Toro, Charles Machine Works discuss how the deal for the Ditch Witch brand went down

The wide-eyed talk at the American Rental Association Show was Toro’s acquisition late last week of the Charles Machine Works, parent company of the Ditch Witch brand.

In a press conference at the ARA Show, the two companies discussed what prompted the buy and how the two companies plan to transition into one company.

About a year and a half ago, a discussion at an Association of Equipment Manufacturers meeting started the process that ended last week when Toro announced that it had bought CMW, says Toro Chairman and CEO Rick Olson. “We basically told them if you’re ever interested… .”

Although CMW had received several offers and inquiries in the past, says Rick Johnson, CMW CEO, “this is the first time we took any of them seriously.”

Johnson continued: “We echo the sentiments about this being an exciting time for both companies. It is a perfect fit.”

But the decision did not come without a great deal of heart searching for the family members, including Tiffany Sewell-Howard, executive chair of CMW, who took over the helm of the company from her grandfather and company founder Ed Malzhan in 2003.

“The emotional roller coaster of selling the family business that had been in the family for 100 years was at times emotionally gut wrenching,” Johnson made clear. “In the end, this is the right decision, and the future for Charles Machine Works as the ‘Underground Authority’ is bright.”

“Our intention is to manage all the brands of both the Charles Machine Works, including Ditch Witch, and the Toro brands in a dual-brand strategy, “ says Rick Rodier, Toro vice president and general manager who will be assuming responsibilities for former CMW products in the transition. “There’s no intention of taking current models away or making a model that is currently orange red and vice versa. We’re thrilled to add Ditch Witch and the other brands to our portfolio of brands.”

“It was an up and down process for the Malzahn family,” admits Johnson, “but in the end they stood together, we feel that the Toro company could take it to a level that we probably couldn’t on our own in terms of access to capital and talent. We feel like this is the next chapter of Ditch Witch and Charles Machine Works.”

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Reaching out to dealers

CMW reached out to its dealer network via a conference call the Friday morning of the announcement, Johnson tells Equipment World. “They told us that they knew it probably was going to happen someday and they were glad we picked someone who need more distribution,” Johnson says.

Following the conference call, company executives also called each dealer individually to hear concerns about such things as dealer discounts and warrantees.

The deal is expected to be finalized by the end of July, which is also the end of Toro’s fiscal third quarter.

Our parent company, Charles Machine Works, has agreed to be acquired by The Toro Company. Our plant is staying right here in Perry, Oklahoma, and will become Toro’s largest manufacturing facility worldwide. #DitchWitch #StillOrangehttps://t.co/jVQN7l3JCg

— Ditch Witch (@ditchwitch) February 15, 2019

In an analyst’s call on Friday, Rick Olson, chairman and CEO of Toro said that CMW and Toro had similar sales mix, with approximately 75 percent of sales domestically and 25 percent internationally. “One of the things that matches up well between the two companies is the value placed on relationships with channel partners,” Olson said. The importance of dealers to success of company was conveyed “very early on” and offers “great alignment with how we feel about our channel as well,” Olson said.

CMW has a strong Ditch Witch brand presence in its dealer network, with dealers are typically identified as “Ditch Witch of [location].” According to the company, Ditch Witch dealers operate in 175 locations in more than 100 countries.

Olson also said that current Ditch Witch CEO Rick Johnson would stay on board but will “transition his responsibilities” as a Toro person becomes responsible for the CMW brands.

Product mix of Toro, Ditch Witch

In examining the data from the 2018-19 Equipment World Spec Guide, it’s clear that the CMW buy gives Toro depth in both directional drills and trenchers, while Toro has strength in compact utility loaders, also called compact toolcarriers. Toro celebrated the 20^thyear of the Dingo line with the introduction of Dingo TXL 2000 at last year’s American Rental Association show.

The Ditch Witch SK line of compact utility loaders, however, is popular with Ditch Witch dealers.

Toro DD2226

In directional drills, Toro offers just two models: the 22,000-pound max pullback DD2226 and the 40,000-pound max pullback DD4050, introduced at the ICUEE show in 2013 and after the company bought the vibratory plow, trencher and small horizontal drill lines of Astec Underground from Astec Industries in 2012. Later in 2012, CMW bought the American Augers brand from Astec Industries, which gave it models above 100,000 pounds max pullback, The company currently offers models ranging from 5,000 to 1.1 million pounds max pullback.

The two companies have competed the longest in trenchers, where Toro has five models ranging from 16 to 121 horsepower. CMW’s offering was broadened by its acquisition of Trencor brand, also part of the 2012 buy from Astec,  and the company now offers trenchers ranging from 11.7 horsepower to 950 horsepower.

Below are the comparison specs for Toro’s and CMW’s offerings in directional drills, compact utility loaders and trenchers from the 2018-19 Equipment World Spec Guide. (Note: Due to publication date, It does not include models introduced in the last five months of 2018.)

Directional Drills

Compact Utility Loaders

Trenchers