Someone has to benefit from the relentless snowfalls this winter, right?
Toro Co. reported a record first quarter Thursday with help from the weather — and the company predicted that the storms would help boost profits for its entire fiscal year.
As a result, the Bloomington-based maker of lawn mowers, snowplows, snow throwers and golf course irrigation systems increased its forecast for all of 2015.
The snowstorms that have assaulted the Northeast and Midwest this winter have "helped to spur demand, drive retail sales, right-size field inventories and position us well for the preseason next fall," Toro CEO Michael Hoffman told Wall Street analysts during a conference call Thursday.
Based on the news, S&P Capital IQ Equity Analyst Jim Corridore increased his 2015 earnings estimate and stock price targets for the company. In a note to investors, he said the company's growth surpassed its peers.
"We are positive on demand drivers for [Toro's] professional and residential turf and snow units," he wrote.
With the stock trading near its 52-week high, Corridore maintained his "hold" rating on the stock.
Toro shares rose 9 cents to close at $68.81 a share Thursday.
For the quarter, Toro earned $30.1 million, or 54 cents a share, beating analysts' estimates by 5 cents.
Sales, however, rose 6 percent to $474 million, about $11 million shy of Wall Street's forecasts. Sales rose amid strong professional snow equipment sales in the fiscal quarter that ended Jan. 30.
Hoffman told analysts that he was happy with results, which benefited from last year's purchase of Boss, a maker of professional snowplow and de-icer dispensing equipment.
"We are encouraged by the execution in that business and the sales it contributed to the quarter," adding about $29 million in new revenue to the quarter, Hoffman said.
Boss aside, Toro is seeing fresh orders, new products in the pipeline and high optimism for an improved golf season for 2015. That combination led Toro to raise its forecast for the year. It still expects revenue to grow 8 to 10 percent, but now expects net earnings to reach $3.35 to $3.45 a share. The forecast change also factors in a tax benefit.
Even with the boost, Hoffman told analysts that the quarter had its share of problems. Toro wrestled with a strong U.S. dollar that made exports to Europe and other places more expensive. Hoffman noted that foreign currencies have "weakened significantly" since December. "We didn't plan on that level of head wind," he said.
Separately, Toro dealt with parts delays caused by labor battles raging at West Coast ports. The end result was a quarter "challenged by lower shipments of residential 'zero turn' riding mowers due to supply inefficiencies and the ramp up of production of our highly anticipated new platform," Hoffman said.
Residential product sales fell 8.7 percent to $134 million during the quarter. In contrast, professional sales, including Boss and global golf-related sales, jumped 15 percent to $340 million.