Toromont Announces Results for the First Quarter of 2018 and Quarterly Dividend
|Three months ended March 31|
|millions, except per share amounts||2018||2017||% change|
|Basic earnings per share ("EPS")||$||0.38||$||0.34||12%|
“We are pleased with results for our first full quarter following the significant acquisition we completed late last year. While maintaining a strong commitment to serve our customers, we remain focused on the integration of our newly acquired businesses and are pleased with the progress achieved,” said
First Quarter Highlights:
• Consolidated results
- Net earnings increased
$3.8 millionor 14% in the quarter versus a year ago to $30.8 millionor $0.38EPS. The following table identifies the components of contributions to Q1 results versus a year ago:
|Net earnings||%||Basic EPS (a)||%|
|millions, except per share amounts||Q1 '18||Q1 '17||change||Q1 '18||Q1 '17||change|
|Legacy Toromont (b)||32.1||$||27.0||19%||0.41||$||0.34||19%|
|Toromont QM (c)||5.0||-||-||0.06||-||-|
|Acquisition-related interest expense (e)||(5.1||)||-||-||(0.06||)||-||-|
|Integration-related costs (e)||(1.2||)||-||-||(0.02||)||-||-|
|Dilutive impact of acquisition shares (d)||-||-||-||(0.01||)||-||-|
|(a) Separately identifies impact of shares issued at acquisition for year-over-year comparability|
|(b) Defined as all businesses continuing from prior to the acquisition|
|(c) Defined as all business acquired October 27, 2017|
|(d) EPS impact of 2.2 million shares issued on acquisition to total net earnings|
|(e) Expenses shown net of taxes|
- Earnings in the legacy Toromont businesses (“Legacy Toromont”) increased 19% in the first quarter versus a year ago on growth in both the
Equipment Groupand CIMCO. The businesses acquired in October of 2017 (“Toromont QM”) contributed $5.0 millionwith contributions from the mining and power systems segments. Integration-related costs included severance and other one-time-only costs and combined with interest expense on the acquisition financing, reduced net earnings by $6.3 millionversus a year ago.
• Equipment Group
- Revenues increased
$253.2 millionor 70% to $613.0 millionversus last year. Legacy Toromont revenues increased 3% on growth in product support and rental revenues, partially offset by lower total equipment sales. Toromont QM contributed $241.4 millionin the quarter, which increased 18% from revenues generated in the first quarter of 2017 at the predecessor organization on growth in new equipment and product support.
- Operating income1 was up
$10.7 million. Legacy Toromont increased $5.0 millionor 14%, which represented a 110 basis points increase in operating income margin1. Toromont QM contributed $5.7 million, net of integration-related costs of $1.7 million.
- Bookings1 in the first quarter of
$370.0 millionwere up 97% over last year, including $157.0 millionfrom Toromont QM. In total, order bookings were strong across most market segments. Backlogs1 were $437.0 millionat the end of March 31, 2018, including $184.0 millionat Toromont QM. Most of the orders in backlog are expected to be delivered this year.
- Revenues increased 22% to
$63.9 millionfrom a year ago mainly due to strong package sales growth in Canada. Product support revenues decreased by 3%. Operating income increased 21% to $3.4 millionand was 5.4% as a percentage of revenues.
- Bookings were down by 5% in the quarter to
$60.0 million. In Canada, strong industrial orders were partially offset by lower recreational orders while in the US, both market segments contracted against record levels achieved last year. Backlogs of $157.0 millionwere at a new high for the end of a first quarter, and up from $134.0 millionat December 31, 2017and $138.0 millionat this time last year. Most of the backlog is expected to be delivered this year.
• Financial position remains strong
- Toromont’s share price of
$55.93at the end of March 2018translates to a market capitalization1 of $4.5 billionand a total enterprise value1 of $5.1 billion.
- Toromont maintained a very strong financial position. Leverage as represented by the net debt to total capitalization1 ratio at
March 31, 2018was 33%.
- The Board of Directors announced a quarterly dividend of
23 centsper common share, payable July 3, 2018to shareholders of record on June 8, 2018. The quarterly dividend was previously increased 21% to 23 centsper share effective with the dividend paid April 2, 2018.
“We are encouraged by the long-term outlook for infrastructure investment from the federal and provincial governments. Momentum remains good in the mining sector," continued Mr. Medhurst. "The sustained momentum at CIMCO reflects its strong market presence and solid reputation as a leader in the markets it serves. Though much work lies ahead, we are making inroads in expanding our U.S. presence. Across our organization, long-term product support growth trends, together with diversity of markets in the new and significantly expanded territory, a strong management group and solid financial underpinning, provide substantial opportunities for continued success.”
Quarterly Results Materials
The complete first quarter report for 2018, including MD&A and unaudited interim condensed consolidated 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.
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 reflect 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
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.
For more information contact:
Executive Vice President and
Chief Financial Officer
Tel: (416) 514-4790
- 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|
|Three months ended March 31|
|($ thousands, except share amounts)||2018||2017|
|Cost of goods sold||510,054||311,903|
|Selling and administrative expenses||117,559||62,511|
|Interest and investment income||(2,179||)||(1,112||)|
|Income before income taxes||42,499||37,174|
|Earnings per share|
|Weighted average number of shares outstanding|
Source: Toromont Industries Ltd.