Toromont Industries Ltd. this week reported financial results for the three and six-month periods ended June 30. Revenues in the second quarter were CA $594.2 million, a 23-percent increase from CA $484.2 million in the year-ago quarter. Net earnings in the second quarter 2010 were CA $21.8 million, a 35-percent drop from CA $33.5 million a year ago.
In the first quarter 2010 Toromont completed the acquisition of Enerflex Systems Income Fund. Results from Enerflex have been consolidated from Jan. 20, the date of acquisition. The combined business of Toromont Energy Systems and Enerflex are now operating under Toromont ownership as Enerflex Ltd.
The lower earnings in the second quarter reflect the cost structure of the combined Enerflex Systems Income Fund and Toromont Energy Systems operations, before rationalization, in the face of weakness in natural gas markets. Earnings per share were CA $0.28 for the second quarter and CA $0.49 for the first half, down 45 percent and 44 percent from the respective comparable periods in 2009, reflecting lower earnings and a higher number of shares outstanding.
"We are encouraged by the activity and profitability experienced in our Equipment Group," said Robert Ogilvie, chairman and CEO of Toromont Industries Limited. "We are also pleased with the process of integration at Enerflex and have now realized $25 million in synergies on an annual basis. We have already seen strong quarter-over-quarter improvements in product support revenues and operating income. Recent increases in bookings are driving higher shop loadings that will eventually lead to better results from our packaging operations."
The board of directors approved a 7-percent increase in Toromont's regular quarterly cash dividend, marking 21 consecutive years of increasing dividends. A quarterly dividend at the new rate of CA $0.16 per share, payable Oct. 1, to shareholders of record at the close of business on Sept. 16, was declared by the board.
"This will be a year of significant transition at Enerflex as we complete the integration of the legacy business, realize identified synergies including disposal of redundant assets, reductions in working capital, and prepare for a recovery in the market," Ogilvie said. "Generally prospects for the remainder of the year are encouraging but remain dependent on continued strengthening of the underlying economy and the specific markets within which we operate. We expect to report improving results from the Compression Group for the balance of the year. The Equipment Group has seen good growth in bookings activity over the first half of the year and is now performing above the comparable periods last year."
Toromont Industries Ltd. operates through two business segments: The Equipment Group and the Compression Group. The Equipment Group includes Battlefield Equipment Rentals, No. 21 on the RER 100, and one of the larger Caterpillar dealerships by revenue and geographic territory in addition to its rental operations.