Advertisement
U.S. markets close in 3 hours 36 minutes
  • S&P 500

    5,251.03
    +2.54 (+0.05%)
     
  • Dow 30

    39,774.79
    +14.71 (+0.04%)
     
  • Nasdaq

    16,380.81
    -18.71 (-0.11%)
     
  • Russell 2000

    2,133.66
    +19.31 (+0.91%)
     
  • Crude Oil

    82.66
    +1.31 (+1.61%)
     
  • Gold

    2,234.90
    +22.20 (+1.00%)
     
  • Silver

    24.86
    +0.11 (+0.44%)
     
  • EUR/USD

    1.0804
    -0.0026 (-0.24%)
     
  • 10-Yr Bond

    4.1930
    -0.0030 (-0.07%)
     
  • GBP/USD

    1.2639
    +0.0001 (+0.01%)
     
  • USD/JPY

    151.2550
    +0.0090 (+0.01%)
     
  • Bitcoin USD

    70,759.05
    +1,814.79 (+2.63%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,964.69
    +32.71 (+0.41%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Toro Q4 Earnings Top, Revenues Lag; FY15 Results Impress

The Toro Company TTC reported fourth-quarter fiscal 2015 (ended Oct 31, 2015) earnings of 42 cents per share, increasing a whopping 121% from 19 cents recorded in the year-ago quarter. Earnings also beat the Zacks Consensus Estimate of 39 cents.

Toro’s net sales came in at $480.8 million in the quarter, up 16% year over year. Revenues however lagged the Zacks Consensus Estimate of $484 million.

Operational Update

Cost of sales in the quarter increased 15% year over year to $312 million. Gross profit in the quarter came in at $168.6 million, up 17.8% year over year. Selling, general and administrative expenses declined 6.7% to $131.7 million. Operating profit surged around 88% year over year to $36.8 million.

Segment Performance

The Professional segment’s sales increased 21% year over year to $325 million. The addition of the BOSS snow and ice management business, as well as higher demand for landscape contractor and specialty construction equipment, drove the increase, partly offset by unfavorable effects of currency swings. Operating profit at the segment was $49 million, up from $31.6 million in the year-ago quarter.

Net sales at the Residential segment went up 6% year over year to $147 million driven by increased sales of residential snow products, including the launch of SnowMaster, along with rising demand for residential zero-turn riding mowers. Operating profit at the segment witnessed a marginal year-over-year decline of 3% to $15.8 million.

Financial Update

At the end of fiscal 2015, Toro had cash and cash equivalents of $126 million compared with $314.9 million at the end of fiscal 2014. The company generated $236.9 million in cash from operating activities in fiscal 2015, compared with $182.4 million in fiscal 2014. As of fiscal 2015 end, total debt stood at $378 million, compared with $374.8 million at the end of fiscal 2014.

In fiscal 2015, Toro returned over $160 million to shareholders through the payment of $55.5 million in dividends and the repurchase of more than 1.5 million shares. Additionally, the board authorized the repurchase of an additional 4 million shares.

The company declared a quarterly cash dividend of 30 cents per share, a 20% increase from its previous quarterly dividend. This dividend will be payable on Jan 11, 2016 to shareholders of record as on Dec 22, 2015.

Fiscal 2015 Highlights

Toro posted record earnings of $3.55 per share in fiscal 2015, up 17.5% year over year. Earnings also surpassed the Zacks Consensus Estimate of $3.52 per share.

Revenues in fiscal 2015 went up roughly 10% to a record $2.4 billion from $2.2 billion in fiscal 2014. Revenues came in line with the Zacks Consensus Estimate. Acquisition of BOSS snow and ice management business drove the upside, offset by unfavorable currency exchange rates.

Outlook

Toro guided revenue growth of about 4% and net earnings of about $3.80 to $3.90 per share for fiscal 2016. The company expects to report net earnings of about 58 cents to 60 cents per share in the first quarter.

For fiscal 2016, capital expenditures are projected at around $70 million, taking into account an additional investment in product research and development capabilities. The company will continue to look for opportunities to drive profitable growth through value-added acquisitions like investment in BOSS.

For fiscal 2016, Toro expects to maintain share repurchases at least at the same level as fiscal 2015. The company also expects to achieve an improvement in gross margin of about 50 basis points in fiscal 2016.

Toro’s BOSS business is positioned as the leader in the snow and ice management industry and continues to gain market share. Further, the landscape contractor businesses are also launching a number of product enhancements to aid growth.

Notably, the company anticipates increased demand in most regions for golf equipment and plans to prepare the launch of multiple products to serve the need. Golf renovation projects should also provide irrigation sales opportunities.

Moreover, Toro is focused on innovation, productivity and profitable growth. However, the company is concerned about adverse weather or economic conditions which could impact demand throughout the year.

In addition, Toro’s international business will continue to face a variety of challenges, including possible currency exchange rate headwinds, regional economic issues, and social and political unrest in troubled areas.

At present, Toro carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the consumer discretionary sector are A-Mark Precious Metals, Inc. AMRK, Activision Blizzard, Inc. ATVI and Masonite International Corporation DOOR. All these stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.  Click to get this free report >>
 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ACTIVISION BLZD (ATVI): Free Stock Analysis Report
 
TORO CO (TTC): Free Stock Analysis Report
 
MASONITE INT CP (DOOR): Free Stock Analysis Report
 
A-MARK PRECIOUS (AMRK): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Advertisement