TORO CO

Executive Summary

Our fiscal 2024 results included the following items of significance that are provided in summary format here and described in greater detail throughout the "Results of Operations," "Business Segments," and "Financial Position" sections:

•Consolidated net sales for fiscal 2024 were $4,583.8 million, an increase of 0.7 percent compared to $4,553.2 million in fiscal 2023.

•Professional segment net sales for fiscal 2024 were $3,556.9 million, a decrease of 3.2 percent compared to $3,674.6 million in fiscal 2023.

•Residential segment net sales for fiscal 2024 were $998.3 million, an increase of 16.9 percent compared to $854.2 million in fiscal 2023.

•Gross margin was 33.8 percent in fiscal 2024, a decrease of 80 basis points compared to 34.6 percent in fiscal 2023.

•Adjusted gross margin was 33.9 percent in fiscal 2024, a decrease of 80 basis points compared to 34.7 percent in fiscal 2023.

•SG&A expense as a percentage of net sales in fiscal 2024 was 22.2 percent, an increase of 40 basis points compared to 21.8 percent in fiscal 2023.

•Net earnings for fiscal 2024 were $418.9 million, or $4.01 per diluted share, compared to $329.7 million, or $3.13 per diluted share, in fiscal 2023.

•Adjusted net earnings for fiscal 2024 were $435.2 million, or $4.17 per diluted share, compared to $443.5 million, or $4.21 per diluted share, in fiscal 2023.

•Field inventory was higher as of the end of fiscal 2024 compared to the end of fiscal 2023, primarily due to increased shipments of golf and grounds and construction products driven by improved manufacturing output and increased shipments of lawn care equipment to our mass channel partners, partially offset by lower shipments of snow and ice management products and reductions in dealer field inventories of lawn care equipment.

•Our order backlog represents unfulfilled customer orders at a point in time. Our order backlog (including shipments beyond 12 months) decreased $0.8 billion to $1.2 billion as of October 31, 2024 from $2.0 billion as of October 31, 2023, primarily driven by improved manufacturing output. Our order backlog remains significantly elevated over what the company would consider normal, due to demand for golf and grounds and underground construction products continuing to outpace production of such products.

We continued our history of paying quarterly cash dividends throughout fiscal 2024 and increased our fiscal 2024 quarterly cash dividend by 5.9 percent to $0.36 per share compared to $0.34 per share paid in fiscal 2023. We also repurchased shares of our common stock under our share repurchase program, thereby reducing our total shares outstanding. As a result of the combination of quarterly cash dividends and share repurchases, we returned $395.0 million of cash to our shareholders during fiscal 2024. As of October 31, 2024, we had a strong liquidity profile with available liquidity of $1,096.8 million, consisting of cash and cash equivalents of $199.5 million and availability under our revolving credit facility of $897.3 million.

AMP Initiative

In the first quarter of fiscal 2024, we launched a significant productivity initiative named AMP, which is a multi-year initiative intended to result in annualized cost savings of more than $100 million by fiscal 2027, driven by sustainable supply-base, design-to-value, route-to-market, and operational efficiency transformation. We expect to reinvest a portion of the savings from this initiative to drive further innovation and growth. We have recognized $3.8 million of cost savings as of October 31, 2024, which amounts to an estimated $14.5 million of annualized cost savings. Refer to the section titled "Non-GAAP Financial Measures" for information about the productivity initiative charges incurred to generate these savings.