Toro Company (The)

Good day, ladies and gentlemen, and welcome to the Toro Company's first quarter earnings conference call. My name is Gigi, and I'll be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session toward the end of today's conference. If at any time during the call you require assistance, please press star followed by zero, and a 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 to this call. With that, I will now turn the call over to Rick.

Thanks, Julie, and good morning, everyone. We began fiscal 2022 by delivering solid first quarter results in what remains a very dynamic operating environment. We achieved 6.8% top-line net sales growth for the quarter over a strong first quarter comparison last year. Our teams intensely managed the supply chain and our manufacturing operations, working to achieve the best possible outcomes. We actively managed production in partnership with our suppliers and aligned our manufacturing schedules based on material availability. The supply chain challenges, along with the surge of the Omicron variant, impacted our volume and mix within the quarter. However, as the quarter progressed, we did start to see some improvement in manufacturing efficiencies. We do expect the current supply chain dynamics to resolve over time and are beginning to see some signs of improvement. Obviously, we also acknowledge the recent geopolitical events and are closely monitoring those developments and any potential impacts. On our last earnings call, we communicated profitability expectations for Q1 in reference to sequential improvements over Q4 of last year. As a reminder, in Q1 of last year, we experienced an acceleration of demand without the current magnitude of inflationary pressures and product availability constraints. With that in mind, we performed in line with our expectations by delivering sequential improvement in gross margin this quarter over Q4 of last year. Our team executed well operationally, achieving productivity benefits and increased net price realization. Importantly, demand for our innovative products has remained robust across our businesses. We have strengthened our market leadership by remaining steadfast in our commitment to serving our customers well. I'd now like to highlight some key advances in two major areas of strategic priorities. First, we continue to bring our technology advancements to market to accelerate profitable growth over the long term. We introduce new products in each of our key technology areas of battery electric, smart connected, and autonomous solutions. Starting with battery, we have a growing suite of electric products for both residential and professional customers. These products are carefully designed to meet the promise of our brands by offering superior performance and durability supported by an extensive customer care network. The latest addition is our new all-electric ultra buggy for material handling in our specialty construction business, which was unveiled at the World of Concrete show in January. The Ultra Buggy delivers eight hours of continuous runtime by leveraging the same hypercell battery system as our Revolution Series commercial-grade mowers. Along with our eDingo compact utility loader, the Ultra Buggy also provides a zero-emission solution for indoor construction and renovation applications. Speaking of the Revolution Series, initial reservations for these new battery-powered commercial-grade stand-on and zero-turn riding mowers have exceeded our expectations. The Revolution product line brings together the best of both worlds with the productivity, durability, and expansive support network that customers expect from us, along with the next-generation benefits of zero emissions, noise reduction, and all-day runtime on a single charge. Moving to smart solutions, we just launched our new Workman UTX line of commercial-grade utility vehicles. These all-season vehicles have a broad range of applications across our markets and feature a proprietary ground speed governing system. This patented system allows for the perfect amounts of power for any job, no matter the desired speed. This feature also enables lower fuel consumption and noise levels. The UTX line was designed with versatility and durability in mind. It offers 2,000 pounds of towing capacity, 25% more cargo capacity than the competition, and leverages our broad product offerings with an integrated BOSS snowplow mount. Another advancement in smart solutions that drives productivity and helps with skilled labor challenges is our new Procore 648S aerator. This machine is the gold standard for greens aeration. It features an innovative electronic drive control, which can maintain more consistent hole spacing on sloping terrain and allows for increased speed on turnarounds. This machine can also minimize turf disruption, reducing the need to make manual repairs. In the area of autonomous, we have showcased several prototypes over the past few years and have invested in technology accelerating acquisitions. We intend to be a market leader in providing autonomous solutions as evidenced by our introduction of our first autonomous fairway mower at the recent GCSAA golf industry show. This product addresses the issue of labor shortages for our golf course customers while enabling increased productivity and more consistent results. As technology evolves, we intend to leverage our battery, smart connected, and autonomous product offerings across our broad portfolio. We are excited about the positive reactions to our new and innovative applications as we further advance our technology leadership. The second strategic area I'd like to highlight is our effective capital allocation. We continue to prudently deploy capital this quarter with the acquisition of the Intimidator Group in January. This acquisition positions us to be an even stronger player in the large and rapidly growing zero-turn mower market, enhancing customer reach and geographic strength. We're excited about the addition of the complementary line of Spartan mowers, which are known for their exceptional performance, features, durability, and distinctive styling. The acquisition also provides us with a larger footprint to further leverage our technology investments, as well as procurement and manufacturing efficiencies. We are confident the combined efforts of our teams will enhance our long-term growth by providing unparalleled products, technologies, and services to our customers. In summary, we made great strides in advancing key strategic areas this quarter. Our entire organization continued to demonstrate creativity, perseverance, and sound judgment as we navigated the challenges and opportunities in the current global environment. As a result, we continue to build our business for sustainable and profitable long-term growth and drove value for all stakeholders. With that, I will turn the call over to Renee for a more detailed review of our financial results for the quarter.