Toro Company (The)

Good day and thank you for standing by. Welcome to the Toro Company third quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 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 your host, Julie Karikas. Senior Managing Director of Investor Relations. Please go ahead.

Thank you and good morning. Our earnings release was issued this morning 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 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 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. We believe these measures may be useful in performing meaningful comparisons of past and present operating results and cash flows to understand the performance of our ongoing operations and how management views the business. Non-GAAP financial measures should not be considered superior to or a substitute for the GAAP financial measures presented in our earnings release and in this call. With that, I will now turn the call over to Rick.

Thanks, Julie, and good morning. The Toro Company delivered record third quarter results. We continue to benefit from robust demand in both our professional and residential segments. and our operations team went above and beyond to execute, even as global supply chain challenges affected availability. Our employees, together with our channel partners, kept a sharp focus on serving the needs of our customers. As a result, total net sales for the third quarter were up 16% year over year. Professional segment net sales increased 15%, marking the second quarter in a row of double-digit growth for this segment. We saw continued strength in landscape contractor and golf markets worldwide, higher pre-season shipments of lost snow and ice management products, and strong demand for our rental and specialty construction equipment and Ventrac products. Our lineup of innovative products combined with strong business competence fueled robust demand. Residential segment net sales were up 23%, And that comparison is on top of a 38% growth rate in the third quarter of last year. Growth in the quarter was driven by strong retail demand for our zero-turn and walk-power mowers. Customers also continued to respond favorably to our all-season FlexForce 60-volt product lineup, which offers power and durability with no compromise on performance. The recent actions we've taken to introduce innovative new products, refresh marketing, and expand mass retail distribution continue to strengthen the Toro brand and drive positive results. As noted last quarter, we expected supply chain constraints and inflationary pressures to escalate at a rate faster than could be fully offset in the near term through pricing and other mitigating actions. Despite these challenges, both segments delivered solid earnings growth in the third quarter, with professional earnings up 7.6% and residential earnings up 10.5%. I'll now touch on some of the key themes for the quarter. First is the robust and broad-based demand we continue to see across our markets worldwide. This has been driven by consumer and business confidence as well as customer investment priorities focused on outdoor environments. We continue to capitalize on these drivers with our commitment to investing in new product developments, our best-in-class distribution, and our talented teams. Second, the continued escalation of global supply chain and inflationary challenges. This included component availability constraints as well as material, freight, and wage-related cost headwinds. Our operations team took extraordinary steps to enable us to source and produce as effectively as possible in this incredibly dynamic environment. We also continued to execute on our productivity and synergy initiatives, demonstrated disciplined expense control, and implemented market-aligned pricing actions. Regardless of how long these pressures persist, we remain focused on managing the factors within our control. Third, in line with general economic trends, we saw an increasingly challenging labor market, including wage pressures and workforce availability limitations in some of our manufacturing locations. Across the enterprise, we have talented and dedicated teams committed to serving our customers. We're focused on having the workforce and other resources in place to put ourselves in the best position to meet demand and deliver our products to the right places at the right time. I want to extend my personal thanks to our team and channel partners for their unwavering commitment to serve our customers while navigating this extremely challenging operating environment. Our innovative product portfolio, outstanding team, and deep relationships with our channel partners and end customers set us apart and position us well for long-term growth. We have the financial capacity to invest in the future, and we continue to allocate capital to best drive value for all stakeholders. This fiscal year, we've made strategic investments in key technologies both organically and through acquisitions to advance our priority areas of alternative power, smart, connected, and autonomous. Our healthy cash flow also has allowed us to return capital to shareholders while maintaining ample liquidity. Looking ahead, we will continue to execute against our enterprise strategic priorities of accelerating profitable growth driving productivity and operational excellence, and empowering people. I'll discuss our outlook further following Renee's more detailed review of our financial results. With that, I will now turn the call over to Renee.