Financial Performance - Consolidated net sales for Q1 fiscal 2025 were $995.0 million, a decrease of 0.7% from $1,001.9 million in Q1 fiscal 2024 [107]. - Net earnings for Q1 fiscal 2025 were $52.8 million, or $0.52 per diluted share, down from $64.9 million, or $0.62 per diluted share in Q1 fiscal 2024 [108]. - Adjusted net earnings for Q1 fiscal 2025 were $65.9 million, or $0.65 per diluted share, compared to $66.5 million, or $0.64 per diluted share in Q1 fiscal 2024 [120]. - Gross profit for Q1 fiscal 2025 was $335.6 million, down 2.6% from $344.5 million in Q1 fiscal 2024, with a gross margin of 33.7% compared to 34.4% [115]. - Professional segment net sales increased by 1.6% to $768.8 million, while Residential segment net sales decreased by 8.0% to $221.0 million [107]. - Professional segment earnings increased by 12.8% to $127.2 million, with an earnings margin of 16.5% compared to 14.9% in Q1 fiscal 2024 [123]. - Residential segment earnings decreased by 26.8% to $17.2 million, with an earnings margin of 7.8% compared to 9.8% in Q1 fiscal 2024 [125]. Cash Flow and Liquidity - Net cash used in operating activities was $48.6 million in Q1 fiscal 2025, a decrease from $92.2 million in Q1 fiscal 2024, mainly due to favorable fluctuations in working capital [129]. - Free cash flow for the three months ended January 31, 2025, was $(67.7) million, compared to $(111.3) million for the same period in 2024, indicating an improvement [147]. - Free cash flow conversion percentage was (128.2)% for the three months ended January 31, 2025, compared to (171.5)% for the same period in 2024 [147]. - As of January 31, 2025, available liquidity was $884.1 million, consisting of cash and cash equivalents of $171.3 million and $712.8 million under the revolving credit facility [132]. - Net cash provided by financing activities was $44.6 million in Q1 fiscal 2025, down from $114.1 million in Q1 fiscal 2024, attributed to higher common stock repurchases [131]. Cost Management and Savings Initiatives - The AMP initiative is expected to deliver annualized cost savings of over $100 million by fiscal 2027, with cumulative savings of $10.7 million achieved by Q1 fiscal 2025 [106]. - SG&A expense increased by $1.9 million, or 0.7%, as a percentage of net sales increased by 30 basis points compared to Q1 fiscal 2024 [116]. - The company employs productivity initiatives to mitigate the impact of commodity cost changes, including collaborating with suppliers and reviewing alternative sourcing options [156]. Inventory and Receivables - Accounts receivable increased by $5.2 million, or 1.1%, in Q1 fiscal 2025 compared to Q1 fiscal 2024, driven by increased international shipments [128]. - Inventory levels decreased by $34.0 million, or 2.9%, in Q1 fiscal 2025 compared to Q1 fiscal 2024, primarily due to lower lawn care product balances [128]. Debt and Interest Rate Exposure - The company has $524.2 million in gross fixed-rate long-term debt and $400.0 million in gross variable rate debt as of January 31, 2025 [153]. - The company has no earnings or cash flow exposure due to interest rate risks on its fixed-rate long-term debt obligations [153]. Foreign Currency and Commodity Risks - The company is exposed to foreign currency exchange rate risks primarily with the Euro, Australian dollar, Canadian dollar, British pound, and Mexican peso [150]. - The company has entered into various derivative instruments to hedge against foreign currency exchange rate risks, with gains and losses highly correlated to underlying exposures [151]. - The primary commodity cost exposures include steel, aluminum, petroleum, and natural gas-based resins, which are critical to the manufacturing process [155]. - As of January 31, 2025, the average contracted rate for foreign currency exchange contracts includes 0.6558 for AUD, 1.3583 for CAD, and 1.1006 for EUR [152]. Shareholder Returns - The Board approved a cash dividend of $0.38 per share for Q1 fiscal 2025, a 5.6% increase from $0.36 per share in Q1 fiscal 2024 [135]. - During Q1 fiscal 2025, the company repurchased 1,240,496 shares of common stock, with 6,931,461 shares remaining available for repurchase [136].

Q1 2025 EARNINGS RELEASE March 6, 2025 THE TORO COMPANY 2 Q1 2025 EARNINGS RELEASE THE TORO COMPANY Safe Harbor This presentation contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are based on management's current assumptions and expectations of future events and often can be identified by words such as "believe," "forward," "future," "goal," "guidance," "improve," "may," ...

Financial Performance - First-quarter net sales were $995 million, down 1% from $1,002 million in the same period of fiscal 2024[5] - Reported diluted EPS for the first quarter was $0.52, a decrease of 16% compared to $0.62 in the same period of fiscal 2024[5] - Adjusted diluted EPS for the first quarter was $0.65, up 2% from $0.64 in the same period of fiscal 2024[5] - Operating earnings decreased to $77.8 million, compared to $88.6 million in the previous year, reflecting a decline of 12.0%[28] - Net earnings for the three months ended January 31, 2025, were $52.8 million, down 18.6% from $64.9 million in the same period of 2024[28] - Adjusted net earnings for the three months ended January 31, 2025, were $65.9 million, slightly down from $66.5 million in the prior year, with adjusted net earnings per diluted share at $0.65, compared to $0.64[36] Segment Performance - Professional segment net sales increased by 1.6% to $768.8 million, driven by higher shipments of golf and grounds products[17] - Professional segment earnings rose to $127.2 million, with a margin of 16.5%, up from 14.9% in the prior-year period[17] - Residential segment net sales decreased by 8% to $221 million, primarily due to lower shipments of snow products and the prior year Pope Products divestiture[17] - The Professional segment net sales increased to $768.8 million, up 1.9% from $756.5 million in the prior year, while the Residential segment net sales decreased to $221.0 million, down 7.9%[30] Cash Flow and Shareholder Returns - The company returned $100 million to shareholders through share repurchases, reflecting improved cash flow[2] - The company reported a net cash used in operating activities of $48.6 million for the three months ended January 31, 2025, compared to $92.2 million in the same period of 2024[34] - Free cash flow for the three months ended January 31, 2025, was $(67.7) million, an improvement from $(111.3) million in the same period of 2024, resulting in a free cash flow conversion percentage of (128.2)% compared to (171.5)%[38] - Net cash used in operating activities for the three months ended January 31, 2025, was $(48.6) million, an improvement from $(92.2) million in the prior year[38] Guidance and Future Initiatives - The company maintains full-year fiscal 2025 net sales growth guidance of 0% to 1% and adjusted diluted EPS guidance of $4.25 to $4.40[7] - The AMP initiative has delivered $64 million in run-rate cost savings to date, with a target of $100 million by fiscal 2027[6] - The company anticipates continued demand trends and has provided fiscal 2025 financial guidance, although specific figures were not disclosed in the provided content[25] Cost and Margin Analysis - Gross margin for the first quarter was 33.7%, down from 34.4% in the same prior-year period due to higher material and manufacturing costs[12] - Gross profit for the same period was $335.6 million, resulting in a gross margin of 33.7%, down from 34.4% in the prior year[28] - Operating earnings for the three months ended January 31, 2025, were $77.8 million, down from $88.6 million in the prior year, with an operating earnings margin of 7.8% compared to 8.8%[36] - Adjusted operating earnings for the three months ended January 31, 2025, were $94.0 million, compared to $92.5 million in the same period of 2024, with an adjusted operating earnings margin of 9.4%[36] Taxation - The effective tax rate for the three months ended January 31, 2025, was 20.1%, an increase from 19.0% in the same period of 2024[36] - Income tax provision for the three months ended January 31, 2025, was $13.3 million, down from $15.2 million in the prior year[36] - The company recorded a tax impact of share-based compensation of $0.1 million for the three months ended January 31, 2025, compared to $1.5 million in the same period of 2024[36]

Financial Data and Key Metrics Changes - The company reported net sales of $4.58 billion for the full year, up about 1% from the previous year, marking the 15th consecutive year of top-line growth [10][28] - Adjusted diluted earnings per share (EPS) for the full year was $4.17, slightly down from $4.21, reflecting a product mix weighted towards the residential segment [29][38] - For Q4, net sales increased by 9.4% year-over-year to $1.08 billion, with adjusted EPS rising 34% to $0.95 [16][28] Business Line Data and Key Metrics Changes - Professional segment net sales for Q4 were $913.9 million, up 10.3% year-over-year, driven by higher shipments of golf and grounds products and underground construction equipment [29] - Residential segment net sales for Q4 were $155.1 million, up 4.5%, but reported a loss of $13.8 million compared to a profit of $4.5 million last year due to higher costs [34][35] - For the full year, professional segment net sales decreased 3.2% to $3.56 billion, while residential segment net sales increased 16.9% to $998.3 million [30][33] Market Data and Key Metrics Changes - The company ended the year with a backlog of approximately $1.2 billion, improved from about $2 billion a year ago, with expectations to normalize by the end of fiscal 2025 [54] - Field inventories for lawn care products remain higher than ideal, while underground construction equipment inventories are much lower than ideal [56] Company Strategy and Development Direction - The company is focused on three strategic priorities: accelerating profitable growth, driving productivity and operational excellence, and empowering people [19] - The introduction of the "AMP It Up" initiative aims to enhance productivity and profitability across the organization [65] - The company plans to continue investing in innovation, particularly in autonomous solutions and alternative power technologies [83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on future growth opportunities despite macroeconomic caution [67] - The outlook for fiscal 2025 includes total company net sales growth in the range of 0% to 1%, with expectations for improved profitability margins [61][62] - Management is closely monitoring macro factors, including the economy and consumer confidence, which could impact future performance [68] Other Important Information - The company returned nearly $400 million to shareholders, including share repurchases of about $250 million and an increase in the regular dividend payout [15] - Free cash flow for the full year was significantly higher at $471 million, reflecting a conversion ratio of 112% of reported net earnings [48] Q&A Session Summary Question: Residential profit contraction in the quarter - Management anticipated a tougher quarter for Residential due to less volume and a mix shift towards lower-margin products [90] Question: Professional segment revenue performance - Management noted caution from homeowners purchasing professional products, impacting revenue expectations for 2025 [93] Question: Details on the AMP It Up initiative - The initiative is an extension of the original AMP program, focusing on productivity and profitability across the employee base [102][103] Question: Autonomous products launch - The launch will include significant retail introductions across golf and commercial applications, with higher penetration expected in these areas [107] Question: Residential business growth and first quarter guidance - Management clarified that the strength in Q4 was not due to pull forward but rather a result of strong product performance [120] Question: 2025 guidance and margin performance - Management indicated that despite lower top-line growth, they expect to improve profitability through strategic positioning and cost management [124]

Financial Risks and Compliance - The company faces potential increases in funding costs and liquidity issues if credit ratings fall below investment grade or leverage ratios exceed 1.50[121]. - Future changes in accounting or tax standards could impact the preparation and reporting of the company's financial statements, potentially affecting financial condition and operating results[121]. - The company is subject to extensive laws and regulations that may increase compliance costs and affect product demand, including climate change legislation that could impose stricter emissions requirements[125]. - The company cannot predict the ultimate impact of future laws on its operations, which may lead to increased compliance burdens and costs[125]. - The company faces financial and operating restrictions due to credit arrangements, including covenants that require maintaining a maximum leverage ratio[118]. - A downgrade in credit ratings could increase the cost of funding and adversely affect access to capital markets[121]. - The company is exposed to risks associated with compliance with international anti-corruption laws, which could result in significant fines and penalties[128]. - The uncertainty in regulatory processes may lead to increased compliance burdens and costs, adversely affecting business operations[125]. Operational Efficiency and Cost Management - The company aims for annualized cost savings of over $100 million by fiscal 2027 through its "Amplifying Maximum Productivity" initiative, focusing on operational efficiency and sustainable supply chains[130]. - The company actively monitors commodity costs and supply chain health to mitigate risks associated with procurement disruptions[39]. - Increased costs of commodities and components have negatively impacted profit margins, highlighting the need for effective cost management strategies[79]. - The company employs Lean methods to continuously improve manufacturing processes, aiming to streamline operations and eliminate waste[36]. - The company is dependent on efficient operations of its facilities and those of suppliers, with potential disruptions from supply chain challenges and labor shortages[95]. Environmental and Sustainability Initiatives - The company is involved in environmental remediation efforts and may incur future costs related to compliance with environmental laws, which could adversely affect financial condition[128]. - The company has taken actions to enhance its ESG practices, including hiring a new executive officer for sustainability and releasing a sustainability report for fiscal 2022[112]. - The sustainability report outlines goals to increase battery and hybrid product sales and reduce GHG emissions over time[112]. - California's AB 1346 mandates that most new sales of small off-road engines must be zero-emission starting January 1, 2024, potentially impacting product demand[126]. - The company is involved in evaluating and cleaning up environmental liabilities, although these matters are not expected to materially affect financial results[75]. Market and Sales Dynamics - International net sales accounted for 20.1%, 20.8%, and 19.5% of total consolidated net sales for fiscal years 2024, 2023, and 2022 respectively[33]. - The company’s Residential segment products are more seasonal, with lawn and garden products shipped primarily between February and June[43]. - The Professional segment's net sales are influenced by factors such as reduced revenue for golf courses, decreased consumer spending on property maintenance, and reduced investment in golf course renovations[88]. - The Residential segment's net sales depend on product placement, consumer confidence, and buying patterns, with potential adverse effects from changes in shelf space at mass retailers[90]. - Weather conditions, exacerbated by climate change, have impacted demand for products, particularly in the Residential and Professional segments, affecting sales patterns[87]. Product Development and Innovation - The company focuses on innovation and quality, investing in new product development and improvements to existing products, utilizing "Voice of the Customer" tools[35]. - New products introduced in the current and previous two fiscal years have represented a significant portion of net sales, indicating the importance of product innovation for future revenue growth[85]. - Changes in product mix can negatively impact financial performance, as Professional segment products generally have higher profit margins than Residential segment products[91]. - The company has set goals to increase battery and hybrid product sales and reduce greenhouse gas emissions over time[130]. Human Resources and Employee Management - The company is dependent on attracting and retaining key executives and employees to achieve strategic objectives, with competition for talent being intense[131]. - Approximately 10.5% of the company's employees are represented by a union under collective bargaining agreements, with agreements expiring between October 2025 and October 2026[59]. - The average number of employees during fiscal 2024 was 11,464, with a total of 11,108 employees as of October 31, 2024[59]. - The company emphasizes employee safety through mandatory monthly training and safety management courses for supervisors[60]. - The company provides a variety of health and wellness programs, including 24/7 access to licensed physicians and on-site nurses[64]. - The company conducts regular compensation market benchmarking to ensure competitive pay and offers a range of benefits including stock-based compensation and flexible work schedules[66]. - The company is committed to upholding human rights and prohibits all forms of child and forced labor in its operations[70]. Financial Performance and Challenges - The Toro Company has faced adverse impacts on net sales and earnings due to economic conditions, including business closures and reduced consumer spending levels[79]. - Disruptions in the availability of commodities and components have adversely affected operations, with some items sourced from single suppliers limiting production capabilities[87]. - The company recorded non-cash impairment charges of $18.0 million related to the Spartan® trade name and $133.3 million related to Intimidator goodwill during Q3 fiscal 2023[110]. - The company may incur additional impairment charges in the future, which could adversely affect operating results[113]. - Foreign currency exchange rate fluctuations have adversely affected operating results and could continue to do so in the future[117]. - The company relies on floor plan financing arrangements for inventory financing, with changes in credit availability potentially affecting sales and operating results[101]. - Inventory management decisions of channel customers can negatively impact net sales and working capital, leading to potential manufacturing inefficiencies[99]. Strategic Partnerships and Acquisitions - The company announced a strategic partnership with Lowe's in September 2023 to drive growth through acquisitions and alliances[108]. - The company’s strategy includes pursuing acquisitions and partnerships, which carry inherent risks that could affect future performance[80]. - The company may face challenges in managing and integrating acquired businesses, which could impact financial performance and operational efficiency[110]. - Divestitures and restructuring activities carry risks that may negatively affect the company's operations and financial condition[111].

Financial Performance - Full-year net sales of $4.58 billion, up from $4.55 billion in fiscal 2023[1] - Fourth-quarter net sales of $1.08 billion, up from $0.98 billion in the same period of fiscal 2023[1] - Gross margin for the fourth quarter was 32.4%, compared with 33.5% for the same prior-year period[22] - Operating earnings as a percentage of net sales for the fourth quarter were 10.1%, compared with 9.6% in the same prior-year period[25] - Gross profit for the twelve months ended October 31, 2024, was $1,549.3 million, with a gross margin of 33.8%[40] - Net earnings for the twelve months ended October 31, 2024, were $418.9 million, with diluted net earnings per share of $4.01[40] - Gross profit for the three months ended October 31, 2024 was $349.0 million, compared to $329.6 million in the same period last year[52] - Adjusted gross margin for the twelve months ended October 31, 2024 was 33.9%, down from 34.7% in the prior year[52] - Operating earnings for the three months ended October 31, 2024 were $109.0 million, up from $94.5 million in the same period last year[52] - Adjusted operating earnings margin for the twelve months ended October 31, 2024 was 12.2%, compared to 12.9% in the prior year[52] - Net earnings for the twelve months ended October 31, 2024 were $418.9 million, up from $329.7 million in the prior year[52] - Adjusted diluted EPS for the twelve months ended October 31, 2024 was $4.17, compared to $4.21 in the prior year[52] Segment Performance - Professional segment net sales for the fourth quarter were $913.9 million, up 10.3% from $828.9 million in the same period last year[13] - Residential segment net sales for the fourth quarter were $155.1 million, up 4.5% from $148.4 million in the same period last year[17] - Professional segment net sales for the twelve months ended October 31, 2024, were $3,556.9 million, contributing significantly to total net sales[42] - Residential segment net sales for the twelve months ended October 31, 2024, were $998.3 million, showing growth compared to the previous year[42] - International net sales for the twelve months ended October 31, 2024, were $923.0 million[42] Cash Flow and Liquidity - Free cash flow increased to just over $470 million in fiscal 2024, with a conversion rate of 112.4%[5] - Cash and cash equivalents increased to $199.5 million in 2024 from $193.1 million in 2023[45] - Net cash provided by operating activities rose to $569.9 million in 2024 compared to $306.8 million in 2023[48] - Free cash flow for the twelve months ended October 31, 2024 was $470.7 million, up from $164.4 million in the prior year[60] - Free cash flow conversion percentage for the twelve months ended October 31, 2024 was 112.4%, compared to 49.9% in the prior year[60] - Net cash used in financing activities increased to $505.1 million in 2024 from $147.5 million in 2023[48] Debt and Equity - Long-term debt reduced to $911.8 million in 2024 from $1,031.5 million in 2023[45] - Stockholders' equity grew to $1,551.9 million in 2024 from $1,510.9 million in 2023[45] Expenses and Investments - Interest expense was down $0.4 million for the fourth quarter to $14.5 million[26] - Purchases of property, plant, and equipment decreased to $103.5 million in 2024 from $149.5 million in 2023[48] - Dividends paid on TTC common stock increased to $149.5 million in 2024 from $141.9 million in 2023[48] - Depreciation of property, plant, and equipment rose to $93.7 million in 2024 from $83.5 million in 2023[48] Tax and Earnings Guidance - Reported effective tax rate for fiscal 2024 was 18.3%, compared with 17.7% in fiscal 2023[28] - Full-year fiscal 2025 guidance of adjusted diluted EPS in the range of $4.25 to $4.40[1] - The company provided adjusted diluted EPS guidance for fiscal 2025, excluding certain unpredictable items[37] Strategic Initiatives and Forward-Looking Statements - The company's forward-looking statements include expectations regarding demand trends, supply chain stabilization, and the success of new products[38] - The company's fiscal 2025 financial guidance anticipates incremental growth from strategic partnerships and new product success[38] - The company uses non-GAAP financial measures to assess liquidity and operational performance, including free cash flow and free cash flow conversion percentage[34] - The company completed the acquisition of Intimidator Group on January 13, 2022, with acquisition-related costs of $0.2 million for the fiscal year ended October 31, 2023[54] - The company launched a significant productivity initiative named AMP in the first quarter of fiscal 2024, with charges of $5.7 million for the twelve months ended October 31, 2024[56] Inventory and Global Presence - Inventories decreased to $1,038.9 million in 2024 from $1,087.8 million in 2023[45] - The Toro Company reported net sales of $4.6 billion in fiscal 2024, with a global presence in over 125 countries[32]

Core Insights - The Toro Company has a strong market position with significant total returns of 4,930% since 2000, outperforming the S&P 500's 560% [1] - Recent sales have declined by 1% and net income by 10% over the last two years, leading to a 30% drop in stock price, resulting in a favorable valuation and a 10-year high dividend yield of 1.7% [2][12] - The company is well-positioned for future growth due to its essential products and diverse market segments [4] Market Segments - **Landscape and Grounds (37% of sales)**: This segment is currently under pressure due to economic conditions, but is nearing a rebound with inventory levels returning to normal [6] - **Underground and Specialty Construction (23% of sales)**: This segment is experiencing growth driven by megatrends such as broadband expansion and infrastructure upgrades, with a book-to-bill ratio over 1 indicating strong demand [8][9] - **Golf (17% of sales)**: Toro holds a 50% market share in this segment, providing steady revenue through leasing agreements and serving prestigious golf courses [10] - **Residential (19% of sales)**: Growth in this segment is accelerating due to a partnership with Lowe's, although it remains sensitive to economic conditions [11] Financial Performance - Toro has maintained strong profitability with net profit and free cash flow margins averaging 9% over the last decade, allowing for funding of acquisitions and dividends [12] - The current dividend yield of 1.7% is sustainable with a payout ratio of only 37%, and has grown at a 16% annual rate since 2014 [14] - The price-to-sales (P/S) ratio of 1.9 is approximately 20% below its 10-year average, indicating a favorable valuation [14] Future Outlook - Management aims to achieve $100 million in annual cost savings by 2027, positioning the company as a strong rebound candidate for investors [15]

Financial Data and Key Metrics Changes - The company reported a nearly 7% increase in net sales to $1.16 billion for Q3 2024, compared to the previous year [6][12] - Adjusted diluted earnings per share rose by 24% to $1.18, up from $0.95 last year [9][12] - Free cash flow improved significantly, totaling $270.5 million year-to-date, an increase of over $200 million compared to last year [18][19] Business Line Data and Key Metrics Changes - The Residential segment saw a 53% increase in net sales to $267.5 million, driven by higher shipments to the mass channel [6][14] - The Professional segment's net sales were $880.9 million, down 1.7% year-over-year, primarily due to lower shipments of snow and ice management products [12][13] - Residential segment earnings increased to $32.6 million, up from $3.8 million last year, reflecting improved productivity and net price realization [14] Market Data and Key Metrics Changes - The company noted elevated order backlogs in both the underground construction and golf and grounds businesses, despite a decrease in backlog compared to the previous year [22][38] - The overall order backlog improved from $1.97 billion at the end of fiscal 2023, although it remains higher than normal [22] Company Strategy and Development Direction - The company is focused on driving productivity and operational excellence through its AMP initiative, aiming for at least $100 million in annualized savings by fiscal 2027 [10][58] - Strategic adjustments included the sale of its Australia-based pulp products business and rebranding efforts to leverage the Spartan brand [11] - The company plans to invest $115 million in capital expenditures during fiscal 2024 to support new product investments and advanced manufacturing technologies [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for future growth, citing strong demand in the underground construction and golf markets, while acknowledging macroeconomic uncertainties [26][45] - The company expects to continue normalizing field inventories and anticipates a return to more typical demand patterns in the coming fiscal year [22][30] Other Important Information - The effective tax rate for Q3 was reported at 17.3%, a significant decrease from 47.6% a year ago, primarily due to a favorable geographic mix of earnings [16] - The company has maintained a strong balance sheet with a leverage ratio within its target of 1x to 2x on a gross basis [19] Q&A Session Summary Question: Context on backlog and order intake - Management indicated that while backlog has decreased year-over-year and sequentially, strong order intake continues to keep backlog elevated, particularly in golf and underground construction [38][39] Question: Inventory management and macro caution - Management confirmed they are 80% of the way to normalizing dealer field inventory levels, with caution observed primarily from homeowners on larger ticket items [41][43] Question: Future sales growth expectations - Management expressed cautious optimism for next year's sales growth, driven by strong demand in golf and underground markets, while acknowledging macroeconomic uncertainties [45] Question: Change in tax rate implications - The change in tax rate was attributed to a favorable geographic mix of earnings and a transfer pricing study, not a significant change in international business performance [47][48] Question: Opportunities in golf projects - Management confirmed that the 500 significant golf projects worldwide involve both equipment and irrigation upgrades, indicating strong growth potential [50][51] Question: M&A market outlook - Management remains open to M&A opportunities, particularly in technology, while maintaining a disciplined approach to capital allocation [52][53] Question: Impact of July's slowdown on August performance - Management noted that August showed a bit more normalization, but caution from homeowners persisted, influencing guidance for the rest of the year [55][56]

Financial Performance - Consolidated net sales for Q3 fiscal 2024 were $1,156.9 million, a 6.9% increase from $1,081.8 million in Q3 fiscal 2023[106]. - Professional segment net sales for Q3 fiscal 2024 were $880.9 million, a decrease of 1.7% compared to $896.3 million in Q3 fiscal 2023[106]. - Residential segment net sales for Q3 fiscal 2024 were $267.5 million, an increase of 52.6% compared to $175.3 million in Q3 fiscal 2023[106]. - Net earnings for Q3 fiscal 2024 were $119.3 million, or $1.14 per diluted share, compared to a net loss of $15.0 million, or $0.14 per diluted share, in Q3 fiscal 2023[106]. - Adjusted net earnings for Q3 fiscal 2024 were $123.7 million, or $1.18 per diluted share, compared to $99.4 million, or $0.95 per diluted share, in Q3 fiscal 2023[106]. - Gross profit for Q3 fiscal 2024 was $402.8 million, an 8.2% increase from $372.4 million in Q3 fiscal 2023, with a gross margin of 34.8%[109]. - SG&A expense increased by $14.5 million, or 6.0%, for Q3 fiscal 2024 compared to Q3 fiscal 2023[110]. - International net sales decreased by $16.8 million in Q3 fiscal 2024, primarily due to lower shipments of both Residential and Professional segment products[108]. Shareholder Returns - The company returned $221.8 million to shareholders through dividends and share repurchases in the first nine months of fiscal 2024[106]. - A cash dividend of $0.36 per share was approved for Q3 fiscal 2024, representing a 5.9% increase from $0.34 per share in Q3 fiscal 2023[135]. - During the first nine months of fiscal 2024, the company repurchased 1,178,074 shares, with 5,771,417 shares remaining available for repurchase[136]. - The company expects to continue paying quarterly cash dividends and repurchasing shares throughout the remainder of fiscal 2024[135][136]. Debt and Liquidity - As of August 2, 2024, available liquidity was $818.4 million, consisting of cash and cash equivalents of $221.1 million and availability under the revolving credit facility of $597.3 million[132]. - As of August 2, 2024, total long-term debt is $991.9 million, a decrease from $1,061.3 million on August 4, 2023[133]. - The company has a $600 million revolving credit facility with $597.3 million of unutilized availability as of August 2, 2024[133]. - The company is in compliance with all debt covenants and requirements of its credit agreements as of August 2, 2024[133]. Operational Efficiency - The company announced the AMP initiative, aiming for annualized cost savings of at least $100 million by fiscal 2027[104]. - The company launched a significant productivity initiative named AMP in the first quarter of fiscal 2024, which is expected to enhance operational efficiency[143]. - Non-GAAP financial measures are used to assess liquidity and operational performance, providing supplemental information to U.S. GAAP measures[138]. Tax and Earnings - The effective tax rate for Q3 fiscal 2024 was 17.3%, a significant decrease from 47.6% in Q3 fiscal 2023, primarily due to prior year tax impacts and a favorable geographic mix of earnings[115]. - Adjusted net earnings for Q3 fiscal 2024 increased by 24.2% per diluted share to $123.7 million, or $1.18 per diluted share, compared to $99.4 million, or $0.95 per diluted share, in Q3 fiscal 2023[116]. Market Risks - The company is exposed to market risks from foreign currency exchange rates, interest rates, and commodity costs, which could affect earnings and cash flows[147]. - The company is exposed to commodity cost changes, particularly in steel, aluminum, petroleum, and natural gas-based resins, which are critical for manufacturing[152]. - The company may increase product prices to offset changes in the cost of commodities, components, parts, and accessories[154]. - The company faces potential declines in gross margins if commodity and component costs increase without effective pricing strategies[154]. Receivables and Cash Flow - Accounts receivable increased by $141.6 million, or 36.2%, as of the end of Q3 fiscal 2024 compared to Q3 fiscal 2023[127]. - Net cash provided by operating activities for the first nine months of fiscal 2024 was $329.8 million, up from $154.7 million in the same period of fiscal 2023[129]. - The net amount of receivables financed for dealers under the arrangement with Red Iron decreased from $2,160.8 million in August 2023 to $1,882.3 million in August 2024[137]. - The total amount of net receivables outstanding under the arrangement with HCFC and other institutions increased from $187.2 million in August 2023 to $228.5 million in August 2024[137]. - The company is contingently liable to repurchase up to $30.2 million of inventory related to receivables under inventory repurchase agreements as of August 2, 2024[137]. Interest Rate and Currency Management - The company has a gross fixed-rate long-term debt of $524.2 million and gross variable rate debt of $470.0 million as of August 2, 2024[151]. - The company does not use interest rate swaps to mitigate interest rate fluctuations, indicating a conservative approach to interest rate risk[151]. - The average contracted rate for foreign currency exchange contracts as of August 2, 2024, indicates ongoing management of currency risk through derivative instruments[149]. - The average contracted rate for buying U.S. dollars and selling Australian dollars is 0.6632, with a notional amount of $92.4 million[150]. - The average contracted rate for buying U.S. dollars and selling Euros is 1.1074, with a notional amount of $177.1 million[150].

Financial Performance - Third-quarter net sales reached $1.16 billion, a 6.9% increase from $1.08 billion in the same period of fiscal 2023[1]. - Reported diluted EPS for the third quarter was $1.14, up from $(0.14) in the same period last year, while adjusted diluted EPS was $1.18, a 24.2% increase from $0.95[1][5]. - The professional segment net sales were $880.9 million, down 1.7% from $896.3 million, primarily due to lower shipments of snow and ice management products[6]. - The residential segment net sales increased by 52.6% to $267.5 million, driven by higher shipments to the mass channel[7]. - Gross margin for the third quarter was 34.8%, up from 34.4% in the same prior-year period, attributed to productivity improvements and net price realization[8]. - Operating earnings for the three months ended August 2, 2024, were $148.1 million, a recovery from an operating loss of $19.1 million in the same period last year[17]. - Net earnings for the nine months ended August 2, 2024, were $329.0 million, compared to $259.4 million for the same period last year, representing an increase of 27.0%[17]. - Adjusted net earnings for the nine months ended August 2, 2024, were $337.5 million, down from $369.4 million for the same period in 2023[21]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended August 2, 2024, was $329.8 million, significantly higher than $154.7 million for the same period in 2023[20]. - Net cash used in investing activities decreased to $43.4 million for the nine months ended August 2, 2024, from $119.2 million in the same period of 2023[20]. - Net cash used in financing activities increased to $260.5 million for the nine months ended August 2, 2024, compared to $82.4 million for the same period in 2023[20]. - Free cash flow for the nine months ended August 2, 2024, was $270.5 million, significantly up from $56.1 million for the same period in 2023[25]. - The company reported a free cash flow conversion percentage of 82.2% for the nine months ended August 2, 2024, a substantial increase from 21.6% in the prior year[25]. - Purchases of property, plant, and equipment were $59.3 million in August 2024, down from $98.6 million in August 2023[25]. Future Outlook - The company expects total net sales growth of about 1% for fiscal 2024, with adjusted diluted EPS guidance revised to a range of $4.15 to $4.20[4]. - The company remains optimistic about fiscal 2025 and beyond, focusing on agility, productivity, and leveraging its innovative product portfolio[4]. - The company anticipates at least $100 million in annualized run rate savings by fiscal 2027 from its multi-year productivity initiative named AMP[3]. - The company anticipates continued demand trends and has provided fiscal 2024 financial guidance, although specific figures were not disclosed in the provided content[16]. Tax and Inventory Management - The effective tax rate for the third quarter was reported at 17.3%, a decrease from 47.6% in the same prior-year period[9]. - The effective tax rate for the nine months ended August 2, 2024, was 17.3%, compared to 47.6% for the same period in 2023[21]. - Significant progress was made in reducing dealer field inventories of lawn care products, with expectations to exit the fiscal year in a better position than last year[3]. Segment Performance - Net sales for the three months ended August 2, 2024, were $1,156.9 million, an increase from $1,081.8 million for the same period last year, representing a growth of 6.9%[17]. - Gross profit for the nine months ended August 2, 2024, was $1,200.3 million, compared to $1,248.0 million for the same period last year, indicating a decrease of 3.8%[17]. - The gross margin for the three months ended August 2, 2024, improved to 34.8% from 34.4% in the same period last year[17]. - The Professional segment net sales for the three months ended August 2, 2024, were $880.9 million, a decrease of 1.6% from $896.3 million in the prior year[18]. - The Residential segment net sales increased significantly to $267.5 million for the three months ended August 2, 2024, compared to $175.3 million for the same period last year, reflecting a growth of 52.6%[18]. Impairment and Charges - Non-cash impairment charges recorded in the third quarter of fiscal 2023 amounted to $151.3 million, impacting the operating segment related to the Intimidator Group[22]. - The company launched the "Amplifying Maximum Productivity" (AMP) initiative in the first quarter of fiscal 2024, which includes significant third-party consulting costs and other related expenses[22].