BLOOMINGTON, Minn. - The Toro Company reported Dec. 6, 2000, that it hit record sales and profitability for the fiscal 2000 year ending Oct. 31. The company credited its professional segment’s strong sales of Toro and Exmark brand landscape contractor equipment and other commercial as the year’s catalysts for growth.
Net income for fiscal 2000 increased 29.2 percent to $45.3 million, compared to $35.1 million in fiscal 1999 after restructuring and other unusual expenses. Net sales for the period were $1.34 billion, an increase of 4.9 percent over fiscal 1999 sales of $1.28 billion.
Toro posted fourth quarter 2000 net income of $1.0 million, compared to a $.2 million loss in the fourth quarter of fiscal 1999 after restructuring and other unusual expenses. Net sales for the quarter were $269.7 million, compared to $265.8 million for the comparable 1999 period.
Kendrick Melrose, chairman and CEO of Toro, said, “Overall, most of our markets had a good year for sales and profitability, and we are taking aggressive action to fix those areas that struggled. The introduction of our ‘5 by Five’ profit improvement program has created a strong sense of process improvement and expense management, and this is transforming Toro into a more efficient leader in the turf industry.”
SEGMENT RESULTS
Professional - The professional segment of Toro increased sales by 7.6 percent for the year due to strong sales of landscape contractor equipment, both Toro and Exmark brands, and commercial equipment sales, according to the company. The landscaping, golf and grounds markets continue to be robust for equipment sales. Golf irrigation sales declined due to the reduction of new course construction and product issues. The company is beginning to focus on the golf course renovation market to offset the expected downturn in new golf course construction. Toro brand contractor-installed irrigation systems were down due to product issues and delays in new product introductions.
Operating earnings for the professional segment were $99.4 million compared to $112.9 million last year. Toro said the decrease was due to a charge for an investment in a technology company, currency losses and lower earnings from the irrigation businesses. These items more than offset overall improvements in operating earnings for domestic landscape contractor, domestic commercial equipment and international markets.
Residential - Residential segment sales declined for the year by 4.1 percent due primarily to the discontinuance of the low-voltage lighting and gas hand-held product lines. Operating earnings for the residential segment increased to $35.7 million, compared to $21.2 million last year.
Other Segment - Operating losses for the other segment, comprised of company-owned distributors and corporate expenses, decreased by 17.5 percent to $63.3 million, compared to $76.7 million last year.
REVIEW OF OPERATIONS
- Gross margins for the year improved to 36.8 percent for the year, compared to 36.0 percent for fiscal 1999, and gross margin for the quarter improved to 35.9 percent, up from 35.0 percent for the same period last year.
- Selling, general and administration expenses, excluding restructuring and other unusual expenses, declined as a percent of sales for the full year and the fourth quarter due to better expense management and lower levels of incentive expense.
- Interest expense increased by $2.5 million from last year due to higher interest rates and higher average borrowing levels related to higher average levels of inventory. Other income for the year was $1.1 million compared to $6.5 million last year. The reduction is due to currency losses related to the decline of the Euro and Australian dollar versus the U.S. dollar, an investment charge related to an investment in a technology company and a lower level of interest income.