Toro Reports Fiscal 2009 Third Quarter Results
- Residential segment sales up on higher retail demand for walk power mowers and riding products
-
Company posts net earnings per share of
$0.54 - Working capital further strengthened as inventories reduced to lowest level in more than a decade
- Improved asset management continues to drive strong operating cash flow
For the fiscal year to date,
“Despite a persistently difficult economic environment, we’ve been able
to offset some of the impact through aggressive and disciplined
actions,” said
To provide additional resources to support strategic growth, the company
recently announced the creation of
SEGMENT RESULTS
Professional
-
Professional segment net sales for the fiscal 2009 third quarter
totaled
$260.9 million , down 27.3 percent from the comparable fiscal 2008 period. Sales declined across most product categories as the equipment replacement cycle extends. Worldwide demand for golf maintenance equipment remains particularly weak in an extremely tough environment. And, while market conditions dampened demand for commercial and landscape contractor equipment, the new Toro® GrandStand™ stand-on mower continues to gain ground on the competition. For the first nine months, professional segment net sales declined 26.7 percent to$800.6 million .
-
Professional segment earnings for the fiscal 2009 third quarter were
$39.4 million , down 44.6 percent from last year’s third quarter. For the first nine months, professional segment earnings totaled$126.4 million , down 42.4 percent compared with the prior year period.
Residential
-
Residential segment net sales for the fiscal 2009 third quarter
totaled
$126.2 million , up 1.2 percent from the comparable fiscal 2008 period. Strength in walk power mowers and riding products were somewhat offset by lower shipments of snowthrower products that are anticipated to occur later due to timing of a new offering. Specific to walk power mowers the company has increased market share, primarily the result of expanded retail placement and a wider range of price points to better meet the needs of customers. For the first nine months, residential segment net sales declined 1.6 percent to$416.8 million . -
Residential segment earnings for the fiscal 2009 third quarter were
$10.7 million , up$7.3 million from last year’s third quarter. For the first nine months, residential segment earnings totaled$32.1 million , up 15.0 percent from the prior year period.
REVIEW OF OPERATIONS
Gross margin for the fiscal 2009 third quarter was 33.9 percent compared with 35.3 percent in the comparable fiscal 2008 period. For the first nine months of fiscal 2009, gross margin was 33.5 percent, compared with 35.8 percent in the same period of fiscal 2008. For the quarter and year to date, the decline in gross margin was primarily due to the impact of production cuts to adjust for reduced demand and unfavorable product mix.
Selling, general and administrative (SG&A) expenses for the fiscal 2009
third quarter declined
Other expense for the fiscal 2009 third quarter was
Interest expense for the fiscal 2009 third quarter was
The effective tax rate for the fiscal 2009 third quarter was 36.6 percent compared with 34.2 percent in the comparable fiscal 2008 period. The tax rate increase was mainly the result of a one-time valuation allowance related to a foreign subsidiary.
Accounts receivable at the end of the fiscal 2009 third quarter totaled
The company’s solid cash flow enabled it to return value to shareholders through dividend payments and share repurchases. During the fiscal 2009 third quarter, the company repurchased 1.6 million common shares and, as previously announced, received authorization in July to repurchase an additional 5 million common shares.
BUSINESS OUTLOOK
“We will manage the business with the expectation of no significant improvement in our end markets in the near future,” said Hoffman. “While we continue to carefully manage costs, we will also maintain our focus on driving market share improvements by bringing innovation to our customers. We will also invest in new initiatives that enable future growth when our markets recover.”
The company continues to expect fiscal 2009 revenues to decline about 18
percent from fiscal 2008. However, due to one-time charges of
The
LIVE CONFERENCE CALL |
August 20, 10:00 a.m. CST |
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 | Nine Months Ended | ||||||||||||||||||||||||
July 31, | August 1, | July 31, | August 1, | ||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
Net sales | $ | 394,859 | $ | 492,635 | $ | 1,234,883 | $ | 1,536,944 | |||||||||||||||||
Gross profit | 133,798 | 173,940 | 413,283 | 550,843 | |||||||||||||||||||||
Gross profit percent | 33.9 | % | 35.3 | % | 33.5 | % | 35.8 | % | |||||||||||||||||
Selling, general, and administrative expense | 94,181 | 110,874 | 300,971 | 352,934 | |||||||||||||||||||||
Earnings from operations | 39,617 | 63,066 | 112,312 | 197,909 | |||||||||||||||||||||
Interest expense | (4,429 | ) | (4,645 | ) | (13,207 | ) | (14,947 | ) | |||||||||||||||||
Other (expense) income, net | (4,018 | ) | (368 | ) | (1,725 | ) | 532 | ||||||||||||||||||
Earnings before income taxes | 31,170 | 58,053 | 97,380 | 183,494 | |||||||||||||||||||||
Provision for income taxes | 11,393 | 19,826 | 34,011 | 63,856 | |||||||||||||||||||||
Net earnings | $ | 19,777 | $ | 38,227 | $ | 63,369 | $ | 119,638 | |||||||||||||||||
Basic net earnings per share | $ | 0.55 | $ | 1.01 | $ | 1.75 | $ | 3.13 | |||||||||||||||||
Diluted net earnings per share | $ | 0.54 | $ | 0.99 | $ | 1.73 | $ | 3.06 | |||||||||||||||||
Weighted average number of shares of common stock outstanding – Basic |
35,981 |
37,901 |
36,248 |
38,177 |
|||||||||||||||||||||
Weighted average number of shares of common stock outstanding – Diluted |
36,357 |
38,708 |
36,626 |
39,039 |
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||||||||||||||||||
Segment Data (Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
July 31, | August 1, | July 31, | August 1, | |||||||||||||||||||||||
Segment Net Sales |
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
Professional | $ | 260,884 | $ 359,070 | $ | 800,630 | $ | 1,092,767 | |||||||||||||||||||
Residential | 126,181 | 124,671 | 416,762 | 423,545 | ||||||||||||||||||||||
Other | 7,794 | 8,894 | 17,491 | 20,632 | ||||||||||||||||||||||
Total * | $ | 394,859 | $ 492,635 | $ | 1,234,883 | $ | 1,536,944 | |||||||||||||||||||
* Includes international sales of | $ | 110,773 | $ 138,682 | $ | 389,004 | $ | 494,909 | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
July 31, | August 1, | July 31, | August 1, | |||||||||||||||||||||||
Segment Earnings (Loss) Before Income Taxes | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
Professional | $ | 39,436 | $ | 71,179 | $ | 126,424 | $ | 219,639 | ||||||||||||||||||
Residential | 10,701 | 3,370 | 32,122 | 27,933 | ||||||||||||||||||||||
Other | (18,967 | ) | (16,496 | ) | (61,166 | ) | (64,078 | ) | ||||||||||||||||||
Total | $ | 31,170 | $ | 58,053 | $ | 97,380 | $ | 183,494 |
Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||
(Dollars in thousands) | |||||||||||
July 31, | August 1, | ||||||||||
2009 | 2008 | ||||||||||
ASSETS |
|||||||||||
Cash and cash equivalents | $ | 130,735 | $ | 55,013 | |||||||
Receivables, net | 269,886 | 364,988 | |||||||||
Inventories, net | 160,589 | 211,760 | |||||||||
Prepaid expenses and other current assets | 12,224 | 14,811 | |||||||||
Deferred income taxes | 58,542 | 56,147 | |||||||||
Total current assets | 631,976 | 702,719 | |||||||||
Property, plant, and equipment, net | 165,975 | 173,812 | |||||||||
Deferred income taxes | 6,445 | 6,485 | |||||||||
Goodwill and other assets, net | 113,299 | 109,319 | |||||||||
Total assets | $ | 917,695 | $ | 992,335 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||
Current portion of long-term debt | $ | 3,027 | $ | 2,441 | |||||||
Short-term debt | - | - | |||||||||
Accounts payable | 68,304 | 86,824 | |||||||||
Accrued liabilities | 237,259 | 258,246 | |||||||||
Total current liabilities | 308,590 | 347,511 | |||||||||
Long-term debt, less current portion | 225,521 | 227,266 | |||||||||
Deferred revenue and other long-term liabilities | 14,791 | 15,836 | |||||||||
Stockholders’ equity | 368,793 | 401,722 | |||||||||
Total liabilities and stockholders’ equity | $ | 917,695 | $ | 992,335 |
THE TORO COMPANY AND SUBSIDIARIES | |||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||||
(Dollars in thousands) | |||||||||||||
Nine Months Ended | |||||||||||||
July 31, | August 1, | ||||||||||||
2009 | 2008 | ||||||||||||
Cash flows from operating activities: | |||||||||||||
Net earnings | $ | 63,369 | $ | 119,638 | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|||||||||||||
Equity losses from investments | 46 | 439 | |||||||||||
Provision for depreciation and amortization | 29,537 | 32,196 | |||||||||||
Gain on disposal of property, plant, and equipment | (51 | ) | (89 | ) | |||||||||
Gain on sale of business | - | (113 | ) | ||||||||||
Stock-based compensation expense | 2,959 | 4,366 | |||||||||||
Decrease (increase) in deferred income taxes | 1,178 | (1,490 | ) | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Receivables | (10,487 | ) | (79,252 | ) | |||||||||
Inventories | 51,841 | 39,663 | |||||||||||
Prepaid expenses and other assets | (1,612 | ) | (3,712 | ) | |||||||||
Accounts payable, accrued expenses, and deferred revenue and other long-term liabilities |
(17,816 | ) | 14,059 | ||||||||||
Net cash provided by operating activities | 118,964 | 125,705 | |||||||||||
Cash flows from investing activities: | |||||||||||||
Purchases of property, plant, and equipment | (24,003 | ) | (34,304 | ) | |||||||||
Proceeds from asset disposals | 200 | 880 | |||||||||||
Increase in investment in affiliates | - | (250 | ) | ||||||||||
Decrease (increase) in other assets | 122 | (288 | ) | ||||||||||
Proceeds from sale of a business | - | 1,048 | |||||||||||
Acquisition, net of cash acquired | - | (1,000 | ) | ||||||||||
Net cash used in investing activities | (23,681 | ) | (33,914 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||
Decrease in short-term debt | (3,237 | ) | (372 | ) | |||||||||
Repayments of long-term debt, net of costs | (2,206 | ) | (1,124 | ) | |||||||||
Excess tax benefits from stock-based awards | 4,478 | 3,511 | |||||||||||
Proceeds from exercise of stock-based awards | 4,877 | 3,506 | |||||||||||
Purchases of Toro common stock | (55,044 | ) | (86,679 | ) | |||||||||
Dividends paid on Toro common stock | (16,313 | ) | (17,170 | ) | |||||||||
Net cash used in financing activities | (67,445 | ) | (98,328 | ) | |||||||||
Effect of exchange rates on cash | 3,538 | (497 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 31,376 | (7,034 | ) | ||||||||||
Cash and cash equivalents as of the beginning of the fiscal period | 99,359 | 62,047 | |||||||||||
Cash and cash equivalents as of the end of the fiscal period | $ | 130,735 | $ | 55,013 |
Source: The
The Toro Company
Investor Relations
John Wright,
952-887-8865
Director, Investor Relations
invest@toro.com
or
Media
Relations
Branden Happel, 952-887-8930
Manager, Public
Relations
pr@toro.com