- Net earnings per share for fiscal 2017
up 17.0 percent to a record $2.41
- Growth across several professional
categories drove solid performance for the year
- Company completes Destination PRIME and
launches Vision 2020
- Quarterly cash dividend increased 14.3
percent to $0.20 per share
The Toro Company (NYSE: TTC) today reported net earnings of
$267.7 million, or $2.41 per share, on a net sales increase of 4.7
percent to $2.505 billion for its fiscal year ended October 31,
2017. In fiscal 2016, the company delivered net earnings of $231.0
million, or $2.06 per share for the year, on net sales of $2.392
billion.
For the fourth quarter, Toro reported net earnings of $33.8
million or $0.31 per share, on a net sales increase of 4.3 percent
to $488.6 million. In the comparable 2016 period, the company
posted net earnings of $30.2 million on net sales of $468.4
million.
The company also announced that its board of directors has
declared a quarterly cash dividend of $0.20 per share, a 14.3
percent increase from its previous quarterly dividend rate of
$0.175 per share. This dividend is payable on January 10, 2018, to
shareholders of record on December 22, 2017. For the fiscal year,
the company returned nearly $236.0 million to shareholders through
the payment of approximately $75.8 million in dividends and the
repurchase of approximately 2.7 million shares of common stock.
“Fiscal 2017 was another record year for The Toro Company. We
experienced solid sales growth fueled by new and innovative product
offerings across our businesses,” said Richard M. Olson, Toro’s
chairman and chief executive officer. “Strong performance in our
golf, landscape contractor and rental businesses continued with the
success of new products such as the Exmark® Radius® zero-turn
riding mowers, the Greensmaster® series of greens mowers and the
Dingo® TX 1000 compact utility loader. We continue to gain momentum
in those markets and we are encouraged by retail trends. Our BOSS®
snow and ice management business also had a strong year driven by
the continued success of the EXT extendable plows and the V-Box
spreaders, which elevate performance and enhance productivity.”
“Sales in our international business were up 5.6 percent for the
year driven by our Australia-based Pope® residential product
offerings and by the newly acquired Perrot line of professional
irrigation products. We are pleased with the integration of Perrot
and we are optimistic about the growth opportunity for that
business as we expand distribution more broadly. Balanced
performance across our professional turf product categories also
bolstered international sales.”
“For the fourth quarter, our residential business generated
solid growth with sales up 3.2 percent driven in part by the
success of our Pope line and increased shipments of zero-turn
riding mowers. Turning to our snow business, field inventory levels
are in good shape and we are well prepared to address customers’
needs in the winter months ahead.”
“Fiscal 2017 marks the end of our three-year Destination PRIME
initiative. I am proud of our team’s accomplishments. We achieved
record revenue, exceeded profitability goals and made significant
progress on improving working capital. With the launch of our new
initiative, Vision 2020, we will once again focus on driving
profitable growth with an emphasis on innovation and serving our
customers, which will generate further momentum for the
organization. It is the collective efforts of our employees that
make these initiatives a success. I look forward to working
together as we kickoff the next chapter.”
For fiscal 2018, the company expects revenue growth to exceed 4
percent, and net earnings to be about $2.57 to $2.63 per share. For
the first quarter, the company expects net earnings to be about
$0.42 to $0.44 per share.
SEGMENT RESULTS
Professional
- Professional segment net sales for
fiscal 2017 totaled $1.812 billion, up 6.2 percent from $1.705
billion last year. Strong performance across our professional
businesses drove the positive results for the year. Solid demand
for our Toro and Exmark branded landscape contractor equipment,
golf, rental and specialty construction and our BOSS product
line-ups were all contributing factors. For the fourth quarter,
professional segment net sales were $360.4 million, up 4.9 percent
from the comparable fiscal 2016 period. The growth was driven
largely by the success of newly introduced products in our
landscape contractor businesses and higher sales in our golf and
specialty construction markets.
- Professional segment earnings for
fiscal 2017 totaled $379.5 million, up 7.8 percent from $352.1
million from the prior year. For the fourth quarter, professional
segment earnings were $65.0 million, up from $59.7 million in the
comparable fiscal 2016 period.
Residential
- Residential segment net sales for
fiscal 2017 were $673.2 million, up 0.6 percent from $669.1 million
last year. Despite mild in-season winter conditions and an
inconsistent start to the spring months, increased sales of our
Pope products and higher shipments of snow products, contributed to
the favorable full year results. For the fourth quarter,
residential segment net sales were $122.6 million, up 3.2 percent
from the comparable fiscal 2016 period. Momentum in our
international business drove the performance for the quarter with
increased sales of our Pope product line in Australia.
- Residential segment earnings for fiscal
2017 totaled $74.7 million, up 1.4 percent from fiscal 2016. For
the fourth quarter, residential segment earnings were $11.7
million, up from $9.2 million in the comparable fiscal 2016
period.
OPERATING RESULTS
Gross margin as a percent of sales for fiscal 2017 was up 20
basis points from last year to 36.8 percent. Margin improvement for
the year was driven by favorable operational productivity and
segment mix, partially offset by commodity headwinds and increased
freight costs. For the fourth quarter, gross margin as a percent of
sales increased 90 basis points to 37.7 percent. Margin improvement
for the quarter was driven by favorable operational productivity
and foreign currency exchange rates, partially offset by higher
commodity costs.
Selling, general and administrative (SG&A) expense as a
percent of sales for fiscal 2017 was 22.6 percent, consistent with
last year. For the fourth quarter, SG&A expense as a percent of
sales increased 50 basis points to 28.0 percent. The quarterly
increase was mainly driven by higher incentive program
expenses.
Operating earnings as a percent of sales for fiscal 2017
improved 20 basis points from last year to 14.2 percent. For the
fourth quarter, operating earnings improved 40 basis points to 9.7
percent of sales.
The effective tax rate for fiscal 2017 was 24.2 percent,
compared to 30.1 percent last year. The effective tax rate for the
fourth quarter was 27.9 percent compared to 27.6 percent in the
prior year. The change in the tax rate for the full year was mainly
driven by adoption of the new share based accounting standard this
fiscal year.
Accounts receivable at the end of fiscal 2017 totaled $183.1
million, up 12.1 percent from last year. Net inventories were
$329.0 million, up 7.2 percent compared to the prior year. Trade
payables were $211.8 million, up 21.2 percent from the prior
year.
About The Toro CompanyThe Toro Company (NYSE: TTC) is a
leading worldwide provider of innovative solutions for the outdoor
environment, including turf, snow and ground-engaging equipment and
irrigation and outdoor lighting solutions. With sales of $2.5
billion in fiscal 2017, Toro’s global presence extends to more than
125 countries. Through constant innovation and caring relationships
built on trust and integrity, Toro and its family of brands have
built a legacy of excellence by helping customers care for golf
courses, landscapes, sports fields, public green spaces, commercial
and residential properties and agricultural fields. For more
information, visit www.thetorocompany.com.
LIVE CONFERENCE CALLDecember 7, 2017 at 10:00 a.m.
CSTwww.thetorocompany.com/invest
The Toro Company will conduct its earnings call and webcast for
investors beginning at 10:00 a.m. CST on December 7, 2017. The
webcast will be available at www.streetevents.com or at
www.thetorocompany.com/invest. Webcast participants will need to
complete a brief registration form and should allocate extra time
before the webcast begins to register and, if necessary, download
and install audio software.
Forward-Looking StatementsThis news release contains
forward-looking statements, which are being made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on
management’s current assumptions and expectations of future events,
and often can be identified by words such as “expect,” “strive,”
“looking ahead,” “outlook,” “guidance,” “forecast,” “goal,”
“optimistic,” “anticipate,” “continue,” “plan,” “estimate,”
“project,” “believe,” “should,” “could,” “will,” “would,”
“possible,” “may,” “likely,” “intend,” “can,” “seek,” “potential,”
“pro forma,” or the negative thereof or similar expressions.
Forward-looking statements involve risks and uncertainties that
could cause actual events and results to differ materially from
those projected or implied. Particular risks and uncertainties that
may affect our operating results or financial position include:
worldwide economic conditions, including slow or negative growth
rates in global and domestic economies and weakened consumer
confidence; disruption at our manufacturing or distribution
facilities, including drug cartel-related violence affecting our
maquiladora operations in Juarez, Mexico; fluctuations in the cost
and availability of raw materials and components, including steel,
engines, hydraulics and resins; the impact of abnormal weather
patterns, including unfavorable weather conditions exacerbated by
global climate change or otherwise; the impact of natural disasters
and global pandemics; the level of growth or contraction in our key
markets; government and municipal revenue, budget and spending
levels; dependence on The Home Depot as a customer for our
residential business; elimination of shelf space for our products
at dealers or retailers; inventory adjustments or changes in
purchasing patterns by our customers; our ability to develop and
achieve market acceptance for new products; increased competition;
the risks attendant to international relations, operations and
markets, including political, economic and/or social instability
and conflict, tax and trade policies in the U.S. and other
countries in which we manufacture or sell our products, and
implications of the United Kingdom’s process for exiting the
European Union; foreign currency exchange rate fluctuations; our
relationships with our distribution channel partners, including the
financial viability of our distributors and dealers; risks
associated with acquisitions; management of our alliances or joint
ventures, including Red Iron Acceptance, LLC; the costs and effects
of enactment of, changes in and compliance with laws, regulations
and standards, including those relating to consumer product safety,
accounting, taxation, trade and tariffs, healthcare, and
environmental, health and safety matters; unforeseen product
quality problems; loss of or changes in executive management or key
employees; the occurrence of litigation or claims, including those
involving intellectual property or product liability matters; and
other risks and uncertainties described in our most recent annual
report on Form 10-K, subsequent quarterly reports on
Form 10-Q, and other filings with the Securities and Exchange
Commission. We make no commitment to revise or update any
forward-looking statements in order to reflect events or
circumstances occurring or existing after the date any
forward-looking statement is made.
THE TORO COMPANY AND SUBSIDIARIES Condensed
Consolidated Statements of Earnings (Unaudited) (Dollars and
shares in thousands, except per-share data)
Three Months Ended
Fiscal Years Ended October 31,
October 31, October 31, October
31, 2017 2016
2017 2016 Net sales $
488,627 $ 468,356 $ 2,505,176 $ 2,392,175 Gross profit 184,258
172,137 920,837 874,595 Gross profit percent 37.7 % 36.8 % 36.8 %
36.6 % Selling, general and administrative expense
136,798 128,623
565,727 540,199
Operating earnings 47,460 43,514 355,110 334,396 Interest expense
(4,804 ) (5,315 ) (19,113 ) (19,336 ) Other income, net
4,271 3,535
17,187 15,400
Earnings before income taxes 46,927 41,734 353,184 330,460
Provision for income taxes 13,079
11,504 85,467
99,466 Net earnings
$ 33,848 $ 30,230
$ 267,717 $ 230,994
Basic net earnings per share of common stock
$ 0.31 $ 0.28 $
2.47 $ 2.10
Diluted net earnings per share of common stock $ 0.31
$ 0.27 $ 2.41
$ 2.06 Weighted-average number of
shares of common stock outstanding — Basic 107,929 109,546 108,312
109,834 Weighted-average number of shares of common stock
outstanding — Diluted 110,731
111,667 111,252
111,987
Segment Data
(Unaudited) (Dollars in thousands)
Three Months Ended
Fiscal Years Ended October 31,
October 31, October 31, October
31, Segment Net Sales 2017
2016 2017
2016 Professional $ 360,436 $ 343,483 $ 1,811,705 $
1,705,312 Residential 122,596 118,801 673,247 669,131 Other
5,595 6,072
20,224 17,732
Total* $ 488,627 $ 468,356
$ 2,505,176 $ 2,392,175
*Includes International Sales
of: $ 139,610 $ 129,011
$ 611,927 $ 579,588
Three Months Ended
Fiscal Years Ended October 31, October 31,
October 31, October 31, Segment Earnings (Loss)
Before Income Taxes 2017
2016 2017 2016
Professional $ 64,951 $ 59,749 $ 379,496 $ 352,060 Residential
11,739 9,197 74,704 73,691 Other (29,763 )
(27,212 ) (101,016 )
(95,291 ) Total $ 46,927
$ 41,734 $ 353,184
$ 330,460
THE TORO COMPANY AND
SUBSIDIARIES Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands)
October 31, October 31,
2017 2016
ASSETS
Cash and cash equivalents $ 310,256 $ 273,555 Receivables, net
183,073 163,265 Inventories, net 328,992 307,034 Prepaid expenses
and other current assets 37,565
35,155 Total current assets 859,886
779,009 Property, plant, and equipment,
net 235,230 222,038 Long-term deferred income taxes 64,083 57,228
Goodwill and other assets, net 334,588
326,297 Total assets $ 1,493,787
$ 1,384,572
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current portion of long-term debt $ 26,258 $ 22,484 Accounts
payable 211,752 174,668 Accrued liabilities
283,786 266,687 Total current liabilities
521,796 463,839
Long-term debt, less current portion 305,629 328,477 Deferred
revenue 24,761 11,830 Long-term deferred income taxes 1,726 — Other
long-term liabilities 22,783
30,391 Total stockholders’ equity
617,092 550,035 Total liabilities and
stockholders’ equity $ 1,493,787 $
1,384,572
THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
Fiscal Years Ended October 31,
October 31, 2017
2016 Cash flows from operating activities: Net earnings $
267,717 $ 230,994 Adjustments to reconcile net earnings to net cash
provided by operating activities: Non-cash income from finance
affiliate (9,960 ) (9,588 ) Distributions from finance affiliate,
net 8,050 9,848 Provision for depreciation and amortization 64,986
64,097 Stock-based compensation expense 13,517 10,637 Provision for
deferred income taxes (6,887 ) 10,075 Other 202 (464 ) Changes in
operating assets and liabilities, net of effect of acquisitions:
Receivables, net (17,701 ) 15,785 Inventories, net (15,611 ) 23,192
Prepaid expenses and other assets (3,424 ) (905 ) Accounts payable,
accrued liabilities, deferred revenue and other long-term
liabilities 59,859
30,614 Net cash provided by operating activities
360,748 384,285
Cash flows from investing activities: Purchases of property, plant
and equipment (58,276 ) (50,723 ) Proceeds from asset disposals 199
310 Proceeds from sale of a business — 1,500 Purchase of
noncontrolling interest (1,500 ) — Acquisition, net of cash
acquired (24,181 ) —
Net cash used in investing activities
(83,758 ) (48,913 ) Cash flows from financing
activities: Short-term debt repayments, net — (1,161 ) Payments on
long-term debt (19,136 ) (24,107 ) Proceeds from exercise of stock
options 10,274 20,226 Payments of withholding taxes for stock
awards (1,294 ) (2,013 ) Purchases of Toro common stock (159,354 )
(109,986 ) Dividends paid on Toro common stock
(75,758 ) (65,890 ) Net cash used in financing
activities (245,268 )
(182,931 ) Effect of exchange rates on cash and cash equivalents
4,979 (5,161 ) Net
increase in cash and cash equivalents 36,701
147,280 Cash and cash
equivalents as of the beginning of the fiscal period
273,555 126,275 Cash and
cash equivalents as of the end of the fiscal period $
310,256 $ 273,555
The company early adopted ASU No. 2016-15, Statement of Cash
Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments, retrospectively effective November 1, 2016. The adoption
of this guidance changed the classification for "Distributions from
finance affiliate, net" from an investing activity to an operating
activity on the Consolidated Statements of Cash Flows. The adoption
of this guidance resulted in a $8,050 and $9,848 increase in cash
flows from operating activities for the twelve months ended October
31, 2017 and October 31, 2016, respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171207005218/en/
The Toro CompanyInvestor RelationsHeather Hille,
952-887-8923Director, Investor
Relationsheather.hille@toro.comorMedia RelationsBranden
Happel, 952-887-8930Senior Manager, Public
Relationsbranden.happel@toro.com
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