BLOOMINGTON, Minn. — The Toro Co. (NYSE: TTC) reports net earnings of $68.4 million, or $0.61 per share, on net sales of $627.9 million, an increase of 4.5%, for its fiscal third quarter ended August 4, 2017. In the comparable fiscal 2016 period, the company delivered net earnings of $55.8 million, or $0.50 per share, on net sales of $601.0 million.
For the first nine months, Toro reported net earnings of $233.9 million, or $2.10 per share, on a net sales increase of 4.8% to $2.017 billion. In the comparable fiscal 2016 period, the company posted net earnings of $200.8 million, or $1.79 per share on net sales of $1.924 billion.
“We are pleased to deliver strong results for the quarter driven by positive momentum in our professional segment,” said Richard M. Olson, Toro’s chief executive officer. “Innovative new offerings across our professional portfolio fueled the growth. Products such as the Exmark Radius and the Toro TITAN HD zero-turn riding mowers have been well received by customers. In our golf and grounds business, the Groundsmaster and Greensmaster mower lines also contributed to the favorable results. Finally, the Perrot irrigation products have proven to be a good addition to our international business, where we achieved nice sales growth for the quarter.”
“With the fourth quarter underway, we are encouraged by the retail trends we are seeing, particularly across many of our professional businesses. BOSS is well positioned with several new product offerings to support the needs of our contractor customers as they prepare for the snow season. Similarly, sales of our residential snow throwers have also been favorable as the channel anticipates the upcoming snow season.”
“As we enter our final quarter of the three-year Destination PRIME employee initiative, I would like to take this opportunity to recognize our team for their hard work and accomplishments throughout this multi-year journey. We are encouraged by the progress we have made and remain focused on driving further improvement in the remainder of the fiscal year and into our next initiative.”
The company now expects revenue growth for fiscal 2017 to be at least 4.5% and net earnings per share to be about $2.38.
- Professional segment net sales for the third quarter totaled $468.6 million, up 9.5% from $427.8 million in the same period last year. For the first 9 months, professional segment net sales were $1.451 billion, up 6.6% from the comparable fiscal 2016 period. Momentum in our landscape contractor, international and golf and grounds business generated positive results for the quarter. For the year-to-date results, we saw strong performance in our golf, landscape and BOSS businesses. Additionally, continued demand for our Dingo TX 1000 compact utility loader and the new tracked Mud Buggy in the rental and specialty construction businesses contributed to the growth for both periods.
- Professional segment earnings for the third quarter totaled $97.4 million, up 9.3% from $89.1 million in the same period last year. For the first nine months, professional segment earnings were $314.5 million, up 7.6% from $292.3 million in the comparable fiscal 2016 period.
- Residential segment net sales for the third quarter were $152.1 million, down 9.3% from $167.8 million in the same period last year. For the first nine months, residential segment net sales were $550.7 million, up 0.1% compared to the same fiscal 2016 period. The sales decline for the quarter was due to a combination of factors. A transition in timing of our Toro Days sales promotion to the second quarter, increasing sales of our professional grade zero turn riding mowers to homeowners with acreage and weakened demand for our steering wheel zero-turn riding mowers, all contributed to the decline for the quarter. Offsetting the decrease were higher shipments of snow products in anticipation of the upcoming selling season. Solid sales of our walk power mowers and channel demand for our snow products contributed to the results for the year.
- Residential segment earnings for the third quarter were $11.4 million, down 11% from $12.8 million in the same period last year. For the first nine months, residential segment earnings were $63.0 million, down 2.4% from the comparable fiscal 2016 period.
Gross margin as a percent of sales for the third quarter was 36.1%, an increase of 10 basis points from the same period last year. The increase was primarily due to segment mix and productivity improvements, which were offset primarily by commodity costs. For the first nine months, gross margin as a percent of sales was 36.5%, which is consistent with the comparable period last year. Segment mix and productivity improvements were offset by commodity cost increases and foreign currency rates, which impacted the results.
Selling, general and administrative (SG&A) expense as a percent of sales for the third quarter was 22.1%, a decrease of 30 basis points from the same period last year. For the first nine months, SG&A expense as a percent of sales was 21.2%, a decrease of 20 basis points from the comparable period last year. The decrease for both periods was primarily due to the leveraging of expenses over higher sales volumes.
Operating earnings as a percent of sales for the third quarter was 14%, an increase of 40 basis points from the comparable period last year. Operating earnings as a percent of sales for the first nine months was 15.3%, an increase of 20 basis points from the same period last year.
The effective tax rate for the third quarter was 22.6%, compared to 30.9% last year. For the first nine months, the effective tax rate was 23.6%, compared to 30.5% in the same period last year. The favorable tax rate for both periods were due to discrete tax items.
Accounts receivable at the end of the third quarter totaled $221.6 million, up 9.5% compared to last year. Net inventories were $349.0 million, up 6.7% and trade payables were $211.5 million, up 22.8% compared to the same period last year.