The Toro pany(TTC) - 2025 Q2 - Quarterly Results

Financial Performance - Second-quarter net sales were $1.32 billion, a decrease of 2% compared to $1.35 billion in the same period of fiscal 2024[3]. - Reported diluted EPS for the second quarter was $1.37, down from $1.38 in the same period of fiscal 2024, while adjusted diluted EPS increased to $1.42 from $1.40[3]. - Professional segment net sales increased by 0.8% to $1,014.1 million, driven by higher shipments of golf and grounds products[14]. - Residential segment net sales decreased by 11.4% to $297.4 million, primarily due to lower shipments of walk power mowers and zero-turn mowers[14]. - Net sales for the three months ended May 2, 2025, were $1,317.9 million, a decrease of 2.6% compared to $1,349.0 million for the same period in 2024[25]. - Operating earnings for the three months ended May 2, 2025, were $174.8 million, a decline of 6.0% from $187.6 million in the same period last year[25]. - Net earnings for the six months ended May 2, 2025, were $189.6 million, compared to $209.7 million for the same period in 2024, reflecting a decrease of 9.6%[25]. - Adjusted net earnings for the six months ended May 2, 2025, were $207.7 million, down from $213.8 million for the same period in 2024, with adjusted net earnings per diluted share at $2.06 compared to $2.04[33]. - Net earnings for the three months ended May 2, 2025, were $136.8 million, down from $144.8 million for the same period in 2024, with net earnings per diluted share at $1.37 compared to $1.38[33]. Guidance and Expectations - The company expects total net sales for fiscal 2025 to be flat to down 3%, with adjusted diluted EPS guidance in the range of $4.15 to $4.30[4]. - The company is taking strategic steps to navigate near-term headwinds while maintaining confidence in managing controllable factors and mitigating macroeconomic risks[4]. Margins and Costs - Gross margin for the second quarter was 33.1%, down from 33.6% in the same prior-year period, attributed to higher material and manufacturing costs[9]. - Operating earnings as a percentage of net sales were 13.3%, compared to 13.9% in the same prior-year period[10]. - Gross profit for the six months ended May 2, 2025, was $772.3 million, down from $797.5 million in the prior year, resulting in a gross margin of 33.4% compared to 33.9%[25]. - Gross profit for the three months ended May 2, 2025, was $436.7 million, a decrease from $453.0 million for the same period in 2024, resulting in a gross margin of 33.1% compared to 33.6%[33]. - The company reported a gross margin of 33.4% for the six months ended May 2, 2025, compared to 33.9% for the same period in 2024[33]. Debt and Cash Flow - Interest expense decreased to $15.8 million, down $0.9 million from the same prior-year period due to lower average interest rates[11]. - Cash and cash equivalents decreased to $176.5 million as of May 2, 2025, down from $188.8 million a year earlier[31]. - The company reported a net cash provided by operating activities of $123.1 million for the six months ended May 2, 2025, compared to $135.1 million in the prior year[31]. - Long-term debt, less current portion, increased to $1,077.1 million as of May 2, 2025, compared to $1,003.3 million a year earlier[29]. - Free cash flow for the six months ended May 2, 2025, was $84.7 million, a decrease from $95.6 million for the same period in 2024, resulting in a free cash flow conversion percentage of 44.7% compared to 45.6%[35]. Strategic Initiatives - The company plans to continue focusing on market expansion and new product development to drive future growth[27]. - The company launched the "Amplifying Maximum Productivity" (AMP) initiative in the first quarter of fiscal 2024, which includes expenses not representative of ongoing business operations[36]. - The productivity initiative charges primarily represent severance and termination benefits, facility exit costs, and third-party consulting costs[36]. Taxation - The effective tax rate for the second quarter was 18.9%, compared to 19.2% in the same prior-year period, reflecting a more favorable geographic mix of earnings[12]. - Income tax provision for the three months ended May 2, 2025, was $31.9 million, compared to $34.4 million for the same period in 2024, with an effective tax rate of 18.9%[33].