Toromont reports Q2 net earnings of C$27.3M, up 7% from year-ago period; revenues fall 1% to C$374.7M
July 29, 2013
– Toromont Industries Ltd. (TSX:TIH) today reported financial results for the second quarter ended June 30, 2013. Net earnings increased 7% in the quarter compared to the same period last year while revenues were 1% lower.
"We are pleased with results for the quarter and first half of the year. Although our Equipment Group faced tough year-over-year comparators in mining, we delivered increased profitability reflecting our strong market position, diversity of industries served and growing contribution from product support. CIMCO achieved record revenues for a second quarter and first six months. Across all of our operations, execution remains strong and we are focused on cost control initiatives," said Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. "We continued to see stronger competitive conditions in equipment markets due to global excess inventories together with softness in certain market segments."
Equipment Group revenues for the second quarter of 2013 were $317 million, down 5% from 2012. Equipment revenues were 14% lower than 2012 which included significant deliveries to mining customers not repeated in 2013. Excluding mining, sales to other market segments increased 14%, principally on strength with road building and infrastructure customers. Product support and rentals grew 5% and 15% respectively, both setting new records for a second quarter. Operating income increased 2% compared to last year on higher gross profit margins, partially offset by lower revenues.
Equipment Group revenues for the first six months of 2013 were $584 million, up 1% from 2012. Equipment sales were 6% lower than 2012 due to lower relative mining revenues. Excluding mining, equipment sales were up 16%, significantly due to road building, infrastructure and power systems. Product support and rentals grew 6% and 17% respectively. Operating income increased 4% compared to last year on lower expense levels. Operating income as a percentage of revenues for the six months ended June 30, 2013 was 9.9% compared with 9.7% for the similar period last year.
Equipment Group backlogs were $173 million at June 30, 2013 compared to $128 million at December 31, 2012 and $260 million at this time last year. Backlogs have declined from this time last year due to significant mining deliveries during 2012 and improved equipment availability. Bookings were $193 million in the second quarter of 2013 compared to $195 million for the same period last year.
CIMCO revenues set a new record for this time of year, at $58 million for the quarter and $104 million for the first six months of 2013. Revenues increased 27% in the quarter and 28% year-to-date compared to last year on revenues related to a significant industrial project. CIMCO realized a $1 million gain due to insurance proceeds. Excluding this, operating income increased 16% in the quarter and 5% through June 30, 2013 compared to last year on higher revenues. Operating income excluding the gain as a percentage of revenues for the six months ended June 30, 2013 was 4.8% compared with 5.9% for the similar period last year on lower gross margins.
CIMCO bookings in the second quarter of 2013 were $34 million, down 19% versus the second quarter of 2012. Canadian bookings were lower while US bookings were strong. Through the first half of 2013, bookings were 1% higher than last year excluding a $50 million order in the prior year. Backlogs were $104 million at June 30, 2013.
Net earnings were $27.3 million in the quarter ($0.36 per share basic), up 7% from $25.4 million ($0.33 per share basic) reported last year, reflecting higher gross profit margins and lower net interest expense. For the first six months of 2013, net earnings were $45.1 million ($0.59 per share basic), up 7% from $42.4 million ($0.55 per share basic) reported last year, reflecting higher revenues and lower expense levels partially offset by lower gross profit margins.
Equipment Group inventory levels have been a focus area. These inventories were reduced $8 million from a year ago but were $42 million higher than December 31, 2012. The normal seasonal trend would have levels increasing during the first half of the year, however incremental ordering (tier III) and lower sales volumes also contributed this year.
Total debt net of cash to total capitalization was 25%, well within stated capital targets.
The Board of Directors approved the regular quarterly dividend of 13 cents per share on outstanding common shares, payable October 1, 2013 to shareholders of record on September 12, 2013. The regular quarterly dividend was previously increased 8% to 13 cents per share effective with the dividend paid April 1, 2013.
"The strength of product support and diversity of end-markets are encouraging for our performance; however, we are seeing continuing softness in certain market segments," continued Mr. Medhurst. "At CIMCO, recreational bookings recovered to more normal levels and the order backlog position bodes well for performance this year."
Quarterly Results Materials
The complete second quarter report for 2013, including MD&A and unaudited interim condensed financial statements, is available on our website at www.toromont.com.
Quarterly Conference Call and Webcast
Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on Monday, July 29, 2013 at 5:00 p.m. (ET). The call may be accessed by telephone at 1-866-226-1792 (toll free) or 416-340-2216 (Toronto area). A replay of the conference call will be available until Monday, August 12, 2013 by calling 1-800-408-3053 or 905-694-9451 and quoting passcode 7809226.
Both the live webcast and the replay of the quarterly conference call can be accessed at www.toromont.com.
Information in this press release that is not a historical fact is "forward-looking information". Words such as "plans", "intends", "outlook", "expects", "anticipates", "estimates", "believes", "likely", "should", "could", "will", "may" and similar expressions are intended to identify statements containing forward-looking information. Forward-looking information in this press release is based on current objectives, strategies, expectations and assumptions which management considers appropriate and reasonable at the time including, but not limited to, general economic and industry growth rates, commodity prices, currency exchange and interest rates, competitive intensity and shareholder and regulatory approvals.
By its nature, forward-looking information is subject to risks and uncertainties which may be beyond the ability of Toromont to control or predict. The actual results, performance or achievements of Toromont could differ materially from those expressed or implied by forward-looking information. Factors that could cause actual results, performance, achievements or events to differ from current expectations include, among others, risks and uncertainties related to: business cycles, including general economic conditions in the countries in which Toromont operates; commodity price changes, including changes in the price of precious and base metals; changes in foreign exchange rates, including the Cdn$/US$ exchange rate; the termination of distribution or original equipment manufacturer agreements; equipment product acceptance and availability of supply; increased competition; credit of third parties; additional costs associated with warranties and maintenance contracts; changes in interest rates; the availability of financing; and, environmental regulation.
Any of the above mentioned risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied in the forward-looking information and statements included in this press release. For a further description of certain risks and uncertainties and other factors that could cause or contribute to actual results that are materially different, see the risks and uncertainties set out in the "Risks and Risk Management" and "Outlook" sections of Toromont's most recent annual or interim Management Discussion and Analysis, as filed with Canadian securities regulators at www.sedar.com and may also be found at www.toromont.com. Other factors, risks and uncertainties not presently known to Toromont or that Toromont currently believes are not material could also cause actual results or events to differ materially from those expressed or implied by statements containing forward-looking information.
Readers are cautioned not to place undue reliance on statements containing forward-looking information that are included in this press release, which are made as of the date of this press release, and not to use such information for anything other than their intended purpose. Toromont disclaims any obligation or intention to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.
Toromont Industries Ltd. operates through two business segments: The Equipment Group and CIMCO. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory in addition to industry leading rental operations. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Both segments offer comprehensive product support capabilities. This press release and more information about Toromont Industries can be found at www.toromont.com.
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