation. Now on inventories, I’m pleased with the progress we are making.

We began managing our inventories down in June 2012 and have seen improvement in our inventory turns leading to positive cash generation. Let’s now turn to the UK and Ireland, where we are becoming more optimistic.

In equipment solution, we have seeing that the gold mining industry is gaining a stability after some industry consolidation, it’s still soft, but it’s moving forward. On the contraction sector, we are pleased with the market share we are gaining with general construction equipment.

The sub-dealer distribution is working well and we have received something significant orders in the planned higher market, which is quite a strong right now, because of the increase in house building and general construction activity. I will close off my remarks by comment on our backlog, which is done at $1 billion at the end of September.

We have very strong deliveries in Q3. Between now and year-end, we will also have a lot of machines to deliver.

Our order intake was up substantially in the quarter. In Canada and FINSA, order intake was up 19% over Q2.

On the large mining orders, we just received in Canada is not included in the $1 billion backlog we have reported today. We are currently working on a number of opportunities.

So I remain confident about the backlog looking forward. On that note, I will now turn it back to Mauk.

Operator, that’s concludes our remarks. Before we go through Q&A, we request everyone in the line that it’s a courtesy to your colleagues, you ask no more than two questions when it is your turn.

Please go to the end of the queue if you have more questions. Operator, if you can please open up the line for questions.

Hey, good morning, guys. Thanks very much.

I just had a couple of questions, but first of all, just on the new equipment supply agreements in both Canada and South America, could you just talk a little bit about the competitiveness of the bidding process and is Cat offering any discounts on new equipment to improve their competitiveness of their – of its dealer networks?

Hey, Ross, it’s Scott. Thanks for the question.

Juan Carlos, do you want to comment on Ross’s question?

Yes, I think that the market is always very competitive in mining. Every time that there is a large package of mining equipment, the negotiations are not easy and they always pull up a lot of meetings and a lot of discussion not only about the initial price of the equipment, but also about the maintenance contracts, the component pricing and everything else.

I would not say that there is a substantial change in the way that we have done mining deals before with today, perhaps the negotiations are a little bit longer and more distressed, but the outcome is not very dissimilar.

Okay. Thanks very much, and then, it’s nice to see the positive free cash flow generation in the quarter, but why are you expecting to be close to the higher end of that 30% to 35% to 45%, is it the external environment, is it taking you a lot longer to reduce your inventories than you might have thought off going into the year, any color there would be helpful.

Hey, Ross, it’s Scott. I’ll let Dave provide comments, but actually Q3 performance was probably a little bit better than we thought.

We pulled forward some cash flow from October. So we are really pleased with Q3 performance.

I actually think on the inventory side, we’re performing better maybe than we thought in the quarter. In Q4, approximately 45%, probably a little bit below that, which is consistent with what we’ve been saying for the whole year, so I don’t think there’s – Dave will have anything to add to that.

I don’t see a change in our guidance on the free cash flow performance.

I think that covers it right. I think anytime you are dealing with the market environment that we have now, sales can be up or down a bit, which will drive collections and timing of it.

We are looking, Ross, at inflows and outflows of roughly $1.8 billion a quarter. So this had a small percentage change and that can move things around a little bit, but as Scott said, we are very pretty confident in that forecast and things go our way, we can do a little bit better.

Okay. Thanks very much guys.

Thanks very much, good morning.

Good morning.

I wondered if you could just give us a bit of perspective on the maintenance deferrals that you’re seeing in the mining sector, in particular, I mean clearly, the machine utilization is remaining high. I just wonder how long you think those deferrals can persist before the machines have to be brought in?

And Cherilyn, it’s Scott. Are you referring to oil sands, copper in Chile or both?

I think your MD&A made reference to this kind of maintenance deferral in both places. So if you could address those that would be great?

Okay, perfect. Juan Carlos, do you want to address the second question?

Yes, absolutely. I mean, yes, when you are managing your budget very tightly, the way to defer maintenance is not really the maintenance, the maintenance has to be done when it has to be done, but the repairs and those type of things can be monitored and you can extract out of the components, the maximum life with close monitoring, that’s what the mining companies are doing.

And by doing so, they can stretch component exchange, maybe 1,000 hours, maybe 2,000 hours. But eventually that needs to be done and the component needs to be repaired and exchanged.

But through good maintenance, good service practices, they can be extended and you have to monitor. There is a risk that if the monitoring is not done very careful, those components will blow and the cost will be much higher.

The mining companies are working very diligent to try to manage that cost, which is postponing some of that repairs.

And can you just remind us 1,000 hours on the machine, what is that in terms of time typically?

Couple of months.

Couple of months?

A couple of months, say about 600 hour per month.

Okay.

And the other thing note too, Cherilyn, I mean despite the – some of the deferrals, the product support businesses was very strong. And we expect that to continue in 2014 and that will offset softness in the new equipment delivery side in South America in particular.

Okay. And then it did sound in the MD&A like the earnings in South America were impacted by a couple of one-time items, some severance and one-time provision on a contract.

Is that worth quantifying for us?

Sure, I’ll let Dave answer that question.

Sure. In South America, we had severance cost of just under a couple of million dollars, under $2 million.

Okay.

And the power contract, we took a provision on with about 3.5 million, Cherilyn.

Okay.

And those were not in the prior year quarter or and we don’t expect any more charges on the power contract.

I think the encouraging thing about that too is FINSA EBIT margin was 9.4% in the quarter and we back out $3.5 million write-down on the power product in your 10% type margin, so it was actually pretty – it was solid performance in FINSA during the quarter if you exclude the one-time items.

Okay, that’s helpful and I think that’s my two.

Good morning, everyone. I just want to start with strength you had in new equipment deliveries in Canada, I understand it reflects significant mining deliveries.

But was there any big ones like the one we saw from Toromont recently or was it more evenly distributed across customers and projects?

Thank you, Peter. Juan Carlos, do you want to give a little bit of a sense on new equipment deliveries, but also I think order intake, because that’s helpful for the context going forward.

Right. We had a large order last year for a mining producer in Canada and we have continued to deliver those equipment during this year part of that is deliveries in Q3, but also the order intake is coming at strong, construction and forestry are very strong and some activity in mining as well.

So it’s very evenly distributed and as I said, we got another order, which came in Q4 also significant.

And just on that, so your backlog did come down to the $1 billion from $1.1 billion, but you do mention of those wins in the oil sands and Chile, where would it be here mid quarter if you do include those wins?

Yes, I think Peter, we don’t typically comment on that. So I think one good progress, particularly, in Canada, when that’s not included in the backlog.

Order intake Q3 in Canada, 19%, 19% in FINSA as well, which gives us some confidence in 2014, but we’re not – we’re not going to comment on backlog given the deal that’s coming in Q4?

Fair enough. Thanks very much.

Hey, good morning and congratulations Juan Carlos for your new role. So the question is you know very well obviously, the regions, just wondering if with your new role whether what we should expect on things you need to assess or change that need to be addressed.

I’m just wondering whether what will be the key trigger to improve the margins in Canada, would it be lower cost structure or maybe a revenue shift or maybe more volume that will kick in Canada?

Yes, Benoit, it’s Scott and I’ll pass it to Juan Carlos, because the question is obviously, very relevant. I have one thing now I just – I picked up on, EBIT margin is important.

There’s no doubt to that, but return on capital is more important and I just want to keep everyone’s frame that EBIT margin is one aspect of this, inventory management, asset utilization is the other thing that we have to keep in mind to improve return on capital and I just think that’s important context to move away from this sole focus on EBIT margin. And Juan Carlos, over to you, I mean, it was a direct question to you.

Yes. Yes, no problem.

As we have defined top priorities, Benoit, for Finning Canada, which are market share, supply chain, service excellence, asset utilization and talent. The market share is, we have opportunities to gain market share in – not so much in mining, a little bit maybe, but mostly in construction, forestry, power system.

So we have pretty clear teams working on that and we have made progress even in Q3. So I’m quite pleased with that and I think that we have room for more.

On the supply chain that we have talked about the initiatives in supply chain, we have also a team working on how we can improve our turns and how we improve our cost managements in supply chain, how we do have less patches and how will that generate more cash and improve our returns on capital. We believe that we have a substantial opportunity here and I think that we will start seeing many of those benefit in 2014 and probably by 2015, everything will be in place.

On service excellence, another great opportunity to improve profitability and we have the team working on service excellence that is basically improved efficiency on how we deliver service, how do we use our facilities, how do – how much do we have on time that is not well utilized, all that, and talent, I think that with the opportunity that Finning Canada has for growth, we have also the opportunity to bring additional talent to the organization and move up some of the existing talent in the organization to take newer responsibilities and expand in the quite critical areas, the other four critical areas that we have defined as area for progress in Finning Canada.

Okay.

I guess, Benoit, just – Benoit, I just want to add to that, I mean, I think the service profitability and the focus on service excellence and the focus on supply chain, ultimately that drives improvement in customer loyalty and that’s a huge focus for us in Canada. So it’s not highlighted as one of the priorities, because it’s embedded in the supply chain improvements and the service improvements.

Okay. and my second question is related to the disposal in Canada that you’ve made in the quarter, I was wondering if you could provide more color on the disposals and whether there is more to come, in terms of disposal, what we should expect?

Thanks.

Hi, Benoit, it’s Dave. You are talking about the capital asset?

Exactly.

Yes, it was a one-off or one item, it’s actually something that’s been in the works for a period of time and it relates to one of our branches in Northeast BC, where we consolidated the property and we’re doing some branch modifications and there was a transaction, there were multiple owners and we ended up combining it and there was a transfer to them and a longer-term leaseback from them. So it was more or less completed in 2012, but it did not come through until 2013, it’s a one-off thing and we do not have any other items at this time to announce obviously, we talked about looking at asset utilization across Canada, but it’s too early at this stage to say whether there would be, what would specifically, come out of that.

Okay. thanks for the time.

Thanks. I guess this is a question for both Scott and Juan Carlos.

So Juan Carlos President of Canada and COO, it seems like a pretty tall order, even in light of some of the structural changes you made. I’m just wondering if you can give us just a little bit more color on how to think about your time allocation between the President of Finning Canada role given the amount of work that has to be done there and the COO role and how that may have changed relative to I think what the original mandate was when you were given that role?

That being said, and that’s what how he’ll act as an advisor to me in the COO capacity.

Okay.

That being said, the vast majority of the time will be spent in Canada. And in fact, we’ve changed reporting relationship.

so Marcello Marchese who is the President of South America will now report to me and Neil Dickinson who is the President of UK and Ireland will report to me and Juan Carlos will be based on Edmonton. So I think the way to think about it is, President of Finning Canada first and foremost most of the time, but I will rely on Juan Carlos for operational advice.

Bert, I think that that answer is the same answer, I guess as you said, there is a lot of things to do here in Canada, I’ll spend all my time here and moving me and my wife to Edmonton, we are buying house here. So we’re going to stay here for the long-term and we see a lot of activity that will keep us busy here.

Okay, great. And then question number two, it sounds like the Bucyrus service looks good.

How is that tracking relative to your expectations and I guess relative to when you did the acquisition?

So why don’t I – Dave, maybe you can provide a little bit more detail. But in general, I think Canada tracking at or above what we thought, but probably less than new equipment sales, lower margins maybe than we thought, but higher margin on the parts and service and more on parts and service.

So in Canada, it’s been successful. In FINSA, it’s been more of a challenge for a number of reasons; we’ve probably integrated that too quickly into our overall mining business.

I think that that’s quite accurate and I think we’re recovering in South America after a good first 2012 was at or above expectations. Some of the changes we made and the decrease in mining spend, as you’re well aware, Bert, impacted things there.

We are recovering not quite back to where we need to be, we had some product issues there. I think the other, we’re getting to things a little differently, we’re getting closer to the bottom line and some of the things we’d in indicate.

So we’re seeing service much stronger than we thought in the business plan and our margins are doing pretty well, relative to expectations on the parts and service side. We still have things to work out on the inventory, in particular, the parts distribution system to get that working more efficiently with Caterpillar and to bring on more parts and components available that I would say lagging behind what we were hoping it would be.

But that’s all being worked on, and overall, we still feel very comfortable with the acquisition that’s been a very – it’s a big win with our customers, we’re packaging deals as you’ve heard from Juan Carlos earlier, that was a big question that everyone had as we went to it, what would be the opportunity to do that and we see in several cases where that is coming to provision, so overall, long-term, still very happy with the acquisition.

Okay, thank you.

Hi, good morning. Can you comment a little, I guess, Scott, on Finning South America, how much of a concern the slowdown is there and are you confident that the cost-cutting measures will be enough to maintain that high EBIT margin at least known traditionally at FINSA?

Yes, thanks, Sara. It’s interesting, the performance in the quarter of FINSA, on the phase, when you look at the financial statement, 9.4% is below what we’d like to see and I think if you back out the end – sorry the Bolivian power contract write-down and the severance costs, you get a much better and stronger financial performance in excess of 10%.

So the quarterly performance of FINSA was quite good, point one. Point two, there is going to be a decline in new equipment sales, next year and a pretty significant decline, I mean we can see that with the customers.

We were very pleased, however with the Codelco sale and there is a few more, I mean there’s other opportunities that we’re talking about in 2014. So that gives us some confidence and the product support business continues to be very strong.

I mean the product support increase this quarter was very strong relative to last year and we expect that to continue into 2014. So that core business feels pretty good.

The two areas where I think I’m focusing on is Bucyrus integration, I mean that we have some upside potential there and as David had mentioned, the results date haven’t been as good as we would have liked. and I think there’s improvements that we can make there, which will come to provision in 2014, and then Argentina is a concern as well and the effective tax rate increase in the quarter essentially was because of currency evaluation in Argentina.

and that’s we’re actually making some good profits in Argentina and that’s why we’re continuing to invest, but given the macroeconomic backdrop and the clinical backdrop, we will probably slow activity or be more cautious in Argentina as we go into 2014. So that’s on the radar screen as well.

Okay, that’s helpful. and maybe just on parts and service has been some deferral there, but are you seeing push back on pricing either on parts or service or both?

Juan Carlos, do you want to take a shot of that answer?

Yes, there is push from the customers in both fronts. I think that we’ve been able to manage it well and the cost pressure that they are all having means that they are coming back and asking for additional pricing discounts and so on.

But I think that we’ve been able to manage and maintain our margins and that is achieved through more efficient work. So we need to find the right balance given the customers what they want and improve our efficiency, so we can maintain and improve our margins overall.

I mean one of the important aspects of this operational excellence agenda is by improving on the service side and improving on the supply chain side. I think we can offset some of that pricing pressure and that’s why this is such a critical agenda item for us as we go into – as we move through 2014.

Okay. Great, and maybe just one quick one on Canada, with the tentative union agreement, just wondering if you are comfortable that offers the flexibility you need for you five point action plan in Canada to get the changes done that you need to?

Juan Carlos, do you want to add to that?

Yes. Yes, I think it does.

I think that the most important thing here is that moving to a better state in the relationship with the union gives all of us, as a company, a better opportunity to continue to do what the customer need us to do and I think that we are getting that sort of flexibility and the union members are getting a very fair deal in this negotiation, which speaks out of the hope that we for ratification and move on and continue to foster the relationship that we have created here, which is really improving a lot in the later year.

That’s great. Thank you.

Thanks, Sara.

Good morning.

Hi. Good morning.

Hello.

Hi. Good morning.

Okay. My question is in regards to, in your outlook, you mentioned mining customers are delaying greenfield projects and also there is revisions around brownfield projects, I always under the impression that greenfield projects were being cutback, but I thought that there was more stability around the brownfield operations, it sounds like this might be more of a recent change, just wanted to get some color as to how that has changed over the last two, three quarters, and any insights around that would be great?

Yes, I don’t – Juan Carlos, I’ll let you add color, but I don’t think this is going to change on the brownfield side. I hope I can leave you with that impression.

I mean, there has been cautious and we expect a reduction in new equipment sales primarily related to greenfield, but I didn’t want to leave you with an impression that something significant has changed here in the last couple of months, but Juan Carlos, do you want to provide some?

Yes, first on the greenfield, I think that especially since that the greenfield that are under more review are gold related rather than copper related, that’s the first one; and the copper related ones are continuous and the gold ones have really been put on hold. On the brownfield, it’s what as Scott said, the Board of Directors are becoming much more cautious about their investment.

So they are asking their management teams, operating teams, to be – invest less if they can and expand the life of old equipment, so where before probably it will be much simpler for an operator or a mine operator to go and replace equipment. Today, they have go through more steps and to get that approval for capital investment, which delay some of the decision and it makes this list agile, and of course, they get to buy not everything they wanted, they get to buy strictly what is necessary, and that will probably last until the equipment age to a point that it would be mandatory to be replaced.

Okay, great. And the second…

And Kam, one thing just to add, I mean, I actually – that side relates to Chile. In Canada, I think it’s been quite robust.

I mean, you’ve seen – we talked about this order in Q4 that’s not in our backlog. We had another couple of discussions with clients on significant pieces of equipment delivery and order intakes up significantly.

So I think you have to differentiate South America from Canada in this regard.

Okay, great. and my second question has to do with contribution of the expanded product line.

It’s been pretty much a positive contributor, especially on – in Canada up until now. And now that, you’ve been running the business for about a year given what you’ve learned and given year-over-year changes, do you still expect it to be contributing to the extent, it has been over the last past year?

Dave, do you want to take that?

Yes, okay. And I think going forward, we expect to see some growth, but it will be more muted, I guess, I would say this year throughout the quarters we’ve seen apples and oranges kind of comparison.

and I think this third quarter is a good example where the mining expanded mining product line for Canada has a full quarter in 2013, it did not exist last year. So you had $46 million increase in product support just in Canada coming from them.

So next year’s growth will obviously be somewhat different. So this year 2013, you got a lot of periods where you’re comparing quarter-to-quarter that you don’t have full period.

next year, we’ll reflect more of the – that if you don’t have full period. Next year, we’ll reflect more of the growth in the business and we’ll probably be more in line with what we see in the rest of the mining space.

Okay. so there is really no, I was thinking maybe, there was more market share gain opportunity on that side of the business in Canada?

You’re right. Well, I think in general, I think that’s a correct statement that I think when we acquired Bucyrus product lines that the opportunity to capture more of the addressable market in the parts and component spaces definitely there and as Caterpillar brings forward more parts and components that we can distribute, then we have the opportunity to do that.

And I think we can get more of the market share that exists within our existing line and through better parts distribution availability and so forth. So I would agree there’s more opportunity on that just in terms of efficiency improvement.

Okay. but you don’t see it coming through next year, like the next 12 months, it’s still going to be muted, relative to what you’ve seen over the past year?

I think what Dave said is, this year is an apples to oranges comparison, because it wasn’t included in some parts of next year. There is a big opportunity in the Bucyrus line, because I mean the strategic rationale for doing this was to embed Cat parts and service into the Bucyrus product and package the Bucyrus product with the Cat product and we’re seeing that, I mean some of the deals we’re doing, we’re now selling shovels with the Cat line.

So there is a – some of the deals we’re doing, we’re now selling shovels with the Cat line. So there is a big opportunity in both Canada and in particularly in FINSA, given we haven’t executed as we would have liked in South America.

So there is an opportunity it’s going to be hard to look at 2013 versus 2012 and extrapolate that because it wasn’t an apples-to-apples comparison. And we can provide you more detail in December on that.

Okay great. That’s all I had.

Dave, can you tell me what the backlog is as of today?

Dave, can you tell me what the backlog is as of today?

I can’t give you a number right now John. Probably we can put one together but we don’t typically comment on backlog mid-quarter because just of all the puts and takes, so do I have one I can give you today.

I just wondered if you would make an exception for the late contract announcements that you announced just prior to the quarter being released.

I just wondered if you would make an exception for the late contract announcements that you announced just prior to the quarter being released.

Yes. Sorry.

And the Codelco contract does that all go into backlog or is there a service component with that that gets a dropped from backlog?

And the Codelco contract does that all go into backlog or is there a service component with that that gets a dropped from backlog?

John, we only put new equipment into the backlog, so the mark repair and maintenance parts and service value of the contract does not go into a backlog number though.

So that Codelco.

So that Codelco.

By the way

The Codelco announcement is that all new equipment there?

The Codelco announcement is that all new equipment there?

The Codelco, just to be clear that was announced in the Q3 backlog and about $60 million would be new equipment.

Okay. That’s great, thanks Dave.

Okay. That’s great, thanks Dave.

Thanks John.

Okay. Thank you, operator.

Before we end the call, I like to invite you all to attend our investor meeting which will be held in the morning of Tuesday, December 17 at St. Andrew’s Conference Centre in Toronto.

We will be sending out invitation shortly and hope to see you there. Thank you very much.