Toro Company (the) · NYSE:TTC
Toro Company (the) — The Toro Company — Q1 2020 Earnings Presentation
26 slides from Toro Company (the)'s earnings presentation, Mar 5, 2020
Slide 1: The Toro Company Investor Presentation
THE TORO COMPANY Investor Presentation March 2020
Slide 2: Safe Harbor
SAFE HARBOR • This presentation contains forward-looking statements regarding our business and future financial and operating results 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 curr
Slide 3: Help Our Customers Most
Help Our Customers Most Trusted Superior Innovation & Superior Customer Care Caring Relationships
Slide 4: Investment Summary
INVESTMENT SUMMARY (NYSE: TTC) Summary & Financial Performance Net Sales & Adjusted Net Earnings* 3,500 (in $ million) 350 325 • Rich History and Deep Expertise in 3,000 300 275 2,500 250 Solutions for the Outdoor 225 2,000 200 Environment & Development of 1,500 175 150 Distribution and Customer Car
Slide 5: Diverse Portfolio
DIVERSE PORTFOLIO F’19 REVENUES—$3.1 BILLION Segments Product Type Equipment 88% Professional Irrigation 78% 12% Geographic Market 26% 26% Residential 21% United States Other 77% 1% International 23% Professional Residential F’19 Sales: $2,443 million F’19 Sales: $661 million F’19 Segment Earnings:
Slide 6: Professional Segment
PROFESSIONAL SEGMENT Charles Machine Works • Strong underground construction brands • Global network of world class dealers • Long-standing customer relationships • Growth opportunities ‒ Infrastructure (water, wastewater) ‒ Telecom (fiber optics, 5G) ‒ Utilities (gas, electricity)
Slide 7: Professional Segment (Con't)
PROFESSIONAL SEGMENT (CON’T) Landscape and Grounds Market Rental & Turf Snow & Ice Lighting & Specialty Equipment Management Irrigation Construction • Serving Contractor Needs Year-Round • Heavy Use Drives Replacement & Parts • TTC Advantage ‒ Leverage Brand & Product Leadership ‒ Product Innovation
Slide 8: Professional Segment (Con't)
PROFESSIONAL SEGMENT (CON’T) Golf Market • Turf Equipment & Irrigation Systems • TTC Advantage ‒ Innovation & Performance—Share Gain & Margin Expansion ‒ Strong Network of Distributors, Relationships & Customer Care Micro-Irrigation Market • Fundamentals & Opportunities ‒ Efficient Water Use & Highe
Slide 9: Residential Segment
RESIDENTIAL SEGMENT For the Homeowner Snow Lawn Garden Equipment • Walk-Behind & ZTR Mowers, Snow Throwers, Handheld Maintenance Products • TTC Advantage ‒ Powerful Brands ‒ Leadership in Product Innovation, Quality & Durability ‒ Strong Mass Retail Relationships ‒ Strong Servicing Dealer Network 9
Slide 10: Benefits of Complementary Businesses
BENEFITS OF COMPLEMENTARY BUSINESSES Innovation Transference Professional Production Optimization Residential Bolsters Brand Recognition 10
Slide 11: First Quarter Fiscal 2020 Results
FIRST QUARTER FISCAL 2020 RESULTS (RELEASED MARCH 5, 2020) AS REPORTED AS ADJUSTED* Change from Change from F’20 Q1 F’19 Q1 F’20 Q1 F’19 Q1 Net Sales $767.5M +27.3% Gross Profit $288.1M +33.6% $288.6M +33.8% ($) Gross Margin 37.5% +170 bps 37.6% +180 bps (% of Revenues) Operating Earnings $91.1M +30
Slide 12: Driving Continuous Improvement Through Employee Initiatives
DRIVING CONTINUOUS IMPROVEMENT THROUGH EMPLOYEE INITIATIVES F’01 – F’03 F’04 – F’06 F’07 – F’09 F’10 F’11 – F’14 F’15 – F’17 F’18 – F’19 ✓ Goal to achieve ✓ Goal to achieve • Goal to drive 3 ✓ Singular Goal – • $100M+ organic • 5% or more • 5% or more 5% PAT “6%+” PAT year compound 5% PAT growth eac
Slide 13: Corporate Responsibility
CORPORATE RESPONSIBILITY • The Toro Company continually seeks to improve its energy efficiency and reduce the environmental footprint of its global manufacturing facilities. • The Toro Company's values-based culture governs how our people conduct business, interact with each other, and support our c
Slide 14: Investments in Growth
INVESTMENTS IN GROWTH • Leadership Through Innovation – Sustained 3%+ Investment in Research & Engineering – Passion to Address Customers Unmet Needs – Drive Market Share Gains & Margin Expansion • Acquisitions – Bias for Professional, Global, Water & Technology – Seeking Platforms for Growth – Adja
Slide 15: Capital Deployment
CAPITAL DEPLOYMENT Cash From ◘ Free Cash Flow Conversion to Approximate Net Income Over Time Operations Operating and Growth Needs • Internal Productive Assets ◘ Target Debt-to-EBITDA Ratio of 1-2x • Acquisitions & Alliances Return to Shareholders / Debt Repayment • Regular Dividends (30-40% of 3-Yr
Slide 16: Key Performance Measures
KEY PERFORMANCE MEASURES Return on Average Invested Capital (%)* Return on Average Equity (%)* 50% 30% 45% 22.7% 40.5% 25% 40% 35% 20% 30% 15% 25% 20% 10% 15% 5% 10% 5% 0% 0% F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16 F'17* F'18* F'19* F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16 F'17* F'18* F'19* Cash Flow
Slide 17: Increasing Shareholder Value
INCREASING SHAREHOLDER VALUE $0.25 Regular Quarterly 250 Shares Outstanding In Millions Dividend (Adjusted for Splits) $0.20 (Adjusted for Splits) 200 $0.15 150 $0.10 100 $0.05 50 Remaining Authority as of 01/31/2020 Approx 7.0 Million Shares $0.00 0 $90 TTC Stock Price $80 (Adjusted for Splits) $70
Slide 18: Summary
SUMMARY GAINING MOMENTUM Building on a Solid Foundation • Beginning our Second Century of Innovation, Relationships & Excellence • Enduring Company Culture & Effective Employee Initiatives • Demonstrated Consistent Financial Performance Leveraging a High Value Business Model • Diverse Portfolio with
Slide 19: Guidance
GUIDANCE (AS OF MARCH 5, 2020) (INCLUDES VENTURE PRODUCTS ACQUISITION) Fiscal Year 2020: Adjusted Diluted EPS* $3.33 - $3.40 Net Sales About $3.6 billion Adjusted Gross Margin* Improvement compared to Fiscal 2019 SG&A Rate Higher compared to Fiscal 2019 with full-year CMW impact Interest Expense Abo
Slide 20: The Toro Company
The Toro Company
Slide 21: Non-GAAP Financial Measures
APPENDIX NON-GAAP FINANCIAL MEASURES • This presentation contains certain adjusted non-GAAP financial measures and metrics, which are not calculated or presented in accordance with U.S. GAAP, as information supplemental and in addition to the most directly comparable financial measures and metrics c
Slide 22: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Return on Average Invested Capital (%)* ($ in Millions) F’09 F’10 F’11 F’12 F’13 F’14 F’15 F’16 F’17* F’18* F’19* Adj. Op. Earnings* $75.6 $99.8 $124.2 $135.7 $157.5 $178.4 $207.2 $233.7 $249.3 $290.6 $325.8 (1-Adj. Tax Rate) Avg. Quarterly $606.0 $526.6 $522.0 $544.1 $579.5
Slide 23: First Quarter Fiscal Year 2020 Non-GAAP Reconciliations
FIRST QUARTER FISCAL YEAR 2020 NON-GAAP RECONCILIATIONS The following table provides a reconciliation of financial measures and metrics calculated and reported in accordance with GAAP, as well as adjusted non-GAAP financial measures and metrics for the three-month periods ended January 31, 2020 and
Slide 24: First Quarter Fiscal Year 2020 Non-GAAP Reconciliations (Con't)
FIRST QUARTER FISCAL YEAR 2020 NON-GAAP RECONCILIATIONS (CON’T) 24
Slide 25: Manufacturing Locations
The Toro Company MANUFACTURING LOCATIONS Irom Mountain, MI Windom, MN Shakopee, MN Tomah, WI h ly West Salem, OH Ortyille, OH Ploiesti, Romania Lake Mills, WI Fiano Romano, Ita Sterling, KY Sanford, FL Petaluma, CA El Cajon, CA El Paso, XxNG Juarez, Mexico Beatrice, NE» Weatherford, TX Beverley, Aus
Slide 26: The Toro Company
The Toro Company AX a TORO [BOSS BW oer SNOWPLOW wRencoR UNIQUE [rritrol. ELECTRONICS LIGHTING SYSTEMS” ‘Youre J SUBSITE HAYTER @pope <2”Ne0> GAdius TOOLS FOR HOD PROFESSI