Growth in several sectors helped Toromont Industries (TSX: TIH) to a 5 percent increase in earnings for the second quarter of 2017, the company has announced in its earnings release. Higher equipment sales and rentals were partially offset by lower product support revenues in the company's Equipment Group. Year-to-date revenues are up 3 percent to $817.9 million thanks to higher equipment sales and rentals.
"Increased demand in mining and power systems is reflected in the strength of bookings and backlog," said Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. "CIMCO [Toromont's refrigeration division] delivered strong results on product support growth and excellent execution both in Canada and the US."
Equipment Group - strong mining and power systems activity offset by softer construction market conditions.
- Revenues of $458.2 million in the quarter were up slightly by $5.0 million or 1% as higher equipment sales and rentals were partially offset by lower product support revenues. Operating income of $50.0 million was relatively unchanged as lower equipment margins were partially offset by reduced selling and administrative expenses. Construction customers experienced challenging operating conditions as reflected in the much lower rental conversions in the quarter and first-half.
- Revenues were up $26.9 million or 3% to $817.9 million year-to-date mainly due to higher equipment sales and rentals. Operating income increased $3.2 million or 4% on the higher revenues and a relatively lower selling and administrative expense ratio, partially offset by lower equipment margins. Product support year-over-year comparison reflected the uneven demand of parts and labour requirements.
- Bookings increased 39% in the quarter to $312.0 million and 23% year-to-date to $500.0 million, principally reflective of strong mining and power systems orders. Backlogs1 were $253.0 million at June 30, 2017, increased substantially from $147.0 million at December 31, 2016 and $125.0 million at this time last year. More than three-quarters of the backlog is expected to be delivered this year.
CIMCO - strong results on continued product support growth and good execution.
- Revenues increased 5% to $72.8 million in the quarter on strong product support revenues in Canada and the US. Operating income increased 57% to $6.5 million and was 9.0% as a percentage of revenues, largely reflecting the higher revenues and higher gross profit margins.
- Revenues were up 5% year-to-date to $125.3 million, also on good product support growth in Canada and the US. Operating income margin1 was 270 basis points higher than last year at 7.5%.
- Bookings were up 7% in the quarter to $72.0 million and 20% year-to-date to $136.0 million on higher Canadian activity. Backlogs of $169.0 million at June 30, 2017 were up from $99.0 million at December 31, 2016 and the all-time high of $135.0 million at this time last year. More than three-quarters of the backlog is expected to revenue over the remainder of this year.
Net earnings increased 5% in the quarter to $40.5 million and 8% year-to-date to $67.5 million.
"The long-term outlook for infrastructure spending remains positive from both the provincial and federal governments. In the meantime, we have seen increased activity in the mining and power systems sectors. Performance at CIMCO continues to be positive and represents the emerging realization of focused strategies," continued Mr. Medhurst. "Growth in bookings and backlog across our organization, together with the long-term product support growth trends and the diversity of markets served provide opportunities for continued success."
