By a News Reporter-Staff News Editor at Real Estate Weekly News -- The Toro Company (NYSE:TTC) reported net earnings of $50 million, or $0.87 per share, on a net sales increase of 11.3 percent to $567.5 million for the third quarter of fiscal 2014. In the comparable fiscal 2013 quarter, the company delivered net earnings of $40.1 million, or $0.68 per share, on net sales of $509.9 million.
For the first nine months, Toro reported net earnings of $163 million, or $2.82 per share, on a net sales increase of 6 percent to $1.759 billion. In the comparable fiscal 2013 period, the company posted net earnings of $149.9 million, or $2.53 per share, on net sales of $1.659 billion.
"Our team is especially proud to deliver record results and double-digit sales and earnings growth for the third quarter in which we also celebrated our Centennial milestone," said Michael J. Hoffman, Toro's chairman and chief executive officer. "After successfully managing through the challenges of a late spring, our quarterly results benefited from favorable summer growing conditions in key markets that, similar to last year, helped drive retail sales across most of our businesses. Shipments of golf equipment and irrigation products increased on strong retail demand for our innovative product offerings. In addition, we returned to a more normal quarterly flow for channel purchases of professional equipment subject to Tier 4 emission standards. Landscape contractor customers continued to invest in turf maintenance equipment, which also helped drive sales. On the residential side of our business, early demand for snow products increased as channel partners began to prepare for the anticipated strong retail pre-season."
"We are optimistic as we enter the final quarter of our fiscal year and Destination 2014 journey," said Hoffman. "With our Centennial on July 10, 2014, we officially launched the company's second century. Looking ahead, we will continue to focus on the key things that have driven our past performance: developing innovative products, serving our customers and executing in the marketplace. We will keep a close eye on both retail demand and field inventory levels and make adjustments as necessary. We also will continue to seek opportunities across the enterprise to improve productivity and leverage expenses. Of course, we remain mindful of the things outside of our control, such as unfavorable weather or economic conditions, that could create potential challenges for our customers. That said, a strong snow pre-season and continued productivity gains, somewhat offset by product mix, should drive solid fourth quarter revenue and earnings results. As such, today we are changing our full-year outlook."
The company now expects revenue growth for fiscal 2014 to be about 6 percent, and net earnings per share to be about $2.94 to $2.96. SEGMENT RESULTS Professional Professional segment net sales for the third quarter totaled $384.7 million, up 11.9 percent from the comparable fiscal 2013 period. Sales of golf equipment and irrigation products increased on strong retail demand for our innovative product offerings, including our new INFINITY™ sprinklers. Sales also benefitted from the return to a more normal quarterly flow of channel purchases of equipment subject to Tier 4 emission standards, as compared to fiscal 2013 when sales were pulled from the third quarter to the first quarter in connection with the regulatory transition. Turf maintenance and ground engaging equipment sales were up due to continued demand by landscape contractors for our productivity enhancing products. In addition, global micro irrigation sales increased with continued demand for more efficient solutions for agriculture. For the first nine months, professional segment net sales were $1.209 billion, up 3.4 percent from the comparable fiscal 2013 period. Sales for the year-to-date period increased on strong retail demand for landscape maintenance equipment and increased demand for our micro irrigation, construction and rental products.
Professional segment earnings for the third quarter totaled $74.8 million, up 23.7 percent from the comparable fiscal 2013 period. For the first nine months, professional segment earnings were $244.7 million, up 4.8 percent from the comparable fiscal 2013 period. Residential Residential segment net sales for the third quarter totaled $175.7 million, up 13 percent from the comparable fiscal 2013 period. Sales of snow products were up due to increased early demand as channel partners began to prepare for the anticipated strong retail pre-season. Sales of our residential zero turn mowing products also grew on continued retail demand for these mowing platforms. For the first nine months, residential segment net sales were $533.7 million, up 11.7 percent from the comparable fiscal 2013 period. Sales for the year-to-date period increased on strong in-season and pre-season demand for our snow products, as well as increased channel and retail demand for our residential zero turn mowers.
Residential segment earnings for the third quarter totaled $18.7 million, up 24.1 percent from the comparable fiscal 2013 period. For the first nine months, residential segment earnings were $60.7 million, up 16.9 percent from the comparable fiscal 2013 period. OPERATING RESULTS Gross margin for the third quarter was 35.6 percent, an increase of 70 basis points compared to the same fiscal 2013 period, primarily due to favorable product mix and realized pricing, somewhat offset by higher commodity costs. For the first nine months, gross margin was 35.8 percent, a decrease of 10 basis points, primarily due to higher commodity costs and unfavorable segment mix and currency exchange rates, somewhat offset by realized pricing.
Selling, general and administrative (SG&A) expense as a percent of sales for the third quarter was 22.9 percent, a decrease of 50 basis points compared to the same fiscal 2013 period. For the first nine months, SG&A expense as a percent of sales was 22 percent, also a decrease of 50 basis points. For both periods, the decrease primarily was due to the leveraging of expenses over higher sales volumes.
Third quarter operating earnings as a percent of sales improved 120 basis points to 12.7 percent compared to the same fiscal 2013 period. For the first nine months, operating earnings as a percentage of sales improved 40 basis points to 13.8 percent.
The effective tax rate for the third quarter decreased to 29.4 percent from 30.5 percent in the comparable fiscal 2013 period primarily due to a one-time tax benefit. For the first nine months, the effective tax rate increased to 31.7 percent from 31 percent in the comparable fiscal 2013 period when the company benefited from the retroactive reinstatement of the Federal Research and Engineering Tax Credit in the first quarter of that fiscal year.
Keywords for this news article include: Real Estate, The Toro Company, Landscape Contractor.
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