Toromont Industries (TIH) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 14% year-over-year to $1.34 billion, driven by strong new equipment deliveries and improved rental activity, especially in light equipment; CIMCO also posted solid growth.

• Net earnings from continuing operations fell 10% to $131.0 million, with EPS down 10% to $1.60, reflecting lower gross margins and higher expenses despite higher revenue.

• The company completed the acquisition of Tri-City Equipment Rentals for $77.5 million in September 2024, expanding heavy equipment rental operations in Southwestern Ontario.

• Two new independent directors joined the board, expanding it to eleven members, with ten independent.

• Backlog remains healthy at $1.1 billion, with Q3 bookings up 4% and 90% expected to be delivered in the next 12 months.

Financial highlights

• Q3 2024 revenue was $1,338M, up 14% year-over-year; YTD revenue up 9% to $3.71 billion.

• Net earnings from continuing operations down 10% in Q3 to $131.7M; YTD down 7% to $350.2M.

• Basic EPS from continuing operations was $1.60 in Q3 and $4.27 YTD.

• Gross profit margin declined 410–440 bps in Q3 to 24.5%, mainly due to sales mix and lower product support revenue.

• Operating income decreased 9% in Q3 to $174.9M, with margin down to 13.1% from 16.4% last year.

Outlook and guidance

• Backlog remains solid at $1.1 billion, supporting a positive operational and financial position heading into Q4.

• Management anticipates a more balanced revenue mix in the next cycle, with increased focus on Product Support as recent equipment deliveries are utilized.

• Cautious optimism for residential and construction markets as interest rates begin to ease, but meaningful activity is expected next year.

• Technician hiring and disciplined execution remain key priorities to meet growing demand and support aftermarket growth.

• CIMCO is expected to continue performing well, supported by a strong order backlog and improved operating discipline.