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BLOOMINGTON, Minn.--(BUSINESS WIRE)--Mar 9, 2023--
The Toro Company (NYSE: TTC) today reported results for its fiscal first-quarter ended February 3, 2023.
“We started fiscal 2023 with great momentum, and achieved record results for the first quarter,” said Richard M. Olson, chairman and chief executive officer. “We delivered top-line growth in both segments as demand for our innovative products remained strong, especially in key professional markets. Our dedicated team executed with their hallmark discipline, while keeping a sharp focus on serving our customers. This discipline, along with an improved supply chain, drove manufacturing efficiencies and profitability gains across the enterprise."
FIRST-QUARTER FISCAL 2023 FINANCIAL HIGHLIGHTS
|
| Reported |
| Adjusted* | ||||||||||||||
(dollars in millions, except per share data) |
| FY23 Q1 |
| FY22 Q1 |
| % Change |
| FY23 Q1 |
| FY22 Q1 |
| % Change | ||||||
Net Sales |
| $ | 1,148.8 |
| $ | 932.7 |
| 23 | % |
| $ | 1,148.8 |
| $ | 932.7 |
| 23 | % |
Net Earnings |
| $ | 106.9 |
| $ | 69.5 |
| 54 | % |
| $ | 103.6 |
| $ | 69.7 |
| 49 | % |
Diluted EPS |
| $ | 1.01 |
| $ | 0.66 |
| 53 | % |
| $ | 0.98 |
| $ | 0.66 |
| 49 | % |
FIRST-QUARTER FISCAL 2023 SEGMENT RESULTS
Professional Segment
Residential Segment
OPERATING RESULTS
Gross margin for the first quarter was 34.5%, compared with 32.2% for the same prior-year period. The increase in gross margin was primarily due to net price realization and productivity improvements, partially offset by higher material, freight, and manufacturing costs, as well as the addition of the Intimidator Group at a lower initial gross margin than the company average.
SG&A expense as a percentage of net sales for the first quarter was 22.6%, compared with 22.4% in the prior-year period. The increase was due to higher warranty costs in certain of our professional segment businesses, partially offset by net sales leverage.
Operating earnings as a percentage of net sales were 11.9% for the first quarter, compared with 9.8% in the same prior-year period. *Adjusted operating earnings as a percentage of net sales for the first quarter were 11.9%, compared with 9.9% in the same prior-year period.
Interest expense was $14.1 million for the first quarter, up $7.1 million. The increase was driven by incremental borrowing to fund the Intimidator Group acquisition, and higher average interest rates.
The reported effective tax rate for the first quarter was 18.6% compared with 20.2% in fiscal 2022, primarily driven by higher tax benefits recorded as excess tax deductions for stock compensation in the current-year period. The *adjusted effective tax rate for the first quarter was 21.4% compared with 20.9% in fiscal 2022.
OUTLOOK
"Our momentum continues to be supported by the exceptional demand and substantial order backlog for products in key professional end markets, as well as the expected benefits from our pricing and productivity initiatives,” concluded Olson. “Importantly, we anticipate continued improvements in the supply chain, which combined with our operational execution, position us to increase product availability and enhance profitability. In addition, we expect to benefit from our innovative product lineup, extensive service and support networks, and well-established market leadership, bolstered by the essential nature and regular replacement cycles of our products.
“Our team continues to operate with agility and resiliency, mindful of the current macroeconomic environment and guided by our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people. We are prioritizing investments in transformational technologies that can be leveraged across our broad portfolio, to promote the acceleration of new product development and capitalize on long-term growth opportunities. These investments, along with our trusted brands and outstanding team of employees and channel partners, are expected to strengthen our market leadership now and into the future, and drive value for all stakeholders.”
For fiscal 2023, management continues to expect net sales growth in the range of 7% to 10% and *adjusted diluted EPS in the range of $4.70 to $4.90. The estimated *adjusted diluted EPS range excludes the tax benefits recorded as excess tax deductions for stock compensation. The company's guidance is based on current visibility in this evolving and dynamic macro environment, and reflects expectations for strong demand across key professional markets, normalized seasonal demand patterns for residential and landscape contractor solutions, and continued operational execution. This guidance also assumes steady supply chain improvement throughout the year, with a return to a more typical distribution of quarterly sales.
*Non-GAAP financial measure. Please refer to the “Use of Non-GAAP Financial Information” for details regarding these measures, as well as the tables provided for a reconciliation of historical non-GAAP financial measures to the most comparable GAAP measures.
LIVE CONFERENCE CALL
March 9, 2023 at 10:00 a.m. CST
www.thetorocompany.com/invest
The Toro Company will conduct its earnings call and webcast for investors beginning at 10:00 a.m. CST on March 9, 2023. The webcast will be available at www.thetorocompany.com/invest. Webcast participants will need to complete a brief registration form and should allocate extra time before the webcast begins to register and, if necessary, install audio software.
About The Toro Company
The Toro Company (NYSE: TTC) is a leading worldwide provider of innovative solutions for the outdoor environment including turf and landscape maintenance, snow and ice management, underground utility construction, rental and specialty construction, and irrigation and outdoor lighting solutions. With net sales of $4.5 billion in fiscal 2022, The Toro Company’s global presence extends to more than 125 countries through a family of brands that includes Toro, Ditch Witch, Exmark, Spartan Mowers, BOSS Snowplow, Ventrac, American Augers, Trencor, Pope, Subsite Electronics, HammerHead, Radius HDD, Perrot, Hayter, Unique Lighting Systems, Irritrol, and Lawn-Boy. Through constant innovation and caring relationships built on trust and integrity, The Toro Company and its family of brands have built a legacy of excellence by helping customers work on golf courses, sports fields, construction sites, public green spaces, commercial and residential properties and agricultural operations. For more information, visit www.thetorocompany.com.
Use of Non-GAAP Financial Information
This press release and our related earnings call reference certain non-GAAP financial measures, which are not calculated or presented in accordance with U.S. GAAP, as information supplemental and in addition to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. The non-GAAP financial measures included within this press release and our related earnings call that are utilized as measures of our operating performance consist of gross profit, gross margin, operating earnings, earnings before income taxes, net earnings, diluted EPS, and the effective tax rate, each as adjusted. The non-GAAP financial measures included within this press release and our related earnings call that are utilized as measures of our liquidity consist of free cash flow and free cash flow conversion percentage.
The Toro Company uses these non-GAAP financial measures in making operating decisions and assessing liquidity because it believes these non-GAAP financial measures provide meaningful supplemental information regarding core operational performance and cash flows, as a measure of the company's liquidity, and provide the company with a better understanding of how to allocate resources to both ongoing and prospective business initiatives. Additionally, these non-GAAP financial measures facilitate the company's internal comparisons for both historical operating results and competitors' operating results by factoring out potential differences caused by charges and benefits not related to its regular, ongoing business, including, without limitation, certain non-cash, large, and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. The company believes that these non-GAAP financial measures, when considered in conjunction with the financial measures prepared in accordance with U.S. GAAP, provide investors with useful supplemental financial information to better understand its core operational performance and cash flows.
Reconciliations of historical non-GAAP financial measures to the most comparable U.S. GAAP financial measures are included in the financial tables contained in this press release. These non-GAAP financial measures, however, should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures included within this press release and the company’s related earnings call. These non-GAAP financial measures may differ from similar measures used by other companies.
The Toro Company does not provide a quantitative reconciliation of the company’s projected range for adjusted diluted EPS for fiscal 2023 to diluted EPS, which is the most directly comparable GAAP measure, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The company’s adjusted diluted EPS guidance for fiscal 2023 excludes certain items that are inherently uncertain and difficult to predict, including certain non-cash, large and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. Due to the uncertainty of the amount or timing of these future excluded items, management does not forecast them for internal use and therefore cannot create a quantitative adjusted diluted EPS for fiscal 2023 to diluted EPS reconciliation without unreasonable efforts. A quantitative reconciliation of adjusted diluted EPS for fiscal 2023 to diluted EPS would imply a degree of precision and certainty as to these future items that does not exist and could be confusing to investors. From a qualitative perspective, it is anticipated that the differences between adjusted diluted EPS for fiscal 2023 to diluted EPS will consist of items similar to those described in the financial tables later in this release, including, for example and without limitation, certain non-cash, large, and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. The timing and amount of any of these excluded items could significantly impact the company’s diluted EPS for a particular period.
Forward-Looking Statements
This news release contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current assumptions and expectations of future events, and often can be identified by words such as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,” “forecast,” “goal,” “optimistic,” “encourage,” “anticipate,” “continue,” “plan,” “estimate,” “project,” “target,” “improve,” “believe,” “become,” “should,” “could,” “will,” “would,” “possible,” “promise,” “may,” “likely,” “intend,” “can,” “seek,” “pursue,” “potential,” “pro forma,” variations of such words or the negative thereof, and similar expressions or future dates. Forward-looking statements involve risks and uncertainties that could cause actual events and results to differ materially from those projected or implied. Forward-looking statements in this release include the company’s fiscal 2023 financial guidance, and expectations for strong demand across key professional markets, normalized seasonal demand patterns for residential and landscape contractor solutions and continued operational execution, as well as supply chain improvement throughout the year, with a return to a more typical distribution of quarterly sales. Particular risks and uncertainties that may affect the company’s operating results or financial position include: adverse worldwide economic conditions, including inflationary pressures; disruption at or in proximity to its facilities or in its manufacturing or other operations, or those in its distribution channel customers, mass retailers or home centers where its products are sold, or suppliers; fluctuations in the cost and availability of commodities, components, parts, and accessories, including steel, engines, hydraulics and resins; COVID-19 related factors, risks and challenges; the effect of abnormal weather patterns; the effect of natural disasters, social unrest, war and global pandemics; the level of growth or contraction in its key markets; customer, government and municipal revenue, budget, spending levels and cash conservation efforts; loss of any substantial customer; inventory adjustments or changes in purchasing patterns by customers; the company’s ability to develop and achieve market acceptance for new products; increased competition; the risks attendant to international relations, operations and markets; foreign currency exchange rate fluctuations; financial viability of and/or relationships with the company’s distribution channel partners; risks associated with acquisitions and dispositions, including the company's acquisition of Intimidator Group; impairment of goodwill or other intangible assets; impacts of any restructuring activities; management of alliances or joint ventures, including Red Iron Acceptance, LLC; impact of laws, regulations and standards, consumer product safety, accounting, taxation, trade, tariffs and/or antidumping and countervailing duties petitions, healthcare, and environmental, health and safety matters; unforeseen product quality problems; loss of or changes in executive management or key employees; the occurrence of litigation or claims, including those involving intellectual property or product liability matters; impact of increased scrutiny on its environmental, social, and governance practices; and other risks and uncertainties described in the company’s most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.
(Financial tables follow)
THE TORO COMPANY AND SUBSIDIARIES | ||||||||
Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||
(Dollars and shares in thousands, except per-share data) | ||||||||
|
| Three Months Ended | ||||||
|
| February 3, |
| January 28, | ||||
Net sales |
| $ | 1,148,840 |
|
| $ | 932,650 |
|
Cost of sales |
|
| 752,916 |
|
|
| 632,174 |
|
Gross profit |
|
| 395,924 |
|
|
| 300,476 |
|
Gross margin |
|
| 34.5 | % |
|
| 32.2 | % |
Selling, general and administrative expense |
|
| 259,497 |
|
|
| 208,850 |
|
Operating earnings |
|
| 136,427 |
|
|
| 91,626 |
|
Interest expense |
|
| (14,124 | ) |
|
| (7,013 | ) |
Other income, net |
|
| 9,011 |
|
|
| 2,534 |
|
Earnings before income taxes |
|
| 131,314 |
|
|
| 87,147 |
|
Provision for income taxes |
|
| 24,454 |
|
|
| 17,637 |
|
Net earnings |
| $ | 106,860 |
|
| $ | 69,510 |
|
|
|
|
|
| ||||
Basic net earnings per share of common stock |
| $ | 1.02 |
|
| $ | 0.66 |
|
|
|
|
|
| ||||
Diluted net earnings per share of common stock |
| $ | 1.01 |
|
| $ | 0.66 |
|
|
|
|
|
| ||||
Weighted-average number of shares of common stock outstanding — Basic |
|
| 104,501 |
|
|
| 105,037 |
|
|
|
|
|
| ||||
Weighted-average number of shares of common stock outstanding — Diluted |
|
| 105,577 |
|
|
| 106,048 |
|
Segment Data (Unaudited) | ||||||
(Dollars in thousands) | ||||||
|
| Three Months Ended | ||||
Segment net sales |
| February 3, |
| January 28, | ||
Professional |
| $ | 880,660 |
| $ | 672,885 |
Residential |
|
| 264,615 |
|
| 255,402 |
Other |
|
| 3,565 |
|
| 4,363 |
Total net sales* |
| $ | 1,148,840 |
| $ | 932,650 |
|
|
|
|
| ||
*Includes international net sales of: |
| $ | 245,337 |
| $ | 194,986 |
|
| Three Months Ended | ||||||
Segment earnings (loss) before income taxes |
| February 3, |
| January 28, | ||||
Professional |
| $ | 144,076 |
|
| $ | 93,272 |
|
Residential |
|
| 37,832 |
|
|
| 31,760 |
|
Other |
|
| (50,594 | ) |
|
| (37,885 | ) |
Total segment earnings before income taxes |
| $ | 131,314 |
|
| $ | 87,147 |
|
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||||
(Dollars in thousands) | ||||||||||||
|
| February 3, |
| January 28, |
| October 31, | ||||||
ASSETS |
|
|
|
|
|
| ||||||
Cash and cash equivalents |
| $ | 174,037 |
|
| $ | 192,959 |
|
| $ | 188,250 |
|
Receivables, net |
|
| 377,262 |
|
|
| 366,270 |
|
|
| 332,713 |
|
Inventories, net |
|
| 1,131,438 |
|
|
| 832,072 |
|
|
| 1,051,109 |
|
Prepaid expenses and other current assets |
|
| 74,957 |
|
|
| 45,962 |
|
|
| 103,279 |
|
Total current assets |
|
| 1,757,694 |
|
|
| 1,437,263 |
|
|
| 1,675,351 |
|
|
|
|
|
|
|
| ||||||
Property, plant, and equipment, net |
|
| 584,147 |
|
|
| 507,549 |
|
|
| 571,661 |
|
Goodwill |
|
| 584,550 |
|
|
| 576,940 |
|
|
| 583,297 |
|
Other intangible assets, net |
|
| 577,064 |
|
|
| 600,797 |
|
|
| 585,832 |
|
Right-of-use assets |
|
| 74,573 |
|
|
| 78,306 |
|
|
| 76,121 |
|
Investment in finance affiliate |
|
| 45,726 |
|
|
| 24,119 |
|
|
| 39,349 |
|
Deferred income taxes |
|
| 11,747 |
|
|
| 3,938 |
|
|
| 5,310 |
|
Other assets |
|
| 19,445 |
|
|
| 24,133 |
|
|
| 19,077 |
|
Total assets |
| $ | 3,654,946 |
|
| $ | 3,253,045 |
|
| $ | 3,555,998 |
|
|
|
|
|
|
|
| ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
| ||||||
Current portion of long-term debt |
| $ | — |
|
| $ | 100,000 |
|
| $ | — |
|
Accounts payable |
|
| 475,218 |
|
|
| 474,483 |
|
|
| 578,624 |
|
Accrued liabilities |
|
| 496,793 |
|
|
| 395,739 |
|
|
| 469,242 |
|
Short-term lease liabilities |
|
| 15,962 |
|
|
| 15,842 |
|
|
| 15,747 |
|
Total current liabilities |
|
| 987,973 |
|
|
| 986,064 |
|
|
| 1,063,613 |
|
|
|
|
|
|
|
| ||||||
Long-term debt, less current portion |
|
| 1,091,015 |
|
|
| 991,354 |
|
|
| 990,768 |
|
Long-term lease liabilities |
|
| 60,680 |
|
|
| 65,760 |
|
|
| 63,604 |
|
Deferred income taxes |
|
| 31,444 |
|
|
| 50,382 |
|
|
| 44,272 |
|
Other long-term liabilities |
|
| 39,663 |
|
|
| 39,936 |
|
|
| 42,040 |
|
|
|
|
|
|
|
| ||||||
Stockholders’ equity: |
|
|
|
|
|
| ||||||
Preferred stock |
|
| — |
|
|
| — |
|
|
| — |
|
Common stock |
|
| 104,283 |
|
|
| 104,529 |
|
|
| 103,970 |
|
Retained earnings |
|
| 1,368,493 |
|
|
| 1,040,634 |
|
|
| 1,280,856 |
|
Accumulated other comprehensive loss |
|
| (28,605 | ) |
|
| (25,614 | ) |
|
| (33,125 | ) |
Total stockholders’ equity |
|
| 1,444,171 |
|
|
| 1,119,549 |
|
|
| 1,351,701 |
|
Total liabilities and stockholders’ equity |
| $ | 3,654,946 |
|
| $ | 3,253,045 |
|
| $ | 3,555,998 |
|
THE TORO COMPANY AND SUBSIDIARIES | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
(Dollars in thousands) | ||||||||
|
| Three Months Ended | ||||||
|
| February 3, |
| January 28, | ||||
Cash flows from operating activities: |
|
|
|
| ||||
Net earnings |
| $ | 106,860 |
|
| $ | 69,510 |
|
Adjustments to reconcile net earnings to net cash used in operating activities: |
|
|
|
| ||||
Non-cash income from finance affiliate |
|
| (3,809 | ) |
|
| (1,398 | ) |
Contributions to finance affiliate, net |
|
| (2,568 | ) |
|
| (2,050 | ) |
Depreciation of property, plant and equipment |
|
| 19,152 |
|
|
| 18,487 |
|
Amortization of other intangible assets |
|
| 9,129 |
|
|
| 6,456 |
|
Stock-based compensation expense |
|
| 5,224 |
|
|
| 5,225 |
|
Other |
|
| (5 | ) |
|
| 146 |
|
Changes in operating assets and liabilities, net of the effect of acquisitions: |
|
|
|
| ||||
Receivables, net |
|
| (42,495 | ) |
|
| (50,599 | ) |
Inventories, net |
|
| (76,769 | ) |
|
| (59,171 | ) |
Prepaid expenses and other assets |
|
| (1,588 | ) |
|
| (4,187 | ) |
Accounts payable, accrued liabilities, and other liabilities |
|
| (81,980 | ) |
|
| (72,462 | ) |
Net cash used in operating activities |
|
| (68,849 | ) |
|
| (90,043 | ) |
|
|
|
|
| ||||
Cash flows from investing activities: |
|
|
|
| ||||
Purchases of property, plant and equipment |
|
| (29,329 | ) |
|
| (11,903 | ) |
Proceeds from insurance claim |
|
| 7,114 |
|
|
| — |
|
Business combinations, net of cash acquired |
|
| — |
|
|
| (401,494 | ) |
Proceeds from asset disposals |
|
| 265 |
|
|
| 26 |
|
Net cash used in investing activities |
|
| (21,950 | ) |
|
| (413,371 | ) |
|
|
|
|
| ||||
Cash flows from financing activities: |
|
|
|
| ||||
Borrowings under debt arrangements |
|
| 170,000 |
|
|
| 400,000 |
|
Repayments under debt arrangements |
|
| (70,000 | ) |
|
| — |
|
Proceeds from exercise of stock options |
|
| 14,029 |
|
|
| 1,150 |
|
Payments of withholding taxes for stock awards |
|
| (2,647 | ) |
|
| (1,381 | ) |
Purchases of TTC common stock |
|
| — |
|
|
| (75,000 | ) |
Dividends paid on TTC common stock |
|
| (35,516 | ) |
|
| (31,469 | ) |
Other |
|
| (1,475 | ) |
|
| — |
|
Net cash provided by financing activities |
|
| 74,391 |
|
|
| 293,300 |
|
|
|
|
|
| ||||
Effect of exchange rates on cash and cash equivalents |
|
| 2,195 |
|
|
| (2,539 | ) |
|
|
|
|
| ||||
Net decrease in cash and cash equivalents |
|
| (14,213 | ) |
|
| (212,653 | ) |
Cash and cash equivalents as of the beginning of the fiscal period |
|
| 188,250 |
|
|
| 405,612 |
|
Cash and cash equivalents as of the end of the fiscal period |
| $ | 174,037 |
|
| $ | 192,959 |
|
THE TORO COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands, except per-share data)
The following table provides a reconciliation of the non-GAAP financial performance measures used in this press release and our related earnings call to the most directly comparable measures calculated and reported in accordance with U.S. GAAP for the three month periods ended February 3, 2023 and January 28, 2022:
|
| Three Months Ended | ||||||
|
| February 3, |
| January 28, | ||||
Gross profit |
| $ | 395,924 |
|
| $ | 300,476 |
|
Acquisition-related costs 1 |
|
| 225 |
|
|
| — |
|
Adjusted gross profit |
| $ | 396,149 |
|
| $ | 300,476 |
|
|
|
|
|
| ||||
Operating earnings |
| $ | 136,427 |
|
| $ | 91,626 |
|
Acquisition-related costs 1 |
|
| 447 |
|
|
| 1,016 |
|
Adjusted operating earnings |
| $ | 136,874 |
|
| $ | 92,642 |
|
|
|
|
|
| ||||
Operating earnings margin |
|
| 11.9 | % |
|
| 9.8 | % |
Acquisition-related costs 1 |
|
| — | % |
|
| 0.1 | % |
Adjusted operating earnings margin |
|
| 11.9 | % |
|
| 9.9 | % |
|
|
|
|
| ||||
Earnings before income taxes |
| $ | 131,314 |
|
| $ | 87,147 |
|
Acquisition-related costs 1 |
|
| 447 |
|
|
| 1,016 |
|
Adjusted earnings before income taxes |
| $ | 131,761 |
|
| $ | 88,163 |
|
|
|
|
|
| ||||
Net earnings |
| $ | 106,860 |
|
| $ | 69,510 |
|
Acquisition-related costs 1 |
|
| 351 |
|
|
| 804 |
|
Tax impact of stock-based compensation 2 |
|
| (3,605 | ) |
|
| (620 | ) |
Adjusted net earnings |
| $ | 103,606 |
|
| $ | 69,694 |
|
|
|
|
|
| ||||
Diluted EPS |
| $ | 1.01 |
|
| $ | 0.66 |
|
Acquisition-related costs 1 |
|
| — |
|
|
| 0.01 |
|
Tax impact of stock-based compensation 2 |
|
| (0.03 | ) |
|
| (0.01 | ) |
Adjusted diluted EPS |
| $ | 0.98 |
|
| $ | 0.66 |
|
|
|
|
|
| ||||
Effective tax rate |
|
| 18.6 | % |
|
| 20.2 | % |
Tax impact of stock-based compensation 2 |
|
| 2.8 | % |
|
| 0.7 | % |
Adjusted effective tax rate |
|
| 21.4 | % |
|
| 20.9 | % |
1 | On January 13, 2022, the company completed the acquisition of Intimidator. Acquisition-related costs for the three month period ended February 3, 2023 represent integration costs. Acquisition-related costs for the three month period ended January 28, 2022 represent transaction and integration costs incurred in connection with the acquisition. | |
2 | The accounting standards codification guidance governing employee stock-based compensation requires that any excess tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax benefits recorded as excess tax deductions for stock-based compensation during the three month periods ended February 3, 2023 and January 28, 2022. |
Reconciliation of Non-GAAP Liquidity Measures
The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment, net of proceeds from insurance claim. Free cash flow conversion percentage represents free cash flow as a percentage of net earnings. The company considers free cash flow and free cash flow conversion percentage to be non-GAAP liquidity measures that provide useful information to management and investors about the company's ability to convert net earnings into cash resources that can be used to pursue opportunities to enhance shareholder value, fund ongoing and prospective business initiatives, and strengthen the company's Consolidated Balance Sheets, after reinvesting in necessary capital expenditures required to maintain and grow the company's business.
The following table provides a reconciliation of non-GAAP free cash flow and free cash flow conversion percentage to net cash provided by operating activities, which is the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, for the three month periods ended February 3, 2023 and January 28, 2022:
|
| Three Months Ended | ||||||
(Dollars in thousands) |
| February 3, |
| January 28, | ||||
Net cash used in operating activities |
| $ | (68,849 | ) |
| $ | (90,043 | ) |
Less: Purchases of property, plant and equipment, net of proceeds from insurance claim |
|
| 22,215 |
|
|
| 11,903 |
|
Free cash flow |
|
| (91,064 | ) |
|
| (101,946 | ) |
Net earnings |
| $ | 106,860 |
|
| $ | 69,510 |
|
Free cash flow conversion percentage |
|
| (85.2 | )% |
|
| (146.7 | )% |
View source version on businesswire.com:https://www.businesswire.com/news/home/20230309005176/en/
CONTACT: Investor Relations
Jeremy Steffan
Director, Investor Relations
(952) 887-7962,jeremy.steffan@toro.comMedia Relations
Heather Hille
Managing Director, Corporate Affairs
(952) 887-8923,heather.hille@toro.com
KEYWORD: UNITED STATES NORTH AMERICA MINNESOTA
INDUSTRY KEYWORD: MACHINERY OTHER CONSTRUCTION & PROPERTY RESIDENTIAL BUILDING & REAL ESTATE AGRICULTURE COMMERCIAL BUILDING & REAL ESTATE NATURAL RESOURCES CONSTRUCTION & PROPERTY OTHER MANUFACTURING URBAN PLANNING BUILDING SYSTEMS LANDSCAPE MANUFACTURING
SOURCE: The Toro Company
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PUB: 03/09/2023 08:30 AM/DISC: 03/09/2023 08:31 AM
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