TTC - Earnings call transcript Q4 2018

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

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

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

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

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

Rick Olson

operating you, earnings records Thank morning, our listeners. and fiscal $X.XX of net good report million we’re input steel delivered results XXXX. sales of $X.X to billion, pressures our of all net million, share that Heather, for tariff of This rates. the and raised and notably $XXX.X sales most record These pleased and include of company to Inflationary earnings earnings morning, cost per and $X.XX. freight earnings for

focused strategies, initiatives, We rental and rounds, have construction way taken sourcing productivity along snow measures our evidenced our results landscape investments board year-end businesses. just products steadfast is ice strategic approved. specialty and Professional price our performances management through creating adjustments shareholders and capital and increased across businesses. dividend with by to and on golf headwinds our as to the contractor, the the with remain offset these Company notable value by share per earnings quarterly returning The lead that

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

contractor landscape help diesel deals strong demand, the fleet conditions cutting favorable generated retail our large line, businesses mowers, throughout continued to the strong the the riding due These in new for of capture the the our through First, zero-turn and economy. including and channel number factors a year quarter earlier demand us quarter.

wrapped channel large the retail later with up quarter. year Like innovative Industry will these of in discuss fourth good Green during equipment additions new through demand crowds landscape and contractor and a a October, range innovations the products, enthusiastic Our number latest some category, call. Equipment and we strong in Expo the full ground the of our of including during golf businesses

well saw the at and We large the year grounds golf competitive market. rotaries vehicles many retail to prevail deals and package in finish continued and

In previous our Outcross including Groundsmaster executed revolutionary annual in pull-behind foreshadowed Outcross Garden and and at Landscaping As rotary. Award received product in the the quarter, fair XXXX Facility two significant the during the the Association of September, their Sports we launches Germany. from trade Innovation Federal calls, XXXX

new We are tradeshows will and poised grounds January industry with February. product exciting in golf during unveil we that and

our majority golf Our renovation wire golf control and won between sales. irrigation installations. systems an satellites market including once successful projects, with to and offering we conversions increased both categories. The similarly We business demand year in finishing again to option new see delivered competitive a strong continues project a course many validate as continue few of of

INFINITY continued at rate. to Accessible Our sell Sprinklers healthy a Top also

for our our solid rental observed is sales to of year Utility Compact and construction across contractors. Moving all Mud currently trenchers. good XXXX inventory season strong TX a many particularly anticipating end rental and regions, growth tracked businesses, enjoyed specialty Field are our a partners but Loader, following year Buggy channel construction retail partners higher with of

officially Dingo weighted Utility at the and October. was compact The our Our capacity XXXX featuring to-date, operating Compact in arms. for XXXX productivity launched XXXX a XXXX top named Construction show new provide that aimed telescoping exciting pounds Equipment XXX TXL efficiency. Loader It loader TXL largest has new is by innovations recognizing products and product GIE and unique award been more one the new at magazine, of an utility

product as award Mud magazine XX end-users. Today new and a the by of for new tracked one Equipments XXXX Buggy construction Our for products top owners equipment most also won intriguing

and in launch positive. business and been KVX and conditions, irrigation helped response drive of in the snow the to demand enjoyed favorable wet summer most and colder in In residential fourth demand; well similar business the early-season as received strong very success year. marketplace. snowfall commercial our channel, based quarter regions new has our unfavorable sales areas controller products for of late normal spite Internet-enabled gains new our posted the spring response activity; a The early key from ice on retail as in management Our than temperatures

growth more our In Ag year results. solid regional central for achieved mixed growth. based on line product addition, products control the irrigation modest delivered

promoting Agency. US in and use recognized water solutions through leadership innovative was by Our Environmental of education Protection product responsible customer the

an in row, a EPA Excellence Toro received year third Award. the For WaterSense

our Turning preseason through activity quarter, HD extended last of the two-stage segments, Turn favorable our to to events plus mowing Late on in of Mowers for conditions. were our quarter line. carryover our large retail thanks nicely snow demand up residential generation season Max spring effect due snowboard and the shipments TimeCutter the Zero activity to retail Power was next lines

quarter strength growth. turn I of the and and call replacements results. operating now product sales fuel the Finally, for gains A introductions, of products our helped to international will over to the detail number fleet year made new and the offering. professional equipment Renee on our financial new

Renee Peterson

and Rick you, everyone. Thank good morning

net for $XXX.X were sales $XXX.X per adjusted the fiscal of X.X%. or fourth earnings fiscal of to the net $XXX XXXX share per a of XXXX This see X.X% Please same Adjusted diluted compared share $X,XXX.X or earlier compared we for per $XX million provided year for of XXXX, $XXX.X year Adjusted million GAAP compares achieved in record net non were compared million As tables earnings an comparable or to fiscal a earnings million increase $X.XX earnings net a or the or quarter the year $XXX.X net sales net $X.XX net quarter this of compared reported to of Net $X.XX comparable in record measures. per per billion. reconciliation increase million the or for of million per million of grew the for fourth to $XXX.X to We of and quarter $X.XX earnings share delivered for XXXX, share share share for XX.X%. in $X.XX earnings to net adjusted $XX.X $XX.X were share. our We morning, $X.XX the GAAP of net adjusted and for the $X.XX XXXX. period quarter ago. per earnings share. an the adjusted million earnings earnings per release $X.XX million earnings million share per or $XX to

shares end, Earlier million on the board week, approximately approximately authorization stock. of remaining For we authorization. year our million repurchased increased At had X this additional an year, X.X X.X we by million shares. company our the

business to Moving results for segment. our

segment from X.X% growth $XXX for were to demand up $XXX.X segment earnings to of These the for quarter fiscal million strong a professional both $XX.X periods for sales Professional compared businesses. million, to year-ago. segment up Professional sales solid the results the the quarter billion across million. earnings for $XX million First, X.X% XX.X% This year. year, for sales were $X,XXX by includes were professional our XXXX. fueled totaled down

late precipitation spring's and helped above the in North in winter half results Max to Interest and sales X.X% thus to zero-turn the segment for fourth America products increase the snow $XXX.X X.X% residential The turf saw good walk and Throwers mowers. triggered sales impacted quarter. Unfavorable Our million. in year quarter sales during weather shipments to for the early $XXX.X parts also drive year. our Snow next-generation in many second conditions decreased and our along fourth of negatively Power for from the power year a both demand riding the new Warmer with year-ago residential million. of year arrival

For year-ago. residential million for $X.X earnings decreased Residential a to the quarter $XX.X $XX.X million. year, the earnings million segment totaled to compared XX.X%

XX basis for decreased our gross by results, to XX.X%. Now margin operating the year to points

full impacts in XX.X%, down from relatively quarter, of points magnified size both inflation challenges, and XXX the quarter, of The the offset were partially were price For small was tariffs, quarter These declines by margin in the realization. periods. year-ago. basis results net during a gross by the fourth supply resulting

investments SG&A XXX sales incentives initiatives, into to points price cost year of Prudent the in strict XX are prudent for and our quarter. expense and margin expense year expect take lower percent periods. management, on decreased leveraging continuing as XXXX, cost full-year pressures the contributed capital the higher by improvement the practices, to over basis such effect gross that selective both and drive on improvement. for sales and strategic by sourcing, productivity While based points improvement a the basis full fiscal increases we focus and improve

offset For the year, our development. initiatives, in investments continued product strategic by in part SG&A including improvements new key were

in during consistent of Following improvement of inflationary operating XXXX, XX.X%. we achieved spite we as the with for In consistent SG&A of were the earnings expect at XXXX rate fiscal year XXXX. percent challenges, strong fiscal SG&A maintain a fiscal at sales sales a to

fiscal adjusted For rate XXXX in the XX% for to XX.X% points to year. tax fiscal reported sales the as expense Interest to the last of compared of rate XXX of last the operating adjusted XX.X% was XXXX year. compared the for period slightly XX.X% for tax were year. was quarter, period The decreased same percent last decline X%, The earnings rate a year. basis compared same a tax

impacted by federal tax and reform of in enactment resulting unfavorable significantly one-time were the the and impact deferred of calculation For rates the of were offset associated redemption the repatriation full-year, reported. rate. of The re-measurement provisional tax with the charges corporate tax tax as from the benefit liabilities tax the previously deemed U.S. provisional the by the partially assets

the quarter, tax fourth was fourth in from period the same last the for rate adjusted rate reported in last year. quarter the year. adjusted was XX.X% period The XX.X% For the tax down rate same of tax the XX.X%, XX.X% to compared

provisional as For XXXX. reported benefit to quarters of adjusted based fiscal previous in deduction compensation, the adjustments items tax the as rate the the well for excess excludes the quarter, of share tax tax

XX.X%. tax company rate that year effective income fiscal XXXX, the For about its estimates will be full adjusted

net order to Turning increase technology with company’s inventories over totaled are new facilities, fill process to of were payables percent working balance about planned in end X.X%. improved sheet. free ended $XX $XXX.X million. the along to X.X% million and fiscal up increased we of of to tooling, continue $XXX.X at as to $XXX.X Net plan cash production new rates. the to as for a work be At XXXX year strong of to Accounts processes. and improve an invest meet The million with year, market flow planned in capital the increases end XX.X% the million, reflects impact to increase receivable the of Trade $XX $XXX sales million. XXXX XX.X%. products the average month expenditures We the compared fiscal to XX our of year demand in million. approximately Capital the

X, fiscal cash $XX expect We approximately of and board to quarterly share. XX.X% our In returned consistently added shareholders. stock, on XXXX. million. investment our increase overall per slightly from record the up quarterly amortization we per repurchase our $XXX performance, This the its consistent with dividend in December on the to actions a million of priorities January shareholders light In When are to million depreciation our previous rate or XXXX, That value returning dividends. XX.X% same. company is on the strong be XXXX XX, to shareholders. of of These dividend to paid $X.XX common payable $XX said, focus declared dividend to share remain

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

Rick Olson

Thank you, Renee.

We’re pleased year. to XXXX delivered fiscal be should another fiscal record in believe have and good results XXXX

adjustments be fiscal development. productivity gross inflationary new challenges, in will first expect pressures the we industry costs, initiatives, will Cognizance leading year. coming will part We sourcing of while investments trade in ongoing new of shows new to mitigate we full and strategic year, particularly we capital and to unveil including in price margins number improve of product and technologies for imperatives, deploy strategies, to continue and input products service In at innovations. months, businesses a which across participating investing these the

various review new prospects fiscal for businesses Let's the year. in our

extend streak a Our starting win with landscape their positioned several well portfolio innovations. equipment new contractor are businesses to broad

model nimble smaller examples mix new the inch the mixing more rider, turn acquired a XX Z-Spray. zero Some line recently include stand-on and ultra

engine, is combined placement operators addition presents has It of stand-on and distribution that positioned of superior for tanks a known. width our quality system platform for complement cutting the which are This landscape maneuverability. forward full a enhance features deal of believe cut line for and solutions lower excitement wheels. new the the has traction comfort. drive operator series our decks delivered Rugged operator, contractors. deliver innovative weight a extensive gas We notable the most from of Another of stability, between adjustable portfolio mowers, gravity and to great industry's center with generated also new increase to an suspension products A for expanded of XX-inch these designed of the XX

grounds the in golf Our during launches turf coming product busy manager are and businesses show. significant industry golf months and sports preparing the

healthy are focused additional growth sales GTX strong field business bid The grounds to Our ground efforts. we vehicle golf enjoy should and opportunities plentiful XXXX. share municipal with our committed is remains and continuing resources we and in to Park and sales sports and line. are on solid Workman have particularly market take our

growth revenues each in Rental rental by moderation for advanced new segment. now years residential years. five projection show their is business will five with believe strong offerings to overall construction very rental forecasted customers under activity the be golf remain received and projects to we upward. have updated America has well. by wrap their North that encouraging American late well equipment We during the Industry in golf forecast Association next the some The revenue unveiling. sources in revised The X% to October Their as specialty X% grow over construction outlook

innovation in new a is help get productivity that also have budgets customers continuing tax like industry. in also from bolster the extendable like BOSS. start rate business. the Furthermore, the key snow have TXL introductions equipment is our snow all healthy increase business HD focused conditions snowblowers and The rugged growth along The for outpacing growth. our early we as stand-on to and exciting management plow with present reputation clients Power for team ice recent strongest to markets rider for continued offer icy reform by The opportunities in the New further the and economy brand EXT residential helped good to off purchases. plow and snow to a Year, increase expect our Max and on good addition continued XXXX. rear-mounted Our Early of new helped snow the

the snow enjoy should positive for as to sales, us fall, the long As solid up setting spring. we to a continues start winter

announced products growth remain the in on we rear Groundsmaster recent including and opportunities pursue regionalized productivity new Outcross our irrigation for variety discharge to the shows. as summary, another GrandStand always, successful year. in introductions, running anticipate across new Mower, a is the additional leading innovation, Collect focus most Interest the Direct As trade profitable our of ProLine we for arena. soon HXXX decks we XXXX, steadfast businesses mowers, In high controllers, be at international and

inflation mindful While ready and uncertainties, of and trade we policy stand make for another to any fiscal headwinds XXXX address year Toro. strong

achieved the channel to in for we XXXX Year. Before partners closing, to employees, thank for fiscal success and the want commitment contributions their I our in continued New their

revenue partner to growth to expected quarter fiscal year growth acquisition are the distributor fiscal For earnings of net attributable $X.XX expects approximately our the of the share. of exceed to per X% for $X.XX X% first Adjusted to with XXXX. XXXX, company be in about the a

first about the includes per net related of an $X.XX concludes earnings acquisition be in our the remarks. For unfavorable adjusted company costs. quarter, quarter formal expects to $X.XX $X.XX to This one-time the to share, impact which

questions at this will your We time. take

Operator

[Operator come the line Sidoti Instructions] of Mondillo with first and our And Company. question from will Joe

Your open. now line is

Joe Mondillo

bit touch to have on improvements wanted on place. Just more little productivity that a in you

mentioned of the and challenges with little expected to heavier costs. that some is I the CapEx XQ. expected tariffs than offset was this in And You a higher obviously the

expected more could you're wondering little color there how doing fiscal growth a you Just to in in that's 'XX? what talk drive and

Rick Olson

that key within results Specific producing productivity to is productivity -- than we areas re-launched one really improving really year and our a great lean plant. more our of initiatives the ago for

leveraging etcetera our that. will cost have on of our very suppliers of like working areas are and elements part buys. be the through consolidate quality of teams some really also with And working also We then cost, various standpoint, from design to a of that specific margin working standardization improvement repurchases

it. of part that’s So

for our And the businesses productivity. very is we each of in deliver options negotiated working really for of have if that; to so to with come sure that's Closely the some have best have that and related of also specific we the suppliers and ensure as to tariffs; the make share that that guidelines of productivity standpoint. our start We really context tariffs the the benefit. are we we realize that minimize to we to tariffs, to the suppliers down want commodities to want subject expenses from then

and steel already started down. peaked has example, to For come

well. to we So as aggressive be reductions those go have to after

Joe Mondillo

regarded improve what have to just always and would And trying job a like on describe the operators, So efficiencies seems in initiated. the you high and not. it you to How come I that. continuously follow-up years. quality very guys great you really done as guys difference you have since over

the describe reinitiated thought I that the to last being the XX over been taken you I so place. how operated lien were have you have manufacturing things months or How said You would beforehand? place would have early process. would in just differences compared

Rick Olson

I what and really would think one operational is out our strategic key of call I productivity excellence initiatives. that is

reigniting a we of than have through investments some But in really that recession lien some knowledge effort, So of did what's there. getting area are the our is lost because we in out as a in focus are the the better base making, gone that we're we we've that return in lot and and we lay reignited our that went lot already of we resources. XXXXs a We plans. our early of outs work as and reduced

because a great how getting example teams were one we solid base base jump lien profits improvements we you understanding knowledge. would a have right that. improvements to good lien So of with cost with and and that's And than that's our of do return expect, our can projects into where better

Joe Mondillo

the We've data and seen for quite is have a how then slowing lot everyone significantly. sector question else let housing me And showing I'll a of chance. last

least to Your or the the economy. business is at highly correlated part of tied

I'm seen You anything business business. and have in you you any are you at that thinking of certainly sort anything hasn’t a we're and probably seen through your about maybe at you affecting that But commentary if seen you sector that anecdotally How necessarily come or have in haven't bit your that? it's to it all? that your or prepared wondering business. believe in And heard have lead your of just slowing anything

Rick Olson

know We do is look The really replacement effect there with our at some And a is is correlations. a a to lot business fact of from we residential of most business that work side. housing.

it but business our our a of it's analysis. impact on So lot doesn’t an additive have component, from immediate

one the irrigation residential is area commercial that the So is area. affected

there. So new homes your systems, irrigation there with would that built effect are be an

seen at in portion not to that that's have point, business reduction this in total. We and of small a directly our tie housing

Joe Mondillo

of signs that overall sense a then here. anything, terms of markets or or markets that believe? involved slowing of leads be that's in you -- you've And to seen those of financial economy it's in slowing. I just economy just some mean, Anything in these obviously just been anything that things could heard in terms broad

Renee Peterson

seeing the look I Yes, there agree quarter of our we you dynamic in our not look business of indicators. continue a would the to we're environment. at When same today. all impacting a it's at news, the lot is anything fourth strength

we continue quarter growth proactively But try and monitor so move from the QX. sales had will economic strong that indicators a in And to we very in standpoint area. to

Operator

with of our James. from line Thank Raymond will question you. come And Sam next the Darkatsh

line open. now Your is

Sam Darkatsh

I if questions, may. few A

don’t off time it I quarter, the to talking First about this fourth lot relates of as quarter. like a to whole spend

consensus the but what a basis talk we August, it’s in of saw out material were as reason, margin. other line some least quarter bit only on season. your looking variances for what variances But Could versus the I about specifically there no not progressed? For versus around quarter fairly plan item at internal were little gross Rick think also you after you a

Renee Peterson

had, and moderated please side. price we had then to to side margin. We And gross speak around XXXX, gross into and as about fiscal margins will have start the little we we of I Rick through when chime cost the bit had expectations the started may we wanted QX, tariff in question, was talk Certainly, and Rick because went Sam, to be lower. didn’t a our if I In than your related insight the to inflation. it we any expected. lower year expected some the

quickly. we felt the it and would areas from see do trending where was peaked but didn’t as went a happen gross It is probably that see margin change look we see we we impact it relief into is point we to do the would we commodities, at year. quarter in particular we steel. small believe that may so little down any we look a sequentially within of that expect you improve. As that given as forward And the your more But one magnifies in QX quarter, to

capacity challenges levels we companies as well, consistent read most as rate, had that have build continue the These higher with like have we that aren’t supply addition, efficiently. with just product and supplier In economy that the being a their to talked of adjust people to growth challenges needing a some to you consistent in supply good getting we to about past. other product our

to production able wanted that with it's please. price, challenge everything And achieve we a to maybe our to sometimes able of you be for than plants little been want a have adjust been the less We but to standpoint, from a produce flow. optimal to bit

Rick Olson

as we are our taken price of range increase about we're followed took previously, our inflationary did, in of a of more transition period. still businesses. about mid-year a period We in increases on talked we price an an as And service as We increase. talked parts immediate various in by

realized. a are quickly rate more that realized, the retailers but at price There specific is which proposals the that its of price our to. quoted The accounts different national transactional have it have have are of points. more many that are residential There each commitments. larger businesses businesses So there is commitments

work environment while We'll we inflationary for as taken the expect to very into have one some versus become price see improvements small markets to more increases has to time. really the continues. those now New re-pricing through process accustomed that that So the and Year, price it's a and going an

Sam Darkatsh

to is margin fiscal where that gross half into up. saying year margin year so next for question, feel the second be me comfortable year on you leads XX you a my point interesting. in gross now, basis commentary that In Which recovering on will have the

a especially fourth much in into visibility much baking you that recovery And light gross how second in you guidance? half quarter of margin your have our how we in margin So that, saw? do gross of are softness the

Renee Peterson

we're impact when cost inflationary more expect Sam, be and XXXX, the think an an going both is in from environment, profile of standpoint, continue from than a cost to impacts manufacturer. direct to price just related saw to we we that And tariffs versus do in of a parts versus the of about you we're assembler pure occur tariff. of more increase that when tariffs

they either saw we of QX. went impact in it And us that or quarter QX they somewhat that creates down. through in down. or more then higher XXXX, a cost of up smaller and we as delay for So assume when up now come a input I'll go go they than come accelerated in down, faster than

gets is comparisons, from it part significant you to year of we we're pretty XXXX, of have we part the when go in embedded through we But first some in higher inflation. think year, the line the year-over-year and As the expect where inflation headwinds base realized still about point the guidance through our to price go we as that as well. have going

but the necessarily that as year through that not to gross start going margin we'll to And we for of the see it's do price in will year QX. total -- go see we inflation So occur we growth realization offsetting improvements the year. more feel of

Rick Olson

commodities rates. several the Oil some on pricing cases trend to as resin will is transportation we part. to have that that. It several are down in in talked Also our obviously, cases the areas, helpful start see and different believe directly with peaked. some we we starting benefit to surcharges freight about The is also cost steel us there our of in

to see start will benefit. some we of So that

some the of will a we'll the initiatives the some realize headwinds to of the to from of negative. benefits cost So start our and of some internally pure pricing see we'll commodity actually improve offset

Sam Darkatsh

points versus X you quarter in quantify little half might second year-on-year -- gross gross I margin bit a progresses? the help the half coming margin. were delta Renee, first quarter quantify the help you we that year-on-year or off that variances change that we're year almost mean, you a can gross off in fourth margin as knowing -- where expect Can in year-on-year

Renee Peterson

note expect I that sequentially that be based year. to same is us as What on so sequential mix continue we're do year-over-year quarter is of throughout products QX, up expect the margin improvement improvement, know just expect and isn’t the necessarily the to from say would important It would and to the we but you for for basically that gross selling. we quarter the size every of Sam not

similar we expect looking improvement year. and year for at just from more to size a sequential So the total improvement QX is QX perspective,

Sam Darkatsh

don’t Final the question, monopolize want I call. to

the interesting mid-single SG&A that percentage years next flat looking on basis. It's growth of especially side, a SG&A, not has you're levered year. On commentary organic was SG&A fact at are since that in been that your Toro least you looking digit light at the

and So as why that leverage would lack also? transpire the progressed year the how of or translate

Renee Peterson

we our initiatives because we of related that I that of XXXX. a saw would fiscal into go intend plan. call to onetime our impact I versus think because internal lower And a those to couple make performance we some. out, XXXX, incentives, of we points In reinstate as would

transition that that will -- is happen. it's So a normal

new and feel invest to also R&D. products continue to it’s We important in

a rate as more to sale. flow to tends that so And

to G&A, to those longer intent we significant good but reinstating initiatives. we’ve really initiatives certainly, will XX, performance improvement to pay the as with And period look maintain a is those that of XXXX. improvement of over quite our we improvement leverage for into time We out seen want we in we in realize XXXX. headwinds great but that So to go continue have opportunities the also

Operator

Thank question our you. next of Arendt from And Robert will Longbow Research. line come with the

Your open. now line is

Robert Arendt

outsized between an pro about were from residential the segments? you give tariffs? any talking see and You tariffs. segment the headwind either segment Would Can breakdown the the

Renee Peterson

One more don’t But market of related. example to themselves and disproportionate implementation of one great segments. biggest is steel mentioned, the seeing that’s I steel. the and moved all our you, be of not is discussion not with a even the tariffs to those tariff piece we’re will No, it's buy I tariff. the related that tariff. either a more subject honest steel entire We impact and lot of

bigger just in it’s to have And how the similar versus tariff. the commodities across us So markets a related it's specific and for professional. residential the pretty moved both impact, general it's

Robert Arendt

the the in that and said you’re to corporate somewhat the in were initiatives. is Can that assume mean, that quantification I how’s pay to business I you going give us XXXX. lower talking decline residential flow XXXX? which and just decline you’re it any you about saw you was pro offset in of our talking an You in initiatives and by EBIT other, obviously, that’s through going

Renee Peterson

more But see well. impact initiatives. segment We don’t impact. as other are would There in the the other that corporate quantify impact necessary management of or the initiatives

would -- hopefully again be So a and it with is it. it our see out XXXX. pay reinstate to It's would intent just across and -- you SG&A you great those in see those all that

Robert Arendt

I we at mean, over just line looking for X%. from And away is X%. us if take it FYXX, top the And the guess the I guidance distributor, lastly X% gives

you’re I from is that these mean pricing, increases does the most fiscal guess? growth to Given to 'XX I coming in price year of and that imply year. going volume minimal doing growth come

Rick Olson

transition and is those But plan surrounding we've goes and is The from infer we be you would that think pricing, increases on. we’re the price business what increases. combination reality the of numbers. some volume I pricing, it period about price year as still in will talked realizing as built of a

as volume the combination some there two. still will and plays combination price. be increases. year really surrounding the the it's But of of price out, It's primarily So

Renee Peterson

the And haven’t that year, what of at I same for taken have since impact level we through purchasing price does habits. think a period we're also on to sort trying so

will So as tell. Rick said, time

Robert Arendt

you any seen pull forward? Have

Renee Peterson

No, nothing substantial.

Operator

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

Heather Hille

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

Operator

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

disconnect. now Good may day. You

The Toro Company (TTC) 6 Dec 182018 Q4 Earnings call transcript