Toro Co. lowered its guidance for fiscal 2009, saying sales probably will drop 5 percent next year as consumer and business customers slog through the uncertain economy.
Toro, which makes lawn mowers, irrigation systems and utility vehicles, took a $4.7 million charge for the fiscal fourth quarter to cover severance costs from a voluntary early retirement program.
Fourth-quarter sales grew 3 percent to $341 million, thanks largely to strong sales in Europe and Australia. But the company's charge lowered fourth-quarter earnings by 8 cents a share. As a result net earnings were just $13,000 or 0.0 cents per share, compared with $6.5 million, or 16 cents per share, for the same period a year ago.
Officials said that the weak economy and high commodity and freight prices also depressed earnings.
Analysts had expected fourth-quarter earnings of 7 cents a share and revenue of $325 million. Excluding the severance charge, results exceeded expectations and sent Toro's stock up $1.12, or 3.71 percent, Tuesday to close at $31.28.
"The company expects the weak market conditions to continue well into 2009," said CEO Mike Hoffman. The company will introduce new products and shed about $10 million in annual costs through an unspecified number of job cuts and lean manufacturing improvements. The company also reported a record $216 million in cash flow for fiscal 2008, which impressed analysts.
In addition, commercial customers are not seeing severe credit tightening issues. On the retail side, credit financing companies have tightened availability but bankers have informed the company that credit should begin loosening next year, officials said.
Hoffman and CFO Stephen Wolfe told analysts Tuesday that global economic weakness and tight credit markets made predictions for next year difficult. However, they now expect that 2009 revenue could be down 5 percent and that earnings could reach just $2.50 to $2.70 a share. That compares with fiscal year 2008 earnings of $119.7 million, or $3.10 a share, on sales of $1.88 billion.
First-quarter earnings are expected to be 15 to 25 cents a share.
Dee DePass • 612-673-7725
4th quarter FY2008, 10/312008 2007 % chg. Revenue $341.2 $332.5 +2.6 Income 0.0 6.5 -99.8 Earn/share 0.00 0.16 --
12 monthsRevenue $1,878.2 $1,876.9 +0.1 Income 119.7 142.4 -16 Earn/share 3.10 3.40 -8.8
Figures in millions except for earnings per share.