Toromont Industries Ltd (TMTNF) Q2 2024 Earnings Call Highlights: Strong Revenue Growth Amidst ...

GuruFocus News
3 min read

In This Article:

  • Revenue: Increased 16% in Q2 2024 compared to Q2 2023.

  • Net Income: Increased 2% in Q2 2024 compared to Q2 2023.

  • Cash: $804 million at the end of Q2 2024.

  • Net Debt to Total Capitalization Ratio: Negative 6%.

  • Return on Equity: 21% in Q2 2024, down from 25.1% in Q2 2023.

  • Return on Capital Employed: 27.9% in Q2 2024, down from 32.2% in Q2 2023.

  • Dividend: $0.48 per share payable on October 2, 2024.

  • Gross Profit Margins: Decreased due to sales mix and market dynamics.

  • Backlog: $1.3 billion as of June 30, 2024.

  • Operating Income: Decreased 1% in Q2 2024.

  • Equipment Sales: Increased 33% in Q2 2024.

  • Rental Revenue: Decreased 5% in Q2 2024.

  • Product Support Revenue: Grew 3% in Q2 2024.

  • Bookings: Decreased 13% in Q2 2024 compared to Q2 2023.

  • Inventory Levels: Increased due to higher activity and normalizing supply conditions.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Revenue increased by 16% in the second quarter of 2024 compared to the same period last year, indicating strong growth.

  • The company commenced operations at a new remanufacturing center in Bradford, Ontario, enhancing service offerings.

  • CIMCO delivered solid results with a 19% increase in revenue for the quarter, driven by strong execution in Canada and the US.

  • Toromont Industries Ltd (TMTNF) ended the second quarter with ample liquidity, including $804 million in cash and a healthy order backlog.

  • The Board of Directors approved a regular quarterly dividend of $0.48 per share, reflecting confidence in the company's financial health.

Negative Points

  • Gross profit margins were lower compared to the prior year due to sales mix and market dynamics.

  • Rental markets were softer, particularly in the light equipment segment, impacting bottom-line results.

  • Operating income decreased by 1% in the quarter and 7% year to date, as higher revenue was offset by lower gross margins and higher expenses.

  • Bookings for the second quarter decreased by 13% compared to last year, indicating potential future revenue challenges.

  • Return on equity and return on capital employed were lower compared to Q2 of 2023, reflecting higher capital investment and excess cash on hand.

Q & A Highlights

Q: What is your overall sense of customer confidence levels given the increase in new equipment sales? A: Michael McMillan, President and CEO, noted that while there is still a tone of caution, the backlog is well-diversified across construction, mining, and power sectors. There is considerable investment in mining, and while construction shows some patience due to broader economic factors, the company remains confident due to the healthy backlog and improved equipment availability.

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