Toro Company (The)

Ladies and gentlemen, thank you for standing by and welcome to the Toro Company third quarter 2020 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to Nicholas Rose, Managing Director of Investor Relations. Please go ahead.

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, detorocompany.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. Thank you. Thank you. In addition, during this call we will reference certain non-GAAP financial measures. Reconciliations of historical non-GAAP financial measures to reported GAAP financial measures can be found in our earnings release or on our website. The company believes these measures 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 non-GAAP financial measures 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 presented in our earnings release and this call. With that, I will now turn the call over to Rick.

Thanks Nick, and good morning. Our third quarter was a strong and dynamic one given the circumstances. Since COVID-19 began to spread across the globe, the macroeconomic environment went from robust growth to recession almost overnight. Now we are seeing more positive economic and market trends, but the rates of the recovery and the status of the virus remain highly variable. In short, the environment in which we conduct business remains uncertain. For the third quarter, we were pleased to have achieved top-line growth on the strength of our residential segment as favorable weather, our new product lineup, and stay-at-home trends drove robust demand in the mass and dealer channels. Incremental sales from our successful venture products acquisition also contributed to third quarter growth. I am deeply grateful for the extraordinary efforts and the commitment of our team during these challenging times. The health and safety of our people remains our top priority as we support and deliver value to our customers. Our talented global team of more than 9,000 remained resilient and solution-oriented. Among other things, we modified production lines and workflow to accommodate social distancing in manufacturing, continued to work effectively while adhering to local safety guidelines, developed methods to move production and inventory to meet customer requirements, and managed the demands of home, child care, and personal wellness. Our teams did all of this while delivering a solid quarter of financial results. Turning to the demand environment during the quarter, in May, as the residential segment remained strong, we saw an improvement in our professional segments. and those trends continued throughout the quarter and into the month of August. As customers gained more confidence, demand started to return. The market continues to be dynamic, given the variability of the economic recovery and the status of the virus around the world. We are fully prepared to respond to potential market changes. Our long-standing ability to adapt to different business environments was evident in the quarter and our team is well positioned to continue to succeed even in challenging market conditions. Looking at the results for the quarter, our residential segment continued to excel with 38% year-over-year net sales growth and strong margins. The movement outdoors we've seen during the past several months contributed to record sales of zero-turn mowers, which doubled in the quarter. We also saw strong contributions from WACPAR mower sales. Professional segment net sales for the quarter declined 8% year over year, which was better than expected. Sales included incremental revenue from the venture products acquisition. We're encouraged by improved demand for our professional segment products, particularly in the landscape contractor, We're seeing demand driven by greater business confidence and increased home investments. Improved retail demand within the quarter reduced field inventory, which is in good shape and lower than prior year, setting us up well for preseason shipments. With robust performance in our residential segment and improved demand in our professional segment, We demonstrated the strength of our diverse portfolio of businesses and our ability to be agile while focusing on customer needs. This positions us to drive growth forward as our end markets normalize. There are two additional highlights in the quarter that I would like to recognize. First, we launched our Sustainability Endures platform, which furthers and enhances our longstanding dedication to make a positive global impact socially, environmentally, and financially. And second, we were named Innovative Partner of the Year by the Tractor Supply Company. This reflects our commitment to innovation as well as the effectiveness of our partnership to deliver great products during these difficult times. The successes we experienced this quarter were due to the dedication of our team, our innovative product lineup, Strong demand through mass and dealer channels and the contribution from our first full quarter of the venture product acquisition. We're enthusiastic about our future given our balanced and flexible business model that allows us to adapt quickly to change, enduring values that focus on the success of customers, innovative new products aligned to customer trends, a strong financial position, and the proven ability of our people to adapt and perform successfully in these dynamic times. With that I will turn the call over to Renee for a more detailed discussion of our financial results.