Summary
- The Toro Company (NYSE: TTC) has agreed to acquire Tornado Infrastructure Equipment Ltd. (formerly Tornado Global Hydrovacs) (TSX-V: TGH) for C$1.92 per share in cash (~US$1.38), valuing the company at approximately C$279 million (~US$200 million) on a fully diluted basis.
- The purchase price implies roughly 1.9x trailing 12-month net sales of about C$149 million (~US$109 million) and reflects several years of strong revenue and earnings growth.
- Since our October 2021 initiating report, when Tornado traded below C$0.45 per share, and our July 2022 update at roughly C$0.55, long-term shareholders have seen a multi-bagger outcome as the business scaled and its strategic value became more visible.
- Record results in 2023 and 2024 followed by continued growth into 2025 and the accretive acquisition of Custom Vacuum Services validated the original investment case around the Red Deer facility, the Ditch Witch / Toro relationship, and expanding North American infrastructure demand.
- Toro’s decision to move from strategic partner to full owner completes that thesis: a larger industry player is paying a strategic premium for Tornado’s engineering, brand, manufacturing footprint, and dealer relationships.
- For investors, the transaction is both a profitable exit and an example of how patient ownership in a small-cap industrial, combined with disciplined execution by management, can be rewarded by the market over time.
Background and Prior Coverage
In October 2021, First Bridge Finance published “Tornado Global: Rare Undervalued Equity Investment Opportunity In Infrastructure” highlighting Tornado Global Hydrovacs Ltd. as a niche hydrovac manufacturer that was undervalued and trading below C$0.45 per share. At that point, the company had recently acquired and built out a much larger facility in Red Deer, Alberta, with the potential to significantly increase production as discussed further in The Financial Post’s coverage of interviews between Company management and First Bridge Finance Managing Partner Ronny Grunwald.
The basic investment case was straightforward. Tornado operated in a structurally growing industry (non-destructive excavation for underground infrastructure) with a strong engineering reputation, a larger and more efficient plant, and a balance sheet that could support growth. In our view, the public market was placing too little value on that capacity and on the incremental earnings power that could be realized as the facility ramped.
In July 2022, we followed up with “Tornado Global: Emerging Industry Leader Supplying New Product Line.” By then, Tornado had signed an important supply and development agreement with the Ditch Witch division of The Toro Company, listed on the OTCQX in the U.S., and was ramping production out of Red Deer. The Ditch Witch agreement called for a minimum of roughly US$44 million in hydrovac sales over four years, plus related IP payments, and helped underpin the view that Tornado was becoming a more significant player in its space.
At the time of those first two articles, Tornado remained a relatively thinly traded small-cap company with zero analyst coverage. The market capitalization and trading volume did not, in our view, fully reflect either the quality of the underlying business or its long-term earnings potential.
From Strategic Partner to Full Ownership
The Ditch Witch relationship was a key turning point. Under the agreement, Tornado co-designed and manufactured an exclusive line of Ditch Witch-branded hydrovac trucks, leveraging its experience and Red Deer capacity while giving Ditch Witch a high-quality product in a growing niche. The contract added visibility to future revenue and further validated Tornado’s engineering capabilities with a well-known industry partner.
Fast forward to October 6, 2025. Toro announced a definitive agreement to acquire Tornado Infrastructure Equipment Ltd. (the new corporate name adopted in December 2024 as the company broadened its product set) for C$1.92 per share in cash (~US$1.38). On a fully diluted basis, the transaction values Tornado at approximately C$279 million (~US$200 million) and implies about 1.9x trailing 12-month net sales of C$149 million (~US$109 million).
The strategic rationale for Toro is straightforward. By acquiring Tornado outright, Toro deepens its presence in vacuum excavation, adds proven hydrovac engineering and manufacturing capabilities, and gains a platform with established relationships across Canada and the United States. Tornado, in turn, benefits from Toro’s scale, balance sheet, and global distribution. For customers, the combined platform should support a broader product range and a more robust long-term supplier.
Financial Performance: 2022-2024 and YTD 2025
Tornado’s recent financial performance helps explain why a larger strategic acquirer was ultimately willing to pay close to C$2.00 per share for the company.
In 2022, Tornado generated approximately C$59.5 million (~US$46 million) in revenue and about C$4.5 million (~US$3.6 million) in EBITDA. This was a solid step up from the prior year and marked the beginning of a more visible ramp at the Red Deer facility.
By 2023, revenue had increased to roughly C$105.0 million (~US$78 million), a year-over-year increase of about 76% as EBITDA rose to around C$12.0 million (~US$9 million) and margins reached double digits, reflecting the benefits of greater volume, operating leverage, and improved purchasing.
In 2024, Tornado reported another record year. Revenue grew about 30% to approximately C$136.9 million (~US$100 million). Unit volume increased to 320 hydrovac trucks in 2024, up from 283 in 2023, as demand for safe, non-destructive excavation continued to grow and as the Ditch Witch agreement and Tornado’s relationship with Custom Truck One Source scaled.
The momentum continued into 2025. For the six months ended June 30, 2025, Tornado reported revenue of roughly C$80.6 million (~US$59 million), up from C$68.3 million (~US$50 million) in the same period of the prior year. Second-quarter revenue alone grew more than 30% year over year, with higher unit volumes and continued benefits from the Red Deer facility and purchasing efficiencies.
In May 2025, Tornado closed the acquisition of Custom Vacuum Services Ltd. (“CustomVac”) for approximately C$28 million (~US$20 million). CustomVac manufactures and services vacuum equipment, including units designed for the transportation of dangerous goods. Management framed the transaction as immediately accretive, with clear opportunities for cross-selling and supply-chain synergies. This deal further supported the idea that Tornado was evolving from a single-product hydrovac manufacturer into a broader infrastructure equipment platform.
Corporate Developments and Strategic Positioning
In December 2024, Tornado Global Hydrovacs changed its name to Tornado Infrastructure Equipment Ltd. The name change was consistent with the direction of the business. Over the prior few years, Tornado had:
- Expanded beyond traditional hydrovac products into complementary vacuum and industrial equipment, a trend accelerated by the CustomVac acquisition;
- Launched Tornado Equipment Finance to help support customers and drive incremental sales;
- Taken steps toward U.S. manufacturing, including supervision of its first Tornado-branded hydrovac assembled in Midland, Texas;
- Broadened its exposure across a range of infrastructure-related end markets, including energy, power transmission, water, environmental services, and telecommunications.
These developments lined up with the themes discussed in our earlier articles: that Tornado had the engineering and manufacturing capability to add products and services over time and that its addressable market was larger than what the legacy financials implied. The rebranding also made Tornado an even more natural strategic fit within Toro’s existing portfolio of construction and infrastructure equipment brands.
Transaction Terms and Valuation
Under the announced agreement, Toro will acquire all of the outstanding shares of Tornado Infrastructure Equipment for C$1.92 per share (~US$1.38) in cash. On a fully diluted basis, the equity value is approximately C$279 million (~US$200 million). Using management’s disclosure of trailing 12-month net sales of about C$149 million (~US$109 million) as of June 30, 2025, the transaction values Tornado at roughly 1.9x trailing sales.
A precise enterprise value multiple will depend on the final net debt figure, including the impact of the CustomVac acquisition. That said, the equity value alone at nearly two times sales and a mid-teens multiple of 2024 EBITDA represents a meaningful re-rating from where the company traded in 2021 and 2022, when it was sub-C$100 million market cap with limited analyst coverage and relatively modest trading liquidity.
Toro has characterized the deal as modestly accretive to earnings, with an estimated US$3 million of run-rate cost synergies over three years. These potential synergies likely come from combined purchasing, manufacturing efficiencies, and shared overhead. Toro is funding the acquisition with debt and expects to retain flexibility around its own capital allocation priorities, which suggests confidence in the cash-generation profile of the combined business.
Share Price Performance and Investor Outcome
From a shareholder standpoint, the progression has been significant. When First Bridge Finance first wrote about Tornado in October 2021, the shares had traded below C$0.45 for an extended period after the company went public. The initial thesis was that, as the Red Deer facility filled and as North American infrastructure spending continued, Tornado’s earnings and free cash flow could support a materially higher share price over time, with C$1.50 identified as a reasonable long-term target.
By July 2022, when the second article was published, the shares traded around C$0.55 on the TSX Venture Exchange, and Tornado had established a secondary quotation on the OTCQX in the U.S., which helped expand the investor base. Even then, the valuation was modest relative to the company’s growth prospects, at roughly 1.3x projected 2022 revenue and about 8.5x projected EBITDA.
The announced C$1.92 per share cash consideration from Toro now represents roughly a 3.5x multiple of the C$0.55 level at the time of the July 2022 update and more than 4x the sub-C$0.45 levels that characterized the stock around the time of the October 2021 initiating report. Investors who underwrote the original operational and strategic thesis and remained patient have realized strong absolute returns, crystallized through an all-cash sale to a high-quality strategic buyer.
Key Takeaways
Tornado’s path from a relatively small Canadian hydrovac manufacturer to a strategic acquisition by Toro highlights several points that are worth keeping in mind when looking at similar situations:
- Capacity and capability can be mispriced for extended periods. In 2021, Tornado already had the Red Deer facility, a growing parts and service business, and an experienced management team. The public market, however, did not initially place much value on what that platform could earn once it was fully utilized.
- Strategic partnerships can foreshadow future transactions. The Ditch Witch supply and development agreement materially de-risked Tornado’s growth outlook and validated its technology and manufacturing. It also established Toro as a natural potential acquirer that understood the asset well, which is ultimately what occurred.
- Conservative balance sheet management adds strategic value. Tornado expanded production, revenue, and earnings without taking on excessive leverage. That discipline protected shareholders on the downside and in turn made the business more attractive to a strategic buyer when the time came.
- Patience is often required in small-cap industrials. There were periods between 2021 and 2025 when Tornado’s share price did not move in line with the improving fundamentals. Investors who focused on the company’s progress rather than short-term price volatility have now been rewarded with a clean, all-cash exit at a materially higher valuation.
Closing Thoughts
When First Bridge Finance first looked at Tornado Global Hydrovacs in 2021, the company represented a specific type of opportunity: a well-positioned, under-followed industrial business, levered to long-term infrastructure trends, with clear avenues to grow earnings and cash flow as management executed on a credible plan.
Over the following four years, Tornado largely did what it set out to do. It ramped up production through the Red Deer facility, expanded its product and service offerings, entered into and grew strategic partnerships, and ultimately reached a scale and profitability profile that attracted a strategic buyer.
For investors following similar companies today, Tornado’s experience serves as a reminder that small-cap industrials with solid asset bases, aligned management teams, and exposure to durable end markets can, over time, move from being overlooked to being sought after and that the public market does not always recognize that shift immediately.
This article is part of a series by First Bridge Finance, led by Managing Partner Ronny Grunwald, covering Tornado Global Hydrovacs and its eventual acquisition by The Toro Company.
