TSX Symbol: SQP For Immediate Release
Strongco Reports Third Quarter Profit of $0.25 per Share
Mississauga, Ontario – October 28 th, 2004: Strongco Inc. today released its results for the third quarter of 2004.
For the three months ended September 30 th, 2004 Strongco generated net income after tax of $2.3 million, ($0.25 per share), vs. $1.5 million, ($0.16 per share), for the comparable quarter 2003. On a diluted basis the net income per share was $0.24 vs. $0.16 last year. Revenues for Q3/04 were $88.4 million versus $73.1 million for Q3/03. The increase in revenue is largely a result of increased sales of Volvo Equipment.
For the nine months ended September 30 th, 2004 net income after tax was $5.5 million, ($0.59 per share), vs. $3.2 million, ($0.34 per share), for the comparable period of 2003. On a diluted basis the net income per share was $0.57 vs. $0.34 last year.
Strongco declared a quarterly dividend of $0.05 per share payable December 15 th, 2004 to shareholders of record at the close of business on November 30 th, 2004.
Ian Sutherland, Chairman of The North West Company, was elected to the Board of Directors.
Mr. Larry Pirnak, President, commented, “We are pleased with the results and anticipate continued improvement for the balance of 2004.”
Strongco will host a conference call at 9:00 a.m. on Friday October 29 th, to further discuss its third quarter. To participate in the conference call, dial 800.440.1782, reservation number is 21211492. A taped version of the call will be available until November 12th, 2004. Dial 800.558.5253 and enter the reservation number.
Strongco is a full-line equipment sales and service company. Its shares are listed on the Toronto Stock Exchange and its website can be accessed at www.strongco.com
For further information contact:
Len Phillips,
Vice President Administration
and Corporate Secretary
Telephone No.: 905.565.3840
Email: lphillips@strongco.com
| Strongco Inc. | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| As at | As at | As at | |||||||
| September 30 | September 30 | December 31 | |||||||
| [unaudited - in thousands of dollars] | $ | 2004 | $ | 2003 | $ | 2003 | |||
| ASSETS | |||||||||
| Current | |||||||||
| Accounts receivable | 29,955 | 31,463 | 31,040 | ||||||
| Inventories | 86,020 | 102,578 | 87,295 | ||||||
| Prepaid expenses and deposits | 1,418 | 997 | 1,797 | ||||||
| Total current assets | 117,393 | 135,038 | 120,132 | ||||||
| Rental equipment, net | 12,800 | 19,016 | 17,425 | ||||||
| Capital assets, net | 16,937 | 17,719 | 17,548 | ||||||
| Capital assets held for sale, net | — | 4,227 | 3,980 | ||||||
| Other assets | 124 | — | — | ||||||
| Accrued benefit asset | 4,188 | 2,789 | 3,314 | ||||||
| 151,442 | 178,789 | 162,399 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current | |||||||||
| Bank indebtedness | 10,940 | 26,399 | 21,465 | ||||||
| Accounts payable and accrued liabilities | 22,153 | 30,583 | 25,312 | ||||||
| Equipment notes payable | 57,024 | 63,593 | 57,540 | ||||||
| Current portion of long-term debt | 3,188 | 6,510 | 4,663 | ||||||
| Income and other taxes payable | 88 | 363 | 424 | ||||||
| Total current liabilities | 93,393 | 127,448 | 109,404 | ||||||
| Long-term debt | 96 | 2,613 | 1,720 | ||||||
| Future income taxes | 2,158 | 2 | 229 | ||||||
| Accrued benefit liability | 966 | 825 | 1,295 | ||||||
| Total liabilities | 96,613 | 130,888 | 112,648 | ||||||
| Shareholders' equity | |||||||||
| Share capital [note 2] | 52,150 | 52,107 | 52,131 | ||||||
| Contributed surplus [note 2] | 21 | — | — | ||||||
| Retained earnings [deficit] | 2,658 | -4,206 | -2,380 | ||||||
| Total shareholders' equity | 54,829 | 47,901 | 49,751 | ||||||
| 151,442 | 178,789 | 162,399 | |||||||
| See accompanying notes | |||||||||
| Strongco Inc. | |||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||
| AND RETAINED EARNINGS | |||||||||
| Three months | Nine months | ||||||||
| ended September 30 | ended September 30 | ||||||||
| [unaudited - in thousands of dollars, except per share amounts] | $ | 2004 | $ | 2003 | $ | 2004 | $ | 2003 | |
| Revenue | 88,351 | 73,078 | 248,490 | 238,416 | |||||
| Cost of sales | 71,917 | 57,828 | 201,114 | 192,406 | |||||
| Gross margin | 16,434 | 15,250 | 47,376 | 46,010 | |||||
| Expenses | |||||||||
| Administration, distribution and selling | 13,126 | 14,139 | 39,496 | 41,270 | |||||
| Other income | -422 | -1,581 | -1,264 | -2,179 | |||||
| Income before the following | 3,730 | 2,692 | 9,144 | 6,919 | |||||
| Interest | 632 | 1,196 | 2,243 | 3,746 | |||||
| Income before income taxes | 3,098 | 1,496 | 6,901 | 3,173 | |||||
| Provision for (recovery of) income taxes | 779 | 33 | 1,392 | -22 | |||||
| Net income | 2,319 | 1,463 | 5,509 | 3,195 | |||||
| Retained earnings [deficit], beginning of period | 810 | -5,669 | -2,380 | -7,401 | |||||
| Common share dividends | 471 | — | 471 | — | |||||
| Retained earnings [deficit], end of period | 2,658 | -4,206 | 2,658 | -4,206 | |||||
| Basic earnings per share | |||||||||
| Earnings per share | $ 0.25 | $ 0.16 | $ 0.59 | $ 0.34 | |||||
| Weighted average number of shares | 9,417,711 | 9,387,802 | 9,416,312 | 9,386,691 | |||||
| Diluted earnings per share | |||||||||
| Earnings per share | $ 0.24 | $ 0.16 | $ 0.57 | $ 0.34 | |||||
| Weighted average number of shares | 9,605,721 | 9,499,292 | 9,588,673 | 9,505,454 | |||||
| See accompanying notes | |||||||||
| Strongco Inc. | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| Three months | Nine months | ||||||||
| ended September 30 | ended September 30 | ||||||||
| [unaudited - in thousands of dollars] | $ | 2004 | $ | 2003 | $ | 2004 | $ | 2003 | |
| OPERATING ACTIVITIES | |||||||||
| Net income | 2,319 | 1,463 | 5,509 | 3,195 | |||||
| Add (deduct) items not involving a current outlay | |||||||||
| (inflow) of cash | |||||||||
| Amortization of rental equipment | 833 | 1,149 | 2,656 | 3,518 | |||||
| Amortization of capital assets | 261 | 302 | 740 | 903 | |||||
| (Gain) / loss on disposal of assets held for sale | — | — | 14 | — | |||||
| (Gain) / loss on disposal of capital assets and rental equipment | 26 | -340 | 73 | -554 | |||||
| Stock based compensation | 6 | — | 21 | — | |||||
| Future income taxes | 748 | -70 | 1,929 | -119 | |||||
| Other | -794 | 250 | -1,327 | -458 | |||||
| 3,399 | 2,754 | 9,615 | 6,485 | ||||||
| Net change in non-cash working capital balances | |||||||||
| related to operations | 553 | -604 | -1,272 | 710 | |||||
| Cash provided by (used in) operating activities | 3,952 | 2,150 | 8,343 | 7,195 | |||||
| INVESTING ACTIVITIES | |||||||||
| Purchase of rental equipment | -3 | -26 | -43 | -133 | |||||
| Purchase of capital assets | -107 | -66 | -266 | -141 | |||||
| Proceeds on disposal of assets held for sale | — | — | 3,966 | — | |||||
| Proceeds on disposal of capital assets and rental equipment | 757 | 1,849 | 2,076 | 4,673 | |||||
| Cash provided by investing activities | 647 | 1,757 | 5,733 | 4,399 | |||||
| FINANCING ACTIVITIES | |||||||||
| Decrease in bank indebtedness | -3,244 | -1,761 | -10,525 | -1,886 | |||||
| Repayment of long-term debt | -6 | -1,384 | -379 | -4,845 | |||||
| Decrease in financing of rental equipment | -885 | -769 | -2,720 | -4,870 | |||||
| Dividends | -471 | — | -471 | — | |||||
| Issuance of share capital | 7 | 7 | 19 | 7 | |||||
| Cash used in financing activities | -4,599 | -3,907 | -14,076 | -11,594 | |||||
| Net increase in cash and cash equivalents during the period | — | — | — | — | |||||
| Cash and cash equivalents, beginning of period | — | — | — | — | |||||
| Cash and cash equivalents, end of period | — | — | — | — | |||||
| Supplemental cash flow information | |||||||||
| Interest paid | 633 | 1,245 | 2,311 | 3,826 | |||||
| Income taxes recovered | -4 | -260 | -201 | -370 | |||||
| See accompanying notes | |||||||||
September 30, 2004
Notes to unaudited interim consolidated financial statements
1. Basis of Presentation
The unaudited interim consolidated financial statements have been prepared following the accounting policies as set out in the fiscal 2003 annual consolidated financial statements.
The interim consolidated financial statements have been prepared by the Corporation in accordance with Canadian generally accepted accounting principles (GAAP) except that certain disclosures required for annual financial statements have not been included. The interim consolidated financial statements follow the same accounting policies and methods in their application as the most recent annual financial statements. In the opinion of management, all adjustments necessary for a fair presentation are reflected in the interim consolidated financial statements. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s annual report for fiscal year 2003.
2. Share Capital and Contributed Surplus
Details of issued share capital and contributed surplus are as follows:
Contributed surplus is comprised of stock based compensation.
3. Post Retirement Obligations
Net benefit plan expense for the three and nine months ended September 30, 2004 and September 30, 2003 is as follows:
4. Segmented Information
Segmented information for the three and nine months ended September 30, 2004 and September 30, 2003 is as follows:
- The reconciling items to adjust segment profit (loss) represent common corporate costs not allocated to the segments and corporate head office costs incurred during the period.
- The reconciling items to adjust segment total assets includes prepaid expenses and accrued benefit assets carried on the corporate head office ledger, offset by the elimination of the intercompany receivables at the corporate head office.
5. Comparative Consolidated Financial Statements
The comparative interim consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2004 interim consolidated financial statements.
