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The Toro Company Reports 24% Jump in Sales in Q2

Original source: The Toro Company

toro7621.jpg

BLOOMINGTON, Minn.--(BUSINESS WIRE)--Jun. 3, 2021-- The Toro Company (NYSE: TTC) today reported results for its fiscal second quarter ended April 30, 2021.


“We delivered record results in the quarter, with continued momentum across our professional and residential segments,” said Richard M. Olson, chairman and chief executive officer. “Sales grew at a robust pace, and earnings grew at nearly twice the sales growth rate. These excellent results point to a strong overall demand environment and continued favorable reception of our innovative products, along with our ability to successfully manage the dynamic supply chain environment and execute well operationally. Our team and channel partners delivered these results while remaining focused on serving our customers and keeping each other safe.


“Sales of professional products connected to golf, landscape contractor, and irrigation markets, as well as residential zero-turn riding mowers and Flex-Force battery-powered product offerings, drove growth in the second quarter,” continued Olson. “Our expanding line of battery-powered products across residential and professional markets continues to underscore our commitment to offering sustainable solutions.


“As we capitalize on robust demand in an increasingly dynamic operating environment, we remain committed to positioning the company for the future,” added Olson. “We are actively prioritizing investments in key technology areas such as alternative power, smart connected and autonomous, and ensuring we have capacity to meet future growth.”


SECOND-QUARTER FISCAL 2021 FINANCIAL HIGHLIGHTS



  • Net sales of $1.15 billion, up 23.6% from $929.4 million in the second quarter of fiscal 2020.

  • Net earnings of $142.2 million, up 44.4% from $98.4 million in the second quarter of fiscal 2020; *adjusted net earnings of $140.3 million, up 40.1% from $100.2 million in the second quarter of fiscal 2020.

  • Reported EPS of $1.31 per diluted share, up 44.0% from $0.91 per diluted share in the second quarter of fiscal 2020; *adjusted EPS of $1.29 per diluted share, up 40.2% from $0.92 per diluted share in the second quarter of fiscal 2020.


YEAR-TO-DATE FISCAL 2021 FINANCIAL HIGHLIGHTS



  • Net sales of $2.02 billion, up 19.2% from $1.70 billion in the same prior-year period.

  • Net earnings of $253.5 million, up 50.4% from $168.5 million in the same prior-year period; *adjusted net earnings of $233.5 million, up 37.5% from $169.8 million in the first six months of fiscal 2020.

  • Reported EPS of $2.32 per diluted share, up 49.7% from $1.55 per diluted share in the same prior-year period; *adjusted EPS of $2.14 per diluted share, up 37.2% from $1.56 per diluted share in the first six months of fiscal 2020.

  • Deployed $100.0 million to pay down debt and returned $163.8 million to shareholders through regular dividends of $56.6 million and share repurchases of $107.2 million. As of April 30, 2021, the company had ample liquidity of $1.1 billion.


OUTLOOK


“As we look ahead to the second half of the year, we are encouraged by the positive demand trends across our businesses, the enthusiastic customer response to innovative new product offerings, and the benefits from our productivity and synergy initiatives. At the same time, the escalation of supply chain and inflationary pressure is likely to create near-term headwinds. We anticipate the impact of this pressure to be most pronounced in the third quarter, before mitigating actions can be more fully realized. All in, we expect enhanced operating performance for the full fiscal year. Our sharp focus on The Toro Company’s enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people positions us well to navigate through these dynamic times and capitalize on our unique position in key growth markets,” concluded Olson.


The company is raising its full-year fiscal 2021 guidance, and now expects total net sales growth in the range of 12.0% to 15.0% and *adjusted EPS in the range of $3.45 to $3.55 per diluted share. The company’s updated guidance is based on management’s current visibility, and reflects expectations of a continuing increased demand environment, as well as escalation of supply chain disruption and inflation. The *adjusted diluted EPS guidance range excludes the benefit of the excess tax deduction for stock-based compensation and the net impact of certain legal settlements.


FISCAL SECOND-QUARTER SEGMENT RESULTS


Professional Segment


Professional segment net sales for the second quarter were $828.4 million, up 25.3% compared with $661.1 million in the same period last year. The increase was largely driven by strong demand for golf, landscape contractor, irrigation, and rental and specialty construction products, slightly offset by decreased sales of underground construction equipment.


Professional segment earnings for the second quarter were $167.1 million, up 57.3% compared with $106.3 million in the same period last year, and when expressed as a percentage of net sales, up 410 basis points to 20.2% from 16.1%. The increase was primarily driven by productivity improvements, including COVID-related manufacturing inefficiencies in the second quarter of last year that did not repeat, net price realization and volume leverage, partially offset by higher commodity costs.


Residential Segment


Residential segment net sales for the second quarter were $315.0 million, up 20.2% compared with $262.0 million in the same period last year. The increase was primarily due to strong retail demand for zero-turn riding mowers and expanded Flex-Force battery-powered product offerings, as well as snow equipment, due to late season snowstorms and enhanced retail placement.


Residential segment earnings for the second quarter were $46.0 million, up 23.9% compared with $37.1 million in the same period last year, and when expressed as a percentage of net sales, up 40 basis points to 14.6% from 14.2%. The increase was largely driven by productivity improvements, including COVID-related manufacturing inefficiencies in the second quarter of last year that did not repeat, net price realization and product mix, partially offset by higher commodity costs.


OPERATING RESULTS


Gross margin for the second quarter was 35.1%, up 210 basis points compared with 33.0% for the same prior-year period. *Adjusted gross margin for the second quarter was 35.1%, up 170 basis points compared with 33.4% for the prior-year period. The increases in gross margin and adjusted gross margin were primarily due to productivity improvements, including COVID-related manufacturing inefficiencies in the second quarter of last year that did not repeat, net price realization and product mix, partially offset by higher commodity costs.


SG&A expense as a percentage of net sales for the second quarter decreased 10 basis points to 19.4% from 19.5% in the prior-year period. The decrease was primarily due to volume leverage and reduced indirect marketing expenses, partially offset by higher incentives due to improved performance and the reinstatement of certain costs that had been part of the company’s fiscal 2020 pandemic-driven expense reductions.


Operating earnings as a percentage of net sales increased 220 basis points to 15.7% for the second quarter. *Adjusted operating earnings as a percentage of net sales increased 170 basis points to 15.7% for the second quarter.


Interest expense was down $1.5 million for the second quarter to $7.1 million, driven by lower debt levels and decreased interest rates.


The effective tax rate for the second quarter was 19.8% compared with 18.9% for the second quarter of fiscal 2020. The *adjusted effective tax rate for the second quarter was 20.9% compared with 20.0% for the second quarter of fiscal 2020. The increases in the effective tax rate and adjusted effective tax rate were primarily driven by the geographic mix of earnings.


*Non-GAAP financial measure. Please see the tables provided for a reconciliation of historical non-GAAP financial measures to the most comparable GAAP measures.



... GO TO 24% Jump in Sales in Q2 TO READ MORE

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