The Toro pany(TTC)2025-06-05 16:06Financial Performance - Consolidated net sales for Q2 fiscal 2025 were $1,317.9 million, down 2.3% from $1,349.0 million in Q2 fiscal 2024[106]. - Professional segment net sales for Q2 fiscal 2025 were $1,014.1 million, an increase of 0.8% compared to $1,005.6 million in Q2 fiscal 2024[107]. - Residential segment net sales for Q2 fiscal 2025 were $297.4 million, a decrease of 11.4% compared to $335.6 million in Q2 fiscal 2024[108]. - Net earnings for Q2 fiscal 2025 were $136.8 million, or $1.37 per diluted share, compared to $144.8 million, or $1.38 per diluted share, in Q2 fiscal 2024[109]. - Adjusted net earnings for Q2 fiscal 2025 were $141.8 million, or $1.42 per diluted share, compared to $147.3 million, or $1.40 per diluted share, in Q2 fiscal 2024[110]. - Total net sales for the first six months of fiscal 2025 decreased by 1.6% to $2,312.9 million compared to $2,350.9 million in the same period of fiscal 2024[125]. - Adjusted net earnings for the six months ended May 2, 2025, were $207.7 million, compared to $213.8 million for the same period in 2024[151]. Profitability Metrics - Gross profit for Q2 fiscal 2025 was $436.7 million, down 3.6% from $453.0 million in Q2 fiscal 2024, with a gross margin of 33.1%[118]. - Professional segment earnings for Q2 fiscal 2025 increased by 6.0% to $202.1 million, with a margin increase to 19.9% from 19.0% in Q2 fiscal 2024[127]. - Residential segment earnings for Q2 fiscal 2025 decreased by 55.4% to $16.1 million, with a margin decrease to 5.4% from 10.8% in Q2 fiscal 2024[129]. - The total gross profit for the six months ended May 2, 2025, was $772.3 million, a decrease from $797.5 million for the same period in 2024[151]. Expenses and Cost Management - SG&A expense decreased by $3.5 million, or 1.3%, for Q2 fiscal 2025 compared to the same period in fiscal 2024[120]. - The AMP initiative has delivered cumulative cost savings of $30.0 million and anticipated annualized cost savings of $70.5 million as of Q2 fiscal 2025[105]. - The company employs productivity initiatives to mitigate unfavorable impacts from commodity cost changes, including collaborating with suppliers and utilizing Lean methods[163]. - The company may increase product prices to offset changes in commodity costs if necessary[163]. Cash Flow and Shareholder Returns - Cash returned to shareholders during the first six months of fiscal 2025 totaled $276.3 million through dividends and stock repurchases[111]. - Free cash flow for the six months ended May 2, 2025, was $84.7 million, with a free cash flow conversion percentage of 44.7%, down from 45.6% in the same period in 2024[152]. - Cash dividend increased by 5.6% to $0.38 per share for Q2 fiscal 2025 compared to $0.36 per share in Q2 fiscal 2024[140]. Liquidity and Debt - As of May 2, 2025, available liquidity was $899.4 million, consisting of cash and cash equivalents of $176.5 million and $722.9 million under the revolving credit facility[136]. - The company has a gross fixed-rate long-term debt of $524.3 million and gross variable rate debt of $400.0 million under term loan credit agreements[160]. - The company has outstanding variable rate revolving credit facility of $175.0 million[160]. Risk Factors - The company is exposed to foreign currency exchange rate risk, particularly with the Euro, Australian dollar, and Mexican peso, which could impact earnings and cash flows[156]. - The company is exposed to commodity cost changes, particularly in steel, aluminum, petroleum, and natural gas-based resins[162]. - Any changes in foreign currency exchange rates will be reflected as a foreign currency translation adjustment, impacting accumulated other comprehensive loss but not net earnings[159]. - The company does not use interest rate swaps to mitigate interest rate fluctuations and has no earnings exposure from fixed-rate long-term debt obligations[160].