Toro Reports Fiscal 2008 Full Year Results
- Company reports net earnings per share of $3.10
- International sales grow 12 percent offsetting weakness in domestic business
- Improved asset management drives record operating cash flow
BLOOMINGTON, Minn.--(BUSINESS WIRE)--
For the fourth quarter ended
With a strong focus on asset management, the company achieved significant improvements in working capital and cash flow. During fiscal 2008, the company generated a record
"While our revenue growth was impacted for the year due to persistently difficult domestic market conditions, Toro and field inventories are down significantly and should benefit us in the coming year," said
SEGMENT RESULTS
Professional
- Professional segment net sales for fiscal 2008 increased 1 percent to
$1,283.1 million . For the year, the company saw strong worldwide demand for golf equipment and irrigation systems from the successful introduction of several new products, and increased shipments of micro irrigation products inEurope andAustralia . Additionally, incremental sales from the acquisitions of Rain Master(R) and Turf Guard(TM) contributed to the slight increase. These gains helped offset declines in domestic sales of professionally-installed residential and commercial irrigation products and landscape contractor equipment. For the fiscal 2008 fourth quarter, professional segment net sales declined 4.5 percent to$208.4 million . - Professional segment earnings for fiscal 2008 were
$234.8 million , down 7.6 percent compared with the same period last year. For the fiscal 2008 fourth quarter, professional segment earnings totaled$14.6 million , compared with$26.7 million in the prior year period.
Residential
- Residential segment net sales for fiscal 2008 were essentially flat with
fiscal 2007 at
$563.9 million . Strong orders for snowthrowers and international sales growth in most residential categories offset declines in domestic shipments for walk power mowers. For the fiscal 2008 fourth quarter, residential segment net sales gained 21.2 percent to$122.2 million . The improvement resulted primarily from increased sales of snowthrowers and walk power mowers due to strong fall demand. - Residential segment earnings for fiscal 2008 were
$33.9 million , down 19.1 percent compared with the same period last year. For the fiscal 2008 fourth quarter, residential segment earnings totaled$6.5 million , compared with$1.5 million in the prior year period.
REVIEW OF OPERATIONS
Gross margin for fiscal 2008 was 34.8 percent compared with 36.1 percent in fiscal 2007. For the fiscal 2008 fourth quarter, gross margin was 29.9 percent compared with 34.9 percent in the comparable fiscal 2007 period. The margin decline in both periods was primarily due to higher commodity and freight costs and lower production volumes.
Selling, general and administrative (SG&A) expenses for fiscal 2008 were 24.2 percent of net sales, flat with fiscal 2007. For the fiscal 2008 fourth quarter, SG&A expenses were 29.7 percent of net sales, an improvement from 31.9 percent in the comparable fiscal 2007 period. SG&A expenses in both periods include charges associated with the workforce adjustments noted above.
Interest expense for fiscal 2008 was
The effective tax rate for fiscal 2008 was 34.0 percent compared with 33.2 percent in fiscal 2007. While the federal Research & Engineering Tax Credit impacted the tax rate in both years, the credit was more favorable in fiscal 2007.
Accounts receivable at the end of fiscal 2008 totaled
BUSINESS OUTLOOK
The company expects the weak market conditions to continue well into fiscal 2009 with even more uncertainties and challenges. "While we don't know how deep and prolonged these difficult economic conditions will be, we will run our business in the coming year with an emphasis on driving demand with innovative new products, lowering our cost structure, and further reducing working capital through improved asset management," said Hoffman.
Given the ongoing global economic weakness and tight credit markets, the outlook for the year ahead is more uncertain and the resulting impact on the business will be even more difficult to predict. The company currently expects fiscal 2009 net earnings per share to be
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Safe Harbor
Statements made in this news release, which are forward-looking, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied. These uncertainties include factors that affect all businesses operating in a global market as well as matters specific to Toro. Particular risks and uncertainties that may affect the company's operating results or overall financial position at the present include: slow or negative growth rates in global and domestic economies, resulting in rising unemployment and weakened consumer confidence; the threat of further terrorist acts and war, which may result in contraction of the U.S. and worldwide economies; fluctuations in the cost and availability of raw materials, including steel, resins and other commodities; fluctuating fuel and other costs of transportation; the impact of abnormal weather patterns and natural disasters; the level of growth in our markets, including the golf market; reduced government spending for grounds maintenance equipment due to reduced tax revenue and tighter government budgets; dependence on
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, |
Net sales |
$ 341,240 |
|
$ 332,456 |
|
$ 1,878,184 |
|
$ 1,876,904 |
Gross profit |
101,867 |
|
116,151 |
|
652,710 |
|
678,375 |
Gross profit percent |
29.9% |
|
34.9% |
|
34.8% |
|
36.1% |
Selling, general, and administrative expense |
101,367 |
|
106,004 |
|
454,301 |
|
454,726 |
Earnings from operations |
500 |
|
10,147 |
|
198,409 |
|
223,649 |
Interest expense |
(4,386) |
|
(4,210) |
|
(19,333) |
|
(19,445) |
Other income, net |
1,681 |
|
3,202 |
|
2,213 |
|
9,023 |
(Loss) earnings before income taxes |
(2,205) |
|
9,139 |
|
181,289 |
|
213,227 |
(Benefit) provision for income taxes |
(2,218) |
|
2,605 |
|
61,638 |
|
70,791 |
Net earnings |
$ 13 |
|
$ 6,534 |
|
$ 119,651 |
|
$ 142,436 |
|
|
|
|
|
|
|
|
Basic net earnings per share |
$ - |
|
$ .16 |
|
$ 3.17 |
|
$ 3.50 |
|
|
|
|
|
|
|
|
Diluted net earnings per share |
$ - |
|
$ .16 |
|
$ 3.10 |
|
$ 3.40 |
|
|
|
|
|
|
|
|
Weighted average number of shares of common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of common |
|
|
|
|
|
|
|
THE TORO COMPANY AND SUBSIDIARIES
Segment Data (Unaudited)
(Dollars in thousands)
|
Three Months Ended |
|
Fiscal Years Ended |
||||
Segment Net Sales |
October 31, |
|
October 31, |
|
October 31, |
|
October 31, |
Professional |
$ 208,433 |
|
$ 218,159 |
|
$ 1,283,111 |
|
$ 1,270,530 |
Residential |
122,242 |
|
100,839 |
|
563,876 |
|
563,524 |
Other |
10,565 |
|
13,458 |
|
31,197 |
|
42,850 |
Total * |
$ 341,240 |
|
$ 332,456 |
|
$ 1,878,184 |
|
$ 1,876,904 |
|
|
|
|
|
|
|
|
* Includes international sales of |
$ 113,370 |
|
$ 101,806 |
|
$ 608,279 |
|
$ 543,599 |
|
Three Months Ended |
|
Fiscal Years Ended |
||||
Segment (Loss) Earnings Before Income Taxes |
October 31, 2008 |
|
October 31, 2007 |
|
October 31, 2008 |
|
October 31, 2007 |
Professional |
$ 14,570 |
|
$ 26,701 |
|
$ 234,809 |
|
$ 254,178 |
Residential |
6,521 |
|
1,513 |
|
33,854 |
|
41,828 |
Other |
(23,296) |
|
(19,075) |
|
(87,374) |
|
(82,779) |
Total |
$ (2,205) |
|
$ 9,139 |
|
$ 181,289 |
|
$ 213,227 |
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
|
October 31, |
|
October 31, |
ASSETS |
|
|
|
Cash and cash equivalents |
$ 99,359 |
|
$ 62,047 |
Receivables, net |
256,259 |
|
283,115 |
Inventories, net |
207,084 |
|
251,275 |
Prepaid expenses and other current assets |
27,491 |
|
10,677 |
Deferred income taxes |
53,755 |
|
57,814 |
Total current assets |
643,948 |
|
664,928 |
|
|
|
|
Property, plant, and equipment, net |
168,867 |
|
170,672 |
Goodwill and other assets, net |
119,445 |
|
115,237 |
Total assets |
$ 932,260 |
|
$ 950,837 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current portion of long-term debt |
$ 3,276 |
|
$ 1,611 |
Short-term debt |
2,326 |
|
372 |
Accounts payable |
92,997 |
|
90,966 |
Accrued liabilities |
225,852 |
|
248,521 |
Total current liabilities |
324,451 |
|
341,470 |
|
|
|
|
Long-term debt, less current portion |
227,515 |
|
227,598 |
Deferred revenue and other long-term liabilities |
15,619 |
|
11,331 |
Stockholders’ equity |
364,675 |
|
370,438 |
Total liabilities and stockholders’ equity |
$ 932,260 |
|
$ 950,837 |
THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
|
Fiscal Years Ended |
||
|
October 31, |
|
October 31, |
Cash flows from operating activities: |
|
|
|
Net earnings |
$ 119,651 |
|
$ 142,436 |
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
Equity losses from investments |
859 |
|
361 |
Provision for depreciation and amortization |
48,194 |
|
42,105 |
Gain on disposal of property, plant, and equipment |
(196) |
|
(194) |
Gain on sale of a business |
(113) |
|
- |
Stock-based compensation expense |
5,684 |
|
7,293 |
Increase in deferred income taxes |
(5,466) |
|
(522) |
Changes in operating assets and liabilities: |
|
|
|
Receivables |
14,770 |
|
9,033 |
Inventories |
29,949 |
|
(1,915) |
Prepaid expenses and other assets |
719 |
|
(977) |
Accounts payable, accrued expenses, and other long-term liabilities |
1,671 |
|
(14,046) |
Net cash provided by operating activities |
215,722 |
|
183,574 |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchases of property, plant, and equipment |
(48,914) |
|
(42,168) |
Proceeds from asset disposals |
1,021 |
|
267 |
Increase in investment in affiliates |
(250) |
|
- |
(Increase) decrease in other assets |
(35) |
|
1,494 |
Proceeds from sale of a business |
1,048 |
|
- |
Acquisitions, net of cash acquired |
(4,430) |
|
(9,881) |
Net cash used in investing activities |
(51,560) |
|
(50,288) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Increase (decrease) in short-term debt |
2,887 |
|
(10) |
Issuance of long-term debt, net of costs |
- |
|
121,491 |
Repayments of long-term debt, net of costs |
(1,497) |
|
(75,000) |
Excess tax benefits from stock-based awards |
3,522 |
|
13,775 |
Proceeds from exercise of stock options |
3,997 |
|
13,255 |
Purchases of Toro common stock |
(110,355) |
|
(182,843) |
Dividends paid on Toro common stock |
(22,615) |
|
(19,459) |
Net cash used in financing activities |
(124,061) |
|
(128,791) |
|
|
|
|
Effect of exchange rates on cash and cash equivalents |
(2,789) |
|
2,029 |
|
|
|
|
Net increase in cash and cash equivalents |
37,312 |
|
6,524 |
Cash and cash equivalents as of the beginning of the fiscal year |
62,047 |
|
55,523 |
|
|
|
|
Cash and cash equivalents as of the end of the fiscal year |
$ 99,359 |
|
$ 62,047 |
CONTACT: The Toro Company
Investor Relations
John Wright, 952-887-8865
Director, Investor Relations
invest@toro.com
or
Media Relations
Branden Happel, 952-887-8930
Manager, Public Relations
pr@toro.com
www.thetorocompany.com
SOURCE: The Toro Company