Toro 2014 Annual Report Download - page 36

Recent Development Outlook for Fiscal 2015
On November 14, 2014, during the first quarter of fiscal 2015, we As we enter our second century, we intend to continue to rely on
acquired substantially all of the assets (excluding accounts receiv- principles that have sustained our longevity and continue our com-
ables) of the BOSS professional snow and ice management busi- mitment of providing an array of innovative products and services
ness of privately held Northern Star Industries, Inc. BOSS designs, to customers around the world. We have taken, and intend to con-
manufactures, and sells a broad line of snowplows, salt and sand tinue to take, proactive measures with investments focused on
spreaders, and related parts and accessories for light and medium generating customer demand, gaining market share, entering new
duty trucks, ATVs, UTVs, skid steers, and front-end loaders. markets, and achieving strong financial results. We believe our fis-
Through this acquisition, we added another professional contractor cal 2015 financial performance will include, among many others,
brand; a portfolio of counter-seasonal equipment; manufacturing the following main factors:
and distribution facilities located in Iron Mountain, Michigan; and a
•
We anticipate fiscal 2015 net sales in our professional segment
distribution network for these products. We believe that this acqui- to increase compared to fiscal 2014 due, in part, to our recent
sition positions us to strengthen and grow our relationships with acquisition of the BOSS professional snow and ice management
professional contractors, municipalities, and other customers by business. We also expect the positive momentum of demand for
enabling us to provide them with innovative, durable equipment our landscape contractor equipment products in fiscal 2014 to
and high-quality service they need for each season. This acquisi- continue in fiscal 2015, driven by our products that are designed
tion closed for $227.9 million, subject to certain post-closing adjust- to enhance productivity and performance for the landscape con-
ments, which included a cash payment of $197.9 million and issu- tractor. Sales in the golf and grounds equipment markets are
ance of a long-term note of $30.0 million. expected to slightly increase in fiscal 2015 as compared to fiscal
2014, and we also anticipate positive customer response gener-
New Three-Year Initiative ated from new products, such as our new INFINITY Series golf
Our new multi-year initiative, ‘‘Destination PRIME,’’ will begin our sprinklers, to continue in fiscal 2015. Additionally, as we
journey into our second century. Similar to our previous Destina- launched our Toro branded products from recent acquisitions in
tion 2014 initiative, this new three-year initiative is intended to help the rental and specialty construction market during fiscal 2014,
us drive revenue and earnings growth and further improve produc- we plan to capitalize on the continued growth and demand in
tivity, while also continuing our century-long commitment to innova- this market with our broader lineup of products. Precision irriga-
tion, relationships, and excellence. Through our new Destination tion products remain a long-term focus for us as continued mar-
PRIME initiative, we intend to strive to achieve our goals by pursu- ket growth and demand for efficient watering solutions for agri-
ing a progression of annual milestones. Each fiscal year we will set culture is expected to drive demand for our products. We expect
forth associated organic revenue growth and operating earnings our increased manufacturing capacity and infrastructure that
goals, while continuing to focus on the progress we made through expanded our market presence for micro-irrigation products to
our previous initiatives, such as working capital. contribute to our anticipated sales growth of micro-irrigation
products in fiscal 2015.
Organic Revenue Growth. We intend to pursue strategic growth
•
We expect our residential segment net sales to increase in fiscal
of our existing businesses and product categories with an annual 2015 compared to fiscal 2014 as we anticipate the domestic
organic revenue growth goal. One of our goals of our new Destina- economy to continue to slowly improve. We also anticipate our
tion PRIME initiative is to achieve at least five percent organic enhanced portfolio of Toro walk power mowers and a new line of
revenue growth each fiscal year of this initiative. riding products to be well received by customers, as well as
Operating Earnings Growth. Additionally, as part of our new increased product placement at a key retailer to drive sales
Destination PRIME initiative growth goals, we have set an earnings growth for our residential segment in fiscal 2015. However, as
goal to raise operating earnings as a percentage of net sales to we benefited from heavy snow falls during the 2013-2014 winter
13 percent or higher by the end of fiscal 2017. season that drove strong sales and demand of our snow thrower
products in fiscal 2014, we do not expect to repeat our sales
Working Capital. As part of our previous initiatives, we have levels of snow thrower products in fiscal 2015 as compared to
placed emphasis on improving asset management, and we intend fiscal 2014.
to build on that momentum as part of our new Destination PRIME
•
We intend to continue to focus on our international markets to
initiative. Our goal is to drive down average net working capital to grow our revenues, and our long-term goal is for our interna-
13 percent or lower by the end of fiscal 2017. tional sales to comprise a larger percentage of our total consoli-
dated net sales. We plan to continue investing in new products
30