Robust lawn mower sales boosted results for the Toro Co., helping it to beat Wall Street’s expectations for the second quarter.
The Bloomington manufacturer of lawn mowers, snowblowers, plows and construction equipment saw sales increases in both professional and residential divisions.
In a conference call with analysts Thursday morning, CEO Michael Hoffman credited the solid results to good spring weather and a line of new products that included new zero-turn riding mowers, an all-wheel-drive walk power-mower, a new golf fairway mower that is a hybrid and new fertilizer-spraying equipment offerings.
Hoffman also said Toro was able to increase the variety of products sold in retail stores during the quarter. Separately, the company benefited from its recently acquired Boss line of snowplows and ice management systems. The Boss addition is expected to boost Toro results in the fourth quarter and help out full-year results, Hoffman said.
For the quarter, total earnings rose 8 percent to $93.8 million, or $1.64 for the quarter, which was 2 cents better than analysts forecast. Revenue rose nearly 11 percent to $826.2 million.
Toro’s stock price closed at $69.27. down 5 cents.
While results were strong, Toro was not immune from the high U.S. dollar and unfavorable foreign-currency exchange rates that have hammered many U.S. manufacturers and exporters for months.
Renee Peterson, Toro’s chief financial officer, said the foreign exchange rates were “a bigger head wind than we originally anticipated.”
The high U.S. dollar not only makes exported U.S. products more expensive for overseas customers but also lowers the value of profits from goods actually made overseas once they are converted into U.S. dollars.
For the quarter, residential mower sales proved particularly strong, Hoffman said.
“We are in one of the biggest months of the year from a retail demand standpoint,” he said. “There is much to be encouraged about with the retail demand year to date.”
Raymond James stock analyst Sam Darkatsh agreed. “The 27 percent growth in residential [sales] is obviously really heady.”
Residential product sales hit $268 million for the quarter, while residential profits jumped an impressive 46 percent to $35 million.
Toro’s larger professional division saw mixed results. Sales rose 4.6 percent to $552 million, but profit dipped 1.3 percent to $120.8 million.
Toro reiterated that it still expects full-year 2015 revenue growth of 8 to 10 percent and earnings per share of $3.35 to $3.45. For the third quarter, Toro expects net earnings per share of 85 to 90 cents.