Toro Announces Profit Rise, New Profitability Campaign

PROFITABILITY CAMPAIGN. "Assuming the economy and the weather cooperate, we believe this goal is achievable and sustainable, and that it will make Toro stronger while delivering better shareholder value," said Kendrick Melrose, chairman and CEO of Toro. "Toro is viewed as an ‘Old Economy’ company, but we are infusing it with ‘New Economy’ concepts that will help sustain our leadership well into the future."

The new profit building effort, called "5 by Five," involves five major thrusts to achieve the 5 percent yield. The company will do the following:

• Revise and transform how Toro manufactures, purchases, distributes, markets and services its products.
• Improve lower performing product lines or discontinue them.
• Overhaul Toro’s expense structure to eliminate low-value activities.
• Embrace change, speed and flexibility in the way Toro does business.
• Accomplish the goals in an innovative fashion, integrating new technologies and involving everyone in the company.

"As we did with the previous profit improvement program, the '5 by Five' program will unfold over time, and we will update the public as its programs progress," Melrose said.

To strengthen the "5 by Five" implementation, Toro also named William Hughes vice president, general manager of its irrigation business and Michael Hoffman vice president, general manager of its consumer business. Hughes was most recently vice president and general manager of consumer business for Toro, and Hoffman was most recently vice president, general manager of commercial business.

SECOND QUARTER RESULTS. Net income for the second quarter, ended April 28, rose to $26.9 million from $24.1 million in the same period last year, and net sales increased 2 percent, to $441.8 million from $433.1 million a year ago.

Net sales for the first half of the year were $722.0 million, compared to $683.9 million for the first half last year, an increase of 5.6 percent. Net income for the first half was $27.8 million, compared to $24.9 million for the same period last year.

Professional segment sales were up 7.7 percent for the first half and 1.4 percent for the second quarter due to very strong sales for landscape contractor equipment, particularly the Siteworks product line and Toro and Exmark brand zero-turning-radius (ZTR) mowers. Retail demand for commercial equipment has been strong although sales are up only slightly due to field inventory management.

Golf equipment sales were up but golf irrigation was down in comparison to an unusually strong first half last year. Toro residential/commercial irrigation sales were up overall. For the full year, Toro expects the professional segment profitability to be better than last year.

A product that will potentially fuel growth in Toro’s consumer division for upcoming years is the Toro-branded RL500 robotic lawnmower. The company announced today that it has joined up with Friendly Robotics LTD., a privately held high-technology company in Tel Aviv, Israel that designed and produced the mower. The agreement extends for five years and represents several hundreds of thousands of units.

For more information about Toro’s initial announcement about the profitability campaign, please click here:
Toro Moves to Clip Costs, Expenses