Toromont nears double-digit earnings in 2015
By Andrew Macklin
February 10, 2016 – Toromont neared double-digit earnings in 2015 according to the year-end financial results the company has released for the year.
“We were pleased with our 2015 results, which demonstrated consistent and resilient performance. Earnings increased nine per cent, in-line with total revenue growth as an increasing contribution from product support, offset margin pressures in today’s challenging markets. We are also pleased with performance in the fourth quarter against a very tough comparator last year,” said Scott J. Medhurst, president and chief executive officer of Toromont Industries Ltd. “The Equipment Group delivered good results on growth in product support and CIMCO had a strong year with increased penetration into the U.S. market.”
Considering the Company’s solid financial position, cash flows and balances, and positive long- term outlook, the Board of Directors today increased the quarterly dividend to 18 cents per share, representing a 6% increase. The next dividend is payable April 1, 2016 to shareholders of record at the close of business on March 10, 2016. The Company has paid dividends every year since going public in 1968 and this represents the 27th consecutive year of increases.
Net earnings for 2015 were $145.7 million ($1.88 EPS) up nine per cent from last year, reflecting higher revenues in both operating groups. The increase was principally due to higher revenues from product support, together with lower expenses relative to revenues, offset by lower gross margins stemming from competitive pressures and challenging end markets.
Net earnings for the fourth quarter were $44.4 million ($0.57 EPS), down
Three per cent from the record reported in the same quarter last year. Pricing pressures continued to grow through the year in part exacerbated by the weakened Canadian dollar. This coupled with reduced utilization of the larger rental fleet resulted in reduced overall margins.
Equipment Group revenues increased eight per cent in the year to $1.6 billion.
Product support growth was strong and equipment sales and rentals also
increased with good activity levels in construction markets.
The weakened Canadian dollar also contributed to revenue growth as reflecting the higher cost of US sourced equipment and parts. Operating income as a percentage of revenues was 12.1 per cent, on lower relative expense levels partially offset by lower margins.
Equipment Group revenues of $406.0 million were relatively unchanged in the fourth quarter versus the same period of 2014 with strong product support growth offsetting lower total equipment sales and rentals.
Operating income of $56.3 million was two per cent lower compared to last year on lower margins.
“In the Equipment Group, the potential for increased infrastructure spending bodes well for prospects while tight conditions in mining and weak agriculture markets are expected to continue. In the near-term, the weakened Canadian dollar may impact customers’ spending power, timing of purchasing decisions and otherwise exert pressures on equipment margins. At CIMCO, activity levels are encouraging in both the U.S. and Canada,” continued Mr. Medhurst. “Across all of our businesses, diversity, expanding product offering and capabilities and a disciplined operating culture remain our strengths, and position us well entering 2016.”