The Toro Company (NYSE: TTC) today reported net earnings of $68.8 million, or $2.26 per share, on net sales of $691.5 million for its fiscal second quarter ended May 4, 2012. In the comparable fiscal 2011 period, the company delivered net earnings of $60.3 million, or $1.88 per share, on net sales of $631.6 million.
For the first six months, Toro reported net earnings of $88.7 million, or $2.91 per share, on net sales of $1,115.3 million. In the comparable fiscal 2011 period, the company posted net earnings of $77.5 million, or $2.41 per share, on net sales of $1,014.8 million.
“We delivered another quarter of strong sales and earnings growth, accelerated by our new product portfolio and the early start to spring and favorable weather conditions across much of the U.S. Turf is growing – driving sales of residential mowing products, and golfers are playing more golf – contributing to revenue for golf courses and improving their ability to invest in new products,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “Our golf, landscape and grounds, and micro irrigation businesses in the U.S. have had a very strong first six months, which has offset challenges in our international business created by the economic issues in Europe.”
“While a portion of our results was the benefit of an accelerated spring, we are hopeful the early start will extend the selling season and drive incremental sales,” said Hoffman. “Our product line-up is strong, our core businesses are well positioned, and our investments in light construction, hardscapes and rental products will contribute to future growth. We are raising our outlook for the year, even against a backdrop of a challenging sales environment in Europe, and an anticipated soft snowthrower pre-season ahead of us.”
The company now expects revenue growth for fiscal 2012 to be about 7 to 8 percent and net earnings to be about $4.30 per share, which includes the $0.15 to $0.20 negative earnings per share impact for investments related to the Astec and Stone product line acquisitions.
Toro also announced today that its Board of Directors has declared a two-for-one split of the company’s common stock, which will be effected in the form of a 100 percent stock dividend. The stock dividend will be distributed June 29 to shareholders of record as of June 15.
- Professional segment net sales for the second quarter totaled $455.9 million, up 9 percent from the prior year period. Domestic sales of golf and grounds equipment increased on improved market conditions, and customers replacing aging equipment with new innovative products. Shipments of landscape maintenance equipment were higher on improved contractor confidence and strength of new products. Micro irrigation sales around the world increased on continued demand for precision irrigation solutions for agriculture. International sales were down slightly in the quarter, primarily from a slowdown in demand for golf and grounds equipment in Europe. For the first six months, professional segment net sales were $739.8 million, up 9.3 percent from the comparable fiscal 2011 period.
- Professional segment earnings for the second quarter totaled $98.7 million, up 15.3 percent from the prior year period. For the first six months, professional segment earnings were $140.8 million, up 14 percent from the comparable fiscal 2011 period.
- Residential segment net sales for the second quarter totaled $231.9 million, up 10.6 percent from the prior year period. Favorable weather accelerated the start of the spring goods selling season driving strong pre-season demand. Shipments of walk power mowers were up on improved weather and new product introductions. For the first six months, residential segment net sales were $369.5 million, up 11 percent from the comparable fiscal 2011 period.
- Residential segment earnings for the second quarter totaled $28.5 million, up 7.5 percent from the prior year period. For the first six months, residential segment earnings were $41.1 million, up 8.5 percent from the comparable fiscal 2011 period.
Gross margin for the second quarter was up 20 basis points to 34.0 percent due to manufacturing efficiencies, and realized pricing offsetting higher materials costs. For the first six months, gross margin was down 20 basis points to 34.3 percent due to an unfavorable product mix.
Selling, general and administrative (SG&A) expense as a percent of sales improved 40 basis points for the second quarter to 18.6 percent. The improvement in SG&A reflects further leveraging of costs over increased sales volumes. For the first six months, SG&A expense improved 90 basis points as a percent of sales to 21.7 percent.
Operating earnings as a percent of sales increased 60 basis points to 15.4 percent for the second quarter, and was up 70 basis points to 12.6 percent for the year to date.
Interest expense for the second quarter was $4.2 million, equal with the prior year period. For the first six months, interest expense totaled $8.6 million, up 3.5 percent from the same period last year.
The effective tax rate for the second quarter was 34.1 percent compared with 33.4 percent in the same period last year. For the year to date comparison, the tax rate increased to 34 percent from 32.6 percent. The increase in both periods was primarily the result of the expiration of the Federal Research and Engineering Tax Credit.
Accounts receivable at the end of the second quarter totaled $272.8 million, down 2 percent from the prior year period, on a sales increase of 9.5 percent. Net inventories were $250.8 million, down 3.5 percent from last year’s second quarter. Trade payables were $196.4 million, down 3.1 percent compared with last year.
About The Toro Company
The Toro Company is a leading worldwide provider of turf and landscape maintenance equipment, and precision irrigation systems, to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields.