TTC

Image source: The Motley Fool. Thursday, Sept. 3, 2026 at 11 a.m. ET Vice President, Corporate Affairs and Investor Relations - Heather Hille Chairman and Chief Executive Officer - Richard Olson President and Chief Operating Officer - Edric Funk Vice President and Chief Financial Officer - Angela Drake Operator: Good day, ladies and gentlemen, and welcome to the Toro Company's Third Quarter Earnings Conference Call. My name is Marvin, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I'll now turn the presentation over to your host for today's conference, Heather Hille, Vice President, Corporate Affairs and Investor Relations. Please proceed, Ms. Hille. Heather Hille: Good morning, everyone, and thank you for joining us for the Toro Company's Third Quarter 2026 Earnings Conference Call. I'm Heather Hille, Vice President of Corporate Affairs and Investor Relations. On the line with me today are Rick Olson, Chairman and Chief Executive Officer; Edric Funk, President and Chief Operating Officer; and Angie Drake, Vice President and Chief Financial Officer. Rick, Edric, and Angie will provide an overview of our third quarter results, which were released earlier this morning and discuss our priorities and outlook for the remainder of fiscal 2026. Following their remarks, we'll open the phone lines for a question-and-answer session. Before we begin, please note that any forward-looking statements made today are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks are detailed in our earnings release, investor presentation and our most recent filings with the SEC. During our remarks, we will also reference certain non-GAAP financial measures. We believe these metrics provide useful insight into the company's performance. Reconciliations to the most directly comparable GAAP measures can be found in this morning's press release. Both the release and our third quarter supplemental presentation are available in the Investor Information section of our corporate website. With that, I will now turn the call over to Rick. Richard Olson: Thank you, Heather, and good morning, everyone. We delivered a strong third quarter, growing net sales 8% and generating adjusted earnings per share of $1.33. The sales momentum from the first half continued into Q3 with both our Professional and residential segments growing net sales over 8%. Within the professional segment, landscape contractor sales increased double digits with underground and specialty construction growing mid-single digits. As expected, golf shipments were down modestly year-over-year against a strong prior-year comparison. The strength in professional contractor was driven in part by the redesigned Exmark Radius zero-turn mower launched earlier this year. Another key contributor was the GrandStand MULTI FORCE product line now equipped with a new, more powerful and fuel-efficient engine. This versatile stand-on machine has numerous attachments, enabling customers to expand services, increase profitability and remain productive in every season. Our Ventrac business continues to grow with professional landscape contractors and homeowners with acreage. This season, we added to the more than 30 Pro-grade attachments with the newly introduced fence post mower. It virtually eliminates one of the most labor-intensive trimming processes, and it's a great example of our innovation process, identifying a customer pain point and developing an effective solution. Customer response has exceeded expectations with demand already surpassing our initial production run. Rounding out a strong season for professional contractors was a successful Q3 load-in for BOSS snow and ice management products. Liquid deicing technologies and the Snowrator delivered the strongest year-over-year growth rates within the portfolio. Underground construction continues its strong performance, growing mid-single digits in the third quarter. We have seen increased market adoption for our industrial and utility pipe relining solutions like HammerHead Bluelight, which has grown over 30% year-to-date. This is an advanced Cured-In-Place pipe rehabilitation system that avoids the disruption of digging a large trench for a full pipe replacement. Our patented LED Bluelight Curing technology cures up to 5x faster than traditional steam, hot water or ambient air methods. Moving on to the residential segment. We grew net sales by over 8%, supported by the continued success of our partnership with Lowe's. Importantly, this growth was accompanied by a margin improvement of 400 basis points year-over-year. We remain on track to achieve our goal of sustainable double-digit operating margins in residential. In a moment, Angie will highlight the progress of our AMP program and the resulting margin expansion for the company. In addition to AMP, we are driving working capital improvements. Year-to-date, these improvements have contributed to our $425 million in free cash flow at a conversion rate of 128%. As a result of our strong cash flow, we executed $358 million of share repurchases. We are entering the fourth quarter with strong momentum and high expectations. Healthy end markets, disciplined execution and ongoing productivity initiatives are driving margin expansion and robust free cash flow. Our strong year-to-date performance gives us the confidence to raise our adjusted EPS guidance to a range of $4.60 to $4.65, up from our prior range of $4.50 to $4.62, bringing the midpoint up over $0.07 to $4.63. Now I'll turn the call over to Angie for the details on the quarter. Angela Drake: Thank you, Rick, and good morning, everyone. Our third quarter results were driven by strong customer demand and disciplined execution. Net sales increased 8.4% to $1.23 billion, or 6.2% organically. Adjusted operating margin was 13.9%, up 30 basis points from the prior year. This improvement was driven primarily by the benefits of our AMP initiative, which will exceed our target of $125 million in run rate savings by year-end. We launched AMP in 2024 to focus on 4 key areas: supply base transformation, design-to-value engineering, route-to-market optimization and operational efficiency. The program has delivered meaningful benefits across each of these areas and has also been instrumental in helping mitigate tariff-related impacts. While AMP will conclude in fiscal 2026, our commitment to continuous improvement will not. Across our supply chain and functional organizations, we will continue to use the muscle gained by the AMP initiative to improve efficiency, reduce complexity, and enhance profitability. Productivity is a critical part of the Toro Company's DNA. The net result for Q3 was an adjusted EPS of $1.33. The year-over-year increase was driven by $0.12 from operational performance, $0.05 from share repurchases and $0.06 from tariff refunds. Partially offsetting these benefits was an $0.08 impact from a higher adjusted tax rate and $0.06 of other corporate items, mainly a higher incentive accrual due to year-to-date performance and less Red Iron income due to lower field inventories. The adjusted tax rate in the third quarter was 22.4%, higher versus our expectations due to the geographic mix of earnings. Our adjusted earnings excludes a noncash impairment charge of $43 million as part of our AMP-related network optimization and product portfolio rationalization. Moving on to our segment details. Within professional, net sales increased 8.8% with 6.1% coming from organic growth. Adjusted operating margin was 20.9%, down 40 basis points year-over-year. This was primarily due to product mix and higher manufacturing costs, partially offset by pricing, productivity improvements and volume leverage. Within residential, net sales increased 8.6%. Adjusted operating margin improved to 5.9%, up 400 basis points year-over-year. The increase was driven by productivity improvements, pricing, volume leverage and a favorable comparison to a prior-year inventory valuation adjustment. These benefits were partially offset by higher material and manufacturing costs. Turning to balance sheet highlights. We improved inventory by $153 million year-over-year due to lower finished goods balances. Accounts receivable were up slightly as a result of the Tornado acquisition, with accounts payable also up slightly due to higher purchases with a greater level of sales. As a result, working capital improved $217 million year-over-year, contributing to the strong free cash flow conversion that Rick mentioned. Turning to our outlook. We are raising our full-year guidance based on our sustained broad-based customer demand and the results of our productivity initiatives. We now expect our full-year net sales to be in the range of 6.3% to 6.6%, up from the prior range of 4% to 6.5%. At the segment level, we anticipate professional net sales to be up mid-single digits, continuing the momentum of recent quarters. Residential net sales will be approximately flat as we lap last year's strong snow-related demand. We are closely monitoring winter weather patterns and will react quickly as the season develops. Moving to profitability. The adjusted EPS range is expected to be between $4.60 to $4.65, up from our prior range of $4.50 to $4.62. The midpoint of our guidance increases from $4.56 to $4.63, reflecting our third quarter outperformance and a better outlook for the fourth quarter. The implied fourth quarter guidance puts net sales between 3.9% and 5.1% and adjusted EPS between $0.93 and $0.98. This guidance includes $7 million of anticipated IEEPA refunds. That is less than the previously expected $12 million, as $5 million has been classified as outside of Phase 2. The refund timing of this portion of IEEPA refunds is uncertain given the current process. If they are available in the future, we will include them in our guidance at that time. We continue to build our business for long-term profitable growth. This includes prioritizing innovation investments that we believe will deliver outstanding returns, driving sustainable margin expansion with disciplined execution, including our productivity initiatives and leveraging the talents of our team and the power of our best-in-class distribution networks. We are confident in our ability to drive significant benefits and opportunities for all of our stakeholders. With that, I will turn the call over to Edric. Edric Funk: Thank you, Angie. I'd like to start today by recognizing and thanking Rick for his leadership, partnership, and unwavering commitment to the Toro Company and its people. Rick has led the organization through a remarkable period of transformation and growth. His vision to strengthen the portfolio. And under his guidance, the company has successfully navigated the many macro and geopolitical challenges of the past 10 years. Today, the company is in a position of strength and poised to capture the opportunities ahead. The team did just that in the third quarter as evidenced by our adjusted operating earnings growth of 11%. This was underpinned by our constant focus on operational excellence. One example was our recent Supplier Summit, which brought together more than 180 organizations. The event reinforced our dedication to building strong supplier partnerships that support supply continuity, innovation and productivity. Direct engagement between leaders of The Toro Company and our supplier partners creates opportunity to identify and accelerate continuous improvement initiatives and to strengthen long-term partnerships that create value for both Toro and our customers. Relationships have always been a strength of The Toro Company, and our golf business is one great example. In early August, we welcomed 36 golf course leaders to our headquarters, representing top courses from across North America. Participants raved about our engineering and manufacturing operations, and were highly enthusiastic about our emerging technology demonstrations in the areas of automation, artificial intelligence, electrification and connected solutions. The investment we make in people and relationships continues to pay dividends. After 2 years of exceptional double-digit growth, golf continues to perform in line with our expectations this year. More importantly, the industry's underlying drivers remain strong. We've now placed hundreds of autonomous products across golf facilities worldwide, including the Turf Pro, Range Pro and GeoLink Autonomous Fairway Mower. Toro's autonomous solutions demonstrated their capabilities on one of golf's biggest stages when Shinnecock Hills hosted the 126th U.S. Open. During tournament Week, the Turf Pro 500 and Range Pro 100 operated together in the practice area, with the Range Pro autonomously collecting golf balls, while the Turf Pro simultaneously maintained the turf. This showcased how automation can help customers optimize labor resources even under the most demanding conditions. I'm very proud of our team for the successful launch of our GeoLink Autonomous Fairway Mower. This product combines the trusted excellence of our renowned quality of cut with advanced autonomous technology to help golf courses maintain superior playing surfaces, all from a smartphone app and allowing the grounds crew to track one or more units as they perform other work on the course. While we've already made considerable progress with this technology, I'm even more excited about what's to come. Next spring, we will add another model, the larger Reelmaster 5010-H as we accelerate the commercialization of our autonomous platform launches. We're also seeing excellent adoption of other new product introductions within golf. The new electric greens roller is already sold out for 2026. This reflects customer appreciation for both its intuitive controls and the built-in pass alignment feature that helps the crew achieve uniform and repeatable results. In addition, the fact that it's all-electric eliminates the risk of oil leaks on sensitive putting surfaces. Demand across our businesses continues to be broad-based. Strong adoption of new products, continued healthy conditions in golf and sustained strength in underground and specialty construction position us well to deliver on our updated full-year guidance. Looking forward, our team remains highly focused on key strategic initiatives that will deliver long-term sustainable value for customers and shareholders alike. Now I'll turn the call back over to Rick for some closing remarks. Richard Olson: Thank you, Edric. During the past decade, I've had the privilege of leading The Toro Company and working alongside an extraordinary team of dedicated and talented employees. Together, we have accelerated growth, doubling revenues and expanding into new markets. We completed 10 strategic acquisitions, including our largest ever in Charles Machine Works. These investments strengthened and diversified our portfolio, making us more resilient and reducing our reliance on weather patterns and consumer purchase cycles. The strong performance by Ditch Witch, Ventrac, and Tornado this quarter reflects the positive impact of this strategy and the value it creates for all stakeholders. We also significantly advanced our technology capabilities; whether helping customers reduce downtime through fleet management solutions, addressing labor challenges with autonomous technologies or offering high-performance gas and electric product options, we continue to innovate. Today, we are expanding these capabilities with AI-enabled business processes and product innovations such as our Spatial Adjust Precision Irrigation Technology. Our team remains focused on execution and delivering value for customers. Our end markets are healthy, inventory levels are well positioned, and we continue to see encouraging demand trends across the business. I would like to thank our employees, channel partners and shareholders for their continued partnership, dedication and trust. I am confident in our ability to deliver on our updated full-year guidance and to finish the year strong. I am also confident in The Toro Company's future with Edric at the helm. He is an exceptional leader who understands our business, customers and people. And I know that he and the team will continue to build on our momentum, leading the company into its next chapter of growth and success. Now we'll open up the line for questions. Operator: [Operator Instructions] And your first question comes from the line of David MacGregor of Longbow Research. David S. MacGregor: Rick, thanks for all the help over the last many years it's really been a pleasure working with you, and I wish you well with whatever comes next. I guess I wanted to explore the Ditch Witch business, the underground construction business. And it seems as though there's been more of a normalization perhaps now as well as some of the benefits from the AMP productivity program. But I wonder if you could just talk about where we are right now in terms of margin contribution there and the extent to which maybe there's further upside yet to be achieved. Richard Olson: Yes. Thanks for asking about the underground business. We are extraordinarily excited about the underground business and particularly the future runway for opportunity there, both for growth, which is driven by the market demand across -- we talk about data centers, but also utility work, broadband, et cetera. But the opportunities to continue to grow in profitability internally with the work that we've done. The trajectory from the acquisition to now is pretty remarkable from a profitability standpoint. We see more opportunity there. If you look specifically, data centers, for example, as an example, we were just looking at a case study. It's not so much the work that's done on the site. It's the work that's done to get the data, the power and the utilities to the site. Just an example, in Frederick, Maryland, 14 miles, 25 drills, 160 people that it took to get the data only to that was a 10-month project. So data centers are a deal for us, but it's just one slice of the demand that we see in that area. So that would be more of a drill and a trencher type of opportunity. And then I think we -- you just heard us feature the relining capabilities with our patented Bluelight system that's multiple times faster than other methods for rehabilitating. So -- and then lastly, just the impact of Tornado. And as we've talked about previously, those are key tools on a drill site or underground site that's adjacent to our products, but they also open up nodes to new opportunities of growth just for soft excavation in general as that becomes more important and required in many areas. David S. MacGregor: And just to build on that, I guess, you've done the Tornado acquisition here. Can you just talk about the extent to which maybe underground is growing as a priority within your capital allocation process and the extent to which we might expect inorganic growth to continue there? Richard Olson: It is a high priority for us, and it cuts across different investment categories. So the largest investment currently in our plants is taking place to unleash unlock more capacity within our facilities for the Ditch Witch business. And it is a high priority from a nonorganic perspective as well. We think there are -- continue to be opportunities for small, medium, and large opportunities within that category as we go forward. So you're exactly right, it does go to the top of our list in several of those categories just based on the opportunity and the runway for continued growth. David S. MacGregor: And my second question, I wanted to just explore the AMP program here because you've reached $125 million in terms of program-to-date. I'm not sure what you've got planned, whether there's a formal AMP 2.0 program or whether this is just something you're going to continue to leverage off going forward. But if you think about the -- I realize it's a little early to be talking about 2027, but just from a construct standpoint, you talked about 8% sort of EPS -- 8% to 10% EPS growth as part of your algorithm. But it seems like there's some unrealized drop to the earnings line from the AMP program as well. And so I guess I'm thinking about 2027 earnings. And I'm just thinking whether there's a carryover benefit from AMP that should be supplemental to that 8% to 10% sort of algorithmic growth next year and we see maybe an above average level of bottom-line growth. Angela Drake: Thanks for the question, David. I'm really pleased with how the AMP initiative has worked for us and created really durable earnings and margin improvements throughout our business. But we also have said, I think, many times that the timing could not have been better as it helped us offset some of the tariff-related impacts and inflationary impacts that we've seen over the past few years. We did mention in our prepared remarks that we expect to achieve our $125 million run rate savings by year-end. We've actually made it there and still have a productivity pipeline in place and expect that to continue in the future. I think as we look forward, once we would -- what we would say, and we're not ready to guide yet for F '27, but we would certainly say that this has created durable earnings margin potential for us. And what you're referring to is our 8% to 10% kind of near-term growth expectations for EPS. The fact that we had to offset -- use some of those savings to offset tariffs and commodity inflation, we're not realizing all of that in this year in F '26. But as we move forward and realize those F '27 -- those run rate savings as we move into F '27, we should be able to see continued margin expansion, to your point. Operator: And our next question comes from the line of Mike Shlisky of D.A. Davidson & Co. Michael Shlisky: Rick, I want to echo thank you for all the information over the last decade or so. It's just been great working with you and talking with you. Your knowledge has been tremendous and your [indiscernible] all of us has been great. So I really appreciate it. On my question, I want to follow up on David's question about the AMP program. It sounds like you've gotten to where you wanted it to be, maybe even better. You've always had kind of a named strategic initiative that the team works on internally, it's not guidance, there's always been some target a couple of years away. Now that you pretty much reached the stated AMP the stated goals. Is there a new name program in the works? And could it actually be a sales-related growth program rather than a margin-related one this coming time around? Edric Funk: Mike, it's Edric here, and thanks for the question. We've actually been giving that a lot of consideration and are working on what's next. So as Angie alluded to all the way back when we kicked off the AMP program, our intention and our hope was that the initiative would ultimately become just more ingrained in the culture and something that we'd operationalize over time. And so we don't expect to deviate or lose ground on that, but we are, in fact, looking at what might be next and not ready to announce anything specific today, but we do anticipate having another initiative and likely will have some element of growth that's a part of that. Michael Shlisky: Great. I also wanted to ask about some more details on the golf business. I guess you had a lot of details to kind of say about autonomous growth and just broadly golf being a strong business. You didn't mention much about irrigation. And I've been hearing a lot about both taking on some pretty big projects and some courses around the U.S. Can you comment on how that's been going order-wise, installation-wise and also globally, how has irrigation performed for Toro this year? Edric Funk: Yes. Thanks for asking. Irrigation has remained strong for us. We've been mentioning in several of the previous calls just about the significant pipeline of projects, and demand remains really, really strong there. And that's fueled by things we've talked about before, a number of courses that have reached really the end of their useful life for their irrigation system. And so they're looking at doing upgrades and replacements and tapping into some of the new technology that we've developed. So the demand remains really strong. And the installation rate has been somewhat gated, as we've talked about, by availability of crews to do the work, and that continues to be the case. But we're seeing projects on the books and bids taking place as far out as 2029. So it's been a good year this year, and we expect that demand and momentum to continue. Operator: Our next question comes from the line of Tim Wojs of Baird. Timothy Wojs: Rick, it's been great working with you. And Edric, congrats on being on a hot seat going forward. Maybe just first question for me. It sounds like the lawn and garden or the professional contractor business had some pretty good volume growth this quarter. How much of that was kind of snow? How much of that was kind of product-specific to Toro? And I guess as you're kind of exiting the season in the contractor side, how would you kind of assess field inventories at this point, just given we've seen some areas of drought here over the past few months? Richard Olson: If you just look at landscape contractor in general, really broad-based demand across really the categories that you mentioned. We saw very strong demand from -- for our mowing products throughout the summer. Contractors came into the prime mowing season this year feeling healthy from a healthy snow season in the prior year. So they came in a good condition. We were in a good position from a field inventory standpoint. And really, landscape contractor was a key driver for the quarter. The BOSS shipments that go along to those same contractors, many of them are the same, were very strong. And it was great to see some of the categories beyond plows, the liquid deicing and the Snowrator products really were strong contributors to that as well. So I think that gets to the last part of the question. It is the innovation and the new products that caused the overperformance probably relative to the market there. The excitement about the refreshment of the Exmark products like the Radius zero-turn mower. And an area that we talked about a bit of the contractor pool that we haven't talked about a lot about in the last couple of years is Ventrac. Ventrac acquisition from 2020, one of the strongest contributors in terms of percentage growth in the quarter. And I mentioned in the prepared remarks, the importance of attachments and it's a super versatile machine the latest, it sounds like a small deal, but fence post trimming, if you can do that autonomously or automatically, that's a huge productivity pickup for a contractor and even someone that has an acreage or something like that. And what it does is it drives tractor sales. And so its innovation tied to healthy market tied to the strength of our portfolio that drives that for us. And the homeowners, I will say, homeowners with acreage that are part of that, they had a decent year. It was -- they're a little bit more responsive if you get into drier conditions during the latter part of the season. So a little bit slower there. Timothy Wojs: And do you feel like the field is okay exiting kind of the season? Or how would you describe that? Edric Funk: We entered in good condition, we are leaving in great condition. So it sets us up for a direct impact of demand as that starts in the spring. Timothy Wojs: I know it's not a huge part of your business, but just as you're -- as investors are kind of thinking about more headlines around Super El Nino, how are you guys' kind of planning that internally? And how does your customer base kind of think about planning for potentially warmer kind of northern temperatures in the winter? Richard Olson: Tim, we're trying to prepare for any potential outcomes. If you've studied the history as we have around what happens when there isn't El Nino, in particular the strong El Nino, certainly, there are areas that get less snowfall. Other areas receive more than normal. As the atmosphere continues to warm, we know that it holds more moisture, and so it sets up the possibility for more extreme snow events. So I'd say as we go into the season, we're prepared for the season. We're not going to overextend ourselves, but we're not going to overreact in either direction. And you may remember last year, we set ourselves up when we had a better snow season than perhaps expected that we were able to react quickly and add some product that ultimately flowed through to retail. We're making sure that we've set ourselves up with the same ability to respond if conditions warranted, but also on the other side, balancing against -- not wanting to get back into where field inventory becomes a problem if the weather pattern plays out in a way that we don't have strong snowfall. Timothy Wojs: Understood. And then just 2 questions on margins. So first on the Pro margin, I know it down year-over-year. If you would take out Tornado, how did the Pro margins perform on a year-over-year basis? And then second, the $5 million less of tariffs that's in guidance, which quarters did that kind of get taken out of? Was it Q3 or Q4 or both? Angela Drake: Yes. Tim, this is Angie. So your question on Pro margin, Tornado does have an impact, as we had mentioned at acquisition time that we would see sales growth coming from that, the inorganic sales growth, but it wouldn't have a strong impact on margin in year 1. So there is a little bit of a negative impact to our overall operating margin from the Tornado acquisition. And the IEEPA refund, the $5 million is coming out of Q4. So, as we think about our guidance and implied guidance for Q4, that really comes out of the residential operating margin for the most part. Operator: Our next question comes from the line of Sam Darkatsh of RJA. Sam Darkatsh: And Edric, again, congratulations on the new post. And Rick, I'm going to obviously echo what everybody else has said. It's been an absolute pleasure working with you over the years. It's been a heck of a ride, too. And I'm very hopeful that our paths cross again very soon. A few questions here. First off, as it relates to the Canadian retaliatory tariffs, have you been able to ballpark or ring-fence what the what the general impact might look like at this point? I know it probably affects Tornado at a minimum and whether that is included within your fourth quarter guidance. Richard Olson: Yes. Sam, I can speak to that a bit. So the -- obviously, the tariff situation is an ever-unfolding, ever-dynamic situation. But based on what has already taken place and what's going into effect here in the near term, really minimal impact to our business. And that just has to do with which tariffs apply to our product lines that we import. So there's some yet-to-unfold discussions, that's taken place that could change things for next year. We'll monitor that closely. But we have factored everything into our Q4 guidance and the impact is relatively minimal. And then on the export side, as it relates to the retaliatory side of things, it has, in some cases, caused our channel partners to ask about making adjustments to the flow of product as they prepare for their upcoming seasons. And so we're working closely with them to manage that flow of product as well. So I'd say the summary comment is everything is contemplated in the updated guidance and relatively minimal impact here in the near term. Sam Darkatsh: The second question, Angie, if you could help a little bit with a bridge. I know it's early and way too early for fiscal '27 guidance per se. But just some line items or factors that are a bit exogenous as it relates to gross tariffs year-on-year, refunds year-on-year. I'm coming up with somewhere around a refund headwind somewhere around $10 million to $15 million and a gross tariff headwind of somewhere around $20 million to $40 million year-on-year. Is that math generally accurate? I know you're going to be offsetting it with AMP, you'll offset it with pricing. I'm just trying to get a sense of the gross cost headwinds next year. Richard Olson: Yes, I can speak to that one as well, Sam. And the -- I'm trying to see where you may have come up with those numbers. I can probably follow what you might be assuming there. I'd suggest maybe if we take a step back, we're reaching a point where I think it's not particularly useful to look at the tariff number as a stand-alone number anymore. And I say that because as you alluded to, there are productivity things that we've put in place. We've made some strategic sourcing decisions. We've continued to make adjustments to our manufacturing network. And so when you net all of those things out, even with a slight adjustment in the timing of refunds, as we look forward, we don't expect next year for tariffs to have a meaningful impact really in one way or the other. Rather, it just becomes part of the overall inflationary message. And as you alluded to, we won't do formal guidance until next quarter, but I'd be happy to share how we're thinking about next year, which is we expect to carry in really strong momentum as we start F '27. We expect our markets to remain strong and continued demand from across the entire portfolio. We talked a bit about AMP, Angie reinforced there as we move some of this year's run rate savings into next year's in-year savings. That will help to be a part of offsetting headwinds, whether they're tariff-related or otherwise. We're expecting our residential business to return to double-digit profitability as we've been signaling for a while. We're on track to do that. And at the end of the day, expecting it will continue to expand margins overall. And we'll do all of that while continuing to add growth to the company. And that's growth fueled not only by the market strength that I described, but also by new product introductions. So we're just really excited about next year, to be perfectly honest. And the tariff piece is something we've got a team that's paying attention to, but that's not presenting any kind of outsized influence on our thinking. Operator: This concludes the question-and-answer session. Ms. Hille, please proceed to closing remarks. Heather Hille: Thank you, everyone, for your questions and interest in The Toro Company. We look forward to talking with you again in December to discuss our fiscal 2026 fourth quarter and full year results. Operator: Thank you for your participation in today's conference. This concludes the program. You may now disconnect. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Net sales growth of 8% was fueled by double-digit expansion in landscape contractor products and mid-single-digit gains in underground construction. The professional segment benefited from the successful launch of the redesigned Exmark Radius and the versatile GrandStand MULTI FORCE, which helps contractors expand service offerings. Underground construction performance was driven by increased market adoption of pipe relining solutions, specifically the HammerHead Bluelight system, which avoids disruptive trenching. Residential segment margins expanded by 400 basis points, supported by the Lowe's partnership and productivity gains from the AMP initiative. Management attributed the strong cash flow conversion of 128% to disciplined working capital management and significant inventory reductions. The Ventrac business saw high demand for specialized attachments, such as the new fence post mower, which addresses critical labor-intensive pain points for customers. Strategic acquisitions like Tornado and Charles Machine Works have diversified the portfolio, reducing the company's historical sensitivity to weather and consumer cycles. Full-year adjusted EPS guidance was raised to $4.60–$4.65, reflecting sustained customer demand and the realization of productivity targets. The AMP initiative is expected to exceed its $125 million run-rate savings target by year-end, providing a tailwind for margin expansion in fiscal 2027. Management anticipates residential net sales to remain approximately flat in the near term as the segment laps strong prior-year snow-related demand. Future growth in the underground segment is tied to long-term infrastructure trends, including data center expansion, utility work, and broadband deployment. The company is accelerating the commercialization of its autonomous platform, with the larger Reelmaster 5010-H model scheduled for launch next spring. A non-cash impairment charge of $43 million was recorded related to network optimization and product portfolio rationalization under the AMP program. Anticipated IEEPA refunds for Q4 were reduced from $12 million to $7 million due to classification changes, with the remaining $5 million timing now uncertain. Management noted that while El Niño patterns are being monitored, the company has maintained flexible production to react to volatile winter weather events. Retaliatory tariffs from Canada are currently expected to have a minimal impact on the business, with all known factors already contemplated in updated guidance. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management highlighted that data centers represent a significant opportunity, not just on-site but in the extensive utility and power infrastructure required to support them. The underground segment is a top priority for capital allocation, with current investments focused on unlocking additional manufacturing capacity. While the formal AMP program concludes in 2026, management is developing a successor initiative that will likely integrate both growth and margin elements. Run-rate savings from AMP will carry over into fiscal 2027, helping to offset potential inflationary or tariff-related headwinds. Irrigation demand remains robust with projects booked out as far as 2029, driven by courses reaching the end of their systems' useful lives. Revenue realization remains gated by the availability of third-party installation crews rather than underlying product demand.

The Toro Company (NYSE:TTC) reported fiscal third-quarter 2026 net sales of $1.226 billion, up 8.4% year over year. The Toro Company (NYSE:TTC) reported a company-defined non-GAAP adjusted operating earnings margin of 13.9%, up from 13.6%. The measure excludes acquisition-related items and costs associated with the AMP productivity initiative, including facility and product-line exits, severance and consulting expenses. The prior-year adjusted calculation also excluded an $81.1 million noncash impairment charge related to the Spartan trade name. Both reportable segments generated sales growth, but segment earnings margins moved in opposite directions. Professional net sales increased 8.8% to $1.013 billion, while the segment earnings margin declined to 20.9% from 21.3%. Residential net sales rose 8.6% to $209.3 million, and the segment earnings margin recovered to 5.9% from 1.9%. The Residential improvement was substantial enough to support consolidated margin expansion despite the much smaller sales base. Residential segment earnings increased to $12.4 million from $3.7 million as productivity improvements, net price realization, sales leverage, and the absence of prior-year inventory valuation adjustments outweighed higher material and manufacturing costs. Professional segment earnings also increased in dollars, reaching $211.8 million from $198.5 million. Higher volume, net price realization and the Tornado acquisition drove sales growth. This result shows that Professional margin compression did not prevent earnings growth during the quarter. The Toro Company (NYSE:TTC) also raised fiscal 2026 net-sales growth guidance to 6.3% to 6.6% from the previous range of 4.0% to 6.5%. The narrower and higher range indicates confidence that demand and execution can support growth through the end of the fiscal year. Operational improvements are working at the consolidated level. Net price realization, productivity gains, and sales leverage lifted both reported and adjusted gross margins despite higher input and manufacturing costs. Residential normalization provides an additional earnings lever if sell-through remains healthy. Professional remains the economic center of The Toro Company (NYSE:TTC), accounting for approximately 83% of quarterly net sales and approximately 94.5% of combined Professional and Residential segment earnings, excluding Other activities. A sustained decline in Professional profitability would therefore outweigh a similar percentage change in Residential profitability. Professional margin contracted 40 basis points because of higher material and manufacturing costs and product mix. Net price realization, productivity improvements and sales leverage provided partial offsets, but the result shows that volume growth does not automatically produce margin expansion. Residential profitability also remains low in absolute terms. The 5.9% segment earnings margin represents a strong recovery, but remains far below Professional’s 20.9%. Part of the year-over-year improvement came from prior-year inventory valuation adjustments that did not recur, making the full 400-basis-point increase an imperfect measure of underlying operating progress. Weather, dealer inventory levels, and customer purchasing patterns can affect shipments and sell-through across both segments. Material inflation or unfavorable mix could also keep Professional margins under pressure. The Toro Company (NYSE:TTC) needs pricing and productivity to continue offsetting those costs without weakening demand. The filings available so far reflect positions held before The Toro Company (NYSE:TTC) reported fiscal third-quarter 2026 results. Insider Monkey’s database showed 34 hedge funds holding The Toro Company (NYSE:TTC) at the end of 2Q2026, down from 37 funds three months earlier. The Toro Company (NYSE:TTC) delivered broad sales growth and enough Residential improvement to support consolidated adjusted operating-margin expansion. The recovery is credible, but Professional economics remain more important because of the segment’s scale. Professional pricing against material costs, Residential sell-through, dealer inventories, and segment margins will determine whether the improvement is durable. While we acknowledge the potential of TTC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Main Street Capital’s (MAIN) Blowout Exit Fuels A Bigger Dividend and Here is Why Chevron (CVX) is a Favorite Among Hedge Funds Disclosure: None. This article is originally published at Insider Monkey.

Interested in Toro Company (The)? Here are five stocks we like better. Toro’s third-quarter sales rose 8.4% to $1.23 billion, while adjusted EPS reached $1.33 and adjusted operating margin improved to 13.9%. Growth was broad-based across its professional and residential businesses. The company raised its fiscal 2026 outlook to 6.3%–6.6% sales growth and adjusted EPS of $4.60–$4.65. Toro also said its AMP productivity program is expected to exceed $125 million in run-rate savings. Strong free cash flow of $425 million supported $358 million in year-to-date share repurchases, while management highlighted sustained demand for underground construction, golf technology and select equipment products. The Toro Company: A Baby Bull Market Is Gaining Traction 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. → Boarding Call: EHang Secures First-Mover Altitude The 8 best agricultural ETFs to consider for your portfolio “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 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. → Medtronic’s Stars Are Aligning for a Price Recovery Toro Stock is Worth Getting Off Season 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. → Dutch Bros Sell-Off Creates a Growth Opportunity 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. 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. 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. 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. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Toro Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

Toro (TTC) came out with quarterly earnings of $1.33 per share, beating the Zacks Consensus Estimate of $1.3 per share. This compares to earnings of $1.24 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +2.31%. A quarter ago, it was expected that this landscaping, maintenance and irrigation equipment maker would post earnings of $1.5 per share when it actually produced earnings of $1.6, delivering a surprise of +6.67%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Toro, which belongs to the Zacks Tools - Handheld industry, posted revenues of $1.23 billion for the quarter ended July 2026, surpassing the Zacks Consensus Estimate by 3.05%. This compares to year-ago revenues of $1.13 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Toro shares have added about 26% since the beginning of the year versus the S&P 500's gain of 12%. While Toro has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Toro was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.97 on $1.12 billion in revenues for the coming quarter and $4.60 on $4.77 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Tools - Handheld is currently in the top 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Consumer Discretionary sector, Caleres Inc. (CAL), has yet to report results for the quarter ended July 2026. The results are expected to be released on September 9. This footwear wholesaler and retailer is expected to post quarterly earnings of $0.37 per share in its upcoming report, which represents a year-over-year change of +5.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Caleres Inc.'s revenues are expected to be $702.5 million, up 6.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toro Company (The) (TTC) : Free Stock Analysis Report Caleres, Inc. (CAL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Raises full-year guidance based on continued strong demand trends Net sales up 8.4% year-over-year to $1.23 billion Reported EPS up 50.0% year-over-year to $0.81 *Adjusted EPS up 7.3% year-over-year to $1.33 Returned $110 million to shareholders bringing the year-to-date total to $471 million BLOOMINGTON, Minn., September 03, 2026--(BUSINESS WIRE)--The Toro Company (NYSE: TTC), a leading global provider of solutions for the outdoor environment, today reported results for its fiscal third-quarter ended July 31, 2026. "Strong momentum continued in the third quarter, supported by sustained demand across our portfolio and our consistent focus on operational excellence and margin expansion," said Richard M. Olson, chairman and chief executive officer. "The Professional segment demand drives overall performance, aided by Residential improvement on both the top and bottom line. We continue to reduce inventory and improve working capital. These company initiatives also drive robust free cash flow and value creation for our shareholders, through dividends and share repurchases." OUTLOOK "Our end markets are healthy, customer response to our innovative new products has been strong, and our team’s disciplined execution continues to drive growth across all of our businesses. Productivity initiatives are delivering margin expansion and the team is effectively managing inventory. This gives us the confidence to raise our full-year guidance." The company is raising its full-year net sales and *adjusted EPS guidance and now expects total company net sales growth in the range of 6.3% to 6.6%, up from the previous range of 4.0% to 6.5%, and *adjusted EPS in the range of $4.60 to $4.65, up from the previous range of $4.50 to $4.62. THIRD-QUARTER FISCAL 2026 FINANCIAL HIGHLIGHTS THIRD-QUARTER FISCAL 2026 SEGMENT RESULTS Professional Segment Professional segment net sales for the third quarter were $1,012.6 million, up 8.8% from $930.8 million in the same period last year. The increase was driven primarily by higher volume, net price realization, and the Tornado acquisition. Professional segment earnings for the third quarter were $211.8 million, up from $198.5 million in the same period last year, and when expressed as a percentage of net sales, 20.9%, down from 21.3% in the prior-year period. The margin decrease was primarily due to higher material and manufacturing costs and product mix, partially offset by net price realization, productivity improvements, and net sales leverage. Residential Segment Residential segment net sales for the third quarter were $209.3 million, up 8.6% from $192.80 million in the same period last year. The increase was primarily driven by higher volume of walk power mowers and net price realization. Residential segment earnings for the third quarter were $12.4 million, up from $3.70 million in the same period last year, and when expressed as a percentage of net sales, 5.9%, up from 1.9% in the prior-year period. The increase was largely driven by productivity improvements, net price realization, net sales leverage, and prior year inventory valuation adjustments that did not recur, partially offset by higher material and manufacturing costs. OPERATING RESULTS Gross margin and *adjusted gross margin for the third quarter were 34.1% and 35.0%, respectively, up from 33.7% and 34.4%, respectively, in the same prior-year period. The change in gross margin was primarily due to net price realization, productivity improvements, and net sales leverage, partially offset by higher material and manufacturing costs. SG&A expense as a percentage of net sales for the third quarter was 21.2%, compared with 20.8% in the prior-year period, primarily driven by higher incentive expenses. Operating earnings as a percentage of net sales were 9.4% for the third quarter, compared with 5.7% in the same prior-year period. *Adjusted operating earnings as a percentage of net sales for the third quarter were 13.9%, compared with 13.6% in the same prior-year period. Interest expense was $13.8 million for the third quarter, down $1.3 million from the same prior-year period. This decrease was primarily due to lower average interest rates and lower average outstanding borrowings. The reported effective tax rate for the third quarter was 28.0%, compared with 7.4% in the same prior-year period, primarily due to the impact of non-recurring adjustments and a less favorable geographic mix of earnings. The *adjusted effective tax rate for the third quarter was 22.4% compared with 17.3% in the same prior-year period, primarily due to a less favorable geographic mix of earnings. LIVE CONFERENCE CALLSeptember 3, 2026 at 10:00a.m. CTwww.thetorocompany.com/invest The Toro Company will conduct its earnings call and webcast for investors beginning at 10:00a.m. CT on September 3, 2026. The webcast will be available at www.thetorocompany.com/invest. Webcast participants will need to complete a brief registration form and should allocate extra time before the webcast begins to register and, if necessary, install audio software. About The Toro Company The Toro Company (NYSE: TTC) is a leading global provider of solutions for the outdoor environment including turf and landscape maintenance, snow and ice management, underground construction, rental and specialty construction, and irrigation and outdoor lighting solutions. With net sales of $4.5 billion in fiscal 2025, The Toro Company’s global presence extends to more than 125 countries through a family of brands that includes Toro, Ditch Witch, Exmark, BOSS, Ventrac, Tornado, HammerHead, American Augers, Spartan, Subsite, Radius, Hayter, Perrot, Unique Lighting Systems, Irritrol, and Lawn-Boy. Through constant innovation and caring relationships built on trust and integrity, The Toro Company and its family of brands have built a legacy of excellence by helping customers work on golf courses, sports fields, construction sites, public green spaces, commercial and residential properties and agricultural operations. For more information, visit www.thetorocompany.com. Use of Non-GAAP Financial Information This press release and the related earnings call reference certain non-GAAP financial measures, which are not calculated or presented in accordance with U.S. GAAP, as information supplemental and in addition to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. The non-GAAP financial measures included within this press release and the related earnings call that are utilized as measures of the company’s operating performance consist of gross profit, gross margin, operating earnings, earnings before income taxes, net earnings, diluted EPS, and the effective tax rate, each as adjusted. The non-GAAP financial measures included within this press release and the related earnings call that are utilized as measures of the company’s liquidity consist of free cash flow and free cash flow conversion percentage. The Toro Company uses these non-GAAP financial measures in making operating decisions and assessing liquidity because it believes these non-GAAP financial measures provide meaningful supplemental information regarding core operational performance and cash flows, as a measure of the company's liquidity, and provide the company with a better understanding of how to allocate resources to both ongoing and prospective business initiatives. Additionally, these non-GAAP financial measures facilitate the company's internal comparisons for both historical operating results and competitors' operating results by factoring out potential differences caused by charges and benefits not related to its regular, ongoing business, including, without limitation, certain non-cash, large, and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. The company believes that these non-GAAP financial measures, when considered in conjunction with the financial measures prepared in accordance with U.S. GAAP, provide investors with useful supplemental financial information to better understand its core operational performance and cash flows. Reconciliations of historical non-GAAP financial measures to the most comparable U.S. GAAP financial measures are included in the financial tables contained in this press release. These non-GAAP financial measures, however, should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures included within this press release and the company’s related earnings call. These non-GAAP financial measures may differ from similar measures used by other companies. The Toro Company does not provide a quantitative reconciliation of the company’s projected range for adjusted diluted EPS for fiscal 2026 to diluted EPS, which is the most directly comparable GAAP measure, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The company’s adjusted diluted EPS guidance for fiscal 2026 excludes certain items that are inherently uncertain and difficult to predict, including certain non-cash, large and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. Due to the uncertainty of the amount or timing of these future excluded items, management does not forecast them for internal use and therefore cannot create a quantitative adjusted diluted EPS for fiscal 2026 to diluted EPS reconciliation without unreasonable efforts. A quantitative reconciliation of adjusted diluted EPS for fiscal 2026 to diluted EPS would imply a degree of precision and certainty as to these future items that does not exist and could be confusing to investors. From a qualitative perspective, it is anticipated that the differences between adjusted diluted EPS for fiscal 2026 to diluted EPS will consist of items similar to those described in the financial tables later in this release, including, for example and without limitation, certain non-cash, large, and/or unpredictable charges and benefits; acquisitions and dispositions; legal judgments, settlements, or other matters; and tax positions. The timing and amount of any of these excluded items could significantly impact the company’s diluted EPS for a particular period. Forward-Looking Statements This news release contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current assumptions and expectations of future events, and often can be identified by words such as "expect," "strive," "looking ahead," "outlook," "guidance," "forecast," "goal," "optimistic," "encourage," "anticipate," "continue," "plan," "estimate," "project," "target," "improve," "believe," "become," "should," "could," "will," "would," "possible," "remain," "promise," "may," "likely," "intend," "can," "seek," "pursue," "potential," variations of such words or the negative thereof, and similar expressions or future dates. Forward-looking statements involve risks and uncertainties that could cause actual events and results to differ materially from those projected or implied. Forward-looking statements in this release include the company’s fiscal 2026 financial guidance, expectations regarding demand trends, our recent strategic acquisition, and the success of new products, supply chain stabilization and AMP, and other statements made under the "Outlook" section of this release. Particular risks and uncertainties that may affect the company’s operating results or financial position or cause actual events and results to differ materially from those projected or implied include: adverse worldwide economic conditions, including inflationary pressures and higher interest rates; the effect of abnormal weather patterns; customer, government and municipal revenue, budget spending levels and cash conservation efforts; loss of any substantial customer or strategic partnership; inventory adjustments or changes in purchasing patterns by customers; fluctuations in the cost and availability of commodities, components, parts, and accessories, including steel, engines, hydraulics, and resins; disruption at or in proximity to its facilities or in its manufacturing or other operations, or those in its distribution channel customers, mass retailers or home centers where its products are sold, or suppliers; risks associated with acquisitions and dispositions, including the company's recent acquisition of Tornado Infrastructure Equipment Ltd. and possible additional future impairment of goodwill or other intangible assets; impacts AMP and any future restructuring activities or productivity or cost savings initiatives; the effect of natural disasters, social unrest, war and global pandemics; the level of growth or contraction in its key markets; the company’s ability to develop and achieve market acceptance for new products; increased competition; the risks attendant to international relations, operations and markets; foreign currency exchange rate fluctuations; financial viability of and/or relationships with the company’s distribution channel partners; management of strategic partnerships, key customer relationships, alliances or joint ventures, including Red Iron Acceptance, LLC; impact of laws, regulations and standards, consumer product safety, accounting, taxation, trade, tariffs and/or antidumping and countervailing duties petitions, healthcare, and environmental, health and safety matters; unforeseen product quality problems; loss of or changes in executive management or key employees; the occurrence of litigation or claims, including those involving intellectual property or product liability matters; impact of increased scrutiny on its environmental, social, and governance practices; and other risks and uncertainties described in the company’s most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made. (Financial tables follow) Reconciliation of Non-GAAP Liquidity Measures The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Free cash flow conversion percentage represents free cash flow as a percentage of net earnings. The company considers free cash flow and free cash flow conversion percentage to be non-GAAP liquidity measures that provide useful information to management and investors about the company's ability to convert net earnings into cash resources that can be used to pursue opportunities to enhance shareholder value, fund ongoing and prospective business initiatives, and strengthen the company's Consolidated Balance Sheets, after reinvesting in necessary capital expenditures required to maintain and grow the company's business. The following table provides a reconciliation of non-GAAP free cash flow and free cash flow conversion percentage to net cash provided by operating activities, which is the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, for the nine month periods ended July 31, 2026 and August 1, 2025: View source version on businesswire.com: https://www.businesswire.com/news/home/20260903508878/en/ Contacts Investor RelationsHeather HilleVice President, Corporate Affairs and Investor Relations(952) 887-8923, [email protected] Eric HerronDirector, Investor Relations(952) 449-1377, [email protected]

This article first appeared on GuruFocus. Net Sales: Increased 8.4% to $1.23 billion, or 6.2% organically. Adjusted Operating Margin: 13.9%, up 30 basis points from the prior year. Adjusted EPS: $1.33 for the third quarter. Professional Segment Net Sales: Increased 8.8%, with 6.1% organic growth. Professional Segment Adjusted Operating Margin: 20.9%, down 40 basis points year-over-year. Residential Segment Net Sales: Increased 8.6%. Residential Segment Adjusted Operating Margin: Improved to 5.9%, up 400 basis points year-over-year. Free Cash Flow: $425 million year-to-date, at a conversion rate of 128%. Share Repurchases: Executed $358 million of share repurchases. Inventory: Improved by $153 million year-over-year. Working Capital: Improved by $217 million year-over-year. Full-Year Net Sales Guidance: Raised to a range of 6.3% to 6.6%. Full-Year Adjusted EPS Guidance: Raised to a range of $4.60 to $4.65. Warning! GuruFocus has detected 6 Warning Sign with TTC. Is TTC fairly valued? Test your thesis with our free DCF calculator. Release Date: September 03, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. The Toro Co (NYSE:TTC) delivered a strong third quarter with net sales growing 8% and adjusted EPS of $1.33, exceeding expectations. Both professional and residential segments saw over 8% net sales growth, with residential margins improving by 400 basis points year-over-year. The AMP initiative is on track to exceed its $125 million run rate savings target by year-end, driving durable margin expansion. Strong free cash flow of $425 million (128% conversion) enabled $358 million in share repurchases, boosting EPS. Innovative products like the redesigned Exmark Radius, GrandStand MULTI FORCE, and HammerHead Bluelight are driving strong demand and market adoption. The company raised its full-year adjusted EPS guidance to $4.60-$4.65, reflecting confidence in continued momentum. Professional segment adjusted operating margin declined 40 basis points year-over-year due to product mix and higher manufacturing costs. Golf shipments were down modestly year-over-year against a strong prior year comparison. The adjusted tax rate was higher than expected at 22.4%, negatively impacting EPS by $0.08. The company recorded a noncash impairment charge of $43 million related to AMP network optimization and product portfolio rationalization. Anticipated IEEPA tariff refunds were reduced by $5 million due to classification issues, creating uncertainty in timing. Residential segment net sales are expected to be approximately flat for the full year as the company laps strong prior-year snow-related demand. Q: Can you discuss the current margin contribution of the Ditch Witch/underground construction business and the potential for further upside, especially regarding capital allocation priorities?A: Rick Olson (Chairman and CEO) stated the company is "extraordinarily excited" about the underground business's future runway for growth, driven by demand from data centers, utility work, and broadband. He highlighted that the profitability trajectory since the acquisition has been remarkable with more opportunity ahead. The company is making its largest current investment in plant capacity to unlock more output for Ditch Witch, and it remains a high priority for inorganic growth opportunities as well. Q: With the AMP program achieving its $125 million run-rate savings target, is there a new formal initiative in the works, and could it focus more on sales growth rather than just margin improvement?A: Edric Funk (President and COO) confirmed the team is actively considering what's next. While the AMP initiative was designed to become ingrained in the company's culture, they anticipate launching another formal initiative. He noted it will likely include an element of growth, though no specific announcement was made. Q: How should we think about the carryover benefit of the AMP program into fiscal 2027, and will it supplement the company's 8% to 10% EPS growth algorithm?A: Angie Drake (CFO) explained that while AMP has created durable earnings and margin improvements, some savings were used to offset tariff and inflationary impacts in fiscal 2026. As the company moves into fiscal 2027 and realizes the full run-rate savings, it should see continued margin expansion, suggesting the potential for above-average bottom-line growth. Q: Can you provide details on the performance of the Golf irrigation business, including order trends and installation rates?A: Edric Funk (President and COO) stated that irrigation demand remains "really, really strong," fueled by many courses reaching the end of their irrigation systems' useful life and seeking upgrades with new technology. While installation rates are gated by crew availability, the company is seeing projects and bids booked as far out as 2029, indicating strong momentum. Q: What drove the strong volume growth in the landscape contractor business, and how would you assess field inventories as the season ends?A: Rick Olson (Chairman and CEO) attributed the growth to broad-based demand and new product innovation, including the redesigned Exmark Radius mower and the Ventrac line with new attachments. He noted that contractors entered the season healthy and that the company entered the season in good inventory condition and is "leaving in great condition," setting up well for spring demand. Q: How is the company planning for the potential of a strong El Nino weather pattern and its impact on snow-related demand?A: Edric Funk (President and COO) said the company is preparing for any outcome without overextending or overreacting. While strong El Ninos can lead to less snowfall in some areas, they can also create more extreme snow events in others. The company is ensuring it can react quickly to demand while balancing against the risk of building excess field inventory if snowfall is weak. Q: How did the Pro segment margins perform year-over-year excluding the impact of the Tornado acquisition, and where was the $5 million reduction in IEEPA refunds reflected in guidance?A: Angie Drake (CFO) confirmed that the Tornado acquisition had a slight negative impact on overall operating margin, as expected in its first year. She clarified that the $5 million reduction in anticipated IEEPA refunds was removed from the fourth-quarter guidance, primarily impacting the residential operating margin. Q: What is the estimated financial impact of Canadian retaliatory tariffs, and is it included in the fourth-quarter guidance?A: Edric Funk (President and COO) stated that based on current tariffs, the impact is "relatively minimal" and has been factored into the Q4 guidance. While some channel partners have asked about adjusting product flow for upcoming seasons, the company is managing that closely. He noted that ongoing discussions could change the outlook for next year, but near-term impact is limited. Q: Can you provide a bridge for the potential gross cost headwinds from tariffs and refunds heading into fiscal 2027?A: Edric Funk (President and COO) suggested it is no longer useful to look at tariffs as a stand-alone number, as productivity initiatives and strategic sourcing decisions have offset impacts. He stated that the company does not expect tariffs to have a meaningful impact next year. He reiterated expectations for strong momentum, continued market strength, residential returning to double-digit profitability, and overall margin expansion in fiscal 2027. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Toro stock has delivered a solid 22.5% gain over the past year, yet the valuation signals are mixed, with a discounted cash flow based intrinsic value suggesting the shares are roughly in line with fair value while market multiples point to a richer price. The 22.5% 1 year return suggests investors have already priced in a fair amount of optimism about Toro’s outlook. Expectations that Toro can keep converting revenue into reliable cash flows may support the current share price, while any pressure on margins or capital spending needs could weigh on that cash generation story. The broader checks are cautious, with Toro scoring 1 out of 6 on value, which leans more toward expensive than clear bargain. The issue now is whether Toro’s current price still offers enough compensation for investors given what the intrinsic value estimate and market multiples are signalling. Broaden your watchlist beyond Toro by scanning a curated set of quality opportunities in the 50 high quality undervalued stocks that combine stronger value checks with solid fundamentals. The Discounted Cash Flow (DCF) model for Toro projects the cash that the business could return to shareholders over time and then discounts it back to today. Based on the latest figures, Toro generated last twelve month free cash flow of about $731.5 million, and the model assumes these cash flows continue as a growing but mature stream rather than a rapid expansion story. On this basis, the DCF points to an estimated intrinsic value of around $105 per share. That is about 7.0% above the current share price, which implies a modest gap between what the cash flow projections support and what the market is currently willing to pay. On the DCF numbers, Toro stock appears roughly fairly valued with only a small implied discount. Toro is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Toro. P/E is a useful cross-check for Toro because earnings are a core focus for many investors in established industrial companies. Toro trades on a P/E of 27.5x, which is slightly above the Machinery industry average of 25.7x and also above the peer average of 26.7x. On Simply Wall St’s fair P/E estimate of 21.5x, which reflects the company’s profile, the stock carries a larger premium. The current multiple is several turns higher than that fair level, so the market is asking you to pay more for each dollar of Toro’s earnings. This gap suggests limited room for disappointment if earnings do not keep pace with what the current price implies. It also contrasts with the DCF work, which pointed to Toro being only modestly below estimated intrinsic value. On the P/E multiple, Toro stock appears overvalued compared with what its earnings profile would typically support. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the Toro valuation puzzle leaves off. They spell out the specific paths for Toro’s revenue, margins and earnings that would make the stock worth materially more or less than today’s price, and they sit on the company’s Community page. Where a single ratio or model gives you one number, these scenarios lay out the future that number relies on so you can judge over time whether it is playing out. One of the top community narratives on Toro: roughly fairly valued Read one of the top narratives on Toro Do you think there's more to the story for Toro? Head over to our Community to see what others are saying! Toro’s Discounted Cash Flow (DCF) work points to an intrinsic value only modestly above the current share price, while the P/E comparison flags the stock as overvalued against both its industry and a fair multiple estimate. That split reflects a cash flow profile that appears sound, set against market expectations that already price in a fuller earnings story. Broader valuation checks also lean weak, so Toro does not screen as an obvious bargain. The key question from here is whether Toro can deliver the earnings and margin resilience that keep today’s richer multiple intact. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TTC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Outdoor equipment company Toro (NYSE:TTC) will be reporting earnings this Thursday before market hours. Here’s what to expect. The Toro Company beat analysts’ revenue expectations last quarter, reporting revenues of $1.42 billion, up 8.1% year on year. It was a strong quarter for the company, with a beat of analysts’ EPS estimates and full-year EPS guidance meeting analysts’ expectations. Is The Toro Company a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting The Toro Company’s revenue to grow 5.2% year on year, a reversal from the 2.2% decrease it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. The Toro Company has missed Wall Street’s revenue estimates multiple times over the last two years. Looking at The Toro Company’s peers in the agricultural machinery segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Alamo delivered year-on-year revenue growth of 7.6%, beating analysts’ expectations by 3%, and Deere reported revenues up 4.9%, topping estimates by 1.4%. Alamo traded up 3.9% following the results while Deere was also up 11.5%. Read our full analysis of Alamo’s results here and Deere’s results here. In the last year or so, investors have shifted their focus from one macro dynamic to the next (AI disintermediation and AI investment to geopolitical conflict, interest rates, and the health of the wider economy). While some of the agricultural machinery stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 6.6% on average over the last month. The Toro Company is up 2.9% during the same time and is heading into earnings with an average analyst price target of $109.25 (compared to the current share price of $97.98). ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all. Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.