Toro Company (the) · NYSE:TTC
Toro Company (the) — Q4 2024 Earnings Presentation
37 slides from Toro Company (the)'s earnings presentation, Dec 18, 2024
Slide 1: The Toro Company Q4 2024 Earnings Release
THE TORO COMPANY Q4 2024 EARNINGS RELEASE December 18, 2024
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current assumptions and expectations of future events and
Slide 3: Overview
Overview 3 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 4: The Toro Company: Built on Strong Relationships and Our Legacy of Excellence
The Toro Company: Built on Strong OUR OUR OUR Relationships and PURPOSE VISION MISSION Our Legacy of To help our customers enrich To be the most trusted leader in To deliver superior innovation and to Excellence the beauty, productivity and sustainability solutions for the outdoor environment. deliv
Slide 5: Investment Thesis
Investment Thesis Well-positioned to win with deep expertise, 1 leading market share positions, and best-in- class distribution and service networks – all of which create high barriers to entry Attractive end markets, customer-centric 2 innovation, and steady replacement cycles drive future organic
Slide 6: Q4 2024 Key Messages
Q4 2024 Key Messages Delivered *adjusted diluted EPS in line with the expectations we 1 shared, despite the sales mix headwind of having more residential segment growth and less snow shipments than originally expected Successfully drove increased output and shipments for underground construction equ
Slide 7: Q4 2024 Financial Highlights
Q4 2024 Financial Highlights (Year-over-year comparisons below) Increase primarily driven by higher shipments of 9.4% golf and grounds products and underground construction equipment, and increased shipments NET SALES of lawn care products, partially offset by lower GROWTH shipments of snow and ice
Slide 8: Q4 2024 Other Notable Highlights
Q4 2024 Other Notable Highlights The Toro Company is a leading Full-Year Free Cash Flow* New Product Pipeline As provider of products Up Over $300M Strong As Ever and solutions for the outdoor Conversion rate* of 112% supported Early 2025 retail launches of environment, including: share repurchases
Slide 9: Amplifying Maximum Productivity (AMP)
Amplifying Maximum Productivity (“AMP”) Significant productivity initiative expected to deliver at least $100M incremental annual cost savings by 2027, a portion of which the company intends to prudently reinvest Annualized Savings Implemented Focus Areas for Transformation $100M+ Supply Base Design
Slide 10: AMP It Up Initiative: 2025-2026
“AMP It Up" Initiative: 2025-2026 Employee initiative focused on driving profitability across the enterprise Adjusted Operating Earnings Margin* 14.5% 14.0% 13.5% 13.0% 12.5% 12.0% 11.5% 11.0% 2024 2026 Goal Employee rewards aligned with stretch goals create engagement at all levels 10 Q4 2024 EARNI
Slide 11: Financials
Financials 11 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 12: Q4 Consolidated Results
Q4 Consolidated Results Strength of businesses with elevated order backlog, along with productivity gains and net sales leverage, drove top- and bottom-line growth REPORTED ADJUSTED* Change from Change from Q4 24 Q4 23 Q4 24 Q4 23 Q4 23 Q4 23 Net Sales $1,076.0M $983.2M +9.4% $1,076.0M $983.2M +9.4%
Slide 13: Q4 Professional Segment Results
Q4 Professional Segment Results NET SALES SEGMENT EARNINGS RATE (in millions) (as a percentage of net sales) +10.3% +360 bps $913.9 18.6% $828.9 15.0% Q4 23 Q4 24 Q4 23 Q4 24 Increase primarily driven by higher shipments of golf and grounds products and underground construction equipment, Increase p
Slide 14: Q4 Residential Segment Results
Q4 Residential Segment Results NET SALES SEGMENT EARNINGS RATE (in millions) (as a percentage of net sales) +4.5% -1190 bps* 3.0% $155.1 $148.4 -8.9% Q4 23 Q4 24 Q4 23 Q4 24 Increase primarily driven by higher shipments of lawn care Decrease primarily due to higher material and freight costs, produc
Slide 15: Full-Year 2024 Consolidated Results
Full-Year 2024 Consolidated Results 15th consecutive year of top-line growth in an extremely dynamic operating environment, driven by the strength of our balanced portfolio, and our team’s disciplined execution REPORTED ADJUSTED* Change from Change from F24 F23 F24 F23 F23 F23 Net Sales $4,583.8M $4
Slide 16: Full-Year 2024 Professional Segment Results
Full-Year 2024 Professional Segment Results NET SALES SEGMENT EARNINGS RATE (in millions) (as a percentage of net sales) -3.2% +410 bps 18.0% $3,675 $3,557 13.9% F23 F24 F23 F24 Decrease primarily due to lower shipments of lawn care Increase primarily driven by non-cash impairment charges in equipme
Slide 17: Full-Year 2024 Residential Segment Results
Full-Year 2024 Residential Segment Results NET SALES SEGMENT EARNINGS RATE (in millions) (as a percentage of net sales) +16.9% -20 bps $998.3 $854.2 8.1% 7.9% F23 F24 F23 F24 Increase primarily due to higher shipments to the company's Change was primarily driven by product mix and higher material ma
Slide 18: Strong Balance Sheet and Resilient Free Cash Flow
Strong Balance Sheet and Resilient Free Cash Flow Free Cash Flow* Free Cash Flow Conversion* Gross Debt to EBITDA Ratio* (Twelve months ended) (Twelve months ended) In millions Goal: 112.4% 100% over Target time Range: 1.3x 1.0x- $470.7 49.9% 2.0x $164.4 F23 F24 F23 F24 F24 Significant improvement i
Slide 19: Effective Capital Deployment
Effective Capital Deployment Consistent Priorities 2024 Actions Invested ~$100M to fund new product investments, Capital expenditures supporting organic growth advanced manufacturing technologies, and capacity for 1 with high returns growth within existing manufacturing footprint Company continues t
Slide 20: Q1 2025 Outlook Commentary
Q1 2025 Outlook Commentary (All on a year-over-year basis unless noted) Total Company Similar Net Sales Professional Segment Up Low Single-Digits Growth (%) Residential Segment Down Mid Single-Digits Adjusted Operating Total Company Slightly Lower Earnings Margin* (%) Professional Segment Similar to
Slide 21: Full-Year 2025 Guidance
Full-Year 2025 Guidance See my comment – need to have two columns (see 9 2022 Net Sales Growth (%) deck for Up 0% to 1% format – I’ve copied that Adjusted Gross Margin slide and Higher than 2024 inserted right after this for Adjusted Operating Earnings Margin* reference (%) – Higher than 2024 we bol
Slide 22: Well Positioned to Win
Well Positioned to Win 1 Leadership in attractive end-markets Brand heritage delivering excellence and 2 brand recognition creating trust Innovation synergies leveraged across 3 product categories Deep long-term customer and channel 4 relationships 5 Disciplined execution 6 Strong balance sheet 22 Q
Slide 23: Appendix
APPENDIX
Slide 24: Order Backlog
Order backlog (open order book) at the end of 2024 was 1 ~$1.2B This remains elevated compared to historical levels, 2 driven by sustained demand in underground construction, and golf and grounds businesses Order backlog improved from ~$2B at the end of 2023, Order 3 driven by our success in driving
Slide 25: Accounts Receivable and Floor Plan Financing
TTC’s accounts receivable balance consists of sales to 1 mass channel partners, irrigation customers, and many of our international dealers and distributors Majority of US independent dealers and distributors take 2 Accounts advantage of inventory floor plan financing programs to fund their purchase
Slide 26: 26 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
26 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 27: 27 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
27 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 28: 28 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
28 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 29: 29 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
29 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 30: 30 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
30 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 31: 31 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
31 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures, which are not calculated or presented in accordance with U.S. GAAP, as information supplemental and in addition to the most directly comparable financial measures calculated and presented in accordance with U
Slide 33: 33 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
33 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 34: 34 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
34 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 35: 35 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
35 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 36: 36 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
36 Q4 2024 EARNINGS RELEASE THE TORO COMPANY
Slide 37: Gross Debt to EBITDA Ratio
Gross Debt to EBITDA Ratio ($ millions) Q1 24 Q2 24 Q3 24 Q4 24 Total Gross Debt $1,186.6 $1,016.8 $991.9 $921.8 $921.8 Earnings Before Income Taxes $80.1 $179.2 $144.2 $109.3 $512.8 Interest Expense $16.2 $16.7 $14.5 $14.5 $61.9 Depreciation and Amortization $30.7 $30.2 $30.9 $36.4 $128.2 EBITDA $1