Toro Co Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Samuel Darkatsh - Raymond James - Analyst : Good morning, Rick. Good morning, Angie. How are you?

Question: Samuel Darkatsh - Raymond James - Analyst : Well as well. Thank you for asking. If I may, three questions. Hopefully, they're pretty quick. First, Angie, I think you mentioned in your prepared remarks a strong conviction in long-term growth. Does that extend -- and I know you don't give guidance for a while for next year, but does that extend into you're confident that next fiscal year will also show organic total sales growth. And I say that in light of the fact that your order book in underground is expected to normalize. You've got a lot of moving parts with landscape and retail and snow and what have you. Is next year prospectively a growth year as you see it right now?

Question: Samuel Darkatsh - Raymond James - Analyst : Thanks. Second question, mentioning that you're anticipating ramping your repo activity or share repurchase activity in the back half I think, at least based on your guidance, it looks like you're anticipating, I don't know, somewhere around, call it, $275 million in second half free cash flow after dividends. Is it fair to assume that the bulk of that might with repo, especially with the stock at current levels?

Question: Samuel Darkatsh - Raymond James - Analyst : Got it. My last question. As it relates to the landscape and retail field inventories. At this stage, what's the timing of expected use the word normalcy of those elevated field inventory. And I guess on top of that, any color you can provide in terms of the Red Iron DSOs being elevated as well. Thanks, guys.

Question: Samuel Darkatsh - Raymond James - Analyst : Very helpful. Thank you.

Question: David McGregor - Longbow Research - Analyst : Good morning, everyone. Congratulations on the strong quarterly results. I wanted to pick up on your response to Sam's question about the retail being so strong? And is there any way you can just give us a retail sales growth number for landscape contractor equipment and residential channels, not necessarily just your business, but the overall industry. But just what was real growth in those two categories in the quarter.

Question: David McGregor - Longbow Research - Analyst : Okay. Is there any way of quantifying how much benefit the weather was to 2Q? You referenced the fact that you got an earlier start in some of the seasonal markets.

Question: David McGregor - Longbow Research - Analyst : Okay. And then just on unit volumes, you talked about the capacity benefits of the debottlenecking investments that you've made in golf and specialty construction. How much better do shipments get in the second half for golf and Ditch Witch as a consequence of these debottlenecking

Question: David McGregor - Longbow Research - Analyst : Last question for me is just on landscape contractor. Just given the average service life and landscape contractor versus some fairly depressed sales trends as of late. You'd have to believe there's some pent-up replacement demand there. What's your best estimate of that deferred replacement demand in this category at this point? And what do you think from a timing standpoint in terms of seeing that come to market?

Question: David McGregor - Longbow Research - Analyst : Great. Got it. Thanks very much, Rick. Good luck.

Question: Ted Jackson - Northland Securities - Analyst : Thanks very much. Good morning.

Question: Ted Jackson - Northland Securities - Analyst : All my questions have kind of been answered. I'm going to ask one, which is around the productivity initiative. We've seen $7.5 million year-to-date with regards to those actions. And I just was curious in terms of maybe providing some color in terms of the activity that you're taking there in terms of streamlining the business. When you see the initiative wrapping up and maybe some kind of quantification with regards to kind of the total cost of the initiatives and kind of how it would play out over the coming reporting periods. That would be my first highlight of question. Thanks.

Question: Ted Jackson - Northland Securities - Analyst : Okay. Then my next question, you kind of went on it, it is nice to hear the focus on working capital is as we think about working capital -- and by the way, it was really nice to see the improvement in this quarter. How do we think about how things are within those line items on the balance sheet trend for the remainder of the year? I mean is it are we going to continue to see improvements with regards to inventory? And then with regards to the receivables and what you had happen, which is clearly a result of success with the mass channel, is that -- like kind of change any of your seasonal dynamics on the receivables front? Or do you assume I'm asking like kind of -- could you help us kind of think through go forward for both inventory and receivables as we kind of go through the year and what it means for your working capital for whether we exit 2024. That's my last question. Thanks.

Question: Ted Jackson - Northland Securities - Analyst : Okay. Thanks very much and congratulations on the quarter.

Question: Eric Bosshard - Cleveland Research - Analyst : A couple of things. First of all, a follow-up, just a clarification. In terms of dealers, landscape contractor dealers, is this business in terms of sell-through, what I heard you say, I just want to make sure is that the sell-through is positive and the homeowner residential through that channel is also positive. Is that the right way directionally to think about how that piece of the business is performing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 3:00PM, TTC.N - Q2 2024 Toro Co Earnings Call

Question: Eric Bosshard - Cleveland Research - Analyst : And is that sustainable? Were we've sort of digested the shift in the change that took place, and now we're back at a point where you can sustain sell-through growth in the dealers in those categories. Is that the right way to think about it?

Question: Eric Bosshard - Cleveland Research - Analyst : Related to this, you had commented a couple of times that you're more than halfway through the inventory rightsized. And at what point would

Question: Eric Bosshard - Cleveland Research - Analyst : And then the other issue and you commented about mix in residential, which I'm guessing this relates to selling more to Lowe's. What -- and if I'm wrong, you can correct me. What I'm interested in residential is what you're seeing in terms of consumer takeaway. And specifically, you have a breadth of price points and then also the introduction of battery-powered. I'm curious how consumer demand, consumer takeaway has shifted this year relative to last year relative to expectations between the various products and price points.

Question: Eric Bosshard - Cleveland Research - Analyst : Is that the same dynamic in walks as it is in Ryder in terms of better success entry mid?

Question: Eric Bosshard - Cleveland Research - Analyst : That's helpful. Thank you for that. Thanks. That's all I have.

Question: Tom Hayes - CL King - Analyst : Hey. Good morning everyone. Thanks for taking my questions. Rick, maybe quick question on the golf industry. It sounds like it's going in the right direction. Any differences between the three primary segments, the private, semiprivate, and public courses on spending?

Question: Tom Hayes - CL King - Analyst : Okay. Just maybe one more. I think you called out on the press release that the zero turn mowers continue to be a headwind. I was just wondering what you think needs to occur to turn that around?

Question: Tom Hayes - CL King - Analyst : Okay. Appreciate the color. Thank you.