Toromont Q2 2025 slides reveal mixed segment performance amid rising costs

Introduction & Market Context

Toromont Industries Ltd . (TSX:TIH) presented its second quarter 2025 results on July 30, revealing modest revenue growth amid rising operational costs. The heavy equipment dealer and refrigeration systems provider reported a 1% increase in quarterly revenue, while expenses surged 11%, creating pressure on profitability metrics.

The company’s stock closed at $132.74 on July 29, near its 52-week high of $134.88, suggesting investor confidence despite the mixed results. Toromont’s presentation highlighted its continued focus on disciplined growth and financial stability in a challenging business environment.

Quarterly Performance Highlights

Toromont reported Q2 2025 revenue of $1.376 billion, a slight 1% increase from $1.360 billion in Q2 2024. However, operating income declined 4% to $171 million, compared to $178 million in the same period last year. Basic earnings per share fell 7% to $1.53, down from $1.65 in Q2 2024.

The company’s backlog remains healthy at $1.4 billion, up slightly from $1.3 billion year-over-year, while Q2 bookings increased by 14%, indicating potential future revenue growth. Year-to-date bookings are up 1% compared to the same period in 2024.

As shown in the following financial summary chart, Toromont has experienced declining profitability despite modest revenue growth:

Segment Analysis

Toromont’s performance showed significant divergence between its two main business segments. The Equipment Group, which represents the majority of the company’s operations, reported flat revenue in Q2 (unchanged year-over-year) and a 7% decline in operating income to $154 million. The segment faced challenges with equipment sales down 2%, though this was partially offset by product support revenue growth of 3% and rental revenue increasing by 15%.

The following chart illustrates the Equipment Group’s performance metrics:

In contrast, the CIMCO refrigeration business demonstrated strong performance with revenue increasing 13% to $140 million in Q2 2025, compared to $124 million in Q2 2024. Operating income for this segment jumped significantly, up $4.4 million to $17 million. CIMCO’s backlog grew 21% year-over-year, reflecting robust order intake with Q2 bookings up an impressive 185%.

The following chart shows CIMCO’s strong performance across key metrics:

Financial Position and Capital Allocation

Despite operational challenges, Toromont maintained a strong financial position with $1 billion in cash on hand and an additional $456 million in available liquidity. The company reported a negative Net Debt to Total (EPA:TTEF) Capitalization ratio of -3% versus -6% in Q2 2024, indicating minimal leverage.

Toromont continued its shareholder return initiatives, repurchasing and cancelling 337,500 shares year-to-date (approximately $40.3 million) and maintaining its quarterly dividend of $0.52 per share. However, the company’s Return on Equity (ROE) slipped to 17.6%, slightly below its long-term target of 18%, while Return on Capital Employed (ROCE) declined to 23.1% from 27.9% in 2024.

The following chart illustrates Toromont’s key financial highlights, including the ROE trend:

Forward-Looking Statements

Looking ahead, Toromont emphasized several key focus areas for the remainder of 2025, including safe execution, customer support, and disciplined business building. Management noted that technician hiring remains a priority, suggesting efforts to address operational capacity constraints.

The company acknowledged that the business environment would be influenced by various external factors but maintained that it is well-positioned both operationally and financially to navigate these challenges. The healthy backlog of $1.4 billion provides visibility for future revenue streams.

As shown in the company’s key takeaways slide:

This cautiously optimistic outlook comes as Toromont faces the challenge of managing rising expenses, which grew 11% in Q2 compared to the previous year, significantly outpacing revenue growth. The company’s ability to control costs while maintaining growth momentum will be crucial for improving profitability metrics in upcoming quarters.

Toromont’s next earnings release is scheduled for October 30, 2025, with an investor call the following day.

Full presentation:

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