Third Quarter of 2021 and Quarterly DividendTORONTO, Nov. 04, 2021 (GLOBE NEWSWIRE) -- Toromont Industries Ltd. (TSX: TIH) reported its financial results for the third quarter ended September 30, 2021. “We are pleased with our operating performance, financial results, cash generation and financial position through a challenging business environment. Overall end market activity levels remained solid with the easing of pandemic restrictions and shutdowns. Nonetheless, we continue to operate in a very fluid, complex and uncertain operating environment,” stated Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. “The Equipment Group reported strong prime product deliveries and excellent order bookings. Rental activity and fleet utilization improved with more favourable markets. Tight supply of equipment from manufacturers coupled with stronger sales activity versus last year have resulted in lower equipment inventories. CIMCO revenues decreased in the quarter on timing of project construction schedules, while product support activity improved. Across the organization, we are continuing to leverage the learnings from the past year with respect to cost structures and new ways to do business.”
Highlights:
Consolidated results
- Revenues increased 8% in the quarter reflecting solid activity levels in most markets, as well as good execution from our teams. Product support revenues were 4% higher and rental revenues were up 6% compared to the third quarter last year.
- Revenues increased 18% to $2.9 billion year-to-date on improved activity in end markets compared to 2020 hit by pandemic restrictions and shutdowns. Deliveries from healthy order backlogs and on strong demand generally, drove equipment and packages revenues 32% higher, while product support and rental revenues increased 6% and 7% respectively.
- Operating income(1) increased 19% in the quarter and 33% year-to-date on the higher revenues. Operating income was 11.2% of revenues for the nine months ended September 30, 2021 compared to 9.9% in the similar period last year, improving on the higher activity levels, coupled with better margins and expense control.
- Backlogs(1) were $1.1 billion at September 30, 2021, compared to $472.1 million at September 30, 2020, reflecting strong bookings(1) in the Equipment Group over the last four quarters. Production timing and tight supply of equipment from manufacturers is beginning to lengthen some delivery schedules to end customers.
- Net earnings increased $16.4 million or 21% in the quarter versus a year ago to $93.8 million and EPS (basic) was up 20% to $1.13 per share.
- Year-to-date, net earnings increased $61.2 million or 37% and EPS (basic) was up 36% to $2.75 per share.
Equipment Group
- Revenues increased $79.7 million or 10% to $914.4 million for the quarter on strong equipment sales (up $62.9 million). Product support and rental activity continues to increase.
- Revenues were up $389.1 million or 17% to $2.7 billion year-to-date with similar trends as the quarter.
- Operating income was up $26.0 million or 25% to $129.4 million reflecting higher revenues coupled with a lower expense ratio.
- Operating income was up $84.7 million or 37% to $315.6 million year-to-date, on the same reasons as noted for the quarter. Operating income margin increased 170 bps to 11.9%.
- Bookings increased $168.8 million or 45% to $539.9 million in the quarter and $853.1 million or 85% to $1.9 billion year-to-date. Most sectors reported higher orders, particularly mining and construction.
- Backlogs of $903.5 million at the end of September 2021 were up $647.4 million or 253% from the end of September 2020 across all sectors. Approximately 40% of the backlog is expected to be delivered this year; certain mining orders are scheduled for delivery in 2023 based on customer requirements.
CIMCO
- Revenues of $82.8 million decreased $4.1 million or 5% compared to the third quarter last year. Package revenues were down $7.8 million or 16%, in part due to delays in project schedules. Product support sales increased $3.7 million or 10%, on higher activity in the recreational segment with the easing of site restrictions and re-opening of recreational rinks for the upcoming winter season.
- Revenues increased $54.7 million or 25% to $272.2 million year-to-date. Package revenues increased $53.5 million or 50% on build of industrial projects in process. Product support sales increased $1.1 million or 1% versus 2020, with the aforementioned recovery in the third quarter.
- Operating income decreased 47% to $5.1 million in the quarter on the lower package revenues. Operating income was 6.1% as a percentage of revenues (Q3 2020 – 10.9%), reflecting lower gross margins on larger industrial projects, increased expenditure in support of higher expected activity levels and a cost of $0.9 million related to a forthcoming move of the head office facility.
- Operating income was down $2.8 million or 19% to $11.5 million year-to-date on higher package revenues, partially offset by lower package gross margins and increased expenses. Operating income margin decreased to 4.2% (2020 – 6.6%).
- Bookings were up $8.9 million or 22% in the quarter and down $71.2 million or 35% year-to-date, on lower industrial orders in Canada where the comparable 2020 period included large orders received in the first quarter.
- Backlogs of $153.8 million were lower by $62.2 million or 29%, against a very strong level last year, reflecting project build out of prior year bookings and lower bookings through September 2021. Subject to construction site access and schedules, approximately 52% of the backlog is estimated to be realized as revenue this year.
Financial Position
- Toromont’s share price of $105.73 at the end of September 2021, translated to a market capitalization(1) of $8.7 billion and a total enterprise value(1) of $8.6 billion.
- The Company maintained a very strong financial position. Leverage as represented by the net debt to total capitalization(1) ratio was -5% at the end of September 2021 (net cash position), compared to 3% at December 2020 and 10% at September 2020.
- The Company commenced a Normal Course Issuer Bid in September 2021, and has repurchased and cancelled 230,000 common shares for $24.2 million (average cost of $105.31 per share, including transaction costs) through to September 30, 2021.
- The Board of Directors announced a quarterly dividend of 35 cents per common share, payable on January 5, 2022 to shareholders on record on December 8, 2021. The quarterly dividend was previously increased 12.9% to 35 cents per share effective with the dividend paid July 5, 2021.
- Return on opening shareholders’ equity(1) was 19.3% at September 30, 2021, on a trailing twelve-month basis, compared to 16.6% at December 2020, and 17.6% at September 2020. Trailing twelve month pre-tax return on capital employed(1) was 25.3% at the end of September 2021, compared to 20.4% at December 2020, and 20.3% at September 2020.
“We value our entire team’s incredible effort and on-going commitment to adapt to changes in the business environment and focus on executing customer deliverables,” noted Mr. Medhurst. “Activity remained sound as demonstrated by new bookings and our current backlog levels, but production schedules and supply chains are challenged. This has restricted availability and is likely to result in delivery date extensions. We continue to monitor cost pressures, supply-demand dynamics and potential distribution disruptions as the pandemic unfolds. Technician hiring remains a priority to our product support offering and to meet growing demand. The diversity of our geographic landscape and markets served, extensive product and service offerings, technology investments and financial strength, together with our disciplined operating culture, continue to position us well. We are proud to continue to provide the essential services and solutions that our clients are looking for, while remaining diligently focused on safeguarding our employees, and protecting our business for the future.”
https://www.globenewswire.com/news-release/2021/11/04/2328189/0/en/Toromont-Announces-Results-for-the-Third-Quarter-of-2021-and-Quarterly-Dividend.html