The Toro pany(TTC) - 2022 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for Q1 fiscal 2022 were $932.7 million, a 6.8% increase from $873.0 million in Q1 fiscal 2021[116] - Net earnings for Q1 fiscal 2022 were $69.5 million, or $0.66 per diluted share, down from $111.3 million, or $1.02 per diluted share in Q1 fiscal 2021[117] - Gross profit for Q1 fiscal 2022 was $300.5 million, a decrease of 4.6% compared to $315.0 million in Q1 fiscal 2021, with a gross margin of 32.2%[123] - Total net sales for Q1 FY2022 were $932.7 million, an increase of $59.7 million, or 6.8%, compared to $873.0 million in Q1 FY2021[131] - Non-GAAP operating earnings for the three months ended January 28, 2022, were $92.6 million, down from $124.4 million for the same period in 2021[156] - Non-GAAP net earnings for the three months ended January 28, 2022, were $69.7 million, compared to $93.2 million for the same period in 2021[156] Segment Performance - Professional segment net sales increased by 3.5% to $672.9 million, while Residential segment net sales rose by 17.3% to $255.4 million[116] - Professional segment net sales increased by 3.5% to $672.9 million in Q1 FY2022, driven by price increases and growth in irrigation businesses[132] - Residential segment net sales increased by 17.3% to $255.4 million in Q1 FY2022, primarily due to price increases and strong demand for mowers[134] Expenses and Costs - SG&A expenses increased by $35.3 million, or 20.3%, in Q1 FY2022 compared to Q1 FY2021, with a 250 basis point increase as a percentage of net sales[124] - Supply chain disruptions and inflationary pressures negatively impacted gross margins in Q1 fiscal 2022, leading to a decrease of 390 basis points in gross margin compared to the prior year[123] - The average cost of commodities, components, parts, and accessories purchased in the first three months of fiscal 2022 was significantly higher compared to the same period in fiscal 2021[168] - The company anticipates that the average cost of commodities, components, parts, and accessories for the remainder of fiscal 2022 will continue to be significantly higher than the comparable period of fiscal 2021[168] Cash Flow and Liquidity - Cash used in operating activities for Q1 FY2022 was $90.0 million, a decrease from cash provided of $95.0 million in Q1 FY2021[140] - Cash used in investing activities increased by $411.3 million in Q1 FY2022, primarily due to the acquisition of Intimidator[141] - Available liquidity as of January 28, 2022, was $387.4 million, consisting of cash and cash equivalents of $193.0 million and availability under the revolving credit facility of $194.4 million[144] Debt and Shareholder Returns - As of January 28, 2022, total long-term debt was $1,091.4 million, an increase from $701.3 million on January 29, 2021[145] - The company had $400.0 million of outstanding borrowings under the revolving credit facility, primarily for the acquisition of Intimidator, with $194.4 million of unutilized availability[146] - The company returned $106.5 million to shareholders through dividends and share repurchases in Q1 fiscal 2022[118] - A cash dividend of $0.30 per share was approved for Q1 fiscal 2022, representing a 14.3% increase from $0.2625 per share in Q1 fiscal 2021[148] - During the first three months of fiscal 2022, the company repurchased 738,632 shares of common stock, with 3,313,830 shares remaining available for repurchase[149] Inventory and Receivables - Field inventory levels were lower in Q1 fiscal 2022 due to strong retail demand exceeding production capabilities, particularly in the Professional segment[119] - Accounts receivable increased by $59.4 million, or 19.4%, as of the end of Q1 FY2022 compared to Q1 FY2021, mainly due to higher Residential segment sales[139] - Inventory levels rose by $156.8 million, or 23.2%, in Q1 FY2022 compared to Q1 FY2021, attributed to supply chain challenges and inflation[139] Foreign Currency and Risk Management - The company is exposed to foreign currency exchange rate risks primarily with the Euro, Australian dollar, Canadian dollar, British pound, Mexican peso, Japanese yen, Chinese Renminbi, and Romanian New Leu against the U.S. dollar[162] - The company does not hedge its net investment in foreign subsidiaries, which means changes in foreign currency exchange rates will affect accumulated other comprehensive loss[164] - The company employs various productivity initiatives to mitigate the impact of commodity cost changes, including collaborating with suppliers and reviewing alternative sourcing options[168]