Toromont Industries Ltd.

Good morning. Today is Wednesday, July 30, 2025. Welcome to the Torremont Industries Limited Second Quarter 2025 Results Conference Call. Please be advised that this call is being recorded and all lines have been placed on mute to prevent any backer noise. Your host for today will be Mr. John Doolittle, Executive Vice President and Chief Financial Officer. Please go ahead, Mr. Doolittle.

Okay. Thank you, Ludi. Good morning, everyone. Thank you for joining us today to discuss our month's results for the second quarter of 2025. Also on the call with me this morning is Mike McMillan, President and Chief Executive Officer. Mike and I will be referring to the presentation that is available on our website. 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'll be more than happy to answer questions. Let's get started and move to slide three. And Mike, over to you to start us off.

Great, thanks very much, John. Good morning, everyone, and thanks for joining us. Our team delivered resilient second quarter results while continuing to navigate macroeconomic and international trade uncertainties. Our disciplined approach remains unchanged, and we continue to invest in our people and capabilities to support our customers today and for the future. Revenue increased overall while net income was slightly lower reflecting reduced interest income and short-term non-cash costs related to the AVL acquisition. The equipment group performed well with growth in rental and product support and new equipment deliveries in the construction and power segments. These were offset by lower deliveries in the mining segment as expected, which tends to be more variable due to the nature of this segment. Revenue was stable as contributions from the acquired business and higher rental and product support volumes were balanced by lower anticipated mining equipment sales. Rental revenue rose driven by a larger fleet, while used equipment sales declined. Product support revenue increased due to higher parts and service volumes. Operating income declined year over year, mainly reflecting the addition of the acquired business expenses and lower interest income on cash balances. Simcoe posted higher revenue and earnings, reflecting healthy market demand and effective execution in both Canada and the U.S. Growth in package revenue was supported by a strong order backlog, while product support activity continued to improve, aided by our growing technician workforce. Operating income rose on higher revenue and solid execution, partially offset by a less favorable sales mix, and slightly higher expenses to support activity and growth. We continue to work closely with our new partners at AVL, focusing on this promising market. Production in Hamilton has ramped up since the acquisition, supporting a healthy order backlog and building demand. Hiring is progressing at a quick pace. Revenues for the three- and six-month periods ended June 30, 2025, were $57 million and $79 million, respectively. While the business is performing well, the bottom line contribution on a year-to-date basis reduced EPS by approximately $0.04 per share related to various non-cash related purchase price accounting items. There's more detail available in our financial statements as well. During the quarter, we acquired a facility in Charlotte, North Carolina to expand production capacity and better serve the eastern market in the U.S. We expect the initial phase of production to begin in the fourth quarter. Let's turn to slide four, our key financial highlights. Investment in non-cash working capital rose 4% year over year with higher accounts receivable more than offset by lower inventory and accounts payable balances due to equipment delivery timing. Accounts receivable increased reflecting higher revenue and the addition of AVL receivables. DSO rose by one day to 42 days. Our team continues to manage receivables aging and customer credit metrics effectively. Inventory levels declined, primarily due to the executed deliveries against order backlog, inventory reduction initiatives, and lower work in process at Simcoe, reflecting project and service timing. We ended the quarter with ample liquidity, including approximately $1 billion in cash and an additional $456 million available under existing credit facilities. After quarter end, we also completed the early redemption of our 2025 debentures at par as previously announced. Our net debt to total capitalization ratio was negative 3%. Overall, our balance sheet remains well positioned to support operations and navigate evolving economic and business conditions. We will continue to apply operational and financial discipline as we support customer needs and evaluate future investment opportunities. Paramount targets a return on equity of 18% over the business cycle. ROE was slightly below this at 17.6% in Q2. Return on capital employed was 23.1%, also lower year-over-year, reflecting increased capital investment and comparatively lower earnings. Finally, as announced yesterday, the Board of Directors approved a regular quarterly dividend of 52 cents per share, payable on October 3rd, 2025, to shareholders of record on September 5th, 2025. John, I'll turn it back over to you for more detailed commentary on the results.