The Toro Company Reports Fiscal 2013 Third Quarter Results
-
Third quarter sales increase to
$510 million and net earnings per share increase to$0.68 - Quarterly results strengthened by improved market conditions and increased demand for residential and landscape contractor products
- Company raises full-year earnings outlook on the strength of margin improvement
For the first nine months,
“For the quarter, our results were strengthened by a summer growing
season with favorable temperatures and precipitation levels as compared
to last year’s severe drought conditions,” said
“As anticipated, the Tier 4 diesel engine transition—which caused a
significant portion of our professional sales to be accelerated into our
first quarter from later quarters as we’ve historically seen—continued
to impact the quarterly results for our professional business.
Year-to-date our results are solid and our business fundamentals remain
sound. Our golf and landscape contractor businesses are benefitting from
innovative and high performing equipment offerings valued by our
end-user customers, we continue to grow our micro irrigation business
around the world, and we realized additional sales from increased
customer demand for our rental products and newly introduced
“Looking ahead, although we are always mindful of the challenges that
Mother Nature can create for us, as well as continuing expectations for
slow worldwide economic growth, we remain cautiously optimistic about
the remainder of our year. We expect favorable sales comparisons to last
year’s fourth quarter when limited prior season snowfall in
The company now expects revenue growth for fiscal 2013 to be about 4 percent and net earnings to be about 2.55 per share, or an increase of about 19 percent over fiscal 2012.
SEGMENT RESULTS
Professional
-
Professional segment net sales for the third quarter totaled
$343.9 million , down 4.8 percent from the prior year period. The quarterly sales decrease primarily was attributable to the Tier 4 diesel engine transition and related acceleration of a significant portion of our professional sales into our first quarter from later quarters as historically experienced. Offsetting the decrease, shipments of landscape contractor equipment benefited from increased demand for our zero turn radius products driven by more favorable weather conditions this quarter compared to the drought conditions last year, as well as newly introduced product offerings. Rental and construction equipment sales were up on increased product demand. Global micro irrigation sales increased on continued demand for more efficient irrigation solutions for agriculture. For the first nine months, professional segment net sales were$1,169.4 million , up 6.2 percent from the comparable fiscal 2012 period. -
Professional segment earnings for the third quarter totaled
$60.5 million , down 14.2 percent from the prior year period. For the first nine months, professional segment earnings were$233.5 million , up 10.5 percent from the comparable fiscal 2012 period.
Residential
-
Residential segment net sales for the third quarter totaled
$155.5 million , up 14.4 percent from the prior year period. Favorable temperatures and precipitation levels in the quarter led to sales increases across all summer product categories, including riding products, walk power mowers and handheld trimmer and blower products. For the first nine months, residential segment net sales were$477.8 million , down 5.5 percent from the comparable fiscal 2012 period. The year-to-date sales results largely were attributable to the unusually mild 2012/2013 winter season and the late start to spring. -
Residential segment earnings for the third quarter totaled
$15.1 million , up 50 percent from the prior year period. For the first nine months, residential segment earnings were$51.9 million , up 1.4 percent from the comparable fiscal 2012 period.
OPERATING RESULTS
Gross margin for the third quarter was 34.9 percent, down 40 basis points from the comparable fiscal 2012 period, primarily due to product mix but offset by favorable commodity costs, productivity gains and realized pricing. For the first nine months, gross margin was up 130 basis points to 35.9 percent.
Selling, general and administrative (SG&A) expense as a percent of sales increased 20 basis points for the third quarter to 23.4 percent. For the first nine months, SG&A expense increased 40 basis points as a percent of sales to 22.5 percent. For both periods, the increase in SG&A as a percent of sales was the result of higher warehousing expense, increased engineering spending and incremental costs from acquisitions, offset by lower warranty expense.
Operating earnings as a percent of sales decreased 60 basis points to 11.5 percent for the third quarter, but was up 90 basis points to 13.4 percent for the year to date.
The effective tax rate for the third quarter was 30.5 percent compared
with 31.8 percent in the same period last year. For the year to date
comparison, the tax rate decreased to 31.0 percent from 33.3 percent.
The decrease in both periods was primarily the result of the reenactment
of the
Accounts receivable at the end of the third quarter totaled
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Safe Harbor
Statements made in this news release, which are
forward-looking, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those projected or implied. These
uncertainties include factors that affect all businesses operating in a
global market as well as matters specific to
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||||||||||||
Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||||||||||||||
(Dollars and shares in thousands, except per-share data) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
August 2, | August 3, | August 2, | August 3, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Net sales | $ | 509,918 | $ | 504,076 | $ | 1,659,065 | $ | 1,619,396 | ||||||||||||
Gross profit | 178,031 | 178,122 | 596,149 | 560,195 | ||||||||||||||||
Gross profit percent | 34.9 | % | 35.3 | % | 35.9 | % | 34.6 | % | ||||||||||||
Selling, general, and administrative expense | 119,451 | 117,137 | 373,894 | 358,689 | ||||||||||||||||
Operating earnings | 58,580 | 60,985 | 222,255 | 201,506 | ||||||||||||||||
Interest expense | (3,909 | ) | (4,198 | ) | (12,307 | ) | (12,791 | ) | ||||||||||||
Other income, net | 2,982 | 2,681 | 7,420 | 5,231 | ||||||||||||||||
Earnings before income taxes | 57,653 | 59,468 | 217,368 | 193,946 | ||||||||||||||||
Provision for income taxes | 17,556 | 18,919 | 67,473 | 64,656 | ||||||||||||||||
Net earnings | $ | 40,097 | $ | 40,549 | $ | 149,895 | $ | 129,290 | ||||||||||||
Basic net earnings per share | $ | 0.70 | $ | 0.69 | $ | 2.58 | $ | 2.17 | ||||||||||||
Diluted net earnings per share | $ | 0.68 | $ | 0.67 | $ | 2.53 | $ | 2.13 | ||||||||||||
Weighted average number of shares of common stock outstanding – Basic |
57,653 |
59,045 |
58,091 |
59,642 |
||||||||||||||||
Weighted average number of shares of common
stock outstanding – Diluted |
58,913 |
60,336 |
59,266 |
60,829 |
||||||||||||||||
Segment Data (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
|
August 2, | August 3, | August 2, | August 3, | ||||||||||||||||
Segment Net Sales |
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Professional | $ | 343,866 | $ | 361,120 | $ | 1,169,446 | $ | 1,100,899 | ||||||||||||
Residential | 155,452 | 135,894 | 477,789 | 505,399 | ||||||||||||||||
Other | 10,600 | 7,062 | 11,830 | 13,098 | ||||||||||||||||
Total * | $ | 509,918 | $ | 504,076 | $ | 1,659,065 | $ | 1,619,396 | ||||||||||||
* Includes international sales of | $ | 138,855 | $ | 133,623 | $ | 492,526 | $ | 480,471 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
|
August 2, | August 3, | August 2, | August 3, | ||||||||||||||||
Segment Earnings (Loss) Before Income Taxes |
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Professional | $ | 60,508 | $ | 70,537 | $ | 233,521 | $ | 211,329 | ||||||||||||
Residential | 15,070 | 10,048 | 51,903 | 51,174 | ||||||||||||||||
Other | (17,925 | ) | (21,117 | ) | (68,056 | ) | (68,557 | ) | ||||||||||||
Total | $ | 57,653 | $ | 59,468 | $ | 217,368 | $ | 193,946 | ||||||||||||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(Dollars in thousands) | ||||||||
August 2, | August 3, | |||||||
2013 | 2012 | |||||||
ASSETS |
||||||||
Cash and cash equivalents | $ | 161,180 | $ | 143,058 | ||||
Receivables, net | 202,148 | 197,023 | ||||||
Inventories, net | 258,929 | 234,790 | ||||||
Prepaid expenses and other current assets | 27,426 | 24,436 | ||||||
Deferred income taxes | 62,324 | 62,368 | ||||||
Total current assets | 712,007 | 661,675 | ||||||
Property, plant, and equipment, net | 179,943 | 177,723 | ||||||
Goodwill and other assets, net | 139,180 | 147,130 | ||||||
Total assets | $ | 1,031,130 | $ | 986,528 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current portion of long-term debt | $ | — | $ | 1,858 | ||||
Accounts payable | 124,244 | 124,168 | ||||||
Accrued liabilities | 284,702 | 278,797 | ||||||
Total current liabilities | 408,946 | 404,823 | ||||||
Long-term debt, less current portion | 223,528 | 223,467 | ||||||
Deferred revenue | 10,547 | 11,289 | ||||||
Deferred income taxes | 2,898 | 1,380 | ||||||
Other long-term liabilities | 6,592 | 7,822 | ||||||
Stockholders’ equity | 378,619 | 337,747 | ||||||
Total liabilities and stockholders’ equity | $ | 1,031,130 | $ | 986,528 | ||||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
(Dollars in thousands) | ||||||||||
Nine Months Ended | ||||||||||
August 2, | August 3, | |||||||||
2013 | 2012 | |||||||||
Cash flows from operating activities: | ||||||||||
Net earnings | $ | 149,895 | $ | 129,290 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||||
Noncash income from finance affiliate | (5,658 | ) | (4,521 | ) | ||||||
Provision for depreciation and amortization | 39,204 | 37,929 | ||||||||
Stock-based compensation expense | 7,927 | 7,465 | ||||||||
Decrease (increase) in deferred income taxes | 183 | (443 | ) | |||||||
Other | 28 | (117 | ) | |||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||
Receivables, net | (56,762 | ) | (51,640 | ) | ||||||
Inventories, net | (12,048 | ) | (6,428 | ) | ||||||
Prepaid expenses and other assets | (1,539 | ) | (6,114 | ) | ||||||
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities |
36,910 |
59,986 |
||||||||
Net cash provided by operating activities | 158,140 | 165,407 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant, and equipment | (34,390 | ) | (28,158 | ) | ||||||
Proceeds from asset disposals | 344 | 114 | ||||||||
Distributions from finance affiliate, net | 2,977 | 1,777 | ||||||||
Acquisitions, net of cash acquired | — | (9,663 | ) | |||||||
Net cash used in investing activities | (31,069 | ) | (35,930 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Repayments of short-term debt | (415 | ) | (922 | ) | ||||||
Repayments of long-term debt | (1,769 | ) | (1,892 | ) | ||||||
Excess tax benefits from stock-based awards | 5,196 | 8,080 | ||||||||
Proceeds from exercise of stock options | 8,146 | 17,337 | ||||||||
Purchases of Toro common stock | (76,003 | ) | (67,354 | ) | ||||||
Dividends paid on Toro common stock | (24,453 | ) | (19,748 | ) | ||||||
Net cash used in financing activities | (89,298 | ) | (64,499 | ) | ||||||
Effect of exchange rates on cash and cash equivalents | (2,449 | ) | (2,806 | ) | ||||||
Net increase in cash and cash equivalents | 35,324 | 62,172 | ||||||||
Cash and cash equivalents as of the beginning of the period | 125,856 | 80,886 | ||||||||
Cash and cash equivalents as of the end of the period | $ | 161,180 | $ | 143,058 | ||||||
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