Form 8-K TORO CO For: Dec 07

December 7, 2017 8:31 AM


            
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
    
Date of Report (Date of earliest event reported): December 7, 2017

THE TORO COMPANY
(Exact name of registrant as specified in its charter)


Delaware
1-8649
41-0580470
(State of Incorporation)
(Commission File Number)
(I.R.S. Employer Identification Number)

8111 Lyndale Avenue South
     Bloomington, Minnesota     
(Address of principal executive offices)

   55420   
(Zip Code)
 
 
Registrant’s telephone number, including area code:
(952) 888-8801
            
                        Not Applicable                        
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
 
 
 
 





Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On December 7, 2017, The Toro Company announced its earnings for the three and twelve months ended October 31, 2017.

Attached to this Current Report on Form 8-K as Exhibit 99.1 is a copy of The Toro Company’s press release in connection with the announcement. The information in this Item 2.02, including the exhibit attached hereto, is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.








Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits.
Exhibit No.
Description
99.1







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
THE TORO COMPANY
 
(Registrant)
 
 
Date: December 7, 2017
By /s/ Renee J. Peterson
 
Renee J. Peterson
 
Vice President, Treasurer and
Chief Financial Officer






EXHIBIT INDEX

EXHIBIT NUMBER
DESCRIPTION
99.1





torologorgb.jpg

Investor Relations
Heather Hille
Director, Investor Relations
(952) 887-8923, heather.hille@toro.com

Media Relations
Branden Happel
Senior Manager, Public Relations
(952) 887-8930, branden.happel@toro.com

For Immediate Release

The Toro Company Reports Record Fiscal 2017 Results

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

BLOOMINGTON, Minn. (December 7, 2017) - 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.







2 - The Toro Company Reports Record Fiscal 2017 Results

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.












3 - The Toro Company Reports Record Fiscal 2017 Results

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 Company
The 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 CALL
December 7, 2017 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 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.















4 - The Toro Company Reports Record Fiscal 2017 Results

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 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.



(Financial tables follow)











5 - The Toro Company Reports Record Fiscal 2017 Results
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,
2017
 
October 31,
2016
 
October 31,
2017
 
October 31,
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
Segment Net Sales
 
October 31,
2017
 
October 31,
2016
 
October 31,
2017
 
October 31,
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
Segment Earnings (Loss) Before Income Taxes
 
October 31,
2017
 
October 31,
2016
 
October 31,
2017
 
October 31,
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






6 - The Toro Company Reports Record Fiscal 2017 Results
THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
 
 
October 31,
2017
 
October 31,
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




















7 - The Toro Company Reports Record Fiscal 2017 Results
THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
 
 
Fiscal Years Ended
 
 
October 31,
2017
 
October 31,
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.
###


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