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The Toro pany(TTC) - 2025 Q1 - Earnings Call Transcript
TTCThe Toro pany(TTC)2025-03-06 19:57

Financial Data and Key Metrics Changes - The company reported total net sales of nearly 1billionforthefirstquarter,withaslightdecreasefromthepreviousyearduetothedivestitureofPopeProducts[8][26]−Adjusteddilutedearningspershare(EPS)increasedto1 billion for the first quarter, with a slight decrease from the previous year due to the divestiture of Pope Products [8][26] - Adjusted diluted earnings per share (EPS) increased to 0.65, up from 0.64year−over−year,whilereportedEPSdecreasedto0.64 year-over-year, while reported EPS decreased to 0.52 from 0.62[10][26]−Theprofessionalsegmentnetsaleswere0.62 [10][26] - The professional segment net sales were 768.8 million, up 1.6% year-over-year, while the residential segment net sales were 221million,downfrom221 million, down from 240 million [28][30] - The company's reported and adjusted gross margins were 33.7% and 34.1%, respectively, compared to 34.4% in the same period last year [33] Business Line Data and Key Metrics Changes - Professional segment earnings for the first quarter were 127.2million,up13127.2 million, up 13% from 112.8 million last year, with a profitability increase to 16.5% from 14.9% [29] - Residential segment earnings decreased to 17.2millionfrom17.2 million from 23.5 million, with a margin drop to 7.8% from 9.8% [31] - The professional segment's growth was driven by higher shipments of golf and grounds products and increased demand for zero-turn mowers [28][30] Market Data and Key Metrics Changes - Demand in the golf market remains strong, with record rounds played and elevated order backlogs [9] - The residential segment faced challenges due to elevated field inventories of snow products and lower shipments of portable power products [30][31] - The company noted that snowfall activity has improved compared to last year, but year-to-date totals remain below historical averages [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 acquisition of ProKASRO Services USA enhances the company's underground construction product portfolio, capitalizing on synergies with existing products [19][22] - The AMP initiative aims to deliver 100millioninannualizedrunratesavingsbyfiscal2027,withaportionreinvestedtoaccelerateinnovation[24][42]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sabilitytodeliverpositivefinancialresultsdespiteuncertaintiesinthemacroenvironment,includingeconomicandgeopoliticalfactors[56][57]−Thecompanyexpectssustainedstrengthindemandforundergroundconstructionandgolfproducts,withanormalizationoffieldinventoriesforlawncareandsnowproducts[43][44]−Guidanceforfiscal2025includestotalcompanynetsalesgrowthinarangeof0100 million in annualized run rate savings by fiscal 2027, with a portion reinvested to accelerate innovation [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][57] - The company expects sustained strength in demand for underground construction and golf products, with a normalization of field inventories for lawn care and snow products [43][44] - Guidance for fiscal 2025 includes total company net sales growth in a range of 0% to 1%, with adjusted diluted EPS expected between 4.25 and 4.40[49][51]OtherImportantInformation−Thecompanyrepurchased4.40 [49][51] Other Important Information - The company repurchased 100 million in shares during the quarter, reflecting confidence in future financial performance [25][41] - The effective tax rate for the first quarter was reported at 20.1%, up from 19% last year, primarily due to lower tax benefits [36] Q&A Session Summary Question: Clarification on AMP savings and impact on earnings - Management confirmed that 7millioningrossrealizedsavingswereachievedinQ1,withatotalrunratesavingsof7 million in gross realized savings were achieved in Q1, with a total run rate savings of 64 million to date [72][73] Question: Inquiry about Pro snow and dealer inventories - Management noted that snow levels were down significantly compared to historical averages, impacting sales, but contractor budgets are in good shape [81][84] Question: Expectations for price-cost spread for the year - Management indicated that while costs have risen, they expect to return to a normal price increase of 1% to 2% for the full year, excluding tariffs [87][88] Question: Tariff exposure and manufacturing locations - Management stated that the majority of products are made in the U.S., with minimal exposure to China and Mexico, and they are prepared to mitigate tariff impacts [92][95] Question: Field channel inventory status - Management reported that field inventories for the Pro landscape contractor side are improved compared to last year, with expectations for further normalization in the spring [103][106] Question: Underground business performance - Management confirmed strong demand in the underground space, with ongoing product introductions and positive future outlook [109]