- Fiscal 2016 net earnings per share for
the year up 15.7 percent to a record $2.06
- Professional segment drives solid
performance for the year
- Quarterly cash dividend increased 16.7
percent to $0.175 per share
The Toro Company (NYSE: TTC) today reported net earnings of
$231.0 million, or $2.06 per share, on a net sales increase of 0.1
percent to $2.392 billion for its fiscal year ended October 31,
2016. In fiscal 2015, the company delivered net earnings of $201.6
million, or $1.78 per share for the year, on net sales of $2.391
billion.
For the fourth quarter, Toro reported net earnings of $30.2
million or $0.27 per share, on a net sales decrease of 2.6 percent
to $468.4 million. In the comparable 2015 period, the company
posted net earnings of $23.6 million on net sales of $480.8
million.
Shares and per share data have been adjusted for all periods
presented to reflect a two-for-one stock split effective September
16, 2016.
The company also announced that its board of directors has
declared a quarterly cash dividend of $0.175 per share, a 16.7
percent increase from its previous quarterly dividend rate of $0.15
per share. This dividend is payable on January 12, 2017 to
shareholders of record on December 27, 2016. For the fiscal year,
the company returned almost $178 million to shareholders through
the payment of $65.9 million in dividends and the repurchase of
approximately 2.7 million shares of common stock.
“We are pleased to announce record earnings for fiscal 2016,
driven by consistent performance and growth in our professional
businesses,” said Richard M. Olson, Toro’s president and chief
executive officer. “New product introductions across the portfolio
were favorably received and we made notable progress in reducing
our inventory levels. Despite challenges presented by negative
currency conditions and a lack of in-season snowfall, we benefitted
from solid demand for our golf equipment and irrigation products
and we gained share in those markets. Similarly, we saw increased
momentum in our landscape contractor, specialty construction and
rental businesses due to the success of new products such as the
TITAN® HD zero turn mower and the Dingo® TX 1000.”
“I am proud of our team’s efforts to increase productivity while
prudently managing expenses, all of which helped drive our
performance,” said Olson. “It is the collective contributions of
our engaged employees that make these results possible. I would
like to thank our entire team, including our channel partners
worldwide. It is their dedication and commitment that helps us
achieve these consistent results.”
“With fiscal 2017 already underway, we remain committed to
delivering innovative products and serving customers across our
businesses. As anticipated, pre-season demand for snow and ice
management products was affected by the lack of snowfall last
winter. However, mild autumn conditions extended the growing season
in several areas, which benefitted our turf maintenance businesses.
Recent weather patterns appear promising, and we are encouraged by
the resulting retail activity. We will pay careful attention to
inventory levels while ensuring we remain responsive to customer
demand. As we embark on the last year of our Destination Prime
employee initiative, we are committed to growth and profitability,
while maintaining focus on working capital management. As always,
we recognize that unfavorable weather conditions could negatively
impact demand throughout the year, but we will maintain a steady
approach in executing on our initiatives in the months ahead.”
For fiscal 2017, the company expects revenue growth to be about
3 to 4 percent, and net earnings to be about $2.20 to $2.26 per
share. For the first quarter, the company expects net earnings to
be about $0.34 to $0.36 per share.
SEGMENT RESULTS
Professional
- Professional segment net sales for
fiscal 2016 totaled $1.705 billion, up 4.0 percent from $1.640
billion last year. Strong performance across our professional
businesses drove the positive results for the year. Solid demand
for our golf equipment, Toro branded landscape contractor
equipment, as well as the success of the Dingo TX 1000 contributed
to the growth for the year. For the fourth quarter, professional
segment net sales were $343.5 million, up 5.6 percent from the
comparable fiscal 2015 period. The growth was driven largely by the
strong demand for golf products paired with favorable weather
conditions experienced in the quarter. The sales growth for both
periods was somewhat offset by the lighter snowfall during the 2016
winter season.
- Professional segment earnings for
fiscal 2016 totaled $352.1 million, up 14.3 percent from $308.0
million from the prior year. For the fourth quarter, professional
segment earnings were $59.7 million, up from $49.3 million in the
comparable fiscal 2015 period.
Residential
- Residential segment net sales for
fiscal 2016 were $669.1 million, down 7.8 percent from $725.7
million last year. Mild in-season winter conditions paired with a
soft snow pre-season to wrap up the fiscal year are the main
contributors to the decline. For the fourth quarter, residential
segment net sales were $118.8 million, down 19.2 percent from the
comparable fiscal 2015 period. A decrease in sales of residential
snow products was the largest contributing factor to the decline.
The negative sales impact for both periods was somewhat offset by
strong demand for our walk power mowers.
- Residential segment earnings for fiscal
2016 totaled $73.7 million, down 13.3 percent from fiscal 2015. For
the fourth quarter, residential segment earnings were $9.2 million,
down from $15.8 million in the comparable fiscal 2015 period.
OPERATING RESULTS
Gross margin as a percent of sales for fiscal 2016 was up 160
basis points from last year to 36.6 percent. For the fourth
quarter, gross margin as a percent of sales increased 170 basis
points to 36.8 percent. For both periods, favorable commodity costs
and enhanced productivity, as well as segment mix, contributed to
the increases. These increases were partially offset by the impacts
of unfavorable currency exchange rates for both the quarter and the
fiscal year.
Selling, general and administrative (SG&A) expense as a
percent of sales for fiscal 2016 increased 10 basis points to 22.6
percent compared to last year. For the fourth quarter, SG&A
expense as a percent of sales increased 10 basis points to 27.5
percent.
Operating earnings as a percent of sales for fiscal 2016
improved 150 basis points from last year to 14.0 percent. For the
fourth quarter, operating earnings improved 160 basis points to 9.3
percent of sales.
The effective tax rate for fiscal 2016 was 30.1 percent,
compared to 30.7 percent last year. The decrease was due to
favorable one-time adjustments and the permanent extension of the
domestic research tax credit.
Accounts receivable at the end of fiscal 2016 totaled $163.3
million, down 7.8 percent from last year. Net inventories were
$307.0 million, down 8.2 percent from last year. Trade payables
were $174.7 million, up 14.9 percent from last 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 $2.4
billion in fiscal 2016, Toro’s global presence extends to more than
90 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 8, 2016 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 8, 2016. 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 operations and markets,
including political, economic and/or social instability, tax and
trade policies in the countries in which we manufacture or sell our
products, and implications of the United Kingdom’s vote to exit 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,
conflict mineral disclosure, 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, 2016 2015
2016 2015 Net sales $ 468,356 $ 480,807 $ 2,392,175 $
2,390,875 Gross profit 172,137 168,574 874,595 835,935 Gross profit
percent 36.8 % 35.1 % 36.6 % 35.0 % Selling, general, and
administrative expense 128,623
131,742 540,199
536,821 Operating earnings 43,514 36,832 334,396
299,114 Interest expense (5,315 ) (4,686 ) (19,336 ) (18,757 )
Other income, net 3,535
3,159 15,400
10,674 Earnings before income taxes 41,734 35,305 330,460
291,031 Provision for income taxes 11,504
11,751 99,466
89,440 Net earnings $
30,230 $ 23,554 $ 230,994
$ 201,591
Basic net earnings per share of
common stock $ 0.28 $ 0.21
$ 2.10 $ 1.81
Diluted net earnings per share of common stock $ 0.27
$ 0.21 $ 2.06 $
1.78 Weighted-average number of shares of
common stock outstanding – Basic 109,546 110,099 109,834 111,130
Weighted-average number of shares of common stock
outstanding – Diluted 111,667 112,587 111,987 113,514 Shares
and per share data have been adjusted for all periods presented to
reflect a two-for-one stock split effective September 16, 2016.
Segment Data (Unaudited) (Dollars in
thousands) Three Months Ended
Fiscal Years Ended October 31, October 31, October
31, October 31, Segment Net Sales 2016 2015
2016 2015 Professional $ 343,483 $ 325,185 $
1,705,312 $ 1,639,659 Residential 118,801 147,095 669,131 725,682
Other 6,072 8,527
17,732 25,534
Total* $ 468,356 $ 480,807
$ 2,392,175 $ 2,390,875
*Includes international sales of: $ 129,011
$ 135,724 $ 579,588
$ 610,635 Three Months
Ended Fiscal Years Ended October 31, October 31,
October 31, October 31, Segment Earnings (Loss) Before Income Taxes
2016 2015 2016 2015
Professional $ 59,749 $ 49,283 $ 352,060 $ 308,010 Residential
9,197 15,825 73,691 84,956 Other (27,212 )
(29,803 ) (95,291 )
(101,935 ) Total $ 41,734 $
35,305 $ 330,460 $ 291,031
THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) October 31,
October 31, 2016 2015
ASSETS
Cash and cash equivalents $ 273,555 $ 126,275 Receivables, net
163,265 177,013 Inventories, net 307,034 334,514 Prepaid expenses
and other current assets 35,155
34,782 Total current assets 779,009
672,584 Property, plant, and equipment, net 222,038
224,995 Long-term deferred income taxes 57,228 66,663 Goodwill and
other assets, net 329,243
339,416 Total assets $ 1,387,518 $ 1,303,658
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 22,484 $ 23,134 Short-term debt
— 222 Accounts payable 174,668 152,017 Accrued liabilities
266,687 268,361 Total current
liabilities 463,839 443,734
Long-term debt, less current portion 331,423 354,818
Deferred revenue 11,830 11,365 Other long-term liabilities 30,391
31,576 Total stockholders' equity 550,035
462,165 Total liabilities and stockholders' equity
$ 1,387,518 $ 1,303,658
THE
TORO COMPANY AND SUBSIDIARIES Condensed Consolidated
Statements of Cash Flows (Unaudited) (Dollars in
thousands)
Fiscal Years Ended October 31, October 31,
2016 2015 Cash flows from operating activities: Net
earnings $ 230,994 $ 201,591 Adjustments to reconcile net earnings
to net cash provided by operating activities: Non-cash income from
finance affiliate (9,588 ) (8,353 ) Provision for depreciation,
amortization, and impairment loss 64,097 63,143 Stock-based
compensation expense 10,637 10,836 Decrease in deferred income
taxes 10,075 200 Other (464 ) (128 ) Changes in operating assets
and liabilities, net of effect of acquisitions: Receivables, net
15,785 (25,647 ) Inventories, net 23,192 (52,656 ) Prepaid expenses
and other assets (905 ) (607 ) Accounts payable, accrued
liabilities, deferred revenue, and other long-term liabilities
18,119 48,490
Net cash provided by/(used in) operating activities
361,942 236,869
Cash flows from investing activities: Purchases of property,
plant, and equipment (50,723 ) (56,374 ) Proceeds from asset
disposals 310 179 Distributions from finance affiliate, net 9,848
4,264 Proceeds from sale of a business 1,500 — Acquisition, net of
cash acquired —
(198,329 ) Net cash provided by/(used in) investing activities
(39,065 ) (250,260 )
Cash flows from financing activities: Repayments of
short-term debt (1,161 ) (21,283 ) Repayments of long-term debt
(24,107 ) (7,227 ) Excess tax benefits from stock-based awards
12,495 8,459 Proceeds from exercise of stock options 20,226 9,203
Purchases of Toro common stock (111,999 ) (106,964 ) Dividends paid
on Toro common stock (65,890 )
(55,549 ) Net cash provided by/(used in) financing
activities (170,436 )
(173,361 ) Effect of exchange rates on cash and cash
equivalents (5,161 ) (1,846 )
Net increase/(decrease) in cash and cash equivalents
147,280 (188,598 )
Cash and cash equivalents as of the beginning of the fiscal period
126,275 314,873
Cash and cash equivalents as of the end of the fiscal period
$ 273,555 $ 126,275
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161208005195/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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