Toro 2013 Annual Report Download - page 34

our micro-irrigation products in fiscal 2014. In late fiscal 2013,
Destination 2014
we launched our Toro branded underground utility products, and
Our multi-year initiative, ‘‘Destination 2014,’’ will take us to our
we anticipate continued growth and demand in the rental and
centennial in 2014 and into our second century. This four-year initi-
construction market to positively impact our professional seg-
ative, which began with our 2011 fiscal year, is intended to focus
ment sales growth in fiscal 2014. Additionally, ongoing demand
our efforts on driving our legacy of excellence through building
for our innovative landscape contractor equipment, along with
caring relationships and engaging in innovation. Through our Desti-
the introduction of an array of new products in fiscal 2014, is
nation 2014 initiative, we strive to achieve our goals by pursuing a
expected to drive customer demand and contribute to our sales
progression of annual milestones. Each fiscal year we set forth
growth. Sales in the golf market are anticipated to be flat to
associated organic revenue growth, operating earnings, and
slightly up in fiscal 2014 as golf rounds in the U.S. were down in
employee engagement goals, such as continuous improvement
fiscal 2013 from unfavorable weather conditions that may result
projects with cross-functional collaboration, and we also strive to
in tighter budgets for golf courses to replace aged equipment in
continue to focus on the progress we made through our previous
fiscal 2014.
initiatives, such as working capital.
•
We expect our residential segment net sales to increase in fiscal
Organic Revenue Growth. We intend to pursue strategic growth 2014 compared to fiscal 2013 as we assume weather conditions
of our existing businesses and product categories with an annual to improve in fiscal 2014 compared to the cool spring weather in
organic revenue growth goal. One of our goals of our Destination fiscal 2013 that negatively impacted sales of our walk power
2014 initiative is to achieve $100 million in organic revenue growth mowers, and we anticipate the domestic economy to continue its
in each of fiscal 2011, 2012, 2013, and 2014. We define organic slow rate of recovery. We anticipate new products, such as our
revenue growth as the increase in net sales, less net sales from new line of Lawn-Boy walk power mowers, to be well received
acquisitions that occurred in the prior twelve-month period. While by customers, and increased product placement to drive sales
we exceeded our organic revenue growth goal of $100 million for growth for our residential segment in fiscal 2014.
fiscal 2011, we fell short of achieving that goal in fiscal 2013 and
•
We intend to continue to focus on international markets to grow
2012. our revenues, and our long-term goal is for international sales to
Operating Earnings Growth. As part of our Destination 2014 comprise a larger percentage of our total consolidated net sales.
growth goals, we also have set an earnings goal to raise operating Recently, we have invested in new international markets, namely
earnings as a percentage of net sales to 12 percent by the end of Asia and Eastern Europe for our micro-irrigation business, as we
fiscal 2014. In fiscal 2011, 2012, and 2013, we made progress anticipate future worldwide demand to increase for our water
towards this goal by achieving operating earnings as a percentage conserving drip irrigation products for agricultural markets. We
of net sales of 9.8 percent, 10.5 percent, and 11.3 percent, plan to continue investing in new products designed specifically
respectively. for international markets and in infrastructure around the world,
connecting us more closely to our customers and increasing our
Outlook for Fiscal 2014 global presence. However, uncertainty with the economies of
As we approach our centennial in fiscal 2014, we intend to con- some European countries is expected to linger into fiscal 2014,
tinue to rely on principles that have sustained our longevity, which which may hamper our international net sales growth. Addition-
include, among many others, the importance of remaining ever vig- ally, recent foreign currency exchange rate trends could hinder
ilant and poised to flexibly respond with innovative solutions to new our international net sales in fiscal 2014.
challenges. We have taken, and intend to continue to take, proac-
•
During fiscal 2014, we anticipate our gross margin rate to
tive measures with investments intended to generate customer improve compared to fiscal 2013 as we continue to place addi-
demand, gain market share, and achieve strong financial results. tional emphasis on productivity improvements intended to reduce
We believe our fiscal 2014 financial performance will include, production costs while realizing greater efficiencies in our
among many others, the following main factors: processes. However, competitive pricing challenges are
•
We anticipate fiscal 2014 net sales in our professional segment expected to restrict our gross margin growth rate along with
to increase compared to fiscal 2013, led by anticipated contin- anticipated higher commodity costs in fiscal 2014 as compared
ued growth in the worldwide micro-irrigation market. Precision to fiscal 2013.
irrigation products remain a long-term focus for us as we help
•
We expect net earnings and diluted net earnings per share to be
our customers find solutions to conserve water as the need to up in fiscal 2014 compared to fiscal 2013, driven mainly by our
become more efficient in water usage is expected to drive anticipated sales growth and an improvement in our gross mar-
demand for our products. We also expect recent global invest- gin rate. Additionally, we anticipate a further reduction in our
ments in manufacturing capacity and infrastructure that diluted shares outstanding due to repurchases of our common
expanded our market presence to contribute to sales growth of stock.
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