Toro Third Quarter Net Earnings Up

• Net earnings for the quarter were $16.9 million, or $1.30 per dilutive share, compared to $16.4 million and $1.26 per dilutive share, respectively, for last year's third quarter. Net earnings increased by 3.0 percent.



• Revenues declined by 4.4 percent to $329.8 million compared to $345.2 million a year ago.



• Nine-month revenues were $1.08 billion, slightly ahead of last year's same period of $1.07 billion. Net earnings year-to-date were $48.3 million, or $3.68 per dilutive share, compared to $44.3 million or $3.39 per dilutive share last year - a 9.1 percent increase on net earnings.

"We increased our profits and beat expectations despite bad weather, a difficult economy and unfavorable currency impacts around the world," said Kendrick Melrose, chairman and CEO of Toro. "This has been a difficult season for everyone in our industry. We were able to exceed expectations because of our leading market shares, strong customer acceptance of new products and a continued focus on building a strong, efficient infrastructure at Toro."

MARKET BREAKDOWN. According to Toro, the landscape contractor market is still experiencing strong growth, which has helped the company offset softer sales in other areas. On the golf course turf management side, Toro has seen a slow down attributed to reduced irrigation and equipment sales.

Professional sales for the period decreased by 4.5 percent for the quarter but are up for the nine-month period by 2.3 percent. Professional operating profit increased by 3.6 percent for the third quarter and rose by 8.8 percent for the nine-month period. The landscape contractor business was a strong contributor to third quarter performance, but was partially offset by weak irrigation sales.

Residential sales declined by 6.9 percent for the third quarter and by 2.6 percent for the nine-month period. Operating profit for the residential segment decreased by 5.6 percent for the third quarter but is up year-to-date by 12.0 percent. Strong performances by new products partially offset slower sales of existing products due to weather and the economy.

The company is now required to report its domestic distribution companies’ results as a separate segment, and distribution sales are higher this quarter due to the addition of an unanticipated acquisition of a distribution company. Operating profits are lower due to slow retail demand and market investments in these businesses.

Toro also announced that Timothy Ford has been named vice president/general manager of Toro's commercial division. Ford had been vice president, service solutions business unit at Honeywell International and had also served in several positions at General Electric before joining Honeywell.

OUTLOOK. "We now expect revenue growth to be relatively flat, and we are comfortable with current consensus analyst earnings expectations for the full year. We continue to manage field inventories to low levels in most areas and we anticipate better than usual pre-season shipping of snowthrowers due to the number of markets that sold out last year," Melrose noted.

"While the weather and the economy are outside of our control, we can control Toro's process improvement and cost containment," he continued. "While we feel that weather can only improve, there are still concerns about the direction of the economy. With that in mind we are estimating our F'02 revenues to be up single digit and earnings to be up double digit, excluding the effect of the goodwill change, in line with analysts expectations reflecting our continued focus on the bottom line."