Toromont Announces Strong Growth in Operations in the Second Quarter of 2008

Toronto-based Toromont Industries Ltd. last week reported revenues in the second quarter increased 15 percent and operating income increased 23 percent versus the comparable period of 2007. Compression Group revenues and operating income were at record levels for this time of year, driven by continued strength in U.S. natural gas operations. The Equipment Group reported good results in the second quarter after a weaker start to the year and is only modestly behind record revenue and operating income levels set last year, the company said.

Earnings in the second quarter and for the first half of 2007 and 2008 included investment gains and earnings from discontinued operations. Excluding these items in both years, net earnings for the second quarter of 2008 were $33.3 million or $0.51 basic earnings per share, up 32 percent from $25.2 million or $0.39 per share in the similar period of 2007. For the first half, excluding these items, net earnings were $47.8 million or $0.73 basic earnings per share, up 21 percent from $39.4 million or $0.61 per share in the comparable period of 2007.

Net earnings were $37.8 million or $0.58 per share, down marginally from the second quarter of 2007 on strong growth in results from operations, largely offset by lower relative gains on investments. Revenues, operating income and net earnings were all higher in the first six months of 2008 compared to the similar periods of 2007. For the first half of the year, net earnings were $54.3 million or $0.83 basic earnings per share, up from $52.3 million or $0.81 per share reported in 2007.

“We are pleased with the results for the second quarter and through the first half of the year,” said Robert Ogilvie, chairman and CEO of Toromont Industries Ltd. “The Compression Group had a terrific quarter with excellent growth in U.S. operations supported by strong market fundamentals. The U.S. natural gas compression market continues to experience strong growth and we are well positioned to participate in this area. The Equipment Group continues to perform well despite the stronger Canadian dollar and softer market conditions in some areas. Strong deliveries of new equipment to the mining and infrastructure markets continue to generally outweigh pockets of weakness.”

In the quarter, Battlefield Equipment Rentals, The Cat Rental Store, purchased a privately owned rental operation in Sault Ste. Marie, Ontario, expanding its coverage to a key area of Northern Ontario and increasing its branch network to 36 locations. Rental revenues were down 3 percent in the second quarter, but were up 1 percent in the first half compared to 2007. At Battlefield, rental revenues were higher in both periods on increased same-store sales and a new location in Concord, Ontario. Rental revenues from the larger machines at the Toromont CAT dealership were down in both periods as the company focused on converting potential rental transactions to sales transactions.

Rental volume for the second quarter dropped from CD $34.5 million (about U.S. $34.0 million) in 2007 to $33.6 million for this year’s second quarter. First-half rental volume increased 1 percent in 2008 compared to 2007, $61 million in 2008 compared with $60.5 million in 2007’s first half.

“Momentum in Compression continues to be positive, with good prospects for the remainder of the year on record bookings and backlogs,” Ogilvie said. “We have also seen some strengthening of demand in Canada for natural gas compression equipment. Significantly stronger pricing for North American natural gas year-over-year bodes well for our markets. We are encouraged that the Equipment Group continues to deliver solid results, even though the economy in central Canada is showing signs of weakness. We anticipate that the Equipment Group will continue its solid performance due to the balance in our products and markets, combined with after-market support activity.”

Toromont last week also announced the regular quarterly dividend of CAD $0.14 (about U.S. $0.13) per share on outstanding common shares, payable Oct. 1, to shareholders of record on Sept. 15.

Toromont Industries Ltd. operates through two business segments: The Equipment Group and the Compression Group. The Equipment Group includes Stoney Creek, Ontario-based Battlefield Equipment Rentals, No. 23 on the RER 100. The Compression Group is a North American leader specializing in the design, engineering, fabrication, and installation of compression systems for natural gas, coal-bed methane, fuel gas and carbon dioxide in addition to process systems and industrial and recreational refrigeration systems.

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