Toromont Industries (TIH) Q4 2023 earnings summary

Executive summary

• FY revenue rose 12% to $4,622.3M and operating income 14% to $704.2M; continuing-operations net earnings increased 18% to $529.1M, with basic EPS of $6.43.

• Q4 revenue grew 9% to $1,227M; operating income fell 3% to $204.6M, continuing-operations net earnings declined 3% to $154.1M and basic EPS fell 4% to $1.87.

• Improved vendor supply, strong opening backlog, product support and rental activity supported execution; Q4 bookings rose 49% and backlog was $1.2B, relatively unchanged year over year.

Financial highlights

• FY reported net earnings were $534.7M versus $454.2M; continuing-operations net earnings increased $79.0M to $529.1M, with diluted EPS of $6.38.

• Q4 operating income excluding property gains in both years increased 5%, as higher revenue was partly offset by lower gross margins; FY operating margin was 15.2% versus 15.0%.

• Q4 revenue growth spanned equipment sales (+12%), product support (+5%) and rental (+7%); FY growth was 15%, 11% and 8%, respectively.

• Q4 expenses increased 14%; higher compensation, profit-sharing accruals and DSU mark-to-market adjustments were partly offset by lower pension and bad-debt expenses. Interest income rose $4.5M in Q4 and $24.3M FY.

• Q4 2022 included a $15.4M after-tax property-disposition gain ($0.19 per share); FY pre-tax property gains were $5.0M in 2023 versus $17.7M in 2022.

Segment performance

• Equipment Group FY revenue rose 12% to $4.2B and operating income increased 12% to $664.7M, with margin unchanged at 15.7%.

• Equipment Group Q4 revenue rose 9%; new equipment sales increased 19%, with rental and product support growth. Operating income excluding the prior-year property gain increased 7%.

• Equipment Group bookings rose 53% in Q4 and 14% FY; backlog fell 7% year over year as delivery availability improved and planned customer orders were fulfilled.

• CIMCO FY revenue increased 13% to $397.2M; operating income rose 49% to $39.5M and margin improved to 10.0% from 7.5%.

• CIMCO Q4 revenue grew 2% as product support rose 14% and package revenue fell 8% amid delivery and project delays; operating income declined 12%. FY bookings rose 19% and backlog 29% to $255.2M.