Toromont Posts Strong First Quarter with Help from Acquisitions
Toromont, owner of one of the world’s largest Caterpillar dealers, posted CDN $676.8 million in the first quarter, compared to $412.3 million in the first quarter a year ago, a 64.2-percent increase. Operating income rose 30 percent, while net earnings went up 14 percent. The legacy Toromont business increased net earnings from $27 million a year ago to $32.1 million, an 18.9-percent jump.
The businesses acquired in October 2017 by both the equipment division of Toromont and its CIMCO division totaled $5 million in earnings. Toromont in October 2017 acquired Hewitt, Caterpillar dealer in Quebec, Western Labrador and the Maritimes, as well as the Caterpillar lift truck dealer for most of Ontario.
In the equipment group, revenues increased $253.2 million or 70 percent to $613.0 million versus last year. Legacy Toromont revenues increased 3 percent on growth in product support and rental revenues, partially offset by lower total equipment sales. The acquired equipment business contributed $241.4 million in the quarter, which increased 18 percent from revenues generated in the first quarter of 2017 at the predecessor organization on growth in new equipment and product support.
Operating income was up $10.7 million. Legacy Toromont increased $5.0 million or 14 percent, which represented a 110 basis points increase in operating income margin. Toromont QM contributed $5.7 million, net of integration-related costs of $1.7 million.
Bookings in the first quarter of $370.0 million were up 97 percent over last year, including $157.0 million from the acquired business. In total, order bookings were strong across most market segments. Backlogs were $437.0 million at the end of March 31, 2018, including $184.0 million at the acquired business. Most of the orders in backlog are expected to be delivered this year.
“We are pleased with results for our first full quarter following the significant acquisition we completed late last year,” said Scott Medhurst, president and CEO of Toromont Industries. “While maintaining a strong commitment to serve our customers, we remain focused on the integration of our newly acquired businesses and are pleased with the progress achieved. Our Equipment Group teams achieved growth in revenues, which together with the strong bookings, backlogs and service work-in-process levels, point to the increased activity levels seen this year.
“We are encouraged by the long-term outlook for infrastructure investment from the federal and provincial governments. Momentum remains good in the mining sector. Across our organization, long-term product support growth trends, together with diversity of markets in the new and significantly expanded territory, a strong management group and solid financial underpinning, provide substantial opportunities for continued success.”
Toromont’s Cat Rental division, Battlefield Equipment Rentals, reported $211 million in rental revenue in 2017.
The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory - spanning the Canadian provinces of Newfoundland & Labrador, Nova Scotia, New Brunswick, Prince Edward Island, Québec, Ontario and Manitoba in addition to most of the territory of Nunavut. In addition, the Group includes one of the industry’s leading rental operations, a complementary material handling business and an agricultural equipment business. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems.
