The Toro Company (TTC) on Q1 2021 Results - Earnings Call Transcript

Operator: Good day, ladies and gentlemen, and welcome to The Toro Company’s First Quarter Earnings Conference Call. My name is Joelle and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s conference Nicholas Rhoads, Managing Director of Investor Relations for The Toro Company. Please proceed, Mr. Rhoads. Nicholas Rhoads: Thank you, and good morning. Our earnings release was issued this morning and a copy can be found in the Investor Information section of our corporate website, thetorocompany.com. On our call today are Rick Olson, Chairman and Chief Executive Officer; Renee Peterson, Vice President, Treasurer, and Chief Financial Officer; and Julie Kerekes, Senior Managing Director, Global Tax and Treasury. We begin with our customary forward-looking statement policy. During this call, we will make forward-looking statements regarding our business and future financial and operating results. You are all aware of the inherent difficulties, risks and uncertainties in making predictive statements. On our earnings release, as well as our SEC filings detailed some of the important risk factors, including those related to COVID-19 that may cause our actual results to differ materially from those in our predictions. Please note that we do not have a duty to update our forward-looking statements. In addition, during this call, we will reference certain non-GAAP financial measures. Reconciliations of historical non-GAAP financial measures to reported GAAP financial measures can be found in our earnings release or on our website. We believe these measures maybe useful in performing meaningful comparisons of past and present operating results to understand the performance of our ongoing operations and how management views the business. Non-GAAP financial measures should not be considered superior to or a substitute for the GAAP financial measures presented in our earnings release and this call. On a personal note, I’d like to take this opportunity to announce that Julie Kerekes will be assuming my responsibilities as Senior Managing Director of Investor Relations, working with Olga Guteneva. It has been a pleasure working with each of you in this capacity over the last year. Julie and Olga are not new to the IR function at The Toro Company, and you will find the transition to be seamless and their leadership of the IR efforts. With that, I will now turn the call over to Rick. Rick Olson: Thanks, Nick, and good morning. I’d like to begin by extending my personal thanks to Nick and congratulate Julie on her expanded role. During the past year, Nick has helped advance our Investor Relations focus, including adding Olga to the team. I’ve enjoyed working with Nick and I look forward to continuing to enhance our external communications under Julie’s leadership. We reported very strong results for the first quarter of fiscal 2021 with continued momentum across our professional and residential businesses. Double-digit growth in this dynamic environment is a testament to our focus on innovation, operational execution and the perseverance of our team and channel partners. Renee Peterson: Thank you, Rick, and good morning, everyone. We reported a very strong first quarter as our professional businesses continue to recover in a meaningful way and we continued to capitalize on robust residential demand. We grew net sales by 13.7% to $873 million. Reported EPS was $1.02 and adjusted EPS was $0.85 per diluted share. This compares with reported EPS of $0.65 and adjusted EPS of $0.64 for the comparable quarter last year. Now to the segment results, Professional segment net sales for the quarter were up 9.3% to $650.2 million. This increase was primarily due to higher shipments of landscape contractor zero turn riding mowers and incremental sales from the Venture Products acquisition partially offset by decreased sales of underground construction equipment to oil and gas markets and the timing of international shipments of golf and grounds equipment. Professional segment earnings for the quarter were up 14% to $116.8 million, when expressed as a percent of net sales segment earnings increased 80 basis points to 18%. This increase was primarily due to sales volume leverage, productivity, synergy initiatives, and net price realization, partially offset by manufacturing cost pressures and product mix. Residential segment net sales for the quarter were up 31.3% to $217.7 million. The increase was primarily due to strong retail demand for snow products, driven by favorable weather and expanded mass retail placement. Flex-Force battery-powered products and shipments of walk power mowers ahead of the key selling season. Residential segment earnings for the quarter were up 48.9% to a record $32.1 million. This reflects a 170 basis points year-over-year increase to 14.7% when expressed as a percent of net sales. The same drivers and offsets that affected Professional segment earnings also affected Residential segment earnings. Rick Olson: Thanks, Renee. Looking ahead, we’ll be watching several macro trends to provide us with additional insights into the remainder of the year. These include the ongoing effects of COVID-19, including its impact on manufacturing efficiencies and potential global supply chain disruptions. Weather patterns including the timing of spring in Northern climates and global economic recovery factors driving general consumer and business confidence, as well as the related commodity and inflationary effects. From an end market perspective, demand trends are positive and we’re well positioned for further growth. Recent strong retail demand has reduced field inventory and many of our channel partners are seeking to replenish given the improved outlook. We’re watching a number of key end market drivers for our residential and certain professional businesses, continuing customer interest in home investments. For landscape contractors improved business confidence, leading to the resumption of capital investments, along with catch up purchases of prior deferrals. For golf, a strong start to the season in Northern markets, an increase in international course reopenings and the expected return of travel and resort golf, all leading to another great year for rounds played. For grounds equipment, increased spending on outdoor space maintenance and improvement projects by municipal and other tax supported entities. For underground increased funding for 5G and broadband build out and critical need infrastructure rehab and replacement. For rental and specialty construction continued upgrades and replacements of fleets by independent rental companies and national accounts. And for snow and ice management, channel response to lower end of season inventory levels as a result of recent snow events. We continue to be excited about our innovative suite of products that are well positioned to capitalize on these market opportunities. And these products directly address customer trends. For the focus on home improvements, a complete line of residential products from walk and Z mowers to irrigation and lighting solutions, including the zero emission all season Flex-Force 60V lithium-ion suite of products. Additionally, our professional line of maintenance and renovation products. For the growing interest in professional battery electric solutions, the Greensmaster eTriFlex and hybrid riding Greensmowers, The Toro e-Dingo compact utility loader and the expanding line of lithium-ion Workman GTX Utility Vehicles. For increased productivity solutions, The Toro Dingo TXL 2000 and Ditch Witch SK3000 stand-on skid-steers. Toro Exmark and Ventrac high capacity mowers, a new line of Ditch Witch horizontal directional drills, the BOSS drag pro rear mountain truck plow and Boston Ventrac Sidewalk Snow and ice management equipment. It’s because of our deep commitment to innovation, strong customer relationships, exceptional sales and service through our channel partners and stellar product lineup that we are seeing significant momentum across our businesses with world-class partners. Two exciting examples in golf are our new partnerships with PGA Frisco and Pebble Beach Resorts. We’re honored that every 2021 major championship tournament will be played on a course serviced by Toro branded turf equipment. And we are the official Ryder Cup turf equipment and irrigation provider for the remainder of the decade. In closing, we are optimistic as we head into our peak selling season, while the environment remains dynamic as we managed through COVID related manufacturing and supply chain challenges. We have a number of factors working in our favor. A diverse portfolio of businesses and strong customer relationships, productivity initiatives to drive increased profitability and operational excellence, continued investments in innovative products and emerging technologies, and as always, our team is the key to The Toro Company’s continued success. Thank you to our employees for your dedication and resilience and to our channel partners, customers and shareholders for your continued support. With that Renee and I will take your questions. Operator: And your first question comes from Tim Wojs with Baird. Your line is now open. Tim Wojs: Hey, everybody. Good morning. Thanks for the details. And congrats Julie and Nick. We’ll miss working with you Maybe just first question I had was, just to kind of focus a little bit on the supply chain. If you could maybe elaborate a little bit on maybe where you’re seeing constraints currently and how you’re kind of managing through that. And I guess, more broadly, what your confidence is that you’ll be able to meet spring demand from kind of a production supply chain and capacity standpoint. Rick Olson: Supply chain is something that we’ve been managing very closely over the last year in the COVID environment and that challenge continues. It’s in the context now of pretty significant demand, demand is very strong at this point. So this is a industry wide issue. It’s a global challenge. In fact, beyond just our industry really has, demand has come back fairly rapidly. And many of the suppliers are still in a COVID restricted environment and probably hadn’t fully anticipated the recovery happening at that rate. We have a very close working relationship with our suppliers. We’re in constant contact with them making sure that we can do every possible thing we can to keep our lines running. Another part of that is just, as you mentioned, making sure that we’ve got the right product in the right location to serve the customers and make sure that we don’t short anyone. So we’re confident coming into the season that we have – we’ve mashed our supply with demand, but that will continue to be an ongoing challenge as we go forward. I would just – also just point out, our ops team has done an heroic job of keeping lines running, keeping the communication lines open with our suppliers to make sure that we can do everything we can to produce. Tim Wojs: Okay. And I guess, relative to others in the industry, I mean, do you – just given your scale, I mean, do you think you’re at a relative advantage versus other players in the industry? Rick Olson: It is – as I said, it’s an industry wide issue, but we do a lot of work to build relationships with our suppliers and to put contracts in place to protect us. So it’s going to be a challenge for everyone, but we believe that we’re in a good position with our suppliers relative to our competition. Tim Wojs: Okay. Okay, great. And then on the Residential business, is there a way to kind of frame, what the – I guess, the placement or product lineups at some of your key retailers look like this year versus maybe the last year or two. And you talked about battery in your prepared remarks, could you just elaborate on what percentage of sales or trailing 12 months or this quarter, battery is for Toro and how that compares to POS. Rick Olson: Starting with the first quarter, snow has been a big – was a big part of the story for residential. And that was, in addition, to a good or better than average snow year, at least in some parts of the country. That was also due to improved placement. So that in fact was part of a greater line, one more complete lineup, if you will with our cusp, with our channel partners, excuse me. And from – I think, that’s probably the best generalization of the trend. We continue to add placement with our key partners. It’s obviously with our dealers, we continue to offer additional products, additional lines with our mass retailers. We continue to add lines. You probably saw the emphasis from the Home Depot specifically on electric. We’re pleased to be one of the brands that will be featured as a electric supplier and the focus area. As a percentage of sale, I don’t know that we have that in front of us. It’s still a relatively small portion of the overall, but it’s a very rapidly growing piece of our business. Tim Wojs: Okay. Okay. That’s great. And then I’m going to sneak one last one and just, these are small, but you did do two robotics acquisitions over the last couple of months. And I know it’s early, but, robotics does seem to be a game changer. If you talk to like golf course, superintendents and things were labor is really a big issue. So could you just talk a little bit about how you see that developing and any sort of, kind of timeline and commercialization there? Rick Olson: We agree. It is an important part of the future. And for us, that really cuts across all of our markets. So you talk about golf, but there’s interest in many of our markets for robotics solutions, driven by a number of factors. If you look at, for example, the spray business, the chemical application business, the ability to do that more accurately to reduce the environmental impact to reduce the costs. Labor is another key driver. The timing we showed last year in 2019, a vision of what our autonomous solutions look like for golf and we’re on track to bring solutions to the market. I can’t be specific about timing, but we’re on track with our plans relative to what we talked about at that time. And then the acquisitions specifically are a perfect fit for the strategies that we have described previously. In fact, they hit all of the technology areas, including, alternative power connected and robotics, and it’ll be a great boost to our capabilities internally as well. Tim Wojs: Okay. Okay, great. Well, thanks for the time and good luck on the rest of the year. Rick Olson: Thank you. Operator: Thank you. Your next question comes from Mike Shlisky with Colliers Securities. Your line is now open. Mike Shlisky: Good morning. In your prepared remarks, you mentioned a few times, there were some manufacturing cost pressures. Can you comment on what those exactly were? Was it – it seems to be different in which companies, to some it’s the cost of labor, to some it’s availability of labor, for others it’s things are stuck in the ports, can’t get out of the ports or into the ports. Just some kind of color as to what it is Toro is doing right now on that side. Renee Peterson: Mike, what we’re seeing is – first of all for the quarter, it’s important to recall that we’re comparing to a pre-COVID quarter. So I think I’ll start with that. What we’re seeing is some of that impact of just the social distancing, some capacity constraints driven by that, as well as, as you mentioned kind of a number of other impacts, just related to, as Rick said, our suppliers getting ramped up as demand increases. Certainly commodities have taken a step-up as well. Steel in particular, we’re seeing the impact of that as well. As always, we focus first and foremost on our synergies and productivity efforts to try to offset that. We do tend to get some price realization, typically between one and two points. We always price to market not to cost. But as these situations are occurring, they’re not unique to Toro. So we anticipate that they’re happening across the industry. And over time, pricing kind of balances out with that as well. Mike Shlisky: Got it. Can you also comment on the cold weather and storms we recently we saw in Texas and parts of the Southeast U.S. in February? I wasn’t – it’s not an area that typically sees a ton of snow. I’m curious if you were able to sneak an inventory to that region at the last minute and/or in the aftermath here, are you seeing any unusual utilization or demand either on the underground equipment side or on the rental side as opposed to trying to clean up? Rick Olson: There were, Mike, a number of effects both on the supply mostly on the supply, but on the demand side as well. Maybe the positives for us on the demand side, not so much the Deep South, but through the central portion of the country, the snow events of the last several weeks have been very positive in terms of driving snow product demand. So that’s on the positive side, the challenge is on the demand excuse me, the supply side. And as you can imagine, we have a number of key suppliers within the Gulf Coast region, especially in the resin. There’s a concentration of resin suppliers in that area. They are coming back online, but they have had some delays. Freights moving products around the country during those weeks with the severe storms has challenged our operation’s footprints, if you will. And we have operations in areas that were affected by the cold. So our facilities are up and running completely, but they did experience some delays and it’s really the continued recovery bringing power back on to the region, fixing the utilities and so forth. And we will have some positive effect on demand with utilities, repair and so forth. But it’s not going to be a significant driver specific to the repair process. Mike Shlisky: Got it. I’m going to ask one more here. And that’s on the stimulus plan is currently bouncing around Congress. And there’s been some changes even as of today as how much and who is eligible. Can you give us the sense – is your outlook at all based upon consumers out there getting more stimulus checks from government? And if things change with that affect do you think the retail sell-through at some of your national partners? Rick Olson: I think the most positive effect would be to continue to bring the economy back faster, so bringing more money into the economy, I think it’s going to be generally positive. We don’t determine specifically, which of our potential customers could be directly advantaged by any of that legislation. For us the biggest thing would be to focus on getting the COVID situation under control. We believe that that has a lot of benefits internally, externally. You heard us talk about how important we feel the vaccination processes and we’re directly making sure that we can optimize our own access and vaccination process within our facilities. Renee Peterson: Yes. And I think that will help not only Toro. But it will help supply base as well. Rick Olson: Exactly. Renee Peterson: So we absolutely think that’s a key focus area, the vaccination. Rick Olson: Good point. Mike Shlisky: Got it. Rick, Renee, thanks so much. Rick Olson: Thank you. Operator: Your next question comes from Eric Bosshard with Cleveland Research Company. Your line is now open. Eric Bosshard: Good morning. Rick Olson: Good morning. Eric Bosshard: Curious, it sounded like on the Pro side the growth was more focused landscape contractor. Curious for what’s going on in terms of end-market demand trends in golf and Charles Machine Works. And how you feel about your ability to manage supply relative to where demand is go into those two end markets? Rick Olson: The trends that we talked about in the fourth quarter have continued for Pro, so a pretty significant recovery. And most of the markets that were affected this time last year have come back very nicely including golf, we see coming back just in terms of orders going forward and the resumption of capital purchases. Maybe the one exception though we’ve talked about, which is a very small portion, but any exposure that we have to oil and gas through Charles Machine Works, they’re kind of in a pause mode as energy policy becomes more clear. But that’s left in a couple of percent – somewhere around a couple percent of our total business. And I think that will kind of refocus on things like natural gas, pipelines versus crude oil, et cetera. So there’s some that are coming back. And in terms of the ability to meet that demand, I think that’s really the theme that we talked about earlier is the same, which is we have – we’re doing every possible thing that we can. We are working with our suppliers to have the products and we’ll continue to management – manage that really as our top priority. Eric Bosshard: Within the Charles Machine Works, just to follow-up, the – between what’s going on in energy, which we now see, the change that’s taken place it appears in residential construction and then what’s going on in 5G. When you look at all of those and I think all the cards are on the table now for those three areas are going. The growth outlook for this business, is it now worse because of what’s happened with energy or are the others offsetting that? Like, when you put all those together, how do you feel about the growth outlook for that business relative to perhaps a year ago when we were looking at this business? Rick Olson: We feel outstanding about the drivers. And you mentioned the key drivers of the 5G broadband build out, I personally have looked at the timeline of previous build outs like 4G. And there’s still more dollars being spent on 4G infrastructure today than 5G. So 5G is nowhere close to hitting its peak. I think investments in infrastructure are twice what they were at 2 times in 2020, what they were in 2019. So the drivers you talked about alternative energy also has a significant portion of underground element to it. The realization even brought to the surface through the problems recently in the South with broken water mains speaks to our aging infrastructure. All those demands are – all those drivers are very positive for the Charles Machine Works business. And just to put it in perspective, the direct oil and gas exposure is less than 10%, so high – kind of high-single digits exposure for that business. But other factors will be much stronger drivers going forward and have a lot of momentum. Eric Bosshard: Very helpful. Thank you. Rick Olson: Thank you. Operator: Your next question comes from Ross Gilardi with Bank of America. Your line is now open. Ross Gilardi: Good morning, guys. Rick Olson: Good morning, Ross. Ross Gilardi: I was just wondering if you just talk a little bit more about the outdoor category at Home Depot. I mean clearly Toro’s got a big position at Home Depot, but there is just seems to be a lot happening. I mean EGO is going to Lowe’s. One of your competitors claims to have 19 cordless mowers on the market right now. It’s just making a big push on riders. It’s building new capacity for cordless mowers in the U.S. And I’m just trying to get as I know you’re investing in it, but what they – can you share at all, what kind of investment you’re making to ensure that you get your appropriate share of shelf space at Home Depot in the cordless category is that evolution continues. And then just any insight on what kind of role Amazon is playing in outdoor? What Toro’s position is and thought is on Amazon as a more important distribution partner? Rick Olson: We’re always very well aware of what’s happening with our competitors. And obviously, when you speak about the Home Depot, this was a long-term partner of ours, and we’ve grown our battery line at the Home Depot pretty steadily over the years and will be a key part of their battery solutions that they offer as we go forward. So in reference to some of the competitors, we’re well aware of the investments and the branding work that they’re doing. I would just say that this is – it’s been a very competitive market for a very long time. So we’ve – we compete with very high quality competitors we always have. And so this is one of them. In terms of battery and investments, as we’ve talked about that’s been a priority for us and for us, we have the ability to leverage across a lot of different areas. So, if you talk about going into the higher power applications, that’s a pretty heavy use of batteries and fundamentally of shelf as well. So we probably come at the advantages in a little different way, but we also have a strong set of advantages including the reputation in the outdoors. And as you shift from low-power applications to higher-power applications, you have to make a decision if you’d like to – if you want to stick with the brand that’s more of a power tools company or if you’d like to stick with someone, a brand that’s got 100 years of outdoor experience. Ross Gilardi: Okay, Rick and any thoughts on Amazon role in this outdoor space and your relationship with them? Rick Olson: We – Amazon is obviously a factor in every market. I can’t think of too many were that wouldn’t be a factor. And we have some relationship with Amazon in various parts of the world and various markets. I don’t think that we’re any different in this market than others necessarily for a – from Amazon exposure. We have a significant online retail e-commerce business through both ourselves and also with a key channel partners that are very significant players in e-commerce and we partner very closely with them. So we have a strong e-commerce presence. Amazon is one factor of many. Ross Gilardi: Okay, great. And then just lastly, I heard you addressed part of this and I’m sorry if I missed your full answer. On Texas, specific to Ditch Witch and underground construction equipment, with all the water infrastructure issues that we’re reading about it in Texas, are the nature of those problems something that is a big opportunity for Ditch Witch, or are these more in areas that wouldn’t involve their type of equipment for remediation? Rick Olson: I think remediation is a modest opportunity. A lot of the entities that are working to fix those have existing equipment they made based on the usage choose to replace it at this time. So there is a modest effect in the short-term. The probably larger effect is just the realization of the general population that we need to address our aging infrastructure. In some cases, decisions need to be made of facilities need to be weatherproof to a greater extent, and that does just add to the longer-term demand trend that will be positive for Charles Machine Works and Ditch Witch. Ross Gilardi: Thank you very much. Rick Olson: Thank you. Operator: Our next question comes from David MacGregor with Longbow Research. Your line is now open. David MacGregor: Yes. Good morning, everyone. Rick Olson: Good morning, Dave. David MacGregor: Just a question on the – good morning, Rick. I just wanted to ask about the outlook on the pro business. And you talk about the fact that you thought there was a pretty good catch up opportunity in 2021 that there’d been a lot of deferred spending by landscape contractors. And then I guess I’m just trying to get a sense of how big that opportunity might be for you as you think about your 2021 guidance. Rick Olson: The catch up is part of it, but I think the bigger portion is just the return of business confidence that’s going to return to that area of growth for us to start out with. So in pro LCE is an important part of that as a growth driver. Our expectations for the makeup really has been included in our guidance for the year. But we do see continued strength really across the pro line. So LCE, the construction businesses are very strong. Rental, now the pickup of business with our national accounts as well as independent rental companies that were strong throughout 2020. And golf continues to pick up. There’s a little question mark about the municipal budget-driven business. And that has a lot to do with relief funding with prioritization of budgets as they come into the next cycle. But we’ve seen also evidence that cities and municipal tax supported budgets are prioritizing their outdoor spaces especially based on the use for those last year. David MacGregor: Do you feel you’re sufficiently inventoried in the field in your pro business for the strong kind of 2021 demand that you’re talking about? Rick Olson: We’ve – our field inventory is in good shape. In general, we have a few areas where we would like to have more field inventory both on the Professional and Residential side. So the strong demand in the fourth quarter and the first quarter made that more challenging to build out inventory. But we will take the opportunity to build as we can. And we feel generally good about the field inventory. David MacGregor: Okay. Second question, just on the Residential business, obviously an extremely strong quarter, up 31%. I’m just wondering given the magnitude of that increase year-over-year if there’s any chance of getting a little bit of transparency into the drivers behind that growth. And specifically, I guess just what did the extended good weather in November, December contribute the Flex-Force. Kind of giving us a sense of what Flex-Force may have contributed as well to the segment growth that would be helpful. Rick Olson: The – some of the factors that we talked about in 2020 are still there. Certainly, the stay-at-home trend continued to help us. But I would say that that’s one of many factors for us. For us, as we talked about through 2020, it’s our refreshed line. It’s the enhanced placement that we have with our current partners. It’s the addition of new mass channel partners like tractor supply. The strength of the brand and the marketing message, so those parts are drivers and so we feel positive about that. Snow was a major significant factor in the quarter, and I think you mentioned them. It would be the strength of the Flex-Force line of lithium ion products. And then walk power mowers although it’s a lower quarter, a smaller quarter for res for those products, they had – the comps were very positive on small numbers. So it’s kind of strength throughout. Snow is the biggest upside driver, both with the weather conditions and with placement. David MacGregor: Okay. If you grow that Flex-Force business, how do you think about – and your entire battery life, for that point. You noted earlier, it’s small at this point, but it’s expected to grow rather rapidly. How do you think about the potential cannibalization on the gas-powered product lines and what net growth could be achieved? Rick Olson: It’s likely that there will be a cannibalization. That’s where some of the volume is coming from if you think about walk power mowers. And the nets, obviously, we – our plans are put in place surrounding maintaining or growing our market share regardless of the power source. And I think as the idea of battery matures, it’s not so much about the novelty of the idea that it’s a battery-powered product, but it comes back to the features, benefits, the quality of cut, the support and that’s where we have some advantages. David MacGregor: Okay. Last question for me is just the acquisitions of TURFLYNX and Left Hand Robotics, very exciting. It’s nice to see you entering the autonomous navigation space maybe a little more definitively. I guess what I’m trying to get a sense of is from a market development standpoint. What are the limiting factors for acceptance of this product and for growth of the product? What would you have to do to get people to get on the purchasing side to get excited about this and make that purchasing decision rather than say I’m going to wait and see what the next generation looks like? Rick Olson: Well, there is significant demand right now for autonomous products based on some of the challenges with labor, productivity and so forth. So I think the limiting factor is having products that meet customer needs. And that’s where we have a strong commitment that we’re not going to have products in the marketplace. Just to say that we have a robot. We’ve actually done that a decade or two ago. So our timing will be predicated on our confidence that we have absolutely terrific solutions that have resolved the customer issues and they will be delighted with. So that’s our driver. We believe the demand is there and it’s growing. It’s the product solution that we’re waiting for. David MacGregor: Okay. Can you leverage your existing dealership network with this product or – I know the dealer network right now is a little limited, but it must be an opportunity for you. Rick Olson: We have an incredible dealer network across multiple brands, thousands of dealer points, multiple distribution partners. And that is absolutely an advantage for us as we get to products that are more technical and they require more support and infrastructure to make them work well. And we view that as an advantage for us. David MacGregor: All right. Congratulations on the progress in this area. Thanks. Rick Olson: Thank you. Very, very exciting for us too. Operator: This concludes the question-and-answer session. Mr. Rhoads, please proceed to closing remarks. Nicholas Rhoads: Thank you for your questions and interest in The Toro Company. We look forward to talking again in June to discuss our results for the second quarter. Thanks, everyone. Operator: Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.
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The Toro Company (NYSE:TTC) Surpasses Earnings Expectations in Q2 Fiscal 2025

  • Earnings Per Share (EPS) of $1.42, beating the Zacks Consensus Estimate of $1.38.
  • Revenue reported at approximately $1.32 billion, slightly below the estimated $1.35 billion.
  • Price-to-Earnings (P/E) ratio stands at approximately 18.50, indicating investor confidence.

The Toro Company, listed on the NYSE:TTC, is a renowned manufacturer of turf maintenance equipment and precision irrigation systems. On June 5, 2025, TTC reported its earnings for the second quarter of fiscal 2025. The company achieved an Earnings Per Share (EPS) of $1.42, surpassing the Zacks Consensus Estimate of $1.38. This performance also marks an improvement from the previous year's EPS of $1.40.

Despite the positive EPS, TTC's revenue for the quarter was approximately $1.32 billion, slightly below the estimated $1.35 billion. This shortfall in revenue might raise concerns, but the company's strong EPS performance indicates effective cost management and operational efficiency. TTC's Price-to-Earnings (P/E) ratio is approximately 18.50, which suggests that investors are willing to pay $18.50 for every dollar of earnings, reflecting confidence in the company's future growth.

TTC's financial health is further supported by its price-to-sales ratio of about 1.62 and an enterprise value to sales ratio of around 1.85. These metrics indicate that the company's market value is well-aligned with its revenue generation. Additionally, TTC's enterprise value to operating cash flow ratio of approximately 13.80 suggests that the company is efficiently converting its operating cash flow into enterprise value.

The company's debt-to-equity ratio of 0.83 indicates a moderate level of debt compared to its equity, which is a positive sign for investors as it suggests a balanced approach to financing. Furthermore, TTC maintains a current ratio of 1.91, highlighting its ability to cover short-term liabilities with its current assets, ensuring good liquidity.

Overall, TTC's financial results for the second quarter of fiscal 2025 demonstrate a strong performance in terms of earnings, despite a slight revenue miss. The company's solid financial ratios and liquidity position indicate a stable foundation for future growth and resilience in the competitive market of turf maintenance and irrigation systems.

The Toro Company (NYSE:TTC) Q4 Earnings Overview

  • Earnings Per Share (EPS) of $0.95 met market expectations.
  • Revenue of approximately $1.08 billion, slightly below the estimated $1.09 billion.
  • Despite record net sales, weak guidance and a challenging economic environment impacted TTC's performance.

The Toro Company (NYSE:TTC) is a renowned manufacturer of outdoor equipment, including lawnmowers and snowblowers. On December 18, 2024, TTC reported its earnings for the fourth quarter, revealing an earnings per share (EPS) of $0.95, which aligned with market expectations. However, the company generated revenue of approximately $1.08 billion, slightly missing the estimated $1.09 billion.

During the Q4 2024 earnings call, key company figures like CEO Richard Olson and CFO Angela Drake discussed the financial results. Despite record net sales for the quarter and fiscal year, the company's share price declined. This was due to missing sales estimates and issuing weak guidance, as highlighted by Seeking Alpha. The challenging economic environment has impacted TTC's performance.

TTC's financial metrics provide a deeper understanding of its market position. With a price-to-earnings (P/E) ratio of 19.97, the market values TTC's earnings moderately. The price-to-sales ratio of 1.82 indicates investor willingness to pay for each dollar of sales. The enterprise value to sales ratio of 2.00 reflects the company's total valuation relative to its sales.

The company's financial health is further illustrated by its debt-to-equity ratio of 0.65, showing a moderate level of debt compared to equity. A current ratio of 1.81 suggests TTC's ability to cover short-term liabilities with short-term assets. These metrics indicate a stable financial position, despite the recent challenges in meeting revenue expectations.

The Toro Company (NYSE:TTC) Q4 Earnings Overview

  • Earnings Per Share (EPS) of $0.95 met market expectations.
  • Revenue of approximately $1.08 billion, slightly below the estimated $1.09 billion.
  • Despite record net sales, weak guidance and a challenging economic environment impacted TTC's performance.

The Toro Company (NYSE:TTC) is a renowned manufacturer of outdoor equipment, including lawnmowers and snowblowers. On December 18, 2024, TTC reported its earnings for the fourth quarter, revealing an earnings per share (EPS) of $0.95, which aligned with market expectations. However, the company generated revenue of approximately $1.08 billion, slightly missing the estimated $1.09 billion.

During the Q4 2024 earnings call, key company figures like CEO Richard Olson and CFO Angela Drake discussed the financial results. Despite record net sales for the quarter and fiscal year, the company's share price declined. This was due to missing sales estimates and issuing weak guidance, as highlighted by Seeking Alpha. The challenging economic environment has impacted TTC's performance.

TTC's financial metrics provide a deeper understanding of its market position. With a price-to-earnings (P/E) ratio of 19.97, the market values TTC's earnings moderately. The price-to-sales ratio of 1.82 indicates investor willingness to pay for each dollar of sales. The enterprise value to sales ratio of 2.00 reflects the company's total valuation relative to its sales.

The company's financial health is further illustrated by its debt-to-equity ratio of 0.65, showing a moderate level of debt compared to equity. A current ratio of 1.81 suggests TTC's ability to cover short-term liabilities with short-term assets. These metrics indicate a stable financial position, despite the recent challenges in meeting revenue expectations.