Toro 2008 Annual Report Download - page 32

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Selling, general, and administrative expense as a percentage of
Summary of Fiscal 2008 Results
net sales in fiscal 2008 remained unchanged at 24.2 percent
Fiscal 2008 was a difficult year with a slight increase in net sales
compared to fiscal 2007.
and a decline in net earnings. Our fiscal 2008 results included the
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We continued to generate strong cash flows from operations.
following items of significance:
Net cash provided by operating activities was $215.7 million in
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Net sales for fiscal 2008 increased slightly by 0.1 percent com-
fiscal 2008 compared to $183.6 million in fiscal 2007, an
pared to fiscal 2007 due primarily to strong international sales,
increase of 17.5 percent. This allowed us to continue to reinvest
which were offset by lower domestic sales as a result of the
in product development, brand building, and new technologies;
continued weakening of the domestic economy.
repurchase shares of our stock; fund acquisitions; and increase
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International net sales continued to grow with a double digit
our cash dividend in fiscal 2008.
increase of 11.9 percent compared to fiscal 2007. Approximately
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We increased our fiscal 2008 quarterly cash dividend for the
$28 million of this increase was the result of the weaker U.S.
fourth consecutive year.
dollar compared to other currencies in which we transact busi-
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We continued with our stock repurchase program in fiscal 2008
ness. This increase was also attributable to our continued invest-
which reduced our number of shares outstanding. This reduction
ments in new products and growth in the international golf mar-
resulted in an increase in diluted net earnings per share of
ket, mainly in Asia and Canada. International net sales
approximately $0.24 in fiscal 2008 compared to fiscal 2007.
comprised 32.4 percent of our total consolidated net sales in
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Despite the difficult domestic economic conditions we faced in
fiscal 2008 compared to 29.0 percent in fiscal 2007 and
fiscal 2008, we improved our asset management with a
27.0 percent in fiscal 2006.
17.6 percent decline in our inventory and our domestic field
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Professional segment net sales, which represented over
inventory levels were lower as of the end of fiscal 2008 as com-
two-thirds of our total consolidated net sales in fiscal 2008,
pared to the end of fiscal 2007.
increased 1.0 percent in fiscal 2008 compared to fiscal 2007 due
primarily to the continued growth and demand in international
GrowLean Initiative
markets, particularly the golf market, as well as our successful
In fiscal 2007, we launched our ‘‘GrowLean’’ initiative. This
introduction of new products. However, our professional segment
three-year initiative focuses our efforts more intensely on revenue
net sales growth rate was hampered by the continued weaken-
growth and asset management while maximizing our use of Lean
ing of the domestic economy and the poor domestic housing
methods to reduce costs and improve quality and efficiency in our
market.
manufacturing facilities and corporate offices. We believe we have
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Our residential segment net sales slightly rose by 0.1 percent in
opportunities to create a leaner, cohesive enterprise that has the
fiscal 2008 compared to fiscal 2007. This increase was primarily
potential to deliver long-term positive financial performance.
attributable to strong demand of snow thrower products in North
America due to heavy snow falls during the 2007-2008 winter Building a Growth Enterprise. We have identified several stra-
season, which was partially offset by lower demand for walk tegic focus areas to drive revenue growth in our businesses and
power mowers as a result of the continued weakening of the accelerate opportunities to expand our global presence through
domestic economy and poor spring weather. stronger customer relations, acquisitions, alliances, and new part-
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Fiscal 2008 net earnings decreased 16.0 percent compared to nerships. Our revenue growth GrowLean initiative goal is to grow
fiscal 2007, and diluted net earnings per share declined 8.8 per- net sales at an average annual rate of 8 percent or more over the
cent compared to fiscal 2007. Our after-tax return on sales for three-year period ending October 31, 2009. For the first two years
fiscal 2008 was 6.4 percent compared to 7.6 percent in fiscal of our GrowLean initiative, our average annual net sales growth
2007. rate was 1.1 percent. Based on our average annual net sales
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Gross margin was 34.8 percent in fiscal 2008, down from growth rate for fiscal 2007 and 2008, as well as our anticipated net
36.1 percent in fiscal 2007. During fiscal 2008, we experienced sales growth for fiscal 2009, excluding the impact of any potential
significant increases in commodity and fuel costs which hindered acquisitions, we do not expect to achieve the 8 percent average
our gross margin as compared to fiscal 2007. We were not able annual revenue growth goal of our GrowLean initiative. However,
to offset the higher costs paid for commodities and fuel, despite we are investing in new product development, marketing, distribu-
increasing prices on most of our products and continued use of tion, and other strategies to help build market share and
Lean methods to reduce costs. In addition, our gross margin for strengthen our brands worldwide. At the same time, we are pursu-
fiscal 2008 was negatively impacted by higher manufacturing ing targeted acquisitions using a disciplined approach that will add
costs from lower plant utilization as we cut production in an value to our existing brands and product portfolio. We also expect
effort to lower inventory levels. to invest in developing innovative, customer-valued products to
generate revenue growth.
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