TORO CO

The Toro Company designs, manufactures, markets, and sells professional turf maintenance equipment and services; turf irrigation systems; landscaping equipment and lighting products; snow and ice management products; agricultural irrigation systems; rental, specialty, and underground construction equipment; and residential yard and snow thrower products. The company's products are marketed and sold worldwide through a network of distributors, dealers, mass retailers, hardware retailers, equipment rental centers, and home centers, as well as online and direct to end-users under primary trademarks including Toro, Ditch Witch, eXmark, Spartan, BOSS, Ventrac, American Augers, Subsite, HammerHead, Radius, Perrot, Hayter, Unique Lighting Systems, Irritrol, and Lawn-Boy. The industry is highly competitive, with competition based on product innovation, quality and reliability, pricing and sales programs, product support and customer service, warranty, brand and reputation, channel relationships, shelf space and product availability, and financing options. The company believes it is a principal competitor in most of its industries and markets.

The company competes with many U.S. and non-U.S. companies across its various markets, industries, and product offerings, with some competitors having substantially larger operations and financial resources. The principal competitive factors in the company's markets are product innovation; quality and reliability; pricing and sales programs; product support and customer service; warranty; brand and reputation; channel relationships; shelf space and product availability; and financing options. The company believes it has a competitive advantage because it manufactures a broad range of product lines, is committed to product innovation and customer service, has a strong history in and focus on the markets in which its businesses operate, and its distribution channels position it well to compete in various markets. Residential segment products generally face a higher volume of competition than Professional segment products given the relatively low barriers to entry.

The company generates revenue through the sale of equipment and irrigation products, as well as rendering of services to its customers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs with the transfer of control of product or services at the time a product is shipped, or in certain agreements, when a product is delivered or as services are rendered. The amount of consideration the company receives and the revenue it recognizes varies as a result of variable consideration, which is recorded at the time revenue is recognized as a reduction of the transaction price and typically occurs as a result of certain sales promotion and incentive programs offered to customers that are determined to represent price concessions, as well as anticipated product returns. The company's primary customer segments include distributors, dealers, mass retailers, hardware retailers, equipment rental centers, home centers, government customers, rental companies, and end-users.

The Professional segment net sales for fiscal 2025 were $3,624.0 million ¹, representing 80.3 percent ² of consolidated net sales. Professional segment products include professional turf maintenance equipment and services; turf irrigation systems; landscaping equipment and lighting products; snow and ice management products; agricultural irrigation systems; and rental, specialty, and underground construction equipment. Professional segment EBIT for fiscal 2025 was $702.5 million ³ with an EBIT margin of 19.4 percent ⁴. The Residential segment net sales for fiscal 2025 were $858.4 million ⁵, representing 19.0 percent ⁶ of consolidated net sales. Residential segment products include walk power mowers, zero-turn riding mowers, snow throwers, and yard tools and garden equipment. Residential segment EBIT for fiscal 2025 was $35.8 million ⁷ with an EBIT margin of 4.2 percent ⁸.

The company's products by market for the Professional segment include the Golf market, Sports Fields and Grounds market, Landscape Contractor market, Underground Construction market, Rental and Specialty Construction market, Snow and Ice Management market, Irrigation and Lighting market, and Ag-Irrigation market. For the Golf market, the company is the only company to offer both equipment and irrigation products and is a market leader in both. Equipment products for the golf market include large reel and rotary riding mowers, autonomous solutions, riding and walking mowers for greens and specialty areas, greens rollers, all-wheel drive articulating tractors, turf sprayer equipment, utility vehicles, aeration equipment, bunker maintenance equipment, and Intelli360 for telematics and fleet management. Irrigation products for the golf market predominantly consist of sprinkler heads, controllers, turf sensors, valves and operating software. For the Underground Construction market, products are sold under the Ditch Witch, American Augers, HammerHead, Subsite, and Radius brands, including horizontal directional drills, walk and ride trenchers, vacuum excavators, horizontal directional drilling guidance and support equipment, utility locators, utility inspection systems, pipe rehabilitation and replacement solutions, and after-market tools. For the Snow and Ice Management market, products are sold under the BOSS, Ventrac, and Toro brands, primarily consisting of snowplows; salt and brine ice control products; accessories for light and medium duty trucks, all-terrain vehicles, utility task vehicles, stand-on skid steers, and front-end loaders; and all-wheel drive articulating tractors, sidewalk snow and ice solution vehicles, and related attachments and accessories.

On December 8, 2025, the company acquired Tornado Infrastructure Equipment Ltd., a Calgary, Alberta, Canada-based manufacturer in the hydrovac excavation solutions industry, for a purchase price of $279.3 million ⁹ Canadian dollars. The company funded the acquisition with borrowings under its existing revolving credit facility and additional financial arrangements. During the third quarter of fiscal 2025, the company recorded a non-cash impairment charge of $81.1 million ¹⁰ related to the indefinite-lived Spartan trade name intangible asset, which resulted in a $19.7 million ¹¹ income tax benefit (deferred tax asset) associated with the remaining tax deductible basis in intangible assets. In the first quarter of fiscal 2024, the company launched a significant productivity initiative named AMP, a multi-year initiative now on track to achieve at least $125 million ¹² of run-rate savings by fiscal 2027, up from the initial program estimate of at least $100 million. As of the fourth quarter of fiscal 2025, the AMP initiative has delivered cumulative cost savings of $78.5 million ¹³ and anticipated annualized cost savings of $86.2 million ¹⁴. During fiscal 2025, the company repurchased 3,780,167 ¹⁵ shares of common stock under its Board authorized stock repurchase program at a cost of $290.0 million ¹⁶ and an average price paid per share of $76.72 ¹⁷. The company also paid common stock cash dividends of $0.38 ¹⁸ per share in each quarter of fiscal 2025, a 5.6 percent ¹⁹ increase over the $0.36 ²⁰ per share paid in each quarter of fiscal 2024. As a result of the combination of quarterly cash dividends and common stock repurchases, the company returned $441.1 million ²¹ of cash to its shareholders during fiscal 2025.

Consolidated net sales for fiscal 2025 were $4,510.4 million ²², a decrease of 1.6 percent ²³ compared to $4,583.8 million ²⁴ in fiscal 2024. Gross margin was 33.4 percent ²⁵ in fiscal 2025, a decrease of 40 basis points ²⁶ compared to 33.8 percent ²⁷ in fiscal 2024. Adjusted gross margin was 34.1 percent ²⁸ in fiscal 2025, an increase of 20 basis points ²⁹ compared to 33.9 percent ³⁰ in fiscal 2024. Net earnings for fiscal 2025 were $316.1 million ³¹, or $3.17 ³² per diluted share, compared to $418.9 million ³³, or $4.01 ³⁴ per diluted share, in fiscal 2024. Adjusted net earnings for fiscal 2025 were $419.6 million ³⁵, or $4.20 ³⁶ per diluted share, compared to $435.2 million ³⁷, or $4.17 ³⁸ per diluted share, in fiscal 2024. Cash provided by operating activities for fiscal 2025 was $662.0 million ³⁹ compared to $569.9 million ⁴⁰ in fiscal 2024. Free cash flow for fiscal 2025 was $578.3 million ⁴¹ compared to $470.7 million ⁴² in fiscal 2024.

The company's order backlog (including shipments beyond 12 months) decreased $0.4 billion ⁴³ to $0.8 billion ⁴⁴ as of October 31, 2025 from $1.2 billion ⁴⁵ as of October 31, 2024, primarily driven by improved manufacturing output and more normalized order patterns. Although the company continues to see sustained demand for underground construction and golf and grounds products, it expects backlog to normalize by mid-fiscal 2026 given its improved manufacturing output and lower lead times.

The company plans to continue to leverage a strategic and disciplined approach to pursue targeted acquisitions that add value to TTC by complementing its existing brands, enhancing its product portfolio, and/or improving its technologies. The acquisition of Tornado Infrastructure Equipment Ltd. on December 8, 2025, for a purchase price of $279.3 million ⁴⁶ Canadian dollars, broadens and strengthens the company's Professional segment and expands its dealer network. The company also plans to continue its commitment to disciplined portfolio management and prudent capital allocation strategies, resulting in its disposition from time to time of non-core product lines. The company's focus on alternative power, smart connected, and autonomous solutions, as well as its continued efforts to address environmental, social, and governance priorities, are embedded as part of its commitment to advancing its sustainability goals.

The company launched a significant productivity initiative named AMP in the first quarter of fiscal 2024, which is a multi-year initiative now on track to achieve at least $125 million ⁴⁷ of run-rate savings by fiscal 2027, up from the initial program estimate of at least $100 million. The program is driven by sustainable supply-base, design-to-value, route-to-market, and operational efficiency transformation. The company expects to reinvest a portion of the savings from this initiative to drive further innovation and growth. As of the fourth quarter of fiscal 2025, the AMP initiative has delivered cumulative cost savings of $78.5 million ⁴⁸ and anticipated annualized cost savings of $86.2 million ⁴⁹.

The company's production system generally utilizes Kanban, supplier pull, and build-to-order methodologies in its manufacturing facilities. The company may also periodically idle production at its manufacturing facilities in order to allow for maintenance, rearrangement, capital equipment installation, seasonality, and as needed, to adjust for market demand, facility renovation projects, and other factors. The company's manufacturing operations include robotic and computer-automated equipment intended to speed production, reduce costs, and improve resource use and the quality, fit, and finish of its products. The company spends considerable effort to reduce manufacturing costs and enhance quality through Lean methods and process improvement, product and platform design, application of advanced technologies, enhanced environmental management systems, safety improvements, and improved supply-chain management.

The company commits to funding research, development, and engineering activities in order to improve and enhance existing products and develop new products. Engineering and research costs incurred for fiscal 2025 were $162.3 million ⁵⁰. Capital expenditures for fiscal 2025 were $83.7 million ⁵¹. The company's stock repurchase program has no expiration date, and as of October 31, 2025, 4,391,790 ⁵² shares of common stock remained available for repurchase under the program. On December 9, 2025, the company's Board of Directors authorized the repurchase of up to an additional 6,000,000 ⁵³ shares of common stock under the stock repurchase program. In each quarter of fiscal 2025, the company's Board of Directors declared a common stock cash dividend of $0.38 ⁵⁴ per share, which was a 5.6 percent ⁵⁵ increase over the common stock cash dividend of $0.36 ⁵⁶ per share paid in each quarter of fiscal 2024. On December 9, 2025, the company's Board of Directors increased the fiscal 2026 first quarter common stock cash dividend by 2.6 percent ⁵⁷ to $0.39 ⁵⁸ per share.

The company's net sales and earnings have been and could continue to be adversely affected by economic conditions and outlook in the locations in which it conducts business, including recessionary conditions, reduced consumer confidence and spending levels, inflationary or deflationary pressures, reduced credit availability or unfavorable credit terms for its distributors, dealers, and end-user customers, higher short-term, mortgage, and other interest rates, and general economic and political conditions and expectations. The company faces risks associated with the imposition of, or changes to, tariffs, which have impacted and could further negatively impact trade between, or increase the cost of operating in, or increase the cost of or negatively impact the demand for, its products or its customers' products in the countries in which it or its customers do business. In 2025, the U.S. government announced a series of tariffs, including tariffs targeting a broad range of imports and targeted tariffs on goods from specific countries and industries, and many countries imposed reciprocal tariffs and other trade restrictions on the United States, triggering considerable volatility in global markets and heightened economic uncertainty.

Weather conditions in particular geographic regions have adversely impacted, and will likely in the future, adversely affect the sales, demand, and field inventory levels and seasonality trends of some of the company's products. Global climate change may exacerbate the frequency and intensity of unfavorable weather conditions, such as fires, hurricanes, tornadoes, drought, water shortages, rainfall, unseasonably warm winter months, or other weather events, in geographic areas where the company's products are manufactured, distributed, sold, and used and where its supply chains are located. The company's international operations expose it to risks inherent in operating in foreign jurisdictions, including weakened economic conditions, adverse currency exchange rate fluctuations, potentially higher tax rates and adverse tax consequences, national and international conflicts, political instability or tensions (such as the current geopolitical tensions involving China and Taiwan, the ongoing war between Russia and Ukraine, and Middle East conflicts and wars), and difficulties in protecting, enforcing or defending intellectual property rights.

The company faces intense competition in highly competitive markets, with Residential segment products facing a higher volume of competition due to low barriers to entry, and some competitors having substantially larger operations and financial resources. Disruption and/or shortages in the availability of commodities, components, parts, or accessories have adversely affected and could continue to adversely affect the business, with certain items sourced from single suppliers limiting availability. The company's net sales and earnings have been and could continue to be adversely affected by economic conditions, including recessionary conditions, reduced consumer confidence, inflationary pressures, and higher interest rates. Weather conditions, including conditions exacerbated by global climate change, have previously impacted and may continue to impact demand for some products and cause disruptions in operations. The company's strategy to pursue acquisitions, including the recent acquisition of Tornado Infrastructure Equipment Ltd. for a purchase price of $279.3 million ⁵⁹ Canadian dollars, involves risks including diversion of management attention, difficulties in integration, and potential write-off of significant amounts of goodwill or other intangible assets, as evidenced by the $81.1 million ⁶⁰ non-cash impairment charge recorded in fiscal 2025 related to the Spartan trade name.

Management's message emphasizes the company's purpose to help customers enrich the beauty, productivity, and sustainability of the land, and its vision to be the most trusted leader in solutions for the outdoor environment. The key themes include accelerating profitable growth, driving productivity and operational excellence, and empowering people. Management highlights the AMP initiative, which is a multi-year productivity initiative now on track to achieve at least $125 million ⁶¹ of run-rate savings by fiscal 2027, up from the initial program estimate of at least $100 million. Management also emphasizes the company's focus on innovation and quality, its commitment to funding research, development, and engineering activities, and its strategy to pursue targeted acquisitions that add value, as demonstrated by the acquisition of Tornado Infrastructure Equipment Ltd. for a purchase price of $279.3 million ⁶² Canadian dollars. The company's strategic priorities include continuing to leverage a strategic and disciplined approach to pursue targeted acquisitions, maintaining a commitment to disciplined portfolio management and prudent capital allocation strategies, and focusing on alternative power, smart connected, and autonomous solutions.