Toro Company (TTC)
F1Q09 (Qtr End 1/30/09) Earnings Call
February 19, 2009 11:00 AM ET
Michael J. Hoffman - Chairman and Chief Executive Officer
Stephen P. Wolfe - Vice President of Finance and Chief Financial Officer
Eric Bosshard - Cleveland Research Company
James Lucas - Janney Montgomery Scott LLC
Sam Darkatsh - Raymond James
Mark Rupe - Longbow Research
Jim Barrett - C.L. King & Associates, Inc.
James Bank - Sidoti & Company
Previous Statements by TTC
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I would now like to turn the presentation over to your host for today's conference Mr. Michael J. Hoffman, Chairman and CEO of The Toro Company. Please proceed Mr. Hoffman.
Michael J. Hoffman
Thank you Tanya and good morning everyone. We appreciate you joining us for our first quarter earning conference call. Here with me this morning are Steve Wolfe, our Chief Financial Officer; Tom Larson, Vice President and Treasurer; and John Wright Director of Investor Relations.
Let's begin with our forward-looking statement policy. Please keep in mind that during the 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, particularly in the current environment. So 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 and can also be found in the investor information section of our corporate website, thetorocompany.com.
Before we get to the results for our first quarter ended January 30, 2009, I would like to update you on a few key items since we last spoke. As you are all acutely aware these are extraordinary times. In one way or another each of us has been affected by the challenges of today's economic environment. Unfortunately the recessionary conditions have showed no signs of abating and have only intensified.
In response to the deteriorating market conditions we've taken a number of actions to deal with the new reality of the global recession. We have further aligned production schedules for reduced demand and our determined to lower inventory. We continue to scrutinize discretionary expenses and reduce spending. The freeze on all open positions that we initiated early last year remains in place and we completed a voluntary retirement program this past December.
Unfortunately just last week we were forced to take additional action to reduce our office and salaried work force by approximately a 100 employees. This was a very difficult decision, but one that became unavoidable given the harsh realities of the current business climate. Combined with previous measures, the company has reduced its overall work force by approximately 15% from the previous year when you include contractors, part time, and temporary employees.
Beyond the reduction, we took additional actions that will effect all the remaining employees including the suspension of regularly scheduled salary increases, reduced officer salaries, changes in our vacation policy, and the addition of for referral days all for the remainder of fiscal 2009. We know these steps are very painful, and yet they were necessary to keep Toro competitive through this difficult environment, so we can resume our chart record of solid financial performance when the world economy begins to improve.
In addition to aggressively managing cost we remain committed to reducing our working capital needs and the resulting improvements to our balance sheet stand out as a positive factor for us in this very difficult business environment. Our inventory levels are much lower, receivables are down considerably, and we are about $60 million less than we did last year -- in last year's first quarter. Also our field inventory levels are down on a year-over-year basis.
So while we are disappointed with our results for the quarter, we know we are not alone in dealing with the current challenges. We will continue to manage the business in line with this new reality and remain confident in the strength of our brands, our products, our people, and our channel partners to effectively compete for our customer's business in the months ahead.
I'll now turn it over to Steve to review our financial results for the first quarter. Steve.
Stephen P. Wolfe
Thanks Mike and good morning to everyone. For the quarter net sales were down 16.2% to $340.2 million. Worldwide sales has declined across most professional categories due to the global recession that we are in. These declines were somewhat offset by stronger orders for snowthrower products and favorable preseason shipments for our redesign lineup of Toro and Lawn-Boy Walk Power mowers.
Net earnings for the quarter were $6.7 million or $0.18 per share, a decrease of 62% on a per share basis compared to the same period last year. The earnings decline included a pre-tax charge of $1.3 million or $0.02 per share on an after-tax basis to account for the workforce adjustments Mike talked about.
Let me turn now to our segment results. Starting with the professional segment, worldwide sales for the quarter were down 22.3% up to $229.4 million. Shipments declined across most professional product categories due to the challenging market conditions and customers reluctance to place orders in this time of economic uncertainty.