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BLOOMINGTON, Minn. – The Toro Co. today announced that its board of directors has elected Michael Hoffman, 49, to the position of chief executive officer effective March 15, 2005. Hoffman, a 27-year veteran with the company, was elected president and chief operating officer on Oct. 18, 2004, and has since been responsible for all the company's businesses and operations. Kendrick Melrose will step down as CEO and assume the role of executive chairman for Toro's board of directors, effective March 15, 2005.
Hoffman joined Toro in 1977, serving the company in various sales, service and marketing roles for nearly all company businesses in the professional and residential segments. Over the past 10 years as a key executive, he successfully directed these divisions toward increased market share, revenue growth, and profitability.
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“Mike has made significant contributions in the areas of business strategy and customer relationships, as well as culture and values over the last 27 years," said Melrose. "The vitality of the organization, our strong management team, and Mike's extensive experience in this industry will ensure that Toro continues its remarkable performance and market leadership well into the future. This is the last step in our well-planned leadership succession strategy and the company is fully prepared for a smooth transition."
Melrose joined The Toro Company in 1970 as director of marketing for the consumer products division. He was named chief executive officer in December 1983 and chairman of the board in December of 1987. Melrose currently serves as a director on the boards of directors of SurModics, the Center for Ethical Business Cultures, the National Association of Manufacturers, the Outdoor Power Equipment Institute, and the Guthrie Theater.
"My priority in this new leadership role will be to build on the proven strategies and cultural values that have enabled Toro to achieve such strong results," said Hoffman. "I look forward to continuing Ken's legacy of leadership – one that values and recognizes employees as the company's competitive advantage and greatest asset."
Hoffman holds a bachelor's degree in marketing management from the University of St. Thomas in St. Paul, Minn., and an MBA from the Carlson School of Management at the University of Minnesota.
| Toro Q1 Shows Record Net Earnings Per Share |
BLOOMINGTON, Minn. – The Toro Co. today reported net earnings of $11.2 million, or $0.47 per diluted share, on net sales of $346.9 million for its fiscal 2005 first quarter ended Jan. 28, 2005. In its fiscal 2004 first quarter, the company reported net earnings of $9.3 million, or $0.36 per diluted share, on net sales of $313.6 million. “Our strong momentum continued into the new fiscal year as our ongoing efforts to increase sales and improve profitability benefited overall performance,” said Kendrick B. Melrose, Toro’s chairman and chief executive officer. Melrose said results for Toro's first quarter, typically the seasonally smallest sales period, were fueled by double-digit sales growth in its professional segment as well as in international sales of both professional and residential products. "International net sales, commensurate with our growth strategy, increased nearly 19 percent compared with last year." First quarter net income increased on strong revenue growth coupled with a decline in sales, general and administrative (SG&A) expenses as a percentage of sales resulting primarily from lower warranty costs and the effects of the company-wide 'No Waste' initiatives. PROFESSIONAL SEGMENT. Compared with the prior year, fiscal 2005 first quarter professional segment sales increased 18.1 percent to $245.2 million. Volume increased in nearly all product categories, reflecting Toro's leadership position in professional segment products, positive market conditions and strong retail demand. “At the recent Golf Industry Show our customers expressed increasing optimism about the golf business and many are forecasting a successful year,” said Melrose. “While new course construction remains slow, investments in course renovations and improvements continue to drive demand for our equipment, services and systems. This same optimism was prevalent at other industry tradeshows during the quarter, where landscape contractors and sports turf professionals were very bullish about their business and the outlook for this season.” Earnings for the first quarter totaled $38.9 million, up 36.6 percent compared with $28.4 million in the prior year first quarter resulting from higher sales volume and improved leveraging of expenses. RESIDENTIAL SEGMENT. Residential segment sales for the first quarter totaled $95.9 million, down 2.1 percent from last year's first quarter. A late-arriving snow season in many parts of the country helped boost retail sales for snow throwers, but not early enough to keep the expected shipments for mowers and riding products moving into the channels. Earnings for the first quarter totaled $4.4 million, down 46.8 percent compared with the same period last year. The decline resulted primarily from lower than expected sales as well as steel and other commodity price increases not present in the first quarter of fiscal 2004. REVIEW OF OPERATIONS. Gross margin for the first quarter was 35.1 percent, compared with 35.9 percent in the first quarter of fiscal 2004. The decline results primarily from the impact of higher costs for steel and other commodities, which the company began to incur late in the first half of fiscal 2004. The impact on profitability of the higher materials costs has been partially offset by price increases as well as cost reductions as a result of the company's '6+8' profit improvement and growth initiatives. SG&A expenses for the first quarter declined to 29.5 percent of net sales, compared with 30.6 percent in the same period last year. The improvement resulted from lower warranty costs reflecting improvements in product quality, as well as 'No Waste' efforts in the office environments. Interest expense for the first quarter totaled $3.8 million compared with $3.9 million in the same period last year. Toro also continues to benefit from improved asset utilization. Despite a 10.6-percent increase in consolidated net sales in the first quarter, net inventories grew only 2 percent compared with the end of fiscal 2004 first quarter and accounts receivable increased only 2.1 percent. BUSINESS OUTLOOK. "Thanks to our strong performance in a seasonally slow period with particularly acute weather-related volatility, we are reaffirming our earnings outlook for fiscal 2005," Melrose said. "To date, we have contained much of the impact of higher commodity costs on our profits by continuing to work at reducing costs and leveraging expenses. We are in the early stage of year two of our '6+8' profitability improvement and sales growth initiative, and we expect further benefits from our efforts in the balance of the year. We are comfortable with our field inventory levels and expect top-line growth to continue to benefit from strong new product acceptance as customers anticipate a favorable spring selling season." After the close of the first quarter of 2005, the company completed the acquisition of Hayter Ltd., a manufacturer of high-quality consumer and commercial mowing products with strong market positions throughout the United Kingdom. "With this acquisition, we have gained a significant foothold in the municipal and high-end residential turf markets, consistent with our long-term strategy to expand our international business," Melrose said. For fiscal 2005, the company continues to expect net earnings per diluted share to grow 12 to 15 percent compared with 2004. The company does not expect the Hayter acquisition to have a material effect on fiscal 2005 earnings, however the acquisition should contribute to fiscal 2005 sales, and the company is now projecting sales growth of 9 to 11 percent for the year. For its fiscal 2005 second quarter, Toro expects to report net earnings per diluted share of $2.30 to $2.40. – PR Newswire |