Kurt Svendsen - Managing Director of Corporate Communications and Investor Relations Michael J. Hoffman - Chairman, Chief Executive Officer and President Renee J. Peterson - Chief Financial officer and Vice President of Finance

Sam Darkatsh - Raymond James & Associates, Inc., Research Division Mark Herbek - Cleveland Research Company Robert A. Kosowsky - Sidoti & Company, LLC James Barrett - CL King & Associates, Inc., Research Division Zoran Milling

Good day, ladies and gentlemen and welcome to the Toro Company Second Quarter Earnings Conference Call. My name is Christie, and I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I'd now like to turn the call over to Kurt Svendsen, Managing Director of Corporate Communications and Investor Relations for the Toro Company. Please proceed.

Thank you and good morning. Joining me for our second quarter earnings call are Mike Hoffman, Chairman and Chief Executive Officer; Renee Peterson, Chief Financial Officer; Tom Larson, Vice President and Treasurer and Blake Grams, Vice President and Controller. We begin with our customary forward-looking statement policy. During this call, we will make certain forward-looking statements, which are intended to assist you in understanding the company's results. You are all aware of the inherent difficulties, risks and uncertainties in making predictive statements. The Safe Harbor portion of the company's earnings release, as well as SEC filings detail some of the important risk factors that may cause actual results to differ from those in our predictions. Our earnings release was issued this morning by Business Wire. A copy can be found in the Investor Information section of our corporate website, thetorocompany.com. I will now turn the call over to Mike. Michael J. Hoffman: Thank you, Kurt and good morning to all our listeners. Despite challenging weather, including a very late start to spring, we delivered record sales and earnings in our second quarter. Net sales increased 2% for the quarter and net earnings per share grew 17%. We believe these results are noteworthy when compared to last year's second quarter when we enjoyed ideal weather conditions due to an earlier-than-normal start to spring. Highlights for the quarter also include positive sales developments in Europe and Asia, along with continued improvement in profitability. Following a brief commentary on the state of our business during the first half of the fiscal year, Renee will discuss our financial and operating results in more detail. Sales results for the first 6 months of the year were primarily fueled by demand for our large professional turf equipment, as well as our irrigation offerings, most notably our golf and micro-irrigation systems. Many of our professional customers are better off today than a year ago. Their enhanced positions have given rise to optimism in the channel that, in turn, helped to generate demand for our products. The late start to spring delayed retail in some markets, which along with the transition to Tier 4, led to increased field inventory. The residential business, which is always more immediately impacted by weather, was held back by adverse conditions throughout most of our first 6 months. The lack of timely snowfall impeded the residential segment's first quarter results, while spring's very late debut through much of North America and Europe decreased shipments of residential products during the second quarter. In fact, the first week of May saw significant snowfall through the plains in Upper Midwest. The good news is we have enjoyed a recent warming trend in both temperatures and residential shipments that has created strong positive momentum, resulting in some very favorable comparisons to May of 2012. The combined effects of the early spring weather this year and the Tier 4 transition that began last year have created an unusual business flow. Timing and weather aside, the fundamentals of our business remain strong. As we reported during our first quarter call, our golf equipment business achieved brisk early retail activity. The momentum slowed a little in the quarter due in part to unfavorable weather in most of the United States and Canada. A year ago, we experienced some of the earliest golf course openings on record but 2013 has seen some of the latest. As we also noted in our first quarter call, distributor inventory is higher than normal due to distributors deciding to buy pre-Tier 4 products and hold them in inventory to meet ongoing customer demand. And customer demand is up. Year-to-date, golf retail is tracking well ahead of last year's results. The Tier 4 transition and the optimism generated by the increased revenues golf courses earned in 2012 have motivated customers to increase purchases. These positive trends are also helping the golf irrigation business. Older system renovations, course redesigns, along with routine system upgrades and replacements are driving sales. Our landscape contractor businesses continue to benefit from a healthy appetite for our latest high-performance machinery, including a full range of zero-turn riding and stand-on mowing and aeration equipment. In addition, customers are being drawn by the high productivity and ease of operation of our new 30-inch commercial mowers. Customer demand for increased productivity is also paying off for our sports field and professional ground business. The need to replace aging fleets and maximize the output of their workforce is motivating buyers to take a close look at our latest technological advancements. The professional rental and construction business has made steady progress during the first 6 months in the integration of our new rental and construction and underground product lines. Many of our new rental and construction products, including motor and cement mixers, compaction equipment and debris handlers are now in production, are shipping and are already being rented and retailed through our business partners. Preparations are on track for our national launch of our underground business at The International Construction and Utility Equipment Exposition in Louisville in early October of this year. Compact utility loader retail is also tracking ahead of last year's pace. And we recently won a significant bid for walk trenchers and stump grinders from a leading rental partner. Overall, the rental and construction categories continue on a steady growth path. We are well-positioned to capitalize on the opportunities presented by this favorable trend. The residential and commercial contractor irrigation businesses have not gained as much traction due to the late season, however, the resurgence in homebuilding should increase the demand for system installations. We are prepared for the anticipated uptick with comprehensive offerings of innovative products. For example, our new evolution smart controller, which features an intuitive customer interface and advanced contractor capabilities has been well-received by contractors. Our low voltage lighting sales continue to grow at a healthy pace in the United States. We are releasing our new light logic remote-control system this month and our Flex LED products continue to gain acceptance from customers. Our residential segment is also well-positioned with exciting new products and aggressive promotional programs. We are very encouraged by the strong surge in retail activity we are experiencing now that spring has finally arrived. Last week's retail report showed an unprecedented level of walk power motor sales. Our new handheld lithium ion battery-powered product line, which allows consumers to perform multiple tasks with a single power source has increased placement at the Home Depot and is gaining retail velocity. The line currently includes blowers, string trimmers and hedge trimmers. Overall, international sales for the quarter were somewhat better than anticipated. The results vary widely by country and product category due to economic conditions and weather patterns. Commercial equipment sales worldwide are gaining momentum driven by golf equipment sales, replacement purchases that many customers postponed in recent years due to the economic downturn are once again occurring. We have also seen strength in some markets for golf irrigation. Finally, in micro-irrigation, our previously announced plan to acquire a small company in China is still in process. We currently expect the acquisition to close just before the end of our fiscal year. I will now turn the call over to Renee for a more detailed discussion of our financial results. Renee J. Peterson: Thank you, Mike and good morning, everyone. As we reported earlier this morning, net sales for the quarter were a record $704.5 million compared to $691.5 million for the same period a year ago. We also delivered net earnings of $78.4 million or $1.32 per share compared to $1.13 in the second quarter of fiscal 2012. Year-to-date net sales were up 3% to $1,149,000,000. We achieved net earnings of $109.8 million for the first 6 months or $1.85 per share compared to $1.46 per share a year ago. Professional segment sales were up 8.9% for the quarter to $496.4 million. Landscape contractor equipment sales were up on channel demand, in anticipation of a strong selling season. Increased sales of our new rental and construction equipment, golf irrigation and micro-irrigation systems also drove growth in the quarter. Year-to-date, our professional sales were up 11.6% to $825.6 million. Professional net earnings for the quarter totaled $112.3 million, a 13.8% increase over last year. For the first 6 months, professional segment earnings were $173 million, up 22.9% compared to the same period last year. Second quarter residential segment sales declined 13.2% to $201.4 million. Year-to-date residential sales were down 12.8% to $322.3 million. Net earnings in the residential segment for the quarter totaled $24.7 million, down 13.5% from last year. Year-to-date earnings were $36.8 million, a 10.4% decrease compared to the first 6 months of fiscal 2012. The second quarter residential sales and earnings results were primarily due to the previously discussed unfavorable spring weather conditions in North America and Europe. The year-to-date results were largely attributable to the challenging winter conditions that affected first quarter and the late spring's impact on the second quarter. Our gross margin for the second quarter improved 180 basis points to 35.8%. Gross margin is up year-to-date by 210 basis points to 36.4%. The increase is attributable to a number of factors, including segment and product mix, our ongoing productivity efforts, positive commodity trends and selected price increases. While we anticipate that mix and lower manufacturing utilization will negatively impact margins in the second half, we are raising our gross margin expectations for the year by about 60 basis points from our previously stated 40 basis point improvement. SG&A expense as a percent of sales increased by 50 basis points for the quarter to 19.1%, and by 40 basis points to 22.1% year-to-date. The SG&A increase was the result of higher warehousing expense, incremental cost from acquisitions, increased engineering spend and higher health insurance costs. For the full year, we expect our SG&A rate to be higher than last year by a similar percentage as we've seen year-to-date. Operating earnings as a percent of sales for the quarter, increased 130 basis points to 16.7%, and by 170 basis points to 14.3% year-to-date. Our productivity initiative continue to have a positive impact. Interest expense for the quarter was $4.1 million, down slightly from a year ago. Year-to-date, interest expense was down 2.3%. Our effective tax rate for the quarter was 32.6% compared to 34% last year. For the first 6 months, the tax rate was 31.3% compared to 34% in 2012. The retroactive reinstatement of the Federal Research and Engineering Tax Credit drove this improvement. We expect the tax rate for fiscal 2013 to be about 32%. Turning to the balance sheet. Accounts receivable for the quarter totaled $307.8 million, up 12.8% on a sales increase of 1.9%. The change was caused by a higher proportion of sales that are not financed with Red Iron Acceptance. Net inventories for the quarter were up 23.6% to $310 million. The inventory growth includes product to support the transition to Tier 4, inventory from the recent addition of the rental and construction equipment businesses, snow product and residential inventory related to the late start to spring. Second quarter trade payables increased 3.7% to $203.7 million. Finally, our net working capital as a percent of sales was above the prior-year level, coming in at 16.3%. The difference is due to higher inventory levels, which we believe will be sharply reduced by yearend. I'll now turn the call back to Mike for his concluding comments. Michael J. Hoffman: Thank you, Renee. While unfavorable weather impeded some of our efforts for the quarter, the outlook for our business remains positive. Our end markets are solid, our product offerings are aligned to customer needs and we continue to compete effectively in the marketplace. For example, the retail outlook for the golf business this season remains solid. We will have good availability of both pre-Tier 4 and Tier 4-compliant products, as well as an outstanding lineup of innovative new equipment and golf irrigation solutions to serve our customer needs through the season. That being said, we do anticipate golf shipments to moderate in the coming months. We will continue to distinguish ourselves from the competition through our relentless focus on game-changing innovation. For instance, we just recently began shipping our exciting new lightweight, highly productive fairway mower, the Reelmaster 3550, the lightest and fastest mower in its class. Rated at under 25 horse power, the mower's diesel engine also avoids the higher cost of the Tier 4 requirements. Through the years, cutting-edge innovation like this has and will continue to enable Toro to grow and lead. Our landscape contractor businesses are also well-positioned to capitalize on the growing retail demand. We have an excellent product and compelling promotional plans to drive retail sales. The Toro sports field and professional ground product portfolio is similarly well-suited for today's market requirements. We have already retailed Tier 4-compliant products to cities and park wards that are more focused on eco-friendly solutions. While significant investments were made to meet the stringent Tier 4 requirements, these research and development efforts yielded additional benefits, such as our new, patent pending, smart power traction technology. Used in our large rotary mowing line, smart power represents another significant step forward in productivity. In more demanding mowing conditions, smart power automatically adjusts the unit's ground speed to route more power to the motor blade so they can run at optimum cutting speed, thus, maximizing the mower's performance. We expect the grounds market to remain strong through the remainder of the year. The outlook for the balance of the year for our professional rental and construction businesses also offers reasons for optimism. Residential and commercial construction forecasts are positive. Growth in the underground product market continues to be fueled by robust installation of fiber optics cable and the replacement of underground infrastructure. Production and shipments of our new Toro-branded underground and construction products will take place during the third quarter. While second quarter sales for our residential business fell short of our plans, the drop was not surprising, in light of the winter that just would not end. The recent surge in demand ignited by warmer temperatures is driving strong retail activity in May. Several midwestern markets have also received welcome relief from the extreme drought conditions they suffered in 2012. The economic challenge in Europe remains. The rate of recovery will be a significant external influence on our international business. We will likely continue to see varied results by country and region. We are closely monitoring inventory levels and we'll respond appropriately. Much of our retail needs for the year still lie ahead due to the delayed start of the primary retail season. We need a strong, growing season with favorable temperatures and precipitation to help drive retail at both our residential products and professional equipment in our distribution channel. These factors are causing us to temper our growth expectations for the year. We now expect sales growth for fiscal 2013 to be about 3% to 4%. Despite the lower sales expectations, we are maintaining our earnings outlook for the year at about $2.40 to $2.45, based on the strong operating performance to date. The unusual sales mix bias towards residential product in the second half will pressure earnings in the remainder of the year. While the year certainly has not played out according to plan, our guidance suggests new record levels of sales and net earnings. As always, we will remain flexible and prepared to respond to market conditions. As our results to date attest, the ingenuity, commitment and hard work of our employees and channel partners around the world continue to deliver solid performance. Their teamwork and team focus enables the company to quickly and effectively respond to changing conditions and find ways to succeed. Their exemplary attitude brings the spirit of our Destination 2014 initiative to life, propelling our company towards our second century and beyond. This concludes our formal remarks. We will now take some questions, so Christie, back to you.

[Operator Instructions] Your first question, which comes from the line of Sam Darkatsh from Raymond James. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: A few questions here. First off, you mentioned your own inventories where they were a little bit higher on a -- certainly on a year-on-year basis. Can you talk more about that channel inventories where you see them being a little bit more flushed than perhaps you'd like to say specifically where that is, whether it's pro versus resi or domestic versus international, certain product lines, what have you? Michael J. Hoffman: Sure. And some of this is planned, some of it is impacted certainly by the recent weather but first one would be the commercial products and the impact of Tier 4 and kind of the distributors pulling those things into their inventories and that's been considered in our guidance as we look through the rest of the year and is certainly contemplated in as we talked about a little softer in the second half. But as you know we always do, we look at -- we kind of look at the year and deal with it that way. So that would be at the top of the list. The second would be the landscape contractor business and there's still landscape contractors, the business was ahead, if you will, until we hit the March, April skid, largely due to weather but there's still optimism, we have some really strong new products out there and so the channel has a bit more inventory than it did last year but what's going on in May, that's quickly correcting and we believe that will correct through the year as well. And then the last one, a bit of snow and walkers but this is, again, through the end of April, the velocity of momentum right now at retail for residential and for landscape, too, is very, very strong. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Two more very quick inventory questions and I have another follow-up then. So do you still expect your own inventories by yearend to be down on a year-on-year basis or have you revised that based on what -- how the season is playing out? Renee J. Peterson: Yes. Sam, we do expect that inventory will decline sharply in the second half and have incorporated that again into our sales guidance. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Sharply versus today but year-on-year, would it be down also by the end of the fiscal year? Renee J. Peterson: Yes, Sam, it would be down year-over-year. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Okay. Next question. So John Deere and its comparable business twice now this year has taken their own industry expectations lower and it looks like only now you're starting to see or at least recognize it publicly, that might suggest that perhaps, your field inventories might be a little bit more flush than theirs if their dealers perhaps acted a little bit quicker to rightsize their inventories. Is that a fair assessment or is it just not really all that comparable to be looking at it in that respect? Michael J. Hoffman: I think, I would say it's not that comparable. And so, obviously, we're focused on our business. The fact is that if ours were a little more flushed, I would actually think it will go the other way but the bottom line is, we don't really know what's going on there and the numbers are pretty limited and so our numbers are pretty clear. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Okay. Last question and I'll defer to others. Your residential business being down, what, 13%. It looks like the walks and the mowers at retail are down maybe mid-single digits in the industry. If that's the case, do you think you lost share or was there some mix issues there? Can you help reconcile the delta between what you saw at residential versus perhaps what the industry was doing? Michael J. Hoffman: I don't think we're losing any share as we look at our kind of our business and working with our channel partners, in this case, Depot and dealers. This was largely what happened in March and April compared to last year. The industry might be down a little bit. That will really, in many respects, depend on what happens this summer, so it's down to date, it was actually ahead and is down now to date because of the March, April impact but it's coming back very strong in May, and if the precipitation patterns continue and some forecasting suggest they will, but we're really careful on commenting on the weather but if that does in fact happen, then we will have very strong comp come June, July, August, when we comp against -- when we're comping against the drought last year. And the bottom line is when there's moisture in the ground and the grass is growing, it tends to use up the mowers, residential mowers, landscape mowers, even golf course mowers, somewhat more when it's very dry, it just makes the products work much harder. So I guess, that's one where we'll say we'll see, but as you know, we're very focused on share and competing in the market. And at this point, our lineup, our placement is good, it's sound and our price points are good and we think we're okay there.

Our next question comes from the line of Mark Herbek from Cleveland Research. Mark Herbek - Cleveland Research Company: Renee, first question for you. Just so that I understand the gross margin, you now expect it to be up 60 or up 60 on top of 40 for 100 for the full year? Renee J. Peterson: It’s the latter. 60 on top of 40 is for 100. Mark Herbek - Cleveland Research Company: Okay. And then in terms of the sales, when you look at your second half implied sales growth, it looks like you're expecting your sales growth to be stronger in the back half than it was in the first half but throughout the call, you talked about a little bit softer golf. Can you just help us reconcile why the second half sales growth will be better than the first half, given some of the more cautious pro comments that you had specifically as it relates to golf? Michael J. Hoffman: Well, I think, you got it, but again, our growth is all-in. So it's golf, it's landscape contractors, it's residential, and a significant part of that, as we see the retail velocity going on right now, we'll be hopefully picking that up. And so as we talk to the impact of mix on the second half, as it moves more towards residential, which is going on right now, May shipments are up significantly in residential because last year, we were shipping a lot of that product in March and April. And so golf will moderate somewhat, but again, that's our shipments and we said inventory is a little higher out there but golf retail has been and continues to be strong. And so we put all those pieces together, certainly, we have a very strong focus here on retail. Retail and what's going on in the golf equipment, golf irrigation, landscape contractor, res, comm, I mean, all the way through the portfolio, and so we've moderated ours a bit but we expect strong, some stronger retail in the second half across all these businesses, which will bring inventories nicely into line. Mark Herbek - Cleveland Research Company: The 1 point cut to sales guidance, is that all due to consumer or is some of that due to pro as well. Michael J. Hoffman: I would guess largely residential, even though we expect still some residential catch up, I don't have, I guess, that detail out in front of me here. Mark Herbek - Cleveland Research Company: Last question. Non-U.S. Strong quarter, non-U.S. what's driving that, I know you mentioned both Europe and Asia were positive. Is one region stronger than the other? Should we expect 5% to 10% growth in the back half in this market, in the non-U.S. market as well, or just kind of walk me through your thoughts on the non-U.S. business from this point? Michael J. Hoffman: Well, if you look at our back-half growth, I don't think it's going to be disproportionate to the rest of the company, if you will, or the U.S. I guess, I'd start with -- when we started the year, we said Europe was kind of muddling along, if you will, we didn't expect a step change up or down, okay, and so we're on the relative positive side of that. It's improving very slowly and that's driving some retail. This slowed down a little bit because they've had some similar weather challenges but that seems to be picking up a bit. Asia was -- continues to be much about the recovery from the tsunami. That wasn't just a 1-year phenomenon. We're seeing some -- that's the largest market, Japan is the largest market for golf there. And some of the other markets are doing okay but China remains kind of a work in progress but I would more of it is Japan. Australia, we're in counter season for Australia, so they've got some, I think, heat and drought challenges but all in, we would not expect international to be a strong driver of sale, disproportionate, if you will, in the second half. Mark Herbek - Cleveland Research Company: Do you have an expectation for snow shipments in the fourth quarter, given that the strong sell-through toward the end of the year? Have you revised your expectations for snow? Michael J. Hoffman: Yes, snow will be up in the fourth quarter year-over-year. And as we've talked in the past, the snow business is really the tail of 2 seasons. The predictable preseason and the unpredictable in-season. So again, if we comp, we look at the comp opportunity, last year's predictable preseason was very low because we were coming off of no snow and it was a very soft preseason. Now the fact is the snows that we received this last season, kind of through '12, late '12 and early '13, well, more of them came in '13, so they came too late in many respects to drive as much retail as we would like, have liked in that season but it sets the stage very nicely going into the '13 preseason. So we would expect snow comparisons to be favorable, very favorable, as we head into the fourth quarter, and hopefully the first quarter. Mark Herbek - Cleveland Research Company: And is it fair to assume that the snow loading is going to be stronger than you would have expected 90 days ago? Michael J. Hoffman: Yes. Mark Herbek - Cleveland Research Company: And that's in your guidance as well? Michael J. Hoffman: Yes, it is. I mean, because we've got most of that snow in the last 90 days unfortunately, we have too much snow in March and April and even May, but it does -- on a serious note, it does help drive behavior as we head into next year's September or the next season, September, October November.

Your next question comes from the line of Robert Kosowsky from Sidoti. Robert A. Kosowsky - Sidoti & Company, LLC: I just wanted to confirm, so the gross margin should be up about 100 basis points and SG&A should be up more than 40 basis points, is that the right -- did I get that right? Renee J. Peterson: You've got the right direction. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. So that gets us to pushing like 11% operating margin for the year. How are you thinking about the path to get to the 12% for 2014? Renee J. Peterson: Well, we'll continue to focus on growing our sales, our internal goal is looking at that $100 million organic sales growth and continue to look at productivity and innovation as ways that we do that. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. And then, I guess, secondly, if precipitation goes as planned, do you think the residential mower industry is going to be growing this year or do you think it's just such a big headwind, given what we saw with the weak spring that we had? Michael J. Hoffman: Yes, it will be very difficult, all-in, to exceed last year and it really boils down to -- on a comparative basis, the spring season is worth relatively more than the summer season. Now again, that's one of those it depends to what degree you comp more favorably. So obviously, in March and April, we comped very poorly but we're comping very strongly in May. We'll see how long that continues, it's a fair amount of ground to make up. But then in June, July, August, if the moisture continues and that puts mowers and other products under heavy load and use, then that will drive strong performance year-over-year. Can we get all the way back? That remains a question. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. And that's not just for Toro, that's for basically the entire industry as well, right? Michael J. Hoffman: It is. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. And then, just as far as the back half of the year on the growth standpoint, you're going to have a very good comp on the residential side. Do you see it being a difficult environment to get revenue growth on professional? Michael J. Hoffman: Well, again, as we've talked, we're -- this is always a combination of our shipments and what's going on at retail. So we expect retail to be very solid -- to continue to be solid in golf and in the landscape arena and some of our newer businesses but we're going to adjust some of this for field inventory, and so as a result, that's reflected in our numbers. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. And is there any breakdown you have between mix and under production? What the kind of the headwind could be in the second half of the year on the gross margin? Renee J. Peterson: The mix is probably the larger factor but they both will be significant. They're drivers. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. Cool. Sounds good. One last question. How do we stand on the integration of the Astec business into your own manufacturing plants and kind of any update on what you see at the market opportunity and the pace of new product launches, is next year going to be bigger on new product launches, just kind of a bigger summary on what's going on with that business? Michael J. Hoffman: Steady progress. Obviously, strategically important, the integration of the products into our Tomah, Wisconsin operation, has continued to go very well. The team is doing a really excellent job down there, bringing the products from Tennessee into their operation. They have moved a couple of them, 3 of them are already at the major products through the system. And so as we said in the comments earlier, we will be shipping rent product in the third quarter, and in terms of the underground products, I would talk about particularly the horizontal drills and some of the trenchers, and so it's going well. Lots of work to be done both on the operations side, as well as on the channel side and building our -- starting to build our Toro reputation, if you will, out in the marketplace. But the team is doing a good job. And so we would expect, in 2014, back to kind of the earlier comment on how do we get to Destination 2014, that would be a key part. The investments this year will pay off in 2014. Robert A. Kosowsky - Sidoti & Company, LLC: And just one last question and then I'll go. Do you have any comments on the dealer network getting a little bit more competitive on the residential side just because some of your competitors have mentioned kind of a bigger push into the higher-margin dealer network. And I know that you're already big there and I'm just wondering if it's going to be crowded or you see that potentially being a headwind? Michael J. Hoffman: Yes, competition's competition. We expect our competition and, is it more intense versus in the past? I'm not sure it's materially different there. Our focus is always on being an innovator with product and having close relationships with our channel partners, dealers and Depot, and that model has worked pretty well today and we expect it will continue to work well in the future.

Your next question comes from the line of Jim Barrett from CL King & Associates. James Barrett - CL King & Associates, Inc., Research Division: Mike, when you look at your professional market for the first half, can you discuss whether any particular end markets are growing faster than the average or are they all growing just about the same? Michael J. Hoffman: Well, and we've talked about this in the past kind of more strategically and so golf, while it's relatively slow, from a market context, in the U.S., we continue to see golf growth outside the U.S. but it will still be a smaller percentage, mid to low single-digits. And the landscape contract arena is growing somewhat more than that. The residential, commercial irrigation market is growing more than that because you see the structural recovery on housing and commercial building so that will grow in the mid to upper single-digits. And then as we've commented in the past, probably the market that's growing the most, a smaller part of our portfolio, but a significant market, where we're making significant investments in it and that's the micro-irrigation business. So that will grow double-digits and as the world puts more and more -- the need for more and more focus on food and better management of water as a precious resource, that will continue and we will continue to make the appropriate investments there. So one book end is probably micro-irrigation from a market growth standpoint, the other book end is all in, probably golf, residential maybe in the same way. These are GDP-like numbers. James Barrett - CL King & Associates, Inc., Research Division: Now the residential irrigation, if new housing starts get back to 1.5, 1.6 million starts, wouldn't, off a very depressed base, that business with the new homebuilders grow much faster than mid to upper single-digits? Michael J. Hoffman: Well, that's a good question, I don't have a precise answer for you. I think, we believe, it will perform better there than we have in the past. So it's really a combination of the market growth coupled with kind of our performance from a share standpoint, so it probably makes more of an argument for what you're saying there but -- and some of it is -- it depends on where the homes are, right? So if home construction is weighted more north, then maybe somewhat less, gives us a longer-term opportunity for systems to have all those get installed on the build but the bottom line is it's a favorable business for us. It's coming off of a lower base and our performance within the area I guess is improving. So it's both moving in the right direction. James Barrett - CL King & Associates, Inc., Research Division: Okay. And then, within the professional market, both in golf and commercial landscaping, the inventories and the trade aside, do you have a sense as to what your market share performance has been this year? Do you believe you are holding share or growing share in those businesses? Michael J. Hoffman: Yes. For golf and probably for landscape contract, in the landscape contract arena, based on the numbers we have, I think, in golf, we have a very high share and our sense is we are holding, there's certainly some -- there's strong competitors and they'd like to have that share, too, and we will fight appropriately and try to hold and build that. The landscape contract, all of these will be influenced by who's driving the new products and innovation and customer solutions and one of the things that our team does very well is in the kind of total cost of ownership. So we tend to be on the premium side of pricing but the value is there when you look at the total cost over the kind of the life cycle of the product and residual values and all of those things. So a long-winded answer to your question, probably in the holding zone more than -- we always try to move it, it doesn't matter where it is, incrementally up.

Your next question comes from the line of David MacGregor from Longbow Research.

This is Zoran Milling for David MacGregor. I guess, just first, can you maybe discuss what sort of price increases you've been able to realize, both on the pre-Tier 4 equipment, and then on your other products more generally. I think your prior guidance assumes net pricing of about 2%. So does that still hold true or we may be trending above that level? Renee J. Peterson: Zoran, that -- overall when we look across the business, that net 2% realized price increase remains on track for the year.

Okay. Good. And then, I guess, to build off that, I mean, as we look at your raw materials and your outlook there, just with regards to steel engines and hydraulics, I realize you kind of locked in pricing on the engine side but have you seen any benefit from the lower steel costs at all? Renee J. Peterson: Our commodities overall are trending similar to what you would see from a peer standpoint, some modest improvement in commodities, not a major driver but we haven't reflected that in our gross margin guidance for the year as well.

Okay. Got it. And then, just lastly, if you can maybe talk briefly about the M&A pipeline. Maybe kind of what markets you're focusing on and whether there's potential for acquisitions here in the second half of this year or first half of next year or whether you'll continue to focus on just share repurchases for the time being? Michael J. Hoffman: Well, it will start with our long-stated objectives and priority would be, first, to find more opportunities from an M&A standpoint. That's been a consistent message and we found a number of smaller ones along the way, we haven't found as many of the larger ones as we would like. It isn't as though many of them are happening and we're just not participating, it's just more a case where we haven't seen them. And so the strategy remains intact there, that remains our priority. We would, to your question on what and where, as we said, we would lean more professional than residential. We would lean certainly more seeing the potential for our international growth over time. So we'd would lean more international than domestic but we'd look at all the opportunities and we're making investments in the micro-irrigation business, some of those are investments that we're making internally, right, and with the expansion of a plant in Romania, for example, but we're also looking for opportunities outside of that and China is a good example, whilst small, gives us some added presence in the micro-irrigation business in China when we get that done.

We have no further questions for you. That's all. I now would like to turn the call over to Mike Hoffman for closing remarks. Michael J. Hoffman: Thank you, Christie. And thank you to all of our listeners. And those who have asked questions, we appreciate that and we look forward to talking with you again in August, to discuss our third quarter results. So thank you and have a great day.

Thank you for your participation in today's conference. This does conclude the presentation. You may now disconnect. Good day.