The Toro’s Co.’s trademark red mowers are blushing with flattery upon hearing the company’s second quarter earnings results.
Toro, Bloomington, Minn., reported Wednesday that its quarterly profits rose 10 percent due to strong sales of lawn care equipment to landscape contractors. In its own right, this rise comes from increased demands of institutional lawn care by professionals. Office parks, homeowners’ associations and other commercial sites need their lawns mowed and contractors are shelling out for new equipment.
“The quarter was stronger than anticipated and prospects for the balance of the year are better than anticipated,” says George Mairs, whose Mairs and Power Growth Fund owns about 3.8 percent of Toro’s outstanding shares. “It’s the institutional business that’s done beautifully for them,” he said.
For the second quarter ended May 2, Toro detailed that its net earnings were $42 million or $1.61 per share, up from $38.1 million or $1.46 per share for the same period in 2002. Additionally, the company’s sales went up 5.4 percent, reaching $495.8 million compared to $470.3 million last year.
Pushed by more commercial accounts, landscape contractors effected the bulk of Toro’s growth. Purchases of wide-area mowers as well as irrigation products boosted the company’s professional business 8.2 percent, while residential income inched up 1.6 percent, slowed by significant rainfall in many strategic markets.
Supplementing increased sales, Toro has focused on cost-cutting measures including streamlining supply chain and manufacturing operations.
“They’ve been doing aggressive cost-cutting over the last several years, and this is really beginning to pay off in terms of margin improvement,” Mairs comments.
After the earnings announcement, Toro stock reached an all-time high of $39.27 per share and closed the day up $2.65 at $39.19.
The author is Assistant Editor of Lawn & Landscape magazine and can be reached at lspiers@lawnandlandscape.com. Reuters contributed to this story.