Toro Company (The) (TTC) Earnings & Analysis

Latest quarter

Toro’s third-quarter revenue exceeded the consensus by 3.05%, while adjusted earnings per share were $1.33, compared with the consensus estimate of $1.30. The company reported net sales of $1,225.8 million, up from $1,131.3 million a year earlier.

Toro attributed the sales increase to higher volumes in both its Professional and Residential segments, pricing and the Tornado acquisition. Professional sales rose 8.8%, while Residential sales rose 8.6%, with higher walk power mower volumes contributing to the latter’s growth.

The filing shows gross margin rose to 34.1 percent from 33.7 percent. Toro attributed the increase to pricing, productivity improvements and sales leverage, partly offset by higher material and manufacturing costs. Diluted earnings per share rose to $0.81 from $0.54; the company cited a prior-year impairment charge and higher segment profits, partly offset by higher productivity charges and taxes.

Toro’s quarterly free cash flow was $161.2 million, compared with $207.8 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Richard Olson said landscape contractor sales increased double digits in the quarter, helped by the redesigned Exmark Radius mower and the GrandStand MULTI FORCE product line. He said underground and specialty construction grew mid-single digits, while golf shipments declined modestly against the prior year. Residential sales growth was supported by Toro’s Lowe’s partnership, he said.

CFO Angela Drake said adjusted operating margin rose to 13.9%, primarily because of the AMP productivity initiative. She said pricing, productivity and volume leverage partly offset higher manufacturing costs and product mix in the Professional segment. In Residential, she attributed margin improvement to productivity, pricing, volume leverage and a favorable comparison with a prior-year inventory adjustment, partly offset by higher material and manufacturing costs.

Asked about AMP, Drake said it had reached its $125 million run-rate savings target and had helped offset tariff and inflation impacts. President and COO Edric Funk said Toro was considering another initiative, likely with a growth component, but was not ready to announce specifics.

On demand for irrigation, Funk said customers were upgrading or replacing systems, though the availability of installation crews continued to constrain the pace of work. He said projects and bids extended as far as 2029.

Asked about tariffs and the quarter ahead, Olson said Toro had factored known impacts into its fourth-quarter guidance and expected a relatively minimal near-term effect. Drake said the outlook included $7 million of anticipated IEEPA refunds, down from $12 million previously expected; timing for the remaining $5 million was uncertain. Olson also said some export channel partners had requested changes to product flows in response to retaliatory tariffs.

Olson said Toro was preparing to respond to winter weather without overextending inventory if snowfall proved low.

Guidance

Toro raised its fiscal 2026 net sales growth guidance to 6.3% to 6.6%, from 4% to 6.5% previously. The company also raised its adjusted earnings-per-share range to $4.60 to $4.65, from $4.50 to $4.62. CFO Angela Drake attributed the updated outlook to sustained customer demand and the results of productivity initiatives.