TOROMONT ANNOUNCES RESULTS FOR THE SECOND QUARTER OF 2025 AND QUARTERLY DIVIDEND

Executive Summary

• Toromont Industries reported financial results for the second quarter and first half of 2025, showing a slight increase in revenue but a decrease in net earnings and operating income compared to the prior year.
• The decline in profitability was primarily driven by higher expenses, lower gross margins, and significant non-cash acquisition-related costs associated with AVL Manufacturing Inc., as well as increased interest expenses.
• The company announced a regular quarterly dividend of $0.52 per share and provided updates on segment performance, with CIMCO showing strong growth while the Equipment Group faced headwinds in mining deliveries.

Key Details

• Financial Results (Q2 2025 vs Q2 2024):
  • Revenue: $1,376.5 million (up 1%).
  • Operating Income: $170.7 million (down 4%).
  • Net Earnings: $124.3 million (down 8%).
  • Basic EPS: $1.53 (down 7%).
• Financial Results (Six Months Ended June 30, 2025 vs 2024):
  • Revenue: $2,466.1 million (up 4%).
  • Operating Income: $269.2 million (down 5%).
  • Net Earnings: $198.8 million (down 9%).
  • Basic EPS: $2.45 (down 8%).
• Segment Performance:
  • Equipment Group: Revenue remained relatively unchanged at $1.2 billion in Q2. New equipment sales decreased 5% due to lower mining deliveries, offset by increases in construction and power systems. Rental revenue increased 15%. Operating income decreased 7% to $154.1 million. Bookings increased 5% to $637.8 million. Backlog was $1.0 billion.
  • CIMCO: Revenue increased 13% to $236.2 million year-to-date (Q2 revenue up 13%). Package revenue was up 22% in Q2. Operating income increased 36% to $16.0 million in Q2. Bookings surged 185% in Q2 to $93.0 million. Backlog increased 21% to $351.0 million.
• Acquisition & Operational Updates:
  • AVL Manufacturing: Revenues were $57.0 million (Q2) and $79.0 million (YTD). The company recognized $21.5 million (Q2) and $30.0 million (YTD) in non-cash expenses related to acquisition accounting (amortization of intangibles and purchase commitments). AVL reported a net loss of approximately $0.03-$0.04 per share.
  • Facility Acquisition: Toromont acquired a facility in Charlotte, North Carolina, for approximately $60.0 million to expand production capacity, expected to begin production in Q4 2025.
• Financial Position & Capital Allocation:
  • Dividend: Board approved a quarterly dividend of $0.52 per share, payable October 3, 2025, to shareholders of record on September 5, 2025.
  • Share Buybacks: Purchased and cancelled 337,500 common shares for $40.3 million under the Normal Course Issuer Bid in the first half of 2025.
  • Debt Redemption: On July 11, 2025, the company completed the early redemption of 10-year, 3.71% senior debentures for approximately $151.6 million using cash on hand.
  • Leverage: Net debt to total capitalization ratio was -3% at June 30, 2025.
  • Returns: Return on Equity (ROE) was 17.6% (TTM); Return on Capital Employed (ROCE) was 23.1% (TTM).
• Backlog & Bookings:
  • Consolidated Backlog: $1.4 billion at June 30, 2025 (up slightly from $1.3 billion in 2024).
  • Consolidated Bookings: Increased 14% in Q2 and 1% year-to-date.

Notable Quotes

• "Our team delivered resilient results in the second quarter while continuing to navigate macroeconomic and international trade uncertainties. Our disciplined approach remains unchanged and we continue to invest in our people and capabilities to support our customers today and into the future." — Michael S. McMillan, President and CEO
• "The ongoing trade tensions create additional variability and uncertainty for every company engaged in cross border trade. Our team is engaged, monitoring and developing an appropriate action plan to navigate the potential impacts over the short and longer term when details become available." — John M. Doolittle, Executive Vice President and CFO