- Quarterly sales increase nearly 10 percent on balanced professional and residential growth
- 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
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 snow thrower 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 (SGandA) expense as a percent of sales improved 40
basis points for the second quarter to 18.6 percent. The improvement in SGandA
reflects further leveraging of costs over increased sales volumes. For the
first six months, SGandA 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.
