Earnings release
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TORNADO INFRASTRUCTURE EQUIPMENT REPORTS FIRST QUARTER 2025 RESULTS Net Income Increased by 17.3% Compared to Q1/2024 CALGARY, May 27, 2025 – Tornado Infrastructure Equipment Ltd. (“Tornado” or the “Company”) (TSX-V: TGH; OTCQX: TGHLF) today reported its unaudited condensed consolidated financial results for the three months period ended March 31, 202 5. The unaudited condensed consolidated financial statements and related management discussion and analysis are available on the Company’s issuer profile in Canada on SEDAR+ at www.sedarplus.com, in the United States at www.otcmarkets.com and on the Company’s website www.tornadotrucks.com. All amounts reported in this news release are in thousands ($000’s CAD) except per share amounts. Significant Developments and Q1/2025 Overview • On May 15, 2025, the Company closed the acquisition (the “Acquisition”) of all the issued and outstanding shares of Custom Vacuum Services Ltd. (“CustomVac”) for an aggregate purchase price of $28 million (the “Purchase Price”) paid in cash, subject to customary closing adjustments. CustomVac is located in Nisku, Alberta and manufactures and services truck -mounted and semi -trailer mounted vacuum equipment, both for the oil and gas, and the utilities, excavation, environmental and safety sectors in Canada. This Acquisition is a key component of Tornado’s broader strategy to expand its footprint across the infrastructure equipment sector. The Acquisition presents significant synergy opportunities, including cross -selling across both customer bases, leveraging Torna do’s established sales channels in Canada and the United States to drive increased sales of CustomVac products, and utilizing Tornado’s established and scalable supply chain to reduce production costs and improve efficiency. The Acquisition provides a new product line for Tornad o which includes units that are designed for the transportation of dangerous goods, which expands Tornado’s product offering to its customers. The Acquisition is expected to be profitable and immediately accretive to Tornado. CustomVac’s unaudited trailing 12-month gross profit was $9.58 million and had assets of $11.59 million as at January 31, 2025. The Company is not assuming any long -term debt in connection with the Acquisition. The Purchase Price was fully funded by a combination of cash on hand and the drawdown of a new non-revolving term loan under the Company’s amended credit facility with its lender, a Canadian Schedule I chartered bank. • The Company has continued strong performance across sales, gross profit, EBITDAS (1) and net income in Q1/2025. • Net income per share (diluted) of $0.020 increased by $0.002 (11.1%) compared to $0.018 in Q1/2024. Net income of $2,846 increased by $419 (17.3%) compared to $2,427 in Q1/2024. This improvement was primarily driven by higher revenue from increased hydrova c truck sales, enhanced production efficiency at the Red Deer facility, and cost savings from scaled operations. • EBITDAS per share (diluted) (1) of $0.032 increased by $0.007 (25.0%) compared to $0.025 in Q1/2024. EBITDAS of $4,522 increased by $1,088 (31.7%) compared to $3,434 in Q1/2024. This increase was principally due to increased revenue and increased gross profit. • Revenue of $35,649 increased by $1,745 (5.1%) compared to $33,904 in Q1/2024 as a result of: (i) the positive impact
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of the four-year Product Supply and Development Agreement (the “Supply Contract”) with Ditch Witch, a division of The Toro Company (“Ditch Witch”), which the Company entered into in 2022 for the co-development and supply of customized hydrovac trucks; (ii) the increase in sales from the sales arrangement with Custom Truck One Source (“Custom Truck”), who is a single-source provider of specialized truck and heavy equipment solutions with over 40 locations across North America; (iii) the increase in sales pri cing of hydrovac trucks, particularly in Q1/2025, supported by a stronger U.S. dollar (“USD”); (iv) the increase in the number of hydrovac trucks sold; and (v) the increase in demand for hydrovac trucks in North America. During Q1/2025 the Company sold 81 hydrovac trucks compared to 79 in Q1/2024. • Gross profit of $7,749 increased by $2,007 (35.0%) compared to $5,742 in Q1/2024 principally due to increased revenue, improved operating efficiency at the Red Deer facility, supply chain advantages from increased purchasing power and favorable foreign exchange impacts from a stronger USD. • Selling and general administrative expenses of $3,227 increased by $840 (35.2%) compared to $2,387 in Q1/2024. The increase was principally due to generally increased employee, sales and travel costs to handle present and anticipated growth and non-recurring professional fees. (1) Non-IFRS Financial Measures - EBITDAS is calculated by subtracting interest, tax, depreciation, amortization, stock-based compensation, gain/loss on foreign exchange, gain/loss on disposal of fixed assets and change in fair value of derivative financial instruments from earnings. EBITDAS per share (diluted) is calculated by dividing EBITDAS by the total number of diluted common shares. The terms EBITDAS and EBITDAS per share (diluted) are non-IFRS financial measures, and readers are cautioned that EBITDAS and EBITDAS per share (diluted) should not be considered to be more meaningful than net income determined in accordance with IFRS. Brett Newton, President and Chief Executive Officer of Tornado, commented: “Tornado delivered another strong quarter in Q1 2025, driven by solid market demand and consistent operational execution. The acquisition of CustomVac meaningfully expands our product portfolio and creates new opportunities for cross -selling and supply cha in efficiency. With the anticipated completion of our new production building in Red Deer later this year, we are well positioned to meet increasing demand. At the same time, we continue to invest in product innovation through internal design initiatives, with several new offerings already launched in 2025. These developments reinforce our confidence in the future and our commitment to long- term, sustainable growth.”
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Financial and Operating Highlights (in CAD $000’s except outstanding common share and per share data) (1) See “Non-IFRS Financial Measures” above. Outlook Management expects the Company’s production and sales of hydrovac trucks and profitability to continue to grow in 202 5 for the following reasons: • Expected continued spending on infrastructure in our industry across North America. • The anticipated increased revenues and benefits from the strategic Acquisition of CustomVac, including expanded product offerings, cross-selling opportunities, and improved supply chain efficiency. • The continuing addition of new and innovative products that will support the infrastructure, telecommunications and oil and gas industries. • The anticipated increasing revenues and benefits from the sales arrangement with its U.S. strategic partner, Custom Truck. • The anticipated increase in production capacity and operating efficiencies resulting from the completion of the new production building being constructed at the Red Deer facility, which is expected to be completed in Q2/2025. • The Company’s strategy to introduce new product lines to increase revenue by internal development and through synergistic business acquisitions. • The Company’s commitment to continuous improvement of its hydrovac truck design which in the Company’s view will result in advantages over other hydrovac trucks currently offered in the market. 2025 2024 Revenue 35,649$ 33,904$ Cost of sales 27,900 28,162 Gross profit 7,749 5,742 Selling and general administrative expenses 3,227 2,387 Other (gain)/loss - foreign exchange 169 (279) Depreciation and amortization 268 188 Finance expense 69 78 Stock-based compensation 377 196 Change in fair value of derivative financial instruments (31) - Loss on disposal of fixed assets 64 - Income before tax 3,606 3,172 Income tax expense (760) (745) Net income 2,846$ 2,427$ EBITDAS (1) 4,522$ 3,434$ Outstanding common shares 137,716,230 135,931,119 EBITDAS per share - diluted (1) 0.032$ 0.025$ Net income per share - diluted 0.020$ 0.018$ Three Months ended March 31
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• The Company’s ability to continue to secure key manufacturing components, including chassis for customers, into future years through strategic supplier relationships. • The Company has strengthened its dealer relationships in both Canada and U.S. to meet the expected demand increase. • Expanded North American coverage for maintenance warranty and repair to serve customers better. • Favorable impact of a strengthened USD on a significant portion of the Company’s U.S. sales, which supports improved gross margins on those transactions. About Tornado Infrastructure Equipment Ltd. Tornado is a pioneer and leader in the vacuum truck industry and has been a choice of utility and oilfield professionals with over 1,800 hydrovacs sold since 200 8. The Company designs and manufactures hydrovac trucks as well as provides heavy duty truck maintenance operations in central Alberta. It sells hydrovac trucks to excavation service providers in the infrastructure and industrial construction and oil and ga s markets. Hydrovac trucks use high pressure water and vacuum to safely penetrate and cut soil to expose critical infrastructure for repair and installation without damage. Hydrovac excavation methods are quickly becoming a standard in North America to safely excavate in urban areas and around critical infrastructure greatly reducing infrastructure damage and related fatalities. For more information about Tornado Infrastructure Equipment Ltd., visit www.tornadotrucks.com or contact: Brett Newton President and Chief Executive Officer Phone: (587) 802-5070 Email: bnewton@tghl.ca Derek Li Vice President and Chief Financial Officer Phone: (403) 204-6350 Email: dli@tghl.ca Advisory Certain statements contained in this news release constitute forward -looking statements. These statements relate to future events. All statements other than statements of historical fact are forward -looking statements. The use of the words “anticipates”, “should”, ‘‘may”, “expected”, “expects”, “believes” and other words of a similar nature are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or e vents to differ materially from those anticipated in such forward -looking statements. Although Tornado believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Such statements include those with respect to: • the Company’s outlook for 2025; • the expectation that the Company’s production, sales of hydrovac trucks and profitability for 2025 will continue to grow; • the expectation that the Acquisition presents significant synergy opportunities, including cross -selling across both customer bases, leveraging Tornado’s established sales channels in Canada and the United States to drive increased sales of CustomVac products, and utilizing Tornado’s established and scalable supply chain to reduce production costs and improve efficiency; • the expectation that the Acquisition provides a new product line for Tornado which includes units that are designed for the transportation of dangerous goods, which expands Tornado’s product offering to its customers; • the expectation that the Acquisition will be profitable and immediately accretive to Tornado; • the expectation that the Acquisition creates new opportunities for cross-selling and supply chain efficiency; • the exception that with the anticipated completion of our new production building in Red Deer later this year, we will be well positioned to meet increasing demand; • the anticipated increased revenues and benefits from the strategic Acquisition of CustomVac, including expanded
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product offerings, cross-selling opportunities, and improved supply chain efficiency; • the anticipated increasing revenues and benefits from the sales arrangement with its U.S. strategic partner, Custom Truck; • the anticipated increase in production capacity and operating efficiencies resulting from the completion of the new building being constructed at the Red Deer Facility, which is expected to be completed in Q2/2025; • the expectation of continued spending on infrastructure in our industry across North America; • the Company’s strategy to introduce new product lines to increase revenue by internal development and through synergistic business acquisitions. • the expectation of adding new and innovative products that will support the infrastructure, telecommunications and oil and gas industries; • management’s belief that the Company’s commitment to continuous improvement of its hydrovac truck design which in the Company’s view will result in advantages over other hydrovac trucks currently offered in the market; • management’s belief in its continuing ability of securing key manufacturing components, including chassis, for customers into future years through strategic supplier relationships; • management’s belief in the positive impact of strengthened dealer relationships in both Canada and U.S. to meet the expected demand increase; • management’s belief in the positive impact of expanded North American coverage for maintenance warranty and repair; and • management’s belief that a strengthened USD will have a favorable impact on gross margins for U.S. sales, supporting improved profitability on cross border transactions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward -looking statements. Actual results could differ materially from those anticipated in these forward-looking statements as a result of prevailing economic conditions, and other factors, many of which are beyond the control of Tornado. Although Tornado believes these statements to be reasonable, no assurance can be given that these expectations will prove to be co rrect and such forward-looking statements included in this news release should not be unduly relied upon. The forward -looking statements contained in this news release represent Tornado’s expectations as of the date hereof and are subject to change after such date. Tornado disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations. Neither the Exchange nor its Regulation Service Provider (as that term is defined in policies of the Exchange) accepts responsibility for the adequacy or accuracy of this news release.