Toro Corp (TTC)
 
In the 3-month period ending February, TTC has posted gains in 8 of the past 10 years, generating a 6.74% average return and a 11.13% median return. TTC's standard deviation is 14.44% in the period and its correlation to the SPY is 0.77.

 

Toro's kicking off substantial cash thanks to rebounding demand and cost cutting.  As a result, it's boosting its dividend payout rate to 30-40% of 3 year average EPS from 20-30% and returning more money to shareholders through buybacks.   2014 should benefit from continuing recovery in the U.S. and an expectedly colder winter across northern states, according to the NOAA.  New home starts and improving commercial construction provide opportunity for residential and commercial landscaping demand in the coming year.  Building permits and home starts rose 7.9% and 29.6% in November from last year, respectively.  The fastest non--residential construction growth is coming from lodging.  Office and commercial are also up 7.1% and 5.6% year-to-date.  Toro is guiding for FY2014 sales growth of 4-5% and EPS of $2.85-$2.90.  Exiting FY'13, Toro upped its dividend to $0.20 per share per quarter from $0.14 per quarter.  Fiscal fourth quarter revenue grew 12.7% to $382.4 million, lifting fiscal 2013 sales to $2.04 billion, up 4.2% from FY2012.   Fiscal '13 growth was led by professional, which grew 7.2% to $1.425 billion.  The strongest areas within professional include commercial mowers and golf irrigation systems.  Residential FY'13 sales fell 2% to $594 million.  However, residential sales grew 14% in FYQ4.  FY13 gross margin improved 1.1% to 35.5%.  Operating margin improved 80 bps to 11.3% in FYQ4 and is at a five year high - - up from <8% in 2009.  The company has beat the street in each of the past four quarters and analyst expectations have climbed to $3.31 from $3.21 for FY15 over the past 90 days.
 

 FYQ4 Earnings Transcript

Clarcor (CLC)
 
In the 3-month period ending February, CLC has posted gains in 7 of the past 10 years, generating a 1.48% average return and a 2.19% median return. CLC's standard deviation is 8.82% in the period and its correlation to the SPY is 0.65.
 

A pick-up in trucking demand and new regulations support truck sales and miles, boosting demand for the company's Baldwin filters.   New and used commercial vehicle registrations are up 2.8% and 7.8% year-to-date through the first nine months versus last year, suggesting fleets continue to replace aging equipment.  Truck demand should continue to support Clarcor given truckload linehaul pricing is up 1.8%, according to Cass, and November daily freight load volume grew 10% from October, according to Transcore.  Year-over-year, freight load volume grew 8% from last year.  Medium and heavy-duty truck production improved 12.5% from a year ago in November, according to Ward's.  And Class 8 orders are 13% higher year-to-date than last year through November, according to ACT Research.  FTR estimates class 8 orders were above 20k for a second consecutive month in November, bringing annualized 3-month orders to 266.6k units.  FTR expects truck orders will climb to 261k units in 2014, up from 241k units this year.  Driving truck demand is 8% YoY growth in the ATA Truck Tonnage Index, which hit a record high last month, and higher rates, which have ticked up following the hours of service rule implementation.   Higher unit sales support Clarcor's engine and mobile filtration segment, which accounts for roughly 45% of sales.  Railroad activity growth also supports locomotive filter demand, resulting in 7% YoY rail filter growth in Q3.  However off-highway is challenged, but could rebound if Europe improves and China strengthens.  Overall, thanks to operating margins improving 1.1%, third quarter diluted EPS hit a new company record, climbing 12% to $0.67.  Engine/Mobile sales grew 5% in the U.S., leading to overall revenue growth of 2% in the quarter.  Aftermarket heavy duty filter sales were up 6% in the U.S.  China sales were up 9% YoY thanks to a growing fleet of heavy duty trucks.   Europe continues to drag on results, suggesting stabilization and eventual growth will support results as they're leveraged against easier comparisons and cost-savings measures.  Rising natural gas production and pipeline activity is boosting the company's industrial and environmental segment, leading to 9% growth in natural gas filtration. That strength pushed sales in industrial/environmental up 1%.  Thanks to a tripling in Latin America sales (Petrobras), oil and gas filtration sales are up 8% year-to-date.  Industrial segment operating margin rose to a record 12.5% in Q3.  Global air travel growth also supports sales of jet fuel filtration products.  Aftermarket sales of jet fuel filtration products for commercial and military customers in the U.S. are up 20% this year from 2012.  Sales are benefiting as global airplane production at OEMs, including Boeing, expands, and global passenger miles climb.  The company pays a $0.17 per share quarterly dividend.  Companywide, sales and EPS have grown a compounded 8.5% and 11.4% annually since 1992, respectively. Sales of filtration products account for 90% of sales and recurring aftermarket sales represent 80%, suggesting improving global utilization will support future results too. 

 
Corporate Presentation
Company's Q3 EPS transcript