The Toro Company Reports Record Third-Quarter Fiscal 2021 Results
Continued Broad-Based Demand Across Professional and Residential Segments
-
Third-quarter net sales up 16.2% year over year to
$977 million ; Professional segment net sales up 15.2%, Residential segment net sales up 23.0% -
Reported diluted EPS of
$0.89 ; *Adjusted diluted EPS of$0.92 , up 12.2% year over year - Raises full-year fiscal 2021 net sales and *adjusted diluted EPS guidance
“Robust sales continued throughout the quarter in both our professional and residential segments,” said
“We delivered double-digit net sales growth for the second quarter in a row for the professional segment, with continued strength in landscape contractor and golf markets worldwide, increased pre-season shipments of BOSS snow and ice management products, and higher demand for rental and specialty construction equipment and Ventrac products. Residential segment net sales were also up double-digits on top of a very strong third quarter last year, driven by increased retail demand for zero-turn and walk power mowers. Customers are excited about our new and enhanced products across both segments, including our expanding line of battery-powered offerings. Our continued investment in key technology areas underscores our commitment to provide a broad range of innovative and sustainable solutions.”
THIRD-QUARTER FISCAL 2021 FINANCIAL HIGHLIGHTS
-
Net sales of
$976.8 million , up 16.2% from$841.0 million in the third quarter of fiscal 2020. -
Net earnings of
$96.3 million , up 8.3% from$89.0 million in the third quarter of fiscal 2020; *adjusted net earnings of$99.4 million , up 12.1% from$88.7 million in the third quarter of fiscal 2020. -
Reported EPS of
$0.89 per diluted share, up 8.5% from$0.82 per diluted share in the third quarter of fiscal 2020; *adjusted EPS of$0.92 per diluted share, up 12.2% from$0.82 per diluted share in the third quarter of fiscal 2020.
YEAR-TO-DATE FISCAL 2021 FINANCIAL HIGHLIGHTS
-
Net sales of
$3.0 billion , up 18.2% from$2.54 billion in the same prior-year period. -
Net earnings of
$349.8 million , up 35.8% from$257.5 million in the same prior-year period; *adjusted net earnings of$333.0 million , up 28.8% from$258.6 million in the first nine months of fiscal 2020. -
Reported EPS of
$3.21 per diluted share, up 35.4% from$2.37 per diluted share in the same prior-year period; *adjusted EPS of$3.06 per diluted share, up 28.6% from$2.38 per diluted share in the first nine months of fiscal 2020. -
Deployed
$100.0 million to pay down debt and returned$261.8 million to shareholders through regular dividends of$84.7 million and share repurchases of$177.1 million . As ofJuly 30, 2021 , the company had ample liquidity of$1.1 billion .
OUTLOOK
“As we enter the final quarter of our fiscal year, we anticipate continued strong demand for our innovative product offerings, and are encouraged by the benefits we are realizing from our productivity and synergy initiatives,” added Olson. “We continue to align our actions with market dynamics and are prudently managing expenses for what is likely to be a challenging supply chain, inflation and labor environment into next year. All in, we are positioned to deliver excellent results for the full fiscal year, including record organic growth as we approach
“Looking ahead, we remain focused on our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people. We are actively prioritizing investments in key technology areas of alternative power, smart connected and autonomous, and ensuring we have capacity to meet expected future growth,” concluded Olson.
The company is increasing its full-year fiscal 2021 guidance, and now expects net sales growth of about 17%, up from a range of 12% to 15% previously, and *adjusted EPS in the range of
FISCAL THIRD-QUARTER SEGMENT RESULTS
Professional Segment
-
Professional segment net sales for the third quarter were
$718.5 million , up 15.2% compared with$623.6 million in the same period last year. The increase was primarily driven by strong demand for landscape contractor, golf, snow and ice management, rental and specialty construction, and Ventrac products, slightly offset by decreased sales of underground construction equipment due to product availability. -
Professional segment earnings for the third quarter were
$122.3 million , up 7.6% compared with$113.7 million in the same period last year, and when expressed as a percentage of net sales, 17.0%, down from 18.2%. The 120 basis point decrease was largely due to higher material and freight costs, partially offset by net price realization and productivity improvements.
Residential Segment
-
Residential segment net sales for the third quarter were
$252.1 million , up 23.0% compared with$205.0 million in the same period last year. The increase was primarily due to strong retail demand for zero-turn and walk power mowers. -
Residential segment earnings for the third quarter were
$31.5 million , up 10.5% compared with$28.5 million in the same period last year, and when expressed as a percentage of net sales, 12.5%, down from 13.9%. The 140 basis point decrease was largely driven by higher material and freight costs, partially offset by net price realization, productivity improvements and product mix.
OPERATING RESULTS
Gross margin for the third quarter was 33.9%, down 110 basis points compared with 35.0% for the same prior-year period. *Adjusted gross margin for the third quarter was 33.9%, down 130 basis points compared with 35.2% for the prior-year period. The decreases in gross margin and adjusted gross margin were primarily due to higher material and freight costs, partially offset by net price realization and productivity improvements.
SG&A expense as a percentage of net sales for the third quarter increased 20 basis points to 21.4% from 21.2% in the prior-year period. The increase was primarily driven by more normalized spending compared with a year ago and a legal settlement in the third quarter of this year.
Operating earnings as a percentage of net sales decreased 130 basis points to 12.5% for the third quarter. *Adjusted operating earnings as a percentage of net sales decreased 80 basis points to 13.1% for the third quarter.
Interest expense was down
The effective tax rate for the third quarter was 18.0% compared with 19.8% for the third quarter of fiscal 2020. The *adjusted effective tax rate for the third quarter was 19.3% compared with 20.9% for the third quarter of fiscal 2020. The decreases were primarily driven by one-time adjustments related to prior years, partially offset by the geographic mix of earnings.
*Non-GAAP financial measure. Please see the tables provided for a reconciliation of historical non-GAAP financial measures to the most comparable GAAP measures.
LIVE CONFERENCE CALL
www.thetorocompany.com/invest
About
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
Reconciliations of historical non-GAAP financial measures to the most comparable
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. Forward-looking statements in this release include the company’s fiscal 2021 financial guidance. Particular risks and uncertainties that may affect the company’s operating results or financial position include: COVID-19 related factors, risks and challenges; adverse worldwide economic conditions; disruption at or in proximity to its facilities or in its manufacturing or other operations, or those in its distribution channel customers, mass retailers or home centers where its products are sold, or suppliers; fluctuations in the cost and availability of commodities, components, parts, and accessories, including steel, engines, hydraulics and resins; the effect of abnormal weather patterns; the effect of natural disasters, social unrest, and global pandemics; the level of growth or contraction in its key markets; customer, government and municipal revenue, budget, spending levels and cash conservation efforts; loss of any substantial customer; inventory adjustments or changes in purchasing patterns by customers; the company’s ability to develop and achieve market acceptance for new products; increased competition; the risks attendant to international relations, operations and markets; foreign currency exchange rate fluctuations; financial viability of and/or relationships with the company’s distribution channel partners; risks associated with acquisitions; impairment of goodwill or other intangible assets; impacts of any restructuring activities; management of alliances or joint ventures, including
(Financial tables follow)
THE TORO COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings (Unaudited) (Dollars and shares in thousands, except per-share data) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
976,836 |
|
|
$ |
840,972 |
|
|
$ |
2,998,929 |
|
|
$ |
2,537,853 |
|
Cost of sales |
|
|
645,719 |
|
|
|
546,398 |
|
|
|
1,949,823 |
|
|
|
1,648,474 |
|
Gross profit |
|
|
331,117 |
|
|
|
294,574 |
|
|
|
1,049,106 |
|
|
|
889,379 |
|
Gross margin |
|
|
33.9 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
Selling, general and administrative expense |
|
|
209,178 |
|
|
|
178,622 |
|
|
|
604,986 |
|
|
|
556,503 |
|
Operating earnings |
|
|
121,939 |
|
|
|
115,952 |
|
|
|
444,120 |
|
|
|
332,876 |
|
Interest expense |
|
|
(7,016 |
) |
|
|
(8,304 |
) |
|
|
(21,662 |
) |
|
|
(25,119 |
) |
Other income, net |
|
|
2,528 |
|
|
|
3,345 |
|
|
|
8,062 |
|
|
|
10,746 |
|
Earnings before income taxes |
|
|
117,451 |
|
|
|
110,993 |
|
|
|
430,520 |
|
|
|
318,503 |
|
Provision for income taxes |
|
|
21,131 |
|
|
|
22,025 |
|
|
|
80,748 |
|
|
|
60,998 |
|
Net earnings |
|
$ |
96,320 |
|
|
$ |
88,968 |
|
|
$ |
349,772 |
|
|
$ |
257,505 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share of common stock |
|
$ |
0.90 |
|
|
$ |
0.83 |
|
|
$ |
3.25 |
|
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net earnings per share of common stock |
|
$ |
0.89 |
|
|
$ |
0.82 |
|
|
$ |
3.21 |
|
|
$ |
2.37 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares of common stock outstanding — Basic |
|
|
107,130 |
|
|
|
107,710 |
|
|
|
107,667 |
|
|
|
107,561 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares of common stock outstanding — Diluted |
|
|
108,363 |
|
|
|
108,543 |
|
|
|
108,818 |
|
|
|
108,569 |
|
Segment Data (Unaudited) (Dollars in thousands) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
Segment |
|
|
|
|
|
|
|
|
||||||||
Professional |
|
$ |
718,477 |
|
|
$ |
623,615 |
|
|
$ |
2,197,058 |
|
|
$ |
1,879,423 |
|
Residential |
|
|
252,117 |
|
|
|
204,961 |
|
|
|
784,852 |
|
|
|
632,807 |
|
Other |
|
|
6,242 |
|
|
|
12,396 |
|
|
|
17,019 |
|
|
|
25,623 |
|
Total net sales* |
|
$ |
976,836 |
|
|
$ |
840,972 |
|
|
$ |
2,998,929 |
|
|
$ |
2,537,853 |
|
*Includes international net sales of: |
|
$ |
191,665 |
|
|
$ |
150,014 |
|
|
$ |
638,921 |
|
|
$ |
508,001 |
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
Segment Earnings (Loss) |
|
|
|
|
|
|
|
|
||||||||
Professional |
|
$ |
122,331 |
|
|
$ |
113,652 |
|
|
$ |
406,279 |
|
|
$ |
322,385 |
|
Residential |
|
|
31,548 |
|
|
|
28,545 |
|
|
|
109,642 |
|
|
|
87,233 |
|
Other |
|
|
(36,428 |
) |
|
|
(31,204 |
) |
|
|
(85,401 |
) |
|
|
(91,115 |
) |
Total segment earnings |
|
$ |
117,451 |
|
|
$ |
110,993 |
|
|
$ |
430,520 |
|
|
$ |
318,503 |
|
THE TORO COMPANY AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands) |
||||||||||||
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
535,330 |
|
|
$ |
394,141 |
|
|
$ |
479,892 |
|
Receivables, net |
|
|
301,234 |
|
|
|
294,672 |
|
|
|
261,135 |
|
Inventories, net |
|
|
665,648 |
|
|
|
656,208 |
|
|
|
652,433 |
|
Prepaid expenses and other current assets |
|
|
43,577 |
|
|
|
39,225 |
|
|
|
34,188 |
|
Total current assets |
|
|
1,545,789 |
|
|
|
1,384,246 |
|
|
|
1,427,648 |
|
|
|
|
|
|
|
|
||||||
Property, plant, and equipment, net |
|
|
456,992 |
|
|
|
457,891 |
|
|
|
467,919 |
|
|
|
|
421,958 |
|
|
|
424,228 |
|
|
|
424,075 |
|
Other intangible assets, net |
|
|
426,497 |
|
|
|
413,270 |
|
|
|
408,305 |
|
Right-of-use assets |
|
|
72,236 |
|
|
|
81,634 |
|
|
|
78,752 |
|
Investment in finance affiliate |
|
|
19,272 |
|
|
|
22,580 |
|
|
|
19,745 |
|
Deferred income taxes |
|
|
6,362 |
|
|
|
9,772 |
|
|
|
6,466 |
|
Other assets |
|
|
18,943 |
|
|
|
20,242 |
|
|
|
20,318 |
|
Total assets |
|
$ |
2,968,049 |
|
|
$ |
2,813,863 |
|
|
$ |
2,853,228 |
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||||||
Current portion of long-term debt |
|
$ |
104,217 |
|
|
$ |
108,869 |
|
|
$ |
99,873 |
|
Accounts payable |
|
|
411,413 |
|
|
|
268,747 |
|
|
|
363,953 |
|
Accrued liabilities |
|
|
427,407 |
|
|
|
404,314 |
|
|
|
376,524 |
|
Short-term lease liabilities |
|
|
15,403 |
|
|
|
15,182 |
|
|
|
15,447 |
|
Total current liabilities |
|
|
958,440 |
|
|
|
797,112 |
|
|
|
855,797 |
|
|
|
|
|
|
|
|
||||||
Long-term debt, less current portion |
|
|
587,345 |
|
|
|
782,036 |
|
|
|
691,250 |
|
Long-term lease liabilities |
|
|
60,002 |
|
|
|
69,752 |
|
|
|
66,641 |
|
Deferred income taxes |
|
|
74,381 |
|
|
|
71,346 |
|
|
|
70,435 |
|
Other long-term liabilities |
|
|
50,703 |
|
|
|
39,585 |
|
|
|
54,277 |
|
|
|
|
|
|
|
|
||||||
Stockholders’ equity: |
|
|
|
|
|
|
||||||
Preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock |
|
|
106,441 |
|
|
|
107,264 |
|
|
|
107,583 |
|
Retained earnings |
|
|
1,157,428 |
|
|
|
981,344 |
|
|
|
1,041,507 |
|
Accumulated other comprehensive loss |
|
|
(26,691 |
) |
|
|
(34,576 |
) |
|
|
(34,262 |
) |
Total stockholders’ equity |
|
|
1,237,178 |
|
|
|
1,054,032 |
|
|
|
1,114,828 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,968,049 |
|
|
$ |
2,813,863 |
|
|
$ |
2,853,228 |
|
THE TORO COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) |
||||||||
|
|
Nine Months Ended |
||||||
|
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net earnings |
|
$ |
349,772 |
|
|
$ |
257,505 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
||||
Non-cash income from finance affiliate |
|
|
(4,694 |
) |
|
|
(6,161 |
) |
Distributions from finance affiliate, net |
|
|
5,167 |
|
|
|
7,729 |
|
Depreciation of property, plant and equipment |
|
|
55,301 |
|
|
|
55,272 |
|
Amortization of other intangible assets |
|
|
17,493 |
|
|
|
14,591 |
|
Fair value step-up adjustment to acquired inventory |
|
|
— |
|
|
|
3,951 |
|
Stock-based compensation expense |
|
|
16,176 |
|
|
|
10,322 |
|
Deferred income taxes |
|
|
699 |
|
|
|
(3,425 |
) |
Other |
|
|
(26 |
) |
|
|
521 |
|
Changes in operating assets and liabilities, net of the effect of acquisitions: |
|
|
|
|
||||
Receivables, net |
|
|
(42,217 |
) |
|
|
(17,687 |
) |
Inventories, net |
|
|
(20,080 |
) |
|
|
18,248 |
|
Prepaid expenses and other assets |
|
|
(1,019 |
) |
|
|
7,827 |
|
Accounts payable, accrued liabilities, and other liabilities |
|
|
100,563 |
|
|
|
(42,817 |
) |
Net cash provided by operating activities |
|
|
477,135 |
|
|
|
305,876 |
|
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property, plant and equipment |
|
|
(47,961 |
) |
|
|
(46,627 |
) |
Business combinations, net of cash acquired |
|
|
(14,874 |
) |
|
|
(138,225 |
) |
Asset acquisitions, net of cash acquired |
|
|
(27,176 |
) |
|
|
— |
|
Proceeds from asset disposals |
|
|
588 |
|
|
|
204 |
|
Proceeds from sale of a business |
|
|
18,732 |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(70,691 |
) |
|
|
(184,648 |
) |
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings under debt arrangements |
|
|
— |
|
|
|
636,025 |
|
Repayments under debt arrangements |
|
|
(100,000 |
) |
|
|
(446,025 |
) |
Proceeds from exercise of stock options |
|
|
12,535 |
|
|
|
11,939 |
|
Payments of withholding taxes for stock awards |
|
|
(1,875 |
) |
|
|
(2,102 |
) |
Purchases of TTC common stock |
|
|
(177,152 |
) |
|
|
— |
|
Dividends paid on TTC common stock |
|
|
(84,677 |
) |
|
|
(80,683 |
) |
Net cash (used in) provided by financing activities |
|
|
(351,169 |
) |
|
|
119,154 |
|
|
|
|
|
|
||||
Effect of exchange rates on cash and cash equivalents |
|
|
163 |
|
|
|
1,931 |
|
|
|
|
|
|
||||
Net increase in cash and cash equivalents |
|
|
55,438 |
|
|
|
242,313 |
|
Cash and cash equivalents as of the beginning of the fiscal period |
|
|
479,892 |
|
|
|
151,828 |
|
Cash and cash equivalents as of the end of the fiscal period |
|
$ |
535,330 |
|
|
$ |
394,141 |
|
THE TORO COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands, except per-share data)
The company has provided financial measures that are not calculated or presented in accordance with
Reconciliation of Non-GAAP Financial Performance Measures
The following table provides a reconciliation of financial performance measures calculated and reported in accordance with
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Gross profit |
|
$ |
331,117 |
|
|
$ |
294,574 |
|
|
$ |
1,049,106 |
|
|
$ |
889,379 |
|
Acquisition-related costs2 |
|
|
— |
|
|
|
1,087 |
|
|
|
— |
|
|
|
3,950 |
|
Management actions3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
857 |
|
Non-GAAP gross profit |
|
$ |
331,117 |
|
|
$ |
295,661 |
|
|
$ |
1,049,106 |
|
|
$ |
894,186 |
|
|
|
|
|
|
|
|
|
|
||||||||
Gross margin |
|
|
33.9 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
Acquisition-related costs2 |
|
|
— |
% |
|
|
0.2 |
% |
|
|
— |
% |
|
|
0.2 |
% |
Non-GAAP gross margin |
|
|
33.9 |
% |
|
|
35.2 |
% |
|
|
35.0 |
% |
|
|
35.2 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Operating earnings |
|
$ |
121,939 |
|
|
$ |
115,952 |
|
|
$ |
444,120 |
|
|
$ |
332,876 |
|
Litigation settlements, net1 |
|
|
5,750 |
|
|
|
— |
|
|
|
(11,325 |
) |
|
|
— |
|
Acquisition-related costs2 |
|
|
— |
|
|
|
1,161 |
|
|
|
— |
|
|
|
6,183 |
|
Management actions3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
857 |
|
Non-GAAP operating earnings |
|
$ |
127,689 |
|
|
$ |
117,113 |
|
|
$ |
432,795 |
|
|
$ |
339,916 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings before income taxes |
|
$ |
117,451 |
|
|
$ |
110,993 |
|
|
$ |
430,520 |
|
|
$ |
318,503 |
|
Litigation settlements, net1 |
|
|
5,750 |
|
|
|
— |
|
|
|
(11,325 |
) |
|
|
— |
|
Acquisition-related costs2 |
|
|
— |
|
|
|
1,161 |
|
|
|
— |
|
|
|
6,183 |
|
Management actions3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
857 |
|
Non-GAAP earnings before income taxes |
|
$ |
123,201 |
|
|
$ |
112,154 |
|
|
$ |
419,195 |
|
|
$ |
325,543 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings |
|
$ |
96,320 |
|
|
$ |
88,968 |
|
|
$ |
349,772 |
|
|
$ |
257,505 |
|
Litigation settlements, net1 |
|
|
4,525 |
|
|
|
— |
|
|
|
(8,947 |
) |
|
|
— |
|
Acquisition-related costs2 |
|
|
— |
|
|
|
924 |
|
|
|
— |
|
|
|
4,922 |
|
Management actions3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
682 |
|
Tax impact of stock-based compensation4 |
|
|
(1,397 |
) |
|
|
(1,173 |
) |
|
|
(7,846 |
) |
|
|
(4,550 |
) |
Non-GAAP net earnings |
|
$ |
99,448 |
|
|
$ |
88,719 |
|
|
$ |
332,979 |
|
|
$ |
258,559 |
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net earnings per diluted share |
$ |
0.89 |
$ |
0.82 |
$ |
3.21 |
|
$ |
2.37 |
|
||||||
Litigation settlements, net1 |
0.04 |
— |
(0.08 |
) |
|
|
— |
|
||||||||
Acquisition-related costs2 |
— |
0.01 |
— |
|
|
0.05 |
|
|||||||||
Tax impact of stock-based compensation4 |
(0.01 |
) |
(0.01 |
) |
(0.07 |
) |
|
|
(0.04 |
) |
||||||
Non-GAAP net earnings per diluted share |
$ |
0.92 |
$ |
0.82 |
$ |
3.06 |
|
$ |
2.38 |
|
||||||
|
|
|
||||||||||||||
Effective tax rate |
18.0 |
% |
19.8 |
% |
18.8 |
% |
|
|
19.2 |
% |
||||||
Tax impact of stock-based compensation4 |
1.3 |
% |
1.1 |
% |
1.8 |
% |
|
|
1.4 |
% |
||||||
Non-GAAP effective tax rate |
19.3 |
% |
20.9 |
% |
20.6 |
% |
|
|
20.6 |
% |
1 |
On |
|
2 |
On |
|
3 |
During the third quarter of fiscal 2019, the company announced the wind down of its Toro-branded large horizontal directional drill and riding trencher product line ("Toro underground wind down"). Management actions represent inventory write-down charges incurred during the nine month period ended |
|
4 |
The accounting standards codification guidance governing employee stock-based compensation requires that any excess tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options under The Toro Company Amended and Restated 2010 Equity and Incentive Plan, can be unpredictable and can significantly impact the company's net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax benefits recorded as excess tax deductions for stock-based compensation during the three and nine month periods ended |
Reconciliation of Non-GAAP Liquidity Measures
The company defines non-GAAP free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Non-GAAP free cash flow conversion percentage represents non-GAAP free cash flow as a percentage of net earnings. The company considers non-GAAP free cash flow and non-GAAP free cash flow conversion percentage to be liquidity measures that provide useful information to management and investors about the company's ability to convert net earnings into cash resources that can be used to pursue opportunities to enhance shareholder value, fund ongoing and prospective business initiatives, and strengthen the company's Consolidated Balance Sheets, after reinvesting in necessary capital expenditures required to maintain and grow the company's business. The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP financial measure, to non-GAAP free cash flow for the nine month periods ended
|
|
Nine Months Ended |
||||||
(Dollars in thousands) |
|
|
|
|
||||
Net cash provided by operating activities |
|
$ |
477,135 |
|
|
$ |
305,876 |
|
Less: Purchases of property, plant and equipment |
|
|
47,961 |
|
|
|
46,627 |
|
Non-GAAP free cash flow |
|
|
429,174 |
|
|
|
259,249 |
|
Net earnings |
|
$ |
349,772 |
|
|
$ |
257,505 |
|
Non-GAAP free cash flow conversion percentage |
|
|
122.7 |
% |
|
|
100.7 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210902005132/en/
Investor Relations
Treasurer and Sr. Managing Director, Global Tax
and Investor Relations
(952) 887-8846, julie.kerekes@toro.com
Media Relations
Senior Manager, Public Relations
(952) 887-8930, branden.happel@toro.com
Source: