The Toro pany(TTC) - 2023 Q3 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Overview The report contains forward-looking statements based on current expectations, subject to risks and uncertainties that could cause actual results to differ materially - Forward-looking statements reflect expectations and assumptions believed to be reasonable, often identified by words like 'expect,' 'outlook,' 'guidance,' and 'anticipate'[9] - These statements relate to future performance, including operating results, liquidity, financial condition, impacts of global supply chain disruptions, inflation, geopolitical tensions, labor markets, business strategies, acquisitions, and regulatory effects[9] Risk Factors The company identifies various factors, including economic conditions, supply chain, and acquisition risks, that could impact future results - Adverse economic conditions (e.g., uncertainty, slowdowns, inflation, high interest rates, reduced consumer spending) in the U.S. and other countries could materially impact results[10] - Risks include continuing supply chain disruptions, shortages, and cost increases for commodities, components, parts, and accessories[10] - Acquisition and alliance risks, such as integration difficulties, loss of customers, and failure to achieve expected synergies, could adversely affect the business[10] - Other factors include weather conditions, ability to develop new products, competition, operational disruptions, retention of key employees, international operation risks (e.g., foreign currency fluctuations, geopolitical tensions), legal and regulatory compliance, intellectual property protection, and cybersecurity failures[10][11][13] PART I. Financial Information Item 1. Financial Statements This section presents the company's unaudited condensed consolidated financial statements, including statements of earnings, comprehensive income, balance sheets, cash flows, and stockholders' equity Condensed Consolidated Statements of (Loss) Earnings (Unaudited) Net loss for three months ended August 4, 2023, due to impairment charges; nine-month net sales increased, but net earnings decreased Condensed Consolidated Statements of (Loss) Earnings (Unaudited) | Metric (in thousands) | Three Months Ended Aug 4, 2023 | Three Months Ended Jul 29, 2022 | Nine Months Ended Aug 4, 2023 | Nine Months Ended Jul 29, 2022 | | :-------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Net sales | $1,081,784 | $1,160,550 | $3,569,950 | $3,342,678 | | Cost of sales | $709,430 | $760,644 | $2,321,951 | $2,236,927 | | Gross profit | $372,354 | $399,906 | $1,247,999 | $1,105,751 | | Operating (loss) earnings | $(19,072) | $163,048 | $336,151 | $425,251 | | Net (loss) earnings | $(14,963) | $125,150 | $259,362 | $325,785 | | Basic EPS | $(0.14) | $1.19 | $2.48 | $3.10 | | Diluted EPS | $(0.14) | $1.19 | $2.46 | $3.08 | - Net sales decreased by 6.8% for the three months ended August 4, 2023, but increased by 6.8% for the nine months ended August 4, 2023, compared to the respective prior periods[15] - The company reported a net loss of $14.963 million for the three months ended August 4, 2023, a significant decline from net earnings of $125.150 million in the prior year, primarily due to non-cash impairment charges[15] Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) Comprehensive loss for three months ended August 4, 2023, driven by net loss and foreign currency adjustments; nine-month comprehensive income declined Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) | Metric (in thousands) | Three Months Ended Aug 4, 2023 | Three Months Ended Jul 29, 2022 | Nine Months Ended Aug 4, 2023 | Nine Months Ended Jul 29, 2022 | | :-------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Net (loss) earnings | $(14,963) | $125,150 | $259,362 | $325,785 | | Foreign currency translation adjustments | $(2,013) | $(5,792) | $16,974 | $(21,190) | | Derivative instruments, net of tax | $606 | $2,472 | $(14,441) | $16,043 | | Other comprehensive (loss) income, net of tax | $(1,407) | $(3,320) | $2,533 | $(5,147) | | Comprehensive (loss) income | $(16,370) | $121,830 | $261,895 | $320,638 | - Comprehensive loss for the three months ended August 4, 2023, was $(16.370) million, compared to comprehensive income of $121.830 million in the prior year[16] - For the nine months ended August 4, 2023, comprehensive income was $261.895 million, down from $320.638 million in the prior year[16] Condensed Consolidated Balance Sheets (Unaudited) Total assets increased to $3.586 billion as of August 4, 2023, driven by inventories and PPE; total liabilities decreased due to lower accounts payable Condensed Consolidated Balance Sheets (Unaudited) | Metric (in thousands) | August 4, 2023 | July 29, 2022 | October 31, 2022 | | :-------------------- | :------------- | :------------ | :--------------- | | Cash and cash equivalents | $147,926 | $231,564 | $188,250 | | Receivables, net | $390,677 | $350,657 | $332,713 | | Inventories, net | $1,112,692 | $939,274 | $1,051,109 | | Total current assets | $1,731,788 | $1,604,356 | $1,675,351 | | Total assets | $3,585,890 | $3,439,949 | $3,555,998 | | Accounts payable | $407,366 | $487,030 | $578,624 | | Total current liabilities | $907,498 | $1,011,262 | $1,063,613 | | Long-term debt, less current portion | $1,061,309 | $990,616 | $990,768 | | Total stockholders' equity | $1,477,083 | $1,286,602 | $1,351,701 | | Total liabilities and stockholders' equity | $3,585,890 | $3,439,949 | $3,555,998 | - Total assets increased by $145.941 million (4.2%) from July 29, 2022, to August 4, 2023, primarily due to higher inventories and property, plant, and equipment[17] - Total current liabilities decreased by $103.764 million (10.3%) from July 29, 2022, to August 4, 2023, mainly driven by a reduction in accounts payable[17] Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash provided by operating activities remained stable for the nine months ended August 4, 2023, while investing activities significantly decreased cash usage due to lower acquisition spending Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric (in thousands) | Nine Months Ended Aug 4, 2023 | Nine Months Ended Jul 29, 2022 | | :-------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $154,665 | $154,563 | | Net cash used in investing activities | $(119,158) | $(480,5