Toromont Industries Ltd. (TSX: TIH) reported its financial results
for the first quarter ended March 31, 2021.
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|
|
|
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Three months ended March 31 |
|
millions, except per share amounts |
|
2021 |
|
2020 |
% change |
|
|
|
|
|
|
Revenues |
$ |
806.2 |
$ |
715.5 |
13 |
% |
|
Operating income |
$ |
70.2 |
$ |
55.2 |
27 |
% |
|
Net earnings |
$ |
48.0 |
$ |
37.4 |
28 |
% |
|
Basic earnings per share
("EPS") |
$ |
0.58 |
$ |
0.46 |
26 |
% |
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“Toromont’s first quarter results reflect our
people’s unwavering commitment to meet our customer needs as we
continue to navigate through a complex operating environment”,
stated Scott J. Medhurst, President and Chief Executive Officer of
Toromont Industries Ltd. “The Equipment Group reported strong prime
product deliveries, reflecting improved activity levels in the
quarter. CIMCO revenues increased with good progress on its order
backlog. Product support activity, particularly in the recreational
markets, continues to reflect the impact of COVID restrictions.
Operational efficiencies with continued focus on expense
disciplines resulted in solid bottom line growth.”
Highlights:
Consolidated results
- Revenues increased 13% in the
quarter versus the same period last year where early COVID effects
caused steep declines in the latter part of the quarter. This
reflected improved activity levels in many areas and good execution
from our teams. Product support revenues were 2% higher while
rental revenues 11% lower compared to the similar quarter last
year.
- Operating income(1) increased 27%
on the higher revenues, coupled with relatively unchanged expense
levels.
- Net earnings increased $10.6
million or 28% in the quarter versus a year ago to
$48.0 million or $0.58 EPS.
- Backlogs(1) were $911.5 million at
March 31, 2021, compared to $567.0 million at
March 31, 2020, reflecting strong bookings(1) in the
Equipment Group over the last two quarters.
Equipment Group
- Revenues were up $69.6 million or 11% to $727.3 million for the
quarter on strong equipment sales combined with product support
growth. Weaker rental revenues were experienced on lower activity
in most markets.
- Operating income was up $14.7 million or 27% reflecting higher
revenues against a relatively unchanged level of
expenses.
- Bookings in the first quarter of $686.1 million increased 103%
reaching new highs. All sectors reported higher orders, most
notably the mining and construction sector.
- Backlogs of $736.0 million at the end of March 2021 were up
$382.9 million or 108% from the end of March 2020 across all
sectors. Approximately 80% of the backlog is expected to be
delivered this year.
CIMCO
- Revenues of $78.9 million increased $21.2 million or 37%
compared to the first quarter last year with strong package
revenues on continued progress against industrial orders booked in
2020.
- Operating income of $0.4 million reflect higher package
revenues, offset by lower gross margins reflective of a less
favourable sales mix (higher package sales and lower product
support).
- Bookings were $37.9 million in the first quarter of 2021,
compared to $112.2 million in the similar period last year.
Several large industrial orders were received in Canada in the
first quarter of 2020.
- Backlogs of $175.5 million were down $38.4 million or 18%,
against a very strong level last year, as progress against order
backlog continued. Approximately 90% of the backlog is estimated to
be realized as revenue this year, however this is subject to
construction site access and schedules.
Financial Position
- Toromont’s share price of $96.19 at the end of March 2021,
translated to a market capitalization(1) of $7.9 billion and a
total enterprise value(1) of $8.0 billion.
- The Company maintained a very strong financial position.
Leverage as represented by the net debt to total capitalization(1)
ratio was 2% at the end March 2021, compared to 3% at the end of
December 2020 and 18% at the end of March 2020.
- The Board of Directors increased the quarterly dividend by
12.9% or 4 cents per share, to 35 cents per common share. The
next dividend is payable on July 5, 2021 to shareholders on record
on June 9, 2021. Toromont has paid dividends every year
since 1968 and this is the 32nd consecutive year of dividend
increases.
- The Company’s return on opening shareholders’ equity(1) was
16.7% at the end of March 2021, on a trailing twelve-month
basis, compared to 16.6% at the end of December 2020 and 21.2% at
the end of March 2020. Trailing twelve month pre‑tax return on
capital employed(1) was 21.5% at the end of March 2021, compared to
20.4% at the end of December 2020 and 22.0% at the end of March
2020.
“We continue to provide essential services and
solutions to our clients, while remaining diligently focused on
safeguarding our employees, and protecting our business for the
future. We appreciate our entire team’s incredible effort and
on-going commitment to adapt to changes in the business
environment,” continued Mr. Medhurst. “Although we experienced
improvement in market activity in the first quarter of 2021, a tone
of caution still exists given the changing status of the pandemic
and response. Our order backlog was healthy heading into 2021, and
new order bookings in 2021 are supportive. The diversity of our
geographic landscape and markets served, extensive product and
service offerings, and financial strength together with our
disciplined operating culture, continue to position us well to
build for the future.”
Annual & Special Meeting of
Shareholders
The Company will be holding its Annual &
Special Meeting of Shareholders in a virtual-only format, via live
audio webcast on Wednesday, May 5, 2021, at 10:00 a.m. (EDT).
Shareholders and other interested parties can attend the Annual
Shareholders’ Meeting virtually by going to
https://web.lumiagm.com/485895139 (password "toromont2021"). The
meeting will also be available via live audio webcast at
www.toromont.com.
Interested parties will be required to register
for the session and are therefore asked to connect to the webcast
approximately 15 minutes before the start time. Questions may be
submitted during the live webcast.
Financial and Operating
Results
All comparative figures in this press release
are for the first quarter ended March 31, 2021 compared to the
first quarter ended March 31, 2020. 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, 2021, 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 2020 Annual Report
and 2021 Annual Information Form, also available on 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 Wednesday, May 5, 2021 at 8:00 a.m. (ET). The call may be
accessed by telephone at 1‑800‑898-3989 (toll free) or 416-406-0743
(Toronto area) and quoting participant passcode 5325808. A replay
of the conference call will be available until Wednesday, May 12,
2021 by calling 1-800-408-3053 or 905-694-9451 and quoting passcode
5909618.
Presentation materials to accompany the call will be available
on our investor page on our website.
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 and regions in which Toromont
operates; commodity price changes, including changes in the price
of precious and base metals; potential risks and uncertainties
relating to the novel COVID-19 global pandemic, including an
economic downturn, reduction or disruption in supply or demand for
our products and services, or adverse impacts on our workforce,
capital resources, or share trading price or liquidity, and
increased regulation of or restrictions placed on our businesses;
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; information
technology failures, including data or cyber security breaches;
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; 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; and ability to secure insurance
coverage and cost of premiums. 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:
Michael S. McMillanExecutive Vice President and
Chief Financial OfficerToromont Industries Ltd.Tel: (416)
514-4790
FOOTNOTES
1 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 |
|
(Unaudited) |
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|
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Three months ended March 31 |
|
|
($
thousands, except share amounts) |
|
2021 |
|
|
2020 |
|
Revenues |
$ |
806,238 |
|
$ |
715,459 |
|
Cost of
goods sold |
|
618,860 |
|
|
544,601 |
|
Gross profit |
|
187,378 |
|
|
170,858 |
|
Selling
and administrative expenses |
|
117,162 |
|
|
115,617 |
|
Operating
income |
|
70,216 |
|
|
55,241 |
|
Interest expense |
|
7,177 |
|
|
6,931 |
|
Interest and investment income |
|
(2,004 |
) |
|
(2,726 |
) |
Income before income
taxes |
|
65,043 |
|
|
51,036 |
|
Income
taxes |
|
17,087 |
|
|
13,640 |
|
Net earnings |
$ |
47,956 |
|
$ |
37,396 |
|
|
|
|
Earnings per
share |
|
|
Basic |
$ |
0.58 |
|
$ |
0.46 |
|
Diluted |
$ |
0.58 |
|
$ |
0.45 |
|
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|
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Weighted average
number of shares outstanding |
|
|
Basic |
|
82,498,589 |
|
|
82,015,440 |
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Diluted |
|
83,248,997 |
|
|
82,548,816 |
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See accompanying
notes |
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