Strongco Keeps Churning in Q3 Despite Tough Times in Alberta

Canadian distributor Strongco Corp. shrunk revenues 16 percent in the third quarter compared to the third quarter of 2014, primarily because of lower revenues in Alberta.
Oct. 30, 2015
3 min read

Canadian distributor Strongco Corp. shrunk revenues 16 percent in the third quarter compared to the third quarter of 2014, primarily because of lower revenues in Alberta. Revenues were $108.4 million compared to $129.2 million in the year ago quarter. For the first nine months of 2015, revenue was $346.1 million compared to $369.5 million in the first nine months of 2014, a 6.3-percent slide.

With two major markets at depressed levels – the Alberta market down 60 percent and Quebec down 40 percent from two years ago – the company reduced costs, decreased inventories and lowered debt to produce improved operating profit on lower sales. Alberta revenues were down 52 percent, or $21.6 million, because of continuing weak market conditions brought on by the decline in oil prices. Demand for heavy equipment in Alberta is estimated to be down close to 40 percent, with general purpose equipment down almost 60 percent, the company said. With large amounts of equipment sitting idle, demand for parts and service has also been curtailed.

“Difficult market conditions related to the current low price of oil in Alberta, the impact of a weaker Canadian dollar, which declined by $0.09 in the quarter, and the familiar headwinds we continue to experience in Quebec, have delayed the full realization of Strongco’s significant investments over the past three years in the branch network, operations and our people,” said Robert Dryburgh, president and CEO of Strongco. “We are responding to this environment and are pleased to be seeing tangible improvements in cost controls and recoveries, operating efficiencies and sales execution, as well as reduced equipment inventories and related equipment finance debt.

“Despite the lower revenues during the quarter, we achieved improved margins as a percentage of sales, lower operating expenses, and – excluding foreign exchange losses – an increase in operating profit year over year.”

Dryburgh said he expects challenging conditions to continue.

“While we anticipate that the tough economic conditions in Atlanta and Quebec will persist, offset slightly by improving conditions in other markets such as the northeast United States, our overall strategy for the business remains on course,” he said. “In response to the current market outlook, we have taken additional actions to contain and reduce costs in ways that are not felt by our customers in order to maintain our strong service reputation and increase market share through this challenging period.”

Based in Mississauga, Ontario, Canada, Strongco is No. 72 on the RER 100.

About the Author

Michael Roth

Editor

Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.

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