Toro Company (The)

Good day, ladies and gentlemen, and welcome to the Toro Company's four-year and fourth-quarter earnings conference call. My name is Victor, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. If at any time during the call you require assistance, please press star followed by 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, Julie Karikas, Treasurer and Senior Managing Director of Global Tax and Investor Relations. Please proceed, Ms. Karikas.

Thank you, and good morning, everyone. 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 this call. With that, I will now turn the call over to Rick.

Thanks, Julie, and good morning, everyone. We delivered record results for fiscal 2021 with full year net sales up over 17% and adjusted diluted earnings per share up nearly 20%. This was a year marked by robust demand in both our professional and residential segments. Of course, this past year will also be remembered for the inflationary pressures and unprecedented supply chain challenges that affected the global economy. In this environment, our entire organization executed extremely well as they collaborated with our channel partners to support the needs of our customers. During this dynamic year, we advanced our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people. First, we drove exciting advancements in technology. We continued to expand our no compromise battery and smart connected solutions. We were especially excited to launch our first commercial grade battery powered stand on and zero turn mowers at the GIE Plus Expo in October. We also showcased several autonomous prototypes at the show. The acquisitions of Turflinks and Left Hand Robotics along with our internal investments have accelerated our innovation pipeline and furthered our momentum in technology leadership. Second, our team demonstrated extraordinary creativity and resilience in this difficult operating environment. Our operations team adapted their production approach and employed new shipping strategies as they managed supply chain adversity. Our sales team implemented multiple in-year pricing adjustments and did so in a way that supported the long-term health of our business. And our entire team focused on mitigating cost headwinds with productivity and synergy initiatives and disciplined expense control. Many of the actions we took this year will provide enduring benefits. This includes the deeper integration of lean principles in our operations and the simplification of SKUs, as well as investments to increase capacity and automation in our plants. Third, we remained focused on all stakeholders. We kept the health and safety of our team in the forefront as we supported our customers and channel partners while delivering record net sales and earnings. We invested in future growth, returned capital to shareholders, and maintained ample liquidity. We also continued our legacy of giving back to the communities where we live and work. Turning now to the results by segment. For fiscal 2021, professional segment net sales were up 16% and earnings were up 19%, both on a year-over-year basis. We capitalized on robust global demand across our portfolio as business confidence increased and our customers looked to replace and upgrade their fleets. Residential segment, full year net sales topped $1 billion for the first time, up 23% year over year. This was on top of 24% growth in fiscal 2020. Earnings were up 7% on top of a 75% increase last year. Our actions to introduce innovative new products, refresh marketing, and expand distribution were key drivers of the excellent results. These actions also strengthened the Toro brand and have positioned us for continued growth. For the fourth quarter, professional segment net sales were up 14% year over year. This marked the third consecutive quarter of double-digit growth for this segment. Earnings were down 3% for the quarter compared with 75% growth in the fourth quarter of fiscal 2020. Residential segment net sales were up 20% for the quarter on top of 39% growth last year. Earnings were down 55% compared to robust 90% growth in the fourth quarter of fiscal 2020. The earnings decreases for both segments were primarily driven by cost inflation, which was partially offset by net price realization. For both professional and residential, there were two main themes in Q4, which were consistent with what we've seen in the past few quarters. First, robust and broad-based demand across our markets worldwide We capitalize on the demand with our innovative products, market leadership, and best-in-class distribution networks. Second, supply chain constraints, inflationary pressures, and labor challenges. While navigating these challenges, we kept our focus on getting products to our customers as efficiently and expeditiously as possible. Our team operated with the creativity and dedication that continues to be their hallmark. Our intense focus on customer service helped us exceed our guidance for the year, and it continues to set us apart and position us for long-term sustainable growth. I want to personally thank our outstanding team and channel partners for their determination in this extremely dynamic environment. We will continue to execute against our enterprise strategic priorities and invest in innovation as we carry our momentum into the next fiscal year. I'll discuss our outlook further following Renee's more detailed review of our financial results. With that, I will turn the call over to Renee.