The Toro pany(US:TTC)2025-12-17 17:02Financial Data and Key Metrics Changes - The company reported consolidated net sales of $1.07 billion for Q4, a decrease of 0.9% from the previous year, primarily due to lower shipments and prior-year divestitures, partially offset by net price realization [21] - For the full year, total consolidated net sales were $4.5 billion, down 1.6% from fiscal 2024, largely due to strategic divestitures [7] - Adjusted diluted earnings per share for Q4 were $0.91, compared to $0.95 in the prior year, reflecting higher expenses related to employee incentive compensation [23] - Full-year adjusted earnings per diluted share were $4.20, slightly up from $4.17 in fiscal 2024 [24] Business Line Data and Key Metrics Changes - Professional segment net sales for Q4 were $910 million, virtually unchanged from the previous year, with earnings margin at 19.2%, up 60 basis points year-over-year [17] - Residential segment net sales for Q4 were $147 million, down 5.1% from the prior year, but exceeded expectations due to net price realization [20] - Full-year professional segment net sales rose 1.9% to $3.62 billion, with earnings margin improving to 19.4% from 18% in fiscal 2024 [19] Market Data and Key Metrics Changes - The company is focusing on key growth markets, particularly in golf, grounds, and underground specialty construction, anticipating a multi-year growth trajectory [8] - The acquisition of Tornado Infrastructure Equipment is expected to enhance the company's position in the underground construction market [9] Company Strategy and Development Direction - The company aims to enhance customer productivity through investments in technology and innovation, with a focus on operational excellence and cost savings [5][10] - The AMP program has been expanded, with a new savings target of $125 million by the end of 2026, up from the previous target of $100 million [11] - The company is committed to maintaining strong profit margins and market competitiveness through productivity improvements and selective price increases [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macroeconomic environment, noting potential pressures from inflation and interest rates on consumer confidence [29] - For fiscal 2026, the company expects total net sales to rise by 2%-5%, with professional segment sales anticipated to grow mid-single digits and residential segment sales expected to decline low to mid-single digits [30] - The company is confident in its ability to navigate cost pressures while continuing to invest in innovation [31] Other Important Information - The company achieved record free cash flow of $578 million for the year, with a conversion rate of 146% [12] - A quarterly dividend increase from $0.38 to $0.39 was announced, along with a share repurchase authorization of up to six million shares [34] Q&A Session Summary Question: Guidance on sales growth and volume expectations - Management acknowledged that a portion of the sales growth is attributed to the Tornado acquisition and indicated continued strength in the professional segment, particularly in underground construction [52][54] Question: Improvement expectations in residential segment - Management expects some recovery in the residential segment, influenced by macroeconomic factors and potential restocking in the channel [57][60] Question: Details on the AMP program and additional savings - Management confirmed that the additional $25 million in savings is achievable through ongoing operational efficiency initiatives without needing volume growth [61][62] Question: Raw material cost expectations for 2026 - Management anticipates some inflation in raw material costs early in the year, with expectations of stabilization by mid-year [66] Question: Channel inventory status - Management reported that channel inventories are in good shape, with improved lead times contributing to customer confidence [73][80] Question: Margin guidance for professional segment - Management indicated that while some benefits from the AMP program will continue, the addition of Tornado may not be fully accretive to operating margin in the first year [81][82]