Toromont Industries Ltd. (TMTNF) CEO Scott Medhurst on Q1 2020 Results - Earnings Call Transcript

Toromont Industries Ltd. (OTCPK:TMTNF) Q1 2020 Earnings Conference Call April 30, 2020 8:00 AM ET

Company Participants

Mike McMillan - Executive Vice President and Chief Financial Officer

Scott Medhurst - President and Chief Executive Officer

Paul Jewer - Executive Vice President

Conference Call Participants

Yuri Lynk - Canaccord Genuity

Jacob Bout - CIBC

Michael Doumet - Scotiabank

Devin Dodge - BMO Capital Markets

Ben Cherniavsky - Raymond James

Cherilyn Radbourne - TD Securities

Maxim Sytchev - National Bank Financial

Operator

Good morning. Today is May 1, 2020. Welcome to the Toromont to announce the First Quarter 2020 Results Conference Call. Please be advised that this call is being recorded. Your host for today will be Mr. Mike McMillan. Please go ahead, Mr. McMillan.

Mike McMillan

Great. Thank you, Donna. Good morning, everyone. Thank you for joining us today to discuss the results of the Toromont Industries Limited for the first quarter of 2020. Also, on the call this morning is Scott Medhurst, President and Chief Executive Officer and Paul Jewer, Executive Vice President. As noted in the press release issued yesterday, we will be referring to a package posted on our website which we encourage listeners to download and follow along.

Before we continue, I would also like to advise listeners that this presentation may contain forward-looking statements and information that are subject to certain risks, uncertainties and assumptions. For a complete discussion of the factors, risks and uncertainties that may lead to actual results or events differing materially from those expected, please refer to Toromont’s press release and MD&A from yesterday, which is available on our website.

We assume that you have had the opportunity to review our press release and related financial information issued yesterday. And as such, we will focus on the key highlights. Scott will begin with a few general remarks and some comments on our outlook, after which, I will provide some highlights on the financial results. Then we will be more than happy to answer questions. Over to you, Scott?

Scott Medhurst

Thank you, Mike and good morning everyone. Before I begin, I would ask that you move to Slide 3 on the deck. I am delighted to officially welcome Michael McMillan, Executive Vice President and Chief Financial Officer to the Toromont team. Michael is an accomplished CFO with more than 25 years of financial experience. He officially joined Toromont on March 1, 2020. It’s been an incredible transition given the environment, but true to Toromont’s philosophy of ensuring orderly transitions. Paul Jewer, Executive Vice President remains on board to assist us in this important changeover. Paul has had a distinguished career providing critical stewardship over the past 15 years. I thank him for his contribution, support and partnership. I would also like to take this opportunity to acknowledge an important milestone. This month, our partner, Caterpillar, celebrated its 95th anniversary. This is a formidable accomplishment and the entire Toromont team extends congratulations. We are proud to be Caterpillar’s partner and representative in Central and Eastern Canada.

Turning now to our financial results, the first quarter of the year is typically softer than others given seasonality in the impact of winter weather conditions in most segments of our businesses. This was exacerbated towards the end of the quarter with reductions in activity, most notably mine and construction shutdowns relating to COVID-19. Results were further dampened by higher expense levels compared to revenue growth. The recent outbreak of COVID-19 puts us in an unprecedented environment as outlined on Slide 4. Of Toromont’s businesses have to-date and declared essential services in all jurisdictions in which we operate, we are not insulated from the broader economic financial and market impacts. Actions have been taken and are ongoing across our three areas of focus, protecting our employees, serving our customer needs and protecting our business for the future. We appreciate our entire team’s effort and commitment supporting our customers during these challenging times.

Highlighted on Slide 5, consolidated revenues increased 2%. However, this was dampened by the onset of COVID-19 in the latter part of the quarter. Product support and rental revenues were trending 5% and 7% higher through February, but reduced activity in March largely offset this growth. Economic and business conditions are fluid. And as such, it is difficult to quantify the impact of COVID-19 on equipment revenues. Operating income was 6% lower on reduced gross margins as a result of tight pricing and lower rental fee utilization combined with increased expenses mainly due to increase in the allowance for doubtful accounts. Net earnings decreased 5% quarter versus year ago while EPS decreased $0.02 to $0.46 per share. Backlogs of $567 million were very healthy at March 31, 2020.

We are proud to take part as an essential service. Toromont’s businesses serve critical essential services, including, but not limited to food production, storage and distribution networks, power generation, including backup power, critical infrastructure, transportation and emergency response. We continue to monitor the situation closely and are implementing responsible measures to manage and protect the long-term health of the business, including voluntary compensation reductions by the executive team and the Board of Directors. The diversity of our geographical landscape and market served, extensive product and service offerings and financial strength, together with a disciplined operating culture positioned us well to weather this situation.

Moving to Slide 6, the Equipment Group’s parts and service business provides stability and benefits from a large diversified installed base. Prior to the outbreak, the long-term outlook for infrastructure projects and other construction activity was positive across most territories. Company has a large base of mining customers, which in some cases has seen reduced operating activities as a result of COVID-19 implications. These customers and jurisdictions they operate in continued to evaluate appropriate activity levels on a daily and weekly basis. Longer term, mine expansion looks positive, but of course depends on global economic and financial conditions.

Company has taken actions to reduce expenses participating in government programs such as work share were available. Human capital, including our technician workforce, is one of our most valuable assets and we will protect that asset to the extent possible. In the quarter, we continue to move forward with our investment in information technology aligning our dealership under one operating system as well as facilitating and securing remote access to our networks. And this created added expense. Actions are being balanced between short-term adjustments relative to demand, while also being sensitive to the long-term requirements ensuring the business is positioned well to meet increased client requirements.

Broader product lines, investment in rental equipment and developing product support technologies supporting remote diagnostics and telematics are expected to contribute to the longer term growth once economic financial and social environments return to more normalized state. CIMCO’s installed base and product support levels are well positioned to support current and future operations and growth trends. The diversity of the markets served, expanding product support offerings and services, strong financial position and disciplined operating culture positioned our company well for continued growth in the long-term. Record recent booking activity and backlogs bode well for future results.

I will now turn the call over to Mike to take you through highlights of the financial results. Mike?

Mike McMillan

Thanks, Scott. It’s a privilege to join the Toromont team and take part in today’s discussion. I look forward to meeting those on the call that I haven’t yet, once it’s safe to do so.

Let’s put a bit more color on the operating results starting with the Equipment Group on Slide 7. Revenues are up 4% in the quarter. Total new and used equipment sales were up 5%. Sales into construction markets were up 10% with good growth in Ontario and Quebec. Sales into mining markets were down 5%, largely related to reduced activity late in the quarter, as Scott noted. Also power system sales were down 7%. Material handling equipment sales increased 11%, while agricultural markets were lower down 13%.

Rental revenues were largely unchanged year-over-year as revenue softness in March largely offset revenue growth from the early part of the quarter. Rental revenues from heavy equipment were down 16%. Power rentals down 11% and material handling rentals were down 4% offset by light equipment rentals which were up 2%, reflecting good activity in Central Canada partly offset by lower activity in Quebec goes well. Rental revenues from equipment on rent with a purchase option or RPO were up 22% on a larger fleet over the period. Product support revenues grew 3% on higher parts and service revenues. Growth was good in construction and power systems. Mining was up 1% as early growth was dampened by mining shutdowns in March.

Gross profit margins decreased 100 basis points in the quarter. Equipment margins were lower on the continued tight pricing environment in concert with lower industry activity levels. Rental margins were lower on fleet utilization and the under-absorption of rental investments made last year. Product support margins were also lower however. Sales mix was neutral year-over-year.

Selling and administration expenses in the quarter included a $4 million gain on the sale of our property while the comparative period last year included a pension curtailment gain of $5 million other selling and administrative expenses were higher including the loans Allowance for doubtful accounts mainly due to the aging of accounts receivable and the timing of collections other compensation costs were higher on annual salary increases and higher headcount mark to market adjustments on deferred share units reduced expenses in the first quarter of 2020 information technology related costs were higher in support of our continued system integration work with the dealership.

Operating income was down 5% on lower margins and the higher expense ratio. Bookings increased 15% in the quarter as higher construction power systems and material handling orders offset the lower mining and agricultural orders. Backlogs of $353 million or 11% lower in this time last year across all sectors except construction. Currently we expect substantially all of this backlog to be delivered this year. As you are aware backlogs can very significantly from period to period on large project activities especially in mining and power the timing of orders and deliveries and availability of equipment from an inventory and suppliers.

Let's now turn to CIMCO on Slide 8. Revenues were down 13% in the quarter, mainly due to timing of package sales slightly offset by product support growth package revenues were down 28% with decreases both in Canada and the U.S. package revenues are recorded based on percentage completion and reflect timing of receipt and start of orders as well as project schedules industrial market segments were down both in Canada and the U.S. offset by higher recreational sales in Canada and the U.S. within Canada Ontario reported strong activity levels, while in other regions, they were lower. Product support revenues increased 1% versus record levels for the first quarter of last year. U.S. was up 6% while revenues in Canada were largely unchanged.

Gross profit margins increased 360 basis points in the quarter versus last year the increase in margin results from higher package margins up 170 basis points and higher product support margins up 40 basis points combined with a favorable sales mix of product support revenues to total revenues selling and administrative expenses were up 13% in the quarter principally due to higher allowance for doubtful accounts on timing of collection activity.

Operating income was lower versus last year at a 165,000 largely reflecting the lower package revenues and an increase in allowance for doubtful accounts slightly offset by the margin improvements bookings were up 61% to $112 million several large industrial orders were received in Canada while our recreational orders were lower overall bookings in the U.S. were 9% lower but on a smaller base backlogs of $214 million were up 64 million or 43% versus the end of March last year industrial backlogs were up 86% offsetting lower recreational backlogs down 5% we expect approximately 70% of this backlog to be realized as revenue in the year however this is subject to construction schedules and potential changes stemming from the COVID-19 pandemic.

On Slide 9, I would like to touch on a few key corporate highlights non cash working capital was $107 million higher at $571 million versus a year ago on lower accounts payable reflecting the timing of receipt in terms of inventory purchases coupled with the gains on foreign currency to evidence used to hedge currency exposure as of March 31 we maintained our very strong financial position with a cash balance of $388 million and a strong balance sheet subsequent to the quarter we secured an additional $250 million through one year syndicated facility to provide additional liquidity in this period of economic uncertainty and finally as announced the board of directors yesterday approved their regular quarterly dividend at a rate of $0.31 per share consistent with last quarter when it was increased by 15%.

That concludes our prepared remarks and at this time we will be pleased to take questions Donna over to you to setup the first call please.

Mike McMillan

Operator, over to you please.

Question-and-Answer Session

Operator

Yes, thank you. [Operator Instructions] And your first question is from Yuri Lynk from Canaccord Genuity. Please go ahead.

Yuri Lynk

Hi, good morning guys.

Scott Medhurst

Good morning, Yuri.

Mike McMillan

Good morning.

Yuri Lynk

Want to talk a little bit about rental fleet utilization continues to drop a little bit. Do you think that the uncertain environment we are in right now when things start to normalize a little bit will lead to perhaps your customers opting more towards rental than perhaps used or new equipment?

Scott Medhurst

Yes, that’s great question. I think we saw it in the quarter, customers with the COVID impact became more conservative and understandably everybody is sort of in the same boat here. And when we saw the decrease in the RPO inventory levels, that’s a signal, but there is a conservative portion of that was also due to the conversions that took place, but we did have some returns. So overall, we might be positioned very well as customers’ demand signals start to improve, because we certainly invested when we look at it over year-over-year basis on the quarter. You look at our rental services business we increased it by almost $100 million. So we think we are positioned well there in the long-term. We are committed to that strategy. But obviously with what took place in the quarter, with the impacts we did see a decline in those rental service utilization numbers and as well as our heavy fleet reflective of the environment, particularly where it came off was in Quebec. So but I think you are right, we could be positioned very well here for those customer demand signals that might shift to short-term needs and be careful with their CapEx.

Yuri Lynk

Yes. I guess in the interim can you – I would assume that net rental CapEx will be down, but any – can you provide us with an update on what we should expect there for the year?

Scott Medhurst

Yes. So I mean we were – we have been aggressive over the last year as we have said, we were about on the rental, full rental services model that we are committed to and that we have proved it out in our legacy businesses. We increased it over the last year, but we are going to slow that down now and that is a conscious decision that took place in the first quarter.

Yuri Lynk

Okay, I will let it turn it over. Thanks.

Scott Medhurst

Thank you, Yuri.

Operator

Thank you. Your next question is from Jacob Bout from CIBC. Please go ahead.

Jacob Bout

Good morning.

Scott Medhurst

Hi, Jacob.

Jacob Bout

So you have talked about some of the actions that you have taken to reduce expenses, what’s the scale of these cost savings?

Scott Medhurst

Well, it’s a combination of lot of factors there. We are really focused on some of this discretionary expense. We have taken those down extremely hard. And as we said, it starts with the senior executive in the board. We have – all discretionary is being pushed to a minimum. We are also though – we are being very conscious in how we go about this. In the first quarter, we – things came off quite fast with the government decisions that were obviously had to be made. We felt it in mining, we felt it in construction, but we were being very sensitive to our skilled labor, in particular, our human capital in general because one things we have worked hard to build our infrastructure to provide the demand signals and meet demands of the customers and grow the businesses. So, we went into internal work shares through usage of vacation and bank time and training. That certainly created an expense, but – and then of course the productivity and the revenue streams came off, but – so that was a short-term move, so that wasn’t necessarily an expense cutting move. But now we are moving into governmental work share programs and we are very aggressive on the discretionary. So, we are monitoring it relative to the modeling of our revenue projections, so we do it on percentages. So that’s how we are working through it.

Jacob Bout

Okay. And my next question might be a little bit early, but you talk a bit about what you are learning from COVID-19? I know some companies are talking about more of their staff working from home longer term and how do you think about Toromont looking post-pandemic?

Scott Medhurst

Yes, that’s a great question. I mean, we were very granular on just positioning the business, protecting our people, meeting the customer demands and the shifts that took place there and then, I mean, I commend Mike on how we worked very hard to position our business for the long-term protecting it with the balance sheet. But – so, we are now just shifting in okay, how do we want to look when we come out and then what are the changes that are going to take place? I think you are going to see some significant changes. We are learning how to interface with internally a little differently, but I think there will be some changes in some of our travel behaviors as well as how we are interfacing with our suppliers. And you know what we are learning how to be effective in those areas as well as I think what we are also seeing is the connectivity with our customer machines. That’s been very helpful to really get reads on the hours logged and things of this nature. And so we are going to continue to leverage those investments. And I think that will be very powerful in the long-term how we interface with customers as well. And as we have been saying we have put a lot of work into our development of data and interface with customers with smartphones that’s coming along. So I think that’s going to accelerate some areas there.

Jacob Bout

I will leave it there. Thank you.

Scott Medhurst

Thank you.

Operator

Thank you. The next question is from Michael Doumet from Scotiabank. Please go ahead.

Michael Doumet

Hey, good morning gentlemen and welcome, Mike.

Scott Medhurst

Hi, Mike.

Michael Doumet

Just the first question, I mean the government restrictions have extended largely through April in Ontario and Quebec. In some respects, I think those restrictions have actually limited more activity. Anyway you guys can give us a sense for the activity levels and how they have trended so far in early Q2? Maybe give us a sense of utilization rates in your rental fleet or your installed fleet just to give how….

Scott Medhurst

Again, we were impacted there. I mean, we had some real hard stops, particularly in mining and we saw mines go into care and maintenance and things of the same. But it’s short-term and we have to deal with it. But again, we are trying to be sensitive to what we need to be when we come out of this. We have had some – it’s all dictated on a lot of the government decisions. Obviously, you are reading it as like we are. Things are going to be phased in here in an early manner right gather. We don’t want to get too far ahead of ourselves in here in terms of speculation, but we have seen some signals that machines are starting to uptick on the hours logged and we have had some demand signals come in for some skilled labor which is good and some of our rental booking activity has improved recently, but we don’t want to get ahead of ourselves here. It’s going to be a phase in and we are going to be there positioned for our customers.

Mike McMillan

Maybe just one thing to add to that, I think again we have referenced the diversification of the business. And so I think you have a couple of things geographical in the customer base are pretty broad. But I think also regionally, our customers are making decisions and as Scott mentioned, we are trying to make sure that we are well positioned there to step in and support them at the right time. And so as they make decisions to go back into phased production and so forth, we are there. And I think that does bode well for us when you think of the essential service nature of the business, but also as our customers make decisions in amongst the governmental regulations, we do benefit from that diversification and ability to – and reach that we have. So we have a well distributed branch network, which is there to support.

Michael Doumet

Okay. And that’s helpful color. Thanks guys. And then just maybe just flipping to your service business, I mean, does the implementation of health precautions and social distancing present any challenges that could increase the cost of doing business for limited throughput at your current facilities or do you think after a period of adjustment, you could return to somewhat normal operating levels?

Scott Medhurst

Well, we have been very granular on our call it COVID protocols and procedures both within the operations as well as externally in the field service and we are working very closely with customers and how we are interfacing and whether we are in their facilities or we are out in their job sites. So that’s our focus. We think I commend our teams. I think they've done admirable job and moving quickly in those fronts. We are able to operate we are being sensitive to how we are scheduling shifts how we are working through some of our procedures so I would say there has been some added costs we saw added costs due to this quickly in the quarter and again we are trying to position steer the business through an unprecedented time sort of costs associated that few air on the side of safety and proper protocols so that’s how we are doing so far we have been able to function with the demand signal we have received particularly in the essential service areas and our people have done really pleased with our people who are adapting and adjusting should be commended

Michael Doumet

Okay, perfect. Thanks for the questions.

Scott Medhurst

Thank you. Stay safe.

Operator

Thank you. Your next question is from Devin Dodge from BMO Capital Markets. Please go ahead.

Devin Dodge

Alright, thanks. Good morning guys.

Scott Medhurst

Good morning.

Devin Dodge

I think what’s in the last couple of years I think the availability of used equipment has been a bit of a challenge just wondering if you expect to see more used equipment coming to market that could provide say opportunities for Toromont I guess if so how difficult has it been to go out and source this equipment given some of the travel restrictions we are seeing?

Scott Medhurst

Okay this is an interesting question Devin. We saw a significant uptick in our used sales on the equipment side of the business we are up overall 21% and then on the construction side it was I think it was over 30% so there is some shifts going in there I think part of it might been also the shift is taking place with the FX with the weakening dollars so and I feel that we think we are positioned well with our inventory levels we did see a shift where the RPO came off fairly significantly due to conversions but also due to equipment being returned but a lot of that equipment was lower so the demo what we classify as demo class inventory or low hour it went up over 68% we think we are positioned well when the demand signals improve meet customer needs because that is going to be attractive in particularly when you compare to the some of the new pricing with the FX shifts. So we think we're positioned well there in the past and we have always said part of our strategy is to be very opportunistic in terms of buying iron used iron we held off in the quarter there was a fairly well I mean there was a couple of moves we made that we are being opportunistic but obviously we are being very careful and focused on our balance sheet and our position there for the long term but we are we have a pretty good skilled team on how to buy iron. So we've got good resources in there we are monitoring that we are going to be careful but that could become a tactical move here as things progress but we are pleased with our position on used equipment.

Devin Dodge

Okay, that’s helpful. Maybe coming back to I think coming back to I think one of the Jacob’s questions are you seeing or do you expect to find opportunities coming out of this down turn I guess I was thinking about changes in market share shifts and product support to technician availability I guess anything like this that we should be considering as an opportunity for Toromont coming out of this downturn?

Scott Medhurst

Yes and that’s what we are trying to be balanced here in our approach to obviously we have to be attending for short term but you don’t want to damage the business and the infrastructure so we are being trying to be as careful as possible with our team and our people because it is going to be interesting to see how governments react with infrastructure spends to try and stimulate some economic activity here so we want to be positioned well for that both on the product support side our rebuild activity in Q1 was I think it was up over 20% at the dealerships so again you might see a shift for customers they are going to move to rebuilds. Our quoting activity there is healthy so again we want to be positioned if that really starts to shift into how customers are going to handle their fleets and their CapEx.

Mike McMillan

Maybe one thing to add to that we can you mentioned we mentioned in our statements that we have invested on some of the integration and technology side as well and I think coming out of this what this does allow us to do is look at some of those opportunities to advance that integration and come out on quicker out of the gate with an integrated platform and move some of those projects forward and so taking advantage of those opportunities as well to move our business forward and integrate the acquisition in the eastern part of the business.

Scott Medhurst

And that’s good question. The first quarter, we worked hard at transitioning the first phase of our Toromont CAT business on to one platform. And so there was a cost associated with that, but we feel comfortable and that’s gone well.

Devin Dodge

That’s good color. I will turn it over. Thanks guys.

Scott Medhurst

Thank you.

Operator

Thank you. The next question is from Ben Cherniavsky from Raymond James. Please go ahead.

Ben Cherniavsky

Good morning.

Scott Medhurst

Good morning, Ben.

Mike McMillan

Good morning.

Ben Cherniavsky

I want to circle back I think it might have been the first question on the rental business and the shift to rental, I can appreciate that some customers might prefer or might migrate to that channel in the downturn, but overall, what generally I would think that if demand conditions go down, there is pressure on rental rates and utilization and you guys did report a little bit of pressure on utilization rates in gross margins, but I am curious what’s been happening to rental rates. Is that not become a more competitive environment at present and what – just what could we expect for the quarter or the year without getting into guidance, just qualitatively what’s happening in the rental market right now?

Scott Medhurst

So, I mean we look at this and over the long-term and if you look at the market data that we continue to process. Long-term we see the rental industry and overall dollar opportunity continue to increase. And then that’s we have seen that year-over-year for several years now and it’s played out well in our legacy business for us and that’s why we are – we have been investing fairly aggressively in Quebec and the Maritimes to expand that full rental services model. What we saw in the quarter was yes, we saw something, but overall, particularly in the legacy, the rental rates were holding up. It just did the – and even we had growth in Ontario. We had over – in the rental reserves we had over 6% growth. We are moving really well in January and February and then everything just came off and then particularly, the thing in Quebec was we were down on our revenue in the first quarter. We have invested heavily in the uptick of the upload of the fleet. So that was a drag on the margin. That was a big shift for us that we didn’t see that progress, but we are committed to it. And as we have said, we are only midway through that strategy where you get the full realization of the model with disposition. So that’s got – just got to stay out, stay committed to it. But you know what, we feel we are – we have invested well there with technology and we compete effectively, but it’s going to be interesting in how it plays out on rates, but it wasn’t – there wasn’t any real shocks, in there in the first quarter from what we saw.

Ben Cherniavsky

And you haven’t seen it in April yet either?

Scott Medhurst

Well, in April, we are starting to see a little uptick, but the other thing that we saw from the rental services was our winter products, the propane and some of the building supplies, it wasn’t maybe as harsh in some areas prior. So that came off a bit for us as well.

Ben Cherniavsky

Okay. And if I could just clarify what’s happening in materials handling, you said in the disclosure your sales were up 11%, I think orders were up 17%, but in that area, rentals were down and just those trends of the sales and orders being up, was that right through March as well or has that side of the business shown any slowdown since the COVID hit?

Scott Medhurst

Yes. So we were trending nice. Those numbers are reflective, Ben, of I think the team really worked hard last year. You know it’s – we did a lot of restructuring in there last year with sales management territory coverage, particularly in Ontario. So that’s where we applauded the team there making good progress. We saw good bookings in the sales. Revenues were up. And then it did come off in March relative to some of the COVID impacts as did the service numbers. And so as we have been very focused on our service excellence strategies and tactics in there, so we did feel it, but we were pleased with the progress on the equipment sales in the material handling business.

Ben Cherniavsky

Okay. That’s helpful. Thanks guys.

Scott Medhurst

Thanks, Ben.

Operator

Thank you. The next question is from Cherilyn Radbourne from TD Securities. Please go ahead.

Cherilyn Radbourne

Thanks very much and good morning.

Scott Medhurst

Good morning, Cherilyn.

Cherilyn Radbourne

Most of my questions have been asked, but maybe I can get you to just comment on how the supply chain has been functioning across the dealership Battlefield and CIMCO and whether you are thinking any differently about inventory across one of those businesses?

Scott Medhurst

Yes. So, so far – I mean, we feel we are positioned well when you look at those inventory levels, they are only down slightly from last year in the quarter. And I think we commented last year we were very aggressive in some of those uploads and how we are managing prime product sales and positioning, because we wanted to be aggressive with our integration plan and that played out fairly well. So I mean, I think our suppliers have done an admiral job, particularly, Caterpillar. Our parts inventories are up slightly. We are in weekly consult with Caterpillar and in the first quarter, their parts supply was solid, fill rates were good. Certainly, they have stated they had some temporary closures and some plants, but we feel we are positioned fairly well. And we are staying close to those signals as things progress, but Caterpillar was open on their call that they are being sensitive to the demand signals and they will adjust accordingly.

Cherilyn Radbourne

Okay. And then in this environment, obviously, customers are going to have a lot of focus on deep cleaning and PPE. And I am just curious whether Battlefield has been adjusting its market offering to respond to that need?

Scott Medhurst

Yes. So particularly with our jobsite solutions group, we have been sort of pivoting in some of the customer demand signals in there with some PPE. And I think our team has done an admirable job in there. Obviously, in some areas, there is paid supply, but we are pivoting in some of those areas, Cherilyn.

Cherilyn Radbourne

Okay. And then just lastly, I guess in particular, at the CAT dealer and at Battlefield, are you seeing customers move more to online channels in a noticeable way and can that be a competitive advantage in some way?

Scott Medhurst

Yes. So it’s interesting. We are monitoring that. We are starting to promote that more, because we have put investment in there. Q1, we didn’t really see any real shift, but that’s something we are monitoring closely as we move forward. So we will see how that plays out. That could be another shift we see due to this COVID impact.

Cherilyn Radbourne

Thank you. That’s all for me.

Scott Medhurst

Thank you, Cherilyn.

Mike McMillan

Thanks, Cherilyn.

Operator

Thank you. [Operator Instructions] And your next question is from Maxim Sytchev from National Bank Financial. Please go ahead.

Maxim Sytchev

Hi, good morning gentlemen.

Scott Medhurst

Good morning, Max.

Mike McMillan

Good morning, Max.

Maxim Sytchev

Yes. Most of my questions have been answered. But I just wanted to follow-up in relation to Scott’s commentary, did you say that there was a little uptick in April in relation to – is it utilization rates or general utilization, I am just trying to clarify that statement if it’s possible?

Scott Medhurst

Yes. I don’t have the data yet on the rates, but we will – I don’t want to get too far ahead ourselves here, but what we saw was some bit of an uptick in some of the booked rental business. We don’t have the final numbers for April. So we will see how it played out there and there was a bit of an uptick in some of the technician demand, so because we have seen some of the mining activity improve as well as construction. We see the hours logged on machines starting to improve slightly. But this is going to be – I wouldn’t want to speculate on, I think it’s a very complex environment obviously and as we will see how the phase-ins go here. But we feel we are positioned and we are trying to be careful with our skilled labor.

Maxim Sytchev

Right. That makes a lot of sense. And I guess, I mean, if we are trying to visualize this, I mean, obviously there was a tail off at the end of the quarter and then at least in April, so far it hasn’t gotten worse. I mean is that sort of a fair assumption, because I mean, I am just making reference?

Scott Medhurst

Yes. Let me give you a little bit color to make sure we – it came off hard in March. I mean, the industry activities in March and I am – what I am talking about is the overall industries for equipment sales. That came off almost 30%. So that’s a dramatic shift. So we will see how things play out here. But we are – it’s came off hard. So it’s a very complex environment and we have got ways to go here, but we are – our focus is on positioning this business best we can with shot-term moves, but also being very sensitive to this infrastructure we have had to build. So we are positioned well when we come out.

Maxim Sytchev

Yes. That makes a lot of sense. And then actually, just maybe one quick one on CIMCO, a reference to the competitive environment, is there anything changes – any changes there, any emergence of new competitors or maybe any color you can provide there, so we can have a better understanding of what’s going on there?

Scott Medhurst

No shift in terms of the competitive environment. What we are pleased about at CIMCO was that bookings in the first quarter, was I think was a record. So we are little over $100 million. So, we are very pleased with that obviously. We had – there is a difference quarter-over-quarter on timing of projects on how we progress. So, that was a bit impactful and we continue to stay very focused on our disciplines on project execution and how we are building the cost structures of the project. So we are pleased with that booking level and now we did have an impact with CIMCO, with some of the service areas came off, but we still feel – signals we are getting right now is those bookings we don’t see a big change as of right now, but on the project completions, but we will see – we are monitoring closely.

Maxim Sytchev

And so maybe just to follow-up on this, is it just the nature or the timing that really resulted in this, very strong bookings quarter or is it your go-to-market strategy, I am just trying to better understand what drove that very significant increase?

Scott Medhurst

Well, we are very focused on our go-to-market strategy, but I think it’s also – it was driven by the customer, because it was them making decisions on their capital decisions. So, it’s mainly due, but the good thing was we are positioned and we are pleased with our win ratios.

Maxim Sytchev

Alright. Excellent. That’s it for me. Thank you very much.

Scott Medhurst

Thank you, Max.

Mike McMillan

Thanks Max.

Operator

Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to Mr. McMillan.

Mike McMillan

Great. Thank you, Donna. Before concluding the call, I would like to remind listeners that our Annual Meeting of Shareholders will be held today at 10 a.m. Again, this is a virtual meeting only. The website details are available in our press release and on our website at toromont.com. I encourage you to look at that. Thanks again for joining us today. And that concludes our call. Take care. Be safe.

Operator

Thank you. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.