Strongco Inc. today reported a loss of $0.07 per share for its third quarter ended September 30, 1999. This compares to net income of $0.23 per share for last year’s third quarter.

The competitive equipment markets with which Strongco has contended all year continued in the third quarter, contributing to a decline in revenue of $9.9 million compared to the same period of 1998. The decline occurred primarily in the area of equipment sales and rentals and took place across most of Strongco’s territories. Revenues generated by customer support and other activities were generally up over last year, resulting in a sales mix shift toward the higher margin aspects of Strongco’s business. Nevertheless, continued margin pressures on equipment sales and rentals resulted in a decrease in the third quarter consolidated gross margin percentage to 22.5% from 23.4% last year. Excluding the impact of acquisitions, operating expenses for the quarter were in line with last year while interest expense was up slightly.

For the nine months ended September 30, 1999, Strongco’s consolidated revenue has declined by $3.5 million to $417.5 million from $420.9 million. Excluding the effect of acquisitions completed last year and this, consolidated revenues are down approximately $21 million, or 5.9%. Gross margins have declined to 20.7% from 21.5% and expenses have increased due to acquisitions and capital expenditures.

"Obviously, we were very disappointed with the company’s third quarter results," said Larry Pirnak, Chairman and CEO of Strongco. "There were, however, several bright spots during the quarter, particularly in our rental, crane and manlift operations and our progress in enhancing Strongco’s customer support endeavours. We were also pleased with the progress we are making in controlling our investment in inventories and managing our balance sheet. Nevertheless, the overall pick up in activity that we had expected at the end of the second quarter failed to materialize to the degree anticipated during the third. Based upon improving industry conditions in several of our markets, we expect that Strongco will return to profitability and that next year will mark a substantial rebound in its earnings."

Strongco is one of the largest multi-line equipment distribution companies in North America. Its shares are listed on the Toronto Stock Exchange and the Montreal Exchange under the symbol ‘SQP’. For further information, contact: