Important Points
-
Strong Q1 results: Income has increased 13% and operating income increased 44% with an operating rate of up to 11.6%; all money has increased 25% (EPS CAD 1.14), reservations are skipped 44% and backlog to CAD 1.7 billion.
-
AVL stake and rise: Toromont has bought another stake it can reach 80% ownership of CAD 71m in cash and expects approximately CAD 45m Q2 expenses; AVL’s revenue increased to CAD 129m (from CAD 22.1m), growing rapidly (Hamilton ~ 100%, Charlotte ramping) and contributed CAD 0.19 to EPS.
-
Power of operation and balance sheet: The Utilities Group led growth with a 14% revenue gain, a 400 basis point improvement in gross margin and strong power system bookings, while Toromont ended the quarter with CAD 1.2bn in cash, net of debt financing. -12%CAD 0.56 quarterly revenue and CAD 400–450m CapEx guidance by 2026.
-
Interested in Toromont Industries Ltd.? Here are five stocks we like best.
Toromont Industries (TSE:TIH) reported higher revenue and earnings for the first quarter of 2026, citing strong performance in multiple business areas despite what President and CEO Mike McMillan described as “continued uncertainty in global stock markets.”
Q1 results: revenue up 13%, operating income up 44%
Executive Vice President and CFO John Doolittle said consolidated revenue increased 13% year-over-year in Q1, driven by a 14% increase in the Materials Group and a 3% increase in CIMCO. Operating income increased 44% as higher revenue and net income exceeded higher costs, while operating income margin improved to 11.6% compared to 9.1% last year.
→ Meta Posted Best Sales Growth Since 2021—So Why Are Shares Falling?
SG&A expenses increased 21% year over year. Doolittle attributed the change primarily to AVL coverage, market adjustments to DSUs, and other spending related to growth investments including compensation, travel, and training. He also noted the provision for expected credit losses increased compared to last year “indicating some exposure.”
Net income was up 25% (up CAD 18.3 million), and underlying EPS was CAD 1.14. Doolittle said bookings were up 44 percent compared to Q1 2025, and backlog ended the quarter at CAD 1.7 billion, up 30 percent year-over-year.
AVL ownership increased to 80% as capacity ramps
→ 5 Stocks to Buy in May Ahead of the Next AI Surge
McMillan said Toromont increased its ownership in AVL to 80% by “promoting the purchase of a portion of the shares that we did not currently own.” He emphasized that the shares were owned by a passive investor and did not interfere with the position of Vince DiCristofaro, president of AVL.
McMillan said Toromont paid CAD 71 million in additional costs and expects “approximately CAD 45 million in costs to be recorded in Q2 2026.” In the Q&A, Doolittle explained that the CAD 45 million represents the difference between the previously recorded purchase obligation and the negotiated value of the accelerated purchase, adding that it will be presented as the cost of the purchase obligation and “does that reduce taxable income or not?”—to which he answered, “No.”
→ Verizon Signal Strength: Loud and Clear Rotary Phone
In practice, management highlighted rapid scaling. McMillan said AVL continued to expand production to support data center needs, particularly in the Eastern US. Doolittle told analysts the Hamilton site was operating at nearly “100% capacity,” while the Charlotte site was “up and running faster than we thought it would,” with margins improving compared to Q4 2025. He said Charlotte came in below Q1 capacity at 5% of 5 expected. in Charlottes expectation is to “double the volume by the end of the year, maybe sooner.”
AVL’s revenue was CAD 129 million in Q1 2026 compared to CAD 22.1 million in Q1 2025. McMillan said the business contributed CAD 0.19 per share to basic EPS compared to last year’s breakdown. He added that Q1 results totaled approximately CAD 13.9 million in acquisition costs, including dividends paid to minority shareholders associated with 2025 fiscal year and cash.
Asked about the potential US Section 232 tariffs, Doolittle said that based on what the company knows, he does not expect the 232 tariffs to have a material impact on AVL’s shipments out of Hamilton, while acknowledging that tax conditions can change from day to day.
Equipment Group: delivery, employment, and product support raise profits
Doolittle said the Equipment Group posted 14% revenue growth, supported by equipment deliveries—“led by significant growth in energy systems”—and improved rental and product support revenue. Equipment sales (new and used) were up 18% year over year, with new equipment sales up 18% and used equipment sales up 21%.
Rental income increased by 11% as traffic increased and activity improved in all markets and regions. Doolittle came up with rental trends that included heavy equipment rentals up 38%, light equipment rentals up 8%, and electrical rentals up 52%, while utility rentals were unchanged. Product support revenue increased 10% in higher segments and service activity.
Gross margin increased 400 basis points for the quarter, with equipment up 370 basis points on a favorable sales mix, rental margins up 60 basis points on improved utilization, and product support margins up 10 basis points. Operating income increased 52% compared to Q1 2025, although selling and administrative expenses increased by CAD 27.9 million (up 22%), Doolittle reiterated mainly due to AVL, DSU market impacts, and capital growth.
Bookings in the Equipment Group increased 45% year over year, led by orders for energy systems including enclosures, which Doolittle said were up 231% on strong demand and increased capacity. He described mining as “bumpy,” with mining bookings up 96%, while construction bookings fell 1%.
CIMCO: high package income, low profit during the project
CIMCO’s revenue rose 3% year over year. Package revenue increased 10%, supported by higher activity in the leisure and industrial markets, but product support revenue decreased 3% due to lower activity in the US that more than offset higher activity in Canada.
Profits fell as gross profit fell by 180 basis points, package margins fell by 230 basis points due to the “nature and timing” of ongoing projects. Operating income decreased by CAD 3 million (down 36%) as lower margins and higher costs outpaced revenue growth.
CIMCO bookings increased 34% (up 16 million CAD), with industrial orders up 51% and leisure orders up 24%. The backlog increased 4% to CAD 360 million, and Doolittle said about 75% is expected to be reached in the next 12 months, depending on construction plans.
Asked about CIMCO’s potential role in data centers, McMillan said the opportunities are there but emerging, noting the need for early involvement in choosing a cooling system, and adding that “the biggest opportunity in this segment is probably in the Canadian market.”
Balance, dividend, and outlook views
McMillan said non-cash investments were down 4% year-over-year, with lower inventory partly offset by higher accounts receivable and lower accounts payable driven by the timing of deliveries. DSO decreased from three days to 40 days, and management said it continues to closely manage receivables and credit metrics.
Toromont ended Q1 with cash of CAD 1.2 billion and CAD 452 million available under existing credit facilities. Total debt was 12%, which management said positioned the company to sustain operations amid changing economic conditions.
McMillan said return on equity was 17.3% in Q1, slightly below the company’s target of 18% over the business cycle, and return on capital employed was 24.4%.
The company also announced a quarterly dividend of CAD 0.56 per share, payable on July 2, 2026, to shareholders of record as of June 5, 2026.
Looking ahead, McMillan said Toromont is monitoring US-Canada trade developments, foreign exchange volatility, and broader trends. He also highlighted the investment in experts as the most important factor in supporting aftermarket services. In terms of capital spending, Doolittle reiterated earlier expectations of CAD 400 million to CAD 450 million for CapEx by 2026 and said projects including a Bradford distribution center and a new branch/head office in Toronto are underway, with additional investments discussed in the GTA, Quebec City, and re-expansion to serve the eastern regions.
About Toromont Industries (TSE:TIH)
Toromont Industries Ltd is a Canadian industrial company. The company operates through two business divisions: Equipment Group and CIMCO. Largely for profit, the Equipment Group includes a Caterpillar dealer and construction equipment rental operation. CIMCO provides solutions for the design, engineering, manufacture, and installation of industrial refrigeration and recreational systems. The company operates primarily in Canada and receives a small portion of its sales from the United States of America.
The article “Toromont Industries Q1 Earnings Call Highlights” was first published by MarketBeat.
