Toromont Industries (TSE:TIH) reported third-quarter revenue growth of 26% to approximately C$1.65 billion, supported by higher equipment deliveries, rental activity and product support revenue. Operating income rose 46% as stronger revenue and gross margins more than offset higher expenses.
President and CEO Mike McMillan described the period as one of “good operational execution,” citing growth across the company’s Equipment Group and CIMCO refrigeration business, a larger order backlog and continued financial flexibility.
Gross profit margin increased 240 basis points from a year earlier to 29.1% in the quarter. Net earnings rose 37%, while basic earnings per share increased 36% to C$2.35. For the first nine months of 2026, net earnings increased C$69.9 million, or 21%, and year-to-date earnings per share reached C$5.02.
Equipment Group drives growth
The Equipment Group’s revenue increased 26% in the quarter and 19% through the first nine months of the year. New and used equipment sales combined rose 41% in the quarter, led by mining deliveries, power systems revenue and improved construction activity.
New equipment sales increased 49% in the quarter, while used equipment sales declined 4%, primarily because of lower mining activity. By market, total equipment revenue increased 55% in mining, 108% in power systems and 11% in construction. Material handling revenue declined 36%.
Rental revenue increased 12% in the quarter, reflecting a larger fleet and higher activity levels. Heavy-equipment rental revenue climbed 40%, light-equipment rental revenue rose 6%, and power rental revenue gained 16%. Material-handling rental revenue declined 6%.
Product support revenue increased 14% in the quarter and 11% year to date, aided by higher equipment utilization and a larger technician workforce. McMillan said mining deliveries made over recent years are beginning to contribute more meaningfully to product support, as fleets move beyond preventative maintenance into component replacement and other service work.
Equipment Group gross profit margins increased 320 basis points in the quarter. Management said favorable equipment-sales mix and stronger rental utilization supported the improvement, although product support made up a lower portion of total revenue and product support margins declined modestly because of the nature of the work performed.
Equipment Group operating income rose 50% during the quarter. Selling and administrative expenses increased C$41.2 million, or 30%, reflecting compensation, training, travel, occupancy costs and other growth investments. The prior-year comparison also included a C$14 million gain on a property sale.
Backlog expands, AVL capacity ramps
Total bookings increased 50% to about C$892 million in the quarter, led by the Equipment Group, where bookings rose 59%. Mining orders increased 294% against what management characterized as a soft comparison, while power systems orders rose 84% and construction orders increased 13%. Material-handling orders fell 28%.
Total company backlog ended the quarter at approximately C$2.9 billion, compared with C$1.3 billion a year earlier. The backlog includes a significant enclosure-business order disclosed in the second quarter that is expected to be delivered substantially in 2027.
The Equipment Group’s backlog stood at C$2.5 billion at Sept. 30, with approximately 70% expected to be delivered over the next 12 months, subject to supplier availability, customer activity and delivery schedules.
John Doolittle, executive vice president and chief financial officer, said AVL revenue reached C$218 million in the quarter, compared with C$78 million in the prior-year period. He said AVL expanded production capacity in Charlotte to roughly the level of its Hamilton operation by the end of the third quarter. Management expects additional incremental production gains from Charlotte, while the Waterdown facility is expected to begin ramping in the third quarter of 2027.
McMillan said demand for enclosures remains strong, particularly looking into 2028 and 2029, although firm orders are generally concentrated through 2027 and into early 2028. He identified engine availability, construction schedules and site sequencing as constraints affecting the pace of projects.
CIMCO revenue rises as margins decline
CIMCO revenue increased 23% in the quarter and 9% year to date, following what Doolittle described as a slow start to the year. Package revenue rose 33%, driven by project timing and higher activity in recreational and industrial markets in Canada and the United States.
Industrial package revenue increased 61% in the quarter, while recreational package revenue rose 21%. Product support revenue grew 9%, led by higher Canadian activity and an expanded technician base.
However, CIMCO gross profit margin declined 410 basis points in the quarter, as package and support margins were lower due to the projects in process. CIMCO operating income increased C$2 million, or 10%, during the quarter, but remained down C$5 million, or 11%, through the first nine months of the year.
CIMCO bookings declined in the quarter but were up 3% year to date. Its backlog was C$324 million, down 5% from the prior year, with Canadian backlog down 14% and U.S. backlog up 10%. About 65% of the backlog is expected to be realized over the next 12 months, subject to construction schedules.
Liquidity, dividend and outlook
Toromont ended the quarter with approximately C$1.2 billion in cash and C$445 million available under existing credit facilities. Its net debt-to-total-capitalization ratio was negative 12%. Return on equity was 17.8%, improving from 16.9% at year-end 2025, while return on capital employed was 26.7%.
The board approved a regular quarterly dividend of C$0.56 per share, payable Jan. 5, 2027.
Looking ahead, McMillan said the company is monitoring trade negotiations, inflation, interest rates, foreign exchange and geopolitical developments. The company said it has experienced limited direct tariff effects so far, though Doolittle said trade uncertainty has weighed on broader economic activity, including in Southwestern Ontario.
Management said it plans to continue investing in technicians, rental fleet capacity and operations while using its backlog and financial position to support growth through the remainder of 2026 and into 2027.
About Toromont Industries (TSE:TIH)
Toromont operates through two business segments: The Equipment Group and CIMCO. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory – spanning the Canadian provinces of Newfoundland & Labrador, Nova Scotia, New Brunswick, Prince Edward Island, Québec, Ontario, and Manitoba in addition to most of the territory of Nunavut. In addition, the Equipment Group includes industry leading rental operations, and a complementary material handling business.
