Toro rides through residential downturn
Bloomington, Minn.-based The Toro Co. reported record highs in sales and earnings for the second quarter, despite a double-digit sales decline in the residential division.
The company posted net earnings of $78.4 million, on a net sales increase of 1.9%, to $704.5 million for its fiscal second quarter ended May 3.
In the comparable fiscal 2012 period, the company delivered net earnings of $68.8 million on net sales of $691.5 million.
“We achieved record sales and earnings in the quarter, despite this year’s challenging weather pattern compared with a year ago,” said Michael Hoffman, Toro’s chairman and CEO. “In 2012, we enjoyed ideal spring conditions with a warm, early start to the season, while this year much of North America and Europe have dealt with unusually cold weather. These conditions delayed sales, especially of our residential products, which are more immediately impacted by weather."
Residential segment net sales were down 13.2% in the quarter to a total of $201.4 million. Unfavorable weather delayed the start of the spring goods selling season, negatively impacting the sales of walk power mowers and riding products. For the first six months, residential segment net sales were $322.3 million, down 12.8% from the comparable fiscal 2012 period. The year-to-date sales results were largely attributable to the unusually mild winter and the late start to spring, the company said.
The company’s golf and micro irrigation businesses have been strong, it said.
“Even with a marginal winter season and late start to spring, we remain cautiously optimistic about the remainder of the year,” said Hoffman.
“Retail activity in our residential business started to pick up in late April, and the momentum is continuing in May," Hoffman said. "Looking forward, we face favorable comparisons to last year, when much of the United States struggled with drought conditions during the summer months."
The company now expects revenue growth for fiscal 2013 to be about 3% to 4%.
Bill would reform EPA Lead Rule
The Environmental Protection Agency’s Lead: Renovation, Repair and Painting (LRRP) Rule is the subject of a bill in the House.
Congressman Tim Murphy (R-Pa.) and 21 co-sponsors introduced a bill in the House of Representatives that was crafted to reduce the burden of the regulation.
The Lead Exposure Reduction Amendments Act of 2013 (H.R. 2093) would restore an opt-out provision from the original rule. The opt-out rule allowed homeowners without children under six or without pregnant women in residence to allow their contractor to forego the rigorous work practices required under the original rule.
The EPA has estimated that the removal of the opt-out clause adds more than $336 million per year in compliance costs.
Another provision calls for suspension of the rule for owner-occupied housing built between 1960 and 1978 without a pregnant woman or small child present, if the EPA cannot approve a test kit meeting its standard for false positives. The bill would also prohibit expansion of the rule to commercial buildings and provide certain exemptions for first-time paperwork violations.
The introduction of the bill was applauded by the the National Lumber and Building Material Dealers Association. A Senate version of this legislation was introduced as S.484 by Sen. Jim Inhofe (R-Okla.) in March.
“This industry faced some tough years when the housing market crashed, and retrofit and remodeling work was critical in keeping some dealers in business,” said NLBMDA chairman Chuck Bankston, president of Bankston Lumber in Barnesville, Ga. "EPA’s forceful focus on paperwork violations, failure to approve a lead test kit meeting its own standards, and ever-broadening interpretation of the rule is having a chilling effect on our industry’s ability to have installed sales operations, serve remodelers and get energy-efficient products into homes. We applaud Congressman Murphy for his continued leadership on this issue, and we will make H.R. 2093 a top legislative priority."
In addition to Rep. Murphy, the original cosponsors of H.R. 2093 are Reps. Bill Cassidy (R-La.), Tom Cole (R-Okla.), Kevin Cramer (R-N.D.), Chuck Fleischmann (R-Tenn.), Tim Griffin (R-Ark.), Brett Guthrie (R-Ky.), Ralph Hall (R-Texas), Steve King (R-Iowa), James Lankford (R-Okla.), Robert Latta (R-Ohio), Dave Loebsack (D-Iowa), Billy Long (R-Mo.), Frank Lucas (R-Okla.), Mark Meadows (R-N.C.), Markwayne Mullin (R-Okla.), Rich Nugent (R-Fla.), Pete Olson (R-Texas), Todd Rokita (R-Ind.), Bill Shuster (R-Pa.), Adrian Smith (R-Neb.), and Lynn Westmoreland (R-Ga).