Toronto, Ontario-based Toromont Industries Ltd. last week reported financial results for the second quarter of 2007. Net earnings were $38.1 million or $0.59 per share, up 53 percent from $24.9 million or $0.39 per share reported in the second quarter of 2006. For the first six months of 2007, net earnings were $52.3 million or $0.81 per share, up 43 percent from the comparable period in 2006.
Results for the second quarter of 2007 included an after-tax gain of $12.9 million, $0.20 basic earnings per share, recorded on the sale of a 60-acre parcel of land in the Region of Halton. The site was acquired in 1996 with plans for ultimate usage as a Toromont CAT Dealership location, but as a result of the subsequent pattern of urban growth and the development of the Highway 407 corridor, was no longer required. Excluding this item, net earnings were up 1 percent in the second quarter and 8 percent through June, compared to the prior year. Revenue growth in both groups in the second quarter was largely offset by lower gross margins in both groups.
"Booking activity was brisk through the first half of the year and backlogs ended the quarter at record levels," said Robert Ogilvie, chairman and CEO of Toromont Industries Ltd. "The Canadian dollar rose by 8 percent in the quarter relative to the United States dollar, continuing a long trend which has had and will continue to have a dampening effect on revenues and margins. The Equipment Group reported solid revenue growth in a competitive market, with strong increases in the mining, construction, infrastructure and marine segments. Strong results in the Compression Group reflect the strength of our operations in the U.S., which compensated for the soft results coming from the Canadian natural gas market."
In the company’s Battlefield Equipment Rentals business, rental revenues were up 7 percent in the quarter and 6 percent for the first half compared to the same periods last year, largely due to increased same store revenues generated from a larger rental fleet. The 2006 opening of a new Battlefield - The CAT Rental Store branch in Barrie, Ontario, together with the recent acquisition in Timmins, Ontario, also contributed to this growth.
Rental revenues were 8-percent lower in the second quarter and 4-percent lower in the first half of 2007 compared to 2006 on lower fleet utilization. Rental activity, primarily in the Canadian market, has been lower due to the softness in the Canadian natural gas market.
Toromont Industries Ltd. operates through two business segments: The Equipment Group and the Compression Group. The Equipment Group includes one of the world's largest Caterpillar dealerships by revenue and geographic territory in addition to industry leading rental operations — No. 22 RER 100 listee Battlefield Equipment Rentals. The Compression Group is a North American leader specializing in the design, engineering, fabrication, and installation of compression systems for natural gas, coal-bed methane, fuel gas and carbon dioxide in addition to process systems and industrial and recreational refrigeration systems.