Strongco Q4 earnings, sales up on high demand
Construction equipment dealer Strongco Corp. (TSE:SQP) said Thursday fourth-quarter earnings and sales rose amid high demand in all regions of Canada and its acquisition.
The company, founded in 1946, services, sells and rents equipment used in the construction, mining, oil and gas and forestry
Net income grew to $2.1 million in the three months ended December 31. This compares to $1.7 million last year.
On a per share basis, profits were 15 cents a share down from 17 cents a share, in the same period one year ago.
The company added that the difference in earnings per share is largely due to an increase in outstanding equity of 13.1 million shares up from 10.5 million shares in 2010.
Sales grew 23 percent to $113.2 million from $91.7 million, driven by its acquisition of Chadwick-BaRoss and high demand in all
regions of Canada.
On February 17, the company finished its acquisition of Chadwick-BaRoss, which it paid $11.1 million in a cash and stock deal.
Equipment sales rose 20 percent to $74.5 million from $62.1 million, as equipment revenue went up in Canada overall, led by a
strong increase in Ontario, where a boom in downtown construction is taking place in Toronto.
Revenue for equipment rentals jumped 22 percent to $8.9 million from $7.3 million, while sales for the product support unit spiked 33 percent to $29.8 million.
Overall gross margin was 18.4 percent from 17.8 percent, due to sales mix and a greater proportion of product support sales.
For 2012, the company expects the Canadian construction markets to improve throughout the year, which "should result in strong demand for heavy equipment."
Strongco, however, remains cautiously optimistic that Canada's economic recovery can continue in 2012.
The company’s stock traded at $6.47 each on the Toronto Stock Exchange.