Toro reports Q3 financials, sales up 6.9 percent

On Sept. 5, 2024, Toro reported the results for its fiscal third quarter ended August 2, 2024, stating net sales were $1.16 billion, up 6.9% from $1.08 billion in the same period of fiscal 2023.

Professional Segment

Professional segment net sales for the third quarter were $880.9 million, down 1.7% from $896.3 million in the same period last year. The decrease was primarily driven by lower shipments of snow and ice management products, lawn care equipment, and compact utility loaders, partially offset by higher shipments of golf and grounds products, and underground construction equipment, along with net price realization.

Residential Segment

Residential segment net sales for the third quarter were $267.5 million, up 52.6% from $175.3 million in the same period last year. The increase was primarily driven by higher shipments to our mass channel.

“Our team executed with discipline and delivered top- and bottom-line growth in a very dynamic environment,” said Richard M. Olson, chairman and chief executive officer. “We achieved substantial growth in our residential segment driven by our strong mass channel, as expected following aggressive destocking last year, and the strategic addition of Lowe’s this year. For our professional segment’s underground construction, and golf and grounds businesses, we successfully drove increased output and shipments to address the sustained demand and elevated order backlog. In both segments, we saw increased caution from homeowners and lawn care dealers as summer progressed due to macro factors, which resulted in lower-than-expected shipments of residential and professional lawn care products to our dealer channel. Even so, we continued to make significant progress in reducing dealer field inventories of those products.

Outlook

 “For our professional segment, the demand drivers in our underground construction and golf businesses remain compelling. The projected strength in infrastructure spending for the foreseeable future is a positive outlier in the construction industry,” said Olson. 

“For lawn care products, we expect a heightened level of macro uncertainty will continue to drive near-term caution. Importantly, we have made significant progress in reducing our dealer field inventories of lawn care products and expect to exit the fiscal year in a much better position than last year. We expect enduring benefits from the investments we’ve made in our innovative product line-up, and from the strategic development of our independent dealer networks and mass partnerships.

For fiscal 2024, the company now expects total company net sales growth of about 1 percent and adjusted diluted earnings per share in the range of $4.15 to $4.20. 

In the Q&A portion of the investor’s call, Rick Olson expanded on the company’s outlook. “The word that comes to mind is cautiously optimistic about next year. We have high confidence in the things that we’re doing to position ourselves for growth next year. And the caution part is just mainly from a macro standpoint. The driver in July is the discussion as well. There’s uncertainty about interest rates, the economy. They talked about a recession there for a few weeks. The political environment, the elections, et cetera, some of those we know will be behind us.

That’s on the cautious side. But from our side, we expect golf and grounds to continue to be very strong, (it) has tremendous momentum. The underground business continues to have a long runway in terms of growth for us. And our plans are now fulfilling that demand much closer to the rate that it’s coming in. We’ll have a year or two with Lowe’s as part of our general mass strategy that’s, honestly, it’s at record levels this year from a mass standpoint if you look across all of our partners in that category.

Snow, I mean, just keep in mind, this is a time-out year for snow because of the last two seasons. So if you have anything close to a normal snow season this year, that’s going to be a positive for us. The field was already stocked as we came into the season. So that was completely missing from our results in the third quarter with the exception of a very small amount of shipments.

We’ve made the progress in reducing our field inventory in those lawn care categories that go through our dealers. Incidentally, the contractor customers have continued to be strong. It’s really the homeowners where the caution has been and where that adjustment has taken place. And then just back to Lowe’s, we will have the benefit of 12 months of business with Lowe’s versus 10. We’ll be getting into the snow season with them, and that’s a very positive factor for us, along with all of our mass partners.”