TOROMONT INDUSTRIES LTD. $22.42 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 76.8 million; Market cap: $1.7 billion; Dividend yield: 2.1%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. Toromont also makes refrigeration systems through its CIMCO division.
In July 2011, the company completed the spinoff of Enerflex Ltd. (see right). Shareholders received shares of the new Toromont and shares of Enerflex. That company leases and sells equipment and services for natural gas production, including field production plants and compression and processing plants.
In the three months ended December 31, 2011, higher equipment sales and rentals pushed up Toromont’s revenue by 19.1%, to $408.4 million from $342.9 million a year earlier. Without one-time items, earnings per share rose 22.2% to $0.44 from $0.36, on the higher revenue and improved profit margins.
Low debt, rising dividend add appeal
Order bookings were down 24.2% from a year earlier, to $157 million from $207 million. However, that was because it won a $125-million contract in late 2010 to supply Detour Gold with trucks for its project in northern Ontario. The company’s total backlog has since risen to $275 million.
Toromont’s financial position is strong: its long-term debt of $132.8 million is 7.8% of its market cap.
The company raised its quarterly dividend by 9.1% with the April 2012 payment, to $0.12 a share from $0.11. The shares now yield 2.1%. Toromont trades at 15.5 times its forecast 2012 earnings of $1.45 a share.
Toromont is still a buy.
