TORONTO, April 27,
2022 /CNW/ - Toromont Industries Ltd. (TSX: TIH)
reported its financial results for the first quarter ended
March 31, 2022.
|
|
|
Three months ended March 31
|
millions, except per share
amounts
|
2022
|
2021
|
% change
|
|
|
|
|
Revenues
|
$
|
860.1
|
$
|
806.2
|
7%
|
Operating
income
|
$
|
86.1
|
$
|
70.2
|
23%
|
Net earnings
|
$
|
59.5
|
$
|
48.0
|
24%
|
Basic earnings per
share ("EPS")
|
$
|
0.72
|
$
|
0.58
|
24%
|
"We are pleased with our operating performance and financial
results, through a challenging business environment. While end
market activity levels remained solid as pandemic restrictions
eased in some markets, persistent supply constraint pressures and
inflation contribute to a fluid, complex and uncertain operating
environment," stated Scott J.
Medhurst, President and Chief Executive Officer of Toromont
Industries Ltd. "The Equipment Group reported good activity in
rental and product support, while global supply chain challenges
persist and continue to impact timing of equipment deliveries.
CIMCO revenues decreased in the quarter on timing of project
construction schedules, while product support activity improved.
Across the organization, we are continuing to leverage the
learnings from the past year and maintain our operating
disciplines, while incorporating new ways to do business with
uncertain conditions."
Highlights:
Consolidated results
- Revenues increased 7% in the quarter versus the same period
last year reflecting solid activity levels in most areas and good
execution from our teams. Product support revenues were 10% higher
on increased demand and technician headcount, while rental revenues
grew 29% on a larger fleet and higher utilization. Equipment sales
were relatively unchanged compared to prior year with Equipment
Group growth of 4% largely offset by weaker CIMCO package revenues
down 7%, as construction projects schedules and deliveries in both
cases were deferred due to supply chain constraints.
- Operating income(1) increased 23% on higher revenues
and gross margins. Expense levels were up slightly at 14.8% of
revenue, reflecting continued cost focus in an inflationary
environment, consistent with gradual business openings.
- Net earnings increased $11.6
million or 24% in the quarter versus a year ago to
$59.5 million or $0.72 EPS.
- Bookings(1) were 16% lower compared to the similar
period last year. The Equipment Group received several large
construction and mining orders in the first quarter of 2021.
Backlogs(1) were $1.5
billion at March 31, 2022,
compared to $911.5 million at
March 31, 2021, reflecting strong
order activity and supply constraints through the latter part of
2021.
Equipment Group
- Revenues were up $59.2 million or
8% to $786.6 million for the quarter
with higher activity in both rental, used equipment and product
support, combined with moderate new equipment sales across most
regions.
- Operating income was up $15.2
million or 22% reflecting higher revenues and gross
margins.
- Bookings in the first quarter of $567.1
million were down 17% against strong mining and construction
sector orders in the comparable period last year.
- Backlogs of $1.3 billion at the
end of March 2022 were up
$624.3 million or 85% from the end of
March 2021, reflecting healthy order
levels in the latter part of 2021. Approximately 80% of the backlog
is expected to be delivered this year, subject to receipt of
equipment from suppliers.
CIMCO
- Revenues of $73.5 million
decreased $5.3 million or 7% compared
to the first quarter last year with lower package revenues on
construction schedules largely offset by higher product support
revenue.
- Operating income of $1.2 million
increased $0.8 million for the
quarter reflecting the higher product support sales and gross
margins along with the favourable sales mix of product support
sales to total revenue.
- Bookings were up $2.0 million or
5% to $39.8 million in the first
quarter of 2022. Industrial orders were higher in both Canada and the US, while recreational orders
were down mainly in Canada, offset
by an increase in orders in the US.
- Backlogs of $169.6 million were
down $5.9 million or 3%, as progress
against order backlog continued. Industrial backlog was down in
both Canada and the US, whereas
recreational backlog was up in both Canada and the US. Substantially all of the
backlog is estimated to be realized as revenue this year, however
this is subject to construction schedules and potential changes
stemming from supply chain constraints.
Financial Position
- Toromont's share price of $118.51
at the end of March 2022, translated
to a market capitalization(1) of $9.8 billion and a total enterprise
value(1) of $9.6
billion.
- The Company maintained a very strong financial position.
Leverage as represented by the net debt to total
capitalization(1) ratio was -8% at the end March 2022, compared to ‑16% at the end of
December 2021 and 2% at the end of
March 2021.
- The Board of Directors approved a quarterly dividend of
$0.39 cents per share, payable on
July 5, 2022 to shareholders on
record on June 9, 2022.
- The Company's return on opening shareholders'
equity(1) was 19.7% at the end of March 2022, on a trailing twelve-month basis,
compared to 19.6% at the end of December
2021 and 16.7% at the end of March
2021. Trailing twelve month pre‑tax return on capital
employed(1) was 27.4% at the end of March 2022, compared to 26.6% at the end of
December 2020 and 21.5% at the end of
March 2021.
"We value our team's on-going commitment to adapt to changes in
the business environment and focus on executing customer
deliverables," noted Mr. Medhurst. "Activity remained sound with
favourable backlog levels, but supply chains are challenged. This
has restricted availability and is likely to result in delivery
date extensions. Pandemic issues remain and we continue to monitor
inflationary pressures and supply-demand dynamics as the economic
environment changes. Technician hiring remains a priority to our
product support offering and to meet growing demand. The diversity
of our geographic landscape and markets served, extensive product
and service offerings, technology investments and financial
strength, together with our disciplined operating culture, continue
to position us well."
Annual & Special Meeting of
Shareholders
The Company will be holding its Annual & Special Meeting of
Shareholders in a virtual-only format, via live audio webcast on
Thursday, April 28, 2022, at
10:00 a.m. (EDT). Shareholders and
other interested parties can attend the Annual Shareholders'
Meeting virtually by going to https://web.lumiagm.com/491229447
(password "toromont2022"). The meeting will also be available via
live audio webcast at www.toromont.com.
Financial and Operating
Results
All comparative figures in this press release are for the first
quarter ended March 31, 2022 compared
to the first quarter ended March 31,
2021. 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 months ended
March 31, 2022, 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 2021 Annual Report and 2022 Annual Information Form, which are
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, April 28, 2022 at 8:00 a.m. (EDT). The call may be accessed by
telephone at 1‑800‑898-3989 (toll free) or 416-406-0743
(Toronto area) and quoting
participant passcode 6779159. A replay of the conference call will
be available until Thursday, May 6,
2022 by calling 1-800-408-3053 or 905-694-9451 and quoting
passcode 1861147.
Presentation materials to accompany the call will be available
on our investor page on our website.
Non-GAAP and Other Financial
Measures
Management believes that providing certain non-GAAP and other
financial measures provides users of the Company's unaudited
interim condensed consolidated financial statements and MD&A
with important information regarding the operational performance
and related trends of the Company's business. By considering these
measures in combination with the comparable IFRS measures (where
available), management believes that users are provided a better
overall understanding of the Company's business and its financial
performance during the relevant period than if they simply
considered the IFRS measures alone.
The non-GAAP and other financial measures used by management do
not have any standardized meaning prescribed by IFRS and are
therefore may not be comparable to similar measures presented by
other issuers. Accordingly, these measures should not be considered
as a substitute or alternative for GAAP measures as determined in
accordance with IFRS.
Management also uses key performance indicators to enable
consistent measurement of performance across the organization.
These KPIs are non-GAAP financial measures, do not have a
standardized meaning under IFRS and may not be comparable to
similar measures presented by other issuers.
Gross Profit
Gross Profit is defined as total revenues less cost of goods
sold.
Operating Income
Operating income is defined as net earnings before interest
expense, interest and investment income and income taxes and is
used by management to assess and evaluate the financial performance
of its operating segments. Financing and related interest charges
cannot be attributed to business segments on a meaningful basis
that is comparable to other companies. Business segments do not
correspond to income tax jurisdictions, and it is believed that
the allocation of income taxes distorts the historical
comparability of the performance of the business segments.
|
Three months ended
March 31
|
($
thousands)
|
2022
|
2021
|
Net earnings
|
$
|
59,532
|
$
|
47,956
|
plus: Interest
expense
|
|
6,686
|
7,177
|
less: Interest and
investment income
|
|
(2,617)
|
(2,004)
|
plus: Income
taxes
|
|
22,522
|
17,087
|
Operating
income
|
$
|
86,123
|
$
|
70,216
|
|
|
|
|
|
Total
Revenues
|
$
|
860,143
|
$
|
806,238
|
Operating income
margin
|
|
10.0%
|
8.7%
|
Net Debt to Total Capitalization/Equity
Net debt to total capitalization/equity are calculated as net
debt divided by total capitalization and shareholders' equity,
respectively, as defined below, and are used by management as
measures of the Company's financial leverage.
Net debt is calculated as long-term debt plus current portion of
long-term debt less cash. Total capitalization is calculated as
shareholders' equity plus net debt.
The calculations are as follows:
|
|
|
|
($ thousands)
|
March
31
2022
|
December 31
2021
|
March 31
2021
|
Long-term
debt
|
$
|
646,518
|
$
|
646,337
|
$
|
646,616
|
less: Cash
|
795,731
|
916,830
|
613,942
|
Net debt
|
(149,213)
|
(270,493)
|
32,674
|
|
|
|
|
Shareholders'
equity
|
1,998,258
|
1,953,329
|
1,759,631
|
Total
capitalization
|
$
|
1,849,045
|
$
|
1,682,836
|
$
|
1,792,305
|
|
|
|
|
Net debt to total
capitalization
|
-8%
|
-16%
|
2%
|
Net debt to
equity
|
-0.07:1
|
-0.14:1
|
0.02:1
|
Market Capitalization & Total Enterprise Value
Market capitalization represents the total market value of the
Company's equity. It is calculated by multiplying the market price
of the Company's common shares by the total number of common shares
outstanding.
Total enterprise value represents the total value of the Company
and is often used as a more comprehensive alternative to market
capitalization. It is calculated by adding net debt (defined above)
to market capitalization.
The calculations are as follows:
|
|
|
|
($ thousands, except for shares and share
price)
|
March
31
2022
|
December 31
2021
|
March 31
2021
|
Outstanding common
shares
|
|
82,522,223
|
|
82,443,968
|
|
82,542,168
|
times: Ending share price
|
$
|
118.51
|
$
|
114.36
|
$
|
96.19
|
Market
capitalization
|
$
|
9,779,709
|
$
|
9,428,292
|
$
|
7,939,731
|
|
|
|
|
|
Long-term
debt
|
$
|
646,518
|
$
|
646,337
|
$
|
646,616
|
less: Cash
|
|
795,731
|
|
916,830
|
|
613,942
|
Net
debt
|
$
|
(149,213)
|
$
|
(270,493)
|
$
|
32,674
|
|
|
|
|
|
Total enterprise
value
|
$
|
9,630,496
|
$
|
9,157,799
|
$
|
7,972,405
|
Gross Profit Margin
This measure is defined as gross profit (defined above) divided
by total revenues.
Operating Income Margin
This measure is defined as operating income (defined above)
divided by total revenues.
Order Bookings and Backlogs
Order bookings represent the retail value of firm equipment or
project orders received during a period. Backlogs are defined as
the retail value of equipment units ordered by customers with
future delivery, and the remaining retail value of package/project
orders remaining to be recognized in revenues under the percentage
of completion method. Management uses order backlog as a measure of
projecting future equipment and project deliveries. There are no
directly comparable IFRS measures for order bookings or
backlog.
Return on Capital Employed ("ROCE")
ROCE is utilized to assess both current operating performance
and prospective investments. The adjusted earnings numerator used
for the calculation is income before income taxes, interest expense
and interest income (excluding interest on rental conversions). The
denominator in the calculation is the monthly average capital
employed, which is defined as net debt plus shareholders' equity,
also referred to as total capitalization.
|
Trailing twelve months ended
|
($ thousands)
|
March 31
2022
|
December 31
2021
|
March 31
2021
|
Net earnings
|
$
|
344,286
|
$332,710
|
$
|
265,475
|
plus: Interest
expense
|
|
27,670
|
28,161
|
|
30,227
|
less: Interest and
investment income
|
|
(9,641)
|
(9,027)
|
|
(8,361)
|
plus: Interest income
- rental conversions
|
|
2,624
|
2,635
|
|
3,529
|
plus: Income
taxes
|
|
129,528
|
124,093
|
|
100,068
|
Adjusted net
earnings
|
$
|
494,467
|
$478,572
|
$
|
390,938
|
|
|
|
|
|
|
Average capital
employed
|
$
|
1,801,398
|
$1,796,703
|
$
|
1,817,866
|
Return on capital employed
|
|
27.4%
|
26.6%
|
|
21.5%
|
Return on Equity ("ROE")
ROE is monitored to assess the profitability of the consolidated
company and is calculated by dividing net earnings by opening
shareholders' equity (adjusted for both shares issued and shares
repurchased and cancelled during the period).
|
Trailing twelve
months ended
|
|
March
31
|
December
31
|
March
31
|
($
thousands)
|
2022
|
2021
|
2021
|
Net earnings
|
$
|
344,286
|
$
|
332,710
|
$
|
265,475
|
|
|
|
|
Opening shareholders'
equity (net of adjustments)
|
$
|
1,746,111
|
$
|
1,695,008
|
$
|
1,587,570
|
Return on
equity
|
19.7%
|
19.6%
|
16.7%
|
Advisory
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 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; increased regulation of or restrictions
placed on our businesses as a result of COVID-19; 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 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 to make contributions or
other payments in respect of registered defined benefit pension
plans or postemployment benefit plans in excess of those currently
contemplated; and increased insurance 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.
About Toromont
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, Québec, 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.
FOOTNOTES
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 March 31
|
($ thousands, except
share amounts)
|
2022
|
2021
|
Revenues
|
$
|
860,143
|
$
|
806,238
|
Cost of goods
sold
|
646,636
|
618,860
|
Gross profit
|
213,507
|
187,378
|
Selling and
administrative expenses
|
127,384
|
117,162
|
Operating income
|
86,123
|
70,216
|
Interest
expense
|
6,686
|
7,177
|
Interest and investment
income
|
(2,617)
|
(2,004)
|
Income before income
taxes
|
82,054
|
65,043
|
Income taxes
|
22,522
|
17,087
|
Net earnings
|
$
|
59,532
|
$
|
47,956
|
|
|
|
Earnings per share
|
|
|
Basic
|
$
|
0.72
|
$
|
0.58
|
Diluted
|
$
|
0.72
|
$
|
0.58
|
|
|
|
Weighted average number of shares
outstanding
|
|
|
Basic
|
82,466,525
|
82,498,589
|
Diluted
|
83,257,204
|
83,248,997
|
SOURCE Toromont Industries Ltd.