The Toro Company Reports Record Results for Fiscal 2013

  The Toro Company Reports Record Results for Fiscal 2013

  *Fiscal 2013 sales increase to a record $2 billion
  *Operating earnings expand to 11.3 percent and a record $230.7 million
  *Net earnings per share for the year up 22 percent to a record $2.62
  *Quarterly cash dividend increased 43 percent to $0.20 per share

Business Wire

BLOOMINGTON, Minn. -- December 5, 2013

The Toro Company (NYSE: TTC) today reported net earnings of $154.8 million, or
$2.62 per share, on a net sales increase of 4.2 percent to $2,041.4 million
for its fiscal year ended October 31, 2013. In fiscal 2012, the company
delivered net earnings of $129.5 million, or $2.14 per share, on net sales of
$1,958.7 million.

For the fourth quarter, Toro reported net earnings of $5 million, or $0.08 per
share, on a net sales increase of 12.7 percent to $382.4 million. In the
comparable fiscal 2012 period, the company posted net earnings of $0.3 million
on net sales of $339.3 million.

The company also announced that its board of directors has declared a
quarterly cash dividend of $0.20 per share, an increase from its previous
quarterly dividend rate of $0.14 per share. This dividend is payable on
January 15, 2014, to shareholders of record on December 30, 2013. In addition,
the company increased its annual dividend guideline to 30 to 40 percent of its
three-year average net earnings per share, up from the previous guideline of
20 to 30 percent. In fiscal 2013, the company paid $32.5 million in dividends
and repurchased over 2 million shares of its common stock, returning more than
$130 million in total cash to its shareholders.

“The Toro Company completed a record year with new highs for revenues,
operating earnings and earnings per share,” said Michael J. Hoffman, Toro’s
chairman and chief executive officer. “We are particularly excited to have
crossed over the $2 billion revenue milestone for the first time in the
company’s history, a timely accomplishment as we head down the home stretch to
our Centennial in July 2014. In addition, we remain focused on returning value
to our shareholders, as demonstrated by the increase in both our annual
dividend guideline and quarterly cash dividend.”

“Looking across our businesses, Fiscal 2013 was a good year. I am extremely
proud of our team and their passion for innovation and serving our customers.
Of course we had our share of challenges, but we were able to successfully
manage through less than ideal weather conditions in the first half of the
year, as well as the phase-in of the Tier 4 diesel engine transition. Our
innovative new product offerings helped us to defend and grow our positions in
golf equipment and irrigation, landscape maintenance products, residential ZTR
mowers and handheld blowers and trimmers. Our recent acquisitions in the
rental and construction space are integrated and contributing. Demand for our
precision agriculture irrigation products continued to grow and we further
expanded our global presence with the closing of our China acquisition in the
fourth – Toro Reports Record Results for Fiscal 2013 quarter. And our efforts
on productivity are making a positive difference, helping to expand our
operating earnings to a record $230.7 million and 11.3 percent and continuing
our progress toward our Destination 2014 operating earnings goal.”

“For the fourth quarter, even with favorable comparisons to last year when we
saw soft preseason demand for our snow products, we delivered solid
performance. Practically all of our product lines contributed to our sales
growth and our expanded gross margins further evidence the traction we are
gaining with our productivity efforts.”

“Looking ahead to fiscal 2014, we are mindful of the mild expectations for our
world-wide economic environments, as well as the challenges that Mother Nature
can create for our businesses and customers. Nonetheless, we are cautiously
optimistic about the prospects for our end markets in this Centennial year.
Golf course development is progressing in key markets, housing and
construction continues to improve, and around the world customers are seeking
more efficient methods of irrigation. We are well-positioned across our
product portfolio to capitalize on growth in all of these areas. In addition,
our recent investments to expand the global footprint of our micro irrigation
business and grow our rental and construction market presence are yielding
positive results and will continue to gain momentum. While we hope that Mother
Nature will deliver favorable weather, that is out of our control. Instead, we
remain focused on the things that have made us successful for our first 100
years: developing innovative products, serving our customers and executing in
the marketplace. We continue to pursue our Destination 2014 goals in this
final year of our initiative and our employees are engaged to drive revenue
growth and further improve productivity.”

The company expects revenue growth for fiscal 2014 to be about 4 to 5 percent,
and net earnings to be about $2.85 to $2.90 per share. For the first quarter,
the company expects net earnings to be about $0.35 per share, with unfavorable
year-over-year quarterly comparisons due to increased sales accelerated into
the first quarter of last year by the Tier 4 diesel engine transition that
will not be repeated this year.

SEGMENT RESULTS

Professional

  *Professional segment net sales for fiscal 2013 totaled $1,425.3 million,
    up 7.2 percent over last year. Sales of landscape maintenance equipment
    increased on strong retail demand for our zero turn radius products and
    successful new product introductions—including our new TurfMaster™ heavy
    duty walk power mower, electronic fuel injection products and turf
    renovation products. Worldwide golf and irrigation sales were up as
    existing golf courses continued to replace aging equipment and irrigation
    systems with our offerings and new international golf course projects were
    awarded to us. Rental and construction equipment sales grew on increased
    demand for our products and incremental sales from recent acquisitions.
    Global micro irrigation sales increased with continued demand for more
    efficient irrigation solutions for agriculture. For the fourth quarter,
    professional segment net sales were $255.8 million, up 11.9 percent from
    the comparable fiscal 2012 period.
  *Professional segment earnings for fiscal 2013 totaled $254.4 million, up
    9.6 percent from the prior year. For the fourth quarter, professional
    segment earnings were $21.8 million, up 5 percent from the comparable
    fiscal 2012 period.

Residential

  *Residential segment net sales for fiscal 2013 were $594.4 million, down
    2.1 percent from last year. This slight decline largely was attributable
    to challenged preseason sales of snow products early in fiscal 2013 and
    unfavorable spring weather at the beginning of the key selling season.
    Sales benefitted from increased shipments of domestic residential riding
    products as consumers continued to transition to our zero turn radius
    mowers, including our Timecutter® line of Zs, and from higher demand for
    our handheld trimmer and blower products in the U.S. and Pope-branded
    irrigation products in Australia. For the fourth quarter, residential
    segment net sales were $116.6 million, up 14.3 percent from the comparable
    fiscal 2012 period. This increase primarily was due to improved preseason
    demand for snowthrowers as compared to our fiscal 2012 fourth quarter,
    with sales of worldwide residential riding products, handheld solutions
    and Pope irrigation products also contributing.
  *Residential segment earnings for fiscal 2013 totaled $62 million, up 7.2
    percent from fiscal 2012. For the fourth quarter, residential segment
    earnings were $10.1 million, up from $6.7 million in the comparable fiscal
    2012 period.

OPERATING RESULTS

Gross margin for fiscal 2013 improved 110 basis points from last year to 35.5
percent. The majority of the margin expansion was due to realized price,
product mix and productivity improvement, somewhat offset by unfavorable
currency exchange rates. For the fourth quarter, gross margin was up 30 basis
points to 33.6 percent.

Selling, general and administrative (SG&A) expense as a percent of sales
increased 30 basis points to 24.2 percent for fiscal 2013. For the fourth
quarter, SG&A expense as a percentage of sales decreased 70 basis points to
31.4 percent.

Other income for fiscal 2013 was $12.3 million, up $4.7 million from last
year. The increase primarily was due to a one-time legal recovery, as well as
lower foreign currency losses and higher income from our investment in Red
Iron Acceptance, our channel financing joint venture.

Operating earnings as a percent of sales improved 80 basis points to 11.3
percent for fiscal 2013 For the fourth quarter, operating earnings improved
100 basis points to 2.2 percent of sales compared to 1.2 percent last year.

Interest expense for fiscal 2013 was $16.2 million, down 4.1 percent compared
to fiscal 2012. For the fourth quarter, interest expense totaled $3.9 million,
down 5.2 percent from the same period last year.

The effective tax rate for the fiscal year was 31.7 percent compared with 34
percent last year, primarily due to the reinstatement of the Federal Research
and Engineering Tax Credit.

Accounts receivable at the end of the fiscal year totaled $157.2 million, up
6.6 percent from the prior year period. Net inventories were $240.1 million,
down 4.4 percent from the end of fiscal 2012. Trade payables were $136.2
million, up 9.1 percent compared with last year.

About The Toro Company
The Toro Company (NYSE: TTC) is a leading worldwide provider of innovative
turf, landscape, rental and construction equipment, and irrigation and outdoor
lighting solutions.With sales of more than $2 billion in fiscal 2013, Toro’s
global presence extends to more than 90 countries through strong relationships
built on integrity and trust, constant innovation and a commitment to helping
customers enrich the beauty, productivity and sustainability of the
land.Since 1914, the company has built a tradition of excellence around a
number of strong brands to help customers care for golf courses, sports
fields, public green spaces, commercial and residential properties and
agricultural fields.More information is available at www.thetorocompany.com.

LIVE CONFERENCE CALL
December 5, 2013 at 10:00 a.m. CST
www.thetorocompany.com/invest

The Toro Company will conduct its earnings call and webcast for investors
beginning at 10:00 a.m. CST on December 5, 2013. 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 Statements
This 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 expectations of future events, and often can be identified by words
such as "expect,” “strive,” “looking ahead,” “outlook,” “forecast,” “goal,”
“optimistic,” “anticipate,” “continue,” “plan,” “estimate,” “believe,”
“should,” “could,” “will,” “would,” “possible,” “may,” “likely,” “intend,” and
similar expressions.Forward-looking statements involve risks and
uncertainties that could cause actual 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 and tax policies in the countries in which we manufacture or sell
our products; 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, Tier 4 emissions requirements, conflict mineral disclosure, taxation,
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 undertake no obligation to update forward-looking statements
made herein to reflect events or circumstances after the date hereof.


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,
                   2013            2012            2013              2012
Net sales          $ 382,366       $ 339,294       $ 2,041,431       $ 1,958,690
Gross profit         128,648         112,899         724,797           673,094
Gross profit         33.6    %       33.3    %       35.5      %       34.4      %
percent
Selling,
general, and        120,241       108,792       494,135         467,481   
administrative
expense
Operating            8,407           4,107           230,662           205,613
earnings
Interest             (3,903  )       (4,115  )       (16,210   )       (16,906   )
expense
Other income,       4,841         2,324         12,261          7,555     
net
Earnings
before income        9,345           2,316           226,713           196,262
taxes
Provision for       4,395         2,065         71,868          66,721    
income taxes
Net earnings       $ 4,950        $ 251          $ 154,845        $ 129,541   
                                                                     
Basic net
earnings per       $ 0.09         $ 0.00         $ 2.67           $ 2.18      
share
                                                                     
Diluted net
earnings per       $ 0.08         $ 0.00         $ 2.62           $ 2.14      
share
                                                                     
Weighted
average number
of shares of
common               57,406          58,836          57,922            59,446

stock
outstanding –
Basic
                                                                     
Weighted
average number
of shares of
common               58,750          60,162          59,105            60,618

stock
outstanding –
Diluted
                                                                     


Segment Data (Unaudited)
(Dollars in thousands)
                                             
                  Three Months Ended              Fiscal Years Ended
                  October 31,   October 31,     October 31,     October 31,
Segment Net       2013            2012            2013              2012
Sales
Professional      $ 255,813       $ 228,605       $ 1,425,259       $ 1,329,504
Residential         116,622         102,036         594,411           607,435
Other              9,931         8,653         21,761          21,751    
Total *           $ 382,366      $ 339,294      $ 2,041,431      $ 1,958,690 
                                                                    
* Includes
international     $ 123,000       $ 113,842       $ 615,371         $ 594,313
sales of
                                                  
                                                  
                  Three Months Ended              Fiscal Years Ended
                  October 31,     October 31,     October 31,       October 31,
Segment
Earnings          2013            2012            2013              2012
(Loss) Before
Income Taxes
Professional      $ 21,807        $ 20,775        $ 254,424         $ 232,104
Residential         10,130          6,715           62,033            57,889
Other              (22,592 )      (25,174 )      (89,744   )      (93,731   )
Total             $ 9,345        $ 2,316        $ 226,713        $ 196,262   
                                                                    


THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
                                                          
                                               October 31,     October 31,
                                               2013            2012
ASSETS
Cash and cash equivalents                      $ 182,993       $  125,856
Receivables, net                                 157,171          147,410
Inventories, net                                 240,089          251,117
Prepaid expenses and other current assets        33,258           24,437
Deferred income taxes                           39,756          63,314
Total current assets                            653,267         612,134
                                                               
Property, plant, and equipment, net              185,096          180,523
Goodwill and other assets, net                  164,385         142,542
Total assets                                   $ 1,002,748     $  935,199
                                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt              $ —             $  1,858
Accounts payable                                 136,158          124,806
Accrued liabilities                             252,687         251,458
Total current liabilities                       388,845         378,122
                                                               
Long-term debt, less current portion             223,544          223,482
Deferred revenue                                 10,899           11,143
Deferred income taxes                            5,969            2,280
Other long-term liabilities                      14,753           7,770
Stockholders’ equity                            358,738         312,402
Total liabilities and stockholders’ equity     $ 1,002,748     $  935,199
                                                                  


THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
                                               
                                                  Fiscal Years Ended
                                                  October 31,    October 31,
                                                  2013             2012
Cash flows from operating activities:
Net earnings                                      $ 154,845        $ 129,541
Adjustments to reconcile net earnings to net
cash

provided by operating activities:
Noncash income from finance affiliate               (7,097   )       (5,996  )
Provision for depreciation, amortization, and       54,134           53,634
impairment losses
Stock-based compensation expense                    10,237           9,503
Decrease (increase) in deferred income taxes        149              (206    )
Other                                               10               (132    )
Changes in operating assets and liabilities,
net of effect of acquisitions:
Receivables, net                                    (11,912  )       (495    )
Inventories, net                                    9,373            (21,973 )
Prepaid expenses and other assets                   (6,825   )       (6,741  )
Accounts payable, accrued liabilities,
deferred revenue, and                              18,962         28,663  

other long-term liabilities
Net cash provided by operating activities          221,876        185,798 
                                                                   
Cash flows from investing activities:
Purchases of property, plant, and equipment         (49,427  )       (43,242 )
Proceeds from asset disposals                       413              491
Distributions from finance affiliate, net           6,342            5,091
Acquisitions, net of cash acquired                 (2,101   )      (9,663  )
Net cash used in investing activities              (44,773  )      (47,323 )
                                                                   
Cash flows from financing activities:
Repayments of short-term debt                       (415     )       (922    )
Repayments of long-term debt                        (1,739   )       (1,858  )
Excess tax benefits from stock-based awards         6,134            9,017
Proceeds from exercise of stock options             9,808            20,347
Purchases of Toro common stock                      (99,587  )       (93,395 )
Dividends paid on Toro common stock                (32,499  )      (26,230 )
Net cash used in financing activities              (118,298 )      (93,041 )
                                                                   
Effect of exchange rates on cash and cash          (1,668   )      (464    )
equivalents
                                                                   
Net increase in cash and cash equivalents           57,137           44,970
Cash and cash equivalents as of the beginning      125,856        80,886  
of the fiscal year
                                                                   
Cash and cash equivalents as of the end of        $ 182,993       $ 125,856 
the fiscal year
                                                                   

Contact:

The Toro Company
Investor Relations
Amy Dahl, 952-887-8913
Managing Director, Corporate Communications and Investor Relations
amy.dahl@toro.com
or
Media Relations
Branden Happel, 952-887-8930
Senior Manager, Public Relations
branden.happel@toro.com
 
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