Toro Company (The)

Ladies and gentlemen, thank you for standing by and welcome to the Toro Company Fiscal Second Quarter 2022 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 the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the call over to your host, Julie Karikas, Treasurer and Senior Managing Director, Global Tax and Investor Relations. You may begin.

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. The Toro Company has a long history of consistently delivering financial results in line with our expectations, and this quarter was no exception. For the second quarter, we drove 8.7% top line net sales growth, and that was on top of our strong 23.6% growth in the second quarter of fiscal 2021. Our top line growth was driven by net price realization, continued strong demand for our innovative products, and our ability to produce in what remains a highly dynamic operating environment. We continue to see broad-based demand across our professional businesses. We also saw solid demand in our residential segment for zero-term riding mowers, although the late spring impacted retail demand for other products. Importantly, we saw areas of incremental improvement in our supply chain. On our last call, we indicated that second quarter adjusted gross margin would be similar to our first quarter. Our team executed well and delivered a 30 basis point sequential improvement in adjusted gross margin compared to Q1. We also reported a 390 basis point sequential improvement in adjusted operating earnings margin for the second quarter as we continued to drive margins toward historic levels. Over the past couple of years, our employees and channel partners have been operating in what has been one of the most dynamic environments that many of us have ever seen. Our team has been creative, resilient, and steadfast in working to optimize the factors within our control and serve our customers well while taking care of one another. As a result of the actions our team has taken to improve our near and long-term performance, we are increasingly confident in our outlook for the fiscal year. Therefore, we are raising both our sales and earnings per share guidance for fiscal 2022. Renee will provide more insight into our improved outlook in just a few minutes. Our market leadership is underpinned by a foundation of long-term caring relationships, which are central to our purpose of helping customers enrich the beauty, productivity, and sustainability of the land. A few highlights since our last call demonstrate our dedication to this purpose. In March, Singapore's world-renowned Sentosa Golf Club announced a 10-year partnership with the Toro Company and our local distributor, Jebson & Jessen. With its pledge to become the world's first carbon-neutral golf club, Sentosa cited the importance of working with a partner who not only shares a commitment to the environment, but also supports their mission to deliver a world-class playing experience. In April, we celebrated our acquisition of the Intimidator Group with state and community leaders at our facility in Batesville, Arkansas. The Intimidator Team shares our values and is passionate about serving customers, supporting the community, and doing business the right way. This acquisition represents an incredible opportunity to share resources and technology to expand product lines and geographic reach. And importantly, we're doing so in the large and growing zero-turn mower space. The integration is off to a great start, and we believe the combination of our teams will drive value for all stakeholders. Throughout the quarter, we kept our focus on our strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people. With this focus, we delivered near-term results while also capitalizing on long-term opportunities supported by our disciplined capital allocation and strong balance sheet. In our manufacturing facilities, we are seeing the benefits of lean principles and are continuing to invest in automation and capacity. We're improving our operations for enhanced resiliency, flexibility, and agility and are prepared to emerge from this dynamic period as an even more productive organization. I will now turn the call over to Renee for a more detailed review of our second quarter financial results.