Toromont Announces Results for the First Quarter of 2011
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Three months ended March 31
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millions, except per share amounts 2011 2010 % change
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Revenues $ 588.0 $ 425.3 38%
Operating income $ 36.5 $ 9.0 306%
Net earnings $ 21.6 $ 15.5 40%
Earnings per share - basic $ 0.28 $ 0.21 33%
Weighted average shares outstanding 77.2 73.9 4%
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Note - In the first quarter of 2010, Toromont completed the acquisition of
Enerflex Systems Income Fund and its results have been consolidated from
January 20, 2010 , the date of acquisition.
Toromont started the year on a very strong note, continuing the positive momentum reported in the fourth quarter of 2010. First quarter bookings were up 27%, backlogs increased year-over-year by 59% to
"Thirty-eight percent revenue growth produced a 306% increase in operating income, reflecting higher plant loading, better margins and good expense control. Product support was especially strong in what is normally a weak quarter, indicating that equipment is being put back to work in all of our markets," said
First Quarter Highlights(1):
-- Net earnings were$21.6 million in the quarter, up 40% from$15.5 million reported in the same quarter last year. Net earnings in 2010 included (all on an after-tax basis) a gain on units ofEnerflex Systems Income Fund ("ESIF") held at time of acquisition of$16.3 million partially offset by$4.3 million in acquisition and integration expenses. -- During the quarter, inter-company dividends were declared and paid by certain foreign operations. While these dividends were not subject to income tax inCanada , withholding tax of$3.2 million (5%) was paid in the foreign jurisdictions ($0.04 per share). Excluding this, the effective income tax rate in the quarter was 28.5%. --Equipment Group revenues of$221 million were up 25% in the first quarter versus the similar period of 2010 on strong new machine sales and higher rental activities. Product support revenues reached an all time record of$82 million . Operating income increased 51% compared to last year on higher revenues and lower relative expenses. --Equipment Group bookings totalling$136 million in the first quarter were even with the first quarter of 2010. Backlogs were$287 million were up 72% compared to this time last year. Mining, power systems and road building have reported strong activity levels. -- Enerflex revenues of$326 million were up 54% in the quarter compared to the same period last year. Product support revenues increased 43% with strong increases inCanada andAustralia . Operating income was$14.4 million for the first quarter of 2011. Enerflex reported an operating loss of$4.9 million in the first quarter of 2010, in part due to acquisition and integration costs of$5.5 million . -- With the integration of the legacy Enerflex and Toromont natural gas businesses largely complete, previously announced synergies are now being realized. In addition to cost savings, capital employed has been reduced significantly from the time of acquisition. Enerflex inventory levels have been reduced from$288 million atMarch 31, 2010 to$179 million atMarch 31, 2011 . Capital assets have also reduced from$330 million to$287 million and additional facilities are listed for sale. -- Enerflex bookings totalling$252 million in the quarter were 62% higher than those reported in the first quarter of 2010. Backlogs ended the quarter at$672 million , 4% higher than atDecember 31, 2010 and 60% higher than atMarch 31, 2010 . -- During the quarter, the Company sold Enerflex Environmental Australia as it was considered not to be core to the growth initiatives of the Company. --Refrigeration Group revenues of$41 million were up 12% in the quarter compared to the same period last year. Operating income increased substantially to$2.6 million , reaching a record for this time of year. --Refrigeration Group bookings totalling$23 million in the quarter were 29% lower than those reported in the first quarter of 2010, stemming in part from the end of the governmental stimulus program. Backlogs ended the quarter at$67 million . -- The Company maintained a strong financial position and ended the quarter with$81.8 million of cash, while reducing its acquisition debt by$45 million during the quarter. Strong cash flow over the last twelve month period has allowed the Company to repay$215 million of the$450 million acquisition financing sinceMarch 31, 2010 . Total debt net of cash to shareholders' equity was 0.24:1. -- The Company held its Annual Meeting of Shareholders onApril 21, 2011 . The meeting is available via webcast of audio and slides at www.toromont.com. -- The Board of Directors declared the regular quarterly dividend of$0.16 per common share, payable onJuly 1, 2011 to shareholders of record onJune 10, 2011 . If the previously announced spinoff ofEnerflex Ltd. is effected prior toJune 10, 2011 , Toromont will instead pay this quarterly dividend in an amount of$0.10 per share on its outstanding common shares. In this event, Enerflex will separately announce its dividend payable contemporaneously with Toromont's dividend. It is expected that Enerflex would declare a dividend of$0.06 per share on its outstanding common shares to holders of record onJune 10, 2011 , such that the initial quarterly dividends paid by Toromont and Enerflex to their respective shareholders after the spinoff is effected will, in the aggregate, equal$0.16 per share. -- A Special Shareholders Meeting will be held onMay 16, 2011 at which time shareholders will be invited to vote on the proposed spinoff. Additional information is contained in Toromont's management information circular filed with respect of this meeting, datedApril 11, 2011 , and is available at www.sedar.com and www.toromont.com/spinoff. -- The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). All 2010 comparative figures have been restated. Management believes that the impact to net earnings in the quarter as a consequence to the implementation of IFRS was insignificant. For a more detailed discussion refer to Note 3 to the unaudited interim financial statements for the three month period endingMarch 31, 2011
"We expect that the Equipment and Refrigeration Groups will continue to benefit from the general recovery that appears to be taking hold in their respective markets," continued
Quarterly Results Materials
The complete first quarter report for 2011, including MD&A and unaudited interim 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
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 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 or Enerflex 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 and Enerflex operate; commodity price changes, including changes in the price of precious and base metals and natural gas; 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; environmental regulation; the integration of Enerflex's operations with the gas compression operations of Toromont; and Enerflex's future dividend policy. Forward-looking information in respect of the spinoff of Enerflex as a separate, publicly traded company also entails various risks and uncertainties, including, among others, risks and uncertainties related to: obtaining approvals, rulings and consents, or satisfying other requirements, necessary or desirable to permit or facilitate completion of the spinoff; future factors that may arise making it inadvisable to proceed with, or advisable to delay, all or part of the spinoff, the potential for a lower combined trading price of common shares of Toromont and Enerflex after the spinoff the lack of an established market for common shares of Enerflex, the possibility of a negative effect on trading prices if current shareholders of Toromont are unwilling or unable to hold common shares of Toromont or Enerflex after the spinoff, potential exposure to substantial tax liabilities if the tax-deferred spinoff requirements are not met, delays or amendments to the spinoff if certain consents and approvals are not obtained on a timely basis, potentially significant indemnification obligations on Toromont and Enerflex following the spinoff and less diverse businesses of the separate companies resulting from the spinoff.
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. Certain risks and uncertainties specific to the proposed spinoff and Enerflex are further described in the information circular dated
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.
About Toromont
TOROMONT INDUSTRIES LTD. INTERIM CONSOLIDATED INCOME STATEMENTS (unaudited) Three months ended March 31 ($ thousands, except share amounts) 2011 2010 ---------------------------------------------------------------------------- Revenues $ 588,015 $ 425,274 Cost of goods sold 466,818 342,858 ---------------------------------------------------------------------------- Gross profit 121,197 82,416 Selling and administrative expenses 84,731 73,434 ---------------------------------------------------------------------------- Operating income 36,466 8,982 Interest expense 4,613 7,104 Interest and investment income (842) (801) Gain on available-for-sale financial assets - (18,627) Equity earnings from associate (201) (217) ---------------------------------------------------------------------------- Income before income taxes 32,896 21,523 Income taxes 12,538 4,763 ---------------------------------------------------------------------------- Net earnings from continuing operations 20,358 16,760 Gain on disposal of discontinued operations 1,430 - Loss from discontinued operations (164) (1,283) ---------------------------------------------------------------------------- Net Earnings $ 21,624 $ 15,477 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings attributable to : Common shareholders $ 21,841 $ 15,489 Non-controlling interests $ (217) $ (12) Basic earnings per share Continuing operations $ 0.26 $ 0.23 Discontinued operations 0.02 (0.02) ---------------------------------------------------------------------------- $ 0.28 $ 0.21 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Diluted earnings per share Continuing operations $ 0.26 $ 0.23 Discontinued operations 0.02 (0.02) ---------------------------------------------------------------------------- $ 0.28 $ 0.21 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of shares outstanding Basic 77,162,569 73,866,042 Diluted 77,492,954 74,205,914
(1)Includes non-GAAP financial measures. See discussion in "Non-GAAP Financial Measures" section in the Management's Discussion and Analysis with respect to financial results for the three-month period ending
Contacts:Toromont Industries Ltd Robert M. Ogilvie Chairman and Chief Executive Officer (416) 667-5554Toromont Industries Ltd. Paul R. Jewer Vice President Finance and Chief Financial Officer (416) 667-5638
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