Toro Co.
(
TTC
) reported record third quarter 2012 earnings of 67 cents per
share, up 22% from 55 cents in the year-ago quarter and
outperforming the Zacks Consensus Estimate of 62 cents per share.
Increased sales of landscape maintenance, golf and irrigation
equipments were the main growth drivers, partially offset by
slowing residential sales.
Operational Update
Sales inched up 1% year over year to $504 million, but fell
short of the Zacks Consensus Estimate of $529 million. Strong sales
performance in the Professional segment mitigated the decline in
the Residential segment.
Gross profit increased 6% year over year to $178 million with
gross margin expanding 180 basis points to 35.3%. Selling, general
and administrative expenses increased 4% year over year to $117
million. Operating income increased 11% year over year to $61
million in the quarter. Operating margin expanded 120 basis points
to 12.1% in the quarter.
Segment Performance
Professional: Sales for the segment jumped 4% year over year to
$361 million. New products and strong demand in markets, despite
the drought, led to increased sales of landscape maintenance
equipment. Domestic sales of golf equipment and irrigation also
increased on the back of strong demand of new products.
Furthermore, recent acquisitions were also accretive to sales.
However, international economic issues and unfavorable currency
exchange were minor offsets. The segment's operating profit
increased 10% to $70 million.
Residential: The segment reported sales of $136 million, down 8%
year over year, affected by the drought conditions. Snow blower
sales and residential riding products sales were down. However,
sales of Toro's new string and hedge trimmers and shipments of walk
power mowers were up slightly during the quarter. Operating income,
however, saw a 10% increase on a year-over-year basis to $10
million from an adjusted $9 million in the year-ago quarter. The
year-ago quarter excluded a pre-tax charge of $4.5 million for
one-time costs associated with a rework issue affecting a large
number of walk power mowers. Including the same, operating income
in the quarter soared 117%.
Financial Position
Toro Co. ended the quarter with cash and cash equivalents of
$143 million, up from the $82.6 million at the end of second
quarter 2012. Cash flow from operating activities during the first
nine months of fiscal 2012 improved to $165 million from $72
million in the prior-year comparable period. As of August 3, 2012,
debt to capitalization ratio improved to 40% from 42.1% as of May
4, 2012.
Outlook
For fiscal 2012, Toro Co. envisions revenue growth of around 4
to 5% and net earnings to be about $2.10 per share. The earnings
guidance includes a negative impact of 8 cents per share for
investments related to the Astec and Stone product-line
acquisitions. This has been trimmed from the company's earlier
expectation of revenue growth of about 7 to 8% and net earnings of
around $4.30 per share. Drought condition in the U.S and uncertain
economic scenario in Europe led to the muted guidance.
Our Take
Toro Co. will continue to benefit from the strong performance of
the golf industry. As the number of golf grounds continues to grow,
increased revenues from the courses will positively impact the
company's future capital budgets. This will help bolster Toro Co.'s
sales moving ahead. The outlook looks positive for the landscape
contractor business as large acreage owners who are replacing their
ageing line and garden tractors with Toro's latest commercial-grade
zero turn equipment. Furthermore, successful launch of new products
will help drive its revenues. However, drought conditions and the
uncertain European scenario remain overhang. The company currently
retains a Zacks #3 Rank (short-term Hold recommendation).
Bloomington, Minnesota.-based Toro Co. is a worldwide provider
of turf and landscape maintenance equipment, and irrigation
solutions, to help customers care for golf courses, sports fields,
public green spaces, commercial and residential properties, and
agricultural fields. The company operates through its two segments-
Professional and Residential.
Deere & Company
(
DE
) and
Honda Motor Co., Ltd.
(
HMC
) are peers of Toro Co.
Toro Co. (TTC) reported record third quarter 2012 earnings of 67
cents per share, up 22% from 55 cents in the year-ago quarter and
outperforming the Zacks Consensus Estimate of 62 cents per share.
Increased sales of landscape maintenance, golf and irrigation
equipments were the main growth drivers, partially offset by
slowing residential sales.
Operational Update
Sales inched up 1% year over year to $504 million, but fell
short of the Zacks Consensus Estimate of $529 million. Strong sales
performance in the Professional segment mitigated the decline in
the Residential segment.
Gross profit increased 6% year over year to $178 million with
gross margin expanding 180 basis points to 35.3%. Selling, general
and administrative expenses increased 4% year over year to $117
million. Operating income increased 11% year over year to $61
million in the quarter. Operating margin expanded 120 basis points
to 12.1% in the quarter.
Segment Performance
Professional: Sales for the segment jumped 4% year over year to
$361 million. New products and strong demand in markets, despite
the drought, led to increased sales of landscape maintenance
equipment. Domestic sales of golf equipment and irrigation also
increased on the back of strong demand of new products.
Furthermore, recent acquisitions were also accretive to sales.
However, international economic issues and unfavorable currency
exchange were minor offsets. The segment's operating profit
increased 10% to $70 million.
Residential: The segment reported sales of $136 million, down 8%
year over year, affected by the drought conditions. Snow blower
sales and residential riding products sales were down. However,
sales of Toro's new string and hedge trimmers and shipments of walk
power mowers were up slightly during the quarter. Operating income,
however, saw a 10% increase on a year-over-year basis to $10
million from an adjusted $9 million in the year-ago quarter. The
year-ago quarter excluded a pre-tax charge of $4.5 million for
one-time costs associated with a rework issue affecting a large
number of walk power mowers. Including the same, operating income
in the quarter soared 117%.
Financial Position
Toro Co. ended the quarter with cash and cash equivalents of
$143 million, up from the $82.6 million at the end of second
quarter 2012. Cash flow from operating activities during the first
nine months of fiscal 2012 improved to $165 million from $72
million in the prior-year comparable period. As of August 3, 2012,
debt to capitalization ratio improved to 40% from 42.1% as of May
4, 2012.
Outlook
For fiscal 2012, Toro Co. envisions revenue growth of around 4
to 5% and net earnings to be about $2.10 per share. The earnings
guidance includes a negative impact of 8 cents per share for
investments related to the Astec and Stone product-line
acquisitions. This has been trimmed from the company's earlier
expectation of revenue growth of about 7 to 8% and net earnings of
around $4.30 per share. Drought condition in the U.S and uncertain
economic scenario in Europe led to the muted guidance.
Our Take
The Toro Co. will continue to benefit from the strong
performance of the golf industry. As the number of golf grounds
continues to grow, increased revenues from the courses will
positively impact the company's future capital budgets. This will
help bolster Toro Co.'s sales moving ahead. The outlook looks
positive for the landscape contractor business as large acreage
owners who are replacing their ageing line and garden tractors with
Toro's latest commercial-grade zero turn equipment. Furthermore,
successful launch of new products will help drive its revenues.
However, drought conditions and the uncertain European scenario
remain overhang. The company currently retains a Zacks #3 Rank
(short-term Hold recommendation).
Bloomington, Minnesota.-based Toro Co. is a worldwide provider
of turf and landscape maintenance equipment, and irrigation
solutions, to help customers care for golf courses, sports fields,
public green spaces, commercial and residential properties, and
agricultural fields. The company operates through its two segments-
Professional and Residential. Deere & Company (DE) and Honda
Motor Co., Ltd. (HMC) are peers of Toro Co.
Toro Co. (TTC) reported record third quarter 2012 earnings of 67
cents per share, up 22% from 55 cents in the year-ago quarter and
outperforming the Zacks Consensus Estimate of 62 cents per share.
Increased sales of landscape maintenance, golf and irrigation
equipments were the main growth drivers, partially offset by
slowing residential sales.
Operational Update
Sales inched up 1% year over year to $504 million, but fell
short of the Zacks Consensus Estimate of $529 million. Strong sales
performance in the Professional segment mitigated the decline in
the Residential segment.
Gross profit increased 6% year over year to $178 million with
gross margin expanding 180 basis points to 35.3%. Selling, general
and administrative expenses increased 4% year over year to $117
million. Operating income increased 11% year over year to $61
million in the quarter. Operating margin expanded 120 basis points
to 12.1% in the quarter.
Segment Performance
Professional: Sales for the segment jumped 4% year over year to
$361 million. New products and strong demand in markets, despite
the drought, led to increased sales of landscape maintenance
equipment. Domestic sales of golf equipment and irrigation also
increased on the back of strong demand of new products.
Furthermore, recent acquisitions were also accretive to sales.
However, international economic issues and unfavorable currency
exchange were minor offsets. The segment's operating profit
increased 10% to $70 million.
Residential: The segment reported sales of $136 million, down 8%
year over year, affected by the drought conditions. Snow blower
sales and residential riding products sales were down. However,
sales of Toro's new string and hedge trimmers and shipments of walk
power mowers were up slightly during the quarter. Operating income,
however, saw a 10% increase on a year-over-year basis to $10
million from an adjusted $9 million in the year-ago quarter. The
year-ago quarter excluded a pre-tax charge of $4.5 million for
one-time costs associated with a rework issue affecting a large
number of walk power mowers. Including the same, operating income
in the quarter soared 117%.
Financial Position
Toro Co. ended the quarter with cash and cash equivalents of
$143 million, up from the $82.6 million at the end of second
quarter 2012. Cash flow from operating activities during the first
nine months of fiscal 2012 improved to $165 million from $72
million in the prior-year comparable period. As of August 3, 2012,
debt to capitalization ratio improved to 40% from 42.1% as of May
4, 2012.
Outlook
For fiscal 2012, Toro Co. envisions revenue growth of around 4
to 5% and net earnings to be about $2.10 per share. The earnings
guidance includes a negative impact of 8 cents per share for
investments related to the Astec and Stone product-line
acquisitions. This has been trimmed from the company's earlier
expectation of revenue growth of about 7 to 8% and net earnings of
around $4.30 per share. Drought condition in the U.S and uncertain
economic scenario in Europe led to the muted guidance.
Our Take
The Toro Co. will continue to benefit from the strong
performance of the golf industry. As the number of golf grounds
continues to grow, increased revenues from the courses will
positively impact the company's future capital budgets. This will
help bolster Toro Co.'s sales moving ahead. The outlook looks
positive for the landscape contractor business as large acreage
owners who are replacing their ageing line and garden tractors with
Toro's latest commercial-grade zero turn equipment. Furthermore,
successful launch of new products will help drive its revenues.
However, drought conditions and the uncertain European scenario
remain overhang. The company currently retains a Zacks #3 Rank
(short-term Hold recommendation).
Bloomington, Minnesota.-based Toro Co. is a worldwide provider
of turf and landscape maintenance equipment, and irrigation
solutions, to help customers care for golf courses, sports fields,
public green spaces, commercial and residential properties, and
agricultural fields. The company operates through its two segments-
Professional and Residential. Deere & Company (DE) and Honda
Motor Co., Ltd. (HMC) are peers of Toro Co.
DEERE & CO (DE): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
TORO CO (TTC): Free Stock Analysis Report
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