Sales of residential lawn mowers and other equipment helped Bloomington-based Toro Co. increase quarterly sales by 16%.
Company officials signaled Thursday that like other manufacturers, supply-chain issues and inflationary cost pressures could become a bigger issue for the rest of the year and into the next.
Toro's biggest issue is meeting increasing customer demand with the disruptive challenges, officials said. A continued focus on outdoor environments from backyards to golf courses driven by the pandemic has increased demand for Toro products and offset some of the inflationary pressure.
"We expected supply-chain constraints and inflationary pressures to escalate at a rate faster than could be fully offset in the near term through pricing and other mitigating actions," Rick Olson, Toro's chief executive, told analysts on their earnings call. "Despite these challenges, both [the residential and commercial] segments delivered solid earnings growth in the third quarter, with professional earnings up 7.6% and residential earnings up 10.5%."
Company earnings rose 8% to $96.3 million, or 89 cents a share, in the quarter ended July 30. Adjusted earnings were 92 cents a share, up 12% from the prior quarter and above analysts' expectations of 77 cents a share.
Sales rose 16% in the quarter to $976.8 million. The professional segment's net sales were $718.5 million, up 15%. The residential segment's sales grew 23% to $252.1 million.
The professional segment had its second straight quarter of double-digit sales increases driven by demand from landscape contractors and in golf markets worldwide. The residential segment's results were driven by sales of zero-turn and walk-behind power mowers.
Residential customers also maintained their strong interest in Toro's line of residential rechargeable battery-operated devices. The Flex-Force line of residential products uses the same interchangeable battery for a number of different devices from snow blowers to grass mowers.
Toro did update its guidance for the remainder of their fiscal year that ends Oct. 31. It now expects sales to increase 17% for the year as it closes in on annual revenue of $4 billion. Previous guidance was for sales to increase from 12 to 15%. They also raised their earnings expectations and now say adjusted EPS will be in the range of $3.53 to $3.57 a share.
Shares of Toro closed Thursday at $108.93, up 45 cents. Over the last 52 weeks shares have ranged between $75.62 and $118.13 each.
