Toromont Industries Ltd. (TSX: TIH) reported its financial results
for the first quarter ended March 31, 2019.
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Financial
Highlights |
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Three months ended March 31 |
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millions, except
per share amounts |
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2019 |
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2018 |
%
change |
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Revenues |
$ |
700.0 |
$ |
676.8 |
3% |
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Operating income |
$ |
58.8 |
$ |
49.2 |
19% |
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Net earnings |
$ |
39.3 |
$ |
30.8 |
28% |
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Basic earnings per
share ("EPS") |
$ |
0.48 |
$ |
0.38 |
27% |
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“The Company delivered good results in the first
quarter through operational improvements in the Equipment Group as
we continued to align disciplines and achieve efficiencies,” said
Scott J. Medhurst, President and Chief Executive Officer of
Toromont Industries Ltd. “The growing proportion of product support
and rental revenues contributed positively to growth.”
Highlights:
Consolidated results
- Net earnings increased $8.5 million or 28% in the quarter
versus a year ago to $39.3 million or $0.48 EPS.
- Net earnings and EPS, excluding a non-recurring curtailment
gain of $3.7 million ($0.04 per share) as described in note 9 of
the notes to the unaudited interim condensed consolidated financial
statements, increased 16%.
Equipment Group
- Revenues were up $20.9 million or 3% to $633.9 million for the
quarter on strong product support and rental growth. Total new and
used equipment sales into mining markets were lower against a tough
prior year comparator which included large deliveries to support
expansion plans at certain mine sites, while sales into
construction markets were down slightly. Total industry activity
softened versus last year’s strong start.
- Operating income(1) was up $6.9 million or 15%, excluding the
non-recurring item, largely reflecting higher revenues and margins
and lower expenses.
- Bookings(1) in the first quarter of $293.1 million were 21%
lower. Mining and power systems orders were lower while
construction orders increased compared to the comparable period
last year. Backlogs(1) of $395.1 million at the end of March 2019
were down $41.4 million or 9% from the end of March 2018.
Substantially all of the backlog is expected to be delivered this
year.
CIMCO
- Revenues of $66.1 million increased $2.2 million or 4% compared
to the first quarter last year. Record product support revenue
growth for a first quarter served to offset the impact of lower
package sales into both recreational and industrial markets in
Canada and the US.
- Operating income was down $2.3 million or 68%, due to lower
package and product support margins, partially offset by reduced
expenses.
- Bookings were up $9.3 million or 15% to $69.7 million. In
Canada, recreational orders were higher while industrial orders
were lower. In the US, industrial orders were higher while
recreational orders were lower. Backlogs of $149.8 million were
down $6.9 million from the record level at the end of March last
year. Substantially all of the backlog is expected to be realized
as revenue this year.
Financial Position
- Toromont’s share price of $68.25 at the end of March 2019,
translated to a market capitalization(1) of $5.6 billion and a
total enterprise value(1) of $6.0 billion.
- The Company maintained a very strong financial position.
Leverage as represented by the net debt to total capitalization(1)
ratio was 26% at the end March 2019, compared to 18% at the end of
December 2018 and 33% at the end of March 2018.
- The Board of Directors announced a quarterly dividend of 27
cents per common share, payable on July 3, 2019 to shareholders on
record on June 7, 2019. The quarterly dividend was previously
increased 17% to 27 cents per share effective with the dividend
paid April 3, 2019.
“Despite a relatively slower start to the year
in certain segments, infrastructure projects and broader
construction activity in the territory continue to present
opportunities for the Equipment Group. Opportunities also exist for
equipment supply into the mining sector over the longer-term. CIMCO
continues to grow its product support, reflecting its strong
presence and solid reputation as a leader in the key markets it
serves,” continued Mr. Medhurst. “The diversity of our geographical
landscape and markets served, extensive product and service
offerings and financial strength together with a disciplined
operating culture, position us well for the near and short
term.”
Annual Meeting of
Shareholders
The Company will hold its Annual Meeting of
Shareholders on Friday, May 3, 2019, at 10:00 a.m. (ET) at the
Toromont Cat offices at 5001 Trans-Canada Highway, Pointe-Claire,
Quebec H9R 1B8. The meeting will also be available via live audio
webcast at www.toromont.com.
Financial and Operating
Results
All comparative figures in this press release
are for the first quarter ended March 31, 2019 compared to the
first quarter ended March 31, 2018. All financial information
presented in this press release has been prepared in accordance
with International Financial Reporting Standards ("IFRS") and are
reported in Canadian dollars. This press release contains only
selected financial and operational highlights and should be read in
conjunction with Toromont's unaudited interim condensed
consolidated financial statements and related notes and
Management's Discussion and Analysis ("MD&A"), as at and for
the three months ended March 31, 2019, which are available on SEDAR
at www.sedar.com and on the Company's website at www.toromont.com.
Additional information is contained in the Company’s filings with
Canadian securities regulators, including the 2018 Annual Report
and 2019 Annual Information Form, also available and SEDAR and the
Company’s website.
Quarterly Conference Call and Webcast
Interested parties are invited to join the
quarterly conference call with investment analysts, in listen-only
mode, on Friday, May 3, 2019 at 8:00 a.m. (ET). The call may be
accessed by telephone at 1-800-478-9326 (toll free) or 416-340-2219
(Toronto area). A replay of the conference call will be available
until Friday, May 10, 2019 by calling 1-800-408-3053 or
905-694-9451 and quoting passcode 6853109#.
Both the live webcast and the replay of the quarterly conference
call can be accessed at www.toromont.com.
Advisory
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 reflects current estimates, beliefs, and
assumptions, which are based on Toromont’s perception of historical
trends, current conditions and expected future developments, as
well as other factors management believes are appropriate in the
circumstances. Toromont’s estimates, beliefs and assumptions are
inherently subject to significant business, economic, competitive
and other uncertainties and contingencies regarding future events
and as such, are subject to change. Toromont can give no assurance
that such estimates, beliefs and assumptions will prove to be
correct. This press release also contains forward-looking
statements about the recently acquired businesses.
Numerous risks and uncertainties could cause the
actual results to differ materially from the estimates, beliefs and
assumptions expressed or implied in the forward-looking statements,
including, but not limited 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; potential environmental liabilities of the acquired
businesses and changes to environmental regulation; failure to
attract and retain key employees; damage to the reputation of
Caterpillar, product quality and product safety risks which could
expose Toromont to product liability claims and negative publicity;
new, or changes to current, federal and provincial laws, rules and
regulations including changes in infrastructure spending; and any
requirement of Toromont to make contributions to the registered
funded defined benefit pension plans, postemployment benefits plan
or the multi-employer pension plan obligations in which it
participates and acquired in excess of those currently
contemplated. Risks and uncertainties related to the 2017
significant acquisition could also cause the actual results to
differ materially from the estimates beliefs and assumptions
expressed or implied in the forward-looking statements, including
but not limited to: changes in consumer and business confidence as
a result of the change in ownership; the potential for liabilities
assumed in the acquisition to exceed our estimates or for material
undiscovered liabilities in the 2017 acquisition; the potential for
third parties to terminate or alter their agreements or
relationships with Toromont as a result of the acquisition; and
risks related to integration of the acquired operations with those
of Toromont including cost of integration and ability to achieve
the expected benefits. Readers are cautioned that the foregoing
list of factors is not exhaustive.
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 Management
Discussion and Analysis, as filed with Canadian securities
regulators at www.sedar.com or at our website 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,
which reflect Toromont’s expectations only 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 to
update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by law.
About Toromont
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 - spanning the Canadian provinces of
Newfoundland & Labrador, Nova Scotia, New Brunswick, Prince
Edward Island, Québec, Ontario and Manitoba, in addition to most of
the territory of Nunavut. The Group includes industry leading
rental operations, a complementary material handling business and
an agricultural equipment business. 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 Ltd. can be found at
www.toromont.com.
For more information contact:
Paul R. JewerExecutive Vice President and Chief
Financial OfficerToromont Industries Ltd.Tel: (416) 514-4790
FOOTNOTES
- These financial metrics do not have a standardized meaning
under International Financial Reporting Standards (IFRS), which are
also referred to herein as Generally Accepted Accounting Principles
(GAAP), and may not be comparable to similar measures used by other
issuers. These measurements are presented for information purposes
only. The Company’s Management’s Discussion and Analysis (MD&A)
includes additional information regarding these financial metrics,
including definitions and a reconciliation to the most directly
comparable GAAP measures, under the headings “Additional GAAP
Measures”, “Non-GAAP Measures” and “Key Performance
Indicators.”
TOROMONT
INDUSTRIES LTD. |
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INTERIM CONDENSED CONSOLIDATED INCOME
STATEMENTS |
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(Unaudited) |
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Three months ended March 31 |
($ thousands,
except share amounts) |
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2019 |
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2018 |
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Revenues |
$ |
699,974 |
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$ |
676,828 |
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Cost of
goods sold |
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529,313 |
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510,054 |
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Gross profit |
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170,661 |
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166,774 |
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Selling
and administrative expenses |
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111,878 |
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117,559 |
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Operating
income |
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58,783 |
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49,215 |
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Interest expense |
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6,919 |
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8,895 |
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Interest
and investment income |
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(2,572 |
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(2,179 |
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Income before income
taxes |
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54,436 |
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42,499 |
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Income
taxes |
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15,175 |
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11,720 |
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Net earnings |
$ |
39,261 |
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$ |
30,779 |
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Earnings per
share |
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Basic |
$ |
0.48 |
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$ |
0.38 |
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Diluted |
$ |
0.48 |
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$ |
0.38 |
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Weighted
average number of shares outstanding |
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Basic |
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81,326,182 |
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80,976,397 |
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Diluted |
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82,001,203 |
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81,886,590 |
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