The Toro Company (TTC, Financial) filed Quarterly Report for the period ended 2009-07-31.
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 $1.3 billion; its shares were traded at around $36.26 with a P/E ratio of 18.5 and P/S ratio of 0.7. The dividend yield of The Toro Company stocks is 1.6%. 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 SG&A expenses were down $16.7 million and $52.0 million for the third quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year. In fiscal 2009, we reduced our worldwide salaried and office workforce by approximately 135 employees through workforce adjustment programs, suspended regularly scheduled salary increases, reduced officers salaries, changed our vacation policy, and added four furlough days. Our inventory levels also decreased 24.2 percent to $160.6 million for the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008, the lowest level in more than a decade.
Net earnings for the third quarter of fiscal 2009 were $19.8 million, or $0.54 per diluted share, compared to $38.2 million, or $0.99 per diluted share, for the third quarter of fiscal 2008, a net earnings per diluted share decrease of 45.5 percent. Year-to-date net earnings in fiscal 2009 were $63.4 million, or $1.73 per diluted share, compared to $119.6 million, or $3.06 per diluted share, last fiscal year, a net earnings per diluted share decrease of 43.5 percent. The primary factors contributing to these declines were lower sales volumes, a decline in gross profit, an increase in other expense from several legal matters, costs incurred for workforce adjustments, and a higher effective tax rate, somewhat offset by a decrease in SG&A expense.
Selling, general, and administrative expense decreased $16.7 million, or 15.1 percent, for the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008. SG&A expense decreased $52.0 million, or 14.7 percent, for the year-to-date period of fiscal 2009 compared to the year-to-date period of fiscal 2008. These declines in SG&A expense were 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 $3.2 million for the year-to-date period of fiscal 2009 compared to the same period in the prior fiscal year. Somewhat offsetting those declines were costs incurred for workforce adjustments of $1.0 million and $3.0 million for the third quarter and year-to-date periods of fiscal 2009, respectively. SG&A expense as a percentage of net sales for the third quarter and year-to-date periods of fiscal 2009 increased to 23.9 percent and 24.4 percent, respectively, compared to 22.5 percent and 23.0 percent for the third quarter and year-to-date periods of fiscal 2008, respectively, due to fixed SG&A costs spread over lower sales volumes.
Other expense, net for the third quarter of fiscal 2009 increased by $3.7 million compared to the third quarter of fiscal 2008. This increase in other expense was due mainly to expenses of $5.0 million in the aggregate for several legal matters and a decline in interest income of $0.2 million. Somewhat offsetting those increases in other expense was a decline in foreign currency exchange rate losses of $1.3 million. For the year-to-date period of fiscal 2009, we incurred $1.7 million of other expense compared to $0.5 million of other income for the year-to-date period of fiscal 2008 due to the same reasons mentioned in the quarter comparison.
Operating Earnings. Operating earnings for the residential segment in the third quarter and year-to-date periods of fiscal 2009 increased by $7.3 million, or 217.5 percent, and $4.2 million, or 15.0 percent, respectively, compared to the same periods last fiscal year. Expressed as a percentage of net sales, residential segment operating margin increased to 8.5 percent compared to 2.7 percent in the third quarter of fiscal 2008, and fiscal 2009 year-to-date residential segment operating margin increased to 7.7 percent compared to 6.6 percent last fiscal year. These profit improvements were primarily attributable to lower SG&A expense from a decline in spending for marketing, engineering, and warehousing as a result of budget reductions. In addition, residential segment gross profit for the third quarter of fiscal 2009 increased compared to the third quarter of fiscal 2008 as a result of lower commodity costs, and a decrease in freight expense. However, gross profit for the year-to-date period of fiscal 2009 was down compared to the same period last year due mainly to higher average commodity costs in the first half of fiscal 2009 compared to t
Read the The complete ReportTTC is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Robert Olstein of Olstein Financial Alert Fund.
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 $1.3 billion; its shares were traded at around $36.26 with a P/E ratio of 18.5 and P/S ratio of 0.7. The dividend yield of The Toro Company stocks is 1.6%. 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 third quarter of fiscal 2009, our net sales were down 19.8 percent compared to the third quarter of fiscal 2008. Year-to-date net sales were also down by 19.7 percent compared to the same period last fiscal year. Shipments of most professional segment products were significantly down due to decreased demand resulting largely as a consequence of the global recessionary conditions. Domestic field inventory levels were also down as of the end of the third quarter of fiscal 2009 compared to the end of the third quarter of fiscal 2008 as a result of continued focus and improved field inventory management during this economic downturn. Residential segment net sales increased slightly by 1.2 percent for the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008; however, year-to-date residential segment net sales declined slightly by 1.6 percent compared to the same period in the prior fiscal year. Sales of walk power mowers increased for the third quarter and year-to-date periods of fiscal 2009 compared to the same periods last fiscal year due mainly to additional product placement at a key retailer for a new and broader line of walk power mowers. However, sales of snow thrower products were down for the third quarter and year-to-date periods of fiscal 2009 compared to the same periods in the prior fiscal year due to the timing of the introduction for a new redesigned offering of snow thrower products that are anticipated to ship in the fourth calendar quarter of 2009. International net sales declined 20.1 percent and 21.4 percent for the third quarter and year-to-date periods of fiscal 2009, respectively, from the same periods in the prior fiscal year, also due 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 negatively impacted net sales by approximately $8 million and $31 million for the third quarter and year-to-date periods of fiscal 2009, respectively. Our net earnings declined 48.3 percent and 47.0 percent for the third quarter and year-to-date periods of fiscal 2009 to $19.8 million and $63.4 million, respectively, compared to the same periods in the prior fiscal year. These decreases were primarily the result of lower sales volumes, a decline in gross profit due to production cuts and unfavorable product mix, an increase in other expense from several legal matters, costs incurred for workforce adjustments, and a higher effective tax rate, somewhat offset by lower selling, general, and administrative (SG&A) expenses in the third 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 SG&A expenses were down $16.7 million and $52.0 million for the third quarter and year-to-date periods of fiscal 2009, respectively, compared to the same periods in the prior fiscal year. In fiscal 2009, we reduced our worldwide salaried and office workforce by approximately 135 employees through workforce adjustment programs, suspended regularly scheduled salary increases, reduced officers salaries, changed our vacation policy, and added four furlough days. Our inventory levels also decreased 24.2 percent to $160.6 million for the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008, the lowest level in more than a decade.
Net earnings for the third quarter of fiscal 2009 were $19.8 million, or $0.54 per diluted share, compared to $38.2 million, or $0.99 per diluted share, for the third quarter of fiscal 2008, a net earnings per diluted share decrease of 45.5 percent. Year-to-date net earnings in fiscal 2009 were $63.4 million, or $1.73 per diluted share, compared to $119.6 million, or $3.06 per diluted share, last fiscal year, a net earnings per diluted share decrease of 43.5 percent. The primary factors contributing to these declines were lower sales volumes, a decline in gross profit, an increase in other expense from several legal matters, costs incurred for workforce adjustments, and a higher effective tax rate, somewhat offset by a decrease in SG&A expense.
Selling, general, and administrative expense decreased $16.7 million, or 15.1 percent, for the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008. SG&A expense decreased $52.0 million, or 14.7 percent, for the year-to-date period of fiscal 2009 compared to the year-to-date period of fiscal 2008. These declines in SG&A expense were 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 $3.2 million for the year-to-date period of fiscal 2009 compared to the same period in the prior fiscal year. Somewhat offsetting those declines were costs incurred for workforce adjustments of $1.0 million and $3.0 million for the third quarter and year-to-date periods of fiscal 2009, respectively. SG&A expense as a percentage of net sales for the third quarter and year-to-date periods of fiscal 2009 increased to 23.9 percent and 24.4 percent, respectively, compared to 22.5 percent and 23.0 percent for the third quarter and year-to-date periods of fiscal 2008, respectively, due to fixed SG&A costs spread over lower sales volumes.
Other expense, net for the third quarter of fiscal 2009 increased by $3.7 million compared to the third quarter of fiscal 2008. This increase in other expense was due mainly to expenses of $5.0 million in the aggregate for several legal matters and a decline in interest income of $0.2 million. Somewhat offsetting those increases in other expense was a decline in foreign currency exchange rate losses of $1.3 million. For the year-to-date period of fiscal 2009, we incurred $1.7 million of other expense compared to $0.5 million of other income for the year-to-date period of fiscal 2008 due to the same reasons mentioned in the quarter comparison.
Operating Earnings. Operating earnings for the residential segment in the third quarter and year-to-date periods of fiscal 2009 increased by $7.3 million, or 217.5 percent, and $4.2 million, or 15.0 percent, respectively, compared to the same periods last fiscal year. Expressed as a percentage of net sales, residential segment operating margin increased to 8.5 percent compared to 2.7 percent in the third quarter of fiscal 2008, and fiscal 2009 year-to-date residential segment operating margin increased to 7.7 percent compared to 6.6 percent last fiscal year. These profit improvements were primarily attributable to lower SG&A expense from a decline in spending for marketing, engineering, and warehousing as a result of budget reductions. In addition, residential segment gross profit for the third quarter of fiscal 2009 increased compared to the third quarter of fiscal 2008 as a result of lower commodity costs, and a decrease in freight expense. However, gross profit for the year-to-date period of fiscal 2009 was down compared to the same period last year due mainly to higher average commodity costs in the first half of fiscal 2009 compared to t
Read the The complete ReportTTC is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Robert Olstein of Olstein Financial Alert Fund.
