Canadian distributor Strongco Corp. increased revenues by 8 percent in the first quarter of 2015 to $112.6 million, with gross margin jumping 12 percent to $21.2 million. EBITDA soared 45 percent to $8.3 million compared to $5.7 million for the first quarter of 2014.
Strongco reported that equipment rental revenue in the first quarter was $6.3 million, consistent with the same period a year ago.
“We are pleased to report sales improvements in both equipment and product support, with market share growth in Canada and the United States, despite new challenges relating to declines in the price of oil and the Canadian dollar as well as the familiar headwinds in Eastern Canada, and that we were able to continue positive trends in inventory management and debt reduction,” said Robert Dryburgh, president and CEO of Strongco. “With the exception of two non-cash charges, namely foreign exchange losses due to a rapid decline in the Canadian dollar and a mark-to-market loss on interest rate swap agreements, we achieved positive earnings for the quarter, which we attribute to expense reductions and effective cost controls, the culmination of a three-year transformation of Strongco with numerous customer-centric initiatives – from sales re-organization to new branches to enhanced product support – coming together and beginning to reach full potential.”
Market conditions were weaker in Alberta as a result of a sharp decline in oil prices, and in Quebec with a downturn in mining.
“While management anticipates 2015 to be a challenging year in the heavy equipment markets, we continue to benefit from the completion of a number of strategic initiatives including the launch of new facilities in Alberta and Quebec, the addition of four new complementary brands, a heightened focus on operational effectiveness, and improvements to sales execution and inventory and debt management,” Dryburgh added.
While low oil prices hurts Strongco’s Alberta business, they should benefit the company’s manufacturing customers in Ontario.
Based in Mississauga, Ontario, Canada, Strongco Corp. is No. 66 on the RER 100.
