TSE Symbol:
SQP
For Immediate Release
Strongco Releases 1999 Operating Results
Mississauga, Ontario; March 1, 2000 – Strongco Inc. today released its operating results for the fourth quarter and year ended December 31, 1999.
Intense industry-wide competition in certain product
lines within the construction equipment industry throughout much of 1999
led to lower revenues and earnings. Earnings
were also negatively affected by non-recurring expenses of over $3 million
pertaining to senior management changes and other operational matters and
a one-time provision of $4.4 million related to the disposition of
Strongco’s lift truck operations in Ontario and Quebec.
Consolidated revenue for the year totaled $571.2
million, a 6% decline from 1998 levels.
The lower revenue resulted primarily from reduced equipment sales
throughout Strongco’s Equipment Distribution segment.
Revenue from Strongco’s equipment rentals, parts and service
operations, as well as its Supplies and Engineered Systems segments, were
comparable to, or slightly better than, last year’s figures.
The lower revenues translated into reduced gross profit margins of
$115.3 million compared to $124.8 million in 1998.
As a percentage of revenue, gross profits were 20.2% compared to
20.5% in 1998. Income before
interest, the lift truck disposition provision and income taxes, was $17.6
million, down from $32.5 million in 1998.
After interest expenses of $19.2 million, Strongco Inc. incurred a
pre-tax loss of $1.6 million, including the non-recurring expenses noted
above but before the lift truck provision.
Strongco had a total pre-tax loss for the year, including the lift
truck provision, of $6.0 million compared to a pre-tax profit in 1998 of
$16.8 million. An income tax
recovery of $1.2 million reduced the final net loss to $4.8 million, or
$0.50 per share.
For the quarter ended December 31, 1999, Strongco’s
consolidated revenue was $153.7 million, down from last year’s $186.8
million. Gross profit margins
were $28.8 million (18.7%) compared to $34.2 million (18.3%) in the fourth
quarter of 1998. Strongco’s
earnings before interest and income taxes, for the quarter, prior to the
lift truck disposition provision, was $3.2 million and its pre-tax loss
was $1.6 million.
Strongco’s annual and quarterly financial results
are summarized below (in $millions, except earnings per share):
Strongco's annual and quarterly financial results are summarized below (in $millions, except earnings per share):
| 1999 | 1998 | ||||||||||
| Q4 | Q3 | Q2 | Q1 | Year | Q4 | Q3 | Q2 | Q1 | Year | ||
| Revenue | 153.7 | 131.2 | 159.7 | 126.6 | 571.2 | 186.8 | 141.1 | 162.9 | 117.0 | 607.7 | |
| EBIT | 3.2* | 4.1 | 5.6 | 4.7 | 17.6* | 7.7 | 8.8 | 11.5 | 4.5 | 32.5 | |
| Net Income | (4.4) | (.6) | .4 | (.1) | (4.7) | 1.4 | 2.3 | 4.4 | 1.2 | 9.3 | |
| Earnings Per Share | (.46) | (.07) | .04 | (.01) | (.50) | .15 | .23 | .48 | .14 | 1.00 |
*prior
to provision of $4.4 million related to lift truck exit costs
Larry
Pirnak, Chairman & CEO of Strongco, commented, “While we are
obviously very disappointed with Strongco’s results in 1999, we are
encouraged about the future of the company for a number of reasons.
First, our Grove manlift and crane rental business is flourishing
and will be expanded further in 2000.
Second, we have disposed of our unprofitable lift truck operations
in Ontario and Quebec. This
line of business generated operating losses of approximately $3 million
last year as well as diverting a significant amount of senior management
time and attention. Without
it, we would have been profitable in 1999, in spite of the decline in
revenue we experienced. Third,
we incurred over $3 million of costs and expenses in 1999 related to
senior management turnover and various other operating matters which will
not be repeated in 2000. Also,
we are increasing our involvement in specialized equipment lines
pertaining to the forestry and municipal/utility industries while, at the
same time, continuing to enhance our after-sales parts and service
capabilities for our more traditional lines.”
Strongco is one of North America’s largest
multi-line equipment companies with operations across Canada and in the
mid-Atlantic area of the United States.
It serves the equipment needs of those in the construction,
forestry, mining, municipal, utility, road building and related
industries.
For
further information, contact:
Randy
Henderson
Sr. Vice President & CFO
905-565-3802
STRONGCO INC.
Consolidated Balance Sheets
As at December 31, 1999
($000's)
| 1999 | 1998 | |
| Accounts Receivable | 74,205 | 87,775 |
| Inventories | 213,061 | 199,493 |
| Other Current Assets | 13,116 | 8,030 |
| ---------- | ---------- | |
| 300,382 | 295,298 | |
| Rental Equipment | 52,547 | 59,791 |
| Capital Assets | 33,235 | 32,970 |
| Goodwill and Other | 19,004 | 19,549 |
| ---------- | ---------- | |
| 405,168 | 407,608 | |
| ====== | ====== | |
| Bank Indebtedness | 57,833 | 49,385 |
| Accounts Payable and Accruals | 52,831 | 59,157 |
| Equipment Notes Payable | 131,388 | 120,636 |
| Other | 21,877 | 36,640 |
| ---------- | ---------- | |
| 263,929 | 265,818 | |
| Long-Term Debt | 58,878 | 52,928 |
| Deferred Income Taxes | 3,966 | 4,426 |
| Shareholder's Equity | 78,395 | 84,436 |
| ---------- | ---------- | |
| 405,168 | 407,608 | |
| ====== | ====== | |
STRONGCO INC.
Consolidated Statements of Income
For the Three and Twelve Months Ended December 31
($000's)
|
-- Three Months-- Ended December 31 |
-- Twelve Months -- Ended December 31 |
|||
| 1999 | 1998 | 1999 | 1998 | |
| ------ | ------ | ------ | ------ | |
| Revenue | 153,760 | 186,789 | 571,248 | 607,711 |
| --------- | --------- | --------- | --------- | |
| Gross Margin | 28,828 | 34,237 | 115,305 | 124,838 |
| Administrative, Distribution and Selling expenses | 25,609 | 26,569 | 97,714 | 92,380 |
| Interest Expenses | 4,764 | 4,686 | 19,184 | 15,660 |
| --------- | --------- | --------- | --------- | |
| 30,373 | 31,255 | 116,898 | 108,040 | |
| --------- | --------- | --------- | --------- | |
| Income before Provision for Lift Truck Exit Costs and Income Taxes | (1,545) | 2,982 | (1,593) | 16,798 |
| Provision for Lift Truck Exit Costs | 4,409 | - | 4,409 | - |
| --------- | --------- | --------- | --------- | |
| Pre-Tax Income | (5,954) | 2,982 | (6,002) | 16,798 |
| Income and Other Taxes | (1,555) | 1,586 | (1,252) | 7,527 |
| --------- | --------- | --------- | --------- | |
| Net Income | (4,399) | 1,396 | (1,242) | 7,527 |
| ====== | ====== | ====== | ====== | |
| Per Share | ($0.46) | $0.15 | ($0.50) | $1.00 |
| ====== | ====== | ====== | ====== | |
STRONGCO INC.
Consolidated Statements of Cash Flow
For the Three and Twelve Months Ended December 31
($000's)
|
-- Three Months-- Ended December 31 |
-- Twelve Months -- Ended December 31 |
|||
| 1999 | 1998 | 1999 | 1998 | |
| ------ | ------ | ------ | ------ | |
| OPERATING ACTIVITIES | ||||
| Net Income | (4,399) | 1,396 | (4,750) | 9,271 |
| Non-Cash Assets Amortization of Rental Equipment | 2,077 | 2,119 | 7,272 | 5,507 |
| Amortization of Capital Assets | 1,081 | 725 | 3,027 | 2,730 |
| Amortization of Goodwill | 208 | 210 | 821 | 577 |
| Gain/(Loss) on Dispositions of Capital Assets and Rental Equipment | 9 | 33 | (438) | (259) |
| Deferred Income Taxes (Recovery) | (508) | 2,306 | (460) | 1,440 |
| Income Tax Benefit | - | - | - | 178 |
| --------- | --------- | --------- | --------- | |
| (1,532) | 6,789 | 5,472 | 19,444 | |
| Net Change in Non-Cash Working Capital | ||||
| Balances Related to Operations | 16,577 | 24,931 | 5,123 | (2,647) |
| --------- | --------- | --------- | --------- | |
| Cash Provided by (Used in) Operations | 15,045 | 31,720 | 10,595 | 16,797 |
| --------- | --------- | --------- | --------- | |
| INVESTING ACTIVITIES | ||||
| Business Acquisitions | (132) | (2,743) | (1,687) | (30,427) |
| Purchase of Rental Equipment | (2,695) | (29,570) | (8,058) | (37,678) |
| Purchase of Non-Rental Capital Assets | (778) | (2,377) | (3,515) | (9,384) |
| Proceeds on Dispositions of Capital Assets | 1,316 | 2,366 | 7,625 | 3,987 |
| Other Assets | - | 19 | - | 25 |
| --------- | --------- | --------- | --------- | |
| Cash Provided by (Used in) Investing Activities | (2,289) | (32,305) | (5,635) | (73,477) |
| --------- | --------- | --------- | --------- | |
| FINANCING ACTIVITIES | ||||
| Increase/(Decrease) in Bank Indebtedness | (7,902) | (19,918) | 8,448 | 11,893 |
| Increase in Long-Term Debt | - | 5,674 | 1,010 | 14,445 |
| Repayment of Long-Term Debt | (859) | (5,143) | (3,482) | (12,817) |
| Financing of Rental Equipment | (3,739) | 20,642 | (9,975) | 31,553 |
| Issuance of Share Capital | - | - | 38 | 14,008 |
| Repurchase of Share Capital | - | (699) | (555) | (2,805) |
| --------- | --------- | --------- | --------- | |
| Cash Provided by (Used in) Financing Activities | (12,500) | 556 | (4,516) | 56,277 |
| --------- | --------- | --------- | --------- | |
|
Effect of Foreign Exchange on Bank Indebtedness |
(265) | 29 | (444) | 403 |
| --------- | --------- | --------- | --------- | |
| Net Increase in Cash and Cash Equivalents during the year | - | - | - | - |
| Cash and Cash Equivalents - beginning of year | - | - | - | - |
| --------- | --------- | --------- | --------- | |
| Cash and Cash Equivalents - end of year | - | - | - | - |
| ====== | ====== | ====== | ====== | |
