Toro's Q1 Sales Miss Expectations, Weighed Down by Material Costs and Promotions

The Toro Company TTC shares are trading lower after the company reported first-quarter fiscal 2025 results.

The quarterly sales decreased 1% year-over-year to $995 million, missing the consensus of $1.005 billion.

Residential segment sales fell 8.0% Y/Y to $221.0 million, due to lower shipments of snow and portable power products, the Pope Products divestiture, and higher promotions. Segment earnings declined to $17.2 million from $23.5 million, impacted by higher material, manufacturing, and freight costs, along with increased promotions and a less favorable product mix.

Professional segment sales increased 1.6% Y/Y to $768.8 million, driven by higher shipments of golf and grounds products, zero-turn mowers, and net price realization. Segment earnings rose to $127.2 million from $112.8 million (16.5% of sales vs. 14.9% last year), fueled by net sales leverage, product mix, and productivity gains.

Adjusted gross margin for the quarter decreased to 34.1% from 34.4% last year, impacted by higher material and manufacturing costs, along with increased AMP productivity initiative charges.

Adjusted operating margin for the quarter was 9.4%, up from 9.2% in the same period last year. As of January 31, 2025, cash and equivalents stood at $171.3 million.

Adjusted EPS of $0.65 (+2% Y/Y), beating the consensus of $0.63.

Richard M. Olson, chairman and chief executive officer said, ”During the quarter, we also returned $100 million to shareholders through share repurchases, reflecting our improved cash flow and confidence in our ability to deliver positive results in fiscal 2025 and beyond.”

FY25 Outlook: Toro expects reaffirmed net sales growth of 0% -1 % and adjusted EPS of $4.25 – $4.40 versus the $4.32 estimate.

Olson added, “We expect dealer field inventories for our lawn care and snow and ice management businesses to be positioned better compared to last year as we head into the upcoming turf season and second half 2025 snow pre-season.”

”We recognize the heightened level of uncertainty affecting the macro environment, including a decline in consumer confidence and rapidly evolving trade policy.”

”We’ve delivered $64 million in run-rate cost savings to-date, and are on track to deliver $100 million by fiscal 2027, a portion of which we intend to prudently reinvest to drive further innovation and growth,”

Investors can gain exposure to the stock via Invesco Water Resources ETF PHO and Neuberger Berman ETF Trust Neuberger Berman Small-Mid Cap ETF NBSM.

Price Action: TTC shares are down 3.08% at $75.61 in early trading Thursday at the last check.

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