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The Toro pany(TTC) - 2025 Q1 - Earnings Call Transcript
TTCThe Toro pany(TTC)2025-03-06 23:59
Financials
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Financial Data and Key Metrics Changes - The Toro Company reported total net sales of nearly 1billionforQ12025,withaslightdecreasefromthepreviousyearduetolowershipmentsintheresidentialsegment[8][26]−Adjusteddilutedearningspershare(EPS)increasedto1 billion for Q1 2025, with a slight decrease from the previous year due to lower shipments in the residential segment [8][26] - Adjusted diluted earnings per share (EPS) increased to 0.65, up from 0.64inthepreviousyear,whilereportedEPSwas0.64 in the previous year, while reported EPS was 0.52 compared to 0.62lastyear[10][26]−Thecompanymaintaineditsfull−yearfiscal2025netsalesandadjusteddilutedEPSguidancedespiteuncertaintiesinthetariffenvironment[11][49]BusinessSegmentDataandKeyMetricsChanges−Professionalsegmentnetsaleswere0.62 last year [10][26] - The company maintained its full-year fiscal 2025 net sales and adjusted diluted EPS guidance despite uncertainties in the tariff environment [11][49] Business Segment Data and Key Metrics Changes - Professional segment net sales were 768.8 million, up 1.6% year-over-year, driven by higher shipments of golf and grounds products and increased demand for zero-turn mowers [28] - Residential segment net sales decreased to 221millionfrom221 million from 240 million, primarily due to lower shipments of snow products and the divestiture of Pope Products [30] - Professional segment earnings improved to 127.2million,representinga13127.2 million, representing a 13% increase from the previous year, while residential segment earnings fell to 17.2 million [29][31] Market Data and Key Metrics Changes - Demand for golf products remains strong, with order backlogs elevated and robust channel demand for new contractor-grade zero-turn mowers [9][43] - The underground construction market is identified as a key growth opportunity, supported by the acquisition of ProKASRO Services USA [19][21] - Field inventories of lawn care products are in a better position compared to the previous year, while snow product inventories remain elevated but are trending in the right direction [44][46] Company Strategy and Development Direction - The company is focused on innovation to address customer needs and align with market growth trends, launching cutting-edge products equipped with the latest technologies [12][13] - The AMP initiative aims to drive productivity and profitability, with nearly 50millioninrunratesavingsimplementedinQ1[22][24]−TheToroCompanyplanstoreinvestuptohalfofthesavingsfromtheAMPinitiativetoaccelerateinnovationandlong−termgrowth[24][42]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sabilitytodeliverpositivefinancialresultsdespiteuncertaintiesinthemacroenvironment,includingeconomicandgeopoliticalfactors[56][58]−Theundergroundconstructionandgolfmarketsarehighlightedashavingstrongnear−andlong−termprospects,supportedbyincreasingdemandforinfrastructureinvestments[59][61]−Thecompanyispreparedtoadjustoperationsandpricinginresponsetoevolvingtariffsituationswhilemaintainingitsmarketleadership[47][96]OtherImportantInformation−Thecompanyrepurchased50 million in run rate savings implemented in Q1 [22][24] - The Toro Company plans to reinvest up to half of the savings from the AMP initiative to accelerate innovation and long-term growth [24][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver positive financial results despite uncertainties in the macro environment, including economic and geopolitical factors [56][58] - The underground construction and golf markets are highlighted as having strong near- and long-term prospects, supported by increasing demand for infrastructure investments [59][61] - The company is prepared to adjust operations and pricing in response to evolving tariff situations while maintaining its market leadership [47][96] Other Important Information - The company repurchased 100 million in shares during the quarter, reflecting confidence in future financial performance [25][42] - The effective tax rate for Q1 was reported at 20.1%, slightly higher than the previous year's 19% [36] Q&A Session Summary Question: Clarification on AMP savings and impact on Q1 - Management confirmed 7millioningrossrealizedsavingsinQ1,withatotalrunratesavingsof7 million in gross realized savings in Q1, with a total run rate savings of 64 million to date, emphasizing that not all savings drop to the bottom line [72][73] Question: Pro snow inventory and contractor sentiment - Management noted that while snow product sales were down due to below-average snowfall, contractor budgets are in good shape heading into spring [81][85] Question: Price-cost expectations for the year - Management indicated that while costs increased due to higher manufacturing and freight costs, they expect to return to a normal price increase of 1% to 2% for the full year [87][89] Question: Tariff exposure and production locations - The majority of products are made in the U.S., with minimal exposure to China and Mexico, and management is actively working to mitigate tariff impacts [92][95] Question: Impact of Pope Products divestiture - The Pope Products business contributed approximately $7.5 million in net sales in Q1 last year, affecting year-over-year comparisons [119]