Outdoor appliance maker The Toro Company reported record net earnings of U.S. $34.2 million, or $1.33 per diluted share, on net sales of $454.0 million for its fiscal 2004 third quarter ended July 30, 2004. In its fiscal 2003 third quarter, Toro reported net earnings of $27.0 million, or $1.03 per diluted share on net sales of $394.5 million.
For the 9 months ended July 30, 2004, Toro reported net earnings of $95.7 million, or $3.68 per diluted share, on net sales of $1,315.6 million. In the comparable fiscal 2003 period, the company reported net earnings of $76.0 million, or $2.92 per diluted share, on net sales of $1,186.3 million.
Kendrick B. Melrose, Toro chairman and CEO, said the strong third quarter results keep the company on track to deliver the best full year financial performance in its history. "During our third quarter, we continued to generate healthy sales growth in all segments," Mr. Melrose said in a statement. "And, as in our second quarter, we converted strong volume growth into even stronger earnings growth by continuing to focus on overall operating effectiveness, productivity improvement through lean manufacturing initiatives, expense reductions through our 'no waste' programs and focused asset management. Our year-to-date gross margin remained above last year's rate despite continued increases in steel and rising transportation and other commodity costs."
Mr. Melrose said third-quarter sales exceeded expectations in most business categories, reflecting increased demand in a recovering economy and brand strength in Toro's principal markets. "During the third quarter, shipments were particularly strong in our landscape contractor, commercial, and international businesses," he said. "In addition, our lean manufacturing and no-waste initiatives are clearly boosting profitability."
For the third quarter, professional segment sales increased 17.9 percent to $287.9 million. As in the prior quarter, segment sales increased in nearly all product categories, although irrigation product sales fell short of the company's expectations. International sales for the third quarter increased 16.4 percent compared with the fiscal 2003 period.
Professional segment earnings for the third quarter were $54.3 million, up 28.6 percent from the fiscal 2003 third quarter which benefited from leveraging of expenses.
Residential segment sales for the third quarter totaled $144.2 million, up 11.8 percent from the prior year third quarter. Product categories with the strongest period-over-period sales growth included snow throwers and electric products. International sales for the third quarter increased 20.7 percent compared with last year's third quarter. Most of the increase was attributable to strong snow thrower and electric product demand, the company said.
Residential segment earnings for the third quarter totaled $17.6 million, up 33.5 percent from $13.2 million in the prior year period. The improvement in third quarter profitability in this segment was largely due to reduced expenses and a prior year restructuring charge of $1.7 million.
Worldwide distribution segment sales for the third quarter totaled $47.1 million, up 9.4 percent compared with last year's third quarter. Distribution segment earnings for the third quarter were $2.3 million, flat with the comparable prior-year period.
The company expects to report fiscal 2004 net earnings per diluted share in the range of $3.82 to $3.90, excluding the effects of the previously announced share repurchase program, on sales growth of 9 to 10 percent.
"Our strong performance through the first 9 months of fiscal 2004 should continue through the year's final quarter and into fiscal 2005," commented Mr. Melrose, adding that. "…we fully expect to complete the year with a solid balance sheet, strong operating cash flow, and low inventories in the field."
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