Toro 2011 Annual Report Download - page 36

2008 from poor economic conditions and new golf development sales, operating earnings, and operating earnings as a percent of
projects, particularly in Asia, as well as the positive customer net sales.
response for new products we introduced. Shipments of landscape
contractor equipment were also strong as a result of the successful (Dollars in millions)
Fiscal years ended October 31 2011 2010 2009
introduction of new products that were well received by customers.
Net sales of micro-irrigation products increased due to our invest- Net sales $623.9 $589.7 $532.7
% change from prior year 5.8% 10.7% (1.9)%
ments in additional manufacturing capacity that increased produc-
Operating earnings $ 54.4 $ 58.0 $ 46.4
tion of our water conserving products to meet the growing world- As a percent of net sales 8.7% 9.8% 8.7%
wide market demand. Additionally, a weaker average U.S. dollar
compared to most other currencies in which we transact business Net Sales. Worldwide net sales for the residential segment in
also contributed to the sales growth. Our domestic field inventory fiscal 2011 were up by 5.8 percent compared to fiscal 2010 primar-
levels of our professional segment products were slightly down as ily as a result of the following factors:
of the end of fiscal 2010 as compared to the end of fiscal 2009.
•
Strong demand for our snow thrower products as our channel
partners purchased product to fill depleted field inventory levels
Operating Earnings. Operating earnings for the professional
for the 2011-2012 snow season following strong sales from
segment in fiscal 2011 increased 18.0 percent compared to fiscal
heavy snow falls during the 2010-2011 snow season, as well as
2010 due primarily to higher sales volumes. Expressed as a per-
additional product placement.
centage of net sales, professional segment operating margins
•
An increase in shipments of zero-turn radius riding mowers
increased 50 basis points to 16.5 percent in fiscal 2011 compared
attributable to continued strong demand, resulting primarily from
to 16.0 percent in fiscal 2010. The following factors impacted pro-
customer acceptance of new products.
fessional segment operating earnings:
•
A weaker average U.S. dollar compared to most other curren-
•
Lower gross margins in fiscal 2011 compared to fiscal 2010 as a
cies in which we transact business.
result of higher average commodity prices and increased freight
Somewhat offsetting those increases was a decline in sales of
expense driven by higher fuel prices. Those increases were
walk power mowers and electric blowers due mainly to unfavorable
somewhat offset by lower manufacturing costs from higher plant
weather conditions. Our domestic field inventory levels of our resi-
utilization, mainly related to increased demand for our products.
dential segment products were slightly up as of the end of fiscal
•
A decline in SG&A expense rate in fiscal 2011 compared to
2011 as compared to the end of fiscal 2010.
fiscal 2010 due mainly to leveraging fixed SG&A costs spread
Worldwide net sales for the residential segment in fiscal 2010
over higher sales volumes and a decline in product liability
were up by 10.7 percent compared to fiscal 2009. This increase
expense.
was due primarily to strong shipments of zero-turn radius riding
Operating earnings for the professional segment in fiscal 2010
mowers attributable to strong demand, resulting in part from cus-
increased 36.2 percent compared to fiscal 2009. Expressed as a
tomer acceptance of new products and additional product place-
percentage of net sales, professional segment operating margins
ment. Sales of snow thrower products were also up due to
increased to 16.0 percent in fiscal 2010 compared to 13.2 percent
increased demand from heavy snow falls during the winter season
in fiscal 2009. The operating profit improvement was due mainly to
of 2009-2010 and the timing of the introduction for our redesigned
higher gross margins as a result of increased sales volumes and
offering of snow thrower products that shipped to customers in the
lower manufacturing costs from increased plant utilization due to
first quarter of fiscal 2010 instead of the fourth quarter of fiscal
increased demand for our products, combined with our cost reduc-
2009. In addition, a weaker average U.S. dollar compared to most
tion efforts. However, increased freight expense and rising com-
other currencies in which we transact business benefited residen-
modity prices hampered our professional segment gross margin
tial segment net sales in fiscal 2010 compared to fiscal 2009.
improvement. Also contributing to the professional segment operat-
ing earnings improvement was a decline in our SG&A expense Operating Earnings. Operating earnings for the residential seg-
rate due primarily to leveraging SG&A costs over higher sales ment in fiscal 2011 decreased 6.1 percent compared to fiscal
volumes. 2010. Expressed as a percentage of net sales, residential segment
operating margins declined 110 basis points to 8.7 percent in fiscal
Residential 2011 compared to 9.8 percent in fiscal 2010. The following factors
Residential segment net sales represented 33 percent of consoli- impacted residential segment operating earnings:
dated net sales for fiscal 2011 and 35 percent for both fiscal 2010
•
Lower gross margins primarily attributable to costs associated
and 2009. The following table shows the residential segment net with a rework for a non-safety quality issue that affected a large
number of our walk power mowers, higher average commodity
prices, and increased freight expense. Those increases were
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