Toromont Industries (TIH) Q3 2024 earnings summary

Executive summary

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

• Net income from continuing operations declined 10% to $131.7 million, reflecting margin pressure from normalized product availability, higher expenses, and a strong prior-year comparator.

• The acquisition of Tri-City Equipment Rentals for $77.5 million in September 2024 expanded the heavy equipment rental business in Southwestern Ontario.

• Board expanded to 11 members, with two new independent directors joining.

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

Financial highlights

• Revenue rose to $1,338M in Q3 2024 from $1,174M in Q3 2023 (+14%); year-to-date revenue up 9% to $3.71 billion.

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

• Operating income decreased 9% in Q3 to $174.9 million, with margin down to 13.1% from 16.4% last year; year-to-date operating income fell 8%.

• Net earnings from continuing operations fell 10% in Q3 to $131.7 million; basic EPS was $1.60 for Q3 and $4.27 year-to-date.

• Cash position at quarter-end was $671 million, with an additional $461 million in available credit.

Outlook and guidance

• Management anticipates a more balanced revenue mix, with product support expected to grow as recent equipment deliveries are utilized.

• Backlogs and bookings remain solid, supporting a positive operational and financial position heading into Q4.

• Technician hiring and investment in aftermarket service capabilities remain key priorities.

• Cautious optimism for residential and construction markets as interest rates stabilize, with significant activity increases expected next year.

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