The Toro Company Reports Record Second Quarter Results
-
Sales increase to record
$704 million for the quarter -
Quarterly net earnings per share up 17 percent to a record
$1.32 - Late spring impacts momentum in quarter
- Company tempers sales growth expectations and maintains earnings outlook
For the first six months,
“We achieved record sales and earnings in the quarter, despite this
year’s challenging weather pattern compared to a year ago,” said
“Even with a marginal winter season and late start to spring, we remain
cautiously optimistic about the remainder of the year,” said Hoffman.
“Retail activity in our residential business started to pick up in late
April, and the momentum is continuing in May. Looking forward, we face
favorable comparisons to last year, when much of
The company now expects revenue growth for fiscal 2013 to be about 3 to
4 percent, and continues to expect net earnings to be about
SEGMENT RESULTS
Professional
-
Professional segment net sales for the second quarter totaled
$496.4 million , up 8.9 percent from the prior year period. Shipments of landscape contractor equipment increased on channel demand in anticipation of the upcoming season. Rental and construction equipment sales were up on strong rental customer demand and incremental sales from the Stone acquisition. Worldwide sales of golf equipment and irrigation increased on improved budgets that enabled customers to replace aging fleets and systems with new innovative products. Global micro irrigation sales increased on continued demand for more efficient irrigation solutions for agriculture. For the first six months, professional segment net sales were$825.6 million , up 11.6 percent from the comparable fiscal 2012 period. -
Professional segment earnings for the second quarter totaled
$112.3 million , up 13.8 percent from the prior year period. For the first six months, professional segment earnings were$173.0 million , up 22.9 percent from the comparable fiscal 2012 period.
Residential
-
Residential segment net sales for the second quarter totaled
$201.4 million , down 13.2 percent from the prior year period. Unfavorable weather delayed the start of the spring goods selling season, negatively impacting the sales of walk power mowers and riding products. For the first six months, residential segment net sales were$322.3 million , down 12.8 percent from the comparable fiscal 2012 period. The year-to-date sales results were largely attributable to the unusually mild winter and the late start to spring. -
Residential segment earnings for the second quarter totaled
$24.7 million , down 13.5 percent from the prior year period. For the first six months, residential segment earnings were$36.8 million , down 10.4 percent from the comparable fiscal 2012 period.
OPERATING RESULTS
Gross margin for the second quarter improved 180 basis points to 35.8 percent due to segment mix, coupled with productivity gains and selective price increases. For the first six months, gross margin was up 210 basis points to 36.4 percent.
Selling, general and administrative (SG&A) expense as a percent of sales increased 50 basis points for the second quarter to 19.1 percent. For the first six months, SG&A expense increased 40 basis points as a percent of sales to 22.1 percent. For both periods, the increase in SG&A as a percent of sales was a result of higher warehousing expense, incremental costs from acquisitions, increased engineering spending, and higher health insurance costs.
Operating earnings as a percent of sales increased 130 basis points to 16.7 percent for the second quarter, and was up 170 basis points to 14.3 percent for the year to date.
The effective tax rate for the second quarter was 32.6 percent compared
with 34.1 percent in the same period last year. For the year to date
comparison, the tax rate decreased to 31.3 percent from 34 percent. The
decrease in both periods was primarily the result of the reenactment 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 |
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Condensed Consolidated Statements of Earnings (Unaudited) |
||||||||||||||||
(Dollars and shares in thousands, except per-share data) |
||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
May 3, | May 4, | May 3, | May 4, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 704,486 | $ | 691,485 | $ | 1,149,147 | $ | 1,115,320 | ||||||||
Gross profit | 252,301 | 235,422 | 418,118 | 382,073 | ||||||||||||
Gross profit percent | 35.8 | % | 34.0 | % | 36.4 | % | 34.3 | % | ||||||||
Selling, general, and administrative expense | 134,830 | 128,922 | 254,443 | 241,552 | ||||||||||||
Operating earnings | 117,471 | 106,500 | 163,675 | 140,521 | ||||||||||||
Interest expense | (4,149 | ) | (4,165 | ) | (8,398 | ) | (8,593 | ) | ||||||||
Other income, net | 2,995 | 2,057 | 4,438 | 2,550 | ||||||||||||
Earnings before income taxes | 116,317 | 104,392 | 159,715 | 134,478 | ||||||||||||
Provision for income taxes | 37,915 | 35,574 | 49,917 | 45,737 | ||||||||||||
Net earnings | $ | 78,402 | $ | 68,818 | $ | 109,798 | $ | 88,741 | ||||||||
Basic net earnings per share | $ | 1.35 | $ | 1.15 | $ | 1.88 | $ | 1.48 | ||||||||
Diluted net earnings per share | $ | 1.32 | $ | 1.13 | $ | 1.85 | $ | 1.46 | ||||||||
Weighted average number of shares of common stock outstanding – Basic |
58,132 |
59,878 |
58,308 |
59,933 |
||||||||||||
Weighted average number of shares of common stock outstanding – Diluted |
59,257 |
60,960 |
59,444 |
60,961 |
||||||||||||
Shares and per share data have been adjusted for all periods presented
to reflect a two-for-one stock split effective
Segment Data (Unaudited) |
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(Dollars in thousands) |
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Three Months Ended | Six Months Ended | |||||||||||||||
|
May 3, | May 4, | May 3, | May 4, | ||||||||||||
Segment Net Sales |
2013 | 2012 | 2013 | 2012 | ||||||||||||
Professional | $ | 496,436 | $ | 455,945 | $ | 825,580 | $ | 739,779 | ||||||||
Residential | 201,390 | 231,897 | 322,337 | 369,505 | ||||||||||||
Other | 6,660 | 3,643 | 1,230 | 6,036 | ||||||||||||
Total * | $ | 704,486 | $ | 691,485 | $ | 1,149,147 | $ | 1,115,320 | ||||||||
* Includes international sales of | $ | 212,005 | $ | 197,386 | $ | 353,596 | $ | 346,848 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
May 3, | May 4, | May 3, | May 4, | |||||||||||||
Segment Earnings (Loss) Before Income Taxes |
2013 | 2012 | 2013 | 2012 | ||||||||||||
Professional | $ | 112,275 | $ | 98,701 | $ | 173,013 | $ | 140,792 | ||||||||
Residential | 24,679 | 28,518 | 36,833 | 41,126 | ||||||||||||
Other | (20,637 | ) | (22,827 | ) | (50,131 | ) | (47,440 | ) | ||||||||
Total | $ | 116,317 | $ | 104,392 | $ | 159,715 | $ | 134,478 | ||||||||
THE TORO COMPANY AND SUBSIDIARIES |
||||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||||
(Dollars in thousands) |
||||||
May 3, | May 4, | |||||
2013 | 2012 | |||||
ASSETS |
||||||
Cash and cash equivalents | $ | 80,341 | $ | 82,572 | ||
Receivables, net | 307,770 | 272,819 | ||||
Inventories, net | 309,998 | 250,804 | ||||
Prepaid expenses and other current assets | 30,434 | 23,281 | ||||
Deferred income taxes | 62,768 | 62,209 | ||||
Total current assets | 791,311 | 691,685 | ||||
Property, plant, and equipment, net | 177,060 | 184,620 | ||||
Goodwill and other assets, net | 146,583 | 153,049 | ||||
Total assets | $ | 1,114,954 | $ | 1,029,354 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
Current portion of long-term debt | $ | 250 | $ | 1,858 | ||
Short-term debt | — | 7 | ||||
Accounts payable | 203,710 | 196,382 | ||||
Accrued liabilities | 294,648 | 278,491 | ||||
Total current liabilities | 498,608 | 476,738 | ||||
Long-term debt, less current portion | 223,513 | 223,701 | ||||
Deferred revenue | 10,605 | 9,347 | ||||
Deferred income taxes | 2,898 | 1,380 | ||||
Other long-term liabilities | 6,287 | 7,614 | ||||
Stockholders’ equity | 373,043 | 310,574 | ||||
Total liabilities and stockholders’ equity | $ | 1,114,954 | $ | 1,029,354 | ||
THE TORO COMPANY AND SUBSIDIARIES |
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
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(Dollars in thousands) |
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Six Months Ended | ||||||||
May 3, | May 4, | |||||||
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 109,798 | $ | 88,741 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
Noncash income from finance affiliate | (3,532 | ) | (2,802 | ) | ||||
Provision for depreciation and amortization | 26,890 | 25,664 | ||||||
Stock-based compensation expense | 5,336 | 5,031 | ||||||
Decrease (increase) in deferred income taxes | 281 | (396 | ) | |||||
Other | 81 | (121 | ) | |||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Receivables, net | (160,534 | ) | (126,215 | ) | ||||
Inventories, net | (59,082 | ) | (21,270 | ) | ||||
Prepaid expenses and other assets | (3,486 | ) | (5,066 | ) | ||||
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities |
120,896 |
125,929 |
||||||
Net cash provided by operating activities | 36,648 | 89,495 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant, and equipment | (19,508 | ) | (21,905 | ) | ||||
Proceeds from asset disposals | 73 | 96 | ||||||
Contributions to finance affiliate, net | (4,669 | ) | (3,559 | ) | ||||
Acquisitions, net of cash acquired | — | (9,663 | ) | |||||
Net cash used in investing activities | (24,104 | ) | (35,031 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments of short-term debt | (415 | ) | (922 | ) | ||||
Repayments of long-term debt | (1,548 | ) | (1,670 | ) | ||||
Excess tax benefits from stock-based awards | 4,577 | 6,879 | ||||||
Proceeds from exercise of stock options | 6,573 | 13,268 | ||||||
Purchases of Toro common stock | (50,499 | ) | (56,067 | ) | ||||
Dividends paid on Toro common stock | (16,364 | ) | (13,228 | ) | ||||
Net cash used in financing activities | (57,676 | ) | (51,740 | ) | ||||
Effect of exchange rates on cash and cash equivalents | (383 | ) | (1,038 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (45,515 | ) | 1,686 | |||||
Cash and cash equivalents as of the beginning of the period | 125,856 | 80,886 | ||||||
Cash and cash equivalents as of the end of the period | $ | 80,341 | $ | 82,572 | ||||
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