The Toro Company Reports Record Second Quarter Results; Declares 2-for-1 Stock Split
BLOOMINGTON, Minn., May 24, 2012 (BUSINESS WIRE) --
Copyright Business Wire 2012
--Net earnings per share for the quarter up 20 percent to a record $2.26
--Company raises full-year guidance
--Toro's Board of Directors declares two-for-one stock split
The Toro Company (NYSE: TTC) today reported net earnings of $68.8
million, or $2.26 per share, on net sales of $691.5 million for its
fiscal second quarter ended May 4, 2012. In the comparable fiscal 2011
period, the company delivered net earnings of $60.3 million, or $1.88
per share, on net sales of $631.6 million.
For the first six months, Toro reported net earnings of $88.7 million,
or $2.91 per share, on net sales of $1,115.3 million. In the comparable
fiscal 2011 period, the company posted net earnings of $77.5 million, or
$2.41 per share, on net sales of $1,014.8 million.
"We delivered another quarter of strong sales and earnings growth,
accelerated by our new product portfolio and the early start to spring
and favorable weather conditions across much of the U.S. Turf is growing
-- driving sales of residential mowing products, and golfers are playing
more golf -- contributing to revenue for golf courses and improving their
ability to invest in new products," said Michael J. Hoffman, Toro's
chairman and chief executive officer. "Our golf, landscape and grounds,
and micro irrigation businesses in the U.S. have had a very strong first
six months, which has offset challenges in our international business
created by the economic issues in Europe."
"While a portion of our results was the benefit of an accelerated
spring, we are hopeful the early start will extend the selling season
and drive incremental sales," said Hoffman. "Our product line-up is
strong, our core businesses are well positioned, and our investments in
light construction, hardscapes and rental products will contribute to
future growth. We are raising our outlook for the year, even against a
backdrop of a challenging sales environment in Europe, and an
anticipated soft snowthrower pre-season ahead of us."
The company now expects revenue growth for fiscal 2012 to be about 7 to
8 percent and net earnings to be about $4.30 per share, which includes
the $0.15 to $0.20 negative earnings per share impact for investments
related to the Astec and Stone product line acquisitions.
Toro also announced today that its Board of Directors has declared a
two-for-one split of the company's common stock, which will be effected
in the form of a 100 percent stock dividend. The stock dividend will be
distributed June 29 to shareholders of record as of June 15.
SEGMENT RESULTS
Professional
--
Professional segment net sales for the second quarter totaled $455.9
million, up 9 percent from the prior year period. Domestic sales of
golf and grounds equipment increased on improved market conditions,
and customers replacing aging equipment with new innovative products.
Shipments of landscape maintenance equipment were higher on improved
contractor confidence and strength of new products. Micro irrigation
sales around the world increased on continued demand for precision
irrigation solutions for agriculture. International sales were down
slightly in the quarter, primarily from a slowdown in demand for golf
and grounds equipment in Europe. For the first six months,
professional segment net sales were $739.8 million, up 9.3 percent
from the comparable fiscal 2011 period.
--
Professional segment earnings for the second quarter totaled $98.7
million, up 15.3 percent from the prior year period. For the first six
months, professional segment earnings were $140.8 million, up 14
percent from the comparable fiscal 2011 period.
Residential
--
Residential segment net sales for the second quarter totaled $231.9
million, up 10.6 percent from the prior year period. Favorable weather
accelerated the start of the spring goods selling season driving
strong pre-season demand. Shipments of walk power mowers were up on
improved weather and new product introductions. For the first six
months, residential segment net sales were $369.5 million, up 11
percent from the comparable fiscal 2011 period.
--
Residential segment earnings for the second quarter totaled $28.5
million, up 7.5 percent from the prior year period. For the first six
months, residential segment earnings were $41.1 million, up 8.5
percent from the comparable fiscal 2011 period.
OPERATING RESULTS
Gross margin for the second quarter was up 20 basis points to 34.0
percent due to manufacturing efficiencies, and realized pricing
offsetting higher materials costs. For the first six months, gross
margin was down 20 basis points to 34.3 percent due to an unfavorable
product mix.
Selling, general and administrative (SG&A) expense as a percent of sales
improved 40 basis points for the second quarter to 18.6 percent. The
improvement in SG&A reflects further leveraging of costs over increased
sales volumes. For the first six months, SG&A expense improved 90 basis
points as a percent of sales to 21.7 percent.
Operating earnings as a percent of sales increased 60 basis points to
15.4 percent for the second quarter, and was up 70 basis points to 12.6
percent for the year to date.
Interest expense for the second quarter was $4.2 million, equal with the
prior year period. For the first six months, interest expense totaled
$8.6 million, up 3.5 percent from the same period last year.
The effective tax rate for the second quarter was 34.1 percent compared
with 33.4 percent in the same period last year. For the year to date
comparison, the tax rate increased to 34 percent from 32.6 percent. The
increase in both periods was primarily the result of the expiration of
the Federal Research and Engineering Tax Credit.
Accounts receivable at the end of the second quarter totaled $272.8
million, down 2 percent from the prior year period, on a sales increase
of 9.5 percent. Net inventories were $250.8 million, down 3.5 percent
from last year's second quarter. Trade payables were $196.4 million,
down 3.1 percent compared with last year.
About The Toro Company The Toro Company is a leading
worldwide provider of turf and landscape maintenance equipment, and
precision irrigation systems, to help customers care for golf courses,
sports fields, public green spaces, commercial and residential
properties, and agricultural fields.
LIVE CONFERENCE CALL May 24, 10:00 a.m. CDT www.thetorocompany.com/invest
The Toro Company will conduct its earnings call and webcast for
investors beginning at 10:00 a.m. CDT on May 24, 2012. The
webcast will be available at www.streetevents.com
or at www.thetorocompany.com/invest.
Webcast participants will need to complete a brief registration form
and should allocate extra time before the webcast begins to register
and, if necessary, download and install audio software.
Safe Harbor Statements made in this news release, which are
forward-looking, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those projected or implied. These
uncertainties include factors that affect all businesses operating in a
global market as well as matters specific to Toro. Particular risks and
uncertainties that may affect the company's operating results or overall
financial position at the present include: slow or negative growth rates
in global and domestic economies, resulting in rising or persistent
unemployment and weakened consumer confidence; the threat of terrorist
acts and war, which may result in contraction of the U.S. and worldwide
economies; drug cartel-related violence, which may disrupt our
production activities and maquiladora operations based in Juarez,
Mexico; fluctuations in the cost and availability of raw materials and
components, including steel, engines, hydraulics, resins and other
commodities and components; fluctuating fuel and other costs of
transportation; the impact of abnormal weather patterns, natural
disasters and global pandemics; the level of growth or contraction in
our key markets; government and municipal revenue, budget and spending
levels, which may negatively impact our grounds maintenance equipment
business in the event of reduced tax revenues and tighter government
budgets; dependence on The Home Depot as a customer for the residential
segment; elimination of shelf space for our products at retailers;
inventory adjustments or changes in purchasing patterns by our
customers; market acceptance of existing and new products; increased
competition; our ability to achieve the revenue growth, operating
earnings and employee engagement goals of our multi-year employee
initiative called "Destination 2014"; our increased dependence on
international sales and the risks attendant to international operations
and markets, including political, economic and/or social instability in
the countries in which we manufacture or sell our products resulting in
contraction or disruption of such markets; credit availability and
terms, interest rates and currency movements including, in particular,
our exposure to foreign currency risk; our relationships with our
distribution channel partners, including the financial viability of
distributors and dealers; our ability to successfully achieve our plans
for and integrate acquisitions and manage alliances or joint ventures,
including Red Iron Acceptance, LLC; the costs and effects of changes in
tax, fiscal, government and other regulatory policies, including rules
relating to environmental, health and safety matters, and Tier 4
emissions requirements; unforeseen product quality or other problems in
the development, production and usage of new and existing products; loss
of or changes in executive management or key employees; ability of
management to manage around unplanned events; our reliance on our
intellectual property rights and the absence of infringement of the
intellectual property rights of others; and the occurrence of litigation
or claims. In addition to the factors set forth in this paragraph,
market, economic, financial, competitive, legislative, governmental,
weather, production and other factors identified in Toro's quarterly and
annual reports filed with the Securities and Exchange Commission, could
affect the forward-looking statements in this press release. Toro
undertakes no obligation to update forward-looking statements made in
this release to reflect events or circumstances after the date of this
release.
SOURCE: The Toro Company
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