23.02.2010

Record quarter for Bronto

Bronto the Finnish based truck mounted aerial lift manufacturer has recorded a strong set of results for the full year 2009 breaking its own records in the fourth quarter and helping its owner, Federal Signal to beat market expectations.

Bronto’s full year revenues were $160 million up 10 percent on 2008, due to a starting the year with a very strong order book and advantageous currency translation from Euros to Dollard. Order intake fell 40 percent, to $96 million for the year but picked up in the fourth quarter reaching $28.4 million compared to $26.7 million in the same quarter of 2008.

Operating income for the year was $19.2 million and increase of 85 percent on 2008, thanks to the higher sales volumes, lower overheads and most significantly due to higher margins delivered by its new plant expansion which has allowed it to bring a large amount of subcontracted work in-house.

For quarter operating income was $9.6 million up 66 percent on the same period in 2008. Bronto’s operating income for the full year represented over 58 percent of Federal Signal’s operating income, helping ensure it made a profit and allowing the group to beat market expectations.

Bronto finished the year with a backlog of $73.8 million almost half what it had at the end of 2008 when deliveries were extended beyond 12 months for many of its models.

Federal Signal’s chief executive, William H. Osborne said: "The company delivered strong results in the quarter, as our operations delivered a 14 percent increase in operating income. We continued to reduce our overhead costs and generate strong cash flow, as we have all year.”

“Our Safety and Security Group and Bronto, our Fire Rescue business, both generated strong double-digit operating margins, with Bronto achieving a record profit quarter."

"Our management team delivered a $30 million reduction in overhead cost for the year and a huge improvement in operating cash flow, both of which reflect the team's dedication to delivering results in any economic environment. Our goal is to translate these efficiencies into even higher margins as our revenue trend recovers.”

Vertikal Comment

This is a fantastic result from Bronto, most particularly the fourth quarter in which order intake picked up again after falling back during the year. The company’s growing margins and profitability will be the envy of everyone in the equipment business.

It is easy to forget though that Bronto is big in fire rescue platforms as well as its more construction related truck mounted lifts and that the business tends to cycle differently to most other equipment producers. And that in some recent years when self propelled lift producers were posting incredible revenue and profits growth, Bronto was seeing more staid results.

Federal Signal is currently bidding to acquire Sirit Inc, a global provider of radio frequency identification technology, and has reportedly been testing market interest in selling Bronto in order to raise cash to acquire companies such as Sirit, which it feels fits closer with its other businesses.

The company is remaining ‘tight lipped’ about any discussions it has had and will of course be balancing the pro’s and con’s of such a strategy given the company's current performance. Whatever it decides Bronto is well placed for another good year in 2010.