- Third quarter sales increase 11.3 percent to a record $567.5 million driven by strong retail demand for both professional and residential products
- Quarterly net earnings per share increase 28 percent to a record $0.87
- Company is well-positioned to achieve Destination 2014 goals as it launches its second century
For
the first nine months, Toro reported net earnings of $163 million, or $2.82 per
share, on a net sales increase of 6 percent to $1.759 billion. In the
comparable fiscal 2013 period, the company posted net earnings of $149.9
million, or $2.53 per share, on net sales of $1.659 billion.
“Our
team is especially proud to deliver record results and double-digit sales and
earnings growth for the third quarter in which we also celebrated our
Centennial milestone,” said Michael J. Hoffman, Toro’s chairman and chief
executive officer. “After successfully managing through the challenges of a
late spring, our quarterly results benefited from favorable summer growing
conditions in key markets that, similar to last year, helped drive retail sales
across most of our businesses.
Shipments
of golf equipment and irrigation products increased on strong retail demand for
our innovative product offerings. In addition, we returned to a more normal
quarterly flow for channel purchases of professional equipment subject to Tier
4 emission standards. Landscape contractor customers continued to invest in
turf maintenance equipment, which also helped drive sales.
On
the residential side of our business, early demand for snow products increased
as channel partners began to prepare for the anticipated strong retail
pre-season.”
“We
are optimistic as we enter the final quarter of our fiscal year and Destination
2014 journey,” said Hoffman. “With our Centennial on July 10, 2014, we
officially launched the company’s second century. Looking ahead, we will
continue to focus on the key things that have driven our past performance:
developing innovative products, serving our customers and executing in the
marketplace. We will keep a close eye on both retail demand and field inventory
levels and make adjustments as necessary. We also will continue to seek
opportunities across the enterprise to improve productivity and leverage
expenses.
Of
course, we remain mindful of the things outside of our control, such as
unfavorable weather or economic conditions, that could create potential
challenges for our customers. That said, a strong snow pre-season and continued
productivity gains, somewhat offset by product mix, should drive solid fourth
quarter revenue and earnings results. As such, today we are changing our
full-year outlook.”
The
company now expects revenue growth for fiscal 2014 to be about 6 percent, and
net earnings per share to be about $2.94 to $2.96.
SEGMENT
RESULTS
Professional
Professional
segment net sales for the third quarter totaled $384.7 million, up 11.9 percent
from the comparable fiscal 2013 period. Sales of golf equipment and irrigation
products increased on strong retail demand for our innovative product
offerings, including our new INFINITY™ sprinklers. Sales also benefitted from
the return to a more normal quarterly flow of channel purchases of equipment
subject to Tier 4 emission standards, as compared to fiscal 2013 when sales
were pulled from the third quarter to the first quarter in connection with the
regulatory transition.
Turf
maintenance and ground engaging equipment sales were up due to continued demand
by landscape contractors for our productivity enhancing products. In addition,
global micro irrigation sales increased with continued demand for more
efficient solutions for agriculture. For the first nine months, professional
segment net sales were $1.209 billion, up 3.4 percent from the comparable
fiscal 2013 period. Sales for the year-to-date period increased on strong
retail demand for landscape maintenance equipment and increased demand for our
micro irrigation, construction and rental products.
Professional
segment earnings for the third quarter totaled $74.8 million, up 23.7 percent
from the comparable fiscal 2013 period. For the first nine months, professional
segment earnings were $244.7 million, up 4.8 percent from the comparable fiscal
2013 period.
Residential
Residential
segment net sales for the third quarter totaled $175.7 million, up 13 percent from
the comparable fiscal 2013 period. Sales of snow products were up due to
increased early demand as channel partners began to prepare for the anticipated
strong retail pre-season. Sales of our residential zero turn mowing products
also grew on continued retail demand for these mowing platforms.
For
the first nine months, residential segment net sales were $533.7 million, up
11.7 percent from the comparable fiscal 2013 period. Sales for the year-to-date
period increased on strong in-season and pre-season demand for our snow
products, as well as increased channel and retail demand for our residential
zero turn mowers.
Residential
segment earnings for the third quarter totaled $18.7 million, up 24.1 percent
from the comparable fiscal 2013 period. For the first nine months, residential
segment earnings were $60.7 million, up 16.9 percent from the comparable fiscal
2013 period.
OPERATING
RESULTS
Gross
margin for the third quarter was 35.6 percent, an increase of 70 basis points
compared to the same fiscal 2013 period, primarily due to favorable product mix
and realized pricing, somewhat offset by higher commodity costs. For the first
nine months, gross margin was 35.8 percent, a decrease of 10 basis points,
primarily due to higher commodity costs and unfavorable segment mix and
currency exchange rates, somewhat offset by realized pricing.
Selling,
general and administrative (SG&A) expense as a percent of sales for the
third quarter was 22.9 percent, a decrease of 50 basis points compared to the
same fiscal 2013 period. For the first nine months, SG&A expense as a
percent of sales was 22 percent, also a decrease of 50 basis points. For both
periods, the decrease primarily was due to the leveraging of expenses over
higher sales volumes.
Third
quarter operating earnings as a percent of sales improved 120 basis points to
12.7 percent compared to the same fiscal 2013 period. For the first nine
months, operating earnings as a percentage of sales improved 40 basis points to
13.8 percent.
The
effective tax rate for the third quarter decreased to 29.4 percent from 30.5
percent in the comparable fiscal 2013 period primarily due to a one-time tax
benefit. For the first nine months, the effective tax rate increased to 31.7
percent from 31 percent in the comparable fiscal 2013 period when the company
benefited from the retroactive reinstatement of the Federal Research and
Engineering Tax Credit in the first quarter of that fiscal year.
Accounts
receivable at the end of the third quarter totaled $215.6 million, up 6.7 percent
from the same fiscal 2013 period. Net inventories were $293.8 million, up 13.5
percent from the same period last year. Trade payables were $169 million, up 36
percent compared to the same fiscal 2013 period, primarily due to recent
purchases in anticipation of product demand.
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.
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