By Steve Noe
When last I left you, I shared with you a sense of optimism from several of your fellow dealers, echoing the sentiments of those executives who participated in our annual two-part “Industry Forecasts” series. Since writing that column, I’ve noticed several more encouraging signs, including record first-quarter earnings for both Toro and John Deere.
On Feb. 21, Toro reported net earnings of $31.4 million, or $0.53 per share, on a net sales increase of 4.9 percent to $444.7 million for its fiscal first quarter ended Feb. 1. In the comparable fiscal 2012 period, the company delivered net earnings of $19.9 million, or $0.33 per share, on net sales of $423.8 million. The “per share” data for the comparative periods was adjusted to reflect a two-for-one stock split effective June 29, 2012.
“Our record-setting first quarter, driven by particularly strong channel demand for large turf equipment and the continued growth of micro-irrigation sales, propelled us to a solid start for the year,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “Our financial performance benefitted from both accelerated sales related to pre-Tier 4 product shipments and early professional end-user demand, along with positive effects of our productivity initiatives.”
“The optimistic outlook of customers across our businesses is encouraging, as we prepare for our primary selling season,” said Hoffman. “Barring new economic headwinds, we anticipate the momentum our golf, landscape contractor and micro-irrigation businesses enjoyed this past quarter will carry into spring. Our residential business retail potential looks solid as well. Recent snowfall across our primary snow markets, including the record-breaking blizzard that struck the Northeast, generated additional revenue for our contractor customers and is helping clear field inventories, thus boosting prospects for our autumn pre-season snow sales.”
Toro also announced Feb. 21 that it had entered into an agreement to acquire a Chinese micro-irrigation company, subject to applicable regulatory approval and other customary closing conditions. Terms of the transaction were not disclosed. “Although small, this acquisition will help strengthen our presence in China, a critical growth market, by establishing a micro-irrigation base of operations,” said Hoffman.
Toro continues to expect revenue growth of about 4 to 5 percent for fiscal 2013. With the expectations that the accelerated margin and earnings benefit of the Tier 4 transition will moderate through the year, the earnings expectations are being raised largely to reflect the benefit of tax-rate improvement. The company expects fiscal 2013 net earnings to be about $2.40 to $2.45 per share. For the second quarter, the company expects to report net earnings per share of about $1.20.
On Feb. 13, Deere announced a net income of $649.7 million, or $1.65 per share, for the first quarter ended Jan. 31, compared with $532.9 million, or $1.30 per share, for the same period last year.
Worldwide net sales and revenues for the first quarter increased 10 percent, to $7.421 billion, compared with $6.767 billion last year. Net sales of the equipment operations were $6.793 billion for the quarter compared with $6.119 billion a year ago.
“With our 11th consecutive quarter of record earnings, John Deere has started 2013 on a positive note and is setting the stage for another successful year,” said Samuel R. Allen, Deere’s chairman and chief executive officer. “These results are further proof of the adept execution of operating and marketing plans aimed at expanding our global market presence while maintaining a tight grip on costs and assets. As a result, Deere remains well-positioned to earn solid profits in today’s fragile global economy and, longer term, to benefit from major trends that we continue to believe hold great promise for the company and its customers and investors.”
Deere’s equipment sales are projected to be up about 6 percent for fiscal 2013 and up about 4 percent for the second quarter compared with the same periods of 2012. For the full year, net income attributable to Deere & Company is anticipated to be approximately $3.3 billion.
With all of the positive news coming from Toro and John Deere, I hope that is a sign of good things to come for you with the arrival of spring and your primary selling season. Best of luck!
OPE Editor Steve Noe