Mississauga, Ontario: July 26, 2001 – Strongco Inc. released its financial results for the second quarter today.

For the latest quarter, Strongco lost $2.5 million, or $0.26 per share after tax. During the quarter, Strongco was appointed by Volvo as its exclusive dealer for construction equipment products in Alberta and Manitoba. This new territory is in addition to the Volvo distribution rights already held by Strongco in Ontario, Quebec and Atlantic Canada. Coincident with this appointment, Strongco’s dealership arrangements with a competing equipment manufacturer were terminated, resulting in a one-time, pre-tax expense of $2.0 million in the quarter.

Revenues for the quarter were down from last year’s second quarter by 9.4%, or $10.8 million. Most of this difference was attributable to the disposition of non-core product lines during the second half of last year, such that the comparable year over year decline was actually $2.2 million, or 2.1%. Most of this shortfall was the result of continued weakness in the company’s eastern markets. Revenues from Strongco’s key product lines were in line with last year’s second quarter numbers, in spite of continued strong competition in the company’s principal markets. Gross margin percentages in the quarter were slightly lower than last year’s, however, they are virtually the same on a year-to-date basis. Operating expenses, before the one-time expense noted above, and interest expenses were both down from last year’s second quarter numbers due mainly to dispositions of non-core assets and lower bank rates. Lower than expected rental fleet utilization and industry-wide reductions in rental rates were the most significant contributors to the quarter’s operating losses.

Strongco generated $11.7 million of cash from operations during the second quarter, largely as a result of the strategic moves executed during the first half of the year pertaining to the sale of the U.S. operations and the elimination of non-core product lines. These steps have also helped the company reduce its asset base by close to $100 million since the end of last year’s second quarter. As a result, leverage is down significantly over this time period and the company is more focused on its key territories and principal product lines.

For the six months ending June 30, Strongco has lost $5.6 million, or $0.60 per share, from continuing operations. Included in these results is the $2.0 million pre-tax provision noted above and a further pre-tax provision of $1.9 million recorded in the first quarter of the year to cover corporate restructuring charges related to the anticipated costs of closing three of the company’s branches in Atlantic Canada in light of continuing weak market conditions there. The year-to-date loss falls to $3.8 million, or $0.40 per share, after taking into account the after-tax gain of $1.8 million realized from the sale of the company’s former U.S. operations in the first quarter.

Mr. Larry Pirnak, Chairman, commented, "Obviously, we are not pleased with the financial performance of the company thus far in 2001. Our losses are largely attributable to widespread market weaknesses in the North American construction equipment industry, both on the dealership side and in the equipment rental business. We firmly believe, however, that the strategic initiatives that we have executed this year in the face of these results have positioned this company to return to strong profitability as industry conditions improve. Chief among these initiatives has been the sharper focusing of our business, both geographically with the sale of the U.S. business, and operationally with the elimination of non-core equipment lines. Our western Canadian business has picked up significantly since our appointment in May as Volvo’s exclusive dealer in Manitoba and Alberta, where industry conditions are still robust. Savings as a result of the downsizing of our Atlantic operations are now benefiting the company and the transfer of production in our Engineered Systems business to new, more efficient facilities in Calgary is complete. We have also reduced Strongco’s leverage and strengthened its balance sheet, in spite of the losses incurred over the last few quarters."

Mr. Pirnak commented further, "While we are confident that these actions are of significant long-term benefit to Strongco, we also expect that the challenging market conditions that have existed during the first half of the year in the equipment sales and rentals marketplace will continue in the latter half."

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