Toromont posted CDN $961.3 million in second quarter total revenue, compared to $530.9 million in the second quarter last year, an 81-percent jump on the strength of its acquisition of Hewitt Caterpillar, the Caterpillar dealership 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 acquisition closed in Oct 2017, and thus Hewitt results were not included in 2017 results.
For the first six months of 2018, the year-over-year leap was 74 percent, from $943.2 million last year to $1,638.1 million this year.
Net earnings leaped 67 percent for the second quarter, from $40.5 million last year to $67.6 million in Q218. For the first six months of 2018, neat earnings soared 46 percent, from $67.5 million a year ago to $98.4 million this year.
While the acquisition boosted Toromont’s number dramatically, organic growth realized by Toromont’s Caterpillar dealerships in Ontario and Manitoba, and Cat Rental chain Battlefield Equipment, were also impressive. Net earnings for “legacy Toromont” jumped from $40.5 million to $53.4 million in the second quarter, a 32-percent jump.
“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 Medhurst, president and CEO 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.”
Growth was strong in the legacy Toromont’s Equipment Group, partially offset by softer results at CIMCO, its refrigeration group. The acquired portion of Toromont 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.
Bookings increased $111.0 million in the quarter and $293.0 million year-to-date. Orders received by Legacy Toromont were down 19 percent in the quarter and 7 percent year-to-date because of a large mining order received in Q2 2017. Other than mining, most market segments were up. The acquired divisions of Toromont 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 the acquired group. Most of the orders in backlog are expected to be delivered this year.
“Infrastructure projects and broader construction activity, continue to present opportunities for Toromont’s Equipment Group and momentum remains good in the mining sector,” continued Medhurst. “The senior leadership team is focused on the integration and expansion of Toromont QM [the acquired segment]. While this is not an overnight task, success presents a substantial long-term growth opportunity for Toromont. CIMCO continues to grow its revenue base, reflecting its strong presence and solid reputation as a leader in the key markets it serves. Recent tariff increases have not had an immediate direct impact on our business; however, it is expected that cost increases could ensue as these tariffs work their way through the supply chain and as suppliers deal with a less predictable environment.”
Toromont’s Cat Rental Store business, Battlefield Equipment, is No. 14 on the RER 100.