Toro Company (The)

Good day, ladies and gentlemen, and welcome to the Toro Company's first quarter earnings conference call. My name is Sarah, and I will be your coordinator for today. At this time, all participants are in the listen-only mode. We will be facilitating the question-and-answer session towards the end of today's conference. If any time during the call you require assistance, please press star then zero, and the coordinator will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Nicholas Rhodes, Managing Director of Investor Relations for the Toro Company. Please proceed, Mr. Rhodes.

Nicholas Rhodes Thank you, and good morning. Our earnings release was issued this morning by Business Wire, and a copy can be found in the investor information section of our corporate website, thetorocompany.com. On our call today are Rick Olson, Chairman and Chief Executive Officer, and Renee Peterson, Vice President, Treasurer, and Chief Financial Officer. We begin with our customary forward-looking statement policy. During this call, we will make forward-looking statements regarding our business and future financial and operating results. You all are aware of the inherent difficulties, risks, and uncertainties in making predictive statements. Our earnings release as well as our SEC filings detail some of the important risk factors that may cause our actual results to differ materially from those in our predictions. Please note that we do not have a duty to update our forward-looking statements. In addition, during this call we will reference certain adjusted non-GAAP financial measures and metrics. Reconciliations of historical adjusted non-GAAP financial measures and metrics to reported GAAP financial measures and metrics can be found in our earnings release or on our website. The company believes these measures and metrics may be useful in performing meaningful comparisons of past and present operating results to understand the performance of its ongoing operations and how management views the business. Such adjusted non-GAAP financial measures and metrics should not be considered superior to, as a substitute for, or as an alternative to and should be considered in conjunction with the GAAP financial measures and metrics presented in our earnings release and this call. With that, I will now turn the call over to Rick.

Thanks and good morning. Fiscal 2020 is off to a positive start and we're encouraged about the season ahead. The team's focus on our strategic priorities of profitable growth, productivity, and empowering people was key to our sales and margin momentum in Q1. We also announced a strategic acquisition to complement our organic growth. Looking at our financial results, although the first quarter is typically a smaller quarter, thanks to the efforts of Toro's dedicated employees, we achieved record net sales and earnings. We generated net sales of $767 million, up 27% over the prior year, and we delivered adjusted diluted earnings per share of 64 cents, up 21%. Results were primarily driven in the professional segment by the addition of Charles Machine Works, continued demand for BOSS snow and ice management equipment, and net price realization. And in the residential segment, by the initial delivery of zero-turn riding mowers to the tractor supply company. During the first quarter, we announced the acquisition of Venture Products, and I'm happy to report that we closed on Monday. Venture Products, which manufactures under the Ventrac brand, is a respected provider of turf, landscape, and snow and ice management equipment. Ventrac machines are valued for their versatility, multi-season attachments, and hillside capabilities. Our people share a similar value-based culture with strong commitments to innovation, quality, and customer service. I want to formally welcome the Ventrac team to the Toro Company. Turning to our operating performance for the quarter, our professional segment net sales grew 31%, reflecting incremental contributions from the Charles Machine Works acquisition and positive contributions from the Boss, Golf and Grounds, and Irrigation businesses. Charles Machine Works, through its family of businesses with iconic brands such as Ditch Witch, American Auger, Trendcore, Subcite, Hammerhead and Radius generated strong incremental revenue for the quarter. We drove solid retail demand with our new products including the Ditch Witch JT24 directional drill and SK3000 mini skid steer. And the recently launched Blue Light LED cured in place lining system gained traction in the marketplace. Nearly one year after the Charles Machine Works team joined the Toro Company, the integration is exceeding expectations and we are on track to deliver our Synergy target. Loss turned in another good quarter due to healthy demand for snow and ice management equipment. This resulted from early winter snowfalls in key regions and sales of undercarriage mounts and plows for new truck models. We also saw continued strong retail demand for the Snow Raider, which turns a multi-person job of plowing and treating sidewalks into a one-person operation. Our worldwide golf and grounds business benefited from solid golf equipment demand in Europe and Asia. Interest in our new all-electric Greensmaster E-Triflex Riding Greensmoor was high. Customers appreciate its reduction in noise, maintenance, and fuel costs. Additionally, we saw increased activity in previously deferred golf projects in the U.S. and across our international markets. Our ag irrigation business posted positive results for the quarter due to increased product demand in the eastern United States and Mexico. This was partially driven by the introduction of the new AquaTrax Azul precision irrigation tape that offers enhanced clog resistance technology. Irrigation business growth in the quarter was driven by favorable weather in key domestic regions that helped drive early demand for Irritrol products used in residential and commercial applications. Turning to our residential segment, we achieved over 14% net sales growth for the quarter, largely driven by initial shipments of zero-term riding mowers to tractor supply stores. We also recorded positive results from our pulp-branded DIY irrigation business in Australia. In summary, we delivered strong performance for the quarter, expanded our mass retail channel with the addition of the tractor supply company, and completed another strategic acquisition to complement our organic growth. I will now turn the call over to Renee for a more detailed discussion of our financial results.