The Toro Company Reports Results for the First Quarter of Fiscal 2024
- First-quarter net sales of $1.00 billion, a decrease from the previous year.
- Reported diluted EPS of $0.62, adjusted diluted EPS of $0.64, both lower than the same period last year.
- Reaffirmation of full-year fiscal 2024 guidance, expecting low-single-digit total company net sales growth and adjusted diluted EPS in the range of $4.25 to $4.35.
- Lower shipments of zero-turn mowers and snow and ice management products, offset by higher shipments in other segments.
- Optimism about innovation leadership and strong business fundamentals driving growth in fiscal 2024.
- Decrease in first-quarter net sales and diluted EPS compared to the previous year.
- Lower shipments of zero-turn mowers and snow and ice management products impacting segment results.
- Operating earnings as a percentage of net sales decreased in the first quarter.
- Increase in interest expense driven by higher average interest rates and borrowings.
Insights
The Toro Company's reported first-quarter net sales decline of 13% year-over-year and a 39% decrease in net earnings indicate a contraction in revenue and profitability, which could be concerning for investors and stakeholders. The company's ability to maintain gross margin rates nearly consistent with the prior year, despite lower sales volumes, suggests effective cost management strategies. However, the increased SG&A expenses as a percentage of net sales reflect the impact of reduced sales on operational efficiency. The company's reaffirmed fiscal 2024 guidance suggests confidence in their market position and strategy, but the reliance on continued strong demand and stable supply for businesses with elevated order backlog could be a potential risk if market conditions change unexpectedly.
The mention of leveraging proprietary technology like the Hypercell™ smart battery system indicates an investment in innovation, which could be a significant driver for long-term growth. However, the actual impact on the company's financials will depend on the market adoption rate of these new technologies and the competitive landscape. The forecasted annualized cost savings of over $100 million by fiscal 2027 through the AMP initiative shows a strategic approach to improving operational efficiency, but the realization of these savings will be critical to monitor in the coming quarters.
From a market perspective, Toro's performance in the golf and grounds and construction markets is a positive sign, highlighting the company's strength in these niches despite overall lower sales. The decline in zero-turn mowers and snow and ice management products is attributed to elevated field inventories and below-average snowfall, which may be temporary factors. The expectation of homeowner markets stabilizing indicates a potential rebound in residential segment sales, which could improve the company's performance in upcoming quarters.
The expanded mass retailer channel could offer incremental growth opportunities, but this strategy's success will depend on consumer spending trends and the competitive dynamics of the retail space. Toro's emphasis on innovation, particularly in sustainable solutions like the Groundsmaster® e3200 mower, aligns with the growing consumer and regulatory push for environmentally friendly products, potentially opening up new market segments and customer bases.
Understanding the macroeconomic factors affecting The Toro Company's performance is crucial. The company's results reflect broader economic trends such as consumer caution, which may be due to economic uncertainty or shifts in spending priorities. The continued strong demand in specific business segments despite economic headwinds suggests resilience in those markets. However, manufacturing inefficiencies and adjustments to production and inventory levels in response to market conditions could indicate a broader economic slowdown affecting consumer and professional equipment purchases.
The company's guidance assumes weather patterns aligned with historical averages, which is a variable factor and introduces an element of unpredictability into their projections. It's important to consider that the outdoor equipment industry is sensitive to weather patterns and any significant deviations could impact future financial performance. Additionally, the company's reliance on an expanded residential segment mass channel as part of its growth strategy may be impacted by the broader retail environment and consumer spending power, which are influenced by economic conditions such as inflation and employment rates.
Continued Strength in Demand Across Construction, and Golf and Grounds Markets
Company Reaffirms Full-Year Fiscal 2024 Guidance
-
First-quarter net sales of
$1.00 billion $1.15 billion -
First-quarter reported diluted EPS of
$0.62 $1.01 -
First-quarter *adjusted diluted EPS of
$0.64 $0.98
“The first quarter aligned with our expectations, as we drove exceptional top-line growth for our underground and specialty construction, and golf and grounds businesses,” said Richard M. Olson, chairman and chief executive officer. "This performance was the result of continued strong demand for these products and the strategic actions we’ve taken to increase output with more stable supply. The strength in these areas was offset by lower shipments of zero-turn mowers, as expected, given elevated field inventories heading into the fiscal year, and lower shipments of snow and ice management products due to below-average snowfall activity. At the same time, our team drove productivity gains that offset higher material costs, operating with resiliency and agility as we continued to align costs and production to demand trends.”
OUTLOOK
“Our innovation leadership in attractive end markets, strong business fundamentals, and proven ability to drive positive results through economic cycles and seasonal variability give us confidence in our ability to deliver growth in fiscal 2024,” continued Olson. "We anticipate homeowner markets will begin stabilizing this spring, following last year’s combination of macro factors and weather patterns that resulted in elevated field inventories of lawn care products. We expect incremental growth from our expanded mass retailer channel will help offset this dynamic. We also expect benefits from the sustained demand in our underground and specialty construction, and golf and grounds businesses. With this demand, order backlog for these businesses remains elevated, and we intend to continue flexing production within our existing facilities to improve lead times and better serve our customers.
“Our commitment to delivering superior innovation and customer care continues to drive our market leadership, supported by our strong balance sheet, disciplined capital allocation, and outstanding team of employees and channel partners. We are prioritizing investments in advanced technologies and solutions that we expect will drive long-term profitable growth and value for all stakeholders. For example, we are leveraging our proprietary Hypercell™ smart battery system to accelerate the development of high-powered sustainable solutions for professional segment markets, such as our new Groundsmaster® e3200 out-front rotary mower. We also continue to drive productivity and operational excellence across the enterprise, including the more than
For fiscal 2024, the company continues to expect low-single-digit total company net sales growth and *adjusted diluted EPS in the range of
FIRST-QUARTER FISCAL 2024 FINANCIAL HIGHLIGHTS |
||||||||||||||||||
|
|
Reported |
|
Adjusted* |
||||||||||||||
(dollars in millions, except per share data) |
|
FY24 Q1 |
|
FY23 Q1 |
|
% Change |
|
FY24 Q1 |
|
FY23 Q1 |
|
% Change |
||||||
Net Sales |
|
$ |
1,001.9 |
|
$ |
1,148.8 |
|
(13 |
)% |
|
$ |
1,001.9 |
|
$ |
1,148.8 |
|
(13 |
)% |
Net Earnings |
|
$ |
64.9 |
|
$ |
106.9 |
|
(39 |
)% |
|
$ |
66.5 |
|
$ |
103.6 |
|
(36 |
)% |
Diluted EPS |
|
$ |
0.62 |
|
$ |
1.01 |
|
(39 |
)% |
|
$ |
0.64 |
|
$ |
0.98 |
|
(35 |
)% |
FIRST-QUARTER FISCAL 2024 SEGMENT RESULTS
Professional Segment
-
Professional segment net sales for the first quarter were
$756.5 million 14.1% from$880.7 million -
Professional segment earnings for the first quarter were
$112.8 million 21.7% from$144.1 million 14.9% , down from16.4% in the prior-year period. The decrease was primarily due to lower net sales volume, partially offset by favorable product mix.
Residential Segment
-
Residential segment net sales for the first quarter were
$240.1 million 9.3% from$264.6 million -
Residential segment earnings for the first quarter were
$23.5 million 37.8% from$37.8 million 9.8% , down from14.3% in the prior-year period. The year-over-year decrease was largely driven by product mix.
OPERATING RESULTS
Gross margin and *adjusted gross margin for the first quarter were both
SG&A expense as a percentage of net sales for the first quarter was
Operating earnings as a percentage of net sales were
Interest expense was
The reported effective tax rate for the first quarter was
* Non-GAAP financial measure. Please refer to the “Use of Non-GAAP Financial Information” for details regarding these measures, as well as the tables provided for a reconciliation of historical non-GAAP financial measures to the most comparable GAAP measures.
LIVE CONFERENCE CALL
March 7, 2024 at 10:00 a.m. CST
www.thetorocompany.com/invest
The Toro Company will conduct its earnings call and webcast for investors beginning at 10:00 a.m. CST on March 7, 2024. The webcast will be available at www.thetorocompany.com/invest. Webcast participants will need to complete a brief registration form and should allocate extra time before the webcast begins to register and, if necessary, install audio software.
About The Toro Company
The Toro Company (NYSE: TTC) is a leading worldwide provider of innovative solutions for the outdoor environment including turf and landscape maintenance, snow and ice management, underground utility construction, rental and specialty construction, and irrigation and outdoor lighting solutions. With net sales of
Use of Non-GAAP Financial Information
This press release and our related earnings call reference certain non-GAAP financial measures, which are not calculated or presented in accordance with
The Toro Company uses these non-GAAP financial measures in making operating decisions and assessing liquidity because it believes these non-GAAP financial measures provide meaningful supplemental information regarding core operational performance and cash flows, as a measure of the company's liquidity, and provide the company with a better understanding of how to allocate resources to both ongoing and prospective business initiatives. Additionally, these non-GAAP financial measures facilitate the company's internal comparisons for both historical operating results and competitors' operating results by factoring out potential differences caused by charges and benefits not related to its regular, ongoing business, including, without limitation, certain non-cash, large, and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. The company believes that these non-GAAP financial measures, when considered in conjunction with the financial measures prepared in accordance with
Reconciliations of historical non-GAAP financial measures to the most comparable
The Toro Company does not provide a quantitative reconciliation of the company’s projected range for adjusted diluted EPS for fiscal 2024 to diluted EPS, which is the most directly comparable GAAP measure, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The company’s adjusted diluted EPS guidance for fiscal 2024 excludes certain items that are inherently uncertain and difficult to predict, including certain non-cash, large and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. Due to the uncertainty of the amount or timing of these future excluded items, management does not forecast them for internal use and therefore cannot create a quantitative adjusted diluted EPS for fiscal 2024 to diluted EPS reconciliation without unreasonable efforts. A quantitative reconciliation of adjusted diluted EPS for fiscal 2024 to diluted EPS would imply a degree of precision and certainty as to these future items that does not exist and could be confusing to investors. From a qualitative perspective, it is anticipated that the differences between adjusted diluted EPS for fiscal 2024 to diluted EPS will consist of items similar to those described in the financial tables later in this release, including, for example and without limitation, certain non-cash, large, and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. The timing and amount of any of these excluded items could significantly impact the company’s diluted EPS for a particular period.
Forward-Looking Statements
This news release contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current assumptions and expectations of future events, and often can be identified by words such as “anticipate,” “believe,” “become,” “can,” “continue,” “could,” “encourage,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “improve,” “intend,” “likely,” “looking ahead,” “may,” “optimistic,” “outlook,” “plan,” “possible,” “potential,” “pro forma,” “project,” “promise,” “pursue,” “should,” “strive,” “target,” “will,” “would,” “seek,” variations of such words or the negative thereof, and similar expressions or future dates. Forward-looking statements involve risks and uncertainties that could cause actual events and results to differ materially from those projected or implied. Forward-looking statements in this release include the company’s fiscal 2024 financial guidance, expectations regarding demand trends, supply chain stabilization and AMP, and other statements made under the "Outlook" section of this release. Particular risks and uncertainties that may affect the company’s operating results or financial position or cause actual events and results to differ materially from those projected or implied include: adverse worldwide economic conditions, including inflationary pressures and higher interest rates; the effect of abnormal weather patterns; customer, government and municipal revenue, budget spending levels and cash conservation efforts; loss of any substantial customer; inventory adjustments or changes in purchasing patterns by customers; fluctuations in the cost and availability of commodities, components, parts, and accessories, including steel, engines, hydraulics, and resins; disruption at or in proximity to its facilities or in its manufacturing or other operations, or those in its distribution channel customers, mass retailers or home centers where its products are sold, or suppliers; risks associated with acquisitions and dispositions; impacts of the company’s AMP initiative and any future restructuring activities or productivity or cost savings initiatives; COVID-19 related factors, risks and challenges; the effect of natural disasters, social unrest, war and global pandemics; the level of growth or contraction in its key markets; the company’s ability to develop and achieve market acceptance for new products; increased competition; the risks attendant to international relations, operations and markets; foreign currency exchange rate fluctuations; financial viability of and/or relationships with the company’s distribution channel partners; management of strategic partnerships, key customer relationships, alliances or joint ventures, including Red Iron Acceptance, LLC; impact of laws, regulations and standards, consumer product safety, accounting, taxation, trade, tariffs and/or antidumping and countervailing duties petitions, healthcare, and environmental, health and safety matters; unforeseen product quality problems; loss of or changes in executive management or key employees; the occurrence of litigation or claims, including those involving intellectual property or product liability matters; impact of increased scrutiny on its environmental, social, and governance practices; and other risks and uncertainties described in the company’s most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.
(Financial tables follow)
THE TORO COMPANY AND SUBSIDIARIES
|
||||||||
|
|
Three Months Ended |
||||||
|
|
February 2, 2024 |
|
February 3, 2023 |
||||
Net sales |
|
$ |
1,001.9 |
|
|
$ |
1,148.8 |
|
Cost of sales |
|
|
657.4 |
|
|
|
752.9 |
|
Gross profit |
|
|
344.5 |
|
|
|
395.9 |
|
Gross margin |
|
|
34.4 |
% |
|
|
34.5 |
% |
Selling, general and administrative expense |
|
|
255.9 |
|
|
|
259.5 |
|
Operating earnings |
|
|
88.6 |
|
|
|
136.4 |
|
Interest expense |
|
|
(16.2 |
) |
|
|
(14.1 |
) |
Other income, net |
|
|
7.7 |
|
|
|
9.0 |
|
Earnings before income taxes |
|
|
80.1 |
|
|
|
131.3 |
|
Income tax provision |
|
|
15.2 |
|
|
|
24.4 |
|
Net earnings |
|
$ |
64.9 |
|
|
$ |
106.9 |
|
|
|
|
|
|
||||
Basic net earnings per share of common stock |
|
$ |
0.62 |
|
|
$ |
1.02 |
|
|
|
|
|
|
||||
Diluted net earnings per share of common stock |
|
$ |
0.62 |
|
|
$ |
1.01 |
|
|
|
|
|
|
||||
Weighted-average number of shares of common stock outstanding — Basic |
|
|
104.4 |
|
|
|
104.5 |
|
|
|
|
|
|
||||
Weighted-average number of shares of common stock outstanding — Diluted |
|
|
104.7 |
|
|
|
105.6 |
|
Segment Data (Unaudited)
|
||||||
|
|
Three Months Ended |
||||
Segment net sales |
|
February 2, 2024 |
|
February 3, 2023 |
||
Professional |
|
$ |
756.5 |
|
$ |
880.7 |
Residential |
|
|
240.1 |
|
|
264.6 |
Other |
|
|
5.3 |
|
|
3.5 |
Total net sales* |
|
$ |
1,001.9 |
|
$ |
1,148.8 |
|
|
|
|
|
||
*Includes international net sales of: |
|
$ |
205.0 |
|
$ |
245.4 |
|
|
Three Months Ended |
||||||
Segment earnings (loss) before income taxes |
|
February 2, 2024 |
|
February 3, 2023 |
||||
Professional |
|
$ |
112.8 |
|
|
$ |
144.1 |
|
Residential |
|
|
23.5 |
|
|
|
37.8 |
|
Other |
|
|
(56.2 |
) |
|
|
(50.6 |
) |
Total segment earnings before income taxes |
|
$ |
80.1 |
|
|
$ |
131.3 |
|
THE TORO COMPANY AND SUBSIDIARIES
|
||||||||||||
|
|
February 2, 2024 |
|
February 3, 2023 |
|
October 31, 2023 |
||||||
ASSETS |
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
198.5 |
|
|
$ |
174.0 |
|
|
$ |
193.1 |
|
Receivables, net |
|
|
489.1 |
|
|
|
377.3 |
|
|
|
407.4 |
|
Inventories, net |
|
|
1,177.1 |
|
|
|
1,131.4 |
|
|
|
1,087.8 |
|
Prepaid expenses and other current assets |
|
|
101.8 |
|
|
|
75.0 |
|
|
|
110.5 |
|
Total current assets |
|
|
1,966.5 |
|
|
|
1,757.7 |
|
|
|
1,798.8 |
|
|
|
|
|
|
|
|
||||||
Property, plant, and equipment, net |
|
|
639.2 |
|
|
|
584.1 |
|
|
|
641.7 |
|
Goodwill |
|
|
451.2 |
|
|
|
584.6 |
|
|
|
450.8 |
|
Other intangible assets, net |
|
|
531.5 |
|
|
|
577.1 |
|
|
|
540.1 |
|
Right-of-use assets |
|
|
121.8 |
|
|
|
74.6 |
|
|
|
125.3 |
|
Investment in finance affiliate |
|
|
48.4 |
|
|
|
45.7 |
|
|
|
50.6 |
|
Deferred income taxes |
|
|
20.3 |
|
|
|
11.7 |
|
|
|
14.2 |
|
Other assets |
|
|
22.2 |
|
|
|
19.4 |
|
|
|
22.8 |
|
Total assets |
|
$ |
3,801.1 |
|
|
$ |
3,654.9 |
|
|
$ |
3,644.3 |
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||||||
Current portion of long-term debt |
|
$ |
6.8 |
|
|
$ |
— |
|
|
$ |
— |
|
Accounts payable |
|
|
421.8 |
|
|
|
475.2 |
|
|
|
430.0 |
|
Accrued liabilities |
|
|
474.5 |
|
|
|
496.8 |
|
|
|
499.1 |
|
Short-term lease liabilities |
|
|
18.8 |
|
|
|
16.0 |
|
|
|
19.5 |
|
Total current liabilities |
|
|
921.9 |
|
|
|
988.0 |
|
|
|
948.6 |
|
|
|
|
|
|
|
|
||||||
Long-term debt, less current portion |
|
|
1,179.8 |
|
|
|
1,091.0 |
|
|
|
1,031.5 |
|
Long-term lease liabilities |
|
|
108.4 |
|
|
|
60.7 |
|
|
|
112.1 |
|
Deferred income taxes |
|
|
0.4 |
|
|
|
31.4 |
|
|
|
0.4 |
|
Other long-term liabilities |
|
|
42.7 |
|
|
|
39.6 |
|
|
|
40.8 |
|
|
|
|
|
|
|
|
||||||
Stockholders’ equity: |
|
|
|
|
|
|
||||||
Preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock |
|
|
104.0 |
|
|
|
104.3 |
|
|
|
103.8 |
|
Retained earnings |
|
|
1,478.9 |
|
|
|
1,368.5 |
|
|
|
1,444.1 |
|
Accumulated other comprehensive loss |
|
|
(35.0 |
) |
|
|
(28.6 |
) |
|
|
(37.0 |
) |
Total stockholders’ equity |
|
|
1,547.9 |
|
|
|
1,444.2 |
|
|
|
1,510.9 |
|
Total liabilities and stockholders’ equity |
|
$ |
3,801.1 |
|
|
$ |
3,654.9 |
|
|
$ |
3,644.3 |
|
THE TORO COMPANY AND SUBSIDIARIES
|
||||||||
|
|
Three Months Ended |
||||||
|
|
February 2, 2024 |
|
February 3, 2023 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net earnings |
|
$ |
64.9 |
|
|
$ |
106.9 |
|
Adjustments to reconcile net earnings to net cash used in operating activities: |
|
|
|
|
||||
Non-cash income from finance affiliate |
|
|
(5.0 |
) |
|
|
(3.8 |
) |
Distributions from (contributions to) finance affiliate, net |
|
|
7.2 |
|
|
|
(2.6 |
) |
Depreciation of property, plant, and equipment |
|
|
22.0 |
|
|
|
19.2 |
|
Amortization of other intangible assets |
|
|
8.7 |
|
|
|
9.1 |
|
Stock-based compensation expense |
|
|
8.4 |
|
|
|
5.2 |
|
Other |
|
|
1.1 |
|
|
|
— |
|
Changes in operating assets and liabilities, net of the effect of acquisitions: |
|
|
|
|
||||
Receivables, net |
|
|
(80.2 |
) |
|
|
(42.5 |
) |
Inventories, net |
|
|
(86.4 |
) |
|
|
(76.8 |
) |
Other assets |
|
|
6.5 |
|
|
|
(1.6 |
) |
Accounts payable |
|
|
(10.3 |
) |
|
|
(103.6 |
) |
Other liabilities |
|
|
(29.1 |
) |
|
|
21.6 |
|
Net cash used in operating activities |
|
|
(92.2 |
) |
|
|
(68.9 |
) |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property, plant, and equipment |
|
|
(19.1 |
) |
|
|
(29.3 |
) |
Proceeds from insurance claim |
|
|
— |
|
|
|
7.1 |
|
Proceeds from asset disposals |
|
|
— |
|
|
|
0.3 |
|
Net cash used in investing activities |
|
|
(19.1 |
) |
|
|
(21.9 |
) |
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Net borrowings under the revolving credit facility1 |
|
|
155.0 |
|
|
|
100.0 |
|
Proceeds from exercise of stock options |
|
|
1.5 |
|
|
|
14.0 |
|
Payments of withholding taxes for stock awards |
|
|
(2.2 |
) |
|
|
(2.6 |
) |
Dividends paid on TTC common stock |
|
|
(37.6 |
) |
|
|
(35.5 |
) |
Other |
|
|
(2.6 |
) |
|
|
(1.5 |
) |
Net cash provided by financing activities |
|
|
114.1 |
|
|
|
74.4 |
|
|
|
|
|
|
||||
Effect of exchange rates on cash and cash equivalents |
|
|
2.6 |
|
|
|
2.2 |
|
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents |
|
|
5.4 |
|
|
|
(14.2 |
) |
Cash and cash equivalents as of the beginning of the fiscal period |
|
|
193.1 |
|
|
|
188.2 |
|
Cash and cash equivalents as of the end of the fiscal period |
|
$ |
198.5 |
|
|
$ |
174.0 |
|
1 |
Presentation of prior year revolving credit facility and long-term debt activity has been conformed to the current year presentation. There was no change to net cash provided by financing activities. |
THE TORO COMPANY AND SUBSIDIARIES
|
||||||||
The following table provides a reconciliation of the non-GAAP financial performance measures used in this press release and our related earnings call to the most directly comparable measures calculated and reported in accordance with |
||||||||
|
|
Three Months Ended |
||||||
|
|
February 2, 2024 |
|
February 3, 2023 |
||||
Gross profit |
|
$ |
344.5 |
|
|
$ |
395.9 |
|
Acquisition-related costs1 |
|
|
— |
|
|
|
0.2 |
|
Adjusted gross profit |
|
$ |
344.5 |
|
|
$ |
396.1 |
|
|
|
|
|
|
||||
Operating earnings |
|
$ |
88.6 |
|
|
$ |
136.4 |
|
Acquisition-related costs1 |
|
|
— |
|
|
|
0.5 |
|
Productivity initiative2 |
|
|
3.9 |
|
|
|
— |
|
Adjusted operating earnings |
|
$ |
92.5 |
|
|
$ |
136.9 |
|
|
|
|
|
|
||||
Operating earnings margin |
|
|
8.8 |
% |
|
|
11.9 |
% |
Productivity initiative2 |
|
|
0.4 |
% |
|
|
— |
% |
Adjusted operating earnings margin |
|
|
9.2 |
% |
|
|
11.9 |
% |
|
|
|
|
|
||||
Earnings before income taxes |
|
$ |
80.1 |
|
|
$ |
131.3 |
|
Acquisition-related costs1 |
|
|
— |
|
|
|
0.5 |
|
Productivity initiative2 |
|
|
3.9 |
|
|
|
— |
|
Adjusted earnings before income taxes |
|
$ |
84.0 |
|
|
$ |
131.8 |
|
|
|
|
|
|
||||
Income tax provision |
|
$ |
15.2 |
|
|
$ |
24.4 |
|
Acquisition-related costs1 |
|
|
— |
|
|
|
0.2 |
|
Productivity initiative2 |
|
|
0.8 |
|
|
|
— |
|
Tax impact of share-based compensation3 |
|
|
1.5 |
|
|
|
3.6 |
|
Adjusted income tax provision |
|
$ |
17.5 |
|
|
$ |
28.2 |
|
|
|
|
|
|
||||
Net earnings |
|
$ |
64.9 |
|
|
$ |
106.9 |
|
Acquisition-related costs, net of tax1 |
|
|
— |
|
|
|
0.3 |
|
Productivity initiative, net of tax2 |
|
|
3.1 |
|
|
|
— |
|
Tax impact of share-based compensation3 |
|
|
(1.5 |
) |
|
|
(3.6 |
) |
Adjusted net earnings |
|
$ |
66.5 |
|
|
$ |
103.6 |
|
|
|
|
|
|
||||
Net earnings per diluted share |
|
$ |
0.62 |
|
|
$ |
1.01 |
|
Productivity initiative, net of tax2 |
|
|
0.03 |
|
|
|
— |
|
Tax impact of share-based compensation3 |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
Adjusted net earnings per diluted share |
|
$ |
0.64 |
|
|
$ |
0.98 |
|
|
|
|
|
|
||||
Effective tax rate |
|
|
19.0 |
% |
|
|
18.6 |
% |
Tax impact of share-based compensation3 |
|
|
1.8 |
% |
|
|
2.8 |
% |
Adjusted effective tax rate |
|
|
20.8 |
% |
|
|
21.4 |
% |
1 |
On January 13, 2022, the company completed the acquisition of Intimidator Group. Acquisition-related costs for the three month period ended February 3, 2023 represent integration costs. |
2 |
In the first quarter of fiscal 2024, the company launched the "Amplifying Maximum Productivity" or AMP initiative. The company considered the nature, frequency, and scale of this initiative compared to prior productivity initiatives when determining that the expenses associated with AMP, unlike prior productivity initiatives, are not common, normal, recurring operating expenses and are not representative of the company's ongoing business operations. Productivity initiative charges for the three month period ended February 2, 2024 primarily represent third-party consulting costs. |
3 |
The accounting standards codification guidance governing employee stock-based compensation requires that any excess tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax benefits recorded as excess tax deductions for stock-based compensation during the three month periods ended February 2, 2024 and February 3, 2023. |
Reconciliation of Non-GAAP Liquidity Measures |
||||||||
The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment, net of proceeds from insurance claim. Free cash flow conversion percentage represents free cash flow as a percentage of net earnings. The company considers free cash flow and free cash flow conversion percentage to be non-GAAP liquidity measures that provide useful information to management and investors about the company's ability to convert net earnings into cash resources that can be used to pursue opportunities to enhance shareholder value, fund ongoing and prospective business initiatives, and strengthen the company's Consolidated Balance Sheets, after reinvesting in necessary capital expenditures required to maintain and grow the company's business. |
||||||||
The following table provides a reconciliation of non-GAAP free cash flow and free cash flow conversion percentage to net cash provided by operating activities, which is the most directly comparable financial measure calculated and reported in accordance with |
||||||||
|
|
Three Months Ended |
||||||
(Dollars in millions) |
|
February 2, 2024 |
|
February 3, 2023 |
||||
Net cash used in operating activities |
|
$ |
(92.2 |
) |
|
$ |
(68.9 |
) |
Less: Purchases of property, plant and equipment, net of proceeds from insurance claim |
|
|
19.1 |
|
|
|
22.2 |
|
Free cash flow |
|
|
(111.3 |
) |
|
|
(91.1 |
) |
Net earnings |
|
$ |
64.9 |
|
|
$ |
106.9 |
|
Free cash flow conversion percentage |
|
|
(171.5 |
)% |
|
|
(85.2 |
)% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240307494926/en/
Investor Relations
Jeremy Steffan
Director, Investor Relations
(952) 887-7962, jeremy.steffan@toro.com
Media Relations
Branden Happel
Senior Manager, Public Relations
(952) 887-8930, branden.happel@toro.com
Source: The Toro Company
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