Ample rain, healthy green lawns and preorders for snow equipment helped Toro Co. deliver a strong quarter that beat expectations and allowed it to raise its full-year guidance, company officials said Thursday, a day after the company announced a significant leadership change.
Toro Co. promoted veteran executive Richard M. Olson to the role of president and chief operating officer, a move that positions him in line as a likely successor to chief executive and chairman Michael J. Hoffman.
Olson, 51, joined Toro 29 years ago and is currently its group vice president of international and micro-irrigation businesses and the head of global distributor development.
In his new role, Olson will oversee all Toro businesses and global operations and continue reporting to Hoffman.
Analysts noted that Olson’s promotion appears to indicate he is the heir apparent to Hoffman, who is 60 and has been with Toro since 1977. Hoffman became COO and president in October 2004, CEO in March 2005 and board chairman in 2006.
The realignment comes at a prosperous time for Toro, which is based in Bloomington and manufactures residential and professional lawn mowers, snow throwers, snowplows, ice melt spreaders, construction equipment and irrigation systems.
Toro on Thursday reported profits that rose 6 percent to $53.3 million, or 94 cents a share, for the three months ended July 31. Analysts had forecast a profit of 91 cents a share.
Revenue rose 7 percent to $609.6 million, below analysts’ forecasts for $613 million.
Toro shares rose 93 cents to close at $71.99 Thursday.
Toro’s news caused some analysts, such as Jim Corridore with S&P Capital IQ, to raise Toro stock price targets for the year.
“Toro sees strong demand for its professional products and sees improving residential demand over the next year on new product introductions and a better U.S. economy,” Corridore said in a research note.
In a conference call to analysts, Hoffman said Toro’s third quarter benefited from favorable summer growing conditions, strong landscape equipment sales, new product introductions and from very strong orders for the Boss line of snowplows and ice melt spreaders that Toro acquired late last year.
The company also saw a rise in quarterly revenue from Toro’s burgeoning construction equipment division. ”Overall we are pleased with our third-quarter results,” Hoffman said. “We are well positioned to close out the end of the year with strong fourth-quarter momentum.”
With the better-than-expected results, Toro raised its outlook for the full year, saying that fiscal 2015 earnings should now reach $3.50 per share, which is up from its prior guidance of $3.35 to $3.45. Sales are now expected to grow 10 percent, at the high end of its previous range of 8 to 10 percent.
Hoffman attributed half of the expected sales surge to heightened demand for Boss snow products in the wake of last year’s record snowstorms across much of the country.
While overall results proved solid, Toro Chief Financial Officer Renee Peterson said foreign currency exchange rates somewhat clipped sales and profits, especially in Toro’s professional product line. The full-year impact is expected to be about $30 million, she said.