Low demand for snow gear melts Toro's earnings

  • Article by: DEE DEPASS and JANET MOORE , Star Tribune staff writers
  • Updated: December 5, 2012 - 8:43 PM

CEO Michael Hoffman said demand for other products, though, was strong.

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Zeke Christensen mows the grass with a Toro 5910 at Valley Lake Park in Apple Valley in May. Demand for golf course gear was strong, andToro's sales of professional landscape equipment grew.

Photo: Joel Koyama, Star Tribune

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Good weather dumped bad news on Toro Co. Wednesday.

The Bloomington-based lawn-care equipment maker reported plummeting fourth-quarter earnings because of sparse snowfall and a corresponding drop in snowthrower sales.

For the fiscal quarter ended Oct. 31, Toro said earnings were $251,000, or zero cents per share. That compares with $5 million, or 8 cents a share, reported for the same period a year ago.

Earnings per share were adjusted to reflect the company's 2-for-1 stock split, which took effect June 29.

On average, Wall Street analysts weren't expecting any earnings per share for the period.

Sales for the quarter fell to $339 million from $368 million a year ago. On average, analysts expected sales of $350 million.

Toro Chairman and CEO Michael Hoffman told Wall Street analysts during a conference call Wednesday that "The majority of the decline in sales for the quarter resulted from the lack of snowthrower shipments due to soft preseason demand."

He noted, however, that "retail sales activity for many of our products was strong this fall, which helped get field inventories in good shape heading into the upcoming season."

Hoffman said U.S. golf course equipment sales proved strong for the full year and that Toro saw growth in new professional landscape equipment, micro irrigation and in residential mowing sales across the Americas.

International economic issues, particularly in Europe, "negatively impacted the sales of most professional businesses for the year," officials said.

For the fiscal year, Toro said earnings grew 4 percent to $129.5 million, or $2.14 per share, compared with $118 million, or $1.85 per share, for fiscal 2011. This year's per-share results matched analysts' expectations but beat the company's own internal forecast by 4 cents per share.

Sales for fiscal 2012 were $1.96 billion, up slightly from $1.88 billion in fiscal 2011.

Toro's shares fell $2.62 per share to close at $42.45 Wednesday. The stock had recently been trading near its 52-week high of $45.18 a share.

Toro expects revenue to grow 4 to 5 percent in fiscal 2013 and for earnings to reach $2.35 to $2.40 a share. First-quarter earnings are expected to hit 40 to 45 cents a share.

Hoffman reiterated that Toro hopes to achieve an operating earnings goal of 12 percent by the end of fiscal 2014.

Dee DePass • 612-673-7725 Janet Moore • 612-673-7752

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