Toro 2007 Annual Report Download - page 7

5
Toro’s centennial will be here before we know it. True to
Churchill’s philosophy, we’ve made changes in the right
direction with more to come in the years ahead to help
ensure a strong and successful future.
Another Record Year
I’m pleased to report Toro once again delivered a double-
digit improvement in earnings per share – up 16.8 percent
to a record $3.40. Net earnings were $142.4 million, an
increase of 10.3 percent. Much of this came from our
ongoing journey toward a Lean Enterprise … which helped
drive improvements in productivity and profitability. Our
5,000-plus employees in offices and plants around the
world streamlined and reduced costs throughout the
supply chain. We’ve come a long way from where we were
in 1999 – at 2.7 percent after-tax return on sales – to
7.6 percent in fiscal 2007.
On the top line, industry forecasts predicting a contraction in
2007 proved accurate. Along with most of the industry, Toro’s
revenue growth for the fiscal year was dampened due to eco-
nomic uncertainty, a slowdown in the U.S. housing market,
rising fuel prices, and some regional weather challenges.
However, we believe an unprecedented level of new products
and our ability to leverage our strong brands in growing
markets helped us gain share nearly across the board.
Once again, worldwide professional segment sales led the
way for revenue growth. The golf market was stronger
outside the U.S. – in countries where golf is important to
economic development. The growing popularity of outdoor
sports, like soccer, fueled demand for maintenance equip-
ment and irrigation systems to keep sports fields and
grounds playable and safe. And the need to become more
efficient in water use drove demand for our micro-irrigation
systems for landscapes and agricultural fields. Ongoing
droughts in many areas of the country, combined with agro-
nomic benefits of drip irrigation, increased the adoption
rate for this product family.
For the year, net sales were a record $1.88 billion, an
increase of 2.2 percent over fiscal 2006. Faced with eco-
nomic headwinds and a softer marketplace, we believe
we gained share in most markets.
Looking forward, we’re already implementing several
changes to accelerate future growth, including:
• Increasing investments in innovation and new products
that are ready for the market today – plus emerging
technologies like sensing products and alternative fuels.
• Executing on a disciplined approach to strategic acqui-
sitions like we did in 2007 with the purchase of Rain
Master Irrigation Systems, a market leader in central
irrigation control systems. This is an extension for our
Irritrol®brand and another offering for the growing
precision irrigation market.
• Developing strategies to broaden our markets and
extend our brands globally. Of our revenue derived from
outside the United States, roughly half was in Europe,
20 percent in Australia, and the remainder in Canada,
Latin America and Asia.
Professional: Global Growth
We have a long history of solving problems for professionals
(now comprising just over two-thirds of our revenue) and
homeowners alike. In 1921, we were the first to develop
a mechanized fairway mower for The Minikahda Club. In
1935, we launched the first power mower and, in 1951,
the first snowthrower for homeowners. Fiscal 2007 was
yet another year of innovation in both the professional
and residential segments.
Around the world, professionals count on Toro’s strong
distributor and dealer network to understand their needs
and support them as they strive for greater productivity
and profits. That’s why they continually invest in our inno-
vative products to help keep turf and agricultural fields
in great shape.
In fiscal 2007, worldwide revenue in our professional seg-
ment grew 3.7 percent to $1.27 billion. Outside the U.S.,
new golf course construction was strong, particularly in
Europe and Asia, while the domestic renovation market
Fiscal 2007 Net Sales by Market
Residential 30%
Lawn & Garden: 27%
High-performing products include
zero-turn radius riding mowers,
walk-behind mowers, irrigation
solutions and hand-held equipment.
Snow: 3%
A complete line of rugged, dependable,
and powerful gas and electric products
that get right down to the pavement.
Professional 68%
Landscape Contractor/Grounds: 35%
Heavy-duty turf products and irrigation
systems for creating and maintaining
sports fields, municipal properties, and
residential and commercial grounds.
Golf: 29%
Mowing and grooming equipment
and precision irrigation systems for
maintaining beautiful golf courses.
Micro Irrigation: 4%
Efficient above-ground and sub-surface
drip irrigation systems to grow healthy
crops even where water is scarce.
Other 2%