The Toro Company

Toro said second-quarter sales were $1.42 billion, up 8.1% overall and 5.7% organically. Adjusted EPS was $1.60, up 13% year over year, while adjusted operating margin was 14.4%, up 70 basis points. Professional segment sales were $1.1 billion, up 9.1%, with segment earnings of $224 million and a 20.3% margin; residential sales were $310 million, up 4.1%, with segment earnings of $30 million and a 9.8% margin. Free cash flow was $266 million, up $181 million year over year, and the company returned $361 million to shareholders in the first half through buybacks and dividends. Full-year guidance was raised to sales growth of 4% to 6.5%, adjusted EPS of $4.50 to $4.62, high single-digit adjusted EPS growth, and free cash flow conversion of at least 120%. For Q3, Toro expects total company sales up mid-single digits, professional sales up mid-single digits, residential sales up low single digits, and total company margins lower than Q2 due to seasonality and inflation/tariff pressures.

Rick Olson emphasized that Toro is seeing broad-based demand and that the company is executing its strategy of profitable growth, productivity, and operational excellence. He highlighted strong performance in underground construction, golf, and landscape contractor, as well as improving residential margins and a more normal inventory position. His tone was confident and upbeat, repeatedly pointing to the durability of demand, innovation in electric/smart/autonomous products, and the benefits of the AMP productivity program.

Angie Drake focused on the mechanics behind the quarter’s outperformance: sales of $1.42 billion, adjusted operating margin of 14.4%, and adjusted EPS of $1.60. She said AMP, facility closures, workforce reductions, and divestitures helped drive margin expansion, while working capital improvements generated $266 million of free cash flow and 125% conversion. She also detailed guidance changes: full-year sales growth now 4% to 6.5%, professional growth 5% to 7%, residential about flat, adjusted EPS $4.50 to $4.62, and at least 120% free cash flow conversion; she noted roughly $0.16 per share of inflation headwind offset by about $0.16 of productivity/pricing benefit, plus about $0.04 of tax pressure.

Analysts pressed on dealer inventory, sell-in versus sell-through, Ditch Witch order trends, parts and service growth, residential demand and weather, tariffs, and the outlook for autonomous golf products. Management said inventories are generally normalized or even below target in some categories, Ditch Witch demand remains very strong with double-digit growth and a robust runway, and parts/service penetration still has room to grow. On tariffs, management said the net fiscal 2026 impact is negligible to guidance, with about $120 million of gross tariff expense expected and about $20 million of refunds, mostly arriving in Q3 and Q4. On weather and residential demand, they said they are watching drought conditions but are not overly concerned, and on autonomous golf they said enthusiasm is building but adoption is still early.