• Net earnings per share for the quarter up 6.4% to a record $1.00
  • Record operating results driven by solid professional segment performance
  • Board of directors declares two-for-one-stock split

BLOOMINGTON, Minn. — The Toro Co. (NYSE: TTC) reports net earnings of $55.8 million, or $1.00 per share, on net sales of $601 million, a decrease of 1.4 %, for its fiscal third quarter ended July 29, 2016. In the comparable fiscal 2015 period, the company delivered net earnings of $53.3 million, or $0.94 per share, on net sales of $609.6 million.

For the first nine months, Toro reported net earnings of $200.8 million, or $3.58 per share, on a net sales increase of 0.7% to $1.924 billion. In the comparable fiscal 2015 period, the company posted net earnings of $178 million, or $3.13 per share, on net sales of $1.910 billion.

“In spite of challenging weather and currency conditions and the resulting impact on our revenues, we are pleased to deliver another solid quarter achieving record earnings. The strong performance within our professional businesses driven by new product introductions and outstanding execution by the team, fueled growth in that segment for the quarter,” says Michael J. Hoffman, Toro’s chairman and chief executive officer. “We see positive momentum in our golf equipment and irrigation businesses as we gain share in key markets. Additionally, our specialty construction and rental businesses are experiencing solid growth and are benefiting from new product introductions like the Dingo TX 1000 compact utility loader.”

“With mixed consumer retail activity in the quarter, as was felt across the industry, we were encouraged by overall retail demand for our walk power and zero-turn riding mower products during the summer months,” said Hoffman. “We performed well despite sluggish sales in certain regions that experienced challenging weather conditions.”

“With the fourth quarter underway, we continue to see positive retail sales across our businesses. Additionally, in our snow and ice management businesses, we are well positioned with new innovative products as the preseason begins. I would like to take this opportunity to thank our worldwide employees and channel partners for their hard work and dedication. It is their tireless commitment to excellence that drives the company’s steady performance.”

The company is narrowing its full-year earnings outlook to about $3.95 to $4.00 per share. Full-year revenue growth expectations for fiscal 2016 have also been narrowed to flat to up 1%.

Toro also announced today that its board of directors has declared a two-for-one split of the company’s common stock, which will be effected in the form of a 100% stock dividend. The stock dividend will be distributed on September 16, 2016, to shareholders of record as of September 1, 2016.

Segment Results

Professional:

  • Professional segment net sales for the third quarter totaled $427.8 million, up 1.4% from $422 million in the same period last year. For the first nine months, professional segment net sales were $1.362 billion, up 3.6% from the comparable fiscal 2015 period. Momentum generated in our golf equipment and irrigation businesses produced positive results for the quarter and the year. Additionally, continued demand for products such as our Dingo TX 1000 compact utility loader in both the rental and specialty construction businesses contributed to the growth for both periods. For the quarter, these gains were offset by lower channel demand for our landscape contractor equipment.
  • Professional segment earnings for the third quarter totaled $89.1 million, up 8.3% from $82.3 million in the same period last year. For the first nine months, professional segment earnings were $292.3 million, up 13.0% from $258.7 million in the comparable fiscal 2015 period.

Residential:

  • Residential segment net sales for the third quarter were $167.8 million, down 4.6% from $176 million in the same period last year. For the first nine months, residential segment net sales were $550.3 million, down 4.9% from the comparable fiscal 2015 period. The sales decline for the quarter was due primarily to reduced worldwide channel demand for walk power and riding mowers. The decrease was somewhat offset by higher shipments of snow products in the quarter. Decreased worldwide sales of zero turn riding mowers and snow product contributed to the decline for the year.
  • Residential segment earnings for the third quarter were $12.8 million, down 37.9% from $20.6 million from the same period last year. For the first nine months, residential segment earnings were $64.5 million, down 6.7% from the comparable fiscal 2015 period.

Operating Results

Gross margin as a percent of sales for the third quarter was 36.0%, an increase of 50 basis points from the same period last year. The increase was primarily due to favorable commodities, enhanced productivity and segment mix. For the first nine months, gross margin as a percent of sales was 36.5%, an increase of 160 basis points from the same period last year, also primarily due to favorable commodities, enhanced productivity and segment mix. These gains were offset by the impact of unfavorable currency exchange rates in both periods.

Selling, general and administrative (SG&A) expense as a percent of sales for the third quarter was 22.4%, a decrease of 10 basis points from the same period last year. For the first nine months, SG&A expense as a percent of sales was 21.4%, an increase of 20 basis points from the comparable period last year.

Operating earnings as a percent of sales for the third quarter was 13.6%, an increase of 60 basis points from the comparable period last year. Operating earnings as a percent of sales for the first nine months was 15.1%, an increase of 140 basis points from the same period last year.

The effective tax rate for the third quarter was 30.9%, compared to 31.3% last year. For the first nine months, the effective tax rate was 30.5%, compared to 30.4 percent in the same period last year.

Accounts receivable at the end of the third quarter totaled $202.4 million, down 11.2% compared to last year. Net inventories were $327.1 million, down 6.6% and trade payables were $172.2 million, up 1.3% compared to the same period last year.

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