Toro Company (TTC)
Q4 2012 Earnings Call
December 05, 2012 11:00 AM ET
Kurt Svendsen - Managing Director of Corporate Communications and IR
Mike Hoffman - Chairman & CEO
Renee Peterson - CFO
Sam Darkatsh - Raymond James
Robert Kosowsky - Sidoti
Jim Barrett - CL King & Associates
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At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the presentation over to your host for today’s conference, Mr. Kurt Svendsen, Managing Director of Corporate Communications and Investor Relations for The Toro Company. Please proceed, Mr. Svendsen.
Thank you and good morning. Joining me this morning for our fourth quarter earnings call are Mike Hoffman, Chairman and Chief Executive Officer; Renee Peterson, Chief Financial Officer; Tom Larson, Vice President and Treasurer; and Blake Grams, Vice President and Controller.
We begin with our customary forward-looking statement policy. During this call we will make certain forward-looking statements which are intended to assist you in understanding the company’s results. You are all aware of the inherent difficulties, risks and uncertainties in making predictive statements. The safe Harbor portion of the company’s earnings release, as well as SEC filings detail some of the important risk factors that may cause actual results to differ from those in our predictions.
Our earnings release was issued this morning by Business Wire, a copy can be found in the investor information section of our corporate website, thetorocompany.com.
With that I will now turn the call over to Mike.
Thank you Kurt and good morning to all our listeners. We welcome the improved weather conditions during the fourth quarter that eased the grip of summer’s extreme drought and helped drive stronger retail sales across most domestic markets. As we said during our last call, addressing higher than desired levels of field inventory was a prime consideration for the quarter and we’re pleased to report that field inventories once again in good shape as we now move into fiscal 2013. While we experienced favorable retail sales for the quarter, overall shipments were down due to the reduced demands for our snow products following last year’s mild winter. To put this in perspective, the drop in snow shipments caused us 2 to 3 points of growth for the year and accounted for most of the decline in our fourth quarter revenues.
The good news is that with the exception of snow, fiscal 2012 was a solid year. We once again delivered both record revenues and earnings per share. We achieved a 4% increase in net sales for the year and 16% growth in earnings per share to $2.14 which includes the $0.07 for investments associated with the acquisitions that we have mentioned in previous calls. Renee will discuss our financial and operating results in more detail later in the call.
Turning to the results of our individual businesses, first, golf sales ended the year strong with solid retail in September and October as weather conditions improved in our ’13 pricing on tier four compliant products was announced. Golf course owners enjoyed good cash flow this year driven by increased play in revenues and chose to use some of their gains to take advantage of our latest product introductions as well as favorably priced pre-tier 4 product.
Our tracking reports indicate we are maintaining our market leadership position as we are still outpacing our primary competitors by winning more of the available equipment deals. Our new (inaudible) [3:09] are also helping propel sales, superintendents, club managers and owners have recognized that our new green (inaudible) [3:16] riding units deliver a clearly superior quality of cut.
The irrigation side of our golf business, we saw growth in our domestic markets for the quarter. Renovation projects got off to an early start this past spring and then settled into a steady flow through the course of the year. Our ability to help courses affordably upgrade their existing systems with our latest innovations has played a significant role in promoting growth. We anticipate these opportunities will continue due to the high number of ageing systems. Internationally sales of golf irrigation products were down for the year. The slowdown in new course construction and economic issues in Europe continue to dampen sales. Like golf, our landscape contractor businesses also enjoy strong fourth quarter retail activity across much of the country. The southern and eastern markets continued their positive late summer sales pattern while improved moisture levels have strong fault programs helped boost sales in the Midwest. Demand was especially strong among larger acreage owners who buy professional grade products. Our new turf management products including our 30 inch Stand On Aerators which are used extensively in the late summer and early fall also contributed to the good results.
Professional grounds product sales performed well for the quarter under strength of their productivity. As we have mentioned in previous calls, tighter budgets have prompted municipalities to increase productivity by equipping their small staffs with our high performance large arteries (ph).
In another key growth area, our rental and construction businesses bolstered by incremental sales from acquisitions mirrored the general trend for the quarter by rebounding following the sluggish summer. Integration efforts related to our stone equipment and Astec underground acquisitions are proceeding smoothly and are on schedule.