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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 positively driven by its Q2 2025 results, which showed a slight decrease in profit but higher revenue. The company's announcement of a renewed normal course issuer bid (NCIB) also boosted investor confidence, allowing it to purchase up to 8,128,838 common shares. Furthermore, the prospect of "nation-building" projects in Canada is expected to narrow the country's infrastructure gap and boost earnings for companies like Toromont. A recent agreement to end a seven-week strike also contributed to a more positive outlook.

1.c. Company Highlights

2. Toromont Industries' Q3 2025 Earnings: A Mixed Bag

Toromont Industries reported a mixed set of results for the third quarter of 2025, with revenue declining 2% year-over-year, primarily due to a 4% decrease in the Equipment Group, offset by a 22% increase in CIMCO revenue. The company's earnings per share (EPS) came in at $1.72, below analyst estimates of $1.91. Gross margins, however, improved, increasing 250 basis points in the quarter and 20 basis points year-to-date, driven by a favorable mix and improved product support and rental margins.

Publication Date: Nov -10

📋 Highlights
  • Equipment Group Performance:: Revenue declined 4% due to lower new equipment sales, offset by 5% rental growth and 4% product support increase.
  • CIMCO Growth:: Revenue rose 22% driven by 28% package revenue growth and a $341M backlog, up 24% YoY.
  • AVL Integration Progress:: Hamilton production ramped up, contributing $278M backlog (17% YoY), though near-term earnings impacted by noncash adjustments.
  • Liquidity & Balance Sheet:: $1.0B cash and $453M credit facilities, with net debt-to-capital at -9% and 13% lower noncash working capital investment.
  • Margin & ROCE Trends:: Gross margins increased 250 bps QoQ (20 bps YoY); ROCE at 23.3% vs. 17.5% ROE (vs. 18% target).

Segment Performance

The Equipment Group executed well, with solid activity in rentals, product support, and used equipment deliveries in construction and mining. However, activity levels still reflect the economic environment, impacting end-customer demand. CIMCO, on the other hand, posted higher revenue and earnings driven by good demand and disciplined execution in both Canada and the U.S. AVL's production in Hamilton has ramped up since the acquisition, supporting a healthy order backlog and demand.

Financial Highlights

Key financial highlights include a 13% decrease in investment in non-cash working capital, largely due to lower inventory levels. The company ended the quarter with ample liquidity, including $1 billion in cash and an additional $453 million available under existing credit facilities. The net debt-to-total capitalization ratio was negative 9%. Return on equity (ROE) was 17.5%, slightly below the company's target of 18% over the business cycle.

Valuation and Outlook

Toromont Industries is currently trading at a P/E Ratio of 26.9 and a P/B Ratio of 4.35. With analysts estimating revenue growth of 6.4% next year, the stock appears to be priced for moderate growth. The company's healthy backlog of $1.3 billion and improving margins are positives, but the EPS miss and revenue decline are negatives. As Michael Stanley McMillan noted, "As we round out the year, our focus remains on executing our strategic priorities, including maintaining safe and efficient operations, delivering exceptional customer service, and applying disciplined financial and operational rigor to support long-term growth."

Conclusion on Valuation Metrics

Given the current valuation metrics, it appears that the market is pricing in a certain level of growth and profitability for Toromont Industries. The EV/EBITDA ratio of 14.63 and ROIC of 11.33% suggest that the company is generating returns above its cost of capital. However, the dividend yield of 1.27% is relatively modest, and investors may need to look to capital appreciation for returns. Overall, the stock's valuation appears reasonable, but investors should carefully consider the company's growth prospects and industry trends before making a decision.

3. NewsRoom

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CIBC Says Ontario and First Nation Agreement For an All-Weather Road Will Speed Access to the Ring of Fire

Dec -02

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Are Toromont Industries Ltd. (TSE:TIH) Investors Paying Above The Intrinsic Value?

Nov -21

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Is It Too Late To Consider Buying Toromont Industries Ltd. (TSE:TIH)?

Nov -05

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Toromont Industries Price Target Raised at RBC, CIBC

Nov -03

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TOROMONT ANNOUNCES RESULTS FOR THE THIRD QUARTER OF 2025 AND QUARTERLY DIVIDEND

Oct -30

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How Recent Analyst Updates Are Shaping the Story Behind Toromont Industries' Valuation

Oct -17

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TOROMONT TO ANNOUNCE THIRD QUARTER 2025 RESULTS ON OCTOBER 30, 2025

Oct -16

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Nation-Building Projects Should Narrow Canada's Infrastructure Gap, Says National Bank

Sep -24

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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: 6.4/10

Value: 5.3

Growth: 7.6

Quality: 5.4

Yield: 5.0

Momentum: 8.5

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Toromont

A-Score: 5.7/10

Value: 2.8

Growth: 6.4

Quality: 6.2

Yield: 2.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Applied Industrial Technologies

A-Score: 5.7/10

Value: 3.2

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Watsco

A-Score: 5.4/10

Value: 3.0

Growth: 6.9

Quality: 7.2

Yield: 6.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Core & Main

A-Score: 5.0/10

Value: 4.0

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 7.0

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

163.06$

Current Price

163.06$

Potential

-0.00%

Expected Cash-Flows