The Toro pany(TTC) - 2025 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for Q1 fiscal 2025 were $995.0 million, a decrease of 0.7$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$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$221.0 million [107]. - Professional segment earnings increased by 12.8% to $127.2 million, with an earnings margin of 16.5$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$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$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].