Good morning. Today is November 5th, 2021. Welcome to the Toromont Third Quarter 2021 Results Conference Call. Please be advised that this call is being recorded. Your host for today will be Mr. Michael McMillan. Please go ahead, Mr. McMillan.
Great. Thank you, Valerie, and good morning, everyone. Thank you for joining us today to discuss the results of Toromont Industries Ltd. for the third quarter and nine months of 2021. Also on the call with me this morning is Scott Medhurst, President and Chief Executive Officer. As noted in the press release issued yesterday, we will be referring to a package posted on our website, and we encourage listeners to download it and follow along. At this time, and as noted on slide two of our presentation, I'd like to advise listeners that this presentation may contain forward-looking statements and information that are subject to certain risks, uncertainties and assumptions that may lead to actual results or events differing materially from those expected. For a complete discussion of these factors, refer to our press release from yesterday, which is available on our website.
As is our practice, we will focus on key highlights for the current quarter. Scott will begin with a few general remarks, followed by comments on our overall results, after which I will provide some highlights on our divisional results and financial position. After our prepared remarks, we'll be more than happy to answer questions. Over to you, Scott.
Thank you, Mike, and good morning, everyone. Before I begin, I would ask that you move to slide three of the package. Overall, end market activity levels remain solid with easing of the pandemic restrictions and shutdowns. The businesses continue to operate in a very fluid, complex and uncertain operating environment with many variables. Equipment Group reported strong prime product deliveries and solid order bookings in the quarter. Tight supply of equipment from OEMs, coupled with improved sales activity versus last year, have resulted in lower equipment inventories. Rental and product support activity improved, driven mainly by higher utilization levels. CIMCO continued to deliver on their order backlog that had significant growth last year. However, revenues decreased on timing of customer construction schedules impacted by COVID related supply chain restrictions.
That said, product support activity improved, particularly in the recreational market as facilities prepared to reopen for the winter season. Overall, the operating leverage remained favorable. We are continuing to assess the learnings from the past year with respect to cost structures and new ways to do business with continued focus on customer deliverables as activities and businesses open. Given the variables, we continue to operate with caution, monitoring the fluid nature of COVID-19 variants, maintaining disciplined protocols, as well as evaluating economic factors flowing from the pandemic, including supply chain disruptions, equipment and parts availability, and factors affecting inflationary rates. Turning now to our financial results highlighted on slide four. Backlogs were CAD 1.1 billion at quarter end, up 124% versus Q3 2020.
In the Equipment Group, solid bookings continued mainly in our mining and construction businesses, which represent approximately 33% and 45% of our backlog, respectively. CIMCO backlogs were 29% lower versus last year, which had exceptionally strong bookings in the first nine months of 2020. CIMCO Q3 bookings improved mainly due to recreational orders in both Canada and the U.S. On a consolidated basis, revenues increased 8%, reflecting solid activity levels in the Equipment Group in most markets and regions, and weaker package sales at CIMCO. Overall Equipment Group execution was solid. Product support and rental revenues increased 4% and 6%, respectively, compared to the similar quarter last year, and were both up 6% and 7%, respectively, on a year-to-date basis.
Operating income was up 19% in the quarter and 33% year-to-date on the higher revenues, coupled with good margins. Revenue growth outpaced expense growth. The easing of COVID-19 restrictions has improved activity levels on a year-to-date basis. Net earnings increased 21% in the quarter, 37% year-to-date versus 2020, while basic earnings per share increased CAD 0.19- CAD 1.13 per share in the quarter and increased by CAD 0.73 - CAD 2.75 per share on a year-to-date basis. We appreciate and value our entire team's incredible effort and ongoing commitment to adapt to changes in the business environment and focus on executing customer deliverables. Activity levels trended well, as demonstrated by our backlog levels. However, production schedules and supply chains are challenged and likely to impact availability and result in delivery date extensions.
Additionally, we continue to monitor inflationary rates and economic factors as the pandemic unfolds. Technician hiring remains top priority to grow our product support offering and meet demand. The diversity of our geographic landscape and market served, extensive product support and service offerings, the technology investments and financial strength, together with our disciplined operating culture, continue to position us well. We are proud to continue to provide the essential services and solutions that our clients are looking for, while remaining diligently focused on safeguarding our employees and protecting our business for the future. Mike, I'll turn it over to you for some more detailed comments on the group results.
Thanks, Scott. Let's put a bit more color on the operating results, starting with the Equipment Group on slide five. Revenues were up 10% in the quarter, 17% on a year-to-date basis on strong equipment sales, combined with higher product support and rental activity in most markets and regions. Total new and used equipment sales were up 16% overall in the quarter and up 30% year-to-date. Sales increased across most markets and regions in the quarter. However, some were lower than prior year on timing of equipment delivery and customer-specific orders. In the quarter, construction markets were up 5%, mining up 141%, power systems down 3%, material handling down 4%, and agriculture effectively flat year-over-year. On a year-to-date basis, equipment sales were up across all markets, reflecting the pandemic effects last year.
Rental revenues were up 6% in the quarter and 7% year-to-date. Most markets and segments were up, reflecting continued improvement in the market activity in the third quarter against a weak comparable last year. Light equipment rentals were up 9% in the quarter and 8% year-to-date. Heavy equipment rentals were down 2% in the quarter, however, were up 22% year-to-date. Power rentals were up 30% in the quarter, 13% year-to-date, and material handling rentals were up 36% in the quarter and 21% year-to-date. RPO revenues were down 28% in the quarter and 32% year-to-date on a smaller average fleet, reflecting the recent customer preference for purchase versus an initial rental period.
The RPO fleet was CAD 37.3 million versus CAD 42.4 million a year ago, and in both cases, well below more normal levels we'd operate at prior to the pandemic. Product support revenues grew 3% in the quarter and 7% year-to-date in both parts and service revenues in the majority of the markets and regions. Activity within construction markets was up 1% in the quarter and 8% year-to-date. Mining was up 2% in the quarter and 4% year-to-date. Material handling was up 16% in the quarter, 22% year-to-date, and agriculture activity was down 22% for the quarter and 9% year-to-date. Gross profit margins increased 170 basis points in the quarter and 60 basis points year-to-date compared to last year. Margins increased across all revenue streams, partially offset by unfavorable sales mix.
Equipment margins were up 130 basis points in the quarter and 50 basis points year-to-date, reflecting strong demand. Product support margins were up 50 basis points in the quarter and 20 bps year-to-date, reflecting improved efficiency on higher volumes. Rental margins were higher by 80 bps and 100 bp s for the quarter and year-to-date, respectively. These improvements reflect higher utilization as well as benefits from fleet adjustments, including selective dispositions and acquisitions over the last year. A shift in sales mix with a lower proportion of product support revenues to total revenues decreased margin by 100 bp s in the quarter and 150 bp s year-to-date. This is reflective of stronger comparative equipment sales in the year.
SG&A expenses in the quarter increased CAD 9.6 million or 9%, and CAD 24.1 million or 8% for the first nine months of 2021. Excluding the CEWS booked last year, expenses were up 3% and 5% for the quarter and year-to-date, respectively. The increase is mainly attributable to higher compensation costs on higher staffing levels, annual salary adjustments, and higher profit sharing accruals with higher earnings, partially offset by a lower mark-to-market adjustment on deferred share units. Other expenses, such as travel and training, increased in support of higher activity levels and after a reduced spending period. Allowance for doubtful accounts decreased CAD 1 million in the quarter, and CAD 0.9 million for the first nine months of the year on good collection activity. Operating income for the quarter and year-to-date was 25% and 37%, respectively.
Reflective of the higher revenue level coupled with lower expense ratio. Again, revenue improvement outpacing expense growth. Bookings increased 45% in the quarter and 85% year-to-date across all sectors except material handling, which was lower by 46% in the quarter. Mining led the way up 268% with several large orders. Construction up 25%, power up 46%, and agriculture up 24%. Backlogs of CAD 903.5 million, or 253% higher than this time last year across all sectors. Approximately 40% of which are currently expected to be delivered this year and subject to timing differences depending on vendor supply, customer activity, and delivery schedules. Approximately 8% of the backlog is scheduled for delivery in 2023. Now let's turn to CIMCO on slide six.
Revenues were down 5% in the quarter and up 25% year-to-date, mainly due to lower package revenues. Supply chain and COVID-19-related restrictions have also resulted in deferral of some customer-specific construction schedules. That said, product support activity improved 10% in the quarter and increased 1% year-to-date, mainly reflecting a gradual increase in economic activity as site restrictions started easing and demand in recreational centers increased in anticipation of reopenings for the winter season. Package revenues were down 16% in the quarter, with decreases in both recreation and industrial markets, and up 50% year-to-date, with increases in the recreational industrial markets for the quarter. For the quarter, package revenues in Canada were down 29%, reflecting lower industrial and recreational revenues.
In the U.S., package revenues increased 57% on a smaller activity base, with higher revenues in both industrial market and recreational markets. On a year-to-date basis, package revenues increased in both Canada, up 53%, and in the U.S., up 37%, with increases in both recreational industrial markets in Canada across all regions and in the U.S. Product support revenues increased in both the quarter, up 10%, and year-to-date, up 1% versus last year. Revenues in Canada increased 10% in the quarter and remain relatively flat year-to-date, reflecting, as previously noted, the gradual increase in economic activity as site restrictions in most areas ease and demand, particularly in the recreational centers, increase in anticipation of reopening for the winter season.
In the U.S., the higher technician base continued to support activity levels, resulting in a 10% increase in the quarter and a 6% increase year-to-date, albeit on a smaller base. Gross profit margins decreased 320 basis points in the quarter and 460 basis points year-to-date versus last year. The decrease in gross profit margins in the quarter was due to lower package margins, mainly due to certain larger projects and lower product support margins, partially offset by a higher sales mix of product support revenues to total revenues. On a year-to-date basis, the decrease was due to lower package margin combined with unfavorable sales mix of product support revenues to total revenues, as well as slightly lower product support margins. Margins mainly reflect activity levels, the nature of projects in process, and construction schedules, which are variable.
Selling administrative expenses were up 5% in the quarter and 9% year-to-date, reflecting higher spending to support future sales. Certain costs, such as travel and training, were higher after a period of contained spending. Compensation increased on higher staffing levels, while occupancy costs increased related to facilities expansion. The allowance for doubtful accounts decreased on good collections, slightly offsetting the increased costs. Operating income was 47% lower for the quarter and down 19% year-to-date, reflecting lower package sales and lower margins, along with slightly higher expenses in the quarter. On a year-to-date basis, higher package revenues were more than offset by lower gross margins, partly due to lower product support mix and increased expenses. Bookings were CAD 48.5 million in the quarter, up 22% versus last year.
Recreational bookings were 200% higher on increased market activity in both Canada and the U.S. after a period of limited activity given the pandemic closures and restrictions. Bookings in industrial markets were 23% lower, with reduced activity in both Canada and the U.S. Year-to-date bookings were CAD 132.5 million, 35% lower than last year. Recall that several large industrial orders were received in Canada in the first quarter of 2020, resulting in a decrease in bookings compared to last year. Industrial orders were down 52% with a decrease in both Canada and the U.S. On a positive note, recreational orders increased 17% to CAD 59.1 million, with increases in both U.S. and Canada.
Backlogs of CAD 153.8 million were 29% lower than the end of September last year, mainly related to progress against the relatively large industrial orders noted. We expect approximately 52% of this backlog to be realized as revenue this year. However, this is subject to construction schedules and potential changes stemming from the COVID-19 pandemic. On slide seven, I'd like to touch on a few key financial highlights. Non-cash working capital reflects our team's focus and effective actions to proactively manage changes relative to activity levels and underlying demand. Management of our working capital receives keen focus as we position the company for the future. Accounts receivable aging is trending well, as DSO remained flat at 46 days compared with Q3 of 2020.
Inventory levels continue to be adjusted in light of market activity and were CAD 164 million below prior year levels, which also were managed lower last year due to pandemic influences. Accounts payable reflect the timing of purchasing and the wind down of certain extended terms with suppliers, which is effectively complete. We ended the third quarter in a strong financial position with ample liquidity, including cash of CAD 733 million, and our net debt to capitalization ratio at -5%. Overall, our balance sheet is well positioned to support changes in demand as we emerge from the pandemic. Also of note, we participated in our NCIB program, repurchasing about 470,000 shares to date.
Finally, as announced, the board of directors yesterday approved the regular quarterly dividend at a rate of CAD 0.35 per common share, consistent with the last quarterly dividend when it was increased by CAD 0.04 per quarter, or 12.9%. On slide eight, we conclude with some takeaways, some key takeaways as we look toward Q4 in 2022.
We will continue to focus on our three key priorities, protecting our employees, serving our customers, and protecting our business for the future. We expect the business environment to remain dynamic with many variables at play for the remainder of 2021 and as we enter 2022. A tone of caution is warranted given the inflationary factors, persistence of the pandemic and response required as vaccination rates improve and restrictions ease. We continue to proactively monitor developments closely and refine our business practices appropriately. As discussed today, market activity was solid in the quarter, and similar to the first half of the year, unique customer buying patterns are evident relative to historic trends. Prime product and parts supply pressures were evident, including extended delivery dates due to supplier constraints.
We continue to work actively with our business partners and suppliers on an ongoing basis monitoring availability, delivery schedules, and customer buying preferences. Across the organization, we are continuing to leverage the learnings from the past year with respect to cost structures and new ways to do business. Technician hiring also remains a top priority to meet demand and build our team for the future. Operationally and financially, we are well positioned to effectively respond to both customer requirements and market opportunities leveraging our operating discipline and culture. Additionally, I'd like to comment on the outlook section where our mid- to long-term prospects are described as being very optimistic. When we look at infrastructure work and mining activity relative to our backlog, I would emphasize, again, relative to our backlog, we are pleased. However, there are many variables in play relative to availability, inflationary costs, and other economic factors.
These considerations combined with a highly competitive environment mean we need to earn the business. With this in mind, the statement should be understood and interpreted that we are encouraged with the backlog, but that too needs to be executed properly. The optimism noted is reflective of our large backlog at play over the medium to long term. Nothing more, nothing less. That concludes our prepared remarks. At this time, we'll be pleased to take questions. Valerie, over to you to set up the first call, please.
Thank you. We will now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause for the participants registered for questions. Thank you for your patience. Our first question is from Cherilyn Radbourne with TD Securities. Please go ahead.
Thanks very much and good morning.
Good morning, Cherilyn.
Scott, to the extent that you have tight new equipment supply, can you talk about how you work with the team to flex the other levers that you have to satisfy demand like rental, used, and rebuild?
Yes. Well, I mean, it started to really creep in the quarter, some of those constraints. We were pleased again, we've been sticking with those pipeline disciplines which I think continued to pay off a bit in the quarter. We were fortunate and we were working hard on our rental strategy. The utilization was really improving in the quarter when you compare it to last year. That was good. Our fleet utilization, you know, has been a bit of a struggle as well, but the good thing was the utilization really improved in the quarter which was good. That certainly adds to some of the outcomes.
In terms of used equipment, I mean, we were down 11% in the quarter on the Equipment Group but, you know, just to provide a little more color on that reflects the tight operating environment when it comes to low-hour used equipment. That was down as well as the RPO income. You know, again, we're operating in a bit of a unique environment with interesting customer buying behaviors. Still, we were able to, when you talk about pulling levers, the team did a nice job continuing on with our strategy to work with customers on our different solutions in the used equipment environment. You know, our used purchases and trade revenues were actually up, I think it was over 30% in the quarter.
That shows the team's working hard to work with customers on other used equipment solutions. We're pleased with that. Those are some of the factors going on there. Then of course on the product support side, we're working hard in there and the rebuild activity that increased on a unit basis I think we're up 16% and on the revenue about 14%. There's some areas the team's we're very pleased with some of the outcomes. You know, it is unique when you see that RPO inventory down again and it was soft last year. I mean, we're down you know, over 100% to where it normally is. As you know, Cherilyn, that usually translates into some strong conversions in Q4.
It is a bit different and as we said in the last quarter, now we really kind of it really crystallized there was a pull forward in buying behaviors in Q2.
That's great color. As far as how the supply chain is operating differently in this upturn versus previous upturns, can you just help us understand that? Like is it specific models or SKUs that are in short supply or is it a more diverse problem than that?
I mean, our new sales were strong, and I think that reflects how closely we've been working with our supply partners on all fronts. It's a bit diverse in there when you look at it both on the aftermarket requirements as well as the prime product. You know, it really crept in there in Q3, and you see it. You know, our inventories are, as you know, Cherilyn, those inventory levels, they're down like 19% in the Equipment Group for this time of year. That's again a bit unique. You know, we're working hard in there with disciplines, but it's a. There's constraints in there.
Thanks. I'll keep it to you and pass it to someone else.
Thank you very much.
Thank you.
Thank you. Our next question is from Brian Schwartz with Raymond James. Please go ahead.
Thanks. Good morning, guys.
Morning, Brian.
Could we just get some color, I guess, on the landscape for technician hires? Understanding that it is competitive out there, but maybe just some high-level comments on how you're attracting talent.
We're making progress, which is good. It's again another trying to be disciplined in our approach throughout all our businesses. The headcount has increased, I'll call it nicely. Could be better, but we're progressing and we're working hard on our, you know, talking and with various strategies relating to recruitment. It's not just recruitment, it's also working closely with our apprenticeship programs. That's another key component of our strategy that we're heavily focused on.
Okay, thanks. Just regarding your comments on improving operational efficiency and leveraging learnings from the past year, could you just provide at a high level some of those learnings that you expect could help going forward?
Well, we've learned how to operate a bit remotely. You know, we were fortunate in Q3, again, that operating leverage came through. It was still there. You know, we're focused on that. We're going into planning sessions and, you know, what we've learned in terms of how we can operate a bit differently and really in many ways with technology, improve our customer interface and just doing a few things differently. You know, the operating leverage was still favorable in Q3. Things are opening up, though.
Good to hear. Thanks. That's it for me.
Great. Thanks.
Thank you. Once again, please press star one at this time if you have a question. Our next question is from Michael Doumet with Scotiabank. Please go ahead.
Hey, good morning, guys.
Good morning.
Good morning. Just to follow up on that last question, I mean, operating leverage seems to be getting better and better. I mean, if you look at it from an SG&A as a percentage of gross margin, I mean, the company is essentially entering a new record territory. You did talk about it a little bit there at the start in your last response, but just to get a sense, you know, is this, is this really just expense management post-COVID? Or, you know, should I attribute it mostly to, you know, maybe some structural efficiencies in the business?
Well, we're always working on our structural efficiencies, and we're always working on our operating costs while we invest in technology. There's a bit of that in there. Also, like we're fortunate in some things. I mean, we're operating very disciplined, right? We're not. I mean, we've been able. I'm really, I couldn't be more proud of our team adapting to this very complex environment. You know, there in the Q3, we saw inflationary costs start to creep in. We saw, you know, there's some economic risk there. We're still cautious, for sure. The team's been executing, I would say nicely.
We were fortunate in the way this operating leverage was positioned again in the quarter for multiple variables like you've outlined there. You know, things are opening a bit, and we're working hard to see how we can adapt some of these, and I'll classify them as best practices, but that still very much is work in progress.
Yeah, it's very impressive. I mean, maybe another way to think about it.
Well, again, we're fortunate in some areas too. We're working. I'm proud. Well, the team's working hard in there to really work hard to execute with customers on the deliverables.
Yeah, that's great. I guess maybe the other way to think about it. I guess, again, just for us on the outside kind of looking in here, you know, the Equipment Group margins are tracking, you know, essentially above where they were pre-Hewitt. You know, and I understand maybe the integration isn't yet complete, but I'm curious if you can give any color here, you know, just as to whether, you know, the margin gap has mostly closed at this point or whether the margins maybe at the legacy regions are finding ways to climb higher versus pre-Hewitt. Just a little bit of color there, you know, between the regions would be great.
Well, again, we're in a bit of a unique environment, but in terms of the integration, I mean, we slowed a bit there with you know, some of the unprecedented variables that took hold. You know, with the largest part of the enterprise in there in the Equipment Group, you know, we still haven't completed that integration. But I'd say we got, you know, again, hats off to the team, applaud their execution. We've worked hard in there, particularly with that ERP integration. So we've really just finished year one of that. We're not finished yet, actually totally there with material handling. I think, you know, that did contribute a bit.
Mm-hmm.
Yeah, I think one part to think about too, Michael, is if you look at the integration platforms, systems and stuff progressing nicely. I think when you look at our business on the rental side, and we've talked pretty openly about this, you know, as Scott mentioned, there was a little bit of a pause with the pandemic. You know, we're about halfway through a five-year cycle on the rental business that we talked to as far as getting to the full cycle productivity levels and the life cycle of the fleet in that business. We've got a couple years left on that to realize the full returns on an aged fleet and, you know, when the disposals and things.
That is part of the equation yet to come, right? Specific to the rental side of the business as we develop that market in Quebec and the Maritimes.
Got it. That's great color, guys. Maybe if I can sneak one last one, it's a short one.
Sure.
On the annuity purchase transaction closed in Q4, you know, is that expected to lead it to any sort of cost savings in subsequent quarters?
You know, it's yet to be seen. I mean, we'll take a small charge as we disclosed in the subsequent event note. You know, I think we're working through a number of things on the pension side just to, you know, economize there. There'll be some small savings. I wouldn't say they'd be overly material. Certainly being able to annuitize some of the pension and relieve that liability, I think is going to be a positive factor for us going forward in terms of just managing the liability and making sure that our employees are taken care of on their pension benefits.
Perfect. Thanks very much, guys.
Thank you.
Thank you.
Thank you. Our next question is from Maxim Sytchev with National Bank Financial. Please go ahead.
Hi. Good morning, gentlemen.
Good morning, Max.
Maybe if you don't mind, if we start with product support and are there constraints on the parts side that is preventing maybe a bit of a more aggressive normalization on this line item? Or how should we think about this in terms of you know sort of a pent-up dynamic on PS?
Yeah, a few variables in there, Max. You know, we did start to feel constraints with aftermarket. The other thing is customers are very busy, right? Their demands are high, which is reflective in some of these outcomes. There could be a bit of, you know, pushing out some of repair schedules as well. The other factor is some of the mix in there on some of the dynamics. I mean, the rebuilds were up. WIP is increased about 6% in the Equipment Group, so you know, that's reflective of some of the outcomes as well. I think there's been with the shift in the last while to new. I mean, that impacts things a bit as well, right?
Mm-hmm.
In terms of the age of the units. The good thing is our unit sales were up again in the quarter. There's a lot of different factors playing in there. You know, there was also a bit of a drag due to FX, if you look at it on a quarter-over-quarter basis in the parts area as well. All those factors contribute to the outcome.
Right. I guess I know obviously you don't like to, you know, telegraph things on a prospective basis, but we should see continued improvement, even though you are facing some constraints, or how should we think about that?
WIP at the end of the quarter, we saw WIP increase. You know, in this environment, I just it's just very difficult with many variables in play economically, inflationary to really speculate. We're pleased with the activity. We're pleased with the machine hours increased slightly again in the quarter, which was good. We'll see how things play out here.
Okay. No, that's super helpful. Thank you. Just one last question. You became a bit more aggressive on the NCIB. Just curious to see your positioning on this particular capital allocation versus, you know, M&A or I mean, obviously you can do all of the above, but just curious right now in terms of, you know, how you think about allocation priorities.
Yeah. A good question, Max. Thanks for that. So I would say just out of the gate, I would say our capital allocation priorities haven't changed. You know, we do monitor our cash flows and our liquidity very carefully as you'd expect. We are expecting to deploy capital, as we've talked about for several quarters now, back into the balance sheet as equipment supply availability eases a bit. You know, I can easily see that we're gonna start to fund our balance sheet and invest in our balance sheet to the tune of in excess of CAD 200 million over time in our inventories, as an example, right? We've talked about that pretty openly in the last few quarters. On the NCIB, you know, what we've looked at is with the cash position and so forth, is just looking at
Just working towards dilution, reducing some of the option exercise dilution and equity dilution. Nothing too aggressive, obviously. Very selective program. You know, you should expect that we're gonna be very disciplined in terms of how we think about allocating our capital as we always have been.
Okay, that's great. Thank you so much. That's it for me.
Thanks, Max.
Thank you. Our next question is from Sabahat Khan with RBC Capital Markets. Please go ahead.
Great. Thanks, and good morning. Just, I guess.
Good morning.
Just following up on the discussion around product support. You know, when you talk to some of your larger mining customers, I guess, is there any hesitation to get into the product support channel? You know, when you try to talk to them about other options in lieu of new equipment, is there any hesitation to get into the product support channel? You know, maybe spending two-thirds of the cost to do a rebuild versus just waiting on a new one. Just wanted to get a bit more color on some of the conversations you're having and, you know, are customers just saying, "You know what? I'll just maybe wait if I can get something in the next few months." Just wanna understand how, you know, some of the discussions are going, and maybe does that vary across end markets?
I'll just say we're in normal discussions with customers in terms of value prop. Those are value propositions when you look at the life cycle of iron. We continuously have those discussions and maximizing total cost of ownership, as well as making sure productivity levels are where they need to be and availability. Those are somewhat complex value propositions that our teams are working on regularly with customers. You know, commodity prices are solid. Production's very important, so you get into discussions on timing of scheduled repairs. That can impact things a bit here.
Overall, you know, the other thing in this type of environment with some of the constraints, we're working closely with customers on demand signals and, you know, getting schedules in place and signals into our supply partners as best we can to work through this in an orderly manner.
Okay. Then, just I guess, when we think about your commentary around hiring new technicians, you know, when you generally look ahead over the next few months, do you think it's more an issue of, you know, the potential for headwinds? Is it more from maybe higher wages, or is it just the sheer, shortage of just qualified staff to bring into your facilities? You know, what's kind of the dynamic out there in your specific market?
Well, again, there's a lot of factors in play right now which, you know, presents our tone a bit here, whether it's inflationary factors, economic risk, but also in the constraints. In terms of technicians, I mean, we've improved this year on our position, which is we're pleased. We continue to focus on that area and recruitment training and working closely with the schools. You know, that's important we continue to focus in those areas, particularly on the skilled labor. I'd say we're progressing reasonably well. We can always do better. We feel, you know, from what we saw in the quarter, the demands are still there for the labor, so we're gonna continue to work hard in there on that front.
Just one last one for me. Just I guess broadly on the rental market, can you maybe just share some thoughts on, you know, how you're just seeing the broader rental market evolve as we come out of the pandemic, and just any comments on, you know, the progress of the Battlefield banner in terms of market share, anything you can share on that front?
Good question. We are very focused on that area strategically. It's a growth area. Our fleet uploads were impacted, particularly in the last, you know, 12, 18 months. You know, we're not where we wanna be at those investment levels. You know, as hopefully things improve, we'll continue to allocate capital in those areas. Our fleet sizes. The good part was we saw, you know, great improvement in the utilization on all fronts, which was good. Heavy was a little softer, but still overall strong, solid utilization. Those fleet sizes are not where they need to be. We're progressing. We saw on the light side, we were up, I think, 9%, I think.
That's good on higher utilization. Even power systems, very, very strong numbers there. Material handling, very, very pleased with the team. Material handling, how they've really improved the structure of that rental business. That's good. We continue to be focused on our footprint. That Battlefield we did expand it a bit this year, which was terrific on a strategic front.
Great. Thanks very much.
Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to you, Mr. McMillan.
Great. Thanks very much, Valerie. Thanks to everyone for your participation today. That concludes our call. Please be safe and have a wonderful day. Take care.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.