Toromont expands power solutions portfolio with majority stake in AVL Manufacturing

Toromont Industries Ltd. (TSX: TIH) has acquired a 60% ownership stake in AVL Manufacturing Inc., strengthening its position in the power generation market. The transaction, financed through a combination of cash and Toromont shares, enhances the company’s ability to provide power storage solutions for industries with critical energy needs, including data centre infrastructure. AVL, headquartered in Hamilton, Ontario, specializes in designing and fabricating enclosures for standby power and prime power systems, serving clients across eastern North America.

Toromont has also committed to acquiring the remaining 40% of AVL through scheduled purchases until 2031, contingent on AVL’s business performance. While the acquisition is expected to be financially accretive, Toromont does not anticipate a material impact on its revenue, earnings, or balance sheet in the immediate future.

How Does AVL Manufacturing Strengthen Toromont’s Market Position?

Toromont operates through two core divisions. The Equipment Group is one of the largest Caterpillar dealerships in Canada, providing sales, rental, and material handling solutions across multiple provinces and territories. CIMCO Refrigeration, the company’s second division, is a leader in industrial and recreational refrigeration systems, delivering engineered cooling solutions to businesses and municipalities.

The acquisition of AVL strengthens Toromont’s power systems division, expanding its portfolio of power storage solutions to better support data centre infrastructure demands. With the rapid expansion of cloud computing and artificial intelligence workloads, businesses are increasingly reliant on standby power enclosures to ensure operational continuity.

Toromont President and CEO Mike McMillan emphasized that AVL’s capabilities align with the company’s broader strategy to expand in the power generation market. He noted that power enclosures are a critical component in supporting leading technology companies, and this acquisition enables Toromont to enhance its service offerings while securing critical supply chains for Toromont Power Systems. The deal also positions the company for future market expansion beyond its existing footprint.

McMillan stated that Toromont is pleased to welcome the AVL team into the company and looks forward to leveraging their expertise to drive business growth.

What Does This Acquisition Mean for AVL Manufacturing?

AVL Manufacturing will continue to operate under its existing leadership, with President Vince DiCristofaro remaining at the helm. This decision ensures a seamless transition for employees and customers while maintaining business continuity.

DiCristofaro expressed confidence in the partnership, stating that AVL’s collaboration with Toromont will provide opportunities to scale its operations and further develop its power storage solutions. He highlighted that combining resources with Toromont will enable AVL to continue delivering high-quality power generation enclosures that serve mission-critical industries.

He further emphasized that AVL remains committed to providing best-in-class design and power storage solutions tailored to customer needs. The company’s focus will remain on innovation and precision engineering, ensuring that clients in the power generation market receive reliable and efficient enclosures.

Why Is Power Generation a Growing Industry?

The increasing global demand for energy resilience has heightened the need for backup power enclosures and energy storage solutions. The expansion of data centre infrastructure has played a significant role in driving growth within the industry, as companies rely on uninterrupted power supply to sustain high-performance computing environments. Additionally, industrial and commercial sectors are investing heavily in prime power solutions to maintain consistent operations.

Stricter environmental regulations have also influenced market trends, encouraging companies to adopt more energy-efficient and sustainable power storage solutions. Businesses are prioritizing system reliability, efficiency, and compliance with regulatory standards, further accelerating the demand for high-quality power generation enclosures.

Toromont’s acquisition of AVL aligns with these industry developments, allowing the company to enhance its expertise in energy storage while strengthening its foothold in the power generation market. The move also places Toromont in a strategic position to capitalize on emerging opportunities as the industry continues evolving.

What’s Next for Toromont and AVL?

With the acquisition finalized, Toromont is expected to integrate AVL’s capabilities into its broader power systems business, ensuring seamless service delivery to customers across North America. As market demand for power storage solutions continues to grow, Toromont’s investment in AVL positions the company for long-term expansion in the power generation industry.

While Toromont has not disclosed additional acquisition plans, industry analysts anticipate further investments in data centre infrastructure and standby power solutions. Given the increasing reliance on energy storage and backup power systems, Toromont’s strategic acquisition of AVL reflects a broader industry shift toward enhancing power reliability and efficiency.