The Toro pany(TTC) - 2026 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for Q1 fiscal 2026 were $1,036.3 million, a 4.2% increase from $995.0 million in Q1 fiscal 2025[119] - Net earnings for Q1 fiscal 2026 were $67.9 million, or $0.69 per diluted share, compared to $52.8 million, or $0.52 per diluted share, in Q1 fiscal 2025[120] - Adjusted net earnings for Q1 fiscal 2026 were $72.6 million, or $0.74 per diluted share, up from $65.9 million, or $0.65 per diluted share, in Q1 fiscal 2025[121] - Total net sales for the company increased by 4.2% to $1,036.3 million in Q1 fiscal 2026[133] - Professional segment EBIT increased by 8.2% to $137.6 million in Q1 fiscal 2026, with EBIT margin rising to 16.7%[135] - Residential segment EBIT decreased by 23.3% to $13.2 million in Q1 fiscal 2026, with EBIT margin falling to 6.4%[137] - The net earnings for the three months ended January 30, 2026, were $67.9 million, an increase from $52.8 million in the prior year, marking a growth of 28.6%[158] Segment Performance - Professional segment net sales increased by 7.2% to $824.0 million, while Residential segment net sales decreased by 6.8% to $206.0 million[119] - Professional segment net sales increased by 7.2% to $824.0 million in Q1 fiscal 2026, driven by net price realization and higher shipments[134] - Residential segment net sales decreased by 6.8% to $206.0 million in Q1 fiscal 2026, primarily due to lower shipments of lawn care products[136] Cost and Expenses - Gross profit for Q1 fiscal 2026 was $336.5 million, with a gross margin of 32.5%, down from 33.7% in Q1 fiscal 2025[127] - SG&A expenses decreased by $8.4 million, or 3.3%, as a percentage of net sales, SG&A expenses decreased by 180 basis points[128] - The gross margin for the three months ended January 30, 2026, was 32.5%, down from 33.7% in the prior year, indicating a decline of 1.2 percentage points[158] Cash Flow and Liquidity - Cash provided by operating activities was $26.1 million in Q1 fiscal 2026, a significant improvement from cash used of $48.6 million in Q1 fiscal 2025[141] - Net cash used in investing activities increased to $210.4 million in Q1 fiscal 2026, primarily due to the Tornado acquisition[142] - Available liquidity as of January 30, 2026, was $936.9 million, including cash and cash equivalents of $189.0 million[144] - The free cash flow for the three months ended January 30, 2026, was $14.6 million, a significant improvement from a negative $67.7 million in the prior year[159] - The free cash flow conversion percentage was 21.5% for the current period, compared to a negative 128.2% in the same period last year[159] Acquisitions and Initiatives - The acquisition of Tornado Infrastructure Equipment was completed for $210.3 million, enhancing the Professional segment and expanding the dealer network[113][114] - The company completed the acquisition of Tornado Infrastructure Equipment on December 8, 2025, which is expected to enhance operational capabilities[163] - The AMP initiative is projected to achieve at least $125 million in run-rate savings by fiscal 2027, with cumulative cost savings of $94.3 million as of Q1 fiscal 2026[117] - The company launched a significant productivity initiative named AMP in the first quarter of fiscal 2024, aimed at improving operational efficiency[163] Tax and Inventory - The effective tax rate for Q1 fiscal 2026 was 21.9%, up from 20.1% in Q1 fiscal 2025, primarily due to a less favorable geographic mix of earnings[131] - The effective tax rate for the three months ended January 30, 2026, was 21.9%, compared to 20.1% in the same period last year[158] - Field inventory levels were lower at the end of Q1 fiscal 2026 compared to Q1 fiscal 2025, mainly due to decreased balances in snow and ice management products[123] Shareholder Returns - The company approved a cash dividend of $0.39 per share for Q1 fiscal 2026, a 2.6% increase from $0.38 per share in Q1 fiscal 2025[147] - The company repurchased 1,131,652 shares of common stock during Q1 fiscal 2026, with 9,260,138 shares remaining available for repurchase[148] Currency Risks - The company is exposed to foreign currency exchange rate risks, particularly with the Euro, Australian dollar, and Canadian dollar, which could impact earnings and cash flows[162]