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BLOOMINGTON, Minn. -- Dec. 4, 2014-- The Toro Company today reported net
earnings of $173.9 million, or $3.02 per share, on a net sales increase of
6.4 percent to $2.173 billion for its fiscal year ended October 31,
2014. In fiscal 2013, the company delivered net earnings of $154.8 million, or $2.62 per share, on net sales of $2.041 billion.
For the fourth quarter, Toro reported net earnings of $10.9 million, or $0.19 per share, on a net sales increase of
8.3 percent to $414.1 million. In
the comparable fiscal 2013 period, the company posted net earnings of $5 million on net sales of$382.4 million.
The company also announced that its board of directors has
declared a quarterly cash dividend of $0.25 per share, a 25 percent increase from
its previous quarterly dividend rate of $0.20 per share. This dividend is payable on January 12, 2015, to shareholders of
record on December 23, 2014.
“Fiscal
2014 was a significant year for The Toro
Company for many reasons,” said Michael J. Hoffman, Toro’s chairman
and chief executive officer. “We delivered record sales, operating earnings and
earnings per share, which enabled us to successfully achieve our Destination
2014 revenue and profitability targets. We celebrated our Centennial and
officially launched the company’s second century.
We entered into and subsequently closed the largest acquisition in
our history with the addition of the BOSS® professional snow and ice management
business. Finally, we returned almost $150
million to our shareholders
through the payment of $45
million in dividends and the
repurchase of more than 1.6 million shares of our common stock.”
“I’d like to thank the entire team for their dedication and
execution throughout the year. Their passion for innovation and customer
service helped to drive retail sales across our portfolio. On the residential
side of our business, we delivered double-digit revenue growth fueled by
abundant snow conditions in key North American markets early in 2014 that
generated strong in-season sales of our snow thrower products. Low field
inventories and pent-up consumer demand set the stage for the robust snow
pre-season that began late this summer and continues to date.
The residential business also saw gains from solid retail demand
for our residential zero turn mowers, as homeowners continue to transition to
these more efficient cutting platforms. Turning to our professional businesses,
contractors who also benefited from the snow season made early investments in
landscape maintenance equipment, helping to drive our sales.
New product features and favorable summer growing conditions
provided additional momentum for the category. In golf, innovative new product
offerings—including our new INFINITY™ sprinklers—helped us to expand our
worldwide market-leading equipment and irrigation positions. We also continued
to develop and grow our newer micro-irrigation, rental and specialty
construction businesses.”
“In addition to driving revenue growth, our enterprise focus on
improving productivity and leveraging expenses is yielding results. It is the
combination of all of these efforts that enabled us to deliver record results
for the year and successfully complete our four-year Destination 2014 journey.
I am proud of the levels of performance that our team was able to achieve
through this initiative, including growing organic revenues more than $430 million over the four-years and establishing a
new level of operating earnings performance at 12.1 percent of sales as of the
end of fiscal 2014. None of that would have been possible without the
remarkable contributions of all of our engaged employees and channel partners
around the world.”
“Looking ahead to fiscal 2015, we are cautiously optimistic. Our
end markets are sound. Contractors will seek productivity-enhancing solutions
for maintaining turf and managing snow and ice. Golf course renovations and
development will progress in key markets. Around the world, customers will
transition to more efficient methods of irrigation, particularly for
agricultural use. Commercial and residential development and infrastructure
improvements will continue, and homeowners will replace their lawn, snow and
handheld products.”
“We are well positioned to capitalize on market growth and drive
share gains with new and innovative product offerings across our businesses and
additional product placements with key customers. We are encouraged by expected
retail demand but, as always, will keep a watchful eye on field inventory
levels and other market conditions. We are excited about the addition of BOSS
to our portfolio and are focused on a successful integration, which is
progressing well and helped by the cultural alignment among our two companies.
We launched a new employee initiative, Destination PRIME, which will
provide momentum to help us drive growth and further improve productivity over
the next three years, while also continuing our century-long commitment to
innovation, relationships and excellence. Despite our optimism, we are
certainly mindful of the challenges that unfavorable weather and economic
conditions can create for our businesses and customers. We will remain flexible
and are prepared to make adjustments across the enterprise as necessary.”
The
company expects revenue growth for fiscal 2015 to be about 8 to 10 percent, and
net earnings to be about $3.30 to
$3.40 per share. For the first
quarter, the company expects net earnings to be about $0.47 per share.
SEGMENT RESULTS
Professional
- Professional segment net sales for fiscal 2014 totaled $1.478 billion, up 3.7 percent over last year. Sales of landscape maintenance equipment increased on strong retail demand for our zero turn mowers and new products introduced during the year. Global micro irrigation sales increased with continued demand for more efficient irrigation solutions for agriculture. Ground engaging and rental equipment sales grew on increased demand for our products. Worldwide golf sales were up as existing golf courses continued to replace aging irrigation systems and equipment with our innovative product offerings, including our new INFINITY™ sprinklers, and new international golf course projects were awarded to us. For the fourth quarter, professional segment net sales were $268.9 million, up 5.1 percent from the comparable fiscal 2013 period.
- Professional segment earnings for fiscal 2014 totaled $276.3 million, up 8.6 percent from the prior year. For the fourth quarter, professional segment earnings were $31.6 million, up from $21.8 million in the comparable fiscal 2013 period.
Residential
- Residential segment net sales for fiscal 2014 were $672.4 million, up 13.1 percent from last year. Sales of our snow thrower products increased due to strong in-season retail demand driven by abundant snowfall across key North American markets early in fiscal 2014 and robust pre-season demand that began late this summer and continued through the end of our fiscal year. Sales of domestic residential zero turn riding products grew on continued retail demand for these mowing platforms. Increased demand for our handheld solutions also contributed to residential segment net sales for the fiscal year. Somewhat offsetting these increases were lower sales of our products inAustralia due to unfavorable currency exchange rates and weather conditions. For the fourth quarter, residential segment net sales were $138.8 million, up 19 percent from the comparable fiscal 2013 period.
- Residential segment earnings for fiscal 2014 totaled $76.9 million, up 24 percent from fiscal 2013. For the fourth quarter, residential segment earnings were $16.3 million, up from $10.1 million in the comparable fiscal 2013 period.
OPERATING RESULTS
Gross
margin as a percent of sales for fiscal 2014 improved 10 basis points from last
year to 35.6 percent. For the fourth quarter, gross margin as a percent of
sales increased 90 basis points to 34.5 percent. For both periods, the
increases primarily were due to realized pricing and productivity improvements
somewhat offset by unfavorable segment mix, unfavorable currency exchange rates
and slightly higher commodity costs.
Selling,
general and administrative (SG&A) expense as a percent of sales for fiscal
2014 decreased 70 basis points from last year to 23.5 percent. For the fourth
quarter, SG&A expense as a percent of sales decreased 160 basis points to
29.8 percent. For both periods, the decreases primarily were due to the
leveraging of expenses over higher sales volumes.
Other
income for fiscal 2014 was $8.7
million, down $3.5 million from last year. This decrease
primarily was due to a one-time legal recovery realized in fiscal 2013 that was
not repeated this year, as well as higher foreign currency losses this year.
Operating
earnings as a percent of sales for fiscal 2014 improved 80 basis points from
last year to 12.1 percent. For the fourth quarter, operating earnings improved
250 basis points to 4.7 percent of sales.
Interest
expense for fiscal 2014 was $15.4
million, down 4.8 percent from last year. For the fourth quarter, interest
expense totaled $4.4 million, an
increase of 11.7 percent from the same period last year.
The
effective tax rate for fiscal 2014 was 32.2 percent compared to 31.7 percent
last year when the company benefited from the retroactive reinstatement of the
domestic research tax credit.
Accounts
receivable at the end of fiscal 2014 totaled $158.2
million, up 1 percent from last year. Net inventories were $274.6 million, up 14.4 percent from
last year. Trade payables were $124.3
million, down 8.7 percent from last year.
Average
net working capital (accounts receivable plus net inventory less trade
payables) as a percent of net sales as of the end of fiscal 2014 was
15.1 percent compared to 16.6 percent as of the end of last year.
About
the Toro Company
The Toro
Company (NYSE:
TTC) is a leading worldwide provider of innovative solutions for the outdoor
environment, including turf, snow and ground engaging equipment and irrigation
and outdoor lighting solutions. With sales of $2.2
billion in
fiscal 2014, Toro’s global presence extends to more than 90 countries. Through
constant innovation and caring relationships built on trust and integrity, Toro and
its family of brands have built a legacy of excellence by helping customers
care for golf courses, landscapes, sports fields, public green spaces,
commercial and residential properties and agricultural fields. For more
information, visit www.thetorocompany.com.
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