Bloomington, Minn.-based Toro Co. last week reported net earnings of $19.8 million, or $0.54 per share, on net sales of $394.9 million for its fiscal third quarter ended July 31, a 48-percent decline from net earnings of $38.2 million, or $0.99 per share, on net sales of $492.6 million in the comparable fiscal 2008 period.
For the fiscal year to date, Toro reported net earnings of $63.4 million, or $1.73 per share, on net sales of $1,234.9 million, a 47-percent drop from net earnings of $119.6 million, or $3.06 per share, on net sales of $1,536.9 million in the comparable fiscal 2008 period.
“Despite a persistently difficult economic environment, we’ve been able to offset some of the impact through aggressive and disciplined actions,” said Michael Hoffman, Toro’s chairman and CEO. “We are focused on driving retail demand and have improved our market share in many product categories. Additionally, we are continuing to realign our cost structure and execute against our working capital initiative, which has resulted in significant reductions in inventory for both Toro and our channel partners. While we cannot insulate ourselves from the broad economic downturn, we believe these actions put us in a better position when our industry starts heading in the right direction.”
To provide additional resources to support strategic growth, the company recently announced the creation of Red Iron Acceptance, LLC, a new joint venture with an indirect subsidiary of TCF Financial Corp. This new commercial finance entity will provide floor plan and open account financing for the company’s U.S. and select Canadian channel partners. For Toro, the venture will help improve working capital and free up cash to deliver increased value to shareholders.
The company’s solid cash flow enabled it to return value to shareholders through dividend payments and share repurchases. During the fiscal 2009 third quarter, the company repurchased 1.6 million common shares and, as previously announced, received authorization in July to repurchase an additional 5 million common shares.
“We will manage the business with the expectation of no significant improvement in our end markets in the near future,” said Hoffman. “While we continue to carefully manage costs, we will also maintain our focus on driving market share improvements by bringing innovation to our customers. We will also invest in new initiatives that enable future growth when our markets recover.”
The company continues to expect fiscal 2009 revenues to decline about 18 percent from fiscal 2008. However, due to one-time charges of $0.15 per share in the fiscal 2009 third quarter to account for workforce adjustments, valuation allowance for taxes, and expenses for several legal matters, the company now expects net earnings per share for fiscal 2009 to be approximately $1.53 to $1.63.
The Toro Co. provides outdoor maintenance equipment and beautification products for use on golf courses, sports fields, public green spaces, commercial and residential properties and agricultural fields.