Strongco Announces First Quarter 2017 Results

—Progress in Operating Performance;
Improvements to Cost Structure and Balance Sheet—

TSX Symbol: SQP

MISSISSAUGA, ON, May 10, 2017 /CNW/ - Strongco Corporation (TSX: SQP) today reported financial results for the first quarter ended March 31, 2017.

Financial Summary
($ millions except per share amounts)

Period Ended March 31	3 Months
	2017	2016
Revenues	83.2	91.2
Operating Income Before Restructuring Costs	0.9	2.1
Pretax Loss	(1.1)	(1.1)
Net Loss from Continuing Operations	(1.1)	(0.9)
Basic and Diluted Loss Per Share from Continuing Operations	(0.08)	(0.07)
EBITDA*	4.3	5.3
Equipment Inventory of Continuing Operations	121.2	159.3
Equipment Notes Payable of Continuing Operations	103.6	135.5

"In the first quarter of 2017, we started to see small, but encouraging signs of improvement in the marketplace, following a challenging, transitional 2016, in which Management took actions to restructure, simplify and streamline the business," said Robert Beutel, Executive Chairman of Strongco. "While cautiously optimistic about the months to come, we are particularly pleased with the progress we've made to-date in streamlining our organization in terms of focus on core brands and core markets, sales processes, cost controls and inventory management. As a result of these initiatives, we now have a significantly reduced cost structure and an improved balance sheet, which will set a solid foundation for stability, enhanced market share and greater profitability going forward."

Activities During the First Quarter

• Operating Results
• Revenues of $83.2 million, compared to $91.2 million. Excluding large, non-recurring crane sales in Quebec in the first quarter of 2016, revenues were higher than the prior year by $4.1 million or 5%. Specifically, revenues were higher in Alberta and Ontario, and product support revenues overall were up 15% over the prior year.
• Gross profit of $15.6 million (18.7% of revenues), compared to $17.1 million (18.8% of revenues).
• Operating income, before restructuring costs and foreign exchange gains, of $0.8 million, compared to $0.9 million.
• EBITDA of $4.3 million, compared to $5.3 million.
• Interest expense of $1.3 million, down from $1.5 million.
• Pretax loss of $1.1 million, unchanged from a year ago.
• Net loss from continuing operations of $1.1 million (loss of $0.08 per share), compared to net loss from continuing operations of $0.9 million (loss of $0.07 per share).
  
  
• Balance Sheet Improvement
• Equipment inventory of continuing operations of $121.2 million, down from $129.2 million at December 31, 2016 and $159.3 million at March 31, 2016.
• Equipment notes payable of continuing operations of $103.6 million, compared to $101.2 million at December 31, 2016 and $135.5 million at March 31, 2016.

First Quarter Results Materials
The complete first quarter 2017 MD&A and Audited Consolidated Financial Statements are available on our website at www.strongco.com/en/investor-relations/financial-reports/.

Conference Call Details
Strongco will hold a conference call on Thursday, May 11 at 10:00am ET to discuss first quarter results. Analysts and investors can participate by dialing 1-800-319-4610 or [phone] outside of Canada and the USA. Following management's introductory remarks, a question and answer session will take place for analysts and institutional investors.

An archived recording will be available to listeners following the call until midnight on June 11, 2017. To access it, dial 1-855-669-9658 or [phone] outside of Canada and the U.S., and enter passcode 1366#.

About Strongco Corporation

Strongco Corporation is a major multiline mobile equipment dealer with operations across Canada. Strongco sells, rents and services equipment used in diverse sectors such as construction, infrastructure, mining, oil and gas, utilities, municipalities, waste management and forestry. The Company has approximately 500 employees serving customers from 26 branches in Canada. Strongco represents leading equipment manufacturers with globally recognized brands, including Volvo Construction Equipment, Case Construction, Manitowoc Crane, including National and Grove, Terex Cedarapids, Terex Trucks, Fassi, Sennebogen, Konecranes and SDLG. Strongco is listed on the Toronto Stock Exchange under the symbol SQP.

Forward-Looking Statements

This news release contains forward-looking statements that involve assumptions and estimates that may not be realized and other risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions which are based on information currently available to the Company's management. The forward-looking statements include but are not limited to: (i) the ability of the Company to meet contractual obligations through cash flow generated from operations, (ii) the expectation that customer support revenues will grow following the warranty period on new machine sales, and (iii) the outlook for 2017. There is significant risk that forward-looking statements will not prove to be accurate. These statements are based on a number of assumptions, including, but not limited to, continued demand for Strongco's products and services. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. The inclusion of this information should not be regarded as a representation of the Company or any other person that the anticipated results will be achieved and investors are cautioned not to place undue reliance on such information. These forward-looking statements are made as of the date of this press release, or as otherwise stated and the Company does not assume any obligation to update or revise them to reflect new events or circumstances.

Additional information, including the Company's Annual Information Form, may be found on SEDAR at www.sedar.com.

Footnotes

* "EBITDA" refers to earnings before interest, income taxes, amortization of capital assets, amortization of equipment inventory on rent, amortization of rental fleet, and amortization of intangible asset.  EBITDA is presented as a measure used by many investors to compare issuers on the basis of ability to generate cash flow from operations. EBITDA is not a measure of financial performance or earnings recognized under International Financial Reporting Standards ("IFRS") and therefore has no standardized meaning prescribed by IFRS and may not be comparable to similar terms and measures presented by other similar issuers. The Company's management believes that EBITDA is an important supplemental measure in evaluating the Company's performance and in determining whether to invest in shares. Readers of this information are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of the Company's liquidity and cash flows.

SOURCE Strongco Corporation

J. David Wood, Vice President and Chief Financial Officer, 905.670.5100, [email protected], strongco.com

Related Links

http://www.strongco.com