Toro Company (the) · NYSE:TTC
Toro Company (the) — Q2 2024 Earnings Presentation
33 slides from Toro Company (the)'s earnings presentation, Jun 6, 2024
Slide 1: The Toro Company Q2 2024 Earnings Presentation
THE TORO COMPANY Q2 2024 EARNINGS PRESENTATION June 6, 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 Q2 2024 EARNINGS PRESENTATION 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: Q2 2024 Key Messages
Q2 2024 Key Messages Record net sales driven by exceptional growth in Residential segment and underground construction; significant progress 1 made in reducing dealer field inventories of lawn care equipment, driven by lower shipments to that channel, as expected, coupled with spring retail momentum
Slide 6: Q2 2024 Financial Highlights
Q2 2024 Financial Highlights (Year-over-year comparisons below) Increase was primarily due to higher product shipments to residential segment mass channel, 0.7% and increased shipments of underground and specialty construction equipment, and golf and NET SALES grounds products, partially offset by l
Slide 7: Q2 2024 Other Notable Highlights
Q2 2024 Other Notable Highlights The Toro Company is a leading New Products Driving Empowered Team provider of products Profitable Growth Inspiring Unique Solutions and solutions for the outdoor Ditch Witch AT120, the world’s most TTC Technology Forum drives environment, including: powerful all-terr
Slide 8: Amplifying Maximum Productivity ("AMP")
Amplifying Maximum Productivity (“AMP”) Major productivity initiative on track and gaining momentum; expect more than $100M of incremental annual cost savings by 2027, a portion of which we intend to prudently reinvest 3 Key Focus Areas for Transformation: Supply Base 1 Design-to-Value 2 Route-to-Ma
Slide 9: Financials
Financials 9 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 10: Q2 2024 Consolidated Results
Q2 2024 Consolidated Results Strength of mass channel and businesses with elevated order backlog drive record net sales REPORTED ADJUSTED* Change from Change from Q2 24 Q2 23 Q2 24 Q2 23 Q2 23 Q2 23 Net Sales $1,349.0M $1,339.3M 0.7% $1,349.0M $1,339.3M 0.7% Gross Profit ($) $453.0M $479.7M -5.6% $4
Slide 11: Professional Segment Results
Professional Segment Results NET SALES SEGMENT EARNINGS RATE (in millions) (as a percentage of net sales) -5.9% -230 bps $1,068.7 $1,005.6 21.3% 19.0% Q2 23 Q2 24 Q2 23 Q2 24 Decrease was primarily driven by lower shipments of zero-turn Change in profitability was expected and primarily due to lower
Slide 12: Residential Segment Results
Residential Segment Results NET SALES SEGMENT EARNINGS RATE (in millions) (as a percentage of net sales) +26.3% +220 bps 10.8% $335.6 8.6% $265.8 Q2 23 Q2 24 Q2 23 Q2 24 Increase was primarily driven by higher shipments of product to Increase was largely due to net sales leverage and productivity ou
Slide 13: 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* (Six months ended) (Six months ended) In millions Goal: 100% 2.0x over time Target Range: 1.0x- $95.6 45.6% 2.0x ($1.3) -0.5% 1H 23 1H 24 1H 23 1H 24 1H 24 Year-to-date free cash
Slide 14: Effective Capital Deployment
Effective Capital Deployment Consistent Priorities 1H 2024 Actions Invested $39.5M to fund new product investments, Capital expenditures supporting organic growth advanced manufacturing technologies, and capacity for 1 with high returns growth Company continues to evaluate potential acquisitions wit
Slide 15: Q3 2024 Outlook Commentary
Q3 2024 Outlook Commentary (All on a year-over-year basis unless noted) Total company up high teens Net Sales Growth Professional segment up high single-digits to low teens (%) Residential segment up substantially Total company higher Adjusted Operating Professional higher; similar to Q2 2024 Earnin
Slide 16: 2024 Net Sales and Adjusted Diluted EPS Guidance Reaffirmed
2024 Net Sales and Adjusted Diluted EPS* Guidance Reaffirmed See my Updated Guidance comment – Guidance as of as of need to have March 7, 2024 June 6, 2024 two columns (see 9 2022 Net Sales Growth (%) deck for Up Low Single-Digits Up Low Single-Digits format – I’ve copied that Adjusted Operating Ear
Slide 17: 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 17 Q
Slide 18: 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 19: Appendix
APPENDIX
Slide 20: 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 21: Order Backlog
Order backlog at the end of fiscal 2023 was $1.97B, as 1 disclosed in our 10K This is elevated compared to historical levels, driven by 2 sustained demand in underground construction, specialty construction and golf/grounds businesses Order backlog at the end of Q2 2024 is down slightly from 3 Order
Slide 22: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
22 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 23: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
23 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 24: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
24 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 25: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
25 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 26: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
26 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 27: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
27 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures, which are not calculated or presented in accordance with U.S. GAAP, as information supplemental and in addition to the most directly comparable financial measures calculated and presented in accordance with U
Slide 29: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
29 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 30: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
30 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 31: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
31 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 32: Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
32 Q2 2024 EARNINGS PRESENTATION THE TORO COMPANY
Slide 33: Gross Debt to EBITDA Ratio
Gross Debt to EBITDA Ratio ($ millions) Q3 23 Q4 23 Q1 24 Q2 24 Total Short Term Debt - - - - - Long Term Debt $1,061.3 $1,031.5 $1,186.6 $1,016.8 $1,016.8 Gross Debt $1,061.3 $1,031.5 $1,186.6 $1,016.8 $1,016.8 Earnings Before Income Taxes ($28.6) $86.9 $80.1 $179.2 $317.6 Interest Expense $15.0 $1