Toro 2015 Annual Report Download - page 40

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•
A decline in SG&A expense rate in fiscal 2014 compared to the late arrival of spring weather conditions and a supplier-
fiscal 2013 due to leveraging fixed SG&A costs over higher related rework that hampered sales in fiscal 2014.
sales volumes. Somewhat offsetting the increase in residential segment net
sales was a decline in sales in Australia from unfavorable weather
Residential conditions, as well as unfavorable foreign currency exchange rate
Residential segment net sales represented 30 percent of consoli- fluctuations.
dated net sales for fiscal 2015, 31 percent for fiscal 2014, and Operating Earnings. Operating earnings for the residential seg-
29 percent for fiscal 2013. The following table shows the residen- ment in fiscal 2015 increased 10.5 percent compared to fiscal
tial segment net sales, operating earnings, and operating earnings 2014. Expressed as a percentage of net sales, residential segment
as a percent of net sales. operating margins increased 30 basis points to 11.7 percent in
fiscal 2015 compared to 11.4 percent in fiscal 2014. The following
(Dollars in millions)
Fiscal years ended October 31 2015 2014 2013 factors impacted residential segment operating earnings:
•
Lower gross margins primarily from unfavorable foreign currency
Net sales $725.7 $672.4 $594.4
% change from prior year 7.9% 13.1% (2.1)% exchange rate fluctuations and increased manufacturing
Operating earnings $ 85.0 $ 76.9 $ 62.0 expenses.
As a percent of net sales 11.7% 11.4% 10.4%
•
Lower SG&A expense rate attributable to further leveraging of
fixed SG&A costs over higher sales volumes.
Net Sales. Worldwide net sales for the residential segment in
Operating earnings for the residential segment in fiscal 2014
fiscal 2015 were up by 7.9 percent compared to fiscal 2014 prima-
increased 24.0 percent compared to fiscal 2013. Expressed as a
rily as a result of the following factors:
percentage of net sales, residential segment operating margins
•
Increased shipments driven by strong retail demand and addi-
increased 100 basis points to 11.4 percent in fiscal 2014 compared
tional product placement for our new platform of zero-turn radius
to 10.4 percent in fiscal 2013. The following factors impacted resi-
riding mowers.
dential segment operating earnings:
•
Higher sales of walk power mowers due to enhanced product
•
Slightly lower gross margins from higher commodity prices and
placement and increased demand for our product offerings,
costs related to a supplier component rework issue in fiscal
including our new all-wheel drive model.
2014, partially offset by production efficiencies on increased
Somewhat offsetting the increase in residential segment net
sales volumes.
sales was a decline in sales in Australia from unfavorable foreign
•
Lower SG&A expense rate attributable to leveraging fixed SG&A
currency exchange rate fluctuations.
costs over higher sales volumes.
Our domestic field inventory levels of our residential segment
products were higher as of the end of fiscal 2015 compared to the Other
end of fiscal 2014 due to the introduction of new products and Other segment net sales, which includes our company-owned
anticipated retail demand for those new products. Additionally, field domestic distributors, represented 1 percent of consolidated net
inventory levels of snow thrower products were up as a result of sales for each of fiscal 2015, 2014, and 2013. The following table
anticipated strong retail demand for the 2015-2016 winter season. shows the other segment net sales and operating losses.
Worldwide net sales for the residential segment in fiscal 2014
were up by 13.1 percent compared to fiscal 2013 primarily as a (Dollars in millions)
Fiscal years ended October 31 2015 2014 2013
result of the following factors:
•
Strong shipments and demand for snow thrower products and Net sales $ 25.5 $ 22.7 $ 21.8
% change from prior year 12.6% 4.2% 0.0%
parts as a result of heavy snow falls during the 2013-2014 snow
Operating losses $(101.9) $(96.8) $(89.7)
season in key markets and strong preseason demand for the
2014-2015 snow season. Net Sales. Net sales for the other segment includes sales from
•
Increased sales and demand of zero-turn radius riding products, our wholly owned domestic distribution companies less sales from
including our enhanced products, as customers continued to the professional and residential segments to those distribution
transition to this mowing platform. companies. The other segment net sales in fiscal 2015 were up by
•
Higher sales of electric handheld products due to additional $2.8 million compared to fiscal 2014 due to higher sales volumes
product placement at mass retailers and favorable weather driven by strong demand for golf and grounds equipment at our
conditions. company-owned distribution companies.
•
A slight increase in sales of walk power mowers due to the The other segment net sales in fiscal 2014 were up by $0.9 mil-
positive customer response to new products and expanded prod- lion compared to fiscal 2013 due to higher sales volumes at our
uct placement for certain models, which was partially offset by company-owned distribution companies.
34