Toro Company (The)

Good day, ladies and gentlemen, and welcome to the Toro Company's third quarter earnings conference call. My name is Lateef, 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. 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. Caracas.

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. In addition, we have introduced a quarterly earnings presentation as well as an updated general investor presentation, both of which are now available on our website. We hope you find these new materials helpful. On our call today are Rick Olson, Chairman and Chief Executive Officer, and Renee Peterson, Vice President and Chief Financial Officer. We also have Angie Drake, our newly promoted Vice President of Finance, and Jeremy Steffen, who recently joined our team as Director of Investor Relations. We begin with our customary forward-looking statement policy. During this call, we will make forward-looking statements regarding our plans and projections for the future. This includes estimates and assumptions regarding financial and operating results, as well as economic, technological, weather, market acceptance, acquisition related, and other factors that may impact our business and customers. You are all 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 and on our website in our investor presentations, as well as in our applicable SEC filings. 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. I'd like to start by congratulating Angie on her promotion and welcoming Jeremy to our investor relations team. Angie most recently served as vice president of our construction business and was previously the chief financial officer of Charles Machine Works. She's a proven leader with strong financial expertise and impressive experience in strategic planning and acquisitions. Her promotion is part of our succession planning for the Toro Company's finance leadership. Jeremy joins us with previous investor relations experience, along with roles of increasing responsibility across accounting and FP&A functions at several large publicly traded companies. We look forward to the many contributions they will make in their new leadership roles. Moving to our third quarter results, we continued to execute at a high level and build upon our long history of delivering financial performance in line with our expectations. We achieved record quarterly results driven by strong professional segment performance and margin improvements. Our third quarter net sales grew by 18.8%. while our adjusted diluted earnings per share grew by 29.3%, both on a year-over-year basis. We continue to see favorable demand for our innovative products along with incremental improvements in our supply chain and manufacturing efficiency. Our top line growth was driven by net price realization as well as our ability to produce in what remains a dynamic . Professional segment demand was robust and broad-based, and our team continued to focus on serving our customers well in this time of constrained supply. For our residential segments, demand was solid, moderating as expected and in line with more typical seasonal trends. Importantly, we achieved healthy single-digit growth in the residential segment, and that's on top of the higher base we've built with two years of double-digit growth. Turning to profitability as a percent of net sales, we grew our adjusted operating earnings 100 basis points year over year and 30 basis points sequentially from the second quarter of this year. These results underscore our team's resiliency, dedication, and ability to execute well. With this progress, we are raising our fiscal 2022 adjusted diluted earnings per share guidance for the second time this year. Renee will share more details on our guidance in a few minutes. Throughout the quarter, we remained focused on our strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people. As a result, we delivered strong performance in the near term while also setting ourselves up to capitalize on attractive long-term growth opportunities. This includes our integration of the Intimidator Group, which remains on track. Our teams are sharing resources and technology as we build our market leadership in the large and growing zero-turn mower space. We're excited about the publication of our latest corporate sustainability report. At the Toro Company, sustainability has long been ingrained in our purpose, actions, and growth strategies. It is core to how we invest in our people, serve our customers and communities, and compete and win in the right way. Our latest report outlines performance goals and specific targets aligned with our strategic priorities, including increasing battery and hybrid product sales, reducing absolute scope one and two greenhouse gas emissions, and increasing the number of women and racial and ethnic minorities in leadership positions. We are committed to doing our part in addressing today's global challenges while simultaneously strengthening our business. This includes developing next generation solutions such as our battery and hybrid technologies. We're designing no compromise products that help our customers reduce or eliminate exhaust emissions while also delivering exceptional performance and productivity. In July, our fully electric e-triflex greens mowers were used to prepare the greens for the 150th Open Championship at St. Andrews Golf Club. This supported the club's sustainability practices and it addressed their staffing challenges by allowing eight operators to perform the work previously done by 24. Equally important, these mowers created world-class playing conditions while providing a second-to-none experience for the operators. Our commitment to sustainability is also demonstrated in the way we partner with community and industry leaders. Recently we hosted our first Sustainability Lab, which is a forum we established to share ideas and facilitate increased collaboration between the Toro Company and urban park systems across North America. Through this initiative, We hope to gain a deeper understanding of how agencies and manufacturers can work together to better support sustainable solutions and best practices. These highlights are just two examples of the many ways we support our purpose of helping our customers enrich the beauty, productivity, and sustainability of the land. I will now turn the call over to Renee for a more detailed review of our third quarter financial results.