- Company reports fiscal 2009 net earnings per share of $1.73
- Focus on liquidity and growing market share guided the company through a difficult year
- Cash flow from operations totaled $251.5 million driven by implementation of Red Iron Acceptance strategy, asset management and earnings
- Increased quarterly cash dividend by 20 percent to $0.18 per share, as announced last week
BLOOMINGTON, Minn.-- Dec. 8, 2009 -- The Toro Company (NYSE: TTC) today reported net earnings of $62.8 million, or $1.73 per share, on net sales of $1,523.4 million for its fiscal year ended October 31, 2009. For fiscal 2008, the company posted net earnings of $119.7 million, or $3.10 per share, on net sales of $1,878.2 million.
For the fourth quarter of fiscal 2009, Toro reported a net loss of $0.5 million, or $0.02 per share, on net sales of $288.6 million. In the comparable fiscal 2008 period, Toro posted breakeven net earnings on net sales of $341.2 million.
Despite the recessionary environment, the company generated a record $251.5 million in cash flow from operations as a result of the Red Iron Acceptance joint venture strategy, a continued focus on asset management, and by executing soundly against its working capital initiative. Excluding the sale of receivables in the fourth quarter to Red Iron Acceptance, the company’s operating cash flow for the year continued to track at historically high levels. Together, these measures help strengthen the company’s cash position to drive future growth and shareholder value. As reported last week, Toro’s board of directors raised its regular quarterly cash dividend to 18 cents per share, a 20 percent increase from its previous quarterly dividend rate of 15 cents per share. In fiscal 2009, the company returned $137 million to shareholders through share repurchases and dividend payments.
“In the face of extraordinarily difficult market and operating conditions, we took early and decisive action to ensure liquidity, grow our market share, and balance the short-term challenges against the long-term needs of the organization,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “Through solid customer relationships, and product lines enriched by many new innovations, we had great success winning share even as our markets contracted. Additionally, the actions we took during the year to adjust production and manage inventories resulted in lower seasonal borrowing and a stronger balance sheet.“
SEGMENT RESULTS
Professional
Professional segment net sales for fiscal 2009 totaled $965.9 million, down 25.9 percent from fiscal 2008. Demand in key professional end markets including the golf, municipal and landscape contractor, remained soft throughout the year as customers generally chose to defer purchases of new equipment and irrigation systems. Despite the sales decline, aggressive efforts to lower field inventories position the company for growth in the eventual recovery. For the fourth quarter, professional segment net sales were $165.3 million, down 21.8 percent from the prior year period.
Professional segment earnings for fiscal 2009 totaled $127.6 million, down from $233.4 million last year. For the fourth quarter, professional segment earnings were $1.2 million compared to $13.8 million in the same period last year.
Residential
Residential segment net sales for fiscal 2009 totaled $532.7 million, down 1.9 percent from fiscal 2008. For the year, customer acceptance was very strong for the expanded lineup of Toro® and Lawn-Boy® walk power mowers and redesigned platform of residential zero-turn mowers. Through close collaboration with dealers and key retailers, domestic shipments held up fairly well but were not enough to keep pace with declines in international markets. For the fourth quarter, residential segment net sales were $115.9 million, down 2.8 percent from the prior year period.
Residential segment earnings for fiscal 2009 totaled $46.4 million, up from $35.3 million last year. For the fourth quarter, residential segment earnings were $14.2 million compared to $7.3 million in the same period last year.
REVIEW OF OPERATIONS
Gross margin for fiscal 2009 was 33.5 percent compared with 34.8 percent in fiscal 2008, mostly due to a change in product mix and reduced demand. For the fourth quarter, however, gross margin improved to 33.9 percent from 29.9 percent in the same period last year. The improvement reflects lower commodity costs, which began to benefit gross margin in the second half of the fiscal year.
Selling, general and administrative (SG&A) expenses for fiscal 2009 were down 12.9 percent, but increased to 26 percent of net sales from 24.2 percent last year. For the fourth quarter, SG&A expenses were down 6.5 percent, but increased to 32.9 percent of net sales from 29.7 percent in the same period last year. While the company has been aggressively reducing expenses, the drop in sales volumes was greater than the rate of decline in SG&A costs.
Other expense for fiscal 2009 was up $4.0 million compared to last year, and increased $1.8 million in the fourth quarter over the prior year period. The increase was mostly due to higher expense for litigation settlements.
Interest expense for fiscal 2009 was $17.6 million, down 9.1 percent compared with last year. The decline in interest expense for the year mainly reflects significantly lower seasonal short-term borrowing. For the fourth quarter, interest expense was even with the same period last year at $4.4 million.
The effective tax rate for fiscal 2009 was 34.4 percent compared with 34.0 percent last year. The slight increase was primarily the result of valuation allowances related to foreign subsidiaries.
Accounts receivable at the end of fiscal 2009 totaled $143.7 million, down 43.9 percent, on a revenue decline of 15.4 percent for the fourth quarter and the previously mentioned sale of receivables to Red Iron Acceptance. Meanwhile, net inventories for the year declined by $30.8 million, or 14.9 percent, from the prior year period.
BUSINESS OUTLOOK
Commenting on Toro’s outlook for fiscal 2010, Hoffman said the company believes demand in its end markets is stabilizing. “Our outlook in the coming year assumes that declines in our markets are largely behind us, so we’re currently expecting net sales for fiscal 2010 to be roughly comparable to last year,” said Hoffman.
“While much uncertainty remains as to the pace and degree of the economic recovery, we are encouraged by our strong customer relationships, continued high level of new products, and the ability to invest in new opportunities. We have taken measures to adjust our cost structure, improve our overall operating effectiveness, and will be more flexible to react to retail demand in the year ahead.”
The company currently expects fiscal 2010 net earnings per share to be about $2.00 on comparable revenues with fiscal 2009. For its seasonally smaller fiscal first quarter, the company expects to report net earnings per share of about $0.18 to $0.20.
The Toro Company is a leading worldwide provider of outdoor maintenance equipment and beautification products to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields.
No comments:
Post a Comment