TTC - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen. And welcome to the Toro Company’s Full Year and Fourth Quarter Earnings Conference Call. My name is Sandra, and I will be coordinator for today. At this time, all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of today’s conference [Operator Instructions]. this being reminder, purposes. for a as conference recorded is replay And Investor Communications would the conference, for of turn like Heather and over Director I to host presentation now Company. the for Toro to your Hille, Relations External today’s Please proceed, Ms. Hille.

Heather Hille

morning. and good Thank you

Our our morning Business Executive corporate call the On a issued Web Wire, with the Investor today this found Petersen, forward-looking Vice Chief Renee our and We our Olson, and Chief can site, Officer be in was Chairman are, Information earnings and policy. release Treasurer by customary copy section and statement Officer. Rich of torocompany.com. President, Financial begin

will and During we make this financial statements and operating regarding call, our future business results. forward-looking

uncertainties predictive You in making of all risks are aware statements. the inherent and difficulties,

SEC Please actual differ results do that Rich. factors now to some as release the of earnings I over that, predictions. risk to not turn our forward-looking a well to as will the our that note Our cause call in update filings, detail our may duty statements. we With have those our from important

Richard Olson

you, XXXX Thank of the morning And Destination our all our initiative. marked PRIME completion on conclusion Heather. listeners. The of good fiscal to

landscape a we employees’ to pleased dedication as that $X.XX. initiative’s net the products specialty of hard We rental are our led finish we journey with of by million of share later will initiatives Professional sales delivered Thanks include operating pleased for PRIME and earnings of able of $XXX multi-year discuss XX% in businesses. we’re growth goal billion, net employees’ delivered. improvements. our declare strong by fiscal capital operating and on way earnings success call. Company notable XXXX. our This in I our employee to working and report records Destination contractor, embark and per morning, results achieved are of that $XXX next performances XX.X%, $X.X to and The Company earnings the golf, original work sales the our earnings These sales million, the earnings construction record surpassing regained the momentum

with irrigation our grounds Our nicely driven professional creating to solid product dividend focus lines. shareholders international Company’s business growth offering performances the year-end Perrot along by contributed evidenced approved. returning of sports with steadfast on the primarily and value newly our by The as that fields acquired our and just and by sales for our results, quarterly X.X%, golf also increased year Board remains our

will results our Following in a operating detail. Renee discuss brief financial businesses, and commentary more our on

equipment mowers, golf, quarter growth businesses reel for our year. sports utility field vehicles Demand First, and ground delivered large for year. the the retail as mowers greens well the as rotary sales for fueled strong and solid gains and both

Similarly, to innovations in the contractor help products continued our and Our grow market quarter service and rose businesses landscape latest sales year. share. us for the

helped boost activity the continued through the the for GrandStand sales products and our results year, zero fall retail both for riding while of months. also Solid turn helped quarter for summer mowers innovative deliver growth and the our late quarter. Demand

versatile to of products in be designed are help highly All productivity. increase to these contractors order

our Dingo the conditions and did rental market businesses. interest favorable As innovative rotors so our and commercial on continued, compact and based specialty of for construction offering. strong of demand Sales momentum construction remain our customer residential in utility

our our the further the Mud results Tracked reception increased sales year. Buggy of favorable Additionally, market’s rental for

the micro-irrigation business both Our quarter the for year. agricultural sales increased enjoyed and

projects results the the contributions made year that the in faced weather challenging increased the businesses both significant ago. Perrot the consistent while quarter, North year, and for overall our for America, conditions other Golf quarter irrigation delayed was business our quarterly for irrigation Although, projects up year. delivering while with

to BOSS, products fiscal management innovations saw position due Next, to enabled up, our year. shipments; sales deliver the ice improved for to and of latest timing thrower the segment. sales increases the year These our for decreased Australia. for compared sales quarter, for Pope launched enthusiasm mowers timing shipments. in residential choosing weather contractor were enjoyed Midwest sales field our the lower year the lines favorable steering snow due down demand somewhat snow Residential quarter in by the the zero-turn were products new early for Like year market’s our quarter a in based professional new Sales part to some the on up increased a events offset and product increased products with The equipments zero snow that due are homeowners sales time however, down step accelerated in for wheels, by residential Demand up for our quarter walk shipments. by driven these of demand were a BOSS cutter inventory turn our of BOSS the were and ago year. good reported across slightly also for riders to of the for of riders the to power riding newly but for to Sales our grade our HD. of for year. the

of rates currency to sales sales business Perrot detail Renee the as the ground our to and have for turn Our X.X%. by well enjoyed golf, good international will currency over I to and $X.X increased international exchange fields a related Unfavorable effect, acquisition, by the financial year increased year due X.X%. business our sports grown Without operating international Overall, our decreased grew to call now would net the results. equipment. sales sales as million.

Renee Peterson

$XX.X net grew quarter Net million This per $X.XX for to million the up share per earnings share. delivered per and to billion. year for for achieved a Net X.X% of compared $X.XX We everyone. record or $X.XXX million million We earnings the XXXX XXXX. XXXX Rich per record net net of fiscal the morning period or $XX.X fourth earnings fiscal good fiscal million or $XXX.X of ago. compares $X.XX in were sales $XXX a for or $XXX.X $X.XX same $XXX.X to million quarter to compared sales share you, Thank the share. year

the year, $XXX X.X At we Company's shares on approximately million authorization. end, stock. For remaining of approximately million had we our repurchased year

Moving to results. segment business our

and to both for for quarter up segment First, This of million. the construction were professional landscape fueled Professional the was $X.XXX includes our $XXX.X year. contractor X.X% for for to billion sales solid equipment. sales by sales growth growth X.X% latest golf specialty demand periods

management our Professional the segment results quarter up year totaled year, ago. for million BOSS fiscal to and rental snow segment for were compared million to million, and earnings $XX from XXXX. $XX.X earnings the also Our $XXX.X products ice Professional the year. up contributed for a X.X%

residential quarter year. favorable increased segment year X.X% also for $XXX.X our results products the contributed residential sales the a million. $XXX.X snow drove sales of Increased from for for Our ago to increased million. The X.X% to to thrower Pope Pope growth the year sales fourth quarter. and sales the

the X.X% increased Residential quarter $X.X year, the up For $XX.X for earnings totaled ago. from million, to segment residential million $XX.X earnings year million. a

Now, basis to margins to points results. the XX was year up for our XX.X%. Gross key operating

increased the and operational improvement margin by gross was for quarter, the productivity points cost. margin For the improvement by commodity favorable cost. to was of commodity for currency higher which The freight productivity partially margin offset the result Operational year partially and a air basis rates improved segment drove offset and mix, XX.X%. XX quarter, exchange

incentive the in quarter. last was XXXX. sales, as expenses. that margin higher mainly We quarter The for expense, with XX SG&A for in expect improvement of gross a and increased increase was in the by fiscal percent to consistent performance points due improved year basis resulted

fiscal for a a the XXXX, SG&A fourth improved year, to For points points improve quarter Interest basis to quarter. expect a sales. as decline of XX.X% basis for to was as which of improvement sales of including year, $XXX,XXX X.X%. lower expense Operating a percent X.X% the we of for earnings the percent included XX XX

Our under to standards. U.S. new estimated effective we expect be guidance tax XXXX as and rate appropriate. fiscal impact last our reform the the our to based tax about on due share expect accounting we current the for tax compensation XX.X% the Based rate to the year the similar based year, XXXX. was to XX.X% that fiscal of the compared amount tax will be adoption to communicate revise for In effective the passes, the of event law, assumption XX%, dollar share mainly the

with XXXX to capital inventories million. be Turning $XX strong to net of new depreciation our difficulty] -- of increase In of an facilities, to amortization an from as increase common the $XXX the share the At end to planned were year we dividends plan the be million. at average $XXX.X XX.X% new increased of of XXXX XXXX, returned our ago. to Net when invest sheet. fiscal in million due approximately strong rate consistently Accounts the from balance compared XX.X% we $XXX cash month $XX new expenditures fiscal $XXX.X increased the repurchase In $XX the increased $X.XX $XX.X, a Company’s totaled shareholders. for to million are of Company processes. timing added XX paid our receivable XX.X% X.X% $XXX to million stock quarterly [Technical dividend We Trade to ended flow year, payables of and up previous shipments. product million. year the of million, as to and Capital working to technology to the production percent over compared million. a Board tooling, of a XX.X%. have approximately free sales the end performance, the XX.X% nearly per will in year our fiscal light

did returning spending overall For said, repurchases XXXX, to shareholders. consistent priorities share fiscal our we remain investment same. on amount the XXXX. with similar focus are anticipate our These in That on fiscal actions of we value as

call both our over continue We now that will acquisitions. value approach through organically will I opportunities pursue for profitable his turn outlook. regarding and comments the growth, disciplined our Rick back drive added to

Richard Olson

Thank you, Renee.

We In of prospects are coming we months, new will we tradeshows promising pleased which have results leading innovation. product and record service be to XXXX. very fiscal fiscal for a and believe in at industry XXXX for participating number unveil will are delivered

and take We golf, sports at lies for what businesses. ahead a look Let’s grounds our with begin fields businesses. various our

Toro more Described to partners like over among new Anticipation to well running one continue these easy-to-use. to turf this share customers smart our to new machine tasks and solutions and customers for Outcross. our help Ag perform customer grounds of combination friendly announced is by utility Outcross used save managers vehicle, tractors intuitive is commonly Outcross providing and this attachment Outcross is golf a the turf launch. More high and can innovations managers programmable sports heavy-duty real they will as be for powerful needed, channel super exciting the markets productivity. versatile than capture a The Company and fields designed a joined as system utility money shows. in vehicles. controls upcoming by multiple and like automotive Its by make turf the positioned other its Our tractor than machine, and important are at increase highly

consumption, This Our A fit riding few through stand highlights speed based Industry gates. landscape a productivity that and decks well Green on machine to by equip a Two access raised, operators operations. contractor wider defined increase thrower to productivity. the designed dealer fleet around can systems we reminders. businesses very tight monitor mowers a believe and of Enhanced the be out landscape generated routers wide. modes, contractors contractor trailers. Expo also series new & include year snow which turn This intelligent during have orders important round contractors. We another technologies XX-inch our fuel our through diesel Power year excitement in and commercial help zero strong to these growth spaces wings new efficiencies. easy aerators reduce the providing October. generate as example of customer on Max and new power performance to mowers smart And grade anticipate that will standard enhanced Stage we of detailed products Equipment operating on health Two launched deliver enhancing for These with profitable allow maintenance solid products powered and scheduled is benefit them in satisfaction new snow onboard designed to is

businesses. continued industry and rental construction growth our construction to in The Moving anticipates XXXX. specialty

Dingo effectively introductions starts be compete Forecast Similarly, American continue Mud expects suggests housing believe as will our single our introduced Tracked The gains. Buggy. family Association rotors particularly should that will including Rental strong our utility strong. other We compact recently to

and increase easier drill underground along next designed help was all input it with operating drill that The operate. our makes from that system and We streamline new operation The power also new productivity. offers time, contractors. overall just to learn new mid-sized save contractors launched enhanced based directional generation an and our utility on should drill

high technologies synthetic our while North continued outlook pattern. America that important of micro-irrigation value acquisition. This support and believe pick-up Last cooling our with month, in Impact other around allow installation Next, artificial playing our coverage a of The business. new positive throwing an for gained grounds investments in permanent footprint. sprinklers for sports sprinklers crops with These we announce will We designed long extension part and precipitation irrigation the normal cash field sports are the perimeter These the series variety were of and turf are application. to full that the long Perrot of of and are natural U.S. from sprinklers, providing series suited series for washing pleased sprinkler rotors and and offerings new sprinklers radius our businesses represents also of abilities integration our products surface. of fields, fields. the for distance includes market

was the year efficient Shifting Award for by third and education receive Our recognized We were the honored utilization. Agency’s the WaterSense to management program. promoting to winter efforts row Protection water a Excellence innovation Environmental products. leadership in XXXX our for water arena in

sales about Our residential Similarly, of season. encouraging start outlook optimistic strong BOSS based acceptance BOSS business prospect The snow retail. team customer increased activity dealers. is latest retail broad sale on innovations, good enjoyed at this continued a our is truck our positive the at for and

with need is positioned all dynamic well snow. are product We a line, we

our of the zero HD walk new platforms mower riders. business, successful year of On full tools. and turf we growth the the handheld side powered of expansion TimeCutter residential battery of see turn availability our second opportunities The power in PowerPlex our

our equipped that a reverse, store. of propelled power power introduced units is this One easy These of SMARTSTOW. significant easy and these we which and with walk of along introductions to our drive personal with two features. more The mowing new series our are combination popular policy paced mowers of These mowers offer easy most season past in convenience. features advancement are a to to backup, customer value system propel, represents self both

will homeowners confident are an mowers new We these receive enthusiastic from reception everywhere.

are three professional our of fiscal the up very the showing are particularly we promising vision year XXXX. with focus new on ProLine new a due anticipate pleased HXXX clean strong Destination in example partners. from mower. be In Prospects help of rotory to expected channel lift markets. international our in our product another we across capability to new international strength collect is initiative direct business our and XXXX. productivity to professional It’s a fleets we Notable employee stronger products perspective, The to addition innovation global remain delivered and profitable sales. our a and steadfast the products innovation, international commitments performance a cut in transition and than drive our as portfolio team line prove from Prime Finally, to the growth in valued summary, should XXXX good international named and high HXXX, for of

achieving driving In XXXX. of with profitable focus We’re reducing more on growth organic customers. Prime capital. the improving or very of each goal We our the again and working revenues and fiscal an innovation in will team’s growth accomplishments. or on targets operating emphasis and we and once XX.X% XXXX, proud operating The end progress by made X% specific Vision achieved Destination earnings serving are initiatives on of earnings year more

our we that, commitments, of my us We customers. a Vision customers first, of reads XXXX strengthen that XXXX, for each cultural intent our our for is in key and for our a support gained and come and highlights operational maintain our The our future interest productivity customer tagline and goals we’ve themes that XXXX the that of is working and excellence all we These to driving metric. lose capital advance our asset, momentum important belief our Vision when growth, priorities not responsible future. specific While not to is this do personally people. Company’s the sight And profitable needs, accelerating secure greatest serving our of stakeholders. target it our empowering there vision corporate believe

I XXXX, closing, for as as the employees the to efforts want in in achieved thank Before opportunity critical fiscal world continued take our their the around this for partners to we their and to Year. channel New well success contributions

For growth per $X.XX about fiscal net of with to $X.XX exceed Company XXXX, the to earnings X% share. expects revenue

be Company quarter, any remarks. expects share. per to of This exclude $X.XX reform. estimates about first the formal impact the these potential concludes $X.XX earnings tax net Again, For to our

We at time. will this take questions

Operator

[Operator Instructions] Raymond question James. And our from of the Sam with Darkatsh line first comes

is open. line Your now

Sam Darkatsh

questions Hopefully nature quarter. of Three everyone truculent be quarter will questions my will this find a less for than you. last

capital dividends, would and now. flow the where and that the relates What are expected delever the on Board these First, it detail And above the M&A, are right as and than do form for remains the you consider more mean, for problems you you things accelerating first without your balance significantly share unlevered optimal that plans dividend the structure is here. I and to thank to would or sheet level share fiscal about but feel repo free expectations repurchase? would further flow like world suggest cash special cash capital of you at it any rates and levered as relates 'XX free highly guidance clearly are share repo. you and allocation

Renee Peterson

same year quite our the and mind I bit general develops. end really the just and that in does at we’re approach. at allocation the a vary a pretty as of would with the high seasonally order think point we magnitude much at Keep cash is year. of starting the look The approach capital

as is of used is cash point don’t be use view XX% that of So for the XX% Perrot for of But factored it just and acquisition of that outside the above our way. important that as also And we that We investments an also or issue. should and some we as in a reference. other U.S. well.

and at plans. invest we our think we M&A where same think it to on first opportunities And remain return, internally. always new allocation and first looking our capital continuing approach efficiency improving our would and you get manner. great the our substantial we have when a the be look productivity products within in disciplined I priority internally That then would overall in

have solid a We pipeline.

just As of we’ve would number past development as more have such also we focus pieced dedicated a and that impact have talked over we’ve ones smaller pipeline when probably about opportunities those recognize the you meaningful developing and type interested a business the of years. size and often the BOSS. at feel ones, on you really of larger company. of we together in But the look more the larger are in resources pipeline know, meaningful on that and being can be we ones And smaller as that last certainly the more our we good but acquisitions

Richard Olson

also the is and good sports fields directly offering. well increase ground sales the think We of of gain our related product Perrot into I that. line and our the but a example obviously Perrot acquisition fits critical mass very it to

distribution around work. the kinds those leverage of to our so also able world, We’re

-- meantime the We’re smaller we’re looking well. picking really as some up benefits clearly also got from for we’ve significant the but larger acquisitions acquisitions in

Renee Peterson

that model share a that effectively as Sam, really look to opportunity re-purchases repurchases be the increase supports we dividend. if we -- discounted cash our great haven’t are well. Then, cash our And as our have flow assuming would would other then more that we share at deployed I continuing also say

So we same on path. would continue that

think would dividend well. chime interested more -- in a I sustainable But as change would we that also be special versus probably in the dividend. will

Sam Darkatsh

to Rick thinking behind the momentum XXXX continued you're Vision the XXXX, including metrics? you it mentioned question What that expecting was Vision I though The not second relates in have, capital. working overly as within

Richard Olson

has initiative X Renee? employee seventh the times, working been think that and I is had, it included capital this is I we’ve -- think So

Renee Peterson

Yes, only twice, yes.

Richard Olson

than twice that Only time.

for point, off the this we ball very we’re much clear. to top our businesses very and But those those clear very we’re for the growing Those at eye at the across is is at people in responsible easy are monitoring is example capital, this working path going each chose sure and So operating of take real focus that built of point. The our increasing make really very capital on one with last year on to the we is and profit engage that to very, two have to closely structure working revenue the our organization. very, performance there. in objectives. say for all not to two focus with chosen some we’ve Not as

Renee Peterson

remains And keep structure our that in and leaders key also our incentive mind Sam same. the officers for our

So revenue either is a growth or growth and there’s certainly, of piece that a that, churns. component of piece is profit asset working of a capital

that So focus interest in continuing same where vested going forward. improvement, we that the and have

Sam Darkatsh

contemplate Third you pressures guidance what inflationary do and for question, Renee, pricing? within

Renee Peterson

look in same initiatives not XXXX be commodities. resins, well major our commodities, particular, similar material fairly we the think well. when of and we so will as work as that rapid engines as steel areas And in So at, real impact best will very and offset would in some be pricing. a increase to where the productivity sharp the we’re we in primarily XXXX, saw there and modest, to as fiscal a we impact in ability lean seeing And hard through impact and our

to and gain That product And potentially focus some our margins. where we’ll innovation continue price of X segment price. continue a than price, is focus market that look of for always also to realized differentiate on in the can you value-added recognized opportunity that on X in offer feature. at cost. a between to And price more customer of offers not ourselves also points as a normal the we know -- We us would we to residential segment. we anticipate and So an range professional different

Sam Darkatsh

obviously Final rate, will be. that that question, without reform it others. The years in is there assume is to then fiscal something we tax XX% one-off is But the to I tax as out too should relates defer rate that this assuming rate? tax XX% ‘XX to or coming

Renee Peterson

the million about comp We’ve Sam. $XX really year included in That’s to in similar change XXXX. difficult XXXX, to in be, we of for inclusion know is standard stay. going will share-based that’s But every that. to accounting here forward. very It’s what the consideration The what saw is a change

So the our we variability it and of will because year, some not stock continue a every and on impact. stock tax it’s you year introduce from rate, but use from vesting to our and of the as evaluate based exercise the each necessarily one price. options, know will But impact year-to-year both is in quarter-to-quarter

hard little change forecast. the of know it’s reporting. its to I So the intent is simplify to

year-to-year; difficult; I the so continue; included but we’ve amount dollar think a a we little amount ’XX forecasting that different will it bit in from impact more did as in ‘XX. does that it maybe exact the make but maybe does similar

Sam Darkatsh

very a of please. all helpful. you season Very holiday Have terrific

Operator

from And you. Longbow of Research. Macgregor Thank the next our line question comes with David

Your open. line now is

David Macgregor

incremental for further Vision as targets. leveraging us are it if, Is detail talk about drivers maybe than about about on you implying and on margins operating what XXXX simply talk Can of the here? bit and wonder and you more you’re talk you little really there. a Is between that? little the XX% a the volume, out, just here you -- just improvement you here if if in from could model the margin Thanks. bit there I I margin give mean going that

Richard Olson

engineered, the a customers. budget. of displacing additional value their highly those are the key areas professional of do of other of on the to And I that or of the topic we’re XXXX lot thing where next to related would one mention they They’re now type products commercial The is as innovation. generation to side first Vision we especially really pieces that’s and in more bring see moving

we more budget. So comes machines, that’s fuel they fuel budget machines where we that can when of have productive other than have their where out that comes money labor efficient more can

and So we that more and value those see equipment engineered. opportunity into to offerings highly product of some are transfer higher

it really is a part that portion it. big that. key So of innovation another piece of is Productivity of

impressive We’re escalation lien with where our seeing in so lien activities. the our productivity plans of on returns initiating commodity we offset far. initiatives increases are our improvements prices or our really largely pretty We

So those are couple Renee? of areas. a the

Renee Peterson

I would say again professional than rates in also continued leverage to at is faster cost. the residential fixed and continuing segment then beneficial, growth

they’re within that also the for dollar-for-dollar SG&A or as investments making is within wise production shouldn’t revenue whether but grows. So area recognizing future the we our see same cost

David Macgregor

helped something Second you sequential up? the you quarter third was XQ on fourth the don’t or you residential else recovery residential on margins, in margin it question was X.X%, than more But typically I maybe that a just in than had could X.X% business, on there quarter, Is do you about step pronounced last quarter. going depressed know. talk that all or

Renee Peterson

mix, business. piece a of residential the on certainly execution think as product I as be it good would well

of both. probably is some So -- I think it it’s

David Macgregor

close we of where comfortable just the product leader you’re more question as Pro presence just in operated big are the well talking the from about battery of Residential. talk and both the category is as can about in but are And development to you you in the mowers, that last pervasive a the longer-term, and to And And being in where how seeing advance? picture lawn extent marketplace. terms

Richard Olson

are a in that as something something see interested that we’re customers and that and offering our definitely We trend interested as well.

spectrum product. As of across our you you said, look to entire have

volt And that introduced the I spectrum XX been personally received. of just our our on have products, end professional well then So products. other of works to you platform handheld we go that’s terrifically. the product

hybrid fully good that which the walk range We really at And and they a technologies, for a mower. provide. customers this electric is of the in point very is between additional capability our professional have all greens because what's set, the

taking is transition there definitely a So place.

across much expect line additional and technology battery across battery the you categories residential product offer professional. in would of investing from options offerings to many in to pretty see us We’re from the to

David Macgregor

with to were XXXX. you come to sometime CTR, to respond a see that? If you in market to battery-operated be How competitor prepared say would a

Richard Olson

making be business. would our We own to strategies relative that

So line. we the across place that are taking investments have our own product

There now. would the out offerings not There actually area there right the offerings products. contractor are landscape something. for that in are that So are electric be

still very, of that's this at small portion very the So a market very, point.

Operator

next Mike the from Global. line of our Seaport with And comes question Shlisky

is now line open. Your

Jordan Bender

Mike, for this This is on Jordan Bender morning.

fiscal give high So of I Toro more be of XXXX. get? we the that us end mean, what know or growth or growth guys your double-digit you Can guidance that a more? can how might X% could higher see for or get sense I about

Richard Olson

probably we that. Yes, get specific extremely about wouldn’t

We year We’re far where play snow the expect so at season mentioned here. yet has to built winter to year still that average develop out year, for snow in we’ve this X%. this we

some number that there be at So strong. Exmark products business The our been market, a growth very HD. our Radius of are the this as we very high-end good to utility response potential this the well, the -- have as continues specialty and introduced But residential and time to in have cutter also we Toro Z The last do rental the have the We’ve construction unknowns. TITAN we well. drivers HD, of the market ZE point. vehicles done got as well offerings strong year

also we exceed expectations, at So that we areas have but our some a unknowns point. this of number have could

Renee Peterson

rate coming the what business more for can single-digit residential add lower of term growth is Toro, mid but long the years talked the of about vary. type growth we’ve certainly little be that just long-term a would But rate business. from from professional growth than would that I over

Jordan Bender

And the the be And will in turn zero then do spring? moment. going what the pricing next think the you mowers what's environment at environment into

Richard Olson

The pricing environment.

Jordan Bender

Yes.

Richard Olson

It's the you’re more end, than And because I describe high the there and of across the really professional. to at really pressure more of and is so is more rest talking really is the for price. higher it then features benefits relative features from about end the market professional. that There lower at through it going very end the probably residential of would spectrum price Zs, the

can’t pressure But feature the more be and real general we side. still deliver. go our on to the set about further probably more based capabilities, price that priced So we ability up, you price get innovations lower have that, on the

Operator

And Research. with next of question Bosshard comes our line Eric Cleveland from the

open. now is line Your

Thomas Mahoney

This you to XXXX for any from Eric quarter? quantify is way tailwind fourth you on guys business Tom the Do the any and Texas? of have contemplating impacts the on storms today. then are Mahoney Florida And in

Renee Peterson

specific to the So hurricanes?

Thomas Mahoney

correct. Correct,

Renee Peterson

people it that very would say will focused occurs, tend if a we favorable would of is hurricanes that But Yes, impact type gets immediate see honestly not see was impact on there things when do immediately. the as other destroyed, it to normally equipment we of I replaced, lot then because are get actually event overtime some replaced. what

term longer it we intense more saw moved did on Florida in it I devastation storm than in and type think the And in through Texas of quickly. actual was more And was Florida, we a based I very and event. just Texas, the storm. think

damage So little more we to there. tended see a

Richard Olson

And loss, retail also example, not immediately, stores see just open. you being for would of

during of storm, our for stores golf Home most damage. in the closed -- had short-term type example But negative. that some Houston Depot but being more courses So even the the for example, of dealers

that’s So into require of and to the equipment bringing directly them to grounds both that also equipment shape. back the

huge any did positive. slightly These are not see by means, we but So swings there. a pick-up

Renee Peterson

the golf of say, for but amount, large look we into courses would When of a contrasted fiscal not it's it that slightly small the I number. would to ’XX, a point, total and but at carry number, the end is, fairly then positive. to XXXX number Rich’s

Thomas Mahoney

the inventory to then acquisitions incremental exiting on of year-over-year? if then or any so year, way up within mowers snow And and a that contribution there size is the X

Renee Peterson

and we I for as XX from is inventory, good average inventory, standpoint, at look professional we position significant at that is year We year made were year. that year. But working think our what a we ended across the end, the really feel capital doing in field on about a shape. ourselves residential month positioning well the the We both improvement we good the feel from ahead.

want develops, we sure to that the ready we’re so make And as to deliver. year

Richard Olson

year than I was this is lower it inventory snow at actually believe last time.

to that out? whatever happens shape out play good in for with play winter to we’re So happens

Operator

Mondillo Sidoty Thank you. next the And question with & Joe from of our line comes Company.

open. is line Your now

Joe Mondillo

Wanted little the up bucket to ask the quarter, segments on up outside X% two was fourth XX% cost in year. was terms for it of that the of about your and in operating about

was that wondering why fiscal XXXX? Just for and what outlook the is

Renee Peterson

operating when going So for you really a couple we look loss of at segment, on look at just when the other. is other the things there

gross thing. type a consolidation margin, just our of the that area First is we of eliminations, within this do of lot where of all,

as eliminations. down So it the the as segment, in clarification. other bit I it offer a all far little the be general, gets a margin we look actually year-over-year. just was But for at gross guess, other When to messy

two our to segments impacted don’t residential, gross company other the in We own But think both company of I our we by professional important margin a up distributor to other. year-over-year. distributors and contrasted two segment and distributors. I notable. was which own specifics. really our was are and mentioned the that I other items we have sold that’s think eliminations XXXX, In one As disclose

of of meaningful. either we favorable more a pools pieces in had went so segment we then the did that of in the one LIFO many repeat is in XXXX so have just And other other impact our but And way; the not impact. in What XXXX, significant, a that locations. inventory LIFO associated there combination in -- with didn’t XXXX and two the other XXXX; the occurring for of our was favorable accounting year-over-year impact we recognize in XXXX which is QX them

other significant at SG&A, have did would some be look your but we inflation overall cost When impact. part negative segment was negatively we margin us a year-over-year incentive. year; that portion point so basis gross corporate anything again, to than in XX general the it impact of being outlier want impacted on margin which the for is more So the think I about question, Company’s gross the the the extent most other

this past. was very did the incentives or the actually are sales great we and profit the So in working wrong standpoint, we turn. profit a some sales, talked and in generally capital low company mentioned from have capital of And growth moved modest XXXX, our the In speaking asset our I X.X% type direction. working either our for about but in

three good we So well of on growth, at of we working incentive conversion measures scored our you one profit good capital. in and in had good XXXX. XXXX, when improvement And look sales

level execution SG&A that a good and all some in seeing back piece on incentive that and inflation. more fronts up it So really bringing of to normal is you’re impact

Joe Mondillo

slower goal So normally be to this going forward, say but I is that guess is the fair it would is than trend if what revenue maybe up? everything up year-over-year,

Renee Peterson

the I that would all why of is any definitely corporate don’t for know different. true be Yes, And piece SG&A. the

Joe Mondillo

golf for played, wanted And in question, last second my then good I several good specifically. ask The market pretty all to about actually. last years really wasn't it rounds however, were year terms the golf; actually at

to fiscal and been year. So all or growth that that in fiscal more has so there I'm you’ve But talked -- actually 'XX, or last in accelerate I rates just worry did how any anything at after of your spend low does slowing 'XX just year in slowing played rounds And decline change that? in 'XX. wondering about golf like single XXXX CapEx business you that or strong, given any affects that and know in XXXX always every single-digit the the

Richard Olson

to our From golf perspective, strong. continues the look business

at can First that days. on talked a things of quite again, about some bit; that's move look played you if that around rounds the we’ve based number all, of one playable

as I playable you appears. it think it's much for as correct not if down days,

variables in So market. go of there out of XXX neighborhood golf normalizing And to per year of plus golf couple the fact, is about business for like in expecting We’ve few also the talked that. the a next of courses just we years. are

area -- of in So are provided that that in the are on We to I single more no just and some and our we And that very high peers the as innovations can And looking trend. we these we numbers that low we if investing. take digit of that the you sense in we there's as market we a get see in back rational we projects we corrections you’re horizon see about past. sense much that no lastly, market see guess a Outcross that then the introduced believe will to based this out that’s customers golf, taking well. be change market market -- in the like the specifically, those fact, products year, talked on share

a the opportunity itself. that’s So for us market added growth above

Joe Mondillo

to the But I years? -- have don't actual in slight of want terms growth. last a in seen over all you the So you know few at growth define acceleration

Richard Olson

those return. terms there because investment, control, pent helps partial on side. use, What lot can seen we a at customers, for by systems are available then to use, organizations on water the is factors of especially install our And is several lower there we today investment that’s least that have there up that energy projects demand better better accelerator, lower a based technology irrigation there the make push with a that spending return larger was in of over is an the golf delayed capital the as edge

So that’s been an accelerator.

Joe Mondillo

is other your buckets of different line. there in just including I business. of several arm that income financing question, last your terms know Just there,

Just looks terms in expecting -- the and similar that that jump you 'XX? fiscal of wondering that in like you what a 'XX And guidance type descent provided, jump 'XX? you're on fiscal thinking in a so is are

Renee Peterson

we substantially Yes, income expect -- I change not other is would year-to-year. does mean normally

other XXXX did went in some favorable joint estimate not an to we You’re that is And goes impact the only that is material correct be through there. would the through future, Red that that for see be Iron going but foreign to impact. fiscal venture of there impact hard that of the currencies

Joe Mondillo

fiscal assume similar guidance the does So levels? ‘XX

Renee Peterson

but income a not change, No, specifically there we don’t out is that’s other the break dramatic correct.

Operator

of Company. from Thank with our Dougherty next question Jon and the you. line comes And Fisher

Your line is open. now

Jon Fisher

Thank Good morning. you.

over I that X% year correctly thought three First was wrong? question the year I it the revenue each objective XXXX, period. hear I you heard Did organic where a on the growth, or say last Vision X% X% annualized

Richard Olson

employee to so just mind, This keep guidance. year. X% this But And not internal in year. is initiative. it’s each X% our is it's It is initiative, an per

Renee Peterson

year people if to didn’t We to to we’ll do but carry each just year. every clean it try they -- always focused Prime, each up clarify, to an also initiative year a employee year. Destination and with they From And on, every a to have don’t per get X% and own. its keep slate year, was great start try standpoint, on forward that stand

Richard Olson

is achieve earnings by we Operating obviously XXXX.

Jon Fisher

was by XX.X% that of the XXXX. end Right,

Renee Peterson

Correct.

Jon Fisher

next had out residential in year, in expecting XXXX look you are you growth in XXXX growth Residential, versus would you XXXX? or in you On when for XXXX improved as expect similar

Richard Olson

growth. of to business there of closer expect businesses, which what plan about talk business GDP the is do that’s -- we and that would as all our for do business expect to residential -- we next about, We really be but it’s that’s we we like talk growth thing like for the we GDP to kind growth we typically what for that the typically have growth do year. When we would

Renee Peterson

and power as It’s as mentioned, new volt I XX well walk that well. and a go Rick see with really we as power Z The and would SMARTSTOW think great TimeCutter has we successful, really the product been impact HD. as the TimeCutter reverse mowers forward expect that to

Richard Olson

the point has for TimeCutter homerun the line of residential versus that’s HD pretty really. the has top been price extremely well feature been set products received, and much a Z the

to continues well. that do So

that drivers business. have business, that continue grow grow we a and number to residential can So of expect to we the

Jon Fisher

of look market share and Toro’s share market gotten where the of terms? turn at your against side. Toro below when and products that market share you in share on should you categories, fair to And of real market that inline you level still general that have growth with zero growth your set in share in landscape in you or category be in have Are just performance you your

Richard Olson

why we’ve contractor of residential last the up spectrum share of fueled new with fix slightly a our the line, in the with really that And believe cross two have And the and and the have the that high start that’s those the across over basic held side and year. from in the from over. we of say minimally the by across successes not from we the reason Zs movements terms look of the Titan whole you through had areas, If intersection landscape landscape end more some you there the Exmark if landscape the residential that I Zs, HD product Toro. contractor, look Radius contractor of is own market because the

product So have properties to this a greater a previous where grade, professional we in to choose have can step homeowners that higher with thought they residential end extent quarters. acreage year happening larger the up can as which to talked we

Jon Fisher

would last question, or then the early good, and during season strong winter you poor… how average, the as occurred And that describe the part it winter selling Would fall describe of here. you

Richard Olson

some season in in that response it’s that’s We sell saw mild then Canada, field third the was quarter and product talked position favorable had had snow teaser with the our few far. year pretty good been offerings timing since preseason. some and in in events the winter we the and had then so preseason a early Colorado that the to The we inventory solid. And about. into of We

looked just may And week you that’s if lake being morning think talked the really system and storm I the produce at the I at region weather to snow around that set looked colder in not snow snow about they weather effect system. moves morning, just be surprises pretty about some but is moisture through this that, channel great or good lakes. this there giving effect channel up that conditions this

that. a eye manage we on something This every we year. is that close keep So

So build to we looking quarter what does it’s through at new us our snow and plan the something not especially. business first around

Operator

Thank we Longbow Macgregor with have line of question the up And follow you. do a from David Research.

open. now Your line is

David Macgregor

snow forecasting this speakers]. the [multiple Well, week Cleveland for end

here opportunity achieve beyond conversion guess And other I then expectations with to for to your XXXX by growth quick on product. in cash distribution just BOSS Just free in if flow also of just product centers follow-ups about couple other talk ‘XX? talking about the Thanks. and some expanding home Any the of here reference this snow. to you could

Richard Olson

or continues in to. of we opportunity by business residential the First even use to average season, we new a that about. continue our customers that very strongly from we product the into all, have snow snowy feel well side our be to very to we response combination we the the line BOSS residential on professional and will if do sell have season and will BOSS talked that on And day driven of that the products to and better and talked a share their that with to today winter about we there -- Company they’ve was been the of that about that test we has They’ve we weaker BOSS and lot is the go been and innovations as through of deal feel really team the did the synergies the closes. have grow they than we seasons. Toro the that to even secret market string introduce. continued BOSS The continue before stronger product

in that’s down system down HTX the [indiscernible] for take that force And the previous the queue, So pick-ups extends quick about the the talked follow recently, pick-ups us half road. ETX which the that calls. the and that more go to used straight with that day think expands while, that I we can a ton allows

winters down. we in of share they’ve the So it really exciting midst up or the stream a got innovations that that and have just taken of believe come along market whether are

David Macgregor

was you distributed opportunity obviously there on to distribution progress part that BOSS, an move distribution. and a the other required could growth bought that into front? maybe It and product you when to back any of expand was and thinking representation. just fewer regions. I'm And some that thesis was Is recently there

Richard Olson

We got are cases specific making some internationally. progress. We’ve

practices able international able been more one on But to We've And some areas for region. been east structure able we the market of is I talked mentioned removal introduce our opportunity and products distribution smaller contractors BOSS and in we been And business. because been to our grow by think example. Canada. a north also our the we've it’s existing relationship, the BOSS China regionally the to themselves the cases. about product with our Canada, complicated with then snow with in are -- the relationship relationships little bit able able we’ve and and the in So have in there more is Exmark you to leverage different the just either landscape leverage be leverage Toro to Toro work to infrastructure or

David Macgregor

And then 'XX? the free cash for conversion flow

Renee Peterson

cash then income flow, productivity We slightly well. David, We’ve working to at but higher when into businesses approximately the cash for net would great look right capital income. conversion looking Free products some higher expenditures. we maintaining certainly expect, to in coming level always opportunities cash we have our do got you equal of related net and as year-over-year flow capital invest new to at and also

Operator

Thank to this concludes And the session. please answer closing Hille proceed Ms. remarks. you. question the and

Heather Hille

you. Toro. Thank interest holiday and discuss Thank you and everyone and your for with first again results. wish quarter you talking to season in February in forward pleasant questions We safe a look to our

Operator

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

You Everyone a good have may now day. disconnect.

The Toro Company (TTC) 7 Dec 172017 Q4 Earnings call transcript