Toromont Announces Results for the Second Quarter of 2021 and Quarterly Dividend
Toromont Industries Ltd. (TSX:TIH.TO) reported its financial results for the second quarter ended June 30, 2021.
Three months ended June 30 Six months ended June 30 millions, except per share amounts 2021 2020 % change 2021 2020 % change Revenues $ 1,127.1 $ 849.6 33 % $ 1,933.3 $ 1,565.1 24 % Operating income $ 122.5 $ 77.1 59 % $ 192.7 $ 132.4 46 % Net earnings $ 85.4 $ 51.2 67 % $ 133.4 $ 88.6 51 % Basic earnings per share ("EPS") $ 1.03 $ 0.62 66 % $ 1.62 $ 1.08 50 %
"We are pleased with the overall activity levels in our end markets and are proud of our team's dedication and ability to adjust to ongoing changes in the environment and customer requirements", stated Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. "The second quarter of 2020 was hardest hit by the pandemic response and restrictions, resulting in the increases reported in 2021 against this comparable. The Equipment Group reported strong prime product deliveries and excellent order bookings, reflecting robust activity levels. Rental and product support activity increased as equipment usage improved. CIMCO revenues increased on project execution, while product support activity continued to be dampened by COVID-19 restrictions, particularly within the recreational segment where facilities remained closed or usage limited."
On July 15, 2021, the Board of Directors announced the retirement of its Chairman, Mr. Robert M. Ogilvie. Mr. Ogilvie's exemplary 36-year career with the Company started in 1985 when he joined as President and included 20 years as Chief Executive Officer and 34 years as Chairman. During Mr. Ogilvie's tenure, Toromont built significant value for shareholders, resulting from disciplines that were embedded in a culture of decentralization, empowerment and accountability. These principles remain core to the Toromont foundation today and a solid platform on which to build our future. In 1985, the Company's market capitalization was $31 million and has grown to more than $8.9 billion as at June 30, 2021. Additionally, the Company has increased its dividend consistently each year since 1989. During his time as Chairman and Chief Executive Officer, the Company's transformational growth was substantial. Mr. Ogilvie's outstanding financial and operational acumen were instrumental in leading strategic events including the 1993 acquisition of the Ontario Caterpillar dealership. Through strong operating performance, the Company accelerated further expansion in 1996, with the acquisition of the Newfoundland and Labrador dealership followed by Manitoba and most of Nunavut territories in 2001. There were many other milestone events including the 1996 acquisition of the Battlefield Equipment Rental business that originally consisted of one store, and has since grown to over 70 outlets from Manitoba to Newfoundland. In 2011, under Mr. Ogilvie's leadership, there was further transformation with the bifurcation of Enerflex Systems Ltd. This decision positioned the business well to focus on growing the dealership, rental and refrigeration businesses. As Chairman, his counsel was instrumental in the acquisition of the Quebec and Maritime dealerships, our largest transaction to date.
Robert was a leader and mentor to many of today's Toromont leadership team and Board of Directors. The entire organization wishes Robert well in his retirement and thanks him for his significant contributions to Toromont's success and his steadfast commitment to our employees, customers and shareholders.
Mr. Richard Roy who joined the Toromont Board in 2018, has been appointed Chairman. Mr. Roy is Chair of Toromont's Environmental, Social and Governance Committee and is a member of the Audit Committee. During his more than 35 years of business experience, he spent 16 years at Uni-Select, where he advanced through several senior executive roles including Vice President, Administration and Chief Financial Officer, Vice President and Chief Operating Officer and President and Chief Executive Officer.
"We continue to provide essential services and solutions to our clients, while remaining diligently focused on safeguarding our employees, and protecting our business for the future," noted Mr. Medhurst. "We appreciate our entire team's incredible effort and on-going commitment to adapt to changes in the business environment. In the quarter, market activity was very strong and in some cases putting pressure on supply chain availability and delivery date extensions. Although vaccination rates in the main markets we serve are improving, caution is warranted given the changing status of the pandemic and response. Technician hiring remains a priority to meet demand. The diversity of our geographic landscape and markets served, extensive product and service offerings, and financial strength together with our disciplined operating culture, continue to position us well to build for the future."
Financial and Operating Results
All comparative figures in this press release are for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020. All financial information presented in this press release has been prepared in accordance with International Financial Reporting Standards ("IFRS") and are reported in Canadian dollars. This press release contains only selected financial and operational highlights and should be read in conjunction with Toromont's unaudited interim condensed consolidated financial statements and related notes and Management's Discussion and Analysis ("MD&A"), as at and for the three and six months ended June 30, 2021, which are available on SEDAR at www.sedar.com and on the Company's website at www.toromont.com. Additional information is contained in the Company's filings with Canadian securities regulators, including the 2020 Annual Report and 2021 Annual Information Form, also available on SEDAR and the Company's website.
Quarterly Conference Call and Webcast
Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on Thursday, July 29, 2021 at 8:00 a.m. (ET). The call may be accessed by telephone at 1-800-898-3989 (toll free) or 416-406-0743 (Toronto area) and quoting participant passcode 5629847#. A replay of the conference call will be available until Thursday, August 5, 2021 by calling 1-800-408-3053 or 905-694-9451 and quoting passcode 9519103#. Both the live webcast and the replay of the call can also be accessed at www.toromont.com.
Presentation materials to accompany the call will be available on our investor page on our website.
Information in this press release that is not a historical fact is "forward-looking information". Words such as "plans", "intends", "outlook", "expects", "anticipates", "estimates", "believes", "likely", "should", "could", "will", "may" and similar expressions are intended to identify statements containing forward-looking information. Forward-looking information in this press release reflects current estimates, beliefs, and assumptions, which are based on Toromont's perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. Toromont's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. Toromont can give no assurance that such estimates, beliefs and assumptions will prove to be correct. This press release also contains forward-looking statements about the recently acquired businesses.
Numerous risks and uncertainties could cause the actual results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: business cycles, including general economic conditions in the countries and regions in which Toromont operates; commodity price changes, including changes in the price of precious and base metals; potential risks and uncertainties relating to the novel COVID-19 global pandemic, including an economic downturn, reduction or disruption in supply or demand for our products and services, or adverse impacts on our workforce, capital resources, or share trading price or liquidity, and increased regulation of or restrictions placed on our businesses; changes in foreign exchange rates, including the Cdn$/US$ exchange rate; the termination of distribution or original equipment manufacturer agreements; equipment product acceptance and availability of supply; increased competition; credit of third parties; additional costs associated with warranties and maintenance contracts; changes in interest rates; the availability of financing; potential environmental liabilities of the acquired businesses and changes to environmental regulation; information technology failures, including data or cyber security breaches; failure to attract and retain key employees; damage to the reputation of Caterpillar, product quality and product safety risks which could expose Toromont to product liability claims and negative publicity; new, or changes to current, federal and provincial laws, rules and regulations including changes in infrastructure spending; any requirement of Toromont to make contributions to the registered funded defined benefit pension plans, postemployment benefits plan or the multi-employer pension plan obligations in which it participates and acquired in excess of those currently contemplated; and ability to secure insurance coverage and cost of premiums. Readers are cautioned that the foregoing list of factors is not exhaustive.
Any of the above mentioned risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied in the forward-looking information and statements included in this press release. For a further description of certain risks and uncertainties and other factors that could cause or contribute to actual results that are materially different, see the risks and uncertainties set out in the "Risks and Risk Management" and "Outlook" sections of Toromont's most recent annual Management Discussion and Analysis, as filed with Canadian securities regulators at www.sedar.com or at our website www.toromont.com. Other factors, risks and uncertainties not presently known to Toromont or that Toromont currently believes are not material could also cause actual results or events to differ materially from those expressed or implied by statements containing forward-looking information.
Readers are cautioned not to place undue reliance on statements containing forward-looking information, which reflect Toromont's expectations only as of the date of this press release, and not to use such information for anything other than their intended purpose. Toromont disclaims any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Toromont Industries Ltd. operates through two business segments: the Equipment Group and CIMCO. 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, Quebec, Ontario and Manitoba, in addition to most of the territory of Nunavut. The Group includes industry 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. Both segments offer comprehensive product support capabilities. This press release and more information about Toromont Industries Ltd. can be found at www.toromont.com.
For more information contact:
Michael S. McMillan
Executive Vice President and
Chief Financial Officer
Toromont Industries Ltd.
Tel: (416) 514-4790
1 These financial metrics do not have a standardized meaning under International Financial Reporting Standards (IFRS), which are also referred to herein as Generally Accepted Accounting Principles (GAAP), and may not be comparable to similar measures used by other issuers. These measurements are presented for information purposes only. The Company's Management's Discussion and Analysis (MD&A) includes additional information regarding these financial metrics, including definitions and a reconciliation to the most directly comparable GAAP measures, under the headings "Additional GAAP Measures", "Non-GAAP Measures" and "Key Performance Indicators."
TOROMONT INDUSTRIES LTD. INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) Three months ended June 30 Six months ended June 30 ($ thousands, except share amounts) 2021 2020 2021 2020 Revenues $ 1,127,066 $ 849,597 $ 1,933,304 $ 1,565,056 Cost of goods sold 872,360 655,810 1,491,220 1,200,411 Gross profit 254,706 193,787 442,084 364,645 Selling and administrative expenses 132,198 116,653 249,360 232,270 Operating income 122,508 77,134 192,724 132,375 Interest expense 7,002 7,890 14,179 14,821 Interest and investment income (2,260 ) (1,564 ) (4,264 ) (4,289 ) Income before income taxes 117,766 70,808 182,809 121,843 Income taxes 32,366 19,598 49,453 33,237 Net earnings $ 85,400 $ 51,210 $ 133,356 $ 88,606 Earnings per share Basic $ 1.03 $ 0.62 $ 1.62 $ 1.08 Diluted $ 1.02 $ 0.62 $ 1.60 $ 1.07 Weighted average number of shares outstanding Basic 82,586,778 82,024,236 82,542,927 82,019,838 Diluted 83,462,230 82,468,858 83,332,327 82,483,651