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): February 18,
2010
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
February 18, 2010, The Toro Company announced its earnings for the three months
ended January 29, 2010.
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 February 18, 2010 (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: February
18, 2010
|
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 February 18, 2010 (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
For
Immediate Release
The
Toro Company Reports Fiscal 2010 First Quarter Results
|
·
|
Company
delivers net earnings per share of $0.32, up $0.14 from prior year
period
|
|
·
|
Field
inventory levels continue to
decline
|
|
·
|
Improved
earnings and working capital drive better cash flow from
operations
|
BLOOMINGTON,
Minn. (February 18, 2010) – The Toro Company (NYSE: TTC) today reported net
earnings of $10.9 million, or $0.32 per share, on net sales of $331.4 million
for its fiscal first quarter ended January 29, 2010. In the
comparable fiscal 2009 period, the company reported net earnings of $6.7
million, or $0.18 per share, on net sales of $340.2
million. Financial results for last year’s first quarter were reduced
by a pre-tax charge of $1.3 million, or $0.02 per share on an after-tax basis,
to account for workforce adjustments.
“Even
with a slight decline in net sales, the leaner cost structure we put in place
last year helped improve our profitability,” said Michael J. Hoffman, Toro’s
chairman and chief executive officer. “Additionally, field
inventories are down significantly and our customers, channel partners and key
retailers are excited about our new product offerings for the coming
season. On another positive note, our cash flow strengthened as a
result of higher earnings and driving improvement in all three areas of working
capital including reducing accounts receivable, lowering inventory and
increasing trade payables.”
SEGMENT
RESULTS
Professional
|
·
|
Professional
segment net sales for the fiscal 2010 first quarter totaled $212.8
million, down 7.2 percent compared with the same period last
year. While retail sales activity suggests that demand is
starting to move in the right direction, shipments were lower across most
professional categories as customers aligned their orders closer to the
selling season, leading to a further reduction in field
inventories. Declines in the segment were somewhat offset by
increased worldwide shipments for micro irrigation products as
agricultural growers look to conserve water resources and improve crop
yields.
|
|
·
|
Professional
segment earnings for the fiscal 2010 first quarter were $25.8 million,
down $4.3 million from last year’s first
quarter.
|
-more-
2 – The
Toro Company Reports Fiscal 2010 First Quarter Results
Residential
|
·
|
Residential
segment net sales for the fiscal 2010 first quarter totaled $116.8
million, up 9.1 percent compared with the same period last
year. Sales benefited from strong orders of irrigation products
in Australia as a result of improved weather conditions, and increased
worldwide shipments for
snowthrowers.
|
|
·
|
Residential
segment earnings for the fiscal 2010 first quarter were $13.4 million, up
$8.6 million from last year’s first
quarter.
|
REVIEW OF
OPERATIONS
Gross
margin for the fiscal 2010 first quarter was 35.1 percent, up 30 basis points
from 34.8 percent in last year’s first quarter. The improvement in
gross margin reflects the benefit of lower commodity costs, favorable currency
movements and cost reduction efforts, which were partially offset by unfavorable
product mix.
Selling,
general and administrative (SG&A) expenses for the fiscal 2010 first quarter
declined $8.0 million, or 7.6 percent, compared with last year’s first
quarter. As a percentage of net sales, SG&A expenses declined to
29.2 percent compared with 30.7 percent in the same period last
year. The decline in SG&A expenses, in both dollars and as a
percent of net sales, resulted primarily from cost structure actions taken in
fiscal 2009, most of them subsequent to the close of last year’s first
quarter. The decline in SG&A was somewhat offset by higher
incentive costs.
Interest
expense for the fiscal 2010 first quarter was $4.2 million, down 2.6 percent
compared with last year’s first quarter.
The
effective tax rate for the fiscal 2010 first quarter was 33.6 percent compared
with 33.7 in last year’s first quarter.
Accounts
receivable at the end of the fiscal 2010 first quarter totaled $167.3 million,
down $130.7 million or 43.9 percent from last year’s first quarter, on a sales
decline of 2.6 percent. The majority of the difference is
attributable to the sale of receivables to the Red Iron Acceptance joint
venture. Net inventories were $191.1 million for the fiscal 2010
first quarter, down $47.6 million or 20.0 percent from last year’s first
quarter. Trade payables were $109.6 million, up $20 million or 22.3
percent from last year’s first quarter, driven mostly by a supply chain
initiative.
BUSINESS
OUTLOOK
“After a
very difficult fiscal 2009, we are encouraged with how the new fiscal year has
begun. With the peak selling season still ahead, we remain
guarded in our market outlook, but believe our many new products will help
drive retail sales and share gains,” said Hoffman. “Given our leaner
cost structure, and continued focus on innovation and asset management, we
believe we are well positioned to benefit from a recovery in retail demand as
our markets improve.”
The
company now expects fiscal 2010 net earnings per share to be about $2.15 on
revenues comparable with fiscal 2009. For its fiscal 2010 second
quarter, the company expects to report net earnings per share of about
$1.15.
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.
-more-
3 – The
Toro Company Reports Fiscal 2010 First Quarter Results
LIVE
CONFERENCE CALL
February
18, 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 Daylight Time (CDT) on February 18, 2010. 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 profitability goal for our
one-year initiative called “5 in ONE, Back on Course!” which is intended to
improve our after-tax return on sales; 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 or
joint ventures, including Red Iron Acceptance, LLC; 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
|
||||||||
|
January
29,
2010
|
January
30,
2009
|
|||||||
|
Net
sales
|
$ | 331,358 | $ | 340,172 | ||||
|
Gross
profit
|
116,391 | 118,260 | ||||||
|
Gross
profit percent
|
35.1 | % | 34.8 | % | ||||
|
Selling,
general, and administrative expense
|
96,599 | 104,559 | ||||||
|
Earnings
from operations
|
19,792 | 13,701 | ||||||
|
Interest
expense
|
(4,245 | ) | (4,358 | ) | ||||
|
Other
income, net
|
901 | 810 | ||||||
|
Earnings
before income taxes
|
16,448 | 10,153 | ||||||
|
Provision
for income taxes
|
5,530 | 3,422 | ||||||
|
Net
earnings
|
$ | 10,918 | $ | 6,731 | ||||
|
Basic
net earnings per share
|
$ | 0.32 | $ | 0.19 | ||||
|
Diluted
net earnings per share
|
$ | 0.32 | $ | 0.18 | ||||
|
Weighted
average number of shares of common
stock
outstanding – Basic
|
34,030 | 36,366 | ||||||
|
Weighted
average number of shares of common
stock
outstanding – Dilutive
|
34,294 | 36,805 | ||||||
Segment
Data (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
||||||||
|
Segment Net Sales
|
January
29,
2010
|
January
30,
2009
|
||||||
|
Professional
|
$ | 212,800 | $ | 229,369 | ||||
|
Residential
|
116,756 | 107,024 | ||||||
|
Other
|
1,802 | 3,779 | ||||||
|
Total*
|
$ | 331,358 | $ | 340,172 | ||||
|
*
Includes international sales of
|
$ | 128,383 | $ | 130,391 |
|
Three
Months Ended
|
||||||||
|
Segment Earnings (Loss) Before Income
Taxes
|
January
29,
2010
|
January
30,
2009
|
||||||
|
Professional
|
$ | 25,810 | $ | 30,129 | ||||
|
Residential
|
13,427 | 4,840 | ||||||
|
Other
|
(22,789 | ) | (24,816 | ) | ||||
|
Total
|
$ | 16,448 | $ | 10,153 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars
in thousands)
|
January
29,
2010
|
January
30,
2009
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 158,210 | $ | 35,597 | ||||
|
Receivables,
net
|
167,260 | 297,962 | ||||||
|
Inventories,
net
|
191,071 | 238,704 | ||||||
|
Prepaid
expenses and other current assets
|
18,441 | 23,813 | ||||||
|
Deferred
income taxes
|
58,316 | 55,311 | ||||||
|
Total
current assets
|
593,298 | 651,387 | ||||||
|
Property,
plant, and equipment, net
|
165,927 | 167,727 | ||||||
|
Deferred
income taxes
|
3,572 | 6,454 | ||||||
|
Goodwill
and other assets, net
|
121,837 | 112,619 | ||||||
|
Total
assets
|
$ | 884,634 | $ | 938,187 | ||||
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
||||||||
|
Current
portion of long-term debt
|
$ | 3,985 | $ | 3,377 | ||||
|
Short-term
debt
|
700 | 25,000 | ||||||
|
Accounts
payable
|
109,556 | 89,561 | ||||||
|
Accrued
liabilities
|
205,651 | 214,403 | ||||||
|
Total
current liabilities
|
319,892 | 332,341 | ||||||
|
Long-term
debt, less current portion
|
224,062 | 226,396 | ||||||
|
Deferred
revenue
|
7,904 | 8,785 | ||||||
|
Other
long-term liabilities
|
7,526 | 6,227 | ||||||
|
Stockholders’
equity
|
325,250 | 364,438 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 884,634 | $ | 938,187 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
||||||||
|
January
29,
2010
|
January
30,
2009
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
earnings
|
$ | 10,918 | $ | 6,731 | ||||
|
Adjustments
to reconcile net earnings to net cash
used
in operating activities:
|
||||||||
|
Equity
losses from affiliates
|
143 | 32 | ||||||
|
Provision
for depreciation, amortization, and impairment losses
|
11,248 | 10,389 | ||||||
|
Loss
on disposal of property, plant, and equipment
|
45 | 18 | ||||||
|
Stock-based compensation
expense
|
1,579 | 874 | ||||||
|
(Increase) decrease in deferred
income taxes
|
(331 | ) | 238 | |||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(28,629 | ) | (42,970 | ) | ||||
|
Inventories
|
(13,099 | ) | (32,586 | ) | ||||
|
Prepaid
expenses and other assets
|
(3,492 | ) | (4,947 | ) | ||||
|
Accounts
payable, accrued expenses, deferred revenue, and other
long-term
liabilities
|
11,082 | (10,306 | ) | |||||
|
Net
cash used in operating activities
|
(10,536 | ) | (72,527 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property, plant, and equipment
|
(10,218 | ) | (9,499 | ) | ||||
|
Proceeds
from asset disposals
|
100 | 6 | ||||||
|
Increase
in investment in affiliates
|
(3,118 | ) | - | |||||
|
Decrease
(increase) in other assets
|
533 | (567 | ) | |||||
|
Acquisition,
net of cash acquired
|
(1,812 | ) | - | |||||
|
Net
cash used in investing activities
|
(14,515 | ) | (10,060 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Increase
in short-term debt
|
- | 22,675 | ||||||
|
Repayments
of long-term debt, net of costs
|
(750 | ) | (1,005 | ) | ||||
|
Excess
tax benefits from stock-based awards
|
2,078 | 2,023 | ||||||
|
Proceeds
from exercise of stock options
|
4,986 | 2,073 | ||||||
|
Purchases
of Toro common stock
|
(3,682 | ) | (1,579 | ) | ||||
|
Dividends
paid on Toro common stock
|
(6,129 | ) | (5,456 | ) | ||||
|
Net
cash (used in) provided by financing activities
|
(3,497 | ) | 18,731 | |||||
|
Effect
of exchange rates on cash
|
(1,015 | ) | 94 | |||||
|
Net
decrease in cash and cash equivalents
|
(29,563 | ) | (63,762 | ) | ||||
|
Cash
and cash equivalents as of the beginning of the fiscal
period
|
187,773 | 99,359 | ||||||
|
Cash
and cash equivalents as of the end of the fiscal period
|
$ | 158,210 | $ | 35,597 | ||||