The Toro Company Reports Record Second Quarter Results; Declares 2-for-1 Stock Split
- Quarterly sales increase nearly 10 percent on balanced professional and residential growth
-
Net earnings per share for the quarter up 20 percent to a record
$2.26 - Company raises full-year guidance
- Toro’s Board of Directors declares two-for-one stock split
For the first six months,
“We delivered another quarter of strong sales and earnings growth,
accelerated by our new product portfolio and the early start to spring
and favorable weather conditions across much of the U.S. Turf is growing
– driving sales of residential mowing products, and golfers are playing
more golf – contributing to revenue for golf courses and improving their
ability to invest in new products,” said
“While a portion of our results was the benefit of an accelerated
spring, we are hopeful the early start will extend the selling season
and drive incremental sales,” said Hoffman. “Our product line-up is
strong, our core businesses are well positioned, and our investments in
light construction, hardscapes and rental products will contribute to
future growth. We are raising our outlook for the year, even against a
backdrop of a challenging sales environment in
The company now expects revenue growth for fiscal 2012 to be about 7 to
8 percent and net earnings to be about
SEGMENT RESULTS
Professional
-
Professional segment net sales for the second quarter totaled
$455.9 million , up 9 percent from the prior year period. Domestic sales of golf and grounds equipment increased on improved market conditions, and customers replacing aging equipment with new innovative products. Shipments of landscape maintenance equipment were higher on improved contractor confidence and strength of new products. Micro irrigation sales around the world increased on continued demand for precision irrigation solutions for agriculture. International sales were down slightly in the quarter, primarily from a slowdown in demand for golf and grounds equipment inEurope . For the first six months, professional segment net sales were$739.8 million , up 9.3 percent from the comparable fiscal 2011 period. -
Professional segment earnings for the second quarter totaled
$98.7 million , up 15.3 percent from the prior year period. For the first six months, professional segment earnings were$140.8 million , up 14 percent from the comparable fiscal 2011 period.
Residential
-
Residential segment net sales for the second quarter totaled
$231.9 million , up 10.6 percent from the prior year period. Favorable weather accelerated the start of the spring goods selling season driving strong pre-season demand. Shipments of walk power mowers were up on improved weather and new product introductions. For the first six months, residential segment net sales were$369.5 million , up 11 percent from the comparable fiscal 2011 period. -
Residential segment earnings for the second quarter totaled
$28.5 million , up 7.5 percent from the prior year period. For the first six months, residential segment earnings were$41.1 million , up 8.5 percent from the comparable fiscal 2011 period.
OPERATING RESULTS
Gross margin for the second quarter was up 20 basis points to 34.0 percent due to manufacturing efficiencies, and realized pricing offsetting higher materials costs. For the first six months, gross margin was down 20 basis points to 34.3 percent due to an unfavorable product mix.
Selling, general and administrative (SG&A) expense as a percent of sales improved 40 basis points for the second quarter to 18.6 percent. The improvement in SG&A reflects further leveraging of costs over increased sales volumes. For the first six months, SG&A expense improved 90 basis points as a percent of sales to 21.7 percent.
Operating earnings as a percent of sales increased 60 basis points to 15.4 percent for the second quarter, and was up 70 basis points to 12.6 percent for the year to date.
Interest expense for the second quarter was
The effective tax rate for the second quarter was 34.1 percent compared
with 33.4 percent in the same period last year. For the year to date
comparison, the tax rate increased to 34 percent from 32.6 percent. The
increase in both periods was primarily the result of the expiration of
the
Accounts receivable at the end of the second quarter totaled
About The
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The
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 | Six Months Ended | |||||||||||||||||||
May 4, |
April 29, |
May 4, |
April 29, |
|||||||||||||||||
Net sales | $ | 691,485 | $ | 631,601 | $ | 1,115,320 | $ | 1,014,813 | ||||||||||||
Gross profit | 235,422 | 213,554 | 382,073 | 350,199 | ||||||||||||||||
Gross profit percent | 34.0 | % | 33.8 | % | 34.3 | % | 34.5 | % | ||||||||||||
Selling, general, and administrative expense | 128,922 | 120,199 | 241,552 | 229,643 | ||||||||||||||||
Operating earnings | 106,500 | 93,355 | 140,521 | 120,556 | ||||||||||||||||
Interest expense | (4,165 | ) | (4,186 | ) | (8,593 | ) | (8,302 | ) | ||||||||||||
Other income, net | 2,057 | 1,331 | 2,550 | 2,699 | ||||||||||||||||
Earnings before income taxes | 104,392 | 90,500 | 134,478 | 114,953 | ||||||||||||||||
Provision for income taxes | 35,574 | 30,250 | 45,737 | 37,421 | ||||||||||||||||
Net earnings | $ | 68,818 | $ | 60,250 | $ | 88,741 | $ | 77,532 | ||||||||||||
Basic net earnings per share | $ | 2.30 | $ | 1.92 | $ | 2.96 | $ | 2.45 | ||||||||||||
Diluted net earnings per share | $ | 2.26 | $ | 1.88 | $ | 2.91 | $ | 2.41 | ||||||||||||
Weighted average number of shares of common | ||||||||||||||||||||
stock outstanding – Basic | 29,939 | 31,447 | 29,967 | 31,650 | ||||||||||||||||
Weighted average number of shares of common | ||||||||||||||||||||
stock outstanding – Diluted | 30,480 | 32,020 | 30,481 | 32,228 | ||||||||||||||||
Segment Data (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
May 4, | April 29, | May 4, | April 29, | |||||||||||||||||
Segment Net Sales |
2012 | 2011 | 2012 | 2011 | ||||||||||||||||
Professional | $ | 455,945 | $ | 418,284 | $ | 739,779 | $ | 676,564 | ||||||||||||
Residential | 231,897 | 209,632 | 369,505 | 332,925 | ||||||||||||||||
Other | 3,643 | 3,685 | 6,036 | 5,324 | ||||||||||||||||
Total * | $ | 691,485 | $ | 631,601 | $ | 1,115,320 | $ | 1,014,813 | ||||||||||||
* Includes international sales of | $ | 197,516 | $ | 201,896 | $ | 346,670 | $ | 340,647 | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
May 4, | April 29, | May 4, | April 29, | |||||||||||||||||
Segment Earnings (Loss) Before Income Taxes |
2012 | 2011 | 2012 | 2011 | ||||||||||||||||
Professional | $ | 98,701 | $ | 85,606 | $ | 140,792 | $ | 123,525 | ||||||||||||
Residential | 28,518 | 26,539 | 41,126 | 37,907 | ||||||||||||||||
Other | (22,827 | ) | (21,645 | ) | (47,440 | ) | (46,479 | ) | ||||||||||||
Total | $ | 104,392 | $ | 90,500 | $ | 134,478 | $ | 114,953 | ||||||||||||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(Dollars in thousands) | ||||||||
May 4, |
April 29, |
|||||||
ASSETS |
||||||||
Cash and cash equivalents | $ | 82,572 | $ | 106,862 | ||||
Receivables, net | 272,819 | 278,491 | ||||||
Inventories, net | 250,804 | 259,826 | ||||||
Prepaid expenses and other current assets | 23,281 | 15,261 | ||||||
Deferred income taxes | 62,209 | 59,535 | ||||||
Total current assets | 691,685 | 719,975 | ||||||
Property, plant, and equipment, net | 184,620 | 180,315 | ||||||
Deferred income taxes | - | 2,140 | ||||||
Goodwill and other assets, net | 153,049 | 150,097 | ||||||
Total assets | $ | 1,029,354 | $ | 1,052,527 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current portion of long-term debt | $ | 1,858 | $ | 2,478 | ||||
Short-term debt | 7 | 64 | ||||||
Accounts payable | 196,382 | 202,588 | ||||||
Accrued liabilities | 278,491 | 285,896 | ||||||
Total current liabilities | 476,738 | 491,026 | ||||||
Long-term debt, less current portion | 223,701 | 224,897 | ||||||
Deferred revenue | 9,347 | 10,673 | ||||||
Deferred income taxes | 1,380 | - | ||||||
Other long-term liabilities | 7,614 | 7,391 | ||||||
Stockholders’ equity | 310,574 | 318,540 | ||||||
Total liabilities and stockholders’ equity | $ | 1,029,354 | $ | 1,052,527 | ||||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
(Dollars in thousands) | ||||||||||
Six Months Ended | ||||||||||
May 4, |
April 29, |
|||||||||
Cash flows from operating activities: | ||||||||||
Net earnings | $ | 88,741 | $ | 77,532 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||
Noncash income from affiliates | (2,802 | ) | (2,239 | ) | ||||||
Provision for depreciation, amortization, and impairment losses | 25,664 | 22,880 | ||||||||
Stock-based compensation expense | 5,031 | 3,975 | ||||||||
Increase in deferred income taxes | (396 | ) | (882 | ) | ||||||
Other | (121 | ) | (11 | ) | ||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||
Receivables, net | (126,215 | ) | (131,433 | ) | ||||||
Inventories, net | (21,270 | ) | (61,490 | ) | ||||||
Prepaid expenses and other assets | (5,066 | ) | (4,012 | ) | ||||||
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities |
125,929 |
113,611 |
||||||||
Net cash provided by operating activities | 89,495 | 17,931 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant, and equipment | (21,905 | ) | (25,925 | ) | ||||||
Proceeds from asset disposals | 96 | 95 | ||||||||
Investment in finance affiliate, net | (3,559 | ) | (4,563 | ) | ||||||
Acquisitions, net of cash acquired | (9,663 | ) | (12,060 | ) | ||||||
Net cash used in investing activities | (35,031 | ) | (42,453 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Decrease in short-term debt | (922 | ) | (776 | ) | ||||||
Repayments of long-term debt | (1,670 | ) | (1,162 | ) | ||||||
Excess tax benefits from stock-based awards | 6,879 | 2,339 | ||||||||
Proceeds from exercise of stock options | 13,268 | 11,248 | ||||||||
Purchases of Toro common stock | (56,067 | ) | (46,712 | ) | ||||||
Dividends paid on Toro common stock | (13,228 | ) | (12,682 | ) | ||||||
Net cash used in financing activities | (51,740 | ) | (47,745 | ) | ||||||
Effect of exchange rates on cash | (1,038 | ) | 1,763 | |||||||
Net increase (decrease) in cash and cash equivalents | 1,686 | (70,504 | ) | |||||||
Cash and cash equivalents as of the beginning of the period | 80,886 | 177,366 | ||||||||
Cash and cash equivalents as of the end of the period | $ | 82,572 | $ | 106,862 |
Source: The
The Toro Company
Investor Relations:
Kurt
Svendsen, 952-887-8630
Managing Director, Corporate Communications
and Investor Relations
kurt.svendsen@toro.com
or
Media
Relations:
Branden Happel, 952-887-8930
Senior Manager,
Public Relations
branden.happel@toro.com