Toro 2009 Annual Report Download - page 33

recovery in our markets and how quickly the recovery will occur. margin rate will increase in fiscal 2010 compared to fiscal 2009,
However, we have taken and continue to take proactive measures as well as a reduction in our diluted shares due to reduced
to manage through this tough economic environment. We believe shares outstanding from repurchases of our common stock.
the key drivers for our fiscal 2010 financial performance will
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In fiscal 2010, we plan to continue our focus on improving asset
include, among many others, the following main factors: utilization. We anticipate a significant reduction in our net work-
•
International markets will continue to be a long-term focus for us ing capital as a percentage of net sales in fiscal 2010 compared
to grow our revenues. We plan to continue investing in new to fiscal 2009 due to benefits from selling our receivables to Red
products designed specifically for international markets and in Iron, as well as ongoing efforts to improve asset management.
infrastructure around the world that will connect us closer to Consistent with our focus on asset management, domestic field
international customers, increasing our global presence. Our inventory levels are within our expectations and we anticipate
goal is for international sales to comprise a larger percentage of field inventory levels to be flat as of the end of fiscal 2010 com-
our total consolidated net sales. As we experienced a weak pared to the end of fiscal 2009.
domestic economy during fiscal 2009, we also experienced chal- We will continue to keep a cautionary eye on the global econo-
lenging economic conditions in our key international markets. We mies, retail demand, field inventory levels, commodity prices,
anticipate economic conditions in some international markets will weather, competitive actions, expenses, and other factors identified
improve in fiscal 2010 and we expect our international business in Part I, Item 1A, ‘‘Risk Factors’’ of this report, which could cause
to slightly increase in fiscal 2010 compared to fiscal 2009. our actual results to differ from our anticipated outlook.
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We anticipate fiscal 2010 net sales in our professional segment
RESULTS OF OPERATIONS
to be approximately equivalent to those in fiscal 2009, as we
Fiscal 2009 net earnings were $62.8 million compared to
expect a slow rebound of worldwide economies will continue to
$119.7 million in fiscal 2008, a decrease of 47.5 percent. Fiscal
impact our professional markets during fiscal 2010. We expect
2009 diluted net earnings per share were $1.73, a decrease of
budgets with municipalities to remain tight in fiscal 2010, which
44.2 percent from $3.10 per share in fiscal 2008. The primary fac-
may add downward pressure on our professional segment net
tors contributing to the net earnings decline were lower sales
sales in fiscal 2010. However, we plan to continue to enhance
volumes, a decline in gross margin, and an increase in other
our professional segment product offering with innovative new
expense, somewhat offset by lower SG&A expenses. However, our
and improved products. In addition, we anticipate growth in the
net earnings per diluted share were benefited by approximately
irrigation market for products that help conserve the use of
$0.10 per share in fiscal 2009 compared to fiscal 2008 as a result
water, namely for the commercial, residential, and agricultural
of reduced shares outstanding from repurchases of our common
markets, as the need to become more efficient in water use is
stock.
expected to drive demand. We plan to invest in new products,
Fiscal 2008 net earnings were $119.7 million compared to
manufacturing capacity, and infrastructure globally as products
$142.4 million in fiscal 2007, a decrease of 16.0 percent. Fiscal
used for water conservation are expected to be a long-term
2008 diluted net earnings per share were $3.10, a decrease of
focus for us. Our goal is for water related products to comprise a
8.8 percent from $3.40 per share in fiscal 2007. The primary fac-
larger percentage of our total consolidated net sales.
tors contributing to the net earnings decline were lower gross mar-
•
Despite the economic downturn we faced in fiscal 2009, our resi-
gins, a higher effective tax rate, and a decline in other income.
dential segment performed relatively well with market share
However, our net earnings per diluted share were benefited by
gains and additional product placement for our walk power
approximately $0.24 per share in fiscal 2008 compared to fiscal
mower and riding mower products. As we anticipate a slow eco-
2007 as a result of reduced shares outstanding from repurchases
nomic recovery in fiscal 2010, we expect our residential segment
of our common stock.
net sales to be about even with fiscal 2009 net sales.
The following table summarizes our results of operations as a
•
During fiscal 2010, we anticipate our gross margin rate to
percentage of our consolidated net sales.
improve compared to fiscal 2009, assuming average costs paid
for commodities in fiscal 2010 will be lower compared to the
Fiscal years ended October 31 2009 2008 2007
average prices paid for commodities in fiscal 2009. In addition,
we plan to increase utilization at our manufacturing facilities by Net sales 100.0% 100.0% 100.0%
Cost of sales (66.5) (65.2) (63.9)
aggressively pursuing cost reduction efforts and increasing
Gross margin 33.5 34.8 36.1
in-sourcing of certain production. SG&A expense (26.0) (24.2) (24.2)
•
Although we anticipate net sales and SG&A costs in fiscal 2010 Interest expense (1.1) (1.0) (1.0)
to be equivalent to fiscal 2009, we expect net earnings and Other (expense) income, net (0.1) 0.1 0.5
Provision for income taxes (2.2) (3.3) (3.8)
diluted net earnings per share to be up in fiscal 2010 compared
to fiscal 2009, driven mainly by our expectation that our gross Net earnings 4.1% 6.4% 7.6%
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