Toro's acquisition of Charles Machine Works, its largest ever, closed ahead of schedule in the second quarter and helped Toro report a 9.9% increase in revenue and raise its guidance for the remainder of the year.
For the quarter ending May 3, Bloomington-based Toro's sales of $962 million might have been higher, but poor spring weather and supplier issues delayed shipments, particularly in the company's professional segment.
The company earned $115.6 million, or $1.07 per share, compared with $131.3 million, or $1.21 per share. The 12% earnings decrease was attributed to acquisition costs but also to increased expenses associated with tariffs and trade issues. Adjusted for those and other one-time issues, the earnings were still down 2.5%.
"The first half of 2019 has been dynamic for the Toro Company," said Richard Olson, Toro's chief executive, in a news release. "We continue to be excited about the transformational acquisition of Charles Machine Works, while managing through unfavorable weather conditions in key regions."
Late-season snowfalls were a boon for the sale of residential and professional snow removal and ice-management products, setting the company up for strong preseason sales later this year, but it also meant a slower arrival of spring and lagging sales for golf and grounds equipment.
Toro announced the $700 million acquisition of Perry, Okla.-based Charles Machine Works on Feb. 15 and closed the transaction on April 1. The deal for the privately held company gives Toro complementary products in its specialty construction business — including key brands such as Ditch Witch, which makes trenchers, directional drills and other products used for underground infrastructure installation, repair and construction.
Toro also continued to expand its professional turf maintenance business, including a multiyear contract at Allianz Field in St. Paul, the new home of the Minnesota United soccer team. The company is the supplier of choice at 60% of Major League Soccer stadiums.
The company announced on May 3 an 11-year equipment and tournament support agreement with Hazeltine National Golf Club in Chaska that will extend through several major events, including the Ryder Cup in 2028.
The addition of Charles Machine Works and new product introductions ahead of Toro's key selling season means the company now expects year-end earnings to be in the range of $2.90 to $3 per share and for annual revenue to be $3.2 billion.
Toro's shares lost 5.6% of their value Thursday, closing at $66.58. The shares were up 26.6% for the year leading into Thursday. They have traded during the past 52 weeks between $52.97 and $75.13 per share.
Patrick Kennedy • 612-673-7926
