2009 Annual Report - Toromont Industries Ltd.

2 | TOROMONT 2009 ANNUAL REPORT
dear Fellow
Shareholders
THE MARK OF A GOOD COMPANY IS THE ABILITY TO PERFORM THROUGH ALL PHASES
OF THE ECONOMIC CYCLE. IN THE WORST ECONOMIC RECESSION IN A GENERATION,
TOROMONT RAISED ITS DIVIDEND, DELIVERED PROFITABLE RESULTS, STRENGTHENED
ITS BALANCE SHEET, MAINTAINED ITS STRONG CORE OF PEOPLE AND CAPABILITIES,
AND ESTABLISHED ITSELF AS A GLOBAL COMPRESSION EQUIPMENT INDUSTRY LEADER
BY MAKING THE LARGEST ACQUISITION IN ITS HISTORY.
we are pleased to say that Toromont made the most of
the recessionary environment. Through the disciplined
work of our team and aggressive action taken at the
first signs of the economic correction, we maintained our track
record of strong performance during this challenging phase of
the business cycle.
Net income for 2009 was $120.5 million or $1.86 per share
as all of our business units continued to operate profitably.
Return on opening shareholders’ equity was 15.5%. Revenues
were $1.8 billion, as the impact of the broad-based decline in
customer spending was somewhat mitigated by product support.
At year end, our cash exceeded our total debt, a financial
position that reflects the ongoing strength of our operations,
our enduring focus on disciplined capital management and a
conscious effort to build our cash position in order to finance
the acquisition of Enerflex.
While the revenue and earnings records of the prior year
remain unsurpassed – for now – Toromont’s long-term track
record stands as the most important testament to the quality
of our Company and its ability to create shareholder value.
AdjUSTEd TO nEw REAliTiES
It was not business as usual in 2009. The global credit crisis
affected our end markets, driving a significant decline in
economic activity and reducing customer order volume in key
sectors including construction and natural gas.
With the support of our employees, Toromont adjusted to
these conditions beginning in September of 2008. Across our
Company, discretionary expenses were reduced, certain projects
were deferred, salaries were frozen and work sharing as well as
voluntary leaves were tools used to help maintain our strong core
of people and capabilities while we await the economic upturn.
Due to these adjustments, and the large backlogs carried over
from 2008, Toromont’s results in 2009 were even stronger than
we anticipated.
What we did not adjust was our approach to business, which
can be summarized as follows:
n We supply highly specified capital equipment to broad markets
and support our customers every step of the way as they use
that equipment – a business model designed with capital
spending trends in mind.
n We strive for market leadership and operate only in those areas
where we have a reasonable prospect of achieving it – because
this is the best way to drive shareholder and customer value.
n We settle for nothing less than the highly productive use
of capital. Each of our businesses operates with an individually
calibrated return on capital employed target and is held
accountable for meeting that target as the price for receiving
capital.
n We trust our business leaders to make capital allocations. This
trust is reflected in our decentralized management system,
which, along with meaningful employee share ownership, is a
trademark characteristic of our Company.
n We pursue opportunities aggressively but never at the expense
of ethical behaviour or employee safety – both of which are
priorities for Toromont.