Haywood raises price target on Tornado Infrastructure Equipment

Haywood Capital Markets analyst Gianluca Tucci raised his target price on Tornado Infrastructure Equipment (Tornado Infrastructure Equipment Stock Quote, Chart, News, Analysts, Financials TSXV:TGH) to $2.80 from $2.50 and maintained a “Buy” rating in a June 26 note, after the company announced a new supply agreement with Ascend Hydrovacs worth at least $88.2-million in gross revenue over four years starting in 2026, the largest contract in its history.

Tornado designs and builds hydrovac trucks at its 63,000-square-foot facility in Red Deer, Alberta. The trucks are sold to infrastructure, industrial construction, and oil and gas customers. The company also offers heavy-duty truck maintenance.

“TGH will be manufacturing a purpose-built, 13-yard tipping tank hydrovac unit exclusively for Ascend Hydrovacs, branded under the Ascend name,” Tucci said. “Production will be carried out at its Nisku, Alberta facility. We believe this particular contract carries a margin profile stronger than TGH’s existing business and model, 25% gross profit contribution along with 15-20% EBITDA contribution, scaling through the life of the agreement. We also believe truck deliveries will grow throughout the 4-year term.”

The supply agreement includes an IP fee of up to $1.8-million, expected to contribute directly to EBITDA on a per-unit basis. Tornado also said its Red Deer facility expansion is nearly complete, with added capacity available to support organic growth starting in Q3 2025.

“We continue to point to TGH as the fastest growing company in our universe of publicly traded vacuum truck/infrastructure peers,” Tucci said.

Tucci believes that Tornado will generate $33.7-million in Adjusted EBITDA on $226.8-million in revenue in fiscal 2026, up from his previous estimate of $31.2-million on $214.8-million in revenue. For fiscal 2027, he expects those numbers to improve to $39.2-million on $255.1-million in revenue, revised from earlier estimates of $35.5-million and $236.2-million.

Backed by rising infrastructure spending, TGH is well-positioned to benefit from steady growth in the hydrovac market, the analyst says.

“The hydrovac industry is becoming the standard for excavation across industry application, from urban to rural projects,” Tucci said. “As of 2023, the market for hydrovac trucks was estimated at US$2B and is expected to grow more than 8% through to 2030 according to Research and Markets, reaching US$3.5B.

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