Press Releases


The Toro Company Reports Record First Quarter Results
  • First quarter sales increase 2.6 percent to a record $486.4 million
  • Net earnings per share for the first quarter up 29.6 percent to a record $0.70
  • Company is well positioned as it enters key selling season
  • Full-year earnings guidance raised

BLOOMINGTON, Minn.--(BUSINESS WIRE)--Feb. 18, 2016-- The Toro Company (NYSE: TTC) today reported net earnings of $39.3 million, or $0.70 per share, on a net sales increase of 2.6 percent to $486.4 million for its first quarter ended January 29, 2016. In the comparable fiscal 2015 period, the company delivered net earnings of $31.0 million, or $0.54 per share, on net sales of $474.2 million.

“We are very encouraged by the positive start to the fiscal year, delivering record results for the first quarter,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “Our residential business benefitted from strong demand for zero-turn riding mowers. Strong sales of our landscape contractor equipment, increased demand for our specialty construction equipment and higher sales of golf irrigation products also contributed to the positive start to the fiscal year.”

“With an ongoing focus on innovation, we are excited about our new product lineup across our businesses for fiscal 2016. Most recently, our new golf equipment and irrigation products received a positive reception at the Golf Industry Show in San Diego, California last week. New products such as the Workman® light-duty vehicle and the enhanced product offerings for our INFINITY® Series golf sprinkler were well received by those attending the show. We were also pleased by the excitement surrounding our new product offerings at the 2016 Sports Turf Managers Show that also took place in San Diego, California. Similarly, in the days ahead, the team will be busy preparing for the upcoming Rental Show in the end of February, where we expect to see positive opportunities in a key growth market.”

“Looking ahead to our primary selling season, we are well positioned across our businesses to drive retail sales and gain market share with our strong product portfolio. We remain optimistic as we prepare to execute on this positive momentum, while acknowledging the challenges we could encounter from a deteriorating economic environment or unfavorable weather conditions. However, as always, we will remain focused on those things within our control – delivering new product innovation, providing strong customer service and driving solid market performance.”

The company continues to expect revenue growth for fiscal 2016 to be about 4 percent, and now expects net earnings per share to be about $3.85 to $3.95 for the year. For the second quarter, the company expects net earnings per share to be about $1.75 to $1.80.

SEGMENT RESULTS

Professional

  • Professional segment net sales for the first quarter were $338.8 million, flat to $339.7 million in the same period last year. Strong sales of landscape contractor equipment contributed positively to the results; however, this momentum was negatively impacted by unfavorable foreign currency exchange rates. Demand for the BOSS® snow and ice management products was lower due to a lack of snowfall in the early winter months, which also affected the first quarter results.
  • Professional segment earnings for the first quarter were $61.6 million, up $5.9 million from $55.7 million in the same period last year.

Residential

  • Residential segment net sales for the first quarter were $144.3 million, up 7.1 percent from $134.7 million in the same period last year. This increase is primarily due to higher shipments of zero-turn riding mowers both domestically and internationally over the comparable period last fiscal year. Somewhat offsetting these increases were lower sales of snow product and walk power mowers compared to the same period last year.
  • Residential segment earnings for the first quarter were $16.7 million, up $3.0 million from $13.7 million in the same period last year.

OPERATING RESULTS

Gross margin as a percent of sales for the first quarter was 37.6 percent, an increase of 200 basis points from the same period last year. This increase was primarily due to the BOSS acquisition purchase accounting, which impacted the first quarter of fiscal 2015, resulting in a onetime adjustment. Productivity improvements, as well as lower commodity prices, also drove the improvement.

Selling, general and administrative (SG&A) expense as a percent of sales for the first quarter was 26.5 percent, an increase of 30 basis points from the same period last year. This increase was due to slightly higher expense across various categories, primarily including advertising, warehousing and employee incentive expenses.

First quarter operating earnings as a percent of sales were 11.1 percent, compared to 9.4 percent for the same period last year.

The effective tax rate for the first quarter was 26.9 percent, compared to 26.3 percent in the same period last year. The benefit received from the retroactive reenactment of the Federal Research and Engineering Tax Credit for calendar year 2015 was consistent with the prior year.

Accounts receivable at the end of the first quarter were $190.3 million, down 7.3 percent from the same period last year. Net inventories were $422.0 million, up 15.8 percent from the same period last year due to both residential snow throwers and BOSS snow plows, and residential and landscape contractor riding mower products. Trade payables were $211.2 million, up 8.0 percent from the same period last year.

About The Toro Company
The Toro Company (NYSE: TTC) 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 $2.4 billion in fiscal 2015, 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. For more information, visit www.thetorocompany.com.

LIVE CONFERENCE CALL
February 18, 2016 at 10:00 a.m. CST
www.thetorocompany.com/invest

The Toro Company will conduct its earnings call and webcast for investors beginning at 10:00 a.m. CST on February 18, 2016. The webcast will be available at www.streetevents.com or at www.thetorocompany.com/invest. Webcast participants will need to complete a brief registration form and should allocate extra time before the webcast begins to register and, if necessary, download and install audio software.

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 assumptions and 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,” “can,” “seek,” and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual events and 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 Juarez, Mexico; fluctuations in the cost and availability of raw materials and components, including steel, engines, hydraulics and resins; the impact of abnormal weather patterns, including unfavorable weather conditions exacerbated by global climate change or otherwise; the impact of natural disasters and global pandemics; the level of growth or contraction in our key markets; government and municipal revenue, budget and spending levels; dependence on The Home Depot as a customer for our residential business; elimination of shelf space for our products at dealers or retailers; inventory adjustments or changes in purchasing patterns by our customers; our ability to develop and achieve market acceptance for new products; increased competition; the risks attendant to international operations and markets, including political, economic and/or social instability and tax policies in the countries in which we manufacture or sell our products; foreign currency exchange rate fluctuations; our relationships with our distribution channel partners, including the financial viability of our distributors and dealers; risks associated with acquisitions, including our acquisition of the BOSS® professional snow and ice management business; management of our alliances or joint ventures, including Red Iron Acceptance, LLC; the costs and effects of enactment of, changes in and compliance with laws, regulations and standards, including those relating to consumer product safety, conflict mineral disclosure, taxation, healthcare, and environmental, health and safety matters; unforeseen product quality problems; loss of or changes in executive management or key employees; the occurrence of litigation or claims, including those involving intellectual property or product liability matters; and other risks and uncertainties described in our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We undertake no obligation to update forward-looking statements made herein to reflect events or circumstances after the date hereof.

 

THE TORO COMPANY AND SUBSIDIARIES

 

Condensed Consolidated Statements of Earnings (Unaudited)

(Dollars and shares in thousands, except per-share data)

 

Three Months Ended

January 29,

2016

  January 30,

2015

Net sales $ 486,398 $ 474,211
Gross profit 182,654 168,999
Gross profit percent 37.6 % 35.6 %
Selling, general, and administrative expense   128,815     124,577  
Operating earnings 53,839 44,422
Interest expense (4,654 ) (4,716 )
Other income, net   4,512     2,267  
Earnings before income taxes 53,697 41,973
Provision for income taxes   14,436     11,023  
Net earnings $ 39,261   $ 30,950  
 
Basic net earnings per share $ 0.71   $ 0.55  
 
Diluted net earnings per share $ 0.70   $ 0.54  
 

Weighted average number of shares of common stock outstanding – Basic

55,014 56,043
 

Weighted average number of shares of common stock outstanding – Diluted

56,163 57,242
 
 
Segment Data (Unaudited)
(Dollars in thousands)
 
Three Months Ended

Segment Net Sales

January 29,

2016

January 30,

2015

Professional $ 338,836 $ 339,706
Residential 144,284 134,743
Other   3,278     (238 )
Total* $ 486,398   $ 474,211  
 
* Includes international sales of $ 127,246 $ 142,901
 
Three Months Ended

Segment Earnings (Loss) Before Income Taxes

January 29,

2016

January 30,

2015

Professional $ 61,592 $ 55,659
Residential 16,739 13,727
Other   (24,634 )   (27,413 )
Total $ 53,697   $ 41,973  
 
 
THE TORO COMPANY AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
 
  January 29,

2016

  January 30,

2015

ASSETS

Cash and cash equivalents $ 118,140 $ 82,914
Receivables, net 190,297 205,287
Inventories, net 422,036 364,390
Prepaid expenses and other current assets 36,983 41,084
Deferred income taxes   37,633   40,414
Total current assets   805,089   734,089
 
Property, plant, and equipment, net 221,523 214,783
Deferred income taxes 28,367 25,629
Goodwill and other assets, net   338,855   347,667
Total assets $ 1,393,834 $ 1,322,168

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current portion of long-term debt $ 23,398 $ 20,340
Short-term debt 52,912 47,000
Accounts payable 211,216 195,569
Accrued liabilities   262,888   245,299
Total current liabilities   550,414   508,208
 
Long-term debt, less current portion 341,127 364,662
Deferred revenue 11,246 10,812
Other long-term liabilities 31,118 24,646
Stockholders’ equity   459,929   413,840
Total liabilities and stockholders’ equity $ 1,393,834 $ 1,322,168
 
 
THE TORO COMPANY AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
 
Three Months Ended
January 29,

2016

  January 30,

2015

Cash flows from operating activities:
Net earnings $ 39,261 $ 30,950

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

Noncash income from finance affiliate (1,878 ) (1,460 )
Provision for depreciation and amortization 15,741 14,849
Stock-based compensation expense 2,477 2,684
Increase in deferred income taxes - (152 )
Other (464 ) (21 )
Changes in operating assets and liabilities, net of effect of acquisitions:
Receivables, net (12,614 ) (50,390 )
Inventories, net (92,918 ) (80,283 )
Prepaid expenses and other assets (4,584 ) (4,745 )
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities  

56,219

   

65,177

 
Net cash provided by (used in) operating activities   1,240     (23,391 )
 
Cash flows from investing activities:
Purchases of property, plant, and equipment (10,680 ) (10,099 )
Proceeds from asset disposals 60 23
Distributions from (contributions to) finance affiliate, net 765 (385 )
Proceeds from sale of a business 1,500 -
Acquisition, net of cash acquired   -     (197,782 )
Net cash used in investing activities   (8,355 )   (208,243 )
 
Cash flows from financing activities:
Increase in short-term debt 51,789 25,717
Repayments of long-term debt (13,442 ) (130 )
Excess tax benefits from stock-based awards 3,362 3,140
Proceeds from exercise of stock options 2,495 2,379
Purchases of Toro common stock (27,485 ) (14,678 )
Dividends paid on Toro common stock   (16,496 )   (14,014 )
Net cash provided by financing activities   223     2,414  
 
Effect of exchange rates on cash and cash equivalents   (1,243 )   (2,739 )
 
Net decrease in cash and cash equivalents (8,135 ) (231,959 )
Cash and cash equivalents as of the beginning of the fiscal period   126,275     314,873  
 
Cash and cash equivalents as of the end of the fiscal period $ 118,140   $ 82,914  
 

Source: The Toro Company

The Toro Company
Investor Relations
Heather Hille, 952-887-8923
Director, Investor Relations
heather.hille@toro.com
or
Media Relations
Branden Happel, 952-887-8930
Senior Manager, Public Relations
branden.happel@toro.com