Good morning. Today is Tuesday, 5th of November 2024. Welcome to the Toromont Industries Limited Q3 2024 Results Conference Call. Please be advised that this call is being recorded and all lines have been placed on mute to prevent any background noise. Your host for today will be Mr. John Doolittle, Executive Vice President and Chief Financial Officer. Please go ahead, Mr. Doolittle. Thank you, Elvis. Good morning, everyone. Thanks a lot for joining us today to discuss Toromont's Q3 results. And also on the call with me this morning is Michael McMillan, President and Chief Executive Officer. Michael and I will be referring to the presentation that is available on our website. And to start, I would like you to refer to Slide 2, which contains our advisory regarding forward-looking information and statements. After our prepared remarks, we'll be more than happy to answer questions. And let's begin by moving to Slide 3, and I'll pass it over to Michael. Great. Thanks very much, John. Good morning, everyone. Thanks for joining us. Before we get started, we are extremely pleased to welcome Avi Lethbridge and Paramita Das to our board of directors. Avi and Paramita bring substantial business acumen and expertise in their respective fields and are important additions that expand the depth and breadth of our team. In addition to our package, on Slide 3, we have provided a brief summary of their respective backgrounds in our quarterly news release as well. With these additions, the company's board of directors will consist of 11 members, of whom 10 are independent. Please join us in welcoming Avi and Paramita. Now let's get started and move to Slide 4. On September 9th, 2024, the company completed the acquisition of the business and net operating assets of Tri-City Equipment Rentals. Tri-City is an industry leader in heavy equipment rentals with operations in southwestern Ontario. The acquisition expands Toromont Cat's heavy rents business to better serve our customer base and aligns with our positive longer-term view of the rental market. We are very pleased to welcome the Tri-City team to the Toromont family. As we move to Slide 5, I'd like to note that John and I will be commenting largely on a continuing operations basis, which excludes the results of AgWest as it was sold in Q2 of 2023. We exclude AgWest as we believe this provides a better basis for comparability. Results for the Q3 of 2024 reflect good growth in revenue across most market segments, as well as continued execution against a strong order backlog, with revenue up 14% and net income lower by 10% from Q3 2023. Margins and bottom line results have been dampened, as expected, with the more normalized product availability against a strong comparator reflective of tighter market conditions in play last year. The Equipment Group executed well with solid new equipment deliveries. Rental markets, specifically light equipment, picked up in the quarter, while used equipment sales declined primarily due to lower rental dispositions. Product support activity levels remain healthy, and we continue to increase technician headcount. Improving equipment availability, good bookings over the first nine months of the year, and a healthy opening order backlog remain supportive. Cimco continued to deliver solid results for the Q3, driven by good execution in both Canada and the U.S., coupled with healthy activity levels. Package revenue in the quarter reflects the advancement of construction schedules in the execution of the strong order backlog. Product support activity continued to demonstrate strong growth in Canada, supported by the larger technician workforce. However, it was slightly dampened by the U.S. region. Our financial position remains strong as we continue to invest in the business in Q3 on a year-to-date basis through working capital and the Tri-City acquisition noted earlier. Although residential-related activities are experiencing a slower part of the business cycle, this is partly offset by strong equipment deliveries in mining related to mine development and expansion in our territory. As we look out over the next cycle, we anticipate a more balanced revenue mix with a focus on product support as recent equipment deliveries are utilized. Across the organization, we continue to focus on our long-term investment strategies and remain committed to our operating disciplines, driving our aftermarket strategies and delivering customer solutions today and for the future. Our strong financial position and order backlog position us well. On Slide 6, I'd like to touch on a few key financial highlights. Investment in non-cash working capital increased 29% versus a year ago. We are comfortable with this increase as it was mainly driven by higher inventory levels and accounts receivable balances reflective of the higher new equipment sales levels and normalizing supply conditions. Inventory levels are higher than the prior year, driven by a number of factors, including delivery timing, inflation, foreign exchange on U.S. source supplies, improving availability through the supply chain, seasonality, and general activity levels. Accounts receivable increased in light of the higher revenue in the quarter. These days sales outstanding were unchanged from this time last year. Our team continues to closely manage the aging of our receivables and monitor credit levels and metrics. We ended the Q3 with ample liquidity, including cash of CAD 671 million and an additional CAD 461 million available to us under existing credit facilities. Our net debt to total capitalization ratio was negative 1%. We purchased and canceled 673,000 shares for approximately CAD 83 million on a year-to-date basis under our NCIB program. These purchases are mainly reflective of good capital hygiene and help to mitigate option exercise dilution. Overall, our balance sheet remains well positioned to support operational needs, and we are prepared to manage challenges related to the economic variables and business conditions. We will continue to exercise the operational financial discipline one would expect as we evaluate investment opportunities that may develop over time. Toromont targets a return on equity of 18% over a business cycle. Return on Equity was lower at 19.4% compared to 24.7% for Q3 of 2023 and lower than our five-year average of 20.8%. Return on Capital Employed was 26.3%, down from 31.6% for Q3 of 2023. Both of these metrics were driven by lower earnings and our higher capital investment, coupled with the increase in working capital as well as our excess cash on hand. And finally, as announced yesterday, the board of directors approved the regular quarterly dividend of CAD 0.48 per share payable on January 6th, 2025, to shareholders on record on December 6th, 2024. John, I'll turn it back to you for some more detailed comments on the results. Okay. Thank you very much, Michael. Let's turn to Slide 7 for a few additional comments on the consolidated results. As Michael noted, results for the Q3 reflected good revenue growth with new equipment deliveries and execution against order backlog and project schedules. Gross profit margins were lower compared to the prior year on sales mix, with a lower percentage of product support revenue to total, and against a tough competitor in the equipment group last year, given market dynamics in play at that time. Operating income was down 9% compared to the strong results last year. Bookings for the Q3 increased 4% compared to a year ago, with higher bookings in the equipment group being offset by lower bookings at Cimco against a strong competitor. On a year-to-date basis, bookings increased 11% in the equipment group. The equipment group was up 12% and Cimco up 1%. Backlog remains healthy at CAD 1.1 billion at the end of September, slightly down from CAD 1.2 billion reported at this time last year, with a decrease in the Equipment Group, down 17%, and an increase at Cimco up 12%. On a consolidated basis, revenue increased 14% in the Q3 and 9% through the first nine months of the year, with increases in both the Equipment Group and Cimco. Expense levels increased 7% in the quarter, increased 8% year-to-date to 12.1% of revenue. Increases reflect higher activity levels along with staffing levels and general inflation, and as usual, discretionary spend is being monitored carefully. Operating income decreased 9% in the quarter and 8% year-to-date as the higher revenue was more than offset by lower gross margins and higher expenses. As a percentage of revenue, operating income was 12.4% on a year-to-date basis compared to 14.7% last year. Net earnings on a continuing operations basis decreased 10%, or CAD 14.7 million, in the quarter compared to last year and decreased 7%, or CAD 24.8 million, on a year-to-date basis. Basic earnings per share on a continuing operations basis was CAD 1.60 in the quarter and CAD 4.27 year-to-date. Let's look at the equipment group in more detail and turn to Slide 8. Revenue was up 14% in the quarter and 9% year-to-date. Equipment sales, including both new and used equipment, were up 29% in the quarter and 18% year-to-date, reflecting good inflow and delivery of equipment. New equipment sales increased 36% in the quarter and 22% year-to-date with good activity across all market segments except for material handling. Used equipment sales decreased 6% during the quarter and decreased 2% year-to-date. Both rental fleet dispositions and sales of used equipment from trades and purchases have decreased, reflecting shifting supply and demand dynamics. In the quarter, total equipment revenue increased 2% in construction, 118% in mining, 17% in power systems, and were down 9% in material handling, another strong quarter for mining. Rental revenue was 3% higher in the quarter and 1% lower year-to-date. Except for the light equipment fleet, which saw some improvement for the quarter, most market sectors and regions were down for the quarter and on a year-to-date basis, generally reflecting persisting softer market conditions, principally in residential construction. Our RPO fleet was CAD 81.5 million at the end of September versus CAD 55 million a year ago, and rental revenue was up 24% year-to-date compared to last year, and we think of RPO as a financing tool that normally results in an eventual sale. Product support revenue grew 1% in the quarter and 2% year-to-date. Parts revenue decreased 1% in the quarter and was relatively unchanged year-to-date on market activity and product support sales mix. Service revenue increased in both the quarter and year-to-date on the higher technician workforce. Looking at specific markets for the quarter, change in revenue was as follows. Construction was down 4%, mining up 7%, power systems up 3%, and material handling down 3%. Gross profit margins decreased 440 basis points in the quarter compared to last year and decreased 290 basis points on a year-to-date basis. Sales mix was unfavorable, with a lower proportion of product support revenue to total, dampening margins by 140 basis points in the quarter. Equipment margins decreased 190 basis points as expected, given market dynamics in play in the prior year. Rental margins were down 120 basis points on lower fleet utilization. Product support margins increased 10 basis points, reflecting nature of work and sales mix. Selling and administrative expenses increased 7% in both the quarter and year-to-date in support of the higher revenue. Compensation costs were higher year-over-year on headcount and regular salary increases, partially offset by lower profit-sharing accruals on the lower income. Other expenses, such as training, travel, and occupancy costs, have increased in light of activity levels, planned investment, and general inflation. We're comfortable with the increases as they largely represent investments in our team and resources. Operating income decreased 12% for the quarter and 10% year-to-date as higher revenue was offset by lower gross margins and higher expenses. Bookings increased 14% in the quarter to CAD 368 million, with strong bookings in construction, power systems, and material handling being partially offset with lower mining orders. Construction markets were active, up 15%, with a continuing evolution towards more normalized supply and demand dynamics. Mining markets also strong with good orders received through the first nine months of the year, but were down 26% from last year's Q3, which was a strong comparable. Power systems order activity was strong, up 81%, and material handling order intake was up 55% in the quarter. Backlog, up CAD 804 million, remains at healthy levels, down 17% versus last year, reflecting deliveries against customer orders from the opening backlog, offset by new bookings. Approximately 90% of the backlog is expected to be delivered over the next 12 months, but of course, it's subject to timing differences depending on vendor supply activity, vendor supply, customer activity, and delivery schedules. Turning to Cimco on Slide 9, revenue was up 17% in the quarter and 14% year-to-date. Package revenue increased 41% in the quarter and 21% year-to-date with advancement of construction schedules and the execution of strong order backlog. Industrial market revenue was up 26%, and recreational market activity was up 57%. Product support revenue increased 2% in the quarter and 6% on a year-to-date basis with higher market activity in Canada in both periods. Activity in the U.S. was down 34% for the quarter and down 12% year-to-date. Activity levels are reflective of market conditions and increased labor capacity. Gross profit margins decreased 40 basis points in the quarter, reflecting an unfavorable sales mix, reducing margin 100 basis points on a lower proportion of product support revenue to total revenue. Package margins improved on good execution and the nature of the projects in process, driving a 60 basis point increase in the quarter. Product support margins were unchanged in the quarter. On a year-to-date basis, gross profit margins increased 110 basis points with higher margins in both packages and product support margins. Selling and administrative expenses increased 11% in the quarter and 12% year-to-date. Compensation costs were higher, reflecting staffing levels, annual salary increases, and higher profit-sharing accruals on the higher earnings. Other expenditures, such as travel and training expenses, increased to support activity. As a percentage of revenue, selling and administrative expenses decreased to 15.6% in the first nine months of 2024 versus 15.8% in a similar period last year. Expenditure control measures on discretionary spend remain a key focus area for the Cimco team. Operating income was up CAD 2.7 million, or 21%, for the quarter, largely reflecting the higher revenue, slightly dampened by the lower gross margins and higher expenses. On a year-to-date basis, operating income was CAD 8.1 million, or 30% year-to-date. On higher revenue, higher gross margins partially offset by higher expenses. Operating income as a percentage of revenue improved 130 basis points compared to last year to 10.4%. Bookings decreased 34% to CAD 56.8 million in the quarter against a strong comparative last year and were 1% higher for the year-to-date period. Recreational bookings were 109% higher than the first nine months of last year, with excellent activity in both Canada and the U.S. Industrial orders were down 42% year-to-date, and Canadian orders were lower against a strong comparative, while the U.S. was higher. Backlog of CAD 275.8 million was 12% higher than last year, with higher backlog in the recreational market partially offset by lower industrial backlog. Industrial backlog decreased 2% with a decrease in Canada, largely offset by a strong increase in the U.S. on good order intake over the trailing 12 months. Recreational backlog was up 32%, reflecting a strong increase in Canada and a modest decrease in the U.S. Approximately 75% of the backlog is expected to be realized over the next 12 months. However, again, this is subject to construction schedules and potential changes stemming from supply chain dynamics. And with that, we can move to Slide 10. Turn it back to Michael to highlight some key takeaways as we look forward to the last quarter of the year. Thanks, John. As one would expect, we consistently focus on our key priority areas, including safe operational execution, serving and supporting our customer requirements, and our disciplined focus on building our business for the future. Our backlog levels remain solid at CAD 1.2 billion overall, and bookings for the first nine months of the year remain solid as well. We continue to hire technicians to support our operations, and this remains an essential focus for our aftermarket and value-added product and service offerings. Operationally and financially, we remain well-positioned with ample liquidity and our strong leadership teams, disciplined culture, and focused operating models. Our team remains committed to disciplined execution with our decentralized and empowered operating model, adapting to changes in the business environment while we remain focused on executing customer deliverables. We continue to monitor key metrics, including supply and demand dynamics. As noted, our long-term focus on growth and returns means we remain committed to our operating financial disciplines to manage our cost structure while we invest in capacity and capabilities to provide exceptional service to our customers today and in the future. Additional efforts continue to focus on managing our discretionary spend and actively recruiting technicians to effectively support our critical aftermarket service strategies and value-add product offering over the long term. With our solid order backlog and balance sheet, we are well-positioned and will continue to support the business through thoughtful capital deployment. We appreciate our entire team's effort and commitment to support our customers and deliver value for our stakeholders. Thanks also to our valued customers, supply partners, and shareholders for their continued support. That concludes our prepared remarks. At this time, we'd be pleased to take questions. Elvis over to you. Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt to indicate that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Yuri Lynk from Canaccord Genuity. Please go ahead. Good morning, guys. Thanks for taking my call today. Good morning. Wanted to dig in a little bit on product support, particularly the parts sales flat year-to-date. Just wondering if that's in line with the market or has your market share changed at all? And as a follow-on to that, I mean, you are putting in the last two quarters almost 40% growth in new equipment sales. When would we expect that to start hitting parts and service? Thanks, Yuri. It's a great question. So I think what we are seeing, and you get the themes that we're reporting, strong new equipment sales, and I think if you roll back a couple of years, you'll notice there was a lack of availability, especially on models that we refer to as parts bias models that consume a lot of parts activity. As we see renewal of our customer fleets and we see good new equipment sales but lower activity, I think it stands to reason. We should expect flat or small growth in parts sales. We're seeing good service revenue and so forth, and that's driving some of our product support activity and a little bit of growth, albeit modest. And so I think what we should be thinking about is, as we see activity levels improve over time, we see the new product in the marketplace being utilized. That naturally should help us see product support and parts sales in particular consumption returning back to a different part of the cycle, so. But there's no change in terms of your market share or competition on the parts side? I would say availability is there like everything else in the marketplace, Yuri. I would say we certainly have an extensive network of operations and services and so forth, and I think it's really more a function of what I mentioned earlier, activity levels generally, and then the modernization of the fleet, and so we're pretty comfortable with where we are and prepared, and that's why we continue to invest in technicians and build for the future as we see demand pick up. Okay. Second one for me, just on Tri-City. Wondering if you're willing to provide any financial profile in terms of revenue, at least, of that acquisition. And follow on to that, were there any significant costs associated with that acquisition in the SG&A for the Q3? No, I would say a little bit of cost on the second part of your question. Naturally, as we put together agreements, purchase agreements, stuff, but I wouldn't say it's overly material on our SG&A in that regard. We tend to expense those costs and manage as much of that as we can internally and have built some of that capability. I think in terms of we did not disclose the revenue contribution there, but what I would refer you to is note 3 does have in our disclosure some good breakdown in terms of the purchase price allocation, and I think you can kind of back into some numbers and estimates based on the purchase price and a reasonable multiple, but we didn't provide further commentary on that, so. I just add on Tri-City, just on the acquisition in general. We continue to have a very disciplined approach to our acquisitions, and we have a playbook. It's, can we add value? Is it a great team? Does it meet our hurdle rates? Does it help our customers and those sorts of things, and the answer to that was yes on all fronts with Tri-City. Okay. I better turn it over there, guys. Thanks very much. Thanks, Yuri. Thank you, Lee. Your next question comes from Sabahat Khan from RBC Capital Markets. Please go ahead. Great. Thanks, and good morning. Just maybe starting off with a bit of a higher-level question. I think some puts and takes in the backlog with new orders. We've got rate cuts, just at least an initial one to start. How are your customers feeling? What kind of feedback are you getting in terms of how they feel about the macro? The Cat's commentary the other day was a bit tempered. Just trying to get an understanding of where in the cycle you feel your customers might be, and that obviously reflects into your backlog, etc. But just curious how you feel about the overall operating environment right now. Thanks, Sabah. Maybe I'll start with that, and John can add a little bit of commentary as well. I would say we've been talking for the last several quarters about a tone of caution, I would say, with our customers, especially when you think of the residential segment of our business and customers involved in supporting that side. So there has been a lower activity level on the residential side. And so I think interest rates, as we all know, have started to taper and come back off. And you would expect that to drive a little bit more activity, but I think it's still a bit early in that regard. And so as you look at our bookings, now the interesting thing is, again, we're still in an interesting situation. But if you look at our disclosure in terms of our backlog and bookings, still at a pretty reasonably high level. Our bookings, in particular, if you look at construction in the quarter and on a year-to-date basis, we're up in construction. We have pretty solid balances in the backlog for both the power group and the mining side. Of course, mining is more lumpy, and it's dictated on investment and development in the mining sector and so forth. So we continue to execute on that. But generally speaking, I'd say there's still a tone of caution just given the activity levels. However, I think with the interest rate environment and what we're seeing, and I'd say the backdrop where we know that in our markets in particular, there's a shortage of affordable housing, and that supply on that side needs to improve over time. I'd say that it's a little early to say that there's any trending there yet, but I would say there's some, I would say, cautious optimism in that area. But I think it's going to be next year before we see too much activity. Okay. Great. And just on a related note, I think in your comments as well as in Kath, there are some comments about just maybe pricing to some extent. And I think you alluded to that in your margin commentary. How are you feeling about just the pricing environment? Do you think it's sort of settled down? Is it generally going to follow the demand environment? Just some thoughts on the pricing side, please. Maybe just to start on that, I think, again, we've really come through an interesting transition period, if you will. And so when you look at where we were several quarters back, a year and a half, restricted supply and so forth, and we were working our way through that and managing our customer requirements with both used and new equipment and so forth. And so that environment has shifted. We're more normalized in terms of supply of equipment at this point in time. You see it in our results, and we do give you some pretty good breakdowns in terms of our gross profit margins and how on the equipment side, in particular, in the quarter, product support, rental mix, and so forth, and the contribution there. I would say we're returning back to more normalized supply conditions, albeit availability broadly is much stronger than it has been for quite a few quarters. Okay. And if I could just squeeze in a quick. Go ahead. No, go ahead, Sabahat. Just for you, John, I guess given where I guess we are in the cycle, given the balance sheet, John, if you could maybe just what are your priorities in terms of capital allocation? Inventory seems to be getting better. Just if you can rank order maybe some of the uses of capital, please. I mean, Sabahat, it really hasn't changed in terms of our priority. We really have four priorities. First is organic growth. And we continue to see a number of organic growth opportunities, be it in rental, be it in Cimco in the U.S. as examples. As you know, we've increased our dividend for 35 years in a row, and that's really important to us and our investors. We have been buying back shares, as Michael pointed out in his commentary, CAD 83 million worth year-to-date. And that's largely capital hygiene, but that's an important part of our capital allocation playbook. And then lastly, M&A, and you saw us execute on Tri-City this quarter. And we have a number of things that we're looking at, a number of things in the pipeline. We'll continue to be very disciplined, as I mentioned before. But those are really the four priorities on capital allocation. Thanks very much. Great. Thanks, guys. Thanks, Sabah. Your next question comes from Cherilyn Radburn from TD Cowen. Please go ahead. Thanks very much, and good morning. Morning, Sherilyn. I just wanted to pick up on the margin conversation a bit. If I look at 13.2% for the equipment group in Q3, that's a very strong Q3 result by historical standards if we exclude the very tight post-COVID period. So just curious how you would characterize margins by line of business if you excluded that very unique post-COVID period? Like you say, I think we're still in this transition that I mentioned to you earlier, Sherilyn. It's interesting in the sense that when you look at the environment, lower activity levels, like I mentioned, residential and that related to residential activity. And one of the things that we broke down for you there was, say, rental. When you think of equipment margin, as you noted, reasonable levels but more normalized, trending that way in particular. Rental margins were lower. And part of that is just purely we have a higher valued fleet, higher acquisition costs over the last several years. And I think those are significant contributors. And as we had comments earlier, when you think of the mix with product support, again, the renewal of the fleets, we're seeing customers, our new equipment sales are reasonably strong, and the bookings continue to be strong. Given all that, there are a number of factors. We always try to think about the mix within the equipment side, but also the mix between product support and the equipment sales side. And I think that's what we're seeing right now. Again, availability is pretty strong, and we're looking to make sure that we maintain our market share and compete effectively in all segments, so. I was just going to add, and Michael talked about this before, but just to emphasize it, over the course of the next cycle, our plan continues to be to invest in technicians to support our customers and grow product support as an overall percentage of the revenue pie. The strong new equipment sales, as you mentioned, Michael, will bode well for that in the future. Rental would be the same case too, Sherilyn. We continue to invest, albeit we optimize our capital, and our teams are very good at managing the allocation of capital we provide. But it's a long-term view. I think that's the key message. Okay, so mix is an important part of this then, you're basically saying? Yes. Okay. I wanted to ask something about power systems. Obviously, that business has been lapping a difficult prior-year comp all year, but I was hoping you could give us some color on what you're seeing relative to data center activity, demand for distributed power, and the like, and also comment to what extent tight availability of large engines is concerning that business, if at all. You raised a couple of good points there. And just to start off, last year, we had one large project in particular, which for the first couple of quarters provides a tough comp as we completed that. And so, but having said that, if you look at our booking areas, you look at where we are with power, again, a smaller business relative to mining and construction. But when you look at the activity level there, the bookings and the backlog, I would say broadly good demand in the engine side. You mentioned restricted power plants. I think certain engines are used in oil and gas in the data centers, as you mentioned. And I think for prime power and other things as well in standby. So those engines continue to be in reasonably tight supply given the data center demand. And I would say predominantly throughout the Caterpillar network in the south, in the U.S. markets at this point. There is some building interest in data centers in Canada. I'd say it's still fairly early days. However, we're prepared to respond. We have a lot of depth and experience when you think of whether it's prime power, standby power, or peak shaving, all of the above. Our team is prepared to respond in those areas and working with opportunities and looking to earn our way into that as it develops in Canada. And then maybe just on the mining side, it looks like there was probably a relatively large fleet delivery out of backlog in the quarter. Maybe you can just comment on that. And then I'd be interested to know what you're seeing in terms of the mix of gold versus base metals in terms of your quoting activity, bookings, and so forth. Good observation. I mean, we often talk about mining in the sense that it's a bit lumpy, and in the last couple of years, we have seen a period with strong commodity pricing, as we all know, decent investment going in new development and so forth. That's given our team the opportunity to earn their way into a number of opportunities, and they've done a terrific job doing that, and so we tend to see, again, in the backlog, if you look at our backlog, I think about 35% of the quarter-end backlog is mining, and those deliveries will continue. We do see a bit of a cycle ahead in terms of a shift from delivery and equipment to utilization of the equipment, and then product support usually follows. At this stage, I wouldn't speculate too much. We continue to be a little bit surprised in terms of what's happening there. Gold prices are at pretty high levels and continue to persist. Iron ore, as you mentioned, the base metal side as well, is a little depressed at the moment. I mean, it's moved around quite a bit over time, and so our balance is still pretty even between, call it, precious metals and base metals, broadly speaking. Thank you for the color. I'll turn it over to someone else. Great. Thank you. Your next question comes from Steve Hansen from Raymond James. Please go ahead. Good morning. Thanks for the time. I want us to go back on the margin issue again, following on Sherilyn. Look, I understand the product mix headwind is something that, sorry, that probably shifts a little bit as the new equipment deliveries scale back a little bit. But just focusing specifically on the gross margin headwind you call out in the equipment market and on rental, how should we think about those two dynamics playing out here over the next couple of quarters? Is the competitive environment and the pricing environment, as maybe you described, going to leave us with some sustained headwinds on the gross margin side on that front? How should we think about that? Maybe just to start on that, thanks, Steve, for the question. Again, I would go back to some of the comments we had there in terms of when you think of even on the new equipment mix, and we just talked a little bit about mining, for example, generally, you're seeing higher value and a little narrower margin product, and so within the new segment, we tend to see a bit of mix in that area as well. We talked about availability and more normalizing supply across most models. Again, that's going to mean that we're going to be working really hard to earn our way into deals and do what we need to do to manage margins, and so you're going to see a little bit of a shift over time based on the execution of the backlog that we have mentioned earlier. I think the other piece, again, on rental, when you think of rental, we're seeing a slightly lower utilization, and that's purely a function of utilization in the markets that we serve. And a lot of it's related to that recreational segment we've talked about. And so I think all things considered, we don't provide guidance, as you know, but as we're prepared to manage through the cycle and looking at the long term as things normalize, activity levels improve, and we see some projects kicked off, I think we want to be well-positioned to be opportunistic to support our customers as things improve in the next year or two. Okay. That's helpful. Thank you. And then just on the rental markets, it sounds like they're pretty uneven out there. The light market dramatically outperforming the other verticals. I mean, do you want us to maybe comment on what you're seeing out there and why that's the case and how you think that sort of plays out going forward? I think, like you mentioned, we saw some modest growth in the light market. I think, again, we've been renewing our fleets over the last 18 months, say, with availability, but really, it's a function of activity levels. I think a couple of factors, activity generally, and we continue to work our way through that in our markets. I think the other piece there is on the renewal of our customer fleets and so forth, combined with activity, we're not seeing as much demand for rental. It's not bad. It was stronger later in the quarter, but again, I think what we're finding is where we would maybe participate in some peak shaving, some other things. Customers have been replacing their fleets and timing their purchases and matching that with activity levels, and so that's really what we're seeing in the heavy side of the marketplace. Okay. Hold on. Just one last thought as we get in. It's just on the opportunity for capital deployment into Cimco. That business does seem to be really performing exceptionally well in the last couple of quarters relative to prior years. Is there any reason you don't look to accelerate capital deployment in that? I know you've talked about some consolidation opportunities perhaps down there in the U.S., but how do you think about that pipeline if you're examining it at all? Thanks. I mean, Steve, as we've talked about before, we're really pleased with the progress the team at Cimco has been making over the last number of quarters. It's a really good team. They have a disciplined approach to managing their projects, and that is an area that we're looking at to grow both organically. As you know, we have good market share, brand presence in Canada, and the U.S. is really an opportunity for growth, so we're looking at both growing organically, region by region in the U.S., and also, we'll look if something comes up on an M&A opportunity in either Canada or the U.S. We'll take a look at it for sure. Thanks for the time. Yep. Thank you. Thanks, Steve. Your next question comes from Devin Dodge from BMO Capital Markets. Please go ahead. All right. Thanks. Good morning, guys. Good morning, Devin. There's been a pretty significant buildup of working capital year to date. Do you feel this is a return to a more normal level for the business, or would you expect some recoveries in the coming quarters just beyond normal seasonality? I mean, if you break it into the two key components, I mean, receivables are up, and that really is a reflection of the growth in the business, Devin, and day sales outstanding are relatively stable and have been for a while, so we obviously watch that pretty closely, and then inventory, it's a reflection of a return to normal in terms of supply, and if you wind back a clock and look at our inventory levels this quarter, obviously, we have invested, and that's reflected in the growth in working capital, but the percentage of inventory over the trailing 12 months of revenue is roughly the same as it was pre-COVID, so this business generates earnings and cash, and we would expect that to continue going forward. Okay. Okay. Makes sense. And then just switching over to Cimco, can you help us to better understand the sharp decline in product support revenues in the U.S.? Sorry. Could you clarify your question there, Devin? I didn't quite get that. I think product support revenues in Cimco in the US, I believe they were down year over year. Just trying to better understand that. I think it is a little bit lumpy depending on the nature of the work there. And keep in mind, it's a smaller part of our business, and so it doesn't take too much to move the needle there. I think what we've tended to see is some pretty good project opportunities there, especially in the commercial industrial side of things. And so nothing really fundamentally different there, to be honest with you. It's really just dependent on customer requirements. And some of the new projects we've put in place, there is a lag between that and the product support, given the nature of the equipment and so forth. I would just say I agree, Michael. I mean, it's a pretty small and growing business right now, and it doesn't take much to move the needle. So it's not reflective of anything other than that, Devin. Okay. Makes sense. I'll turn it over. Thank you. Great. Thanks, Devin. Your next question comes from Maxim Sytchev from National Bank Financial. Please go ahead. Hi. Good morning, gentlemen. Good morning, gentlemen. Good morning, Max. Most questions have been already asked. But, Michael, wondering, as right now there are some discussions around sort of lower immigration intake and potentially seeing flat population growth for maybe a year or potentially two, how you would see the business evolve in that type of environment or maybe any color from a sensitivity perspective, if you don't mind sharing with us? Thanks. Sure. Thanks, Max. I think a good question. Now, I would suggest, again, I think what we've seen is quite a lag in terms of affordable housing I mentioned earlier. And when you think of often hear quite a bit from our customers in terms of it's been a lot quieter on the residential side. I think with higher interest rate environments, we have yet to see an uptick. And I think a lot of folks are being patient. So I would suggest that as we look at the residential market going forward, there's quite a significant amount of lack of availability for affordable housing. And I think the rates are weighing in quite heavily. We haven't really seen that move. And so we're trying to keep close with our customers in terms of their development plans and so forth. And keep in mind, when you think about our customers starting a project, I mean, a lot of times they may see some pre-sales and things, but it could be shovels in the ground next year, and it could be an 18-month development cycle. And so I think maybe we'll see a little bit better activity as we get into the spring period here. But I think when you look at the infrastructure, where our customers tend to spend their time and sewer and water and infrastructure development to support residential requirements, some of the highway projects that we've got planned for growth in our key markets, those I think are positive tailwinds for us over the longer term. Immigration, I think, is going to take some time personally to work its way out because we had very significant immigration in our key markets here in the last several years, so. For sure. Okay. No, that's great. That's it from me. Thank you so much. Thank you. Thank you, Max. Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead. Hi. Good morning and thanks for taking my questions. The first one. Good morning, John. Good morning. Looking at the substantial decrease in the Equipment Group backlog, how much of that can we attribute to market dynamics versus it just being generally lumpy? A couple of things. I guess we'd probably direct you, Jonathan, to some of that disclosure. I mean, at CAD 800 million, call it CAD 804 million, I think, in the equipment group, for example. I mean, if you look at Cimco, again, that's a different business. It is lumpy, as we've mentioned, but very solid backlog numbers in that business. But on the equipment side itself, when you break it down between construction, mining, power, and material handling, say, which is quite a small component, I think what we're starting to see, we should see fulfillment of that backlog and delivery of units going into it with more free supply, which gives our customers more flexibility in terms of when they place the orders and so forth. Now, the interesting thing is if you look at our bookings in the quarter and on a year-to-date basis, in particular, construction, I think, was up 15% in the quarter. So we're still seeing an appetite to book equipment and so forth. And so we're continuing to see some positive support there going into the second part of the or the last part of the year and into the spring. So keep that in mind. I think it's not quite normalized. If you go back historically, you look at our disclosure, mining will be lumpy. Mining is definitely lumpy. Power at times can have a little bit of that same theme based on projects, like we mentioned earlier, if you have a large installation or distributed power or something or peak shaving. So we try to provide you with a little guidance on those areas at times. No, I appreciate that. That's some good color. And then I guess the second question, I was hoping you could give a progress update on the Reman site staffing levels and sort of the pace that you expect to ramp utilization going forward. I think we're making very good progress at the site. I was up there a couple of weeks ago, Jonathan, and it is state-of-the-art facility, environmentally friendly. I think we're aiming to have approximately 150 technicians when we're at our peak, and we're about two-thirds of the way there now. We've had very good success attracting talent in that area, and we'd expect that to continue, but that's where we stand in terms of hiring. I think also just on that too, just as a sense, we're planning on having more of a, call it an official opening or broader opening in the spring, and we'll provide more information on that. But I think some equipment is still being put in place. We've got a robotic soda blaster that's in place today. We have, from the engine side of things, the dynos are going in as we speak. And so those things, we're still in a little bit of transition, albeit we have a significant workforce up there deployed so far and continue to hire as we go into the spring. Okay. Perfect. Thanks for taking my questions. Thank you. There are no further questions at this time. So I'd now like to turn the call over to John Doolittle for final closing comments. Okay. Thank you, Elvis, for hosting us today. And thanks, everyone, for their participation. Great questions. Have a terrific day. You too. Take care. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.