Better weather and lawn mower demand raised Toro Co.’s sales for the fiscal third quarter, while improved efficiency measures led executives Thursday to raise their outlook for the full year.
Bloomington-based Toro, which makes residential and commercial lawn equipment, irrigation systems and light construction equipment, reported stronger residential sales during the quarter. Homeowners who put off purchases during the cold and snowy spring instead bought lawn mowers and hedge clippers during the latest three-month reporting-period, which ended Aug. 2, the company said.
Company officials praised the summer weather, which showed a vast improvement over the drought-affected 2012.
Toro’s largest business, the professional segment, enjoyed strong landscape equipment sales and a positive reception for its latest “zero-turn” riding mowers during the quarter.
But total professional sales were clipped as golf courses put off buying the cleaner diesel mowers that manufacturers are now required to make under environmental rules that went into effect in January 2013. Some golf courses purchased older-model machines to avoid the higher price tag.
As a result, “The professional margins were as low as they have been since 2009,” noted Raymond James analyst Sam Darkatsh during a conference call with company officials Thursday.
CEO Michael Hoffman said “that will normalize” once the industry moves to the cleaner machines and higher price tags become standard.
The regulatory hit to earnings was not enough to erase total results, as cost cutting and the jump in residential and contractor equipment sales carried the quarter.
Total sales rose 1.2 percent to $509.9 million. Earnings were $40.1 million, just below the year-ago level of $40.5 million. Earnings were 68 cents a share, 11 cents better than Wall Street analysts expected.
Going forward, Toro officials said they expect improved profit margins in 2013 and favorable sales comparisons over the weather-challenged 2012, when drought affected much of the U.S.
Toro boosted its full-year forecast. Executives said they now expect a 4 percent jump over 2012 sales, which were $1.96 billion, and a 19 percent jump in earnings to $2.55 per share.
Investors welcomed the news. Toro’s shares rose $3.54 per share, or 7.3 percent, on Thursday to $52.32.