TORO (TTC) Q1 FY26 earnings call: guidance and Q&A

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

How much did snow and ice product sales increase in Q1, and how did it impact field inventory?

Snow was the largest portion of the increase in both segments. Residential snow shipments were about the 10-year average, but retail was stronger, leading to a positive field inventory position. Professional snow shipments were well above the 10-year average, also leading to a positive field inventory position for the second half.

“The largest portion of each of the segments was snow, but really strength across the businesses. And in the case of residential, kind of back to a more normal snow shipment year for us.”

asked by Sam Darkatsh · answered by Richard Olson

Why was the Residential segment guidance raised while the Professional segment guidance was not, despite strong Q1 performance?

The Residential guide was raised due to unexpected upside in snow sales in Q1. The Professional segment experienced some softness in international markets that offset some of the Q1 upside, keeping the full-year outlook largely as expected.

“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. But the rest of it is really largely as we expected in the Professional segment for the year. we raised resi because we did see some upside in snow that was a little higher than we expected in Q1 based on some of the snow events that we saw across the country.”

asked by Timothy Wojs · answered by Angela Drake

What is the current status of autonomous solutions in golf, and what are the KPIs or product adoption trends?

There is significant interest in autonomous solutions due to labor shortages and cost. Toro offers a broad range of autonomous products from mowbots for clubhouses to higher-energy machines for roughs and fairway mowers. Adoption is still early but growing, with golf courses experimenting with solutions.

“We've seen -- it's kind of difficult to find a golf course that hasn't at least experimented with some autonomous solutions. And I think they're still looking for how that ultimately fits into their business.”

asked by Timothy Wojs · answered by Edric Funk

How much have Ditch Witch margins improved, and what markets are experiencing international weakness?

Ditch Witch margins have steadily improved since the 2019 acquisition, now soundly within the professional profitability range, driven by leveraging Toro's scale and internal improvements. International weakness is broad across Europe and Asia, affecting multiple categories, attributed to the general economic environment.

“So we're back in the -- soundly in the range of the professional profitability at this point.”

asked by Joseph Nolan · answered by Richard Olson

With leverage at 1.5x, what is the capital allocation strategy for the next 12-18 months regarding M&A vs. share buybacks?

The capital allocation strategy remains consistent: first, R&D and innovation; second, productivity and technology investments; third, M&A; fourth, dividends and share buybacks. The company has capacity and interest for M&A of all sizes, with valuations showing signs of moderating.

“Our capital allocation strategy remains the same. We first invest in research and our new products and innovations. We invest in opportunities for productivity improvement and technology within our facilities. We obviously look for opportunities with M&A. And then, of course, we fund our dividends and typically would buy back stock at the end of that list.”

asked by Eric Bosshard · answered by Richard Olson