A Collection of Current Outdoor Power Equipment (OPE) Industry Related News Articles From OPEESA's (Outdoor Power Equipment and Engine Service Association) Newsletter "OPE-In-The-Know," the Business of OPE.
December 9 -- It's that comforting sound after every Minnesota snowfall...the sound of the machine that helps scoop it up quickly.
It always takes that first snowfall though, to inspire those who don't yet have a snow blower.
"This morning when we were shoveling we realized we just really need to get that snow blower," says Audrey Appelseis.
Appelseis is shopping at Kuiper Ace Hardware in Golden Valley and she came at the right time. There are still snow blowers in stock.
"Normally we would order about 75 machines. We cut it down to a third of that this year because of previous years being so lean and planning on reorders but now we're finding out that the stock isn't there for us to reorder," says Dale Hoffmann of Kuiper's Ace Hardware.
It's true there are fewer Toro snow blowers in stores right now. The Minnesota-based company says it plans to extend snow production, which usually switches to lawn-care in December, through January.
Last year was great for snow blower sales and Toro has already had a robust pre-season. That's great news for the company, but it's also contributing to the current shortage.
"We made essentially what dealers ordered and most dealers probably ordered a little less this year than they have in the past and now that they've actually got snow and are selling some products they want to order more products and that's why we're extending manufacturing into January," says Matt Medden with The Toro Company.
Business based on snow is always a gamble, but this year, if you're looking to buy, your best bet is to act fast.
"If you see it in the store, don't wait. Buy it now if you can," says Medden.
If you miss out just remember more stock is on the way. Stores should be full again in January.
Blount International Inc. on Monday said it has reduced the size of the company’s borrowing capacity.
The Portland-based manufacturer of outdoor products such as saw chains and lawn mower blades reached a deal with lenders to reduce the amount available in its revolving credit facility from $90 million to $60 million.
It arrangement also extends the maturity dates from August 2010 to February 2012 for a majority of the funds available under the credit facility.
The terms also include an increased interest rate applicable to 96 percent of the $107.5 million of term loans outstanding. About $4 million of the existing loans will retain the August 2010 maturity date.
Blount has about $48 million of its $60 million in borrowing capacity available and $58 million of cash on hand.
In a statement, Chief Financial Officer Calvin E. Jenness said the restated credit facility, joined with Blount’s ongoing cash flow, gives the company adequate liquidity to execute business plans in the next two years.
General Electric Capital Corp. served as the administrative agent in amending the credit arrangement.
SEC FORM 8-K - ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
“On December 4, 2009, Blount International, Inc. ("Blount" or the "Company"), entered into an amendment and restatement (the "Amendment and Restatement") to Blount's Amended and Restated Credit Agreement, dated as of August 9, 2004, pursuant to which General Electric Capital Corporation acts as administrative agent (the "Credit Agreement").
The Amendment and Restatement, among other things, extends the maturity date of Blount's revolving credit facility and term loans from August 9, 2010 to February 9, 2012 and reduces the size of the revolving credit facility from $90 million to $60 million.
The Company reduced the size of the revolving credit facility to better align borrowing capacity with working capital needs and minimize future costs related to undrawn amounts. The Amendment and Restatement also increases the interest rate of the term loans from LIBOR plus 1.75% to LIBOR plus 3.50% and establishes a minimum interest rate of 5.50% on the portion of the term loans covered by the Amendment and Restatement.
The terms of existing term loans amounting to $3.9 million of the total $107.5 million term loan principal outstanding will not be amended and remain unchanged, including interest at LIBOR plus 1.75% and a maturity date of August 9, 2010. The Company may also elect certain defined index interest rates under the term loan facility which are not expected to be lower than the LIBOR-based rates described above. The Amendment and Restatement also increased the maximum allowed Leverage Ratio, as defined in the Credit Agreement, from 4.25 to 4.50.”
Company reports fiscal 2009 net earnings per share of $1.73
Focus on liquidity and growing market share guided the company through a difficult year
Cash flow from operations totaled $251.5 million driven by implementation of Red Iron Acceptance strategy, asset management and earnings
Increased quarterly cash dividend by 20 percent to $0.18 per share, as announced last week
BLOOMINGTON, Minn.-- Dec. 8, 2009-- The Toro Company (NYSE: TTC) today reported net earnings of $62.8 million, or $1.73 per share, on net sales of $1,523.4 million for its fiscal year ended October 31, 2009. For fiscal 2008, the company posted net earnings of $119.7 million, or $3.10 per share, on net sales of $1,878.2 million.
For the fourth quarter of fiscal 2009, Toro reported a net loss of $0.5 million, or $0.02 per share, on net sales of $288.6 million. In the comparable fiscal 2008 period, Toro posted breakeven net earnings on net sales of $341.2 million.
Despite the recessionary environment, the company generated a record $251.5 million in cash flow from operations as a result of the Red Iron Acceptance joint venture strategy, a continued focus on asset management, and by executing soundly against its working capital initiative. Excluding the sale of receivables in the fourth quarter to Red Iron Acceptance, the company’s operating cash flow for the year continued to track at historically high levels. Together, these measures help strengthen the company’s cash position to drive future growth and shareholder value. As reported last week, Toro’s board of directors raised its regular quarterly cash dividend to 18 cents per share, a 20 percent increase from its previous quarterly dividend rate of 15 cents per share. In fiscal 2009, the company returned $137 million to shareholders through share repurchases and dividend payments.
“In the face of extraordinarily difficult market and operating conditions, we took early and decisive action to ensure liquidity, grow our market share, and balance the short-term challenges against the long-term needs of the organization,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “Through solid customer relationships, and product lines enriched by many new innovations, we had great success winning share even as our markets contracted. Additionally, the actions we took during the year to adjust production and manage inventories resulted in lower seasonal borrowing and a stronger balance sheet.“
SEGMENT RESULTS
Professional
Professional segment net sales for fiscal 2009 totaled $965.9 million, down 25.9 percent from fiscal 2008. Demand in key professional end markets including the golf, municipal and landscape contractor, remained soft throughout the year as customers generally chose to defer purchases of new equipment and irrigation systems. Despite the sales decline, aggressive efforts to lower field inventories position the company for growth in the eventual recovery. For the fourth quarter, professional segment net sales were $165.3 million, down 21.8 percent from the prior year period.
Professional segment earnings for fiscal 2009 totaled $127.6 million, down from $233.4 million last year. For the fourth quarter, professional segment earnings were $1.2 million compared to $13.8 million in the same period last year.
Residential
Residential segment net sales for fiscal 2009 totaled $532.7 million, down 1.9 percent from fiscal 2008. For the year, customer acceptance was very strong for the expanded lineup of Toro® and Lawn-Boy® walk power mowers and redesigned platform of residential zero-turn mowers. Through close collaboration with dealers and key retailers, domestic shipments held up fairly well but were not enough to keep pace with declines in international markets. For the fourth quarter, residential segment net sales were $115.9 million, down 2.8 percent from the prior year period.
Residential segment earnings for fiscal 2009 totaled $46.4 million, up from $35.3 million last year. For the fourth quarter, residential segment earnings were $14.2 million compared to $7.3 million in the same period last year.
REVIEW OF OPERATIONS
Gross margin for fiscal 2009 was 33.5 percent compared with 34.8 percent in fiscal 2008, mostly due to a change in product mix and reduced demand. For the fourth quarter, however, gross margin improved to 33.9 percent from 29.9 percent in the same period last year. The improvement reflects lower commodity costs, which began to benefit gross margin in the second half of the fiscal year.
Selling, general and administrative (SG&A) expenses for fiscal 2009 were down 12.9 percent, but increased to 26 percent of net sales from 24.2 percent last year. For the fourth quarter, SG&A expenses were down 6.5 percent, but increased to 32.9 percent of net sales from 29.7 percent in the same period last year. While the company has been aggressively reducing expenses, the drop in sales volumes was greater than the rate of decline in SG&A costs.
Other expense for fiscal 2009 was up $4.0 million compared to last year, and increased $1.8 million in the fourth quarter over the prior year period. The increase was mostly due to higher expense for litigation settlements.
Interest expense for fiscal 2009 was $17.6 million, down 9.1 percent compared with last year. The decline in interest expense for the year mainly reflects significantly lower seasonal short-term borrowing. For the fourth quarter, interest expense was even with the same period last year at $4.4 million.
The effective tax rate for fiscal 2009 was 34.4 percent compared with 34.0 percent last year. The slight increase was primarily the result of valuation allowances related to foreign subsidiaries.
Accounts receivable at the end of fiscal 2009 totaled $143.7 million, down 43.9 percent, on a revenue decline of 15.4 percent for the fourth quarter and the previously mentioned sale of receivables to Red Iron Acceptance. Meanwhile, net inventories for the year declined by $30.8 million, or 14.9 percent, from the prior year period.
BUSINESS OUTLOOK
Commenting on Toro’s outlook for fiscal 2010, Hoffman said the company believes demand in its end markets is stabilizing. “Our outlook in the coming year assumes that declines in our markets are largely behind us, so we’re currently expecting net sales for fiscal 2010 to be roughly comparable to last year,” said Hoffman.
“While much uncertainty remains as to the pace and degree of the economic recovery, we are encouraged by our strong customer relationships, continued high level of new products, and the ability to invest in new opportunities. We have taken measures to adjust our cost structure, improve our overall operating effectiveness, and will be more flexible to react to retail demand in the year ahead.”
The company currently expects fiscal 2010 net earnings per share to be about $2.00 on comparable revenues with fiscal 2009. For its seasonally smaller fiscal first quarter, the company expects to report net earnings per share of about $0.18 to $0.20.
The Toro Company is a leading worldwide provider of outdoor maintenance equipment and beautification products to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields.
Item 2.01 Completion of Acquisition or Disposition of Assets
As previously disclosed in a Current Report on Form 8-K dated August 12, 2009, The Toro Company, a Delaware corporation, and TCF Inventory Finance, Inc., a Minnesota corporation and direct subsidiary of TCF National Bank (“TCFIF”), established a joint venture in the form of a Delaware limited liability company named Red Iron Acceptance, LLC (“Red Iron”) to provide inventory financing, including floor plan financing and open account financing, to distributors and dealers of products of Toro and certain of its affiliates (“Toro Products”) in the United States and to select distributors of Toro Products in Canada.
In connection with the joint venture, The Toro Company and certain of its wholly-owned subsidiaries (collectively, “Toro”) agreed to sell to Red Iron, in more than one transaction to occur during Toro’s fourth quarter of fiscal 2009 and first quarter of fiscal 2010, certain floor plan and open account receivables from distributors and dealers of Toro Products and certain related assets (“Receivables”).
As previously disclosed in a Current Report on Form 8-K dated October 1, 2009, Red Iron and Toro entered into the first Receivables transaction on October 1, 2009, pursuant to which Red Iron purchased from Toro certain Receivables for an aggregate purchase price of approximately $69.9 million.
On October 9, 2009, Toro and Red Iron entered into a second Receivables transaction having an aggregate purchase price of approximately $2.8 million and, on December 1, 2009, Toro and Red Iron entered into a third Receivables transaction having an aggregate purchase price of approximately $18.1 million. In each transaction, the purchase price generally represented the face value of, or the purchase price paid for, the Receivables by Toro.
WASHINGTON — December 2 - The Environmental Protection Agency said Monday that it would probably increase the amount of ethanol that gasoline retailers could blend into ordinary fuel, to 15 percent, if tests established that the blend would not damage cars.
The maximum ethanol blend is now 10 percent, except for cars specially equipped to handle higher blends. The agency said it was likely to approve the increase to 15 percent next summer, perhaps for use only in cars of the 2001 model year and later.
This raises the possibility that gasoline retailers might need to carry different ethanol blends in different pumps, and that drivers with older cars might have to be careful about which blend they buy.
The E.P.A. was responding to a petition from ethanol manufacturers, who have complained that unless a higher blending level is approved, within two years they will not have a big enough market to absorb their production.
A coalition of environmentalists, oil refiners, grocery industry representatives and the makers of power equipment has vowed to fight the change, and the auto industry has also expressed concern.
In a letter to Growth Energy, an ethanol trade association that filed the request for a higher blend in March, the E.P.A. said that “our engineering assessment to date indicates that the robust fuel, engine and emissions control systems on newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15.” But the agency added that it would wait for the Energy Department to test a dozen vehicles, a task that should be completed in May.
The decision drew mixed reviews. At Growth Energy, Wesley K. Clark, a retired general who is co-chairman of the organization, said the reply was “basically a positive answer,” and sent a signal to his industry to invest in more plants, including some advanced plants that would make ethanol from corn cobs, wood chips and other nonfood sources.
Congress ordered increased use of ethanol in energy bills that passed in 2005 and 2007, but the plan has not worked as backers had hoped. Millions of “flex fuel” cars are on the road that can use ethanol blends as high as 85 percent, but fewer than 2 percent of service stations sell blends above 10 percent. Adjusted for its lower energy content, E85, as the higher blend is known, is more expensive than gasoline, and motorists thus have little reason to use it.
The automakers’ trade association praised the E.P.A.’s decision to wait for more test data, but expressed some concern about the idea that gas stations would begin selling fuel that might be good for younger cars and bad for older ones. A system based on model year “would create a tremendous likelihood of consumer confusion and misfueling,” said Charles Territo, a spokesman for the Alliance of Automobile Manufacturers.
Kris Kiser, executive vice president of the Outdoor Power Equipment Institute, said that high ethanol blends could force the clutch on a chain saw to engage, and spin the chain, when the user thought it was in neutral, and that such blends could cause leaks and fires in equipment held in the hand or carried on the back. Mat Dunn, legislative director of the National Marine Manufacturers Association, said such blends could make boats break down far from shore. “We cannot just pull over and call AAA,” he said.
And Bill Holbrook, a spokesman for the National Petrochemical and Refiners Association, said some of his group’s members were already being sued on the basis that their 10 percent ethanol blends had damaged engines.
But another ethanol producers’ group, the Renewable Fuels Association, argued against any delay in approving higher blends. Ethanol backers intend to ask Congress to supplant the E.P.A.’s decision-making and simply require a higher blend.
ALEXANDRIA, Va., Dec 01, 2009 -- The Outdoor Power Equipment Institute (OPEI) today announced that it remains concerned by the Environmental Protection Agency's (EPA) response to the Growth Energy waiver on 15 percent ethanol as it overlooks the impact on hundreds of millions of outdoor power equipment used by consumers, such as utility vehicles, lawnmowers, chainsaws, snow throwers and other affected equipment, including boats, ATVs, motorcycles and snow mobiles.
"EPA's letter basically addressed the consideration of E15 for newer automobiles, but ignores the substantial non-automobile product families and the economic and safety issues related to their use," said Kris Kiser, Executive Vice President at OPEI. "However, we're pleased that EPA acknowledges more testing is needed."
Department of Energy testing of mid-level ethanol blends on outdoor power equipment engines demonstrated performance irregularities and failure on tested product. "Should EPA allow higher levels for newer autos, we still face a daunting task of educating millions of consumers and labeling pumps to prevent possible mis-fueling that could potentially harm engine equipment and its users," added Kiser.
To read OPEI's own study of the DOE testing report, go directly to the study.
About the Outdoor Power Equipment Institute:
OPEI is an international trade association representing the $15 billion landscape, forestry, utility and lawn and garden equipment manufacturing industry. OPEI is a recognized Standards Development Organization for the American National Standards Institute (ANSI) and active internationally through the International Standards Organization (ISO) in the development of safety standards. Founded in 1952, OPEI represents and promotes the outdoor power equipment industry before federal, state and international legislative and regulatory bodies. For more information on OPEI, visit www.OPEI.org.
November 10 - The insider theft incident last week at Stens Corporation is evidence of how organisations need to implement an access governance change management control framework.
According to a report by Softpedia, Scott R. Burgess and Walter D. Puckett used to work for Stens Corporation, a distributor of replacement parts for small engine outdoor power equipment and after quitting their jobs in late 2004 and early 2005, respectively, Burgess and Puckett went on to work for a rival company.
Authorities claim that until September 2006, the two men illegally accessed private information stored on computers belonging to Stens on twelve separate occasions. According to prosecutors, the men used still active credentials to access sensitive information for almost two years.
According to assistant US attorney Todd S. Shellenbarger, Burgess and Puckett face a maximum sentence of five years in prison and a fine of $250,000 each. The Federal Bureau of Investigation and the Indiana State Police have collaborated in the investigation.
According to Brian Cleary, vice president of products and marketing at Aveksa, to prevent incidents such as this, organisations need to implement an access governance change management control framework that provides access visibility to all information resources both within and external to the enterprise.
Cleary said: “It also needs the control to understand whether the access is appropriate for the user's functional role or task, the on-going monitoring to ensure that access risk is being dynamically managed and the use of automatic access event-driven rules to understand what actions need to be taken when access change is requested or detected.”
He claimed that when an employee terminates their relationship with the company, it is vital that the IT department has automated procedures to remove access to all enterprise information resources to ensure that they secure their sensitive data and systems quickly and effectively.
IT departments are quick to remove network access privileges because many information resources are secured by the firewall, but Cleary said that this is not sufficient enough as accounts to information resources must also be revoked.
Cleary said: “Surprisingly, having orphaned accounts to information resources is quite common in both small and large organisations as IT departments struggle to keep pace with the amount of requests for initial user access or change to existing access coming from the business.
“Providing or changing access becomes the priority because IT doesn't want to be a barrier to the business being able to move forward. Revoking access at the specific information resource level takes second priority if the user's network access has been de-provisioned, but as stated this is a false sense of security.
“As more and more data, information resources and services are moving into the cloud, this becomes a control nightmare for IT organisations because information resources that can be accessed via the web can't be controlled with network login. What's worse is that many IT departments are unaware of how many cloud based applications and services the organisation is actually using so they don't have the visibility to know what to revoke.”
November 25 - Generac Power Systems Inc., a Waukesha, WI-based manufacturer of residential and commercial standby generators, today introduced a new Hybrid Electrical System for recreational vehicles (RVs).
According to Generac, as today’s motor coaches have all the bells and whistles and comforts of the home, they are using far more energy than ever before. The appliances and accessories that need to be powered are increasingly more sophisticated and advanced and need a dependable, clean power source.
Generac has partnered with Magnum Energy and Precision Circuits Inc. to introduce the first Hybrid Electrical System to deliver all the power needed for large RVs without having to install a larger, more costly generator.
“For more than 50 years, Generac has garnered considerable expertise in producing small engines, providing innovative and value-driven generator products for the residential, commercial and RV industries. Generac’s staff of talented engineers is responsible for creating this opportunity to expand the company’s RV product offerings, developing a cutting-edge system to answer consumer needs for a better power solution on the road,” said Bill Slavik, director of RV OEM, Generac. “This new power management system allows consumers to now have all the comforts of home without the increased energy costs.”
According to Slavik, the new Hybrid Electrical System can save up to $3,000 on the cost of a larger generator and weighs 270 pounds less - thus, increasing fuel savings and lowering emissions. The smart power management system begins to supply power to the coach one circuit at a time - keeping all startup spikes in energy to a minimum. This allows the system and the Generac generator to run up to three separate air conditioners at one time. If peak demand exceeds the output of the generator, the inverter turns on and supplements the power. If the battery voltage drops too low, the Hybrid Electrical System will begin to shed non-critical loads until a balance is maintained. Once the peak demand is over, the system begins to return service to the preselected loads supplying seamless, clean power.
Generac also announced it has formed a strategic partnership with Fiat Powertrain Technologies (FPT), one of the most significant global players in the powertrain sector.
Beginning in 2010, FPT will supply Generac with a wide range of industrial diesel engines for use in gensets with outputs ranging from 60 to 350 kilowatts. The FPT engines are state-of-the-art designs that will help increase productivity and greatly reduce engine operating costs.
The engines require 37 percent less oil and feature best-in-class 600-hour oil and filter change intervals.
"FPT engines have many superior technology and performance advantages that Generac seeks to utilize in its gensets," said Allen Gillette, senior vice president of engineering at Generac. "Using FPT engines will enable us to offer our customers superior products and technology. In addition, as FPT products are developed to reduce engine emissions while improving fuel consumption, they will aid Generac in continuing to meet the new exhaust emissions standards required by the U.S. Environmental Protection Agency (EPA), and providing the most innovative engine technologies on the market today."
