Q3 2024 The Toro Co Earnings Call

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Tomo Anda: Good day ladies and gentlemen and welcome to the tour company's third quarter earnings conference call. My name is Tomo Anda and I will be your coordinator for today.

Tomo Anda: at this time, all participants on a listen only mode.

Tomo Anda: We will be facilitating a question and answer session towards the end of today's conference.

Speaker Change: As the reminder, this conference has been recorded for replay purposes.

Julie Kerekes: I would now like to turn the presentation over to your host for today's conference. Julie Kerekes, Treasurer and Senior Managing Director of Global Tax and Investor Relations. You may begin.

Julie Kerekes: Thank you and good morning, everyone. Our earnings release will be issued this morning and a copy can be found in the Investor Information section of our corporate website, thetoralcompany.com. We have also posted a third quarter earnings presentation to supplement our earnings release.

Speaker Change: on our call today, our Rick Olson, Chairman and Chief Executive Officer, Angie Drake, Vice President and Chief Financial Officer and Jeremy Steffen, Director and Investor Relations.

Speaker Change: During this call, we will make forward looking statements regarding our plans and projections for the future.

Speaker Change: Former leading statements are made upon our historical performance and current expectations and are subject to risks on certainties and other factors that may cause actual results to differently from those compensated by these statements.

Speaker Change: Additional information regarding these factors can be found in today's earnings release and in our investor presentation, as well as in our SEC report.

Speaker Change: During today's call, we will also refer to non-gap financial measures, which we believe are important in evaluating the company's performance. For more details on these measures, the most comparable gap measures, and a reconciliation of the two, please refer to this morning's earnings release and our investor presentation.

Speaker Change: with that it will not turn the call over to Rick.

Rick Olson: Thanks, Julie, and good morning, everyone.

Rick Olson: Our team executed with discipline and agility in the third quarter as we continue to position the company for a strong future by advancing our key strategic priorities of accelerating profitable growth, driving productivity and operational excellence and empowering our people.

Speaker Change: Our team delivered top and bottom line growth in a very dynamic environment, which included continued strength in our businesses with elevated order backlog along with an uptick in caution across homeowner facing businesses.

Speaker Change: We grow sales growth by capitalizing on an ever-expanding portfolio of innovative products that solve our customers' most pressing needs, coupled with our best-in-class distribution networks.

Speaker Change: We also drove improved profitability as we achieved productivity and net price benefits while continuing to align production to demand trends.

Speaker Change: From the third quarter, we delivered a nearly 7% increase in that sales to $1.16 billion. A residential segment grew 53%.

Tuwanda: Good day, ladies and gentlemen, and welcome to the tour company's third quarter earnings conference call. My name is Tuwanda, and I will be your coordinator for today. At this time, all participants on a listen only mode.

Speaker Change: Servant by Increased shipments to our mask channel and expected following aggressive destocking by that channel last year. Coupled with these strategic conditions of lows this year.

Tuwanda: We will be facilitating a question and answer session towards the end of today's conference. As a reminder, this conference is being recorded for replay purposes.

Speaker Change: The residential segment continues to benefit from the strength of the Toro brand, successful new products and productions, and better weather conditions compared to last year.

Tuwanda: I will now like to turn the presentation over to your host for today's conference.

Julie Kerekes: Julie Kerekes, Treasurer, and Senior Managing Director of Global Tax and Investor Relations. You may begin. Thank you and good morning, everyone. Our earnings release was issued this morning and a copy can be found in the investor information section of our corporate website, tutorial company.com. We have also posted a third quarter earnings presentation to supplement our earnings release.

Speaker Change: With an our professional segment, we deliver net sales growth in our underground construction and golfing ground businesses. We're strong demand is keeping the order backlog at high levels.

Speaker Change: We successfully drove increased output within our existing manufacturing footprint to address this sustained man and best serve our customers.

Speaker Change: In doing so, we continue to improve backlog, but still expect all of these levels for these businesses heading into Mexico year given the influx of new orders.

Julie Kerekes: On our call today are Rick Olson, Chairman and Chief Executive Officer, Angie Drake, Vice President and Chief Financial Officer, and Jeremy Stephens, Director of Investor Relations. During this call, we will make forward-looking statements regarding our plans and projections for the future. Forward-looking statements are based upon our historical performance and current expectations, and are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those constants played by these statements.

Speaker Change: This strength was offset by lower shipments of snow and ice management products and contractor grade zero turn motors. This was expected given elevated field inventories in our dealer channel and industry wide.

Speaker Change: At Summer for Rest, we saw macro factors drive more caution from homeowners and dealers than original answers to pauses. These factors included general consumer uncertainty, high interest rates, and the current geopolitical environment.

Julie Kerekes: Additional information regarding these factors can be found in today's earnings release and in our investor presentations, as well as in our SEC reports. During today's call, we will also refer to non-gap financial measures, which we believe are important in evaluating the company's performance. For more details on these measures, the most comparable gap measures, and a reconciliation of the two, please refer to this morning's earnings release and our investor presentations.

Speaker Change: This upticking caution resulted in trade-down activity and purchase deferrals, which led to lower than expected shipments of residential and professional segment line peer products during July.

Speaker Change: Even so, we continue to execute on our objectives of normalizing dealer field levels for these products. And once again, make significant progress in both the professional and residential segments.

Rick Olson: With that, I will now turn the call over to Rick. Thanks, Julie, and good morning, everyone. Our team executed with discipline and agility in the third quarter as we continue to position the company for a strong future by advancing our key strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering our people. Our team delivered top and bottom line growth in a very dynamic environment, which included continued strength in our businesses with elevated order backlog, along with an uptick in caution across homeowner-facing businesses.

Speaker Change: We are now about 80% of the way back to normal, for dealer fields and jewelry levels for these products.

Speaker Change: Moving to the bottom line, we delivered adjusted diluted grains per share of $1.18 and increased of 24% over last year's 95 cents.

Speaker Change: This increase reflects our progress in driving productivity and manufacturing efficiencies, along with positive, net price and prudent management of SGNA.

Rick Olson: We drove sales growth by capitalizing on an ever-expanding portfolio of innovative products that solve our customers' most pressing needs, coupled with our best-in-class distribution networks. We also drove improved profitability as we achieved productivity and net price benefits, while continuing to align production to demand trends. From the third quarter, we delivered a nearly 7% increase in that sales to $1.16 billion. Our residential segments grew 53%. Driven by increased shipments to our mass channel and expected following aggressive destocking by that channel last year, coupled with the strategic addition of lows this year.

Speaker Change: Importantly, our free cash flow improves substantially compared to the last year for reflection of our discipline and execution and focus on working capital.

Speaker Change: Based on our visibilities for the remainder of the year and considering the expected continuation of increased caution in our homeowner facing markets, we're revising our four year physical 24 guidance.

Speaker Change: and you will walk through those details shortly.

Speaker Change: Throughout the quarter, we advanced our enterprise strategic priorities, strive, shareholder value to the long term. I'd like to comment specifically on our key priority of driving productivity and operational excellence.

Rick Olson: The residential segment continued to benefit from the strength of tutorial brands, successful new products, introductions, and better weather conditions compared to last year. With our professional segment, we delivered net sales growth in our underground construction and golf and grounds businesses where strong demand is keeping order backlog at high levels. We successfully drove increased output within our existing manufacturing footprint to address this sustained demand and best serve our customers. In doing so, we continue to improve backlog but still expect elevated levels for these businesses heading into the next fiscal year, given the influx of new orders.

Speaker Change: As our team did an outstanding job in delivering productivity gains this quarter.

Speaker Change: We remain on track to deliver at least $100 million of annualized, run rate savings by fiscal 2027 from our Malta Year Productivity Initiative named AMP for Amplifying Maximum Prioritivity.

Speaker Change: As we've discussed, we intend to prudently reinvest up to 50% of the savings to further accelerate innovation and long-term growth.

Speaker Change: As a part of our amp initiative, we recently held a wide scale supplier summit with more than 100 key suppliers represented. We shared our vision for the future with transformational productivity being an enabler of further innovation, investments and growth.

Rick Olson: This strength was offset by lower shipments of snow and ice management products and contractor grade zero turn moors. This was expected given elevated field inventories in our dealer channel and industry wide. As summer progressed, we saw macro factors drive more caution from homeowners and dealers than original anticipated. These factors included general consumer uncertainty, high interest rates, and the current geochotical environment. This uptick in caution resulted in trade down activity and purchased deferrals which led to lower than expected shipments of residential and professional segment lawn pure products during July.

Speaker Change: Based on the feedback we've received, suppliers must assume it engaged and excited to partner with us on our private involvement in putty of the objectives.

Speaker Change: We also made target portfolio adjustment this quarter with AMP, deferred their position to company for popular growth.

Speaker Change: He's included the sale of our Australia-based pulp products for residential garden watering and irrigation business and the rebranding of our Intimidator and MB products.

Speaker Change: This rebranding allows us to leverage marketing investments and capitalize on the strength of this bargain brand name.

Rick Olson: Even so, we continue to execute on our objective of normalizing dealer field levels for these products and once again, may significant progress in both the professional and residential segments. We are now about 80% of the way back to normal for dealer field inventory levels for these products. Moving to the bottom line, we delivered adjusted diluted grains per share of $1.18 and increased of 24% over last year's 95 cents. This increased reflects our progress in driving productivity and manufacturing efficiencies along with positive net price and prudent management of SGNA. Importantly, our free cash flow improves substantially compared to last year, or reflection of our disciplined execution and focus on working capital.

Speaker Change: We are already realizing benefits from help and we expect these benefits to accelerate over the next two years.

Speaker Change: Importantly, everything we're doing with AMP helps us fuel our existing strategic priorities to accelerate and powerful growth, driving productivity and operational excellence, and empowering our people.

Speaker Change: With that, I'll turn the call over to Angie to discuss our financial results and guidance before I return to provide commentary on the outlook for our business.

Angie Drake: Thank you, Rick, and good morning, everyone. We were pleased to drive productivity and price benefits in the quarter and make progress in addressing both orderback block and field inventory.

Angie Drake: While shipments of long-care products were impacted by homeowner into our caution, we are confident in this strength of our markets here at our well-positioned for the future.

Speaker Change: consolidated net sales for the quarter, will $1.16 billion, up 6.9% from Q3 last year. Reported EPS was $1.14 per deleted share, compared to a loss of 14 cents in the third quarter of last year.

Rick Olson: Based on our visibility for the remainder of the year and considering the expected continuation of increased caution in our homeowner facing markets, we're revising our full year fiscal 24 guidance.

Speaker Change: Adjusted EPS was $1.8% for deleted share of 24% from 95 cents.

Rick Olson: Angie will walk through those details shortly. Throughout the quarter, we advanced our enterprise strategic priorities to drive shareholder value for the long term. I'd like to comment specifically on our key priority of driving productivity and operational excellence. As our team did an outstanding job in delivering productivity gains this quarter, we remained on track to deliver at least $100 million of annualized run rate. As we discussed, we intend to prudently reinvest up to 50% of the savings to further accelerate innovation and long-term growth.

Speaker Change: Now to the segment results.

Speaker Change: Professional segments net sales for the third quarter were $800 and $80.9 million, down 1.7% year over year. This decrease was primarily driven by lower segments of snow and ice management products and long-care equipment as we work to reduce field inventory.

Speaker Change: and lower segments of compact utility loaders with the replenishment of field levels, as a result of improved output in recent quarters.

Speaker Change: This was partially offset by higher shipments of golf and ground products and underground construction equipment. As we continue to address the robust demand and significant open orders for these businesses, we also solve net price realization in the quarter.

Rick Olson: As a part of our initiatives, we recently held a wide scale supplier summit with more than 100 key suppliers represented. We shared our vision for the future with transformational productivity being an enabler of further innovation investments and growth. Based on the feedback we received, suppliers left the summit engaged and excited to partner with us on our product development and productivity objectives. We also made targeted portfolio adjustments this quarter with AMP to further position the company for profitable growth.

Speaker Change: Professional segment earnings for the third quarter were $165.7 million. Compared to 13 million last year.

Speaker Change: When expressed as a percentage of net fails, earnings for the segments were 18.8% compared to 1.5%.

Speaker Change: The positive change in profitability was primarily due to last year's non-cast impairment charges of 151.3 million, as well as productivity improvements, favorable product mix would be a personal growth in golf and ground shipments and net price

Speaker Change: This was partially offset by higher material in manufacturing costs and lower net sales volume.

Rick Olson: We also made a fairly based pulp products residential garden watering and irrigation business and the rebranding of our intimidator and envy products. This rebranding allows us to leverage marketing investments and capitalize on the strength of the Spartan brand name. We are already realizing benefits from AMP and we expect these benefits to accelerate over the next two years. Importantly, everything we are doing with AMP helps us fuel our existing strategic priorities of accelerating proper growth, driving productivity and operational excellence and empowering our people.

Speaker Change: Presidential segment net sales for the third quarter, or 267.5 million dollars. Up 52.6% compared to last year.

Speaker Change: The strong growth was primarily driven by higher submissive products to our mass panel.

Speaker Change: Residential segment earnings for the quarter were 32.6 million dollars, a substantial increase for 3.8 million last year.

Speaker Change: When expressed as the percentage of net sales, earnings for the segment were 12.2% up significantly from 2.2%.

Angie Drake: With that, I'll turn the call over to Angie to discuss our financial results and guidance before I return to provide commentary on the outlook for our businesses. Thank you, Rick, and good morning, everyone. We were pleased to drive productivity and price benefits in the quarter and make progress in addressing both order backlog and field inventory. While shipments of lawn care products were impacted by homeowner and newer caution, we are confident in the strength of our market share and are well positioned for the future.

Speaker Change: The year over your increase was largely due to net sales leverage, productivity improvements, and net price realization primarily driven by lower floor plan costs. This was partially offset by product mix and higher material in manufacturing costs.

Speaker Change: Turning to our operating results from the total company.

Speaker Change: Our report is an adjusted gross margin worth 34.8 and 35.4% respectively for the quarter. This compares to 34.4% for both in the same period last year.

Angie Drake: Consolidated net sales for the quarter were $1.16 billion, about 6.9% from Q3 last year. Reported EPS was $1.14 per deleted share compared to a loss of 14 cents in the third quarter of last year. Adjusted EPS was $1.18 per deleted share, about 24% from 95 cents.

Speaker Change: The increase was primarily due to productivity improvement in that price realization. This was partially offset by higher materials in manufacturing costs and segment mix with growth weighted to residential.

Speaker Change: SGNA Excell, as the percentage of net fails for the quarter, improves slightly to 22%. In 20 days, the point improvement over the same period last year.

Angie Drake: Now to the segment results. Professional segment net sales for the third quarter were $880.9 million, down 1.7% year over year. This decrease was primarily driven by lower shipments of snow and ice management products and lawn care equipment as we work to reduce field inventories and lower shipments of compact utility loaders with the replenishment of field levels as a result of improved output in recent quarters. This was partially offset by higher shipments of golf and grounds products and underground construction equipment as we continue to address the robust demand and significant open orders for these businesses.

Speaker Change: The improvement was primarily driven by net sales leverage and lower marketing costs, partially offset by higher incentive expenses.

Speaker Change: Operating earnings as a percentage of net sales for the quarter or 12.8% compared to a negative 1.8% in the same period last year.

Speaker Change: On an adjusted basis, operating earnings as a percentage of net sales were 13.7%. A 150 basis point increase over 12.2%.

Speaker Change: Interest extends for the quarter was $14.5 million, down from $15 million last year.

Angie Drake: We also saw net price realization in the quarter. Professional segment earnings for the third quarter were $1.165.7 million, compared to 13 million last year. When expressed as a percentage of net sales, earnings for the segment were 18.8% compared to 1.5%. The positive change in profitability was primarily due to last year's non-cash impairment charges of 151.3 million, as well as productivity improvements. Favorable product net would give pushable growth in golf and grounds shipments and that price realization.

Speaker Change: The decrease was primarily due to lower average outstanding bar wings, enabled by our significant improvement in free cash flows.

Speaker Change: The reported effective tax rate for the third quarter was 17.3% compared with 47.6% a year ago.

Speaker Change: The decrease was primarily due to the tax impact related to non-cash impairment charges last year, combined with a more favorable geographic mix of earnings this year.

Speaker Change: The adjusted effective tax rate for the third quarter was 18%, compared with 19% last year. Since also reflect the more favorable geographic next to earnings.

Angie Drake: Wilson. This was partially offset by higher material and manufacturing costs and lower net sales volume. Residential segment net sales for the third quarter were $267.5 million, of 52.6% compared to last year. The strong growth was primarily driven by higher segments of products to our mass channel. Residential segment earnings for the quarter were $32.6 million, a substantial increase from 3.8 million last year. When expressed as a percentage of net sales, earnings for the segment were 12.2% significantly from 2.2%. The year-over-year increase was largely due to net sales leverage, productivity improvement, and net price realization primarily driven by lower floor plan costs. This was partially offset by product mix and higher material and manufacturing costs.

Speaker Change: Turning to our balance sheet.

Speaker Change: Accounts were feasible for 523.3 million dollars of 36.2% from a year ago. Primarily driven by increased fitness to our mouse channel, as well as payment turns to that channel.

Speaker Change: This increase was expected given our strategic partnership with Lowe's, which continues to provide positive momentum within the residential segment.

Speaker Change: Well, not a part of our accounts for Stephenable Balance, we once again saw significant improvement in red iron DSOs, a decrease of about 30 days.

Speaker Change: This is a reflection of our progress in rebalancing deem or ill levels of one-care products as cell-through continues to exceed cell-in.

Speaker Change: In the story, at the end of 2003, was $1.08 billion, down 3% compared to last year, and slightly lower sequentially from last quarter.

Angie Drake: Turning to our operating results for the total company. Our reported and adjusted gross margin were 34.8% and 35.4% respectively for the quarter. This compares to 34.4% for both in the same period last year. The increase was primarily due to productivity improvement and net price realization. This was partially offset by higher material and manufacturing costs and segment mix with growth weighted to residential. SDNA expense as the percentage of net sales for the quarter improved slightly to 22%.

Speaker Change: The year of a year of decrease was driven by a reduction in both long-care equipment, finish goods, balances, and working process.

Speaker Change: These reductions were partially offset by higher levels of compact utility loaders at those inventories normalized and higher levels of snow and ice management products, as expected given last winter's lack of snowfall.

Speaker Change: Accounts payable were $437.8 million, up 7% from last year, primarily driven by the timing of material purchases.

Speaker Change: Here today, free cash flow was $270.5 million, and improvement of over $200 million compared to last year.

Angie Drake: A 20 basis point improvement over the same period last year. The improvement was primarily driven by net sales leverage and lower marketing costs partially offset by higher incentive expenses. Operating earnings as a percentage of net sales for the quarter were 12.8% compared to a negative 1.8% in the same period last year. On an adjusted basis, operating earnings as a percentage of net sales were 13.7%. A 150 basis point increase over 12.2%.

Speaker Change: As a reminder, the majority of our operating cash flow is typically generated in the second half of our fiscal years based on seasonal flow.

Speaker Change: We expect that same time is this year

Speaker Change: For the full year, we are confident we will deliver a free cash flow conversion rate at at least 100% based on reported men income.

Speaker Change: This is significantly higher than the past two years, and back in alignment with our 10-year historical average.

Angie Drake: Inter-six cents for the quarter was $14.5 million down from 15 million last year. The decrease was primarily due to lower average outfinding borrowings, enabled by our significant improvement in free cash flow. The reported effective tax rate for the third quarter was 17.3%. Compared with 47.6% a year ago. The decrease was primarily due to the tax impact related to non-cash impairment charges last year, combined with a more favorable geographic mix of earnings this year.

Speaker Change: and importantly, our balance sheet remains strong. Our leverage ratio is within our stated target of 1 to 2 times on a growth basis, and we continue to have investment-grade credit ratings.

Speaker Change: This provides financial flexibility to fund investment that drive attractive returns.

Speaker Change: Our discipline approach to capital allocation remains unchanged, with our first priority to make strategic investments in our business to drive long-term profitable growth, both organically and through acquisitions.

Speaker Change: We are acting on this priority with our plan to fund $115 million in capital expenditures during fiscal 2024.

Angie Drake: The adjusted effective tax rate for the third quarter was 18%, compared with 19% last year. This also reflects the more favorable geographic mix of earnings. Turning to our balance sheet, accounts receivable were $523.3 million of 36.2% from a year ago, primarily driven by increased shipments to our mass channel, as well as payment terms to that channel. This increase was not expected, given our strategic partnership was low, which continues to provide positive momentum within the residential segment.

Speaker Change: This will support youth product investments, advanced manufacturing technology, and capacity for growth within our existing footprint.

Speaker Change: Our next priority is to return capital to shareholders, both through our regular dividend and share our new priority is to return capital to shareholders, both through our regular dividend, and to share

Speaker Change: We've increased our dividend 6% this year and have consistently grown our dividend payout over time.

Speaker Change: This demonstrates the conviction we have in our strong and sustainable future cash flows.

Speaker Change: With respect to sharing purchases, we can continue to bond repurchases with XS3 Casplo while maintaining our leverage goals.

Angie Drake: While not a part of our accounts receivable balance, we once again sought significant improvement in rediron DSOs, a decrease of about 30 days. This is a reflection of our progress in rebalancing deem or field levels of one-care products, as cell-through continues to exceed cell-in. Inventory at the end of Q3 was $1.08 billion, down 3% compared to last year, and slightly lower sequentially from last quarter. The year-over-year decrease was driven by a reduction in both one-care equipment finish goods balances and work in process.

Speaker Change: We've invested almost $110 million through Q3 to repurchase nearly 1.2 million shares, while also paying off our outstanding revolver borrowings.

Speaker Change: and we plan to continue researching shares in the fourth quarter.

Speaker Change: This is the reflection of our substantial improvement and cash flow this year, along with our strong connection and future growth opportunities.

Speaker Change: As we close out the fiscal year, we continue to expect benefits from the sustained strength and demand and significant order backlogs for underground construction products and helping ground equipment.

Angie Drake: These reductions were partially offset by higher levels of compact utility loaders as those inventories normalize, and higher levels of snow and ice management product as expected, given last winter's lack of snowfall. Accounts payable were $437.8 million, up 7% from last year, primarily driven by the timing of material purchases. Year-to-day free cash flow was $270.5 million, and improvement of over $200 million compared to last year. As a reminder, the majority of our operating cash flow is typically generated in the second half of our fiscal year based on seasonal flow.

Speaker Change: 40 businesses, field inventory levels remain lower than ideal and backlog remains elevated, although we continue to make the progress.

Speaker Change: On a total company basis, order backlog has improved from the $1.97 billion dollar balance at fiscal 2023 year-end. It is lower both on a year-over-year basis and sequentially from last quarter. It's still much higher than what we consider normal.

Speaker Change: We will provide an updated year-end figure in our annual 10K filing in December.

Speaker Change: For both segments, we expect to continue making progress in normalizing field inventories of one-care and snow products, although levels remained elevated both for us and industry-wide.

Angie Drake: We expect that same came in this year. For the full year, we are confident we will deliver a free cash flow conversion rate of at least 100% based on reported net income. This is significantly higher than the past two years, and back in alignment with our 10-year historical average. Importantly, our balance sheet remains strong. Our leverage ratio was within our stated target of one to two times on a gross basis, and we continue to have investment-grade credit ratings.

Speaker Change: We factor this diamond into our estimate.

Speaker Change: We've also factored in expectations for a continuation of the increased macro caution we started seeing in July for our homeowner facing businesses.

Speaker Change: with this backdrop and based on our current visibility, we are making some adjustments to our guidance.

Speaker Change: For the full year, we now expect total company net sales growth of about 1%.

Speaker Change: For the professional segment, we now affects full-year net sales to be down-low single digits, which implies mid-tands grows for the fourth quarter.

Angie Drake: This provides financial flexibility to fund investments that drive attractive returns. Our discipline approach to capital allocation remains unchanged, with our first priority to make strategic investments in our business to drive long-term profitable growth, those organically and through acquisitions. We are asking on this priority with our plan to fund $115 million in capital expenditures during fiscal 2024. This will support new product investments, advanced manufacturing technologies, and capacity for growth within our existing footprint.

Speaker Change: For the residential segment, we continue to expect net sales to grow at a rate significantly higher than the total company average for the full year.

Speaker Change: Big Facts Fort Quarter Residential Met Fails to be down most English digits on a year or year basis.

Speaker Change: Looking at profitability.

Speaker Change: We now expect adjusted gross margins and adjusted operating earnings as a percentage of net sales to be slightly lower than last year, a reflection of product mix.

Speaker Change: Turning the segment profitability, we continue to expect both the professional and residential segment earnings margins to be higher than last year's on full year basis.

Angie Drake: Our next priority is to return capital to shareholders, both through our regular dividend and share purchases. We've increased our dividend 6% this year and have consistently grown our dividend payout over time. This demonstrates the conviction we have in our strong and sustainable future cash flows. With respect to share repurchases, we continue to fund repurchases with excess free cash flow while maintaining our leverage goals. We invested almost $110 million through Q3 to repurchase nearly 1.2 million shares, while also paying off our outstanding revolver borrowings.

Speaker Change: For the professional segment, we now expect a similar earnings margin to last year. When you exclude last year's impairment charges,

Speaker Change: For the residential segment, we expect a high-angle digit margin for the full year.

Speaker Change: For the other activities category, we continue to expect higher expense compared to fiscal 2023. This reflects a return to more normal incentive compensation.

Speaker Change: For the fourth quarter, we expect an expensive similar to Q1.

Speaker Change: With that, we now expect full year adjusted to loot at EPS in the range of $4.15 to $4.20.

Angie Drake: And we plan to continue repurchasing shares in the fourth quarter. This is a reflection of our substantial improvement in cash flow this year, along with our strong conviction in future growth opportunities. As we close out the fiscal year, we continue to expect benefits from the sustained strength in demand and significant order backlogs for underground construction products and golfing grounds equipment. For these businesses, field inventory levels remain lower than ideal and backlog remains elevated, although we continue to make good progress.

Speaker Change: Additionally, for the full year, we continue to expect depreciation and amortization of about 120 to 130 million dollars and interest extends of about $60 million.

Speaker Change: We now expect an adjusted effective tax rate of about 19.5%. Driven by a more favorable geographic mix of earnings.

Speaker Change: We continue to build our business for long-term profitable growth.

Angie Drake: On a total company basis, order backlog has improved from the $1.97 million dollar balance at fiscal 2023 year end. It is lower both on a year-over-year basis and sequentially from last quarter, but still much higher than what we would consider normal.

Speaker Change: This includes prioritizing innovation and investments that we believe will deliver outskating returns, threatening sustainable margin expansion with disciplined executions, including our hand initiative and leveraging the talents of our team and the power of our best-in-class distribution networks.

Angie Drake: We will provide an updated year-end figure in our annual 10K filing in December. For both segments, we expect to continue making progress in normalizing field inventories of one-care and snow products, although levels remain elevated both for us and industry-wide. We factor this dynamic into our estimates. We've also factored in expectations for a continuation of the increased macro caution we started seeing in July for our homeowner facing businesses.

Speaker Change: We are confident in our ability to drive significant benefits and opportunities for all of our stakeholders.

Speaker Change: with that I'll turn the call back to Rick.

Rick Olson: Thank you, Angie.

Rick Olson: Our business fundamentals remain strong, and we continue to execute with discipline.

Speaker Change: for our businesses with sustained strength in demand and elevated backlogs. We are successfully driving increased output within our manufacturing footprint.

Rick Olson: for our businesses that are experiencing a near-term increase in caution driven by macrophactors. We expect to be very well positioned as those markets recover.

Angie Drake: With this backdrop, and based on our current visibility, we are making some adjustments to our guidance. For the full year, we now expect total company net sales growth of about 1%. For the professional segment, we now expect full year net sales to be down low single digits, which implies mid-teens growth for the fourth quarter. For the residential segment, we continue to expect net sales to grow at a rate significantly higher than the total company average for the full year.

Rick Olson: We continue to benefit from our strong leadership position in attractive and markets. Our ever-expanding, sweet, innovative solutions that perform necessary work with regular replacement cycles, and our deep customer and channel relationships.

Rick Olson: and, importantly, our team is executing well, driving productivity and operational efficiency through our ampt initiatives and flexing production to align with market conditions and better serve our customers.

Angie Drake: We expect fourth quarter residential net sales to be down low single digits on a year-over-year basis. Looking at profitability, we now expect adjusted growth margins and adjusted operating earnings as a percentage of net sales to be slightly lower than last year, a reflection of product mix. Turning the segment profitability, we continue to expect both the professional and residential segment earnings margins to be higher than last year on a full year basis.

Rick Olson: We're keeping a close eye on macro factors as well as demand dynamics in our specific and markets.

Rick Olson: For the Underground Construction Market we expect demand to remain robust and order of backlog to remain elevated, heading into fiscal 2025.

Rick Olson: There is a very positive runway for projects to address global infrastructure needs, including communications, utilities and data centers.

Angie Drake: For the professional segment, we now expect a similar earnings margin to last year. When you exclude last year's impairment charges. For the residential segment, we expect a high single digit margin for the full year. For the other activities category, we continue to expect higher expense compared to fiscal 2023. This reflected return to more normal incentive compensation. For the fourth quarter, we expect an expense similar to Q1.

Rick Olson: These projects are supported by public and private multi-year spending.

Rick Olson: Infrastructure, spending remains a positive outlier in the broader construction industry with strong growth forecasted for the foreseeable future.

Speaker Change: especially construction markets, which include our porrdingo and ditch-witch FK lines of compact utility loaders, we are seeing a return to more typical patterns as supply and demand have come into balance with improved lead times.

Angie Drake: With that, we now expect full year adjusted-deluted EPS in the range of $4.15 to $4.20. Additionally, for the full year, we continue to expect depreciation and amortization of about $120 to $130 million and interest expense of about $60 million. We now expect an adjusted-effective tax rate of about 19.5 percent, driven by a more favorable geographic mix of earnings. We continue to build our business for long-term profitable growth. This includes prioritizing innovation investments that we believe will deliver outstanding returns, dreading sustainable margin expansion with disciplined execution, including our initiative, and leveraging the talents of our team and the power of our best-in-class distribution network. Fox. We are confident in our ability to drive significant benefits and opportunities for all of our stakeholders.

Speaker Change: For rental markets, which are meaningful to our specialty construction business, expectations are for a return to mid-single digit growth next year, following three years of double-digit growth.

Speaker Change: As we discussed last quarter, our border backlog for compact utility voters has normalized as expected.

Speaker Change: For Gallup and Grounds, we expect to continue to see their prioritization of equipment and irrigation purchases supported by healthy budgets and new course development.

Speaker Change: Worldwide, there are more than 500 significant new and renovation golf projects in the pipeline across 88 countries.

Speaker Change: and Rowland's play data continues to reinforce that the golf industry has had a positive reset.

Speaker Change: For the first six months of 2024, US rounds played more 2% ahead of last year's pace, which is notable given 2023 with the highest year of US rounds played in history.

Rick Olson: With that, I'll turn the call back to Rick. Thank you, Angie. Our business fundamentals remain strong, and we continue to execute with discipline. For our businesses with sustained strength and demand and elevated backlog, we are successfully driving increased output within our manufacturing footprint. For our businesses that are experiencing a near-term increase in caution driven by macro factors, we expect to be very well positioned as those markets recover. We continue to benefit from our strong leadership position in attractive end markets, our ever-expanding suite of innovative solutions that perform necessary work with regular replacement cycles, and our deep customer and channel relationships.

Speaker Change: Our worldwide market leadership position and new product pipeline to address the golf and ground's market is also as strong as ever. This includes our new Grouse Master E3200 fully electric out front road remover.

Speaker Change: Who's machine, what are Jews, are proprietary hypercell battery systems?

Speaker Change: to enable increased productivity, the significantly quieter operation, zero investments and no compromise on cut quality.

Speaker Change: With these sustained strengths in orders, we continue to see in our awesome rounds equipment. We've specced order backlog to remain higher than normal for this business into fiscal 2025.

Rick Olson: And importantly, our team is executing well, driving productivity and operational efficiency through our amp initiatives and flexing production to align with market conditions and better serve our customers. Looking ahead, we are keeping a qualified macro factors as well as demands, dynamics in our specific end markets. For the underground construction market, we expect demands to remain robust and order backlog to remain elevated heading into fiscal 2025. There is a very positive runway for projects to address global infrastructure needs, including communications, utilities, and data centers.

Speaker Change: For landscape contractors, we continue to expect stable, resale demand driven by regular replacement activity with some pockets of price sensitivity given the interest rates environments and high field levels across the industry.

Speaker Change: For homeowners, we expect macro uncertainty will continue to drive caution including trade-down activity given higher interest rates.

Speaker Change: We expect demands to be driven by regular replacement needs.

Speaker Change: and certainly in favourable, true growing conditions would be beneficial.

Speaker Change: Persono at Ice Management, preseason and so on demand has been reduced as expected to pollinate second straight season of below average snowfall.

Rick Olson: These projects are supported by both public and private multi-year spending. Infrastructure spending remains a positive outlier in the broader construction industry with strong growth forecasted for the foreseeable future. For specialty construction markets, which include our Poro Dingo and Ditchwich SK lines of compact utility loaders, we are seeing a return to more typical patterns as supply and demand have come into balance with improved lead times. For rental markets, which are meaningful to our specialty construction business, expectations are for a return to mid-single digit growth next year following three years of double digit growth.

Speaker Change: However, contracture budgets are a good shape following a better turf growing season. And if more normal snowfall patterns return in fiscal 2025, we would expect in-season orders to pick up as well.

Speaker Change: The overall consensus is chronic patterns or positions to shift from El Niño to Leninia. This year, if that happens, it could be more favorable for snow prospects.

Speaker Change: We continue to strengthen our position in this market with innovative solutions that help contractors achieve great results while reducing labor requirements.

Rick Olson: As we discussed last quarter, our order backlog for compact utility loaders has normalized as expected. For golf and grounds, we expect to continue to see their prioritization of equipment and irrigation purchases supported by healthy budgets and new course development. Worldwide, there are more than 500 significant new and renovation golf projects in the pipeline across 88 countries. And rounds played data continues to reinforce that the golf industry has had a positive reset.

Speaker Change: This includes our new entry-level scout snow radar, the latest edition in our powerful and versatile sidewalk warrior lineup.

Speaker Change: This new model has garnered much enthusiasm and initial production is already sold out.

Speaker Change: Before we take questions, I'd like to reiterate why we are so excited about the future and what we see as the greatest growth opportunities as we fulfill our corporate purpose of helping customers enrich the beauty, productivity and sustainability of the land.

Rick Olson: For the first six months of 2024, US rounds played were 2% ahead of last year's pace, which is notable given 2023 was the highest year of US rounds played in history. Our world wide market leadership position and new product pipeline to address the golf and grounds market is also as strong as ever. This includes our new grounds master E3200 fully electric out front road remover. This machine leverages our proprietary hypercell battery system to enable increased productivity with significantly quieter operation, zero exhaust emissions, and no compromise on cut quality.

Speaker Change: The opportunity before us are the results, not only of our work in fiscal 2020-204, but the many years of diligence in developing our diversified and complementary portfolio of businesses.

Speaker Change: are leading market positions in our deep customer and channel relationships.

Speaker Change: First, we are excited about our underground construction business where we are extremely well positioned as a worldwide market leader with the most comprehensive equipment and brand-wide-up Indian industry.

Speaker Change: In addition together with our best-in-class channel, we have very deep relationships with our customers. These relationships coupled with the sophisticated technology required are difficult to duplicate.

Rick Olson: With the sustained strength in orders we continue to see in our golf and grounds equipment, we expect order backlog to remain higher than normal for this business into fiscal 2025. For landscape contractors we continue to expect stable retail demand driven by regular replacement activity with some pockets of price sensitivity given the interest rate environment and high field levels across the industry. For homeowners we expect macro uncertainty will continue to drive caution including trade down activity given higher interest rates.

Speaker Change: What makes these competitive differentiators even more compelling are the near and long-term positive market demand dynamics.

Speaker Change: As a leader in this space, we are capitalizing on the rapidly growing demands for data communications infrastructure and energy grid modernization as well as the global focus and replacing aging infrastructure.

Speaker Change: Second, much like our underground construction business, our golf business is exciting, due to the wind combination of our strong market leadership and long-term market fundamentals.

Speaker Change: Here, we also have deep relationships with our customers and channel partners and a lineup of industry-leading products and solutions.

Rick Olson: We expect demand to be driven by regular replacement needs and certainly favorable turf growing conditions would be beneficial. Personnel and ice management pre-season selling demand has been reduced as expected, following a second straight season of below average snowfall. However, contractor budgets are in good shape following a better turf growing season and if more normal snowfall patterns returned in fiscal 2025, we would expect in season orders to pick up as well. The overall consensus is climate patterns are positioned to shift from El Nino to La Niña this year.

Speaker Change: including our full suites of reduced and zero exhaust emission offerings.

Speaker Change: Importantly, we have a distinct competitive advantage as the only company to offer both equipment and irrigation solutions for this market and as the worldwide market leader involves.

Speaker Change: Ceiling our growth involved is the sustained global momentum, which are prepared to capitalize on this opportunity with continued innovation and our best-in-class service and support network.

Speaker Change: Third, we continue to strengthen our multi-brand leadership in the important zero-turn molar space.

Rick Olson: If that happens it could be more favorable for snow prospects. We continue to strengthen our position in this market with innovative solutions that help contractors achieve great results while reducing labor requirements. This includes our new entry level scout snow reader, the latest addition in our powerful and versatile sidewalk warrior lineup. This new model has garnered much enthusiasm and initial production is already sold out.

Speaker Change: This represents the largest single-long care category for both our professional and residential segments.

Speaker Change: We've enhanced our market leadership position through investments in our innovative product lineup and these strategic developments of our independent dealer networks and mass partnerships.

Speaker Change: Our momentum in this space positions us extremely well for further growth, especially as these markets return to normal strength.

Speaker Change: For us, we have a proven ability to leverage our technology and innovation investments across our Red Portfolio.

Rick Olson: Before we take questions I'd like to reiterate why we are so excited about the future and what we see is the greatest growth opportunities as we fulfill our corporate purpose of helping customers enrich the beauty, productivity, and sustainability of the land. The opportunities before us are the results not only of our work in fiscal 2024 but the many years of diligence in developing our diversified and complementary portfolio of businesses, our leading market positions, and our deep customer and channel relationships.

Speaker Change: 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.

Speaker Change: We will continue to drive a return on innovation with prioritized investments in the key technology areas of alternative power, smarts connected and autonomous solutions.

Speaker Change: and finally, we have a talented team that has determined to capitalize on all of our opportunities with discipline and build on our long history of delivering consistently strong financial performance.

Rick Olson: First, we are excited about our underground construction business where we are extremely well positioned as a worldwide market leader with the most comprehensive equipment and brand lineup in the industry. In addition, together with our investing class channel we have very deep relationships with our customers. These relationships coupled with the sophisticated technology required are difficult to duplicate. What makes these competitive differentiators even more compelling are the near and long-term positive market demand dynamics.

Speaker Change: We have the best network of strategically aligned channel partners focused on going above and beyond to serve our customers every day.

Speaker Change: We have built a strong and agile organization that has been resilient through many macro cycles.

Speaker Change: We are ready to see the opportunities that lie ahead to drive value for our customers, our channel partners, and our shareholders in both the near and long-term.

Rick Olson: As a leader in this space we are capitalizing on the rapidly growing demand for data communications infrastructure and energy grid modernization as well as the global focus on replacing aging infrastructure. II, much like our underground construction business, our golf business is exciting due to the weight combination of our strong market leadership and long-term market fundamentals. Here we also have deep relationships with our customers and channel partners and a lineup of industry leading products and solutions, including our full suite of reduced and zero exhaust admission offerings.

Speaker Change: With that, we will open up the call for questions.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, if you wish to ask the question, please for a stop, followed by one one on your telephone.

Speaker Change: If you have questions, if your questions have been answered and you wish to withdraw your question, please first start one one again.

Speaker Change: Our first question comes from the line of Tim Wojis with Bear, the line is open.

Rick Olson: Importantly, we have a distinct competitive advantage as the only company to offer both equipment and irrigation solutions for this market and as the worldwide market leader in both. Fuelling our growth involved is the sustained global momentum. We are prepared to capitalize on this opportunity with continued innovation and our besting class service and support network. Third, we continue to strengthen our multi-brand leadership in the important zero-term molar space. This represents the largest single lawn care category for both our professional and residential segments.

Tim Wojis: Hey everybody, good afternoon.

Tim Wojis: I guess me.

Tim Wojis: Good morning. Maybe just my first question on the backlog.

Tim Wojis: If you give a little bit of context, I know you probably won't give us a specific number, but just maybe a little bit of context kind of relatively where the backlog exceeded the quarter. And then any sort of kind of context around orders like, you know, book the bill over one within golf, underground, those types of things.

Tim Wojis: Yeah, sure. I'll take that. Tim, so on the backlog, if you look at, by several comparisons, so if you look relative to the end of last year, we've made improvements in the backlog, we're used to it. If you look at your over year, the backlog is down and if you want to see coincidentally the backlog you've down.

Rick Olson: 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. Our momentum in this space positions us extremely well for further growth, especially as these markets return to normal strength. Fourth, we have a proven ability to leverage our technology and innovation investments across our broad portfolio. 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.

Speaker Change: It's really concentrated in the two areas that we've talked about, the golfing grounds and the underground areas.

Speaker Change: and the reason we have not cleared the backlog is because of the intake of orders in those businesses continue to be extremely strong.

Speaker Change: from a factory output standpoint. We've made tremendous progress, but here we are at

Speaker Change: You know, certainly pre-pandemic levels of production does not record production in those plants right now, so

Rick Olson: We will continue to drive a return on innovation with prioritized investments in the key technology areas of alternative power smart connected and autonomous solutions. And finally, we have a talented team that is determined to capitalize on all of our opportunities with discipline and build on our long history of delivering consistently strong financial performance. We have the best network of strategically aligned channel partners focused on going above and beyond to serve our customers every day.

Speaker Change: The momentum in both of those businesses is tremendous at this point and that's really the reason for the continued larger backlog position.

Speaker Change: We do expect for both of those general businesses for the backlog being more normalized by the end of 25, but at this point we still believe the backlog would certainly the backlog will extend into 25 just for those two businesses.

Speaker Change: I think it contains the extraordinary demand at this point.

Speaker Change: Okay, okay, now that's helpful, thanks.

Rick Olson: We have built a strong and agile organization that has been resilient through many macro cycles. We are ready to seize the opportunities that lie ahead to drive value for our customers, our channel partners, and our shareholders in both the near and long term.

Speaker Change: and then just on the lawn and guard end of the landscape business, can you just...

Speaker Change: Help us tie!

Speaker Change: the comments together around just kind of increased macro caution there but also kind of getting through the channel inventory.

Speaker Change: I guess you think you're going to land kind of in the same inventory position, exiting the season and you're just taking production down to get there or is it, you know, and we'll probably have a little bit higher channel in inventory, exiting in the year, but it's still a lot more manageable than extra, just trying to kind of marry those two things together.

Tuwanda: With that, we will open up the call for questions. Thank you. Ladies and gentlemen, if you wish to ask the question, please press star while it by 11 on your touch tone telephone. If you have questions, if your questions have been answered and you wish to withdraw your question, please press star one one again. Please stand by for your first question.

Angie Drake: We, I think, the number that Angie quoted with 80% of the way at this point in managing that field of inventory down. The caution that we saw was from home owners, it's funny that I'm larger to get items.

Tim Walgis: Our first question comes from the line of 10 Walgis with Bear. Your line is open. Hey everybody, good morning. I guess, good morning. Maybe just my first question on the backlog. If you could maybe give us just a little bit of context, I know you probably won't give us a specific number, but just maybe a little bit of context kind of relatively where the backlog exceeded the quarter. And then any sort of kind of context around orders, like is book to bill over one within golf underground, those types of things.

Angie Drake: Little bit of trade down, so we thought continuing strength on residential mass was tremendous in the quarter, but on the higher ticket items, the tend to go through our dealer network, someone which were the inventory that were managing down, just a little bit of caution coming in, and especially in July, and a very latter part of our quarter.

Angie Drake: is once on cause that flow down. And it's really a combination of the end customer themselves, plus just the dealer restacking at that point of year given the macro environment.

Speaker Change: Okay, and I guess within Pro in the quarter was the shortfall relative to your guidance.

Tim Walgis: Yeah, sure. I'll take that. Tim, so on the backlog, if you look at by several comparisons, so if you look relative to the end of last year, we've made improvements in the backlog, reduced it. If you look at year over year, the backlog is down, and if you look sequentially, the backlog is down, the it's really concentrated in the two areas that we've talked about the golf and grounds and the underground areas.

Speaker Change: specifically the landscape business, and was it really kind of tied to the weaker last shipment?

Speaker Change: Exactly, yes.

Speaker Change: Okay, great. I'll hop back and cue. Thanks for the time.

Speaker Change: Good, thank you.

Speaker Change: please stand by for our next question.

Tim Walgis: And the reason we have not cleared the backlog is because of the intake of orders, so the orders in those businesses continue continue to be extremely strong. From a factory output standpoint, we've made tremendous progress this year. We are at, you know, certainly pre pandemic levels of production and not record production in those plants right now. So the momentum in both of those businesses is tremendous at this point. And that's really the reason for the continued larger backlog position.

Speaker Change: Our next question comes from the line of Samuel.cash with Raymond James, your line is open.

Samuel.cash: Good morning Rick, good morning Angie, how are you?

Speaker Change: for you down.

Samuel.cash: Yeah, just a follow-on question to what Tim asked. I don't know if it was directly answered, but I think you all were looking to have normalized field inventories and ostensibly red iron DSOs by the end of the fiscal year. Are you still on track to do that specifically?

Speaker Change: We're on track, and we're at 80% we still have some of the year left to go, we may just be slightly...

Tim Walgis: We do expect for both of those general businesses for the backlog be more normalized by the end of 25. But at this point, we still leave the backlog with certainly the backlog will extend into 25 just for those two businesses where there can change to be extraordinary demand at this point.

Speaker Change: We're being tremendous progress and it's really a combination of strong refill in those businesses, drawing down our inventory.

Rick Olson: Okay, okay, no, that's helpful. Thanks. And then just on the on the lawn and garden or the landscape business, could you just help us tie the comments together around just kind of increased macro caution there, but also kind of getting through the channel inventory. I guess you think you're going to land kind of in the same inventory position, exiting the season and you're just taking production down to get there. Or is it, you know, we'll probably have a little bit higher channel inventory, exiting the year, but but it's still a lot more manageable the next year, just trying to kind of marry those two things together.

Speaker Change: The relatively higher general inventory from some countersers and federal that are a factor. But we've done what we expected to do. We'll be close to getting exactly where we expected to be.

Speaker Change: Gotcha, and then...

Speaker Change: last quarter Rick, you indicated.

Rick Olson: at least an early expectation for kind of mid-single digit organic sales growth for next year. I know you're not going to be formally giving guidance for next year for a bit, but if you could update us, at least on what you're thinking is.

Rick Olson: We, I think the number that Angie quoted was 80% of the way at this point and managing that field inventory down the caution that we saw was from homeowners, especially on larger ticket items, a little bit of trade down. So we saw a continued strength on, you know, residential mass was tremendous in the quarter, but on a higher ticket items that tend to go through our dealer network, some of which were the inventory that we're managing down.

Speaker Change: for next year's sales growth and how to unpack that, maybe give a more specific framework as to what gives you confidence in your projections as it stands.

Speaker Change: So, it's a little bit similar to my previous response, if you think about it, it's the word that comes to mind is cautiously optimistic about next year.

Speaker Change: We have high confidence in the things that we're doing to position ourselves for growth next year and the caution part is just mainly from a macro standpoint.

Rick Olson: Just a little bit caution coming in, and especially in July, and the very latter part of our quarter is what caused that that slowdown. And it's really a combination of the end customer themselves, plus just the dealer restacking at that point of year, given the macro environment. Okay, and I guess within pro and the quarter, was the shortfall kind of relative to your guidance specifically the landscape business, and was it really kind of tied to the week and July shipment? Exactly, yes. Okay, okay, great. I'll hop back and cute. Thanks for the time. Okay, thank you.

Speaker Change: and that was really the driver in July, if the discussion was well interest rate, if it's on certainty about interest rates, the economy, they talked about recession there for a few weeks.

Speaker Change: the political environment, the elections, etc. some of those we know will be behind us.

Speaker Change: Salus are absent at cautious side, but from our side, the expect's golf and grounds to continue to be very strong has tremendous momentum.

Speaker Change: The underground business continues to have a long runway in terms of growth for us and our plants are now.

Speaker Change: Fulfilling that demand, much closer to the rate that it's coming in.

Milan of Samuel Darkatsh: Please stand by for our next question. Our next question comes from Milan of Samuel Darkatsh with Raymond James. Your line is open.

Speaker Change: will have a year or two with Lowe's as part of our general mass strategy that's honestly at record levels this year for a mass standpoint. If you look across all of our partners in that category.

Rick Olson: Good morning, Rick. Good morning, Angie. How are you? Yeah, just a follow-on question to what Tim asked. I don't know if it was directly answered, but I think you all were looking to have normalized field inventories and ostensibly red-iron DSOs by the end of the fiscal year. Are you still on track to do that specifically? We're on track and we're at 80 percent. We still have some of the year left to go.

Speaker Change: Snavely, I mean, just keep it in mind, this is a timeout for Snavely, because of the last two seasons, so if you have anything close to a...

Speaker Change: to a normal, uh, so-called season, that's going to be a positive for us. The field was already stacked as we came into the season, so that that was, you know, completely missing from our results in the third quarter with the exception of a very small amount of

Speaker Change: We've made the progress in reducing our field inventory and those lawn care categories that go through our dealers.

Rick Olson: We may just be slightly, you know, not back to zero, but absolutely nothing like where we started this year. So relative to where we started this year might far closer to normal. Yeah, we've made tremendous progress and it's really a combination of strong retail and those businesses, drawing down our inventory. There's relatively higher general inventory from competitors and federal that are a factor, but we've done what we expected to do will be close to getting exactly where we're expected to be. Gotcha.

Speaker Change: You know, instantly the contractor customers have continued to be strong. It's really the homeowners where the caution has been and where that adjustment has taken place.

Speaker Change: and then just, you know, back to loads, we will have the benefit of 12 months of business with loads versus 10, we'll be getting into the snow season with them and that.

Speaker Change: that's a very positive factor for us to pull along with all of our mass partners.

Rick Olson: And then last quarter, Rick, you indicated at least an early expectation for kind of mid-single-digit organic sales growth for next year. I know you're not going to be formally giving guidance for next year for a bit, but if you could update us at least on what you're thinking is for next year's sales growth and how to unpack that, maybe give a more specific framework as to what gives you confidence in your projections as it stands.

Speaker Change: My final question real quick, again, related to your original expectations for the quarter.

Speaker Change: and maybe this is too fine, the change in tax rate.

Speaker Change: from 21 to 19 and a half. I guess that implies that the international business was considerably less robust than you thought. Was that the primary driver of the negative variance rig?

Speaker Change: I'll take that one if it's okay Rick, really that was driven by a favorable geographic mix of earnings. So, both of foreign and some state tax mix and then we also did a transfer pricing study.

Rick Olson: So it's a little bit similar to my, the previous response if you think about, I guess the word that comes to mind is cautiously optimistic about next year. We have high confidence in the things that we're doing to position ourselves for growth next year and the caution part is just mainly from a macro standpoint. And that was really the driver in July, the discussion was well interest rate. There's uncertainty about interest rates, the economy, they talked about recession there for a few weeks, the political environment, the elections, etc.

Rick Olson: Some of those we know will be behind us. So those are, that's on the cautious side, but from our side we expect golf and grounds to continue to be very strong has tremendous momentum. The underground business continues to have a long runway in terms of growth for us and our plans are now fulfilling that demand much closer to the rate that is coming in. We will have year two with lows as part of our general mass strategy.

Speaker Change: and help us a little bit there. If we think about lowering that for the year, but next year, we also expect a lower, more like a, you know, 21% probably lower than 21% somewhere 20 to 20 to a half percent, but we'll provide a little more color on that in December.

Speaker Change: So international business was not materially different than your plan.

Rick Olson: It was not, it didn't have some of the same impacts that we saw that Rick talked about on the residential, obviously, the snow side of the business and the lawn care, but yeah, mostly due to transfer pricing.

Speaker Change: Got it. Thank you very much. Appreciate it.

Speaker Change: Thank you.

Speaker Change: please stand by for our next question.

Speaker Change: Her next question comes from a line of Michael Shilowski, with DA Davis and a company, your line is open.

Michael Shilowski: I guess I can more than just take in my questions.

Rick Olson: That's honestly, it's at record levels this year for a mass standpoint. If you look across all of our partners in that category, snow, I mean just keep that mind, this is a time out year for snow because of the last two seasons. So if you have anything close to a, to a normal snow season this year that's going to be a positive for us. The field was already stocked as we came into the season.

Boyd: Boyd Boyd Boyd Boyd Boyd Boyd

Speaker Change: Projects to improve their facilities and the golf side.

Speaker Change: Could you be sure that that's whether that is a mixed, it is a large mixed navigation in there or are they?

Speaker Change: and just give us a sense of the opportunity that Toro could get versus how this looks the last year with the combination of the location and equipment project.

Rick Olson: So that, that was completely missing from our results in the third quarter with the exception of a very small amount of shipments. We've, you know, we've made the progress in reducing our field inventory and those lawn care categories that go through our dealers. You know, incidentally the contractor customers have continued to be strong. It's really the homeowners where the caution has been and where that adjustment has taken place. And then just, back to lows, we will have the benefit of 12 months of business with lows versus 10. We'll be getting into the snow season with them. And that, that, you know, that's a very positive factor for us to come on with all of our mass partners. Thank you for that answer.

Speaker Change: Sure, yeah, so pretty much any time there's a renovation of the course itself. It's a reshaping or improving greens or expansion or reconfiguration. It's just by definition automatically an irrigation project because that all gets torn up.

Speaker Change: there are also, I don't think actually even that that 500 includes just pure irrigation upgrade so this would be major, you know, either major renovations, expansions or brand new calls that involve.

Speaker Change: Moving dirt, but in every case of the 500, it's impossible to touch a golf course without doing something to the irrigation, so by definition it's worth.

Angie Drake: My final question real quick. Again, related to your original expectations for the quarter. Maybe this is too fine a point, but the change in tax rate from 21 to 19 and a half, I guess that implies that the international business was considerably less robust than you thought. Was that the primary driver of the negative variance, Rick? I'll take that one if it's okay, Rick. Really, that was driven by favorable geographic mix of earnings.

Speaker Change: and Fantastic.

Speaker Change: and then just on Capitol Education, wasn't really mentioned much in your prepared comments. Please visit us on how the M&D market is looking these days. Other assets for sale, we just kind of do it to support your looking at size-wise and interfere-wise. I'll be helpful.

Speaker Change: Hi, I'm Angie Snavely, and I'm a little bit nervous about what I'm doing.

Speaker Change: Once we regard to M&A, you know, as we say, the process never stops, you're always building relationships and that continues.

Speaker Change: and our tapal allocations remain the same as you can feed in our investor deck, but we are always looking for opportunities.

Angie Drake: So both foreign and some state tax tax mix and then we also did a transfer pricing study that helped us a little bit there. If we think about lowering that for the year, but next year, we also expect a lower, more like 21% probably lower than 21% somewhere 20 to 20 and a half percent, but we will provide a little more color on that in December. So international business was not materially different than your plan?

Speaker Change: that would enhance our current customer focus areas or be new opportunities. It tend to be adjacent fees at product lines, but we're also open to anything that would be in our sphere.

Speaker Change: We do want to, you know, we insist on maintaining the discipline that we have about making those selections and making sure that they can enhance shareholder values really the key for us.

Angie Drake: It was not. It has some of the same impact that we saw that Rick talked about on the residential, obviously, the snow side of the business and the lawn care, but yeah, mostly due to transfer pricing. Got it.

Tuwanda: Thank you very much. Appreciate it. Thank you. Please stand by for our next question.

Speaker Change: and why we are very discriminating about those.

Speaker Change: Just thought they were actually, are there any of the deals looking at in the text-based like a left-hand again or other similar products or they all equip it, you know, iron.

Michael Shlisky: Our next question comes from the line of Michael Shiliski with DA Davis and a company. Yes. Hi. Good morning. There's taken my questions. I think you mentioned I heard this correctly. 500 courses in 88 countries are are pursuing projects to improve their facilities and the golf side. Could you make sure that's whether that is a mix.

Speaker Change: As a general category technology, it's definitely one that we're always interested in. They tend to be smaller acquisitions that might be more entrepreneurial.

Speaker Change: but yeah, that is on our list of just primarily because the way that we can leverage our technology across different areas. So that makes them attractive that they tend to be small, but can have a huge impact just like what Santa Robotics did for us.

Michael Shlisky: There's a large mix of irrigation in there, or are they packages of both combined or just the equipment, just give us a sense that the kind of opportunity that Toro could get versus that they have to split the last year with the combination of irrigation and equipment project. Sure. Yeah. So so pretty much anytime there's a renovation of the course itself. It's if it's a reshaping or improving greens or expansion or reconfiguration.

Speaker Change: Chair, thanks very, appreciate that I'll pass along.

Mike: Thank you, Mike.

Speaker Change: Please stand by for our next question.

Speaker Change: Our next question comes from the line of David McGregor.

Speaker Change: with Longbow Research, Nielana Sopen.

David McGregor: Yeah, thanks for the good morning, everyone Rick, you've repeated reference to, hey, good morning Rick, you've repeated reference to the slowdown in July, so I guess it kind of get that extra question about August, it can help us with kind of what we're seeing in August and now that week is in July, we're going to have a good evening, we're going to have a good evening, we're going to have a good evening,

Michael Shlisky: It's just by definition automatically in irrigation projects because that all gets torn up. There are also, I don't think actually even that that 500 includes just pure irrigation upgrades. So this would be major, you know, either major renovations expansions or brand new golf that involve moving dirt. But in every case of the 500, it's impossible to touch a golf course without doing something to the irrigation. So by definition, it's both.

Michael Shlisky: Fantastic.

Speaker Change: Yeah, I'm gonna start, I think, you know...

Speaker Change: Still a little bit of caution, but...

Speaker Change: I'm probably a bit more normalized to let's say, and we've included our expectations based on what we see in our guidance for the rest of the year.

Speaker Change: It's so we obviously knew that snow was not going to be a factor for the fourth quarter and we've already factored in based on the trajectory that we saw that we're seeing in our guidance for the fourth quarter.

Michael Shlisky: And then just on capital allocation, wasn't really mentioned much in a pair of comments, because it's up to that somehow the MN8 market's looking these days. Other assets for sale, we just kind of just know what you're looking at size wise and if you wise, that'll be helpful. Thank you. With with regard to MN8, you know, as we say, the process number stops you're always building relationships and that that continues. And our capital allocations remain the same as you can see in our investor death, but we're always looking for opportunities that would enhance our current customer focus areas or be new opportunities.

Speaker Change: So, a little bit of caution from the corners.

Speaker Change: and...

Speaker Change: but that's included in what we're writing so far. Yeah, I say we still expect to see that strong demand from underground and golfing grounds as well as we look forward.

Speaker Change: and it really positions those well groups for five out the way we're out today.

Speaker Change: Right, right, right

Speaker Change: Thanks for that, I guess I wanted to ask you about productivity because that's starting to come up in discussion more frequently and we guess at this stage of the game we're far enough along the ramp program that maybe the benefits are exceeding the upfront sort of investment costs but if you look at a professional segment, adjusting for the year [inaudible]

Michael Shlisky: It tend to be adjacent fees, product lines, but we're also open to, you know, anything that would be in our in our sphere. We just, we do want to, you know, we insist on maintaining the discipline that we have about making those selections and making sure that they enhance shareholder value is really the key for us. And why we are, you know, very discriminating about those.

Speaker Change: and the margins are actually up to 50 basis points despite a pretty weak top line performance. So I guess, as you give it a magnitude of the volume deck of metal, it's in the higher-run material cost, the productivity improvement's most of the pretty substantial.

Speaker Change: and we're talking about where you are on the app and where you are in productivity and how we should be modeling that going forward as a good guy.

Michael Shlisky: Just follow up directly, are there any of the deals looking at in the text space like they left hand again or other soon the products or they all equipment, you know, iron? As a general category technology is definitely one that we're always interested in, they tend to be smaller, smaller acquisitions that might be more entrepreneurial. But yeah, that is on our list of just primarily because the way that we can leverage our technology across different areas, so that that makes them attractive that they tend to be small. But can have a huge impact just like what kind of robotics did for us. Sure, thanks. I appreciate that. I'll pass it along. Thank you, Mike.

Speaker Change: Sure, yeah, let me first start with just kind of a progress we made on Amton Q3. We made some great progress, so we continue to identify opportunities for synergies.

Speaker Change: Work Alongside that team that's the three notable highlights that we had in the quarter were the supplier son of the Rick mentioned in the prepared remarks. We had about 100 key suppliers in and they left here very excited about their opportunity to partner with us on our road aspirations.

Speaker Change: We also have some portfolio actions in the quarter, I saw the Pope Investiture that is included in the residential segment. You'll see that in other income in the residential segment.

Speaker Change: and then we have some actions that we took to drive future synergies with our Spartan brand and you'll see that in the professional segment.

David Macgregor: Please stand by for our next question. Our next question comes from the line of David MacGregor. With long, low research, the line is open. Yeah, thanks. Good morning, everyone. Rick repeated reference to, hey, good morning.

David McGregor: Overall, the rest of the expenses with our transformational office and some of the personnel associated with that and consulting expenses are sitting in other activities, David.

David McGregor: but overall productivity continues to be a great project for us. We continue to focus on that and we're confident in delivering that at least $100 million by 27.

David Macgregor: You've made repeated reference to the slowdown in July, so I guess it kind of get better to question the boat August. It can help us with kind of what we're seeing in August and how that that week is in July. They will flow forward. Yeah, August, I think, you know, still a little bit of caution, but, you know, I'm probably a bit more normalized, I would say. And we've included our expectations based on what we see in our in our guidance for the rest of the year.

David McGregor: David, I would just add a bit of fabric.

David O'Neill: David O'Neill, just as we talked about with particularly our professional business in the underground golfing grounds, there is a those plants operate at a higher level, it really creates the opportunity to work on productivity, the absorption of the plants gets better.

David Macgregor: It said it's so we obviously knew that snow was not going to be a factor for the fourth quarter. And we've already factored in based on the trajectory that we saw that we're seeing, you know, in our guidance for the fourth quarter. But still a little bit of caution from owners and. And that's included in what we're writing so far. Yeah, I'd say we still expect to see that strong demand from underground and golf and grounds as well as we look forward. And it really positions as well. We're out today. Right, right. Thanks for that.

David O'Neill: and so manufacturing variants is less than the issues that contributes to productivity as well as the specific initiatives that we have to run. And we would just add that we're also leveraging our DNA costs, so we've worked hard to control what we can.

Speaker Change: Okay, figure a follow-up with you a little more on that offline, but I just want to more if I could and just, you know...

Speaker Change: you talk about material costs for higher in the quarter in both segments.

Speaker Change: Obviously we've still got some higher contract that steel place is coming off the balance, you know.

Speaker Change: and through the PNL, but can you help us understand just on the timing of the PNL benefits from lower steel costs? When do we start to see that? Are we waiting for a contract reset at the beginning of the year and then a 90-day lag for it to come off the balance sheet? Or are you thinking about timing around that, please?

David Macgregor: I guess I wanted to ask you a productivity because I'm starting to come up in discussion more frequently. And I would guess at this stage of the game, we're far enough along the amp program that maybe the benefits are exceeding the upfront sort of investment costs. But you know, if you look at a professional segment, you know, adjusting for the year ago, non cash and payment charge, of course. You know, the margins were actually up 50 basis points display a pretty weak top line performance.

David Macgregor: So I guess, you know, just give it a magnitude of the volume decremental is in the high wrong to cost productivity improvements must have been pretty substantial. Like you just talk about where you are on amp and where you are productivity and how we should be modeling that going forward is a good guy. Sure. Yeah, let me, let me first start with just kind of the progress we made on amp in Q3.

F.B.: F.B. with regard to...

Speaker Change: Community Costs in general, I think that the biggest focus for us is actually an offshoot of our Amp initiative to work with our suppliers and partners and drive down.

Speaker Change: Our costs both through just competitive pricing but also through partnering with our suppliers to do better on costs

Speaker Change: from a steel standpoint. I mean, overall market, we did see it adjustment probably about a year and a half ago or so. And we're in a little bit more of a flat sewed from a market standpoint. We still have major steel contracts.

David Macgregor: We made some great progress so we continue to identify opportunities for synergies and work alongside that team. But the three notable highlights that we had in the quarter were the supplier summit that Rick mentioned in the prepared remarks. We had about 100 key suppliers in and they left here very excited about their opportunity to partner with us on our growth aspirations. We also have some portfolio actions in the quarter. You saw the Pope divestiture that is included in the residential segment.

Speaker Change: The negotiations coming up, so that's still TBDG, but we'll obviously be watching to drive as much of a provenance possible in this class.

Speaker Change: Yeah, and anything that we've seen there, we've included that in our guidance to the best of our ability.

Speaker Change: Wright. But I guess we're going to try to really understand it's just the timing and so let's stand back from whether it's up or down and just whatever it is, the timing, do we see that kind of contract reset at calendar first, first and a year and then it's 90 days to come off the balance sheet or you just help us with the timing.

David Macgregor: You'll see that in other income in the residential segment. And then we had some actions that we took to drive future synergies with our Spartan brand and you'll see that in the professional sector. Smith. Overall, the rest of the expenses with our transformational office and some of the personnel associated with that and consulting expenses are sitting in other activities, David. But overall, productivity continues to be a great project for us. We continue to focus on that, and we're confident in delivering at least $100 million by F-27.

Speaker Change: That's roughly correct, although there are some continuous processes of negotiation. So it's not everything happens right on a fiscal year basis. There are negotiations through the year.

Speaker Change: Okay, great, well thanks very much and good luck.

Speaker Change: Thank you. Thank you for staying by for our next question.

Speaker Change: Our next question comes from a line of Eric Buffhardt with Cleveland Research Company. Y'all on his open.

David Macgregor: David, I would just add, as we talked about with particularly our professional business in the underground, Gulf and Grounds areas, as those plants operate at a higher level, it really creates the opportunity to work on productivity, the absorption of the plants gets better, and so manufacturing variance is less of an issue. So that contributes to productivity as well as the specific initiatives that we have to run. And we would just add, we're also leveraging our ST&A costs, so we've worked hard to control what we can. Right, right.

Speaker Change: Thank you.

Eric Buffhardt: She's just a bit of clarity on the change in the revenue guide. Is I listen, you walk through all this and there's a lot of strength and backlog and the...

Eric Buffhardt: Turf growing season. There's a whole number of things going well. It seems like narrowly this is Dealer cell through and dealer hoarders that are homeowner driven. Is that the right way to narrow it or would you narrow it differently than that?

Speaker Change #101: I've stood the right way to narrow it, that is the biggest factor through the rest of this year.

David Macgregor: Okay, maybe I'll follow up with you a little more on that offline, but just one more if I could, and just, you know, you talk about material costs where higher in the quarter than both segments. Obviously, you've still got some higher contracted steel prices coming off the balance sheet, and so the P&L, but can you help us understand just on the timing of the P&L benefits from the lower steel costs? When do we start to see that?

Speaker Change #102: Ok, and this was an area that would be...

Speaker Change #102: this homeowner piece of the business has been.

Speaker Change #103: is a different and worse than expected the last 15 months. Is it incrementally worse now? Was there an assumption that it was stabilizing or getting better? I'm just trying to figure out this isn't the first time we've heard about that piece of the business. I'm just trying to figure out what's different now here on the back after them.

David Macgregor: Are we waiting for a contract reset at the beginning of the year, and then a 90-day lag for it to come off the balance sheet, or would you think that we're timing around that, please? David, with regard to commodity costs in general, I think that the biggest focus for us is actually an offshoot of our AMP initiative to work with our suppliers and partners and drive down our costs, both through just competitive pricing, but also through partnering with our suppliers to do better on costs.

Speaker Change #103: you know the trend or the expectation and why.

Speaker Change #105: Yeah, I would say that it's consistent with our expectations going back to a year ago, where we recognized based on a significant slowdown in the market at that time and...

Speaker Change #106: Yeah, dealers coming off with three years where they didn't have products and have built up inventory that we needed to go through an inventory adjustment.

Speaker Change #106: and we have been, that's what we've been working on for the last year and we've made tremendous progress. We are close to being on track with our mentor, reduction plan, I think we've quoted 80%.

David Macgregor: From a steel standpoint, and the overall market, we did see an adjustment probably about a year and a half ago or so, and we're in a little bit more of a plateau from a market standpoint, we still have major steel contracts, negotiations coming up, so that's still TBD, but we'll obviously be looking to drive as much improvement as possible in those costs. Yeah, anything that we've seen there, we've included that in our guidance to the best of our ability.

Speaker Change #106: still have a few months to go in the year and so that's really what the factor is. We're acknowledging and it's...

Speaker Change #106: obviously seen in our revenue that.

Speaker Change #106: there was caution that came into our customers in July.

Speaker Change #106: and shared with our dealers about taking stock at this time of year.

David Macgregor: Right, but I guess what I'm trying to really understand is just the timing, and so let's stand back from whether it's up or down, and just whatever it is, the timing, do we see that kind of contract reset at calendar first of the year and then it's 90 days to come off the balance sheet, or do you just help us with the timing? That's roughly correct, although there are some continuous processes of negotiation, so it's not everything happens right on a fiscal year basis, there are negotiations through the year.

Speaker Change #106: that's the trajectory and changed a little bit at the end of the year. But this is, again, the end of summer season and much of our sewing area. But it's not unusual for...

Speaker Change #106: Old customers and dealers make decisions, there wasn't...

Speaker Change #106: that's really where the factor came from. So, we've been on track with the reducing inventory as we've suggested a year ago. Been working on that, retails, strong commitments that then bucks lower for us intentionally.

David Macgregor: Okay, great, thanks very much and good luck. Thank you.

Speaker Change #107: to write for that fuel-limin for you.

Speaker Change #108: Thank you.

Eric Bosshard: All right, next question comes from a line of Eric Bothard with Cleveland Research Company, Yolanda Fulton. Thank you. Just a bit of clarity on the change in the revenue guide is I listen, you walk through all this and there's a lot of strength and backlog and the turf growing season. There's a whole number of things going well. It seems like narrowly, this is dealer cell through and dealer orders that are homeowner driven.

Speaker Change #109: Okay, thank you.

Speaker Change #109: Our next question comes from the line of tag Jackson with Northland Capital Market, Yelena Soltin.

Yelena Soltin: Good morning, thanks for taking the question.

Speaker Change #111: See you next time!

Speaker Change #112: I'm a circle around inventory on the balance sheet and just kind of a new little around it for a bit, you know, you're doing a good job in terms of kind of, you know, working through that when I think about your inventory on the balance sheet and you can play it out over.

Eric Bosshard: Is that the right way to narrow it or would you narrow it differently than that? That's the right way to narrow it. That is the biggest factor through the rest of this year. Okay, and this was an area that was this homeowner piece of the business has been different and worse than expected the last 15 months. Is it incrementally worse now? Was there an assumption that it was stabilizing or getting better? I'm just trying to figure out this isn't the first time we've heard about that piece of the business.

Speaker Change #112: you know the next 12-18 months.

Speaker Change #113: and at first of all, I would expect it to eventually try to self-down to a more normal level. So my first question is, when you look at your inventory at turns or days-based, is what would your definition of normal be and then behind that is in my correct to assume that

Speaker Change #114: you know, glove in hand in terms of bringing down that inventory level on your balance sheet is you bringing down.

Eric Bosshard: I'm just trying to figure out what's different now here in the back half than either the trend or the expectation and why. I would say that it's consistent with our expectations going back to a year ago where we recognize based on a significant slowdown in the market at that time and dealers coming off with three years where they didn't have products and had built up inventory that we needed to go through an inventory adjustment and we have been that's what we've been working on for the last year.

Speaker Change #115: The backlog that you have with regards to underground construction and golf, you know, point being that, you know, you're seeing such strength in orders that you have, you know, you have this amount of inventory because you've got all those businesses that you've got to kind of work with.

Speaker Change #116: and then behind that even is kind of at what point do you think you get to where that kind of normalized level is, you know, based upon, you know, say, turns or days. And so that's my question.

Eric Bosshard: And we've made a tremendous progress. We are close to being on track with our inventory reduction plan. I think we've quoted 80% still have a few months to go in the year. And so that's that's really what the factor is we're acknowledging and it's obviously seen in our revenue that there was caution that came into our customers in July. And shared with our dealers about taking stock at this time of year that's the trajectory changed a little bit at the end of the year.

Speaker Change #116: [inaudible]

Speaker Change #117: So we continue to rely on our inventory tab and we've had a sharp focus as you know on that all year long. We did make really good progress in the quarter, so we're down about $25 million sequentially. Some of that driven by a whip, so to your point on increasing output, some of that inventory is sitting in whip so that we can address that backlog for our customers.

Speaker Change #117: and we've made great progress, so we've probably about $75 million to go, we've talked last quarter about kind of heading in the right direction and where we wanted our inventory a dollar to be. So I'd say we're to get to our ideal levels, we're looking at about $75 million still to go.

Eric Bosshard: But this is again the end of the summer season and much of our selling area. But it's not unusual for both customers and dealers to make decisions. It wasn't that that's really where the factor came from. So we've been on track with the reducing inventory as we suggested a year ago. Been working on that retail strong chipmins have been what's lower for us intentionally to write says that fuel inventory. Okay, that's my question. Thank you. Okay. Thank you.

Speaker Change #118: And then if I could ask one more question and it's early more than I have been a question and it's just more of a commentary. You know this morning, Calaway and Top Golf announced there's kind of a separation and you know that.

Speaker Change #119: the rationale behind it is that you know, tight top golf is...

Speaker Change #120: had some, you know, call it, you know, performance issues, you know, as we've moved past COVID-19 and I know that the golf business for you is exceptionally strong and you continue coming to yourself that, you know, rounds played or up in everything, but, you know, in the past it's also been commented that, you know, what...

Ted Jackson: Please say bye for our next question. Our next question comes from the line of pay Jackson with Northland capital market. Yalan is open.

Ted Jackson: Good morning. Thanks for taking my question. You bet. I'm going to circle around the inventory on the balance sheet and just kind of knew it around it for a bit. You know, you're doing a good job in terms of kind of working through that. When I think about your inventory on the balance sheet and play it out over. The next 12 to 18 months. And first of all, I would expect it to eventually trend itself down to more normal level.

Speaker Change #121: of one of the underlying drivers that has been bringing in a new golfer or through something like Top Golf. It's trying to think to read with regards to what's going on on that side of the business with regards to Top Golf in terms of kind of a longer term. Let's figure that out. That's it for me.

Ted Jackson: So my first question is, when you look at your inventory at the turns or days basis, what would your definition of normal be? And then behind that is, am I correct to assume that glove and hand in terms of bringing down that inventory level on your balance sheet is you bringing down the backlog that you have with regards to undergown construction and golf, you know, a point being that, you know, you're seeing such strength and orders that you have, you know, you have this amount of inventory because you've got all those business that you've got to kind of work through.

Speaker Change #122: has certainly a agency. It's a little bit different than our golf course business. And I know that...

Speaker Change #123: One of the factors is there are more players in that particular field right now just because of the strength of golf. So I haven't had a chance to look at the information that you're looking at.

Speaker Change #123: But what it does reflect is just the overall interest level in the game of golf and continue to grow in all forms.

Speaker Change #123: on course, pop course.

Speaker Change #123: and increasing data that says if you play off course in one of these forms, even on some of these sort of whole hunting places that it does increase your interest in playing golf on a grass golf course and that's good for us.

Speaker Change #124: Okay, well, thanks for taking my questions, and all of them by the way congratulations on the Catholic generation for the quarter, it was impressive.

Speaker Change #125: Thank you.

Ted Jackson: So, and then behind that even is kind of, at what point do you think you get to where that kind of normalized level is, you know, based upon, you know, say, turns or days. So that's my question. So we continue to rely on our inventory Ted and we've had a sharp focus, as you know, on that all year long. We did make really good progress in the quarter. So we're down about $25 million sequentially.

Speaker Change #126: Thank you.

Speaker Change #127: Ladies and gentlemen, this concludes the question and answer session. I will now let's turn the call back over to Julie. Please proceed with closing remarks.

Julie Kerekes: Thank you to Andrea and thank you everyone for your questions and interest in the Toronto company. We look forward to talking with you again in December to discuss our fiscal 2024, fourth quarter and full year results.

Ted Jackson: Some of that driven by Whip. So to your point on increasing output, some of that inventory is sitting in Whip so that we can address that backlog for our customers. And we've made great progress. So we've, you know, probably about $75 million to go. We've talked last quarter about kind of heading in the right direction and where we wanted our inventory a dollars to be. So I'd say we're to get to our ideal levels. We're looking at about $75 million still to go. And then if I could ask one more question.

Speaker Change #128: Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Everyone have a good day.

Speaker Change #128: The End

Ted Jackson: And it's early more than I didn't question, it's just more of a kind of a, that's some commentary. You know, this morning, Callaway and Topgolf announced this kind of a separation and, you know, the rationale behind it is that, you know, Topgolf has had some, you know, call it, you know, performance issues, you know, as we've moved past COVID-19. And I know that the golf business for you is exceptionally strong and you continue to comment yourself that, you know, rounds played are up and everything.

Speaker Change #128: [inaudible]

Ted Jackson: But, you know, in the past, it's also been commented that, you know, one of the underlying drivers that has been bringing in a new golfer is through something like Topgolf. Starting to think to read with regards to what's going on, you know, on that side of the business with regards to Topgolf in terms of kind of a longer term. Just figure that out.

Speaker Change #128: [inaudible]

Rick Olson: That's it for me. And the, certainly, Jason C. It's a little bit different than our golf course business. And I know that one of the factors is there are more players in that particular field right now just because of the strength of golf. So I haven't had a chance to look at the information that you're looking at. But what it does reflect is just the overall interest level in the game of golf and continued growth in all forms, you know, on course, off course.

Rick Olson: And increasing data that says if you play it off course in one of these forms, even on some of these social funding places, but it does increase your interest in playing golf on a graph, golf course, and that's good for us. Okay.

Speaker Change #128: [inaudible]

Ted Jackson: Well, thanks for taking my questions. Oh, and by the way, congratulations on the cash flow generation for the quarter. It was impressive. Thank you.

Julie Kerekes: Ladies and gentlemen, this concludes the question and answer session. I will now like to turn the call back over to Julie. Please proceed with closing remarks. Thank you, Tuwanda, and thank you, everyone, for your questions and interest in the Toro company.

Julie Kerekes: We look forward to talking with you again in December to discuss our fiscal 2024 fourth quarter and full year results. Ladies and gentlemen, thank you for your participation in today's conference.

Tuwanda: This concludes the presentation.

Tuwanda: You may now disconnect. Everyone to have a good day.

Speaker Change #128: [inaudible]

Speaker Change #128: Music

Michael Shlisky: Michael Schultz, Michael Jackson, Michael Jackson, Michael Jackson[inaudible] Michael Jackson, Michael Jackson, Michael Jackson,[inaudible] John David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes, David MacGregor, David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes, David MacGregor, David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes,[inaudible] Thomas Hayes, David MacGregor, Thomas Hayes,[inaudible] Thomas Hayes, David MacGregor, Thomas David MacGregor, Thomas Hayes, David MacGregor, Thomas Hayes, David MacGregor, Thomas[inaudible] Michael Jackson, David MacGregor, John