Toromont Industries Ltd. (TSX: TIH) today reported financial
results for the three months and year ended December 31, 2019.
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Three months ended December 31 |
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Years ended December 31 |
millions, except per share amounts |
|
2019 |
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2018 |
% change |
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2019 |
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2018 |
% change |
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Revenues |
$ |
1,025.2 |
$ |
966.0 |
6% |
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$ |
3,678.7 |
$ |
3,504.2 |
5% |
Operating income |
$ |
128.2 |
$ |
121.6 |
5% |
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$ |
412.5 |
$ |
369.6 |
12% |
Net earnings |
$ |
90.5 |
$ |
84.9 |
7% |
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$ |
286.8 |
$ |
252.0 |
14% |
Basic earnings per share
("EPS") |
$ |
1.10 |
$ |
1.04 |
6% |
|
$ |
3.52 |
$ |
3.10 |
14% |
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“Toromont delivered solid results in the fourth quarter and full
year of 2019,” said Scott J. Medhurst, President and Chief
Executive Officer of Toromont Industries Ltd. “The Equipment Group
recorded growth across its expanded territory. Reflecting on
the substantial acquisition completed in late 2017, we are pleased
with our progress to date in integration of operations and the
benefits achieved, as we leverage best practices and operational
efficiencies. The process is on going. CIMCO continued to
grow its product support business which contributed positively to
the bottom line.”
Considering the Company’s solid financial
position and positive long-term outlook, the Board of Directors
today increased the quarterly dividend by 14.8% to 31 cents per
share. The next dividend is payable April 2, 2020 to shareholders
on record at the close of business on March 9, 2020. Toromont has
paid dividends every year since 1968 and this is the 31st
consecutive year of dividend increases.
Highlights:
Consolidated results
- Net earnings in 2019 were $286.8 million, up 14% from 2018,
with basic EPS (earnings per share) also 14% higher to $3.52.
Revenue growth and mix, expense control and lower interest costs on
reduced debt levels contributed to the improved results.
- Net earnings for the fourth quarter were $90.5 million, up 7%
from 2018; basic EPS up 6% to $1.10.
Equipment Group
- Revenues were up $182.9 million to $3.3 billion for the year on
growth in product support, rentals and used equipment sales. New
equipment sales were unchanged from 2018, which included large
mining deliveries.
- Operating income(1) increased $35.2 million (10%) for the year,
and was up 50 basis points (“bps”) as a percentage of revenues
(11.5% versus 11.0%).
- For the fourth quarter, revenues were up $59.3 million (7%) to
$933.1 million, with increases across all revenue streams except
used equipment sales which were relatively unchanged.
- Operating income was up $2.0 million (2%) in the quarter but
was 60 bps lower as a percentage of revenues at 12.6%.
- Bookings(1) in 2019 decreased $68.5 million (4%) to $1.5
billion, with increases in construction orders more than
offset by declines in mining and power. Fourth quarter bookings
were down 2% ($7.9 million) to $415.1 million, on increases in
power systems and material handling lift truck orders. Backlogs(1)
decreased $69.5 million (20%) to $272.3 million, most of which is
expected to be delivered in 2020.
CIMCO
- Revenues for the year decreased $8.4 million (2%) to $334.8
million. Recreational markets were strong in Canada and the US and
served to partially offset weaker industrial markets. Product
support revenues increased in Canada and the US.
- Operating income was up by $7.7 million (37%) in 2019,
reflecting a one-time charge last year, which did not repeat, and
improved project gross margins on better execution in 2019.
Operating income margin(1) was 8.5% versus 6.0% last
year.
- For the fourth quarter, revenues of $92.1 million were largely
unchanged from the record last year.
- Operating income increased $4.6 million (78%) in the quarter
versus last year as the one-time item noted above and improved
gross margins were partially offset by higher expense levels.
- Bookings of $193.6 million for the year were up $8.9 million
(5%) with higher recreational orders offsetting lower industrial
orders. Fourth quarter bookings were also up ($7.5 million or 20%)
but with higher industrial orders and lower recreational orders.
Backlogs of $122.5 million at December 31, 2019 were up $9.8
million (9%), substantially all of which is expected to be realized
as revenue in 2020.
Financial Position
- Toromont continued to produce strong shareholder returns,
delivering increased dividends, a 21.4% return on opening
shareholders’ equity(1) and a 22.9% pre-tax return on capital
employed(1).
- Toromont’s share price of $70.59 at the end of 2019, translates
to a market capitalization(1) of $5.8 billion and a total
enterprise value(1) of $6.1 billion.
- The Company maintained a very strong financial position.
Leverage, as represented by the net debt to total capitalization(1)
ratio decreased to 15% at the end of December 31, 2019 from 18% at
the end of December 31, 2018.
“Infrastructure projects and broader
construction activity offer growth in equipment sales, product
support and rentals for our Equipment Group,” continued Mr.
Medhurst. “Opportunities exist for equipment supply into the mining
sector, especially in support of the replacement and expansion
requirements at existing mine sites. Overall, we are very pleased
with the progress achieved so far on the transition and integration
fronts and remain cautiously optimistic about the significant
potential which lies ahead. CIMCO continues to grow its product
support, reflecting its strong presence and solid reputation as a
leader in the key markets it serves.”
Financial and Operating
Results
All comparative figures in this press release
are for the fourth quarter and fiscal year ended December 31, 2019
compared to the fourth quarter and fiscal year ended December 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 audited
consolidated financial statements and related notes and
Management's Discussion and Analysis ("MD&A") for the year
ended December 31, 2019, which are available on SEDAR at
www.sedar.com and on the Company's website at www.toromont.com. The
Company's audited consolidated financial statements and MD&A
contain detailed information about Toromont's financial position,
results, liquidity and capital resources, strategy, plans and
outlook, which investors are encouraged to read carefully.
Quarterly Conference Call and Webcast
Interested parties are invited to join the quarterly conference
call with investment analysts, in listen-only mode, on Wednesday,
February 12, 2020 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), no passcode is required. A replay of the conference call
will be available until Wednesday, February 19, 2020 by calling
1-800-408-3053 or 905-694-9451 (Toronto area) and quoting passcode
9231627# to listen.
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 its registered
funded defined benefit pension plans, post-employment benefits plan
or the multi-employer pension plan obligations in excess of those
currently contemplated. 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 MD&A, 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 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.”
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