In the words of Pete Najarian, co-founder of optionmonster.com and a regular on CNBC’s Halftime Report, Toro is “just killing it.”
Landscape contractors have done their part to help shares of the Bloomington, Minnesota-based company rise about 10 percent in the past 12 months, while this week’s announcement of record earnings in the company’s fiscal first quarter (ended Jan. 29) certainly bodes well for another strong year.
Toro reported net earnings for the quarter of $39.3 million, or 70 cents a share, up from $31 million, or 54 cents per share, in the same period last year.
In a conference call with securities analysts Thursday, Toro’s chairman and CEO, Mike Hoffman, said results were “off to a good start” across the board. He pointed especially to the landscape contractor segment, as well as retail riding mowers and specialty construction products as strong performers.
“The positive outlook for spring also prompted increased sales of professional landscape contractor equipment during the quarter,” Hoffman said on the call, “including our stand-on and walk power mowers as well as our zero-turn riders.”
The company noted, too, that its net sales would have increased even more during the quarter were it not for the adverse effects of foreign-exchange rates. Toro does business in 90 countries, although about 75 percent of its revenue is generated by U.S. sales.
One of the few negatives during the company’s record-setting quarter stemmed from minimal snows early in the season. Winter’s warm beginning slowed sales of snow-removal equipment, particularly residential snow throwers. Still, those sales boomed during the previous year so the most recent quarter’s performance was also dimmed by the tough comparison to Q1 2015.
Hoffman said sales of snow throwers and related products rebounded somewhat after snow showers returned in mid-January, with last month’s big snow storms providing a late but significant bump to retail sales.
Looking toward spring, professional landscapers boosted first-quarter performance with early orders of stand-on, zero-turn and walk-behind mowers, Hoffman told analysts on the call. The November-January quarter also benefitted from retail sales of residential mowers due to the an exceptionally warm fall in much of the country.
Although foreign-exchange rates presented challenges to the company during the first quarter, Hoffman said Toro’s international sales held up well with respect to both professional landscaping and irrigation equipment.
Meanwhile, the company’s president and chief operating officer, Rick Olson, said he expects the landscape contractor segment of the market to remain strong as Toro heads into early spring. He acknowledged that some supply shortages the company experienced at this time last year had caused problems, but Olson assured analysts on the call that Toro is in good shape on that front this year.
“We do believe that there is strength in that (landscaping) market,” he said, adding that Toro has “strong preseason booking orders in hand ready to ship in the weeks ahead.”