Net sales for our Other activities in the first quarter of fiscal 2023 decreased by $0.8 million compared to the same period in fiscal 2022.

Changes in foreign currency exchange rates resulted in a decrease in our net sales of approximately $6.3 million for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

However, a decline in retail sales or financial difficulties of our distributors or dealers could cause this situation to change and thereby require us to repurchase financed product, which could have an adverse effect on our results of operations, financial position, or cash flows.

Our order backlog (including shipments beyond 12 months) was slightly higher as of the end of the first quarter of fiscal 2023 compared to the end of the fourth quarter of fiscal 2022 driven by continued strong demand.

Segment EarningsProfessional segment earnings for the first quarter of fiscal 2023 increased 54.5 percent compared to the first quarter of fiscal 2022, and Professional segment earnings margin increased to 16.4 percent from 13.9 percent in the first quarter of fiscal 2022.

Segment EarningsResidential segment earnings for the first quarter of fiscal 2023 increased 19.1 percent compared to the first quarter of fiscal 2022, and Residential segment earnings margin increased to 14.3 percent from 12.4 percent in the first quarter of fiscal 2022.

Sustainability is integrated into our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering our people.

This net sales increase was primarily driven by higher volume, net price realization and the acquisition of Intimidator.

We strive to provide innovative, well-built, and dependable products supported by an extensive service network.

The international net sales increase for the first quarter of fiscal 2023 was mainly driven by higher volume and net price realization.

The increase in net earnings per diluted share for the first quarter comparison was primarily due to net price realization, higher Professional segment net sales volume, and productivity improvements, partially offset by higher material, freight, and manufacturing costs.

The increase was driven primarily by higher shipments of product broadly across the segment, net price realization, and incremental revenue from our acquisition of Intimidator.

This was an increase of 13.3 percent over our cash dividend of $0.30 per share for the first quarter of fiscal 2022.

The increase in Residential segment earnings margin for the first quarter of fiscal 2023 was largely driven by net price realization and productivity improvements, partially offset by higher material, freight, and manufacturing costs, and higher SG&A expense.

Gross margin was 34.5 percent for the first quarter of fiscal 2023 compared to 32.2 percent for the first quarter of fiscal 2022, an increase of 230 basis points.

The increase in gross margin was primarily due to net price realization and productivity improvements, partially offset by higher material, freight, and manufacturing costs.

Adjusted net earnings for the first quarter of fiscal 2023 were $103.6 million, or $0.98 per diluted share, compared to $69.7 million, or $0.66 per diluted share, for the first quarter of fiscal 2022, an increase of 48.5 percent per diluted share.

Adjusted gross profit for the first quarter of fiscal 2023 was $396.1 million, up 31.8 percent compared to 28Table of Contents$300.5 million for the first quarter of fiscal 2022.

The increase in Residential segment net sales for the first quarter of 2023 was primarily driven by net price realization and higher shipments of zero turn riding mowers, partially offset by lower shipments of snow products.

The increase in Professional segment earnings margin was primarily due to net price realization, net sales leverage and productivity improvements, partially offset by higher material, freight, and manufacturing costs, and the addition of Intimidator at a lower initial earnings margin than the segment average.

Professional segment net sales for the first quarter of fiscal 2023 were $880.7 million, an increase of 30.9 percent compared to $672.9 million in the first quarter of the prior fiscal year.

Residential segment net sales for the first quarter of fiscal 2023 were $264.6 million, an increase of 3.6 percent compared to $255.4 million in the first quarter of the prior fiscal year.

EarningsNet earnings for the first quarter of fiscal 2023 were $106.9 million, or $1.01 per diluted share, compared to $69.5 million, or $0.66 per diluted share, for the first quarter of fiscal 2022, an increase of 53.0 percent per diluted share.

This increase was primarily due to higher income from our Red Iron joint venture and the favorable impact from derivative instruments.

Net sales in international markets increased by $50.4 million for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

Net SalesConsolidated net sales for the first quarter of fiscal 2023 were $1,148.8 million, up 23.2 percent compared to $932.7 million in the first quarter of fiscal 2022.

Residential SegmentSegment Net SalesWorldwide net sales for our Residential segment for the first quarter of fiscal 2023 increased 3.6 percent compared to the first quarter of fiscal 2022.

Cost of sales(65.5)(67.8)Gross profit34.5 32.2 Selling, general and administrative expense(22.6)(22.4)Operating earnings11.9 9.8 Interest expense(1.2)(0.8)Other income, net0.7 0.3 Earnings before income taxes11.4 9.3 Provision for income taxes(2.1)(1.8)Net earnings9.3 %7.5 %Gross Profit and Gross MarginGross profit for the first quarter of fiscal 2023 was $395.9 million, up 31.8 percent compared to $300.5 million in the first quarter of fiscal 2022.

Our purpose is to help our customers enrich the beauty, productivity, and sustainability of the land.

The acquisition of Intimidator broadened our Professional reportable segment and expanded our manufacturing footprint and dealer network.

The Toro Company is an American company that designs, manufactures, and markets a range of turf maintenance equipment , snow removal equipment , and irrigation system supplies for commercial and residential gardens, public parks, golf courses, sports fields, and agricultural fields. The company is based in the Minneapolis suburb of Bloomington, Minnesota.

The Toro Company designs, manufactures, and markets professional and residential equipment worldwide. The company's Professional segment offers turf and landscape equipment products, including sports fields and grounds maintenance equipment, golf course mowing and maintenance equipment, landscape contractor mowing equipment, landscape creation and renovation equipment, rental and specialty construction equipment, and other maintenance equipment; and snow and ice management equipment, such as snowplows, salt and sand spreaders, and related parts and accessories for light and medium duty trucks, utility task vehicles, skid steers, and front-end loaders. It also provides irrigation products comprising sprinkler heads, electric and hydraulic valves, controllers, computer irrigation central control systems, coupling systems, and agricultural irrigation system drip tape and hose products, as well as professionally installed lighting products through distributors and landscape contractors. This segment sells its products primarily through a network of distributors and dealers to professional users engaged in maintaining golf courses, sports fields, municipal properties, agricultural fields, residential and commercial landscapes, and removing snow and ice, as well as directly to government customers, rental companies, and retailers. Its Residential segment provides walk power mowers, riding mowers, snow throwers, replacement parts, and home solution products that include trimmers, blowers, blower-vacuums, and underground and hose-end retail irrigation products. This segment sells its products to homeowners through a network of distributors and dealers; and various home centers, hardware retailers, and mass retailers, as well as online. The Toro Company was founded in 1914 and is headquartered in Bloomington, Minnesota.

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