Toro Company (TTC) Misses Q2 EPS by 2c, Revenues Miss

June 4, 2020 8:35 AM EDT

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Toro Company (NYSE: TTC) reported Q2 EPS of $0.92, $0.02 worse than the analyst estimate of $0.94. Revenue for the quarter came in at $929.4 million versus the consensus estimate of $1.03 billion.

SECOND-QUARTER AND YEAR-TO-DATE FISCAL 2020 FINANCIAL HIGHLIGHTS

  • Net sales of $929.4 million down 3.4% compared with $962.0 million in the second quarter of fiscal 2019; Year-to-date fiscal 2020 net sales were $1.70 billion, up 8.4% compared with $1.56 billion in the same prior year period.
  • Net earnings of $98.4 million, down 14.8% compared with $115.6 million in the second quarter of fiscal 2019; *Adjusted net earnings of $100.2 million, down 20.5% compared with $126.0 million in the second quarter of fiscal 2019.
  • Year-to-date fiscal 2020 net earnings of $168.5 million, down 3.8% compared with $175.1 million in the same prior year period; *Adjusted net earnings of $169.8 million, down 7.0% compared with $182.7 million in the first six months of fiscal 2019.
  • Reported EPS of $0.91 per diluted share, down 15.0% compared with $1.07 per diluted share in the second quarter of fiscal 2019; *Adjusted EPS of $0.92 per diluted share, down 21.4% compared with $1.17 per diluted share in the second quarter of fiscal 2019.
  • Year-to-date fiscal 2020 reported EPS of $1.55 per diluted share, down 4.3% compared with $1.62 per diluted share in the same prior year period; *Adjusted EPS of $1.56 per diluted share, down 7.7% compared with $1.69 per diluted share in the first six months of fiscal 2019.

“It has been inspiring to see The Toro Company’s values in action during this challenging time,” said Richard M. Olson, chairman and chief executive officer. “Everyone pulled together to maintain the team’s safety, supply our customers with essential products and services, and help our communities in the COVID-19 fight.”

“Retail demand in the second quarter started strong and continued favorably until mid-March when the full effects of the pandemic were realized in North America,” continued Olson. “The direct impact of government orders and the general weakening of customer confidence reduced demand in key professional markets. Residential segment sales were strong throughout the quarter driven by new products, an expanded channel, a strong start to spring and consumer behavior in favor of home and garden improvement during stay at home orders.”

“In May, the residential segment momentum continued—driven by the same factors, while the professional segment saw a significant step down in some markets as customers reduced capital budgets and deferred new purchases,” added Olson. “While we can’t fully determine the level of customer spending that will return in fiscal 2020, we are taking every opportunity to support our customers with products and parts along with financing and other tools.”

OUTLOOK

On March 30, 2020 the company withdrew its guidance given the uncertainties involved with the COVID-19 pandemic. The Toro Company will not be providing detailed financial quarterly or full-year guidance until visibility into market conditions has improved.

The company believes current market trends will continue throughout the fiscal year, including customer budget constraints and cash preservation and a preference for repairs and deferrals over new equipment purchases in the professional segment, as well as higher demand in the residential segment. At this point, based on current information regarding the global economic outlook, the company expects the most pronounced year-over-year sales and EPS percentage declines in the third quarter of fiscal 2020. The company also expects negative year-over-year fourth quarter sales and EPS growth. Factors that could impact these expectations and assumptions include:

  • The company’s ability to continue operations and/or adjust our production schedules due to governmental actions that have been, and continue to be, taken in response to the COVID-19 pandemic,
  • Supplier risk and the company’s ability to obtain commodities, components, parts and accessories in a timely manner and at anticipated costs,
  • Prolonged periods of economic stress which may affect customer liquidity and could impede customer buying patterns, and
  • Other risks and uncertainties described in the company’s most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q or current reports on Form 8-K, and other filings with the Securities and Exchange Commission.

“We anticipate an easing of the COVID-19 pressures as we head into fiscal 2021, and are optimistic about our strength as a company and our ability to drive long-term growth through innovation and superior customer service. Our portfolio reflects customer and product diversity, scale, and a foundation of essential global operations. We will continue to concentrate on controlling what we can control, while being prepared to respond to those that we cannot, and focusing on our key strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering our people,” concluded Olson.

For earnings history and earnings-related data on Toro Company (TTC) click here.



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