Mr. Paul Jewer reports

TOROMONT ANNOUNCES 2015 RESULTS AND 6% INCREASE IN QUARTERLY DIVIDEND

Toromont Industries Ltd. has released financial results for the three- and 12-month periods ended Dec. 31, 2015.

"We were pleased with our 2015 results, which demonstrated consistent and resilient performance. Earnings increased 9 per cent, in line with total revenue growth as an increasing contribution from product support, offset margin pressures in today's challenging markets. We are also pleased with performance in the fourth quarter against a very tough comparator last year," said Scott J. Medhurst, president and chief executive officer of Toromont Industries. "The equipment group delivered good results on growth in product support, and Cimco had a strong year with increased penetration into the U.S. market."

Considering the company's solid financial position, cash flows and balances, and positive long-term outlook, the board of directors today increased the quarterly dividend to 18 cents per share, representing a 6-per-cent increase. The next dividend is payable April 1, 2016, to shareholders of record at the close of business on March 10, 2016. The company has paid dividends every year since going public in 1968, and this represents the 27th consecutive year of increases.

Highlights:

• Net earnings for 2015 were $145.7-million ($1.88 in earnings per share), up 9 per cent from last year, reflecting higher revenues in both operating groups. The increase was principally due to higher revenues from product support, together with lower expenses relative to revenues, offset by lower gross margins stemming from competitive pressures and challenging end markets.
• Net earnings for the fourth quarter were $44.4-million (57 cents in EPS), down 3 per cent from the record reported in the same quarter last year. Pricing pressures continued to grow through the year in part exacerbated by the weakened Canadian dollar. This coupled with reduced utilization of the larger rental fleet resulted in reduced overall margins.
• Equipment group revenues increased 8 per cent in the year to $1.6-billion. Product support growth was strong, and equipment sales and rentals also increased with good activity levels in construction markets. The addition of the two agriculture dealerships to Toromont late in 2014 also contributed to revenue growth in a market which saw significant weakness in 2015. The weakened Canadian dollar also contributed to revenue growth as reflecting the higher cost of U.S.-sourced equipment and parts. Operating income as a percentage of revenues was 12.1 per cent, on lower relative expense levels partially offset by lower margins.
• Equipment group revenues of $406.0-million were relatively unchanged in the fourth quarter versus the same period of 2014 with strong product support growth offsetting lower total equipment sales and rentals. Operating income of $56.3-million was 2 per cent lower compared with last year on lower margins.
• Equipment group bookings in 2015 of $779.0-million were up 3 per cent from last year's record. Fourth quarter bookings of $165.0-million were 18 per cent lower than last year on softened market conditions. Backlogs were $92.0-million at the end of 2015 compared with $102.0-million at this time last year. The reduced ordering activity, combined with shortened delivery windows at Caterpillar and available equipment in inventory, has contributed to reduced backlogs. Most of this backlog is expected to be delivered in 2016.
• Cimco reported record revenues of $232.7-million for the year, up 10 per cent from 2014 on good product support and package sales growth in both the United States and Canada. Operating income of $14.9-million was the second highest ever, increasing 23 per cent over last year on higher revenues and improved margins, partially offset by a higher relative expense level.
• Cimco also reported record revenues for the fourth quarter on growth in the United States both on product support and package sales. Canada realized growth in product support; however, package sales were lower. Fourth quarter operating income increased 16 per cent versus a year ago due to the higher revenues and good project execution.
• Cimco bookings increased 22 per cent to $139.0-million for the year and represented the second-highest level over the last five years. Fourth quarter bookings were up 20 per cent to $36.0-million on higher U.S. activity. Backlogs were $88.0-million at Dec. 31, 2015, up 31 per cent from 2014, substantially all of which are expected to revenue in 2016.
• The company continued to produce superior shareholder returns, delivering increased dividends, a 21.6-per-cent return on opening shareholders' equity and a 24.3-per-cent pretax return on capital employed.
• The company maintained a strong financial position. Total debt, net of cash, to total capitalization at Dec. 31, 2015, was 10 per cent, well within stated capital targets.

"In the equipment group, the potential for increased infrastructure spending bodes well for prospects while tight conditions in mining and weak agriculture markets are expected to continue. In the near term, the weakened Canadian dollar may impact customers' spending power, timing of purchasing decisions and otherwise exert pressures on equipment margins. At Cimco, activity levels are encouraging in both the US and Canada," continued Mr. Medhurst. "Across all of our businesses, diversity, expanding product offering and capabilities, and a disciplined operating culture remain our strengths, and position us well entering 2016."

Quarterly conference call and webcast

Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on Feb. 10, 2016, at 8 a.m. (ET). The call may be accessed by telephone at 1-866-225-6564 (toll-free) or 416-340-2220 (Toronto area). A replay of the conference call will be available until Feb. 24, 2016, by calling 1-800-408-3053 or 905-694-9451 and quoting passcode 3205449.

Both the live webcast and the replay of the quarterly conference call can be accessed at the Toromont website.

               CONSOLIDATED INCOME STATEMENTS                                                                             
            ($ thousands, except share amounts)
 
                                              Years ended Dec. 31,
                                                2015         2014

Revenues                                 $ 1,802,233  $ 1,660,390
Cost of goods sold                         1,356,630    1,247,999
Gross profit                                 445,603      412,391
Selling and administrative expenses          241,093      227,579
Operating income                             204,510      184,812
Interest expense                               8,668        8,188
Interest and investment income                (3,422)      (4,154)
Income before income taxes                   199,264      180,778
Income taxes                                  53,598       47,582
Net earnings                             $   145,666  $   133,196
Earnings per share
Basic                                    $      1.88  $      1.73
Diluted                                  $      1.86  $      1.71

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