Toromont Industries Ltd. — Interim / Quarterly Report 2021

May 5, 2021

TOROMONT INDUSTRIES LTD.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

($thousands) Note	March 31 2021	December 31 March 31 2020 2020
Assets Current assets Cash Accounts receivable Inventories Income taxes recoverable Derivative financial instruments 5 Other current assets	613,942 $ 482,844 760,087 12,783 - 13,533	591,128 $ 388,182 $ 541,580 454,148 728,404 976,401 135 16,651 - 36,916 10,897 16,547
Total current assets Property, plant and equipment 2 Rental equipment 2 Other assets Deferred tax assets Goodwill and intangible assets	1,883,189 416,824 527,116 31,293 493 477,318	1,872,144 1,888,845 423,282 432,087 539,412 592,814 33,263 41,760 504 1,275 478,187 481,962
Total assets	3,336,233 $	3,346,792 $ 3,438,743 $
Liabilities Current liabilities Accounts payable and accrued liabilities Provisions Deferred revenues and contract liabilities Derivative financial instruments 5 Income taxespayable	538,004 $ 25,034 181,671 6,037 -	584,003 $ 751,517 $ 26,645 24,287 149,109 153,483 11,043 - 23,416 -
Total current liabilities Deferred revenues and contract liabilities Long-term lease liabilities Long-term debt 3, 5 Post-employment obligations 9 Deferred tax liabilities	750,746 17,866 15,362 646,616 104,803 41,209	794,216 929,287 16,383 12,895 16,565 21,098 646,299 745,703 149,451 103,443 25,226 51,011
Total liabilities Shareholders' equity Share capital 4 Contributed surplus Retained earnings Accumulated other comprehensive(loss)income	1,576,602 520,126 15,112 1,225,854 (1,461)	1,648,140 1,863,437 516,591 491,452 14,243 14,182 1,169,239 1,057,222 (1,421) 12,450
Total shareholders' equity	1,759,631	1,698,652 1,575,306
Total liabilities and shareholders' equity	3,336,233 $	3,346,792 $ 3,438,743 $

See accompanying notes

1

TOROMONT INDUSTRIES LTD. INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)

($ thousands, except share amounts) Note	2021 2020 Three months ended March 31	2021 2020 Three months ended March 31
	2021
Revenues 11 Cost ofgoods sold	806,238 $ 618,860	715,459 $ 544,601
Gross profit Sellingand administrative expenses	187,378 117,162	170,858 115,617
Operating income Interest expense 6 Interest and investment income 6	70,216 7,177 (2,004)	55,241 6,931 (2,726)
Income before income taxes Income taxes	65,043 17,087	51,036 13,640
**Net earnings **	47,956 $	37,396 $
Earnings per share Basic 7 Diluted 7	0.58 $ 0.58 $	0.46 $ 0.45 $
Weighted average number of shares outstanding Basic 7 Diluted 7	82,498,589 83,248,997	82,015,440 82,548,816

See accompanying notes

2

TOROMONT INDUSTRIES LTD. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three months ended March 31	Three months ended March 31
($thousands)	2021	2020
Net earnings	47,956 $	37,396 $
Other comprehensive (loss) income, net of income taxes: Items that may be reclassified subsequently to net earnings:
Foreign currencytranslation adjustments	(142)	931
Unrealized (losses) gains on derivatives designated as cash flow hedges Income tax recovery (expense)	(4,107) 1,067	19,606 (5,155)
Unrealized(losses) gains on cash flow hedges,net of income taxes	(3,040)	14,451
Realized losses (gains) on derivatives designated as cash flow hedges Income tax(recovery)expense	4,246 (1,104)	(3,528) 937
Realized losses(gains)on cash flow hedges,net of income taxes	3,142	(2,591)
Items that will not be reclassified subsequently to net earnings: Actuarial and other gains Income tax expense	46,593 (12,347)	24,222 (6,419)
Actuarial and othergains,net of income taxes	34,246	17,803
Other comprehensive income	34,206	30,594
Total comprehensive income	82,162 $	67,990 $

See accompanying notes

3

TOROMONT INDUSTRIES LTD. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three months ended March 31	Three months ended March 31
($thousands) Note	2021	2020
Operating activities Net earnings Items not requiring cash: Depreciation and amortization Stock-based compensation Post-employment obligations Deferred income taxes Gain on sale of rental equipment and property, plant and equipment	47,956 $ 39,071 1,466 1,945 3,611 (7,705)	37,396 $ 41,867 1,410 1,961 7,355 (8,093)
Net change in non-cash working capital and other 10 Additions to rental equipment 2 Proceeds on disposal of rental equipment	86,344 (29,397) (23,640) 17,576	81,896 (98,551) (36,632) 12,402
Cashprovided by (used in) operating activities	50,883	(40,885)
Investing activities Additions to property, plant and equipment 2 Proceeds on disposal of property, plant and equipment Increase in other assets	(4,605) 1,793 (44)	(19,017) 9,766 (46)
Cash used in investing activities	(2,856)	(9,297)
Financing activities Drawings on credit facility Dividends paid 4 Cash received on exercise of stock options Shares purchased for cancellation 4 Payment of lease liabilities	- (25,560) 2,938 - (2,553)	100,000 (22,139) 1,494 (4,043) (2,685)
Cash(used in) provided by financing activities	(25,175)	72,627
Effect of currencytranslation on cash balances	(38)	148
Increase in cash during the period Cash,at beginningof theperiod	22,814 591,128	22,593 365,589
Cash, at end of theperiod	613,942 $	388,182 $

Supplemental cash flow information (note 10)

See accompanying notes

4

TOROMONT INDUSTRIES LTD. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

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Share capital Accumulated other comprehensive income (loss)
Foreign
currency
Contributed Retained translation Cash flow
($ thousands, except share numbers) Number Amount surplus earnings adjustments hedges Total Total
At January 1, 2021 82,474,658 $ 516,591 $ 14,243 $1,169,239 $ 1,880 $ (3,301) $ (1,421) $ 1,698,652
- - - - - -
Net earnings 47,956 47,956
Other comprehensive income (loss) - - - 34,246 (142) 102 (40) 34,206
Total comprehensive income - - - 82,202 (142) 102 (40) 82,162
- - - -
Exercise of stock options 67,510 3,535 (597) 2,938
Stock-based compensation expense - - 1,466 - - - - 1,466
Effect of stock compensation plans 67,510 3,535 869 - - - - 4,404
Dividends declared - - - (25,587) - - - (25,587)
At March 31, 2021 82,542,168 $ 520,126 $ 15,112 $ 1,225,854 $ 1,738 $ (3,199) $ (1,461) $ 1,759,631
At January 1, 2020 82,012,448 $ 490,047 $ 13,088 $1,031,097 $ 2,219 $ (2,560) $ (341) $ 1,533,891
- - - - - -
Net earnings 37,396 37,396
Other comprehensive income - - - 17,803 931 11,860 12,791 30,594
Total comprehensive income - - - 55,199 931 11,860 12,791 67,990
- - - -
Exercise of stock options 35,980 1,810 (316) 1,494
Stock-based compensation expense - - 1,410 - - - - 1,410
- - - -
Effect of stock compensation plans 35,980 1,810 1,094 2,904
- - - -
Shares purchased for cancellation (67,800) (405) (3,638) (4,043)
Dividends declared - - - (25,436) - - - (25,436)
At March 31, 2020 81,980,628 491,452 14,182 1,057,222 $ 3,150 $ 9,300 $ 12,450 $ 1,575,306
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See accompanying notes

5

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the three months ended March 31, 2021 (Unaudited)

($ thousands, except where otherwise indicated)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Corporate Information

Toromont Industries Ltd. (the “Company” or “Toromont”) is a limited company incorporated and domiciled in Canada whose shares are publicly traded on the Toronto Stock Exchange under the symbol TIH. The registered office is located at 3131 Highway 7 West, Concord, Ontario, Canada.

Toromont operates through two reportable segments: the Equipment Group and CIMCO. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory in addition to industry-leading rental operations and an agricultural equipment business. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Both segments offer comprehensive product support capabilities.

Basis of Preparation

These interim condensed consolidated financial statements were prepared in accordance with  International Accounting Standard (“IAS”) 34 Interim Financial Reporting (“IAS 34”). Accordingly, these interim condensed consolidated financial statements do not include all disclosures required for annual financial statements and should be read in conjunction with the audited annual consolidated financial statements of the Company for the year ended December 31, 2020.

The preparation of interim condensed consolidated financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the interim condensed consolidated financial statements, were the same as those that applied to the Company’s consolidated financial statements as at and for the year ended December 31, 2020. Management also incorporated the potential impact of COVID-19 into its estimates and assumptions.

These interim condensed consolidated financial statements are presented in Canadian dollars and all values are rounded to the nearest thousands, except where otherwise indicated.

These interim condensed consolidated financial statements were authorized for issue by the Board of the Directors on May 4, 2021.

The accounting policies adopted in the preparation of these interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended December 31, 2020. Several amendments apply for the first time in 2021, but do not have an impact on the interim condensed consolidated financial statements of the Company. The Company has not early-adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

6

2. PROPERTY, PLANT AND EQUIPMENT AND RENTAL EQUIPMENT

Activity within property, plant and equipment and rental equipment during the period included:

	Three months ended March 31	Three months ended March 31
	2021	2020
Additions Rental equipment Property, plant and equipment	23,640 $ 4,605	36,632 $ 19,017
Total additions	28,245 $	55,649 $
Disposals - Net book value ("NBV") Rental equipment Property, plant and equipment	11,115 $ 549	8,518 $ 5,557
Total disposals - NBV	11,664 $	14,075 $
Depreciation Cost of goods sold Sellingand administrative expenses	31,064 $ 4,224	32,091 $ 5,910
Total depreciation	35,288 $	38,001 $

3. LONG-TERM DEBT

	March 31 2021	December 31 2020 March 31 2020
Bank revolving credit facility Senior Debentures: 3.71%, $150.0 million, due September 30, 2025(1) 3.84%, $500.0 million,due October 27,2027(1)	- $ 150,000 500,000	- $ 100,000 $ 150,000 150,000 500,000 500,000
Debt issuance costs,net of amortization	650,000 (3,384)	650,000 750,000 (3,701) (4,297)
Total long-term debt	646,616 $	646,299 $ 745,703 $

(1) Interest payable semi-annually, principal due on maturity.

All debt is unsecured.

The Company maintains a $500.0 million committed revolving credit facility that matures in October 2022. On April 17, 2020, the Company entered into an additional $250.0 million committed revolving credit facility maturing in April 2021 (this credit facility was not renewed). Debt under these facilities is unsecured and ranks pari passu with debt outstanding under Toromont’s existing debentures. Interest is based on a floating rate, primarily bankers’ acceptances and prime, plus applicable margins and fees based on the terms of the credit facility.

No amounts were drawn on these revolving credit facilities as at March 31, 2021 and as at December 31, 2020. As at March 31, 2020, $100.0 million was drawn down on the $500.0 million credit facility and was repaid in September 2020.

Standby letters of credit issued utilized $30.0 million of the $500.0 million facility as at March 31, 2021 (December 31, 2020 – $30.8 million and March 31, 2020 – $34.0 million).

7 Notes to the Interim Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2021

(Unaudited)

4. SHARE CAPITAL

Normal Course Issuer Bid (“NCIB”)

The Company purchased and cancelled 67,800 common shares for $4.0 million (average cost of $59.62 per share, including transaction costs) under the NCIB program during the first quarter of 2020.

The Company’s NCIB expired in August 2020 and was not renewed.

Dividends

The Company paid dividends of $25.6 million or $0.31 per share during the three months ended March 31, 2021 (2020 - $22.1 million or $0.27 per share).

Subsequent to quarter-end, the Board of Directors approved a dividend increase of 4 cents or 12.9%, to 35 cents per common share per quarter effective with the dividend payable on July 5, 2021 to shareholders on record on June 9, 2021.

5. FINANCIAL INSTRUMENTS

Financial Assets and Liabilities – Classification and Measurement

The following table highlights the carrying amounts and classifications of certain financial assets and liabilities:

	March 31 2021	December 31 March 31 2020 2020
Other financial liabilities: Long-term debt Derivative financial instruments (liabilities) assets, net: Foreign exchange forward contracts	646,616 $ (6,037) $	646,299 $ 745,703 $ (11,043) $ 36,916 $

Fair Value of Financial Instruments

The fair value of derivative financial instruments is measured using the discounted value of the difference between the contract’s value at maturity based on the contracted foreign exchange rate and the contract’s value at maturity based on the comparable foreign exchange rate at period-end under the same conditions. The financial institution’s credit risk is also taken into consideration in determining fair value. The valuation is determined using Level 2 inputs, which are observable inputs or inputs that can be corroborated by observable market data for substantially the full term of the asset or liability, most significantly foreign exchange spot and forward rates.

8

Notes to the Interim Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2021

(Unaudited)

The fair value and carrying value of long-term debt is as follows:

Long-termdebt	March 31 2021	December 31 March 31 2020 2020
Fair value Carryingvalue	700,469 $ 650,000 $	726,871 $ 771,046 $ 650,000 $ 750,000 $

The fair value was determined using the discounted cash flow method, a generally accepted valuation technique. The discounted factor is based on market rates for debt with similar terms and remaining maturities and based on Toromont’s credit risk. The Company has no plans to prepay these instruments prior to maturity.

During the three-months ended March 31, 2021, there were no transfers between Level 1 and Level 2 fair value measurements.

Derivative Financial Instruments and Hedge Accounting

Foreign exchange contracts and options are transacted with financial institutions to hedge foreign currency-denominated obligations related to purchases of inventory and sales of products. As at March 31, 2021, the Company was committed to USD purchase contracts with a notional amount of $463.4 million at an average exchange rate of $1.2704, maturing between April 2021 and October 2022.

Management estimates that a loss of $6.0 million (December 31, 2020 – loss of $11.0 million; March 31, 2020 – gain of $37.3 million) would be realized if the contracts were terminated on March 31, 2021. Certain of these forward contracts are designated as cash flow hedges, and accordingly, an unrealized loss of $4.3 million (December 31, 2020 – unrealized loss of $4.4 million; March 31, 2020 – unrealized gain of $10.8 million) has been included in other comprehensive income. These losses are not expected to affect net income as the amounts will be reclassified to net income within the next eleven months and will offset losses recorded on the underlying hedged items, namely foreign-denominated accounts payable and accrued liabilities. Certain of those forward contracts are not designated as cash flow hedges, but are entered into for periods consistent with foreign currency exposure of the underlying transactions. A loss of $1.7 million (December 31, 2020 – loss of $6.6 million; March 31, 2020 – gain of $26.5 million) on forward contracts not designated as hedges is included in net income, which offsets losses recorded on the foreign-denominated items, namely accounts payable and accrued liabilities.

9

Notes to the Interim Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2021

(Unaudited)

6. INTEREST INCOME AND EXPENSE

The components of interest expense were as follows:

	Three months ended March 31 2021 2020	Three months ended March 31 2021 2020
	2021
Credit facilities Senior debentures Interest on leaseliabilities	748 $ 6,243 186	410 $ 6,278 243
	7,177 $	6,931 $

The components of interest and investment income were as follows:

	Three months ended March 31	Three months ended March 31
	2021	2020
Interest on conversion of rental equipment Other	770 $ 1,234	771 $ 1,955
	2,004 $	2,726 $

7. EARNINGS PER SHARE

	Three months ended March 31	Three months ended March 31
	2021	2020
Net earnings available to common shareholders	47,956 $	37,396 $
Weighted average common shares outstanding Dilutive effect of stock option conversions	82,498,589 750,408	82,015,440 533,376
Diluted weighted average common shares outstanding	83,248,997	82,548,816
Earnings per share: Basic Diluted	0.58 $ 0.58 $	0.46 $ 0.45 $

There were no anti-dilutive options in the three-months ended March 31, 2021 or March 31, 2020.

10

Notes to the Interim Condensed Consolidated Financial Statements

As at and for the three months ended March 31, 2021

(Unaudited)

8. STOCK-BASED COMPENSATION

A reconciliation of the outstanding options was as follows:

	Three months ended March 31, 2021	Three months ended March 31,2020
	Weighted Average Number of Exercise Options Price	Weighted Average Number of Exercise Options Price
Options outstanding, January 1 Exercised(1) Forfeited	2,328,038 58.67 $ (67,510) 43.51 (86,400) 57.55	2,329,705 51.68 $ (35,980) 41.53 (2,000) 65.97
Options outstanding,March 31	2,174,128 59.19 $	2,291,725 51.82 $
Options exercisable,March 31	779,265 46.83 $	859,935 39.81 $

(1) The weighted average share price at date of exercise for the three months ended March 31, 2021 was $92.22 (2020 - $69.62).

The following table summarizes stock options outstanding and exercisable as at March 31, 2021.

Range of Exercise Prices	Options Outstanding	Options Exercisable
	Weighted Weighted Average Average Remaining Exercise Number Life(years) Price	Weighted Average Exercise Number Price
$23.40 - $26.52 $36.65 - $39.79 $53.88 - $66.22 $72.95	119,430 3.0 25.37 $ 373,510 5.0 38.80 $ 1,151,245 7.5 62.97 $ 529,943 9.4 72.95 $	119,430 25.37 $ 304,550 38.58 $ 355,285 61.12 $ - - $
	2,174,128 7.3 59.19 $	779,265 46.83 $

Deferred Share Unit (“DSU”) Plan

A reconciliation of the DSU plan was as follows:

Outstanding, January 1 Units taken or taken in lieu and dividends Redemptions Fair market value adjustment Outstanding,March 31	March 31, 2021 Three months ended	March 31,2020 Three months ended
	Number of DSUs Value	Number of DSUs Value
	394,154 35,555 $ 13,732 1,258 (89,399) (8,211) - 1,353	388,547 27,392 $ 12,017 813 - - - (3,993)
	318,487 29,955 $	400,564 24,212 $

The liability for DSUs is recorded in accounts payable and accrued liabilities.

11

Notes to the Interim Condensed Consolidated Financial Statements

As at and for the three months ended March 31, 2021

(Unaudited)

9. EMPLOYEE FUTURE BENEFITS

Employee future benefits expense included the following components:

Defined benefit plans Defined contribution plans 401(k)matched savings plans	Three months ended March 31	Three months ended March 31
	2021	2020
	4,911 $	4,914 $
	3,849	4,001
	68	70
	8,828 $	8,985 $

10. SUPPLEMENTAL CASH FLOW INFORMATION

	Three months ended March 31	Three months ended March 31
	2021	2020
Net change in non-cash working capital and other Accounts receivable Inventories Accounts payable and accrued liabilities Provisions Deferred revenues and contract liabilities Income taxes Derivative financial instruments Other	58,736 $ (31,683) (45,738) (1,611) 34,045 (36,064) (4,866) (2,216)	70,904 $ (64,215) (71,803) 607 9,073 (7,376) (31,394) (4,347)
	(29,397) $	(98,551) $
Cash paid during the year for: Interest Income taxes	2,783 $ 51,014 $	4,092 $ 13,870 $
Cash received during the year for: Interest Income taxes	1,929 $ 1,461 $	2,615 $ 166 $

11. SEGMENTED INFORMATION

The Company has two reportable segments: the Equipment Group and CIMCO as described in note 1, each supported by the corporate office. These segments are strategic business units that offer different products and services, and each is managed separately. The corporate office provides finance, treasury, legal, human resources and other administrative support to the segments and does not meet the definition of a reportable operating segment as defined in International Financial Reporting Standards (“IFRS”) 8 – Operating Segments , as it does not earn revenue.

The accounting policies of each of the reportable segments are the same as the significant accounting policies described in the most recent annual audited consolidated financial statements.

Segment performance is assessed based on operating income, which is measured differently than income from operations in the interim condensed consolidated financial statements. Corporate

12 Notes to the Interim Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2021

(Unaudited)

overheads are allocated to the segments based on revenue. Income taxes, interest expense, interest and investment income are managed at a consolidated level and are not allocated to the reportable operating segments. Current income taxes, deferred income taxes and certain financial assets and liabilities are not allocated to the segments as they are also managed on a consolidated level.

The aggregation of the operating segments is based on the economic characteristics of the business units. These business units are considered to have similar economic characteristics including nature of products and services, class of customers and markets served and similar distribution models.

No reportable segment is reliant on any single external customer.

The following table sets forth information by segment for the three months ended March 31, 2021 and 2020:

Equipment Group CIMCO	Consolidated	Consolidated
Three months ended March 31 2021 2020 2021 2020	2021	2020
Equipment/package sales 323,095 $ 251,735 $ 46,389 $ 22,609 $ Rentals 72,298 80,978 - - Product support 329,224 322,351 32,466 35,074 Powergeneration 2,766 2,712 - -	369,484 $ 72,298 361,690 2,766	274,344 $ 80,978 357,425 2,712
Total revenues 727,383 $ 657,776 $ 78,855 $ 57,683 $	806,238 $	715,459 $
Operating income 69,813 $ 55,076 $ 403 $ 165 $	70,216 $	55,241 $
Interest expense Interest and investment income Income taxes	7,177 (2,004) 17,087	6,931 (2,726) 13,640
Net earnings	47,956 $	37,396 $

Operating income from rental operations was $2.5 million for the three months ended March 31, 2021 (2020 – operating income of $2.4 million).

12. BUSINESS SEASONALITY

Interim period revenues and earnings historically reflect seasonality. For the Equipment Group, the first quarter is typically the weakest due to winter shutdowns in the construction industry while the fourth quarter has consistently been the strongest quarter due to higher conversions at the Caterpillar dealership of equipment on rent with a purchase option. For CIMCO, the fourth quarter tends to be the strongest due to higher activity in recreational markets in advance of the winter recreational season.

In 2020, these patterns were impacted by the governmental and market response and reaction to COVID-19, with the second quarter experiencing the most significant slowdown in market activity. The recent surge in COVID-19 variants and further governmental measures imposed to combat the spread of the virus may further alter the typical seasonal trend.

The breadth and duration of this pandemic are unknown, in part given the many unknowns related to the virus, the ability to contain transmission and the timing of vaccine roll-out. Staff shortages, reduced customer activity and demand, increased government regulations or intervention, are

13 Notes to the Interim Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2021

(Unaudited)

some of the factors that have and may continue to negatively impact the business, consolidated financial results and conditions of the Company. It is not possible to reliably estimate the length and severity of these developments as well as the impact on the consolidated financial results and condition of the Company in future periods.

14

Notes to the Interim Condensed Consolidated Financial Statements

As at and for the three months ended March 31, 2021

(Unaudited)