Mr. Scott Medhurst reports

TOROMONT ANNOUNCES RESULTS FOR THE FIRST QUARTER OF 2023 AND QUARTERLY DIVIDEND

Toromont Industries Ltd. has released its financial results for the first quarter ended March 31, 2023.

"We are pleased with the solid start to the year, buoyed in part by a solid opening order backlog," stated Scott J. Medhurst, president and chief executive officer of Toromont Industries. "The Equipment Group executed well delivering on several large customer orders, as well as growing rental and product support results. CIMCO revenue improved in the quarter on project construction and higher product support activity. Across the organization, we remain committed to our operating disciplines, driving our after-market strategies and delivering customer solutions."

Highlights

Consolidated results

• Revenue increased $201.1-million (23 per cent) to $1.1-billion for the quarter. Revenue increased in both groups, with The Equipment Group up 24 per cent, compared with last year on higher equipment sales (plus 33 per cent), product support (plus 20 per cent) and rental activity (plus 6 per cent), while CIMCO was up 17 per cent versus the first quarter last year, on higher package revenue (plus 29 per cent) and product support activity levels (plus 8 per cent).
• Operating income increased 48 per cent in the quarter, and was 12 per cent of revenue compared with 10 per cent in the similar period last year, reflecting a lower relative expense ratio.
• During the quarter, a vacant property was sold for $7.4-million, resulting in an after-tax gain of $3.1-million (four cents per share basic).
• For the quarter, net earnings increased $36.5-million or 61 per cent to $96.0-million, or $1.17 EPS (earnings per share) (basic) and $1.16 EPS (fully diluted).
• Bookings decreased 33 per cent compared with the similar period last year. Equipment Group booking decreased against a tough comparable which included several large orders, exacerbated by cautious market ordering during the uncertain economic environment. CIMCO bookings increased on solid demand for the company's products and services. A number of factors previously reported have impacted booking activity over the past several years, overriding typical seasonality.
• Backlog was $1.2-billion as at March 31, 2023, compared with $1.5-billion as at March 31, 2022, reflecting progress on construction and delivery schedules as well as some improvement in general equipment flow through the supply chain.

Equipment Group

• Revenue was up $188.7-million or 24 per cent to $1.0-billion for the quarter, across all geographical markets and revenue streams, except for used equipment sales. New equipment sales increased on the delivery against the opening order backlog, reflecting improving inventory supply and also customer delivery schedules for sites. Rental revenue increased due to higher market activity and an expanded heavy and light equipment fleet. Product support saw strong activity, up in both parts and service.
• Operating income increased $37.7-million or 44 per cent to $122.7-million in the quarter, reflecting the higher revenue and gross margins, coupled with lower relative expense levels. Operating income margin increased 180 basis points to 12.6 per cent.
• Bookings in 2023 were $400-million, a decrease of $200.6-million or 35 per cent versus prior year, reflecting in part a tough comparable, with an extended period of strong industry activity, as well as several large specific customer orders. Additionally, the uncertain economic environment is leading to cautious investing behaviours across the industries the company serves.
• Backlog of $1.0-billion at the end of March, 2023, was down $355.4-million or 26 per cent from the end of March, 2022, reflecting improving equipment delivery from manufacturers as well as planned deliveries against customer orders. Approximately 80 per cent of the backlog is expected to be delivered in 2023, subject to timing of receipt of equipment from suppliers.

CIMCO

• Revenue increased $12.4-million or 17 per cent to $86.0-million for the quarter on higher package revenue (up 29 per cent), mainly lead by an increase in the industrial market, while the recreational market remained relatively flat compared with the same period last year. Product support sales also increased (up 8 per cent) on higher activity in both Canada and the United States. The timing of construction schedules continues to be impacted by supply chain constraints, affecting the comparability of reported package revenue between periods.
• Operating income was up $3.7-million or 320 per cent to $4.9-million for the quarter, reflecting improved gross margins and higher revenue. Operating income margin increased to 5.6 per cent (2022 -- 1.6 per cent).
• Bookings increased 1 per cent to $40.2-million in the first quarter of 2023. Recreational orders were up 23 per cent, with higher orders in the United States being slightly offset by weaker orders in Canada. Industrial orders were down 14 per cent, mainly on weaker orders in Canada, partially offset by increased U.S. orders.
• Backlog of $199.1-million at March 31, 2023, was up $29.5-million or 17 per cent from last year. Recreational backlog was up in both Canada and the U.S., reflecting good order intake last year, and some deferral or delay in construction schedules resulting from supply chain constraints. Industrial backlog was marginally down, with a decrease in Canada, being slightly offset by an increase in the U.S. Approximately 85 per cent of the backlog is expected to be realized as revenue in 2023, subject to construction schedules and potential changes stemming from supply chain constraints.

Financial position

• Toromont's share price of $110.93 at the end of March, 2023, translates to a market capitalization and a total enterprise value of $9.1-billion.
• The company maintained a strong financial position. Leverage as represented by the net debt to total capitalization ratio was negative 1 per cent at the end of March, 2023, compared with negative 14 per cent at the end of December, 2022, and negative 8 per cent at the end of March, 2022. Leverage reduced as significant investments were made in working capital and capital assets in order to support current and future activity levels.
• The board of directors approved a quarterly dividend of 43 cents per share, payable on July 5, 2023, to shareholders on record on June 9, 2023.
• The company's return on equity was 24.9 per cent at the end of March, 2023, on a trailing 12-month basis, compared with 23.5 per cent at the end of December, 2022, and 19.7 per cent at the end of March, 2022. Trailing-12-month pretax return on capital employed was 32.4 per cent at the end of March, 2023, compared with 32.3 per cent at the end of December, 2022, and 27.4 per cent at the end of March, 2022.
• On April 17, 2023, the company announced it had entered into an agreement for the sale of AgWest Ltd., a wholly owned subsidiary, effective May 1, 2023, in a share and asset transaction. Total proceeds will be paid in cash and are subject to customary postclosing adjustments. AgWest is reported in The Equipment Group.

"Our team remains focused on executing customer deliverables, while adhering to our operational model with disciplined execution," noted Mr. Medhurst. "We are mindful of the uncertain economic environment and continue to monitor key metrics and supply-demand dynamics. While focused on managing discretionary spend, we continue to recruit technicians, to support our critical after-market technology strategies and value-added product offering over the long term."

Financial and operating results

All comparative figures in this press release are for the three months ended March 31, 2023, compared with the three months ended March 31, 2022. All financial information presented in this press release has been prepared in accordance with international financial reporting standards (IFRS), except as noted herein, and are reported in Canadian dollars. This press release contains only selected financial and operational highlights and should be read in conjunction with Toromont's unaudited interim condensed consolidated financial statements and related notes and management's discussion and analysis (MD&A), as at and for the three months ended March 31, 2023, which are available on SEDAR and on the company's website .

Additional information is contained in the company's filings with Canadian securities regulators, including the 2022 annual report and 2023 annual information form, which are available on SEDAR and the company's website.

Annual meeting of shareholders

The company will be holding its annual meeting of shareholders in a virtual-only format, via live audio webcast on Friday, April 28, 2023, at 10 a.m. EDT. Shareholders and other interested parties can attend the annual shareholders' meeting virtually (password toromont2023). The meeting will also be available via live audio webcast on the company's website.

Quarterly conference call and webcast

Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on Friday, April 28, 2023, at 8 a.m. ET. The call may be accessed by telephone at 888-664-6383 (North American toll-free) or 416-764-8650 (Toronto area) and quoting participant passcode 31665224. A replay of the conference call will be available until Friday, May 5, 2023, by calling 1-888-390-0541 (North American toll-free) or 416-764-8677 (Toronto area) and quoting passcode 665224. The live webcast can also be accessed on the company's website.

About Toromont Industries Ltd.

Toromont Industries operates through two business segments: The Equipment Group and CIMCO. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory -- spanning the Canadian provinces of Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Ontario, and Manitoba, in addition to most of the territory of Nunavut. In addition, the group includes industry-leading rental operations, a complementary material handling business and an agricultural equipment business. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Both segments offer comprehensive product support capabilities.

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