Toro sales up on higher shipments to “mass channel”

On June 6, Toro shared results for its fiscal second quarter ended May 3, 2024, reporting record net sales of $1.35 billion, a slight tick up from the $1.34 billion in the same period of fiscal 2023. The company reports that large sales gains in its residential segment are due in large part in higher shipments to the mass channel, and lower shipments to the dealer channel.

“We executed well in the second quarter, delivering results aligned with our expectations and achieving record net sales,” said Richard M. Olson, chairman and chief executive officer. “We realized exceptional growth in our residential segment due to our strong mass channel, successful new product introductions, and better weather conditions compared to last year.” 

Olson added, “Importantly, we made significant progress in reducing dealer field inventories of lawn care equipment in both the residential and professional segment, a result of lower shipments to that channel, coupled with spring retail momentum.”

Q2 sales by segment

Toro reported professional segment sales for the second quarter of $1,005.6 million, down 5.9% from $1,068.7 million in the same period last year. The company said the decrease was primarily driven by lower shipments of zero-turn mowers, partially offset by higher shipments of underground and specialty construction equipment and golf and grounds products. The sales decrease, combined with higher material and manufacturing costs, resulted in a 16.2% drop in earnings in the pro segment. 

In the residential segment, Toro reported net sales for the second quarter were $335.6 million, up 26.3% from $265.8 million in the same period last year. The increase was primarily driven by higher shipments to our mass channel, partially offset by lower shipments to our dealer channel. Residential segment earnings for the second quarter were $36.1 million, up 59.0% from $22.7 million in the same period last year, largely due to net sales leverage and productivity improvements.

Outlook

“Our strong business fundamentals, leadership in attractive end markets, and deep relationships give us confidence in our ability to deliver growth in fiscal 2024,” added Olson. 

In the financial report, Toro wrote that, “for lawn care products, we are encouraged by the positive signs of recovery in homeowner markets along with the favorable spring weather patterns to date. We expect continued growth in shipments to our residential segment mass channel and anticipate this growth will help offset our expectations for lower preseason shipments of snow and ice management products given the lack of snow this past winter.”

For fiscal 2024, the company continues to expect low single-digit total company net sales growth and adjusted diluted EPS in the range of $4.25 to $4.35. This guidance is based on current visibility and assumes:

• continued strong demand and stable supply for businesses with elevated order backlog;
• a continuation of macro factors that have driven increased consumer and channel caution; and
• weather patterns aligned with historical averages for the remainder of the year;
• elevated field inventory levels of lawn care and snow and ice management products;
• manufacturing inefficiencies as production and inventory levels continue to be adjusted to market conditions; and
• the net impact across all residential mass channel partners related to our new strategic partnership with Lowe’s.