- First quarter sales grow to $446 million driven by strong demand for snow products
- Net earnings per share of $0.44 delivered for the quarter
- Company well-positioned for primary selling season with innovative new product offerings
BLOOMINGTON,
MN.-- Feb. 20 -- The Toro Company today reported net earnings of $25.9 million,
or $0.44 per share, on net sales of $446 million for its fiscal 2014 first
quarter ended January 31, 2014. In the comparable fiscal 2013 period, the
company delivered net earnings of $31.4 million, or $0.53 per share, on net
sales of $444.7 million.
“Significant
snowfall across key North American markets this winter season spurred retail
demand for our snow products—helping to drive sales for the quarter and
providing a solid start to our 2014 fiscal year,” said Michael J. Hoffman,
Toro’s chairman and chief executive officer.
“The
combination of more abundant snow conditions, stronger international demand and
solid execution by our team helped us to temper the challenging year-over-year
quarterly comparisons we faced due to the Tier 4 diesel engine transition that
accelerated sales of large turf equipment into our first quarter last year. In
addition, we finished our first quarter more favorably situated in terms of
field inventory levels as compared to last year, considering that pre-Tier 4
equipment sales last year went into our channel while snow products sold this
year moved all the way through to end-user customers.”
“Looking
ahead to our primary selling season, we are well-positioned across our
businesses to drive retail sales and increase our market share. Golf course
development and renovations continue to progress and customers and channel
partners alike are excited about our innovative new equipment and irrigation
offerings, including those featured at the recent Golf Industry Show—the Sand
Pro® zero turn mechanical bunker rake, the Multi Pro® advanced spraying
systems, and the INFINITY™ golf sprinklers with unique SMART ACCESS™ to
internal components.
Landscape
contractor equipment sales are poised to benefit from the additional revenues
generated by contractors this winter, as well as the increased demand we expect
for our zero turn radius mowers featuring new electronic fuel injection and
onboard intelligence technologies. Global food demand and increased water use
restrictions continue to drive the need for more efficient irrigation solutions
for agriculture, including our new Neptune® thin wall drip line with flat
emitter technology.
“Although
we are optimistic, it is early in our fiscal year, our peak selling season is
still in front of us and we remain mindful of the challenges we could face if
we encounter unfavorable swings in economic or weather conditions. As such, we
will continue to focus on the things we can control—product innovation,
customer service, and market execution—as well as our Destination 2014 goals of
driving revenue growth and further improving productivity.”
The
company now expects revenue growth for fiscal 2014 to be about 5 to 6 percent,
and net earnings per share to be about $2.90 to $2.95. For the second quarter,
the company expects net earnings per share to be about $1.45 to $1.50.
SEGMENT
RESULTS
Professional
Professional
segment net sales for the first quarter totaled $295.5 million, down 10.2
percent from the same period last year. This decrease primarily was
attributable to strong channel demand in the first quarter of last fiscal year
that was not repeated this year for large turf equipment subject to the Tier 4
diesel engine emission requirements that began phasing in for products
manufactured after January 1, 2013.
Sales
benefitted from pre-season shipments of landscape maintenance equipment,
including our zero turn radius products with electronic fuel injection and
onboard intelligence technologies, in anticipation of retail demand. Rental and
construction equipment sales grew on increased demand for our products,
including recently acquired products newly introduced under the Toro brand.
Global micro-irrigation sales increased with continued demand for more
efficient irrigation solutions for agriculture. Worldwide golf irrigation sales
benefitted as customers continued to select our innovative system offerings for
new course projects and existing course renovations.
Professional
segment earnings for the first quarter totaled $47.5 million, down 21.9 percent
from the same period last year.
Residential
Residential
segment net sales for the first quarter totaled $147.6 million, up 22.0 percent
from the same period last year. This increase primarily was driven by retail
demand for our snow products due to significant snowfall across key North
American markets this winter season.
Sales
also benefitted from pre-season shipments of domestic residential zero turn
radius mowers in anticipation of the continuing transition of consumers to this
mowing platform, as well as additional shipments of handheld solutions.
Offsetting such increases were unfavorable currency exchange rates, primarily
relating to the Australian dollar versus the U.S. dollar.
Residential
segment earnings for the first quarter totaled $18.1 million, up 49.2 percent
from the same period last year.
OPERATING
RESULTS
Gross
margin for the first quarter was 36.7 percent, a decrease of 60 basis points
compared to the same period last year, primarily due to product mix but also
affected by unfavorable currency exchange rates and slightly higher commodity
costs, somewhat offset by realized pricing.
Selling,
general and administrative (SG&A) expense as a percent of sales for the
first quarter was 27.6 percent, an increase of 70 basis points compared to the
same period last year, primarily due to higher administrative expense,
including health care costs, warranty expense, and incremental expense relating
to our recently completed China micro-irrigation acquisition, somewhat offset
by lower warehousing expense.
First
quarter operating earnings as a percent of sales were 9.1% compared to 10.4% in
the same period last year.
First
quarter interest expense was down 11.7 percent to $3.8 million compared to the
same period last year.
The
effective tax rate for the first quarter was 33.2 percent compared with 27.7
percent in the same period last year when the company benefited from the
retroactive reinstatement of the Federal Research and Engineering Tax Credit.
Accounts
receivable at the end of the first quarter totaled $199.8 million, up 10.8
percent from the same period last year. Net inventories were $304.9 million,
down 9.2 percent from the same period last year. Trade payables were $192.7
million, up 14.5 percent compared to the same period last year.
About
The Toro Company
The
Toro Company (NYSE: TTC) is a leading worldwide provider of innovative turf,
landscape, rental and construction equipment, and irrigation and outdoor
lighting solutions. With sales of more than $2 billion in fiscal 2013, 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 is available at www.thetorocompany.com.
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