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Toro 3Q Earnings Fall 48% On Weak Demand, Results Beat Views
Toro Co.'s (TTC) fiscal third-quarter earnings fell 48%, though they beat analysts' expectations, on continued weak demand and the company also lowered its fiscal-year earnings view again.
The lawnmower and snowblower maker has already been hit by anemic demand from both consumers and professional customers wary of spending on big-ticket items. The company has been cutting costs - laying off 10% its work force, trimming officer salaries and imposing furloughs. The efforts have started to pay off, but the company is continuing to cut more costs and drive demand.
Toro also recently started a joint venture with TCF Inventory Finance for floor plans and open accounts of distributors and dealers, to facilitate easier financing access in a environment tight on credit.
Chief Executive Michael Hoffman said the company will continue to manage with the expectation of "no significant improvement" in its markets in the near future.
For the quarter ended July 31, the company reported a profit of $19.8 million, or 54 cents a share, down from $38.2 million, or 99 cents a share, a year earlier. The latest period included 15 cents in charges related to the job cuts.
Revenue decreased 19.8% to $394.9 million.
Analysts polled by Thomson Reuters expected earnings of 49 cents a share on revenue of $373 million.
Gross margin fell to 33.9% from 35.3% because of production cuts to adjust for lower demand.
Profits in the company's largest business, the professional segment, fell 45% as net sales dropped 27%, falling across most product categories as consumers keep products longer before replacing them.
In the residential segment, net sales rose 1.2% because of strength in walk-power mowers and riding mowers. Profits more than doubled.
For the fiscal year, Toro said it now expects earnings, including items, of $1.53 to $1.63 a share, from its earlier estimate of $1.60 to $1.80, because of the job-cut charges during the most recent period. Toro affirmed its view for fiscal-year sales to fall about 18%.
Shares closed at $36.90 Wednesday and didn't trade premarket. The stock has been volatile this year, but is up more than 70% since its early-March low.
Source: Dow Jones Newswires
