- First quarter sales increase 6.3 percent to $474.2 million
- Net earnings per share for the first quarter up 23 percent to $0.54
- Company well-positioned for spring selling season with innovative product line-up
- Full-year earnings guidance raised
BLOOMINGTON, Minn.-- Feb. 19, 2015-- The Toro
Company today reported net earnings of $31 million, or $0.54 per share, on a
net sales increase of 6.3 percent to $474.2 million for its 2015 first quarter
ended January 30, 2015. In the comparable fiscal 2014 period, the company
delivered net earnings of $25.9 million, or $0.44 per share, on net sales of
$446 million.
“We are pleased to deliver record results for
the quarter, which was not only the first of our fiscal year but also the first
to include the BOSS® professional snow and ice management products as part of
our expanded professional portfolio,” said Michael J. Hoffman, Toro’s chairman
and chief executive officer.
“We are encouraged by the execution in that
business and the sales it contributed to the quarter. Our integration efforts
are progressing well and we continue to be optimistic about the prospects for
future growth. Looking across our other professional businesses, shipments of
worldwide golf and grounds equipment, landscape contractor turf equipment and
rental products all increased in the quarter due to strong channel and retail
demand for our innovative and productivity-enhancing offerings, helping to
drive the double-digit revenue growth for that segment.”
“On the residential side of our business, we
faced difficult first quarter comparisons due to last year’s early and abundant
snowfalls that helped drive strong segment performance,” continued Hoffman.
“This year, the robust pre-season demand that began in the second half of our
2014 fiscal year continued early in the quarter, but in-season demand was
curtailed by a lack of snow events. The recent snowstorms that hit the
Northeast and parts of Midwest at the end of our quarter, and are continuing to
date, have helped to spur demand, drive retail sales, right-size field
inventories and position us well for the pre-season next fall.
All in, this is
proving to be another successful snow season for us and one that helped our
residential first quarter results, which otherwise were challenged by lower
shipments of residential zero turn riding mowers due to supply inefficiencies
and the ramp up of production of our highly anticipated new platform, as well
as unfavorable currency exchange rates.”
“As we look ahead to our three key remaining
tradeshows and beyond to our primary selling season, we believe we are
well-positioned with a suite of new and innovative products that will help to
drive retail sales and increase our market share across our businesses.
For example, at the Golf Industry Show next
week, our Reelmaster® hybrid fairway mower and INFINITY® golf sprinklers are
just two of the many new and enhanced products that will attract the attention
of worldwide golf customers as they visit our booth and make equipment and
irrigation selections for use in the development and renovation of golf
courses.
At the Rental Show, which also is next week,
we expect that the momentum from double-digit industry growth in 2014, combined
with the excitement we expect to generate with the introduction of new products
including our all-new Dingo® compact utility loader, will help to drive rental
customer orders.
Finally, in March, BOSS will exhibit at the
NTEA Work Truck Show and unveil several new products and features that will
further evidence its innovation leadership in the professional snow and ice
management market.”
“With our peak selling season still in front
of us, we are optimistic and hopeful that Mother Nature will deliver more
normal spring conditions after two consecutive years in which it basically
showed up in time to transition to the summer growing season. That said, we are
mindful of the challenges our businesses and customers could face if, among
other things, we encounter unfavorable swings in economic conditions,
additional currency pressure or continued supply inefficiencies or disruptions
resulting from U.S.
West Coast port labor issues. We remain flexible and
prepared to make adjustments across the enterprise as necessary and will continue
to maintain our focus on the things we can control—investing in product
innovation, delivering excellent customer service and executing in our
markets.”
The company continues to expect revenue
growth for fiscal 2015 to be about 8 to 10 percent, and now expects net
earnings per share to be about $3.35 to $3.45. For the second quarter, the
company expects net earnings per share to be about $1.58 to $1.63.
SEGMENT RESULTS
PROFESSIONAL
Professional segment net sales for the first
quarter totaled $339.7 million, up 15 percent from $295.5 million in the same
period last year. The addition of the BOSS snow and ice management products to
our professional portfolio helped to drive sales growth for the quarter.
Worldwide golf and grounds sales increased on strong channel and retail demand
for turf equipment. Sales of landscape maintenance equipment also grew with
continued demand for our professional zero turn riding and walk-behind mowing
platforms. Somewhat offsetting these increases were unfavorable currency
exchange rates and lower international micro-irrigation sales primarily due to
unfavorable economic conditions. Professional segment earnings for the first
quarter totaled $55.7 million, up 17.3 percent from $47.5 million in the same
period last year.
RESIDENTIAL
Residential segment net sales for the first
quarter were $134.7 million, down 8.7 percent from $147.6 million in the same
period last year. This decrease primarily was due to lower shipments of
residential zero turn riding mowers resulting from supply inefficiencies and
the ramp up of production of our highly anticipated new platform that offers
either dual lever or steering wheel controls, as well as lower international
sales of residential products due to unfavorable currency exchange rates and
weather conditions in Australia. Somewhat offsetting these decreases were
higher pre-season domestic sales of walk power mowers due to expanded channel
placement and increased demand for our innovative product line-up, including
the new all-wheel drive model. Sales of our residential snow thrower products
also were up modestly. Residential segment earnings for the first quarter were
$13.7 million, down $4.4 million from $18.1 million the same period last year.
OPERATING RESULTS
Gross margin as a percent of sales for the
first quarter was 35.6 percent, a decrease of 110 basis points from the same
period last year. This decrease primarily was due to the purchase accounting
impact of the BOSS acquisition and unfavorable currency exchange rates,
somewhat offset by favorable segment mix.
Selling, general and administrative
(SG&A) expense as a percent of sales for the first quarter was 26.2
percent, a decrease of 140 basis points from the same period last year. This
decrease was due to lower expense as a percent of sales across various expense
categories, including warranty, warehousing, administrative and incentive
expenses.
First quarter operating earnings as a percent
of sales were 9.4 percent, compared to 9.1 percent for the same period last
year.
First quarter interest expense was $4.7
million, up $1 million from the same period last year, primarily due to the
additional long-term debt issued in connection with the BOSS acquisition.
The effective tax rate for the first quarter
was 26.3 percent, compared to 33.2 percent in the same period last year,
primarily due to the retroactive reenactment of the domestic research tax
credit for calendar year 2014.
Accounts receivable at the end of the first
quarter totaled $205.3 million, up 2.7 percent from the same period last year.
Net inventories were $364.4 million, up 19.5 percent from the same period last
year. Trade payables were $195.6 million, up 1.5 percent from the same period
last year.
About The Toro Company
The Toro Company is a leading worldwide
provider of innovative solutions for the outdoor environment, including turf,
snow and ground engaging equipment and irrigation and outdoor lighting
solutions. With sales of $2.2 billion in fiscal 2014, Toro’s global presence
extends to more than 90 countries. Through constant innovation and caring
relationships built on trust and integrity, Toro and its family of brands have
built a legacy of excellence by helping customers care for golf courses,
landscapes, sports fields, public green spaces, commercial and residential
properties and agricultural fields.
