Canada’s Strongco Posts 3 Percent First Quarter Revenue Decline
Canadian distributor Strongco posted first quarter revenue of $109.7 million compared to $112.6 million in the first quarter of 2015, a 3 percent decline. The decrease was primarily in Alberta, where revenues plunged 38 percent because of weak market conditions as a result of the drop in oil prices. Overall equipment sales increased 3 percent year over year because of strong crane sales in Eastern Canada, which more than offset the drop in sales in Alberta. However, rental revenues and product support sales both declines in the quarter.
Despite lower revenues, gross profits were virtually unchanged from a year ago at $21.1 million.
Strongco management anticipates increased construction activity this year, which will lead to increased demand for equipment, parts and service. However, market conditions are expected to remain challenging throughout the balance of 2016 in Canada, particularly in Quebec. In New England the company expects that ongoing recovery in traditional markets for residential construction and forestry should continue to benefit heavy equipment markets.
“Strongco continues to take the necessary steps to guide the business to profitability; however, constrained by a difficult economic environment and an overall air of caution, we still face significant headwinds in many regions,” said Robert Beutel, executive chairman of Strongco. “As we navigate these challenging conditions, we were pleased to see meaningful reductions in equipment inventories and the associated financing costs, which have positively impacted the balance sheet and will help pave the way to stability and strength over the long term.”
Strongco, based in Mississauga, Ontario, Canada, is No. 82 on the new 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.