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    TTC
    Earnings call· Jan 2026(Q1 FY26)

    TORO Q1 FY26 earnings call TTC

    Mar 5, 2026 Source

    Executive summary

    The Toro Company Q1 FY26 — Strong Snow Demand and Productivity Drive Sales and EPS Beat

    The Toro Company delivered a strong Q1 FY26, surpassing expectations for sales and adjusted EPS, primarily driven by robust snow and ice product demand and effective operational execution. The company capitalized on market opportunities, integrated the Tornado acquisition, and advanced its AMP productivity program, leading to improved profitability and cash flow. While facing some international softness, management raised its full-year sales and EPS outlook, confident in its strategic direction and continued investment in innovation and efficiency.

    Highlights

    5

    • Consolidated net sales increased over 4% to $1.04 billion, exceeding expectations due to strong execution in both segments.

    • Adjusted EPS rose to $0.74 from $0.65 year-over-year, beating previous outlook.

    • Free cash flow reached $14.6 million with a 22% conversion rate, a significant improvement from prior year.

    • AMP program contributed $95 million in cost savings towards a $125 million aggregate goal.

    • Returned $133 million to shareholders through dividends and share repurchases, including $95 million in stock buybacks.

    Concerns

    3

    • International business experienced some softness across multiple categories in Europe and Asia.

    • Residential segment net sales are expected to be flat to down 3% for the full year.

    • Higher material and manufacturing costs partially offset gains from net price realization and productivity improvements.

    Guidance & targets

    17
    CategoryTargetConfidence
    Full-year 2026 Adjusted EPS
    $4.40 to $4.60
    high materiality
    High
    Full-year 2026 Total Company Net Sales Growth
    3% to 6.5%
    high materiality
    High
    Full-year 2026 Professional Segment Net Sales Growth
    mid-single digits
    medium materiality
    High
    Full-year 2026 Residential Segment Net Sales Growth
    flat to down 3%
    medium materiality
    High
    Full-year 2026 Adjusted Gross Margin Rate
    higher
    medium materiality
    High
    Full-year 2026 Professional Segment Earnings Margin
    18.5% and 19.5%
    medium materiality
    High
    Full-year 2026 Residential Segment Earnings Margin
    6.5% and 8.5%
    medium materiality
    High
    Full-year 2026 Interest Expense
    approximately $60 million
    low materiality
    High
    Full-year 2026 Adjusted Effective Tax Rate
    about 21%
    low materiality
    High
    Full-year 2026 Capital Expenditures
    $90 million to $100 million
    medium materiality
    High
    Full-year 2026 Free Cash Flow Conversion Rate
    at least 120%
    high materiality
    High
    Q2 2026 Total Company Net Sales Growth
    mid-single digits
    medium materiality
    High
    Q2 2026 Professional Segment Net Sales Growth
    mid-single-digit
    medium materiality
    High
    Q2 2026 Residential Segment Net Sales Growth
    mid-single-digit
    medium materiality
    High
    Q2 2026 Professional Segment Earnings Margin
    similar to a year ago
    medium materiality
    High
    Q2 2026 Residential Segment Earnings Margin
    approach double digits
    medium materiality
    High
    Q2 2026 Adjusted EPS Growth
    mid-single-digit
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Professional
    Segment earnings were $137.6 million, exceeding expectations. Growth was driven by higher snow and ice product shipments, net price realization, and strength in underground construction including the Tornado acquisition.
    Underground construction growthLandscape business growthHigher shipments of snow and ice productsNet price realization
    		$824 million7%—$137.6 million
    Residential
    Segment earnings were $13.2 million, exceeding expectations. Benefited from higher shipments of snow and ice products and net price realization. Retail sales for snow products were stronger than shipments.
    Higher shipments of snow and ice productsNet price realization
    		$206 million——$13.2 million

    Operational metrics

    11
    Consolidated Net Sales
    $1.04 billionup 4.2% YoY
    Q1 FY26

    Exceeded expectations.

    Adjusted EPS
    $0.74up from $0.65 YoY
    Q1 FY26

    Exceeded previous outlook.

    Consolidated Adjusted Operating Earnings Margin
    9.8%up from 9.4% YoY
    Q1 FY26

    Reflects net price realization and productivity improvements, partially offset by higher costs.

    Free Cash Flow Conversion Rate
    22%
    Q1 FY26

    Impressive rate for a quarter typically resulting in net use of cash.

    Inventory Turnover
    2.8ximproved
    Q1 FY26

    Improved due to integrated business planning and seasonal snow demand.

    Leverage Ratio
    1.5x
    Q1 FY26

    Remains healthy and well within stated target range.

    Capital Returned to Shareholders
    $133 million
    Q1 FY26

    Demonstrates continued confidence in ability to generate cash.

    Share Repurchases
    $95 million
    Q1 FY26

    Reflects commitment to return value to shareholders.

    Tornado Acquisition Contribution to Sales Growth
    2%
    Q1 FY26

    Inorganic growth from the Tornado acquisition.

    Professional Segment Organic Sales Growth
    5%
    Q1 FY26

    Estimated organic growth after accounting for Tornado acquisition and international softness.

    International Sales
    softness
    Q1 FY26

    Experienced softness across multiple categories in Europe and Asia, attributed to general economic environment.

    Industry KPIs

    6
    MetricValueDetails
    Tariff cost impact—
    Parts aftermarket business—
    Data center prime power demand—
    Dealer inventory months of supply—
    Incremental margin operating leverage—
    Order backlog order intake by segment—

    Product announcements

    6
    ProductTypeDetails
    BOSS plows with Cold Front Technology (CFT)launch
    JT21 horizontal directional drillupdate
    Ditch Witch SK1000launch
    AI-enabled spatial adjust softwarelaunch
    RXC irrigation controllerlaunch
    Autonomous turf maintenance solutionsroadmap

    Deals & partnerships

    1
    Tornado Infrastructure EquipmentAcquisition to expand hydrovac excavation solutions.

    Further strengthens capabilities in underground and specialty construction, a natural adjacency to existing businesses.

    Capital programs

    1
    AMP programunderway$125 million
    Spent to date: $95 million achieved

    Benefit: cost savings

    Multiyear program fueling sustainable productivity improvements and cost savings.

    Risks & headwinds

    4
    International sales softnessQ1 FY26

    Broadly across Europe and Asia, multiple categories

    Mitigation: Teams are optimistic to get back on track for the year, but currently a general economic environment situation.

    Higher material and manufacturing costsQ1 FY26

    Partially offset gains from net price realization and productivity improvements

    Mitigation: Ongoing productivity improvement and cost savings measures through the AMP program, net price realization.

    Tariffs

    Effect of tariffs

    Mitigation: AMP improvements are working to fully offset the effect of tariffs.

    External factors (economy, geopolitical environment, weather)

    Ongoing considerations

    Mitigation: Committed to maintaining discipline and aligning inventories with expected demand.

    What to watch in Q2 FY26

    5

    Professional Segment International Sales Recovery

    next quarter
    CurrentSoftness across Europe and Asia
    TargetSigns of recovery or stabilization

    Why it matters

    International sales softness was noted as an offsetting factor to strong Q1 performance and could impact full-year Professional segment growth.

    I'd say that from the Pro, we probably saw a little more softness in international than we expected. So we are having to offset some of that.

    Q&A highlights

    6

    What was the organic growth rate for Professional segment sales, excluding the Tornado acquisition?

    Professional segment sales were up 7%. Tornado contributed about 2% to sales growth, implying organic growth around 5%, though some international softness partially offset this. Snow and underground construction were key organic drivers.

    “What we had mentioned in Q4 is that Tornado would contribute about 2% growth for sales. So inorganic growth will be about 2%. And our sales were -- we were expecting to be about $100 million for the year. So pretty well in line with what our expectations were for Q1.”

    asked by Sam Darkatsh · answered by Angela Drake

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Q1 Performance Driven by Snow and Productivity

    The Toro Company exceeded Q1 FY26 expectations with consolidated net sales of $1.04 billion, up 4.2%, and adjusted EPS of $0.74, up from $0.65. This outperformance was primarily attributed to strong execution in both Professional and Residential segments, capitalizing on incremental demand for snow and ice products due to winter storms, and continued growth in underground and specialty construction. The AMP program contributed $95 million in cost savings towards a $125 million aggregate goal, driving productivity improvements and favorable operating leverage.

    02

    Strategic Investments and Innovation

    The company continued to invest in value-creating technology and innovation, including the acquisition of Tornado Infrastructure Equipment to expand hydrovac excavation solutions. New product introductions like the BOSS plows with Cold Front Technology, the JT21 horizontal directional drill, and the Ditch Witch SK1000 compact stand-on skid steer were highlighted. In golf, innovations like AI-enabled spatial adjust software and the new RXC irrigation controller aim to improve water management and workforce productivity, alongside a broad range of autonomous turf maintenance solutions.

    03

    Financial Discipline and Shareholder Returns

    The Toro Company demonstrated strong financial stewardship with positive free cash flow of $14.6 million, representing a 22% conversion rate, a significant year-over-year increase. The leverage ratio remained healthy at 1.5x, well within the target range. The company returned $133 million to shareholders through dividends and share repurchases, including approximately $95 million in common stock buybacks, reflecting confidence in cash generation.

    04

    Outlook Raised Despite Headwinds

    Based on strong Q1 performance, management raised its full-year FY26 outlook, expecting total net sales growth of 3% to 6.5% and adjusted EPS in the range of $4.40 to $4.60. This revised outlook assumes higher adjusted gross and operating margins, with Professional segment earnings margin between 18.5% and 19.5% and Residential between 6.5% and 8.5%. However, some softness in international markets across Europe and Asia was noted as an offsetting factor.

    05

    Focus on Underground Construction and Aftermarket

    The company is actively pursuing opportunities in underground construction, fueled by aging infrastructure, new data centers, and energy/telecommunications projects, showcasing its broadest offering at CONEXPO. The aftermarket/services segment, particularly in golf, is also a focus, with new innovations like the AI-enabled spatial adjust software bolstering subscription service offerings and providing incremental recurring revenue.

    AI-generated summary of the company’s earnings call. Not investment advice.