The Toro Company (TTC) 18 Dec 242024 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to The Toro Company Fourth Quarter and Full Year Fiscal 2024 Earnings Conference Call. My name is Marvin, and I'll be your coordinator for today. [Operator Instructions] I'll now turn the presentation over to your host for today's conference, Julie Kerekes, Treasurer and Senior Managing Director of Global Tax and Investor Relations. Please proceed, Ms. Kerekes.

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 general and updated presentation. On Chief Vice Jeremy Chief our Rick and earnings also Executive with are investor fourth Steffan, today Financial Relations. Chairman have release, along Officer; posted presentation We Director, President to Olson, our call Officer; earnings an Drake, quarter Investor and Angie

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

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

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details of the investor measures that, the to on and our will most presentation. For please measures, morning's Rick. release over GAAP this turn now two, to the I comparable these earnings more reconciliation call With a and refer

Julie, good morning, Thanks, everyone. and

succeed began our innovations enhanced AMP. growth During dynamic successfully environment, extremely net with network introduced exciting our we to And help major on and customers fiscal they best-in-class that sales in execute productivity our operating initiative distribution call XXXX, delivered we an we products new value.

leadership our position closed all remain market we year, across our As out the strong. businesses

deliver innovative the to into we confident our future. Our are in our extremely is value ability to product lineup and compelling, shareholders

marks solutions. exceptional our the ground XXth and which were sales the as line top and net net reported performance, consecutive last billion, year team. balanced full up year. $X.XX growth our delivered of We over disciplined at Looking execution financial demonstrates of we year golf about our X% as underground and for by products This our growth sales talented construction of well strength portfolio,

Vendor be X our start, portfolio. the our zero-turn with post-pandemic affecting navigating for in seasons Lowe's as customers. demand by within the a as department. The highlighted Year average order offset in address expectations, introductions elevated of the helped dealer parts partnership production our strategically for to strength demand category. sustained snowfall other is was channel, their and seasonal care This we managed our recognized by consecutive leadership dynamics fiscal months respective of the our strategic manufacturing footprint our with for Residential increased for output line off team year to first keep market as continues growth end the honored we're were was relationship dynamics satisfy and strength new mower exceeded well these in mass that strong exceptional to Our below ice substantially businesses. Top macro products industry-wide as these our backlog of of the driven segment. our product to along fantastic snow We our channel, successful areas in lawn This of by with also and included including businesses. This XX correction These Lowe's. and caution outdoor management new

Turning line to in with year, our earnings adjusted the for per full profitability. share of We $X.XX delivered expectations. diluted

outsized were products. growth Residential reduced affected snow product given margins mix, by and shipments higher-margin the Our of in segment our

results cash of regular than benefits demand $XXX in our flow to cost as offset cash an production to of future. full $XXX inflation, throughout confidence of deliver strong million more an about financial free These a $XXX year generate patterns increase in including extremely into productivity adjusting the including the for and enabled ability the to year pleased us to This our continue and in positive our flow actions increase return the shift. We're shareholders, nearly to year. payout. on free repurchases million However, basis, dividend demonstrate price and million deliver net share

sales Turning grounds our as to and Net the construction quarter. by golf increased over and underground output products, increased fourth equipment expected. X.X% last and driven shipments for year,

saw to offer any This and shipments reliability, in the bar of technology enables We cut Z any lawn without tools. launched deck growth These optimum newly for dealer our for also in quickly to demand strong Adapt performance channel quality rake raise conditions. Exmark and productivity Exmark's mass products care Lazer the zero-turn adjust mowers. professional-grade our models and on exclusive new turf

X:X the a was As in surprise share preferred quarter call. third that the mowers executed of the mix best-selling with outlook Exmark quarter, during Even the $X.XX. line drive profitable over by than and shared of our for year, diluted priorities driving Exmark sales are expenses productivity XX brand. Adjusted result to professionals prudently with of more highlight advanced less fourth the our accelerating possible strategic Throughout people. each. per enterprise with increased quarter on was our so, it's team I'll outcome. headwind next the we no celebrates operational to margin examples This and empowering discipline the and to full we and Similar snow landscape expected. XX% leadership, years growth, originally best X residential year, manage growth shipments excellence earnings

driving lifeblood leverage of is the to key company across growth. breakthroughs profitable innovation we to businesses. and First, Innovation long-term continue our our

During products of the needs the with customers. growth year, and productivity aligned our new we introduced trends market

hyperCell Spartan. quieter and improved on X of install emissions we and Exmark, models system even for underground Ditch Warlock grounds. launched machine in Witch our repairs WX new cut efficiently Groundsmaster increase with battery compromise This eXXXX make congested areas. The underground in And exhaust include electric construction, mower golf and and enables compact examples mower leverages proprietary brands: quality. rotary X a provides significantly Some for across and no series zero-turn to productivity Toro our operation, Toro all which expose, utility fully to footprint. This front performance out maximum infrastructure excavator and vacuum the to contractors safely

continue are We solutions autonomous and autonomous fiscal of launches our residential to professional also and planning wider XXXX. mowers in advance

this productivity in million maximum named changing track from annualized fiscal outstanding gains for AMP by Second, XXXX initiative We of amplifying our our of $XXX quickly team savings on year did deliver productivity multiyear run remain to productivity. rate an delivering a job environment.

we've slightly its we annualized expectations. $XX.X intend cost up of As team of innovation the implemented savings discussed, to year, prudently long-term of accelerate reinvest In further our rate our million to run savings, ahead to growth. half and first

ensure portfolio for consolidations. Earlier priorities. our additional This to resulted adjustments strategic also for organizational company to the divestitures profitable including align employees reduce further our the our long-term month, very action primarily took were operating in and structure salaried to employees. environment. partners workforce Obviously, again empowered wasn't was we channel made We dynamic our this by and aligned brand once approximately implemented targeted position to this we and what difficult superior adjustments growth, a third, XXX we customer better deliver in lightly. And decision care a

improvement. commitment growth Our to we I'll our and doing turn ability they that, wavered doing way. from like over to In right attractive future opportunities confidence in the in markets. the our team agile business our I'd on profitability to remained With end our the reiterate strengthened market high simultaneously never so, driving have while call to leadership capitalize successfully Angie.

quarter time, At We in growth continue in quarter Reported backlogs last for drove $X.XX everyone. from and up share, per year. pleased sales EPS Rick, was last QX price of EPS progress net X.X% for from diluted morning, billion, benefits quarter net make and and productivity the ago. same Adjusted from the to diluted $X.XX the and sales year fourth were share, to elevated was deliver order the up full up in you, Thank XX% the year. and we year. were net addressing field a $X.XX good per inventories. Consolidated $X.XX $X.XX

last per to billion $X.XX, year, charge For This segment. our the EPS year, per year. $X.XX share. was full of product from net slightly full adjusted share, Reported to up Residential diluted of noncash mix, segment. On was compares last reflection were $X.XX which down billion included with EPS basis, sales year a $X.XX impairment our in diluted weighted growth Professional $X.XX an a from $X.XX

management backlog quarter net kept has order golf year-over-year. grounds net expected, driven lower as This offset the construction and XX.X% heading of segment and equipment by the given that as Professional partially field ice that replenished level into fourth given up also million, results. and shipments $XXX.X to as increase elevated higher realization. season. expected, underground by and have primarily products, Now utility price demand compact segment of was products the was were and shipments This snow loaders, sustained inventories lower sales we for shipments elevated field of the address

a XX% the profitability higher $XXX.X comprised of last net For price net sales $XXX.X offset earnings XX%. a and net the fourth to to mix. change XX.X%, material primarily percentage net up million for and manufacturing earnings This was X.X% sales, in of from sales Professional company was leverage, were positive improvements, segment were partially $X.XX productivity million When and full realization segment The sales. net Professional the basis, reported decreased for due total segment costs. as up product from by expressed quarter on billion year. year,

Professional year, million from earnings up fiscal million, were full the segment For in XXXX. $XXX.X $XXX.X

to quarter products products segment of were of promotions. Growth year. last care snow up mass earnings the were higher in million, quarter for primarily partially offset lower year. Residential sales compared percentage last net our a by sales, was net XX%, As to driven XX.X% higher lawn X.X% of segment shipments fourth up and channel, by $XXX.X shipments the from sales

net XX.X% of a full profit XX% higher by XXXX million freight of The were material company in improvements. net sales expense $X.X and offset a $XX.X comprised to segment partially year-over-year This loss marketing year, the higher Residential was $XXX.X to year. up due reported and was $XXX.X fiscal segment warranty sales. The and and million compared For product mix. largely costs, last productivity total million decrease Residential million, from

This we As unique shipments an same pronounced to than the variability higher adjusting changing of while more timing and demand year. rapidly circumstances. good we due and material at expected, in to costs production impact a dynamics. given quarter. We supplier, was the time, the was The prioritized the recognized the of typical, freight being throughout outsized

earnings year, For up segment $XX.X were $XX.X the million, million. Residential full from

was This a X.X% year. earnings mix towards year, and mowers. a were weighting As within level segment product of segment percentage to the in of zero-turn sales, the snow reflection reduction with largely the compared entry X.X%, shipments last this net

results our for total to operating company. Turning the

were to by primarily was This costs. Our higher same The offset adjusted material, XX.X% was margin decrease year. improvements. period partially for XX.X%, respectively, respectively, last reported gross XX.X%, to compares the manufacturing due and and and quarter. This XX.X% in freight and the productivity

a to compares fiscal This by year, adjusted of XX.X% and and mix. manufacturing costs. margins was by marketing change material driven This leverage, This the primarily as partially to expense the driven XX.X% For quarter was improved was expense. The reported and lower respectively. and primarily incentive full a partially XX.X% higher net The product sales were XX.X% for higher in compensation improvement improvements. SG&A gross by offset year lower percentage net sales and XX.X% warranty XX.X%, was offset and productivity costs XXXX. ago. by from

from as quarter For full for from were expense period net same SG&A XX.X% year as the improvement a sales year. Operating a net the percentage sales was operating the last a basis XX.X% adjusted earnings up of in percentage compared an XX.X%, net an XX On of earnings to percentage XX.X%, as year, of sales ago. the quarter fourth X.X% were a point basis, last year.

rates was for offset borrowings. The These were to were due on average year, both respectively, The For average and decreases quarter in ago. These and geographic compare average adjusted quarter XX.X%. from average sales year by of and $XX.X $XX.X reported year-over-year XX.X%, last fourth and adjusted XX.X% this net of partially for higher expense earnings year. basis, a up fiscal the outstanding The compared $X.X a primarily borrowings decrease an XXXX. Interest to XX.X% interest and were was the percentage the was lower earnings basis, mix adjusted and effective full operating million, Interest rates, a more X.X% increase a due expense reported million for with due on XX.X% outstanding as to and interest year were respectively. lower million, rates. full tax year. million. XX.X% favorable down primarily was the to $XX.X The XX.X%, primarily lower

compared tax deductions in effective was full prior this a For the The the lower full year, the year. a offset rate adjusted XXXX. year XX.X% reported favorable mix primarily earnings. XX.X% was in tax the the due and tax fiscal mix tax The for for current to in year-over-year excess year. impact earnings geographic largely XX.X% as favorable partially of to was noncash effective The impairment increase benefits recorded was This stock year of charges XX.X% to was improvement a compared more rate by due ago. the geographic year of to more compensation

by purchases. balance billion, work Full to in initial increased Lowe's. as in last of year-over-year million. and significantly loaders, channel. our slightly sheet. $XXX.X of goods partially timing our by were ago, the higher earnings, shipments from higher reported X.X% as to driven channel, third This was compact products. finished receivable payable quarter. year much payment This from care X.X% terms $XXX This with increase was primarily XX% year a compared mass driven of was driven primarily Inventory end last was was of of balances net process, to as by from The utility year. reflects year, down by from $XXX.X lawn to year driven million, strategic $X.XX of the lower partnership up a primarily up cash prior levels related to reductions in the by given lower the offset ratio Turning XXX% at well XX.X% expected. Accounts decrease were at improved that conversion and material the free QX year-over-year sequentially million, Accounts flow year expected, our both

and provides flexibility. Importantly, our financial strong remains sheet balance

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

acquisition. set October $XXX and revolver million term million of expire increased $XXX million we those a During $XXX our revolver We both the to facilities a term million refinanced XXXX. and facility quarter, The revolving credit with that last loan. growth also our in replaced $XXX since loan modestly a were accommodate revolver mechanism Machine substantial to is the a provides refinancing company the size a This in acquisitions. to reflection risk Charles in easily which Works sized prior of XXXX, the upsize was future reduce larger and

growth investments approach We another disciplined fiscal to with $XXX unchanged, long-term remains acquisitions. to fiscal our to million make in Our and million capital profitable both to about our drive capital invested priority in business first in invest XXXX. allocation XXXX organically expenditures strategic during $XXX expect through and

in $X.XX and We repurchase $XXX while the through with time to excess plan approved quarter return consistent future of to borrowings another XXXX, through both X.X first priority next about increased reflection We regular Our fiscal of off X% our goals. share over continue growth respect in future fund or term of our X% conviction increase fiscal and to XXXX loan. Board a shareholders, we increase And sustainable shares, for revolver is share per buybacks capital to share and flow to repurchases. flows. With strong strong our the regular for leverage cash million profitable dividend shares payout our This our in repurchases, have and our dividend cash invested million XXXX. fiscal free demonstrates just paying dividend XXXX. maintaining conviction We opportunities. nearly continue our $XX to in also outstanding our repurchasing while fiscal million we

the authorization total an million putting In our fiscal increase, addition new under heading our X million shares additional Board at the shares the repurchase X over authorized program, dividend to year. just into

for provide XXXX of been Before investors. moments a top I fiscal to topics on to details few address that X I outlook, take want our have mind

a our about in billion our $X year order has to what ended The point open but We construction a we golf ago, consider X with attributable would billion. over and book normal time. about elevated still and from grounds. This at of of a backlog is improved is $X.X year the backlog, order First, which business: underground elevation a range. areas

We continue normal to to by will expect fiscal backlog XXXX. of end be the close

help will and as these normalize. in strength sustained the expect we a Importantly, significant gap businesses supply avoid demand

expect and provide lawn We field our normalize, some products of to care inventories which offset. snow should also

lawn snow Second, levels than and ideal and than ideal construction remain much inventory. equipment. businesses our Field underground for for care higher field lower

For to back where have get little products, to a last were work we still quarter. similar lawn we at the end care to of normal,

positioning in and made and field attractive care homeowner market XXXX, our eventually coupled shipments, by dealer driven averages. This lower retail we progress as rebalance. our industry of products significant the growth Importantly, sales lawn fiscal sell-through brands markets of reducing inventories and outperformance during with that strength share demonstrates outpaced

the expect in field to turf a fiscal the season better in position XXXX as enter as We to of preseason much XXXX. well half the second fiscal snow compared upcoming

or I plan same, our the standard. inventory financing. another From portion whether of planning In a financial perspective, we allows financing on comment our operates for is financing it a us. OEM, the or structure Iron recoup Red the From programs the dealer positive institution. distributor which JV floor costs would the to inventory the like our is Third, as pay through industry, floor us to perspective, are

of given terms up is DSO Iron typical, seasonally balances sequentially the the flow retail Iron this, from seasonal as Red move around slightly flow. expected, QX receivables, normal Red given also as patterns. ticked In With our follow the

to fourth acquisition year, after improvement we for balances. slight saw last quarter new the a the adjusting of However, onboarding compared of

fiscal Importantly, of usual of amount to point to during and given XXXX, sound. the was as distributors which our required our is network and remains dealers consider strength the repurchases were we of immaterial data brands. financially channel One make

our outlook. XXXX fiscal moving Now to

caution to weather care historical X% and supply we homeowners considers for in full the demand just to seen visibility, total This for our based sales markets provided strong businesses aligned company levels snow X% continued additional and products. field to net the our elevated of expect range backlog, we in assumes connected backdrop current I the year. patterns also a stable macro on With needed a lawn growth and with normalized averages. It have continuation of and of with adjustments the

year digits. the sales we segment, be single full to expect net For up low Professional

full segment, we as continued expect our net as of the be last Residential divestitures. the high which mass to top impact For considers down rebalancing the of well partners, sales digits, year's single year

Looking at profitability.

and year, sales. full the gross percentage in For both adjusted margins earnings expect as of operating we a improvement net adjusted

Residential the EPS anticipate to this both We in year. also $X.XX. diluted year adjusted full backdrop, earnings last margins range Professional segment higher With $X.XX expect the and than we be of to

depreciation for expect net year, million effective Additionally, interest about reported expense of of $XXX tax rate an XXX% XX% million, the of we $XXX cash flow full and of to and a free amortization adjusted about rate of about conversion about million, $XX income.

Turning to net be first anticipate fiscal XXXX. company We similar quarter the year-over-year. of total sales to

to expect to be sales digits net Residential We mid-single to the Professional segment up down single sales last same be year. digits low period net and compared

Looking at profitability.

quarter, expect company be first slightly operating the we For adjusted to lower year-over-year. total margin

to than slightly be higher EPS segment period last fiscal earnings We expect similar slightly lower the Overall, to and to margin Residential year lower. slightly margin to the first diluted XXXX quarter the year-over-year. segment adjusted be Professional expect earnings be same our we

the growth our with momentum for We and continue long-term excited to are build we business AMP. seeing profitable about are

goal incent least This year current our to sunsets, drive margin company by next and to a for align full adjusted total new introducing XXXX. operating will AMP and a As employee initiative profitability, It all employees at with we Up. fiscal achieve called Five productivity are XX% Drive of earnings initiative initiative our

productivity With the drive I'll the Rick. to and our enterprise. We are to in profitability turn back confident across that, improvement call gains ability

industry-wide our years, confidence Angie. in and you, in few that environment the has innovation position In for operational the improved company We optimism. growth. fiscal some included headwinds our of new we've and markets past entered to long-term capabilities an for with the Thank invested year

our leadership strong. remain market Importantly, business fundamentals and

appropriate. I'll and are including demand benefits and specific under the and are prepared new close business now on the any the administration potential consumer economy, actions as Looking closely and ahead, monitoring the confidence comment policy take on to a risks dynamics the factors, we eye geopolitical macro our We're environment. of in markets. keeping changes

underground remain private strong, For to multiyear expect construction, we by demand spending. public supported and both

spending of in consistent into future. visibility address the utilities global runway for and the projected growth Infrastructure centers. We needs, compelling projects broader to communications, have outlier foreseeable a with remains data the including construction positive infrastructure industry,

lines Dingo replenished includes compact specialty For SK our construction, which across been Ditch utility field of have industry. and Toro levels loaders, Witch the

meaningful for a is construction, year which part to market, next double-digit following return years a rental growth X growth. expectations the mid-single-digit of specialty of For are

American We'll macro markets, patterns. should initial some in visibility with expect construction into trends watching month's Next provide XXXX's for be landscape we homeowner some Show and Association this, Rental where along order demand projects. caution

that data industry and worldwide. and turn, grounds, the of This, demand. durability golf reinforces sustained For golfer grounds reinforce played momentum new in the has

as demand continued expect by driven as We irrigation for well investments and equipment courses, on emphasis existing course development. new

interest care regular starting demand, sensitivity field rate the with lawn landscape inventory contractors, of by and For stable we elevated driven the given remains pockets retail environment solutions, replacement that in industry. some expect with price activity

we homeowners, For the we these XXXX. markets seen have continue to in caution expect into

spending favorable would factors We beneficial. consumer watching conditions And how over regular be rates affect will and turf patterns needs. replacement be growing above certainly, and interest macro

are in better patterns contractors growing XXXX, homeowners. retail budgets turf season. return contractor a and management, would ice expect we and in-season both in snowfall for pick good up following shape more snow to For fiscal normal If

it's So season. far, still but in early than the weather last patterns favorable more be year, appear tracking to the

For projects lighting, the residential for outlook projects. and demand commercial homeowner outpace we irrigation solid and and for be commercial expect to

from stable For in demand term. finally, we to with at for the homeowners, conditions irrigation, similar caution, And last least continued near growers. expect generally agricultural year, micro we expect

are solutions use. our we efficient designing worldwide to of that businesses, the end-to-end address for irrigation need all committed For water

so automation This control for irrigation amount from enabling that Ag can DXi yield manage Lynx drip Tempus Azul golf well least our applications, customers to precision, AquaTraxx stay helps with offers commercial as they Toro our maximize our our and the lineup for example, agricultural growers unmatched and and location. automation includes micro systems For focused for any water. central also on connected tape as use. of system crop outcomes easily improve Toro We're

Before ahead. we the the see is we questions, why so and excited like take growth greatest future reiterate we're I'd to about what opportunities

compelling are and strong driven we energy for modernization, trends. excited the growing business, as global prospects First, as long-term construction near- by is global infrastructure. data extremely aging about and on well has There underground grid infrastructure which rapidly a demand focus replacing communication

Importantly, as lineup we a leader worldwide with best-in-class the very in positioned most the are channel well and innovative, industry, deep comprehensive as brand equipment a and well as relationships.

due industry-leading is combination for and the to winning relationships as worldwide Second, have in market have this golf and Like offer leadership. market innovative company And of construction, the business solutions distinct strong advantage only equipment our we solutions. fundamentals, a products and as competitive both irrigation and of our leader coupled market also both. the exciting lineup deep a we underground to positive long-term comprehensive market with

Toro multi-brand dealer market development leadership networks the a continue single enhancing through our superior our extremely Professional market normal new of our in across to we while Residential care our we of mass space. both investments We've portfolio. and category proven the represents innovative independent important into positioned our our lawn markets lineup for drive return that investments enhanced further strength. Fourth, have the and ability productivity strategic the innovation development results future. technology the and strengthen mower Company's our help the We're leadership This competitive growth, partnerships. products as and leverage in position product these accelerated and our leadership customers well largest enables advantage This ensuring Third, zero-turn segments. and to to especially broad for

upcoming products our Tracer retail with autonomous Mower. portfolio, residential, GeoLink our technology This XiQ We golf and commercial excited mower, across Autonomous includes of applications. about robotic and Turf Exmark Solutions Fairway including Haven the are launches Toro

disciplined through growth. We and to return including smart down been organization prioritized XX and that consecutive alternative the will execution macro technology comes to finally, it and has on investments, built autonomous consistent years key solutions. cycles. resilient a financial top reported continue drive of agile connected performance. power, with areas strong line our And of We've We've innovation many

that focused beyond talented is a aligned capitalize all team day. to have going our strategically partners on determined of we to best customers of network serve the our opportunities. We have channel And above on every and

All customers, our for the term. of With extremely well call will up drive our near to in and channel shareholders that, for our both and positions this partners us questions. value long we open the

Instructions] first line of from Eric comes question Company. Cleveland [Operator of Research Your the Bosshard

things. what XQs different than, Two could any quarter of the help quarter? profit little performance better the I a Residential in Residential guess, I all, profit looked us contraction the way in was you guess, the many first Anything have like. unique or understand

Eric. I'll this morning, Good Yes, take one.

with snow mowers. more and a a role played that So we and anticipated Residential. mix tougher for zero-turn entry-level quarter in volume usual, as with QX We had also less

a the programming X% operating We prepared we we're or about full in well. our the some focus at -- which also margin look increased freight, manufacturing additional efficiencies remarks, Residential good being some year. you as at some and just year, supplier, if reminder, for a and have mentioned drove margin on that Overall,

hear was and it's up talk X% Rick, within was in of a now then, and it in ago, lot know path And was Okay. that growth X% X. the a helpful move up is, the forward. Pro I to quarter. to the guess there 'XX, it XX question XX% you X thought XX%, was I of I expectation the tailwinds see I business we think to days as or perhaps And

outlook quarter certainly different in like, the terms And Pro in of intact, with and the so what's guess performance I is, the 'XX? in question in tailwinds my the revenue total

Yes.

first I think you hear Eric. from all, good of -- you, if to

side. if does you are look the it just at -- that products the the caution Pro and about you in our contractor saw reflect we buying the of those from year, If that third outlook with look quarter, a to started the for at bit homeowners professional next particularly little the landscape business, talk general, in

part what continues of that's next as So well. year into

plays okay as in yet from to grounds, construction the how keep strength are then for with obviously, well. out, an factors. And in but snow do conditions. season, and we've -- had Pro to that continued We and mind, healthy have in guess, we're the other which along in We has backlog, I that's extremely factored underground see, areas the off see golf where major start,

part So positioned it's and factors. get of growth. some into other our Professional that taking for we and well standpoint future in we first year. in really little off were for bit, CULs the from place a we're markets leadership adjustments a well positioned these as But the see the

the I caution reflects about think it we talked quarter. that the third in just

Your and comes Company. Shlisky the from of Davidson line next Mike of question D.A.

Can logo. employee Or is it rewarding amped a a it other thinking more Rick? them mentioned, from differs doing? here, that AMP more should more an Up at are guess, how slides it's taking original about of and involved? little it what got It initiative Does on here, a I involve be there got I for suggestions AMP up we bit about here? Looking what's it? nice the And that the version you're program already I things I'm you looking your you've detail little get curious guess

by lot initiative, entire what's -- Well, extension Up Mike, of central the really In talk of understand employee that improvements, have it's It that, if you our cost first the -- focusing lean She's of initiatives of with on a AMP base productivity amplifying with got AMP, AMP really some initiative. productivity, factors, If let recall, Angie kind actually of I'll history about et to so on an our you've this. efficiency, of you focusing all, us, sponsor emphasis our and been cover? this And base that critical. cetera. Does really case, really we're on our really our Angie? compounding employee AMP employee maximum is

a employees Yes, just a time, profitability not it's really be like This goal, it's but year, well. it -- be to this going And internal focused profitability. mentioned, focus, or a you it's initiative. with it to reminder, it's employee being that be X-year Mike, will all guidance, going covers our on --

that more of Rick for to initiative to profitable. for mentioned productivity that with aligns really us and go So look become ways all

year, that Sounds mix-wise the ask group? your It product kind Residential differ of Rick. than to after and secondly, the to Xth sounds retail what's might have given Fair a that the and maybe larger enough. like a going of thoughts to real want a might here. the launch few delivers? is be Professional been, first like the some curve Any appreciated. kind margin-wise it's be see would where maybe previous might time period what Just expect to you've the year, this to also versus bit Okay. It be of as like, here launch it autonomous in as times about mentioned tests the mean penetration you of your I by a products comments, after what over thoughts

correct. Yes, you areas. X are across This a launch is significant pretty

the Tracer the consumer So and both it with -- Haven includes the side, the commercial on Turf our side. golf that golf the our equipment homeowner includes business,

numbers at order that kind I higher we're penetration, have but look at talking would be them. in time, of specific penetration the the gave about you this we If the don't that

standpoint. So in business already higher and The businesses robotics from commercial a applications. very competitive are golf penetration the a residential

to of So just operate, as labors it's see really go why the have extremely and availability you're is Mike, the our as many forward. really the it labor that the customers years. lot be add, could not investments would there indicator through we are there. we've timing just if are better but made asking chance a to about fruits concerned come. I more probably it's by and of these players machines the But nature, technology, see a this operate, question, reason more really the an you of These the astonishing are people

So there's more interest than ever.

So and this technology of a that there's not timing been be products have lot could gone introducing and better. the of into work these

Thanks Rick. hop queue. so discussion. much I'll for in the the Exciting, back

Thanks, Mike.

Instructions] [Operator

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

just first Residential the growth on first mid-single wanted programming fourth forward Can extent volume unit stronger-than-expected the have fourth is pulled guide I start to and quarter half which promotions digits. from quarter in discuss 'XX? but quarter, business guess I you may the to down

year, we the into we this year. has -- commentary reflects really, as snow really More head quarter it's David. Yes. as previously, really if the mentioned to what consistent first even last our And to you channel from the product at talk snow now. Good before. lower talked guide, what our to relative about It look And of with I third with consistent homeowners lot a it caution the quarter. in you, we in right

snow that of more a inventory, the an we're half even of field opportunity second it creates bit down for drawing getting and for So little it's us. happening, as

snow will the probably be out Yes, that's -- you are -- headwind, itself in business factors projections those pulp bottom is, residential, snow the at than look be -- look taking you that a that it. we positive into of there as the becomes a great story driving if is And second the forward area. part the of our bigger the half the at with side some made is if we've of that year. the on of get would and lineup do we So Lowe's our part line, divestiture product investments what's

any So for spring just kind of the we still third what reflects the the off-season about that quarter. there product. you It's talked see in caution

that see there, really we'll in improvements flows the those. how and So macro if factors there's that were

Right.

I just but here. a question, So have I follow-up to want clarify

weakness versus saying in terms XQ that not the XQ? was issue pull in an of So you're here strength forward in

There forward. field in significantly lot for see now. better -- a pull -- pull can a that are is competitors. of position unusual independent we with Nothing industry-wide regard factors an promotion. actually forward better than atmosphere to It's right The our us,

product introductions. can new there factors, example, You also -- get are for

Our Lazer team introduced new Exmark platform. a

remarks. in think market. have I entered mentioned our the we prepared Those

don't are but a fourth we So factors, pull have lot in the of forward there any about quarter. discomfort

question you've mean margins growth adjusted -- there's just margins up -- flat, there. got word guidance. maybe with to talked the and But X%. about gross And up slightly relatively And in regard follow-up Okay. sales you've your net XXXX I no my is then not slightly.

feel like that incremental just was strength of performance? And pretty though performance. takes margin could margin sort So you incremental is if wondering for a and up driving incremental the within that What performance talk about good you setting you're puts I in -- 'XX?

workforce to it our speak able more actions position in described general, positioning Angie the of ourselves to but And reduction, that top kinds -- to it's profitability. ourselves ourselves And the growth taken line, we've well. surprised as the AMP, reflects to strategy be won't to want year be maybe but that competitive those to just even with specifics, profitability. position ourselves That's positioning to if but are next the can we've improve we on to positive, in in reflected to things, if even lower there's able reflected be improve we regret we

product I'll the some Yes. be back additional But just and it half the in is better snow add it than also half. first we expect mix, will that some in

Great. raw a expect that year? Do be good you materials next will guide

I think overall. our we're stable commodities on pretty

Some into continue the to favorability, half 'XX. of maybe first

Baird. of line the from with comes Wojs Tim question next Your

the maybe just question the just my cadence is Maybe year. of first for kind EPS

you thanks growth the about that? kind of trying should I'm or through to a you So of that rest mean, QX -- Or quarters? of of how comments, expecting kind for think the pace the think earnings I kind half about year. expect how remaining is year, we than guidance year-over-year earnings -- are weighted basis for the the X as second should guess more we on the I

do the is a typically haven't to we largest of normal 'XX. lawn our being of care is guided our really our close half both, second and year first be more there. greater We we position. rest quarters specifically that sales as field expect to backlog because that third quarters than inventory the by typical. But cadence are into the expect and And and a So for end of EPS snow F better for our in half second our

Okay.

guess I on at the ended backlog, And billion. Okay. $X.X year you the

is at You've you say and kind that? that of you of of mean, a much kind guess how kind a today much how imply of what number, that -- of now? within kind fair billion, when normalized $X.X underground chewed normalized are And I and for of implying backlog amount golf you I today year the ending that. through is of the do what

about normal areas X talked The for those be X what golf that long-term and a called remaining you out them more getting positive. is we've -- to areas look largest the about Yes. are makes trends them rates. That thing is underground. and extremely And demand run grounds to remaining down the positive

the also them down So the bring demand good there. And year our run long-term goal have durable because rates we offsets. is the more this quite to mean looks news, to I

that a right businesses we get this expect are have into contributing that to would We we going return that through correction now year. to to as

we're with of So business the it grounds. really golf underground that X and weather with the really those We've and speaks strength been about able, to talking last those here markets over portfolio. corrections the in the years, to

those F in of construction I would and businesses in that, 'XX. progress underground both add we've volume and to made just for grounds for golf

a to to produce doing. people that are really to our it business. help tremendous our ability speaks footprint has work our the been within Our given And operations

Okay.

Okay.

saying normal you're like you where So have don't a like like or a that, like normal -- don't have something million you it's backlog? like number a $XXX

got We've mind. something in

$XXX I think that of thinking we're it's probably million. south

Okay.

And golf -- then shipping of demand. I you in 'XX That's this on Okay. I just backlog, guess if I can an mean underground? pocket Just like like like and prevent mathematically, helpful. kind overshipping guess in fiscal -- you're air technically is you're

those there's Just demand I like have imply still probably if kind mathematically it businesses, some kind just if normal normalizes, too. trying in you just could year, are but know to to does guess, like have you I down? of understand like volatility that it. businesses those landscape a seems next prevent way So of it

the really durability of is think key I the the demand.

can rate rate, So the a at more demand. a more return normal and demand of we normal fulfilling continues to

orders We the quality out that have confidence the in high right are now. of there

In fact, through make to them that current. gone an sure refresh and exercise we've they're

that's high demand confidence there. in So we've got the

more talking a you're not that that without landscape back that is contractor up other will demand to return will portfolio, about. to a ability -- that and snow the back we future be, good normal And to believe collapse strength normal work manage have market, in demand, is if well. will level. pocket to normal the And -- that to then online. to businesses in our plan as We we back of manage of the Eventually, in a the getting have we business. rate don't to the healthier which the confidence more That's we have the down yes, air backup coming be there's there that the that

Okay.

Okay. X I could if X last I squeeze in. more, And then understand.

same the have I that lower much there question? you risk earnings a could just answer jobs? have of don't upcoming kind lot would have to how on have guess, so guess a tariffs? you the you related the as kind if drive some explicitly -- But of integration? that labor is anything administration, in positive. be you your your that customers how they could just of guidance to know have do I of actually a a products thought And year Just of I then -- complete productivity, number how about

backwards. done one customers or really have that another. to get going of Maybe have jobs way Most our

they has to -- course work but it's interested higher in be greater. with be investment, higher be that So products of we they that they've -- ultimate going on demand the or high machines, productivity for got would productivity autonomous, we a exceptionally property, or believe if just are maintaining that done. much restricted also solutions let's on be sort municipality, the whether say, labor, have are many will return so those a to And golf a provide

positive, just our that tariffs, So be going to to back things. couple of customers. And then it's challenge for as a although just a view we a

reduced products have specifically, majority produced of included we've XXXX. in of regard vast and price to products. And more not all since would tariffs our our United China, Mexico And with the our production effect for the competitive are China do our products. substantially in of risk the guidance. our have We professional some I virtually that just of We States remind in

we've some So done positioning for current situation. this

that all in the just got are making there sure for biggest is sure closely we a I flip as advantage we side, we're out and And see of that what number we've factors mitigations thing very monitoring think well. that would potential on of be place of the making as then positive anything negative. the moves take

[Operator Instructions]

Question come Wilson James. from Raymond the of line of Josh

clarification. Just a of point

it subsegments about you're relates are as assuming when guidance, versus that talk to for 'XX you those First, mean Intimidator, the 'XX? sales stable year-on-year and of does contractor conditions in landscape flat 'XX

I'd of field say we're down both for inventory those. working still the

that mentioned. lawn But said are down those of care flat, snow We both year-over-year. and and better we both for we but they're haven't we field those -- including working will expect to that you be it be

to of that that even down. number, probably the third to work level. we've We would believe, go field in at bring probably expected quoted inventory an point, a similar XX% or have at quarter further We done this I the

at have So we are much to time. work where do we to a position adjust last better than in we field this inventory some year our were still

from comes of question next Jackson Ed line Your Northland. the of

first air morning. Good the flip Thanks It's the kind Skin Q&A. much. the with working and pocket. My through side is pretty backlog the teeth, regards simple. and question to got of it very by of earlier the question

something getting you see this could of your XXXX that the you because tailwind the that you 'XX? you're no dealer As side that and hit of that we half your expectation longer wouldn't even year, exit in being a for -- let's perhaps a say, where normalize second inventory in be having pickup you would be could headwind? that flip before to And the case and with you your sales normalized deal

Ted, you that. to of elements there's couple mean, think, I I speak -- a of

markets. the movement all, of First of various our

-- our we has do the point. that potentially been if a for -- a this demand healthy little you would markets positive be that if perspective in some recovery bit would contractor net sales. and combination muted, areas So which for a of and long golf have of from looks And a with that have positive the underground, believe landscape be at you positive, continuation did

True, that's think definitely plays cetera. subject the to but et out, how I macroeconomics, So true. year

going Yes. snow know Well, we to tomorrow. it's

least Just pointing are. it at where we out,

So second question.

they You getting on you and drives looking was not subdued, commented And rates of The the of they're have mean your But their you've gone portion business the know rental I that. during the in in as them I seeing rental the quarter thing what the on that the the last it's for through to with mean if an third some X market back fourth kind CapEx. softened. I more most not update is pulling houses, listen I the utilization call of calls that -- had for you they're a the like you just that were everything. clearly of seen past. quarter? outlooks little business for

had last -- rental our We years. I Witch. have our construction think several we did portion, customers. rental of investments is portion the that, loaders, over called and caution may especially not X compact sides utility done capital business, the Ditch from out national some And significant people That more a Toro of so huge a the

better of than that more their obviously is in the the construction I we have they've So much relatively are on think And do. caution some have rental. new. just less fleets resulted that areas that commentary in seen They

cetera. projects, in very And business. kind homeowners be ease or where projects, landscape a independent et and more rental, the homeowner that's that tend contractor landscape shows On see of contractor, to landscaping up similar to those caution our residential professional we towards

move consumer that more factors expect of we to factors, normalizing. that the So other with the macro that and confidence we've -- we kind think and about talked

today. leave it be correct? Is that feedback will later Okay. I'll out queue too. The

correct. That's

This concludes please the question-and-answer Kerekes, session. to Ms. remarks. closing proceed

thank XXXX in results. joyous again for to forward you quarter and everyone, your in safe discuss wish first look a March The you Toro holiday talking with Thank We Company. and our and to Marvin, questions We interest you, you, season. fiscal

Thank the you for This your conference. participation conclude does in today's presentation.