While overall Toromont Industries posted a 12-percent increase in 2008, the equipment group was flat year over year and dropped 4 percent in the fourth quarter. Rental revenue from its Battlefield Equipment Cat Rental division increased 3 percent from CA $147.4 million in 2007 to $151.3 million in 2008 (about U.S. $122 million according to current exchange rates).
Total volume for the equipment group declined 5 percent year over year, from CA $528.4 in 207 to $503.5 in 2008 (about U.S. $405 million according to current exchange rates).
The equipment groupâ€™s revenues dropped 4 percent in the fourth quarter of 2008 compared with the same period of 2007 on lower new machine sales, partially offset by increases in used equipment sales, rental and product support. Operating income in the quarter increased 12 percent over the same period last year on improved gross margins.
Equipment group bookings in the fourth quarter were down 36 percent from the record levels produced in the same period of 2007, which included several large mining orders. For the year, bookings dropped 10 percent from 2007 levels and backlogs were 27-percent lower than reported at the end of 2007.
â€śThe slowdown began to show in the fourth quarter as equipment bookings in both groups [equipment and compression] dropped off significantly, particularly in December,â€ť said Robert Ogilvie, chairman and CEO. â€śWe entered 2009 with large backlogs in the compression group that should provide good momentum through the first half of the year. Equipment group backlogs were also good, and the spending stimulus announced in the recent federal budget could be positive for our operations. Toromont has a very strong balance sheet and is well positioned in each of its markets.â€ť
The equipment group is comprised of Toromont Cat, one of the worldâ€™s largest Caterpillar dealerships by revenue and geographic territory, and Battlefield â€“ the Cat Rental Store.
The year-over-year rental revenue increase was largely the result of new locations in Sault Ste. Marie and Concord, Ontario. Revenues generated by stores open for more than one year were 5.5-percent higher year-over-year on an expanded rental fleet.
In other Toromont news, the board of directors approved a 7-percent increase in Toromontâ€™s regular quarterly cash dividend, representing the 20th consecutive annual increase. The dividend, at the rate of CA 15 cents per share, is payable April 1 to shareholders of record at the close of business March 13. The company has paid a dividend annually every year since it went public in 1968.
Battlefield Equipment Rentals, No. 23 on the RER 100, has 28 branches in Ontario, five in Newfoundland and two in Manitoba.