Toro Reports Record Second Quarter

Toro has reported record second-quarter sales and earnings for the period ending May 3, 2013; professional segments up but residential products down due to late spring.

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The Toro Company has reported net earnings of $78.4 million on a net sales increase of 1.9% to $704.5 million for its fiscal second quarter ended May 3, 2013. In the comparable fiscal 2012 period, the company delivered net earnings of $68.8 million on net sales of $691.5 million.

For the first six months, Toro reported net earnings of $109.8 million on a net sales increase of 3% to $1,149.1 million. In the comparable fiscal 2012 period, the company posted net earnings of $88.7 million on net sales of $1,115.3 million.

“We achieved record sales and earnings in the quarter, despite this year’s challenging weather pattern compared to a year ago,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “In 2012, we enjoyed ideal spring conditions with a warm, early start to the season, while this year much of North America and Europe have dealt with unusually cold weather. These conditions delayed sales, especially of our residential products which are more immediately impacted by weather. Improved market conditions for some of our professional customers, combined with new products and solid execution, fueled shipment growth that offset the delay of our residential shipments. Through the first six months, our golf and micro irrigation businesses have been strong, and our professional sales in Europe and Asia are ahead of last year. While our earnings benefited from mix and timing, I’m pleased to see our productivity efforts yielding results on the path to our Destination 2014 operating earnings goal.”

“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 United States struggled with drought conditions during the summer months. Since we are not likely to make up all of the impact from the late start to spring, including a resulting increase in field inventory, we are tempering our revenue growth expectations for the year. Despite lower sales growth, we are maintaining our earnings outlook on the strength of productivity gains and favorable commodity trends, somewhat offset by anticipated pressures from mix and manufacturing utilization in the second half of the year.”

The company now expects revenue growth for fiscal 2013 to be about 3 to 4%, and continues to expect net earnings to be about $2.40 to 2.45 per share, or an increase of about 12 to 15% over fiscal 2012.

Segment Results

Professional segment net sales for the second quarter totaled $496.4 million, up 8.9% 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% from the comparable fiscal 2012 period.

Residential segment net sales for the second quarter totaled $201.4 million, down 13.2% 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% 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.

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