Toromont Industries Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 27, 2023

There are 9 speakers on the call.

Operator

Morning. Today is Thursday, July 27, 2023. Welcome to the Toromont Industries Limited Second Quarter 2023 Results Conference Call. Please be advised that this call is being recorded and all lines have been placed on mute to prevent any background noise. Your host for today will be Mr.

Operator

Michael McMillan, Executive Vice President and Chief Financial Officer. Please go ahead, Mr. McMillan.

Speaker 1

Thank you, Ennis. Good morning, everyone. Thank you for joining us today to discuss Toromont's results for the Q2 of 2023. Also on the call with me this morning is Scott Medhurst, President and Chief Executive Officer. Scott and I will be Referring to the presentation that is available on our website.

Speaker 1

To start, I would like to refer our listeners to slide 2, which contains our customary advisory regarding forward looking information and statements. After our prepared remarks, we'll be more than happy to answer questions. So So let's get started. We can move to Slide 3 and Scott will kick us off.

Speaker 2

Thank you, Mike, and good morning, everyone. We are pleased with the operating and financial performance through the first half of the year. Our discussion today will focus on continuing operations and therefore exclude the Ag West results, which is shown as a discontinued operation unless otherwise noted. The equipment group executed well delivering on several large customer orders combined with growth in rental and product support. Cisco revenue and bottom line improved in the quarter and on project construction and higher product support activity.

Speaker 2

Across the organization, we continue to navigate through economic conditions and remain committed to our operating disciplines, driving our aftermarket and digital strategies and delivering customer solutions. Turning now to our financial results highlighted on Slide 4. Results for the Q2 of 2023 were healthy, reflecting solid execution on new equipment deliveries against our order backlog as well as favorable operating leverage. Revenue increased 12% in the 2nd quarter and 17% through the first half with increases in both the Equipment Group and CIMCO. Rental and product support revenue increased on customer activity.

Speaker 2

While gross margins remained unchanged, lower relative expenses and higher interest income on cash balances both contributed to higher net earnings versus Q2 last year. Net earnings from continuing operations increased 20% in the quarter compared to last year, reflecting revenue growth, expense management and higher interest income. For the first half of the year, net earnings increased 34% from last year to $229,000,000 were $2.79 per share, which was $2.86 per share when including the AgWest gain in contribution. Bookings for the Q2 increased 69% compared to last year and increased 10% on a year to date basis. Both the Equipment Group and CIMCO reported increased bookings and good demand for our products.

Speaker 2

However, Certain markets remain cautious given the current economic climate. Backlog remains healthy at $1,300,000,000 down slightly from last year. However, historically solid, Backlog is supportive and reflects progress on construction and delivery schedules as well as some improvement in general equipment flow through the supply chain. General macroeconomic factors such as inflation, higher interest rate, Canadian dollar movements continue to challenge the business as well as disrupt historical seasonality and are expected to continue to do so for the near term. Looking forward, our teams remain focused on executing customer deliverables, key strategies, while adhering to our operational model and disciplined execution.

Speaker 2

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 aftermarket service strategies and value added product offerings over the long term. Mike, I'll turn it over to you for some more detailed comments on the group results.

Speaker 1

Thanks, Scott. Let's get started with the Equipment Group on Slide 5. Revenue was up 11% in the quarter with higher activity across all revenue streams except used equipment sales. Taken together, the new and used equipment sales were up 10% in the quarter. New equipment sales increased 16% in the quarter across all markets, segments and regions, predominantly reflecting the delivery of equipment against order backlog, interim reflecting improvement improving inventory supply and also customer delivery schedules.

Speaker 1

Used equipment sales decreased 9% in the quarter, partly offset by slightly higher fleet dispositions. In the quarter, Total new and used equipment sales increased in mining, up 64%, power systems up 39%, material handling up 91%. This was partly offset by a 2% decrease in construction markets. Rental revenue was up 7% in the quarter, reflecting higher market activity, strong execution and an expanded heavy and light equipment fleet. Growth was experienced in most areas for the quarter with the following increases: light equipment rentals up 6%, Heavy equipment rentals up 17%, power rentals up 5% and material handling up 4%.

Speaker 1

Product support revenue grew 12% in the quarter with increases in both parts up 12% and service up 15%. Most markets and regions were higher in the quarter, construction up 11%, mining up 13%, Power Systems up 21%, while material handling was largely unchanged. Gross profit margins decreased 20 basis points in the quarter compared to Q2 of 2022 with lower margins on new equipment sales. Rental margins were largely unchanged while product support margins increased slightly on good activity levels and execution. Selling and administrative expenses increased 8% in the quarter on an 11% increase in revenue.

Speaker 1

Compensation costs increased with higher headcount, higher salary increases and higher profit sharing on the increased earnings. Certain expenses such as travel and training have increased compared to the prior year with greater levels of in person interaction and some inflationary effects. Allowance for doubtful accounts decreased $5,300,000 on good collections and improved aging. As a percentage of revenue, selling and administrative expenses improved to 12% in Q2 of 2023 compared to 13% for the same period last year. Operating income increased 12% for the quarter, reflecting the higher revenue, partially offset by lower gross margins and higher expenses.

Speaker 1

Bookings increased 74% in the quarter after a softer start to the year and reflecting in part several large mining customer orders. Through the first half of twenty twenty three, Bookings were 9% higher than the similar period last year. Backlog was $1,100,000,000 at the end of June 2023, reflecting good bookings as well as improving equipment delivery from manufacturers and planned deliveries against customer orders. Approximately 55% of the backlog is expected to be delivered in the remainder of 2023. But of course, this is subject to timing differences depending on vendor supply, customer activity and delivery schedules.

Speaker 1

Now let's turn to CIMCO on slide 6. Revenue was up 19% in the quarter, reflecting good progress on package And increased product support activity. Package revenue increased 18% in the quarter on good activity in industrial markets in both Canada in the U. S. Recreational markets were lower in both markets.

Speaker 1

Product support revenue improved 21% in the quarter with increases in both Canada and the U. S. Activity levels continue to improve reflective of market conditions and increased labor capacity. Gross profit margins increased 200 basis points in the quarter versus the comparable period last year, largely due to package margins on improved execution and the nature of projects in process. Product support margins increased slightly on good market activity.

Speaker 1

Selling and administrative expenses were up 8% in the quarter. Allowance for doubtful accounts increased 600,000 dollars on a large balance of aged receivables. Compensation costs increased due to an increase in headcount, annual salary increases and higher profit sharing accruals related to the higher earnings level. Other expenditures such as travel and training expenses increased to support activity and staffing levels. As a percentage of revenue, selling and administrative expenses were lower at 15.3% through the first half of the year versus 16.8% for the similar period last year.

Speaker 1

Operating income was not quite double that of last year at $9,800,000 for the quarter, reflecting improved gross margins and higher revenue. Bookings increased 30% in the quarter. Industrial orders increased 70% compared to last year with increases in both Canada and the U. S. Recreational bookings were lower in both markets.

Speaker 1

Backlog of $207,000,000 was 19% higher versus last year, reflecting continued good order intake and some deferral or delay in construction schedules, mainly resulting from supply chain constraints. Approximately 55 percent of the backlog is to be realized as revenue over the remainder of 2023. However, again, This is subject to construction schedules and potential supply chain constraints. On slide 5, I'd like to touch on a few key financial highlights. Investment in non cash working capital increased 52% versus a year ago, mainly driven by higher inventory levels.

Speaker 1

Inventory levels are higher than the prior year, driven by a number of factors, including a strong backlog, delivery timing, variability in the supply chain for both equipment and parts, higher activity levels coupled with foreign exchange and inflation. Accounts receivable continued to receive focus while DSO improved slightly. We are closely managing the aging of our receivables and credit metrics. We ended the Q1 with ample liquidity, including cash of 734,000,000 and an additional $471,000,000 available to us on our existing credit facilities. Our net debt to total capitalization ratio was at negative 4%.

Speaker 1

We purchased and canceled 238,000 common shares for 25,000,000 during the quarter under our NCIB program. These purchases are reflective of good capital hygiene by mitigating option exercise dilution. Overall, Our balance sheet remains well positioned to support operational needs and we are prepared to manage challenges related to the economic variables and business conditions. We continue to exercise the operational and financial discipline one would expect as we evaluate investment opportunities that may develop over time. Oromont targets a return on equity of 18% over a business cycle.

Speaker 1

Return on equity improved to 24.6% compared to 20.5% for Q2 of 2022 and exceeds our 5 year average of 20.7% as well. Return on capital employed was 31.9%, up from 29.4% for Q2 of 2022. Improvement of both of these metrics reflect improved earnings and continued capital discipline. And finally, as announced yesterday, the Board of Directors approved the regular quarterly dividend of $0.43 per share payable on October 4, 2023 to shareholders on record on September 8, 2023. On Slide 8, we conclude with some key takeaways as we look forward to the second half of the year.

Speaker 1

We expect the business environment to gradually improve. However, a number of factors are in play, some of which include the evolving dynamics of the global supply chain and improving availability, inflation, Inflationary and macro and economic trends and managing customer credit risk along with growth opportunities, all of which can overshadow normal seasonality and customer buying patterns. We continue to proactively monitor developments and are taking actions we believe to be appropriate. As one would expect, we consistently focus on key priority areas, including safe operational execution, serving and supporting our customer requirements and our disciplined approach to capital allocation as we focus on building our business for the long term. Our backlog levels remain well positioned.

Speaker 1

However, as noted, care must be taken to monitor customer buying patterns and preferences. In In terms of technician hiring, we continue to make good progress and this remains an essential focus to support our growth in our aftermarket and value added product and service offerings. Operationally and financially, we are well positioned with ample liquidity and our strong leadership team's disciplined culture and focused operating models. We appreciate our entire team's effort and commitment to continue to support our customers and deliver value for our stakeholders. Thanks also to our valued customers, supply partners and shareholders for their ongoing support.

Speaker 1

That concludes our prepared remarks. At this time, we will be pleased to take questions. Ennis, over to you please to set up the first call.

Operator

Thank you, sir. Ladies and gentlemen, we will now begin the and Your first question will come from Cherilyn Radbourne with TD. Please go ahead.

Speaker 3

Thanks very much and good morning, Scott and Mike.

Speaker 4

Good morning.

Speaker 3

You had some strong additions to the rental fleet in the first half. So I'm curious what your Spending plans are for the second half and whether due to supply chain constraints, you're still having to choose carefully between adding to the rental fleet versus satisfying retail demand?

Speaker 1

Yes. Thanks, Cherilyn. Good question. So what you'll note In our disclosure is, we did add significantly to our heavy and light fleet, And probably a little ahead of pace for the balance of the year. And so what we are seeing in terms of availability, Certain units are more available.

Speaker 1

If you think of the light fleet, we've talked about a few units such as excavators and so forth, but there's still some constraints in other areas. And There is still some optimization going on for certain units, but we are seeing better availability. And when you look at our CapEx spend in their disclosures, you'll note that we are pacing above On a net addition basis, we are pacing above by about $60,000,000 versus last year.

Speaker 2

Yes. Just a little more there, Shaul. We've been out of sync in Those fleet uploads for some time now because of availability constraints. So we're trying to address some of that. So it's Probably a bit more lumpy than normal.

Speaker 2

So there's still tough comps in there on a historical basis on that front. So teams working hard to get those fleets where we want them plus execute our and advancing our strategy there as well.

Speaker 3

Okay. And then I noticed that service work in process was relatively flat year over year, which was a bit surprising given the strength elsewhere in the business and the increase in parts inventory. So I was just wondering if that was a point in time thing or if there was some other reason for that?

Speaker 2

Again, when you look at historically, we had some you're seeing some improvement in there in parts flow, although still certain areas The parts requirements are tight. So we're moving through the flow better. What I think was we were pleased with is you see some strong service numbers in there. That's Reflective of we've been executing the hiring of the techs. So we're getting better throughput there.

Speaker 2

And again, so you're dealing with some interesting comps, But we were really satisfied with the parts and service growth in the quarter and the first half and Please with those labor

Speaker 3

sales. So you'd say it's generally because there's better flow through work in progress? That's part

Speaker 2

of it. Yes. And there were some our rebuild programs in the first half were up again. So that strategy continues, but we're monitoring things closely, but we were Pleased with what we saw in aftermarket activity and our penetration there to capitalizing on the opportunities.

Speaker 3

Great. That's my 2, so I'll pass it on. Thank you. Thanks, Sean.

Operator

Your next question will come from Michael Doumet with Scotiabank. Please Go ahead.

Speaker 2

Hey, good morning guys.

Speaker 1

Good morning.

Speaker 5

First question on product support. We've seen 4 or 5 quarters strong double digit growth and I'm assuming price realization played a role. So maybe 2 part question. Is the year on year price realization expected to moderate in the second half of twenty twenty three? And on the volumes, Is there an element of normalization that we should consider going forward or is the volume growth sustainable there?

Speaker 1

Yes. So maybe just to start that one, Michael. I think we did see as we spoke about over the last probably last 4 or 5 quarters, We did see some inflationary effects right across the board as everybody did. And so again, we monitor that pretty carefully. And I do think there is although we Break it out.

Speaker 1

There is an effect there in terms of nominal growth, should be reflective of some of the inflationary effects, Right. I think we do see, as we mentioned in the call, we do see some higher activity and flow through, as Scott just touched on as well, which is driving Real growth in that area and happy to see those activity levels increase. And so, we're just monitoring the environment right now in terms of Inflationary effects, they've seem to have broadly tapered across the economy, if you will. But yet to be determined how we see that materialize over the second half of the year and going into next year.

Speaker 5

Terrific. Thanks. That's helpful. And then maybe just To the backlog, nice to see an increase there after what it looked like we were seeing some normalization. So On the mining and power system orders, would you characterize those as several large wins?

Speaker 5

Or is there Potentially part of a trend there because we didn't necessarily see that dynamic in construction and material handling.

Speaker 1

Yes, I think a couple of things. I mean, we did book, as we mentioned, we did book some orders and you'll see like I think it's Important also just to reflect on the backlog itself versus the bookings. The bookings were strong in the quarter. As we mentioned, mining was up quite a bit. And Power Systems as well as in there was up nicely as well.

Speaker 1

And so where construction was pretty flat in the quarter in terms of actual bookings. On the backlog side, you'll see about a third of the backlog in the equipment group relates to mining. And so there's some a couple of nice orders booked there. And I think, Again, the team does a nice job of continuing to work hard to earn our way into some opportunities and continue to deliver Some of the other activity that we were awarded over the last year and a half or so.

Speaker 5

Perfect. Very nice quarter guys. Those are my 2.

Speaker 1

Great. Thanks, Michael.

Operator

Your next question will come from Steve Hansen with Raymond James. Please go ahead.

Speaker 4

Yes. Good morning, everyone. Thanks for the time. Just a broader question about your inventory or working capital levels at this point. How do you feel about them?

Speaker 4

You've obviously got a deep backlog to deliver against here, but with the supply chain loosening pretty quickly, we are hearing some indications that firms are reassessing the safety stock levels they might have had Place through the pandemic. Just curious how you feel about that interplay. Thanks.

Speaker 1

Yes. Thanks, Steve. That's a good question. I think if you look at our again, looking at our inventory levels That would relative depends how you measure it. If you measure it relative to the end of the year, we're up about almost $90,000,000 in overall inventory, but about $200,000,000 comparatively to Q2 of last year.

Speaker 1

As we mentioned, there's still some constraints on certain units in terms of availability, but we are seeing better flow Of inventory in other areas and so forth. You see that, as we mentioned, broadly speaking, their sales numbers. When we talk about mix between new and used, we're seeing growth in the new areas, new equipment sales, And we're being very targeted on used. And so that's an indication. And so as we look at the inventory levels, I wouldn't say it's normalized.

Speaker 1

I wouldn't say that we're back to where We would expect to be under ideal conditions, but it is improving and We continue to see some improvement in each of our OEM areas throughout the year so far. But we still have a little ways to go And the team is working pretty hard to optimize areas, especially like I mentioned on the used side of things.

Speaker 2

I think we've Steve, you've been out of sync there a bit, right, on normal Yes. Relative to pipeline forecasting and things of that nature, we're getting into more normalized states. So that working capital is an area of focus.

Speaker 4

Okay. That's helpful. And just one follow-up. This may be a bit premature, but there's some very large linear projects in Canada, TMX, Coastal GasLink, etcetera, they're winding towards completion here. They've consumed an incredible amount of equipment over the past 5 years, particularly in Western Canada.

Speaker 4

Any thoughts on What these completions might mean for the broader used market in Canada and the rental markets in particular?

Speaker 2

Well, we don't like to speculate. There's lots of talk going on in mining segments and infrastructure, but we don't we just comment on what we saw in the quarter. Again, in the quarter, I think there was solid quoting activity. We had some nice wins as you saw in the backlog. We're not getting too far ahead of ourselves here.

Speaker 2

So we're monitoring these things closely, but There were some segments that we saw some softening, but the team executed well to build that Those bookings that was we're pleased with that. And so we'll see how things play out, right?

Speaker 4

Okay, great. Appreciate the color guys. Thanks. Thanks.

Operator

Your next question comes from Jacob Bout with CIBC. Please go ahead.

Speaker 6

Good morning.

Speaker 1

Good morning, Jacob. Good morning.

Speaker 2

Good morning, Jacob. Good morning.

Speaker 6

Just a question here on the sustainability of margins going forward. I know there's lots of moving parts, including mix. But I noticed in the MD and A, you're talking about equipment margins being lower year on year. How do you see this trend continuing as equipment availability improves?

Speaker 1

Yes, I think not surprisingly, Jacob, we commented a little bit around mix has helped us on an overall margin basis when you think of equipment versus Product support and the growth that we've seen in the product support side in new. But as we mentioned earlier, it's one of the things we're certainly watching with availability. We've been in a quite a different market, both in new and used, frankly, for quite a considerable period of time, which has supported Decent margins performance and so forth. And we anticipate that we would see a little bit more normalization over time as availability and it would be again, it would go back to specific units, but we are seeing improvements there and we're being conservative, I think in terms of how we're thinking about it.

Speaker 2

I think the quarter also reflected the type of equipment that was being sold. So you get shifts in there on margin. There was some softening in there, but that's reflective of some of the type of iron that was being sold. But Again, the good thing was the team secured some solid business there. We had some favorable outcomes there due to the product support as Total percentage, which was nice to see and again we're very focused on that product support strategy in the aftermarket.

Speaker 2

And So that's a bit more color on what happened there in the quarter.

Speaker 6

And my second question here, I know last quarter you talked about some customers Turning cautious, it seems like you have a more positive tone coming at

Speaker 2

this quarter. I would I'll jump in there. We're monitoring. We did see some softness in certain areas, but the team executed well. So I wouldn't say we've changed our tone in this type of economic climate.

Speaker 2

This is all about execution and delivering a value proposition to your customers and we're doing that.

Speaker 6

What areas are you seeing?

Speaker 2

The tone has changed.

Speaker 6

Okay. What area are you seeing some softness right now?

Speaker 2

Well, there were certain pockets in certain segments and And things, but I think overall activity and you got to be careful here. This is why you're coming off some historical numbers, right? We've Talking about that for a while. So these comps are they're tough because some of these Areas we were operating in had some historically high numbers. So I would say when you look at it overall in the first half and the quarter, what we saw is still solid activity And we're monitoring closely.

Speaker 6

Thank you.

Speaker 2

And we were pleased with the bookings in the quarter.

Operator

Your next question comes from Davis Bacon with BMO Capital Markets. Please go ahead.

Speaker 7

Hi. This is Davis on for Devon Dodge. So the balance sheet is in great shape and you have a lot of fiscal capability, where do you see the most opportunities to invest in the organic growth of the business over the next couple of years?

Speaker 1

Yes. Thanks, Davis. So a couple of things we've mentioned. I think 1st and foremost, it's managing, as Scott mentioned earlier, the capital working capital And supporting serving our customers and so forth is our primary focus. It's the care and feeding of the business and supporting customer requirements.

Speaker 1

And we do see some investment there. We see it both in the rental fleets. We see it in some of the inventory levels, but also Just making sure that we're prepared to respond to customer requirements where it's new or used. I think the second thing would be organic investment is a priority. We've talked a little For example, our remanufacturing build out, we're investing considerable CapEx there this year and into the early part of next year.

Speaker 1

And so continue to develop the remanufacturing product support capabilities for our customers In an area of focus and we'll continue to add. Again, it's more about growing our product offer, our service offer, whether that's in the rental business And the product support is a natural one as well in different areas. And so that would be our focus. I would say as we go into the second half, we think about the economic climate. The team is really focused on execution, supporting our working capital and our credit risk and areas working capital that we need to look Carefully in terms of including inventory and then looking longer term on investment in areas we control like remanufacturing.

Speaker 7

Okay. Thank you. I'll turn it over.

Speaker 1

Thanks, guys.

Operator

Your next question comes from Sabahat Khan with RBC Capital Markets. Please go ahead.

Speaker 8

Hi, thanks. So I just wanted to get some perspective on you talked about some mixed demand signals out there, also obviously trying to build inventory in this environment where Supply chains are still a bit uncertain. Can you maybe talk about how you're managing that, the need to have the right inventory while still not kind of overstocking case There's a significant macro slowdown. Just some perspective on how you're managing kind of the outlook.

Speaker 1

Yes. Maybe just to start on that, Sabah. Thanks for the question. I think as we've been saying, there are a number of variables, right? And I think you touched on some of them.

Speaker 1

I think as we look at the environment today, There is better availability. We are fulfilling. We had quite a considerable backlog going into the quarter. The team did a nice job of executing well on that. The softer areas we touched on, for example, on the construction side was a little bit subdued compared to the other segments Like mining and power where we saw some great growth as well as some nice order input.

Speaker 1

And so CIMCO as well seems to be doing well on their side of the business and executing well both on the package side and the product support side. And so Again, we're monitoring that really carefully. I would say that we're watching rental activity carefully. We're watching The RPO models were up a little bit, but still well below what we normally would see. And so those patterns and behaviors have It started to show some improvement, but I would say we're still far from normal in that sense.

Speaker 2

But just in terms of the mixed demand signals, we're going to I think we're going to be able to get back to better monitoring demand signals relative to the pipeline, how we manage that and the pull for the parts and the prime product and then I mean that backlog is still very solid on a historical basis. So we're satisfied with that. And we were pleased the rental demand signals remained fairly solid. And then we were able to Really start to address those fleets like we've been wanting to do for a while now.

Speaker 8

Great. And then just second one, and I think Mike just touched On the rental part, just a 2 part question. 1, how is the demand for rentals trending as some of the new equipment availability improves? Are you seeing a bit of Shift back to that. And then secondly, I think the company has been making some progress on driving rental margins higher.

Speaker 8

Part of that was kind of the full cycle, part of that was your integration. Just maybe Where are you on that full rental margin potential for the Toromont business at this point?

Speaker 1

Sure. Maybe just to start on a couple of key points you I think when you look at our rental business, we've invested pretty heavily as we talked about earlier. And so we're starting to see better availability, but there's still certain units, as I mentioned earlier, that are constrained and we're still Optimizing in terms of how that turns over in the full cycle. As you mentioned, we're not disposing of as many units in certain areas. On the other hand, you'll see the additions to the fleet.

Speaker 1

And the activity levels are pretty good. We mentioned the growth in the rental side overall. It's up nicely in the quarter, but with a larger fleet, larger investment, again, the inflationary costs On new units and so forth, I think again that's why when you look at our margin side of things, You see it's relatively flat versus a quarter ago. And so although activity is up, growth is up, we are also seeing that some of those costs Start to come in. I think the other piece for us is continue to monitor return to ready our labor component and technician availability and that's still constraint in some areas, right.

Speaker 1

So that's a little bit of a factor as well when we think of the overall rental picture.

Speaker 8

Great. Thanks very much.

Operator

Thank you. There are no further questions comes at this time. I will turn the conference back to Mr. McMillan for some closing remarks.

Speaker 1

Great. Thanks very much, Ennis, And to everyone for your participation today. That concludes our call for Q2. I hope you have a safe and enjoyable balance of your summer. We Look forward to speaking to you at Q3.

Speaker 1

Take care.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your

Powered by Quartr

Key Takeaways

  • Toromont reported Q2 revenue up 12% and net earnings from continuing operations up 20% year-over-year, driven by strong equipment deliveries, rental growth and expense management.
  • Bookings surged 69% in Q2 (10% year-to-date) and backlog remains healthy at approximately $1.3 billion, supporting deliveries through the remainder of 2023.
  • The Equipment Group delivered 11% revenue growth with new equipment sales up 16%, rental revenue up 7% and product support up 12%, while CIMCO achieved 19% revenue growth and expanded gross margins by 200 basis points.
  • Toromont’s balance sheet is strong with $734 million in cash, negative net debt (–4% net debt-to-capital), and $25 million of share repurchases under its NCIB in Q2.
  • Management expects a gradually improving business environment but remains cautious on inflation, interest rates and supply chains, focusing on aftermarket strategies, technician recruitment and disciplined capital allocation.
AI Generated. May Contain Errors.
Earnings Conference Call
Toromont Industries Q2 2023
00:00 / 00:00