Vic Bonilla of Jehoshaphat Research joins Zer0es TV to present their short thesis on The Toro Company (TTC). While Toro is facing numerous headwinds to its business, Jehoshaphat believes the biggest issue facing the company is a massive $450 million hole in its upcoming cash flows. The culprit – the unwind of excessive sales into the channel, which will only be exacerbated by the loss of its largest customer, Home Depot. As we get deeper into the weeds, Vic presents further accounting irregularities such as suspiciously low inventory provisions, bad debt provisions, and the removal of “recurring non-recurring” expenses from adjusted operating income. Should a company with these problems, and struggling with its highest debt/EBITDA level in over 20 years, be worthy of an S&P-type multiple?
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