2017 proved to be a busy year for Toromont, which reported strong earnings in a year when the company purchased the Hewitt Group of Companies while acquiring new territories for its Caterpillar dealerships.
The company had net earnings for 2017 of $176 million, up 13 percent from the previous year, and displayed revenue growth of 25 percent in the Equipment Group, bringing in $2.03 billion. Toromont QM, the former Hewitt operations, contributed $242.6 million for the two months. In the legacy operations, equipment sales into mining, power systems and agriculture markets increased while construction markets declined slightly. All rental revenue streams increased, reflecting the Company's focus on growing the fleet to address demand in this important segment. Product support growth continued with increases in both parts and service. Operating income was up $24.0 million or 13% after excluding the contribution from Toromont QM and acquisition-related expenses in 2017, together with a gain on sale of internally-developed software recorded in 2016.
"Toromont delivered strong results for the fourth quarter and full year of 2017, with solid organic growth in the Equipment Group and CIMCO, coupled with two months of operations at our acquired businesses," said Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. "The Equipment Group executed well and CIMCO had another record year, a testament to the team's dedication and commitment to excellence during a period of elevated focus on completing the Hewitt acquisition. Entering 2018 the Company, supported by a strong balance sheet, is well positioned to continue to build value for shareholders."
The Company completed the acquisition of businesses and net operating assets of the Hewitt Group on October 27, 2017 for a total purchase price of $1.02 billion. The acquired businesses will be referred to as Toromont Quebec/Maritimes for the remainder of this document. The acquisition strengthens Toromont's position and provides significant opportunity for profitable growth and expanded market diversification. Our total customer offering in the key mining, construction and power systems markets along with our product and service expertise positions Toromont well for continued delivery of consistent returns to our stakeholders.
Toromont became the authorized Caterpillar dealer for Quebec, Western Labrador and the Maritimes; the Caterpillar lift truck dealer for Quebec and most of Ontario and the MaK engine dealer for Quebec, the Maritimes and the eastern seaboard of the United States from Maine to Virginia.
"We are encouraged by the long-term outlook for infrastructure spending across all territories from both the provincial and federal governments. Momentum is strong in the mining sectors that we serve. CIMCO continues to experience significant positive momentum. Growing CIMCO's technician base and market presence in the US remains a priority," continued Mr. Medhurst. "Integration and transition efforts at Toromont QM are well underway, with the primary focus on safety of our people and customer deliverables. Effective execution will be required to realize on the significant potential of a combined presence in key Canadian economic sectors. Across the enterprise, good bookings and backlog levels, together with the long-term product support growth trends and the diversity of markets in the new and significantly expanded territory, provide substantial opportunities for continued success."
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