Toromont Industries Ltd. ((TSE:TIH)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Toromont Industries Ltd. Navigates Mixed Earnings Amid Economic Uncertainty
The recent earnings call for Toromont Industries Ltd. reflected a mixed sentiment, highlighting both growth and challenges. While CIMCO demonstrated notable growth and strong liquidity, the Equipment Group faced revenue declines and increased expenses. The company is strategically navigating economic uncertainties with investments and a focus on operational discipline.
CIMCO Revenue and Earnings Increase
CIMCO reported a significant increase in revenue and earnings, driven by robust demand and disciplined execution in both Canada and the U.S. The segment’s revenue increased by 22% in Q3 and 15% year-to-date, supported by a strong order backlog.
Healthy Backlog and Bookings Growth
Toromont’s backlog remains healthy, standing at $1.3 billion, a 17% increase year-over-year. The Equipment Group saw a 15% increase, while CIMCO’s backlog grew by 24%. Bookings for Q3 surged by 47% compared to the previous year.
Operating Income Improvement
Operating income saw an 8% increase in Q3, benefiting from a $13.7 million pretax gain on a property sale. Excluding this gain, operating income was slightly lower by 1% compared to a strong previous period.
Strong Cash and Liquidity Position
The company ended the quarter with a robust cash position of $1 billion and an additional $453 million available under existing credit facilities, maintaining a negative 9% net debt to total capitalization ratio.
AVL Acquisition Progress
Since the acquisition, production in Hamilton has ramped up, supporting a healthy order backlog and demand. A new facility in Charlotte, North Carolina, has commenced production and is expected to ramp up throughout 2026.
Decline in Equipment Group Revenue
The Equipment Group experienced a 4% revenue decline, primarily due to reduced mining activities following a strong period of capital investment. This was partially offset by revenues from the newly acquired AVL business.
Lower Net Earnings Year-to-Date
Net earnings decreased by 3% or $10.8 million for the first nine months of the year. Basic earnings per share for the year-to-date were $4.18, reflecting the changes in net earnings.
Higher SG&A Expenses
SG&A expenses increased by 9% in Q3 and 3% year-to-date, excluding the property disposition gain. This rise was attributed to higher DSU mark-to-market adjustments and compensation costs.
Interest Expense Increase
Net interest expense rose by $4 million in Q3 and $18 million year-to-date, due to higher borrowings from new senior debentures issued in March 2025 and lower interest income on cash.
Forward-Looking Guidance
Toromont Industries provided forward-looking guidance, noting varied performance across its segments. Despite a 2% revenue decline in Q3, driven by a 4% decrease in the Equipment Group, CIMCO’s revenue increased by 22%. The company maintains a strong balance sheet with $1 billion in cash and a negative 9% net debt to total capitalization ratio. Toromont aims for an 18% return on equity, reporting 17.5% for the period, and announced a quarterly dividend of $0.52 per share.
In summary, Toromont Industries Ltd.’s earnings call highlighted a mixed sentiment with growth in CIMCO and challenges in the Equipment Group. The company remains focused on strategic investments and operational discipline to navigate economic uncertainties, maintaining a strong financial position and commitment to shareholder value.