Toro 2011 Annual Report Download - page 31

rework for a non-safety quality issue that affected a large num-
Summary of Fiscal 2011 Results
ber of our residential segment walk power mowers.
Fiscal 2011 was a strong year with both double digit net sales and
•
Gross margin was 33.8 percent in fiscal 2011, a decline of 30
earnings growth. Our fiscal 2011 results included the following
basis points from 34.1 percent in fiscal 2010. Higher average
items of significance:
commodity prices and increased freight expense from higher fuel
•
Net sales for fiscal 2011 increased by 11.5 percent compared to
prices hindered our gross margin rate in fiscal 2011 as com-
fiscal 2010 to a record of $1,884.0 million. This increase was
pared to fiscal 2010.
primarily attributable to increased demand for our products
•
Although selling, general, and administrative (‘‘SG&A’’) expense
across all of our businesses largely resulting from the successful
was up 6.4 percent in fiscal 2011 compared to fiscal 2010,
introduction of new products that were well received by custom-
SG&A expense as a percentage of net sales in fiscal 2011 was
ers, improved market conditions in our professional segment,
down to 24.0 percent compared to 25.1 percent in fiscal 2010,
and incremental sales of $19 million from acquisitions.
reflecting further leveraging of our SG&A costs over higher sales
•
Professional segment net sales, which represented 66 percent of
volumes plus lower product liability expense. However, market-
our total consolidated net sales in fiscal 2011, grew 14.2 percent
ing expenses increased in fiscal 2011 compared to fiscal 2010
in fiscal 2011 compared to fiscal 2010. Shipments increased due
due to higher sales volumes and incentive programs designed to
to higher demand for most of our professional segment products
promote sales growth.
largely resulting from the successful introduction of new prod-
•
Receivables increased 3.7 percent as of the end of fiscal 2011
ucts, strong demand in the worldwide golf market, continued
due to higher sales volumes compared to fiscal 2010. Our inven-
growth in the micro-irrigation market, particularly in Eastern
tory levels were also up by 14.7 percent as of the end of fiscal
Europe, and a rebound in the rental market.
2011 compared to fiscal 2010 as we pre-bought engines for pro-
•
Our residential segment net sales were up by 5.8 percent in
duction planning and pricing efficiencies. Average net working
fiscal 2011 compared to fiscal 2010 primarily from strong
capital (accounts receivable plus inventory less trade payables)
demand for our new line of zero-turn radius riding mowers. Ship-
as a percent of net sales as of the end of fiscal 2011 was
ments of snow thrower products also increased as our channel
15.0 percent compared to 13.9 percent as of the end of fiscal
partners purchased products to fill depleted field inventory levels
2010. This increase was due mainly to higher average inventory
for the 2011-2012 snow season following strong sales from
levels in fiscal 2011 compared to fiscal 2010 as we prebuilt
heavy snow falls during the 2010-2011 snow season, as well as
inventory, mainly for residential turf products, in anticipation of
additional product placement. However, sales of walk power
higher demand, which did not occur as expected due primarily to
mowers and electric blowers were down due mainly to unfavora-
unfavorable weather conditions. Our domestic field inventory
ble weather conditions.
levels were also slightly higher as of the end of fiscal 2011 com-
•
International net sales for fiscal 2011 were up 13.1 percent com-
pared to the end of fiscal 2010 due in part to anticipated
pared to fiscal 2010, due also to increased demand for our prod-
increase in retail demand.
ucts largely resulting from the successful introduction of new
•
We continued our history of paying quarterly cash dividends and
products, new golf development projects in Asia, and additional
increased our fiscal 2011 quarterly cash dividend by 11 percent
manufacturing capacity that increased production and enabled
to $0.20 per share compared to our quarterly cash dividend in
higher sales of our micro-irrigation products for agricultural mar-
fiscal 2010 of $0.18 per share.
kets to meet growing worldwide demand. To meet increasing
•
Our stock repurchase program continued to return a significant
worldwide demand for micro-irrigation products for the agricul-
amount of cash to our shareholders in the amount of $130 mil-
tural market, particularly in Eastern Europe, we completed the
lion during fiscal 2011, which continued to reduce our number of
construction of our new manufacturing facility in Romania in the
shares outstanding. This reduction resulted in a benefit to our
fourth quarter of fiscal 2011. Additionally, approximately $21 mil-
diluted net earnings per share of approximately $0.18 per share
lion of our net sales growth was the result of the weakening of
in fiscal 2011 compared to fiscal 2010.
the U.S. dollar compared to other currencies in which we trans-
act business. International net sales comprised 32.3 percent of
Destination 2014
our total consolidated net sales in fiscal 2011 compared to
In fiscal 2011, we launched our new enterprise-wide multi-year ini-
31.8 percent in fiscal 2010 and 32.0 percent in fiscal 2009.
tiative, ‘‘Destination 2014,’’ that will take us to our centennial in
•
Fiscal 2011 net earnings of $117.7 million rose 26.2 percent
2014 and into our second century. This four-year initiative is
compared to fiscal 2010, and diluted net earnings per share
intended to focus our efforts on driving our legacy of excellence
increased 32.6 percent in fiscal 2011 to $3.70 compared to
through building caring relationships and engaging in innovation.
$2.79 in fiscal 2010. Our net earnings were hampered by a
As this is a multi-year initiative, we will strive to achieve our Desti-
pre-tax charge of $4.7 million due to costs associated with a
nation 2014 goals by pursuing a progression of annual milestones.
Each fiscal year we will set forth associated organic revenue
25