The Toro Company (TTC, Financial) filed Quarterly Report for the period ended 2009-05-01.
Toro Company designs manufactures and markets consumer and professional turf maintenance equipment snow removal products and irrigation systems and provides landscaping and turf maintenance services. The company manufactures walk-behind power mowers and snowblowers and riding lawn mowers and lawn and garden tractors. The company designs and markets electrical and gas products professional turf maintenance equipment and turf irrigation products. The Toro Company has a market cap of $1.21 billion; its shares were traded at around $33.71 with a P/E ratio of 14.9 and P/S ratio of 0.6. The dividend yield of The Toro Company stocks is 1.8%. The Toro Company had an annual average earning growth of 18.8% over the past 10 years. GuruFocus rated The Toro Company the business predictability rank of 4-star.
During this difficult economic environment, we have been reducing expenses and continuing efforts to reduce working capital. As a result of these actions, our selling, general, and administrative (SG&A) expenses were down $22.7 million and $35.3 million for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year. In February 2009, we announced the reduction of our worldwide salaried and office workforce by approximately 100 employees, suspension of regularly scheduled salary increases, a reduction of officers salaries, changes in our vacation policy, and four furlough days – all for the remainder of fiscal 2009. Our inventory levels also decreased 18.7 percent for the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008, which also contributed to a decline in short-term debt of $118.6 million as of the end of the second quarter of fiscal 2009 compared to the end of the second quarter of fiscal 2008. We declared a cash dividend of $0.15 per share during the second quarter of fiscal 2009, which was equivalent to the cash dividend we declared in the first quarter of fiscal 2009 and each quarter of fiscal 2008.
Net earnings for the second quarter of fiscal 2009 were $36.9 million, or $1.00 per diluted share, compared to $62.8 million, or $1.60 per diluted share, for the second quarter of fiscal 2008, net earnings per diluted share decrease of 37.5 percent. Year-to-date net earnings in fiscal 2009 were $43.6 million, or $1.18 per diluted share, compared to $81.4 million, or $2.07 per diluted share, last fiscal year, net earnings per diluted share decrease of 43.0 percent. The primary factors contributing to these declines were lower sales volumes and a decline in gross profit, somewhat offset by a decrease in SG&A expense and a lower effective tax rate.
Worldwide consolidated net sales for the second quarter and year-to-date periods of fiscal 2009 were down 21.7 percent and 19.6 percent, respectively, from the same periods in the prior fiscal year. Worldwide professional segment net sales were down 29.2 percent and 26.4 percent for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same period in the prior fiscal year as shipments for most product categories were hampered by decreased demand largely resulting from the global economic recession. Worldwide sales of golf maintenance equipment and irrigation systems were down significantly, as were sales of professionally installed residential/commercial irrigation products and landscape contractor equipment. Residential segment net sales also decreased by 4.7 percent and 2.8 percent for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in fiscal 2008 due mainly to a decline in worldwide shipments and decreased demand for riding products. Somewhat offsetting these declines were an increase in sales of walk power mowers as a result of additional product placement at a key retailer for a new and broader line of walk power mowers, as well as strong demand for snow thrower products in North America as a result of heavy snow falls during the winter season of 2008/2009 for the year-to-date comparison. International net sales for the second quarter and year-to-date periods of fiscal 2009 were down 24.8 percent and 21.6 percent, respectively, from the same periods in the prior fiscal year due also to reduced demand as a result of the recessionary conditions affecting our key international markets, as well as a stronger U.S. dollar compared to other currencies in which we transact business that accounted for approximately $12 million and $24 million of our net sales decline for the second quarter and year-to-date periods of fiscal 2009, respectively.
Selling, general, and administrative expense decreased $22.7 million, or 18.2 percent, for the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. SG&A expense decreased $35.3 million, or 14.6 percent for the year-to-date period of fiscal 2009 compared to the year-to-date period of fiscal 2008. SG&A expense as a percentage of net sales for the second quarter and year-to-date periods of fiscal 2009 increased to 20.5 percent and 24.6 percent, respectively, compared to 19.6 percent and 23.2 percent for the second quarter and year-to-date periods of fiscal 2008, respectively, due to fixed SG&A costs spread over lower sales volumes. The decline in SG&A expense was primarily attributable to overall reduced spending in response to the continuing worldwide recessionary economic conditions, as well as lower profit sharing and incentive compensation expense of $1.8 million and $5.5 million for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year. Somewhat offsetting those declines were increased costs incurred for workforce reductions of $2.1 million and higher bad debt expense of $1.3 million, mainly for the year-to-date comparison.
Other income, net for the second quarter and year-to-date periods of fiscal 2009 increased $2.3 million and $1.4 million, respectively, compared to the same periods in the prior fiscal year. These increases were due to foreign currency exchange rate gains this year compared to foreign currency exchange rate losses last year, somewhat offset by a decline in financing charge revenue and lower interest income.
Read the The complete ReportTTC is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
Toro Company designs manufactures and markets consumer and professional turf maintenance equipment snow removal products and irrigation systems and provides landscaping and turf maintenance services. The company manufactures walk-behind power mowers and snowblowers and riding lawn mowers and lawn and garden tractors. The company designs and markets electrical and gas products professional turf maintenance equipment and turf irrigation products. The Toro Company has a market cap of $1.21 billion; its shares were traded at around $33.71 with a P/E ratio of 14.9 and P/S ratio of 0.6. The dividend yield of The Toro Company stocks is 1.8%. The Toro Company had an annual average earning growth of 18.8% over the past 10 years. GuruFocus rated The Toro Company the business predictability rank of 4-star.
Highlight of Business Operations:
For the second quarter of fiscal 2009, our net sales were down 21.7 percent compared to the second quarter of fiscal 2008. Year-to-date net sales were also down by 19.6 percent compared to the same period last fiscal year. Shipments of most professional segment products were significantly down due to decreased demand and customers reluctance to place stocking orders largely as a consequence of the global recessionary conditions, which also resulted in lower field inventory levels for our domestic businesses. Residential segment net sales were also down by 4.7 percent and 2.8 percent for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year due mainly to a decline in shipments of riding products, which was somewhat offset by an increase in sales of walk power mowers as a result of additional product placement at a key retailer for a new and broader line of walk power mowers. International net sales declined 24.8 percent and 21.6 percent for the second quarter and year-to-date periods of fiscal 2009, respectively, from the same periods in the prior fiscal year, due also to reduced demand as a result of the recessionary conditions affecting our key international markets, as well as a stronger U.S. dollar that negatively impacted net sales by approximately $12 million and $24 million for the second quarter and year-to-date periods of fiscal 2009, respectively. Our net earnings declined 41.3 percent and 46.5 percent for the second quarter and year-to-date periods of fiscal 2009 to $36.9 million and $43.6 million, respectively, compared to the same periods in the prior fiscal year. These decreases were primarily the result of lower sales volumes and lower gross margin due to higher commodity costs, production cuts, and unfavorable product mix in the second quarter and year-to-date periods of fiscal 2009 compared to the same periods last fiscal year.During this difficult economic environment, we have been reducing expenses and continuing efforts to reduce working capital. As a result of these actions, our selling, general, and administrative (SG&A) expenses were down $22.7 million and $35.3 million for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year. In February 2009, we announced the reduction of our worldwide salaried and office workforce by approximately 100 employees, suspension of regularly scheduled salary increases, a reduction of officers salaries, changes in our vacation policy, and four furlough days – all for the remainder of fiscal 2009. Our inventory levels also decreased 18.7 percent for the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008, which also contributed to a decline in short-term debt of $118.6 million as of the end of the second quarter of fiscal 2009 compared to the end of the second quarter of fiscal 2008. We declared a cash dividend of $0.15 per share during the second quarter of fiscal 2009, which was equivalent to the cash dividend we declared in the first quarter of fiscal 2009 and each quarter of fiscal 2008.
Net earnings for the second quarter of fiscal 2009 were $36.9 million, or $1.00 per diluted share, compared to $62.8 million, or $1.60 per diluted share, for the second quarter of fiscal 2008, net earnings per diluted share decrease of 37.5 percent. Year-to-date net earnings in fiscal 2009 were $43.6 million, or $1.18 per diluted share, compared to $81.4 million, or $2.07 per diluted share, last fiscal year, net earnings per diluted share decrease of 43.0 percent. The primary factors contributing to these declines were lower sales volumes and a decline in gross profit, somewhat offset by a decrease in SG&A expense and a lower effective tax rate.
Worldwide consolidated net sales for the second quarter and year-to-date periods of fiscal 2009 were down 21.7 percent and 19.6 percent, respectively, from the same periods in the prior fiscal year. Worldwide professional segment net sales were down 29.2 percent and 26.4 percent for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same period in the prior fiscal year as shipments for most product categories were hampered by decreased demand largely resulting from the global economic recession. Worldwide sales of golf maintenance equipment and irrigation systems were down significantly, as were sales of professionally installed residential/commercial irrigation products and landscape contractor equipment. Residential segment net sales also decreased by 4.7 percent and 2.8 percent for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in fiscal 2008 due mainly to a decline in worldwide shipments and decreased demand for riding products. Somewhat offsetting these declines were an increase in sales of walk power mowers as a result of additional product placement at a key retailer for a new and broader line of walk power mowers, as well as strong demand for snow thrower products in North America as a result of heavy snow falls during the winter season of 2008/2009 for the year-to-date comparison. International net sales for the second quarter and year-to-date periods of fiscal 2009 were down 24.8 percent and 21.6 percent, respectively, from the same periods in the prior fiscal year due also to reduced demand as a result of the recessionary conditions affecting our key international markets, as well as a stronger U.S. dollar compared to other currencies in which we transact business that accounted for approximately $12 million and $24 million of our net sales decline for the second quarter and year-to-date periods of fiscal 2009, respectively.
Selling, general, and administrative expense decreased $22.7 million, or 18.2 percent, for the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. SG&A expense decreased $35.3 million, or 14.6 percent for the year-to-date period of fiscal 2009 compared to the year-to-date period of fiscal 2008. SG&A expense as a percentage of net sales for the second quarter and year-to-date periods of fiscal 2009 increased to 20.5 percent and 24.6 percent, respectively, compared to 19.6 percent and 23.2 percent for the second quarter and year-to-date periods of fiscal 2008, respectively, due to fixed SG&A costs spread over lower sales volumes. The decline in SG&A expense was primarily attributable to overall reduced spending in response to the continuing worldwide recessionary economic conditions, as well as lower profit sharing and incentive compensation expense of $1.8 million and $5.5 million for the second quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year. Somewhat offsetting those declines were increased costs incurred for workforce reductions of $2.1 million and higher bad debt expense of $1.3 million, mainly for the year-to-date comparison.
Other income, net for the second quarter and year-to-date periods of fiscal 2009 increased $2.3 million and $1.4 million, respectively, compared to the same periods in the prior fiscal year. These increases were due to foreign currency exchange rate gains this year compared to foreign currency exchange rate losses last year, somewhat offset by a decline in financing charge revenue and lower interest income.
Read the The complete ReportTTC is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
