Toromont Industries Ltd., which operates an equipment segment including one of the world’s larger Caterpillar dealers and Battlefield Equipment Rentals, one of Canada’s largest rental outfits, reported strong results in the fourth quarter with net earnings from continuing operations increasing 31 percent to $44.9 million in the quarter from $34.2 million a year ago, reflecting strong growth in product support, rental activities and improved margins that the company attributes to sales mix. For the year, net earnings increased 17 percent to $120.6 million from $102.7 million in 2011, on the same factors as well as higher new equipment deliveries.
"We are very pleased with our results for the quarter and year,” said Scott Medhurst, Toromont Industries president and CEO. “Revenues from equipment, product support and rentals were at record levels for the full year and were at or near record levels for the quarter. Each of our business units set records for the year. Our increased installed base and focus on product support, combined with increased rental utilization, resulted in terrific growth in earnings of 17 percent."
Equipment Group revenues declined 1 percent in the fourth quarter to $367 million versus the similar period of 2011 on lower new and used equipment sales. Product support and rental revenues were at record levels for the quarter, up 29 percent and 26 percent respectively from the fourth quarter of 2011. Operating income increased 23 percent in the quarter compared to last year on higher gross margins resulting from improved sales mix, with a higher proportion of product support activities in the current period, and higher heavy and light rental fleet utilization. Investments in the rental fleet continue to gain traction. Gross margin improvement was partially offset by higher expense levels and lower revenues.
Full-year 2012 Equipment Group revenues were $1.3 billion, a 9-percent increase from last year with records in equipment sales, product support and rental. Revenue growth resulted largely from increased mining activity in the company’s markets. Operating income increased 16 percent year-over-year on higher revenues, improved gross margin and a lower expense ratio.
Backlogs in the Equipment Group were $128 million at the end of 2012 compared to $224 million in the prior-year period. Significant mining deliveries in the year drew down the order backlog.
The company’s board of directors increased the quarterly dividend to $0.13 per share. It is payable April 1, to shareholders of record at the close of business on March 13.
"Toromont is well positioned entering 2013 with momentum in product support and rental activities, increased equipment populations including large mining units, record backlogs at CIMCO and a strong balance sheet," Medhurst said. "We expect to see improved performance from our Power Systems Group, are cautiously optimistic that construction markets will be buoyed by several large projects and continue to see significant long-term opportunities in mining. Our team is focused on improving market share by providing exceptional service to our customers."
Toronto-based Toromont also operates CIMCO, a freight shipping and trucking company as well as a refrigeration business. Battlefield Equipment, based in Stoney Brook, Ontario, Canada, is No. 22 on the RER 100.
