Toromont Industries Ltd

TSX:TIH

Earnings Call Transcript 2020-Q1

[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.

[Michael Stanley Howie McMillan, Executive VP & CFO]

Great. Thank you, Donna. Good morning, everyone. Thank you for joining us today to discuss the results of the Toromont Industries Ltd. 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've had the opportunity to review our press release and related financial information issued yesterday. And as such, we will focus on 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'll be more than happy to answer questions. Over to you, Scott.

[Scott J. Medhurst, CEO, President & Director]

Thank you, Mike, and good morning, everyone. Before I begin, I would ask that you move to Slide 3 on the deck. I'm delighted to officially welcome Michael McMillan, Executive Vice President, 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'd 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 and the impact of the 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. Though Toromont's businesses have to date been 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 3 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 to 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 fleet utilization, combined with increased expenses mainly due to increase in the allowance for doubtful accounts. Net earnings decreased 5% for quarter versus a year ago, while EPS decreased $0.02, $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 markets served, extensive product and service offerings and financial strength, together with a disciplined operating culture, position 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 and diversified installed base. Prior to the outbreak, the long-term outlook for infrastructure projects and other construction activity was positive across most territories. The 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 continue 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. The company has taken actions to reduce expenses participating in government programs such as work share where 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 continued 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 a 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, position the 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?

[Michael Stanley Howie McMillan, Executive VP & CFO]

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 were 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 activities late in the quarter, as Scott noted. Also, Power Systems 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 as 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 mine 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 underabsorption 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 a property, while the comparative period last year included a pension curtailment gain of $5 million. Other selling and administrative expenses were higher, including 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 head count. 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 were 11% lower than 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 significantly -- can vary significantly from period to period on large project activities, especially in mining and power, and 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 $165,000, largely reflecting the lower package revenues and an increase in allowance for doubtful accounts, slightly offset by the margin improvement. Bookings were up 61% to $112 million. Several large industrial orders were received in Canada, while 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 19 (sic) [ Slide 9 ], I'd like to touch on a few key corporate highlights. Noncash 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 derivatives used to hedge currency exposure. As at 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 a 1-year syndicated facility to provide additional liquidity in this period of economic uncertainty. And finally, as announced, the Board of Directors yesterday approved the 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'll be pleased to take questions. Donna, over to you to set up the first call, please. Operator, over to you, please.

[Operator]

[Operator Instructions] And your first question is from Yuri Lynk from Canaccord Genuity.

[Yuri Lynk]

Want to talk a little bit about the rental fleet utilization continues to drop a little bit. Do you think that the uncertain environment we're 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 J. Medhurst, CEO, President & Director]

Yes, that's a great question. I think we saw it in the quarter, our 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 that there's a conservative approach. Now 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've certainly invested. When you look at it over a year-over-year basis on the quarter, you look at our rental services business, we increased it over -- almost $100 million. So we think we're positioned well there. In the long term, we're 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're right, we could be positioned very well here for those customer demand segments 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 J. Medhurst, CEO, President & Director]

Yes. So I mean we were -- we've been aggressive over the last year, as we've said, we're about -- on the rental -- full rental services model that we're committed to and that we 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.

[Operator]

Your next question is from Jacob Bout from CIBC.

[Jacob Jonathan Bout]

So you talked about some of the actions that you've taken to reduce expenses. What is the scale of these cost savings?

[Scott J. Medhurst, CEO, President & Director]

Well, it's a combination of a lot of factors there. We're really focused on some of these discretionary expense. We've taken those down extremely hard. And as we said, it starts with the Senior Executive and the Board. We've -- all discretionary is being pushed to a minimum. We're also, though -- we're being very conscious in how we go about this. In the first quarter, we -- things came off quite fast with the government decisions that 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, and all our human capital in general because one thing is you -- we've 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're moving into governmental work-share programs, and we're very aggressive on the discretionary. So we're monitoring it relative to the modeling of our revenue projection. So we do it on percentages. So that's how we're working through it.

[Jacob Jonathan Bout]

Okay. And my next question might be a little bit early, but maybe talk a bit about what you're 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 J. Medhurst, CEO, President & Director]

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 he 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're going to see some significant changes. We're learning how to interface with -- internally a little differently. I think there'll be some changes in some of our travel behaviors as well as how we're interfacing with our suppliers. And you know what? We're learning how to be effective in those areas, as well as I think what we're 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're 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've been saying, we've 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.

[Operator]

The next question is from Michael Doumet from Scotiabank.

[Michael Doumet, Analyst]

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

[Scott J. Medhurst, CEO, President & Director]

Well, 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're 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're reading it as like we are. Things are going to be phased in here in an orderly manner I gather. We don't want to get too far ahead of ourselves 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're going to be there positioned for our customers.

[Michael Stanley Howie McMillan, Executive VP & CFO]

Maybe just one thing to add to that. I think again, we referenced the diversification of the business. And so I think you have a couple of things. Geographical in the customer base, so pretty broad. But I think also, regionally, our customers are making decisions and as Scott mentioned, we're trying to make sure that we're 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're 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, Analyst]

Okay. And that's helpful color. 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 J. Medhurst, CEO, President & Director]

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

[Operator]

The next question is from Devin Dodge from BMO Capital Markets.

[Devin Dodge, Analyst]

For, I would say, in much of 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. And I guess, if so, how difficult has it been to go out and source this equipment given some of the travel restrictions we're seeing?

[Scott J. Medhurst, CEO, President & Director]

Okay. This is an interesting question, Devin. We -- as you saw, we saw a significant uptick in our used sales. On the equipment side of the business, we're up overall 21%. And then on the construction side, it was -- I think it was over 30%. So there is some shifts going on there. I think part of it might have been also the shift that's taking place with the FX, with the weakening dollar. So in actual fact, we think we're 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 low hour. So the demo that -- we classify as demo class inventory or low hour, it went up over 68%. We think we're positioned well when the demand signals improve to meet customer needs because that's going to be attractive iron, particularly when you compare it to the -- some of the new pricing with the FX shifts. So we think we're positioned well there. In the past, and we've 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 were being opportunistic. But obviously, we're being very careful and focused on our balance sheet and our position there for the long term. But we are -- I mean we have a pretty good skilled team on how to buy iron. So we've got good resources in there. We're monitoring that. We're 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, Analyst]

Okay. That's helpful. Maybe coming back to, I think, one of Jacob's questions. Just are you seeing or do you expect to find opportunities coming out of this downturn? I guess what I'm thinking about is really like changes in market share, shifts in product support, technician availability? I guess anything like this that we should be considering as an opportunity for Toromont coming out of this downturn?

[Scott J. Medhurst, CEO, President & Director]

Yes. And that's what -- we're trying to be balanced here in our approach to -- obviously, we have to be attentive to short term, but you don't want to damage the business and the infrastructure. So we're being -- trying to be as careful as possible with our team and our people. Because it's 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 where customers 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.

[Michael Stanley Howie McMillan, Executive VP & CFO]

Maybe one thing to add, too, that we can -- you mentioned -- we mentioned in our statements that we've 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 J. Medhurst, CEO, President & Director]

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

[Operator]

The next question is from Ben Cherniavsky from Raymond James.

[Ben Cherniavsky, Managing Director & Head of Industrial Research]

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 a downturn. But overall, generally, I would think that if demand conditions go down, there's pressure on rental rates and utilization. And you guys did report a little bit of pressure on utilization rates in gross margins. But I'm curious what's been happening to rental rates. Has that not become a more competitive environment at present? And what -- just -- and what could we expect for the quarter or the year without getting into guidance, just qualitatively what's happening in those -- in the rental market right now?

[Scott J. Medhurst, CEO, President & Director]

So in -- and, again, we look at this, Ben, 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 that's -- we've seen that year-over-year for several years now. And it's played out well in our legacy business for us, and we -- that's why we're -- we've been investing fairly aggressively in Québec and the Maritimes to expand that full rental services model. What we saw in the quarter was, yes, we saw some tightening. 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're moving really well in January -- January and February, and then everything just came off. And then particularly, the thing in Québec was we were down on our revenue in the first quarter. We've invested heavily and then the uptick on 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're committed to it. And as we've said, we're only midway through that strategy where you get the full realization of the model with disposition. So that's got to -- just got to play out, stay committed to it. But you know what? We feel we're -- we've invested well there with technology, and we can 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, Managing Director & Head of Industrial Research]

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

[Scott J. Medhurst, CEO, President & Director]

Well, in April, we're starting to see a little uptick. But the other thing that we saw -- and 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, Managing Director & Head of Industrial Research]

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 the -- 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 J. Medhurst, CEO, President & Director]

Yes. So we were trending nice. Those numbers are reflective, Ben, of I think the team really worked hard last year. 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 -- I applauded the team, they’re making good progress. We saw good bookings and the sales revenues were up. And then it did come off in March relative to some of the COVID impact, as did the service numbers. And so because we've 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 and the material handling business.

[Operator]

The next question is from Cherilyn Radbourne from TD Securities.

[Cherilyn Radbourne, Analyst]

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 the CIMCO, and whether you're thinking any differently about inventory across one of those businesses?

[Scott J. Medhurst, CEO, President & Director]

Yes. So, so far, in the -- I mean we feel we're 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 were 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 admirable job, particularly Caterpillar. Our parts inventories are up slightly. We're in weekly consult with Caterpillar. And in the first quarter, their parts supply was solid, fill rates were good. Certainly, they've stated they had some temporary closures in some plants, but we feel we're positioned fairly well. And we're staying close to those signals as things progress. But Caterpillar was open on their call that they're being sensitive to the demand signals, and they'll adjust accordingly.

[Cherilyn Radbourne, Analyst]

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

[Scott J. Medhurst, CEO, President & Director]

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’s done an admirable good job in there. Obviously, in some areas, there's tight supply, but we are pivoting in some of those areas, Cherilyn.

[Cherilyn Radbourne, Analyst]

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 J. Medhurst, CEO, President & Director]

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

[Operator]

[Operator Instructions] And the next question is from Maxim Sytchev from National Bank Financial.

[Maxim Sytchev, MD & AEC]

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'm just trying to clarify that statement if it's possible.

[Scott J. Medhurst, CEO, President & Director]

Yes. I don't have the data yet on the rates, but we'll -- we don't want to get too far ahead of ourself here, but what we saw was some -- a bit of an uptick in some of the booked rental business. We don't have the final numbers for April. So we'll see how it played out there. But -- 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. So -- but this is going to be -- I wouldn't want to speculate on anything. It's a very complex environment, obviously. And as -- we'll see how the phase-ins go here, but we feel we're positioned and we're really trying to be careful with our skilled labor.

[Maxim Sytchev, MD & AEC]

Right. No, makes a lot of sense. And I guess, I mean, if we're 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'm just making reference...

[Scott J. Medhurst, CEO, President & Director]

Yes, let me give you a little more color to make sure we -- it came off hard in March. So I mean the industry activities in March, and I'm -- what I'm talking about is the overall industries for equipment sales, that came off almost 30%. So that's a dramatic shift. So we'll see how things play out here, but we're -- it came off hard. So it's a very complex environment, and we've got a ways to go here, but we're -- our focus is on positioning this business best we can with short-term moves, but also being very sensitive to this infrastructure we've worked hard to build. So we're positioned well when we come out.

[Maxim Sytchev, MD & AEC]

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 what's going on there?

[Scott J. Medhurst, CEO, President & Director]

No shift in terms of the competitive environment. What we're pleased about at CIMCO was the bookings in the first quarter was -- I think it was a record, so we're over -- well over $100 million. So we're very pleased with that. Obviously, we had -- there's a difference quarter-over-quarter on timing of projects and 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 projects. So -- but we're pleased with that booking level. And now we're -- we did have an impact with CIMCO. Some of the service areas came off. But we still feel -- signals we're getting right now is those bookings, we don't see a big change as of right now, but -- on the project, completions, but we'll see. We're monitoring closely.

[Maxim Sytchev, MD & AEC]

And sorry, 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'm just trying to better understand what drove that very significant increase.

[Scott J. Medhurst, CEO, President & Director]

Yes, it's -- well, we're very focused on our go-to-market strategy, but I think it's also -- it was driven by the customer. Because we -- they -- it was them making decisions on their capital decisions. So it's mainly due to -- but the good thing was we were positioned and we're pleased with our win ratios.

[Operator]

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

[Michael Stanley Howie McMillan, Executive VP & CFO]

Great. Thank you, Donna. Before concluding the call, I'd like to remind listeners that our annual meeting of shareholders will be held today at 10:00 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.