The Toro Company Reports 2011 First Quarter Results

o   Quarterly sales increased nearly 16 percent fueled by strong growth in all professional businesses o   Net earnings per share up 66 percent to $0.53 o   Record level of new products drives early season demand o   Company raises full-year guidance BLOOMINGTON, Minn., Feb 17, 2011 -- The Toro Company (NYSE: TTC) today reported net earnings of $17.3 million, or $0.53 per share, on net sales of $383.2 million for its fiscal first quarter ended January 28, 2011. In the comparable fiscal 2010 period, the company delivered net earnings of $10.9 million, or $0.32 per share, on net sales of $331.4 million. "Fiscal 2011 is off to a good start," said Michael J. Hoffman, Toro's chairman and chief executive officer. "We are pleased with the ongoing recovery of our professional businesses driven by excitement around our new innovations and improving market conditions. Significant snowfalls drove strong retail demand for snow products, which helped the quarter, and also provided revenue for landscape contractor customers which will support purchases of mowing equipment as we head into spring." SEGMENT RESULTS Professional Professional segment net sales for the fiscal 2011 first quarter totaled $258.3 million, up 21.4 percent from the same period last year. Shipments were up across all professional businesses on improved customer optimism and strong acceptance for new products. Golf development and existing renovation projects around the world accelerated demand for golf equipment and precision irrigation systems. Early orders for landscape maintenance equipment to channel partners grew in anticipation of a strong selling season. Worldwide sales for micro irrigation products continued to strengthen on increased penetration of these water-saving technologies. Professional segment earnings for the fiscal 2011 first quarter were $37.9 million, up 46.9 percent from last year's first quarter. Residential Residential segment net sales for the fiscal 2011 first quarter totaled $123.3 million, up 5.6 percent from the same period last year. Growing consumer confidence had a positive impact on revenues. Shipments for riding products were up on the successful introduction of a new line of innovative zero turn mowers, while strong snowfall and expanded placement drove demand for snow products. These improvements were somewhat offset by difficult weather conditions in Australia that impacted sales of Pope-branded products, along with lower initial orders of walk power mowers in an effort by retailers to time shipments closer to retail demand. Residential segment earnings for the fiscal 2011 first quarter were $11.4 million, down 15.3 percent from last year's first quarter. REVIEW OF OPERATIONS Gross margin for the fiscal 2011 first quarter improved 60 basis points to 35.7 percent from the prior year period. The increase in gross margin was primarily driven by favorable product mix and higher production volumes, which were somewhat offset by raw material inflation. Selling, general and administrative (SG&A) expense for the fiscal 2011 first quarter was up $12.8 million, or 13.3 percent from the same period last year, but declined as a percent of sales to 28.6 percent from 29.2 percent. The decline in SG&A as a percent of sales reflects further leveraging of costs over increased sales volumes, which was somewhat muted by higher warranty expense. Interest expense for the fiscal 2011 first quarter was $4.1 million, down 3 percent compared with the same period last year. The effective tax rate for the fiscal 2011 first quarter was 29.3 percent compared with 33.6 percent in last year's first quarter. The lower tax rate was primarily due to the retroactive extension of the Federal Research and Engineering Tax Credit. Accounts receivable at the end of the fiscal 2011 first quarter totaled $171.2 million, up slightly from the same period last year, on a sales increase of nearly 16 percent. Net inventories for the first quarter were $239.7 million, up 25.5 percent from the prior year period. Trade payables were $149.7 million, up 36.6 percent compared with last year. BUSINESS OUTLOOK "Customer confidence in our markets is continuing to build," said Hoffman. "Professional customers are beginning to reinvest in their businesses, and we are well positioned with a record level of new products to drive retail demand and increase our market share. While always mindful of the impact of Mother Nature on our business, we are optimistic about the selling season ahead." The company now expects fiscal 2011 net earnings to be about $3.40 per share on a revenue increase of about 7 percent. For its fiscal 2011 second quarter, the company expects to report net earnings of about $1.58 per share. 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.