Fall-off in Mining Leads Toromont’s Equipment Group to 5-Percent Revenue Dip as Rental Sets Q2 Record

Toromont Industries Ltd., which operates an equipment segment including one of the world’s larger Caterpillar dealers and Battlefield Equipment, one of Canada’s largest rental outfits, this week reported financial results for the second quarter ended June 30. Net earnings increased 7 percent to $27.3 million in the quarter compared to $25.4 million in the same period last year while revenues fell 1 percent to $374.7 million from $379.6 million in Q212.

"We are pleased with results for the quarter and first half of the year,” said Scott Medhurst, president and CEO of Toromont Industries Ltd. “Although our Equipment Group faced tough year-over-year comparators in mining, we delivered increased profitability reflecting our strong market position, diversity of industries served and growing contribution from product support. CIMCO achieved record revenues for a second quarter and first six months. Across all of our operations, execution remains strong and we are focused on cost-control initiatives. We continued to see stronger competitive conditions in equipment markets due to global excess inventories together with softness in certain market segments."

Equipment Group revenues for the second quarter of 2013 were $317 million, down 5 percent from 2012. Equipment revenues were 14-percent lower than 2012, which included significant deliveries to mining customers not repeated in 2013. Excluding mining, sales to other market segments increased 14 percent, principally on strength with road building and infrastructure customers. Product support and rentals grew 5 percent and 15 percent respectively, both setting new records for a second quarter. Operating income increased 2 percent compared to last year on higher gross profit margins, partially offset by lower revenues.

For the first six months of 2013 Equipment Group revenues were $584 million, up 1 percent from 2012. Equipment sales were 6-percent lower than 2012 due to lower relative mining revenues. Excluding mining, equipment sales were up 16 percent, significantly due to road building, infrastructure and power systems. Product support and rentals grew 6 percent and 17 percent respectively. Operating income increased 4 percent compared to last year on lower expense levels. Operating income as a percentage of revenues for the six months ended June 30 was 9.9 percent compared with 9.7 percent for the similar period last year.

Equipment Group backlogs were $173 million at June 30 compared to $128 million at Dec. 31, 2012, and $260 million at this time last year. Backlogs have declined from this time last year due to significant mining deliveries during 2012 and improved equipment availability. Bookings were $193 million in the second quarter of 2013 compared to $195 million for the same period last year.

Toromont Industries’ board of directors approved the regular quarterly dividend of 13 cents per share on outstanding common shares, payable Oct. 1, to shareholders of record on Sept. 12. The regular quarterly dividend was previously increased 8 percent to 13 cents per share effective with the dividend paid April 1.

Toronto-based Toromont also operates CIMCO, a freight shipping and trucking company as well as a refrigeration business. Battlefield Equipment, based in Stoney Creek, Ontario, Canada, is No. 21 on the RER 100.