Toro 2013 Annual Report Download - page 38

shipments and demand for domestic golf and landscape contractor 33 percent for fiscal 2011. The following table shows the residen-
equipment as customers replaced their aged inventory. Addition- tial segment net sales, operating earnings, and operating earnings
ally, golf rounds played were up in fiscal 2012 compared to fiscal as a percent of net sales.
2011 resulting in increased revenue for golf courses and related
(Dollars in millions)
investments in equipment. Net sales of micro-irrigation products Fiscal years ended October 31 2013 2012 2011
also increased due to acceptance and demand for our drip irriga- Net sales $594.4 $607.4 $623.9
tion solutions for agricultural markets, additional manufacturing % change from prior year (2.1)% (2.6)% 5.8%
capacity that increased production and enabled higher sales of our Operating earnings $ 62.0 $ 57.9 $ 54.4
micro-irrigation products, and dealer expansion that assisted us to As a percent of net sales 10.4% 9.5% 8.7%
better meet the growing market demand for agricultural irrigation
Net Sales. Worldwide net sales for the residential segment in
products. Incremental sales of $22.1 million from acquisitions also
fiscal 2013 were down by 2.1 percent compared to fiscal 2012
benefited our professional segment net sales for fiscal 2012.
primarily as a result of the following factors:
Somewhat offsetting those sales increases were lower sales in
•
Lower shipments and demand for snow thrower products due to
Europe as a result of economic weakness and uncertainty in that
the lack of snowfall during the past two winter seasons in certain
region during fiscal 2012.
key markets.
Operating Earnings. Operating earnings for the professional
•
A decrease in sales of walk power mowers due to adverse
segment in fiscal 2013 increased 9.6 percent compared to fiscal spring weather conditions that negatively impacted demand and
2012 due primarily to higher sales volumes and an improvement in our sales during the key selling period.
gross margin. Expressed as a percentage of net sales, profes-
Somewhat offsetting the decrease in residential segment net sales
sional segment operating margins increased 40 basis points to
were:
17.9 percent in fiscal 2013 compared to 17.5 percent in fiscal
•
Increased sales of Pope irrigation products in Australia as a
2012. The following factors impacted professional segment operat-
result of dry weather conditions in that region.
ing earnings:
•
Higher shipments and demand of zero-turn radius riding mowers
•
Higher gross margin in fiscal 2013 compared to fiscal 2012 as a
and handheld trimmer and blower products due mainly to posi-
result of the same factors discussed previously in the Gross
tive customer response to newly introduced and enhanced prod-
Margin section.
ucts, as well as favorable fall weather conditions.
•
A slight decline in SG&A expense rate in fiscal 2013 compared
Worldwide net sales for the residential segment in fiscal 2012
to fiscal 2012 due mainly to leveraging fixed SG&A costs over
were down by 2.6 percent compared to fiscal 2011 primarily as a
higher sales volumes and lower warranty expense.
result of lower shipments and demand for our snow thrower prod-
Operating earnings for the professional segment in fiscal 2012
ucts and service parts due to the lack of snowfall during the
increased 13.2 percent compared to fiscal 2011 due primarily to
2011-2012 winter season. Somewhat offsetting the decrease in
higher sales volumes. Expressed as a percentage of net sales,
residential segment net sales included higher shipments and
professional segment operating margins increased 100 basis
demand of walk power mowers, zero-turn radius riding mowers,
points to 17.5 percent in fiscal 2012 compared to 16.5 percent in
and trimmers due to positive customer response to newly intro-
fiscal 2011. The operating profit improvement was due to higher
duced products and favorable weather conditions that drove strong
gross margin as a result of price increases on some products and
demand. Sales of Pope products in Australia were also up due to
manufacturing efficiencies from higher plant utilization, mainly
more favorable weather conditions in fiscal 2012 compared to fis-
related to increased production and demand for our products.
cal 2011.
Those gross margin improvements were somewhat offset by higher
average commodity prices and lower gross margins on product Operating Earnings. Operating earnings for the residential seg-
sales from acquisitions. Additionally, a decline in SG&A expense ment in fiscal 2013 increased 7.2 percent compared to fiscal 2012.
rate due mainly to leveraging fixed SG&A costs over higher sales Expressed as a percentage of net sales, residential segment oper-
volumes and a decline in marketing expenses, somewhat offset by ating margins increased 90 basis points to 10.4 percent in fiscal
higher warranty expense, contributed to our professional segment 2013 compared to 9.5 percent in fiscal 2012. The following factors
operating margin improvement in fiscal 2012 compared to fiscal impacted residential segment operating earnings:
2011.
•
Higher gross margins from cost reduction efforts and lower com-
modity costs, somewhat offset by unabsorbed manufacturing
Residential costs from lower plant utilization as we cut production due to
Residential segment net sales represented 29 percent of consoli- lower sales volumes of snow thrower products and walk power
dated net sales for fiscal 2013, 31 percent for fiscal 2012, and mowers.
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