- Full-year reported diluted EPS of $3.78; *Adjusted diluted EPS of $3.62, up 19.9% year over year
- Fourth-quarter net sales up 14.2% year over year to $960.7 million; Professional segment net sales up 13.7%, Residential segment net sales up 19.8%
- Fourth-quarter reported and *adjusted diluted EPS of $0.56
- Full-year fiscal 2022 guidance of *adjusted diluted EPS in the range of $3.90 to $4.10 per diluted share
BLOOMINGTON, Minn. — The Toro Company (NYSE: TTC) today reported results for its fiscal fourth-quarter and full-year periods ended October 31, 2021.
“We exceeded our top- and bottom-line guidance for fiscal 2021, driving double-digit net sales growth for both the quarter and full-year for our professional and residential segments,” said Richard M. Olson, chairman and chief executive officer. “We delivered these solid results, despite global supply chain challenges and inflationary pressures. Once again, with great resolve our employees and channel partners collaborated to serve the needs of our customers.
“We also continued to lead the way in offering no compromise, sustainable solutions across both segments. In October, we launched our battery-powered Revolution Series stand-on and zero-turn riding mowers. Equipped with our proprietary Horizon360 business management software and HyperCell battery system, these commercial-grade products enable a smarter, more connected fleet and will run a full work day on a single charge. For residential customers, we added a two-stage snow thrower to our ever-expanding Flex-Force 60V product lineup. We are positioning the company for future growth with continued investments in capacity and the key technology areas of alternative power, smart connected and autonomous.”
FOURTH-QUARTER FISCAL 2021 FINANCIAL HIGHLIGHTS
- Net sales of $960.7 million, up 14.2% from $841.0 million in the fourth quarter of fiscal 2020.
- Net earnings of $60.1 million, down 16.7% from $72.2 million in the fourth quarter of fiscal 2020; *adjusted net earnings of $59.7 million, down 13.7% from $69.2 million in the fourth quarter of fiscal 2020.
- Reported EPS of $0.56 per diluted share versus $0.66 per diluted share in the fourth quarter of fiscal 2020; *adjusted EPS of $0.56 per diluted share versus $0.64 per diluted share in the fourth quarter of fiscal 2020.
FULL-YEAR FISCAL 2021 FINANCIAL HIGHLIGHTS
- Net sales of $3.96 billion, up 17.2% from $3.38 billion last year.
- Net earnings of $409.9 million, up 24.3% from $329.7 million last year; *adjusted net earnings of $392.7 million, up 19.8% from $327.7 million in fiscal 2020.
- Reported EPS of $3.78 per diluted share, up 24.8% from $3.03 per diluted share last year; *adjusted EPS of $3.62 per diluted share, up 19.9% from $3.02 per diluted share in fiscal 2020.
- Deployed $100.0 million to pay down debt and returned $414.7 million to shareholders through regular dividends of $112.4 million and share repurchases of $302.3 million. As of October 31, 2021, the company had ample liquidity of $1.0 billion.
OUTLOOK
“As we enter the new fiscal year, we continue to see robust demand for our innovative products and remain focused on serving our customers,” added Olson. “We are encouraged by the benefits we are realizing from our productivity initiatives and pricing actions. At the same time, we anticipate the challenging macro environment will continue for at least the near term. We will remain focused on managing our expenses prudently, while also prioritizing investments that support long-term, sustainable growth across our businesses.
“I would like to thank our team for coming together to perform and exceed our fiscal 2021 Power Forward employee initiative goals for net sales and adjusted operating earnings. I am excited to announce our new three-year Drive for Five initiative, which will continue to align and engage employees across the enterprise toward collective goals. The core focus of the new initiative will be to exceed $5 billion in annual net sales through organic growth, while improving profitability, by the end of fiscal 2024. We have strong momentum heading into the new fiscal year, guided by our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people.”
For fiscal 2022, management expects net sales growth in the range of 8% to 10% and *adjusted EPS in the range of $3.90 to $4.10 per diluted share. This estimated *adjusted diluted EPS range excludes the tax benefits recorded as excess tax deductions for stock compensation. This guidance is based on current visibility and reflects expectations for a strong demand environment and increasing net price realization, coupled with the continuation of a challenging operating environment.
FISCAL FOURTH-QUARTER AND FULL-YEAR SEGMENT RESULTS
Professional Segment
- Professional segment net sales for the fourth quarter were $732.5 million, up 13.7% compared with $644.0 million in the same period last year. The increase was primarily driven by net price realization and strong demand for products in our landscape contractor and golf and grounds markets worldwide.
For fiscal 2021, professional segment net sales were $2.93 billion, up 16.1% from $2.52 billion last year. The increase was mainly driven by broad-based demand across the portfolio, led by increased sales of landscape contractor zero-turn riding mowers, and net price realization.
- Professional segment earnings for the fourth quarter were $101.0 million, down 3.0% compared with $104.2 million in the same period last year, and when expressed as a percentage of net sales, 13.8%, down from 16.2% in fiscal 2020. The decrease was largely due to higher material and freight costs, partially offset by net price realization, volume leverage and productivity improvements.
Full-year fiscal 2021 professional segment earnings were $507.3 million, up 18.9% compared with $426.6 million in the prior fiscal year, and when expressed as a percentage of net sales, 17.3%, up from 16.9% last year. The increase was mainly driven by net price realization, volume leverage, productivity improvements and product mix, partially offset by higher material and freight costs.
Residential Segment
- Residential segment net sales for the fourth quarter were $225.2 million, up 19.8% compared with $187.9 million in the same period last year. The increase was primarily due to net price realization and strong retail demand for zero-turn riding mowers.
For fiscal 2021, residential segment net sales were $1.01 billion, up 23.1% compared with $820.7 million last year. The increase was mainly driven by strong retail demand for zero-turn riding and walk power mowers, net price realization, and increased sales of snow thrower and 60V Flex-Force battery-powered home solutions products.
- Residential segment earnings for the fourth quarter were $11.9 million, down 55.1% compared with $26.4 million in the same period last year, and when expressed as a percentage of net sales, 5.3%, down from 14.1% in fiscal 2020. The decrease was largely driven by higher material, manufacturing and freight costs, partially offset by net price realization, product mix, volume leverage and productivity improvements.
For fiscal 2021, residential segment earnings increased 6.9% to $121.5 million, compared with $113.7 million last year, and when expressed as a percentage of net sales, decreased to 12.0% from 13.8% in fiscal 2020. The decrease was mainly driven by higher material and freight costs, partially offset by net price realization, productivity improvements, volume leverage and product mix.
OPERATING RESULTS
Gross margin for the fourth quarter was 30.1%, compared with 35.7% for the same prior-year period. The decrease was primarily due to higher material and freight costs, partially offset by net price realization.
For fiscal 2021, gross margin was 33.8%, compared with 35.2% for fiscal 2020. *Adjusted gross margin for fiscal 2021 was 33.8%, compared with 35.4% for fiscal 2020. The decreases in reported and *adjusted gross margin were primarily driven by higher material and freight costs, which were partially offset by net price realization, productivity improvements and product mix.
SG&A expense as a percentage of net sales for the fourth quarter was 22.4% compared with 24.6% in the prior-year period. The improvement was primarily driven by volume leverage, partially offset by higher indirect marketing expenses.
For fiscal 2021, SG&A expense as a percentage of net sales was 20.7%, compared with 22.6% in fiscal 2020. The improvement was primarily due to volume leverage and a favorable net legal settlement.
Operating earnings as a percentage of net sales were 7.7% for the fourth quarter, compared with 11.1% in the same prior-year period. For fiscal 2021, operating earnings as a percentage of net sales were 13.1%, compared with 12.6% in fiscal 2020. *Adjusted operating earnings as a percentage of net sales for fiscal 2021 were 12.8%, unchanged on a year-over-year basis.
Interest expense was down $1.0 million for the fourth quarter to $7.0 million, and down $4.5 million for the full year to $28.7 million, driven by lower debt levels and decreased interest rates.
The reported effective tax rates for the fourth quarter and full year were 13.3% and 18.0%, respectively, compared with 18.5% and 19.0% for fiscal 2020. The *adjusted effective tax rates for the fourth quarter and full year were 13.9% and 19.6%, respectively, compared with 21.9% and 20.9% for fiscal 2020. The decreases were primarily driven by the geographic mix of earnings and one-time adjustments related to prior years. The reported effective tax rate decreases were partially offset by lower tax benefits recorded as excess tax deductions for stock compensation.
