Toro has unveiled its outlook for fiscal 2025, revealing a bottom-line projection that doesn't meet analysts' expectations. The company's fourth-quarter performance showed sales lagging behind projections, although earnings matched market forecasts. For fiscal 2025, Toro anticipates adjusted earnings to be between $4.25 and $4.40 per share, whereas the current consensus on FactSet stands at a non-GAAP EPS of $4.58.
For the fiscal year that concluded on October 31, Toro reported an adjusted EPS of $4.17, reflecting a 1% decrease from the previous year. Sales for the ongoing fiscal year are projected to remain flat, with an expected increase of 1%, while analysts are anticipating total revenue of $4.78 billion.
Toro reported that its sales climbed to $4.58 billion for fiscal 2024, up from $4.55 billion the prior year, yet the stock experienced a decline of 3.6% during Wednesday's trading. CEO Richard Olson pointed out that Toro is facing an "elevated order backlog" in its underground construction and golf and grounds sectors.
He noted that field inventories in both lawn care and snow ice management operations are currently "higher than ideal," yet expectations are for a stronger position as they enter the upcoming turf season compared to the prior year. During the three-month period ending in October, Toro's adjusted earnings surged 34% year-over-year to $0.95 per share, which aligns with the consensus view.
Sales showed a modest rise of 9%, reaching $1.08 billion, falling short of the analysts' estimate of $1.09 billion. In his statement, Olson remarked, "In the fourth quarter, we enhanced productivity and carefully controlled expenses. This helped offset the impact of a higher proportion of lower-margin products in our net sales than we anticipated, and enabled us to achieve adjusted diluted EPS in line with our expectations." Sales within the professional segment grew by 10%, reaching $913.9 million, driven by the performance of golf and grounds products, underground construction equipment, and successful net price realization.
Residential sales also saw a 4.5% increase to $155.1 million, mainly due to lawn care product shipments, although this was somewhat tempered by reduced snow product shipments and sales promotions. However, Toro reported a decline in gross margin to 32.4%, down from 33.5% in the same period last year, primarily due to increased costs in materials, freight, and manufacturing..