TTC - Earnings call transcript Q1 2019

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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 James, and I will be your coordinator for today. [Operator Instructions].

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, Heather Hille, Director of Investor Relations and External Communications for The Toro Company. Ms. proceed, Please Hille.

Heather Hille

good and Thank morning. you,

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

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

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

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

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

Richard Olson

start with is Fiscal sales. record Good good to all first our off Heather. a to morning listeners. quarter you, XXXX Thank

first including quarter net earnings traditionally million smaller adjusted is share $X.XX XX%, million, of one, X.X%. strong pleased or Adjusted of XXXX in of earnings a for the net results, we of were $XX.X record of $X.XX the to $X.XX $XXX compared share. are earnings delivered net or increase period, $XX.X While sales and $XX.X the an to per have net per or million million per share quarter comparable increase an

our for sales and shipments from and partially Our and professional grew in power also the landscape to Sales X.X% offset throwers increases fields sales actions pricing snow strong for and both were segments due golf, BOSS up quarter to XX.X% mowers. Residential inflationary pressures. benefited walk products. management grounds due sports snow higher demand contractor, that ice of

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

solid alliance also First, results. our our especially models. retail quarter offering, mowers first to riding quarter across behind and Shipments landscape equipment Radius Lazer intermediate contractor walk channel zero-turn of strong demand experienced the contributed our and

demand prepare as and orders. a Super Next, send to to the to equipment of were Atlanta's utility businesses led and fulfill Groundsmaster the prepared and again driven for base channel distributors results quarter Mercedes-Benz once We mowers Bowl. Workman way. crew honored help Stadium field vehicles the for grounds golf solid our customer the, fields by to of sports strong their delivered and Shipments

of technology enabled address fleet vehicles, to field and game. playing the surface blowers managers optimize needs to Pro sensing Force for big equipment, the Our maintenance specific the

STMA Industry appearances the at successful Show. also recent enjoyed very and We Golf

highlight shows We the the of will new the products exciting in later we some unveiled during call.

our BOSS by in turned was performance quarter first strong Another team.

for also Path our the the contributed received. quarter. The L.T. well drop positive and XT the Snowrator Stainless our rear-mounted plow including V-Plow, acquisition continuous with products, results resonate improvement from particularly products of Steel BOSS Exact Innovation were customers. Rich and spreader to the New the

dealers last the coming update construction fleet to new business. to positive Shipments invested up season. were equipment contributed enjoyed construction of for to work new year steady the and quarter their our in contractor the The for as rental the to TXL Turning equipment release customers their who result. XXXX independent

second rental of a take have equipment in affected a the the However, business the as first deciding in to some in were as slowdown impact during temperatures their also quarter fleet the winter orders negative by on Shipments customers experienced had quarter the instead severe past. they large usage.

extremely American and Machine were throughout joining last Following levels Works' Show. Charles generated busy the both week's week's forces prospects Toro and Witch this in booth The high center. our from conference of Ditch Rental announcement, organization companies during excitement teams the of

and fueled successful snowfalls impact the enjoyed business. on lighting strong residential for both snow segments while show favorable our Irrigation unfavorable had golf throwers. sales Association similarly other and Recent Golf irrigation reception strong Our show. during quarter, weather irrigation weather conditions. business at Conversely, a remained demand the project faced

team shipping by were on power bolstered the solid mowers. executed capitalize strategies Our to further developing sales of opportunities. sales retail effectively for quarter Residential strong walk rapidly our

saw across Finally, and businesses business mixed regions. the results international

ProLine Our and Groundsmaster international interest and for from team in remained benefited our golf irrigation XXXX Customer in golf Outcross, in high. products strong certain HXXX equipment grounds demand regions. new

Renee of will currency now results. I and over the tempered results. more headwinds a financial pattern our weather to international call detailed regional business for However, turn our discussion

Renee Peterson

Thank and everyone. morning, you, good Rick,

strong first quarter per $XX.X increased earnings significantly to or $X.XX net $XXX.X impacted fiscal this earlier our of Charles for refer acquisition earnings $XX.X net or first earnings sales for ago. Machine reported tax for expenses adjusted the increase delivered per quarter to distributor by reform. net adjusted and release share to were share Works for in $X.XX non-GAAP to related the our reconciliation compared million per of period for XXXX, a the in per to compared to million the businesses. earnings XX.X% impact and $XX.X the the Adjusted increase quarter million million $X.XX of year which ago. partner. sales an share, morning, record or performances of year XX% of we $XXX million quarter diluted segment an same million comparable compared a the X.X%. earnings to earnings share of million, represents due Professional earnings grew quarter Please $XXX $XX.X tables to net a of As a million totaled was a segment This Professional $XX includes which net many GAAP to for XX.X% across $X.XX measures. We

the by in overall international increased decline currency-related increased grew demand retail were positive and driven snow tariff XX.X% offset power sales. sales million Domestic strategic quarter $XX.X Our million. primarily products pricing X.X% XX.X% commodity for $XXX.X costs, residential X.X%, of results and for from Residential $XX.X and segment by The earnings the caused totaled mowers. walk year. channel for million, down residential productivity to quarter somewhat negative were The actions. and sales decline last offset which by demand for by weather was

operating key results. our to Now

to decreased primarily expect to fiscal tax offset same of year. rate somewhat the half company gross quarter one last finished as as XXXX, basis for tariff-related in the quarter decrease distributor XX.X% for in sales XX.X% the a a period points XX.X% to of decrease by and points gross the acquisition-related for higher expenses. last XX margin continues were leveraging pricing quarter, XXX Operating to was expected accounting decreased compared XX% improvement to expenses impact volume, basis acquisition year. to the the costs, points for the First to SG&A earnings percent XX of margin basis first by of quarter of of due the due Interest The second over our negative expense slightly. was of year-over-year effective partners. the The the improvements. productivity for compared sales quarter year. The despite sales of expense for XX% increased down a and commodity XX.X% percent

The fiscal compared the same tax year. quarter tax in XX.X% by XXXX significantly affected The XX.X% associated of adjusted adjusted last tax rate reform. period first was the onetime to quarter for the with the in impact rate was

continues the tax will XXXX, that to effective anticipate fiscal adjusted about be its company For XX.X%. rate income

the result This Turning initiative. a $XXX.X to the and to ago Net inventory for X.X% inventories for year XX.X% Accounts a increased mainly due receivable management from down decrease sales. sheet. quarter was million. $XXX.X increased as the were totaled up sales of quarter balance million, to

a remainder near First Works payables average end quarter to XX-month of on acquisition, to At trade on common the net working return as We million. of quarter shares XX.X% end. percent of curtail stock over ago. will debt of quarter X.X% term. the our repurchased repurchases a approximately year anticipation XXXX, the increased for quarter, now X share in million XX.X% to have $XXX.X during the in Charles to the and of authorization we compared remaining the as company's as of sales was I XXX,XXX capital plan Rick. repayments we Machine focus shares repurchase fiscal closing the call In the

Richard Olson

you, Thank Renee.

indications on and Machine We large business, announced are demand agreement quarter performance, our our acreage strong beyond our strong among our based for plans early for our XXXX fiscal Charles strategic and contractor about and suggest contractors acquire first enthused with long-range landscape prospects Works. landscape products to owners. Beginning

Show which in new biz underway resources in years. equipment from more of for strong the broad The in sports visitors FTMTA mean expanded in line golf fields plowing this are is sales pursuing park the opportunities. and our that recent and XX% the expect active, fields report growth world equivalent projects generate opened our range Golf the and very revenues The of either full were of their the positive recently that World and our and USGA, Furthermore, the many Positive municipal continue over grounds the month. during XXXX to contractor X XXX and than zero-turn investments last demand. nearly to riders or golf identified snowfalls course January is sports construction are U.K. We spring prevalent grounds also remains earlier of Industry outlook the Golf R&A, increased among planning, the courses attitudes number around businesses. Around released for Show advance new

these While include productivity rotary are out-front XXXX professional help season remains patent-pending should which premium enhancements also customer wound control cutting in introductions finishes to to valued to the with Outcross management Groundsmaster that BOSS Innovation continue all-new snow width greensmower; ago walk-behind are mowers venues. several conditions short business. Favorable eTriFlex options; out and These fixed keys term, high, highly riding interest ice months. expected Greensmaster productivity are unveiled excitement more weather and the by our that offering in the a successful our stripped with the introductions equipped greensmowers new solid preseason Groundsmaster two of to past year from new on and to season mowers series contractors and created this and XXXX head program. already we stage fleet by ProStripe and engine two all-electric deliver well features; made a for their Improvements looking the expand capabilities. set Snowrator were booking prior received and

clearing Continued of productivity refinements on through more contractors sidewalks. help means should efficient Snowrator increase the

compact is again Rental on support Next, demonstrates XX,XXX positive display solutions electric in creating and the The yesterday. utility construction economic month. of construction of our garnered prototype once commitment Industry our other was creating growth of our continued American Show should for recorded for attention XXXX innovations loader TXL conditions in awards. the favorable industry e-Dingo, jobs and has innovative forecast that that The number spending rental drew Among compact a utility e-Dingo trends the infrastructure ongoing new customers. to construction our It construction development. at a an under groups innovation last spending, ended business. evidenced loader as lot Association

monetary business save also exciting and and run significant team delivering that the X.X's shows, is irrigation operators time, projects in time improved Central water usage. Control the The including Lynx golf the in diagnostics remain innovations Our dependability. precision, while considerable unveiled strong. for encouraging new system efficient unprecedented recent precision advancements as outlook X.X system during provides controlling speed and The

the residential to Moving segments.

key in retail preseason We this generated snow advantage bookings of taking strong fall. by and anticipate are markets opportunities recent later

to rider advancements mower late well compared power residential will more If We walk year's deliver this retail anticipate normal last a and perform sales latest spring we at arrival spring. we will and also start, for our enjoy and expect to regional our for golf positive There the international a solutions way. on and likely revenues. our are second Demand grounds a of larger share business indicators market lead basis. equipment of irrigation quarter

with mentioned of the rear new discharge the quarter, previously our of promising are We launching greensmowers, particularly controllers launches include irrigation strong. a are this international and new product current ProStripe, orders Harrier decks the GrandStand line Other products mowers. Hayter and

us the anticipated the Outcross HXXX zero-turn share launch successful are the the also setting category expect MyRIDE and of gains additional in as ProLine Market feature apart. also regions. We in is

extremely want to to to its of of stakeholders. we be our plans company's milestone we We prove one legacy conclusion, about we in year Works. that could care those should are The long this their of unexpected Finally, business. events result. and in to Charles I excited challenges are people employees transformative are enabled and strong commitment first acquisition potential of their to another feel history attractiveness is the due support will ongoing it that Their to poised most our our believe the an us acquisition recognize Machine customer Enterprise of dramatic and We us construction to growth planned exceptional prepared the work underground helping are drive long-term expansion our In profitable our all for Machine Works action. appropriate partners represents. excellence. of our it Charles take the deliver important hard successful to and thank innovation significant key pull and mark quarter to It critical for growth. channel achieve to

an acquisition $X.XX items $X.XX quarter, expect the of expenses for curtailment. for This share Machine Assuming closes third earnings acquisition quarter. to adjusted results performance per adjusted which of the $X.XX $X.XX quarter. $X.XX of months, includes in share the acquisition-related per second estimated for Charles the of $X.XX, an the and repurchase first incurred of the Works impact are These we This excluding $X.XX in acquisition-related expense estimate share in equates of the to to earnings first X $X.XX to addition in operational to expense impacts.

at at/or of our our expect we concludes We the time. the closing acquisition. we update and our questions This will remarks, -- this expect after to formal guidance take

Operator

[Operator Instructions].

the question first Our from comes Tim Wojs with of line Baird.

Timothy Wojs

questions first, I'm -- mix So quarter? just have I I guess, offset the did in to professional. to might maybe able inflation had segment the that the cost to on impacts maybe first the seen was of a couple price that -- you trying price was quarter? the in cost decipher maybe relative in

Renee Peterson

the than will Yes. What offset and cost That's in enterprise and we well, be true seen saw saw had price standpoint quarter. is for -- much did as we quarter. the price the productivity a stronger combination was the this we of what fourth professional, totally for for from not not

total but continue the improvement relates half. We last that improve to the margins from to to then tariffs move we're gross of believe realization really will a And pressures other just reaction year standpoint. expecting that commodities more the and to and second for the when inflationary of year that in year-over-year, price year see in to

Timothy Wojs

you anything center any any guys that any sort there is prebuy ahead like, is have And in price increases professional? Okay. -- there or of, implemented of

Richard Olson

nothing quarter, the the but to residential No. between bit across first feel the feel look a and be between lines. the field down good those we've that year-over-year. second times, in talked commercial, and the good as half quarter many of We the field about And I so would changes first our about inventory have Residential is year, little we inventory. about along total. mean, we mix actually

Timothy Wojs

by mean just you just what or or on little the Okay. back then just buy buyback, I color back stock curtailment? you not? any on added buy not you will a Great. mean, And So just

Renee Peterson

we Machine on our basis is we paying debt, we intent. acquisition, close Works on forward a timely assuming Yes. will on I mean, down Charles go focus and which

but the down year. a at we'll So lower on would debt, for it -- so amount be paying that focus

Operator

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

Samuel Darkatsh

a and two got housekeeping maybe just I've questions then follow-up.

operating within X the reported, but in -- the guessing Or was segments? of P&L shown of the Renee? on just the So quarter other up that that $X.XX cost, I'm line, that accurate, is the show one deal-related did in the

Renee Peterson

on of all been P&L all lines, but have No, it's it other a other. would -- within in different couple

Samuel Darkatsh

in least, portion that guessing deal-related $X.XX, I'm of continues of QX with And that at constitutes costs. the a

Renee Peterson

would. Yes, it

Samuel Darkatsh

Okay.

guidance operating where you the guessing a I'm know update because an timing I and that didn't to share guidance changed of were curtailment deal-related and and for there's parts whole question. think of any lot X, all costs around closing moving repurchase X from the been for standpoint, there But us you year has that. would be Rick? ago, reason from Second months

Richard Olson

have And good you're on right, there year to you is There's our you no feel change And complications some fundamentally, we a those year. map planned. year. out do for little about the on. that expectations if take operating as But playing the away, are the underlying

-- our performance. operational we're underlying So would we reiterate

Samuel Darkatsh

final the my I'll I before all perfunctory question ask, then companies, that's for is and question have tariffs. this defer, all we to And and guess, that

tariffs the out to guidance? in if of are expectations And now? positive not it your XX% that negative guidance? is formal is that to go right should pushed X, So a a fluid are in do March our occur, How or your us? pretty to that if given how do about are is things reflected as think we models And your much they

Renee Peterson

assumed we of not that but some included, be amount. there'll the full have -- that Yes,

to expecting as up the not its decline forward in see in and is included tariffs. thing our we well. -- of forecasted guidance step some is as the as necessarily forecasted another that cost commodity and we're of going a and have we in And is base of and kind change we're So peak, the starting expected. Steel

seeing on down as that well included have are we and come our guidance. So that

Samuel Darkatsh

at that in, from would various to that at XX% rephrase until I'll be do it, Is sure an understand to to positions. So make were those least, negative, right? incremental you go tariffs least, or, offset the if

Renee Peterson

us. before see tariff tariffs stated themselves. tariffs we've seeing, the that not tariffs related, think, continue are it's to is not Yes. actually of the and themselves the inflation you're What is some impactful, The I to necessarily but

the lot we're a direct tariff a that on. we of not products seeing So purchasing are

are they're to We But themselves, commodities seeing impact related fairly go modest to tariffs the it. us. up

Operator

line MacGregor Our of with David next question from comes the Research. Longbow

Robert Aurand

is was some to on for of This on hoping the dig I products. Rob Aurand new David today. in

a business? greensmower. down around that your of interest the electronics. announced lot obviously we How all-electric trickle new see There's could parts to other You of

Richard Olson

Yes.

the ion our energy opportunities. lithium in on As the example of would briefly we emphasis We also That past, talked or experience an business. it and the We've golf in past. interest hybrid in in about talked in but about amount the opportunities had remarks in be mentioned the excuse an of prepared is surprising we've e-Dingo. -- Certainly, that leading, me, alternative technology that. technology

machine smart less is future lot So the of of the operator alternative really requires turf and we tractor an leverage And utility which part of to has Outcross training intelligence see energy, of example much lastly, across great as business. autonomous, those is as has our and from it We into operate and a the connected vehicle that built a products, combination standpoint. that, that well. see all as entire been it the needed

does. that. So a significant of is a greensmowers we for as across usable the Of course at able course, greensmower delivering look Does do very is benefit be all-electric feat to an golf entire -- that application? TriFlex it residential riding that us cause to complexity an

really So opportunity. we the see

leverage but in whole But a some across trickle a cases, businesses. business, job and it's working trickle up. across of a talked all it's we're our to about a do our down, leveraging better cases, You in

Robert Aurand

share show to people's that? year? early into what numbers that, the to still be the that end here till there just Outcross. of is worked in year? on and talking And earlier on really budgets mean, from any demos not the I up you're Are more the Okay. you expecting can you Is people,

Richard Olson

the We sales. see are item. ticket a starting large to It's

large is hit while. as about thought the golf on actually, process the in target for of just So like necessarily. like we're from hadn't that. -- been but But customers really sweet takes And seeing our have it fields, it's sales say, that spot machine our the target areas was -- great a interested, looks process surprising responses ahead expectations there. a particular, Sports we I'll

Operator

show back so I in I Ms. now turn closing to for no over further Hille remarks. will queue, questions

Heather Hille

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

Operator

Ladies your the for today's concludes and in participation gentlemen, This thank presentation. you conference.

You may wonderful now disconnect. Everyone, a day. have

The Toro Company (TTC) 21 Feb 192019 Q1 Earnings call transcript