The Toro Company Reports Record Fiscal 2016 Results
-
Fiscal 2016 net earnings per share for the year up 15.7 percent to a
record
$2.06 - Professional segment drives solid performance for the year
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Quarterly cash dividend increased 16.7 percent to
$0.175 per share
For the fourth quarter, Toro reported net earnings of
Shares and per share data have been adjusted for all periods presented
to reflect a two-for-one stock split effective
The company also announced that its board of directors has declared a
quarterly cash dividend of
“We are pleased to announce record earnings for fiscal 2016, driven by
consistent performance and growth in our professional businesses,” said
“I am proud of our team’s efforts to increase productivity while prudently managing expenses, all of which helped drive our performance,” said Olson. “It is the collective contributions of our engaged employees that make these results possible. I would like to thank our entire team, including our channel partners worldwide. It is their dedication and commitment that helps us achieve these consistent results.”
“With fiscal 2017 already underway, we remain committed to delivering innovative products and serving customers across our businesses. As anticipated, pre-season demand for snow and ice management products was affected by the lack of snowfall last winter. However, mild autumn conditions extended the growing season in several areas, which benefitted our turf maintenance businesses. Recent weather patterns appear promising, and we are encouraged by the resulting retail activity. We will pay careful attention to inventory levels while ensuring we remain responsive to customer demand. As we embark on the last year of our Destination Prime employee initiative, we are committed to growth and profitability, while maintaining focus on working capital management. As always, we recognize that unfavorable weather conditions could negatively impact demand throughout the year, but we will maintain a steady approach in executing on our initiatives in the months ahead.”
For fiscal 2017, the company expects revenue growth to be about 3 to 4
percent, and net earnings to be about
SEGMENT RESULTS
Professional
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Professional segment net sales for fiscal 2016 totaled
$1.705 billion , up 4.0 percent from$1.640 billion last year. Strong performance across our professional businesses drove the positive results for the year. Solid demand for our golf equipment, Toro branded landscape contractor equipment, as well as the success of the Dingo TX 1000 contributed to the growth for the year. For the fourth quarter, professional segment net sales were$343.5 million , up 5.6 percent from the comparable fiscal 2015 period. The growth was driven largely by the strong demand for golf products paired with favorable weather conditions experienced in the quarter. The sales growth for both periods was somewhat offset by the lighter snowfall during the 2016 winter season. -
Professional segment earnings for fiscal 2016 totaled
$352.1 million , up 14.3 percent from$308.0 million from the prior year. For the fourth quarter, professional segment earnings were$59.7 million , up from$49.3 million in the comparable fiscal 2015 period.
Residential
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Residential segment net sales for fiscal 2016 were
$669.1 million , down 7.8 percent from$725.7 million last year. Mild in-season winter conditions paired with a soft snow pre-season to wrap up the fiscal year are the main contributors to the decline. For the fourth quarter, residential segment net sales were$118.8 million , down 19.2 percent from the comparable fiscal 2015 period. A decrease in sales of residential snow products was the largest contributing factor to the decline. The negative sales impact for both periods was somewhat offset by strong demand for our walk power mowers.
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Residential segment earnings for fiscal 2016 totaled
$73.7 million , down 13.3 percent from fiscal 2015. For the fourth quarter, residential segment earnings were$9.2 million , down from$15.8 million in the comparable fiscal 2015 period.
OPERATING RESULTS
Gross margin as a percent of sales for fiscal 2016 was up 160 basis points from last year to 36.6 percent. For the fourth quarter, gross margin as a percent of sales increased 170 basis points to 36.8 percent. For both periods, favorable commodity costs and enhanced productivity, as well as segment mix, contributed to the increases. These increases were partially offset by the impacts of unfavorable currency exchange rates for both the quarter and the fiscal year.
Selling, general and administrative (SG&A) expense as a percent of sales for fiscal 2016 increased 10 basis points to 22.6 percent compared to last year. For the fourth quarter, SG&A expense as a percent of sales increased 10 basis points to 27.5 percent.
Operating earnings as a percent of sales for fiscal 2016 improved 150 basis points from last year to 14.0 percent. For the fourth quarter, operating earnings improved 160 basis points to 9.3 percent of sales.
The effective tax rate for fiscal 2016 was 30.1 percent, compared to 30.7 percent last year. The decrease was due to favorable one-time adjustments and the permanent extension of the domestic research tax credit.
Accounts receivable at the end of fiscal 2016 totaled
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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 | Fiscal Years Ended | |||||||||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net sales | $ | 468,356 | $ | 480,807 | $ | 2,392,175 | $ | 2,390,875 | ||||||||||
Gross profit | 172,137 | 168,574 | 874,595 | 835,935 | ||||||||||||||
Gross profit percent | 36.8 | % | 35.1 | % | 36.6 | % | 35.0 | % | ||||||||||
Selling, general, and administrative expense | 128,623 | 131,742 | 540,199 | 536,821 | ||||||||||||||
Operating earnings | 43,514 | 36,832 | 334,396 | 299,114 | ||||||||||||||
Interest expense | (5,315 | ) | (4,686 | ) | (19,336 | ) | (18,757 | ) | ||||||||||
Other income, net | 3,535 | 3,159 | 15,400 | 10,674 | ||||||||||||||
Earnings before income taxes | 41,734 | 35,305 | 330,460 | 291,031 | ||||||||||||||
Provision for income taxes | 11,504 | 11,751 | 99,466 | 89,440 | ||||||||||||||
Net earnings | $ | 30,230 | $ | 23,554 | $ | 230,994 | $ | 201,591 | ||||||||||
Basic net earnings per share of common stock | $ | 0.28 | $ | 0.21 | $ | 2.10 | $ | 1.81 | ||||||||||
Diluted net earnings per share of common stock | $ | 0.27 | $ | 0.21 | $ | 2.06 | $ | 1.78 | ||||||||||
Weighted-average number of shares of common | ||||||||||||||||||
stock outstanding – Basic | 109,546 | 110,099 | 109,834 | 111,130 | ||||||||||||||
Weighted-average number of shares of common | ||||||||||||||||||
stock outstanding – Diluted | 111,667 | 112,587 | 111,987 | 113,514 | ||||||||||||||
Shares and per share data have been adjusted for all periods presented to reflect a two-for-one stock split effective September 16, 2016. | ||||||||||||||||||
Segment Data (Unaudited) | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Three Months Ended | Fiscal Years Ended | |||||||||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||||||
Segment Net Sales | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
Professional | $ | 343,483 | $ | 325,185 | $ | 1,705,312 | $ | 1,639,659 | ||||||||||
Residential | 118,801 | 147,095 | 669,131 | 725,682 | ||||||||||||||
Other | 6,072 | 8,527 | 17,732 | 25,534 | ||||||||||||||
Total* | $ | 468,356 | $ | 480,807 | $ | 2,392,175 | $ | 2,390,875 | ||||||||||
*Includes international sales of: | $ | 129,011 | $ | 135,724 | $ | 579,588 | $ | 610,635 | ||||||||||
Three Months Ended | Fiscal Years Ended | |||||||||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||||||
Segment Earnings (Loss) Before Income Taxes | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
Professional | $ | 59,749 | $ | 49,283 | $ | 352,060 | $ | 308,010 | ||||||||||
Residential | 9,197 | 15,825 | 73,691 | 84,956 | ||||||||||||||
Other | (27,212 | ) | (29,803 | ) | (95,291 | ) | (101,935 | ) | ||||||||||
Total | $ | 41,734 | $ | 35,305 | $ | 330,460 | $ | 291,031 | ||||||||||
THE TORO COMPANY AND SUBSIDIARIES | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(Dollars in thousands) | |||||||
October 31, | October 31, | ||||||
2016 | 2015 | ||||||
ASSETS |
|||||||
Cash and cash equivalents | $ | 273,555 | $ | 126,275 | |||
Receivables, net | 163,265 | 177,013 | |||||
Inventories, net | 307,034 | 334,514 | |||||
Prepaid expenses and other current assets | 35,155 | 34,782 | |||||
Total current assets | 779,009 | 672,584 | |||||
Property, plant, and equipment, net | 222,038 | 224,995 | |||||
Long-term deferred income taxes | 57,228 | 66,663 | |||||
Goodwill and other assets, net | 329,243 | 339,416 | |||||
Total assets | $ | 1,387,518 | $ | 1,303,658 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current portion of long-term debt | $ | 22,484 | $ | 23,134 | |||
Short-term debt | — | 222 | |||||
Accounts payable | 174,668 | 152,017 | |||||
Accrued liabilities | 266,687 | 268,361 | |||||
Total current liabilities | 463,839 | 443,734 | |||||
Long-term debt, less current portion | 331,423 | 354,818 | |||||
Deferred revenue | 11,830 | 11,365 | |||||
Other long-term liabilities | 30,391 | 31,576 | |||||
Total stockholders' equity | 550,035 | 462,165 | |||||
Total liabilities and stockholders' equity | $ | 1,387,518 | $ | 1,303,658 | |||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
(Dollars in thousands) | ||||||||||
Fiscal Years Ended | ||||||||||
October 31, | October 31, | |||||||||
2016 | 2015 | |||||||||
Cash flows from operating activities: | ||||||||||
Net earnings | $ | 230,994 | $ | 201,591 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||
Non-cash income from finance affiliate | (9,588 | ) | (8,353 | ) | ||||||
Provision for depreciation, amortization, and impairment loss | 64,097 | 63,143 | ||||||||
Stock-based compensation expense | 10,637 | 10,836 | ||||||||
Decrease in deferred income taxes | 10,075 | 200 | ||||||||
Other | (464 | ) | (128 | ) | ||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||
Receivables, net | 15,785 | (25,647 | ) | |||||||
Inventories, net | 23,192 | (52,656 | ) | |||||||
Prepaid expenses and other assets | (905 | ) | (607 | ) | ||||||
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities | 18,119 | 48,490 | ||||||||
Net cash provided by/(used in) operating activities | 361,942 | 236,869 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant, and equipment | (50,723 | ) | (56,374 | ) | ||||||
Proceeds from asset disposals | 310 | 179 | ||||||||
Distributions from finance affiliate, net | 9,848 | 4,264 | ||||||||
Proceeds from sale of a business | 1,500 | — | ||||||||
Acquisition, net of cash acquired | — | (198,329 | ) | |||||||
Net cash provided by/(used in) investing activities | (39,065 | ) | (250,260 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Repayments of short-term debt | (1,161 | ) | (21,283 | ) | ||||||
Repayments of long-term debt | (24,107 | ) | (7,227 | ) | ||||||
Excess tax benefits from stock-based awards | 12,495 | 8,459 | ||||||||
Proceeds from exercise of stock options | 20,226 | 9,203 | ||||||||
Purchases of Toro common stock | (111,999 | ) | (106,964 | ) | ||||||
Dividends paid on Toro common stock | (65,890 | ) | (55,549 | ) | ||||||
Net cash provided by/(used in) financing activities | (170,436 | ) | (173,361 | ) | ||||||
Effect of exchange rates on cash and cash equivalents | (5,161 | ) | (1,846 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | 147,280 | (188,598 | ) | |||||||
Cash and cash equivalents as of the beginning of the fiscal period | 126,275 | 314,873 | ||||||||
Cash and cash equivalents as of the end of the fiscal period | $ | 273,555 | $ | 126,275 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161208005195/en/
Source: The
The Toro Company
Investor Relations
Heather
Hille, 952-887-8923
Director, Investor Relations
heather.hille@toro.com
or
Media
Relations
Branden Happel, 952-887-8930
Senior Manager,
Public Relations
branden.happel@toro.com