TORONTO, Feb. 13, 2024 /CNW/ – Toromont Industries Ltd. (TSX:TIH) today reported its financial results for the three months and year ended December 31, 2023.
Three months ended December 31
Years ended December 31
($ millions, except per share amounts)
2023
2022
% change
2023
2022
% change
Revenue
$ 1,226.9
$ 1,128.5
9 %
$ 4,622.3
$ 4,115.3
12 %
Operating income
$ 204.6
$ 210.4
(3) %
$ 704.2
$ 619.1
14 %
Net earnings
$ 154.1
$ 159.9
(4) %
$ 534.7
$ 454.2
18 %
Basic earnings per share (“EPS”)
$ 1.87
$ 1.94
(4) %
$ 6.50
$ 5.52
18 %
“We are pleased with the operating and financial performance which our teams delivered this year,” stated Michael S. McMillan, President and Chief Executive Officer of Toromont Industries Ltd. “The Equipment Group executed well, delivering against the opening order backlog in line with customer schedules and improvement in inventory flow, coupled with good growth in rental and product support activity, as well as a continued focus on expense control. CIMCO revenue and bottom line improved for the year on good execution and higher product support activity. Across the organization, we continue to navigate through uncertain economic conditions and remain committed to our operating disciplines, driving our after-market strategies and delivering customer solutions.”
Considering the Company’s strong financial position and long-term outlook, the Board of Directors today increased the quarterly dividend by 11.6% to 48 cents per share. Toromont has paid dividends every year since 1968 and this is the 35th consecutive year of dividend increases. The next dividend is payable on April 4, 2024 to shareholders on record on March 8, 2024.
HIGHLIGHTS:
Consolidated Results
Revenue increased $98.4 million or 9% in the fourth quarter compared to the similar period last year, with higher revenues in both groups. Equipment Group was up 9% and CIMCO revenue was up 2%.
Revenue increased $507.0 million (up 12%) to $4.6 billion for the year. Revenue increased in both groups, with the Equipment Group up 12% and CIMCO up 13% compared to 2022. Growth reflects in part improved supply from vendors, good opening order backlog, solid execution and the larger rental fleet investment. Product support revenues increased in both groups, reflecting continued activity in end markets. Our increased technician labour workforce continues to support growth.
In the fourth quarter of 2022, a property was sold resulting in a pre-tax gain of $17.7 million, and reported in the Equipment Group. This impacts comparability of results in both the quarter and year.
Operating income(1) decreased 3% in the quarter reflecting the property gain in the prior year. Excluding property gains in both years, operating income increased 5%, reflecting higher revenue partially offset by lower gross margins. Operating income as a percentage of sales decreased to 16.7% from 18.6% in the prior year, reflecting lower gross margins in the current period and the large property gain in the prior year.
Operating income increased 14% in the year, and was 15.2% of revenue compared to 15.0% in the similar period last year, reflecting similar trends as noted for the quarter.
As previously reported, the Company completed the sale of AgWest Ltd., a wholly-owned subsidiary, in the second quarter of 2023.
Net earnings from continuing operations decreased $4.2 million or 3% in the quarter versus a year ago to $154.1 million or $1.87 EPS (basic) and $1.86 EPS (fully diluted).
For the year, net earnings from continuing operations increased $79.0 million or 18% to $529.1 million, or $6.43 EPS (basic) and $6.38 EPS (fully diluted).
Bookings(1) increased 49% in the quarter compared to the similar period in 2022, and were 15% higher on a full year basis. Both Equipment Group and CIMCO reported higher bookings in both periods, although activity has been somewhat variable through the year due to a variety of market-related factors and customer buying patterns.
Backlog(1) remained relatively unchanged from this time last year at $1.2 billion, reflecting strong order activity. Equipment inflow through the supply chain has generally improved.
Equipment Group
Revenue was up $96.1 million or 9% to $1.1 billion for the quarter. Equipment sales (up 15%) improved across most markets. New equipment sales increased 19% on improving equipment availability, customer delivery schedules and year-end buying decisions. Rental revenue continued to grow on higher market activity, good execution and an expanded heavy and light equipment fleet. Product support activity was strong, with increases in both parts and service, reflecting good demand and increased technician levels.
Revenue was up $460.8 million or 12% to $4.2 billion for the year. Equipment sales, product support and rental activity were higher across most geographical markets and product groups on similar reasons as the quarter.
Operating income decreased $4.1 million or 2% in the fourth quarter when including the property gain reported in the prior period. Excluding this item, operating income increased 7%, reflecting higher revenue and lower expenses, partially offset by lower gross margins.
Operating income increased $72.1 million or 12% to $664.7 million in the year, reflecting the higher revenue, partially offset by lower gross margins and higher expenses. Operating income margin was unchanged from last year at 15.7%.
Bookings in the fourth quarter were $537.2 million, an increase of 53%. Customer demand improved late in the quarter, mainly in the construction sector, which had been slower throughout the year. Bookings in the full year 2023 were $1.9 billion, an increase of 14% from the prior year, with higher activity in mining, power and construction. Construction markets remain somewhat cautious given current business and economic factors which continue to override normal seasonality.
Backlog of $957.3 million at the end of December 2023 was down $74.7 million or 7% from the end of December 2022, reflecting good new order intake, improving equipment delivery from suppliers as well as planned deliveries against customer orders.
CIMCO
Revenue increased $2.4 million or 2% compared to the fourth quarter last year. Product support revenue was strong, up 14%, reflecting good market activity, with an increase in winter activities. Package revenue was lower, down 8%, with some delays in equipment delivery and project schedules by customers.
Revenue increased $46.2 million or 13% to $397.2 million for the year on higher package revenue (up 8%), mainly lead by an increase in the industrial market (up 12%), while recreational market activity was relatively flat (up 2%). Product support sales also increased (up 18%) on higher activity in both Canada and the US.
Operating income decreased $1.7 million or 12% for the quarter, as higher revenue was dampened by lower gross margins and higher selling and administrative expenses.
Operating income was up $13.0 million or 49% to $39.5 million for the year, reflecting improved gross margins and higher revenue. Operating income margin increased to 10.0% (2022 was 7.5%) reflecting higher gross margins on solid execution.
Bookings increased 24% in the fourth quarter to $56.2 million, and increased 19% for the year to $245.9 million. For the year, bookings were 35% higher in Canada and 18% lower in the US. Industrial bookings were 58% higher while recreational bookings were down 30%. Booking activity can be variable over time based on customer decision making schedules.
Backlog of …
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