TTC - Earnings call transcript Q1 2018

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Operator

Good day ladies and gentlemen and welcome to the Toro Company's First Quarter Earnings Conference Call. My name is Bridget and I'll be your 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] And as a reminder; this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Ms. Investor External of Toro for Director Company. Hille, Relations Communications and The Heather proceed Please Ms. Hille.

Heather Hille

good morning. and you Thank

Our policy was On including a in Officer; Financial Vice website, copy statement non-GAAP earnings thetorocompany.com. Wire measures, the of Business release Peterson, and Chief financial of well and the issued Investor this Information Officer. customary earnings our be today release, can begin a section of as President, by Rick our reconciliation Chairman found morning corporate Olson, regarding are call information Renee our and Executive with We non-GAAP Chief as Treasurer forward-looking measures. and

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

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

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

earnings be included measures and superior measures operating this its now Our earnings, as per GAAP non-GAAP how operating the adjusted comparisons related Rick. earnings are performing in adjusted The useful be schedule measures with past and conjunction non-GAAP that, call substitute over not the business. financial in to release. the performance I of views management a present our for, certain will these in ongoing believes as results, to, considered our company GAAP considered non-GAAP net turn the be Such may contained diluted should understand measures and and in With measures adjusted to to, earnings should in release call. contains alternative share presented to consisting performance. call related as or an the of meaningful in earnings tax of operations, measures measures of net of rate Reconciliations financial our in effective release this

Richard Olson

quarter. of all and our helping is X.X% sales businesses, quarter offset our higher good demand record to snow led to a morning aggregation power products with somewhat Good Heather. broad the rental, sales start including off contractor, thrower. first products XXXX and in listeners. you, golf, Thank X.X% for Strong due segment. up shipments were Fiscal way based the landscape for our deliver professional mowers, for growth but Residential for of professional demand to the by the riding of walk lower sales were

million, included the comparable a earnings per earnings $X.XX earnings increase results includes see record share quarter $X.XX or a pleased to Please benefit XXXX our a we and These excess period, per million share information of for of sales lower earnings are the rate for the net $XXX.X $XX.X compared a GAAP $XX.X share, release or benefit an is measures. of X.X% than million million in XXXX $X.XX have and tables adjusted to earnings net tax compensation share-based of net traditionally one, smaller and an to non-GAAP and the associated are of comparable results, XX.X%. net net the strong deductions the U.S. to earnings adjusted the diluted reconciliation tax for earnings $X.XX adjusted While in quarter earnings excludes from tax $X.XX net corporate increase were one-time including lower first $XX.X delivered per or reform. our Adjusted reported charges first XXXX share. due which with per of

in prove affected the quarter to by upfront reform future. the charges tax for were be rate our from legislation, the beneficial tax overall the earnings reforms reduce and While will

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

riders and power for demand First, was for solid HD mowers. zero-turn for experienced particularly spring. strong lines Demand our the prepared and equipment heavy-duty the as our quarter channel walk first contractor TITAN landscape riders Lazer

business solid and to and golf of meet of reels provide Customers businesses Sales with our U.S. value our they sports to home mowers in market, golf XX. field the vehicle Stadium, shipments and fleet good fields Minnesota grow. demand. grounds Golf The enjoyed a quarter cuts in the mowers GTX the employees, the Bank driven slightly vehicles. XXXX. INFINITY part of Toro primarily of by of The sports utility crew and our host the maintenance of delivered from Vikings, to and for results first prepare quarter, helped driven EdgeSeries Super reel products shipments that GTX our new a continue irrigation along cost. ground first of large enhanced Workman were because up sprinkler Next, Bowl by quality also reduced was greens interest Toro quarter of

our Our with turf Force dry field. equipped vehicles HDX Sand both and blowers, with and synthetic Pros, the brush, helped groom along Pro

this supported have the to preceding honored Bowls. Super all of are and We

rental XXXX business. our of the compact and to new and began for drilled utility construction we our Mud shipping redesigned the completely TX Tracked the and drill. quarter Turning loader growth Shipments Buggy directional

our also rental Buggy XXXX a won that by to Product Innovative pleased Tracked the Equipment were leading Rental the Mud Registry. magazine, Award We learn

strong by our certain the December to Midwest, late throwers. year. the snowfall for The to option plows contractors. placements particularly of Aqua-Traxx to last our ahead management snow channel for timing favorable nicely plows continued V-blade BOSS customer attract the to by of agricultural sales our businesses, snow shipments Positive channel turn performed sales of Our demand our markets. residential with key markets, irrigation similarly Like DIY professional to straight-blade lighting of overall HTX V-blade were highly perhaps reactions The businesses low notably consolidation. continues across irrigation also plows downforce levels in the products, ice our most effects experienced events trucks and and decreased significant quarter. were valued in EXT solutions. quarter. new through other The by tape softened posted overall well. due gains be with HTX snow the unique FlowControl largely somewhat Early growers. latest lower contributed line offset commercial

strong shipments helped is Late that riders, However, the snowfall to growth activity inventories. deliver lawn did products, quarter. reduce through especially, helping generate field zero-turn retail of

Finally, irrigation, strong the the business last as the international continued business across landscape international momentum through of the contractor, the results. -- businesses achieved in momentum as Increased Perrot, commercial regions equipment year for demand quarter. construction golf, fueled the professional grounds, well and addition specialty and

the by demand solid residential growth Our was international driven quarter for largely riders. zero-turn for

detailed financial results. for by will I favorable Our of rates. international turn over a the discussion enhanced our more were now call exchange results to modestly Renee

Renee Peterson

everyone. Rick you, morning good Thank and

and walk effective and EPS we As tax financial tax to transition. Therefore, of result. net GAAP both like one In we adjusted view adjusted guidance Heather earnings that have to rate. Toro's measures of Rick would for net mentioned, previous recognize this is I EPS included QX non-GAAP reported from diluted reform, actual per share, quarter QX our earnings, and our

was Our $X.XX $X.XX compensation per tax $X.XX QX rate. benefit share-based pretax a EPS related to previous included which at share, reform guidance excess deduction to for

the slightly benefit from with due tax in was deduction for net in The per reform. operational tax QX lower $X.XX that compensation benefit, consistent share of a $X.XX. this the rate share-based to $X.XX came to excess $X.XX but lower Excluding earnings guidance, actual resulted corporate

per QX period. to the QX this adjusted $X.XX first back start share to our our operational other Rick share-based adjusted of is operational we which earlier, benefit to and includes it compared our basis. benefit the with a compensation, benefit rate, EPS the our included to $X.XX performance performance due reported is reform by The When on brings $X.XX mentioned an from tax In tax of $X.XX in was which not of per the guidance. related adjusted QX previous $X.XX included QX words, charges of $X.XX performance lower share. and an QX add $X.XX exceeded per then for EPS -- our As guidance one-time subtract the comparable achieved $X.XX if end us comparable of share not $X.XX excluded, $X.XX of we share, QX an in previous per top $X.XX per share EPS a exceeded guidance to to

associated adjusted excess company's We more also believe tax useful performance exclude exclude present in helped that the benefit charges of compensation. share-based may understand providing and these results the reviewers excluding performing tax for meaningful we're operating and of U.S. deduction reform clearly. past the measures the that and forward, the be to more one-time Going comparisons with items operating

to changes financials QX the through back the QX let's walked more walk and Now, from our adjusted EPS step detail. reported that results, in through we've

diluted which represents of is GAAP earnings the net of and measures. of this the release net lower charges non-GAAP million morning, the delivered Professional than to for share earnings of reconciliation net to or per a increase to quarter XX.X%. earnings $X.XX tables adjusted a a $XXX.X refer adjusted $XX the to an Earnings for an million per This reform. year We million net performances for ago. the increase share, reported reported net earnings X.X% $XX.X in comparable businesses. share. earnings Please sales for record our million $X.XX per segment were the the compared XX.X% or a year decline million $XXX.X tax ago. sales of X.X% strong to or $XX.X earnings for for increased the many $XX.X $X.XX due earnings to segment period related due quarter to same totaled million to As across million Adjusted $XXX.X first quarter were per our grew million, one-time $XX.X compared quarter of XXXX our share. Professional quarter to

results primarily channel $XX.X by earnings X.X% residential increased related parts. the quarter the somewhat products Our These products and driven demand were by snow quarter for totaled million. down offset $XX.X year. but to from million, riding service Residential positive for segment demand increased for for last million softer $XXX.X X.X% sales were

key our to operating results. Now,

by discrete The leveraging somewhat commodity a quarter that net unfavorable finished in adjusted charge basis charges one-time share-based over improvement. tax improvement to resulted and which increase an tax quarter decreased tax First last sales and of segments. was compared reform rates to the currently XX%. about the effective basis payable remeasurement excess tax, of cost expense liabilities the the provisional eight tax noncash to one-time of to tax points quarter, for offset and primarily The XX.X%, fiscal income of rates. over million quarter of earnings favorable XX.X% partially Operating the XX.X% was down was reported benefit resulting -- XXXX exchange slightly. a for increased The be U.S. of rate. last in product XX% repatriation in tax was adjusted remeasurement The and estimates by assets XX.X% for tax act is deferred SG&A tax repatriation tax reform. Interest last deemed with quarter XX in points the from by the the were these year quarter as respectively. as rate same the of a for million calculation sales exclude $XX.X margin within drove assets was compensation. points compared tax full adjusted will tax first due higher by same of charges note adjusted the reduction that $XX.X and its sales the of Please the deemed period The mix The exclude company The benefit significantly the unfavorable the XX impact rate associated and decreased rate percent a to The XX.X% year. XX.X% year. of largely by the basis our compared corporate decrease to XX was years. of XX.X%. the tax offset volumes the federal period the impacted charges provisional is expenses driven for the deferred tax the percent for year. rate deduction quarter gross The

our adjusted fiscal and The will about tax XXXX, the for share-based fiscal XXXX the adjusted by for exclusion be XX% excess XXXX. to effective income effective rate XX%. points three compensation tax tax estimates about rate company For benefit of currently that increases its

comparison. to balance increased Turning $XXX.X from inventories totaled the to currency Accounts businesses and This to in a for mainly of receivable X.X% foreign million, to in up million. due foreign largely exchange higher year-over-year for year rates. currency were was up several anticipated sheet. the impact exchange quarter increase sales the sales X.X% quarter due ago planned and the rates the $XXX.X Net

compared as First a average million. ago. to payables quarter XX.X% was XX.X% trade capital of increased the end At percent $XXX.X the sales to a the XX.X% working of company's net quarter, XX-month year

impact cash million revised are of our incorporates asset, in $XXX tax. of deferred and guidance the benefit the our guidance The tax non-cash lower the a including repatriation $XXX reduction deemed million. rate, We the timing tax payment flow installment tax reform, increasing net free of from to the

Our at XX% XX% share. dividend per X-year guideline remains to earnings reported unchanged of average

intend quarter we authorization growth. increase million with remaining in and line our to quarter X.X such, the our dividend of as As of shares regular our over XXX,XXX We've reported in during repurchased stock approximately repurchase common shares have end. EPS

Before I our our XXXX to the EPS call year guidance Rick, prior turn to full to like adjusted from fiscal would back XXXX EPS I fiscal walk guidance.

pretax rate. $X.XX was $X.XX benefit -- year the EPS year $X.XX for included compensation reform a deduction at our for prior full tax guidance which full Our excess to [ph] share-based

XXXX the $X.XX compensation it from for year includes to the Our related adjusted benefit deduction guidance excess corporate fiscal the tax lower rate. EPS for tax excludes now share-based benefit a post-tax reform guidance full $X.XX -- and

Our excludes as $X.XX This adjusted performance year In our same EPS tax for to the I will prior now charge results $X.XX. one-time our over call guidance essence, guidance. associated return Rick. $X.XX also with an the the to underlying guidance EPS operational of fiscal reform. XXXX the expected remains adjusted in

Richard Olson

Thank start, operating first performance. strong positive is Fiscal fueled our you, to XXXX by quarter a Renee. off

long-term empowering of tax Our to for with excellence, strategy. investment benefits our growth, light to employees' the positions the disciplined we accelerating the In consistent productivity focus These driving of priorities year. priorities us on anticipated additional will key maximize commitments results allocation evaluate capital reform, and and profitable operational opportunities company's people. well

will priorities strategic Our remain unchanged.

First, courses. valued recent of along our services. profitable leading example a invest good GreenSight, provider will research to drone and investment with services is in and agronomic growth. the drive latest customer we innovations us provide in will development golf strategic technologies acquisitions continue Using help of order this A in to for

waste, work improve lean reduce in improve to continued automation. information eliminate quality processes, will we investments Second, cost, technologies and through and

people, best strive Third, by to our asset, that to we their will be well-being. and in developments greatest investing be empower our they can the

As strategic to our shareholders. priorities, value we we continue to return these meet will

for interest our our the effects drive business, are decks profitable year. the anticipated these and accelerate customer take providing at on Let's prospects look through a to business particular, value growth of innovation commitments, in service Contractors with excitement high-capacity have zero-turn by our our inch Beginning in riders, products demand. diesel our generated stand-on contractor XX and featuring early landscape new and showing strong aerators. our

longer is STMA in the critical new the multiple expectations are pieces Our promote during and simplify patented recent the managers of next-generation revolutionary Golf golf productivity, change machine with increased way Outcross products sales. the better saving and Industry our to is equipment system of onboard grounds -- vehicle, money part to reported designed efficiency the favorable and tractor, Shows. The time promoted also Innovative positions part and turf and which lives, benefits. businesses a intelligent fuel followed innovation and productivity its customers we Attendees budget more that Outcross and attracting complete tasks. a supports show favorite, for was heavy-duty extending characteristics replace

systems operating Pro of myTurf latest fuel hours, maintenance usage, attachments, management web-based connects and other in recommendations regardless smart and significant brand, equipment represents on These maintenance asset records, turf advancement another also -- technology. and parts user's needs. system assets maintenance requirements. manages attracts based The all irrigation Our and system inventory maintenance provide

control irrigation new Control smart ability Workman irrigation kits. Lynx sensor form EFI irrigation and precision that a to complex of in to important the System, with Lynx remotely enhance unveiled Other advancements wood and tractors. input powered of by the a product traditional rotary of team launches pull-behind and the Central system. new include the GTX Groundsmaster their easily new systems optimize modules, solutions X.X operator's These number our an Our smart engine Outcross or the a attaches cutting XX-foot new

the a to new system. addition our raise Series, of introduction reduces synthetic sinking sprinkler Sprinkler bounce no inevitable raising manually This heads increments. the the cover. is for also out need RAZOR basis. INFINITY a RAZOR our the them addresses grades heads We STEALTH in showcased on X.X-inch regular two digging The Rounding INFINITY to by show

celebrated support a economic and consistently favorable Toro, rental show Optimism company. for the we anniversary successful sales. construction proven construction a and as industry product this for should was This Next, be for place to Show, spending, conditions positive our fundamentals American year XXth trends of week's creating as the our which strong that utility one in another Dingo ongoing season. loader, infrastructure performer suggest compact reports for has permeated Rental are the memorable Association

show, more powerful utility our model. -- we loader the a displayed During concept larger and

We that Ag, These in extremely Mixer line. also opportunities for transport recently displayed durable our for solid commercial is businesses drum anticipate and our season option and UltraMix to residential, Mortar drums the our provide polyethylene solution ahead. an Similarly, clean. irrigation announced applications mixing easy

we In front, line our new On introducing increased tape. elements LED we demand are brass see and to technology. the drop-in color changing a continue FlowControl Ag for have lighting,

In works and connected smart addition, lighting extending the Amazon system logic we of Google into are Assistant. products, control Alexa which with our suite

Our current our same evolution connectivity use residential with product will controller. commercial line the and

products is to Despite to at and ice and Equipment truck are activity sales of see point at field preparing season. dealers continue appropriate year. for BOSS on be March this signs inventory for BOSS levels the conditions, our year Association an at innovative for customer acceptance Trade snow in our encouraging offering based prospects positive, for for impressive the economy, National The all retail equipment. of BOSS sales, growth the challenging season's management snow Our is introduced team lineup the Show. new Truck the in we

taking bookings. late of opportunities residential are advantage in and inventory next markets key up Moving segment, we generated retail heavy to snow the set clear snow to by season's field

We perform walk rider expect well power advancements at mower and to our latest the spring. retail

Finally, that there grounds lead we our we regional are are a and to indicators for encouraged way. could irrigation We -- action. challenges stakeholders. year on Demand will golf market and for sales and of are for equipment business progress we Overall, all to another unexpected encouraging poised the solutions likely take international appropriate continued recognize to are prepared basis. pose and deliver plans, we believe successful the

As we our growth quarter this want their with employees work another thank deliver and first to the profitable to our I us helping employee new along to achieve initiative, enabled Vision strong for embark successful hard of to XXXX opportunity take on our that results. us drive support channel are partners, year. critical They,

We are year. the by encouraged the start of

of is However, our selling still small quarter. is of ahead us. QX a Most season

see but at the will underlying time, have we our weather changed spring an perspective. guidance unfolds, We this operating how from not

growth to share revenue We per exceed continue X% to and fiscal of about for expect to expect adjusted earnings $X.XX net XXXX $X.XX.

$X.XX we For earnings adjusted our concludes of This the remarks. second quarter, $X.XX. per to about expect formal net share

time. questions We at take will this

Operator

[Operator of line the Mike Global. Shlisky from Seaport with Instructions] question Our comes first

line open. is Your

Michael Shlisky

Hey, good morning everybody.

Renee Peterson

Good morning.

Renee Peterson

Good morning.

Michael Shlisky

X% So, the I thinking? easier first least about to from quarter But second again, X% getting a does excess of of that The get know only fourth more. bit in here or in growth quarters. the further you been push little little comps initially bit were said, you at of there's than growth X%

RichardOlson

made we in the encouraged see are quarter we Well, earlier. we first comments that the what by with

is that key is get we would of Much still the the it's And we at just a full early holding far to even back season that ahead before like I the so fact point. thing we're that think about I think through quarter us. our and and be us really -- But be year. optimistic selling year small is spring results. just that this the of in would it's it's of break would more encouraged

Michael Shlisky

timing from to at as compared anything wholesale retail here? work Okay, are the this level promotions some year big, timing curious QX affect either of or level QX great. And professional going the about or to selling year. at the secondly, I was seasonally how The last the of to

Richard Olson

taking for really I we not with things, third between Yes, think, don't the at Toro channel especially competitive -- happen other want tends major was talked we and I to because probably would that that's same something that partners, quarter. think, don't that about variable last between -- aware so But moving any one time. that the negotiate see only Days the -- our it's it we can year to quarters. attract -- comes a not be something second to and shifts, and it's And other I'm of be that so mind that make that place either the of, that promotions thing we we two reasons between public certainly the will

Michael Shlisky

pretax a to decent in more finally, profit margins I aware anything increase, of a in higher was then with I [Indiscernible], do be you your should you had margins. mean, with costs, a Can And residential. you on to Okay. give discounting, anything decline wanted for commodity get me, us the color, sales et pretty we there just but cetera, to had bit some color of? can you kind do

Renee Peterson

at lower less line its when snow, maybe say year. much we the -- quarter, a so pretty But that because expectations, X.X%, Yes, not residential, our see GDP indicative little bit of growth. with again, of type growth did necessarily always in small we we it look

some and tariffs increases are are those steel what the is our changes in and we went see seeing in this of enterprise know haven't in guidance. into pull through we we some may be kind with would line around and expectations Overall, are included a In to year had remainder some that, lot we seeing there other forward-looking and that comment see, sales in at the discussion increases So, I we of from on materials, the stronger modest particular, Mike. standpoint, year. expecting resin, point

that mix see of initiatives, hard But did and as if as always well, within well. quarter to impacts commodity We'll work to we we higher impact So, cost. some offset product lean productivity did those some we as would. some see our with

Michael Shlisky

fair much you guys. very enough. Okay, Thank

Richard Olson

you. Thank

Operator

the James. question comes next Sam Darkatsh of our with And from line Raymond

Your line open. is

Joshua Wilson

in is for Thanks congratulations Good on quarter. Josh filled for the questions morning. Sam. and This Wilson taking my

Richard Olson

Hi you. thank Josh,

Joshua Wilson

A few impact the what the in quarter? first, housekeeping items sales was on FX

Renee Peterson

Very About the million. $X quarter. minimal in

slightly So, impact, favorable. very minimal

Joshua Wilson

then with at working mean you're you're is that residential it's it it. happy the needs you the where some Got said work? And or inventory does snow that down in still channel,

Richard Olson

Yes, It we've in now, seen the inventory. right in snow generate went in the many the to And benefits in reorders very in it field-level season reducing field. season. below later this of satisfied year tends the the with point. on is especially, But shape this effective at the we're not inventory the inventory, year. snow we at shape good as are point very that's prior the at the inventory with into We season and good leaving

events preseason, especially, next for few be clear healthy -- the set a in field to we if will for us So, continue here, the they inventory more season. get to a position should up and

Joshua Wilson

us to remind are extent your commodity you and assumptions for inflation? to productivity can and offset then, price guidance And what price what in are

Renee Peterson

reminder we of segment get price point more more market, price. professional residential expectation. of with be cost, to buyer's trying one the we we're that's regarding that product a do realized residential tends and price from than a to price we that. type where of segment the consistent from at segment. business, little get a enterprise to point the a The what provide not is always two points of Yes, Typically, just to We level between the at

Joshua Wilson

transportation And on wage or inflation can against a you what bit installation specifically and might thinking to in be color your exposure give costs, relates us as it truckers? availability of little of I'm

Renee Peterson

saw changes past the as are everyone market. that We we, in of that experiencing some well. does, Yes, in as overall some

we included changes our So, significantly we seeing different time, we and we're what than not have guidance. this in experienced -- point in have what at that are

Richard Olson

help certainly place we through and see in some aware But -- of issue, at contracts of this have to that those certainly through it. of us we We're that we've managing been that the tend and challenges. point

Joshua Wilson

luck quarter. Got the it. with Good next

Richard Olson

Thank you.

Renee Peterson

Thank you.

Operator

Our comes Dougherty of question Jon from with next Company. Fisher the line &

open. is line Your

Jon Fisher

Thank morning. Good you.

Richard Olson

Good morning.

Renee Peterson

Hi.

Jon Fisher

Good quarter.

little explore more gross a margin. Just on the bit

to You line. would the thought professional mix and positive net-net one that and then is to mentioned have question, product the margin gross in have in issues. And with comments of the the would unfavorable response prepared margin of residential the first been mix just gross

of of what wondering else mix that's standpoint it So, was can out gross was kind from on the there's to you're if that a or something a if margins? underperformance alluding if drag BOSS, product you break that

Renee Peterson

in are aware what seeing we're you has Jon, segment, Really, the in segment, the a offering across that our largest that enterprise, as also looking and broad professional is of particular, and very products.

professional. saw Although the impact professional within we just specific from And is margins, in are segment. are there low similar, margins variance the they all primarily what are pro-type high to that combined the of sold products

on Just gross margin. had a our impact net

both relatively so both and again, small a quarter overall, businesses, and residential for professional. quarter, good So,

commodities, a was within So, product segment. it the mix again, mostly,

from some a currency, Some positive and modest was impacts impact of foreign price. that actually

Jon Fisher

year-over-year I BOSS subpar want understood correctly, in just make down And I that to weather, did winter because sure Okay. of was correctly? the understand QX

Richard Olson

quarter the slightly the correct. winter, down with was that's for BOSS

Jon Fisher

Okay.

Richard Olson

position from the emphasis strong inventory we're -- in on at field assure over shape, the in inventory point. we've making -- good had at our right and concerning believe again, And we're right but that we time overly not We're any product we the standpoint. have at

Renee Peterson

Yes and growth year we from BOSS the as expect total do standpoint the well. to still

Jon Fisher

weather at one when season, anticipate sounds would performance? time expect what fall to only out. when the kind Would winter you kind you. just looking -- immaterial levels, the you of sure. to overall given negative of the like Do presell be winter. exiting Okay, and or a this you like impact you're Thank given quarter But drag conditions you it an winter? I know the any on overall -- weather, work a subpar And solid inventory

Richard Olson

has if think next of winter just the I number more clears us out the to inventory, of half the helpful it. fact a for have really winter first That, events of season, about took late we have season, is had we in which year. the would Yes, preseason first it about the that all, we less But us. optimistic positive been

the just in minds preseason the don't as plays year. in from of of we well. consumers' winter carryover have So, and -- for memory for following dealers Then, a the the inventory previous secondly, factor previous our the winter

to going snows they late season where a again next are be having they're for a So, to in position year. encouraged order

Jon Fisher

Okay. then me. question last And for

the and kind lot spring of QX, residential of Just was professional. it buying overall early strength both given of product, a of

performance risk sales Just pre-buy wondering, seasonal normal kind of or that from of fell of risk have What if QX. into potentially into a this fallen there's if has that maybe occurring? QX from is kind normally, the a buying of standpoint, some may been

Richard Olson

the we think together. there's look quarters yet because factor take also our is since I at the economy that at think, strong we confidence early indications at hard It's they the especially, it's said, or of this in of that the spring and about channel pretty level business I confidence, say, don't point. quarters. is shape, good with know to is isolate strong is is timing do, highest them, of the of within have optimism But spring. we to that same just our falls things the timing consumer XXXXs, And the we our multiple that always

expectations, from our So, the if channel I positive spring goods. pretty are for that the comes planned, as think,

Jon Fisher

very much. Thanks Okay.

Richard Olson

you. Thank

Operator

question Longbow next with Macgregor from And our David is Research.

open. is line Your

David Macgregor

taking question. the morning and thanks good for everyone Yes,

Richard Olson

morning. Good

David Macgregor

Great the business segment of Good seasonal but want reflect as A earnings seasonal and quarter in quarter fourth in leverage. residential for residential the X.X%, quarter, really years, already, about I I talk this business to been there's the realize pattern past up pro-business. -- down the X.X%, in this a first successes no growth lot some it's here. two business, SG&A revenues

International strong guess, maybe the I about talked growth implies negative residential quarters have five the last You may eight have residential, business, been which been now. of residential at domestic negative. the looking

more how maybe domestic guess of working you transparency in I the lack the help would couple the past do what's question residential over So, business. years, the us not? the you is and understand in that reinvigorate be willing residential into guess particular, give in us little growth light I business, to and business what's and And just a of

Richard Olson

our very positive strongly feel residential We and business. very Sure. about

We have to with lineup. our product position regard great

each We in have of markets. share key strong the market

partners and We best mass channel mass our dealers have partners. primary our and the --

in each summer we time optimism positive our strongly is a then have is the position. negative -- the we a the The very But of year, number somewhat performance offset factor other. that and forces. very take of about competition, the So, market we has spring we're business. This the factor. to to with good relative put the feel was time The snow overall in spring a snow, and that weather major

to So, business makes on this portion end that -- it's high a said that business it's the a spectrum. our going is be not we have money, of growth

-- GDP still but roughly residential positive our we their and fit we're businesses. growth, very its rest So, of strongly business and with about our the

Renee Peterson

get related some is residential. economies I technologies to profitable would often a cost an as it there, There Rick And facility, across as said, various more leveraged shared scale of And operational capital. segments see we covers standpoint than just with add and Yes. synergies its we well. are of production the of from and number that

David Macgregor

Okay. are guess of assuming-- you're I about what I whether does and innovation you paid case. that it that questions guess for appreciate in may category be able raise a get to color. less I

Richard Olson

in you that our relative look to so in case have think some to also market. I had the have very significant we competition innovations

we you mowers last power you We've introduced leading about without and mowers walk industry. market with at share really to power standard have walk gone low the single-digit the precise Personal the market in are standards, years. that So, too share number it, from and that at for Personal products Pace, being look PoweReverse Pace the especially, look the -- of

the So, there. look nice at of the key share. gaining is any conclusions the to to market draw We're rest

David Macgregor

years? guide that's what growth are I past the guess for you to second in given two toughest Okay, $X.XX the helpful. residential compares assuming for quarter $X.XX of the your

Renee Peterson

the break don't between the related -- that variables revenues based the weather out is quarters. and there quarter-by-quarter other we because happens to we portion Yes, specifically a on movement

guidance for for to revenue not X%, again, specific the exceed full QX. a number So, the is year but

David Macgregor

at XXXX? me, for for development in Okay. a the We've words lot you on In just political you XXXX this of on point do steel into the costing Last had steel. this fully weeks. question against hedged real it's market contracts procurement just price or in than Are to variance risk any mills becomes risk the Thanks. with the few your last the for protect other your rollover is XXXX?

Renee Peterson

and have as other to that for true contracts and are is we Yes, -- related the well. commodities steel throughout this year staggered

have don't an standpoint. everything in locked entire from we year's So,

tend as peer keep a in versus well similar more mind of product in we However, to a manufacturer. that be

amount. by So, large an but steel, of as raw we some do not

period tend that's go to a changes often, So, little than see our lag again, time to of in We up some We part, and a prices in down. because manufacturing that agreements or bit we're go that from of more true related those that to lag the and have on occur place we tend for buying see perspective when approach. parts.

David Macgregor

much Thanks very Renee.

Renee Peterson

welcome. You're

Richard Olson

Thank you.

Operator

Company. And question & Mondillo you. with our from Joe Sidoti next Thank is

Your line is open.

Joe Mondillo

morning. Hi everyone. Good

Just wanted the quick, was beginning, raise $X.XX. to about clarify missed just the the guidance, really I

You'd first your quarter to by be $X.XX. guidance about relative

much So, net-net, based all that that based taxes you by -- on on based the of that guidance and how was $X.XX. of Was much related? organic on was how sort business raised

Renee Peterson

the we deduction and should on you a are also ongoing excess out actually an we're two what for then share-based basis benefit piece Yes, that There items consider. compensation. is the tax for have adjusting

we this for well should $X.XX taxes. out So, did and think see so as to the try about in then to share-based excess detail added transcript we as took if reference you should available $X.XX also, compensation a to related be hopefully, -- that and the

that want of for Really we accounts is to of and QX the performance see timing in leaving and strong same the net the rest a underlying start $X.XX. to We relates particular, develops, that that feel year had encouraged. year, do the fact the quarter, So, to the we're but really how it change a we we're smaller of spring.

Joe Mondillo

So, take guidance? if came relative be first exclude related your tax you you to just was guidance $X.XX, a your to the to in $X.XX that clarify, right if $X.XX stuff quarter at you the so and and -- midpoint was $X.XX, all net you

Renee Peterson

did you because excess We out well we deduction to need for do, as Joe, pulled would that what is that -- that's share-based actually out quarter, compensation. No, the in through we're to pulling the $X.XX.

we compensation. the You of that the share-based $X.XX to guidance, deduction included -- excess would need original when for gave to $X.XX $X.XX guidance for originally,

that So, it. and pull out to you have compare

Joe Mondillo

Okay.

sort -- it's apples-to-apples? was not of guidance the So,

Renee Peterson

so $X.XX clarify change the $X.XX by is how about high of on try think $X.XX. it. you of end to We end to that. we're because that Yes, should making $X.XX we beat our guidance, high the you took if

Joe Mondillo

rates of guided And the the running in you've year, that's so terms tax rest what tax for you've your with too in then at help line of sort Okay. to of sort of historical been reform the much? doesn't what

Renee Peterson

make No, about Actually, benefit up actually points. is favorable. excess of tax and Again, I that out underlying you an think, That to it That increase incorporated our on three have tax pull of the rate then the is. would the to, causes rate tax basis rate go deduction. reform. we've adjusted tax an

benefit an underlying taxes seeing on are basis. So, an ongoing corporate from we

Joe Mondillo

more think your ask what in any all at anecdotally, side free-up get cash the or I then in towards that's going customers, a And and financials tax especially, and have of the especially, the in your that imagine, I just reform professional professional business if a had business. bump to just of to yet anything? relative your Okay. to heard seen your I of you at you'd sort wanted wondering lot would you business,

heard head benefit we've you spring the season. sort So, that noticed to sort I'm anything just anything trend we or seen of into that's started if of anecdotally wondering the and start as

Richard Olson

be they would anecdotal, my comments be would Yes, positive. but

based those -- small the they different will -- a be of every reform. capital affected the puts together myself So, that's those different resources by and generalizations on -- shows, can buying go tax that businesses positively with affected equipment. in those But tax the by sense and be with is -- have I my -- to that are talking example, But other available you purposes, general for are in for more -- will equipment and conversations. changes. strung logically, at And each ways people there that

can We but seen haven't necessarily we point our financials. in to that,

Joe Mondillo

stated almost yourselves you're -- and upcoming that this address And advantage inventories, well, related positioning last in year. be this of, I up year-over-year. sort you to was XX%, as the but think, Okay. of to terms on of of may that It the call take sort

spoke or saw quarter. this if time? visibility of you compared call? increased on you point your is inventory's when confidence have point Just where to to of wondering last same time Do in of And do first remains at kind in what have at visibility the relative more level the we it the at this you sort the on last what

Richard Olson

be largest of the start in the would and inventory anticipation of second to this So, quarter normal our the portion would year beyond. build time where in

make the a up inventory it is residential than the when most is it that side would So, normally side. the on professional on of time and inventory build we is the more

the there's summer our that for small because that, would available inventory, forward-looking and snow but component inventory is a of good snow, professional wider that's products. season, it yes, a of products So, most the of specially good and be is products really

Renee Peterson

Yes line products that we actually more have products and add earlier. to in successful -- it of is our that when would our able what did we that with really at to some to customer we like dealers new last demand I the customers expectations, really some is, have look were is especially have would -- that meet year,

we that we channel as a of about some better that talked seeing as be we're I with think supplier. well want So, to the pull

that So, we're going and meet into demand ready year to also that it well. the as being materializes as anticipating

Joe Mondillo

sort ballpark, of percent depreciation for of me. of your product you roughly? wondering Okay. what offering your benefit just percent from sales customers accelerated last percent I'm XXX% just And products the say question just of or would

Renee Peterson

deduction mind, in from there U.S.-based. some an XXX%, for start to What the you only, be if that don't tell would I U.S. would go I is still then percentage, say been to piece Keep from, so think take -- And the to is with, time. -- international the did going it a that I I so XX% benefit, it's in generally know it out. period truth. exact bonus to guess would has be

but subset that. know be would U.S. some XX%, don't of so an I exact a So, amount, roughly be would it piece be

Richard Olson

professional You more be too this could I guess. without towards -- thinking probably and probably much the on going go to international professional would go you could takeout it's and towards the that about -- residential, side

Renee Peterson

Agree. Agree with that.

Joe Mondillo

Okay.

right. Thanks. all Okay,

Renee Peterson

welcome. You're

Operator

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

Heather Hille

quarter. Thank in forward talking day. Toro. May discuss look in second you you, great a to with interest We our Bridget. for you to Have Thank again questions and your

Operator

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

may now day. disconnect. You Good

The Toro Company (TTC) 22 Feb 182018 Q1 Earnings call transcript