Toro 2014 Annual Report Download - page 37

designed specifically for international markets and in infrastruc- partially offset by a reduction in other income and a higher effec-
ture around the world, connecting us more closely to our cus- tive tax rate. Our net earnings per diluted share were also bene-
tomers and increasing our global presence. Specifically, we have fited by $0.08 per share in fiscal 2014 compared to fiscal 2013 as
increased manufacturing capacity and infrastructure for our a result of reduced shares outstanding from repurchases of our
micro-irrigation business as we anticipate worldwide demand to common stock.
increase for our efficient, water conserving products for agricul- Fiscal 2013 net earnings were $154.8 million compared to
tural markets. However, uncertainty with the economies of key $129.5 million in fiscal 2012, an increase of 19.5 percent. Fiscal
international markets, including some European countries, is 2013 diluted net earnings per share were $2.62, an increase of
expected to linger into fiscal 2015, which may hamper our inter- 22.4 percent from $2.14 per share in fiscal 2012. The primary fac-
national net sales growth. Additionally, foreign currency tors contributing to the net earnings improvement were higher net
exchange rate trends could hinder our international net sales in sales, an increase in gross profit, higher other income, and a
fiscal 2015. decrease in our effective tax rate, partially offset by an increase in
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We expect net earnings and diluted net earnings per share to be SG&A expense. Our net earnings per diluted share were also ben-
up in fiscal 2015 compared to fiscal 2014, driven mainly by our efited by $0.07 per share in fiscal 2013 compared to fiscal 2012 as
anticipated sales growth and leveraging of our SG&A costs. a result of reduced shares outstanding from repurchases of our
However, we anticipate our gross margin rate in fiscal 2015 to common stock.
be slightly down as compared to our fiscal 2014 gross margin The following table summarizes our results of operations as a
rate, primarily due to the purchase accounting impact of our percentage of our consolidated net sales.
recent acquisition of the BOSS snow and ice management busi-
ness. Additionally, we anticipate a further reduction in our diluted Fiscal years ended October 31 2014 2013 2012
shares outstanding due to anticipated continued repurchases of Net sales 100.0% 100.0% 100.0%
our common stock. Cost of sales (64.4) (64.5) (65.6)
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As announced on December 4, 2014, our Board of Directors Gross margin 35.6 35.5 34.4
increased our fiscal 2015 first quarter cash dividend by 25 per- SG&A expense (23.5) (24.2) (23.9)
cent to $0.25 per share compared to the quarterly cash dividend Operating earnings 12.1 11.3 10.5
paid in the first quarter of fiscal 2014. Interest expense (0.7) (0.8) (0.9)
Other income, net 0.4 0.6 0.4
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In fiscal 2015, we plan to continue to place emphasis on improv-
Provision for income taxes (3.8) (3.5) (3.4)
ing asset utilization with a focus on reducing the amount of
Net earnings 8.0% 7.6% 6.6%
working capital in the supply chain. However, we anticipate our
average net working capital as a percentage of net sales in fis-
cal 2015 to slightly increase as compared to fiscal 2014. Aver- Fiscal 2014 Compared With Fiscal 2013
age inventory levels and receivables are anticipated to be higher Net Sales. Worldwide net sales in fiscal 2014 were $2,172.7 mil-
in fiscal 2015 compared to fiscal 2014 as a result of incremental lion compared to $2,041.4 million in fiscal 2013, an increase of
inventory and receivables from our recent acquisition of the 6.4 percent. This net sales improvement was attributable to the
BOSS professional snow and ice management business. Addi- following factors:
tionally, we anticipate our average inventory levels to be higher
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Increased sales of professional segment products due to strong
in fiscal 2015 because our inventory levels as of the end of demand for landscape contractor equipment, continued accept-
fiscal 2014 were higher as compared to inventory levels as of ance and demand for our drip irrigation solutions in agricultural
the end of fiscal 2013, mainly for products impacted by the con- markets, and the successful introduction of new and enhanced
tinued phase-in of applicable Tier 4 diesel engine emission products that were well received by customers, including prod-
requirements and other regulations in Europe. ucts in the golf market and rental and specialty construction
equipment market. Additionally, improved price realization, as
RESULTS OF OPERATIONS well as incremental sales from acquisitions of $2.8 million, con-
Fiscal 2014 net earnings were $173.9 million compared to tributed to our net sales growth in fiscal 2014.
$154.8 million in fiscal 2013, an increase of 12.3 percent. Fiscal
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Increased sales of residential segment products due to strong
2014 diluted net earnings per share were $3.02, an increase of shipments and demand for snow thrower products and parts as
15.3 percent from $2.62 per share in fiscal 2013. The primary fac- a result of heavy snow falls during the 2013-2014 snow season
tors contributing to the net earnings improvement were higher net in key markets and strong preseason demand for the 2014-2015
sales, a slight increase in gross profit, and leveraging fixed SG&A snow season. Additionally, higher shipments and demand for our
costs over higher sales volumes. However, those increases were zero-turn radius riding mowers and increased sales of electric
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