Toro 2014 Annual Report Download - page 35

fiscal 2014 compared to 30.1 percent in fiscal 2013 and
Summary of Fiscal 2014 Results
30.3 percent in fiscal 2012.
In fiscal 2014, we achieved record net sales of $2,172.7 million
•
Fiscal 2014 net earnings of $173.9 million increased 12.3 per-
and net earnings growth of 12.3 percent. With the culmination of
cent compared to fiscal 2013, and diluted net earnings per share
our Destination 2014 initiative that we launched in fiscal 2011, we
increased 15.3 percent in fiscal 2014 to $3.02 compared to
exceeded our revenue growth goal in fiscal 2014, which was to
$2.62 in fiscal 2013.
achieve $100 million in organic revenue growth, by realizing
•
Gross margin was 35.6 percent in fiscal 2014, a slight increase
$128.5 million of organic revenue growth. We define organic reve-
of 10 basis points from 35.5 percent in fiscal 2013. This
nue growth as the increase in net sales, less net sales from acqui-
improvement was the result of improved price realization and
sitions that occurred in the prior twelve-month period. We also
production efficiencies mainly from cost reduction efforts. How-
exceeded our Destination 2014 operating earnings goal, which was
ever, unfavorable segment mix and foreign currency exchange
to raise our operating earnings as a percentage of net sales to
rate movements, slightly higher commodity prices, and costs for
12 percent by the end of fiscal 2014, by attaining operating earn-
a supplier component rework issue hampered our gross margin
ings as a percentage of net sales of 12.1 percent in fiscal 2014.
growth rate in fiscal 2014 compared to fiscal 2013.
Our fiscal 2014 results included the following items of significance:
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Although selling, general, and administrative (‘‘SG&A’’) expense
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Net sales for fiscal 2014 increased by 6.4 percent compared to
was up 3.2 percent in fiscal 2014 compared to fiscal 2013,
fiscal 2013 to a record of $2,172.7 million. This increase was
SG&A expense as a percentage of net sales in fiscal 2014 was
primarily attributable to strong sales and demand of snow
down 70 basis points to 23.5 percent compared to 24.2 percent
thrower products, increased sales of landscape contractor equip-
in fiscal 2013, reflecting further leveraging of our SG&A costs
ment, continued market growth and demand for our micro-irriga-
over higher sales volumes.
tion products, higher shipments and demand for our residential
•
In fiscal 2014, we continued to place emphasis on improving
zero-turn riding mowers, the successful introduction of new and
asset utilization and reducing the amount of working capital in
enhanced products, improved price realization, and incremental
the supply chain. Average net working capital (accounts receiva-
sales from acquisitions of $2.8 million. However, sales in Austra-
ble plus inventory less trade payables) as a percent of net sales
lia were down in fiscal 2014 compared to fiscal 2013.
was 15.1 percent as of the end of fiscal 2014 compared to
•
Professional segment net sales, which represented 68 percent of
16.6 percent as of the end of fiscal 2013. Receivables increased
our total consolidated net sales in fiscal 2014, grew 3.7 percent
slightly, by 0.6 percent, as of the end of fiscal 2014 compared to
in fiscal 2014 compared to fiscal 2013. Shipments increased due
the end of fiscal 2013. Our average inventory levels were up
to higher demand for our landscape contractor equipment prod-
2.8 percent during fiscal 2014 compared to fiscal 2013. How-
ucts, increased sales of micro-irrigation products from continued
ever, inventory levels as of the end of fiscal 2014 compared to
market growth and demand for our drip irrigation solutions for
the end of fiscal 2013 were up by $34.5 million, or 14.4 percent,
agricultural markets worldwide, and the successful introduction of
as we built inventory in anticipation of strong demand for certain
new and enhanced products. Additionally, improved price reali-
products, including products impacted by the continued phase-in
zation and incremental sales of $2.8 million from acquisitions
of applicable Tier 4 diesel engine emission requirements and
contributed to our professional segment net sales increase in
other regulations in Europe. Our domestic field inventory levels
fiscal 2014 compared to fiscal 2013.
were up as of the end of fiscal 2014 compared to the end of
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Our residential segment net sales increased 13.1 percent in fis-
fiscal 2013 due, in part, to anticipated continued demand for our
cal 2014 compared to fiscal 2013 due to strong shipments and
products in fiscal 2015 and expansion in new markets.
demand for snow thrower products as a result of heavy snow
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We continued our history of paying quarterly cash dividends in
falls during the 2013-2014 snow season in key markets and
fiscal 2014 and also raised our annual dividend guideline from
strong preseason demand for the 2014-2015 snow season. Addi-
20 to 30 percent of our three-year average net earnings per
tionally, higher shipments and demand for our zero-turn radius
share to 30 to 40 percent of our three-year average net earnings
riding mowers contributed to our residential sales growth. How-
per share. Under this new guideline, we increased our fiscal
ever, residential segment net sales in Australia were down due
2014 quarterly cash dividend by 42.9 percent to $0.20 per share
to unfavorable weather conditions and foreign currency
compared to our quarterly cash dividend in fiscal 2013 of $0.14
exchange rate changes.
per share.
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International net sales for fiscal 2014 were slightly up by 1.2 per-
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Our stock repurchase program returned over $100 million to our
cent compared to fiscal 2013. However, changes in foreign cur-
shareholders during fiscal 2014, which reduced our number of
rency exchange rates reduced our total net sales by approxi-
shares outstanding. This reduction resulted in a benefit to our
mately $5 million in fiscal 2014. International net sales
diluted net earnings per share of $0.08 per share in fiscal 2014
comprised 28.7 percent of our total consolidated net sales in
compared to fiscal 2013.
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