Mr. Michael McMillan reports

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

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

"We are pleased with the operating and financial performance through the first nine months of the year," stated Michael S. McMillan, president and chief executive officer of Toromont. "The equipment group executed well, delivering against the opening order backlog in line with customer schedules and improvement in inventory flow, coupled with good growth in rental and product support activity, as well as a continued focus on expense control. Cimco revenue and bottom line improved in the quarter on good execution and higher product support activity. Across the organization, we continue to navigate through uncertain economic conditions and remain committed to our operating disciplines, driving our aftermarket strategies and delivering customer solutions."

Highlights

Consolidated results:

• Revenue increased $87.5-million or 8 per cent in the third quarter compared with the similar period last year, with higher revenues in both groups. Equipment group was up 7 per cent in the quarter on higher equipment sales (up 7 per cent), product support revenues (up 7 per cent) and rental activity (up 11 per cent). Cimco revenue increased 15 per cent, with progress on package sales (up 2 per cent) and strong product support growth (up 29 per cent).
• Revenue increased $408.5-million (14 per cent) to $3.4-billion for the year-to-date period. Revenue increased in both groups, with the equipment group up 13 per cent and Cimco up 17 per cent year to date, on similar trends as noted for the quarter.
• Operating income increased 17 per cent in the quarter, reflecting the higher revenue and gross margins, along with the lower relative expense ratio. Operating income as a percentage of sales increased to 16.4 per cent from 15.3 per cent in the prior year.
• Operating income increased 22 per cent in the year-to-date period and was 14.7 per cent of revenue compared with 13.7 per cent in the similar period last year, reflecting similar trends as noted for the quarter.
• Net earnings from continuing operations increased $25.1-million or 21 per cent in the quarter versus a year ago to $145.6-million or $1.77 in earnings per share (basic) and $1.76 in EPS (fully diluted).
• For the year-to-date period, net earnings from continuing operations increased $83.2-million or 29 per cent to $375.1-million, or $4.56 in EPS (basic) and $4.52 in EPS (fully diluted).
• Bookings for the third quarter decreased 5 per cent compared with last year and increased 5 per cent on a year-to-date basis. The equipment group reported lower bookings during the quarter (down 10 per cent) after a strong start to the year and given the uncertain economic conditions. Cimco reported increased bookings (up 18 per cent) on good demand for its products and services. Year to date, both groups reported increased bookings, with the equipment group up 4 per cent and Cimco up 17 per cent.
• Backlog was $1.2-billion as at Sept. 30, 2023, compared with $1.4-billion as at Sept. 30, 2022, reflecting good order intake and progress on construction and delivery schedules, as well as some improvement in equipment flow through the supply chain.

Equipment group:

• Revenue was up $73.2-million or 7 per cent to $1.1-billion for the quarter. Equipment sales (up 7 per cent) improved across most markets. New equipment sales increased 5 per cent on delivery against the opening order backlog, reflecting improving equipment availability 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, with increases in both parts and service, reflecting good demand and increased technician levels.
• Revenue was up $364.7-million or 13 per cent to $3.1-billion for the year-to-date period across most geographical markets and revenue streams, with similar trends as noted for the quarter.
• Operating income increased $21.1-million or 13 per cent in the third quarter, reflecting the higher revenue and gross margins.
• Operating income increased $76.2-million or 19 per cent to $472.3-million in the year-to-date period, reflecting the higher revenue and gross margins. Operating income margin increased 80 basis points to 15.3 per cent, with a lower relative expense level.
• Bookings in the third quarter were $322.8-million, a decrease of 10 per cent, after a stronger start to the year. Bookings in the first nine months of 2023 were $1.3-billion, an increase of 4 per cent from the prior year, with good activity in Mining. Construction market remains cautious given current business and economic factors, which continue to override normal seasonality.
• Backlog of $1.0-billion at the end of September, 2023, was down $190.3-million or 16 per cent from the end of September, 2022, reflecting improving equipment delivery from manufacturers, as well as planned deliveries against customer orders.

Cimco:

• Revenue increased $14.3-million or 15 per cent compared with the third quarter last year, with slightly higher package revenue (up 2 per cent) on the progression of construction schedules, coupled with higher product support revenue (up 29 per cent) on good market activity.
• Revenue increased $43.8-million or 17 per cent to $299.1-million for the year-to-date period on higher package revenue (up 15 per cent), mainly lead by an increase in the industrial market, offset by lower recreational market activity compared with the same period last year. Product support sales also increased (up 20 per cent) on higher activity in both Canada and the United States. 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 $6.3-million or 100 per cent for the quarter on higher revenue and higher gross margins, partly offset by higher selling and administrative expenses in support of the increased activity levels.
• Operating income was up $14.8-million or 118 per cent to $27.4-million for the year-to-date period for similar reasons as the quarter. Operating income margin increased to 9.1 per cent (2022 was 4.9 per cent), reflecting higher gross margins and lower relative expense levels.
• Bookings increased 18 per cent in the third quarter to $86.0-million and increased 17 per cent for the year-to-date period to $189.7-million. Booking activity can be variable from quarter to quarter based on customer schedules.
• Backlog of $245.3-million at Sept. 30, 2023, was up $42.7-million or 21 per cent from last year, reflecting good order intake and some deferral or delay in construction schedules resulting from supply chain constraints.

Financial position:

• Toromont's share price of $110.62 at the end of September, 2023, translated to market capitalization of $9.1-billion and total enterprise value of $9.0-billion.
• The company maintained a strong financial position. Leverage as represented by the net debt to total capitalization ratio was minus 7 per cent at the end of September, 2023, compared with minus 14 per cent at the end of December, 2022, and minus 6 per cent at the end of September, 2022. The change in the ratio reflects significant investments made in working capital and capital assets to support current and future activity levels.
• The company purchased 238,000 common shares for $25.0-million in the nine-month period ended Sept. 30, 2023 (473,100 common shares for $48.5-million for the comparative period). The company renewed its normal course issuer bid in September, 2023.
• The board of directors approved a quarterly dividend of 43 cents per share, payable on Jan. 4, 2024, to shareholders on record on Dec. 8, 2023.
• The company's return on equity was 24.3 per cent at the end of September, 2023, on a trailing 12-month basis, compared with 23.3 per cent at the end of December, 2022, and 21.5 per cent at the end of September, 2022. Trailing 12-month pretax return on capital employed was 31.5 per cent at the end of September, 2023, compared with 32.5 per cent at the end of December, 2022, and 30.4 per cent at the end of September, 2022.

"We are mindful of the uncertain economic environment and continue to monitor key metrics and supply dynamics," continued Mr. McMillan. "We have seen some softening in demand for equipment in construction markets after a period of strong growth. We will continue to follow our disciplined approach, working our operational model while delivering results for our customers, suppliers and employees. While focused on managing discretionary spend, we continue to recruit technicians to support our critical aftermarket 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 nine months ended Sept. 30, 2023, compared with the three and nine months ended Sept. 30, 2022. 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, related notes, and management's discussion and analysis as at and for the three and nine months ended Sept. 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 Tuesday, Oct. 31, 2023, at 8 a.m. EDT. The call will be available by telephone at 888-664-6383 (North American toll-free) or 416-764-8650 (Toronto area) and by quoting participant passcode 38920463. A replay of the conference call will be available until Tuesday, Nov. 7, 2023, by calling 1-888-390-0541 (North American toll-free) or 416-764-8677 (Toronto area) and quoting passcode 920463. The live webcast will also be available at the Toromont website.

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

About Toromont Industries Ltd.

Toromont 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.

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