Toromont Industries (TSE:TIH) reported higher revenue in the fourth quarter and full year of 2025, supported by contributions from its Equipment Group and Cimco business, while full-year earnings declined modestly amid growth investments, lower net interest income, and non-cash purchase accounting impacts tied to its AVL acquisition.
Quarter and full-year performance
Management said the company closed 2025 with “solid results” in the fourth quarter despite ongoing macroeconomic and trade uncertainty. Earnings improved over the course of the year, though full-year earnings were down modestly as the company invested in growth-related initiatives, faced lower net interest income, and recorded short-term non-cash costs associated with the AVL acquisition.
Operating income increased 2% versus last year, according to CFO John Doolittle, but he noted that excluding a pre-tax capital gain of CAD 13.7 million from a property disposition in the third quarter, operating income was “relatively flat” year over year. Net earnings rose 1% (CAD 0.9 million) in the fourth quarter but decreased 2% (CAD 9.9 million) for the full year. Basic EPS was CAD 1.93 for the quarter and CAD 6.11 for the year.
Bookings and backlog: sharp increase in Q4, strong backlog exiting 2025
Bookings increased 47% in the fourth quarter compared to Q4 2024, reflecting higher bookings in the Equipment Group, including a significant contribution from the acquired business and “strong mining activity,” partly offset by lower bookings at Cimco. Consolidated backlog ended the year at CAD 1.5 billion, up 46% year over year, with the Equipment Group backlog up 68% and Cimco’s backlog comparable to 2024.
In the Q&A, CEO Mike McMillan attributed the equipment backlog dynamics in part to improved industry equipment availability combined with softer demand and activity levels in Canada. He said customers appear more able to time purchases to project pipelines, describing a “more patient” buying environment than in recent periods.
Equipment Group: higher revenue, rental and product support strength; mining variability
Equipment Group revenue increased 9% in the fourth quarter and 3% for the year. Doolittle said higher activity in construction and power systems (including AVL), along with higher rental and product support revenue, was “largely offset by lower mining revenue against a strong comparable.”
Key segment details discussed on the call included:
- Total equipment sales (new and used) rose 9% in the quarter and 1% for the year; new equipment sales increased 10% in the quarter and 1% for the year.
- Mining equipment revenue fell 39% in the quarter, while power systems revenue rose 131%, construction increased 1%, and material handling increased 12%.
- Rental revenue increased 5% in the quarter and 9% for the year, supported by a larger fleet, though utilization remained below the prior year.
- Product support revenue increased 9% in the quarter and 4% year to date, with increases in both parts and service.
Equipment Group gross margin expanded slightly, with gross profit margins up 10 basis points in the quarter and up 30 basis points for the year. Equipment margins improved, while rental margins declined due to recent fleet acquisitions and higher maintenance and repair costs. Selling and administrative expenses increased, and as a percentage of revenue, selling and administrative expenses were 12.1% versus 11.5% last year.
McMillan said mining orders are “lumpy” and cyclical, reflecting lower-frequency but larger orders. In response to analyst questions, he said the company is seeing interest in mine development across gold and base metals, but emphasized the competitive environment and the difficulty of predicting order flow.
Cimco: revenue and operating income higher, bookings lower in Q4
Cimco’s revenue increased 10% in the fourth quarter and 14% for the year. Package revenue rose 4% in the quarter and 18% year to date, led by strong recreational market activity, which increased 51% for the year, while the industrial market declined 3% year over year. Product support revenue climbed 17% in the quarter and 9% year to date, with higher activity in Canada, while U.S. product support activity was down 11% in the quarter and down 1% year to date.
Operating income increased CAD 2 million (9%) in the quarter and CAD 11 million (20%) for the year, with management citing higher revenue and improved gross margins, partially offset by higher expenses that supported growth. Cimco bookings declined 45% (CAD 56 million) in the quarter and were 11% lower for the year against a strong comparator; management said economic uncertainty has delayed some customer buying decisions. Cimco backlog was CAD 343 million, relatively unchanged year over year, and management said about 75% is expected to be realized over the next 12 months, subject to construction schedules.
AVL acquisition: ramping capacity, non-cash accounting impacts, and future dividends
Management highlighted continued expansion at AVL, including ramping production and building order demand. McMillan reiterated that a facility in Charlotte, North Carolina—acquired to expand production capacity and better serve the Eastern U.S. market—began first-phase production in the third quarter of 2025 and is expected to ramp throughout 2026. In Q&A, executives said Charlotte was not a significant drag on fourth-quarter performance, but margins are expected to build as revenue grows and fixed costs are absorbed during the ramp.
For AVL, Toromont reported fourth-quarter and full-year revenue of CAD 97.7 million and CAD 254.7 million, respectively. The company recorded non-cash expenses of CAD 33.4 million (Q4) and CAD 90.4 million (full year) on a pre-tax basis related to amortization of acquired intangibles and other acquisition accounting items tied to the commitment to purchase the remaining AVL shares. Doolittle said most of the acquired backlog intangible amortization will be effectively completed in the first half of 2026, while customer relationship intangibles amortize over five years.
Net income for AVL, after amortization of intangibles recognized at acquisition, was approximately negative CAD 0.01 per share in Q4 and a contribution of CAD 0.01 per share for the full year. Management also discussed the revaluation of the liability associated with Toromont’s commitment to purchase the remaining 40% of AVL through 2031. Doolittle said the liability was revalued upward from CAD 42 million to CAD 50 million, resulting in a CAD 7.9 million expense in 2025; future changes could move higher or lower depending on business performance because the structure is based on an earnings multiple.
Doolittle also said Toromont expects AVL dividends to begin in 2026 and anticipated a dividend in the first quarter, factoring in 2025 earnings before amortization and AVL’s cash needs for growth, though the cadence (quarterly or otherwise) remains to be determined.
Separately, Toromont said it ended the year with CAD 1.3 billion in cash and CAD 453 million available under existing credit facilities, and reported a net debt-to-total capitalization ratio of -19%. The company repurchased and canceled 337,500 common shares for CAD 40.1 million under its NCIB in 2025. The board approved a quarterly dividend increase of CAD 0.04 per share (7.7%) to CAD 0.56 per share, payable April 2, 2026, to shareholders of record as of March 6, 2026.
About Toromont Industries (TSE:TIH)
Toromont Industries Ltd is a Canadian industrial company. The company operates two business segments: Equipment Group and CIMCO. The larger segment by revenue, Equipment Group includes a Caterpillar dealership and rental operation of construction equipment. CIMCO offers solutions for the design, engineering, fabrication, and installation of industrial and recreational refrigeration systems. The company operates primarily in Canada and derives a smaller portion of sales from the United States of America.
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