BLOOMINGTON, Minn. — The Toro Company reported net earnings of $39.3 million, or $0.70 per share, on a net sales increase of 2.6 percent to $486.4 million for its first quarter ended January 29, 2016. In the comparable fiscal 2015 period, the company delivered net earnings of $31.0 million, or $0.54 per share, on net sales of $474.2 million.
“Our residential business benefited from strong demand for zero-turn riding mowers. Strong sales of our landscape contractor equipment, increased demand for our specialty construction equipment and higher sales of golf irrigation products also contributed to the positive start to the fiscal year,” said Michael J. Hoffman, Toro’s chairman and chief executive officer.
The company continues to expect revenue growth for fiscal 2016 to be about 4 percent, and now expects net earnings per share to be about $3.85 to $3.95 for the year. For the second quarter, the company expects net earnings per share to be about $1.75 to $1.80.
Professional Segment Results
- Professional segment net sales for the first quarter were $338.8 million, flat to $339.7 million in the same period last year. Strong sales of landscape contractor equipment contributed positively to the results; however, this momentum was negatively impacted by unfavorable foreign currency exchange rates. Demand for the BOSS® snow and ice management products was lower due to a lack of snowfall in the early winter months, which also affected the first quarter results.
- Professional segment earnings for the first quarter were $61.6 million, up $5.9 million from $55.7 million in the same period last year.
Gross margin as a percent of sales for the first quarter was 37.6 percent, an increase of 200 basis points from the same period last year. This increase was primarily due to the BOSS acquisition purchase accounting, which impacted the first quarter of fiscal 2015, resulting in a onetime adjustment. Productivity improvements, as well as lower commodity prices, also drove the improvement.
Selling, general and administrative expense as a percent of sales for the first quarter was 26.5 percent, an increase of 30 basis points from the same period last year. This increase was due to slightly higher expense across various categories, primarily including advertising, warehousing and employee incentive expenses.
First quarter operating earnings as a percent of sales were 11.1 percent, compared to 9.4 percent for the same period last year.
The effective tax rate for the first quarter was 26.9 percent, compared to 26.3 percent in the same period last year. The benefit received from the retroactive reenactment of the Federal Research and Engineering Tax Credit for calendar year 2015 was consistent with the prior year.
Accounts receivable at the end of the first quarter were $190.3 million, down 7.3 percent from the same period last year. Net inventories were $422.0 million, up 15.8 percent from the same period last year due to both residential snow throwers and BOSS snow plows, and residential and landscape contractor riding mower products. Trade payables were $211.2 million, up 8.0 percent from the same period last year.