The Toro Company Reports Record Results for Fiscal 2013

• Fiscal 2013 sales increase to a record $2 billion
• Operating earnings expand to 11.3 percent and a record $230.7 million
• Net earnings per share for the year up 22 percent to a record $2.62
• Quarterly cash dividend increased 43 percent to $0.20 per share

BLOOMINGTON, Minn.-- Dec. 5, 2013-- The Toro Company today reported net earnings of $154.8 million, or $2.62 per share, on a net sales increase of 4.2 percent to $2,041.4 million for its fiscal year ended October 31, 2013. In fiscal 2012, the company delivered net earnings of $129.5 million, or $2.14 per share, on net sales of $1,958.7 million.

For the fourth quarter, Toro reported net earnings of $5 million, or $0.08 per share, on a net sales increase of 12.7 percent to $382.4 million. In the comparable fiscal 2012 period, the company posted net earnings of $0.3 million on net sales of $339.3 million.

The company also announced that its board of directors has declared a quarterly cash dividend of $0.20 per share, an increase from its previous quarterly dividend rate of $0.14 per share. This dividend is payable on January 15, 2014, to shareholders of record on December 30, 2013. In addition, the company increased its annual dividend guideline to 30 to 40 percent of its three-year average net earnings per share, up from the previous guideline of 20 to 30 percent. In fiscal 2013, the company paid $32.5 million in dividends and repurchased over 2 million shares of its common stock, returning more than $130 million in total cash to its shareholders.

“The Toro Company completed a record year with new highs for revenues, operating earnings and earnings per share,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “We are particularly excited to have crossed over the $2 billion revenue milestone for the first time in the company’s history, a timely accomplishment as we head down the home stretch to our Centennial in July 2014. In addition, we remain focused on returning value to our shareholders, as demonstrated by the increase in both our annual dividend guideline and quarterly cash dividend.”

“Looking across our businesses, Fiscal 2013 was a good year. I am extremely proud of our team and their passion for innovation and serving our customers. Of course we had our share of challenges, but we were able to successfully manage through less than ideal weather conditions in the first half of the year, as well as the phase-in of the Tier 4 diesel engine transition. 

Our innovative new product offerings helped us to defend and grow our positions in golf equipment and irrigation, landscape maintenance products, residential ZTR mowers and handheld blowers and trimmers. Our recent acquisitions in the rental and construction space are integrated and contributing. 

Demand for our precision agriculture irrigation products continued to grow and we further expanded our global presence with the closing of our China acquisition in the fourth quarter. And our efforts on productivity are making a positive difference, helping to expand our operating earnings to a record $230.7 million and 11.3 percent and continuing our progress toward our Destination 2014 operating earnings goal.”

“For the fourth quarter, even with favorable comparisons to last year when we saw soft preseason demand for our snow products, we delivered solid performance. Practically all of our product lines contributed to our sales growth and our expanded gross margins further evidence the traction we are gaining with our productivity efforts.”

“Looking ahead to fiscal 2014, we are mindful of the mild expectations for our world-wide economic environments, as well as the challenges that Mother Nature can create for our businesses and customers. Nonetheless, we are cautiously optimistic about the prospects for our end markets in this Centennial year. Golf course development is progressing in key markets, housing and construction continues to improve, and around the world customers are seeking more efficient methods of irrigation. 

We are well-positioned across our product portfolio to capitalize on growth in all of these areas. In addition, our recent investments to expand the global footprint of our micro irrigation business and grow our rental and construction market presence are yielding positive results and will continue to gain momentum. 

While we hope that Mother Nature will deliver favorable weather, that is out of our control. Instead, we remain focused on the things that have made us successful for our first 100 years: developing innovative products, serving our customers and executing in the marketplace. We continue to pursue our Destination 2014 goals in this final year of our initiative and our employees are engaged to drive revenue growth and further improve productivity.”

The company expects revenue growth for fiscal 2014 to be about 4 to 5 percent, and net earnings to be about $2.85 to $2.90 per share. For the first quarter, the company expects net earnings to be about $0.35 per share, with unfavorable year-over-year quarterly comparisons due to increased sales accelerated into the first quarter of last year by the Tier 4 diesel engine transition that will not be repeated this year.

SEGMENT RESULTS

Professional

Professional segment net sales for fiscal 2013 totaled $1,425.3 million, up 7.2 percent over last year. Sales of landscape maintenance equipment increased on strong retail demand for our zero turn radius products and successful new product introductions—including our new TurfMaster™ heavy duty walk power mower, electronic fuel injection products and turf renovation products. Worldwide golf and irrigation sales were up as existing golf courses continued to replace aging equipment and irrigation systems with our offerings and new international golf course projects were awarded to us. 

Rental and construction equipment sales grew on increased demand for our products and incremental sales from recent acquisitions. Global micro irrigation sales increased with continued demand for more efficient irrigation solutions for agriculture. For the fourth quarter, professional segment net sales were $255.8 million, up 11.9 percent from the comparable fiscal 2012 period.

Professional segment earnings for fiscal 2013 totaled $254.4 million, up 9.6 percent from the prior year. For the fourth quarter, professional segment earnings were $21.8 million, up 5 percent from the comparable fiscal 2012 period.

Residential

Residential segment net sales for fiscal 2013 were $594.4 million, down 2.1 percent from last year. This slight decline largely was attributable to challenged preseason sales of snow products early in fiscal 2013 and unfavorable spring weather at the beginning of the key selling season. Sales benefitted from increased shipments of domestic residential riding products as consumers continued to transition to our zero turn radius mowers, including our Timecutter® line of Zs, and from higher demand for our handheld trimmer and blower products in the U.S. and Pope-branded irrigation products in Australia. 

For the fourth quarter, residential segment net sales were $116.6 million, up 14.3 percent from the comparable fiscal 2012 period. This increase primarily was due to improved preseason demand for snowthrowers as compared to our fiscal 2012 fourth quarter, with sales of worldwide residential riding products, handheld solutions and Pope irrigation products also contributing.

Residential segment earnings for fiscal 2013 totaled $62 million, up 7.2 percent from fiscal 2012. For the fourth quarter, residential segment earnings were $10.1 million, up from $6.7 million in the comparable fiscal 2012 period.

OPERATING RESULTS

Gross margin for fiscal 2013 improved 110 basis points from last year to 35.5 percent. The majority of the margin expansion was due to realized price, product mix and productivity improvement, somewhat offset by unfavorable currency exchange rates. For the fourth quarter, gross margin was up 30 basis points to 33.6 percent.

Selling, general and administrative (SG&A) expense as a percent of sales increased 30 basis points to 24.2 percent for fiscal 2013. For the fourth quarter, SG&A expense as a percentage of sales decreased 70 basis points to 31.4 percent.

Other income for fiscal 2013 was $12.3 million, up $4.7 million from last year. The increase primarily was due to a one-time legal recovery, as well as lower foreign currency losses and higher income from our investment in Red Iron Acceptance, our channel financing joint venture.

Operating earnings as a percent of sales improved 80 basis points to 11.3 percent for fiscal 2013 For the fourth quarter, operating earnings improved 100 basis points to 2.2 percent of sales compared to 1.2 percent last year.

Interest expense for fiscal 2013 was $16.2 million, down 4.1 percent compared to fiscal 2012. For the fourth quarter, interest expense totaled $3.9 million, down 5.2 percent from the same period last year.

The effective tax rate for the fiscal year was 31.7 percent compared with 34 percent last year, primarily due to the reinstatement of the Federal Research and Engineering Tax Credit.

Accounts receivable at the end of the fiscal year totaled $157.2 million, up 6.6 percent from the prior year period. Net inventories were $240.1 million, down 4.4 percent from the end of fiscal 2012. Trade payables were $136.2 million, up 9.1 percent compared with last year.

About The Toro Company

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 $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.

Ariens Buys 3 Direct Marketing Brands From W.W. Grainger

Calling it part of a strategy to offset some of the seasonality inherent in its business, Ariens Co. said Monday it is acquiring three direct marketing brands from W.W. Grainger Inc.

The brands are Gempler's, Ben Meadows and AW Direct. All three brands market outdoor-related products including landscape and horticulture equipment, gear for fighting wildfires and tow truck equipment.

The brands will become part of Brillion-based Ariens on Jan. 1. Terms of the agreement were not disclosed, but, "the dollars are fairly significant," said Dan Ariens, CEO of Ariens and the fourth generation of the family to lead the company. "It adds a big new revenue base to our business."

Grainger said in a statement that the three brands total had estimated revenue of $90 million in 2013.

The three brands will help smooth Arien's revenue, which is skewed heavily toward fall and winter when sales of its snow blowers spike.

"When we look at their revenues over quarters they are much more level," Ariens said.

Ariens will add 250 new employees total at an office in Madison and a distribution site in Janesville as a result of the transaction, putting its total employment at about 2,300.

The company has been seeking an acquisition as a means to diversify its portfolio of businesses, Ariens said.

"We've been looking for a couple of years to find something that fits like this," Ariens said.

Ariens operates in the outdoor power equipment manufacturing as well as distribution segments in consumer and professional markets. The company's brands include Sno-Thro snow blowers; Countax and Westwood lawn tractors; and Gravely and Parker commercial equipment for the landscape management, facilities maintenance and sports field sectors. Ariens' affiliates, Stens Corp., J Thomas and Ariens Pty Ltd. in Australia, supply replacement parts to the outdoor power equipment industry.

"As we grow the distribution side of the business, these companies represent strong niche segments that fit nicely with our current portfolio of outdoor brands," the company said in a statement.

The acquisition is "another way to talk to the same customer with a different set of products," Ariens said.

Ariens will be taking over leased space in Madison as well as leasing space in the Janesville distribution center from Grainger, said Ariens spokeswoman Ann Stilp, in an email.

Ariens will operate the acquired brands along with Stens and J. Thomas as part of a newly formed specialty brands group.

The location of the businesses Ariens is acquiring played a role in the agreement, Dan Ariens said.

"We want to invest in Wisconsin wherever we can," he added. "We see opportunity here."

Ariens was established in 1933.

W.W. Grainger Inc., is based in Lake Forest, Ill., and had 2012 sales of $9 billion. The company is a business-to-business distributor of products used to maintain, repair or operate facilities.

Joe Taschler       www.jsonline.com  

NAEDA Announces New Association President/CEO

St. Louis, MO. – December 2 -- The North American Equipment Dealers Association (NAEDA) named Richard E. “Rick” Lawhun, president and chief executive officer effective January 1, 2014. Prior to joining NAEDA, he served as president and CEO of the American Concrete Pressure Pipe Association (ACPPA) in Fairfax, VA.

Prior to joining ACPPA, Lawhun was vice president of member benefits for the National Association of Insurance and Financial Advisors in Falls Church, VA. He also served in a variety of staff leadership roles at the American Society of Civil Engineers, including manager of technical activities, senior manager of membership development and director of the Construction Institute. Early in his career, Lawhun managed an engineering department at Dewberry & Davis, an ENR Top 50 design firm.

“We are extremely pleased to have Rick as our new president,” noted NAEDA chair Tom Nobbe, CEO of Wm. Nobbe & Co., Inc., Waterloo, IL. “He has a unique set of skills and experience that will serve NAEDA well as we seek to reorganize our governance structure and increase the effectiveness of the organization.”

 “This is a challenging opportunity to be part of an organization that is seeking to increase its visibility and better serve its members. I am honored to have been selected and look forward to working with the members, board of directors and staff in leading NAEDA into a promising future,” stated Lawhun.

Lawhun is an alumnus of Virginia Tech in Blacksburg, VA, where he earned a Bachelor of Science degree in Civil Engineering.  He and his wife, Ping will be relocating to St. Louis from their current home in Fairfax, VA.

Kohler Company To Start Making Portable Generators

November 20 -- Kohler Co. will start making portable generators next year, joining competitors like Generac Holdings Inc. and Briggs & Stratton Corp. that already make both standby and portable generators.

The privately held Kohler-based company has made standby generators, but not portable ones. That will change in January when it formally unveils a line of portable generators that range from a 2-kilowatt inverter to a 12.3-kilowatt gasoline generator, the company said Wednesday.

The line will also include trash pumps and water pumps.

“Today Kohler offers a complete range of generators up to 3.2 megawatts that are relied upon in myriad applications: construction, telecom, residential/light commercial, industrial, mobile and marine,” said Manny Rumao, senior product manager, in a prepared statement. “Adding portable generators helps us further meet our customers’ needs for clean, efficient and dependable power.”

Generator demand has increased nationwide in recent years in the wake of devastating storms like Superstorm Sandy.

Generator manufacturers say that demand for portable generators spikes immediately after such storms, then demand for home standby generators jumps for several months afterward. The move by Kohler allows it to play in both spaces.

Jeff Engel          www.bizjournals.com   

Dixie Chopper Says Will Call Back Laid Off Workers By Early 2014

FILLMORE – November 18 -- Reluctantly, Dixie Chopper has temporarily laid off some of its employees as of Monday.

"The decision was not an easy decision but it was necessary for the continued success of the company," Chief Financial Officer (CFO) Bradley M. Craig said in a prepared statement provided to the Banner Graphic.

"The doors at Dixie Chopper are open and will remain open," he added.

Dixie Chopper has every intention of calling back as many of the affected employees during the beginning of 2014, company officials said

Specific numbers laid off were not disclosed.

The layoffs have come as the Dixie Chopper management team, which was put in place back in June, is reorganizing the company "to ensure a strong financial position in the marketplace, optimal production levels, reduced overhead costs, and a streamlined shipping process."

The new management team is composed of company founder Art Evans as chairman of the board, Wes Evans as president and chief executive officer (CEO), Jeff Haltom as vice president, Bradley Craig as CFO and Greg Fernandez as vice president of administration.

Company founder Art Evans, who built the first of Dixie Chopper's zero-turning-radius lawnmowers in an old dairy barn on his parents' property north of Fillmore in 1980, is delighted to let everyone know that the "city slickers are out of town" and that the company is "getting back to its roots."

Those roots run deep locally and include producing commercial and residential zero-turn mowers designed to outlast the competition.

To date, every Dixie Chopper mower ever built has been assembled in Putnam County -- either at the longtime factory outside Fillmore or for a short time in the former Mallory plant in Greencastle that was razed in April 2011, two years after production was transferred back to Fillmore from that facility.

Meanwhile, in related news, Dixie Chopper has announced the release of a new stand-on mower, The Stryker, which was recently unveiled at the Green Industry Expo (GIE) show in Louisville, Ky.

The Stryker stand-on received a lot of attention for its durability and state-of-the-"Art" handling.

Dixie Chopper plans to begin production on The Stryker stand-on in early spring as the homegrown Putnam County company focuses on continuing to bring new, innovative ideas to the marketplace.

www.bannergraphic.com     

GE Capital Survey Says Successful Selling Season Leads to Positive Sentiment in Lawn and Garden Industry

November 18 -- Lawn and garden industry participants are inclined to stock up on new low-cost models based on a positive summer selling season, according to survey results released today by GE Capital, Commercial Distribution Finance (CDF).

Fifty-four percent of industry participants said the popularity of lower-cost models will have the largest impact on sales this year, compared to 43 percent last year. One quarter said reduced levels of inventory will impact sales, down one percentage point from last year. Only seven percent pointed to long production lead times impacting sales, down from 20 percent.

“Pent-up demand for machines may have driven both consumer and commercial sales this year,” said Michael Horak, commercial leader of CDF’s outdoor products group. “Dealers have told us they feel good about the recent selling season and, based on current conditions, they’re planning to order more new equipment for next year.”

In fact, nearly half (49 percent) of respondents said this is a good time to consider re-stocking, up from 40 percent last year. About one-third (34 percent) had mixed feelings, down from 40 percent.

Respondents were generally optimistic about sales trends next year, as well. Thirty-eight percent said their sales would grow 5-10 percent; 23 percent said 10-15 percent; and 23 percent said 15 percent or more.

“From the inventory financing point of view, we’ve seen strong liquidations and ‘outstandings’ have been reduced to levels equivalent to this time last year,” Horak added. “At the same time, inventory turns have increased to a very healthy level.”

The lawn and garden industry survey was conducted Oct. 23–25. The 164 respondents were composed of retailers and dealers (27 percent); manufacturers (23 percent); distributors (15 percent); and other industry participants (35 percent).

For more than 20 years, CDF has played an important role in the green industry. Inventory financing, also known as floorplan financing, enables dealers to stock, market and sell lawn care products. Manufacturers generally benefit from enhanced product flow and increased sales opportunities, while dealers can obtain improved credit availability and terms.

To learn more about the ways CDF helps customers manage their inventory and access exclusive industry intelligence, dealers can speak with a CDF representative by calling 800-451-5944 or visiting the web site: http://www.gecdf.com/home.

About GE Capital, Commercial Distribution Finance

GE Capital, Commercial Distribution Finance provided nearly $31 billion in financing for more than 33,000 dealers and 2,000 distributors and manufacturers in the U.S. and Canada in 2012. Programs include inventory and accounts receivable financing, asset-based lending, private label financing, collateral management and related financial products. For more information, visit www.gecdf.com/ or follow company news via Twitter (www.twitter.com/GEInventoryFin

Wisconsin Manufacturers Turn to Long-Term Temporary Employees

November 14 -- More manufacturers are gearing up to hire temporary employees, sometimes for jobs lasting many months, as they need the help but are reluctant to make permanent commitments.

Thursday, Ariens Co. said it was seeking 150 employees to build snow throwers and lawn-and-garden equipment in Brillion. Also, the company says it will hire another 150 people in January and February.

Some of the jobs could be temporary, but many new hires will stay on as year-round employees, said company spokeswoman Ann Stilp.

"The bigger challenge for us sometimes is our location," she said, since Brillion isn't a big town and residents also commute to work in Manitowoc, Appleton and Green Bay.

Recently, Harley-Davidson Inc. added 100 temporary jobs at its Menomonee Falls plant as the company prepares for the production of model-year 2014 motorcycles.

Harley says the employees have been hired for the work that runs from January until June at the powertrain operations on Pilgrim Road.

The company used staffing agencies and its website to recruit people for the jobs that pay roughly $16.75 to $23.30 an hour — similar to the pay scale at the York, Pa., motorcycle assembly plant that's seeking 400 temporary employees.

This summer, Harley completed its first year of seasonal surge production in York. That effort, also taking place at the company's other plants, is aimed at producing motorcycles closer to market demand, increasing manufacturing efficiencies and saving hundreds of millions of dollars in costs.

The company's plant in Tomahawk needs 60 more seasonal employees to work 10 months starting in January, said Harley-Davidson spokeswoman Maripat Blankenheim.

Wages at the Tomahawk plant are comparable with Menomonee Falls and the other plants, she said.

Some companies, such as outdoor power equipment makers, have long used surge production and seasonal hiring to build products close to demand and not carry excess inventory.

That's the case for Kohler Co., which hires seasonal employees to build engines in advance of the lawn-and-garden equipment season. In Waukesha, Generac Power Systems has used temporary hires to fill a glut of orders for generators after major power outages.

But more manufacturers are using the hiring strategy to fill year-round jobs while avoiding long-term commitments to employees, according to staffing agencies.

"Employers, especially Milwaukee-based manufacturing companies, seem to be favoring that because they're trying to get a handle on whether their growth will be sustained. Everybody is still in limbo about this economy. That's the bottom line," said Wendy Koppel, president and owner of Division 10 Personnel/AeroStaff, a Milwaukee staffing agency.

"Five years after the recession, this is the slowest recovery I have ever seen. One way employers are responding to this tentative feeling is they're opting for more long-term temporary employees," Koppel said.

Some companies use temporary hires as a way to try people out before they offer them permanent positions. It gives them more flexibility to fire someone if the job isn't working out or the work suddenly ends.

People hired for jobs that sometimes last only a few months should take the time they're with a company and get the inside track on permanent positions, said Jim Golembeski, executive director of the Bay Area Workforce Development Board in Green Bay.

"Even if you come in as a seasonal worker, companies are looking for people who stand out," he said.

A short stint at a manufacturing plant can be a way to sharpen your workplace skills and enhance your chances at getting permanent employment.

"One of the big problems with people who are out of work for a long time is their skills atrophy. It's a reason why many employers are reluctant to hire someone who has been unemployed for a couple of years," said Hank Cox, who recently retired from the National Association of Manufacturers in Arlington, Va., and is now a freelance writer on manufacturing issues.

"There's some good in it, and people adapt. But for most people, it can't be a good feeling to know their job is only for a few months. Overall, I think it's a negative trend that I hope doesn't become too prevalent," Cox said.

Rick Barrett                www.jsonline.com

John Deere Opens the MyJohnDeere Platform to Collaborating Software Developers and Companies

Agricultural industry software companies will leverage MyJohnDeere to assist customers in managing machine and agronomic data.

OLATHE, Kan. , Nov. 14 -- In order to provide more value to agricultural producers, John Deere is collaborating with other businesses to deliver new applications and services that help customers more quickly turn data into management decisions. This collaboration supports improved productivity, efficiency and yield. Companies will provide software and applications to interface with MyJohnDeere, JDLink™, and Wireless Data Transfer – three important elements of Deere's overall technology strategy for the agricultural industry.

In 2012, John Deere introduced MyJohnDeere, a comprehensive information platform to help agricultural producers consolidate the management of equipment information, production data and farm operations. This centralized, online platform allows producers to access, view, archive, manage and share a wide variety of business information.

"Our goal is to provide a preferred, safe and secure environment for these applications, while building valuable features to connect customers with trusted advisors," said Cory Reed , Senior Vice President, Intelligent Solutions Group, Deere & Company. "Customers will be able to make choices about the use and flow of the data."

MyJohnDeere is an open platform that provides customers with a complete and comprehensive solution for their data management needs. Customers are able to view and manage this information from smart phones, tablets, and computers when and where they need it.

Reed said the Deere strategy of non-exclusive collaboration with other companies will enable data to be available in a convenient, easy-to-use platform, as determined by the customer, while maintaining John Deere's core principles surrounding data management. A special web site, www.JohnDeere.com/Trust, has been created to explain Deere's position on data management and security.

"The MyJohnDeere platform will allow input suppliers, ag retailers, local agronomists and software companies to provide applications and software that connect through the platform," said Reed. "A recent DuPont Pioneer announcement is an example of how these collaborations will greatly benefit our customers by expanding the choices they have to improve productivity, efficiency and yield. Producers should also expect to see more collaborative applications with other businesses going forward."

For companies or developers interested in connecting their applications to the MyJohnDeere platform, visit http://developer.deere.com/.

For more information on MyJohnDeere, Wireless Data Transfer, and JDLink, visit the web site at http://MyJohnDeere.com or contact your local John Deere dealer.

Deere & Company (DE) is a world leader in providing advanced products and services and is committed to the success of customers whose work is linked to the land - those who cultivate, harvest, transform, enrich and build upon the land to meet the world's dramatically increasing need for food, fuel, shelter and infrastructure. Since 1837, John Deere has delivered innovative products of superior quality built on a tradition of integrity. For more information, visit John Deere at its worldwide website at www.JohnDeere.com.

Former Rexnord Executive Named Kohler Engines VP

November 11 -- Former Rexnord Corp. executive Brian Melka has been named Kohler Engines vice president overseeing its Americas business, according to a Monday press release.

Melka previously worked as vice president of global mining and product management for Milwaukee-based Rexnord, according to his LinkedIn profile. He has also worked for Textron Inc., Providence, R.I. He holds a bachelor's degree in finance from the University of Wisconsin-Madison and a master’s in business administration from University of Wisconsin–Whitewater.

“Brian is a seasoned global business leader,” said Kohler Engines president Tom Cromwell. “His experience in a variety of key leadership positions will support our business initiatives moving forward.”

Kohler Engines is a division of Kohler-based Kohler Co., a privately held manufacturer of kitchen and bath products, engines and power generation systems, cabinetry, tile and home interiors.

Jeff Engel         www.bizjournals.com   

Amazon to Begin Sunday Deliveries, with Post Office's Help

November 11 -- Amazon.com Inc. will begin delivering packages on Sundays in the nation's two largest cities later this month with an unlikely partner—the U.S. Postal Service.

The marriage of one of the country's most successful enterprises with one of its most troubled underscores Chief Executive Jeff Bezos's ambitions to weave Amazon more deeply into consumers' lives. The nation's largest Internet retailer has begun same-day grocery delivery in some cities, and is developing smartphones and a set-top box.

Sunday delivery is Amazon's latest effort to chip away at a key advantage for brick-and-mortar retailers: immediacy.

"Delivery on a Sunday would be very compelling for consumers. There are certainly people who decide not to make an order on a Friday because it won't get there until Monday," said Sucharita Mulpuru, a Forrester Research analyst.

But Ms. Mulpuru said Amazon would likely incur relatively higher costs on Sunday because of lower volumes. "This has to be much more expensive than other days," she said.

Amazon and the Postal Service declined to discuss the costs, volume projections or the length of the contract.

Amazon said Sunday delivery will begin on Nov. 17 in Los Angeles and New York and expand next year to Dallas, New Orleans, Houston and Phoenix, among others. Amazon will bring packages from its warehouses to Postal Service locations on Saturday evening or Sunday morning. The agency will then deliver them to doorsteps.

Sunday delivery will be available for all Amazon customers in markets where the program is available at no additional cost. Customers won't specify Sunday delivery; eligible items will show up on Sunday if that is when they are ready.

Representatives of Amazon and the Postal Service said the Seattle-based company was taking advantage of a little-known offering available to any shipper. The Postal Service makes limited Sunday package deliveries for its own needs around the holidays, but the arrangement with Amazon represents its first large foray into Sunday delivery.

The Amazon contract will be a much-needed financial boost to the Postal Service, which continues to bleed red ink as more Americans eschew "snail mail" in favor of email, instant messaging and social networks. The agency, which said it expects to lose around $6 billion this year, has been closing locations and has proposed ceasing Saturday delivery of many items to cut costs.

A Postal Service spokeswoman said the agency wouldn't need to hire additional workers. She said officials have been working for more than a year on a "flexible" workforce that could be asked to clock in on Sundays. "We're ready for Sunday in the current markets," the spokeswoman said. "If this were to expand, we would look at staffing levels and adjust accordingly."

Amazon selected the Postal Service over United Parcel Service Inc., FedEx Corp. and others because its technology pairs well with the government agency's, said a spokeswoman, who declined to discuss specifics. The Postal Service delivers some Amazon packages on other days.

Sunday delivery is Amazon's latest initiative to expand the speed and breadth of its offerings. The company has been building a network of warehouses close to urban centers, from which it has begun offering same-day grocery delivery in Los Angeles and Seattle using its own trucks. Amazon has offered Sunday delivery through the grocery service, where consumers can select from more than 100,000 nongrocery items to be delivered along with their frozen waffles and tomatoes—an offering that will continue after Sunday parcel delivery begins.

In addition, Amazon has created mini-distribution centers in Procter & Gamble Co. plants from which it ships items directly to customers, rather than relaying them through larger warehouses. To reduce failed deliveries, it also is installing lockers in grocery, convenience and drugstore outlets where customers can later pick up their packages.

Dave Clark, Amazon's vice president of world-wide operations, said that later this month Amazon would also begin Sunday delivery in London, using its own trucks.

Adding an additional delivery day could help drive more users to Amazon's $79-a-year Prime unlimited two-day shipping program, said Mr. Clark. Amazon doesn't disclose its Prime membership rolls, though it said this month that those customers buy twice as many goods as customers opting for free shipping. Analysts estimate the company has more than 10 million Prime users.

Greg Bensinger    www.online.wsj.com  

Blount Announces Third Quarter Results

• Third quarter 2013 sales declined one percent from third quarter 2012
• FRAG segment sales up seven percent year-over-year for the third quarter of 2013
• Net debt reduced $55.7 million in the third quarter on strong free cash flow
• Company has filed its June 30, 2013 Form 10-Q

PORTLAND, Ore. --   November. 1 -- Blount International, Inc. today announced results for the third quarter ended September 30, 2013.

Results for the Quarter Ended September 30, 2013

Sales in the third quarter were $230.6 million, a one percent decrease versus the third quarter of 2012. Operating income for the third quarter of 2013 was $15.6 million compared to $22.5 million in the prior year. Restructuring charges of $5.1 million were incurred in the third quarter related mostly to consolidating the Company's two forestry-related, Portland, Oregon manufacturing facilities. Third quarter net income was $7.7 million, or $0.15 per diluted share, compared to $11.6 million, or $0.23 per diluted share, in the third quarter of 2012.

"In the third quarter, our business results were mixed. Our FLAG business improved in North America but continued to be challenged by difficult economic conditions in other regions, particularly Europe and Asia," stated Josh Collins, Blount's Chairman and CEO. "Our FRAG and CCF businesses performed well in the quarter, and both had increased sales compared to last year."

"As we navigate through the soft FLAG demand, we remain committed to managing our balance sheet and cost structure. We generated significant cash flow and reduced net debt and working capital in the third quarter," Mr. Collins continued. "Also, the closure of our Milwaukie, Oregon operation and consolidation of production into our other facilities remains on schedule and is expected to be completed in the fourth quarter."

Segment Results

Blount operates primarily in two business segments – the Forestry, Lawn, and Garden ("FLAG") segment and the Farm, Ranch, and Agriculture ("FRAG") segment. The Company reports separate results for the FLAG and FRAG segments. Blount's Concrete Cutting and Finishing ("CCF") business is included in "Corporate and Other."

Forestry, Lawn, and Garden

The FLAG segment reported third quarter 2013 sales of $149.5 million, a five percent decrease from the third quarter of 2012. Sales were lower due to unit volume decreases with lower average selling prices and unfavorable foreign exchange fluctuations contributing to the decline. Sales volumes were mostly impacted in Asia, which declined by 17% compared to the prior year on weaker demand driven by currency rates and commodity prices along with channel inventory correction. Sales in South America and Europe/Russia were also slightly lower compared to the prior year. As weather-related softness abated, North America showed a two percent gain in volume for the third quarter 2013, which partially offset the decline in other regions. Average pricing was lower in the quarter as a result of price adjustments in select markets and product mix.

Segment backlog was $115.9 million at September 30, 2013, a decrease of 18% from $141.2 million at September 30, 2012. The reduction in backlog relates primarily to soft overall demand and a reduction in backorders as FLAG distribution operations have improved on-time delivery performance.

Segment contribution to operating income was $21.6 million and Earnings Before Interest, Taxes, Depreciation, Amortization and certain charges ("Adjusted EBITDA") was $28.5 million, (after $5.9 million of allocated shared services expenses) for the third quarter of 2013. Segment contribution to operating income and Adjusted EBITDA declined by $3.4 million and $3.1 million, respectively, for the third quarter of 2013 versus 2012.

The effects of unfavorable volume and average pricing combined with higher overall costs negatively affected results. Costs were driven $2.2 million higher in the quarter as a result of increased logistics costs of $1.2 million and unfavorable fixed costs absorption on lower manufacturing volumes of $2.3 million. FLAG manufacturing facilities operated at approximately 71% of capacity in the third quarter of 2013 in concert with the Company's inventory reduction initiative. SG&A expenses were $1.3 million lower than the prior year on lower advertising spending and partially offset the profit decline from reduced volumes and efficiency.

Farm, Ranch, and Agriculture

The FRAG segment reported third quarter 2013 sales of $74.3 million, an increase of $4.6 million from the third quarter of 2012, mostly on improved sales volumes of agriculture attachments and tractor parts as well as improved log splitter sales. Average pricing and exchange rate fluctuations were minor.

Segment backlog was $31.0 million at September 30, 2013, compared to $25.6 million at September 30, 2012. Backlog has increased primarily due to increased tractor attachment and parts ordered, partially offset by the impact of improved throughput of SpeeCo products in the Company's Kansas City, Missouri distribution and assembly center.

The FRAG segment had $8.9 million of Adjusted EBITDA in the third quarter of 2013. FRAG segment contribution to operating income was $4.4 million after $1.4 million of depreciation expense, $3.2 million of non-cash acquisition accounting charges, and $2.0 million of allocated shared services expenses.

Segment costs and volumes improved over the prior year quarter. Expedited shipping and logistics costs in the prior year of $2.5 million were not repeated in the third quarter of 2013. The improvement in segment costs was partially offset by increased SG&A spending mainly in incentive compensation. Additionally, average selling prices increased as a result of normal annual price increases.

Corporate and Other

Corporate and Other generated net expense of $10.4 million in the third quarter of 2013 compared to net expense of $3.6 million in the third quarter of 2012. The $6.8 million increase in net expense was primarily due to facility closure and restructuring costs of $5.1 million, which were $4.3 million higher than in the third quarter of 2012. SG&A expense increase accounted for the balance of the change in net expense as the prior year benefited from the termination of a contingent liability related to previously divested businesses.

Additionally, a corporate sponsored manufacturing technology project was discontinued, generating a $1.2 million non-cash charge. The Company's CCF business, included in Corporate and Other, experienced increased sales of eight percent in the third quarter compared to the third quarter in 2012.

Restructuring

The Company's announced consolidation of saw chain manufacturing facilities in Portland, Oregon into one location is in process and proceeding according to plan. As part of the consolidation, saw chain manufacturing will be discontinued at the former Carlton Company facility acquired in 2008. The Carlton® brand continues to be a strong forestry brand for the Company and will continue to be sold worldwide. Manufacturing for Carlton products will be consolidated into existing FLAG production facilities in Portland and globally.

The Company continues to expect to achieve more timely delivery by manufacturing closer to its customers, an overall net reduction in global FLAG manufacturing headcount of approximately 200 positions, and annual cost savings of between $6 million and $8 million. Including the $5.1 million incurred in the third quarter, the Company expects to incur expenses of $9 million to $10 million in total to consolidate the manufacturing operations, of which approximately $4 million to $5 million are cash transition costs including severance and moving expenses and approximately $5 million represents non-cash charges for accelerated depreciation on equipment to be idled and a write-down of land and building carrying value.

Recent SEC Filings

We recently filed our June 30, 2013 Form 10-Q and expect to file a 2012 Form 10-K/A and March 31, 2013 Form 10-Q/A after filing of the September 30, 2013 Form 10-Q. As disclosed in our June 30, 2013 Form 10-Q filed on October 28, 2013, we have concluded that there was no material misstatement of our 2012 financial statements, although the 2012 Form 10-K and March 31, 2013 Form 10-Q will be amended to reflect modified conclusions regarding internal control over financial reporting. Please refer to the June 30, 2013 Form 10-Q filed on October 28, 2013 for additional details.  

Net Income

Third quarter 2013 net income declined due to lower overall operating income compared to 2012. Additionally, the impact of higher average borrowing rates increased net interest expense by approximately $0.6 million with a lower effective income tax expense rate providing a $1.7 million benefit to net income compared to last year due to settling certain tax audit issues. Finally, other expense increased by approximately $1.3 million reflecting unfavorable effects of foreign currency exchange rate movements on non-operating assets.

Cash Flow and Debt

As of September 30, 2013, the Company had net debt of $404.8 million, a decrease of $61.7 million from December 31, 2012 and a decrease of $63.0 million compared to September 30, 2012. Free cash flow of $56.1 million was generated in the third quarter of 2013 compared to $6.1 million in the prior year third quarter. Most of the increased free cash generation was driven by a reduction in working capital as well as reduced capital spending compared to the prior year.

Net working capital decreased by approximately $43.1 million in the third quarter compared to a $6.8 million decrease in the third quarter of 2012. Working capital benefited from significant accounts receivable collection in the third quarter of 2013 compared to 2012 along with inventory reduction in the third quarter of 2013.

Net capital spending in the third quarter of 2013 was $7.7 million, a reduction of $4.7 million from the prior year third quarter, primarily as a result of lower capacity capital spending in the Fuzhou, China plant as expansion of that facility nears completion of the first significant phase. The Company defines free cash flow as cash flows from operating activities less net capital spending.

The ratio of net debt to last-twelve-months ("LTM") Adjusted EBITDA was 3.1x as of September 30, 2013, a decrease from 3.4x at December 31, 2012, and a decrease from 3.5x at June 30, 2013. The decrease in leverage from the end of 2012 is primarily the result of improved free cash flow and resulting net debt reduction, partially offset by lower Adjusted EBITDA for the LTM period ended September 30, 2013.

2013 Financial Outlook

The Company has updated its fiscal year 2013 outlook. Sales are expected to range between $905 million and $915 million, and operating income to range between $64.0 million and $70.0 million. Our expectation for sales assumes FLAG segment sales are down for the full year between 4% and 5%, and that FRAG segment sales grow for the full year between 6% and 7%, both compared to 2012 levels. In 2013, operating income is expected to experience headwind from foreign currency exchange rates of between $1 million and $2 million, and steel costs are expected to have up to an overall $4 million favorable impact for the year compared to 2012.

The 2013 operating income outlook includes non-cash charges of approximately $16 million related to acquisition accounting. Free cash flow in 2013 is expected to range between $57 million and $63 million, after approximately $33 million to $37 million of capital expenditures. Net interest expense is expected to be between $18 million and $19 million in 2013, and the effective income tax rate for continuing operations is expected to be between 32 percent and 35 percent in 2013.

Blount is a global manufacturer and marketer of replacement parts, equipment, and accessories for consumers and professionals operating primarily in two market segments: Forestry, Lawn, and Garden ("FLAG"); and Farm, Ranch, and Agriculture ("FRAG"). Blount also sells products in the construction markets and is the market leader in manufacturing saw chain and guide bars for chain saws. Blount has a global manufacturing and distribution footprint and sells its products in more than 115 countries around the world. Blount markets its products primarily under the OREGON®, Carlton®, Woods®, TISCO, SpeeCo®, and ICS® brands.

ARI Network Services Announces Fiscal 2013 Results

ARI NETWORK SERVICES ANNOUNCES FISCAL 2013 RESULTS

MILWAUKEE, Oct. 29 -- ARI Network Services (ARIS), a leading provider of website, software, and data solutions that help dealers, distributors, and manufacturers Sell More Stuff!(TM), reported financial results today for its fiscal fourth quarter and fiscal year ended July 31, 2013.

Highlights For The Fiscal Fourth Quarter Included:

·         Revenues for the fourth quarter of fiscal year 2013 were $8.5 million, a 44.0% increase over the same period last year.

·         Recurring revenues for the fourth quarter of fiscal year 2013 were $7.9 million, a 65.1% increase over the fourth quarter of fiscal year 2012. As a percentage of total revenues, recurring revenues in the fourth quarter were 93.6% in fiscal year 2013 versus 81.7% for the same period in fiscal year 2012.

·         EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $1.5 million in the fourth quarter, an increase of 36.4% over the same period last year.

Highlights For The Fiscal Year 2013 Included:

·         The Company reported record revenues of $30.1 million, a 33.8% increase over fiscal year 2012.

·         Recurring revenues for the fiscal year 2013 were $27.0 million, a 44.3% increase over fiscal year 2012.       As a percentage of total revenues, recurring revenues were 89.7% in fiscal year 2013 versus 83.2% in          fiscal year 2012.

·         EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $3.5 million in fiscal year 2013, a decline of 19.5% from fiscal year 2012, which was related to costs associated with the two fiscal year 2013 acquisitions.

·         On August 17, 2012, the Company acquired substantially all of the assets of Ready2Ride, Inc., the first-to-market and leading provider of aftermarket fitment data to the powersports industry. The Company leveraged this data in its February 2013 release of AccessorySmart(TM), a fitment driven parts lookup solution, which won a Nifty 50 Award at the powersports industry's largest trade show.

·         On November 28, 2012, the Company acquired the assets of the retail division of 50 Below Sales and Marketing, Inc., a leading provider of eCommerce websites to the powersports, automotive tire and wheel and durable medical equipment industries. The 50 Below operation, which was purchased out of bankruptcy, is already generating positive cash flow.

·         On March 13, 2013, the Company announced that it entered into agreements with various accredited investors in a private placement of 3.2 million shares ($4.8 million) of its common stock at a purchase price of $1.50 per share. The Company also issued warrants to purchase 1.1 million shares, all but 214,000 of which have been exercised to date. The funds raised in the private placement were used to pay down a substantial portion of the Company's outstanding debt.

·         On April 25, 2013, the Company announced that it closed new senior secured credit facilities with Silicon Valley Bank. The facilities include a $4.5 million term loan and a $3.0 million revolving credit facility. The proceeds from the transaction were used to pay down the remaining portion of the Company's outstanding debt with Fifth Third Bank and with a shareholder.

Fiscal Year 2013 Financials

ARI reported revenues of $30.1 million for fiscal year 2013 versus $22.5 million for fiscal year 2012, an increase of 33.8%. Recurring revenue comprised 89.7% of total revenue during fiscal year 2013 versus 83.2% in fiscal year 2012. The increase in revenues was driven by the Company's November 2012 acquisition of the assets of the retail division of 50 Below Sales and Marketing, Inc.

Overall gross margin for fiscal year 2013 was 78.0%, versus 76.6% last year. The gross margin improvement resulted from the Company's focus on higher margin, recurring revenue streams and its continued shift away from one-time revenue sources.

The company incurred a net loss of $753,000 or ($0.08) per share for the year, compared to net income of $1,055,000 or $0.13 per share last year. The loss incurred in fiscal 2013 was driven by acquisition-related costs of approximately $1,200,000, a non-cash loss on the fair market valuation of stock warrants of $635,000, a non-cash loss of $682,000 related to the early repayment of debt and a $420,000 non-cash impairment charge to a long-lived asset. These charges were offset in part by a non-cash gain recognized on a change in estimate of contingent liabilities of $180,000 and an income tax benefit of $1,133,000.

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "Fiscal 2013 was a transformational year for ARI. We completed two acquisitions, which provided us with a first-to-market opportunity in the powersports industry and introduced ARI to several new markets -- aftermarket wheel and tire and durable medical equipment. 

We raised $4.5 million in a private placement transaction that was used to reduce our post-acquisition debt and are excited about our new relationship with Silicon Valley Bank, which we believe will be a critical growth partner for the Company."

Mr. Olivier continued, "Our acquisition of 50 Below in November 2012 was a game changer for ARI. We posted record revenues in fiscal 2013, exceeding $30 million for the first time in the Company's history and now host and maintain more than 5,500 websites. 

ARI has proven time and time again that it is highly capable of acquiring and efficiently integrating companies. The 50 Below operation, which we acquired out of bankruptcy in November 2012, recorded an operating loss of $3.4 million on revenues of $9.2 million for the trailing twelve months ended October 31, 2012. By the quarter ended April 30, 2013, we had already achieved positive cash flow and EBITDA for 50 Below, ahead of our original expectations."

Darin Janecek, Chief Financial Officer of ARI, commented, "ARI's overall profitability was affected in fiscal year 2013 as a result of the one-time acquisition-related costs and other non-cash charges. Excluding these charges, ARI generated adjusted EBITDA of $1.5 million in the fourth fiscal quarter; it's the first quarter since the acquisitions of both Ready2Ride and 50 Below of year over year EBITDA growth, an indication that we are successfully integrating the acquisitions. 

Further, we continued to improve on two of our most important growth metrics -- recurring revenue and churn. Recurring revenues exceeded 90% of total revenue in the fourth fiscal quarter and our overall rate of churn improved to 12.8% in fiscal year 2013 versus 13.4% last year. The private placement and Silicon Valley Bank financing transactions enabled us to improve our balance sheet substantially following the two acquisitions, leaving us poised for continued growth as we head into fiscal 2014."

Steelworkers Union Approves 4-Year Contract at Briggs and Stratton

MILWAUKEE -- October 30 -- United Steelworkers Local 2-232, which represents about 395 employees at Briggs and Stratton Corp. plants in the Milwaukee area, voted Wednesday to accept a four-year labor contract that includes 2% pay raises in three of the four years.

The contract was approved by a vote of 268 in favor to 82 against, Briggs spokeswoman Laura Timm said.

Briggs is the world's largest manufacturer of gasoline engines used in outdoor power equipment. The company also makes generators, lawn-and-garden equipment and other products.

The new contract, effective Jan. 1, covers employees at the company's engine components plant in Wauwatosa and a distribution center in Menomonee Falls.

Employees will receive 2% raises in the second, third and fourth years of the contract. They also will receive the same health care benefits as salaried employees, Timm said.

"Everybody will be under one benefits plan," she said.

Also under the contract, permanent employees will not be replaced by temporary employees. Instead, temporary employees will only be brought in for seasonal work.

In another change, employees won't have to take an initial pay cut when they transfer to another job. That was important to the membership, said Local 2-232 President Jesse Edwards.

After meeting with a negotiations mediator on Oct. 23, the union bargaining committee recommended that members vote to accept the contract.

"Overall, I feel like it was the best we could do at this time," Edwards said.

This was the third contract vote at the Briggs plants in three months. The first two times the proposal was rejected, but the voter turnout was low.

To encourage a higher turnout Wednesday, the company shut down its plants here and gave employees their regular full pay for the day if they attended the union meeting that preceded the vote and explained the terms of the proposed contract.

Union members said they were told this was Briggs' best and final offer. If the contract had been rejected again, work could have been moved out of the area or the contract terms could have been implemented by the company, union officials said.

"I don't think the members wanted to go on strike, so they accepted the proposal," Edwards said.

Under the previous three-year contract, employees' increased health insurance costs more than offset pay raises and a one-time $500 signing bonus.

Union leaders made no recommendation on that pact, which was approved in October 2010 by a vote of 211 to 77.

Rick Barrett           www.jsonline.com