Well good afternoon ladies and gentlemen. Welcome to Toro Company's 2012 annual meeting of shareholders. My name is Mike Hoffman and I'm the Chairman and CEO. This meeting is being webcast and I would like to extend a special welcome to those listening. As you can see here from our agenda, following instructions we will conduct the formal portion of our annual meeting. I will then spend a few minutes talking to you about our business.
Before we adjourn to enjoy some refreshments and to view some of the new products that we have on display, I will be happy to take any questions. I would ask that you hold your questions until that time. I would now like to introduce the independent members of our Board of Directors. Please hold your applause until all of our directors have been introduced.
Robert Buhrmaster, the Retired Chairman and Chief Executive Officer of Jostens and our presiding non-management Director; Janet Cooper the Retired Senior Vice President and Treasurer of Qwest Communications International; Gary Ellis, the Senior Vice President and Chief Financial Officer of Medtronic; Jeff Ettinger, the Chairman, President and Chief Executive Officer of Hormel Foods; Kathy Harless, the Retired President and Chief Executive Officer of Idearc; Bob Nassau, the Retired President and Chief Executive Officer of St. Raymond Wood Products; Gregg Steinhafel, the Chairman, Chief Executive Officer and President of Target; and Chris Twomey, the current Chairman and Retired Chief Executive Officer of Arctic Cat. Please join me in thanking these directors for all of their contributions to the Toro Company.
On behalf of the Company and the Board I would like to extend a special thank you to Inge Thulin who resigned from our board today. As many of you know Inge was recently elected as the President and Chief Executive Officer of 3M and plans to focus his time and efforts exclusively in this new role. During his years of service on our Board, Inge used his significant international expertise to help us to continue to successfully increase our global presence and to grow our international revenues. Please join me in thanking Inge for his many contributions to the Toro Company.
I would also like to introduce the representatives from KPMG, our accounting firm who are with us today. They are Tim Forstad and Heike Drake-Cavalletti, please welcome Tim and Heike.
With that I will now call our 2012 annual shareholders meeting to order. I would like to introduce Amy Dahl, our Assistant Corporate Secretary who will conduct the formal portion of the meeting. Amy?
Thank you Mike and good afternoon shareholders. We previously received an affidavit of distribution establishing that notice of this meeting was duly given. All shareholders of record at the close of business on January 23rd 2012, the record date for this meeting are entitled to vote at the meeting. Mr. Anthony [Crudele] of Broadridge is here with us today and has been appointed as an independent Inspector of Election for the meeting. Please help me welcome Tony.
Immediately prior to the meeting, we were informed by the Inspector of Election that more than 27.8 million shares or approximately 92% of our common stock is represented today in person or by proxy. Therefore we have a quorum. Because the notice of this meeting was duly given and the quorum is present, this meeting is duly convened for purposes of transacting the business to properly come before it.
The polls are now open and will remain open during the presentation of the items to be voted upon at the meeting. If anybody would like a ballot, please raise your hand and one will be provided. As most of you know, if you previously voted by proxy you don't need to vote by ballot today. Our first order of business is the election of three directors, each to serve for a three-year term ending at our 2015 annual meeting. Our nominees are Janet Cooper, Gary Ellis and Gregg Steinhafel.
The second order of business is the ratification of KPMG as our independent, registered public accounting firm for the fiscal year ending October 31, 2012.
And the third and final order of business is the advisory vote on executive compensation or the say-on-pay vote.
And with that I hereby declare the polls closed. Prior to the meeting the inspector of elections determined that pending tabulations, each of our nominees for election to the Board has received an excess of 97% in the votes cast, and has been reelected.
The selection of KPMG as our fiscal 2012 independent registered public accounting firm has received in excess of 98% of votes cast and has been ratified and the say-on-pay advisory vote received an excess of 94% of the votes cast and has been approved.
Final tabulation of these votes will appear in our required Form 8-K to be filed with the SEC.
This shall conclude the formal portion of our 2012 annual shareholders meeting. Before I turn the meeting back over to Mike, I just like to remind you about our forward-looking statement policy. The Safe Harbor portions of our SEC filings detail some of the important risks factors that may cause actual results to differ from those in our predictions.
And with that, I will now turn the meeting back over to Mike. Thank you
Thank you, Amy. With the formal portion of our 2012 annual meeting concluded, I would like to take a few minutes up and before formally adjourning the meeting and to give a update to you on the business of the company.
Let’s start with a look back. FY ‘11 was a very good year for the Toro Company. Net sales grew to a record $1.884 billion and so we had an opportunity to get back from the challenge of recession in 2009. We grew earnings per share by 33% to $3.70 per share. We repurchased approximately $130 million worth of company stock and we increased the regular quarterly dividends once again.
Additionally we made good progress against our destination 2014 goal. This is something we put in place at the beginning of F’2011. The goals were to drive our organic growth each year for the next four years 11, 12, 13 and 14 bringing us to our 100th anniversary by at least $100 million.
We also have the goal of driving operating earnings to 12% by 2014. As we reflect back on F11, we more than almost doubled our annual goal of $100 million. It came very close to $200 million. We saw a nice improvement in operating earnings from 8.9% to 9.8%.
We continued to look for growth beyond our existing businesses completing a couple of important acquisitions in F’11. They were unique lighting and lawn solutions. So one coupled with our irrigation business and one with our Sitework Systems business. And now more recently we have completed acquisitions with Graden and Astec Underground and I will talk a little more about these in a minute.
Our F’11 results show the company’s investment priorities remain on track. First, achieving healthy, organic through innovation. Second, extending the reach both within our existing businesses as well as into new fields through thoughtful acquisitions. Third, returning value to shareholder via dividends and share repurchases.
Let me just make a couple of comments on each of these. So the area of driving a growth in innovation here within the company; innovation has been right at the heart of Toro’s success for nearly 100 years. We continue to strive to achieve market by providing innovative product and service solutions for our customers across our range of businesses.
We have a goal of achieving at least 35% of revenues from new products introduced over the last three years and as you can see, we have done that now consistently for the last several years. 2011 was an excellent year for new products and we have a solid portfolio of new products headed into 2012.
Beyond new products, we look to drive growth with acquisitions. Two of the more recent acquisitions I mentioned just a minute ago demonstrate how the company’s growth is bolstered by the strategy. First, the Graden Greens Rollers filled an important gap in our golf and strengthens our leadership position in Greens maintenance; a position we established way back in 1924 with the introduction of our first greens mower.
Second, the Astec Underground products business allows us to offer a whole new range of products to both current total customers and new ones. This will address about $500 million market. The products acquired include horizontal directional drills, trenchers and vibratory plows. These are used for trenching, for installing repairing and replacing utility lines, for using the horizontal drills to minimize the collateral damage by going underneath landscapes and structures. And again, our customers will include landscape and irrigation contractors, municipalities as well as telecommunications and utility companies.
The past decade has been a very good one for Toro shareholders. We continue to focus on innovation, on increasing efficiencies and productivity and using our strong cash position to invest in profitable growth opportunities. We have also increased dividends consistently over the last eight years.
In addition to dividends, we have consistently repurchased shares over that same period of time. And in terms of stock performance, we have seen good results; you can see here, and this through 2011 and they’re even better year-to-date today.
Our business fundamentals are strong and we have good momentum heading into the New Year. So quick snapshot of where we stand as we look at the New Year. We are very much off to a promising start.
First quarter revenues, first quarter net earnings and first quarter earnings per share, all set new company performance records. We are well positioned with a host of new innovative products and once again we expect to deliver solid growth results for the year.
If we achieve the anticipated revenue growth that we talked about previously in F’12, the company will surpass the $2 billion mark for the first time in its history and that's a major milestone. That is very much part of the destination 2014 journey.
One of our major businesses is the golf industry, the golf maintenance industry and we recently attended our golf industry tradeshow. This slide shows a picture of our booth act with enthusiastic customers during this highly successful event and in many ways our competitors and with the traffic that the Toro booth enjoys and has enjoyed over the years.
It’s a fitting backdrop for kind of my concluding comments regarding the results of an independent survey of Golf Course Superintendents conducted by Golf Course Industry Magazine. The results were reported in their December 2011 issue. Golf Course Industry asked the Golf Course Superintendents to rate all of their suppliers, and like I say, we are both humbled and pleased to see these results.
Toro was named number one in all relevant categories whether that was in the irrigation business, the chemical business, the seed and fertilizer business or the equipment business. Toro was seen as the most admired company. Toro was seen as the most trustworthy company that these people deal with. These results speak to the key foundational factors of our past, our present and our future success.
On July 10, 2014, we will join in the words of management guru Jim Collins a special and verified group of companies that survive a 100 years or longer. Our company to approach this, our centennial year in a position of strength is attributed to the conviction of our people throughout the years. The relationships, innovation and excellence of our employees, valued channel partners and their predecessors have and continue to develop, strengthen our overall position in the market. So the journey continues.
So in conclusion, I want to thank all of our shareholders for their confidence; you continue to show in the people of this company. On behalf of our dedicated team, I guarantee you that our commitment to continuing to enhance shareholder value remains ever bullish.
Before we adjourn, our management team as well as KPMG will be happy to take any questions at this time.
[No Q&A session for this event]
As there appear to be no questions, we will now close the meeting. And thank you for joining us today. For those here at headquarters, new products are on display. Please feel free to go out here and take a closer look while you enjoy some refreshments and for those listening on the webcast please have a great day. Thank you.
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