Release Date: June 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Toro Co (TTC, Financial) exceeded its adjusted earnings per share expectations for the quarter, achieving $1.42.
- The company continued to return cash to shareholders through dividends and share repurchases, deploying $100 million towards share repurchases in the quarter.
- The professional segment showed growth, with net sales over $1 billion, driven by higher shipments of golfing grounds products.
- The AMP program has generated $70 million in run rate savings and is on track to deliver $100 million by 2027.
- The Toro Co (TTC) received the 2024 Ace Hardware Vendor of the Year award, recognizing substantial sales growth and innovative products.
Negative Points
- Revenue for the quarter declined 2.3% year-over-year to $1.3 billion, impacted by weak consumer confidence and a late spring.
- Residential segment net sales decreased by 11% year-over-year, primarily due to lower shipments of certain products and divestitures.
- The company faced higher material and manufacturing costs, which impacted margins despite productivity improvements.
- Tariff headwinds are expected to be approximately 3% of the annual cost of goods sold, posing a challenge to cost management.
- The guidance for fiscal 2025 was adjusted to reflect additional macroeconomic headwinds, with total year revenue expected to be flat to down 3% from fiscal 2024.
Q & A Highlights
Q: In the landscape business within the pro segment, where does the inventory stand now, and how did the landscape contractor business perform in the quarter?
A: Richard Olson, CEO: We've largely returned to our desired inventory levels, although the delayed start to spring has kept it slightly higher. The landscape contractor business performed as expected, but the late spring affected shipments. We feel better about our field inventory position now.
Q: Is the residential business the primary area where guidance has been revised, and is the impact broad-based across customer channels and products?
A: Richard Olson, CEO: Yes, the residential business is the primary driver of the revised guidance. The macroeconomic environment and consumer confidence are affecting sales, with customers tending to buy lower-ticket items. The delayed spring also impacted sales.
Q: Can you explain the discrepancy between the underground business being down year-over-year and the positive demand metrics?
A: Richard Olson, CEO: The decline is due to the sale of two dealers, SKU rationalization, and startup challenges with new products. Despite these factors, we remain positive about the long-term demand driven by infrastructure projects and data center construction.
Q: Can you provide more details on the tariff impact and mitigation strategies?
A: Richard Olson, CEO: Tariffs are expected to impact about 3% of our COGS, primarily from China, steel, and aluminum. We plan to mitigate these through productivity initiatives, price adjustments, and optimizing our supply chain. The impact will be more significant in the fourth quarter.
Q: How are you managing price/cost dynamics given material cost headwinds and tariff pressures?
A: Angie Drake, CFO: We expect price to be slightly up due to reduced promotions and implemented tariff price actions. Our transformational productivity initiative is helping offset material costs, and we anticipate price increases to be slightly higher than our normal 1% to 2%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
