The Toro Company Reports Record Results for Fiscal 2013
- Fiscal 2013 sales increase to a record
$2 billion - Operating earnings expand to 11.3 percent and a record
$230.7 million - Net earnings per share for the year up 22 percent to a record
$2.62 - Quarterly cash dividend increased 43 percent to
$0.20 per share
For the fourth quarter,
The company also announced that its board of directors has declared a quarterly cash dividend of
“The Toro Company completed a record year with new highs for revenues, operating earnings and earnings per share,” said
“Looking across our businesses, Fiscal 2013 was a good year. I am extremely proud of our team and their passion for innovation and serving our customers. Of course we had our share of challenges, but we were able to successfully manage through less than ideal weather conditions in the first half of the year, as well as the phase-in of the Tier 4 diesel engine transition. Our innovative new product offerings helped us to defend and grow our positions in golf equipment and irrigation, landscape maintenance products, residential ZTR mowers and handheld blowers and trimmers. Our recent acquisitions in the rental and construction space are integrated and contributing. Demand for our precision agriculture irrigation products continued to grow and we further expanded our global presence with the closing of our
“For the fourth quarter, even with favorable comparisons to last year when we saw soft preseason demand for our snow products, we delivered solid performance. Practically all of our product lines contributed to our sales growth and our expanded gross margins further evidence the traction we are gaining with our productivity efforts.”
“Looking ahead to fiscal 2014, we are mindful of the mild expectations for our world-wide economic environments, as well as the challenges that Mother Nature can create for our businesses and customers. Nonetheless, we are cautiously optimistic about the prospects for our end markets in this Centennial year. Golf course development is progressing in key markets, housing and construction continues to improve, and around the world customers are seeking more efficient methods of irrigation. We are well-positioned across our product portfolio to capitalize on growth in all of these areas. In addition, our recent investments to expand the global footprint of our micro irrigation business and grow our rental and construction market presence are yielding positive results and will continue to gain momentum. While we hope that Mother Nature will deliver favorable weather, that is out of our control. Instead, we remain focused on the things that have made us successful for our first 100 years: developing innovative products, serving our customers and executing in the marketplace. We continue to pursue our Destination 2014 goals in this final year of our initiative and our employees are engaged to drive revenue growth and further improve productivity.”
The company expects revenue growth for fiscal 2014 to be about 4 to 5 percent, and net earnings to be about
SEGMENT RESULTS
Professional
- Professional segment net sales for fiscal 2013 totaled
$1,425.3 million , up 7.2 percent over last year. Sales of landscape maintenance equipment increased on strong retail demand for our zero turn radius products and successful new product introductions—including our new TurfMaster™ heavy duty walk power mower, electronic fuel injection products and turf renovation products. Worldwide golf and irrigation sales were up as existing golf courses continued to replace aging equipment and irrigation systems with our offerings and new international golf course projects were awarded to us. Rental and construction equipment sales grew on increased demand for our products and incremental sales from recent acquisitions. Global micro irrigation sales increased with continued demand for more efficient irrigation solutions for agriculture. For the fourth quarter, professional segment net sales were$255.8 million , up 11.9 percent from the comparable fiscal 2012 period. - Professional segment earnings for fiscal 2013 totaled
$254.4 million , up 9.6 percent from the prior year. For the fourth quarter, professional segment earnings were$21.8 million , up 5 percent from the comparable fiscal 2012 period.
Residential
- Residential segment net sales for fiscal 2013 were
$594.4 million , down 2.1 percent from last year. This slight decline largely was attributable to challenged preseason sales of snow products early in fiscal 2013 and unfavorable spring weather at the beginning of the key selling season. Sales benefitted from increased shipments of domestic residential riding products as consumers continued to transition to our zero turn radius mowers, including our Timecutter® line of Zs, and from higher demand for our handheld trimmer and blower products in the U.S. and Pope-branded irrigation products inAustralia . For the fourth quarter, residential segment net sales were$116.6 million , up 14.3 percent from the comparable fiscal 2012 period. This increase primarily was due to improved preseason demand for snowthrowers as compared to our fiscal 2012 fourth quarter, with sales of worldwide residential riding products, handheld solutions and Pope irrigation products also contributing. - Residential segment earnings for fiscal 2013 totaled
$62 million , up 7.2 percent from fiscal 2012. For the fourth quarter, residential segment earnings were$10.1 million , up from$6.7 million in the comparable fiscal 2012 period.
OPERATING RESULTS
Gross margin for fiscal 2013 improved 110 basis points from last year to 35.5 percent. The majority of the margin expansion was due to realized price, product mix and productivity improvement, somewhat offset by unfavorable currency exchange rates. For the fourth quarter, gross margin was up 30 basis points to 33.6 percent.
Selling, general and administrative (SG&A) expense as a percent of sales increased 30 basis points to 24.2 percent for fiscal 2013. For the fourth quarter, SG&A expense as a percentage of sales decreased 70 basis points to 31.4 percent.
Other income for fiscal 2013 was
Operating earnings as a percent of sales improved 80 basis points to 11.3 percent for fiscal 2013 For the fourth quarter, operating earnings improved 100 basis points to 2.2 percent of sales compared to 1.2 percent last year.
Interest expense for fiscal 2013 was
The effective tax rate for the fiscal year was 31.7 percent compared with 34 percent last year, primarily due to the reinstatement of the
Accounts receivable at the end of the fiscal year 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 expectations of future events, and often can be identified by words such as "expect,” “strive,” “looking ahead,” “outlook,” “forecast,” “goal,” “optimistic,” “anticipate,” “continue,” “plan,” “estimate,” “believe,” “should,” “could,” “will,” “would,” “possible,” “may,” “likely,” “intend,” and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual 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, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Net sales | $ | 382,366 | $ | 339,294 | $ | 2,041,431 | $ | 1,958,690 | ||||||||||||
Gross profit | 128,648 | 112,899 | 724,797 | 673,094 | ||||||||||||||||
Gross profit percent | 33.6 | % | 33.3 | % | 35.5 | % | 34.4 | % | ||||||||||||
Selling, general, and administrative expense | 120,241 | 108,792 | 494,135 | 467,481 | ||||||||||||||||
Operating earnings | 8,407 | 4,107 | 230,662 | 205,613 | ||||||||||||||||
Interest expense | (3,903 | ) | (4,115 | ) | (16,210 | ) | (16,906 | ) | ||||||||||||
Other income, net | 4,841 | 2,324 | 12,261 | 7,555 | ||||||||||||||||
Earnings before income taxes | 9,345 | 2,316 | 226,713 | 196,262 | ||||||||||||||||
Provision for income taxes | 4,395 | 2,065 | 71,868 | 66,721 | ||||||||||||||||
Net earnings | $ | 4,950 | $ | 251 | $ | 154,845 | $ | 129,541 | ||||||||||||
Basic net earnings per share | $ | 0.09 | $ | 0.00 | $ | 2.67 | $ | 2.18 | ||||||||||||
Diluted net earnings per share | $ | 0.08 | $ | 0.00 | $ | 2.62 | $ | 2.14 | ||||||||||||
Weighted average number of shares of common
stock outstanding – Basic |
57,406 |
58,836 |
57,922 |
59,446 |
||||||||||||||||
Weighted average number of shares of common
stock outstanding – Diluted |
58,750 |
60,162 |
59,105 |
60,618 |
||||||||||||||||
Segment Data (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended | Fiscal Years Ended | |||||||||||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||||||||
Segment Net Sales |
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Professional | $ | 255,813 | $ | 228,605 | $ | 1,425,259 | $ | 1,329,504 | ||||||||||||
Residential | 116,622 | 102,036 | 594,411 | 607,435 | ||||||||||||||||
Other | 9,931 | 8,653 | 21,761 | 21,751 | ||||||||||||||||
Total * | $ | 382,366 | $ | 339,294 | $ | 2,041,431 | $ | 1,958,690 | ||||||||||||
* Includes international sales of | $ | 123,000 | $ | 113,842 | $ | 615,371 | $ | 594,313 | ||||||||||||
Three Months Ended | Fiscal Years Ended | |||||||||||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||||||||
Segment Earnings (Loss) Before Income Taxes |
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Professional | $ | 21,807 | $ | 20,775 | $ | 254,424 | $ | 232,104 | ||||||||||||
Residential | 10,130 | 6,715 | 62,033 | 57,889 | ||||||||||||||||
Other | (22,592 | ) | (25,174 | ) | (89,744 | ) | (93,731 | ) | ||||||||||||
Total | $ | 9,345 | $ | 2,316 | $ | 226,713 | $ | 196,262 | ||||||||||||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(Dollars in thousands) | ||||||||
October 31, | October 31, | |||||||
2013 | 2012 | |||||||
ASSETS |
||||||||
Cash and cash equivalents | $ | 182,993 | $ | 125,856 | ||||
Receivables, net | 157,171 | 147,410 | ||||||
Inventories, net | 240,089 | 251,117 | ||||||
Prepaid expenses and other current assets | 33,258 | 24,437 | ||||||
Deferred income taxes | 39,756 | 63,314 | ||||||
Total current assets | 653,267 | 612,134 | ||||||
Property, plant, and equipment, net | 185,096 | 180,523 | ||||||
Goodwill and other assets, net | 164,385 | 142,542 | ||||||
Total assets | $ | 1,002,748 | $ | 935,199 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current portion of long-term debt | $ | — | $ | 1,858 | ||||
Accounts payable | 136,158 | 124,806 | ||||||
Accrued liabilities | 252,687 | 251,458 | ||||||
Total current liabilities | 388,845 | 378,122 | ||||||
Long-term debt, less current portion | 223,544 | 223,482 | ||||||
Deferred revenue | 10,899 | 11,143 | ||||||
Deferred income taxes | 5,969 | 2,280 | ||||||
Other long-term liabilities | 14,753 | 7,770 | ||||||
Stockholders’ equity | 358,738 | 312,402 | ||||||
Total liabilities and stockholders’ equity | $ | 1,002,748 | $ | 935,199 | ||||
THE TORO COMPANY AND SUBSIDIARIES | ||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
(Dollars in thousands) | ||||||||||
Fiscal Years Ended | ||||||||||
October 31, | October 31, | |||||||||
2013 | 2012 | |||||||||
Cash flows from operating activities: | ||||||||||
Net earnings | $ | 154,845 | $ | 129,541 | ||||||
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
||||||||||
Noncash income from finance affiliate | (7,097 | ) | (5,996 | ) | ||||||
Provision for depreciation, amortization, and impairment losses | 54,134 | 53,634 | ||||||||
Stock-based compensation expense | 10,237 | 9,503 | ||||||||
Decrease (increase) in deferred income taxes | 149 | (206 | ) | |||||||
Other | 10 | (132 | ) | |||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||
Receivables, net | (11,912 | ) | (495 | ) | ||||||
Inventories, net | 9,373 | (21,973 | ) | |||||||
Prepaid expenses and other assets | (6,825 | ) | (6,741 | ) | ||||||
Accounts payable, accrued liabilities, deferred revenue, and
other long-term liabilities |
18,962 |
28,663 |
||||||||
Net cash provided by operating activities | 221,876 | 185,798 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant, and equipment | (49,427 | ) | (43,242 | ) | ||||||
Proceeds from asset disposals | 413 | 491 | ||||||||
Distributions from finance affiliate, net | 6,342 | 5,091 | ||||||||
Acquisitions, net of cash acquired | (2,101 | ) | (9,663 | ) | ||||||
Net cash used in investing activities | (44,773 | ) | (47,323 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Repayments of short-term debt | (415 | ) | (922 | ) | ||||||
Repayments of long-term debt | (1,739 | ) | (1,858 | ) | ||||||
Excess tax benefits from stock-based awards | 6,134 | 9,017 | ||||||||
Proceeds from exercise of stock options | 9,808 | 20,347 | ||||||||
Purchases of Toro common stock | (99,587 | ) | (93,395 | ) | ||||||
Dividends paid on Toro common stock | (32,499 | ) | (26,230 | ) | ||||||
Net cash used in financing activities | (118,298 | ) | (93,041 | ) | ||||||
Effect of exchange rates on cash and cash equivalents | (1,668 | ) | (464 | ) | ||||||
Net increase in cash and cash equivalents | 57,137 | 44,970 | ||||||||
Cash and cash equivalents as of the beginning of the fiscal year | 125,856 | 80,886 | ||||||||
Cash and cash equivalents as of the end of the fiscal year | $ | 182,993 | $ | 125,856 | ||||||
Source: The
The Toro Company
Investor Relations
Amy Dahl, 952-887-8917
Managing Director, Corporate Communications and Investor Relations
amy.dahl@toro.com
or
Media Relations
Branden Happel, 952-887-8930
Senior Manager, Public Relations
branden.happel@toro.com