• First-quarter net sales up 6.8% compared to the same prior year period, to $932.7 million; Professional segment net sales up 3.5%, Residential segment net sales up 17.3%
  • First-quarter reported and *adjusted diluted EPS of $0.66
  • Gross margin results improved sequentially from the fourth quarter of fiscal 2021, driven by increased net price realization and enhanced operational performance; comparisons to the same prior-year period were affected by increased inflationary pressures and product availability constraints

BLOOMINGTON, Minn. —The Toro Company (NYSE: TTC) today reported results for its fiscal first-quarter ended January 28, 2022.

“We achieved solid financial results for the quarter and continued to advance our strategic initiatives,” said Richard M. Olson, chairman and chief executive officer. “Demand across our businesses remained robust, while supply chain constraints and inflationary pressures continued. Our team kept a sharp focus on operational execution and serving our customers as they collaborated with suppliers and channel partners. This focus allowed us to drive productivity gains, achieve sequential margin improvement and fund investments for a sustainable future, all of which enabled us to extend our market leadership.

“We continued to invest in new products and acquisitions that align with our strategic priorities and bolster our reputation for best-in-class performance and technology. In January, our acquisition of the Intimidator Group added the complementary Spartan line of professional zero-turn mowers. Spartan is known for its exceptional performance, features, durability, and distinctive styling. The acquisition positions us to be an even stronger player in the large and rapidly growing zero-turn mower market, enhancing customer reach and geographic strength. More recently, at the GCSAA golf industry show, we introduced our GeoLink Solutions Autonomous Fairway Mower, which represents an important milestone in advancing our autonomous vision.”

FIRST-QUARTER FISCAL 2022 FINANCIAL HIGHLIGHTS

  • Net sales of $932.7 million, up 6.8% from $873.0 million in the first quarter of fiscal 2021.
  • Net earnings of $69.5 million, down 37.5% from $111.3 million in the first quarter of fiscal 2021; *adjusted net earnings of $69.7 million, down 25.3% from $93.2 million in the first quarter of fiscal 2021.
  • Reported EPS of $0.66 per diluted share versus $1.02 per diluted share in the first quarter of fiscal 2021; *adjusted EPS of $0.66 per diluted share versus $0.85 per diluted share in the first quarter of fiscal 2021.
  • Utilized cash on hand and existing credit facilities to acquire the Intimidator Group, and returned $106.5 million to shareholders through regular dividends of $31.5 million and share repurchases of $75.0 million.

OUTLOOK

“The Toro Company team worldwide continues to work diligently to advance our strategic priorities and fulfill our purpose of helping our customers enrich the beauty, productivity and sustainability of the land,” added Olson. “These efforts are rooted in our world-class innovation capabilities and enterprise-wide operational excellence, which together, will help drive our sales momentum, margin expansion, and enterprise value for all stakeholders. While we are seeing improvements in our manufacturing performance, as well as positive indicators in our supply chain, we acknowledge that the recent geopolitical events may create additional challenges. Our operational efficiency and market leadership position us well to manage through this environment and take our business to the next level.

“Our inspired team is focused on delivering results. The strength of our purpose and culture, founded upon our commitment to innovation, collaboration, and caring relationships, helps us attract top talent. The Toro Company's focus on accelerating profitable growth, driving productivity and operational excellence, and empowering people sets us up to emerge from the current cycle even stronger.”

The company is raising its full-year fiscal 2022 net sales guidance to incorporate the Intimidator Group acquisition, and now expects total net sales growth in the range of 12% to 14%. In light of the current geopolitical environment, the company is holding its *adjusted EPS guidance in the range of $3.90 to $4.10 per diluted share. This guidance is based on current visibility, and reflects expectations for continued strong demand and increasing net price realization.

FIRST-QUARTER FISCAL 2022 SEGMENT RESULTS

Professional Segment

  • Professional segment net sales for the first quarter were $672.9 million, up 3.5% compared with $650.2 million in the same period last year. The increase was driven primarily by net price realization, partially offset by lower volume in certain key product categories due to product availability constraints.
  • Professional segment earnings for the first quarter were $93.3 million, down 20.2% compared with $116.8 million in the same period last year, and when expressed as a percentage of net sales, 13.9%, down from 18.0% in the prior-year period. The decrease was largely due to higher material, freight and manufacturing costs, partially offset by increased net price realization.

Residential Segment

  • Residential segment net sales for the first quarter were $255.4 million, up 17.3% compared with $217.7 million in the same period last year. The increase was primarily due to net price realization and higher shipments of zero-turn riding and walk power mowers.
  • Residential segment earnings for the first quarter were $31.8 million, down 1.1% compared with $32.1 million in the same period last year, and when expressed as a percentage of net sales, 12.4%, down from 14.7% in the prior-year period. The decrease was largely driven by higher material and freight costs, partially offset by increased net price realization and productivity improvements.

OPERATING RESULTS

Gross margin for the first quarter was 32.2%, compared with 36.1% for the same prior-year period. The decrease was primarily due to higher material and freight costs, partially offset by increased net price realization.

SG&A expense as a percentage of net sales for the first quarter was 22.4% compared with 19.9% in the prior-year period. The increase was primarily due to the favorable impact of a one-time legal settlement in the prior year that did not reoccur, as well as increased investments in research, engineering and marketing in the current-year period.

Operating earnings as a percentage of net sales were 9.8% for the first quarter, compared with 16.2% in the same prior-year period. *Adjusted operating earnings as a percentage of net sales for the first quarter were 9.9%, compared with 14.2% in the same prior-year period.

Interest expense was down $0.5 million for the first quarter to $7.0 million, driven by lower average debt levels and decreased interest rates.

The reported effective tax rate for the first quarter was 20.2%, compared with 18.1% for the same prior-year period. The reported effective tax rate increase was primarily due to lower tax benefits recorded as excess tax deductions for stock compensation. The *adjusted effective tax rate for the first quarter was 20.9%, compared with 21.5% in the first quarter of 2021.