The Toro Company’s first quarter fiscal 2026 results came in ahead of management’s expectations, supported by higher shipments of snow and ice products, continued growth in underground and specialty construction, and ongoing productivity and cost savings initiatives.
First-quarter results exceed expectations
Toro (NYSE:TTC) reported consolidated net sales of $1.04 billion, up 4.2% from the prior year. Management said results exceeded its guidance in both the professional and residential segments, helped by strong execution that allowed the company to capitalize on seasonal demand.
Consolidated adjusted operating earnings margin improved to 9.8% from 9.4% a year ago. Segment earnings also topped internal expectations, with professional segment earnings of $137.6 million and residential segment earnings of $13.2 million. Drake said year-over-year results reflected net price realization and the favorable impact of Toro’s ongoing productivity improvement and cost savings measures, partially offset by higher material and manufacturing costs.
Adjusted earnings per share were $0.74, up from $0.65 in the prior-year quarter. CEO Rick Olson noted the professional segment represents roughly 80% of the company’s portfolio and was the primary contributor to higher earnings.
Snow and ice demand, construction growth drive performance
Management repeatedly pointed to snow and ice products as the largest contributor to first-quarter growth, supported by a series of winter storms in major population centers. Olson said the company’s operational agility helped it deliver products and “capitalize on incremental demand,” and he said strong performance in the quarter positions Toro well for “robust performance” in these categories later in the fiscal year.
During the Q&A, executives described snow and ice as the largest portion of the sales increase in both segments. They also noted differences between the two businesses:
- Residential: Shipments were described as roughly in line with a 10-year average, while retail sell-through was “even stronger than the shipments” because field inventory was already in place.
- Professional: Shipments were described as “well above” the 10-year average.
Beyond snow, Olson and Drake highlighted continued growth in underground and specialty construction. Olson noted that horizontal directional drills, including the JT21 launched last year, contributed to sales upside, and he said Toro expects customer demand in that area to remain strong. Toro also plans to showcase the recently launched Ditch Witch SK1000 compact stand-on skid steer, which the company said offers increased lifting capacity and reduced maintenance and is aimed at utility and landscaping applications.
Acquisition activity and innovation priorities
Toro used the quarter to expand its hydrovac excavation solutions through the acquisition of Tornado Infrastructure Equipment. Management characterized Tornado as a “natural adjacency” that complements existing underground and specialty construction offerings and expands growth opportunities.
On the call, executives reiterated that Tornado was expected to contribute about 2% to sales growth, consistent with commentary provided previously, and that the company was expecting Tornado’s sales to be about $100 million for the year. In response to questions about professional segment growth, management indicated that, excluding Tornado, professional growth was driven largely by snow, underground construction, professional contractor shipments, and golf and grounds, though it also noted some softness internationally.
President and COO Edric Funk emphasized Toro’s broader innovation agenda, particularly in underground construction, golf grounds and irrigation, and autonomous turf maintenance. Funk said the company is pursuing global demand for underground construction equipment, which he said is being fueled by aging infrastructure, new data centers, and increased energy and telecommunications projects. At ConExpo, he said Toro is exhibiting its “broadest offering ever” of underground and specialty construction solutions.
In golf and irrigation, Funk highlighted the company’s AI-enabled “spatial adjust” software introduced last November, which he said customers have called “an absolute game changer.” He said the software helps preserve water, supports more consistent playing conditions, and bolsters subscription service offerings that provide incremental recurring revenue. Toro also plans to expand its water management suite with the launch of a new RXC irrigation controller, which Funk said will offer modular expandability, advanced flow monitoring, and predictive weather-based scheduling.
In response to analyst questions about autonomous products in golf, management said interest is rising due to labor constraints and the high share of labor in golf course budgets. Funk said it is still “early days” for broad adoption, but he emphasized Toro’s wide range of autonomous offerings across multiple energy platforms and applications, from smaller-area mowing and range ball collection to higher-energy applications including fairway mowing.
Productivity program, cash flow, and capital allocation
Olson said Toro’s multi-year AMP program is driving “sustainable productivity improvements” and has contributed $95 million in cost savings toward an aggregate goal of $125 million. Management said these efforts, alongside net price realization, are aimed at moderating higher material and manufacturing costs and “fully offset the effect of tariffs.” Executives also said the company is carefully managing inventory, citing a “healthy net inventory position” at the end of the quarter as a driver of working capital improvement.
Free cash flow was $14.6 million, which Drake said was an increase of more than $80 million year over year and produced a free cash flow conversion rate of 22%. She attributed the result to inventory improvement driven by the integrated business planning process and seasonal snow demand, adding that inventory turnover improved to 2.8x in the quarter.
On capital returns, Toro repurchased about $95 million of common stock during the quarter, and Drake said total cash returned to shareholders was $133 million through dividends and share repurchases. The company’s leverage ratio was 1.5x, which management described as healthy and within its target range. Executives reiterated a capital allocation framework that prioritizes investment in R&D and innovation, productivity and facility technology initiatives, M&A, dividends, and then share repurchases.
Outlook raised for fiscal 2026
Based on first-quarter performance, Toro raised its fiscal 2026 outlook. The company now expects total net sales growth of 3% to 6.5%, with professional segment net sales expected to grow mid-single digits and residential segment net sales expected to be flat to down 3%. Drake said the residential outlook improved from prior guidance due to the stronger first quarter and a better outlook for the rest of the year.
Toro also raised full-year adjusted EPS guidance to $4.40 to $4.60. The updated outlook includes assumptions for higher adjusted operating earnings margin, with professional segment earnings margin between 18.5% and 19.5% and residential segment earnings margin between 6.5% and 8.5%. Additional assumptions include interest expense of about $60 million, an adjusted effective tax rate of approximately 21%, and capital expenditures of $90 million to $100 million. Toro now expects free cash flow conversion of at least 120%.
For the second quarter, Toro expects total net sales to increase mid-single digits year over year, with mid-single-digit growth in both segments. Professional segment earnings margin is expected to be similar to the prior year, while residential segment earnings margin is expected to approach double digits. Management expects mid-single-digit adjusted EPS growth in Q2 and noted that the second quarter is typically the company’s largest.
During Q&A, executives said they did not raise the professional outlook despite the strong first quarter because of “a little more softness in international” than expected. They described softness as broad-based across Europe and Asia and across multiple categories, attributing it to the general economic environment, while noting the team remains optimistic about being on track for the year.
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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