Toromont Announces Results for the Third Quarter of 2019 and Quarterly Dividend
04 Novembro 2019 - 7:04PM
Toromont Industries Ltd. (TSX: TIH) reported its financial results
for the third quarter ended September 30, 2019.
|
Three months ended September 30 |
|
Nine months ended September 30 |
millions, except per share amounts |
|
2019 |
|
2018 |
% change |
|
|
2019 |
|
2018 |
% change |
|
|
|
|
|
|
|
|
Revenues |
$ |
975.2 |
$ |
900.1 |
8 |
% |
|
$ |
2,653.5 |
$ |
2,538.2 |
5 |
% |
Operating income |
$ |
114.5 |
$ |
99.8 |
15 |
% |
|
$ |
284.3 |
$ |
247.9 |
15 |
% |
Net earnings |
$ |
79.7 |
$ |
68.7 |
16 |
% |
|
$ |
196.3 |
$ |
167.1 |
17 |
% |
Basic
earnings per share ("EPS") |
$ |
0.98 |
$ |
0.84 |
17 |
% |
|
$ |
2.41 |
$ |
2.06 |
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“The Company delivered strong results in the
quarter on solid execution and disciplined expense management,”
said Scott J. Medhurst, President and Chief Executive Officer of
Toromont Industries Ltd. “The increasing proportion of product
support and rental revenues to total revenues across the enterprise
continues to contribute positively to higher earnings.”
Highlights:
Consolidated results
- Net earnings increased $11.0
million or 16% in the quarter versus a year ago to $79.7 million or
$0.98 EPS.
- On a year-to-date basis, net
earnings and EPS were up 17%. Adjusted to exclude the non-recurring
gain recorded in the first quarter described in note 9 to the
financial statements, net earnings and EPS were up 15%.
Equipment Group
- Revenues were up $81.4 million or
10% to $881.5 million for the quarter with growth in most product
groups.
- Revenues were up $123.6 million or
5% to $2.4 billion year-to-date, on higher product support, rentals
and used equipment sales. New equipment sales were lower against
the prior year comparator which included large mining
deliveries.
- Operating income(1) was up $10.8
million or 12% to $104.2 million in the quarter reflecting the
higher revenues. Operating income margin(1) increased 10 basis
points (“bps”) to 11.8%.
- Operating income was up $33.2
million or 14% to $266.3 million year-to-date, reflecting higher
revenues and lower relative expenses. Excluding the non-recurring
item, operating income was up 12% and operating income margin
increased 60 bps to 10.8%.
- Bookings(1) increased $11.6 million
or 4% in the quarter but were down $60.5 million or 5%
year-to-date. Construction, mining and material handling orders
were up in the quarter while power systems and agriculture orders
were lower versus a tough comparator. On a year-to-date basis, only
construction orders increased. Backlogs(1) of $325.3 million at the
end of September 2019 were down $40.6 million or 11% from the end
of September 2018. Approximately 75% of the backlog is expected to
be delivered over the remainder of the year.
CIMCO
- Revenues decreased $6.2 million or
6% to $93.7 million for the quarter. Strong product support
revenues for a third quarter served to partially offset lower
package sales in Canada and the US.
- Revenues decreased $8.3 million or
3% to $242.7 million year-to-date with similar trends as the
quarter.
- Operating income was up $3.9
million or 62% to $10.3 million, largely reflecting higher gross
profit margins on significantly improved project execution relative
to cost over-runs experienced on one U.S. project in 2018.
Operating income margin of 10.9% was the highest ever for a third
quarter.
- Operating income was up $3.1
million or 21% to $17.9 million year-to-date for similar reasons as
the quarter. Operating income margin was 7.4% versus 5.9% for the
similar period last year.
- Bookings were up $8.7 million or
34% in the quarter and $1.4 million or 1% year-to-date. Canadian
orders were strong in the quarter in both recreational and
industrial markets while US orders were lower in both segments.
Year-to-date, recreational bookings were higher while industrial
was lower, with similar trends in both Canada and the US. Backlogs
of $128.6 million were up $2.9 million or 2%, approximately half of
which is expected to be realized as revenue over the remainder of
this year.
Financial Position
- The Company maintained its very
strong financial position. Leverage as represented by the net debt
to total capitalization(1) ratio was 22% at the end September 2019,
compared to 18% at the end of December 2018 and 25% at the end of
September 2018.
- The Board of Directors announced a
quarterly dividend of 27 cents per common share, payable on January
3, 2020 to shareholders on record on December 9, 2019. The
quarterly dividend was previously increased 17% to 27 cents per
share effective with the dividend paid April 3, 2019.
- The Company continued its long
track record of superior shareholder returns, delivering increased
dividends, a 21.9% trailing twelve months return on opening
shareholder’ equity(1) and a 22.9% trailing twelve months pre-tax
return on capital employed(1).
- Toromont’s share price of $64.00 at
the end of September 2019, translated to a market capitalization(1)
of $5.2 billion and a total enterprise value(1) of $5.7
billion.
“Infrastructure investment and broader
construction activity continue to present opportunities for the
Equipment Group. Opportunities also exist for equipment supply into
the mining sector over the longer-term, albeit slower to date this
year. Prospects for continued growth in product support and rental
business remain positive. CIMCO is also expanding 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
combined with a disciplined operating culture, position us well for
the long term.”
Financial and Operating
Results
All comparative figures in this press release
are for the three and nine months ended September 30, 2019 compared
to the three and nine months ended September 30, 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 and nine months ended September 30, 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 Tuesday,
November 5, 2019 at 8:00 a.m. (ET). The call may be accessed by
telephone at 1-800-377-0758 (toll free) or 416-340-2218 (Toronto
area). A replay of the conference call will be available until
Tuesday, November 12, 2019 by calling 1-800-408-3053 or
905-694-9451 and quoting passcode 4859593#.
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. |
|
|
|
|
INTERIM
CONDENSED CONSOLIDATED INCOME STATEMENTS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended |
Nine months ended |
|
September 30 |
September 30 |
($ thousands, except share amounts) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenues |
$ |
975,221 |
|
$ |
900,094 |
|
$ |
2,653,515 |
|
$ |
2,538,189 |
|
Cost of
goods sold |
|
731,842 |
|
|
671,798 |
|
|
2,002,567 |
|
|
1,918,253 |
|
Gross profit |
|
243,379 |
|
|
228,296 |
|
|
650,948 |
|
|
619,936 |
|
Selling
and administrative expenses |
|
128,894 |
|
|
128,545 |
|
|
366,652 |
|
|
371,990 |
|
Operating
income |
|
114,485 |
|
|
99,751 |
|
|
284,296 |
|
|
247,946 |
|
Interest expense |
|
6,944 |
|
|
7,479 |
|
|
20,851 |
|
|
24,093 |
|
Interest and investment income |
|
(1,805 |
) |
|
(2,199 |
) |
|
(6,585 |
) |
|
(6,429 |
) |
Income before income
taxes |
|
109,346 |
|
|
94,471 |
|
|
270,030 |
|
|
230,282 |
|
Income
taxes |
|
29,659 |
|
|
25,774 |
|
|
73,684 |
|
|
63,196 |
|
Net earnings |
$ |
79,687 |
|
$ |
68,697 |
|
$ |
196,346 |
|
$ |
167,086 |
|
|
|
|
|
|
Earnings per
share |
|
|
|
|
Basic |
$ |
0.98 |
|
$ |
0.84 |
|
$ |
2.41 |
|
$ |
2.06 |
|
Diluted |
$ |
0.97 |
|
$ |
0.84 |
|
$ |
2.39 |
|
$ |
2.04 |
|
|
|
|
|
|
Weighted average
number of shares outstanding |
|
|
|
|
Basic |
|
81,621,614 |
|
|
81,383,350 |
|
|
81,487,112 |
|
|
81,165,183 |
|
Diluted |
|
82,168,100 |
|
|
82,233,892 |
|
|
82,030,091 |
|
|
81,913,066 |
|
|
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