Toro NYSE: TTC reported third-quarter fiscal 2026 net sales growth of 8.4% to $1.23 billion, supported by demand across its professional and residential businesses, and raised its full-year adjusted earnings outlook.
Adjusted earnings per share totaled $1.33 for the quarter. Adjusted operating margin increased 30 basis points from the prior year to 13.9%, as productivity gains helped offset manufacturing costs, tariffs and other pressures.
“We delivered a strong third quarter, growing net sales 8% and generating adjusted earnings per share of $1.33,” Chairman and Chief Executive Officer Rick Olson said. “We are entering the fourth quarter with strong momentum and high expectations.”
Professional, Residential Sales Both Rise
Professional segment net sales rose 8.8%, including 6.1% organic growth. Landscape contractor sales increased by double digits, while underground and specialty construction sales grew at mid-single-digit rates. Golf shipments declined modestly from the prior year, which Olson said reflected a strong comparison period.
The company cited demand for its redesigned Exmark Radius zero-turn mower, the GrandStand MULTI FORCE product line and Ventrac equipment. Olson said customer demand for Ventrac’s newly introduced Fence Post Mower had exceeded expectations and surpassed the initial production run.
BOSS snow and ice management products had a successful third-quarter load-in, according to Olson, with liquid de-icing technologies and Snowrator products posting the strongest year-over-year growth in the portfolio.
Underground construction also remained a focus. Olson said HammerHead Bluelight pipe-relining solutions had grown more than 30% year to date, aided by adoption of its LED curing technology. During the question-and-answer session, he said the company sees a long runway for Ditch Witch and related underground businesses due to demand tied to data centers, utilities and broadband infrastructure.
“The largest investment currently in our plants is taking place to unleash a lot more capacity within our facilities for the Ditch Witch business,” Olson said, adding that the category is also a high priority for acquisition-related investment.
Residential segment sales increased 8.6%, while adjusted operating margin improved 400 basis points to 5.9%. The margin improvement reflected productivity, pricing, volume leverage and a favorable comparison with a prior-year inventory valuation adjustment, partially offset by higher material and manufacturing costs.
Chief Financial Officer Angie Drake said residential sales are expected to be approximately flat for the full year as the company laps strong snow-related demand in the prior year. The company said it is monitoring winter weather patterns and intends to adjust as the season develops.
AMP Program Drives Savings and Margin Progress
Toro said its AMP productivity initiative will exceed its target of $125 million in run-rate savings by the end of fiscal 2026. The program, launched in 2024, has focused on supply-based transformation, design-to-value engineering, route-to-market optimization and operational efficiency.
Drake said AMP was a primary contributor to the third-quarter margin improvement and helped mitigate tariff-related effects. The company recorded a $43 million non-cash impairment charge related to AMP-driven network optimization and product portfolio rationalization; that charge was excluded from adjusted earnings.
Although AMP is scheduled to conclude in fiscal 2026, Toro said it expects the productivity practices developed through the program to remain embedded in its operations. Drake said the company has already achieved its run-rate savings target and continues to have a productivity pipeline in place.
“We’re not ready to guide yet for fiscal 2027,” Drake said, but added that the initiative has created “durable earnings margin potential” and that some savings not fully realized during fiscal 2026 could support continued margin expansion in the following year.
President and Chief Operating Officer Edric Funk said management is considering a future strategic initiative that could include a growth component, though he said the company was not ready to announce specifics.
Cash Flow, Capital Returns and Updated Outlook
Year-to-date free cash flow reached $425 million, representing a conversion rate of 128%, according to Olson. Working capital improved by $217 million year over year, aided by a $153 million reduction in inventory, primarily from lower finished-goods balances.
The company used its cash flow to repurchase $358 million of shares during the year to date. Drake said third-quarter adjusted EPS benefited by $0.05 from share repurchases and by $0.06 from tariff refunds. Operational performance contributed $0.12 per share, while a higher adjusted tax rate and other corporate items partially offset those gains.
Toro raised its fiscal 2026 sales outlook to growth of 6.3% to 6.6%, from its earlier range of 4% to 6.5%. It now expects full-year adjusted EPS of $4.60 to $4.65, compared with previous guidance of $4.50 to $4.62.
The updated outlook implies fourth-quarter sales growth of 3.9% to 5.1% and adjusted EPS of $0.93 to $0.98. Guidance includes $7 million in anticipated IEEPA tariff refunds, compared with the $12 million previously expected, after $5 million was classified outside phase two. Toro said the timing of those additional refunds remains uncertain.
Golf Technology and Long-Term Demand
Funk said golf industry conditions remain healthy after two years of double-digit growth, even as the business performs in line with management’s expectations this year. Toro has placed hundreds of autonomous products at golf facilities globally, including Turf Pro, Range Pro and GeoLink autonomous fairway mower systems.
The company plans to add the larger Reelmaster 5010-H autonomous model next spring. Funk also said Toro’s new electric greens roller is sold out for 2026.
Golf irrigation demand remains strong, Funk said, supported by courses replacing aging systems and adopting newer technologies. However, installation activity has been constrained by the availability of crews. He said the company is seeing projects and bids extending as far as 2029.
Olson said Toro’s markets remain healthy and inventory levels are well positioned. He also pointed to the company’s acquisition strategy, including the contributions of Ditch Witch, Ventrac and Tornado, as helping diversify the business and reduce reliance on weather patterns and consumer purchasing cycles.
About Toro (NYSE:TTC)
The Toro Company NYSE: TTC specializes in the design, manufacture and marketing of a broad range of outdoor environment equipment for residential, commercial and professional markets. Its product portfolio includes lawn mowers, utility vehicles, snow throwers, irrigation systems and landscape maintenance equipment. Toro's offerings span walk-behind and ride-on mowers, zero-turn radius mowers, snow blowers, sprinklers, drip irrigation products, spreaders and specialty turf maintenance machines tailored to golf courses, sports fields and municipal parks.
Founded in 1914 and headquartered in Bloomington, Minnesota, Toro has built a century-long legacy of innovation in the grounds-care industry.
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