Toro 2013 Annual Report Download - page 35

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As announced on December 5, 2013, our Board of Directors The following table summarizes our results of operations as a
increased our fiscal 2014 first quarter cash dividend by 42.9 per- percentage of our consolidated net sales.
cent to $0.20 per share compared to the quarterly cash dividend
Fiscal years ended October 31 2013 2012 2011
paid in the first quarter of fiscal 2013. Additionally, during the
first quarter of fiscal 2014, we changed our annual dividend Net sales 100.0% 100.0% 100.0%
Cost of sales (64.5) (65.6) (66.2)
guideline from 20 to 30 percent to 30 to 40 percent of our
three-year average net earnings per share for the current and Gross margin 35.5 34.4 33.8
SG&A expense (24.2) (23.9) (24.0)
previous two fiscal years.
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In fiscal 2014, we plan to place emphasis on improving asset Operating earnings 11.3 10.5 9.8
Interest expense (0.8) (0.9) (0.9)
utilization with a focus on reducing the amount of working capital
Other income, net 0.6 0.4 0.3
in the supply chain. We anticipate average inventory levels to be Provision for income taxes (3.5) (3.4) (3.0)
slightly lower in fiscal 2014 compared to fiscal 2013, and we
Net earnings 7.6% 6.6% 6.2%
anticipate our average net working capital as a percentage of
net sales in fiscal 2014 to be lower as compared to fiscal 2013.
Fiscal 2013 Compared With Fiscal 2012
We will continue to keep a cautionary eye on the global eco-
nomic environment, retail demand, field inventory levels, commod- Net Sales. Worldwide net sales in fiscal 2013 were $2,041.4 mil-
ity prices, weather conditions, competitive actions, expenses, and lion compared to $1,958.7 million in fiscal 2012, an increase of
other factors identified in Part I, Item 1A, ‘‘Risk Factors’’ of this 4.2 percent. This net sales improvement was attributable to the
report, which could cause our actual results to differ from our antic- following factors:
ipated outlook.
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Increased shipments and demand for professional segment
products, mainly landscape contractor equipment, the successful
RESULTS OF OPERATIONS introduction of new and enhanced products that were well
Fiscal 2013 net earnings were $154.8 million compared to received by customers, continued acceptance and demand for
$129.5 million in fiscal 2012, an increase of 19.5 percent. Fiscal our drip irrigation solutions in agricultural markets, and golf reno-
2013 diluted net earnings per share were $2.62, an increase of vation projects that drove demand for our golf irrigation systems.
22.4 percent from $2.14 per share in fiscal 2012. The primary fac- Additionally, price increases introduced on some products,
tors contributing to the net earnings improvement were higher net increased sales and demand in the rental market, as well as
sales, an increase in gross profit, higher other income, and a incremental sales from acquisitions of $6.4 million, contributed to
decrease in our effective tax rate, somewhat offset by an increase our net sales growth in fiscal 2013.
in SG&A expense. Our net earnings per diluted share were also
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Increased sales of Pope irrigation products in Australia, zero-turn
benefited by approximately $0.07 per share in fiscal 2013 com- radius riding mowers, and handheld trimmer and blower products
pared to fiscal 2012 as a result of reduced shares outstanding in our residential segment due to positive customer response to
from repurchases of our common stock. newly introduced and enhanced products, as well as favorable
Fiscal 2012 net earnings were $129.5 million compared to weather conditions.
$117.7 million in fiscal 2011, an increase of 10.1 percent. Fiscal
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Higher international net sales due primarily to increased demand
2012 diluted net earnings per share were $2.14, an increase of in the EMEA region and Asia for micro-irrigation and golf equip-
15.7 percent from $1.85 per share in fiscal 2011. The primary fac- ment products. However, changes in foreign currency exchange
tors contributing to the net earnings improvement were higher net rates resulted in a reduction of our net sales of approximately
sales, an increase in gross profit, leveraging of fixed SG&A costs $13 million in fiscal 2013.
over higher sales volumes, and a pre-tax charge of $4.7 million in
Somewhat offsetting those sales increases were:
fiscal 2011 associated with a rework for a non-safety quality issue
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A decline in overall residential segment net sales primarily from
for our walk power mowers that was not duplicated in fiscal 2012.
lower shipments of snow thrower products due to the lack of
However, our tax rate in fiscal 2012 was higher compared to our
snowfall during the past two winter seasons in certain key mar-
tax rate in fiscal 2011 due to the expiration of the domestic
kets. In addition, shipments of walk power mowers were down
research tax credit on December 31, 2011. Our net earnings per
due to adverse spring weather conditions that negatively
diluted share were also benefited by approximately $0.10 per
impacted demand and our sales during the key selling period.
share in fiscal 2012 compared to fiscal 2011 as a result of reduced
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Lower sales of our retail irrigation products as a result of
shares outstanding from repurchases of our common stock.
reduced product placement at a key customer.
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