TOROMONT ANNOUNCES RESULTS FOR THE THIRD QUARTER OF 2024 AND QUARTERLY DIVIDEND
Canada NewsWire
TORONTO, Nov. 4, 2024
TORONTO, Nov. 4, 2024 /CNW/ - Toromont Industries Ltd. (TSX: TIH) today reported its financial results for the third quarter ended September 30, 2024.
Three months ended September 30 Nine months ended September 30
($ millions, 2024 2023 % change 2024 2023 % change
except per
share
amounts)
Revenue $ 1,338.0 $ 1,174.0 14 % $ 3,714.2 $ 3,395.4 9 %
Operating
income $ 174.9 $ 193.1 (9) % $ 459.0 $ 499.7 (8) %
Net earnings $ 131.0 $ 145.6 (10) % $ 350.2 $ 380.7 (8) %
Basic
earnings per
share
("EPS") $ 1.60 $ 1.77 (10) % $ 4.27 $ 4.63 (8) %
Continuing
operations:
Net earnings $ 131.0 $ 145.6 (10) % $ 350.2 $ 375.1 (7) %
Basic
earnings per
share
("EPS") $ 1.60 $ 1.77 (10) % $ 4.27 $ 4.56 (6) %
"Results for the third quarter of 2024 reflect good activity levels across most markets as well as continued execution against a strong order backlog. Bottom line results have been dampened as expected against a strong comparator reflective of market dynamics in play last year," stated Michael S. McMillan, President and Chief Executive Officer of Toromont Industries Ltd. "The Equipment Group executed well with solid new equipment deliveries. Rental markets, specifically light equipment, picked up in the quarter. CIMCO revenue and bottom line improved on good activity and execution. Our financial position remained strong as we continued to invest in the business through working capital and a business acquisition. Although residential related activities are experiencing a slower part of the business cycle, this is partially offset by the completion of deliveries in mining related to mine development and expansion in our territory. As we look out over the next cycle, we anticipate a more balanced revenue mix with a focus on Product Support as recent equipment deliveries are utilized. Our team remains focused on our long--term investment strategies and our operating disciplines, driving our after-market strategies and delivering customer solutions."
HIGHLIGHTS:
Consolidated Results
-- Revenue increased $163.9 million or 14% in the third quarter compared to
the similar period last year, with higher revenue in both groups with
Equipment Group up 14% and CIMCO up 17%. Higher revenue in the Equipment
Group resulted from solid new equipment deliveries against order backlog.
Product support revenue was healthy while rental revenue recovered
slightly against easing market conditions, with improved activity for
light equipment. CIMCO's growth reflects good package revenue, dampened
slightly by lower product support activity levels in the US.
-- Revenue increased $318.8 million (up 9%) to $3.7 billion for the
year--to--date period. Revenue increased in the Equipment Group 9% and
increased at CIMCO 14% compared to the third quarter of 2023.
-- Gross profit margins(1) decreased to 24.5% in the quarter and 24.4% for
the year-to-date. This represents a 410 bps and 260 bps reduction
respectively. Sales mix was unfavourable, with a lower proportion of
product support revenue to total, accounting for 140 bps and 90 bps of
the reduction respectively. Equipment Group gross profit margin on prime
equipment sales and rentals were lower reflecting market dynamics in
play.
-- Operating income(1) decreased 9% in the quarter, as the higher revenue
was more than offset by lower gross margins and higher expenses.
Operating income as a percentage of sales decreased to 13.1% from 16.4%
in the prior year, reflecting lower gross margins in the current period.
-- Operating income decreased 8% in the year--to--date period, and was 12.4%
of revenue compared to 14.7% in the similar period last year. The
decrease in operating income reflects the higher revenue, more than
offset by lower gross margins and higher expenses primarily related to
growth initiatives.
-- Net earnings from continuing operations decreased $14.7 million or 10% in
the quarter versus a year ago to $131.0 million. EPS was $1.60 (basic)
and $1.59 (fully diluted), lower by 10% compared to the third quarter
last year.
-- For the year--to--date period, net earnings from continuing operations
decreased $24.8 million or 7% to $350.2 million compared to the similar
period last year. EPS was $4.27 (basic) and $4.23 (fully diluted), lower
6% compared to last year.
-- Bookings(1) for the third quarter increased 4% compared to last year with
higher bookings in the Equipment Group being offset by lower bookings at
CIMCO against a strong comparator. On a year-to-date basis, bookings
increased 11% with both groups reporting higher bookings: Equipment Group
up 12% and CIMCO up 1%, on a strong comparator.
-- Backlog(1) of $1.1 billion as at September 30, 2024, was down slightly
from $1.2 billion as at September 30, 2023. Backlog remains healthy,
reflecting continued good order intake, offsetting deliveries and
progress on construction and delivery schedules.
Equipment Group
-- Revenue was up $145.2 million or 14% to $1.2 billion for the quarter. New
equipment sales increased 36%, with good activity and deliveries in the
mining and construction markets. Rental revenue demonstrated a marginal
recovery from earlier this year with improved light equipment activity.
Product support activity was good, with a healthy increase in service,
reflecting continued growth of our technician workforce, which was
slightly offset by a modest decline in parts revenue.
-- Revenue was up $278.4 million or 9% to $3.4 billion for the
year--to--date period. New equipment sales and product support activity
were higher across most markets and product groups, partially offset by
lower used equipment and rental revenue.
-- Operating income decreased $20.9 million or 12% in the third quarter, as
the higher revenue was more than offset by lower gross margins and higher
expenses, primarily related to growth initiatives. Lower gross margins
reflect an unfavourable sales mix as well as market dynamics in play.
-- Operating income decreased $48.8 million or 10% to $423.5 million in the
year--to--date period, due to similar reasons as noted for the quarter.
Operating income margin decreased to 12.6% versus 15.3% in the comparable
period last year, primarily reflecting lower gross margins.
-- Bookings in the third quarter were $367.5 million, a increase of 14%,
with strong bookings in construction, power systems and material handling
being partially offset with lower mining orders. Year-to-date bookings
were $1.5 billion, an increase of 12% from the similar period last year.
Construction bookings increased 22%, reflecting good market activity.
Mining was also strong with good orders received through the first half
of the year. Power systems order activity was lower, in part reflecting a
large project received last year. Both mining and power systems orders
have more variability over time due to the nature of orders.
-- Backlog of $803.7 million at the end of September 2024 was down $167.4
million or 17% from the end of September 2023, reflecting deliveries
against opening backlog offset by new bookings.
CIMCO
-- Revenue increased $18.7 million or 17% compared to the third quarter last
year. Package revenue was higher, up 41%, with good execution on package
project construction. Product support revenue was down 2%, reflecting
good market activity in Canada supported by the increased technician
workforce, offset by lower US activity.
-- Revenue increased $40.4 million or 14% to $339.6 million for the
year--to--date period as package revenue was up 21% on good execution on
package project construction, in both the recreational and industrial
markets. Product support activity was up 6%, with increases in both
Canada and the US.
-- Operating income increased $2.7 million or 21% for the quarter, as higher
revenue was partly offset by lower gross margins and higher relative
expenses in support of the increased activity.
-- Operating income was up $8.1 million or 30% to $35.5 million for the
year--to--date period, reflecting higher revenue and gross margins,
partially offset by higher expenses. Operating income margin increased to
10.4% (2023 -- 9.1%) reflecting higher gross margins on good execution.
-- Bookings decreased 34% in the third quarter, against a strong comparative
to $56.8 million, however were 1% higher for the year--to--date period at
$192.5 million. For the first nine months of the year, higher bookings in
the US, up 95%, were largely offset by lower bookings in Canada, down
23%. Recreational bookings were 109% higher while industrial bookings
were 42% lower. Booking activity can be variable over time based on
customer decision making and construction schedules.
-- Backlog of $275.8 million at September 30, 2024 was up $30.5 million or
12% from last year, with an increase in both Canada and the US.
Industrial backlog decreased slightly down 2%, with a decrease in Canada,
largely offset by an increase in the US. Recreational backlog was up 32%,
predominately reflecting a strong increase in Canada and a modest
decrease in the US.
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