Strongco Announces Fourth Quarter and Full Year 2017 Results
Strongco Announces Fourth Quarter and Full Year 2017 Results
--Focus on core brands and inventory management
leads to improved financial performance--
TSX Symbol: SQP
MISSISSAUGA, ON, March 21, 2018 /CNW/ - Strongco Corporation (TSX: SQP) today reported financial results for the fourth quarter and year ended December 31, 2017.
Financial Summary - Continuing Operations
($ millions except percentages and per share amounts)
Period Ended December 31 3 Months 12 Months
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2017 2016 2017 2016
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Revenues 93.6 81.2 356.0 361.3
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Gross Profit 17.3 11.9 63.8 57.0
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Operating Income (Loss) 0.6 (4.4) 3.7 (7.7)
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Restructuring Costs - 0.4 0.7 3.6
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Intangible Impairment - - - 16.5
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Pretax Loss (0.9) (6.2) (2.2) (33.6)
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Net Loss (0.9) (6.1) (2.2) (38.3)
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Basic and Diluted Loss Per Share (0.07) (0.46) (0.17) (2.90)
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EBITDA* 5.9 (0.2) 20.0 5.8
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Equipment Inventory 149.9 129.2
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Equipment Notes Payable 131.0 101.2
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"2017 was a successful transition year for Strongco, following the restructuring initiatives that commenced in 2016. We're pleased with the progress we are seeing to simplify and stabilize the business, as the performance improvements in 2017 were driven by core brand sales and increases in rentals and product support," said Robert Beutel, Executive Chairman of Strongco. "While we are seeing improved activity in key markets, the progress is gradual and challenges are real. The successful execution of our strategy has Strongco well positioned to build market share today and in the years ahead."
Activities During the Fourth Quarter and the Year
-- Operating Results
-- Revenues of $93.6 million in the fourth quarter, up from $81.2
million, or 15.3%. For the 12 months, revenues of $356.0 million,
down from $361.3 million. Excluding large, non-recurring sales of
cranes to the Champlain Bridge project in Quebec in 2016,
year-over-year revenues increased by $22.5 million, due to the
following:
-- Higher sales of construction equipment across the country
-- Higher sales of used equipment, especially in Western Canada
-- Lower crane sales, due to non-recurring sales to the Champlain
Bridge project in Quebec in 2016 and weaker markets for cranes
in Ontario
-- Increased rental revenues, particularly in Western and Central
Canada
-- Higher product support sales in Western and Eastern Canada
-- Gross profit of $17.3 million (18.5% of sales) in the fourth
quarter, up from $11.9 million (14.7% of sales) last year, an
increase of 45.4%. For the 12 months, gross profit of $63.8 million
(17.9% of sales), compared to $57.0 million (15.8% of sales), up
11.9%.
-- Improved margins and lower expenses resulted in an operating income
of $0.6 million in the quarter, compared to a loss of $4.4 million,
before restructuring costs. For the 12 months, operating income,
before restructuring costs, of $3.7 million, compared to a loss of
$7.7 million.
-- EBITDA increase of $6.0 million, compared to EBITDA loss of $0.2
million. For the 12 months, EBITDA of $20.0 million, compared to
$5.8 million, due to improved operating income.
-- Pretax loss, before restructuring costs, of $0.9 million in the
quarter, improved from a loss of $5.8 million last year. For the 12
months, pretax loss, before impairment of intangible asset and
restructuring costs, of $1.5 million, compared to pretax loss of
$13.5 million.
-- Net loss from continuing operations of $0.9 million ($0.07 per
share) in the quarter, compared to net loss from continuing
operations of $6.1 million ($0.46 per share) in Q4 2017. For the 12
months, net loss from continuing operations of $2.2 million ($0.17
per share), compared to net loss from continuing operations of $33.6
million ($2.90 per share).
-- Balance Sheet Improvement
-- Equipment inventory of $149.9 million, up from $129.2 million at
December 31, 2016, due to increased rental activity.
-- Equipment notes payable of $131.0 million, up from $101.2 million at
December 31, 2016.
Fourth Quarter and Year-End Results Materials
The complete fourth quarter and year-end 2017 MD&A and Audited Consolidated Financial Statements are available on our website at www.strongco.com/en/investor-relations/financial-reports/.
Conference Call Details
Strongco will hold a conference call on Thursday, March 22 at 9:30am ET to discuss fourth quarter and year-end results. Analysts and investors can participate by dialing 1-800-319-4610 or +1-604-638-5340 outside of Canada and the USA. Following management's introductory remarks, a question and answer session will take place for analysts and institutional investors.
An archived recording will be available to listeners following the call until midnight on April 22, 2018. To access it, dial 1-855-669-9658 or +1-604-674-8052 outside of Canada and the U.S., and enter passcode 2082#.
About Strongco Corporation
Strongco Corporation is a major multiline mobile equipment dealer with operations across Canada. Strongco sells, rents and services equipment used in diverse sectors such as construction, infrastructure, mining, oil and gas, utilities, municipalities, waste management and forestry. The Company has approximately 500 employees serving customers from 26 branches in Canada. Strongco represents leading equipment manufacturers with globally recognized brands, including Volvo Construction Equipment, Case Construction, Manitowoc Crane, including National and Grove, Terex Cedarapids, Terex Trucks, Fassi, Sennebogen, Konecranes and SDLG. Strongco is listed on the Toronto Stock Exchange under the symbol SQP.
Forward-Looking Statements
This news release contains forward-looking statements that involve assumptions and estimates that may not be realized and other risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions which are based on information currently available to the Company's management. The forward-looking statements include but are not limited to: (i) the ability of the Company to meet contractual obligations through cash flow generated from operations, (ii) the expectation that customer support revenues will grow following the warranty period on new machine sales, and (iii) the outlook for 2018. There is significant risk that forward-looking statements will not prove to be accurate. These statements are based on a number of assumptions, including, but not limited to, continued demand for Strongco's products and services. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. The inclusion of this information should not be regarded as a representation of the Company or any other person that the anticipated results will be achieved and investors are cautioned not to place undue reliance on such information. These forward-looking statements are made as of the date of this press release, or as otherwise stated and the Company does not assume any obligation to update or revise them to reflect new events or circumstances.
Additional information, including the Company's Annual Information Form, may be found on SEDAR at www.sedar.com.
Footnotes
* "EBITDA" refers to earnings from continuing operations before interest, income taxes, amortization of capital assets, amortization of equipment inventory on rent, and amortization of rental fleet, and impairment and amortization of intangible assets. EBITDA is presented as a measure used by many investors to compare issuers on the basis of ability to generate cash flow from operations. EBITDA is not a measure of financial performance or earnings recognized under International Financial Reporting Standards ("IFRS") and therefore has no standardized meaning prescribed by IFRS and may not be comparable to similar terms and measures presented by other similar issuers. The Company's management believes that EBITDA is an important supplemental measure in evaluating the Company's performance and in determining whether to invest in shares. Readers of this information are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as indicators of the Company's performance or to cash flows from operating, investing and financing activities as measures of the Company's liquidity and cash flows.
J. David Wood, Vice President and Chief Financial Officer, 905.670.5100, jdwood@strongco.com, strongco.com
SOURCE Strongco Corporation
