The Toro Company Reports Fiscal 2019 Results
Charles Machine Works Acquisition and Snow Products Contribute to Strong Q4 and Full-Year Performance
-
Full-year net sales increased 19.8% over prior fiscal year to a record
$3.1 billion
- Reported full-year diluted EPS up 1.2% over prior fiscal year; *Adjusted full-year diluted EPS up 12.4% over prior fiscal year
-
Charles Machine Works integration ahead of plan, and on track to deliver
$30 million synergy target
-
Company issues fiscal 2020 guidance of adjusted EPS in the range of
$3.33 to $3.40 per diluted share, representing up to 13.3% year-over-year growth at the high end of the range
“We concluded fiscal 2019 by exceeding the
Fiscal Year 2019 Financial Highlights
-
Net sales of
$3,138.1 million , up 19.8% compared to fiscal 2018 net sales of$2,618.7 million -
Net earnings of
$274.0 million , up 0.8% compared to fiscal 2018 net earnings of$271.9 million ; *Adjusted net earnings of$324.3 million , up 11.8% compared to fiscal 2018 adjusted net earnings of$290.1 million -
Reported EPS of
$2.53 per diluted share, up 1.2% compared to fiscal 2018 reported EPS of$2.50 per diluted share; *Adjusted EPS of$3.00 per diluted share, up 12.4% compared to fiscal 2018 adjusted EPS of$2.67 per diluted share -
Returned
$116.1 million to shareholders:$96.1 million in dividends and$20.0 million through share repurchases
Fourth Quarter Fiscal 2019 Financial Highlights
-
Net sales of
$734.4 million , up 36.2% compared to fiscal 2018 net sales of$539.3 million -
Net earnings of
$38.3 million , down 2.0% compared to fiscal 2018 net earnings of$39.0 million ; *Adjusted net earnings of$51.8 million , up 51.5% compared to fiscal 2018 adjusted net earnings of$34.2 million -
Reported EPS of
$0.35 per diluted share, down 2.8% compared to fiscal 2018 reported EPS of$0.36 per diluted share; *Adjusted EPS of$0.48 per diluted share, up 50.0% compared to fiscal 2018 adjusted EPS of$0.32 per diluted share
*Please see the tables provided for a reconciliation of non-GAAP adjusted net earnings and adjusted diluted earnings per share to the comparable GAAP measures.
Key Performance Highlights
- Charles Machine Works (CMW) acquisition positions the company as a market leader in underground and specialty construction markets, driving less seasonal net sales growth and creating incremental value for our shareholders. CMW brands, such as Ditch Witch and American Augers, made significant net sales contributions from equipment that enables the installation and replacement of underground infrastructure from natural gas pipelines and high-voltage electric lines to water systems and 5G wireless networks.
- Strong snow and ice management product demand for the fiscal year was led by BOSS® and residential snow throwers for our mass retail and dealer channel partners.
- All season Flex-Force™ lithium-ion battery-powered products, such as snow throwers, walk power mowers and portable power products, had strong introductions in the fiscal year.
- Investments are being made in innovations such as alternative energy, smart-connected products and autonomous technologies designed to enhance productivity and help solve customer challenges such as labor availability.
- Prudent sourcing strategies, productivity and cost improvement initiatives, as well as strategic capital investments and price adjustments, helped to mitigate rising input costs and tariffs for the year.
First Quarter and Fiscal Year 2020 Outlook
“With the first quarter of fiscal 2020 underway, we are encouraged by the retail activity in our professional and residential snow and ice management products. The fundamentals of the business remain strong and we expect to generate higher levels of free cash flow and return value to our shareholders through dividends and share repurchases," said Olson.
For fiscal 2020, management expects net sales of about
The company expects higher depreciation and amortization as a result of the Charles Machine Works acquisition and are forecasting about
SEGMENT RESULTS
Professional
-
Professional segment net sales for fiscal 2019 increased 25.5% to
$2,443.4 million from$1,947.0 million last year. For the fourth quarter, professional segment net sales increased 46.9% to$588.2 million from$400.5 million last year. For both periods, the addition of CMW was the main driver of net sales growth. Similarly, strong net sales of BOSS® snow and ice management equipment driven primarily by favorable snowfalls earlier in the year and the successful launch of the stand-on Snowrator® bolstered the results. For the year, net sales increased in the landscape contractor business primarily due to the introduction of the new Staris® stand-on zero-turn riding mower and new lawn solution products from a prior acquisition. The rental and specialty construction portfolio performed well due to the introduction of the Dingo® TXL 2000 compact utility loader and continued channel demand for the Dingo® TX 1000 compact utility loader. -
Professional segment earnings for fiscal 2019 were
$380.9 million compared with$399.8 million in the same period last year, largely as a result of the unfavorable impact of purchase accounting adjustments, higher selling, general and administrative expenses, and acquisition and integration expenditures related to the CMW acquisition. Professional segment earnings for the fourth quarter were$61.2 million , essentially flat with the prior-year period.
Residential
-
Residential segment net sales for fiscal 2019 were up 1.0% to
$661.3 million from$654.4 million last year, reflecting higher net sales of snow thrower products due to strong retail demand and new product introductions such as the Power Clear® and Power Max®. Additionally, the Flex-Force™ lithium-ion battery-powered snow throwers and walk power mowers bolstered results for the year. For the fourth quarter, residential segment net sales were up 1.9% to$135.7 million from$133.2 million last year, due to strong snow thrower demand and new product introductions, somewhat offset by weaker demand for zero-turn riding and walk power mowers. -
Residential segment earnings for fiscal 2019 were up 0.5% to
$65.2 million from$64.8 million in the comparable period last year. Residential segment earnings for the fourth quarter were up 104.7% to$13.9 million from$6.8 million last year primarily as a result of pricing and productivity as well as lower commodity costs compared to the fourth quarter of fiscal 2018.
OPERATING RESULTS
Gross margin for fiscal 2019 was 33.4% compared with 35.9% for fiscal 2018, a decrease of 250 basis points, primarily the result of the unfavorable impact of higher commodity and tariff costs and purchase accounting charges associated with the CMW acquisition. For the fourth quarter of fiscal 2019, gross margin improved to 33.4% from 33.2% in the prior period, driven by pricing and productivity, partially offset by the unfavorable impact of the CMW purchase accounting and acquisition-related charges.
Selling, general and administrative (SG&A) expense as a percent of sales for fiscal 2019 increased 130 basis points to 23.0% versus the comparable period last year, reflecting higher incremental expenses related to the CMW acquisition and increased engineering expense for new product development. For the fourth quarter, SG&A expense as a percent of sales was 27.5%, an increase of 230 basis points from the fourth quarter of 2018 primarily a result of the CMW acquisition.
For fiscal 2019, operating earnings as a percent of net sales were 10.4%, compared with 14.2% in fiscal 2018. Operating earnings as a percent of net sales for the fourth quarter were 5.9%, compared with 8.0% in the same period last fiscal year.
Interest expense for fiscal year 2019 increased year over year by
Other income, net, for fiscal 2019 was
The effective tax rate for fiscal 2019 was 14.9%, compared with 27.0% in fiscal 2018. The effective tax rate for the fourth quarter in fiscal 2019 was 12.4% compared with 10.4% for the fourth quarter in fiscal 2018.
Accounts receivable at the end of the fiscal year were
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The
Use of Non-GAAP Financial Information
This press release and our related earnings call references certain non-GAAP financial measures, which are not calculated or presented in accordance with U.S. GAAP, as information supplemental and in addition to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. The non-GAAP financial measures included within this press release and our related earnings call consist of gross profit, operating earnings before income taxes, operating earnings, net earnings, net earnings per diluted share and effective tax rate, each as adjusted, as measures of our operating performance.
The
Reconciliations of historical non-GAAP financial measures to the most comparable GAAP financial measures are included in the financial tables contained in this press release. These measures, however, should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures included within this press release and our related earnings call. These non-GAAP financial measures may differ from similar measures used by other companies.
The
Forward-Looking Statements
This news release contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current assumptions and expectations of future events, and often can be identified by words such as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,” “forecast,” “goal,” “optimistic,” “anticipate,” “continue,” “plan,” “estimate,” “project,” “believe,” “should,” “could,” “will,” “would,” “possible,” “may,” “likely,” “intend,” “can,” “seek,” “potential,” “pro forma,” or the negative thereof or similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual events and results to differ materially from those projected or implied. Particular risks and uncertainties that may affect our operating results or financial position include: worldwide economic conditions, including slow or negative growth rates in global and domestic economies and weakened consumer confidence; disruption at our manufacturing or distribution facilities, including drug cartel-related violence affecting our maquiladora operations in
THE TORO COMPANY AND SUBSIDIARIES |
||||||||||||||||
Condensed Consolidated Statements of Earnings (Unaudited) |
||||||||||||||||
(Dollars and shares in thousands, except per-share data) |
||||||||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
October 31, |
|
October 31, |
|
October 31, |
|
October 31, |
||||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||||
Net sales |
|
$ |
734,379 |
|
|
$ |
539,303 |
|
|
$ |
3,138,084 |
|
|
$ |
2,618,650 |
|
Gross profit |
|
245,067 |
|
|
179,063 |
|
|
1,047,963 |
|
|
941,011 |
|
||||
Gross margin |
|
33.4 |
% |
|
33.2 |
% |
|
33.4 |
% |
|
35.9 |
% |
||||
Selling, general and administrative expense |
|
201,761 |
|
|
136,067 |
|
|
722,934 |
|
|
567,926 |
|
||||
Operating earnings |
|
43,306 |
|
|
42,996 |
|
|
325,029 |
|
|
373,085 |
|
||||
Interest expense |
|
(8,395 |
) |
|
(4,882 |
) |
|
(28,835 |
) |
|
(19,096 |
) |
||||
Other income, net |
|
8,787 |
|
|
5,457 |
|
|
25,939 |
|
|
18,408 |
|
||||
Earnings before income taxes |
|
43,698 |
|
|
43,571 |
|
|
322,133 |
|
|
372,397 |
|
||||
Provision for income taxes |
|
5,432 |
|
|
4,534 |
|
|
48,150 |
|
|
100,458 |
|
||||
Net earnings |
|
$ |
38,266 |
|
|
$ |
39,037 |
|
|
$ |
273,983 |
|
|
$ |
271,939 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share of common stock |
|
$ |
0.36 |
|
|
$ |
0.37 |
|
|
$ |
2.57 |
|
|
$ |
2.56 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net earnings per share of common stock |
|
$ |
0.35 |
|
|
$ |
0.36 |
|
|
$ |
2.53 |
|
|
$ |
2.50 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares of common stock outstanding — Basic |
|
107,166 |
|
|
106,042 |
|
|
106,773 |
|
|
106,369 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares of common stock outstanding — Diluted |
|
108,414 |
|
|
107,916 |
|
|
108,090 |
|
|
108,657 |
|
||||
Segment Data (Unaudited) |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
October 31, |
|
October 31, |
|
October 31, |
|
October 31, |
||||||||
Segment Net Sales |
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
Professional |
|
$ |
588,180 |
|
|
$ |
400,463 |
|
|
$ |
2,443,448 |
|
|
$ |
1,946,999 |
|
Residential |
|
135,735 |
|
|
133,224 |
|
|
661,274 |
|
|
654,413 |
|
||||
Other |
|
10,464 |
|
|
5,616 |
|
|
33,362 |
|
|
17,238 |
|
||||
Total net sales* |
|
$ |
734,379 |
|
|
$ |
539,303 |
|
|
$ |
3,138,084 |
|
|
$ |
2,618,650 |
|
|
|
|
|
|
|
|
|
|
||||||||
*Includes international net sales of: |
|
$ |
177,599 |
|
|
$ |
146,685 |
|
|
$ |
724,931 |
|
|
$ |
643,088 |
|
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
October 31, |
|
October 31, |
|
October 31, |
|
October 31, |
||||||||
Segment Earnings (Loss) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
Professional |
|
$ |
61,225 |
|
|
$ |
61,199 |
|
|
$ |
380,914 |
|
|
$ |
399,806 |
|
Residential |
|
13,898 |
|
|
6,788 |
|
|
65,151 |
|
|
64,807 |
|
||||
Other |
|
(31,425 |
) |
|
(24,416 |
) |
|
(123,932 |
) |
|
(92,216 |
) |
||||
Total segment earnings |
|
$ |
43,698 |
|
|
$ |
43,571 |
|
|
$ |
322,133 |
|
|
$ |
372,397 |
|
THE TORO COMPANY AND SUBSIDIARIES |
||||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||||
(Dollars in thousands) |
||||||
|
|
October 31, |
|
October 31, |
||
2019 |
|
2018 |
||||
ASSETS |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
151,828 |
|
$ |
289,124 |
Receivables, net |
|
268,768 |
|
193,178 |
||
Inventories, net |
|
651,663 |
|
358,259 |
||
Prepaid expenses and other current assets |
|
50,632 |
|
54,076 |
||
Total current assets |
|
1,122,891 |
|
894,637 |
||
|
|
|
|
|
||
Property, plant and equipment, net |
|
437,317 |
|
271,459 |
||
Deferred income taxes |
|
6,251 |
|
38,252 |
||
Goodwill, other intangible assets, and other assets, net |
|
764,088 |
|
366,636 |
||
Total assets |
|
$ |
2,330,547 |
|
$ |
1,570,984 |
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
||
Current portion of long-term debt |
|
$ |
79,914 |
|
$ |
— |
Accounts payable |
|
319,230 |
|
256,575 |
||
Accrued liabilities |
|
357,826 |
|
276,060 |
||
Total current liabilities |
|
756,970 |
|
532,635 |
||
|
|
|
|
|
||
Long-term debt, less current portion |
|
620,899 |
|
312,549 |
||
Deferred income taxes |
|
50,579 |
|
1,397 |
||
Other long-term liabilities |
|
42,521 |
|
55,487 |
||
Total stockholders' equity |
|
859,578 |
|
668,916 |
||
Total liabilities and stockholders' equity |
|
$ |
2,330,547 |
|
$ |
1,570,984 |
THE TORO COMPANY AND SUBSIDIARIES |
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
(Dollars in thousands) |
||||||||
|
|
Twelve Months Ended |
||||||
|
|
October 31, |
|
October 31, |
||||
2019 |
2018 |
|||||||
Cash flows from operating activities: |
|
|
|
|
||||
Net earnings |
|
$ |
273,983 |
|
|
$ |
271,939 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
||||
Non-cash income from finance affiliate |
|
(11,948 |
) |
|
(11,143 |
) |
||
Distributions from finance affiliate, net |
|
10,343 |
|
|
9,228 |
|
||
Depreciation of property, plant and equipment |
|
69,314 |
|
|
53,484 |
|
||
Amortization of other intangible assets |
|
18,384 |
|
|
7,793 |
|
||
Fair value step-up adjustment to acquired inventory |
|
39,368 |
|
|
— |
|
||
Stock-based compensation expense |
|
13,429 |
|
|
12,161 |
|
||
Deferred income taxes |
|
(6,190 |
) |
|
25,255 |
|
||
Other |
|
6,357 |
|
|
507 |
|
||
Changes in operating assets and liabilities, net of effect of acquisitions: |
|
|
|
|
||||
Receivables, net |
|
(11,042 |
) |
|
(10,365 |
) |
||
Inventories, net |
|
(104,832 |
) |
|
(29,770 |
) |
||
Prepaid expenses and other assets |
|
9,747 |
|
|
(11,744 |
) |
||
Accounts payable, accrued liabilities, deferred revenue and other long-term liabilities |
|
30,458 |
|
|
47,460 |
|
||
Net cash provided by operating activities |
|
337,371 |
|
|
364,805 |
|
||
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property, plant and equipment |
|
(92,881 |
) |
|
(90,124 |
) |
||
Proceeds from asset disposals |
|
4,669 |
|
|
151 |
|
||
Proceeds from sale of a business |
|
12,941 |
|
|
— |
|
||
Investments in unconsolidated entities |
|
(200 |
) |
|
(6,750 |
) |
||
Acquisitions, net of cash acquired |
|
(697,471 |
) |
|
(31,202 |
) |
||
Net cash used in investing activities |
|
(772,942 |
) |
|
(127,925 |
) |
||
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings under debt arrangements |
|
900,000 |
|
|
— |
|
||
Repayments under debt arrangements |
|
(511,000 |
) |
|
(19,757 |
) |
||
Proceeds from exercise of stock options |
|
29,336 |
|
|
17,243 |
|
||
Payments of withholding taxes for stock awards |
|
(2,662 |
) |
|
(4,095 |
) |
||
Purchases of Toro common stock |
|
(20,043 |
) |
|
(160,435 |
) |
||
Dividends paid on Toro common stock |
|
(96,133 |
) |
|
(85,031 |
) |
||
Net cash provided by (used in) financing activities |
|
299,498 |
|
|
(252,075 |
) |
||
|
|
|
|
|
||||
Effect of exchange rates on cash and cash equivalents |
|
(1,223 |
) |
|
(5,937 |
) |
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents |
|
(137,296 |
) |
|
(21,132 |
) |
||
Cash and cash equivalents as of the beginning of the fiscal period |
|
289,124 |
|
|
310,256 |
|
||
Cash and cash equivalents as of the end of the fiscal period |
|
$ |
151,828 |
|
|
$ |
289,124 |
|
THE TORO COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands, except per-share data)
The company has provided non-GAAP financial measures, which are not calculated or presented in accordance with accounting principles generally accepted in
The following table provides a reconciliation of financial measures calculated and reported in accordance with GAAP, as well as adjusted non-GAAP financial measures, in the accompanying press release for the three and twelve month periods ended
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
October 31, |
|
October 31, |
|
October 31, |
|
October 31, |
||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Gross profit |
|
$ |
245,067 |
|
|
$ |
179,063 |
|
|
$ |
1,047,963 |
|
|
$ |
941,011 |
|
Acquisition-related costs1 |
|
7,267 |
|
|
— |
|
|
42,958 |
|
|
— |
|
||||
Management actions2 |
|
1,199 |
|
|
— |
|
|
10,316 |
|
|
— |
|
||||
Adjusted non-GAAP gross profit |
|
$ |
253,533 |
|
|
$ |
179,063 |
|
|
$ |
1,101,237 |
|
|
$ |
941,011 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating earnings |
|
$ |
43,306 |
|
|
$ |
42,996 |
|
|
$ |
325,029 |
|
|
$ |
373,085 |
|
Acquisition-related costs1 |
|
11,275 |
|
|
— |
|
|
62,333 |
|
|
— |
|
||||
Management actions2 |
|
7,163 |
|
|
— |
|
|
16,311 |
|
|
— |
|
||||
Adjusted non-GAAP operating earnings |
|
$ |
61,744 |
|
|
$ |
42,996 |
|
|
$ |
403,673 |
|
|
$ |
373,085 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings before income taxes |
|
$ |
43,698 |
|
|
$ |
43,571 |
|
|
$ |
322,133 |
|
|
$ |
372,397 |
|
Acquisition-related costs1 |
|
11,275 |
|
|
— |
|
|
62,333 |
|
|
— |
|
||||
Management actions2 |
|
8,019 |
|
|
— |
|
|
17,167 |
|
|
— |
|
||||
Adjusted non-GAAP earnings before income taxes |
|
$ |
62,992 |
|
|
$ |
43,571 |
|
|
$ |
401,633 |
|
|
$ |
372,397 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings |
|
$ |
38,266 |
|
|
$ |
39,037 |
|
|
$ |
273,983 |
|
|
$ |
271,939 |
|
Acquisition-related costs1 |
|
9,347 |
|
|
— |
|
|
51,149 |
|
|
— |
|
||||
Management actions2 |
|
6,454 |
|
|
— |
|
|
13,817 |
|
|
— |
|
||||
Tax impact of share-based compensation3 |
|
(2,159 |
) |
|
(4,917 |
) |
|
(13,677 |
) |
|
(14,555 |
) |
||||
U.S. Tax Reform4 |
|
(86 |
) |
|
89 |
|
|
(1,012 |
) |
|
32,702 |
|
||||
Adjusted non-GAAP net earnings |
|
$ |
51,822 |
|
|
$ |
34,209 |
|
|
$ |
324,260 |
|
|
$ |
290,086 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS |
|
$ |
0.35 |
|
|
$ |
0.36 |
|
|
$ |
2.53 |
|
|
$ |
2.50 |
|
Acquisition-related costs1 |
|
0.09 |
|
|
— |
|
|
0.47 |
|
|
— |
|
||||
Management actions2 |
|
0.06 |
|
|
— |
|
|
0.13 |
|
|
— |
|
||||
Tax impact of share-based compensation3 |
|
(0.02 |
) |
|
(0.04 |
) |
|
(0.12 |
) |
|
(0.13 |
) |
||||
U.S. Tax Reform4 |
|
— |
|
|
— |
|
|
(0.01 |
) |
|
0.30 |
|
||||
Adjusted non-GAAP diluted EPS |
|
$ |
0.48 |
|
|
$ |
0.32 |
|
|
$ |
3.00 |
|
|
$ |
2.67 |
|
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
October 31, |
|
October 31, |
|
October 31, |
|
October 31, |
||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Effective tax rate |
|
12.4 |
% |
|
10.4 |
% |
|
14.9 |
% |
|
27.0 |
% |
||||
Acquisition-related costs1 |
|
(0.4 |
)% |
|
— |
% |
|
(0.3 |
)% |
|
— |
% |
||||
Management actions2 |
|
0.6 |
% |
|
— |
% |
|
0.1 |
% |
|
— |
% |
||||
Tax impact of share-based compensation3 |
|
4.9 |
% |
|
11.3 |
% |
|
4.3 |
% |
|
3.9 |
% |
||||
U.S. Tax Reform4 |
|
0.2 |
% |
|
(0.2 |
)% |
|
0.3 |
% |
|
(8.8 |
)% |
||||
Adjusted non-GAAP effective tax rate |
|
17.7 |
% |
|
21.5 |
% |
|
19.3 |
% |
|
22.1 |
% |
1 |
During the second quarter of fiscal 2019, the company acquired The Charles Machine Works, Inc. ("CMW"), a privately held Oklahoma corporation. Acquisition-related costs represent integration and transaction costs incurred, as well as charges incurred for the take-down of the inventory fair value step-up amount and amortization of the backlog intangible asset resulting from purchase accounting adjustments, related to the company's acquisition of CMW during the three and twelve month periods ended October 31, 2019. |
|
|
|
|
2 |
During the third quarter of fiscal 2019, the company announced its wind down of its Toro-branded large horizontal directional drill and riding trencher product line. Additionally, during the fourth quarter of fiscal 2019, the company incurred charges for a corporate restructuring event and a loss on the divestiture of a used underground construction equipment business. Management actions represent charges incurred during the three and twelve month periods ended October 31, 2019 for the Toro underground wind down, including charges related to the write-down of inventory, anticipated inventory retail support activities, and accelerated depreciation on fixed assets; the corporate restructuring event, including employee severance charges; and the divestiture of a used underground construction equipment business, including the loss on the sale of the business. |
|
|
|
|
3 |
In the first quarter of fiscal 2017, the company adopted Accounting Standards Update No. 2016-09, Stock-based Compensation: Improvements to Employee Share-based Payment Accounting, which requires that any excess tax deduction for share-based compensation be immediately recorded within income tax expense. These amounts represent the discrete tax benefits recorded as excess tax deductions for share-based compensation during the three and twelve month periods ended October 31, 2019 and October 31, 2018. |
|
|
|
|
4 |
Signed into law on December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act"), reduced the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent, effective January 1, 2018, resulting in a blended U.S. federal statutory tax rate of 23.3 percent for the fiscal year ended October 31, 2018. This reduction in rate required the re-measurement of the company's net deferred taxes as of the date of enactment. The Tax Act also imposed a one-time deemed repatriation tax on the company's historical undistributed earnings and profits of foreign affiliates. During the three and twelve month periods ended October 31, 2019, the company recorded a tax benefit of $0.1 million and $1.0 million, respectively, related to a prior year true-up of the Tax Act. During the three and twelve month periods ended October 31, 2018, the remeasurement of the company's net deferred taxes and the one-time deemed repatriation tax resulted in a combined charge of $0.1 million and $32.7 million, respectively. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191218005098/en/
Source: The
Investor Relations
Nicholas Rhoads
Director, Investor Relations
(952) 887-8865, nicholas.rhoads@toro.com
Media Relations
Branden Happel
Senior Manager, Public Relations
(952) 887-8930, branden.happel@toro.com