Husqvarna CEO Magnus Yngen to Leave, Search Begun for Replacement

The Board of Directors and Magnus Yngen have agreed that Husqvarna is better served by a new CEO and President following Magnus Yngen's leave of absence. Consequently the Board of Directors have today given notice to terminate Magnus Yngen's contract. Magnus Yngen has also resigned from his position as a member of the Board.

According to the employment contract, Magnus Yngen has a notice period for termination of 12 months on the part of the Company. He is also entitled to severance pay, corresponding to 12 monthly base salaries with deduction for any other income.

The search for a new CEO and President has been initiated and will cover both internal and external candidates.

On June 9, 2011 Hans Linnarson was appointed acting CEO and President. Hans Linnarson remains in these positions until a new CEO and President has been appointed. Hans Linnarson is Executive Vice President, Head of Sales Europe & Asia/Pacific since 2006 and will remain in this position as well.

"We thank Magnus Yngen for his important contribution to Husqvarna and wish him good luck in his future endeavours. The search process is initiated and in the mean-time we are very pleased that Hans Linnarson remains acting CEO", says Lars Westerberg, chairman of the Board.

Production of Linamar's Lawnmowers Stalls

GUELPH, ONT --- August 20  — Linamar is shutting down production of its cordless, battery-powered lawn mowers. Future production of the product is uncertain.

 

The manufacture of the machines was launched roughly three years ago, and was supported early on by funding from the province. The mowers were touted as an environmentally friendly alternative to gasoline-powered machines. 

Linamar’s chief executive officer, Linda Hasenfratz, said production has been shut down. 

“We had a significant supplier issue this year which has effectively shut production down for the season,” she said in an email. “It was a supply issue as opposed to a technical issue; the lawnmower continues to be a premium product in the market.”

While Hasenfratz continues to believe in the efficacy of the green lawnmowers, the future of the product is under review.

“We are currently evaluating market conditions and potential in order to develop a strategy going forward for this business,” she said. 

Back in 2008, the company received $1.8 million in provincial funding to take the rechargeable mowers to market, with funds coming from a $30 million pot of money dedicated to environmental and alternative energy development. Guelph MPP Liz Sandals said Linamar received a “much smaller” grant in 2006 to pilot the electric motor technology they were developing. 

Home Hardware and Home Depot were among the major retailers that sold Linamar’s lawnmowers, which were marketed under the Solaris, Epic and Utopia brands, essentially the same machine with slightly different paintjobs. 

The cutting power of the rechargeable Terra Phase electric motor, which has a one-hour charge, was said to be comparable to an internal combustion engine. They run on rechargeable batteries as opposed to gasoline, and come with an optional solar-powered recharger. They sold for between $500 and $600. 

The mowers were assembled in Guelph, and were part of Linamar’s recent efforts to branch out and diversify its business. While the company continues to make parts for the alternative energy sector, and manufactures electric motors and utility trailers, the automotive power-train and driveline segment of its global business is where it makes the bulk of its profits. 

Andrea Bowman, Linamar spokesperson, said the company is fully supporting the products should there be any problems with them. 

“A person can either go back to where they purchased the lawnmower or they are welcome to contact our consumer products division and someone there will help them,” Bowman said. The toll-free number for Linamar’s consumer products is 1-866-857-1445. 

Bowman said she was not able to provide additional details on the “supplier issue” mentioned by Hasenfratz. Company employees who built the mowers have been redeployed elsewhere in Linamar’s operations, Bowman added.

Sandals said Linamar received a small amount of funding first from the Ontario Ministry of Research and Innovation to boost the performance of the mower’s electric motor. The company then received the $1.8 million to help commercialize the technology, simultaneously enlisting large distributors like Home Depot to market them.

Sandals said Linamar fulfilled all obligations tied to the funding. 

“The development work on the motor occurred, and going to market in a serious, chain-store sort of way to see if the consumer is going to buy this, they certainly did that as well,” she said.

Sandals said consumer demand, or lack of it, often seals a product’s fate, but supporting new products and economic diversification is part of what government does.

“It doesn’t mean the product that was developed and refined won’t have commercial application in some other product,” she added. She commended Linamar for making efforts to diversify its business beyond the automotive sector. 

“Clearly what we’ve learned from the recession is that whether it’s a company or the province, we need to have a broader range of possibilities,” she added. “That’s what we’ve been trying to do as a government, is to diversify the base. That’s why these grants were there in the first place – to help people explore diversifying the base.” 

www.guelphmercury.com     

Preseason Snow Blower Sales Power Toro Results

August 18 -- Last season's snow-laden winter continues to be the gift that keeps on giving for Toro Co.The Bloomington company said Thursday that strong preseason sales of snowblowers to dealers restocking depleted inventories offset weaker sales of mowers. The result was a 9 percent increase in sales for the third quarter, to $501 million.

Toro's earnings rose 5 percent, to $35.1 million, in the quarter ended July 29. Professional segment earnings increased slightly due to healthy sales of irrigation products and golf course maintenance equipment.

Residential segment profits fell 57 percent. Most of the decline resulted from costs associated with correcting a transmission problem in some power mowers.

The defect wasn't discovered until the products had been shipped to retailers, so they had to be returned, fixed and reshipped. Most of the affected lawn mowers didn't get beyond dealerships, but some made their way to consumers, the company said.

Toro said the "rework issue" shaved 9 cents off earnings per share, which came in at $1.11 vs. $1.01 a year earlier. Analysts had forecast $1.13.

In a conference call, CEO Michael Hoffman said poor weather conditions and shaky consumer confidence also dampened residential segment results. Consumers' spending decisions tend to be made in "real time," he said, unlike professionals who buy products based on long-term budget plans.

"The weather and softening economy created challenges," Hoffman said, preventing the company from working through as much inventory as expected.

Toro maintained its previous guidance for the year of 10 to 12 percent revenue growth and earnings per share of $3.60 vs. $2.79 last year. The company said it expects gross margins to be relatively flat this year as it deals with higher raw material and freight costs.

In a research note, Michael Wherley of Janney Capital Markets said that margins were lower than expected but that Toro's sales nearly met expectations.

"This bodes well for the company entering fiscal 2012, even if the macro worries of the larger global economy are taking all stocks for a ride these days," Wherley said.

www.startribune.com  

Genstar Capital Announces Agreement to Sell Woods Equipment to Blount

Here’s the seller’s take on why they’re selling Woods Equipment Company to Blount.

SAN FRANCISCO -- Aug. 17 -- Genstar Capital, LLC, a middle market private equity firm that focuses on investments in selected segments of the life sciences, healthcare, financial services, software, and industrial technology industries, today announced the signing of a definitive agreement with Blount International, Inc. to sell its portfolio company Woods Equipment Company, a leading manufacturer of attachments for agricultural and construction applications and the largest independent distributor of tractor parts.  The transaction is valued at approximately $185 million.

Woods Equipment Company, headquartered in Oregon, Ill., is a leading full-line manufacturer of high-quality attachments and implements, as well as a leading distributor of aftermarket parts.  The company serves the agriculture, grounds care, and construction industries, as well as providing aftermarket parts. Woods serves a dealer network of agricultural, landscape, and construction professionals with products marketed under the brand names Woods®, Alitec®, Central Fabricators®, Gannon®, Wain-Roy®, WoodsCare™, and TISCO®. 

Rob S. Rutledge, a Genstar Vice President who heads the firm's Industrial Technology vertical, said, "The sale of Woods is a good example of how Genstar applies its differentiated strategy in the middle market to effectuate change and build industry-leading businesses. Working with the Woods management team and our operating executives, Michael Hurt and Ed Carpenter, the company implemented strategic initiatives such as product re-engineering, distribution expansion and key management additions and promotions to drive growth and improve its market position.  Woods is now very well positioned for continued success as a key part of Blount."

Bill Marcum, CEO of Woods, said, "Because of the support and commitment of our partners at Genstar we were able to focus on our business and commit new capital to projects that will enable us to offer innovative technology innovations that will make Woods even stronger going forward.  We thank Genstar for their support and partnership."

The transaction is subject to the expiration or termination of the Hart-Scott-Rodino Antitrust Act waiting period and is expected to close in the third quarter.

About Genstar Capital, LLC

Genstar Capital is a leading private equity firm that has been actively investing in high quality companies for more than 20 years. Based in San Francisco, Genstar works in partnership with its management teams and its network of operating executives and strategic advisors to transform its portfolio companies into industry-leading businesses. Genstar has more than US$3 billion of committed capital under management and targets investments focused on selected sectors within the life science, healthcare services, software and software services, financial services, and industrial technology industries.

Blount International Acquires Woods Equipment Company

August 17 -- The acquisition of an Illinois tractor and tool company by Portland's Blount International Inc. is the latest in a string of deals the company has made in an effort to expand its reach from forests to farms.

Blount International, a holding company, markets its products under several different brands.

• Oregon, Carlton and Windsor: The three brands manufacture replacement parts for chainsaws, particularly chains and guide bars. The largest, Oregon, also makes outdoor power equipment replacement parts.
• SpeeCo: The 2010 acquisition of the log splitter and tractor part company was Blount's first foray into farm, ranch and agriculture.
• ICS: Manufactures concrete cutting hydraulic and gas chainsaws for the construction business, as well as replacement parts.
• Woods: The newly-acquired company markets its agriculture, groundskeeping and construction equipment and parts under the brands Woods, Alitec, Central Fabricators, Gannon, Wain-Roy, WoodsCare and TISCO.

Blount, the makers of the Oregon brand saw chains and yard care products, announced Wednesday it would buy Illinois-based Woods Equipment Co. for $185 million.

The cash acquisition, Blount said, will increase its reach in the agriculture business. The company will acquire the Woods and TISCO tractor parts brands, as well as three manufacturing facilities and five distribution centers.

The deal is Blount's fourth acquisition in 18 months. After a changeup in Blount's senior leadership in 2009, the company launched a new growth plan to acquire companies in related markets, with a particular emphasis on agriculture.

"Woods was high on our list," said David Willmott, Blount's president and chief operating officer. "We identified it well over a year ago."

Just last week, Blount closed a deal to buy PBL SAS, a French lawnmower-blade manufacturer. It paid $14 million in cash and took on $14 million in debt. In March, Blount paid $20.6 million in cash and stock to buy KOX, a German direct-to-customer forestry-parts company.

Last year, the company bought SpeeCo, a Golden, Colo., maker of log splitters and farm and ranch accessories. It paid $90 million in cash.

Willmott said Blount is looking to make more acquisitions in the ranch and farm market. In particular, he said, the company is looking to expand its presence in Brazil, where it already manufactures forestry and yard products.

"I wouldn't expect something to happen in the very near future, but we're spending a lot of time researching the market in Brazil on the agriculture side," Willmott said.

Willmott said SpeeCo and other recent acquisitions have already performed well for the company. In the quarter ending March 31, Blount reported SpeeCo and KOX had contributed $22.3 million in sales, by itself a 16.7 percent boost over the first quarter of 2010.

Woods registered about $160 million in sales last year, Blount said. It also hopes to leverage Woods' network of 11,000 dealers.

"Just about any place where ag parts and accessories are sold, you either are or should be selling saw chain," Willmott said.

Blount will form a subsidiary to merge with the company. The deal is expected to close by the end of 2011's third quarter, pending regulatory approval.

Blount will finance the deal through cash on hand and its revolving credit facility. The company had $80.5 million on hand at the end of June, according to a financial report filed last week.

The Toro Company Reports 2011 Third Quarter Results

• Quarterly sales up 9 percent to a record $501 million
• Worldwide shipments of golf equipment increase on strength of new products
• Net earnings per share for the quarter up 10 percent to $1.11
• Company reaffirms full-year guidance

BLOOMINGTON, Minn. (August 18, 2011) — The Toro Company today reported net earnings of $35.1 million, or $1.11 per share, on net sales of $501 million for its fiscal third quarter ended July 29, 2011. The company's third quarter earnings were reduced by $0.09 per share to account for a product rework expense. In the comparable fiscal 2010 period, the company reported net earnings of $33.4 million, or $1.01 per share, on net sales of $ 458.9 million.

For the first nine months, Toro reported net earnings of $112.6 million, or $3.51 per share, on net sales of $1,515.9 million. In the comparable fiscal 2010 period, the company posted net earnings of $90 million, or $2.66 per share, on net  sales of $1,353.1 million.

"We delivered record sales over what was a good third quarter last year," said Michael J. Hoffman, Toro's chairman and chief executive officer. "Unfortunately, weather around the country slowed sales in our residential and landscape contractor businesses, and a disappointing walk power mower rework issue negatively impacted earnings for the quarter.

Even so, demand for golf and grounds equipment around the world remained strong, and adoption of our micro irrigation solutions continued to grow, which helped drive strong quarterly results."

SEGMENT RESULTS

PROFESSIONAL

Professional segment net sales for the third quarter totaled $346 million, up 8.8 percent from the prior year period. Worldwide shipments of golf equipment led segment growth on increased demand and strength of new products, such as Toro's Multi Pro® 5800 sprayer and Reelmaster® 7000 fairway mower.

Micro irrigation products saw solid gains on a worldwide basis driven by added production capacity and growing acceptance for drip technologies, including Toro's patented Aqua-Traxx® premium drip tape. Slower sales for landscape maintenance equipment resulting from significant drought in key markets offset some of the gains. For the first nine months, professional segment net sales were $1,022.5 million, up 16.2 percent from the comparable fiscal 2010 period.

Professional segment earnings for the third quarter totaled $64.3 million, up slightly from $62.7 million in the prior year period.

For the first nine months, professional segment earnings were $187.9 million, up from $156.1 million in the comparable fiscal 2010 period.

RESIDENTIAL

Residential segment net sales for the third quarter totaled $147.5 million, up 8.6 from the prior year period. Worldwide orders for snow products were up significantly for the quarter on strong preseason demand due to last year's healthy snowfalls that depleted field inventory levels. Somewhat offsetting these gains were lower sales of walk power mowers and riding products.

For the first nine months, residential segment net sales were $480.4 million, up 3.8 percent from the comparable fiscal 2010 period.

Residential segment earnings for the third quarter totaled $4.6 million, down from $10.7 million in the prior year period. The earnings decline was mainly the result of a pre-tax charge of $4.5 million to account for one-time costs associated with a rework issue affecting a large number of walk power mowers. For the first nine months, residential segment earnings were $42.5 million, down from $49.2 million in the comparable fiscal 2010 period.

OPERATING RESULTS

Gross margin for the third quarter declined 170 basis points from the same period last year to 33.5 percent. The margin decline was mostly due to the mower rework issue, increased commodity costs and higher freight expense.

For the first nine months, margins were down 20 basis points from the comparable fiscal 2010 period to 34.2 percent.

Selling, general and administrative (SG&A) expense as a percent of sales for the third quarter was down 90 basis points to 22.6 percent, and for the first nine months decreased 100 basis points to 22.6 percent. The decline in SG&A as a percent of sales for both periods reflects further leveraging of costs over improved sales volumes.

Operating earnings as a percent of sales decreased 80 basis points to 10.9 percent for the third quarter, but increased 80 basis points to 11.6 percent for the first nine months.

Interest expense for the third quarter was $4.3 million, up slightly from prior year period. For the first nine months, interest expense totaled $12.6 million, down slightly percent from the same period last year.

The effective tax rate for the third quarter was 32.9 percent compared with 35.7 percent in the same period last year. For the first nine months, the tax rate declined to 32.7 percent from 34.4 percent last year, primarily the result of the retroactive extension of the Federal Research and Engineering Tax Credit.

Accounts receivable at the end of the third quarter totaled $199 million, up 17 percent from the prior year period, on a sales increase of 9 percent. Net inventories were $232.4 million, up 31 percent from the comparable fiscal 2010 period. Trade payables were $126.7 million, up 7.4 percent compared with last year.

OUTLOOK

"Even with the external challenges of weather and the economy, along with the rework issue, we posted very solid results for the first nine months and remain committed to our revenue and EPS guidance for the year," said Hoffman.

"Increased economic concern certainly isn't welcome news, but we remain encouraged about our end markets, competitive position, and innovation levels as we finish up our fiscal year. The summer selling season is winding down and we are positioned well for the upcoming snow season with a strong lineup and expanded placement."

The company continues to expect net earnings for fiscal 2011 to be about $3.60 per share on a revenue increase of about 10 to 12 percent.

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.