Record Full-Year Net Sales Driven by Strength
in Residential Segment, Underground Construction, and Golf
Significant Improvement in Cash Generation Supported Increased
Share Repurchases
- Full-year net sales of $4.58 billion, up from $4.55 billion in
fiscal 2023
- Full-year reported diluted EPS of $4.01 and *adjusted diluted
EPS of $4.17, compared to $3.13 reported and $4.21 *adjusted
diluted EPS in fiscal 2023
- Fourth-quarter net sales of $1.08 billion, up from $0.98
billion in the same period of fiscal 2023
- Fourth-quarter reported diluted EPS of $0.87 and *adjusted
diluted EPS of $0.95, compared to $0.67 reported diluted EPS and
$0.71 *adjusted diluted EPS in the same period of fiscal 2023
- Full-year fiscal 2025 guidance of *adjusted diluted EPS in the
range of $4.25 to $4.40
The Toro Company (NYSE: TTC), a leading global provider of
solutions for the outdoor environment, today reported results for
its fiscal fourth-quarter and full-year ended October 31, 2024.
“We delivered our 15th consecutive year of net sales growth in
what remained an extremely dynamic environment,” said Richard M.
Olson, chairman and chief executive officer. “This was a testament
to the strength of our portfolio and the disciplined execution by
our team of talented employees and channel partners.
“In our residential segment, we drove exceptional top-line
growth due to the strength of our mass channel, including the
inaugural year of our strategic partnership with Lowe’s, along with
the success of new product introductions, such as the Havoc™
editions of our next generation lineup of Toro® TimeCutter® and
TITAN® zero turn riding mowers. In our professional segment, our
team drove significant production improvements for underground
construction equipment and golf and grounds solutions, as we
substantially increased output and capitalized on the sustained and
strong end market demand for these products. Our ability to execute
in these areas offset industry-wide dynamics affecting other parts
of our portfolio, including softness in markets tied to snow and
ice management, given the historic lack of snowfall last winter, as
well as homeowner markets tied to lawn care in our dealer channel.
Importantly, we made significant progress in reducing dealer field
inventories of lawn care products, driven by lower shipments,
coupled with retail sales growth. The momentum in sell-through year
over year demonstrates the strength of our brands and market
share.
“Moving to profitability, we successfully drove productivity and
net price benefits during the year, offsetting inflation and the
costs of adjusting production to meet quickly changing demand and
better serve our customers. In the fourth quarter, we enhanced
productivity and carefully controlled expenses. This helped offset
the impact of a higher proportion of lower-margin products in our
net sales than we anticipated, and enabled us to achieve adjusted
diluted EPS in line with our expectations.
”We were extremely pleased to deliver a substantial increase in
*free cash flow during fiscal 2024, to just over $470 million,
which equated to a *conversion rate of 112.4%. This significant
improvement supported the return of nearly $400 million to
shareholders, including an increase in our regular dividend payout
and about $250 million in share repurchases.”
OUTLOOK
“As we enter the new fiscal year, we have confidence in our
ability to deliver earnings growth, supported by the strength of
our diverse portfolio and talented team, along with the momentum we
have generated with our significant productivity initiative,”
continued Olson. “Our market leadership positions across our
portfolio remain strong, supported by our innovative product lineup
and best-in-class distribution networks. For our underground
construction, and golf and grounds businesses, we continue to have
elevated order backlog, and expect demand will remain robust.
Importantly, with our success in driving output, we expect order
backlog will be at or near normal levels by the end of the year.
For our lawn care and snow and ice management businesses, while
field inventories remain higher than ideal, we expect to be
positioned much better than last year as we head into the upcoming
turf season, along with the snow pre-season in the second half of
2025.
“While industry-wide macro and weather dynamics over the past
few years have played out differently than anticipated, our
business fundamentals remain strong. This is supported by our
innovation leadership, with a robust new product pipeline aligned
to market trends and designed to solve our customers’ most pressing
needs. We are excited about the upcoming retail launches of
autonomous products across our portfolio, including residential,
commercial, and golf applications. This includes the early 2025
rollout of our Toro® Haven™ robotic mower, Exmark® Turf Tracer®
with XiQ technology, and GeoLink® Solutions™ autonomous fairway
mower.
“We are well-positioned to capitalize on future growth
opportunities in our attractive end markets, while simultaneously
driving profitability improvement. Our significant productivity
initiative, named AMP, is off to a great start, and we remain on
track to deliver $100 million in run-rate cost savings by fiscal
2027. We intend to reinvest a portion of the savings from this
initiative, to drive further innovation and growth. We look forward
to the coming year with optimism, guided by our enterprise
strategic priorities of accelerating profitable growth, driving
productivity and operational excellence, and empowering
people.”
For fiscal 2025, management expects total company net sales
growth in the range of 0% to 1% and *adjusted diluted EPS in the
range of $4.25 to $4.40. The company's guidance is based on current
visibility and reflects:
- continued strong demand and stable supply for our underground
construction and golf and grounds businesses,
- a continuation of macro factors that have driven increased
consumer and channel caution,
- remaining adjustments needed to normalize field inventories of
lawn care products and snow and ice management solutions, and
- weather patterns aligned with historical averages.
This guidance does not include any policy or regulatory changes
that have not yet been enacted.
FOURTH-QUARTER FISCAL 2024 FINANCIAL
HIGHLIGHTS
Reported
Adjusted*
(dollars in millions, except per share
data)
F24 Q4
F23 Q4
% Change
F24 Q4
F23 Q4
% Change
Net Sales
$
1,076.0
$
983.2
9
%
$
1,076.0
$
983.2
9
%
Net Earnings
$
89.9
$
70.3
28
%
$
97.7
$
74.1
32
%
Diluted EPS
$
0.87
$
0.67
30
%
$
0.95
$
0.71
34
%
FULL-YEAR FISCAL 2024 FINANCIAL
HIGHLIGHTS
Reported
Adjusted*
(dollars in millions, except per share
data)
F24
F23
% Change
F24
F23
% Change
Net Sales
$
4,583.8
$
4,553.2
1
%
$
4,583.8
$
4,553.2
1
%
Net Earnings
$
418.9
$
329.7
27
%
$
435.2
$
443.5
(2
)%
Diluted EPS
$
4.01
$
3.13
28
%
$
4.17
$
4.21
(1
)%
SEGMENT RESULTS
Professional Segment
- Professional segment net sales for the fourth quarter were
$913.9 million, up 10.3% from $828.9 million in the same period
last year. The increase was primarily driven by higher shipments of
golf and grounds products and underground construction equipment,
along with net price realization, partially offset by lower
shipments of compact utility loaders and snow and ice management
products.
- Full-year fiscal 2024 professional segment net sales were $3.56
billion, down 3.2% from $3.67 billion last year. The decrease was
primarily due to lower shipments of lawn care equipment, snow and
ice management products, and compact utility loaders, partially
offset by higher shipments of golf and grounds products and
underground construction equipment.
- Professional segment earnings for the fourth quarter were
$169.7 million, up 36.3% from $124.5 million in the same period
last year, and when expressed as a percentage of net sales, 18.6%,
up from 15.0% in the prior-year period. The positive change was
primarily due to productivity improvements, net sales leverage, net
price realization, and product mix, partially offset by higher
material and manufacturing costs.
- Full-year fiscal 2024 professional segment earnings were $638.9
million, up 25.5% compared with $509.1 million in the prior fiscal
year, and when expressed as a percentage of net sales, 18.0%, up
from 13.9% last year. The change was primarily driven by non-cash
impairment charges in the prior year, productivity improvements,
and product mix, partially offset by higher material and
manufacturing costs and lower net sales volume.
Residential Segment
- Residential segment net sales for the fourth quarter were
$155.1 million, up 4.5% from $148.4 million in the same period last
year. The increase was primarily driven by higher shipments of lawn
care products to the company's mass channel, partially offset by
lower shipments of snow products and higher sales promotions.
- Full-year fiscal 2024 residential segment net sales were $998.3
million, up 16.9% from $854.2 million last year. The increase was
primarily due to higher shipments to the company's mass channel,
partially offset by lower shipments of snow products.
- Residential segment loss for the fourth quarter was $13.8
million, or 8.9% of net sales, compared to earnings of $4.5
million, or 3.0% of net sales, in the same period last year. The
change was primarily driven by higher material and freight costs,
higher warranty and marketing expense, and product mix, partially
offset by productivity improvements.
- Full-year fiscal 2024 residential segment earnings were $78.4
million, up 13.8% from $68.9 million in the prior fiscal year, and
when expressed as a percentage of net sales, 7.9%, compared to 8.1%
last year. The change was primarily driven by product mix and
higher material and manufacturing costs, partially offset by
productivity improvements and net sales leverage.
OPERATING RESULTS
Gross margin for the fourth quarter was 32.4%, compared with
33.5% for the same prior-year period. *Adjusted gross margin for
the fourth quarter was 32.3%, compared with 33.6% for the same
prior-year period. The decreases in reported and *adjusted gross
margin were primarily due to higher material, freight, and
manufacturing costs, partially offset by productivity
improvements.
For fiscal 2024, gross margin was 33.8%, compared to 34.6% for
fiscal 2023. *Adjusted gross margin for fiscal 2024 was 33.9%,
compared with 34.7% for fiscal 2023. The decreases in reported and
*adjusted gross margin were primarily driven by higher material and
manufacturing costs and product mix, partially offset by
productivity improvements.
SG&A expense as a percentage of net sales for the fourth
quarter was 22.3%, compared with 23.9% in the prior-year period.
The improvement was primarily driven by net sales leverage, lower
incentive compensation, and lower marketing costs, partially offset
by higher warranty expense.
For fiscal 2024, SG&A expense as a percentage of net sales
was 22.2%, compared with 21.8% for fiscal 2023. The change was
primarily due to higher corporate expenses, partially offset by
lower marketing costs.
Operating earnings as a percentage of net sales for the fourth
quarter were 10.1%, compared with 9.6% in the same prior-year
period. *Adjusted operating earnings as a percentage of net sales
for the fourth quarter were 10.9%, compared with 10.1% in the same
prior-year period.
For fiscal 2024, operating earnings as a percentage of net sales
were 11.6%, compared with 9.5% in fiscal 2023. *Adjusted operating
earnings as a percentage of net sales for fiscal 2024 were 12.2%,
compared with 12.9% for fiscal 2023.
Interest expense was down $0.4 million for the fourth quarter to
$14.5 million, primarily driven by lower average outstanding
borrowings and lower average interest rates. Interest expense was
up $3.2 million for the full year to $61.9 million, primarily
driven by higher average interest rates, partially offset by lower
average outstanding borrowings.
The reported and *adjusted effective tax rates for the fourth
quarter were 17.7% and 16.9%, respectively, compared with 19.1% and
19.3% in the same prior-year period. The decreases were primarily
due to a more favorable geographic mix of earnings.
For fiscal 2024, the reported effective tax rate was 18.3%,
compared with 17.7% in fiscal 2023. The increase was primarily due
to the impact of non-cash impairment charges in the prior year and
lower tax benefits recorded as excess tax deductions for stock
compensation in the current year, partially offset by a more
favorable geographic mix of earnings in the current year. The
*adjusted effective tax rate for fiscal 2024 was 18.8%, compared
with 20.4% in fiscal 2023. The year-over-year improvement was
primarily driven by a more favorable geographic mix of
earnings.
*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 December 18, 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 December 18, 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 global provider of
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 $4.6 billion in
fiscal 2024, The Toro Company’s global presence extends to more
than 125 countries through a family of brands that includes Toro,
Ditch Witch, Exmark, Spartan, BOSS, Ventrac, American Augers,
Trencor, Subsite, HammerHead, Radius, Perrot, Hayter, Unique
Lighting Systems, Irritrol, and Lawn-Boy. Through constant
innovation and caring relationships built on trust and integrity,
The Toro Company and its family of brands have built a legacy of
excellence by helping customers work on golf courses, sports
fields, construction sites, public green spaces, commercial and
residential properties and agricultural operations. For more
information, visit www.thetorocompany.com.
Use of Non-GAAP Financial Information
This press release and the related earnings call include certain
non-GAAP financial measures, which are not calculated or presented
in accordance with U.S. GAAP, as information supplemental and in
addition to the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP. The non-GAAP
financial measures included within this press release and the
related earnings call that are utilized as measures of operating
performance consist of gross profit, gross margin, operating
earnings, earnings before income taxes, net earnings, diluted EPS,
and the effective tax rate, each as adjusted. The non-GAAP
financial measures included within this press release and the
related earnings call that are utilized as measures of liquidity
consist of free cash flow and free cash flow conversion
percentage.
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 the company's 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 the company's 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 U.S. GAAP, provide investors with useful
supplemental financial information to better understand its core
operational performance and cash flows.
Reconciliations of historical non-GAAP financial measures to the
most comparable U.S. GAAP financial measures are included in the
financial tables contained in this press release. These non-GAAP
financial measures, however, should not be considered superior to,
as a substitute for, or as an alternative to, and should be
considered in conjunction with, the U.S. GAAP financial measures
included within this press release and the company’s related
earnings call. These non-GAAP financial measures may differ from
similar measures used by other companies.
The Toro Company does not provide a quantitative reconciliation
of the company’s projected range for adjusted diluted EPS for
fiscal 2025 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 2025 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 2025
to diluted EPS reconciliation without unreasonable efforts. A
quantitative reconciliation of adjusted diluted EPS for fiscal 2025
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 2025 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, such as impairment and restructuring charges;
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 “expect,” “strive,” “looking ahead,” “outlook,” “guidance,”
“forecast,” “goal,” “optimistic,” “encourage,” “anticipate,”
“continue,” “plan,” “estimate,” “project,” “target,” “improve,”
“believe,” “become,” “should,” “could,” “will,” “would,”
“possible,” “promise,” “may,” “likely,” “intend,” “can,” “seek,”
“pursue,” “potential,” “pro forma,” 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 2025 financial guidance,
expectations regarding demand trends, including incremental growth
from strategic partnership with Lowe’s and the success of new
products, 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, including the company's
acquisition of the Intimidator Group and possible additional future
impairment of goodwill or other intangible assets; impacts AMP 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
Condensed Consolidated
Statements of Earnings (Unaudited)
(Dollars and shares in
millions, except per-share data)
Three Months Ended
Twelve Months Ended
October 31, 2024
October 31, 2023
October 31, 2024
October 31, 2023
Net sales
$
1,076.0
$
983.2
$
4,583.8
$
4,553.2
Cost of sales
727.0
653.6
3,034.5
2,975.6
Gross profit
349.0
329.6
1,549.3
1,577.6
Gross margin
32.4
%
33.5
%
33.8
%
34.6
%
Selling, general and administrative
expense
240.0
235.1
1,016.0
995.6
Non-cash impairment charges
—
—
—
151.3
Operating earnings
109.0
94.5
533.3
430.7
Interest expense
(14.5
)
(14.9
)
(61.9
)
(58.7
)
Other income, net
14.8
7.3
41.4
28.5
Earnings before income taxes
109.3
86.9
512.8
400.5
Provision for income taxes
19.4
16.6
93.9
70.8
Net earnings
$
89.9
$
70.3
$
418.9
$
329.7
Basic net earnings per share of common
stock
$
0.88
$
0.67
$
4.04
$
3.16
Diluted net earnings per share of common
stock
$
0.87
$
0.67
$
4.01
$
3.13
Weighted-average number of shares of
common stock outstanding — Basic
102.7
104.2
103.8
104.4
Weighted-average number of shares of
common stock outstanding — Diluted
103.2
104.9
104.4
105.3
Segment Data
(Unaudited)
(Dollars in millions)
Three Months Ended
Twelve Months Ended
Segment net sales
October 31, 2024
October 31, 2023
October 31, 2024
October 31, 2023
Professional
$
913.9
$
828.9
$
3,556.9
$
3,674.6
Residential
155.1
148.4
998.3
854.2
Other
7.0
5.9
28.6
24.4
Total net sales*
$
1,076.0
$
983.2
$
4,583.8
$
4,553.2
*Includes international net sales of:
$
231.6
$
191.0
$
923.0
$
947.7
Three Months Ended
Twelve Months Ended
Segment earnings (loss) before income
taxes
October 31, 2024
October 31, 2023
October 31, 2024
October 31, 2023
Professional
$
169.7
$
124.5
$
638.9
$
509.1
Residential
(13.8
)
4.5
78.4
68.9
Other
(46.6
)
(42.1
)
(204.5
)
(177.5
)
Total segment earnings before income
taxes
$
109.3
$
86.9
$
512.8
$
400.5
THE TORO COMPANY AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets (Unaudited)
(Dollars in millions)
October 31, 2024
October 31, 2023
ASSETS
Cash and cash equivalents
$
199.5
$
193.1
Receivables, net
459.7
407.4
Inventories, net
1,038.9
1,087.8
Prepaid expenses and other current
assets
66.8
110.5
Total current assets
1,764.9
1,798.8
Property, plant, and equipment, net
644.8
641.7
Goodwill
450.3
450.8
Other intangible assets, net
498.7
540.1
Right-of-use assets
114.5
125.3
Investment in finance affiliate
49.2
50.6
Deferred income taxes
45.0
14.2
Other assets
15.4
22.8
Total assets
$
3,582.8
$
3,644.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt
$
10.0
$
—
Accounts payable
452.7
430.0
Accrued liabilities
493.0
499.1
Short-term lease liabilities
20.3
19.5
Total current liabilities
976.0
948.6
Long-term debt
911.8
1,031.5
Long-term lease liabilities
99.1
112.1
Deferred income taxes
0.5
0.4
Other long-term liabilities
43.5
40.8
Stockholders’ equity:
Preferred stock
—
—
Common stock
101.5
103.8
Retained earnings
1,496.4
1,444.1
Accumulated other comprehensive loss
(46.0
)
(37.0
)
Total stockholders’ equity
1,551.9
1,510.9
Total liabilities and stockholders’
equity
$
3,582.8
$
3,644.3
THE TORO COMPANY AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(Dollars in millions)
Twelve Months Ended
October 31, 2024
October 31, 2023
Cash flows from operating activities:
Net earnings
$
418.9
$
329.7
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Non-cash income from finance affiliate
(20.8
)
(19.2
)
Distributions from finance affiliate,
net
22.2
7.9
Depreciation of property, plant, and
equipment
93.7
83.5
Amortization of other intangible
assets
34.5
35.7
Stock-based compensation expense
23.0
19.4
Deferred income taxes
(27.9
)
(47.9
)
Non-cash impairment charges
—
151.3
Other
(2.9
)
(0.2
)
Changes in operating assets and
liabilities, net of the effect of acquisitions:
Receivables, net
(53.1
)
(71.6
)
Inventories, net
27.5
(26.7
)
Other assets
19.9
17.8
Accounts payable
24.3
(149.9
)
Other liabilities
10.6
(23.0
)
Net cash provided by operating
activities
569.9
306.8
Cash flows from investing activities:
Purchases of property, plant, and
equipment
(103.5
)
(149.5
)
Proceeds from insurance claim
4.3
7.1
Business combination
—
(21.0
)
Asset acquisition
(0.8
)
—
Proceeds from asset disposals
0.3
0.4
Proceeds from divestitures
40.0
5.3
Net cash used in investing activities
(59.7
)
(157.7
)
Cash flows from financing activities:
Net (repayments) borrowings under the
revolving credit facility
(40.0
)
40.0
Long-term debt repayments
(70.0
)
—
Proceeds from exercise of stock
options
9.1
19.7
Payments of withholding taxes for stock
awards
(3.9
)
(3.8
)
Purchases of TTC common stock
(245.5
)
(60.0
)
Dividends paid on TTC common stock
(149.5
)
(141.9
)
Other
(5.3
)
(1.5
)
Net cash used in financing activities
(505.1
)
(147.5
)
Effect of exchange rates on cash and cash
equivalents
1.3
3.3
Net increase in cash and cash
equivalents
6.4
4.9
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
$
199.5
$
193.1
THE TORO COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in millions, except per-share data)
The following table provides a reconciliation of the non-GAAP
financial performance measures used in this press release and the
related earnings call to the most directly comparable measures
calculated and reported in accordance with U.S. GAAP for the three
and twelve month periods ended October 31, 2024 and October 31,
2023:
Three Months Ended
Twelve Months Ended
October 31, 2024
October 31, 2023
October 31, 2024
October 31, 2023
Gross profit
$
349.0
$
329.6
$
1,549.3
$
1,577.6
Acquisition-related costs1
—
—
—
0.2
Restructuring charges2
—
1.2
—
1.2
Productivity initiative3
(1.2
)
—
5.7
—
Adjusted gross profit
$
347.8
$
330.8
$
1,555.0
$
1,579.0
Gross margin
32.4
%
33.5
%
33.8
%
34.6
%
Restructuring charges2
—
%
0.1
%
—
%
0.1
%
Productivity initiative3
(0.1
)%
—
%
0.1
%
—
%
Adjusted gross margin
32.3
%
33.6
%
33.9
%
34.7
%
Operating earnings
$
109.0
$
94.5
$
533.3
$
430.7
Acquisition-related costs1
—
—
—
0.4
Restructuring charges2
—
5.0
—
5.0
Productivity initiative3
8.0
—
27.2
—
Non-cash impairment charges4
—
—
—
151.3
Adjusted operating earnings
$
117.0
$
99.5
$
560.5
$
587.4
Operating earnings margin
10.1
%
9.6
%
11.6
%
9.5
%
Restructuring charges2
—
%
0.5
%
—
%
0.1
%
Productivity initiative3
0.8
%
—
%
0.6
%
—
%
Non-cash impairment charges4
—
%
—
%
—
%
3.3
%
Adjusted operating earnings margin
10.9
%
10.1
%
12.2
%
12.9
%
Earnings before income taxes
$
109.3
$
86.9
$
512.8
$
400.5
Acquisition-related costs1
—
—
—
0.4
Restructuring charges2
—
5.0
—
5.0
Productivity initiative3
8.2
—
23.1
—
Non-cash impairment charges4
—
—
—
151.3
Adjusted earnings before income taxes
$
117.5
$
91.9
$
535.9
$
557.2
Income tax provision
$
19.4
$
16.6
$
93.9
$
70.8
Restructuring charges2
—
1.1
—
1.1
Productivity initiative3
0.4
—
3.3
—
Non-cash impairment charges4
—
—
—
36.7
Tax impact of stock-based
compensation5
—
0.1
3.5
5.1
Adjusted income tax provision
$
19.8
$
17.8
$
100.7
$
113.7
Net earnings
$
89.9
$
70.3
$
418.9
$
329.7
Acquisition-related costs1
—
—
—
0.4
Restructuring charges2
—
3.9
—
3.9
Productivity initiative3
7.8
—
19.8
—
Non-cash impairment charges4
—
—
—
114.6
Tax impact of stock-based
compensation5
—
(0.1
)
(3.5
)
(5.1
)
Adjusted net earnings
$
97.7
$
74.1
$
435.2
$
443.5
Diluted EPS
$
0.87
$
0.67
$
4.01
$
3.13
Restructuring charges2
—
0.04
—
0.04
Productivity initiative3
0.08
—
0.19
—
Non-cash impairment charges4
—
—
—
1.09
Tax impact of stock-based
compensation5
—
—
(0.03
)
(0.05
)
Adjusted diluted EPS
$
0.95
$
0.71
$
4.17
$
4.21
Effective tax rate
17.7
%
19.1
%
18.3
%
17.7
%
Restructuring charges2
—
%
0.1
%
—
%
—
%
Productivity initiative3
(0.9
)%
—
%
(0.2
)%
—
%
Non-cash impairment charges4
—
%
—
%
—
%
1.5
%
Tax impact of stock-based
compensation5
0.1
%
0.1
%
0.7
%
1.2
%
Adjusted effective tax rate
16.9
%
19.3
%
18.8
%
20.4
%
1
On January 13, 2022, the company completed
the acquisition of Intimidator Group. Acquisition-related costs for
the fiscal year ended October 31, 2023 represent integration costs
incurred in connection with the acquisition.
2
In the fourth quarter of fiscal 2023, the
company initiated a restructuring program which was completed in
the first quarter of fiscal 2024. The restructuring charges
associated with the program for three and twelve month periods
ended October 31, 2023 represent accrued severance, termination
benefits, and other exit-related expenses.
3
In the first quarter of fiscal 2024, the
company launched a significant productivity initiative named AMP.
Productivity initiative charges for the three and twelve month
periods ended October 31, 2024 represent asset write-offs,
third-party consulting costs, product-line exit costs, and
compensation for fully-dedicated AMP personal, partially offset by
a gain on divestiture.
4
At the end of the third quarter of fiscal
2023, the company recorded non-cash impairment charges within its
Professional reportable segment.
5
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 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
and twelve month periods ended October 31, 2024 and October 31,
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 U.S. GAAP for the twelve month periods ended October 31, 2024
and October 31, 2023:
Twelve Months Ended
(Dollars in millions)
October 31, 2024
October 31, 2023
Net cash provided by operating
activities
$
569.9
$
306.8
Less: Purchases of property, plant, and
equipment, net of proceeds from insurance claim
99.2
142.4
Free cash flow
470.7
164.4
Net earnings
$
418.9
$
329.7
Free cash flow conversion percentage
112.4
%
49.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241218618179/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
Grafico Azioni Toro (NYSE:TTC)
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