Toro Reports Record First Quarter Net Sales and Earnings

Net Earnings Per Diluted Share Up 39.1%

LIVE CONFERENCE CALL
February 23, 10:00 a.m. CT
http://www.thetorocompany.com/invest

BLOOMINGTON, Minn., Feb. 23 /PRNewswire-FirstCall/ -- The Toro Company (NYSE: TTC) today reported net earnings of $14.3 million, or $0.32 per diluted share, on net sales of $369.6 million for its fiscal 2006 first quarter ended February 3, 2006. In the comparable fiscal 2005 period, Toro reported net earnings of $11.2 million, or $0.23 per diluted share, on net sales of $346.9 million. Earnings per share for the 2005 period have been adjusted to reflect the effects of a 2-for-1 stock split which was effective March 28, 2005.

Michael J. Hoffman, The Toro Company's president and chief executive officer, said the company's first quarter performance benefited from strong sales growth in international markets and from the company's continued focus on profitability improvement. "With our solid first quarter results, we are well positioned to meet our sales and earnings growth goals for fiscal 2006," said Hoffman.

The international business posted a healthy sales increase, primarily from its core markets, as well as strong contributions from Hayter, Ltd., which the company acquired in February 2005. Compared to the fiscal 2005 first quarter, international sales grew 33.9 percent. "The increase in international sales results from a strategic focus on expanding that part of our business in order to realize more growth opportunities for Toro and to better balance our overall portfolio," said Hoffman.

SEGMENT RESULTS

Segment data are provided in the table following the "Condensed Consolidated Statements of Earnings".

Professional

Segment sales for the fiscal 2006 first quarter totaled $253.6 million, up 3.4 percent compared with the fiscal 2005 first quarter. Revenue growth in the quarter was due to increased sales in the international business resulting from the strong acceptance of new equipment and irrigation products worldwide.

Segment earnings for the fiscal 2006 first quarter totaled $41.7 million, up 7.2 percent from $38.9 million in the fiscal 2005 first quarter.

Hoffman said Toro is encouraged by the generally optimistic outlook of customers attending the annual Golf Industry Show in Atlanta, GA. "Our industry-leading maintenance equipment and irrigation systems, strengthened by innovative new offerings introduced at the show, help course operators improve productivity, manage water use more effectively and keep courses in top playing condition."

Residential

Segment sales for the fiscal 2006 first quarter totaled $108.2 million, up 12.8 percent compared with the fiscal 2005 first quarter. Growth in residential international sales accounted for the revenue increase, including contributions from Hayter and strong sales of riding products.

Segment earnings for the fiscal 2006 first quarter totaled $5.1 million, up 16.1 percent from $4.4 million in the first quarter of fiscal 2005.

REVIEW OF OPERATIONS

Gross margin for the fiscal 2006 first quarter was 35.7 percent compared with 35.1 percent in the same period the previous year. The improvement was primarily the result of continued focus on profitability and slower growth in commodity costs.

SG&A expenses as a percentage of net sales declined to 29 percent in the fiscal 2006 first quarter from 29.5 percent in the comparable 2005 period. The decline resulted primarily from lower administrative expenses.

Interest expense for the fiscal 2006 first quarter totaled $4.2 million compared with $3.8 million in the fiscal 2005 first quarter.

Accounts receivable at the end of the fiscal 2006 first quarter totaled $313.2 million, essentially flat on a 6.6 percent increase in consolidated first quarter net sales.

Net inventories at the end of the fiscal 2006 first quarter totaled $295.7 million, up $19.3 million compared with the end of the fiscal 2005 first quarter. The majority of the increase was due to the Hayter acquisition completed in the second quarter of fiscal 2005.

BUSINESS OUTLOOK

"We are off to a good start in the new fiscal year," said Hoffman. "Overall, we currently believe conditions in our core markets will be more favorable in 2006 than they were last year. With innovative new products across multiple categories now entering the market, we are well positioned to benefit from share and overall market growth. In addition, we are expanding our brand presence at retail through strategies such as the launch of a new line of lawn and garden tractors and we continue to benefit from our focus on international growth. These growth initiatives are complemented by ongoing profit improvement initiatives, including further adoption of lean and no waste principles throughout our company and continued emphasis on containing costs and expenses."

The Company reaffirmed its outlook for the remainder of fiscal 2006 and expects to achieve earnings per share growth of 12 to 15 percent on sales growth of 8 percent. This assumes that no widespread extremes in economic and environmental factors will impact the company's key selling seasons, which are still ahead.

For its stand alone fiscal 2006 second quarter, Toro expects to report net earnings per diluted share of $1.42 to $1.48.

The Toro Company is a leading worldwide provider of outdoor maintenance and beautification products for home, recreation and commercial landscapes.

The Toro Company will conduct a conference call and webcast for investors beginning at 10:00 a.m. Central Time (CST) on February 23, 2006. The webcast will be available at http://www.streetevents.com or at http://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.

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. These uncertainties include factors that affect all businesses operating in a global market as well as matters specific to Toro. Particular risks and uncertainties facing the company's overall financial position at the present include the threat of further terrorist acts and war, which may result in contraction of the U.S. and worldwide economies; slow growth rate in global and domestic economies, resulting in rising unemployment and weakened consumer confidence; our ability to achieve the goals for the '6+8' growth and profit improvement initiative which is intended to improve our revenue growth and after-tax return on sales; the company's ability to achieve sales and earnings per share growth in fiscal 2006; our ability to successfully integrate acquisitions and manage alliances; ability of management to manage around unplanned events; unforeseen product quality problems in the development and production of new and existing products; fluctuations in the cost and availability of raw materials, including steel and other commodities; rising cost of transportation; level of growth in the golf market; increased dependence on The Home Depot as a customer for the residential segment; reduced government spending for grounds maintenance equipment due to reduced tax revenue and tighter government budgets; increased competition; elimination of shelf space for our products at retailers; financial viability of distributors and dealers; market acceptance of existing and new products; unforeseen inventory adjustments or changes in purchasing patterns by our customers; the impact of abnormal weather patterns; and the previously disclosed pending litigation against the company and other defendants that challenges the horsepower ratings of lawnmowers, of which the company is currently unable to assess whether the litigation would have a material adverse effect on the company's consolidated operating results or financial condition, although an adverse result might be material to operating results in a particular reporting period. In addition to the factors set forth in this paragraph, market, economic, financial, competitive, weather, production and other factors identified in Toro's quarterly and annual reports filed with the Securities and Exchange Commission, could affect the forward-looking statements in this press release. Toro undertakes no obligation to update forward-looking statements made in this release to reflect events or circumstances after the date of this statement.

                          (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
                                                  February 3,    January 28,
                                                      2006           2005
    Net sales                                       $369,640       $346,913
    Gross profit                                     131,874        121,663
        Gross profit percent                            35.7%          35.1%
    Selling, general, and administrative expense     107,205        102,239
        Earnings from operations                      24,669         19,424
    Interest expense                                  (4,243)        (3,760)
    Other income, net                                    886          1,141
        Earnings before income taxes                  21,312         16,805
    Provision for income taxes                         7,033          5,629
        Net earnings                                 $14,279        $11,176

    Basic net earnings per share                       $0.33          $0.24

    Diluted net earnings per share                     $0.32          $0.23
    Weighted average number of shares of common
     stock outstanding - Basic                        43,608         46,136

    Weighted average number of shares of common
     stock outstanding - Dilutive                     44,959         47,758

      Shares and per share data have been adjusted for all periods presented
      to reflect a two-for-one stock split effective March 28, 2005.

                           Segment Data (Unaudited)
                            (Dollars in thousands)

                                                       Three Months Ended
      Segment Net Sales                            February 3,    January 28,
                                                      2006           2005
      Professional                                  $253,605       $245,230
      Residential                                    108,185         95,876
      Other                                            7,850          5,807
        Total*                                      $369,640       $346,913

      * Includes international sales of             $120,059        $89,653


                                                       Three Months Ended
      Segment Earnings (Loss) Before               February 3,   January 28,
       Income Taxes                                   2006           2005
      Professional                                   $41,660        $38,865
      Residential                                      5,149          4,434
      Other                                          (25,497)       (26,494)
        Total                                        $21,312        $16,805



                      THE TORO COMPANY AND SUBSIDIARIES

              Condensed Consolidated Balance Sheets (Unaudited)
                            (Dollars in thousands)

                                                   February 3,    January 28,
                                                      2006           2005
    ASSETS
    Cash and cash equivalents                        $19,744         $7,467
    Receivables, net                                 313,157        312,984
    Inventories, net                                 295,687        276,364
    Prepaid expenses and other current assets         18,049         14,756
    Deferred income taxes                             70,251         54,662
        Total current assets                         716,888        666,233

    Property, plant, and equipment, net              165,078        160,718
    Goodwill and other assets, net                    98,493        101,629
        Total assets                                $980,459       $928,580

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current portion of long-term debt                    $35            $45
    Short-term debt                                   51,900         62,162
    Accounts payable                                  95,213         90,459
    Accrued liabilities                              256,605        235,683
        Total current liabilities                    403,753        388,349

    Long-term debt, less current portion             175,000        175,035
    Long-term deferred income taxes                      872          3,837
    Deferred revenue and other long-term
     liabilities                                       9,423          8,166
    Stockholders' equity                             391,411        353,193
        Total liabilities and
         stockholders' equity                       $980,459       $928,580



                      THE TORO COMPANY AND SUBSIDIARIES

         Condensed Consolidated Statements of Cash Flows (Unaudited)
                            (Dollars in thousands)

                                                       Three Months Ended
                                                   February 3,    January 28,
                                                      2006           2005
    Cash flows from operating activities:
    Net earnings                                     $14,279        $11,176
      Adjustments to reconcile net earnings to net
       cash used in operating activities:
      Equity losses from investments                     359            201
      Provision for depreciation and amortization     10,534          9,429
      Gain on disposal of property, plant, and
       equipment                                         (29)          (205)
      Stock-based compensation expense                 2,510          2,498
      Increase in deferred income taxes              (11,679)        (1,674)
      Changes in operating assets and liabilities:
        Receivables, net                             (17,599)       (28,371)
        Inventories, net                             (60,085)       (53,832)
        Prepaid expenses and other assets             (2,270)         2,877
        Accounts payable, accrued expenses, and
         deferred revenue                             10,652          3,123
          Net cash used in operating activities      (53,328)       (54,778)

    Cash flows from investing activities:
      Purchases of property, plant, and equipment     (8,026)        (7,319)
      Proceeds from asset disposals                      126          2,191
      Decrease (increase) in other assets              3,118         (3,224)
      Proceeds from sale of a business                     -            765
          Net cash used in investing activities       (4,782)        (7,587)

    Cash flows from financing activities:
      Increase in short-term debt                     51,575         61,023
      Repayments of long-term debt                       (11)           (11)
      Excess tax benefits from share-based
       arrangements                                   12,275          1,709
      Proceeds from exercise of stock options          4,101          2,950
      Purchases of Toro common stock                 (27,587)       (83,763)
      Dividends paid on Toro common stock             (3,923)        (2,793)
          Net cash provided by (used in)
           financing activities                       36,430        (20,885)

    Effect of exchange rates on cash                      22            (39)

    Net decrease in cash and cash equivalents        (21,658)       (83,289)
    Cash and cash equivalents as of the beginning
     of the period                                    41,402         90,756

    Cash and cash equivalents as of the end
     of the period                                   $19,744         $7,467

SOURCE The Toro Company
02/23/2006
CONTACT: Investor Relations, Stephen P. Wolfe, Vice President, CFO,
+1-952-887-8076, or John Wright, Director, Investor Relations,
+1-952-887-8865, or Media Relations, Connie Kotke, Toro Media Relations,
+1-952-887-8984, pr@toro.com , all of The Toro Company
Company News On-Call: http://www.prnewswire.com/comp/103025.html
Web site: http://www.thetorocompany.com
http://www.thetorocompany.com/invest
(TTC)

Our Company

At The Toro Company, we take great pride in helping our customers enrich the beauty, productivity, and sustainability of the land. Founded in 1914, The Toro Company was built on a tradition of quality and caring relationships. Today, the company is a leading worldwide provider of innovative solutions for the outdoor environment including turf maintenance, snow and ice management, landscape, rental and specialty construction equipment, and irrigation and outdoor lighting solutions. Through a strong network of professional distributors, dealers and retailers in more than 125 countries, we proudly offer a wide range of products across a family of global brands to help golf courses, professional contractors, groundskeepers, agricultural growers, rental companies, government and educational institutions, and homeowners – in addition to many leading sports venues and historic sites around the world.