Toro Q4 Profit Results Beat View, Hikes Dividend; But Outlook Disappoints

(RTTNews) - Turf maintenance equipment maker Toro Co. (TTC) on Thursday reported a profit for the fourth quarter that surged from last year on higher sales across all its three segments. Both earnings per share and revenue for the quarter beat analysts' expectations. In addition, Toro's board of directors increased the quarterly dividend.

Looking ahead, Toro forecast earnings for the first quarter as well as for fiscal 2014 below analysts' expectations, saying it was cautiously optimistic about the prospects for its end markets in the year.

Michael Hoffman, Toro's chairman and chief executive officer said, "For the fourth quarter, even with favorable comparisons to last year when we saw soft preseason demand for our snow products, we delivered solid performance. Practically all of our product lines contributed to our sales growth and our expanded gross margins further evidence the traction we are gaining with our productivity efforts."

The company's professional business segment offers turf and landscape equipment products such as sports fields and grounds maintenance equipment, golf course mowing and maintenance equipment, and landscape contractor mowing equipment.

The residential business segment provides walk power mowers, riding mowers, snow throwers, replacement parts, and home solutions products.

Professional segment net sales for the fourth quarter rose 12 percent from the year-ago period to $225.81 million, while residential segment net sales increased 14 percent to $116.62 million. Other sales increased 15 percent to $9.93 million.

Bloomington, Minnesota-based Toro's net earnings for the fourth quarter were $4.95 million or $0.08 per share, up from $251 thousand or break even per share in the same quarter last year. On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 13 percent to $382.37 million from $339.29 million in the prior year quarter. Two analysts had consensus revenue estimate of $369.40 million for the quarter.

Gross margin rose 30 basis points from last year to 33.6 percent.

For fiscal 2013, Toro's net earnings increased to $154.85 million or $2.62 per share from $129.54 million or $2.14 per share last year. Net sales rose 4 percent to $2.04 billion from $1.96 billion in the previous year.

Toro's board of directors has declared a quarterly cash dividend of $0.20 per share, an increase from its previous quarterly dividend rate of $0.14 per share. This dividend is payable on January 15, 2014, to shareholders of record on December 30, 2013.

In addition, the company increased its annual dividend guideline to 30 to 40 percent of its three-year average net earnings per share, up from the previous guideline of 20 to 30 percent.

Looking ahead to the first quarter, Toro forecasts net earnings of about $0.35 per share, with unfavorable year-over-year quarterly comparisons due to increased sales accelerated into the first quarter of last year by the Tier 4 diesel engine transition that will not be repeated this year.

Street expects the company to earn $0.49 per share for the quarter on revenues of $458.65 million.

For fiscal 2014, Toro forecasts net earnings of about $2.85 to $2.90 per share and revenue growth of about 4 to 5 percent. Analysts expect the company to earn $2.93 per share for the year on revenues of $2.17 billion.

Hoffman added, "Looking ahead to fiscal 2014, we are mindful of the mild expectations for our world-wide economic environments, as well as the challenges that Mother Nature can create for our businesses and customers. Nonetheless, we are cautiously optimistic about the prospects for our end markets in this Centennial year."

In Thursday's regular trading session, TTC is trading at $58.98, down $1.25 or 2.08 percent on a volume of 92,242 shares.