Amy Dahl Michael J. Hoffman - Chairman, Chief Executive Officer and President Renee J. Peterson - Chief Financial Officer, Vice President of Finance and Treasurer

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

Good day, ladies and gentlemen, and welcome to the Toro Company Third Quarter Earnings Conference Call. My name is Philip, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Ms. Amy Dahl, Managing Director of Corporate Communications and Investor Relations for the Toro Company. Please proceed, Ms. Dahl.

Thank you, Philip, and good morning. Joining me for our third quarter earnings call are Mike Hoffman, Chairman and Chief Executive Officer; Renee Peterson, Chief Financial Officer; and Tom Larson, Vice President and Corporate 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 our earnings release, as well as our SEC filings, details 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 and a copy can be found on the Investor Information page of our corporate website, thetorocompany.com. I will now turn the call over to Mike. Michael J. Hoffman: Thank you, Amy, and good morning to all our listeners. Before we begin our third quarter conversation, I would like to take a moment to recognize our participants here who have recently assumed new responsibilities. Renee, who celebrates her 2-year anniversary with Toro today, has taken on the treasury role, along with being CFO, and I'm pleased to recognize Tom Larson, with whom you are familiar in his previous role as Treasurer. Tom has assumed the responsibility of being our Chief Accounting Officer in his new role as Vice President and Corporate Controller. Both Renee and I value Tom's leadership and counsel. In addition, many of our listeners have had an opportunity to speak with Amy Dahl, our new Managing Director of Corporate Communications and Investor Relations. Amy previously served as our Assistant General Counsel and will now lead our investor relations activities, as well as our overall corporate communications, including our centennial activities in 2014. I'm confident Renee, Tom and Amy will continue to serve Toro and our many stakeholders very well in their new roles. Moving now to the quarter. Our third quarter results closely mirror the messages we shared during our second quarter call. For example, first, we told you that while we anticipated shipments of professional equipment to moderate in the third quarter due to the Tier 4 diesel engine transition, which accelerated traditional demand from later quarters into the first, our retail outlook for the year remained positive. Secondly, we also talked about our landscape contractor businesses being well positioned with excellent product and promotional plans to capitalize an anticipated retail demand. Finally, back then we reported on how a turn in the weather had prompted a recent strong surge in demand for our residential products that we believe would continue as long as temperatures and moisture levels remained favorable. All of these previous forecast held true, resulting in retail sales gains for the quarter, as well as our decision to now raise our full year earnings outlook on the strength of margin improvement. Net sales for the third quarter increased 1.2%, slightly surpassing last year's record level, while net earnings per share increased to $ 0.68. Following a brief commentary on the state of our business due to the first 9 months of the fiscal year, Renee will discuss our financial and operating results in more detail. Turning to the golf business, equipment shipments eased during the third quarter from the robust pace earlier in the year. Abundant rainfall across key markets created vigorous turf growing conditions, which kept product in the field working overtime to maintain courses in top playing condition. The downside is some markets have experienced the decrease in rounds played, impacting course revenues as the rain kept golfers off the course. Nonetheless, we are in a good position to offer both pre-Tier 4 and Tier 4-compliant products to meet customer-specific needs. While many customers favor the pre-Tier 4 product primarily for cost reasons, our ability to supply compliant products has proven helpful in situations involving customers looking for the advanced emission controls. Renovations and upgrade projects have kept the golf irrigation business tracking ahead of last year on a year-to-date basis. However, the rains slowed some component sales in July due to the reduced system usage. On the other side of the rain equation, robust turf growth helped our landscape contractor businesses enjoy strong third quarter retail activity. Furthermore, excellent products and appealing promotional campaigns provided the perfect one-two punch when favorable spring-like temperatures and precipitation made their late debut. Demand across our zero-turn riding and stand-on product lines has been strong, with special emphasis on our more advanced premium offerings. Also, our new professional 30-inch walk-behind mowers continues to be on strong demand as contractors appreciate the unit's durability and productivity. Professional grounds product sales remains solid as fiscal year and budgets close for many municipalities in June. Our highly productive offerings continue to resonate with local government agencies as they strive to maximize budget and labor resources. The professional rental and construction businesses extended their improved year-to-date performance. New construction products went into production in the third quarter, which also saw the Toro Pro Sneak Vibratory Plows both shipped and moved through into retail. The rental market as a whole is on a roll with industry purchasing -- purchases steadily growing toward pre-recession record levels. Our compact utility loaders and walk trencher lines enjoyed a strong quarter and offer encouraging signs for ongoing growth. During the quarter, we also launched an updated version of our popular STX-38 stump grinder. Field inventories are in good shape, and our new product offerings continue to gain favor with rental professionals. The residential and commercial contractor irrigation businesses continued their roller coaster ride as the cool late spring transitioned to an abnormally heavy rainfall pattern that reduced demand across many key markets. The western region of the United States delivered healthy sales activity, while much of the remainder of the country struggled having to play catch-up due to the slow start to the season. The subsequent rains reduced system usage, which limited replacement jobs and left contractors much like their golf industry colleagues, waiting for breaks in the storm fronts for proper installation conditions for new systems. Our residential segment gained significant momentum this quarter, sparked by the fortuitous timing of the change in the weather, coinciding with our May Toro days promotion. While we prefer an earlier arrival of spring, if Mother Nature had to be a contrarian, the timing of her eventual change in disposition suited our promotional calendar. Zero-turn riding equipment, walk power mowers, electric blowers and trimmers all delivered strong retail performances for the quarter, boosting our sales and reducing field inventories. Snow shipment continued to hold our year-to-date results back due to the residual effects of the lack of snow haul during both of the last 2 snow seasons. Overall, our international business has had a good quarter posting third quarter sales gains in the face of continuing economic challenges in Europe and varying weather conditions. The professional segment led the way for the quarter on golf equipment sales growth in Europe and Asia, promising irrigation sales gains in Latin America and increased municipal and sport field demand for professional grounds products. Our results for the quarter also benefited from demand for pulp irrigation products in Australia as dry conditions continue to affect the continent. Finally, micro-irrigation had a very strong quarter in the EMEA and generally solid year-to-date showings as a whole. Our micro-irrigation sales in North America were pressured by water restrictions in California that resulted in close to 1 million acres of farmland being left fallow. So we're pleased with our overall results for the third quarter. Our strong focus on key markets helped deliver a slight increase in revenues, as well as an important reduction in field inventories across our product lines. As we'll discuss in the concluding comments, we believe we are well positioned for a solid finish to the year. I'll 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 grew to $509.9 million compared to $504.1 million for the same period a year ago. We also delivered net earnings of $40.1 million or $0.68 per share compared to $0.67 in the third quarter of fiscal 2012. Year-to-date net sales were up 2.4% to $1,659,100,000. We achieved net earnings of $149.9 million for the first 9 months or $2.53 per share compared to $2.13 per share a year ago. Professional segment sales were down 4.8% for the quarter to $343.9 million. This decline was anticipated because of the movement of traditional third quarter sales forward to the first quarter of the year due to the Tier 4 diesel engine transition. Year-to-date professional sales were up 6.2% to $1,169,400,000. Professional net earnings for the quarter totaled $60.5 million, down 14.2% compared to last year. For the first 9 months, professional segment earnings were $233.5 million, up 10.5% compared to the same period last year. Third quarter residential sales grew 14.4% to $155.5 million, rebounding from the late start to spring that held back sales in the second quarter. Year-to-date residential sales were down 5.5% to $477.8 million. The decline primarily reflects the combination of the decrease in snow shipments and the late spring. Net earnings in the residential segment for the quarter totaled $15.1 million, a 50% increase from last year. Year-to-date earnings were $51.9 million, a 1.4% increase compared to the first 9 months of fiscal 2012. Gross margin for the third quarter decreased by 40 basis points to 34.9%. However, gross margin is up year-to-date by 130 basis points to 35.9%. The relative mix of professional and residential products is responsible for both the quarter and the year-to-date results. A higher bias toward residential lowered our margins for the quarter, while the higher professional share through the first 3 quarters led to the year-to-date gain. As we mentioned during our last call, our ongoing productivity efforts, positive commodity trends and selective price increases also contributed to the year-to-date margin improvement. SG&A expense as a percent of sales increased by 20 basis points for the quarter to 23.4% and by 40 basis points to 22.5% year-to-date. The SG&A increase was the result of higher warehousing expense, increased engineering spend and incremental cost from acquisitions offset by lower warranty costs. Consistent with our year-to-date results, we expect our SG&A rate for the full year to be slightly higher than last year. Operating earnings as a percent of sales for the quarter decreased 60 basis points to 11.5%, but increased by 90 basis points to 13.4% year-to-date. Our productivity initiatives continue to have a positive impact. Interest expense for the quarter was $ 3.9 million, down 6.9% from a year ago. Year-to-date, interest expense was down 3.8%. Our effective tax rate for the quarter was 30.5% compared to 31.8% last year. For the first 9 months, the tax rate was 31% compared to 33.3% in 2012. The retroactive reinstatement of the Federal Research and Engineering Tax Credit drove this improvement. We expect the tax rate for the year to be about 31.5%. Turning to the balance sheet. Accounts receivable for the quarter totaled $202.1 million, up 2.6% on a sales increase of 1.2%. Net inventories for the quarter were up 10.3% to $258.9 million. The largest portion of the increase consists of equipment to support the transition to Tier 4. The increased inventory also includes some micro-irrigation, rental and construction and residential products. We have made good progress in reducing inventory to date and anticipate ending the year with total inventory below our fiscal 2012 year-end levels. Third quarter trade payables were $124.2 million, which is equivalent to a year ago. Our net working capital at 16.9% of sales was above the prior year level. Higher inventory levels are responsible for the change but as I mentioned earlier, we expect to reduce inventory in the fourth quarter. Capital expenditures are expected to finish the year at about $55 million, which is $5 million less than we forecasted in December. Finally, we expect to spend a similar amount for the year on share repurchases as we did in 2012. I'll now turn the call back to Mike for his concluding comments. Michael J. Hoffman: Thank you, Renee. Last month, the company turned 99 years old, entering our countdown year to our centennial on July 10, 2014. Among the many lessons our longevity has taught us is the importance of remaining ever vigilant and poised to flexibly respond with innovative solutions to new challenges. Certainly, the economic ups and downs of the last several years have tested all of us, such as the cantankerous twist and turns of the recent global weather patterns have further challenged those whose livelihoods are impacted by the growing seasons and winter snow conditions. As our quarter and year-to-date results attest, our dedicated employees and channel partners continue to effectively execute and find ways to succeed. Our end markets are sound. We continue to compete effectively in the marketplace. Our innovative product offerings are aligned to customer needs, and our productivity efforts have momentum. While golf course budgets may tighten in certain markets due to some level of decreased rounds played, golf sales opportunities for the rest of the year are encouraging as many customers continue to release funding for capital purchases that were delayed. Our new Reelmaster 3500 lightweight fairway mower that we have highlighted in recent calls is selling well as golf course operators seek more productive ways for mowing fairways, approaches and green surrounds. Our golf irrigation business is also attracting a strong list of projects for the fourth quarter. Golf course professionals continue to turn to us for the latest advances in turf maintenance technologies. While our landscape contractor business' retail momentum typically slows as the fall takes hold, if the vigorous turf growth conditions continue, our fall selling season should yield solid results. The Toro sports field and professional grounds business anticipates positive momentum as new municipal fiscal budgets improved by increased tax revenues are released. Last year's product demonstration efforts will soon pay off as many municipalities have included our latest zero-turn commercial Groundsmaster mowers in their fleet budgets. Additionally, as some municipalities choose to purchase Tier 4-compliant product, we are in an excellent position with the full product offering to meet their demand. The outlook for our professional rental and construction businesses is strong for the balance of the year. The rental industry momentum shows no signs of abating, and many national accounts are posting very strong revenue growth. We're also looking forward to the exciting official debut of our underground products at the International Construction & Utility Equipment Exposition, the largest underground contractor show in the business that takes place this October in Louisville. Residential and commercial irrigation contractors are encouraged by the backlog of jobs they are now installing since the weather has given them a break. Our new recently released Evolution irrigation controller is receiving very positive reviews from our contractor customers. As daylight grows shorter across North American markets, September and October are traditionally strong sales months for low-voltage lighting systems. We anticipate a good fourth quarter as our specification efforts begin to pay off due to the awarding of a number of large lighting jobs for the fall. Our residential business is looking for retail momentum to continue. The team is poised with a strong fall promotional offering to capitalize on late season sales opportunities. Preparations are also in place to spur consumer interest for the coming snow season with highly creative programs, including the Toro S'No Risk Guarantee. As we stated in our release this morning, this quarter we expect to deliver favorable snow sales compared to last year's fourth quarter numbers. While encouraged by the recent news of the euro zone economy's return to growth after 6 straight quarters of contraction, we realized the expansion is not evenly spread across member nations, and consequently, we cannot depend on a significant lift for our international businesses from economic growth in the region. Foreign exchange volatility and social and political unrest in other troubled regions all pose additional challenges. Nonetheless, we continue to see growth opportunities via our ongoing introductions of innovative products and increased focus on markets like municipal and sports fields. As overseas golf markets continue to recover, we are ready to supply superior equipment and irrigation solutions. Our new underground product portfolio has us well positioned to grow in key international markets as well where they have major infrastructure projects in the works. Finally, micro-irrigation's importance in the quest to marshal precious water resources and tackle the world's food shortages presents long-term growth opportunities. We accomplished several important goals during the third quarter by catching up on many weather-related sales opportunities, continuing to build on strong, early professional sales momentum and effectively reducing both planned and unplanned field inventories. The positive sales trends we discussed, along with the ongoing success of our productivity initiative and favorable commodity trends, should all help drive additional earnings gains. We now expect sales growth for fiscal 2013 to be about 4%. And due to our strong operating performance to date, we now expect earnings for the year to be about $2.55 per share. Our guidance will take us to new record levels of sales and net earnings. As always, we will remain flexible and prepared to respond to market conditions. Before I open the call up for questions, I wish to thank our employees, distributors and all channel partners for their continued hard work, ingenuity and focus on our end-user customers. As legendary former Toro Chairman and CEO David Lilly once said, "While no one person is indispensable, everyone is important." Without the passion and support of our employees, distributors and business partners, the success the company has achieved, whether during this last quarter or over the last 99 years, simply would not have been possible nor would our future hold such promise. So thank you, one and all. This concludes our formal remarks. We will now take your questions. So Philip, back to you.

[Operator Instructions] Your first question comes from the line of Mark Herbek from Cleveland Research. Mark Herbek - Cleveland Research Company: First question, as it relates to August to date and the mower business, can you talk a bit about what you're seeing first 20 days of August? Is the growth in the mower business continuing? And then also what you think that means for field inventory in the mower business as we exit the season? Michael J. Hoffman: Yes, well, again, as we've said, field inventories kind of across the portfolio are in good shape and that was really a key objective this last quarter. There's a lot of focus there. A lot of good execution certainly impacted our sales somewhat. And so the last few weeks, I would say the retail momentum has continued to be positive, maybe not quite as strong as it was but it's up over the prior year, and so this will somewhat depend on just what kind of growth we get in the August-September-October time period. But I would say we're relatively positive about that and early indications are that's holding up. Mark Herbek - Cleveland Research Company: Is it your expectation field inventory finishes the season down year-over-year? I know you talked about it being reduced. Michael J. Hoffman: Yes. Both -- yes, we want both our Toro inventory and our goal would be for the same for the field. Mark Herbek - Cleveland Research Company: Okay. Next question, in terms of favorable commodity trends, can you talk about what that means for 2014 production? I guess, Renee, is it your expectation that costs will be down versus 2013? And also then a follow-up question on that, what do you now expect your gross margin expansion to be for 2013? Renee J. Peterson: Well, when we look at commodity trends, I mean, for the remainder of the year, we're expecting commodities to stay pretty much where they're at. They have been favorable year-to-date and have benefited us from a gross margin standpoint. Looking forward, we are still going through our planning process and it's early to predict what the commodity trends will be for next year. When we look at our gross margin from a total year standpoint, Mark, we are expecting our gross margin to be up about 100 basis points year-over-year for the overall business. So good improvement on our gross margin to date. Mark Herbek - Cleveland Research Company: Last question, just from a Tier 4 versus pre-Tier 4, how long do you expect pre-Tier 4 inventory be available in 2014? Michael J. Hoffman: There'll be some mix of pre-Tier 4 inventory available ongoing through 2014. We will have both products -- or both models available in a -- but it'll be -- at the end of the day, it'll be limited and so we're already seeing some of that take place in the marketplace. And there are certain customers that are going to want Tier 4-compliant products. They are perceived as relatively greener and maybe more some of the governmental customers, if you will, but they'll be a mix through a good part of 2014.

Your next question comes from the line of Sam Darkatsh from Raymond James. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: A couple of questions, if I might. First off, could you help quantify what you would -- what you think the Tier 4 impact was on Q3 sales and margins? I've noticed that the professional operating margin for the whole quarter was about as low as it's been in 10 years outside of 2009. I'm guessing the majority of that is the Tier 4, but if you could help quantify that, put a little meat on the bone, that will be helpful. Michael J. Hoffman: Well, you've answered the question. The majority of that is Tier 4. So what we would ask you to do, as we've done in the past, is you really have to look at the year-to-date margin for Pro to get a better read of that and that will kind of normalize going forward. And so... Sam Darkatsh - Raymond James & Associates, Inc., Research Division: From a margin standpoint? Michael J. Hoffman: Yes, it's really... Sam Darkatsh - Raymond James & Associates, Inc., Research Division: From a sales standpoint, Mike, can you help us in the quarter as to what it might have affected the Pro business? Michael J. Hoffman: Say that again, Sam? Sam Darkatsh - Raymond James & Associates, Inc., Research Division: From a sales standpoint in the quarter, you noted that as being a negative impact on the top line in Pro. Just trying to get a sense of if you could quantify that. Michael J. Hoffman: Yes, I don't -- we didn't quantify that. It is a combination of what we shipped out in the first quarter. I'm going to think about that and maybe will come back. Again, on a year-to-date basis and field inventory ties into that is now relatively normalized, Pro is -- or commercial is up somewhat, and so looking at third quarter standalone would really be misleading. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Okay. The next question, the international business, up 4%, was a pleasant surprise, knowing that weather in Europe is still weak and Australia is obviously going through some macro issues. You went through some of the drivers quickly, Mike, but if you could help explain some of the -- what you're seeing in the international markets that's real favorable for you right now. Michael J. Hoffman: Yes, it is so many pieces, right, and so we talked about what kind of stands out for us is in Australia, the pulp business, which is a water-related business, was strong for us in the quarter. The EMEA was strong in the micro-irrigation business. Commercial is doing okay, and Europe's the biggest market outside the U.S. and we're doing solidly there. But as you know, the nature of the international business is just a lot of pieces and so it's not like 1 or 2 things that make all the difference. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Last question and it's a housekeeping question, Renee. Did I hear you right that the tax rate for the year was expected to be about 31.5%? Renee J. Peterson: That's correct. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Help me how to get there. I think, at least by my math, it's 31% year-to-date and you're not expecting to be all that profitable in Q4. So how do we get to 31.5%, if it's 31% for the year so far? Renee J. Peterson: Yes, really, Sam, what we're doing is looking at our forecast for Q4 and our profitability by region and truing up our tax rate and we're anticipating about 31.5% for the year. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Okay. And then for the out years, how should we look at it? Renee J. Peterson: Well, for this year, the biggest driver to our improvement in the tax rate is the retroactive reinstatement of the R and E Credit, the Research and Engineering Credit. So part of that is dependent on if Congress decides to extend that into the future, that would be a positive impact for us. Otherwise, we would anticipate that our tax rate would increase without that R and E Credit. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Back to that 33%, 34% range or so? Renee J. Peterson: I would anticipate that, yes.

Your next question comes from the line of Robert Kosowsky from Sidoti. Robert A. Kosowsky - Sidoti & Company, LLC: I just wanted to look at the Tier 4 on a little different way. How much lower was the plant utilization rate in the professional segment this quarter, say, versus what it was last quarter or what it was in kind of a normal third quarter environment? And also, did you take any production downtime in the residential business, given the lumpy order patterns in the year? Michael J. Hoffman: Yes, I don't know that the -- our commercial plant operations are materially different. We did, obviously, build a little inventory earlier. So I guess, I'd say it wasn't a big third quarter issue on variance standpoint. Now as we move through the year, we did make some adjustments as it's reflected in our sales and our inventory. We did make some adjustments to put that focus on driving downfield inventory, which we accomplished. And so there's a little more negative variance in manufacturing this year than last but very manageable. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. Then on the residential side, did you have to take any production downtime because of just the lumpiness in demand? Or was it pretty tight throughout the year? Michael J. Hoffman: Well, again, kind of the same story. So when we had the kind of the challenges this spring, we certainly made some production adjustments and that's reflected now and that's a little -- creates a little bit of a negative manufacturing variance that's all, I think, been kind of factored in now. We expect the snow to be stronger in the 4, so that gives us a little bit of an offset. Well, yes, that would tell you that the third quarter worked out well in terms of Mother Nature cooperating and retail being strong and recovering a good part of, not all of it, but a good part of what was lost in the spring time period, which is our largest season. Robert A. Kosowsky - Sidoti & Company, LLC: Okay, that's helpful. Then I think I remember last quarter, you thought that the hole dug was a little bit too given the late spring but now we've had some pretty brisk sales in some of that residential side. Do you think the lawn and garden market at retail is going to be up this year? Or any kind of market forecast that you have for how the fall season is going to play out? Michael J. Hoffman: Well, I think the fall season will play out. It will be behind last year just because of the extraordinary spring last year. And so as I said, we made up a good part of it during the summer but we won't make it all up. Robert A. Kosowsky - Sidoti & Company, LLC: Okay, so that's consistent. And finally, just kind of like a broader question, can you give us like a broad assessment of how the landscaping industry is doing? We've seen landscaping employment start to pick up. Are they doing well? And do you think that the landscapers are taking share relative to people just mowing the lawn themselves? And is it something that's going to be kind of a sustainable tailwind? And how do you play this housing cycle playing into that as well? Michael J. Hoffman: Right. And so I think this ties back to just the general health of the economy. And so as that happens, we see those on one end decide they want to outsource their home lawn maintenance that creates opportunities for the landscapers. The landscaping business is strong, continues to be strong, got through the spring time period. But retail through the summer time period has been very good. Their book of businesses is very good and I think that's -- especially, as you see housing improving, that creates new opportunities for the residential homeowners side but it also creates some shift to people to the landscaping side. So all in, the landscape arena is very healthy. Revenues have been good. Inventories are in good shape. I think there's relatively good sense of optimism. And we're expanding some of the things we're doing with that market, not just with -- we've had mowing solutions but now we've got things beyond mowers with their cultivation solutions and some of the rental products that landscapers would either rent or own within their fleets. And so we're finding ways to serve those customers more broadly. Robert A. Kosowsky - Sidoti & Company, LLC: Okay, that's helpful. And then finally, just on the construction business and the rental business, can you give us any more numbers to say how strong it was versus last year or maybe where we are relative to the peak from 2007? I know it was under a different ownership back then largely. But any kind of numbers or a way to think about kind of where we are at the point of the cycle and kind of what the opportunity is there? Michael J. Hoffman: Yes, so let's separate it. I think, in the remarks, we said it's approaching the record levels of '07. That's the -- we're talking about the market, okay? And so back in '07, we were a tiny player at best in that arena. We're becoming more, a bigger and stronger player, both with the development work that the team was worked on here with products we developed like walk-behind trenchers and stump grinders and the like, as well as the acquisitions of Stone and even some of the Astec products. And so still a relatively small part of our portfolio but a very large market. And so if you were to go to the rental show this year, contrast it to what it was 5 years ago, Toro's presence would be very notable. We talked about the show in the comments that will take place down in Louisville. That's a $0.5 billion market that we're just kind of entering with the line of trenching and underground drilling products. And so we're just kind of getting started there with the Astec purchase but we're learning and we're making great progress.

Your next question comes from the line of David MacGregor from Longbow Research. David S. MacGregor - Longbow Research LLC: I guess, I wanted to go back to the Pro segment and the question was asked about the margin performance and you had noted that most of that was T4. The decremental margins here were about 60%, 59% to be exact, and I'm just wondering if you could maybe provide a little more granularity around some of the puts and takes in that number. Certainly, a big part of that was T4. But you noted in your prepared remarks, Mike, about the golf business and volumes there being down and I just wondered if I could get you to peel into that a little further for us to help us better understand some of the, again, some of the puts and takes. Renee J. Peterson: Well, David, first of all, just from a Q3 standpoint, had the mix of business been the same as it had been in the past between Pro and residential, our gross margins would've been up. So as Mike had commented earlier, I mean, Tier 4 is really the driver. I think it's important to step back and look at our margins from a year-to-date basis given that because the mix is different quarter-to-quarter. And really, the drivers are consistent with what we've been talking about as far as the margin improvement. Again, the mix impacting particular quarters but our ongoing productivity efforts are significant. As I talked about earlier, the positive commodity trends are also benefiting our margins and then selective pricing. So those continue to be the big 3 drivers with mix impacting particular quarters. David S. MacGregor - Longbow Research LLC: Okay. Can you quantify the extent to which the golf business was down? Renee J. Peterson: No, we don't separately disclose that. David S. MacGregor - Longbow Research LLC: Could you talk at least conceptually about what happened there? Renee J. Peterson: Well, I think when we look at the business year-to-date, you wouldn't see probably a substantial change year-over-year. Michael J. Hoffman: Yes, I think the best way to answer that, David, just so we don't get into that detail but just the golf retail is up. So if that's -- if you're wondering about the health of the market, it's healthy. This is just about timing. David S. MacGregor - Longbow Research LLC: Okay, good. Next question, I guess, with respect to new product introductions, it seems like you got a lot going on. There's been a lot of innovation. Can you just talk about what new product introductions as a percentage of revenues, how it would have compared with where you were last year, the year before? I guess last year was kind of distorted by weather patterns but I'm just wondering if new product introductions as a percentage of revenues proportionately is greater now that it has been year-to-date and over the past few years. Michael J. Hoffman: Yes, it's a good question. So I would -- let's start with -- this is in the deck. Our goal is to be at 35% of our revenues that are products that we introduced either the current year or the prior 2, right? And so you can -- looking back -- actually, if you're looking back in '09, '10, '11, we were cresting 50% and it's tough just actually to sustain that. So I would say as we move through F '13, we'll be very close to that 35%. We might be a little bit on the shy side of it or right at it, but it will be a healthy number. And then as we move into F '14 and '15, it swings back up even more. So it's one of those, it depends. A good example is we spent a significant amount of engineering in '10, '11 and '12 on the whole Tier 4 initiative, right, for the -- to be compliant with those products. We don't -- as a rule of count, if it's just meeting regulations, we won't count some of those products as new products. It will have to have some additional level of innovation or customer value in them. But most of our revenue in F '13 have been -- has been pre-Tier 4 stuff, so while we've done the engineering, we're not necessarily getting the new product benefit. The bottom line, I would say, is our new product portfolio of what we've done and what we're going to do remains healthy. Our engineering teams, whether that's residential or landscape or on the golf and municipal side, we've got a lot of good things going. Our irrigation business has some good initiatives. We're advancing in micro-irrigation. I would say much work has been done in the underground and rental and construction side. So we've got a very good portfolio and building a better one for the future. David S. MacGregor - Longbow Research LLC: So if you were to adjust for Tier 4, because again it's a bit of a distortion, but if you adjust for Tier 4, is the trailing 3-year window on new product profitability, is it greater now than it has been in prior 3 or 4 years? Or how does it compare? Michael J. Hoffman: I don't have an answer to that on profitability. We really measure it on revenues. It's a good question for us to look at it. David S. MacGregor - Longbow Research LLC: Okay. Tier 4 product, did you say what you're expecting for the fourth quarter and what you've included in your guidance assumptions? Michael J. Hoffman: Well, I think we didn't. I mean, it's in our -- it's obviously in our revenue guidance, but what we're really saying is much -- just remember now, it's a very small -- fourth quarter is a very small quarter and a significant part of it is snow so it's not particularly a big deal. What we're really saying is the Tier 4 impact was largely a -- some portion of second, some portion of the third pulled up to the first. So when you look at the year-to-date results, that's all -- that's where you have to focus. David S. MacGregor - Longbow Research LLC: You're kind of far removed from the first quarter now so the impact from the pull forward has got to be de minimis. Michael J. Hoffman: Right. David S. MacGregor - Longbow Research LLC: Okay. Can you just talk about residential irrigation and what trends you might be seeing there? Michael J. Hoffman: Well, 2 things. We've talked about residential irrigation. There's a DIY component and actually that's down somewhat particularly because of some placement loss. It's a small -- very small part of the business. Bigger -- a larger part of the business is connected with the professionally installed residential irrigation, the irrigation contractor would come and install. And that business is sound and it would likely continue to get better both twofold, one, obviously with the growth in housing that continues from its fairly low level to continuing improvement. They'll be -- we know that's a little lumpy. So that's positive. And then our performance within that business, both on the residential and commercial side of construction, if you will, business, we used to have a very, very high share backing up a couple of decades and a bit of that had gotten away from us, and we got it moving now back in the right direction. So the combination of those 2 things should bode well for the residential and commercial contractor installed irrigation business. And new products play a key role there, too. The core products like the controller systems that goes on the wall in the garage, if you will, we introduced a terrific new controller called the Evolution, state-of-the-art ability to integrate in moisture-sensing control. Contractors are giving us positive feedback about it. And so that just reinforces that Toro's a leader and innovator in the residential, commercial irrigation space. David S. MacGregor - Longbow Research LLC: Okay, great. Last question was just with respect to the snow. I noticed that this promotion you're running is on electric throwers. Is it confined to electric throwers? And if so, what might that represent as a percentage of total revenues? Michael J. Hoffman: No. It's actually largely on gas snow throwers. It may be electric start for the gas snow thrower but it's across the bulk of the snow business. And this is something -- just to be clear, we -- the S'No Risk idea is something we executed back in the '80s and had another -- did it again in the '90s. This is the -- we haven't done it for a while. For the consumer, we started with -- we make the world's best snow throwers, we think. And so if the customer needs a snow thrower, they're going to buy one and all this does is give them a potential. If it doesn't snow, a chance of recouping some -- certainly, it's low odds it's not going to snow to some degree but that's okay. If it does snow, they've got the snow thrower and they're happy. If it doesn't snow -- or if it snows less than 50%, they get some of their money back. So it's a -- it's no risk for them and it's -- the fact is we're protected on this and so it's no risk for us either. David S. MacGregor - Longbow Research LLC: How are you protected on this? Michael J. Hoffman: This is -- through insurance plans. So it's not something that if it doesn't snow, the company has to take an earnings hit to pay the customer back, that's not the case.

Your next question comes from the line of Jim Barrett from CL King & Associates. James Barrett - CL King & Associates, Inc., Research Division: Mike, could you start with your product placements in the -- with your major residential customers, how is that shaping up for spring 2014? Michael J. Hoffman: Yes. We'll talk more about that specifically in the December call. I would just tell you it's progressing well. We expect to have a very solid position, but at this point, it remains an ongoing work in progress. James Barrett - CL King & Associates, Inc., Research Division: I see. Within your residential lawn mower business, can you give us a sense as to what the sales breakdown is, broadly speaking, between the walk-behinds versus the riding mowers? Michael J. Hoffman: Yes, so we don't break them down but I would tell you both are substantial pieces of the residential portfolio. We would just tell you walks are slightly higher than the zero-turn rides but they're both pretty important, both core, and both we have strong positions in. James Barrett - CL King & Associates, Inc., Research Division: Certainty, the home centers mentioned that riding mowers did especially well for them in the July quarter. Did your walk-behinds also keep pace with the sales that -- of your riding mowers in the quarter? Michael J. Hoffman: Yes. So I would say that both walkers -- riders maybe a little better. The riders tend to be a bit more of a planned purchase versus a walk power mower. And so we obviously took the hit with the cold, wet late spring and -- but as Mother Nature was more cooperative as we move into the May-June-July time period, we recovered a good part of that. It's still behind but it's healthy. James Barrett - CL King & Associates, Inc., Research Division: Good. And then finally, could you broadly speak about how you think about the market share on a year-to-date basis in your key categories, the market share performance? Michael J. Hoffman: Yes -- no, it's a fair question. So the season continues and we're always -- that is something we pay very close attention to across the businesses. And so just generally, I think we would say as we look at the portfolio, where we are in the year, that our market shares are in good shape. We've not seen any material erosion anywhere to our golf portfolio of equipment and irrigation is sound. Our landscape business, the combination of the Exmark and Toro landscape products, now we're adding new categories to that as well, aeration products and such. Commercial residential irrigation, moving in the -- very much in the right direction. Part of that's the market growth, part of that's our performance within the market. The rental construction, small part of our business. We have a smaller share there, a lot of opportunity, a lot of work being done, but I would again say moving in the right direction. So I'm not -- and then last, micro is a very -- micro-irrigation's a very large market. We have some real strength in our micro-irrigation tape product, some patented technology there, hoping to build on that. But we're looking at adding products to that portfolio, different types of emission products, different -- beyond tape, a hose and thin line, they call it, as well as some of the other categories. So that's pretty general but -- and we'll talk maybe a little more specifically about that in December, but we would tell you we think we're in pretty good shape there.

Ladies and gentlemen, this will conclude the question-and-answer portion of today's conference. I would now like to turn the call over to Mike Hoffman for closing remarks. Michael J. Hoffman: Well, let me just thank all of you for your questions and interest in Toro, and we look forward to talking with you again in December to discuss our results for the full year and the outlook for our centennial year in 2014. So thanks, and have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.