|Three months ended
||Nine months ended
|millions, except per share amounts||2020||2019||% change||2020||2019||% change|
|Basic earnings per share ("EPS")||$||0.94||$||0.98||(4%)||$||2.02||$||2.41||(16%)|
“We are pleased with the improvement experienced over last quarter, reflective of the Toromont team’s ability to adapt to an ever-changing environment, provide essential services and execute in a very challenging market,” said
- Revenues decreased 5% to
$921.7 millionin the quarter versus last year reflecting continued lower economic activity imposed by COVID-19. While some recovery phased in during the quarter, revenues were still below prior year levels. Product support and rental revenues were lower by 3% and 11% respectively. Equipment sales were lower by 6%, reflecting lower new equipment sales across most markets.
- Revenues decreased 6% to
$2.5 billionyear-to-date, reflecting similar trends as outlined above for the quarter.
- Operating income(1) was 1% lower in the third quarter on the lower revenues, largely offset by lower expenses. Cost containment initiatives continued throughout the quarter and sales-related expenses were lower on the reduced activity level including travel. Subsidies accrued under the
CanadaEmergency Wage Subsidy program (“CEWS”) totalled $7.3 millionin the quarter.
- Operating income was 14% lower year-to-date reflecting lower economic activity levels experienced since the onset of the pandemic. Cost containment strategies took some time to take hold and some additional costs were incurred early on in order to support and protect employees. Operating income margin(1) decreased 80 basis points (“bps”) to 9.9%.
- Backlogs(1) were
$472.1 millionat September 30, 2020, compared to $453.9 millionat September 30, 2019. CIMCO backlogs were at near record levels on strong industrial booking activity in early 2020. Equipment Groupbacklogs were lower on reduced activity levels reflecting the cautious tone throughout the quarter and fulfillment of orders from inventory.
- Net earnings decreased
$2.3 millionor 3% in the quarter versus a year ago to $77.4 million or $0.94EPS.
- On a year‑to‑date basis, net earnings decreased
$30.3 millionor 15% and EPS of $2.02per share was down 16%.
- Revenues were down
$46.8 millionor 5% to $834.7 millionfor the quarter and $141.6 millionor 6% to $2.3 billionyear-to-date on reduced economic activity. New equipment sales, product support and rental activity were lower across all geographic markets and product groups.
- Operating income was down
$0.8 millionor 1% to $103.4 millionin the quarter on lower revenues and gross profit margins. Operating income margin increased 60 bps to 12.4% reflecting a lower expense ratio, due in part to a $6.5 milliongovernment wage subsidy in the current year.
- Operating income was down
$35.4 millionor 13% to $231.0 millionyear-to-date, due to similar reasons as the quarter. Operating income margin decreased 80 bps to 10.2%.
- Bookings(1) increased
$38.5 millionor 12% in the quarter and decreased $46.5 millionor 4% year‑to‑date. Higher orders resulted across most segments reflecting improvements in underlying economic activity. Backlogs of $256.1 millionat the end of September 2020, were down $69.2 million or 21% from September 2019. Approximately 70% of the backlog is expected to be delivered this year.
- Revenues decreased
$6.8 millionor 7% to $86.9 millionfor the quarter versus the third quarter last year. Project construction work was slower during the quarter due to COVID-19 site restrictions reducing activity. Product support revenues also decreased on lower activity.
- Revenues decreased
$25.2 millionor 10% to $217.5 millionyear-to-date with similar trends as reported in the quarter.
- Operating income was down
$0.8 millionor 8% to $9.5 millionfor the quarter largely reflecting lower revenues. Operating income was down $3.7 millionor 20% to $14.3 millionyear-to-date on the lower revenues. Operating income margin decreased to 6.6% year-to-date reflecting the lower revenues supporting fixed costs.
- Bookings were up
$5.2 millionor 15% in the quarter and $54.5 millionor 37% year-to-date on increased industrial activity in Canadaand the US. Backlogs of $216.0 millionwere up $87.4 million or 68% from September 2019, approximately 35% of which is expected to be realized as revenue this year, subject to construction schedules.
- Toromont’s share price of
$79.68at the end of September 2020, translated to a market capitalization(1) of $6.6 billionand a total enterprise value(1) of $6.7 billion.
- The Company maintained its strong financial position. Leverage as represented by the net debt to total capitalization(1) ratio was 10% as at the end
September 2020, compared to 15% at December 2019, and 22% at September 2019.
- The Board of Directors announced a quarterly dividend of
31 centsper common share, payable on January 5, 2021to shareholders of record on December 9, 2020. The quarterly dividend was previously increased 14.8% to 31 centsper share effective with the dividend paid April 2, 2020.
- Return on opening shareholders’ equity(1) was 17.6% at
September 30, 2020, on a trailing twelve-month basis, compared to 21.4% at December 2019, and 21.9% at September 2019. Trailing twelve month pre‑tax return on capital employed(1) was 20.3% at the end of September 2020, compared to 22.9% at December 2019, and 22.9% at September 2019.
“While market activity improved somewhat from the second quarter, it remained below last year’s level,” continued
Financial and Operating Results
All comparative figures in this press release are for the three and nine months ended
Quarterly Conference Call and Webcast
Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on
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; 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.
For more information contact:
Executive Vice President and
Chief Financial Officer
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.”
|INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS|
|Three months ended
||Nine months ended
|($ thousands, except share amounts)||2020||2019||2020||2019|
|Cost of goods sold||695,043||731,842||1,895,454||2,002,567|
|Selling and administrative expenses||113,736||128,894||346,006||366,652|
|Interest and investment income||(1,719||)||(1,805||)||(6,008||)||(6,585||)|
|Income before income taxes||106,722||109,346||228,565||270,030|
|Earnings per share|
|Weighted average number of shares outstanding|
Source: Toromont Industries Ltd.