·
First quarter revenues grow 4.9
percent to a record $444.7 million
·
Net earnings per share up over 60
percent to a record $0.53
·
Company raising full-year earnings
guidance; well positioned entering key selling season
·
Commitment to building micro
irrigation global presence continues with acquisition in China
BLOOMINGTON, Minn.-- Feb. 21, 2013--
The Toro Company today reported net earnings of $31.4 million,
or $0.53 per share, on a net sales increase of 4.9 percent to $444.7
million for its fiscal first quarter ended February 1, 2013.
In the comparable fiscal 2012
period, the company delivered net earnings of$19.9 million, or $0.33 per
share, on net sales of $423.8 million. The “per share” data for the
comparative periods has been adjusted to reflect a two-for-one stock split
effective June 29, 2012.
“Our record-setting first quarter,
driven by particularly strong channel demand for large turf equipment and the
continued growth of micro irrigation sales, propelled us to a solid start for
the year,” said Michael J. Hoffman, Toro’s chairman and chief executive
officer. “Our financial performance benefitted from both accelerated sales
related to pre-Tier 4 product shipments and early professional end-user demand,
along with positive effects of our productivity initiatives.”
“The optimistic outlook of customers
across our businesses is encouraging, as we prepare for our primary selling
season,” said Hoffman. “Barring new economic headwinds, we anticipate the
momentum our golf, landscape contractor and micro irrigation businesses enjoyed
this past quarter will carry into spring.
Our residential business retail
potential looks solid as well. Recent snowfall across our primary snow markets,
including the record-breaking blizzard that struck the Northeast, generated
additional revenue for our contractor customers and is helping clear field
inventories, thus boosting prospects for our autumn pre-season snow sales.”
“Additionally, along with positive
market conditions,” Hoffman added, “our latest professional and residential
product innovations, like the Reelmaster® 3550-D (the lightest golf fairway
mower on the market), new 30” professional walk power mowers for landscape
contractors and the newly Toro-branded products from our Astec and
Stone Construction acquisitions from 2012, are helping create further
opportunities.”
The Toro Company is also
announcing today that it has entered into an agreement to acquire a Chinese
micro-irrigation company, subject to applicable regulatory approval and other
customary closing conditions. Terms of the transaction were not disclosed.
Hoffman commented, “Although small, this acquisition will help strengthen our
presence in China, a critical growth market, by establishing a micro
irrigation base of operations.”
The company continues to expect
revenue growth of about 4 to 5 percent for fiscal 2013. With the expectations
that the accelerated margin and earnings benefit of the Tier 4 transition will
moderate through the year, the earnings expectations are being raised largely
to reflect the benefit of tax rate improvement discussed below. The company now
expects fiscal 2013 net earnings to be about $2.40 to $2.45 per
share. For the second quarter the company expects to report net earnings per
share of about $1.20.
SEGMENT RESULTS
Professional
· Professional segment net sales for
the first quarter totaled $329.1 million, up 16 percent from the same
period last year. Domestic shipments of large turf equipment were up due to
channel demand. The early successful launch of products from the Astec and
Stone acquisitions, also contributed to the professional businesses’ strong
quarter. Furthermore, increased capacity enabled the company to capitalize on
steadily growing demand for micro-irrigation systems to meet the ever-growing
global food requirements. Results in the professional segment were somewhat
offset by soft international sales activity.
· Professional segment earnings
totaled $60.7 million, up 44.3 percent from $42.1 million last
year.
Residential
· Residential segment net sales for
the first quarter totaled $120.9 million, down 12.1 percent from the first
quarter last year. The decline reflects reduced retail demand for snow products
due to unseasonable winter weather in North America. However, residential
segment results benefitted from improved sales of Pope products in Australia.
· Residential segment earnings for the
fiscal 2013 first quarter totaled $12.2 million, down 3.6 percent from $12.6
million in the same period last year.
OPERATING RESULTS
Gross margin for the fiscal 2013
first quarter increased 270 basis points from last year to 37.3 percent. The
margin growth was primarily the result of product mix, pricing, and progress on
our productivity efforts.
Selling, general and administrative
(SG&A) expense as a percent of sales for the fiscal 2013 first quarter was
up 30 basis points to 26.9 percent. The SG&A increase as a percent of sales
reflects incremental costs associated with the acquisition of Astec and Stone,
as well as start-up costs for the new distribution facility in Iowa.
First quarter operating earnings as
a percent of sales were 10.4 percent compared to 8 percent a year ago.
First quarter interest expense was
down 4 percent to $4.2 million due to lower average debt levels.
The effective tax rate for the
quarter was 27.7 percent compared with 33.8 percent last year. 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 2013 first quarter totaled $180.3 million, up 2.7 percent from
the same period last year, on a sales increase of 4.9 percent. Net inventories
for the first quarter were $335.7 million, up 23.2 percent. The increase
includes product to support the Tier 4 transition, snow throwers and inventory
from the Astec and Stone acquisitions. Trade payables increased 10.9 percent
for the first quarter to $168.3 million.
The Toro Company is a leading worldwide provider of innovative turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions. With sales of more than $1.9 billion in fiscal 2012, Toro’s global presence extends to more than 90 countries through strong relationships built on integrity and trust, constant innovation, and a commitment to helping customers enrich the beauty, productivity and sustainability of the land. 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. More information
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