Canadian distributor Strongco posted second-quarter revenue of CA $69.6 million (about U.S. $66.4 million), a 9-percent decrease compared with CA$76.7 for the second quarter of 2009. However, rental revenue nearly doubled, from CA$2.2 million for last year’s second quarter to CA $4.3 million this year.

“During the second quarter, construction markets began to reflect growing confidence in the Canadian economy,” said Robert Dryburg, Strongco president and CEO. “The combination of a recovering business environment, government infrastructure spending and spring weather had a positive effect on equipment orders and our order backlog. The markets for new heavy equipment, other than cranes, displayed signs of good growth in the quarter, albeit from the reduced base of 2009. While this trend is encouraging, the markets for construction equipment have been slow to emerge from recession. As a result, Strongco’s revenue and EBITDA from continuing operations in the second quarter were lower than last year, and that led to a loss from continuing operations.”

Strongco’s order book improved, with backlogs increasing for heavy earthmoving equipment, especially in compact and lower-priced models.

David Wood, vice president and chief financial officer, attributed the increase in rentals, to many customers having reduced financial resources and being reluctant to commit to purchase new heavy equipment.

“That meant many customers opted to rent equipment and extend the life of their current machinery by repairing and refurbishing instead of buying new,” said Wood. “As a result, while equipment sales were down in the quarter, rentals were up and product support was essentially flat year over year.”

Loss from continuing operations for the quarter totaled $500,000, compared to earnings of $1.9 million in 2009’s second quarter. EBITDA for the quarter remained positive at $4.3 million compared to $5 million in last year’s second quarter.

Reduced demand for new construction equipment in the first and second quarter left many dealers holding high levels of aging inventories, which led to increased price competition.

Based in Mississauga, Ontario, Strongco is No. 82 on the RER 100.