Toro 2014 Annual Report Download - page 40

Our domestic field inventory levels of our professional segment
•
A slight decline in SG&A expense rate in fiscal 2013 compared
products were higher as of the end of fiscal 2014 compared to the to fiscal 2012 due to leveraging fixed SG&A costs over higher
end of fiscal 2013 due, in part, to anticipated strong demand for sales volumes and lower warranty expense.
products subject to Tier 4 diesel engine emission requirements and Residential
expansion in new markets.
Residential segment net sales represented 31 percent of consoli-
Worldwide net sales for the professional segment in fiscal 2013
dated net sales for fiscal 2014, 29 percent for fiscal 2013, and
were up by 7.2 percent compared to fiscal 2012 primarily as a
31 percent for fiscal 2012. The following table shows the residen-
result of the following factors:
tial segment net sales, operating earnings, and operating earnings
•
Successful introduction of new and enhanced products that were
as a percent of net sales.
well received by customers, particularly for landscape contractor
equipment. (Dollars in millions)
Fiscal years ended October 31 2014 2013 2012
•
Higher global sales of our micro-irrigation products from market
growth and demand for our drip irrigation solutions for agricul- Net sales $672.4 $594.4 $607.4
% change from prior year 13.1% (2.1)% (2.6)%
tural markets, as well as additional manufacturing capacity that
Operating earnings $ 76.9 $ 62.0 $ 57.9
increased production and enabled higher sales of our micro- As a percent of net sales 11.4% 10.4% 9.5%
irrigation products.
•
Increased sales and demand in the rental and specialty con- Net Sales. Worldwide net sales for the residential segment in
struction market from broadening our customer base as part of fiscal 2014 were up by 13.1 percent compared to fiscal 2013 pri-
our acquisitions in fiscal 2012, improved market conditions, and marily as a result of the following factors:
new product introductions.
•
Strong shipments and demand for snow thrower products and
•
Incremental sales of $6.4 million from acquisitions. parts as a result of heavy snow falls during the 2013-2014 snow
•
Increased sales of golf and grounds equipment and irrigation season in key markets and strong preseason demand for the
systems as a result of price increases, higher demand, and golf 2014-2015 snow season.
renovation projects in the U.S., as well as golf projects in Asia
•
Increased sales and demand of zero-turn radius riding products,
and the EMEA region. including our enhanced products, as customers continued to
transition to this mowing platform.
Somewhat offsetting those sales increases were lower sales of our
•
Higher sales of electric handheld products due to additional
retail irrigation products as a result of reduced product placement
product placement at mass retailers and favorable weather
at a key customer.
conditions.
Operating Earnings. Operating earnings for the professional seg-
•
A slight increase in sales of walk power mowers due to the
ment in fiscal 2014 increased 8.6 percent compared to fiscal 2013 positive customer response to new products and expanded prod-
primarily due to higher sales volumes and an improvement in gross uct placement for certain models, which was partially offset by
margin. Expressed as a percentage of net sales, professional seg- the late arrival of spring weather conditions and a supplier-
ment operating margins increased 80 basis points to 18.7 percent in related rework that hampered sales in fiscal 2014.
fiscal 2014 compared to 17.9 percent in fiscal 2013. The following
Somewhat offsetting the increase in residential segment net sales
factors impacted professional segment operating earnings:
was a decline in sales in Australia from unfavorable weather condi-
•
Higher gross margin in fiscal 2014 compared to fiscal 2013 as a
tions, as well as unfavorable foreign currency exchange rate
result of improved price realization and cost reduction efforts.
fluctuations.
•
A decline in SG&A expense rate in fiscal 2014 compared to
Our domestic field inventory levels of our residential segment
fiscal 2013 due to further leveraging fixed SG&A costs over
products were higher as of the end of fiscal 2014 compared to the
higher sales volumes.
end of fiscal 2013, mainly for snow thrower products as a result of
Operating earnings for the professional segment in fiscal 2013
anticipated strong retail demand for the 2014-2015 winter season.
increased 9.6 percent compared to fiscal 2012 primarily due to
Worldwide net sales for the residential segment in fiscal 2013
higher sales volumes and an improvement in gross margin.
were down by 2.1 percent compared to fiscal 2012 primarily as a
Expressed as a percentage of net sales, professional segment
result of the following factors:
operating margins increased 40 basis points to 17.9 percent in
•
Lower shipments and demand for snow thrower products due to
fiscal 2013 compared to 17.5 percent in fiscal 2012. The following
the lack of snowfall during the 2013-2012 and 2012-2011 winter
factors impacted professional segment operating earnings:
seasons in certain key markets.
•
Higher gross margin as a result of the same factors discussed
previously in the Fiscal 2013 Compared to Fiscal 2012 Gross
Margin section.
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