TORONTO, ONTARIO -- (MARKET WIRE) -- 10/30/07 -- Toromont Industries Ltd. (TSX: TIH) today reported financial results for the third quarter of 2007. Net earnings were $30.7 million or $0.47 per share, up 18% from $25.9 million or $0.41 per share reported in the third quarter of 2006. For the first nine months of 2007, net earnings were $83.0 million or $1.28 per share, up 33% from the comparable period in 2006. Growth in consolidated revenues and earnings in the quarter was attributable to continued strong growth in the Equipment Group.

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                          Three months ended             Nine months ended
                                September 30                  September 30
                   --------------------------------------------------------
$ millions, except                  % change                      % change
 per share amounts     2007    2006                2007      2006
---------------------------------------------------------------------------
Revenues            $ 502.8 $ 456.0       10% $ 1,362.3 $ 1,269.0        7%
Operating income    $  50.4 $  43.2       17% $   118.6 $   106.7       11%
Net earnings        $  30.7 $  25.9       18% $    83.0 $    62.5       33%
Earnings per share
 - basic           $   0.47 $  0.41       15% $    1.28 $    0.98       31%
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"We are pleased with the performance of our Company through the first three quarters of 2007. New records have again been established for both revenue and net income, despite a challenging currency environment and dramatic softening in the Canadian natural gas market," stated Robert M. Ogilvie, Chairman and Chief Executive Officer of Toromont Industries Ltd. "We experienced continued growth in most sectors of the Equipment Group. Booking activity in the Equipment Group was very strong through the quarter and backlogs ended 48% higher than a year ago. While backlogs continue at record levels, Compression Group results through September 2007 were mixed, as significant increases in refrigeration and U.S. natural gas compression were offset by weakness in the markets for Canadian natural gas compression equipment. Overall, expenses have been well contained, enhancing earnings performance to date."

Highlights:

- Equipment Group revenues were at record levels for the third quarter, up 15% versus the same period of 2006. Growth was driven by sales of new and used equipment, and higher rental revenues. Operating income for the quarter increased 44% from the prior year, reflecting higher volumes and lower relative expense levels.

- Bookings at the Caterpillar dealership were at record levels for the third quarter, up 49% over last year on continued strong demand for new equipment, particularly in the mining and infrastructure markets and for electrical power and marine applications. Backlogs ended the quarter at record levels for any quarter.

- During the quarter, the Company was selected by Agnico Eagle Mines Limited to supply the mobile equipment and certain power modules for the Meadowbank Project north of Baker Lake, Nunavut --the Territory's newest open pit gold mine. The total estimated value of this contract is $62 million, to be supplied over the next two years.

- Revenues in the Compression Group were up 5% in the quarter over the comparable period last year on higher sales of refrigeration systems and increased product support activity. Natural gas compression systems revenues were down 1% from last year as higher revenues in the U.S. were offset by declines in Canada. Operating income in the Compression Group for the quarter was down 13% from 2006, as improvements in refrigeration compression and in the U.S. gas compression were more than offset by declines in Canadian natural gas compression operations.

- Compression Group bookings were 8% lower in the quarter than last year as a 33% increase in refrigeration systems was more than offset by a 10% decline in natural gas compression bookings. Backlogs ended the quarter at record levels for this time of year, up 13% from September 2006.

- The recently opened Denver sales office has quickly established an excellent presence, resulting in bookings for natural gas compression packages in excess of $50 million to date.

- The Board of Directors declared the regular quarterly dividend of $0.12 per common share, paid on October 1, 2007 to shareholders of record on September 14, 2007. The Company has paid dividends every year since going public in 1968.

- The normal course issuer bid was renewed, allowing the Company to purchase up to 3.2 million of its common shares during the 12-month period commencing August 31, 2007.

- On October 19, 2007, the Company announced the appointment of Mr. Garry P. Mihaichuk as President and Chief Executive Officer of Toromont Energy Systems Inc. Mr. Mihaichuk is an experienced leader of energy related businesses and his appointment reflects our commitment to continue the rapid growth of TESI into a global compression business.

"We entered the fourth quarter with record backlogs in both the Equipment and Compression Groups, indicating excellent momentum well into 2008," continued Mr. Ogilvie. "The short-term outlook for the Equipment Group is for strong order activity and deliveries, partially offset by currency challenges. The Compression Group is strong in all areas except for the Canadian gas compression operations. In summary, we anticipate that we will report good results for the fourth quarter and the year but that we are likely to fall short of the exceptional earnings reported in the final three months of last year."

Quarterly Conference Call and Webcast

Interested parties are invited to join our quarterly conference call with investment analysts, in listen-only mode, on Tuesday, October 30, 2007 at 4:30 p.m. (ET). The call may be accessed by telephone at 1-866-862-3915 (toll free) or 416-641-6133 (Toronto area). A replay of the conference call will be available until Tuesday, November 13, 2007 by calling 1-800-408-3053 or 416-695-5800 and quoting passcode 3237738.

Both the live audio webcast and the replay of the quarterly conference call can be accessed at www.toromont.com.

About Toromont

Toromont Industries Ltd. operates through two business segments: The Equipment Group and the Compression Group. The Equipment Group includes one of the world's largest Caterpillar dealerships by revenue and geographic territory in addition to industry leading rental operations. The Compression Group is a North American leader specializing in the design, engineering, fabrication, and installation of compression systems for natural gas, coal-bed methane, fuel gas and carbon dioxide in addition to process systems and industrial and recreational refrigeration systems. Both Groups offer comprehensive product support capabilities. Toromont employs approximately 4,400 people in more than 115 locations and is listed on the Toronto Stock Exchange under the symbol TIH. This press release and more information about Toromont Industries can be found at www.toromont.com.

MANAGEMENT'S DISCUSSION AND ANALYSIS of financial results for the three and nine months ended September 30, 2007

This Management's Discussion and Analysis ("MD&A") comments on the operations, performance and financial condition of Toromont Industries Ltd. ("Toromont" or the "Company") as at and for the three and nine months ended September 30, 2007, compared to the preceding year. It also discusses factors that could affect future performance. This MD&A should be read in conjunction with the attached unaudited interim consolidated financial statements and related notes for the three and nine months ended September 30, 2007, the annual MD&A contained in the 2006 Annual Report and the audited annual consolidated financial statements of the Company for the year ended December 31, 2006.

The unaudited interim consolidated financial statements reported herein have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and are reported in Canadian dollars. The information in this MD&A is current to October 29, 2007.

Additional information is contained in the Company's filings with Canadian securities regulators, including the Company's 2006 Annual Report and 2007 Annual Information Form. These are available on SEDAR at www.sedar.com and on the Company's website at www.toromont.com.

Responsibility of Management and the Board of Directors

Management is responsible for the information disclosed in this MD&A and the accompanying unaudited interim consolidated financial statements and has in place the appropriate information systems, procedures and controls to ensure that information used internally by management and disclosed externally is materially complete and reliable. In addition, the Company's Audit Committee, on behalf of the Board of Directors, provides an oversight role with respect to all public financial disclosures made by the Company, and has reviewed and approved this MD&A and the accompanying unaudited interim consolidated financial statements.

Disclosure Controls and Procedures and Internal Control Over Financial Reporting

The Chairman & Chief Executive Officer and the Chief Financial Officer, together with other members of management, have designed the Company's disclosure controls and procedures in order to provide reasonable assurance that material information relating to the Company and its consolidated subsidiaries, would have been known to them and others within those entities.

Additionally, they have designed internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reporting in accordance with GAAP. There has been no change in the design of the Company's internal controls over financial reporting during the quarter ended September 30, 2007, that would materially affect, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

While the Officers of the Company have designed the Company's disclosure controls and procedures and internal controls over financial reporting, they expect that these controls and procedures may not prevent all errors and fraud. A control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met.

Forward Looking Statements

Certain statements contained herein, constitute "forward-looking statements". Words such as "plans", "intends", "outlook", "expects", "anticipates", "estimates", "believes", "should" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on current expectations and are influenced by management's historical experience, perception of trends and current business conditions, expected future developments and other factors which management considers appropriate. These statements entail various risks and uncertainties as more fully described in the "Risks and Uncertainties" and the "Outlook" sections of this MD&A when read in conjunction with the annual MD&A. These risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied. The Company disclaims any obligation or intention to update or revise any forward-looking statement, whether the result of new information, future events or otherwise.

Non-GAAP Financial Measures

The success of the Company and business unit strategies is measured using a number of key performance indicators, which are outlined below. These measures are also used by management in its assessment of relative investments in operations. These key performance indicators are not measurements in accordance with Canadian GAAP. It is possible that these measures will not be comparable to similar measures prescribed by other companies. They should not be considered as an alternative to net income or any other measure of performance under Canadian GAAP.

Operating Income and Operating Margin

Each business segment assumes responsibility for its operating results as measured by, amongst other factors, operating income, which is defined as income before income taxes, interest income and interest expense. Financing and related interest charges cannot be attributed to business segments on a meaningful basis that is comparable to other companies. Business segments and income tax jurisdictions are not synonymous, and it is believed that the allocation of income taxes distorts the historical comparability of the performance of our business segments. Consolidated and segmented operating income is reconciled to net earnings in tables where used in this MD&A.

Operating income margin is calculated by dividing operating income by total revenue.

Working Capital and Non-Cash Working Capital

Working capital is defined as current assets less current liabilities. Non-cash working capital is defined as working capital less cash and equivalents.

Consolidated Results of Operations
----------------------------------

                                          Three months ended September 30
$ thousands, except per share amounts          2007       2006   % change
---------------------------------------------------------------------------

Revenues                                  $ 502,778  $ 455,959         10%
Cost of goods sold                          395,326    356,192         11%
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Gross profit                                107,452     99,767          8%
Selling and administrative expenses          57,029     56,524          1%
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Operating income                             50,423     43,243         17%
Interest expense                              3,445      3,522         (2%)
Interest and investment income               (1,047)      (664)        58%
Gain on sale of property                          -          -          -
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Income before income taxes                   48,025     40,385         19%
Income taxes                                 17,364     14,487         20%
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Net earnings                               $ 30,661  $  25,898         18%
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Earnings per share - Basic                 $   0.47  $    0.41         15%
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Key ratios:
Gross profit as a % of revenues                21.4%      21.9%
Selling and administrative expenses as
 a % of revenues                               11.3%      12.4%
Operating income as a % of revenues            10.0%       9.5%
Income taxes as a % of income before
 income taxes                                  36.2%      35.9%



                                           Nine months ended September 30
$ thousands, except per share amounts          2007        2006  % change
---------------------------------------------------------------------------

Revenues                                $ 1,362,321 $ 1,268,990         7%
Cost of goods sold                        1,070,748     995,236         8%
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Gross profit                                291,573     273,754         7%
Selling and administrative expenses         172,928     167,067         4%
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Operating income                            118,645     106,687        11%
Interest expense                             10,637      10,872        (2%)
Interest and investment income               (2,759)     (2,353)       17%
Gain on sale of property                     15,990           -         -
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Income before income taxes                  126,757      98,168        29%
Income taxes                                 43,775      35,638        23%
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Net earnings                            $    82,982 $    62,530        33%
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Earnings per share - Basic              $      1.28 $      0.98        31%
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Key ratios:
Gross profit as a % of revenues                21.4%       21.6%
Selling and administrative expenses as
 a % of revenues                               12.7%       13.2%
Operating income as a % of revenues             8.7%        8.4%
Income taxes as a % of income before
 income taxes                                  34.5%       36.3%

Consolidated revenues increased 10% to $502.8 million in the quarter versus the same period of the prior year. Equipment Group revenues were up 15% on higher new and used machine sales, and rental revenues. Compression Group revenues were up 5% in the quarter on higher refrigeration package sales and product support revenues.

For the first nine months of the year, consolidated revenues were up 7% compared to 2006, to $1.4 billion. Equipment Group revenues were up 12% on strong new and used machine sales and rental revenues. Compression Group revenues through September 2007 were up 2% from 2006 as higher U.S. natural gas compression, refrigeration compression and product support revenues were largely offset by declines in Canadian natural gas compression package sales.

Consolidated gross profit increased 8% in the quarter over the comparable period in the prior year on the 10% increase in revenues. Gross profit margin decreased to 21.4% in the quarter from 21.9% in the same quarter of the prior year. Gross profit margins in Compression were down, as productivity improvements within the U.S. facilities were more than offset by lower margins in the Canadian process operations resulting from lower volumes. Equipment Group gross profit margins were comparable to 2006, as higher gross margin percentages were offset by a change in sales mix to a higher proportion of equipment sales, which generate lower relative margins than product support activities.

For the first nine months of 2007, consolidated gross profit increased 7% over the comparable period in 2006 in line with the 7% increase in revenues. Gross profit margin was 21.4% through September 2007, compared to 21.6% in the prior year. Equipment Group gross profit margins were slightly lower in 2007 on a change in sales mix. Gross profit margins in Compression were comparable to the prior year for the first nine months as higher gross margins in the U.S. were largely offset by lower margins in Canada.

Selling and administrative expenses increased $0.5 million or 1% in the third quarter versus the comparable period of 2006. Compensation related expenses were $2.4 million higher while net information technology spending was $1.0 million lower.

Selling and administrative expenses increased $5.9 million or 4% in the first nine months of 2007 versus the comparable period of 2006. Increased selling and administrative expenses reflect higher compensation costs of $5.1 million generally related to increases implemented at the beginning of the year. Occupancy costs have increased $2.2 million through the first nine months on expanded operations in the U.S. and general inflation increases for utilities, property taxes, rent and other such items. Net spending on information technology has declined $1.4 million. Selling and administrative expenses as a percentage of revenues was 12.7% through September 2007, down from 13.2% reported in the comparable period of the prior year.

Operating income in the third quarter of $50.4 million was 17% higher than 2006 on higher volumes and lower relative selling and administrative expenses, partially offset by lower gross margins. Operating margin for the quarter was 10.0%, up from 9.5% in the similar period of 2006 on lower relative selling and administrative expense levels.

Operating income in the first nine months of 2007 was $118.6 million, up 11% from the prior year on higher volumes and lower relative selling and administrative expenses. Operating margin for the first nine months was 8.7%, up slightly from 8.4% reported in the similar period of 2006.

Interest expense for the third quarter and first nine months of 2007 was 2% lower than in the same periods last year on lower borrowing levels. Interest income for the third quarter and first nine months of 2007 was higher than the comparable periods of 2006 on higher average cash balances.

During the second quarter of 2007, a 60-acre parcel of land in the Region of Halton was sold for net proceeds of $17.6 million. The resulting gain was $16.0 million, $12.9 million after tax, or $0.20 basic earnings per share.

The effective income tax rate for the third quarter was 36.2% compared to 35.9% in 2006, reflecting a greater proportion of earnings generated in higher tax jurisdictions. The effective income tax rate through September 2007 was 34.5% compared to 36.3% in the prior year. The 2007 rate is lower due to the reduced rate on the capital gain from the second quarter property sale. Excluding this item, the effective income tax rate for first nine months of 2007 was 36.8%, higher than in 2006 due to a greater proportion of earnings generated in higher tax jurisdictions.

Net earnings in the quarter were $30.7 million, up 18% from $25.9 million reported in the comparable period a year ago. Basic earnings per share for the quarter were $0.47, up 15% from $0.41 reported in the comparable period last year.

Net earnings for the first nine months were $83.0 million, up 33% from $62.5 million reported in 2006. Basic earnings per share for the period were $1.28, up 31% from $0.98 reported in the comparable period last year. Excluding the gain on sale of property in the second quarter of 2007, net earnings for the first nine months were $70.0 million, $1.08 per share.

Comprehensive income for the quarter was $25.9 million, comprised of net earnings of $30.7 million and other comprehensive loss of $4.8 million. Comprehensive income for the nine-month period was $68.7 million, comprised of net earnings of $83.0 million and other comprehensive loss of $14.3 million. The other comprehensive loss in both periods arose on translation of self-sustaining foreign operations and a decline in fair value of cash flow hedges. The Company does not enter into foreign exchange forward contracts for speculative purposes. The gains and losses on the foreign exchange forward contracts designated as cash flow hedges are intended to offset the translation losses and gains on the hedged foreign currency transactions when they occur. The reader is referred to Changes in Accounting Policies below as well as Note 2 in the accompanying unaudited interim consolidated financial statements for the period ended September 30, 2007 for further details.

The continued strengthening of the Canadian dollar has had an adverse impact on results. Within the Equipment Group, it has a negative impact on some of our customers, particularly in the manufacturing sector. Within the Compression Group, it has been identified as one of the factors behind the weakness in the Canadian natural gas market. Within both Groups, pricing to our customers typically reflects movements in the exchange rate on U.S. sourced equipment, components and spare parts, resulting in lower revenues. While gross margin percentages are generally maintained, expenses, which are in Canadian dollars, tend to rise as a percentage of revenue and margins, putting downward pressure on net income. As well, the stronger Canadian dollar negatively impacts reported results on the translation of the Compression Group's growing U.S. operations.

Results of Operations in the Equipment Group
--------------------------------------------

                                           Three months ended September 30
$ thousands                                       2007      2006 % change
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Equipment sales and rentals
 New                                         $ 133,442 $ 113,541       18%
 Used                                           37,372    25,240       48%
 Rental                                         45,204    40,194       12%
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Total equipment sales and rentals              216,018   178,975       21%
Power generation                                 2,121     3,642      (42%)
Product support                                 66,789    65,281        2%
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Total revenues                               $ 284,928 $ 247,898       15%
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Operating income                              $ 32,213 $  22,371       44%
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Key ratios:
Product support revenues as a % of total
 revenues                                         23.4%     26.3%
Group total revenues as a % of consolidated
 revenues                                         56.7%     54.4%
Operating income as a % of revenues               11.3%      9.0%



                                           Nine months ended September 30
$ thousands                                       2007      2006 % change
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Equipment sales and rentals
 New                                         $ 356,930 $ 295,249       21%
 Used                                          102,387    87,267       17%
 Rental                                        105,669    97,136        9%
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Total equipment sales and rentals              564,986   479,652       18%
Power generation                                 8,943    11,474      (22%)
Product support                                207,737   206,017        1%
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Total revenues                               $ 781,666 $ 697,143       12%
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Operating income                             $  72,944 $  61,447       19%
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Key ratios:
Product support revenues as a % of total
 revenues                                        26.6%     29.6%
Group total revenues as a % of consolidated
 revenues                                        57.4%     54.9%
Operating income as a % of revenues               9.3%      8.8%

The Equipment Group set new milestones for revenues and operating income for the quarter and first nine months of 2007. New and used equipment sales and rentals were brisk.

New machine sales were up 18% in the quarter and 21% for the first nine months compared to the same periods in 2006. Revenues in the tractor sector increased 9% in the quarter and 18% through September on higher unit sales. The mining and heavy construction markets largely drove growth in this sector. Revenues have also benefited from higher sales of prime and back-up electrical power systems and of engines for marine applications.

Used equipment sales were up 48% in the quarter and 17% for the first nine months compared to the similar periods last year. Sales of used equipment vary depending on customer buying preferences, exchange rate considerations and general product availability.

Rental revenues were up 12% in the quarter and 9% through September compared to the same periods last year, largely due to increased same store revenues generated from a larger rental fleet and increased utilization. Growth in rental revenues was broad-based with most regions reporting year-over-year increases. Northern Ontario and the greater Toronto area experienced substantial growth on increased activity. The recent acquisition in Timmins, Ontario also contributed to this growth.

Revenues from power generation declined 42% in the quarter and 22% in the year-to-date versus last year, reflecting the disposition of power generation assets located near Trenton, Ontario, in the second quarter of 2007. On a comparable basis, power generation revenues were up 29% in the quarter and 18% for the first nine months compared to the same periods in 2006, reflecting increased operating hours and higher average prices for electricity.

Product support revenues increased 2% in the quarter and 1% for the first nine months compared to the same periods of last year on growth in service work, while parts sales were generally even with last year. Parts revenue has been significantly impacted by the decline in the U.S. dollar. Product support activity has generally been higher through our operations, with the exception of that related to on-highway truck engines, which has been down through the year. In Newfoundland, a strike by hourly staff, which commenced August 2007, has negatively impacted product support revenues by an estimated $1 million in the quarter. Offsetting this was higher product support revenues in Nunavut and Northern Ontario, where there was strong mining activity. Work-in-progress at September 30, 2007 was 25% higher than at the same time last year.

Operating income for the quarter was up 44% from that reported in the same period last year on higher revenues and lower relative selling and administrative expenses. Gross profit margins were at the same level as in the prior year as improvements in product support margins maintained overall margins, even through a period where a higher proportion of revenues were generated through equipment sales.

Operating income for the first nine months of 2007 was up 19% from the previous year on higher volumes, partially offset by lower gross margins and higher volume-related expenses. Lower gross margins for the first nine months reflect a change in sales mix. Operating income as a percentage of revenues was 9.3% through September 2007 versus 8.8% in the comparable period of 2006.

Third quarter bookings were at record levels, up 46% from the same period last year, on continued demand for new equipment, particularly for machines used in the mining and heavy construction markets, and for electrical power and marine applications. Backlogs ended the quarter at record levels, up 48% from this time last year.

Results of Operations in the Compression Group
----------------------------------------------

                                          Three months ended September 30
$ thousands                                       2007      2006 % change
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Package sales and rentals
 Package sales                               $ 163,238 $ 155,704        5%
 Rentals                                         4,616     5,149      (10%)
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Total package sales and rentals                167,854   160,853        4%
Product support                                 49,996    47,208        6%
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Total revenues                               $ 217,850 $ 208,061        5%
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Operating income                              $ 18,210 $  20,872      (13%)
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Key ratios:
Product support revenues as a % of total
 revenues                                         22.9%     22.7%
Group total revenues as a % of consolidated
 revenues                                         43.3%     45.6%
Operating income as a % of revenues                8.4%     10.0%



                                           Nine months ended September 30
$ thousands                                       2007      2006 % change
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Package sales and rentals
 Package sales                               $ 425,365 $ 429,390       (1%)
 Rentals                                        14,202    15,113       (6%)
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Total package sales and rentals                439,567   444,503       (1%)
Product support                                141,088   127,344       11%
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Total revenues                               $ 580,655 $ 571,847        2%
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Operating income                             $  45,701 $  45,240        1%
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Key ratios:
Product support revenues as a % of total
 revenues                                         24.3%     22.3%
Group total revenues as a % of consolidated
 revenues                                         42.6%     45.1%
Operating income as a % of revenues                7.9%      7.9%

Results within the Compression Group reflect varied market conditions. The Canadian natural gas compression market remains weak. Meanwhile, conditions within the U.S. natural gas compression market continue to be favourable and participation in this market is increasing. The net impact of these conditions has been marginally negative through September 2007. The demand for refrigeration equipment has been strong overall.

The Canadian natural gas industry has slowed significantly from the very active market conditions seen through 2005. Benign weather conditions have resulted in high levels of stored gas. At the same time, growing production of natural gas in the United States along with increasing LNG import capacity has added supply and competition. The frenetic pace of energy development in Western Canada in recent years has resulted in substantially increased cost structures resulting in higher cost natural gas deliveries to U.S. markets. The rising Canadian dollar has added to the cost disadvantage. Consequently, it is currently uneconomic for natural gas producers to increase production in Canada. As a result, drilling has declined and the demand for compression equipment is down substantially from the peak seen in 2005.

Package sales were 5% higher in the third quarter on higher recreational refrigeration applications. Revenues from natural gas compression packages were down 1% as increased revenues in the U.S. were offset by declines in Canada. Recreational refrigeration revenues were up 73% over the same period last year, with gains in all markets. Industrial refrigeration compression revenues were up 12% on improved results in the U.S. market.

Through the first nine months, package sales revenues were down 1% from the prior year on lower natural gas compression package revenues, partially offset by higher recreational refrigeration revenues. Revenues from natural gas compression packages were down 7% as higher revenues generated from the Company's expanded U.S. natural gas compression operations were more than offset by declines in the Canadian natural gas market. Recreational refrigeration revenues were up 74% over the same period last year, on gains in North American and international markets.

Rental revenues were 10% lower in the third quarter and 6% lower in the first nine months of 2007 compared to 2006 on lower fleet utilization in the Canadian-based natural gas rental operation.

Product support revenues were up 6% in the quarter and 11% through September 2007 versus the comparable periods of 2006. Continued focus on product support activities in Canada in both natural gas and recreational refrigeration produced increases in both markets. Third quarter product support revenues in the U.S. were even with the prior year, although down 7% on a reported basis on the stronger Canadian dollar. Through the first nine months, U.S. product support revenues were up 22%.

Operating income in the third quarter was down 13% from that reported in the same period of 2006 on much reduced activity in the Canadian natural gas compression market. The recreational and industrial refrigeration operations have seen improvements year-over-year in all regions on higher volumes in the U.S. and improved cost control in all regions. Profitability gains in the U.S. natural gas compression operations from higher volumes and improved project mix and execution have been more than offset by declines in Canadian natural gas compression.

Operating income for the first nine months of 2007 was 1% higher than in the same period of 2006. Higher volumes in the refrigeration operations drove improved results. Profitability within the natural gas compression operations was down marginally with the prior year levels, as productivity gains and improved execution in the U.S. on the higher volumes have been more than offset by lower volumes in Canada. Operating income as a percentage of revenues was 7.9% for the first nine months of 2007, the same as in the comparable period of 2006.

Bookings were 8% lower in the quarter than for the same period last year as a 10% decline in natural gas compression bookings was partially offset by a 33% increase in refrigeration. Process systems bookings vary due to timing of customer project schedules, and while down 22% in the third quarter, are level through the first nine months of the year. Backlogs ended the quarter at record levels for this time of year, up 13% from September 2006.

The Compression Group has excellent momentum in all areas except for the Canadian natural gas compression operations. To better manage costs and shop utilization in Canada, we have exited certain leased facilities and reallocated production in other shops. A significant recovery in Canadian natural gas markets in the near term is not anticipated. As reported in the second quarter, lower earnings are expected for the Compression Group in the fourth quarter, compared to the fourth quarter of 2006. Eventually, production declines and growing demand will bring the gas market into balance.

Consolidated Financial Position

The Company has maintained a strong financial position. At September 30, 2007, the ratio of total debt to equity was 0.38:1 compared to 0.47:1 at December 31, 2006. Total assets were $1.3 billion at September 30, 2007, up modestly from that reported at the end of 2006.

The Company's investment in non-cash working capital was $407.7 million at September 30, 2007. The major components, along with the changes from December 31, 2006 and September 30, 2006, are identified in the following table.

                                     September 30 December 31    Increase
                                             2007        2006   (Decrease)
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Accounts receivable                  $    311,315 $   341,470 $   (30,155)
Inventories                               497,533     461,672      35,861
Other current assets                       20,368       7,753      12,615
Accounts payable and accrued
 liabilities                             (256,849)   (301,131)      44,282
Deferred revenue                         (137,531)    (90,596)     (46,935)
Dividends payable                          (7,767)     (6,431)      (1,336)
Derivative financial instruments          (12,466)          -      (12,466)
Other                                      (7,596)     (1,113)      (6,483)
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Total non-cash working capital       $    407,007 $   411,624 $     (4,617)
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                                     September 30     Increase
                                             2006    (Decrease)
--------------------------------------------------------------

Accounts receivable                  $    340,077 $    (28,762)
Inventories                               476,929       20,604
Other current assets                        9,479       10,889
Accounts payable and accrued
 liabilities                             (270,531)      13,682
Deferred revenue                         (106,723)     (30,808)
Dividends payable                          (6,396)      (1,371)
Derivative financial instruments                -      (12,466)
Other                                       1,165       (8,761)
---------------------------------------------------------------

Total non-cash working capital       $    444,000 $    (36,993)
---------------------------------------------------------------
---------------------------------------------------------------

Accounts receivable were 9% lower at September 30, 2007 compared to December 2006 and 8% lower compared to September 2006. These decreases are largely attributable to the Compression Group, where the stronger Canadian dollar has reduced the reported amounts for U.S. denominated accounts receivable. The Canadian dollar has increased 17% from December 2006 and 13% from September 2006 compared to the U.S. dollar.

Inventories were 8% higher at September 30, 2007 compared to December 2006 and 4% higher than at September 30, 2006 on higher inventory levels in both Groups. Equipment Group machine inventory levels were higher than at the comparator periods due to increased sales volumes and seasonal trends, somewhat offset by an improvement in product availability and delivery-times on most products. Compression Group inventory levels increased 7% over both periods on increased inventories held at the expanded Wyoming operations. Work-in-process levels in the refrigeration compression operations were also higher compared to both periods on higher activity.

The increase in other current assets compared to both December 2006 and September 2007 relate to deposits made for equipment ordered relating to a significant project and scheduled for delivery through 2008.

Accounts payable and accrued liabilities were 15% lower than December 2006 and 5% lower than September 2006. Compared to December 2006, the decrease is attributable to reduced key supplier payables as well as seasonality related to bonus accruals. Compared to September 2006, the decrease is due to reduced key supplier payables.

Deferred revenues have increased 52% from December 2006 and 29% from September 2006. The Compression group uses progress billings as a method of funding working capital requirement of long-term contracts.

Derivative financial instruments, namely foreign exchange contracts and an interest rate swap, are recorded on the balance sheet beginning from January 1, 2007. Foreign exchange contracts reduce volatility by fixing landed costs related to specific customer orders and establish a level of price stability for high volume goods such as spare parts. Toromont does not enter into foreign exchange forward contracts for speculative purposes. Given the sharp movement in the Canadian dollar compared to the U.S. dollar in the recent quarter, these practices have led to a cumulative opportunity cost of approximately $12.5 million as at September 30, 2007 as disclosed in note 14. This is not expected to affect net income, as the unrealized losses will offset future gains on hedged items.

As at the date of this MD&A, the Company had 64,714,117 common shares and 2,022,739 share options outstanding.

In August of this year, the Company renewed its normal course issuer bid (NCIB) with the Toronto Stock Exchange (TSX). Pursuant to the NCIB, the Company may purchase for cancellation up to 3,233,838 of its common shares during the 12-month period commencing August 31, 2007 and ending August 30, 2008. The shares that may be purchased under this issuer bid represent approximately 5% of Toromont's issued and outstanding common shares. The actual number of shares purchased and the timing of any such purchases will be determined by Toromont. All shares purchased under the bid will be cancelled. Shareholders may contact our Corporate Secretary to obtain, without charge, a copy of our notice to the TSX regarding the normal course issuer bid.

Liquidity and Capital Resources

Toromont obtains short-term financing through a combination of cash from operating activities and committed long-term credit facilities. Combined unsecured credit facilities amounted to $245 million at September 30, 2007, of which $183 million was unutilized.

Management expects that the Company's available credit facilities, together with cash flows from operations, are more than sufficient to fund its cash flow requirements including operations, debt-servicing obligations, capital expenditures and dividends to its shareholders.

                                        Three months ended September 30
($ thousands)                              2007       2006   $ Variance
------------------------------------------------------------------------

Cash provided by operating
 activities                            $ 38,017  $ (21,283) $    59,300
Cash used in investing activities       (13,025)   (17,969)       4,944
Cash used in financing activities       (10,191)    (6,668)      (3,523)
------------------------------------------------------------------------
Change in cash and cash equivalents    $ 14,801  $ (45,920) $    60,721
------------------------------------------------------------------------
------------------------------------------------------------------------


                                        Nine months ended September 30
($ thousands)                             2007       2006   $ Variance
-----------------------------------------------------------------------

Cash provided by operating
 activities                           $ 71,790  $  32,917   $   38,873
Cash used in investing activities      (35,956)   (64,891)      28,935
Cash used in financing activities      (45,639)   (16,744)     (28,895)
-----------------------------------------------------------------------
Change in cash and cash equivalents     (9,805) $ (48,718)  $   38,913
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Operating activities provided $38.0 million in the quarter compared to using $21.3 million in the same period last year. Cash from operations increased 13% over the prior year on higher volumes and operating margins. Non-cash working capital used $2.2 million in the quarter compared to $56.7 million in 2006 on improved working capital management, namely decreases in accounts receivable and inventories.

For the first nine months, operating activities provided $71.8 million, up more than 100% from $32.9 million provided in the same period last year. The increase in cash provided was partly attributable to increased cash from operations, up 11% from 2006 on higher volumes and operating margins. The Company made substantial investments in inventories in 2006, largely in light of product availability constraints and extended delivery-time constraints from certain suppliers at that time.

Investing activities used $13.0 million in the quarter, down from $18.0 million in the similar period last year. Gross investment in property, plant and equipment of $6.4 million included expansion of the Equipment Group branch network ($2.4 million), vehicles to support business growth ($1.4 million) and various other investments. Net investment in rental equipment was $7.5 million, $0.8 million lower than that reported in the same period last year on the timing of fleet investments in the Equipment Group.

Investing activities for the first nine months of 2007 included net proceeds of $17.6 million on the sale of property. Excluding this item, the Company invested $53.6 million, compared to $64.9 million in the prior year. Net investment in rental equipment was $31.2 million, down from $37.1 million last year. Additions to the rental fleet in the Equipment Group are lower in 2007 than in 2006 following two years of significant investment. Gross investment in property, plant and equipment was $20.7 million, comprised of facility expansion in U.S. natural gas compression operations ($3.1 million), vehicles to support business growth ($6.4 million), information technology equipment and systems ($2.1 million) and branch additions and renovations in the Equipment Group ($5.0 million).

Financing activities used $10.2 million in the third quarter of 2007 versus $6.7 million in the comparable period of 2006. The Company paid dividends of $7.8 million in the quarter, up 21% from the same period in 2006, reflecting the higher dividend rate per share.

Through September 2007, financing activities used $45.6 million compared to $16.7 million in the comparable period of 2006. The Company paid dividends of $21.9 million, up 23% from the same period in 2006 on the higher dividend rate per share. Bank and other long-term debt was reduced by a net $27.6 million from the positive cash flows of the Company.

Outlook

The overall outlook for Toromont's business continues to be positive. The balance in the Company's products and markets, combined with after-market support activity, provides a strong operating foundation.

Backlogs were at record levels entering the fourth quarter, for both the Equipment and Compression Groups, indicating excellent prospects well into 2008.

The fourth quarter outlook for the Equipment Group is for strong order activity and deliveries partially offset by currency challenges. Infrastructure spending, mine development and power systems should continue to be strong and sustain the momentum in overall revenue growth.

The Compression Group has excellent momentum in all areas except for the Canadian gas compression operations.

In summary, good results are anticipated for the fourth quarter and the year but they are likely to fall short of the exceptional earnings reported in the fourth quarter of last year.

Risks and risk management

In the normal course of business, Toromont is exposed to operating and financial risks that may potentially impact its operating results in either or both of its business segments. The company and each operating segment employ risk management strategies with a view to mitigating these risks on a cost-effective basis. There have been no material changes to the operating and financial risk assessment and related risk management strategies as described in the Company's 2006 Annual Report and 2007 Annual Information Form.

Critical accounting policies and estimates

The accounting policies used in the preparation of the accompanying unaudited interim consolidated financial statements are consistent with those used in the Company's 2006 audited annual consolidated financial statements, and described in Note 1 therein, except for the changes in accounting policies described in the following section.

The preparation of financial statements in conformity with Canadian GAAP requires estimates and assumptions that affect the results of operation and financial position. By their nature, these judgments are subject to an inherent degree of uncertainty and are based upon historical experience, trends in the industry and information available from outside sources. Management reviews its estimates on an ongoing basis. There have been no material changes to the critical accounting estimates as described in the Company's 2006 Annual Report.

Changes in accounting policies

Effective January 1, 2007, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Sections 1530 Comprehensive Income, Section 3855 Financial Instruments - Recognition and Measurement and Section 3865 Hedges. The adoption of these new standards resulted in changes in the accounting for financial instruments and hedges, as well as the recognition of certain transition adjustments. As provided under the standards, the comparative consolidated financial statements have not been restated, except for the presentation of translation gains or losses on self-sustaining foreign operations.

The adoption of these Sections is done retroactively without restatement of the consolidated financial statements of prior periods. As a January 1, 2007, the impact on the consolidated balance sheet of measuring derivatives at fair value as at January 1, 2007 was an increase in: accounts receivable $27,000; derivative financial instrument assets $6,143,000; current future income tax assets $300,000; accounts payable and accrued liabilities $3,753,000; long-term future income tax liabilities $846,000; derivative financial instrument liabilities $857,000 and opening accumulated other comprehensive income $1,014,000.

The effect of these changes in accounting policies on net income for the three and nine month periods ending September 30, 2007 is not significant.

Effective January 1, 2007, the Company adopted the revised Section 1506 Accounting Changes, relating to changes in accounting policies, changes in accounting estimates, and errors. Adoption of these recommendations had no effect on the consolidated financial statements for the three month and nine month periods ending September 30, 2007, except for the disclosure of accounting changes that have been issued by the CICA but have not yet been adopted by the Company because they are not effective until a future date (refer to Future Accounting Standards below).

The reader is referred to Note 2 in the accompanying unaudited interim consolidated financial statements for the quarter ended September 30, 2007 for further details regarding the adoption of these standards.

Future accounting standards

On December 1, 2006, the CICA issued three new accounting standards: Handbook Section 1535, Capital Disclosures; Handbook Section 3862 Financial Instruments - Disclosures; and Handbook Section 3863 Financial Instruments - Presentation. These standards are effective for interim and annual financial statements for the Company's reporting period beginning on January 1, 2008. Section 1535 specifies the disclosure of (i) an entity's objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The new Sections 3862 and 3863 replace Handbook Section 3861 Financial Instruments - Disclosure and Presentation, revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation requirements. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.

In March 2007, the CICA approved Handbook Section 3031 Inventories, which replaces the existing Section 3030 Inventories. This standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008, with earlier application encouraged. The standard provides more guidance on the measurement and disclosure requirements for inventories.

The Company is currently assessing the impact of these new accounting standards on its financial statements.

Selected quarterly information
------------------------------

$ thousands, except per             2005                       2006
 share amounts                  Q3        Q4        Q1        Q2        Q3
                         ------------------- -----------------------------
Revenues
 Equipment Group         $ 231,086 $ 266,015 $ 187,188 $ 262,057 $ 247,898
 Compression Group         196,802   209,473   182,240   181,546   208,061
                         ------------------- -----------------------------
 Total revenues          $ 427,888 $ 475,488 $ 369,428 $ 443,603 $ 455,959
                         ------------------- -----------------------------
                         ------------------- -----------------------------

Net earnings (loss)
 from continuing
  operations             $  23,943 $  27,296 $  11,722 $  24,910 $  25,898
 from discontinued
  operations                   742         -         -         -         -
                         ------------------- -----------------------------
Total net earnings       $  24,685 $  27,296 $  11,722 $  24,910 $  25,898
                         ------------------- -----------------------------
                         ------------------- -----------------------------

Basic earnings (loss)
 per share
  from continuing
   operations            $    0.38 $    0.43 $    0.18 $    0.39 $    0.41
 from discontinued
   operations                 0.01         -         -         -         -
                         ------------------- -----------------------------
Total basic EPS          $    0.39 $    0.43 $    0.18 $    0.39 $    0.41
                         ------------------- -----------------------------
                         ------------------- -----------------------------

Diluted earnings (loss)
 per share
  from continuing
   operations            $    0.37 $    0.43 $    0.18 $    0.38 $    0.40
 from discontinued
   operations                 0.01         -         -         -         -
                         ------------------- -----------------------------
Total diluted EPS        $    0.38 $    0.43 $    0.18 $    0.38 $    0.40
                         ------------------- -----------------------------
                         ------------------- -----------------------------

Dividends per share      $    0.08 $    0.08 $    0.10 $    0.10 $    0.10
                         ------------------- -----------------------------
                         ------------------- -----------------------------


                              2006                2007
$ thousands, except per
 share amounts                  Q4        Q1        Q2        Q3
                         --------- -----------------------------
Revenues
 Equipment Group         $ 290,725 $ 228,306 $ 268,432 $ 284,928
 Compression Group         205,118   161,849   200,956   217,850
                         --------- -----------------------------
Total revenues           $ 495,843 $ 390,155 $ 469,388 $ 502,778
                         --------- -----------------------------
                         --------- -----------------------------

Net earnings (loss)
 from continuing
  operations             $  36,891 $  14,251 $  38,070 $  30,661
 from discontinued
  operations                     -         -         -         -
                         --------- -----------------------------
Total net earnings       $  36,891 $  14,251 $  38,070 $  30,661
                         --------- -----------------------------
                         --------- -----------------------------

Basic earnings (loss)
 per share
 from continuing
  operations             $    0.58 $    0.22 $    0.59 $    0.47

 from discontinued
  operations                      -         -         -         -
                         --------- -----------------------------
Total basic EPS          $    0.58 $    0.22 $    0.59 $    0.47
                         --------- -----------------------------
                         --------- -----------------------------

Diluted earnings (loss)
 per share
 from continuing
  operations             $    0.58 $    0.22 $    0.58 $    0.47
 from discontinued
  operations                     -         -         -         -
                         --------- -----------------------------
Total diluted EPS        $    0.58 $    0.22 $    0.58 $    0.47
                         --------- -----------------------------
                         --------- -----------------------------

Dividends per share      $    0.10 $    0.12 $    0.12 $    0.12
                         --------- -----------------------------
                         --------- -----------------------------

Interim period revenues and earnings historically reflect seasonality in both the Equipment and Compression Groups. Within the Equipment Group, the first quarter is typically the softest due to winter shutdowns in the construction industry while the fourth quarter has consistently been the strongest quarter due to higher conversions at the Caterpillar dealership of equipment on rent with a purchase option. Within the Compression Group, the fourth quarter tends to be the strongest due to higher activity levels resulting from well-site access and drilling patterns. The second and third quarter impacts of seasonality in both Groups are relatively neutral.

TOROMONT INDUSTRIES LTD.

CONSOLIDATED BALANCE SHEETS
(unaudited)

                               September 30    December 31    September 30
($ thousands)                          2007           2006            2006
--------------------------------------------------------------------------

Assets
Current assets
 Cash and cash equivalents   $       48,209  $      58,014  $        1,998
 Accounts receivable                311,315        341,470         340,077
 Inventories                        497,533        461,672         476,929
 Income taxes receivable                  -              -             789
 Future income taxes                 26,946         24,305          25,769
 Other current assets (note 7)       20,368          7,753           9,479
--------------------------------------------------------------------------
Total current assets                904,371        893,214         855,041

Property, plant and equipment       182,180        185,290         179,497
Rental equipment                    156,898        138,214         139,441
Goodwill                             34,800         34,800          34,800
Future income taxes                   2,997              -               -
Other assets (note 7)                28,771         48,474          26,645
--------------------------------------------------------------------------
Total assets                 $    1,310,017  $   1,299,992  $    1,235,424
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Liabilities
Current liabilities
 Accounts payable and
  accrued liabilities
  (note 8)                   $      402,147  $     398,158  $      383,448
 Current portion of
  long-term debt (note 9)            31,487         25,194          25,595
 Income taxes payable         

Published Oct. 30, 2007 
 

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