Toro leadership presented a deep dive into its Q4 sales in a Dec. 18 earnings call which included Rick Olson, chairman and chief executive officer; Angie Drake, vice president and chief financial officer; and Jeremy Steffan, director – Investor Relations. As a follow up to initial coverage shared later that day of the Bloomington, Minn.-based company’s statement this follow up overview of executive commentary focuses on the company’s key initiatives in 2024 — its 110th year, and factors impacting the outlook for 2025.
In reviewing Toro’s performance, Olson said, “During fiscal 2024, we delivered net sales growth in an extremely dynamic operating environment, enhanced our best-in-class distribution network, began to successfully execute on our major productivity initiative we call AMP, and introduced exciting new products that help our customers succeed with innovations they value.”
Additionally, in the fourth quarter, net sales increased 9.4% over last year.
Looking at full-year financial performance, Toro reported net sales of $4.58 billion, which were up about 1% over last year, he noted, adding, “This marks our 15th consecutive year of top-line growth and demonstrates the strength of our balanced portfolio.”
A key focus area for Toro’s leaders in the earnings call was on what it referred to as “exceptional top-line growth” for the fiscal year in Toro’s residential segment, which includes large acreage owners and professional customers. According to Olson, this was driven by successful new product introductions which exceeded expectations and strength of its mass channel — including the first 10 months of our new strategic partnership with Lowe’s.
“This relationship is off to a fantastic start, highlighted by our respective leadership in the zero-turn mower category. We were honored to be recognized by Lowe’s as Vendor of the Year for their seasonal and outdoor department,” reported Olson. “The strength in these areas helped offset industry-wide dynamics affecting other parts of our portfolio. These dynamics included the post-pandemic correction and macro caution we’re navigating with lawn care products in our dealer channel as well as two consecutive seasons of below-average snowfall for our snow and ice management businesses.”
Olson offered additional insight into ways the residential market is answering dealer and customer demands. He acknowledged the Exmark brand now celebrating its 30th year, and said, “We also saw growth in shipments of lawn care products to our mass channel and strong dealer demand for our newly launched Exmark Laser Z professional grade zero-turn mowers. These new models raise the bar for reliability, cut quality and productivity, and offer Exmark’s exclusive Adapt technology to quickly adjust the deck rake without tools. This enables optimum performance on any turf in any conditions.”
Strategic Priorities: Accelerating Growth, Driving Productivity, Empowering People
Acknowledging the need for the Toro team to exhibit discipline “to prudently manage expenses and drive the best possible outcome,” Olson identified key priorities from 2024. “Throughout the year, we advanced our three enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people.
“Innovation is the lifeblood of our company and key to driving long-term profitable growth,” according to Olson, who emphasized that the company continues to leverage innovation, and noted examples:
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The Toro Grounds Master E3200 fully electric upfront rotary mower for golf and grounds leverages Toro’s proprietary hypercell battery system to increase productivity with significantly quieter operation, zero exhaust emissions, and no compromise on cut quality.
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Launch of new and improved zero turn mower models across all three of our brands, Exmark, Toro, and Spartan.
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Plans to continue to advance our autonomous solutions include wider launches of residential and professional autonomous mowers in fiscal 2025, said Olson.
Salaried Employee Workforce Reductions
Speaking of productivity gains in a fast-changing market, Olson offered the following update: “Earlier this month, we implemented additional adjustments to better align our organizational structure for our long-term strategic priorities. This resulted in the difficult action to reduce our workforce by approximately 300 primarily salaried employees. Obviously, this wasn’t a decision we took lightly.”
In what he repeatedly noted was “a very dynamic operating environment,” Olson said the company worked to ensure its employees and channel partners were aligned and empowered to deliver superior customer care. He said, “Our team remained agile and never wavered from our commitment to doing business the right way. In doing so, they successfully strengthened our market leadership in our attractive end markets.”
Drake, Toro vice president and CFO, also reinforced the message of strong net sales growth in the quarter and year. She said the company “drove productivity and net price benefits and continued to make progress in addressing elevated order backlogs and field inventories.” During the earnings call, Drake also said the company successfully strengthened its market leadership in attractive end markets. Echoing Olson’s prior statement she said they have high confidence in the company’s ability to capitalize on future growth opportunities, while simultaneously driving profitability improvement.
Drake introduced Toro’s Amp It Up initiative, reporting that it will “align and incent all employees to drive productivity and profitability with a goal to achieve a total company adjusted operating earnings margin of at least 14% by the full-year fiscal 2026.”
Toro CEO Highlights 2025 Growth Opportunities
While Olson said the company entered the new fiscal year with confidence and optimism, he and Drake emphasized the challenges in several markets Toro has faced over the past years.
“Looking ahead, we are keeping a close eye on macro factors, including the economy, consumer and business confidence, and the geopolitical environment, and we’re closely monitoring the benefits and risks of any potential policy changes under the new administration and are prepared to take actions as appropriate,” said Olson.
Focusing on the residential market, he noted that the company expects a sense of caution from this past year to carry into the next, noting they will be watching “how macro factors and interest rates affect consumer spending patterns over and above regular replacement needs.”
Said Olson, “For homeowners, we expect continued caution at least in the near term. And finally, for agricultural micro irrigation, we expect similar conditions to last year with generally stable demand from growers. For all of our irrigation businesses, we are committed to designing end-to-end solutions that address the worldwide need for efficient water use … We’re also focused on automation that helps our customers stay connected, so they can easily manage and improve outcomes from any location,” he added, noting a couple of landscape-focused products as well as the Tempus AG automation system for agricultural use.
Olson identified several factors behind the executive’s enthusiasm moving into the new year. In addition to strong global trends driving its underground construction business, he spoke of the rapidly-growing demand for data communication infrastructure and energy grid modernization as well as a global focus on replacing aging infrastructure. Additionally, Olson and Drake discussed the company’s ability to leverage technology and innovation investments across Toro’s broad portfolio. As noted by Olson, “This enables the accelerated development of new products that help our customers drive productivity and superior results while enhancing the total company’s competitive advantage and ensuring market leadership into the future.”
Popularity of Zero-turn Mowers & Launch of Autonomous Products
Toro’s CEO reported the company has strengthened multi-brand leadership in the zero-turn mower space. “This represents the largest single lawn care category for both our professional and residential segments,” Olson said. “We’ve enhanced our market leadership position through investments in our innovative product lineup and the strategic development of our independent dealer networks and mass partnerships. We’re positioned extremely well for further growth, especially as these markets return to normal strength.”
He said the company is particularly excited about its upcoming retail launches of autonomous products across the portfolio, including residential, commercial and golf applications. Olson closed the earnings call comments reinforcing the 15 consecutive years of top-line growth, adding that the company is able to be resilient through many macro cycles due to its agility.
“We have a talented team that is determined to capitalize on all of our opportunities and we have the best network of strategically aligned channel partners focused on going above and beyond to serve our customers every day. All of this positions us extremely well to drive value for our customers, our channel partners, and our shareholders in both the near and long term,” said Olson.
In the earnings call Q&A session, an analyst question focused on whether any tariffs would impact the company. Toro’s Olson offered this assessment: “We have not included the effect of tariffs in our guidance.The vast majority of our products are produced in the United States … we do have production in Mexico for some of our more price-competitive products, and with regard to China, specifically, we’ve substantially reduced our China risk since 2016. So, we’ve done some positioning for this current situation and I think the biggest thing is we’re closely monitoring all the factors and making sure that we’ve got mitigations in place for anything that would be negative.”
