Rock to Road

Strongco Q1 results show lower sales than anticipated

May 15, 2013  By Aggregates and Roadbuilding

May 15, 2013, Mississauga, Ont. – Strongco reported financial results for the first quarter of 2013. The company experienced lower sales than anticipated, but is expecting to see a continued demand for heavy equipment throughout the rest of the year.


  • Total revenues increased by 0.7% to $97.5 million
  • Gross margin of $18.7 million compared to $19.4 million
  • Operating loss of $0.1 million compared to earnings of $2.9 million
  • EBITDA of $6.5 million compared to $7.8 million
  • Net loss of $2.2 million compared to net income of $1.1 million
  • Loss per share of $0.16 compared to earnings of $0.08 per share

* Comparisons are between first quarter 2013 and first quarter 2012

"Our markets took a marked pause in the first quarter of
2013, most significantly, losing momentum in the month of March which
saw customers postpone deliveries and delay conversions on Rental
Purchase Options," said Robert Dryburgh, president and CEO.


Strongco's net loss in the first quarter of 2013 was $2.2
million ($0.16 per share), compared to earnings of $1.1 million ($0.08
per share) in the first quarter of 2012.


"Although we did not see the increase in sales levels that
were anticipated for the quarter, our backlog level remains strong and
importantly, customer activity has substantially increased in April and
May," said Dryburgh.

Demand for heavy equipment in Quebec has declined recently in
response to the hold on municipal tenders in Montreal as the
Charbonneau Commission investigates corruption in the construction
industry. The suspension to all infrastructure spending by the newly
elected provincial government and recent pronouncements regarding mining
activities in northern Quebec have both impacted construction activity.
However, there is growing political pressure to resume spending to
repair and replace the seriously deteriorating infrastructure in the
province and the Company's quoting activity in Quebec remains strong.

With the recent evidence of recovery in residential housing
markets and the increased level of new job creation, economists are also
projecting modest economic growth in 2013 in the United States,
particularly in the second half of the year. This is a positive
indicator for ongoing recovery in construction markets and demand for
heavy equipment.

Strongco's sales backlogs and level of RPOs remained strong
during the first quarter of 2013, which are positive indicators of
continued demand for heavy equipment. While demand for heavy equipment
may soften in the near term in certain regions, management remains
cautiously optimistic that recent investments in new branches will lead
to an increase in revenues in 2013.

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