- Net earnings per share for the quarter
up 22 percent to a record $0.61
- Third quarter sales increase 4.5
percent to a record $627.9 million
- Strong results driven by increased
demand for professional segment products
The Toro Company (NYSE: TTC) today reported net earnings of
$68.4 million, or $0.61 per share, on net sales of $627.9 million,
an increase of 4.5 percent, 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 percent
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 percent and net earnings per share to be about $2.38.
SEGMENT RESULTS
Professional
- Professional segment net sales for the
third quarter totaled $468.6 million, up 9.5 percent from $427.8
million in the same period last year. For the first nine months,
professional segment net sales were $1.451 billion, up 6.6 percent
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 percent 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 percent
from $292.3 million in the comparable fiscal 2016 period.
Residential
- Residential segment net sales for the
third quarter were $152.1 million, down 9.3 percent 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 percent
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 percent 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 percent
from the comparable fiscal 2016 period.
OPERATING RESULTS
Gross margin as a percent of sales for the third quarter was
36.1 percent, 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 percent, 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 percent, 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
percent, 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 percent, 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 percent, an increase of 20 basis points
from the same period last year.
The effective tax rate for the third quarter was 22.6 percent,
compared to 30.9 percent last year. For the first nine months, the
effective tax rate was 23.6 percent, compared to 30.5 percent 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 percent compared to last year. Net
inventories were $349.0 million, up 6.7 percent and trade payables
were $211.5 million, up 22.8 percent compared to the same period
last year.
About The Toro CompanyThe Toro Company (NYSE: TTC) is a
leading worldwide provider of innovative solutions for the outdoor
environment, including turf, snow and ground engaging equipment and
irrigation and outdoor lighting solutions. With sales of $2.4
billion in fiscal 2016, Toro’s global presence extends to more than
90 countries. Through constant innovation and caring relationships
built on trust and integrity, Toro and its family of brands have
built a legacy of excellence by helping customers care for golf
courses, landscapes, sports fields, public green spaces, commercial
and residential properties and agricultural fields. For more
information, visit www.thetorocompany.com.
LIVE CONFERENCE CALLAugust 24, 2017 at 10:00 a.m.
CDTwww.thetorocompany.com/invest
The Toro Company will conduct its earnings call and webcast for
investors beginning at 10:00 a.m. CDT on August 24, 2017. The
webcast will be available at www.streetevents.com or at
www.thetorocompany.com/invest. Webcast participants will need to
complete a brief registration form and should allocate extra time
before the webcast begins to register and, if necessary, download
and install audio software.
Forward-Looking StatementsThis news release contains
forward-looking statements, which are being made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on
management’s current assumptions and expectations of future events,
and often can be identified by words such as “expect,” “strive,”
“looking ahead,” “outlook,” “guidance,” “forecast,” “goal,”
“optimistic,” “anticipate,” “continue,” “plan,” “estimate,”
“project,” “believe,” “should,” “could,” “will,” “would,”
“possible,” “may,” “likely,” “intend,” “can,” “seek,” “potential,”
“pro forma,” or the negative thereof or similar expressions.
Forward-looking statements involve risks and uncertainties that
could cause actual events and results to differ materially from
those projected or implied. Particular risks and uncertainties that
may affect our operating results or financial position include:
worldwide economic conditions, including slow or negative growth
rates in global and domestic economies and weakened consumer
confidence; disruption at our manufacturing or distribution
facilities, including drug cartel-related violence affecting our
maquiladora operations in Juarez, Mexico; fluctuations in the cost
and availability of raw materials and components, including steel,
engines, hydraulics and resins; the impact of abnormal weather
patterns, including unfavorable weather conditions exacerbated by
global climate change or otherwise; the impact of natural disasters
and global pandemics; the level of growth or contraction in our key
markets; government and municipal revenue, budget and spending
levels; dependence on The Home Depot as a customer for our
residential business; elimination of shelf space for our products
at dealers or retailers; inventory adjustments or changes in
purchasing patterns by our customers; our ability to develop and
achieve market acceptance for new products; increased competition;
the risks attendant to international relations, operations and
markets, including political, economic and/or social instability
and conflict, tax and trade policies in the U.S. and other
countries in which we manufacture or sell our products, and
implications of the United Kingdom’s process for exiting the
European Union; foreign currency exchange rate fluctuations; our
relationships with our distribution channel partners, including the
financial viability of our distributors and dealers; risks
associated with acquisitions; management of our alliances or joint
ventures, including Red Iron Acceptance, LLC; the costs and effects
of enactment of, changes in and compliance with laws, regulations
and standards, including those relating to consumer product safety,
conflict mineral disclosure, taxation, trade and tariffs,
healthcare, and environmental, health and safety matters;
unforeseen product quality problems; loss of or changes in
executive management or key employees; the occurrence of litigation
or claims, including those involving intellectual property or
product liability matters; and other risks and uncertainties
described in our most recent annual report on Form 10-K,
subsequent quarterly reports on Form 10-Q, and other filings
with the Securities and Exchange Commission. We make no
commitment to revise or update any forward-looking statements in
order to reflect events or circumstances occurring or existing
after the date any forward-looking statement is made.
THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(Dollars and shares in thousands, except per-share data)
Three Months Ended Nine
Months Ended
August 4, 2017
July 29, 2016
August 4, 2017 July 29,
2016 Net sales $ 627,943 $ 600,980 $ 2,016,549
$ 1,923,819 Gross profit 226,785 216,617 736,579 702,458 Gross
profit percent 36.1 % 36.0 % 36.5 % 36.5 % Selling, general, and
administrative expense 139,001
134,664 428,929 411,576
Operating earnings 87,784 81,953 307,650 290,882 Interest
expense (4,750 ) (4,646 ) (14,309 ) (14,021 ) Other income, net
5,349 3,480
12,916 11,865 Earnings before income
taxes 88,383 80,787 306,257 288,726 Provision for income taxes
19,979 24,965
72,388 87,962 Net earnings
$ 68,404 $ 55,822 $ 233,869
$ 200,764
Basic net earnings per share of common
stock $ 0.63 $ 0.51 $ 2.16
$ 1.83
Diluted net earnings per share of
common stock $ 0.61 $ 0.50 $
2.10 $ 1.79 Weighted-average number of
shares of common stock outstanding — Basic 108,456 109,966 108,434
109,946 Weighted-average number of shares of common stock
outstanding — Diluted 111,457
112,112 111,460 112,154
Shares and per share data have been
adjusted for all periods presented to reflect a two-for-one stock
split effective September 16, 2016.
Segment Data (Unaudited) (Dollars in
thousands) Three Months Ended
Nine Months Ended Segment Net Sales
August 4, 2017 July 29, 2016
August 4, 2017 July 29,
2016 Professional $ 468,564 $ 427,784 $ 1,451,269 $
1,361,829 Residential 152,127 167,815 550,651 550,330 Other
7,252 5,381 14,629
11,660 Total* $ 627,943
$ 600,980 $ 2,016,549 $
1,923,819
*Includes International Sales of: $ 139,434
$ 126,975 $ 472,317 $
450,577
Three Months Ended
Nine Months Ended Segment Earnings (Loss) Before Income
Taxes August 4, 2017 July
29, 2016 August 4, 2017
July 29, 2016 Professional $ 97,368 $ 89,096 $
314,545 $ 292,311 Residential 11,360 12,767 62,965 64,494 Other
(20,345 ) (21,076 )
(71,253 ) (68,079 ) Total $ 88,383
$ 80,787 $ 306,257 $ 288,726
THE TORO COMPANY AND
SUBSIDIARIES Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands)
August 4, 2017
July 29, 2016
ASSETS
Cash and cash equivalents $ 335,026 $ 277,243 Receivables, net
221,551 202,389 Inventories, net 349,022 327,114 Prepaid expenses
and other current assets 42,550
39,658 Total current assets 948,149
846,404 Property, plant, and equipment,
net 226,926 220,876 Long-term deferred income taxes 59,754 65,216
Goodwill and other assets, net 334,715
331,949 Total assets $ 1,569,544
$ 1,464,445
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current portion of long-term debt $ 23,056 $ 22,627 Accounts
payable 211,453 172,156 Accrued liabilities 309,385
318,628 Total current liabilities
543,894 513,411
Long-term debt, less current portion
308,793 331,641 Deferred revenue 24,964 11,958 Other long-term
liabilities 31,971 29,585
Total stockholders’ equity 659,922
577,850 Total liabilities and stockholders’ equity
$ 1,569,544 $ 1,464,445
THE TORO COMPANY AND SUBSIDIARIES Condensed
Consolidated Statements of Cash Flows (Unaudited) (Dollars
in thousands) Nine Months Ended
August 4, 2017 July 29,
2016 Cash flows from operating activities: Net
earnings $ 233,869 $ 200,764 Adjustments to reconcile net earnings
to net cash provided by operating activities: Non-cash income from
finance affiliate (7,566 ) (7,302 ) Provision for depreciation,
amortization, and impairment loss 47,713 46,332 Stock-based
compensation expense 9,691 7,723 (Increase)/decrease in deferred
income taxes (2,121 ) 256 Other 71 (464 ) Changes in operating
assets and liabilities, net of effect of acquisitions: Receivables,
net (54,935 ) (23,699 ) Inventories, net (34,069 ) 3,428 Prepaid
expenses and other assets (7,625 ) (2,108 ) Accounts payable,
accrued liabilities, deferred revenue, and other long-term
liabilities 86,991 79,055
Net cash provided by operating activities 272,019
303,985 Cash flows from
investing activities: Purchases of property, plant, and equipment
(36,572 ) (34,601 ) Proceeds from asset disposals 74 232
Distributions from finance affiliate, net 4,617 3,594 Proceeds from
sale of a business — 1,500 Acquisition, net of cash acquired
(24,181 ) — Net cash used in investing
activities (56,062 ) (29,275 )
Cash flows from financing activities: Repayments of short-term debt
— (1,161 ) Repayments of long-term debt (19,158 ) (20,713 )
Proceeds from exercise of stock options 9,756 19,691 Purchases of
Toro common stock (96,059 ) (69,189 ) Dividends paid on Toro common
stock (56,926 ) (49,488 ) Net cash
(used in) financing activities (162,387 )
(120,860 ) Effect of exchange rates on cash and cash
equivalents 7,901 (2,882 )
Net increase in cash and cash equivalents
61,471 150,968 Cash and cash
equivalents as of the beginning of the fiscal period
273,555 126,275 Cash and cash
equivalents as of the end of the fiscal period $ 335,026
$ 277,243
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170824005214/en/
The Toro CompanyInvestor RelationsHeather Hille,
952-887-8923Director, Investor
Relationsheather.hille@toro.comorMedia RelationsBranden
Happel, 952-887-8930Senior Manager, Public
Relationsbranden.happel@toro.com
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