Toro's Q1 Top-Line Lags Street View, Notes Margin Pressure

Toro Co TTC reported first-quarter FY22 sales growth of 6.8% year-over-year to $932.65 million, missing the consensus of $967.83 million.
Adjusted EPS was $0.66, beating the consensus of $0.62.
Sales by segments: Professional $672.89 million (+3.5% Y/Y), and Residential $255.4 million (+17.3% Y/Y).
Operating earnings reduced by 35.2% Y/Y to $91.63 million, and margin declined by 640 bps to 9.8%
Gross margin contracted by 390 bps to 32.2%, reflecting increased inflationary pressures and product availability constraints.
SG&A expense as a percentage of net sales 22.4% versus 19.9% a year ago.
Toro's cash used in operating activities was $90.04 million, compared to cash generated $95.03 million a year ago. Adjusted free cash outflow was $101.95 million.
The company held cash and equivalents of $192.96 million as of January 28, 2022.
FY22 Outlook: Toro raised its FY22 net sales guidance to incorporate the Intimidator Group acquisition. The company expects net sales growth of 12% to 14% (prior expectation of 8% - 10%).
Toro holds on to the adjusted EPS outlook of $3.90 - $4.10 versus the consensus of $3.97.
Price Action: TTC shares traded lower by 2.12% at $94.73 on the last check Thursday.

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