Strongco Announces Third Quarter 2017 Results

MISSISSAUGA, ON, Nov. 1, 2017

TSX Symbol: SQP

MISSISSAUGA, ON, Nov. 1, 2017 /CNW/ - Strongco Corporation (TSX: SQP) today reported financial results for the third quarter ended September 30, 2017.

Financial and Operating Highlights – Continuing Operations
($ millions except percentages and per share amounts)

Period Ended September 30	Three Months		Nine Months ARIVA.DE Börsen-Geflüster Kurse STRONGCO CORPORATION -   0,00%
	2017	2016	2017	2016
Revenues	83.3	86.7	262.4	280.1
Gross Profit	15.8	15.4	46.5	45.1
Operating Income (Loss) Before Restructuring Costs	1.5	(0.9)	3.1	(3.3)
Pretax Earnings (Loss)	0.2	(19.0)	(1.3)	(27.4)
Net Income (Loss)	0.2	(26.1)	(1.3)	(32.3)
Basic and Diluted Earnings (Loss) Per Share	0.02	(1.97)	(0.10)	(2.44)
EBITDA*	6.3	3.1	14.1	6.0
Equipment Inventory			154.3	146.3
Equipment Notes Payable			132.4	127.9

"Management is encouraged by the positive bottom line for the quarter, and meaningful progress in margins and operating profits year-to-date. These results reflect the direction of our business, and the actions taken in 2016 and the first part of 2017 to simplify and streamline our processes," said Robert Beutel, Executive Chairman of Strongco. "With the stabilizing process largely behind us, Strongco has emerged with a stronger balance sheet and a more sustainable cost and inventory structure that is paving the way for improved performance." 

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

Income Statement

• Revenues of $83.3 million for the three months, down from $86.7 million in 2016. Excluding large, non-recurring crane sales to the Champlain Bridge project in Quebec in 2016, revenues were unchanged from a year ago, due to:
• Higher construction equipment sales in Western Canada, especially sales of used equipment
• Lower crane sales, due to weaker markets in Ontario
• Increased rental revenues across the country, particularly in Western and Central Canada
• Higher product support sales (parts and service) in Western and Eastern Canada

Excluding the large crane sales to the Champlain Bridge project in 2016, revenues for the nine months were up 4%, with higher rental revenues in Central and Western Canada, and strong product support revenues in Quebec and Alberta.

• Gross profit of $15.8 million (19.0% of revenues), compared to $15.4 million (17.8% of revenues) in 2016. For the nine months, gross profit of $46.5 million (17.7% of revenues), compared to $45.1 million (16.1% of revenues).
• Operating income of $1.5 million, compared to a loss of $0.9 million, before restructuring costs. For the nine months, operating income of $3.1 million, compared to a loss of $3.3 million, before restructuring costs, due to higher margins and lower operating expenses.
• EBITDA of $6.3 million, up from $3.1 million, due to improved operating income and lower depreciation. For the nine months, EBITDA of $14.1 million, up from $6.0 million.
• Interest expense lower, due actions taken in 2016 to reduce aged equipment inventories and interest-bearing debt.
• Pre-tax earnings of $0.2 million, compared to a pre-tax loss of $2.3 million, before intangible impairment and restructuring costs, the result of improved operating earnings and lower interest. For the nine months, pre-tax loss of $0.7 million, before the restructuring provision and impairment charge, compared to a pre-tax loss of $7.7 million.
• Net income of $0.2 million ($0.02 per share), compared to a net loss of $26.1 million (loss of $1.97 per share) after intangible impairment. For the nine months, net loss of $1.4 million ($0.10 loss per share), compared to a net loss of $32.3 million ($2.44 loss per share).

Balance Sheet

• Equipment inventory of $154.3 million, including $54.8 million in equipment on rent to support increased rental activity across the country, up from $129.2 million at December 31, 2016 and $146.3 million at September 30, 2016.
• Equipment notes payable of $132.4 million, compared to $101.2 million at December 31, 2016 and $127.9 million at September 30, 2016.

Quarterly Results Materials
The complete third 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 Thursday, November 2, 2017 at 10:00am ET to discuss third 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 December 2, 2017. To access it, dial 1-855-669-9658 or +1-604-674-8052 outside of Canada and USA and enter passcode 1949#.

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