Toromont shows solid second quarter 2018
Toromont Industries Ltd. reported a strong second quarter of 2018, with revenue increase of 81 percent year over year bringing the company to a total revenue through June 30 of $1.638 billion and basic earnings per share of $0.83, compared to $0.52 through the second quarter of 2017.
These results include those generated from the operations of the significant acquisition completed by the Company on October 27, 2017. This transaction expanded Toromont's operations to include the Caterpillar dealerships for Quebec, the Maritime Provinces and Western Labrador and the MCFA lift truck dealership for Quebec and Ontario, in addition to other distribution rights. The acquired operations are collectively referenced as "Toromont QM" throughout this report.
"We are still in the early days of realizing the growth opportunities presented by the substantially expanded business and while much work remains, we are pleased with the progress achieved so far," said Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. "The Company delivered solid results in the second quarter on organic growth at the legacy operations, together with a growing contribution from the acquired businesses. Focus remains on integration and sharing best practices across the broader organization to better serve our customers and business partners."
Net earnings increased $27.1 million or 67% in the quarter versus a year ago to $67.6 million or $0.83 EPS.
Earnings in the legacy Toromont businesses ("Legacy Toromont") increased 32% in the quarter versus a year ago on solid growth in the Equipment Group, partially offset by softer results at CIMCO. Toromont QM contributed $18.7 million on improved profitability versus that achieved a year ago in the predecessor organization. Integration-related costs included severance and other one-time-only costs and combined with interest expense on the acquisition financing, reduced net earnings by $4.5 million versus a year ago.
On a year-to-date basis, net earnings increased $30.9 million or 46% to $98.4 million or $1.21 EPS.
Legacy Toromont earnings and EPS increased 27% and 26%, respectively, on a year-to-date basis on the strong growth in the Equipment group, offset by weaker earnings from CIMCO.
Revenues of $874.1 million in the quarter increased $416.0 million or 91% versus last year. Legacy Toromont revenues increased 15% on growth across most lines of business. Toromont QM contributed $348.7 million in the quarter, up 19% from the second quarter of 2017 at the predecessor organization, also on growth across most lines of business. Strong product support revenues, including those generated by increased rebuild activity, reflect the larger base on equipment in the territories served.
Revenues were up $669.2 million or 82% to $1.5 billion year-to-date. Legacy Toromont reported 10% growth versus last year while Toromont QM was up 19% to $590.1 million.
Operating income was up $43.9 million or 88% in the quarter. Legacy Toromont increased $19.0 million or 38% on the higher revenues, improved margins and a relatively lower expense ratio. Toromont QM contributed $24.9 million in the quarter, net of integration-related costs.
Operating income was up $54.7 million or 64% year-to-date. Legacy Toromont increased $23.9 million or 28% while Toromont QM contributed $30.8 million, net of integration related costs.
Bookings increased $111.0 million in the quarter and $293.0 million year-to-date. Orders received by Legacy Toromont were down 19% in the quarter and 7% year-to-date due to a large mining order received in Q2 2017. Other than mining, most market segments were up. Toromont QM reported good activity in the quarter ($169.0 million) and year-to-date ($327.0 million) across all market segments. Backlogs were $407.0 million at the end of June 30, 2018, including $175.0 million at Toromont QM. Most of the orders in backlog are expected to be delivered this year.