Why Outdoor Equipment Products Provider Toro Shares Are Surging Today

The Toro Co TTC shares are trading higher by around 8% after the company reported Q4 results and issued FY24 guidance.

The company reported a sales decline of 16% Y/Y to $983.2 million, beating the consensus of $973.7 million.

Richard M. Olson, chairman and chief executive officer said, "Demand for our innovative products was robust across much of our professional segment this year, with notable strength in our underground and specialty construction, and golf and grounds businesses." 

"This strength offset the sharp year-over-year reduction in homeowner demand and acceleration of channel destocking for residential and professional segment lawn care solutions, which was driven by a combination of weather and macro factors."

Sales by segments: Professional $828.9 million (-12.3% Y/Y), and Residential $148.4 million (-33.6% Y/Y).

Adjusted gross margin contracted to 33.6% from 34.1% a year ago. Adjusted operating margin declined to 10.1% from 12.9% the prior year.

Adjusted EPS of $0.71 (-36% Y/Y) surpassed the consensus of $0.56.

As of October 31, 2023, cash and equivalents stood at $193.1 million.

FY24 Outlook: Toro expects low-single-digit total company net sales growth adjusted EPS of $4.25-$4.35 (vs. consensus: $4.35).

Olson added, "As we enter the new fiscal year, we expect to benefit from the strength of our portfolio, a more stable supply chain and our new strategic partnership with Lowe's."

"...This focus aligns with our recent launch of a transformational productivity initiative we have named AMP, which stands for 'Amplifying Maximum Productivity.' We expect this multi-year initiative to result in annualized cost savings of more than $100 million by fiscal 2027, driven by sustainable supply-base, design-to-value, and route-to-market transformation."

Price Action: TTC shares are up 8.04% at $96.40 on the last check Wednesday.

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