The Toro pany(TTC)2022-03-04 03:02Financial Data and Key Metrics Changes - The company achieved consolidated net sales of 0.66 per diluted share, down from 0.85 respectively in the first quarter a year ago [29] - Gross margin for the quarter was 32.2%, compared to 36.1% in the same period last year, primarily due to higher material and freight costs [33] - SG&A expense as a percent of net sales for the quarter was 22.4%, compared to 19.9% in the same period last year [34] - Operating earnings as a percent of net sales for the first quarter were 9.8%, compared to 16.2% in the same period last year [36] Business Line Data and Key Metrics Changes - Professional segment net sales for the quarter were up 3.5% to 255.4 million, up 17.3% over last year, primarily driven by increased net price realization and higher shipments of zero-turn riding and walk power mowers [31] - Professional segment earnings for the first quarter were 31.8 million, down from 14.7% in the first quarter last year to 12.4% [32] Market Data and Key Metrics Changes - The company noted strong demand momentum across its diverse portfolio of businesses, with particular strength in the golf market, where golf rounds played were up 5.5% in 2021 [51][52] - The company is closely monitoring geopolitical developments and their potential impacts on operations and supply chains [11][12] Company Strategy and Development Direction - The company is focused on technology advancements to accelerate profitable growth, introducing new products in battery electric, smart connected, and autonomous solutions [14][23] - The acquisition of the Intimidator Group is expected to enhance customer reach and geographic strength in the zero-turn mower market [24][25] - The company aims to restore and improve margins over the long term while adjusting pricing to market conditions [34][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate supply chain challenges and maintain strong demand across its markets [9][41] - The company updated its full-year fiscal 2022 guidance, expecting net sales growth in the range of 12% to 14% [43] - Management acknowledged the impact of geopolitical events on operations but emphasized the company's strong position to capitalize on profitable growth [48][51] Other Important Information - Free cash flow in the quarter was a use of cash at 150 million to $175 million in capital expenditures this year to enhance capacity and productivity [40] Q&A Session Summary Question: Supply chain progress - Management noted improvements in the supply chain, with strong demand remaining a challenge for production capacity [61][62] Question: Full-year guidance implications - Management confirmed that guidance reflects ongoing progress, with geopolitical uncertainty factored in [65][66] Question: Price and inflation expectations - Management indicated that they are committed to restoring margins and expect to see improvements over time [75][76] Question: Order deferrals or cancellations - Management reported that order pace remains strong, with no significant drop-off in demand [80][81] Question: Professional segment revenue shortfall - Management attributed the shortfall to supply chain constraints, particularly in heavier duty professional product categories [90][92] Question: Impact of competitors' actions - Management expressed confidence in the growth of their electric product offerings, despite competitors dropping gas-powered equipment [94][95] Question: Intimidator Group acquisition impact - Management acknowledged that Intimidator has lower initial gross margins but is confident in leveraging synergies for growth [102][104] Question: Professional margins breakdown - Management indicated that supply chain constraints are affecting professional margins, but demand remains strong [114][116] Question: Snow season contribution to growth - Management highlighted a strong snow season contributing to growth, particularly in professional demand [118][120] Question: Equipment and rental market outlook - Management reported strong demand across the rental market, complementing direct sales [130][132]