Strongco Announces Second Quarter 2017 Results

- Continued Improvements to Operating Performance, Cost Structure and Balance Sheet -

TSX Symbol: SQP

MISSISSAUGA, ON, Aug. 2, 2017 /CNW/ - Strongco Corporation (TSX: SQP) today reported financial results for the second quarter ended June 30, 2017.

Financial Summary Continuing Operations
($ millions except percentages and per share amounts)

Period Ended June 30

Three Months

Six Months


2017

2016

2017

2016

Revenues

95.9

102.2

179.1

193.4

Operating Income (Loss) Before Restructuring Costs

0.7

(4.5)

1.5

(2.5)

Pretax Loss

(0.5)

(7.3)

(1.6)

(8.4)

Net Loss

(0.5)

(5.4)

(1.6)

(6.2)

Basic and Diluted Loss Per Share

(0.04)

(0.40)

(0.12)

(0.47)

EBITDA*

3.4

(2.4)

7.8

2.9

Equipment Inventory



130.8

145.9

Equipment Notes Payable



119.5

128.3

"Slow signs of market recovery in Alberta and Quebec, combined with the strategic actions initiated in 2016 to refocus our core business, boosted overall operating performance in the quarter," said Robert Beutel, Executive Chairman of Strongco. "Against a backdrop of continuing challenges in our key markets, we remain encouraged by the tangible progress made to-date, including enhanced operational efficiencies, a significantly reduced cost structure and an improved balance sheet, in our ongoing efforts to ensure a more profitable and sustainable future for Strongco."

Activities During the Quarter (Second Quarter 2017 and Second Quarter 2016)

Operating Results

  • Revenues of $95.9 million, down from $102.2 million. Excluding large, non-recurring crane sales in Quebec in the second quarter of 2016, revenues were higher than the prior year by 7%, with higher revenues in Alberta and Quebec. Excluding large non-recurring crane sales in Quebec in the first half of 2016, revenues for the six months were up 6%, with higher revenues in Alberta and Quebec, and a 6% increase in product support revenues.
  • Gross profit of $15.0 million (15.7% of revenues), compared to $12.5 million (12.2% of revenues). For the six months, gross profit of $30.6 million (17.1% of revenues), compared to $29.6 million (15.3% of revenues).
  • Operating income, before restructuring costs, of $0.7 million, compared to a loss of $4.5 million. For the six months, operating income before restructuring costs of $1.5 million, compared to an operating loss of $2.5 million.
  • EBITDA of $3.4 million, compared to a loss of $2.4 million. For the six months, EBITDA of $7.8 million, compared to $2.9 million.
  • Interest expense of $1.1 million, down from $1.5 million. For the six months, interest expense of $2.4 million, down from $3.0 million.
  • Pretax loss of $0.5 million, compared to $7.3 million. For the six months, pretax loss of $1.6 million, compared to $8.4 million.
  • Net loss from continuing operations of $0.5 million (loss of $0.04 per share), compared to net loss from continuing operations of $5.4 million (loss of $0.41 per share). For the six months, net loss from continuing operations of $1.6 million (loss of $0.12 per share), compared to a net loss from continuing operations of $6.2 million (loss of $0.47 per share).

Balance Sheet Improvement

  • Equipment inventory from continuing operations of $130.8 million, up from $129.2 million at December 31, 2016 and down from $145.9 million at June 30, 2016.
  • Equipment notes payable from continuing operations of $119.5 million, up from $101.2 million at December 31, 2016 and down from $128.3 million at June 30, 2016.

Quarterly Results Materials
The complete second quarter 2017 MD&A and Unaudited Interim Condensed Consolidated Financial Statements are available on our website at www.strongco.com/en/investor-relations/financial-reports/.

Quarterly Conference Call Details
Strongco will hold a conference call on Friday, August 4, 2017 at 10:00am ET to discuss second quarter 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 September 4, 2017. To access it, dial 1-855-669-9658 or +1-604-674-8052 outside of Canada and USA and enter passcode 1605#.

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 2017. 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 MD&A, 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, amortization of rental fleet, and impairment and amortization of intangible asset.  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 an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of the Company's liquidity and cash flows.

SOURCE Strongco Corporation

For further information: J. David Wood, Vice-President and Chief Financial Officer, 905-670-5100, jdwood@strongco.com, strongco.com

RELATED LINKS
http://www.strongco.com

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