Strongco Reported Financial Results for The Three and Six Months Ended June 30, 2012

Strongco Corporation recently reported financial results for the three and six months ended June 30, 2012. "We are pleased with the continued growth in revenues and operating profits evident in Strongco's results for the second quarter of 2012," said Robert Dryburgh, president and chief executive officer of Strongco. "In the quarter, the company achieved increases in all major revenue streams year-over-year and, simultaneously improved gross margins on equipment sales in competitive markets. Revenues in all regions were up from the prior period. Revenues were significantly higher in Alberta, in particular, where we are making substantial investment to enhance our market position." Second Quarter 2012 Review Total revenues in the three months ended June 30, 2012, were up 16 percent from the second quarter of 2011. Equipment sales increased by 20 percent from last year to $92.4 million; product support revenues gained 8 percent to $33.4 million; and rental revenues were $6.4 million, up 5 percent from the year-earlier period. Gross margin increased by 12 percent to $23.8 million during the second quarter. As a percentage of revenue, the sales mix slightly reduced the overall gross margin to 18.0 percent from 18.6 percent in the same period of 2011. Administrative, distribution and selling expenses during the second quarter totalled $18.5 million, compared to $16.3 million in 2011. As a percentage of revenue administrative, distribution and selling expenses were 14.0 percent compared to 14.3 percent in the second quarter of 2011. EBITDA for the second quarter increased to $12.7 million from $10.5 million a year earlier and earnings before income taxes were $4.4 million, up from $3.8 million in the second quarter of 2011. Strongco is now taxable whereas the company was able to utilize loss carry forwards to offset tax expenses in 2011. Consequently, Strongco's net income in the second quarter of 2012 was $3.2 million ($0.25 per share), down from $3.6 million ($0.28 per share) in the second quarter of 2011. The second quarter of 2012 included $1.1 million of provision for income taxes, compared to $0.1 million in 2011. Outlook "We are optimistic about the economic outlook in regions across the country and in particular in Alberta, where we have expanded our branch capacity and anticipate construction to begin in the third quarter of 2012 for our new Fort McMurray branch," said Dryburgh. The Canadian economy in general and the markets for construction equipment and cranes across Canada are expected to continue the improvement the company has seen in the first half throughout 2012. Strongco's sales backlogs grew during the first quarter and have remained at robust levels through the second quarter as Strongco moved into its prime selling season, a positive indication of the increasing demand for heavy equipment. Equipment suppliers are expected to continue to improve production capability and delivery lead times throughout the balance of 2012. Inventory levels at Strongco were allowed to run higher than normal at year end and through the first half of the year to ensure availability of product for the company through the prime selling season. While availability of certain product lines did impact sales in the first half of 2012, current inventory and improving product availability is expected to support sales through the balance of the year. Management remains cautiously optimistic that the improving Canadian economy will continue through the balance of the year, and lead to increased revenues. In addition, while market conditions in the northeastern United States remain weak, Chadwick-BaRoss realized modest growth in the first half of 2012 and contributed positively to Strongco's overall results. While demand for equipment from its traditional markets is expected to remain flat, Chadwick-BaRoss expects to continue to show a modest increase in revenues from sales to other non-traditional markets and strong product support sales throughout the balance of the year, which should contribute to improved revenue and profitability in 2012. About Strongco Corporation Strongco Corporation is one of Canada's largest multiline mobile equipment dealers and operates in the northeastern United States through Chadwick-BaRoss, Inc. Strongco sells, rents and services equipment used in sectors such as construction, infrastructure, mining, oil and gas, utilities, municipalities, waste management and forestry. Strongco has approximately 640 employees serving customers from 27 branches in Canada and five in the United States. Strongco represents leading equipment manufacturers with globally recognized brands, including Volvo Construction Equipment, Case Construction, Manitowoc Crane, National, Grove, Terex Cedarapids, Terex Finlay, Ponsse, Fassi, Allied Construction, Taylor, ESCO, Dressta, Sennebogen, Jekko, Takeuchi, Doppstadt, Link-Belt and Kawasaki. Strongco is listed on the Toronto Stock Exchange under the symbol SQP. Source: aednet