) reported break-even results in the fourth quarter of 2012, in
line with the Zacks Consensus Estimate but compared unfavorably
with 8 cents per share earned in the year-ago quarter. Fourth
quarter results were affected by the reduced demand for snow
products due to last winter's paltry snowfall, which restrained
consumers to buy equipment for this season. The warm, dry start
to winter this year further aggravated the situation.
Sales declined 8% year over year to $339 million, falling
short of the Zacks Consensus Estimate of $350 million. The
decline in the Residential segment offset the increase in the
Gross profit decreased 10% year over year to $226 million with
gross margin contracting 100 basis points to 33.3%. Selling,
general and administrative expenses decreased 1% year over year
to $109 million. Operating income plunged 55% year over year to
$4.1 million in the quarter with operating margin contracted130
basis points to 1.2% in the quarter.
Professional: Sales for the segment increased 6% year over
year to $228.6 million in the quarter. The segment's operating
profit increased 21% to $20.7 million.
Residential: The segment reported sales of $102 million, down
29% year over year, affected by weak snow thrower sales.
Operating income dropped 43% to $6.7 million with operating
margin contracting 170 basis points to 6.6%.
Fiscal 2012 Performance
Despite a lackluster fourth quarter, Toro reported record
earnings per share of $1.85 in fiscal 2012, up 16% from $2.14 in
the prior year and ahead of the Zacks Consensus Estimate by a
cent. Sales increased 4% year over year to a record $1.96
billion. Successful introduction of new products and accretive
acquisitions helped grow its positions in golf equipment,
landscape contractor and grounds, micro irrigation and
residential mowing, which fully offset weak snow thrower sales,
leading to the improvement in results.
Toro Co. ended the year with cash and cash equivalents of $126
million, up from the $81 million at the end fiscal 2011. Cash
flow from operating activities during the year improved to $186
million from $114 million in the prior-year comparable period. As
of fiscal 2012 end, the debt-to-capitalization ratio improved to
42% from 46% as of fiscal 2011 end.
For fiscal 2013, Toro Co. envisions revenue growth of around
4% to 5% and net earnings in the range of $2.35 to $2.40 per
share. For the first quarter, net earnings are expected to
lie within 40 cents to 45 cents per share, positively impacted by
anticipated accelerated purchases of diesel products ahead of the
Tier 4 price change.
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.
With weather forecasts indicating normal snowfall this season,
it is expected that Toro's new snow product offerings will be
received well by consumers. The outlook also looks positive for
the landscape contractor business as large acreage owners are
replacing their ageing line and garden tractors with Toro's
latest commercial-grade zero turn equipment. However, the company
currently retains a Zacks #2 Rank (short-term Buy rating).
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
Honda Motor Co., Ltd.
) are the peers of Toro Co.
DEERE & CO (DE): Free Stock Analysis
HONDA MOTOR (HMC): Free Stock Analysis Report
TORO CO (TTC): Free Stock Analysis Report
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