UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 21,
2009
THE
TORO COMPANY
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-8649
|
41-0580470
|
|
(State
of Incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification Number)
|
|
8111
Lyndale Avenue South
Bloomington,
Minnesota
(Address
of principal executive offices)
|
55420
(Zip
Code)
|
Registrant’s
telephone number, including area code: (952) 888-8801
Not
Applicable
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Section
2 — Financial Information
Item
2.02 Results of Operations and Financial Condition.
On
May 21, 2009, The Toro Company announced its earnings for the three and six
months ended May 1, 2009.
Attached
to this Current Report on Form 8-K as Exhibit 99.1 is a copy of The Toro
Company’s press release in connection with the announcement. The
information in this Item 2.02, including the exhibit attached hereto, is
furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except as shall be expressly set forth by specific
reference in such filing.
Section
9 — Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits
(d) Exhibits.
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
release dated May 21, 2009 (furnished
herewith).
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
THE TORO
COMPANY
(Registrant)
|
Date: May
21, 2009
|
By
/s/ Stephen P.
Wolfe
|
|
Stephen
P. Wolfe
|
|
|
Vice
President, Finance and Chief Financial
Officer
|
EXHIBIT
INDEX
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
99.1
|
Press
release dated May 21, 2009 (furnished
herewith).
|
Investor
Relations
John
Wright
Director,
Investor Relations
(952)
887-8865, invest@toro.com
Media
Relations
Branden
Happel
Manager,
Public Relations
(952)
887-8930, pr@toro.com
www.thetorocompany.com
For
Immediate Release
TORO REPORTS FISCAL 2009
SECOND QUARTER RESULTS
|
·
|
Solid
performance drives net earnings per share of
$1.00
|
|
·
|
Strong
execution against working capital initiative enhances liquidity
position
|
|
·
|
Cash
flow from operations improves $38 million from prior
year
|
BLOOMINGTON,
Minn. (May 21, 2009) – The Toro Company (NYSE: TTC) today reported net earnings
of $36.9 million, or $1.00 per share, on net sales of $499.9 million for its
fiscal second quarter ended May 1, 2009. In the comparable fiscal
2008 period, the company posted net earnings of $62.8 million, or $1.60 per
share, on net sales of $638.5 million.
For the
fiscal year to date, Toro reported net earnings of $43.6 million, or $1.18
per share, on net sales of $840 million. The company’s net earnings
for the first half of fiscal 2009 were reduced by $2.1 million, or $0.04 per
share on an after-tax basis, to account for workforce adjustments. In
the first half of fiscal 2008, the company posted net earnings of $81.4 million,
or $2.07 per share, on net sales of $1,044.3 million.
Michael
J. Hoffman, Toro’s chairman and chief executive officer, stated that shipments
to both the professional and residential markets declined due to the impact of
the ongoing global recession resulting in lower golf equipment and project
spending, continued weakness in commercial construction and housing, and soft
consumer demand. “We believe our market share position continues to
improve and our field inventory levels are down from the prior year,” said
Hoffman. “To avoid building excess inventory, we remain focused on
managing and aligning production with end market demand. At the same
time, we are carefully controlling spending, and aggressively competing for our
customers’ business.”
SEGMENT
RESULTS
Professional
|
·
|
Professional
segment net sales for the fiscal 2009 second quarter totaled $310.4
million, down 29.2 percent from the comparable fiscal 2008
period. Sales declined across nearly all product categories
with worldwide demand for golf maintenance equipment and irrigation
systems under significant pressure. Overall shipments for
landscape contractor products were down, but somewhat offset by strong
orders for the new GrandStand™ stand-on mowers and next generation
zero-turn mowers. For the fiscal year to date, professional
segment net sales declined 26.4 percent to $539.7
million.
|
|
·
|
Professional
segment earnings for the fiscal 2009 second quarter were $56.9 million,
down 41.3 percent from last year’s second quarter. For the
fiscal year to date, professional segment earnings totaled $87 million,
down 41.4 percent from the prior year
period.
|
Residential
|
·
|
Residential
segment net sales for the fiscal 2009 second quarter totaled $183.6
million, down 4.7 percent from the comparable fiscal 2008
period. Improved product placement for a new and broader line
of walk power mowers drove healthy gains, while shipments of riding
products were lower as consumers took a more cautionary approach to larger
purchases. For the fiscal year to date, residential segment net
sales declined 2.8 percent to $290.6
million.
|
|
·
|
Residential
segment earnings for the fiscal 2009 second quarter were $16.6 million,
down 20.2 percent from last year’s second quarter. For the
fiscal year to date, residential segment earnings totaled $21.4 million,
down 12.8 percent from the prior year
period.
|
REVIEW OF
OPERATIONS
Gross
margin for the fiscal 2009 second quarter was 32.3 percent compared with 35.7
percent in the comparable fiscal 2008 period. For the first half of
fiscal 2009, gross margin was 33.3 percent, compared with 36.1 percent in the
first half of 2008. The margin decline in both the second quarter and
first half was primarily due to commodity costs versus last year, production
cuts from lower sales volumes and efforts to reduce inventory levels, and
unfavorable product mix.
Selling,
general and administrative (SG&A) expenses for the fiscal 2009 second
quarter declined $22.7 million, or 18.2 percent, but increased to 20.5 percent
of net sales from 19.6 percent in the same period last year. For the
fiscal year to date, SG&A expenses were down $35.3 million, or 14.6 percent,
but increased to 24.6 percent of net sales compared with 23.2 percent in the
prior year’s first half. SG&A expenses in both periods were lower as a
result of reduced spending across most areas and lower incentive
expenses.
Interest
expense for the fiscal 2009 second quarter was $4.4 million compared with $5.4
million in the prior year’s second quarter. The decline in interest
expense resulted from a reduction in average short-term debt compared with the
fiscal 2008 second quarter, reflecting benefits of the company’s continued focus
on working capital management and a more conservative approach to share
repurchases. For the fiscal year to date, interest expense totaled
$8.8 million, down from $10.3 million from the comparable 2008
period.
The
effective tax rate for the fiscal 2009 second quarter was 34.2 percent compared
with 35 percent in the comparable 2008 period primarily due to the reinstatement
of the federal Research and Engineering Tax Credit.
Accounts
receivable at the end of the fiscal 2009 second quarter totaled $407.8 million,
down 25.5 percent, on a 21.7 percent decline in second quarter net
sales. Net inventories in the fiscal 2009 second quarter declined by
nearly $50 million, or 18.7 percent, from the comparable 2008
period. The company’s ongoing efforts to improve asset management
resulted in lower accounts receivable and inventory levels, and contributed to
improved cash flow from operations.
BUSINESS
OUTLOOK
“While
there are forecasts of the economic environment improving by the end of 2009, we
expect that would have little impact on our fiscal year which ends in October,”
said Hoffman. “This has been a difficult year, but we remain focused
on driving retail demand, managing production and inventory, reducing spending,
and investing in innovation. Even though our new product sales cannot
fully counter a recession, our investment in innovation is paying off now and
should continue to do so as our markets improve.”
Given the
ongoing global recession, the company has adjusted its outlook for fiscal 2009
and now expects fiscal 2009 revenues to decline about 18 percent from fiscal
2008, and net earnings per share to be approximately $1.60 to
$1.80.
The Toro
Company is a leading worldwide provider of outdoor maintenance equipment and
beautification products to help customers care for golf courses, sports fields,
public green spaces, commercial and residential properties, and agricultural
fields.
LIVE
CONFERENCE CALL
May
21, 10:00 a.m. CST
www.thetorocompany.com/invest
The
Toro Company will conduct a conference call and webcast for investors beginning
at 10:00 a.m. Central Time (CST) on May 21, 2009. 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.
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 Toro. Particular risks and uncertainties
that may affect the company’s operating results or overall financial position at
the present include: slow or negative growth rates in global and domestic
economies, resulting in rising unemployment and weakened consumer confidence;
the threat of further terrorist acts and war, which may result in contraction of
the U.S. and worldwide economies; drug cartel-related violence, which may
disrupt our production activities and maquiladora operations based in Juarez,
Mexico; fluctuations in the cost and availability of raw materials, including
steel, resins and other commodities; fluctuating fuel and other costs of
transportation; the impact of abnormal weather patterns, natural disasters and
global pandemics; the level of growth or contraction in our markets, including
the golf market; government and municipal revenue, budget and spending levels,
which may negatively impact our grounds maintenance equipment business in the
event of reduced tax revenues and tighter government budgets; dependence on The
Home Depot as a customer for the residential segment; elimination of shelf space
for our products at retailers; inventory adjustments or changes in purchasing
patterns by our customers; market acceptance of existing and new products;
increased competition; our ability to achieve the goals for our current
three-year growth, profit and asset management initiative called “GrowLean”
which is intended to improve our revenue growth, after-tax return on sales and
working capital efficiency; our increased dependence on international sales and
the risks attendant to international operations; credit availability and terms,
interest rates and currency movements including, in particular, our exposure to
foreign currency risk; our relationships with our distribution channel partners,
including the financial viability of distributors and dealers; our ability to
successfully achieve our plans for and integrate acquisitions and manage
alliances; the costs and effects of changes in tax, fiscal, government and other
regulatory policies, including rules relating to environmental, health and
safety matters; unforeseen product quality or other problems in the development,
production and usage of new and existing products; loss of or changes in
executive management or key employees; ability of management to manage around
unplanned events; our reliance on our intellectual property rights and the
absence of infringement of the intellectual property rights of
others; the occurrence of litigation or claims, including 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, legislative, governmental,
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 release.
(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
|
Six
Months Ended
|
|||||||||||||||
|
May
1,
2009
|
May
2,
2008
|
May
1,
2009
|
May
2,
2008
|
|||||||||||||
|
Net
sales
|
$ | 499,852 | $ | 638,510 | $ | 840,024 | $ | 1,044,309 | ||||||||
|
Gross
profit
|
161,225 | 227,766 | 279,485 | 376,903 | ||||||||||||
|
Gross
profit percent
|
32.3 | % | 35.7 | % | 33.3 | % | 36.1 | % | ||||||||
|
Selling,
general, and administrative expense
|
102,231 | 124,943 | 206,790 | 242,060 | ||||||||||||
|
Earnings
from operations
|
58,994 | 102,823 | 72,695 | 134,843 | ||||||||||||
|
Interest
expense
|
(4,420 | ) | (5,419 | ) | (8,778 | ) | (10,302 | ) | ||||||||
|
Other
income (expense), net
|
1,483 | (798 | ) | 2,293 | 900 | |||||||||||
|
Earnings
before income taxes
|
56,057 | 96,606 | 66,210 | 125,441 | ||||||||||||
|
Provision
for income taxes
|
19,196 | 33,822 | 22,618 | 44,030 | ||||||||||||
|
Net
earnings
|
$ | 36,861 | $ | 62,784 | $ | 43,592 | $ | 81,411 | ||||||||
|
Basic
net earnings per share
|
$ | 1.01 | $ | 1.64 | $ | 1.20 | $ | 2.12 | ||||||||
|
Diluted
net earnings per share
|
$ | 1.00 | $ | 1.60 | $ | 1.18 | $ | 2.07 | ||||||||
|
Weighted
average number of shares of common
stock
outstanding – Basic
|
36,397 | 38,239 | 36,382 | 38,313 | ||||||||||||
|
Weighted
average number of shares of common
stock
outstanding – Diluted
|
36,763 | 39,126 | 36,807 | 39,263 | ||||||||||||
Segment
Data (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
Segment Net Sales
|
May
1,
2009
|
May
2,
2008
|
May
1,
2009
|
May
2,
2008
|
||||||||||||
|
Professional
|
$ | 310,377 | $ | 438,650 | $ | 539,746 | $ | 733,697 | ||||||||
|
Residential
|
183,557 | 192,549 | 290,581 | 298,874 | ||||||||||||
|
Other
|
5,918 | 7,311 | 9,697 | 11,738 | ||||||||||||
|
Total *
|
$ | 499,852 | $ | 638,510 | $ | 840,024 | $ | 1,044,309 | ||||||||
|
*
Includes international sales of
|
$ | 148,756 | $ | 197,770 | $ | 279,147 | $ | 356,227 | ||||||||
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
Segment Earnings (Loss) Before Income
Taxes
|
May
1,
2009
|
May
2,
2008
|
May
1,
2009
|
May
2,
2008
|
||||||||||||
|
Professional
|
$ | 56,859 | $ | 96,907 | $ | 86,988 | $ | 148,460 | ||||||||
|
Residential
|
16,581 | 20,782 | 21,421 | 24,563 | ||||||||||||
|
Other
|
(17,383 | ) | (21,083 | ) | (42,199 | ) | (47,582 | ) | ||||||||
|
Total
|
$ | 56,057 | $ | 96,606 | $ | 66,210 | $ | 125,441 | ||||||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars
in thousands)
|
May
1,
2009
|
May
2,
2008
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 29,673 | $ | 32,053 | ||||
|
Receivables,
net
|
407,801 | 547,192 | ||||||
|
Inventories,
net
|
215,775 | 265,428 | ||||||
|
Prepaid
expenses and other current assets
|
16,405 | 13,698 | ||||||
|
Deferred
income taxes
|
57,704 | 56,633 | ||||||
|
Total
current assets
|
727,358 | 915,004 | ||||||
|
Property,
plant, and equipment, net
|
165,564 | 172,203 | ||||||
|
Deferred
income taxes
|
6,470 | 6,508 | ||||||
|
Goodwill
and other assets, net
|
111,952 | 110,172 | ||||||
|
Total
assets
|
$ | 1,011,344 | $ | 1,203,887 | ||||
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
||||||||
|
Current
portion of long-term debt
|
$ | 3,377 | $ | 2,341 | ||||
|
Short-term
debt
|
32,900 | 151,500 | ||||||
|
Accounts
payable
|
98,592 | 117,425 | ||||||
|
Accrued
liabilities
|
238,922 | 275,911 | ||||||
|
Total
current liabilities
|
373,791 | 547,177 | ||||||
|
Long-term
debt, less current portion
|
225,909 | 227,753 | ||||||
|
Deferred
revenue and other long-term liabilities
|
15,011 | 16,813 | ||||||
|
Stockholders’
equity
|
396,633 | 412,144 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 1,011,344 | $ | 1,203,887 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(Dollars
in thousands)
|
Six
Months Ended
|
||||||||
|
May
1,
2009
|
May
2,
2008
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
earnings
|
$ | 43,592 | $ | 81,411 | ||||
|
Adjustments
to reconcile net earnings to net cash
used
in operating activities:
|
||||||||
|
Equity
losses from investments
|
38 | 324 | ||||||
|
Provision
for depreciation and amortization
|
21,576 | 21,836 | ||||||
|
Gain
on disposal of property, plant, and equipment
|
(13 | ) | (81 | ) | ||||
|
Gain
on sale of a business
|
- | (113 | ) | |||||
|
Stock-based compensation
expense
|
2,084 | 3,281 | ||||||
|
Decrease (increase) in deferred
income taxes
|
187 | (1,463 | ) | |||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(150,379 | ) | (260,988 | ) | ||||
|
Inventories
|
(7,382 | ) | (13,920 | ) | ||||
|
Prepaid expenses and other
assets
|
(3,207 | ) | (2,870 | ) | ||||
|
Accounts payable, accrued
liabilities, deferred revenue, and other long-term
liabilities
|
20,639 | 61,291 | ||||||
|
Net
cash used in operating activities
|
(72,865 | ) | (111,292 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property, plant, and equipment
|
(17,366 | ) | (22,479 | ) | ||||
|
Proceeds
from asset disposals
|
75 | 871 | ||||||
|
Increase
in investment in affiliates
|
- | (250 | ) | |||||
|
Increase
in other assets
|
(320 | ) | (279 | ) | ||||
|
Proceeds
from sale of a business
|
- | 1,048 | ||||||
|
Acquisition,
net of cash acquired
|
- | (1,000 | ) | |||||
|
Net
cash used in investing activities
|
(17,611 | ) | (22,089 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Increase
in short-term debt
|
30,209 | 151,128 | ||||||
|
Repayments
of long-term debt, net of costs
|
(1,477 | ) | (750 | ) | ||||
|
Excess
tax benefits from stock-based awards
|
3,293 | 339 | ||||||
|
Proceeds
from exercise of stock-based awards
|
3,759 | 1,718 | ||||||
|
Purchases
of Toro common stock
|
(4,803 | ) | (36,906 | ) | ||||
|
Dividends
paid on Toro common stock
|
(10,919 | ) | (11,478 | ) | ||||
|
Net
cash provided by financing activities
|
20,062 | 104,051 | ||||||
|
Effect
of exchange rates on cash
|
728 | (664 | ) | |||||
|
Net
decrease in cash and cash equivalents
|
(69,686 | ) | (29,994 | ) | ||||
|
Cash
and cash equivalents as of the beginning of the period
|
99,359 | 62,047 | ||||||
|
Cash
and cash equivalents as of the end of the period
|
$ | 29,673 | $ | 32,053 | ||||
###