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1. Company Snapshot

1.a. Company Description

Toromont Industries Ltd.provides specialized capital equipment in Canada, the United States, and internationally.It operates in two segments, Equipment Group and CIMCO.


The Equipment Group segment engages in the sale, rental, and service of mobile equipment for Caterpillar and other manufacturers; sale, rental, and service of engines used in various applications, including industrial, commercial, marine, on-highway trucks, and power generation; and sale of complementary and related products, parts, and services.This segment serves building, mining, aggregates, public infrastructure, residential construction, power generation, marine, agriculture, forestry, on-highway truck engines, industrial, demolition, and waste management markets.The CIMCO segment is involved in the design, engineering, fabrication, installation, and after-sale support of refrigeration systems in industrial and recreational markets.


This segment primarily serves beverage and food processing, cold storage, food distribution, mining, and recreational ice rink sectors.Toromont Industries Ltd.was founded in 1961 and is based in Concord, Canada.

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1.b. Last Insights on TIH

Toromont Industries' recent performance was driven by strong Q4 net earnings and revenue growth, with a notable increase in quarterly dividend. The company's financial results for the three months and year ended December 31, 2025, showed a significant improvement, with net earnings and revenue rising. Additionally, the announcement of a new all-weather road agreement between the Government of Ontario and the Marten Falls First Nation is expected to accelerate access to the Ring of Fire, potentially driving future growth.

1.c. Company Highlights

2. Toromont Industries' Q4 2025 Earnings: A Resilient Performance Amidst Uncertainty

Toromont Industries Limited reported a robust financial performance for the fourth quarter and full year of 2025, with revenue reaching $97.7 million and $254.7 million, respectively. The company's earnings per share (EPS) came in at $1.93, significantly beating analyst estimates of $1.05. The Equipment Group and CIMCO both contributed to the revenue growth, with the Equipment Group increasing by 9% and CIMCO by 10% in the quarter. The company's gross profit margins improved, driven by better sales mix and efficiency, which helped offset higher expense levels.

Publication Date: Feb -17

📋 Highlights
  • Revenue Growth:: Full-year revenue rose 4% to $254.7 million, driven by AVL acquisition integration and higher Equipment Group/CIMCO sales.
  • Dividend Increase:: Quarterly dividend hiked 7.7% to $0.56/share ($2.24 annual), reflecting confidence in future earnings despite lower ROE of 16.9%.
  • Liquidity Strength:: Net debt to capitalization ratio at -19% with $1.3 billion cash and $453 million available credit, ensuring operational flexibility.
  • AVL Acquisition Impact:: $90.4 million pretax noncash amortization from AVL intangibles in 2025, with 68% Equipment Group backlog growth to $1.5 billion.
  • Margin Pressures:: Operating income up 2% YoY, but expenses offset gains; gross margins improved, yet full-year earnings declined due to investment costs.

Segment Performance

The Equipment Group's revenue growth was driven by new equipment deliveries, execution against order backlog, and project schedules, as well as the revenue from the newly acquired business AVL. CIMCO's revenue increase was supported by strong demand for its products and services, with package revenue rising by 4% in the quarter and 18% year-to-date. The company's backlog remained strong at $1.5 billion, up 46% year-over-year, with the Equipment Group backlog increasing by 68%.

Acquisition and Integration

The AVL acquisition is tracking to the production plan, with near-term earnings contributions modest due to noncash purchase accounting adjustments. The company is focusing on ramping up production to support data center projects and is making good progress at the Charlotte facility. As Mike McMillan, President and CEO, mentioned, "the AVL acquisition is tracking to the production plan," indicating a successful integration process.

Valuation and Outlook

Toromont Industries' current valuation metrics indicate a price-to-earnings (P/E) ratio of 33.6 and a price-to-book (P/B) ratio of 5.26. Analysts estimate revenue growth of 4.4% for the next year. The company's strong backlog and improving margins position it for potential long-term growth. However, the near-term outlook remains cautious due to economic uncertainty. The company's return on equity (ROE) was 16.9%, below the target of 18% over the business cycle.

Dividend and Cash Flow

The company announced a 7.7% increase in the quarterly dividend to $0.56 per share, indicating a commitment to returning value to shareholders. The company's cash position remains strong, with $1.3 billion in cash and an additional $453 million available under its existing credit facilities. The net debt to total capitalization ratio was negative 19%, highlighting the company's solid financial position.

3. NewsRoom

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CIBC Details the Companies It Expects May Benefit From Canada's New Defence Industrial Strategy

Feb -18

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Toromont Industries' (TSE:TIH) Shareholders Will Receive A Bigger Dividend Than Last Year

Feb -14

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CIBC Confirms Neutral Rating on Toromont Industries and Raises Target to $200

Feb -12

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Assessing Toromont Industries (TSX:TIH) Valuation After Q4 Beat And 37th Consecutive Dividend Increase

Feb -12

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Toromont Industries Q4 Earnings Call Highlights

Feb -12

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Toromont Industries Ltd (TMTNF) Q4 2025 Earnings Call Highlights: Strong Revenue Growth and ...

Feb -11

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Toromont Industries Q4 Net Earnings and Revenue Rises; Increases Quarterly Dividend

Feb -11

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TOROMONT ANNOUNCES 2025 FOURTH QUARTER AND FULL YEAR RESULTS AND INCREASES QUARTERLY DIVIDEND

Feb -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.59%)

6. Segments

Equipment Group

Expected Growth: 2.5%

Toromont Industries Ltd.'s Equipment Group growth is driven by increasing demand for heavy equipment in construction and mining, government investments in infrastructure, and a growing rental market. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to its 2.5% growth rate.

CIMCO

Expected Growth: 3.5%

CIMCO's 3.5% growth is driven by increasing demand for HVAC and refrigeration solutions, expansion into new markets, and strategic partnerships. Additionally, investments in digitalization and product innovation have improved operational efficiency and enhanced customer experience, contributing to the company's growth momentum.

7. Detailed Products

Heavy Equipment

Toromont Industries Ltd. offers a range of heavy equipment from Caterpillar, including excavators, dozers, loaders, and more.

Power Systems

Toromont Industries Ltd. provides power systems, including generators, switchgear, and transfer switches, for industrial, commercial, and residential applications.

Material Handling

Toromont Industries Ltd. offers material handling solutions, including forklifts, pallet jacks, and warehouse equipment, for efficient warehouse management.

Compression and Process

Toromont Industries Ltd. provides compression and process solutions, including compressors, pumps, and valves, for oil and gas, chemical, and other process industries.

Rental Equipment

Toromont Industries Ltd. offers a range of rental equipment, including aerial lifts, generators, and compressors, for short-term projects and events.

8. Toromont Industries Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Toromont Industries Ltd. operates in a industry with moderate threat of substitutes. The company's products and services are moderately differentiated, and customers have some alternatives, but not many.

Bargaining Power Of Customers

Toromont Industries Ltd. has a diverse customer base, and no single customer has significant bargaining power. The company's customers are also relatively small, which reduces their bargaining power.

Bargaining Power Of Suppliers

Toromont Industries Ltd. has a moderate level of bargaining power with its suppliers. The company relies on a few key suppliers, but it also has some alternative sources, which reduces the suppliers' bargaining power.

Threat Of New Entrants

The threat of new entrants in Toromont Industries Ltd.'s industry is low due to high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in Toromont Industries Ltd.'s industry is high due to the presence of several established competitors, which leads to aggressive pricing and marketing strategies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.92%
Debt Cost 5.70%
Equity Weight 79.08%
Equity Cost 7.57%
WACC 7.18%
Leverage 26.46%

11. Quality Control: Toromont Industries Ltd. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Finning

A-Score: 6.6/10

Value: 4.9

Growth: 7.6

Quality: 5.3

Yield: 5.0

Momentum: 10.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
MSC Industrial Direct Co

A-Score: 6.0/10

Value: 4.0

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Toromont

A-Score: 6.0/10

Value: 2.6

Growth: 6.4

Quality: 6.3

Yield: 2.0

Momentum: 9.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Applied Industrial Technologies

A-Score: 5.3/10

Value: 3.1

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 4.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Watsco

A-Score: 5.2/10

Value: 3.1

Growth: 6.8

Quality: 7.1

Yield: 6.0

Momentum: 1.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Core & Main

A-Score: 4.6/10

Value: 3.6

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

201.38$

Current Price

201.38$

Potential

-0.00%

Expected Cash-Flows