Financial Data and Key Metrics Changes - Adjusted earnings per share (EPS) for the second quarter increased to $1.42, exceeding expectations, while reported EPS was $1.37 compared to $1.38 in the same quarter last year [5][14] - Revenue for the quarter declined 2.3% year over year to $1.3 billion, attributed to weak consumer confidence and unfavorable weather conditions [6][14] - Free cash flow for the second quarter was $84.7 million, a slight decrease year over year, with $100 million allocated for share repurchases [21] Business Line Data and Key Metrics Changes - Professional segment net sales were just over $1 billion, up about 1% year over year, driven by higher shipments of golf and grounds products [15] - Residential segment net sales decreased by 11% year over year to $297 million, primarily due to lower shipments of walk power mowers and zero-turn mowers [17] - Professional segment earnings margin improved to 19.9%, up from 19%, while residential segment earnings margin fell to 5.4% from 10.8% [16][18] Market Data and Key Metrics Changes - The golf and grounds market continues to show strong demand, while underground construction is benefiting from infrastructure projects [10][22] - The residential segment is facing challenges due to high interest rates and cautious consumer behavior, impacting sales [22][23] Company Strategy and Development Direction - The company is focused on operational excellence, product innovation, and mitigating tariff impacts through strategic actions [5][9] - Plans to continue implementing price increases while ensuring competitiveness and protecting profit margins [9][24] - The company aims to leverage its U.S.-based manufacturing capabilities to maintain a competitive edge in the current macroeconomic environment [22][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of macroeconomic factors on consumer confidence and spending, particularly in the residential segment [22][24] - The outlook for the Professional segment remains positive, with expected growth in golf and grounds and underground construction [22][23] - Adjusted guidance for fiscal 2025 reflects anticipated revenue declines in the residential segment due to ongoing economic headwinds [24][26] Other Important Information - The company has reduced its global salaried workforce by an additional 10% and rationalized its operational footprint in the residential segment [8] - The AMP program has generated $70 million in run rate savings and is on track to deliver $100 million by 2027 [7] Q&A Session Summary Question: What is the current status of inventory in the landscape business? - Management indicated that inventory levels have largely returned to desired levels, although a slower start to spring has resulted in slightly higher inventory in some areas [31][32] Question: What factors contributed to the revised guidance for the residential business? - The primary drivers for the guidance revision are macroeconomic conditions affecting consumer confidence and the delayed start of spring [35][36] Question: Can you explain the decline in the underground business despite good demand metrics? - The decline was attributed to the sale of two dealers and SKU rationalization, with management remaining optimistic about long-term demand [39][40] Question: How are tariffs impacting the company's cost structure? - Tariffs are estimated to be approximately 3% of annual cost of goods sold, with management confident in mitigating these costs through various strategies [48][49] Question: What is the company's approach to promotions in the current environment? - Promotions have been slightly lower in the residential segment compared to last year, but the company continues to use them to drive sales [82] Question: How does the company view its competitive position in light of tariffs? - Management believes the company is in a solid competitive position due to its U.S. manufacturing base and strategies implemented since 2018 [126]

Financial Data and Key Metrics Changes - Adjusted earnings per share (EPS) for Q2 2025 increased to $1.42, exceeding expectations, compared to $1.40 in the same period last year [6][13] - Revenue for the quarter declined 2.3% year over year to $1.3 billion, impacted by weak consumer confidence and unfavorable weather conditions [6][13] - Reported EPS was $1.37, down from $1.38 in Q2 last year [13][18] - Free cash flow for the quarter was $84.7 million, a slight decrease year over year [19] Business Line Data and Key Metrics Changes - Professional segment net sales were just over $1 billion, up about 1% year over year, driven by higher shipments of golf and grounds products [14] - Residential segment net sales decreased by 11% year over year to $297 million, primarily due to lower shipments of walk power mowers and zero-turn mowers [15] - Professional segment earnings increased by 6% year over year to $200 million, with a margin of 19.9% [14] - Residential segment earnings fell to $16 million, with a margin of 5.4%, down from 10.8% last year [15] Market Data and Key Metrics Changes - The golf market continues to show strong participation levels, driving equipment investment [9] - Demand for underground construction is supported by ongoing infrastructure projects [9] - The residential segment is facing challenges due to high interest rates and low consumer confidence, impacting sales [20] Company Strategy and Development Direction - The company is focused on operational excellence and mitigating tariff impacts through strategic actions, including workforce adjustments and manufacturing footprint rationalization [5][7] - Continued investment in product innovation and technology is a priority, with new product launches aimed at enhancing customer productivity [10][11] - The company aims to maintain competitive pricing while protecting profit margins and investing in future growth [8][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic macroeconomic environment and its impact on consumer confidence, particularly in the residential segment [20][21] - The outlook for the Professional segment remains positive, with expected growth in golf and underground construction [21] - Adjusted guidance for fiscal 2025 reflects anticipated revenue declines of flat to down 3% year over year, primarily due to residential segment challenges [22][23] Other Important Information - The company has implemented an AMP program that has generated $70 million in run rate savings, with a target of $100 million by 2027 [6][19] - The company has returned $200 million to shareholders through share repurchases year to date, reflecting confidence in cash generation [19][25] Q&A Session Summary Question: Inventory levels in the landscape business - Management indicated that inventory levels have largely returned to desired levels, although a slower start to spring has resulted in slightly higher inventory [29][30] Question: Guidance revision for the residential business - The primary drivers for guidance revision are macroeconomic factors affecting consumer confidence and the delayed start of spring [32][34] Question: Demand metrics in the underground business - Management noted that the underground business is experiencing strong demand, despite a year-over-year decline due to dealer sales and SKU rationalization [36][38] Question: Tariff impacts and mitigation strategies - The company expects to mitigate tariff impacts through pricing actions and productivity initiatives, with a focus on maintaining margins [44][49] Question: Capital allocation and share repurchases - The company remains committed to disciplined capital allocation, prioritizing investments in R&D and returning capital to shareholders through share repurchases [78][79]

Company Performance - Toro reported quarterly earnings of $1.42 per share, exceeding the Zacks Consensus Estimate of $1.38 per share, and showing a slight increase from $1.40 per share a year ago, representing an earnings surprise of 2.90% [1] - The company posted revenues of $1.32 billion for the quarter ended April 2025, which was below the Zacks Consensus Estimate by 1.94%, and a decrease from $1.35 billion in the same quarter last year [2] - Over the last four quarters, Toro has surpassed consensus EPS estimates two times but has not beaten revenue estimates during this period [2] Stock Outlook - Toro shares have declined approximately 5.6% since the beginning of the year, contrasting with the S&P 500's gain of 1.5% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the upcoming quarter at $1.23 on revenues of $1.15 billion, and for the current fiscal year at $4.30 on revenues of $4.62 billion [7] - The Zacks Rank for Toro is currently 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Tools - Handheld industry, to which Toro belongs, is currently ranked in the bottom 10% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Toro's stock performance [5]

Q2 2025 EARNINGS RELEASE June 5, 2025 THE TORO COMPANY Cautionary Note 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," "expect," "intend," "forward," "future," "goal," "guidance," "improve," "may," "outlook," "should," ...

Financial Performance - Second-quarter net sales were $1.32 billion, a decrease of 2% compared to $1.35 billion in the same period of fiscal 2024[3]. - Reported diluted EPS for the second quarter was $1.37, down from $1.38 in the same period of fiscal 2024, while adjusted diluted EPS increased to $1.42 from $1.40[3]. - Professional segment net sales increased by 0.8% to $1,014.1 million, driven by higher shipments of golf and grounds products[14]. - Residential segment net sales decreased by 11.4% to $297.4 million, primarily due to lower shipments of walk power mowers and zero-turn mowers[14]. - Net sales for the three months ended May 2, 2025, were $1,317.9 million, a decrease of 2.6% compared to $1,349.0 million for the same period in 2024[25]. - Operating earnings for the three months ended May 2, 2025, were $174.8 million, a decline of 6.0% from $187.6 million in the same period last year[25]. - Net earnings for the six months ended May 2, 2025, were $189.6 million, compared to $209.7 million for the same period in 2024, reflecting a decrease of 9.6%[25]. - Adjusted net earnings for the six months ended May 2, 2025, were $207.7 million, down from $213.8 million for the same period in 2024, with adjusted net earnings per diluted share at $2.06 compared to $2.04[33]. - Net earnings for the three months ended May 2, 2025, were $136.8 million, down from $144.8 million for the same period in 2024, with net earnings per diluted share at $1.37 compared to $1.38[33]. Guidance and Expectations - The company expects total net sales for fiscal 2025 to be flat to down 3%, with adjusted diluted EPS guidance in the range of $4.15 to $4.30[4]. - The company is taking strategic steps to navigate near-term headwinds while maintaining confidence in managing controllable factors and mitigating macroeconomic risks[4]. Margins and Costs - Gross margin for the second quarter was 33.1%, down from 33.6% in the same prior-year period, attributed to higher material and manufacturing costs[9]. - Operating earnings as a percentage of net sales were 13.3%, compared to 13.9% in the same prior-year period[10]. - Gross profit for the six months ended May 2, 2025, was $772.3 million, down from $797.5 million in the prior year, resulting in a gross margin of 33.4% compared to 33.9%[25]. - Gross profit for the three months ended May 2, 2025, was $436.7 million, a decrease from $453.0 million for the same period in 2024, resulting in a gross margin of 33.1% compared to 33.6%[33]. - The company reported a gross margin of 33.4% for the six months ended May 2, 2025, compared to 33.9% for the same period in 2024[33]. Debt and Cash Flow - Interest expense decreased to $15.8 million, down $0.9 million from the same prior-year period due to lower average interest rates[11]. - Cash and cash equivalents decreased to $176.5 million as of May 2, 2025, down from $188.8 million a year earlier[31]. - The company reported a net cash provided by operating activities of $123.1 million for the six months ended May 2, 2025, compared to $135.1 million in the prior year[31]. - Long-term debt, less current portion, increased to $1,077.1 million as of May 2, 2025, compared to $1,003.3 million a year earlier[29]. - Free cash flow for the six months ended May 2, 2025, was $84.7 million, a decrease from $95.6 million for the same period in 2024, resulting in a free cash flow conversion percentage of 44.7% compared to 45.6%[35]. Strategic Initiatives - The company plans to continue focusing on market expansion and new product development to drive future growth[27]. - The company launched the "Amplifying Maximum Productivity" (AMP) initiative in the first quarter of fiscal 2024, which includes expenses not representative of ongoing business operations[36]. - The productivity initiative charges primarily represent severance and termination benefits, facility exit costs, and third-party consulting costs[36]. Taxation - The effective tax rate for the second quarter was 18.9%, compared to 19.2% in the same prior-year period, reflecting a more favorable geographic mix of earnings[12]. - Income tax provision for the three months ended May 2, 2025, was $31.9 million, compared to $34.4 million for the same period in 2024, with an effective tax rate of 18.9%[33].

Group 1 - The Toro Company (NYSE: TTC) was reaffirmed as a 'hold' candidate in December 2023, indicating a stable outlook for the company [1] - The company focuses on the production and cash flow generation in the oil and natural gas sector, highlighting its value and growth prospects [1] Group 2 - Crude Value Insights provides an investing service and community centered on oil and natural gas, emphasizing cash flow analysis [2] - Subscribers have access to a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2]

Company Overview - Toro (TTC) is a Consumer Discretionary stock headquartered in Bloomington, with a year-to-date price change of -5.37% [3] - The company currently pays a dividend of $0.38 per share, resulting in a dividend yield of 2.01%, which is slightly below the Tools - Handheld industry's yield of 2.11% and the S&P 500's yield of 1.53% [3] Dividend Performance - Toro's annualized dividend of $1.52 has increased by 5.6% from the previous year [4] - Over the last five years, Toro has raised its dividend five times, achieving an average annual increase of 10.22% [4] - The company's current payout ratio is 36%, indicating that it distributes 36% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - Toro is expected to see earnings growth in the current fiscal year, with the Zacks Consensus Estimate for 2025 at $4.31 per share, reflecting a year-over-year growth rate of 3.36% [5] Investment Considerations - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [6] - While high-yielding stocks may face challenges during periods of rising interest rates, Toro is positioned as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 2 (Buy) [7]

Core Viewpoint - Wall Street's initial reaction to the new tariff policies is negative, particularly affecting heavy equipment manufacturers like Caterpillar, Toro, and Deere, which saw significant declines in their stock prices [1][2]. Group 1: Market Reaction - Shares of Caterpillar (CAT) fell by 8.11%, Toro (TTC) by 7.31%, and Deere (DE) by 4.16% as of 1 p.m. ET following the announcement of new tariffs [1]. - The aggressive round of tariffs has caught the markets off guard, leading investors to assess the potential impacts on their investments and the possibility of retaliatory measures from trade partners [2]. Group 2: Impact on Costs and Demand - New levies on raw materials like steel could increase costs for companies specializing in construction and agriculture equipment, potentially forcing them to raise prices or reduce profitability [2]. - Demand for heavy equipment may be affected both domestically and internationally, particularly for Caterpillar, which relies heavily on sales from China, a country likely to retaliate against tariffs [3]. - The agricultural sector, a core customer base for Deere, may see reduced profitability due to tariffs affecting about 20% of U.S. agricultural production that is exported [4]. Group 3: Long-term Considerations - There is a potential argument that tariffs could boost sales for U.S. manufacturers by reducing competition from foreign rivals, leading to increased demand for heavy-duty equipment if U.S. manufacturing is stimulated [5]. - Historical performance suggests that these companies are best-in-class operators that may eventually adapt to the new environment, although the uncertainty surrounding the duration and impact of the tariffs warrants caution [6].

Financial Data and Key Metrics Changes - The Toro Company reported total net sales of nearly $1 billion for Q1 2025, with a slight decrease from the previous year due to lower shipments in the residential segment [8][26] - Adjusted diluted earnings per share (EPS) increased to $0.65, up from $0.64 in the previous year, while reported EPS was $0.52 compared to $0.62 last year [10][26] - The company maintained its full-year fiscal 2025 net sales and adjusted diluted EPS guidance despite uncertainties in the tariff environment [11][49] Business Segment Data and Key Metrics Changes - Professional segment net sales were $768.8 million, up 1.6% year-over-year, driven by higher shipments of golf and grounds products and increased demand for zero-turn mowers [28] - Residential segment net sales decreased to $221 million from $240 million, primarily due to lower shipments of snow products and the divestiture of Pope Products [30] - Professional segment earnings improved to $127.2 million, representing a 13% increase from the previous year, while residential segment earnings fell to $17.2 million [29][31] Market Data and Key Metrics Changes - Demand for golf products remains strong, with order backlogs elevated and robust channel demand for new contractor-grade zero-turn mowers [9][43] - The underground construction market is identified as a key growth opportunity, supported by the acquisition of ProKASRO Services USA [19][21] - Field inventories of lawn care products are in a better position compared to the previous year, while snow product inventories remain elevated but are trending in the right direction [44][46] Company Strategy and Development Direction - The company is focused on innovation to address customer needs and align with market growth trends, launching cutting-edge products equipped with the latest technologies [12][13] - The AMP initiative aims to drive productivity and profitability, with nearly $50 million in run rate savings implemented in Q1 [22][24] - The Toro Company plans to reinvest up to half of the savings from the AMP initiative to accelerate innovation and long-term growth [24][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver positive financial results despite uncertainties in the macro environment, including economic and geopolitical factors [56][58] - The underground construction and golf markets are highlighted as having strong near- and long-term prospects, supported by increasing demand for infrastructure investments [59][61] - The company is prepared to adjust operations and pricing in response to evolving tariff situations while maintaining its market leadership [47][96] Other Important Information - The company repurchased $100 million in shares during the quarter, reflecting confidence in future financial performance [25][42] - The effective tax rate for Q1 was reported at 20.1%, slightly higher than the previous year's 19% [36] Q&A Session Summary Question: Clarification on AMP savings and impact on Q1 - Management confirmed $7 million in gross realized savings in Q1, with a total run rate savings of $64 million to date, emphasizing that not all savings drop to the bottom line [72][73] Question: Pro snow inventory and contractor sentiment - Management noted that while snow product sales were down due to below-average snowfall, contractor budgets are in good shape heading into spring [81][85] Question: Price-cost expectations for the year - Management indicated that while costs increased due to higher manufacturing and freight costs, they expect to return to a normal price increase of 1% to 2% for the full year [87][89] Question: Tariff exposure and production locations - The majority of products are made in the U.S., with minimal exposure to China and Mexico, and management is actively working to mitigate tariff impacts [92][95] Question: Impact of Pope Products divestiture - The Pope Products business contributed approximately $7.5 million in net sales in Q1 last year, affecting year-over-year comparisons [119]

Financial Data and Key Metrics Changes - The company reported total net sales of nearly $1 billion for the first quarter, with a slight decrease from the previous year due to the divestiture of Pope Products [8][26] - Adjusted diluted earnings per share (EPS) increased to $0.65, up from $0.64 year-over-year, while reported EPS decreased to $0.52 from $0.62 [10][26] - The professional segment net sales were $768.8 million, up 1.6% year-over-year, while the residential segment net sales were $221 million, down from $240 million [28][30] - The company's reported and adjusted gross margins were 33.7% and 34.1%, respectively, compared to 34.4% in the same period last year [33] Business Line Data and Key Metrics Changes - Professional segment earnings for the first quarter were $127.2 million, up 13% from $112.8 million last year, with a profitability increase to 16.5% from 14.9% [29] - Residential segment earnings decreased to $17.2 million from $23.5 million, with a margin drop to 7.8% from 9.8% [31] - The professional segment's growth was driven by higher shipments of golf and grounds products and increased demand for zero-turn mowers [28][30] Market Data and Key Metrics Changes - Demand in the golf market remains strong, with record rounds played and elevated order backlogs [9] - The residential segment faced challenges due to elevated field inventories of snow products and lower shipments of portable power products [30][31] - The company noted that snowfall activity has improved compared to last year, but year-to-date totals remain below historical averages [46] Company Strategy and Development Direction - The company is focused on innovation to address customer needs and align with market growth trends, launching cutting-edge products equipped with the latest technologies [12][13] - The acquisition of ProKASRO Services USA enhances the company's underground construction product portfolio, capitalizing on synergies with existing products [19][22] - The AMP initiative aims to deliver $100 million in annualized run rate savings by fiscal 2027, with a portion reinvested to accelerate innovation [24][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver positive financial results despite uncertainties in the macro environment, including economic and geopolitical factors [56][57] - The company expects sustained strength in demand for underground construction and golf products, with a normalization of field inventories for lawn care and snow products [43][44] - Guidance for fiscal 2025 includes total company net sales growth in a range of 0% to 1%, with adjusted diluted EPS expected between $4.25 and $4.40 [49][51] Other Important Information - The company repurchased $100 million in shares during the quarter, reflecting confidence in future financial performance [25][41] - The effective tax rate for the first quarter was reported at 20.1%, up from 19% last year, primarily due to lower tax benefits [36] Q&A Session Summary Question: Clarification on AMP savings and impact on earnings - Management confirmed that $7 million in gross realized savings were achieved in Q1, with a total run rate savings of $64 million to date [72][73] Question: Inquiry about Pro snow and dealer inventories - Management noted that snow levels were down significantly compared to historical averages, impacting sales, but contractor budgets are in good shape [81][84] Question: Expectations for price-cost spread for the year - Management indicated that while costs have risen, they expect to return to a normal price increase of 1% to 2% for the full year, excluding tariffs [87][88] Question: Tariff exposure and manufacturing locations - Management stated that the majority of products are made in the U.S., with minimal exposure to China and Mexico, and they are prepared to mitigate tariff impacts [92][95] Question: Field channel inventory status - Management reported that field inventories for the Pro landscape contractor side are improved compared to last year, with expectations for further normalization in the spring [103][106] Question: Underground business performance - Management confirmed strong demand in the underground space, with ongoing product introductions and positive future outlook [109]