Arien's Nowegian Power Equipment Distributor Acquires Nowegian Aftermarket Parts Distributor

ARIENS BUYS NORWAY PARTS DISTRIBUTOR

BRILLION — June 25 --  Sovde, Ariens Co.'s Norwegian power equipment distributor, has acquired Norpower Parts, a Norwegian aftermarket parts distributor in Aurskog, Norway.

"Norpower has steadily developed the dealer network throughout Norway," Dan Ariens, company president, said in a statement. "Offering a companion portfolio of both wholegoods and aftermarket parts will be an advantage as Sovde continues to grow business in that region."

Norpower was founded by Svein Hansen in 1980. It is an importer and distributor of replacement parts for the outdoor power equipment industry in Norway.

Ariens acquired Sovde in February.

Brillion-based Ariens Co. is a manufacturer of outdoor power equipment for both consumer and professional use.

The Toro Company Acquires Lawn Solutions Commercial Products, Inc.

BLOOMINGTON, Minn. --  Jun 27 -- The Toro Company today announced it has acquired Lawn Solutions Commercial Products, Inc., a leading manufacturer of innovative turf renovation equipment for the landscape, rental, municipal and golf markets. The acquisition, which includes a dedicated lineup of aerators, seeders, power rakes and brush cutters, adds key product categories to Toro's portfolio to support growth across its core global businesses. Terms of the transaction were not disclosed.

"Turf renovation is a natural category for Toro having built our company around turf maintenance for almost 100 years," said Michael Drazan, vice president of the company's Contractor Business. "These products complement our brands and markets extremely well, while extending our offering to customers worldwide. With our expanded distribution and market strength, we believe we can deliver significant share growth in these categories."

Based in Louisville, Kentucky, employing about 10 people, and founded in 2006, Lawn Solutions has quickly established its position in the turf renovation market and become known for its reputable line of innovative products.

It will continue to make the products for Toro in Louisville for now. Toro has had a private label agreement with Lawn Solutions since last year for a walk-behind aerator and seeder.

As part of the purchase, David Cook, owner of Lawn Solutions, will continue to consult with Toro after the acquisition and provide important product development and category expertise.

About The Toro Company

The Toro Company (NYSE: TTC) is a leading worldwide provider of turf and landscape maintenance equipment, and precision irrigation systems. With sales of nearly $1.7 billion in fiscal 2010, Toro's global presence extends to more than 80 countries through its reputation of world-class service, innovation and turf expertise. Since 1914, the company has built a tradition of excellence around a number of strong brands to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields.

Generac and Ecomotors Agree to Engine Development Partnership

ALLEN PARK, Mich., June 14 -- EcoMotors International and Generac Power Systems, have announced an agreement to jointly develop the revolutionary EcoMotors opoc® engine for Generac products. The agreement is designed to enable Generac to apply the opoc® technology to its market-leading range of residential, commercial and industrial power generation solutions.

"We are very excited to partner with Generac on this game-changing initiative for the power generation industry," said Don Runkle, CEO of EcoMotors. "Together, our organizations look forward to bringing clean, efficient opoc®-powered Generac products to the power generation market in the near future."

Aaron Jagfeld, CEO of Generac, added, "This agreement with EcoMotors reflects Generac's proud role as the standby power generation industry leader and innovator, and our continual quest to bring new technologies that add value for our customers and shareholders."

Allen Gillette, Generac's Senior Vice President of Engineering, noting the inherent functional advantages of opoc® said,  "We believe that this remarkably compact and flexible engine can play a key role in ensuring that Generac products remain responsive to our customer needs, and to further distinguish Generac in terms of advanced technologies that are environmentally sound."

EcoMotors claims its “opoc engines” are 15 to 50 percent more fuel efficient than traditional internal combustion engines, as well as smaller and lighter to boot.

Chief executive officer of EcoMotors, Don Runkle (who spoke at TechCrunch Disrupt in New York last month) explained the impact of the partnership with Generac to his business:

“We’re going to work with Generac to qualify the ‘EcoMotors opoc engine’ for applications in gen sets, or the power generation area. We’d expect to begin to see [generators equipped with our engines] on the market in 2013. We have engines in prototypes, now in a wide variety of applications.

Partnering with a market leader in generators— which is about an $8 billion market, compared to a larger market in automotive— we hope to get through development quickly.

It can be easier to get engines tested for this application because you don’t have to do crash [tests] to see what happens to an engine like you would with vehicles. Gen sets run at one speed, also. In the U.S. that’s 60 cycles per second, and in EU that’s 50 cycles per second. Whereas with automotive, marine and aerospace applications, you have the engine going up and down in speed, obviously. It is easier to calibrate for generators.”

Since 1959, Generac has been a leading manufacturer of backup power generation products serving residential, light commercial and industrial markets. Generac's power systems range in output from 800 watts to 9 megawatts and are available through a broad network of independent dealers, retailers and wholesalers. Generac is committed to developing a long-term vision that promotes environmentally responsible products, processes and partnerships and strives to be a positive contributor of sustainable growth in the backup power generation industry. For more information on Generac and its extensive line of both portable and automatic generators, visit www.generac.com.

Established in early 2008, EcoMotors is changing the landscape of internal combustion power. Based in Allen Park, Mich., EcoMotors is commercializing the unique opoc® engine for use in cars, light trucks, commercial vehicles, aerospace, marine, agriculture, auxiliary power units, generators, etc. Anywhere conventional gas or diesel power is currently utilized, opoc® represents a better propulsion solution.

The two primary investors in EcoMotors are Khosla Ventures and Bill Gates. Khosla Ventures, based in Menlo Park, California, offers venture assistance, strategic advice and capital to entrepreneurs. The firm helps entrepreneurs extend the potential of their ideas in breakthrough scientific work in clean technology areas such as solar, battery, high efficiency engines, lighting, greener materials like cement, glass and bio-refineries for energy and bio-plastics, and other environmentally friendly technologies as well as traditional venture areas like the Internet, computing, mobile and silicon technology arenas. Vinod Khosla, who founded the firm in 2004, is a founder of Sun Microsystems and was formerly a General Partner at Kleiner Perkins.  

Ariens Plant Expansion to be Finished by July

BRILLION — June 11 -- Ariens Co.'s $3.8 million plant expansion at it its facility at 655 W. Ryan St. is on track for completion in July.

The company on Thursday hosted a ceremony marking the installation of the final beam of the project.

The plant expansion is being managed by Miron Construction of the Town of Menasha.

The upgrades include expansion of offices and research and development facilities as well as increased workstation capacity, a new employee "kaizen" learning center, a new food services area, new product development and testing labs and a revamped main entrance.

It also includes the addition of a geothermal heating and cooling system.

Ariens Co. manufactures outdoor power equipment for both consumer and professional use, employing about 1,200 people in Brillion.

Husqvarna Recalls Yard Tractors with Tufftorq Transaxle Due to Loss of Braking

 June 9, 2011

The following product safety recall was voluntarily conducted by the firm in cooperation with the CPSC. Consumers should stop using the product immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Husqvarna Yard Tractors with TuffTorq K46LD Transaxle

Units: About 1,600

Manufacturer: Husqvarna Professional Products Inc., of Charlotte, N.C.

Hazard: The yard tractor's transaxle can experience intermittent drive failure, posing a risk of reduced or lost braking ability.

Incidents/Injuries: None reported.

Description: This recall involves orange, Husqvarna yard tractors with TuffTorq K46LD transaxle. Yard tractors included in the recall have model numbers YTH23V42LS and YTH24V48LS and serial numbers ranging from 050110A001000 to 123110D999999. The first six digits of the serial number is a date code. Tractors included in the recall have a serial date range of May 1, 2010 through December 31, 2010. Model and serial information is located on an identification plate attached to the underside of the seat.

Sold at: Husqvarna authorized dealers nationwide from May 2010 through December 2010 for between $2,300 and $2,800.

Manufactured in: USA

Remedy: Consumers should immediately stop using the recalled yard tractors and contact Husqvarna to schedule a free repair at an authorized Husqvarna dealer.

Consumer Contact: For more information, contact Husqvarna toll-free at (877) 257-6921 between 8 a.m. and 6 p.m. ET Monday through Friday. Consumers can also visit the firm's website at www.husqvarna.us

Positec's Path to Success Built on Brand

A Chinese manufacturer pursues innovative products to build a global brand.

June 3 -- Tom Duncan and Don Gao grew up worlds apart but they shared a common goal -- build a branded power tool company. Gao was an entrepreneurial Chinese manufacturer who in 1998 started Positec, a contract tool manufacturer, and built his own factory. Duncan had worked in the power tool industry for 20 years. After leaving Robert Bosch Tool Group, he gained the rights to the Rockwell tool brand and was intent on starting his own company.

During the mid-90s, Positec was growing at a double-digit rate annually. Gao shipped 700,000 angle grinders one year to Black & Decker. But the tool giant decided to make the grinders itself. Gao came to the conclusion that he wanted to control his own destiny. He would remake the company from a contract manufacturer to a producer of branded products. He met Duncan and hired him as president and CEO of Positec USA to run his North American operations.

Despite their track record in the industry, Duncan notes, they had a tough time selling the idea of their transition to a brand company to large chains such as Home Depot and Lowe's. But they soon landed on another approach. Positec developed high-quality infomercials to sell its line of WORX lawn trimmers directly to consumers. The infomercials proved a success and enabled Positec to gain access to the big box retailers. Today, nearly 60% of Positec's sales are through retail stores.

Different by Design

As Duncan notes, it is one thing to gain access to retail stores, but you need to have products that stand out from the established brands. Gao understood the importance of visual appeal and hired Paolo Andriolo, based in Vicenza, Italy, to design products that were ergonomic, easy to use and visually attractive.

Perhaps most importantly, Positec focused on cordless electric trimmers rather than following the industry's traditional concentration on gas-powered machines for men. The company was able to produce light tools with lithium ion batteries and no pull-cord starters. The battery technology not only reduced weight but held its charge without fading, allowing the machines to run at full power until they were fully discharged. Company leaders decided they would target women buyers with these machines. The strategy worked. "The market for cordless trimmers the year before we launched was in the neighborhood of 400,000 pieces," Duncan recalls. Positec sold 400,000 cordless trimmers in its first year, doubling the market. Positec now sells 60% of its trimmers to women.

While Chinese companies have not been viewed as innovators for the most part, Positec has emphasized innovative product development in its culture. The company has registered more than 2,000 design and product patents in its 12-year history. In keeping with their mission of producing products that make people's lives easier, a number of these developments improve user safety and health. Product features include VibraFree, a vibration-cancelling technology, and Cyclonix, a system for sanders that separates air from the dust and is designed to reduce the risk of wood dust-related respiratory conditions.

"We are just launching a product called the JawSaw, which is basically a safe chain saw," says Duncan. The electric-powered chain saw is contained in the jaws and only exposed when cutting. Noting that thousands of chain saw injuries occur each year, Duncan says the idea for the JawSaw originated with the company's Australian design office. It was then sent to China for engineering design and to Italy for its exterior design. The U.S. team conducted end user research that resulted in the development of a pole mechanism to reach up into tree limbs, rather than have users climbing on ladders.

That global approach to the business has led the company to pursue talent wherever it can find it and to skillfully blend these talents in its pursuit of innovation, a trait Lowe's recognized when it named Positec its "2010 Innovator of the Year."

Last year, Positec reached $350 million in revenue, with 60% of sales coming from North America. And despite a late start this year to the outdoor season in the Midwest because of heavy rains, Duncan expects Positec's continued launching of new products to keep propelling sales upward.

www.industryweek.com

The Toro Company - SEC Form 10-Q For the Quarter Ending April 29, 2011 - EXCERPTS

For the Quarter Ending April 29, 2011

Item 2.  Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

Nature of Operations

The Toro Company is in the business of designing, manufacturing, and marketing professional turf maintenance equipment and services, turf irrigation systems, agricultural micro-irrigation systems, landscaping equipment and lighting, and residential yard and snow removal products. We sell our products worldwide through a network of distributors, dealers, hardware retailers, home centers, mass retailers, and over the Internet. Our businesses are organized into three reportable business segments: Professional, Residential, and Distribution. Our Distribution segment, which consists of our company-owned domestic distributorships, has been combined with our corporate activities and is shown as “Other.” Our emphasis is to provide innovative, well-built, and dependable products supported by an extensive service network. A significant portion of our revenues has historically been, and we expect will continue to be, attributable to new and enhanced products. We define new products as those introduced in the current and previous two fiscal years.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the MD&A included in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended October 31, 2010.

RESULTS OF OPERATIONS

OVERVIEW

Our results for the second quarter of fiscal 2011 were positive with a net sales growth rate of 12.2 percent and a net earnings growth rate of 32.0 percent, each as compared to the second quarter of fiscal 2010. Year-to-date net earnings increased 37.0 percent in fiscal 2011 compared to the same period in the last fiscal year on a year-to-date net sales growth rate of 13.5 percent. Sales for all professional segment businesses increased due to higher demand resulting from improved economic conditions, better product availability, the successful introduction of new products, and strong demand for golf equipment and irrigation systems. Early orders for landscape contractor equipment, rebound of the rental market, and continued demand for our micro-irrigation products also contributed to the growth of professional segment sales. To meet increasing worldwide demand for micro-irrigation products for the agricultural market, particularly in Eastern Europe, we began construction of a new manufacturing facility in Romania with production anticipated to begin in late 2011. We expect this new facility in Romania to provide many advantages due to its central location, established transportation infrastructure, and access to skilled manufacturing resources. Residential segment sales decreased slightly for the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010 but increased 1.9 percent for the year-to-date period of fiscal 2011 compared to the same period last fiscal year. Cool, wet weather dampened sales of walk power mowers for both the second quarter and year-to-date periods of fiscal 2011 compared to the same periods in the prior fiscal year. These declines were somewhat offset by consumer demand resulting in strong orders for our new line of zero-turn radius riding mowers, as well as better product availability. Net earnings as a percentage of net sales rose to 9.5 percent and 7.6 percent in the second quarter and year-to-date periods of fiscal 2011, respectively, compared to 8.1 percent and 6.3 percent in the second quarter and year-to-date periods of fiscal 2010, respectively. Higher gross margins, leveraging of selling, general, and administrative (“SG&A”) expenses, and a lower effective tax rate also contributed to the earnings improvement.

We continued to focus on asset management and our financial condition remains strong. Our receivables increased by 6.8 percent as of the end of the second quarter of fiscal 2011 compared to the end of the second quarter of fiscal 2010. Our inventory levels also increased by 49.0 percent as of the end of the second quarter of fiscal 2011 compared to the end of the second quarter of fiscal 2010 as we prebuilt inventory in anticipation of expected higher demand for our products and product availability issues we experienced last year that we did not want to replicate this fiscal year, coupled with the impact of lower sales of some residential segment products due to unfavorable weather conditions. As of the end of our second quarter of fiscal 2011, our average net working capital (accounts receivable plus inventory less trade payables) as a percentage of net sales was 13.6 percent compared to 19.0 percent as of the end of our second quarter of fiscal 2010. We also increased our second quarter cash dividend by 11 percent from $0.18 to $0.20 per share compared to the quarterly cash dividend paid in the second quarter of fiscal 2010.

We are off to a good start with our new multi-year initiative, “Destination 2014” that will take us to our centennial in 2014 and into our second century. This four-year initiative is intended to focus our efforts on driving our legacy of excellence through building caring relationships and engaging in innovation. Through our Destination 2014 initiative financial goals, we will strive to achieve $100 million in organic revenue growth in each of fiscal 2011, 2012, 2013, and 2014, and 12 percent operating earnings as a percentage of net sales by the end of fiscal 2014. We currently believe that we will achieve our organic revenue growth goal of $100 million for fiscal 2011. We define organic revenue growth as the increase in net sales, less net sales from acquisitions that occurred in the current fiscal year.

We are optimistic that the positive momentum from our second quarter should continue through the remainder of fiscal 2011. Our continued focus is on generating customer demand and aggressively driving retail sales for our innovative products, while keeping production closely aligned with expected shipment volumes. We will continue to keep a cautionary eye on the global economies and the pace and degree of recovery, retail demand, field inventory levels, commodity prices, weather, competitive actions, expenses, and other factors identified below under the heading “Forward-Looking Information,” which could cause our actual results to differ from our anticipated outlook.

NET SALES

Worldwide consolidated net sales for the second quarter and year-to-date periods of fiscal 2011 were up 12.2 percent and 13.5 percent, respectively, from the same periods in the prior fiscal year. Worldwide professional segment net sales were up 19.7 percent and 20.3 percent for the second quarter and year-to-date periods of fiscal 2011, respectively, compared to the same periods in the prior fiscal year. Shipments for all professional segment businesses increased due to strong demand resulting from improved economic conditions, better product availability, and the successful introduction of new products. 

Demand for golf equipment and irrigation systems was particularly strong due to golf development projects in key international markets and domestic renovation projects. Sales of landscape contractor equipment were also up due to positive customer response of new products and strong demand from professional contractors for the spring and summer mowing season, despite a slow start to spring in key markets. In addition, shipments of products from our Sitework Systems business were up as a result of the rebound in the rental market, as well as new products that were positively received by customers.

Micro-irrigation product sales also increased due to the continued growing market demand, particularly in Eastern Europe, and additional manufacturing capacity that increased production and sales of our water-conserving products. Residential segment net sales declined slightly for the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010, but increased 1.9 percent for the year-to-date period of fiscal 2011 compared to the same period in fiscal 2010.

Sales of riding products were strong due to continued demand for our new zero-turn radius riding mowers, as well as better product availability. However, shipments of walk power mowers were down for the second quarter and year-to-date periods of fiscal 2011 compared to the same periods last fiscal year as a result of cool, wet weather conditions in key markets.

International net sales for the second quarter and year-to-date periods of fiscal 2011 increased 19.5 percent and 14.6 percent, respectively, from the same periods in the prior fiscal year due in part to a weaker U.S. dollar compared to other currencies in which we transact business that accounted for approximately $4.7 million and $5.7 million of additional net sales for the second quarter and year-to-date periods of fiscal 2011, respectively.

BUSINESS SEGMENTS

As described previously, we operate in three reportable business segments: Professional, Residential, and Distribution. Our Distribution segment, which consists of our company-owned domestic distributorships, has been combined with our corporate activities and elimination of intersegment revenues and expenses that is shown as “Other” in the following tables. Operating earnings for our Professional and Residential segments are defined as operating earnings plus other income, net. Operating loss for “Other” includes operating earnings (loss), corporate activities, other income, net, and interest expense.

PROFESSIONAL

Net Sales.

Worldwide net sales for the professional segment in the second quarter and year-to-date periods of fiscal 2011 increased 19.7 percent and 20.3 percent, respectively, compared to the same periods in the last fiscal year. Shipments for all professional segment businesses increased due to strong demand resulting from improved economic conditions, better product availability, and the successful introduction of new products. 

Demand for golf equipment and irrigation systems was particularly strong due to golf development projects in key international markets and domestic renovation projects. Sales of landscape contractor equipment were also up due to positive customer response of new products and strong demand from professional contractors for the spring and summer mowing season, despite a slow start to spring in key markets. In addition, shipments of products from our Sitework Systems business were up as a result of the rebound in the rental market, as well as new products that were positively received by customers. Micro-irrigation product sales also increased due to the continued growing market demand, particularly in Eastern Europe, and additional manufacturing capacity that increased production and sales of our water-conserving products.

Operating Earnings.

Operating earnings for the professional segment in the second quarter and year-to-date periods of fiscal 2011 increased 26.6 percent and 32.2 percent, respectively, compared to the same periods in the last fiscal year. Expressed as a percentage of net sales, professional segment operating margin increased to 20.5 percent compared to 19.3 percent in the second quarter of fiscal 2010, and fiscal 2011 year-to-date professional segment operating margin also increased to 18.3 percent compared to 16.6 percent from the same period in the last fiscal year. These profit improvements were primarily attributable to higher sales volumes and lower SG&A expenses as a percentage of net sales due to leveraging fixed SG&A costs over higher sales volumes.

RESIDENTIAL

Net Sales.

Worldwide net sales for the residential segment in the second quarter of fiscal 2011 decreased slightly, by 0.2 percent, compared to the second quarter of fiscal 2010. For the year-to-date period of fiscal 2011, worldwide net sales for the residential segment increased 1.9 percent compared to the same period last fiscal year. Sales of riding products were strong due to continued demand for our new zero-turn radius riding mowers, as well as better product availability. However, shipments of walk power mowers were down for the second quarter and year-to-date periods of fiscal 2011 compared to the same periods last fiscal year as a result of cool, wet weather conditions in key markets.

Although net sales of Pope products sold in Australia increased in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010, shipments of Pope products were down for the year-to-date comparison due to heavy rains and flooding in Australia that negatively impacted demand in the first quarter of fiscal 2011.

Net sales for the year-to-date period of fiscal 2011 compared to the same period last fiscal year were benefited by higher shipments of snow thrower products as a result of expanded product placement and strong demand driven by heavy snowfalls during the 2010/2011 winter season.

Operating Earnings.

Operating earnings for the residential segment in the second quarter of fiscal 2011 increased 5.7 percent compared to the second quarter of fiscal 2010. Expressed as a percentage of net sales, residential segment operating margin increased to 12.7 percent in the second quarter of fiscal 2011 compared to 12.0 percent in the second quarter of fiscal 2010. This profit improvement was primarily attributable to higher gross margins due to the same factors discussed previously in the Gross Profit section.

Operating earnings for the residential segment in the year-to-date period of fiscal 2011 were down by 1.6 percent compared to the same period in the prior fiscal year. Expressed as a percentage of net sales, residential segment operating margin also decreased to 11.4 percent for the year-to-date period of fiscal 2011 from 11.8 percent for the year-to-date period of fiscal 2010.

Higher SG&A expenses, mainly from an increase in warranty expense due to special provisions for product modifications incurred mainly in the first quarter of fiscal 2011, as well as overall higher fixed SG&A costs over essentially flat sales volumes, more than offset the improvement in gross margins for the year-to-date period of fiscal 2011 compared to the same period in the prior fiscal year.

OTHER

Net Sales.

Net sales for the other segment include sales from our wholly owned domestic distribution companies less sales from the professional and residential segments to those distribution companies. The other segment net sales for the second quarter and year-to-date periods of fiscal 2011 increased slightly, by $0.5 million and $0.4 million, respectively, compared to the same periods in the prior fiscal year.

Operating Losses.

Operating losses for the other segment were down for the second quarter and year-to-date periods of fiscal 2011 by $2.3 million, or 9.7 percent, and $0.3 million, or 0.6 percent, respectively, compared to the same periods in the last fiscal year. These loss declines were primarily attributable to the following factors: (i) improved profitability at our wholly owned domestic distribution companies; (ii) lower self-insured health care costs; and (iii) an increase in income from equity investments. Somewhat offsetting those factors was an increase in incentive compensation expense due to anticipated improved financial performance and higher foreign currency exchange rate losses.