Toro reports gains on “mass channel” success

On Dec. 18, The Toro Company reported results for its fiscal fourth-quarter and full-year ended October 31, 2024.

Summary:

• Net sales for the quarter were $1.08 billion, a 9% increase from Q4 2023 net sales.
• For the full year, Toro reported net sales of $4.58 billion, up 1%, from $4.55 billion in fiscal 2023.
• Pro segment growth due to higher shipments of golf and grounds products and underground construction equipment.
• Residential segment up 16.9% due in part to strategic partnership with Lowe’s.
• Outlook for fiscal 2025: Toro said its management expects total company net sales growth in the range of 0% to 1%.

“We delivered our 15th consecutive year of net sales growth in what remained an extremely dynamic environment,” said Richard M. Olson, chairman and chief executive officer. “This was a testament to the strength of our portfolio and the disciplined execution by our team of talented employees and channel partners.

Professional Segment results

Toro grew its professional segment net sales for the fourth quarter by 10.3%, to $913.9 million, up from $828.9 million in the same period last year. The company said this increase was primarily driven by higher shipments of golf and grounds products and underground construction equipment, along with net price realization, partially offset by lower shipments of compact utility loaders and snow and ice management products.

For the year, professional segment net sales dropped 3.2 %, to $3.56 billion, from $3.67 billion last year. The decrease was primarily due to lower shipments of lawn care equipment, snow and ice management products, and compact utility loaders, partially offset by higher shipments of golf and grounds products and underground construction equipment.

“In our professional segment, our team drove significant production improvements for underground construction equipment and golf and grounds solutions, as we substantially increased output and capitalized on the sustained and strong end market demand for these products,” said Olson. “Our ability to execute in these areas offset industry-wide dynamics affecting other parts of our portfolio, including softness in markets tied to snow and ice management, given the historic lack of snowfall last winter, as well as homeowner markets tied to lawn care in our dealer channel. Importantly, we made significant progress in reducing dealer field inventories of lawn care products, driven by lower shipments, coupled with retail sales growth. The momentum in sell-through year over year demonstrates the strength of our brands and market share.”

Residential Segment results

Toro reported growth in the residential segment mainly due to “mass channel sales.” Net sales for the fourth quarter were $155.1 million, up 4.5% from $148.4 million in the same period last year. The increase, Toro said, was primarily driven by higher shipments of lawn care products to the company’s mass channel, partially offset by lower shipments of snow products and higher sales promotions.

“In our residential segment, we drove exceptional top-line growth due to the strength of our mass channel, including the inaugural year of our strategic partnership with Lowe’s, along with the success of new product introductions, such as the Havoc editions of our next generation lineup of Toro TimeCutter and TITAN zero turn riding mowers,” said Richard M. Olson.

Full-year fiscal 2024 residential segment net sales were $998.3 million, up 16.9% from $854.2 million last year. The increase was primarily due to higher shipments to the company’s mass channel, partially offset by lower shipments of snow products.

Residential segment loss for the fourth quarter was $13.8 million, or 8.9% of net sales, compared to earnings of $4.5 million, or 3.0% of net sales, in the same period last year. The change was primarily driven by higher material and freight costs, higher warranty and marketing expense, and product mix, partially offset by productivity improvements.

Full-year fiscal 2024 residential segment earnings were $78.4 million, up 13.8% from $68.9 million in the prior fiscal year, and when expressed as a percentage of net sales, 7.9%, compared to 8.1% last year. The change was primarily driven by product mix and higher material and manufacturing costs, partially offset by productivity improvements and net sales leverage.

For fiscal 2024, gross margin was 33.8%, compared to 34.6% for fiscal 2023. Adjusted gross margin for fiscal 2024 was 33.9%, compared with 34.7% for fiscal 2023. The decreases in reported and *adjusted gross margin were primarily driven by higher material and manufacturing costs and product mix, partially offset by productivity improvements.

Outlook

For fiscal 2025, Toro said its management expects total company net sales growth in the range of 0% to 1%.

“As we enter the new fiscal year, we have confidence in our ability to deliver earnings growth, supported by the strength of our diverse portfolio and talented team, along with the momentum we have generated with our significant productivity initiative,” continued Olson. “For our lawn care and snow and ice management businesses, while field inventories remain higher than ideal, we expect to be positioned much better than last year as we head into the upcoming turf season, along with the snow pre-season in the second half of 2025.”

“While industry-wide macro and weather dynamics over the past few years have played out differently than anticipated, our business fundamentals remain strong. This is supported by our innovation leadership, with a robust new product pipeline aligned to market trends and designed to solve our customers’ most pressing needs. We are excited about the upcoming retail launches of autonomous products across our portfolio, including residential, commercial, and golf applications. 

“We are well-positioned to capitalize on future growth opportunities in our attractive end markets, while simultaneously driving profitability improvement. Our significant productivity initiative, named AMP, is off to a great start, and we remain on track to deliver $100 million in run-rate cost savings by fiscal 2027. We intend to reinvest a portion of the savings from this initiative, to drive further innovation and growth. We look forward to the coming year with optimism, guided by our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people.”