Lower-than-Expected Homeowner Demand for Lawn
Care Solutions Driven by Macro Factors and Weather
Continued Strength in Demand Across
Construction, and Golf and Grounds Markets
Announces New Strategic Partnership with
Lowe’s
- Third-quarter net sales of $1.08 billion, compared to $1.16
billion in the comparable period of fiscal 2022
- Third-quarter reported diluted EPS of ($0.14), which includes
non-cash impairment charges related to the Intimidator Group of
$151.3 million on a gross basis; $114.6 million net of $36.7
million tax benefit
- Third-quarter *adjusted diluted EPS of $0.95, compared to $1.19
in the comparable period of fiscal 2022
- Revises full-year *adjusted diluted EPS guidance to a range of
$4.05 to $4.10
The Toro Company (NYSE: TTC), a leading worldwide provider of
innovative solutions for the outdoor environment, today reported
results for its fiscal third quarter ended August 4, 2023. In a
separate news release, the company also announced a new strategic
partnership with Lowe's.
“During the third quarter, we experienced a sharp and
accelerated reduction in homeowner demand for residential and
professional segment lawn care products,” said Richard M. Olson,
chairman and chief executive officer. “This drove the
underperformance versus our expectations, and also led to the
Intimidator Group non-cash impairment charges. Demand was strong
across the rest of our end customer base, and with that, the other
businesses in our diverse portfolio delivered excellent growth in
the quarter.”
“The softness in homeowner demand was driven by a combination of
macro factors, including economic uncertainty, higher interest
rates, and consumer spending preferences following a period of
exceptional demand during the pandemic, along with unusually
unfavorable weather patterns. These factors led to significantly
lower than expected shipments of lawn care solutions in both our
residential and professional segments. Macro factors drove reduced
demand from homeowners, including purchase deferrals and
trade-downs, as well as a reduction in orders by our dealer channel
and an acceleration of destocking by our mass channel. Dry
conditions in key regions persisted throughout June and into July,
which delayed replacement needs and slowed mid-season channel
replenishment orders.
“On a positive note, the rest of the businesses in our diverse
portfolio performed well. We continued to see exceptional demand
within the professional segment for our underground and specialty
construction, and golf and grounds solutions driven by
infrastructure spending and support, sustained momentum in new
golfers and rounds played, and the prioritization of public green
spaces. Importantly, with improved supply and our team’s
operational execution, volumes were up significantly for those
businesses on a year-over-year basis, as lead times continued to
improve.”
OUTLOOK
“As we look ahead, we have and are taking appropriate actions to
further align costs and production to demand trends that we expect
will continue into fiscal 2024,” continued Olson. "We believe the
combination of macro dynamics and weather patterns this year has
exacerbated the rebalancing of homeowner demand for lawn care
solutions in both of our residential and professional segments,
which has resulted in elevated dealer field inventories of those
products, along with higher floorplanning expense than originally
anticipated. At the same time, we expect continued strength in
demand and substantial order backlog for our underground and
specialty construction, and golf and grounds solutions. As the
supply chain for those products further stabilizes, we intend to
leverage our existing manufacturing footprint to implement
incremental, flexible production capacity to better serve our
customers and return backlog to more normal levels as soon as
possible.
“In addition, we are excited about our new strategic partnership
with Lowe’s, and this shared opportunity to leverage the Toro brand
and further serve our customer base. Lowe’s leadership position in
the zero-turn mower category and strong footprint in key customer
markets complements our existing channel strategy and is expected
to bolster market presence of our powerful 60V battery portfolio.
Our full line-up of Toro-branded all-season outdoor power equipment
will be available at Lowe’s nationwide for the spring 2024 selling
season.
“We believe our market leadership and business fundamentals
remain strong. We have a proven ability to manage through economic
cycles and seasonal variations, as evidenced by our long history of
delivering positive results. We continue to prioritize investments
that we expect will drive long-term profitable growth, supported by
our empowered and resilient team of employees and channel partners.
We believe we remain well-positioned to grow share and
profitability in each of our attractive end markets with our strong
brands, innovative new product pipeline and extensive distribution
networks,” concluded Olson.
For the fiscal year ending October 31, 2023, the company now
expects net sales similar to slightly higher than the prior fiscal
year, and adjusted diluted EPS in the range of $4.05 to $4.10. The
updated full-year outlook is based on management’s current
visibility, and assumes continued supply chain stabilization,
incremental manufacturing inefficiencies as production is further
aligned to demand, and a continuation of the macro factors that
affected third quarter results.
THIRD-QUARTER FISCAL 2023 FINANCIAL
HIGHLIGHTS
Reported
Adjusted*
(dollars in millions, except per share
data)
FY23 Q3
FY22 Q3
% Change
FY23 Q3
FY22 Q3
% Change
Net Sales
$
1,081.8
$
1,160.6
(7
)%
$
1,081.8
$
1,160.6
(7
)%
Net Earnings
$
(15.0
)
$
125.2
(112
)%
$
99.4
$
125.1
(21
)%
Diluted EPS
$
(0.14
)
$
1.19
(112
)%
$
0.95
$
1.19
(20
)%
THIRD-QUARTER FISCAL 2023 SEGMENT
RESULTS
Professional Segment
- Professional segment net sales for the third quarter were
$896.3 million, up 1.1% from $886.2 million in the same period last
year. The increase was primarily driven by higher shipments of
underground and specialty construction, and golf and grounds
products, and net price realization, partially offset by lower
shipments of lawn care equipment.
- Professional segment earnings for the third quarter were $13.0
million, down 92.1% from $166.2 million in the same period last
year, and when expressed as a percentage of net sales, 1.5%, down
from 18.8% in the prior-year period. The decrease was primarily due
to gross non-cash impairment charges of $151.3 million, and higher
material and manufacturing costs, partially offset by productivity
improvements and net price realization.
Residential Segment
- Residential segment net sales for the third quarter were $175.3
million, down 35.1% from $270.0 million in the same period last
year. The decrease was primarily driven by lower shipments of
products broadly across the segment.
- Residential segment earnings for the third quarter were $3.8
million, down 85.4% from $26.3 million in the same period last
year, and when expressed as a percentage of net sales, 2.2%, down
from 9.8% in the prior-year period. The decrease was primarily
driven by lower volume and unfavorable product mix, partially
offset by lower material costs.
OPERATING RESULTS
Gross margin and *adjusted gross margin for the third quarter
were both 34.4%, down slightly from 34.5% for both in the same
prior-year period. The decrease was primarily driven by higher
material costs, mostly offset by lower freight expense.
SG&A expense as a percentage of net sales for the third
quarter was 22.2%, compared with 20.5% in the prior-year period.
The increase was primarily due to lower net sales, higher marketing
costs, and increased investment in research and engineering.
Operating earnings as a percentage of net sales were (1.8)% for
the third quarter, compared with 14.0% in the same prior-year
period. *Adjusted operating earnings as a percentage of net sales
for the third quarter were 12.2%, compared with 14.1% in the same
prior-year period.
Interest expense was $15.0 million for the third quarter, up
$5.8 million from the same prior-year period. This increase was
primarily driven by higher average interest rates.
The reported effective tax rate for the third quarter was 47.6%,
compared with 20.3% in the same prior year period. The change was
primarily due to the tax benefit from non-cash impairment charges
in the current-year period. The *adjusted effective tax rate for
the third quarter was 19.0% compared with 20.7% in the same prior
year period. The decrease was primarily due to an increased benefit
from the geographic mix of earnings in the current-year period.
*Non-GAAP financial measure. Please refer
to the “Use of Non-GAAP Financial Information” for details
regarding these measures, as well as the tables provided for a
reconciliation of historical non-GAAP financial measures to the
most comparable GAAP measures.
LIVE CONFERENCE CALL September 7, 2023 at 10:00 a.m.
CDT www.thetorocompany.com/invest
The Toro Company will conduct its earnings call and webcast for
investors beginning at 10:00 a.m. CDT on September 7, 2023. The
webcast will be available at www.thetorocompany.com/invest. Webcast
participants will need to complete a brief registration form and
should allocate extra time before the webcast begins to register
and, if necessary, install audio software.
About The Toro Company
The Toro Company (NYSE: TTC) is a leading worldwide provider of
innovative solutions for the outdoor environment including turf and
landscape maintenance, snow and ice management, underground utility
construction, rental and specialty construction, and irrigation and
outdoor lighting solutions. With net sales of $4.5 billion in
fiscal 2022, The Toro Company’s global presence extends to more
than 125 countries through a family of brands that includes Toro,
Ditch Witch, Exmark, Spartan, BOSS, Ventrac, American Augers,
Trencor, Pope, Subsite, HammerHead, Radius, Perrot, Hayter, Unique
Lighting Systems, Irritrol, and Lawn-Boy. Through constant
innovation and caring relationships built on trust and integrity,
The Toro Company and its family of brands have built a legacy of
excellence by helping customers work on golf courses, sports
fields, construction sites, public green spaces, commercial and
residential properties and agricultural operations. For more
information, visit www.thetorocompany.com.
Use of Non-GAAP Financial Information
This press release and our related earnings call reference
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.S. GAAP. The non-GAAP
financial measures included within this press release and our
related earnings call that are utilized as measures of our
operating performance consist of gross profit, gross margin,
operating earnings, earnings before income taxes, net earnings,
diluted EPS, and the effective tax rate, each as adjusted. The
non-GAAP financial measures included within this press release and
our related earnings call that are utilized as measures of our
liquidity consist of free cash flow and free cash flow conversion
percentage.
The Toro Company uses these non-GAAP financial measures in
making operating decisions and assessing liquidity because it
believes these non-GAAP financial measures provide meaningful
supplemental information regarding core operational performance and
cash flows, as a measure of the company's liquidity, and provide
the company with a better understanding of how to allocate
resources to both ongoing and prospective business initiatives.
Additionally, these non-GAAP financial measures facilitate the
company's internal comparisons for both historical operating
results and competitors' operating results by factoring out
potential differences caused by charges and benefits not related to
its regular, ongoing business, including, without limitation,
certain non-cash, large, and/or unpredictable charges and benefits;
acquisitions and dispositions; legal judgments, settlements, or
other matters; and tax positions. The company believes that these
non-GAAP financial measures, when considered in conjunction with
the financial measures prepared in accordance with U.S. GAAP,
provide investors with useful supplemental financial information to
better understand its core operational performance and cash
flows.
Reconciliations of historical non-GAAP financial measures to the
most comparable U.S. GAAP financial measures are included in the
financial tables contained in this press release. These non-GAAP
financial measures, however, should not be considered superior to,
as a substitute for, or as an alternative to, and should be
considered in conjunction with, the U.S. GAAP financial measures
included within this press release and the company’s related
earnings call. These non-GAAP financial measures may differ from
similar measures used by other companies.
The Toro Company does not provide a quantitative reconciliation
of the company’s projected range for adjusted diluted EPS for
fiscal 2023 to diluted EPS, which is the most directly comparable
GAAP measure, in reliance on the unreasonable efforts exception
provided under Item 10(e)(1)(i)(B) of Regulation S-K. The company’s
adjusted diluted EPS guidance for fiscal 2023 excludes certain
items that are inherently uncertain and difficult to predict,
including certain non-cash, large and/or unpredictable charges and
benefits; acquisitions and dispositions; legal judgments,
settlements, or other matters; and tax positions. Due to the
uncertainty of the amount or timing of these future excluded items,
management does not forecast them for internal use and therefore
cannot create a quantitative adjusted diluted EPS for fiscal 2023
to diluted EPS reconciliation without unreasonable efforts. A
quantitative reconciliation of adjusted diluted EPS for fiscal 2023
to diluted EPS would imply a degree of precision and certainty as
to these future items that does not exist and could be confusing to
investors. From a qualitative perspective, it is anticipated that
the differences between adjusted diluted EPS for fiscal 2023 to
diluted EPS will consist of items similar to those described in the
financial tables later in this release, including, for example and
without limitation, certain non-cash, large, and/or unpredictable
charges and benefits; acquisitions and dispositions; legal
judgments, settlements, or other matters; and tax positions. The
timing and amount of any of these excluded items could
significantly impact the company’s diluted EPS for a particular
period.
Forward-Looking Statements
This news release 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 often can be identified by words
such as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,”
“forecast,” “goal,” “optimistic,” “encourage,” “anticipate,”
“continue,” “plan,” “estimate,” “project,” “target,” “improve,”
“believe,” “become,” “should,” “could,” “will,” “would,”
“possible,” “promise,” “may,” “likely,” “intend,” “can,” “seek,”
“pursue,” “potential,” “pro forma,” variations of such words or the
negative thereof, and similar expressions or future dates.
Forward-looking statements involve risks and uncertainties that
could cause actual events and results to differ materially from
those projected or implied. Forward-looking statements in this
release include the company’s fiscal 2023 financial guidance,
expectations regarding demand trends and supply chain
stabilization, and other statements made under the "Outlook"
section of this release. Particular risks and uncertainties that
may affect the company’s operating results or financial position or
cause actual events and results to differ materially from those
projected or implied include: adverse worldwide economic
conditions, including inflationary pressures and higher interest
rates; the effect of abnormal weather patterns; customer,
government and municipal revenue, budget spending levels and cash
conservation efforts; loss of any substantial customer; inventory
adjustments or changes in purchasing patterns by customers;
fluctuations in the cost and availability of commodities,
components, parts, and accessories, including steel, engines,
hydraulics, and resins; disruption at or in proximity to its
facilities or in its manufacturing or other operations, or those in
its distribution channel customers, mass retailers or home centers
where its products are sold, or suppliers; risks associated with
acquisitions and dispositions, including the company's acquisition
of the Intimidator Group and possible future impairment of goodwill
or other intangible assets; impacts of any future restructuring
activities or cost savings initiatives; COVID-19 related factors,
risks and challenges; the effect of natural disasters, social
unrest, war and global pandemics; the level of growth or
contraction in its key markets; the company’s ability to develop
and achieve market acceptance for new products; increased
competition; the risks attendant to international relations,
operations and markets; foreign currency exchange rate
fluctuations; financial viability of and/or relationships with the
company’s distribution channel partners; management of strategic
partnerships, key customer relationships, alliances or joint
ventures, including Red Iron Acceptance, LLC; impact of laws,
regulations and standards, consumer product safety, accounting,
taxation, trade, tariffs and/or antidumping and countervailing
duties petitions, healthcare, and environmental, health and safety
matters; unforeseen product quality problems; loss of or changes in
executive management or key employees; the occurrence of litigation
or claims, including those involving intellectual property or
product liability matters; impact of increased scrutiny on its
environmental, social, and governance practices; and other risks
and uncertainties described in the company’s most recent annual
report on Form 10-K, subsequent quarterly reports on Form 10-Q and
other filings with the Securities and Exchange Commission. The
company makes no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances occurring or
existing after the date any forward-looking statement is made.
(Financial tables follow)
THE TORO COMPANY AND
SUBSIDIARIES
Condensed Consolidated
Statements of Earnings (Unaudited)
(Dollars and shares in
thousands, except per-share data)
Three Months Ended
Nine Months Ended
August 4, 2023
July 29, 2022
August 4, 2023
July 29, 2022
Net sales
$
1,081,784
$
1,160,550
$
3,569,950
$
3,342,678
Cost of sales
709,430
760,644
2,321,951
2,236,927
Gross profit
372,354
399,906
1,247,999
1,105,751
Gross margin
34.4
%
34.5
%
35.0
%
33.1
%
Selling, general and administrative
expense
240,163
236,858
760,585
680,500
Non-cash impairment charges
151,263
—
151,263
—
Operating (loss) earnings
(19,072
)
163,048
336,151
425,251
Interest expense
(14,987
)
(9,182
)
(43,822
)
(24,219
)
Other income, net
5,496
3,225
21,241
8,262
(Loss) earnings before income taxes
(28,563
)
157,091
313,570
409,294
Income tax (benefit) provision
(13,600
)
31,941
54,208
83,509
Net (loss) earnings
$
(14,963
)
$
125,150
$
259,362
$
325,785
Basic net (loss) earnings per share of
common stock
$
(0.14
)
$
1.19
$
2.48
$
3.10
Diluted net (loss) earnings per share of
common stock
$
(0.14
)
$
1.19
$
2.46
$
3.08
Weighted-average number of shares of
common stock outstanding — Basic
104,286
104,827
104,479
104,931
Weighted-average number of shares of
common stock outstanding — Diluted
104,286
105,448
105,409
105,754
Segment Data
(Unaudited)
(Dollars in thousands)
Three Months Ended
Nine Months Ended
Segment net sales
August 4, 2023
July 29, 2022
August 4, 2023
July 29, 2022
Professional
$ 896,321
$ 886,232
$ 2,845,714
$ 2,484,927
Residential
175,314
269,962
705,765
845,039
Other
10,149
4,356
18,471
12,712
Total net sales*
$ 1,081,784
$ 1,160,550
$ 3,569,950
$ 3,342,678
*Includes international net sales of:
$ 234,964
$ 216,142
$ 756,686
$ 656,799
Three Months Ended
Nine Months Ended
Segment earnings (loss) before income
taxes
August 4, 2023
July 29, 2022
August 4, 2023
July 29, 2022
Professional
$
13,049
$
166,191
$
384,621
$
424,833
Residential
3,848
26,348
64,411
95,203
Other
(45,460
)
(35,448
)
(135,462
)
(110,742
)
Total segment (loss) earnings before
income taxes
$
(28,563
)
$
157,091
$
313,570
$
409,294
THE TORO COMPANY AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets (Unaudited)
(Dollars in thousands)
August 4, 2023
July 29, 2022
October 31, 2022
ASSETS
Cash and cash equivalents
$
147,926
$
231,564
$
188,250
Receivables, net
390,677
350,657
332,713
Inventories, net
1,112,692
939,274
1,051,109
Prepaid expenses and other current
assets
80,493
82,861
103,279
Total current assets
1,731,788
1,604,356
1,675,351
Property, plant, and equipment, net
624,963
531,816
571,661
Goodwill
451,264
583,803
583,297
Other intangible assets, net
549,190
595,141
585,832
Right-of-use assets
116,623
73,349
76,121
Investment in finance affiliate
48,528
31,389
39,349
Deferred income taxes
41,711
961
5,310
Other assets
21,823
19,134
19,077
Total assets
$
3,585,890
$
3,439,949
$
3,555,998
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current portion of long-term debt
$
—
$
65,000
$
—
Accounts payable
407,366
487,030
578,624
Accrued liabilities
482,304
443,557
469,242
Short-term lease liabilities
17,828
15,675
15,747
Total current liabilities
907,498
1,011,262
1,063,613
Long-term debt, less current portion
1,061,309
990,616
990,768
Long-term lease liabilities
101,221
60,921
63,604
Deferred income taxes
109
50,332
44,272
Other long-term liabilities
38,670
40,216
42,040
Stockholders’ equity:
Preferred stock
—
—
—
Common stock
103,835
104,194
103,970
Retained earnings
1,403,840
1,213,551
1,280,856
Accumulated other comprehensive loss
(30,592
)
(31,143
)
(33,125
)
Total stockholders’ equity
1,477,083
1,286,602
1,351,701
Total liabilities and stockholders’
equity
$
3,585,890
$
3,439,949
$
3,555,998
THE TORO COMPANY AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(Dollars in thousands)
Nine Months Ended
August 4, 2023
July 29, 2022
Cash flows from operating activities:
Net earnings
$
259,362
$
325,785
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Non-cash income from finance affiliate
(14,099
)
(5,814
)
Distributions from (Contributions to)
finance affiliate, net
4,920
(4,905
)
Depreciation of property, plant, and
equipment
56,551
54,269
Amortization of other intangible
assets
26,828
24,760
Stock-based compensation expense
14,382
17,105
Non-cash impairment charges
151,263
—
Other
720
3,893
Changes in operating assets and
liabilities, net of the effect of acquisitions:
Receivables, net
(52,757
)
(38,118
)
Inventories, net
(46,580
)
(173,000
)
Other assets
(74,258
)
(32,483
)
Accounts payable
(174,743
)
(24,858
)
Other liabilities
3,076
7,929
Net cash provided by operating
activities
154,665
154,563
Cash flows from investing activities:
Purchases of property, plant, and
equipment
(105,700
)
(75,772
)
Proceeds from insurance claim
7,114
—
Business combinations, net of cash
acquired
(20,971
)
(402,386
)
Asset acquisitions, net of cash
acquired
—
(7,225
)
Proceeds from asset disposals
399
197
Proceeds from sale of a business
—
4,605
Net cash used in investing activities
(119,158
)
(480,581
)
Cash flows from financing activities:
Borrowings under debt arrangements
515,000
700,000
Repayments under debt arrangements
(445,000
)
(335,000
)
Proceeds from exercise of stock
options
19,398
4,440
Payments of withholding taxes for stock
awards
(3,748
)
(2,308
)
Purchases of TTC common stock
(60,040
)
(110,004
)
Dividends paid on TTC common stock
(106,505
)
(94,401
)
Other
(1,525
)
—
Net cash (used in) provided by financing
activities
(82,420
)
162,727
Effect of exchange rates on cash and cash
equivalents
6,589
(10,757
)
Net decrease in cash and cash
equivalents
(40,324
)
(174,048
)
Cash and cash equivalents as of the
beginning of the fiscal period
188,250
405,612
Cash and cash equivalents as of the end of
the fiscal period
$
147,926
$
231,564
THE TORO COMPANY AND
SUBSIDIARIES
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(Dollars in thousands, except
per-share data)
The following table provides a
reconciliation of the non-GAAP financial performance measures used
in this press release and our related earnings call to the most
directly comparable measures calculated and reported in accordance
with U.S. GAAP for the nine month periods ended August 4, 2023 and
July 29, 2022:
Three Months Ended
Nine Months Ended
August 4, 2023
July 29, 2022
August 4, 2023
July 29, 2022
Gross profit
$
372,354
$
399,906
$
1,247,999
$
1,105,751
Acquisition-related costs1
—
401
225
1,425
Adjusted gross profit
$
372,354
$
400,307
$
1,248,224
$
1,107,176
Operating (loss) earnings
$
(19,072
)
$
163,048
$
336,151
$
425,251
Acquisition-related costs1
—
704
447
3,456
Non-cash impairment charges2
151,263
—
151,263
—
Adjusted operating earnings
$
132,191
$
163,752
$
487,861
$
428,707
Operating (loss) earnings margin
(1.8
)%
14.0
%
9.4
%
12.7
%
Acquisition-related costs1
—
%
0.1
%
—
%
0.1
%
Non-cash impairment charges2
14.0
%
—
%
4.3
%
—
%
Adjusted operating earnings margin
12.2
%
14.1
%
13.7
%
12.8
%
(Loss) earnings before income taxes
$
(28,563
)
$
157,091
$
313,570
$
409,294
Acquisition-related costs1
—
704
447
3,456
Non-cash impairment charges2
151,263
—
151,263
—
Adjusted earnings before income taxes
$
122,700
$
157,795
$
465,280
$
412,750
Income tax (benefit) provision
$
(13,600
)
$
31,941
$
54,208
$
83,509
Acquisition-related costs1
—
143
96
716
Non-cash impairment charges2
36,621
—
36,621
—
Tax impact of share-based
compensation3
324
581
5,004
1,568
Adjusted income tax provision
$
23,345
$
32,665
$
95,929
$
85,793
Net (loss) earnings
$
(14,963
)
$
125,150
$
259,362
$
325,785
Acquisition-related costs, net of tax1
—
561
351
2,740
Non-cash impairment charges, net of
tax2
114,642
—
114,642
—
Tax impact of stock-based
compensation3
(324
)
(581
)
(5,004
)
(1,568
)
Adjusted net earnings
$
99,355
$
125,130
$
369,351
$
326,957
Net (loss) earnings per diluted share
$
(0.14
)
$
1.19
$
2.46
$
3.08
Acquisition-related costs, net of tax1
—
0.01
—
0.03
Non-cash impairment charges, net of
tax2
1.09
—
1.09
—
Tax impact of stock-based
compensation3
—
(0.01
)
(0.05
)
(0.02
)
Adjusted net earnings per diluted
share
$
0.95
$
1.19
$
3.50
$
3.09
Effective tax rate
47.6
%
20.3
%
17.3
%
20.4
%
Non-cash impairment charges2
(27.5
)%
—
%
1.7
%
—
%
Tax impact of stock-based
compensation3
(1.1
)%
0.4
%
1.6
%
0.4
%
Adjusted effective tax rate
19.0
%
20.7
%
20.6
%
20.8
%
1
On January 13, 2022, the company completed
the acquisition of Intimidator. Acquisition-related costs for the
nine month period ended August 4, 2023 represent integration costs.
Acquisition-related costs for the three and nine month periods
ended July 29, 2022 represent transaction and integration
costs.
2
At the end of the third quarter of fiscal
2023, the company recorded non-cash impairment charges within our
Professional reportable segment related to the Intimidator Group
operating segment.
3
The accounting standards codification
guidance governing employee stock-based compensation requires that
any excess tax deduction for stock-based compensation be
immediately recorded within income tax expense. Employee
stock-based compensation activity, including the exercise of stock
options, can be unpredictable and can significantly impact our net
earnings, net earnings per diluted share, and effective tax rate.
These amounts represent the discrete tax benefits recorded as
excess tax deductions for stock-based compensation during the three
and nine month periods ended August 4, 2023 and July 29, 2022.
Reconciliation of Non-GAAP Liquidity Measures
The company defines free cash flow as net cash provided by
operating activities less purchases of property, plant and
equipment, net of proceeds from insurance claim. Free cash flow
conversion percentage represents free cash flow as a percentage of
net earnings. The company considers free cash flow and free cash
flow conversion percentage to be non-GAAP liquidity measures that
provide useful information to management and investors about the
company's ability to convert net earnings into cash resources that
can be used to pursue opportunities to enhance shareholder value,
fund ongoing and prospective business initiatives, and strengthen
the company's Consolidated Balance Sheets, after reinvesting in
necessary capital expenditures required to maintain and grow the
company's business.
The following table provides a reconciliation of non-GAAP free
cash flow and free cash flow conversion percentage to net cash
provided by operating activities, which is the most directly
comparable financial measure calculated and reported in accordance
with U.S. GAAP, for the nine month periods ended August 4, 2023 and
July 29, 2022:
Nine Months Ended
(Dollars in thousands)
August 4, 2023
July 29, 2022
Net cash provided by operating
activities
$
154,665
$
154,563
Less: Purchases of property, plant and
equipment, net of proceeds from insurance claim
98,586
75,772
Free cash flow
56,079
78,791
Net earnings
$
259,362
$
325,785
Free cash flow conversion percentage
21.6
%
24.2
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230907369676/en/
Investor Relations Jeremy Steffan Director, Investor
Relations (952) 887-7962, jeremy.steffan@toro.com
Media Relations Branden Happel Senior Manager, Public
Relations (952) 887-8930, branden.happel@toro.com
Toro (NYSE:TTC)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Toro (NYSE:TTC)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024