The Toro Company (TTC) 5 Sep 242024 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to The Toro Company's Third Quarter Earnings Conference Call. My name is Towanda, and I will be your coordinator for today. [Operator Instructions] 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, Julie Kerekes, Treasurer and Senior Managing Director of Global Tax and Investor Relations.

You may begin.

morning, good and you, everyone. Thank

was Our copy our morning a this be earnings corporate found thetorocompany.com. of release can section in and Information issued the website, Investor

supplement a earnings also third have release. posted presentation We to our earnings quarter

Chairman our Officer; Chief Chief Officer; Angie On Director Steffan, and Executive and President and Jeremy Rick Vice of today are Financial call Olson, Drake, Investor Relations.

future. will make plans for the our forward-looking and regarding we statements call, this During projections

to risks, Forward-looking differ based subject expectations our and may performance that historical materially contemplated by to current and statements these and uncertainties cause statements. are upon those results factors other are actual from

Additional and can in information as be release presentations investor today's as well earnings reports. factors regarding our SEC in found these our in

measures, company's are in During today's call, we performance. will financial we evaluating important which also the non-GAAP refer believe to

details and more of reconciliation morning's two, For comparable most these investor the our and presentation. earnings on GAAP to a measures please this release refer the measures,

With over that, I will call Rick. to now turn the

Julie, good Thanks, and morning, everyone.

with executed in driving and company as continue future discipline agility team and strategic growth, people. of excellence our Our productivity quarter accelerating by the operational a strong priorities profitable to for our empowering the we key position third advancing and

capitalizing across very caution top our homeowner line delivered an needs, order networks. facing an coupled elevated best-in-class most and solve pressing in We portfolio Our on team our our with ever-expanding products in that with which growth businesses. dynamic sales in bottom included a environment, businesses strength of with by customers' growth continued backlog, distribution uptick innovative drove along

benefits while achieve we to as and continuing demand profitability price production improved net drove also We to align trends. productivity

nearly delivered we X% $X.XX sales in quarter, to increase third the net a For billion.

new last channel of residential from compared driven this coupled weather better shipments successful XX%, The year, product year. Lowe's Toro conditions by grew as with segment channel year. that by The mass benefit to the continued increased segment following strength strategic introductions the of aggressive and last Residential addition destocking expected, brand, our to Our to

underground growth where strong demand sales demand Within best footprint grounds our delivered within our In Professional the and increased our segment, businesses but mowers. products of expect sustained high snow influx management and serve zero-turn strength levels. golf to address customers. drove improve year, we and these at contractor-grade to fiscal so, net existing lower manufacturing by in this elevated given was order our orders. construction still and is backlog keeping new doing into ice continue We successfully output we backlog of for next heading offset levels This and shipments businesses

This was expected given inventories in and our elevated channel field dealer industry-wide.

in from July. trade As uptick to segment macro lower-than-expected factors shipments and resulted professional we This caution more the factors during pure originally saw consumer products current purchase general residential which and down geopolitical summer of line anticipated. homeowners environment. uncertainty, activity and high than drive These rates interest and progressed, dealers in deferrals, included caution led

professional dealer and Even on products of these so, the in we again field and made normalizing levels progress residential objective to continue our execute once both significant for segments.

dealer about normal now are field to We the XX% for back way levels products. for these of inventory

increase bottom and share increase last along per SG&A. prudent progress adjusted driving an earnings of with and Moving to reflects $X.XX, efficiencies, $X.XX, XX% we positive manufacturing the management line, of year's price of diluted over in this delivered productivity our net

Angie the details enterprise year will advanced the the caution the to for strategic shareholder remainder fiscal a walk through substantially 'XX facing focus last we the those in our of compared drive revising improved priorities quarter, are of value flow full and homeowner year, Based considering markets, of Throughout our shortly. guidance. on disciplined our and reflection visibility to cash expected free execution for working our year continuation capital. Importantly, our on long we our increased term.

I'd track our savings of job remain did run multiyear least as and operational by deliver initiative amplifying key priority excellence this $XXX comment fiscal driving rate maximum quarter. from productivity. productivity to our outstanding for annualized specifically We an at our in on on named delivering million team of AMP like to productivity gains XXXX productivity

As we've long-term further to discussed, we XX% prudently innovation reinvest savings to up the accelerate and intend to of growth.

with and vision with of than for productivity As recently and we enabler further on and being on Based an represented. transformational received, XXX the summit to shared objectives. more our AMP the the partner us our supplier product initiative, of with a We key wide-scale future investments development held we've excited suppliers engaged growth. a innovation, part productivity left summit feedback suppliers our

to this with rebranding on quarter the and and leverage for Spartan sale also residential the products. allows strength NV adjustments the growth. the These to Australia-based name. us targeted This our and capitalize pulp portfolio our investments profitable of further company brand products watering of irrigation and rebranding of marketing position AMP We made the business Intimidator garden include

AMP, We are X accelerate from the benefits already realizing next over we to benefits expect these years. and

are AMP priorities productivity growth, profitable people. fuel operational everything our driving with us accelerating doing and helps we and excellence of Importantly, strategic our empowering existing

the and on provide With over discuss the that, for guidance to turn commentary businesses. before I'll Angie to our call I outlook results our to financial return

drive order and productivity Rick, quarter good the morning, and benefits field in progress and and We backlog pleased made inventories. in addressing price you, to Thank were everyone. both

up diluted $X.XX the care sales of from was strength $X.XX caution, of products the While Adjusted we year. the homeowner loss the in per last Consolidated share year. confident $X.XX billion, share by per quarter well $X.XX EPS are impacted long and EPS third and a last to up in were were share, for was our quarter dealer Reported XX% market are from compared diluted X.X% positioned of net of QX $X.XX. for shipments future.

improved and primarily year-over-year. This as equipment by to shipments we the Professional the products and third shipments net inventories driven was lung and lower of Now down lower reduce $XXX.X care quarter decrease results. work segment compact of million, snow to segment for field sales ice management as was were X.X% the for with and in loaders to we grounds of open significant and as quarters. continue demand businesses. partially and orders address utility of output recent of equipment shipments offset replenishment field robust This the higher result construction these golf products underground by a levels

We also saw in quarter. the net price realization

and well profitability strong lower net was were the mix in to year's segment last noncash due net of productivity shipments material our by volume. quarter million Professional products from price improvements, net million for by sales manufacturing of last this impairment to higher million of were a channel. quarter was expressed positive for primarily with costs compared were substantial the growth The sales $XX and as ground product driven earnings higher third change This and year. last for increase quarter segment realization. shipments the and Residential in Residential net primarily $XXX.X XX.X% mass was X.X%. appreciable a earnings million third for year. were earnings $X.X The When $XXX.X segment year. partially $XX.X million, million, compared compared offset to growth as golf as segment $XXX.X favorable to to percentage last charges the XX.X% sales, up

leverage, from was were When XX.X%, driven significantly realization, and offset expressed segment This productivity sales, and and of by was costs. mix as lower increase for a primarily product percentage price largely manufacturing The improvements this year-over-year X.X%. plant net floor higher up net due costs. net earnings material partially sales to by

results operating our to company. Turning total for the

both productivity as XX.X% weighted improvement sales quarter mix to the due improved over period reported year. XX for sales net This incentive material residential. expense SG&A was respectively, to primarily same costs, XX.X%, expenses. price higher gross in partially slightly the basis offset by The margin by year. percentage point leverage a and primarily segment last lower of improvements and net for driven were and for last partially to compares realization. by quarter. increase The Our was the with XX%, adjusted and offset and marketing to XX.X% This improvement a net growth same period costs and higher manufacturing was the

year. quarter sales lower of average were to XX.X% quarter negative over increase XXX the XX.X%. to primarily from and point earnings down for The expense borrowings, million, as ago. were outstanding reported Interest $XX.X a and for year percentage was a last was million sales operating a compared for $XX by as XX.X% in with XX.X% of an significant basis, earnings X.X% Operating due XX.X% decrease period was last basis On improvement rate percentage the effective a the our the net The cash same enabled net year. compared flow. third quarter adjusted tax free in

earnings of reflects rate more charges geographic third decrease geographic with this earnings. impact The effective related XX% tax XX% adjusted a more The last year. was to a last primarily impairment for of was combined compared favorable also This mix mix to due noncash with year. the quarter favorable year, tax the

Turning as residential positive well to given was sheet. within Lowe's, the increase primarily XX.X% payment to receivable to as year our shipments up as by partnership strategic million, our ago, terms were continues channel. from channel driven balance a segment. our that $XXX.X momentum to This which provide mass Accounts with increased expected

sell-through levels progress long-care once dealer XX of While sell-in. at continues a iron sequentially end care The receivable process. billion, red a part of significant days. and a from about the and Inventory X% products of is not quarter. again a work This decrease last our driven was balance, compared saw year we as of slightly our in by down in lawn in both rebalancing exceed accounts DSOs, improvement to last goods lower decrease field reflection in $X.XX was to balances QX of reduction finished equipment, year-over-year

those of expected, reductions year, up by to last of compact loaders material snow products million, payable $XXX.X cash was snowfall over higher Accounts X% last and from free flow were the higher levels and million, $XXX.X purchases. improvement given of million inventories compared utility were timing offset ice last normalize Year-to-date driven an management of as year. $XXX primarily by as of levels winter's partially These lack

typically As on the a seasonal flow. second year cash reminder, fiscal based of flow the half operating majority of is in our our generated

expect cadence that We same year. this

our For year, net XX-year deliver alignment and This confident of is will with higher least the a years on past XXX% reported historical we rate income. in based flow back are average. we cash full at the free than X significantly conversion

balance sheet strong. our remains Importantly,

within Xx investment-grade to is ratio credit leverage to we and our on target ratings. of basis, stated a Our gross continue have X

provides This attractive that fund drive flexibility investments to returns. financial

capital long-term priority growth, strategic to to business through our profitable Our approach drive disciplined our remains first both investments unchanged acquisitions. in allocation with to and organically make

to new product support XXXX. will manufacturing this for in expenditures capital with and This acting are fiscal $XXX growth investments, fund existing million capacity plan We on within our our advanced footprint. priority during technologies,

return regular capital and to is demonstrates to shareholders, priority conviction grown dividend this our X% Our share our repurchases. sustainable cash both strong and time. have We've This payout consistently our next dividend increased we in and through our dividend year the over future flows. have

With our reflection almost $XXX and fund a invested is shares substantial to we to opportunities. repurchasing flow cash to repurchases while our growth This leverage in we the shares outstanding continue million plan future conviction X.X revolver through in with and this our paying repurchase while free improvement maintaining share of nearly year, borrowings, strong We've off along million our flow respect fourth cash quarter. repurchases, to also with goals. continue excess QX

for demand year, and and close we from continue equipment. to construction the significant benefits products underground expect sustained and in golf grounds we the As out backlogs strength order fiscal

lower For these to ideal remains and than levels progress. remain inventory continue although backlog good we field elevated, businesses, make

$X.XX a total on the is higher from company consider Order has balance sequentially still much we a would backlog what It quarter. normal. lower year-over-year billion fiscal improved from basis, year-end. last but both XXXX basis than at and On

provide XX-K will year-end December. our updated annual figure We an in in filing

this both also dynamic we segments, care field We've estimates. our factored increased continue guidance. progress homeowner into started a normalizing inventories for our to for we of us businesses. some expectations in factored expect although both We've and levels in With making remained we this snow continuation to current backdrop are of our products, facing visibility, and caution for seeing based lawn For on the adjustments elevated in industry-wide. macro making and July our

of the we For X%. year, growth company expect full sales net total now about

now expect Professional net which low quarter. to for growth segment, fourth down single digits, the year mid-teens we the implies full For be sales

to sales the segment, For higher rate expect we average a total the residential continue significantly company net to for full the grow year. at than

net We down expect to low fourth year-over-year on basis. quarter residential single sales be digits a

net of and a mix. margins a at gross adjusted than operating percentage Looking We earnings year, of as to be expect last sales profitability. lower adjusted now reflection product slightly

segment to profitability. Turning

residential professional higher expect to margins year segment earnings a than on continue year both last to basis. full the be and We

last impairment For the we when a earnings year now charges. exclude expect similar Professional you margin to segment, last year's

For for the we a segment, high single-digit the full residential expect margin year.

other This normal more XXXX. continue to For to reflects activities compensation. incentive category, expect the fiscal we return expense compared to higher a

about depreciation of $XXX about an $XX more million For a year Additionally, of and and of quarter, expense adjusted With the XX.X%, expect to full $X.XX full that, to the for fourth expect adjusted mix we about million. $X.XX. driven earnings. $XXX tax in similar by of we expect effective We to rate continue favorable we amortization to range now interest now the an million The expense diluted EPS year, of expect geographic QX.

profitable long-term We for continue our business growth. to build

innovation will team execution, best-in-class AMP with the talents driving our initiative leveraging distribution outstanding This and networks. investments believe our the deliver power sustainable margin of our we including expansion returns prioritizing includes of that disciplined and

confident to are ability We our and drive of our for opportunities stakeholders. all in benefits significant

turn the to back I'll that, Rick. call With

Thank you, Angie.

fundamentals discipline. with execute business remain continue and to Our we strong,

with and businesses demand our footprint. increased output our within sustained successfully we driving and are manufacturing elevated For strength backlog in

near-term businesses markets as experiencing our increase be to caution those For recover. we a that expect by well very driven macro positioned factors, are in

deep We to our and and work benefit leadership our position ever-expanding perform regular solutions with of relationships. suite innovative channel strong that attractive end continue markets replacement our necessary cycles from in customer

productivity driving customers. And to importantly, flexing well AMP with better production executing and efficiency conditions operational our through market is and and initiatives team serve our align our

are well end keeping macro ahead, specific we factors as on markets. Looking a eye our close as dynamics demand in

spending. needs, positive utilities we For fiscal outlier the address are demand centers. by spending growth into broader underground robust Infrastructure very data XXXX. a with and to to projects industry global projects remain multiyear communications, remains runway foreseeable the These both for positive is public order a There the strong supported construction expect forecasted for elevated market, and including infrastructure and remain heading private backlog construction in to future.

we more construction Ditch balance loaders, For as of times. compact our which SK utility Dingo are include lines to demand Witch come a patterns with into specialty Toro supply and typical have lead seeing markets, and return improved

business, for years to expectations which next a to our are year meaningful growth markets, specialty For rental construction growth. X double-digit return are of mid-single-digit following

order backlog for we utility as compact As quarter, has discussed normalized our loaders last expected.

healthy to grounds, positive has continues and pipeline For supported to a of XX and golf equipment and we prioritization XXX expect that golf course by are continue to see purchases rounds renovation new in and countries, development. across there projects reinforce the had reset. and significant than the new industry the budgets Worldwide, irrigation golf data played more

played is were For U.S. pace months year in was X which played year's the given history. first U.S. of of XXXX, of rounds highest the XXXX rounds X% last notable ahead

and position and product also is the as ever. market grounds strong leadership market golf new address as worldwide Our pipeline to

Groundsmaster electric This exhaust productivity leverages upfront enable operation, mower. fully and machine new cut quality. no zero increased hyperCell eXXXX to proprietary on our battery our compromise includes emissions system significantly with rotary This quieter

the sustained equipment, expect With golf this higher fiscal for backlog XXXX. see continue business orders, in to in and normal we to than strength order into grounds remain our we

demand the activity environment the retail by given high some driven to of with price and across pockets sensitivity stable contractors, landscape we levels rate continue industry. For expect regular field replacement interest

given trade expect down higher uncertainty interest homeowners, will including drive For macro to caution, rates. continue we activity,

be beneficial. certainly to would by conditions turf and driven regular demand expect favorable We be needs replacement growing

second and reduced as sell-in straight been snow of snowfall. following season expected, a average demand has Management below preseason ice For

following good happens, La turf more up budgets year. Nina The patterns expect ship in are favorable positioned be pick patterns in and contractor in-season season climate would more could if this we a snow XXXX, normal for However, prospects. snowfall that Nino to better growing as El shape returned consensus to is overall If fiscal well. are from it to orders

while We requirements. latest help versatile labor includes powerful entry-level and strengthen solutions great reader that our market scout reducing snow results lineup. our addition contractors to This with position sidewalk achieve in this continue our the in warrior innovative new

enthusiasm model initial has and out. is much already new garnered production This sold

questions, the as work deep like positions are the diversified not of relationships. of Before portfolio before fulfill of in we developing fiscal take results see opportunities beauty, why our excited enrich what sustainability the our the and future greatest XXXX, The the reiterate our to market I'd land. opportunities about purpose we we as of channel but only complementary and customer we our us so corporate and many are of helping customers leading and businesses, growth years productivity our in and the diligence

First, equipment positioned market extremely well excited the in we leader where are and our business the construction lineup underground as we a are with worldwide about industry. comprehensive most brand

In we to required the are and long-term dynamics. market relationships addition, makes our with customers. with demand sophisticated What coupled have even channel, with relationships, difficult differentiators together These more near- duplicate. our competitive these are positive very the technology compelling best-in-class deep

As space, modernization the and rapidly global a leader capitalizing focus well the in communications for this infrastructure demand on grid on data as infrastructure. energy aging replacing growing as are we

construction like market our to due winning exciting leadership market much our golf strong business, business combination is the fundamentals. Second, and of underground long-term our

and our offerings. reduced Here, suite emission with also and zero products a channel of we lineup exhaust full solutions, our relationships and of partners industry-leading customers have deep including and

is the both to the and leader competitive this as in our sustained advantage both. for golf market global worldwide irrigation Importantly, momentum. as we a have market in solutions and distinct company only equipment growth the offer Fueling

capitalize and support network. continued and our service to innovation this are with opportunity best-in-class We prepared on

space. important the in the and leadership product strengthen lineup category residential zero-turn innovative we our mower represents position our strategic partnerships. continue for investments single market lawn in both largest and independent We've This dealer to multi-brand of and our our professional Third, mass care the networks enhanced segments. leadership our through development

growth, of advantage future. into the while help superior Our to well investments normal return positions competitive Company's to for that portfolio. our enables we new development productivity customers momentum innovation further extremely space our us a our these results across broad and strength. as and markets accelerated leadership ability drive in leverage market Toro technology enhancing ensuring this especially the have Fourth, This and products proven the

on continue of opportunities with technology smart, investments on with prioritized power, key financial to on a drive return autonomous in build all consistently discipline and our that of strong a and delivering We we innovation team And of the connected to have will talented long capitalize is determined areas performance. alternative our finally, solutions. history

have agile evolve on cycles. and the channel has best customers aligned serve focused beyond of network and have organization to we We day. macro partners going many resilient through been a our strong that built every strategically

to the that value ready partners in for our shareholders and ahead are both seize and We lie the drive our term. long channel customers, opportunities near our to

call With the questions. that, up for will open we

comes the [Operator line first Tim Instructions] from of Our question Baird. Wojs with

I on guess -- question backlog. maybe my first just the

a context of those is of number, types orders book-to-bill things. And kind maybe of little bit a just context quarter. of around golf, you won't give over where kind a X us maybe the bit little specific within then of sort I probably context. know exited underground, If but you any give backlog relatively us the like just could of

Yes, take Tim. that, sure. I'll

backlog look we've on at last if in by backlog, to the the year, you several So if improvements end of reduced the you made it. comparisons look relative

the in in have If orders this reason look not if the the factory the The progress orders continue be is really intake and those for that of a businesses golf we've standpoint, the down. -- the we the down. backlog and year. underground we've to the backlog at about, backlog is strong. because made it's From talked areas. And of cleared tremendous output the is extremely X look grounds areas year-over-year, And you concentrated you sequentially,

certainly at production now. levels in not of right record are We that's production, plants pre-pandemic those

reason businesses position. at do for both for demand the backlog is the will this at momentum in We And by point, be for there end of tremendous still just extend point. of where both believe backlog those those this 'XX backlog this the certainly those X we that's point. the more of But larger really at normalized continued businesses be for expect backlog general the the businesses, So into continues extraordinary 'XX. -- to the

Okay.

position the on you're also Okay. land you channel No, together of then helpful. could that's caution do just getting in of the increased have inventory inventory. going is the comments us hey, just around help bit of it kind things the to same together. channel or And Garden there, landscape just macro you're through and just kind trying of business, those -- think higher kind to Lawn down exiting Or the the Just but next tie I lot but guess, you production & manageable the to a exiting season it's X get taking kind we'll inventory little marry more still to there? year, a probably year?

number -- the point the was quoted on think trade The ticket down. that saw I of especially way was managing bit a Angie this down. little we field larger from inventory that of caution and We homeowners, items, at XX% that

residential mass quarter. tend managing on our which on But the to strength the down. continued network, a some dealer saw of we're go that that the was inventory in tremendous ticket we were So through items higher

part of at end little what July of themselves, plus latter the quarter slowdown. combination that our bit customers really in in And environment. the a dealer a point restocking Just the given in of very that caution it's the the coming year macro caused especially just is of

shipments. of shortfall weaker the And tied the landscape July of really kind I kind guidance, relative it your Okay. the And was specifically business? the quarter, Pro within to guess was in to

Exactly, yes.

James. question comes Samuel Darkatsh line from of Raymond next Our with the

DSOs you inventories specifically? year. you know have Just do I still and all looking of by on the track iron fiscal Tim I don't if were a that what to red follow-on asked. question it Are think but field was the normalized end to ostensibly to answered, directly

year track, X, some may go. We're on We We not this to just absolutely we where to XX%. slightly nothing the we're started still and year. at of but back have left like be

So There's relatively are to general down We've to progress, retail inventory strong started closer to done cetera, where far factor, higher a getting and made really those year normal. inventory. in this we drawing our relative of businesses, tremendous by Yes. it's to combination et close exactly it we from competitors, a expected We'll where do. we what that expect be. to be we've but

Got least at what what that, it least if us more for year's next your a you gives you. know not how confidence Rick, you indicated of And stands? expectation projections quarter, could maybe growth for year sales for year. then last sales next you unpack organic giving for framework at mid-single-digit in going give specific formally bit. kind an to a update you're is But growth your be early to for guidance and as I next to thinking on as

little to a So my it's similar bit previous the -- response.

word I about about, guess, to mind next that think comes you If optimistic the year. cautiously is

the position have uncertainty And as economy. rates, interest the confidence driver the was discussion we're that from ourselves July well, that about a is year. for caution And part to next things just high macro there's standpoint. in rate, We growth doing in really interest is mainly the the

will know a us. They a talked some environment, weeks. those we The be cetera, for the political behind elections, recession about few of et there

we -- coming in be grounds much are in. to on closer to fulfilling rate our the of that tremendous our golf very side. are But have plans continues now business the continue it's to from side, and those long growth cautious that momentum. for expect strong, underground that's to And The us. demand terms runway a So has

because have for mass year if across this X year our the you look just of this is Snow, or from in X We'll honestly, keep Lowe's partners mind, mean, levels out year time that our in of general record standpoint, category. a all I a as it's mass part snow a of with last that's strategy at seasons.

the positive to have a snow that's if stocked close this came be season you for anything the already into So going was to we a year, field us as normal season.

has results field continued dealers. with So completely in to homeowners in the really third have that the from quarter categories care be progress strong. missing inventory Incidentally, go our through exception the amount We've made shipments. of that It's the in a very contractor was our our those where where of lawn very that has XX And reducing small customers the months partners. Lowe's, our have the with then into factor business back adjustment all of Lowe's taken caution and a been be them, the the us, benefit mass with and XX. we getting just of that's place. with season snow to We'll will versus of positive for along

I in guess international implies Was thought. you variance, robust considerably your Rick? that this real from to original tax final question that XX for quarter, change the My related primary less of to that the fine the than driver XX.X. Again, expectations quick. the maybe business is too a was the negative rate but point,

by a Rick. it's earnings. if okay, of one, favorable driven that Really, geographic take mix I'll that was

next but expect probably a did we provide year, the XX%, foreign transfer like a December. for year, helped a lower, XX%, XX.X%, And to also study that If us lowering that in color we we'll tax there. also pricing a both some little but more lower state more on somewhere and mix than we bit XX% little about then Sam. that So think

So International than business plan? different materially was your not

transfer saw Rick talked due on residential that side It the of impacts snow yes, business not. the to and obviously, the pricing. the about the we of same mostly has was some lawn It and that care, but

line comes the Davidson Company. question from with & Our Michael of Shlisky next D.A.

combination this countries how of Or improve that their us they heard let's a give combined the correctly, in versus, say, looked mentioned, could facilities irrigation -- the side. you of you there? just to there's mix Could a opportunity to I of equipment and whether us are irrigation mix last maybe think if or are the projects. I of pursuing Toro as to kind courses year XX the this both share with projects on that sense golf get XXX pages with equipment? is Just large in a

Sure. Yes.

pure So the there's of projects reconfiguration, reshaping at also upgrades. pretty itself, in if much a I or XXX includes -- improving gets don't actually think or or greens that torn expansion because any up. all are time it's irrigation that even course renovation just by just, definition, There automatically it's irrigation

it's this to be course -- renovations, doing impossible So without expansions case moving irrigation. of either XXX, touch golf the But something that or involve major brand-new dirt. the every in would major golf to a

by So definition, both. it's

then how just allocation, on other wasn't because looking and that update your market kind capital at assets M&A just the helpful. it days, much comments sale. what these would prepared on And be us industry-wide, really mentioned for you're looking size just of wise is Fantastic. you in Maybe

making are discipline value we We about spear. want anything insist those for we're that our discriminating just key never that we're enhance And continues. us. we With the the -- focus M&A, opportunities process we making we regard but customer open on our as would said, in but can why adjacencies our the for you product see areas to current and that tend to that capital have they shareholder always that be be also allocations very building investor to to those. and about be opportunities. maintaining selections or in looking we same -- remain the new really and as would stops, always our deck, relationships, do lines, It enhance we're and is sure

any or there are Just at up iron? to they Or space in equipment follow Rick, other left-hand tech the like again there, a the deals summers? all of are looking

in. we're primarily They might our entrepreneurial, general always that tend that definitely As is of on list one of different is across interested we the way leverage smaller but to technology acquisitions category, that that be our be more areas. a technology because just can

So huge attractive, but they tend but them what like a just us. have can to for small, impact did that Robotics be makes can

Research. the line David from of comes question next Our Longbow with MacGregor

Rick, reference you the to made July. slowdown in repeated

weakness seeing in And it July and with August I August. better may about if of you us that flown So have can kind of forward. what guess we're question kind how in help a

would to knew that a included be factored And August, we our but for of Yes. the going caution, for year. bit factor a caution far. -- still in from quarter. obviously rest saw still what quarter. already guidance was trajectory in our I we the for fourth so little expectations of homeowners. -- we've fourth our based we included bit in the based little not providing the we've more And I the on on a It's bit And probably think snow in a But that what we're we're guidance that's a say. that see normalized, seeing of

we say I'd Yes, at forward. see us today. really [indiscernible] and strong underground from it we grounds to that And still for 'XX as expect as where we're look well and golf demand well positions

course, program enough if upfront look the that I frequently a top costs. segment, Right. were probably wanted along at the ago, of about the at are to because professional XX line productivity it's margins guess pretty stage But AMP the actually the of the more performance. discussion noncash for we your adjusting exceeding game, to weak impairment up Right. I starting that's in charge, guess basis maybe far come and ask year we're sort points, you investment benefits up of you this

decrementals and be how are higher productivity pretty most improvements, productivity given about just of raw and modeling AMP Can you the on where are substantial. magnitude and material good guess as talk where going forward I in and we So just should guy? have costs the you the that been volume a you

Yes. Sure.

start of on first me with the great we some in QX. made progress. We progress just AMP made Let kind

synergies X excited that the key But notable XXX supplier work the to in So had left the here, that for were their we opportunity they alongside highlights with quarter the growth in. summit aspirations. prepared and we team. about we about And remarks, our opportunities mentioned suppliers to us identify partner had Rick continue that very in on

also the We portfolio some have quarter. in actions

residential the segment. in included is That divestiture. Poke the saw You

great that and David. synergies that income consulting the and personnel a you'll expenses of in in in took the office brand, our we drive of with segment. segment. Overall, actions see with for that our sitting that be other have project the Spartan the other to continues But in some expenses You with associated residential And to transformational productivity and the are overall, activities, see professional then some rest future we us.

and 'XX. We at $XXX continue least F we're by that to confident focus on that, delivering in million

the at I better. just the really grounds David, and on David, as those plant -- higher add the I would opportunity as professional talked about areas, productivity. to it level, underground with plants in work creates would just a absorption of The we add, operate particularly business golf gets our

so And variances left initiatives. some manufacturing

initiatives as So the AMP. as that we have well through specific contributes to productivity that

our And we add that also would we're leveraging costs. just SG&A

So control we've we can. worked to what hard

Right. Great.

steel balance steel But of the the a that, could. Is off more got how XX-day -- offline. I Okay. then it balance contract at the from costs segments. about just some we more lower higher can were higher the I'll just a you us sheet understand one in and contracted timing P&L P&L. year quarter should that? still And material But prices coming come that benefits please? it thinking with the little do you've or help off on follow start the timing you a talked Obviously, in if are for the up -- costs? to the on When see for beginning we just sheet Maybe just and around lag of both you to about be waiting reset we

in costs With commodity regard Yes. general. to

in overall see market on steel our to better We steel also plateau standpoint. From or actually our about I costs, pricing, a an but I market, we're initiative more think of so, major and an our adjustment cost. offshoot have competitive to with a we is a negotiations the years contract a still our standpoint, drive did ago mean suppliers coming and X.X of probably little down up. bit from biggest through suppliers us both through just that focus to work partnering partners with do for AMP

improvement but obviously possible still those that's we'll So much TBD, as be on looking costs. to drive as

the Yes. we've that And there, best in seen ability. guidance included anything we've of our our that to

guess understand I'm But to is timing. I trying just the Right. really what

from back calendar timing? and see that we stand first timing. reset the let's whether of it's then just us whatever up the balance to year you days down kind is, come can or Do the at Or off sheet? of it's and a with the so XX it And contract help just

roughly on That's are although continuous there negotiations. correct, processes some

through So it's right negotiations year. everything year are fiscal a There not basis. happens the on

Eric Company. Cleveland with question of comes Our from Bosshard Research the next line

clarity the change guide. on in revenue Just a of bit the

It As narrowly of I this, backlog Is walked and lot driven. orders in right narrow well. it? dealer a to way is season. and dealer There's you that? through that this listen, growing you than all things whole homeowner that and it a sell-through narrow going there's strength like differently seems of Or turf the are number the would

That's is it. the rest right biggest way factor of narrow through this year. That to the the

worse business. this Okay. in a it trend the an figure why? half was different XX we've homeowner the the the that -- was about what's to heard last time better? worse trying now? I'm expected the different it than Was trying here I'm business that now getting has an incrementally there the And this was out just of either back or or months. area than piece that just to is the piece and figure expectation stabilizing this first been assumption out, of and Is

inventory year at in our off had say recognize expectations years they needed to going would through we ago, of products it's X time. Yes. the didn't inventory where based that market have coming go on slowdown And dealers with where up adjustment. that a to and I an built consistent that we back significant a

we've And what for the we been made have working tremendous on we've progress. been -- And that's last year.

to on reduction plan. our with track close are We inventory being

few in the we've a think XX%, year. go to still quoted months I have

so really came taking time at year. obviously July our our in is. factor And what in this that about caution there and revenue the that's was dealers customers it's with that our seen the acknowledging We're and stock into of shared

the our bit season That's end end selling -- year. the But and changed trajectory of this area. a the at again, much is, the summer little of of the

-- wasn't decisions. the So make where to came it's not dealers for unusual It really customers that's and from. both factor

we So we've ago, been inventory us to with suggested inventory. that. intentionally for on been rightsize working on strong a have much that year lower Retail, track shipments as field been reducing

Our Ted Jackson the Northland question with line of Capital comes from next Markets.

balance for around sheet on I just inventory of the want to kind and circle move around bit. it a

XX all inventory that. working trend And of in job is, normal to play kind your good more You're would on out the balance I of down doing that eventually itself of XX about expect a I to to months. sheet level. the and a next first terms through over When think it

golf, question balance you've am through. inventory then So have basis, level look my down you've point kind your of amount your construction such underground that of when you bringing businesses, because correct you to got have regards you of definition I glove would all let's being this on or sheet the that of at those you got in you days that with and to first your that bringing And is turns that down orders have work is, inventory strength terms backlog is, you're seeing in normal inventory, what in assume hand behind say, that be? to

you then so behind my say, kind -- -- kind days? of that, where So even what upon, point and or normalized as based do And level that to get terms think at question. of you that's is

to realign really the all we quarter. in we've as good So sharp progress had Ted, our on make a We and continue that you long. year inventory focus, know, did

of million sequentially down some that $XX we're by driven about WIP. So

in WIP. inventory some of point So output, to that sitting is your on increasing

for So can customers. that our made great that progress. backlog we And address we've

probably We our talked wanted we inventory million last where we've about direction right heading $XX and quarter the about be. to go. in So to of dollars kind

-- to to looking go. ideal we our $XX still million levels, to get are we're say So I'd at about

I regards golfers been what's it's a you bringing of And kind separation. [indiscernible] past strong what like with to in the just the rounds is to past, to ask one COVID-XX. That's more could call issues that But or know new yourself the on that I drivers kind with a Top something as has me. terms if move commentary. of there's Golf for longer-term, of of just played more kind comment read that Callaway underlying then performance anything it's figure continue And and we side to is it it's that in and business that golf for ask. the And question, it and is not regards question, there it, business commented some one morning, that Topgolf of a the Is also of announced, exceptionally This had behind that you going Topgolf some on, everything. of through even the in Topgolf. up and a of rationale

there business. certainly, the know The -- of more that the golf field I And it's our a golf. adjacency, because One the bit factors strength is that particular are that course players in right than little different now of of just

on in of us. and full reflect forms, your on-course, But forms, even just of at. to chance interest course that does does places a playing golf you're one in these of So so all increase look these golf off interest information for at the hunting the continued of on and it some grass that's play off-course, you if a I in it says game in overall haven't looking that good data course, growth had and that the is what level increasing

generation Congratulations It cash was on impressive. the for quarter. the flow

would and like Julie. with to this back session. call the closing proceed the concludes I gentlemen, remarks. Ladies question-and-answer Please now to turn over

and Tolanda, talking in in We and discuss your year The to results. quarter fourth look and thank December for fiscal our to you, full interest Thank you you, questions forward Toro Company. with everyone, again XXXX

presentation. for the thank This participation today's in concludes gentlemen, and your conference. Ladies you

now disconnect. have may Everyone, good day. You a