Toro Co TTC
Q2 2013 Earnings Call Transcript

Transcript Call Date 05/23/2013

Operator: Good day, ladies and gentlemen, and welcome to The Toro Company Second Quarter Earnings Conference Call. My name is Kercy, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Kurt Svendsen, Managing Director of Corporate Communications and Investor Relations for The Toro Company. Please proceed.

Kurt Svendsen - Managing Director, Corporate Communications and IR: Thank you and good morning. Joining me for our second quarter earnings call are Mike Hoffman, Chairman and Chief Executive Officer; Renee Peterson, Chief Financial Officer; Tom Larson, Vice President and Treasurer; and Blake Grams, Vice President and Controller.

We begin with our customary forward-looking statement policy. During this call, we will make certain forward-looking statements, which are intended to assist you in understanding the Company's results. You are all aware of the inherent difficulties, risks, and uncertainties in making predictive statements. The Safe Harbor portion of the Company's earnings release as well as SEC filings detail some of the important risk factors that may cause actual results to differ from those in our predictions. Our earnings release was issued this morning by Business Wire, a copy can be found in the Investor Information section of our corporate website,

I will now turn the call over to Mike.

Michael J. Hoffman - Chairman and CEO: Thank you, Kurt, and good morning to all our listeners. Despite challenging weather including a very late start to spring, we delivered record sales and earnings in our second quarter. Net sales increased 2% for the quarter and net earnings per share grew 17%.

We believe these results are noteworthy when compared to last year second quarter, when we enjoyed ideal weather conditions due to an earlier than normal start to spring. Highlights for the quarter also include positive sales developments in Europe and Asia along with continued improvement in profitability.

Following brief commentary on the state of our business, during the first half of the fiscal year, Renee will discuss our financial and operating results in more detail.

Sales results for the first six months of the year were primarily fueled by demand for our large professional Turf Equipment as well as our irrigation offerings, most notably our golf and micro-irrigation systems. Many of our professional customers are better off today than a year ago. Their enhanced positions have given rise to optimism in the (channel depth) in turn helped to generate demand for our products. The late start to spring delayed retail in some markets which along with the transition to tier 4 led to increased field inventory.

The residential business which is always more immediately impacted by weather was held back by adverse conditions throughout most of our first six months. A lack of timely snowfall impeded the residential segments first quarter results while spring's very late debut through much of North America and Europe decreased shipments of residential products during the second quarter. In fact, the first week of May saw significant snowfall through the plains and upper Midwest.

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