Toromont Industries Ltd.

Good morning. Today is Wednesday, February 12, 2025. Welcome to the Torremont Industries Limited 2024 Fourth Quarter and Full Year Results Conference Call. Please be advised that this call is being recorded and all lines have been placed on mute to prevent any background noise. Your host for today will be Mr. John Doolittle, Executive Vice President and Chief Financial Officer. Please go ahead, Mr. Doolittle.

Thank you very much, Joelle. Good morning, everyone. Thank you for joining us today to discuss Torremont's results for the fourth quarter and full year of 2024. Also on the call with me this morning is Mike McMillan, President and CEO. Mike and I will be referring to the presentation that is available on our website. And to start, I would like to refer our listeners to slide two, which contains our advisory regarding forward-looking information and statements. After our prepared remarks, we will take your questions, and let's begin by moving to slide three. I'll pass it over to you, Mike.

Great. Thanks very much, John. Good morning, everyone. Thanks for joining us. I'd like to note before I get started that John and I will be commenting largely on a continuing operations basis. This excludes the results of AgWest, which was a business we sold in Q2 of 2023. We do exclude AgWest as we believe it. This provides a better basis for comparability and, of course, comparisons between Q4 of 23 and 24. exclude Pegwest altogether. Results in 2024, and in particular Q4, reflect good execution across most markets against a solid order backlog. For the year, bottom line results were below the strong comparator last year, in part due to reduced activity in the residential sector. Overall, the team performed well in Q4, improving on last year's bottom line. The equipment group reported solid new equipment deliveries in both the construction and mining segments. Rental markets remain constrained, however utilization levels improved toward the end of 2024. Simcoe revenue and bottom line improvements demonstrated the team's strong execution while they continue to build their backlog throughout the year. Our solid financial position was maintained while we continue to exercise disciplined capital allocation, investing in the business to support organic growth initiatives, in addition to our heavy rents tri-city business acquisition this year. Our team is committed to strengthening our partnerships with our supply partners and customers while executing and allocating our resources with discipline in order to deliver high quality products and services. This results in sustainable growth over the long term. We are proud of our team and their commitment to disciplined execution of our decentralized operating model, adapting to changes in the business environment while remaining focused on executing customer deliverables. Additional efforts continue to consistently and effectively manage our discretionary spend while actively recruiting technicians to execute our critical aftermarket service strategies and value-added product offering over the long term. Our disciplined attention to our financial position and solid order backlog position as well as we enter 2025. On slide four, I'd like to touch on a few key financial highlights. Investment in non-cash working capital increased 32% versus a year ago. We are comfortable with this increase, as it was mainly driven by higher inventory levels, reflective of the higher new equipment sales levels, improved product availability, and normalizing supply conditions. Inventory levels are higher than the prior year, driven by a number of factors, including delivery timing, inflation, foreign exchange rates on U.S. source supplies, improving availability through the supply chain, seasonality, and general activity levels. Accounts receivable was unchanged year over year, with higher revenue and lower day sales outstanding. Our team continues to closely manage the aging of our receivables, monitor credit levels, and metrics. We ended the year with ample liquidity, including cash of $891 million an additional $459 million available to us under our existing credit facilities. Our net debt to total capitalization ratio was negative 9%. We purchased and canceled 1,321,500 shares for approximately $160.4 million to date for the year under our NCIB program. Our purchases are intended to practice good capital hygiene and to mitigate auction exercise dilution. We increased our level of purchases moderately through Q4 in light of our cash position and market fundamentals. Overall, our balance sheet remains well positioned to support operational needs, and we are prepared to manage challenges related to the economic variables and business conditions. We will continue to exercise the operational and financial discipline one would expect as we evaluate investment opportunities that may develop over time. Torremont targets a return on equity of 18% over a business cycle. Return on equity was lower at 19.2% compared to 23.1% for 2023, reflecting higher equity levels alongside lower annual earnings comparatively for fiscal period 2024. Return on capital employed was 25.7%, lower than 30.4% last year, largely reflecting the same factors. And finally, as announced yesterday, the Board of Directors increased the quarterly dividend by $0.04 per share, or 8.3% to $0.52 per share, or $2.08 per share annually. Torremont has paid dividends every year since 1968, and this is our 36th consecutive year of dividend increases. We continue to be proud of this track record and our disciplined approach to capital allocation. John, I'll turn it back to you for some more detailed comments on the results.