Mr. Scott Medhurst reports

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

Toromont Industries Ltd. has released its financial results for the second quarter ended June 30, 2023.

"We are pleased with the operating and financial performance through the first half of the year," stated Scott J. Medhurst, President and Chief Executive Officer of Toromont Industries Ltd. "The Equipment Group executed well, delivering on several large customer orders, as well as growing rental and product support results. CIMCO revenue and bottom line improved in the quarter on project construction and higher product support activity. Across the organization, we continue to navigate through economic conditions and remain committed to our operating disciplines, driving our after-market strategies and delivering customer solutions."

HIGHLIGHTS:

Consolidated Results

• Revenue increased $121.3 million or 12% in the second quarter compared to the similar period last year. Revenue was higher in both groups with the Equipment Group up 11% in the quarter on higher new equipment sales (+16%), partially offset by lower used equipment sales (-9%), while CIMCO revenue was up 19%, with good progress on package sales (+18%). Product support revenue was 13% higher on increased demand in both Groups, while rental revenue grew 7% on a larger fleet and higher activity levels.
• Revenue increased $321.0 million (17%) to $2.2 billion for the year-to-date period. Revenue increased in both groups, with the Equipment Group up 17%, while CIMCO was up 18% versus the first half of 2022, on similar trends as noted for the quarter.
• Operating income(1) increased 15% in the quarter reflecting the higher revenue and lower relative expense level. Operating income as a percentage of sales increased to 15.2% from 14.8% in the prior year.
• Operating income increased 26% in the year-to-date period, and was 13.8% of revenue compared to 12.8% in the similar period last year, reflecting a lower relative expense ratio.
• Net earnings from continuing operations increased $22.3 million or 20% in the quarter versus a year ago to $133.3 million or $1.62 EPS (basic) and $1.61 EPS (fully diluted).
• For the year-to-date period, net earnings from continuing operations increased $58.2 million or 34% to $229.4 million, or $2.79 EPS (basic) and $2.76 EPS (fully diluted).
• Bookings(1) for the second quarter increased 69% compared to last year and increased 10% on a year-to-date basis. Both the Equipment Group and CIMCO reported increased bookings on good demand for our products, however certain markets remain cautious given the uncertain economic conditions.
• Backlog(1) was $1.3 billion as at June 30, 2023, compared to $1.4 billion as at June 30, 2022, reflecting progress on construction and delivery schedules as well as some improvement in equipment flow through the supply chain.
• On May 1, 2023, the Company completed the sale of AgWest Ltd., a wholly-owned subsidiary, in a share and asset transaction. Total proceeds were paid in cash of approximately $41.6 million and are subject to customary post-closing adjustments. AgWest was reported in the Equipment Group and effective with the second quarter, has been presented as discontinued operations.

Equipment Group

• Revenue was up $104.2 million or 11% to $1.1 billion for the quarter. Equipment sales (up 10%) improved across most markets. New equipment sales increased 16% on delivery against the opening order backlog, reflecting improving inventory supply and customer delivery schedules. Rental revenue continued to grow on higher market activity, good execution and an expanded heavy and light equipment fleet. Product support saw strong activity, up in both parts and service, on increased technician levels.
• Revenue was up $291.5 million or 17% to $2.0 billion for the year-to-date period, across most geographical markets and revenue streams, with similar trends and reasons as the quarter.
• Operating income increased $18.3 million or 12% in the second quarter, reflecting the higher revenue.
• Operating income increased $55.1 million or 23% to $291.9 million in the year-to-date period, reflecting the higher revenue, partially offset by lower gross margins and higher expenses. Operating income margin increased 80 bps to 14.4%.
• Bookings in the second quarter were $671.2 million, an increase of 74% on higher mining and power systems orders, slightly offset by lower material handling orders, while construction was relatively unchanged. Bookings in the first half of 2023 were $1.0 billion, an increase of 9% from the prior year, reflecting similar trends as the quarter, however construction decreased slightly as the market remains cautious given the current business and economic factors overriding normal seasonality.
• Backlog of $1.1 billion at the end of June 2023 was down $122.9 million or 10% from the end of June 2022, reflecting improving equipment delivery from manufacturers as well as planned deliveries against customer orders. Approximately 55% of the backlog is expected to be delivered in 2023, subject to timing of receipt of equipment from suppliers.

CIMCO

• Revenue increased $17.1 million or 19% compared to the second quarter last year, with higher package revenue (up 18%) on the progression of construction schedules, coupled with higher product support revenue (up 21%) on good market activity.
• Revenue increased $29.5 million or 18% to $190.7 million for the year-to-date period on higher package revenue (up 23%), mainly lead by an increase in the industrial market, offset by weaker recreational market activity compared to the same period last year. Product support sales also increased (up 14%) on higher activity in both Canada and the US. The timing of construction schedules continues to be somewhat impacted by supply chain constraints, affecting the comparability of reported package revenue between periods.
• Operating income increased $4.8 million or 94% for the quarter as higher revenue and higher gross margins were dampened by higher selling and administrative expenses.
• Operating income was up $8.5 million or 136% to $14.7 million for the year-to-date period, for similar reasons as the quarter. Operating income margin increased to 7.7% (2022 of 3.9%).
• Bookings increased 30% in the second quarter to $63.5 million, and increased 17% for the year-to-date period to $103.7 million. Booking activity can be variable from quarter to quarter based on customer decision making schedules. For both the quarter and the year, industrial orders were higher in both Canada and the US, while recreational orders were down mainly in Canada, partially offset by an increase in orders in the US on a year-to-date basis.
• Backlog of $207.2 million at June 30, 2023 was up $32.7 million or 19% from last year. Recreational backlog was up in both Canada and the US, reflecting good order intake last year, and some deferral or delay in construction schedules resulting from supply chain constraints. Industrial backlog also marginally increased, with an increase in Canada, being slightly offset by a decrease in the US. Approximately 55% 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 $108.83 at the end of June 2023, translates to market capitalization(1) and total enterprise value(1) of $8.9 billion.

The Company maintained a strong financial position. Leverage as represented by the net debt to total capitalization(1) ratio was -4% at the end of June 2023, compared to -14% at the end of December 2022 and -7% at the end of June 2022. The ratio reduced as significant investments were made in working capital and capital assets in order to support current and future activity levels.

Under the Normal Course Issuer Bid, the Company purchased 238,000 common shares for $25.0 million (average cost of $105.02 per share, including transaction costs) in the six-month ended June 30, 2023. Under the previous bid the Company purchased 362,000 common shares for $37.7 million (average cost of $104.11 per share, including transaction costs) for the comparative period.

The Board of Directors approved a quarterly dividend of $0.43 cents per share, payable on October 4, 2023 to shareholders on record on September 8, 2023.

The Company's return on equity(1) was 24.6% at the end of June 2023, on a trailing twelve-month basis, compared to 23.3% at the end of December 2022 and 20.5% at the end of June 2022. Trailing twelve month pre-tax return on capital employed(1) was 31.9% at the end of June 2023, compared to 32.5% at the end of December 2022 and 29.4% at the end of June 2022.

"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 service 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 and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. All financial information presented in this press release has been prepared in accordance with International Financial Reporting Standards ("IFRS"), except as noted below, 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 and six months ended June 30, 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.

QUARTERLY CONFERENCE CALL AND WEBCAST

Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on Thursday, July 27, 2023 at 8:00 a.m. (EDT). 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 79776117. A replay of the conference call will be available until Thursday, August 3, 2023 by calling 1-888-390-0541 (North American toll free) or 416-764-8677 (Toronto area) and quoting passcode 776117. The live webcast can also be accessed on the company's website.

Presentation materials to accompany the call will be available on our investor page on our website.

ABOUT TOROMONT

Toromont Industries Ltd. 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. The Equipment Group includes industry-leading rental operations and a complementary material handling 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.

(1) These financial metrics do not have a standardized meaning under International Financial Reporting Standards (IFRS), which are also referred to herein as Generally Accepted Accounting Principles (GAAP), and may not be comparable to similar measures used by other issuers. These measurements are presented for information purposes only. The Company's Management's Discussion and Analysis (MD&A) includes additional information regarding these financial metrics, including definitions and a reconciliation to the most directly comparable GAAP measures, under the headings "Additional GAAP Measures", "Non-GAAP Measures" and "Key Performance Indicators."

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