The Toro Company reported results for its fiscal first quarter ended January 31, 2025 in a March 6 news release which followed its earnings call.
Highlighted by Professional Segment Growth and Profitability Improvement
- First-quarter net sales of $1.0 billion, down slightly from the same period of fiscal 2024
- First-quarter reported diluted EPS of $0.52, compared to $0.62 in the same period of fiscal 2024
- First-quarter *adjusted diluted EPS of $0.65, up from $0.64 in the same period of fiscal 2024
- Maintains full-year fiscal 2025 net sales and *adjusted diluted EPS guidance
“Fiscal 2025 is off to a solid start as we exceeded our first-quarter bottom-line expectations, driven by our team’s disciplined execution, the continued momentum of our Amplifying Maximum Productivity (“AMP”) initiative, and the improvement of our professional segment earnings margin,” said Richard M. Olson, chairman and chief executive officer. “We achieved this result despite below-average snowfall in key markets. During the quarter, we also returned $100 million to shareholders through share repurchases, reflecting our improved cash flow and confidence in our ability to deliver positive results in fiscal 2025 and beyond.
“We drove first-quarter net sales growth in the professional segment with increased output for golf and grounds products to address sustained demand and elevated order backlog, while also capitalizing on strong channel orders for our new, innovative lineup of zero turn mowers. Professional segment growth was offset by lower shipments in the residential segment, as expected, due to elevated field inventory levels of snow products heading into the quarter as well as the Pope Products divestiture last year.
“The Toro Company’s market-leading innovation was readily apparent at the recent GCSAA trade show, where we showcased our suite of robotic solutions that enable significant labor and cost savings for golf customers, while delivering high-quality performance. These included the introduction of our new Toro® Turf Pro™ autonomous mower and our Toro® Range Pro™ golf ball picking robot. We also announced an exclusive partnership with TerraRad to introduce a first-of-its-kind, data-driven soil moisture sensing and irrigation control technology. This software will recommend and enable real-time sprinkler adjustments to help superintendents enhance turf health, while reducing water consumption and operational cost.”
FIRST-QUARTER FISCAL 2025 SEGMENT RESULTS
Professional Segment
- Professional segment net sales for the first quarter were $768.8 million, up 1.6% from $756.5 million in the same period last year. The increase was primarily driven by higher shipments of golf and grounds products and zero turn mowers, along with net price realization, partially offset by lower shipments of compact utility loaders.
- Professional segment earnings for the first quarter were $127.2 million, up from $112.8 million in the same period last year, and when expressed as a percentage of net sales, 16.5%, up from 14.9% in the prior-year period. The increase in profitability was primarily due to net sales leverage, product mix, and productivity improvements, partially offset by higher material, manufacturing, and freight costs.
Residential Segment
- Residential segment net sales for the first quarter were $221.0 million, down 8.0% from $240.1 million in the same period last year. The decrease was primarily driven by lower shipments of snow products, portable power products, the prior year Pope Products divestiture, and higher sales promotions and incentives, partially offset by higher shipments of zero turn and walk power mowers.
- Residential segment earnings for the first quarter were $17.2 million, down from $23.5 million in the same period last year, and when expressed as a percentage of net sales, 7.8%, down from 9.8% in the prior-year period. The year-over-year decrease was largely driven by higher material, manufacturing, and freight costs, increased sales promotions and incentives, and product mix, partially offset by productivity improvements.
OUTLOOK
“We are confident in our ability to extend our market leadership and drive value for all stakeholders, supported by the strength of our business fundamentals and balance sheet. Demand trends in our key growth markets remain strong with our golf business coming off another record-setting year of rounds played, and a very positive runway for global infrastructure spending. We expect dealer field inventories for our lawn care and snow and ice management businesses to be positioned better compared to last year as we head into the upcoming turf season and second half 2025 snow pre-season. We recognize the heightened level of uncertainty affecting the macro environment, including a decline in consumer confidence and rapidly evolving trade policy. We are prepared to take operational and pricing actions, as appropriate, to position the company for success. As a reminder, our products perform necessary work and the vast majority are produced in the U.S. Importantly, our entire enterprise remains focused on driving productivity with our AMP initiative. We’ve delivered $64 million in run-rate cost savings to-date, and are on track to deliver $100 million by fiscal 2027, a portion of which we intend to prudently reinvest to drive further innovation and growth,” concluded Olson.
For fiscal 2025, management maintains expectations for total company net sales growth in the range of 0% to 1% and *adjusted diluted EPS in the range of $4.25 to $4.40. This guidance is based on current visibility and reflects:
- continued strong demand and stable supply for our underground construction and golf and grounds businesses,
- a continuation of macro factors that have driven increased consumer and channel caution,
- remaining adjustments needed to normalize dealer field inventories of lawn care products and snow and ice management solutions, and
- weather patterns aligned with historical averages for the remainder of the fiscal year.
Due to the uncertain and rapidly changing tariff environment, this guidance excludes all incremental tariffs introduced year to date, with the exception of the additional tariffs on China imports that came into effect in February.
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