The Toro Company Reports First Quarter Results
-
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
“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
“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
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 afterJanuary 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
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
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
Accounts receivable at the end of the first quarter totaled
About The
The
LIVE CONFERENCE CALL
www.thetorocompany.com/invest
The
Forward-Looking Statements
This news release contains
forward-looking statements, which are being made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management’s current
expectations of future events, and often can be identified by words such
as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,”
“forecast,” “goal,” “optimistic,” “anticipate,” “continue,” “plan,”
“estimate,” “project,” “believe,” “should,” “could,” “will,” “would,”
“possible,” “may,” “likely,” “intend,” and similar expressions or future
dates. Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those projected or
implied. Particular risks and uncertainties that may affect our
operating results or financial position include: worldwide economic
conditions, including slow or negative growth rates in global and
domestic economies and weakened consumer confidence; disruption at our
manufacturing or distribution facilities, including drug cartel-related
violence affecting our maquiladora operations in
(Financial tables follow)
THE TORO COMPANY AND SUBSIDIARIES |
||||||||
Condensed Consolidated Statements of Earnings (Unaudited) |
||||||||
(Dollars and shares in thousands, except per-share data) |
||||||||
Three Months Ended | ||||||||
January 31, | February 1, | |||||||
2014 | 2013 | |||||||
Net sales | $ | 445,981 | $ | 444,661 | ||||
Gross profit | 163,514 | 165,817 | ||||||
Gross profit percent | 36.7 | % | 37.3 | % | ||||
Selling, general, and administrative expense | 122,916 | 119,613 | ||||||
Operating earnings | 40,598 | 46,204 | ||||||
Interest expense | (3,753 | ) | (4,249 | ) | ||||
Other income, net | 1,910 | 1,443 | ||||||
Earnings before income taxes | 38,755 | 43,398 | ||||||
Provision for income taxes | 12,886 | 12,002 | ||||||
Net earnings | $ | 25,869 | $ | 31,396 | ||||
Basic net earnings per share | $ | 0.45 | $ | 0.54 | ||||
Diluted net earnings per share | $ | 0.44 | $ | 0.53 | ||||
Weighted average number of shares of common stock outstanding – Basic |
57,020 | 58,480 | ||||||
Weighted average number of shares of common stock outstanding – Diluted |
58,306 | 59,628 | ||||||
Segment Data (Unaudited) |
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(Dollars in thousands) |
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Three Months Ended | ||||||||
January 31, | February 1, | |||||||
Segment Net Sales |
2014 | 2013 | ||||||
Professional | $ | 295,468 | $ | 329,144 | ||||
Residential | 147,570 | 120,947 | ||||||
Other | 2,943 | (5,430 | ) | |||||
Total* | $ | 445,981 | $ | 444,661 | ||||
* Includes international sales of |
$ | 151,263 | $ | 141,580 | ||||
Three Months Ended | ||||||||
January 31, | February 1, | |||||||
Segment Earnings (Loss) Before Income Taxes |
2014 | 2013 | ||||||
Professional | $ | 47,463 | $ | 60,738 | ||||
Residential | 18,134 | 12,154 | ||||||
Other | (26,842 | ) | (29,494 | ) | ||||
Total | $ | 38,755 | $ | 43,398 | ||||
THE TORO COMPANY AND SUBSIDIARIES |
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Condensed Consolidated Balance Sheets (Unaudited) |
||||||
(Dollars in thousands) |
||||||
January 31, | February 1, | |||||
2014 | 2013 | |||||
ASSETS |
||||||
Cash and cash equivalents | $ | 104,025 | $ | 60,700 | ||
Receivables, net | 199,829 | 180,317 | ||||
Inventories, net | 304,921 | 335,700 | ||||
Prepaid expenses and other current assets | 35,507 | 25,291 | ||||
Deferred income taxes | 38,590 | 63,878 | ||||
Total current assets | 682,872 | 665,886 | ||||
Property, plant, and equipment, net | 189,186 | 173,267 | ||||
Deferred income taxes | 25,776 | — | ||||
Goodwill and other assets, net | 141,761 | 144,990 | ||||
Total assets | $ | 1,039,595 | $ | 984,143 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
Current portion of long-term debt | $ | 140 | $ | 250 | ||
Accounts payable | 192,727 | 168,334 | ||||
Accrued liabilities | 250,560 | 258,909 | ||||
Total current liabilities | 443,427 | 427,493 | ||||
Long-term debt, less current portion | 223,839 | 223,498 | ||||
Deferred revenue | 10,513 | 10,974 | ||||
Deferred income taxes | 5,969 | 2,804 | ||||
Other long-term liabilities | 14,407 | 6,531 | ||||
Stockholders’ equity | 341,440 | 312,843 | ||||
Total liabilities and stockholders’ equity | $ | 1,039,595 | $ | 984,143 | ||
THE TORO COMPANY AND SUBSIDIARIES |
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
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(Dollars in thousands) |
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Three Months Ended | ||||||||
January 31, | February 1, | |||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 25,869 | $ | 31,396 | ||||
Adjustments to reconcile net earnings to net cash used in operating activities: |
||||||||
Noncash income from finance affiliate | (1,266 | ) | (1,353 | ) | ||||
Provision for depreciation and amortization | 13,285 | 13,517 | ||||||
Stock-based compensation expense | 2,541 | 2,479 | ||||||
Decrease in deferred income taxes | 3,231 | 335 | ||||||
Other | 5 | (11 | ) | |||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Receivables, net | (44,118 | ) | (32,217 | ) | ||||
Inventories, net | (66,825 | ) | (83,794 | ) | ||||
Prepaid expenses and other assets | (4,705 | ) | (243 | ) | ||||
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities |
59,389 |
46,429 |
||||||
Net cash used in operating activities | (12,594 | ) | (23,462 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant, and equipment | (18,085 | ) | (3,233 | ) | ||||
Proceeds from asset disposals | 28 | 13 | ||||||
Contributions to finance affiliate, net | (1,404 | ) | (2,484 | ) | ||||
Acquisition, net of cash acquired | (715 | ) | — | |||||
Net cash used in investing activities | (20,176 | ) | (5,704 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments of short-term debt | (849 | ) | (415 | ) | ||||
Increase in (repayments of) long-term debt | 30 | (1,578 | ) | |||||
Excess tax benefits from stock-based awards | 5,527 | 3,442 | ||||||
Proceeds from exercise of stock options | 3,076 | 3,602 | ||||||
Purchases of Toro common stock | (42,013 | ) | (33,185 | ) | ||||
Dividends paid on Toro common stock | (11,381 | ) | (8,198 | ) | ||||
Net cash used in financing activities | (45,610 | ) | (36,332 | ) | ||||
Effect of exchange rates on cash and cash equivalents | (588 | ) | 342 | |||||
Net decrease in cash and cash equivalents | (78,968 | ) | (65,156 | ) | ||||
Cash and cash equivalents as of the beginning of the fiscal period | 182,993 | 125,856 | ||||||
Cash and cash equivalents as of the end of the fiscal period | $ | 104,025 | $ | 60,700 |
Source: The
The Toro Company
Investor Relations
Amy Dahl,
952-887-8917
Managing Director, Corporate Communications and
Investor Relations
amy.dahl@toro.com
or
Media
Relations
Branden Happel, 952-887-8930
Senior Manager,
Public Relations
branden.happel@toro.com