Toro Company Reports Disappointing Q3 Results Amid Falling Demand

Key Takeaways

• Toro Company missed third-quarter earnings and revenue estimates as both homeowners and businesses pulled back on purchases.
• The maker of lawn mowers and snowblowers also reduced its full-year profit and sales forecasts.
• CEO Richard Olsen said the results were impacted by macroeconomic pressures.

Toro Company (TTC) shares sank Thursday as the manufacturer of lawn mowers and snowblowers reported worse-than-expected results and guidance on falling demand for its products amid what Chief Executive Officer (CEO) Richard Olson called a “very dynamic environment.”

The company posted fiscal 2024 third-quarter earnings per share (EPS) of $1.14, with revenue rising 6.9% year-over-year to $1.16 billion. Both were short of consensus estimates of analysts compiled by Visible Alpha.

Sales at the Professional segment fell 1.7% to $880.9 million, “primarily driven by lower shipments of snow and ice management products, lawn care equipment, and compact utility loaders.” Sales jumped 52.6% to $267.5 million at its Residential division, mostly the result of higher shipments to its mass channel.

Toro ‘Saw Increased Caution’ From Customers

Olson said the company “saw increased caution from homeowners and lawn care dealers as summer progressed due to macro factors, which resulted in lower-than-expected shipments of residential and professional lawn care products to our dealer channel.”

Toro now sees full-year net sales growth of about 1%, down from its previous outlook of a low-single-digit percentage gain. It anticipates adjusted EPS in a range of $4.15 to $4.20 versus the earlier $4.25 to $4.35. Both were less than analysts’ forecasts.

Shares of Toro Company sank 10% to $81.78 in late-morning trading Thursday. They are down about 15% this year.

Overall, Toro Company’s disappointing third-quarter results and lowered forecasts reflect the challenges it faces in a rapidly changing market. The company’s performance was impacted by a decline in demand from both homeowners and businesses, leading to lower shipments of its lawn care products.

According to CEO Richard Olson, the cautious approach taken by customers can be attributed to macroeconomic pressures. As the summer progressed, homeowners and lawn care dealers became more hesitant to make purchases, resulting in lower-than-expected sales for Toro Company.

The company’s Professional segment, which includes snow and ice management products, lawn care equipment, and compact utility loaders, experienced a decline in sales of 1.7%. On the other hand, the Residential division saw a significant increase in sales of 52.6%, primarily due to higher shipments to its mass channel.

In response to the challenging market conditions, Toro Company has revised its full-year sales growth outlook from a low-single-digit percentage gain to approximately 1%. Additionally, the company has adjusted its EPS guidance to a range of $4.15 to $4.20, down from the previous range of $4.25 to $4.35.

Investors reacted negatively to the news, causing Toro Company’s shares to drop by 10% in late-morning trading on Thursday. The stock has experienced a decline of about 15% so far this year.

Looking ahead, Toro Company will need to navigate the ongoing macroeconomic pressures and adapt to changing consumer preferences to regain momentum. The company may need to explore new strategies to attract customers and drive sales, such as introducing innovative products or expanding into new markets.

Despite the current challenges, Toro Company remains a well-established player in the lawn care industry. With its long history and reputation for quality products, the company has the potential to rebound and regain investor confidence in the future.

However, it will be crucial for Toro Company to closely monitor market trends and consumer behavior to stay ahead of the competition. By staying agile and responsive to customer needs, the company can position itself for long-term success in the ever-evolving lawn care market.

In conclusion, Toro Company’s disappointing third-quarter results highlight the impact of falling demand on its business. The company’s revised forecasts reflect the cautious approach taken by customers and the challenging macroeconomic environment. As Toro Company navigates these challenges, it will be important for the company to adapt and innovate to regain momentum and drive future growth.

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