Toro 2008 Annual Report Download - page 4

To our shareholders,
Fiscal 2008 proved to be a challenging year for The Toro
Company. Diffi cult conditions on a number of fronts, including
the economic downturn and adverse weather conditions during
the key spring selling season, dampened top-line revenues. At
the same time, increased commodity and fuel costs impacted
our gross margins. Despite these challenges, our fi nancial
results were solid and our internal disciplines enabled us to
fi nish the year in a good position for fi scal 2009.
Throughout the year, we worked hard to execute in areas we
could control. We pursued initiatives that gained signifi cant
effi ciencies, improved manufacturing fl exibility, and drove
operational cost savings. These and other actions helped
strengthen our cost structure and somewhat offset the rising
input costs we experienced throughout the year. And, as proof
of our progress around Lean, we improved our working capital
position. While improvement in this area is more challenging
during slow economic times, our efforts helped lower net
inventories by 17.6 percent and reduce accounts receivable
by 9.5 percent. These changes have been gradual, but we
expect measurable improvement in this area going forward.
While we’re not satisfi ed with our fi nancial performance for
fi scal 2008, our talented team did fi ght through the adversity
with determination and resolve. Toro employees around the
world executed in admirable fashion against sound business
strategies and realized many improvements during the year.
All the while, we remained true to our core values of building
caring relationships and achieving market leadership through
industry-leading innovation and service.
Several fi nancial highlights for fi scal 2008 include:
■ Generated record cash fl ow from operating activities.
■ Returned $133 million to shareholders through dividend
payments and share repurchases.
■ Grew international sales 12 percent for the year, helping
offset weakness in our domestic business.
■ Continued our investments in engineering to deliver several
major product advancements that helped us hold or gain
share in key markets.
■ Reduced Toro inventories by 17.6 percent for the year.
Fiscal 2008 Results
For fi scal 2008, net sales were essentially fl at as compared
to the previous year at $1.88 billion. As a result of our ongoing
global growth initiative, we grew international sales to 32
percent of total revenue. Meanwhile, net earnings for the year
were $119.7 million, or $3.10 per share — a decrease of 8.8
percent on a per-share basis compared to last year. Lastly,
with a heightened focus on asset management, we generated
a record $216 million in cash from operating activities. This
achievement is a positive signal to employees, customers and
shareholders that we are determined to run our business in a
leaner, yet more responsive manner in the years ahead.
With a constant commitment to strengthening our market
leadership through innovation, our investments in new product
development have never been more robust and effective.
We invested more than $63 million in engineering during the
year, and once again met our goal of having over 35 percent
of annual revenue attributable to new products. The year
was also punctuated with the 10th anniversary of our Center
for Advanced Turf Technology (CATT). This dedicated team
of engineers and agronomists keeps us at the forefront of
anticipating customer needs by offering creative solutions
to tomorrow’s challenges.
Professional Segment Results
Our professional segment sales grew, albeit modestly, from
increased international sales of golf and grounds equipment as
a result of the successful introduction of several new products,
along with strong shipments of micro irrigation products in
Europe and Australia. These gains were somewhat offset by
Michael J. Hoffman, Chairman and CEO
Mowing an acre in less than
fi ve minutes, the 16-foot Toro®
Groundsmaster® 5900 Series
rotary mower delivers unmatched
productivity and value in a time
when budgets are stretched. This
time-saving machine replaces
the industry standard — the Toro
580-D — and will again raise the
bar in productivity, durability and
operator comfort.
Three years in the making, the
Exmark® Next Lazer Z® includes
dozens of enhancements to
reduce maintenance, improve
handling, and make the mower
more comfortable for landscape
professionals. With 40 percent
fewer parts than the original Lazer Z
and fewer grease points, the Next
Lazer Z helps customers do their
jobs in less time, with less effort.