Toro 2012 Annual Report Download - page 33
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Please find page 33 of the 2012 Toro annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.phase-in of additional Tier 4 emission requirements affecting our
Destination 2014
products having diesel engines with greater than 25 but less
Our multi-year initiative, ‘‘Destination 2014,’’ will take us to our
than 75 horsepower manufactured after January 1, 2013 and
centennial in 2014 and into our second century. This four-year initi-
sold in the U.S. and Canada, we prebuilt inventory in anticipation
ative, which began with our 2011 fiscal year, is intended to focus
of higher demand before we implement expected price increases
our efforts on driving our legacy of excellence through building
for our products subject to these regulations. Accordingly, we
caring relationships and engaging in innovation. Through our Desti-
anticipate stronger demand prior to price increases going into
nation 2014 initiative, we strive to achieve our goals by pursuing a
effect for products subject to Tier 4 emission requirements,
progression of annual milestones. Each fiscal year we set forth
which is expected to result in higher sales volumes of our diesel
associated organic revenue growth, operating earnings, and
engine products, mainly in the first quarter of fiscal 2013, than
employee engagement goals, such as continuous improvement
we have experienced in the past or expect to experience in the
projects with cross-functional collaboration, and we also strive to
future. Additionally, we anticipate that our recent acquisitions in
continue to focus on the progress we made through our previous
fiscal 2012 will expand our market presence in the rental and
initiatives, such as working capital.
construction market and contribute incremental sales in fiscal
Organic Revenue Growth. We intend to pursue strategic growth 2013.
of our existing businesses and product categories with an annual
•
We expect our residential segment net sales to increase slightly
organic revenue growth goal. One of our goals of our Destination in fiscal 2013 compared to fiscal 2012 as we anticipate the
2014 initiative is to achieve $100 million in organic revenue growth domestic economy to continue its slow rate of recovery. We
in each of fiscal 2011, 2012, 2013, and 2014. We define organic anticipate higher demand for our innovative zero-turn radius rid-
revenue growth as the increase in net sales, less net sales from ing mowers in fiscal 2013 as we believe customers will continue
acquisitions that occurred in the prior twelve-month period. While to migrate to zero-turn radius mowers from lawn and garden
we exceeded our organic revenue growth goal of $100 million for tractors. We also anticipate new products, such as our new two-
fiscal 2011, we fell short of achieving that goal in fiscal 2012. stage snow thrower products and extension of our lithium-ion
Operating Earnings Growth. As part of our Destination 2014 battery-powered home solutions products, to be well received by
growth goals, we have also set a bold earnings goal to raise oper- customers in fiscal 2013.
ating earnings as a percentage of net sales to 12 percent by the
•
International markets will remain a focus for us to grow our reve-
end of fiscal 2014. In fiscal 2012 and 2011, we made progress nues. However, as the European economic conditions remained
towards this goal by achieving operating earnings as a percentage weak in fiscal 2012, we anticipate uncertainty with the European
of net sales of 10.5 percent and 9.8 percent, respectively. economy to continue into fiscal 2013, which is expected to ham-
per our international net sales growth. We plan to continue
Outlook for Fiscal 2013 investing in new products designed specifically for international
Our focus for fiscal 2013 is on generating customer demand for markets and in infrastructure around the world, connecting us
our innovative products, in spite of continuing economic uncer- more closely to international customers and increasing our global
tainty, particularly in the United States and Europe. We have presence. In fiscal 2012 we began operations at our new micro-
taken, and continue to take, proactive measures with investments irrigation manufacturing facility in Romania as we anticipate
intended to help us gain market share and achieve strong financial future worldwide market demand to increase for our water con-
results. We believe the key drivers for our fiscal 2013 financial serving drip irrigation products for agricultural markets, as previ-
performance will include, among many others, the following main ously discussed. A long-term goal is for international sales to
factors: comprise a larger percentage of our total consolidated net sales.
•
We anticipate fiscal 2013 net sales in our professional segment
•
During fiscal 2013, we anticipate our gross margin rate to
to increase compared to fiscal 2012, led by anticipated contin- improve compared to fiscal 2012 as we continue to focus on
ued growth in the worldwide micro-irrigation market for products productivity improvements intended to reduce production costs
that help our customers conserve the use of water as the need while realizing greater efficiencies in our processes. In addition,
to become more efficient in water use is expected to drive we expect to increase prices on some of our products.
demand for our products. We plan to continue to invest globally
•
We expect net earnings and diluted net earnings per share to be
in new micro-irrigation products, manufacturing capacity, and up in fiscal 2013 compared to fiscal 2012, driven mainly by our
infrastructure as we expect that products used for water conser- expectation of sales growth and an improvement in our gross
vation to be a long-term focus for us. We also anticipate higher margin rate, as well as an anticipated further reduction in our
sales of domestic golf and grounds equipment and landscape diluted shares outstanding due to repurchases of our common
contractor equipment as we plan to introduce an array of innova- stock.
tive new products and expect customers to continue to replace
aged inventory in fiscal 2013. As we continued to prepare for the
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