Core Insights - The Toro Company demonstrated strong operational agility in Q1 2026, capturing increased demand from winter storms, which significantly contributed to performance outperformance [4] - The Professional segment, accounting for 80% of the portfolio, is the main growth driver, supported by demand in underground construction and specialty equipment [4] - The acquisition of Tornado Infrastructure Equipment enhances the company's capabilities in hydrovac excavation, tapping into high-growth potential markets [4] Financial Performance - The multiyear AMP program has yielded $95 million in cumulative cost savings, aiding in offsetting rising material and manufacturing costs [4] - Free cash flow conversion rate improved to 22%, with projections for the full year now expected to reach at least 120% due to inventory optimization and seasonal demand [4] - Adjusted EPS guidance for the full year 2026 has been raised to $4.40–$4.60, reflecting strong execution in Q1 and improved expectations for the Residential segment [4] Market Outlook - The company anticipates a robust performance in snow and ice categories for the latter half of the fiscal year, supported by healthy field inventory and positive preseason fill expectations [4] - Growth in the Professional segment is expected to continue, driven by multiyear tailwinds in data centers, energy, and telecommunications infrastructure projects [4] - International markets have shown unexpected softness in Europe and Asia, attributed to a cooling global macroeconomic environment [4] Strategic Initiatives - The company is managing the impact of tariffs and inflation through net price realization and productivity initiatives [4] - Capital allocation is focused on R&D and M&A, with $95 million in stock repurchases executed in Q1 as a secondary return mechanism [4] - The transition towards high-margin technology solutions, including autonomous turf maintenance and AI-enabled water management software, is strengthening market positioning [4]

Financial Performance - Consolidated net sales for Q1 fiscal 2026 were $1,036.3 million, a 4.2% increase from $995.0 million in Q1 fiscal 2025[119] - Net earnings for Q1 fiscal 2026 were $67.9 million, or $0.69 per diluted share, compared to $52.8 million, or $0.52 per diluted share, in Q1 fiscal 2025[120] - Adjusted net earnings for Q1 fiscal 2026 were $72.6 million, or $0.74 per diluted share, up from $65.9 million, or $0.65 per diluted share, in Q1 fiscal 2025[121] - Total net sales for the company increased by 4.2% to $1,036.3 million in Q1 fiscal 2026[133] - Professional segment EBIT increased by 8.2% to $137.6 million in Q1 fiscal 2026, with EBIT margin rising to 16.7%[135] - Residential segment EBIT decreased by 23.3% to $13.2 million in Q1 fiscal 2026, with EBIT margin falling to 6.4%[137] - The net earnings for the three months ended January 30, 2026, were $67.9 million, an increase from $52.8 million in the prior year, marking a growth of 28.6%[158] Segment Performance - Professional segment net sales increased by 7.2% to $824.0 million, while Residential segment net sales decreased by 6.8% to $206.0 million[119] - Professional segment net sales increased by 7.2% to $824.0 million in Q1 fiscal 2026, driven by net price realization and higher shipments[134] - Residential segment net sales decreased by 6.8% to $206.0 million in Q1 fiscal 2026, primarily due to lower shipments of lawn care products[136] Cost and Expenses - Gross profit for Q1 fiscal 2026 was $336.5 million, with a gross margin of 32.5%, down from 33.7% in Q1 fiscal 2025[127] - SG&A expenses decreased by $8.4 million, or 3.3%, as a percentage of net sales, SG&A expenses decreased by 180 basis points[128] - The gross margin for the three months ended January 30, 2026, was 32.5%, down from 33.7% in the prior year, indicating a decline of 1.2 percentage points[158] Cash Flow and Liquidity - Cash provided by operating activities was $26.1 million in Q1 fiscal 2026, a significant improvement from cash used of $48.6 million in Q1 fiscal 2025[141] - Net cash used in investing activities increased to $210.4 million in Q1 fiscal 2026, primarily due to the Tornado acquisition[142] - Available liquidity as of January 30, 2026, was $936.9 million, including cash and cash equivalents of $189.0 million[144] - The free cash flow for the three months ended January 30, 2026, was $14.6 million, a significant improvement from a negative $67.7 million in the prior year[159] - The free cash flow conversion percentage was 21.5% for the current period, compared to a negative 128.2% in the same period last year[159] Acquisitions and Initiatives - The acquisition of Tornado Infrastructure Equipment was completed for $210.3 million, enhancing the Professional segment and expanding the dealer network[113][114] - The company completed the acquisition of Tornado Infrastructure Equipment on December 8, 2025, which is expected to enhance operational capabilities[163] - The AMP initiative is projected to achieve at least $125 million in run-rate savings by fiscal 2027, with cumulative cost savings of $94.3 million as of Q1 fiscal 2026[117] - The company launched a significant productivity initiative named AMP in the first quarter of fiscal 2024, aimed at improving operational efficiency[163] Tax and Inventory - The effective tax rate for Q1 fiscal 2026 was 21.9%, up from 20.1% in Q1 fiscal 2025, primarily due to a less favorable geographic mix of earnings[131] - The effective tax rate for the three months ended January 30, 2026, was 21.9%, compared to 20.1% in the same period last year[158] - Field inventory levels were lower at the end of Q1 fiscal 2026 compared to Q1 fiscal 2025, mainly due to decreased balances in snow and ice management products[123] Shareholder Returns - The company approved a cash dividend of $0.39 per share for Q1 fiscal 2026, a 2.6% increase from $0.38 per share in Q1 fiscal 2025[147] - The company repurchased 1,131,652 shares of common stock during Q1 fiscal 2026, with 9,260,138 shares remaining available for repurchase[148] Currency Risks - The company is exposed to foreign currency exchange rate risks, particularly with the Euro, Australian dollar, and Canadian dollar, which could impact earnings and cash flows[162]

Financial Data and Key Metrics Changes - Consolidated net sales increased by more than 4% to $1.04 billion, driven by strong execution in both professional and residential segments [4][12] - Adjusted earnings per share (EPS) rose to $0.74, up from $0.65 a year ago, reflecting higher earnings in the professional segment [5][13] - Free cash flow for the quarter was $14.6 million, with a conversion rate of 22%, marking a significant improvement [6][15] Business Line Data and Key Metrics Changes - Professional segment net sales were $824 million, while residential segment net sales were $206 million, both benefiting from higher shipments of snow and ice products [12] - Professional segment earnings reached $137.6 million, and residential segment earnings were $13.2 million, both exceeding expectations [13] - The consolidated adjusted operating earnings margin improved to 9.8%, up from 9.4% a year ago [12] Market Data and Key Metrics Changes - The company experienced strong demand for snow and ice products due to winter storms, contributing significantly to sales growth [7][8] - There was noted softness in international markets, particularly in Europe and Asia, which impacted overall performance [56][60] Company Strategy and Development Direction - The company is focused on executing strategic priorities, investing in technology and innovation, and expanding its portfolio through acquisitions like Tornado Infrastructure Equipment [4][8] - The AMP program is aimed at driving sustainable productivity improvements and achieving cost savings of $125 million by the end of 2026 [5][15] - The company is optimistic about multi-year growth in underground and specialty construction markets [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining operational discipline and aligning inventories with expected demand, despite external economic pressures [10][24] - The outlook for fiscal 2026 has been raised, with expected net sales growth of 3% to 6.5% and adjusted EPS guidance of $4.40 to $4.60 [16][17] - The company anticipates strong performance in the second quarter, typically the largest of the year, with mid-single-digit sales growth expected [18] Other Important Information - The company is committed to returning value to shareholders, having repurchased approximately $95 million of common stock [6] - Innovations in product offerings, such as the new Cold Front Technology in plows and advancements in irrigation solutions, are expected to drive future growth [7][21][23] Q&A Session Summary Question: What was the organic growth in professional sales excluding Tornado effects? - Management indicated that organic growth was approximately 5%, with Tornado contributing about 1-2% [28][30] Question: How much did snow and ice products contribute to the quarter's performance? - Snow and ice products were the largest portion of sales growth in both segments, with shipments exceeding the 10-year average [31][32] Question: Why was the residential guidance raised but not the professional guidance? - The residential guidance was raised due to stronger-than-expected snow performance, while softness in international markets affected the professional segment [40] Question: What is the current state of field inventory? - The company reported a healthy field inventory position, which provides confidence for the second half of the year [66] Question: What are the expectations for autonomous solutions in the golf business? - There is significant interest in autonomous solutions, with many golf courses experimenting with these technologies due to labor challenges [44][46]

Financial Data and Key Metrics Changes - Consolidated net sales increased by more than 4% to $1.04 billion, exceeding expectations [5][13] - Adjusted earnings per share rose to $0.74, up from $0.65 a year ago, driven by higher earnings in the professional segment [6][15] - Free cash flow for the quarter was $14.6 million, with a conversion rate of 22%, marking a significant improvement [7][16] - Adjusted operating earnings margin improved to 9.8%, up from 9.4% a year ago [13] Business Line Data and Key Metrics Changes - Professional segment net sales were $824 million, while residential segment net sales were $206 million, both benefiting from higher shipments of snow and ice products [13] - Professional segment earnings reached $137.6 million, and residential segment earnings were $13.2 million, both exceeding expectations [14] Market Data and Key Metrics Changes - Strong execution in both professional and residential segments allowed the company to capitalize on incremental demand for snow and ice products [5][8] - The integration of Tornado Infrastructure Equipment contributed positively to the professional segment's growth [6][9] Company Strategy and Development Direction - The company is focused on executing strategic priorities, driving operational excellence, and investing in technology and innovation [5][8] - The AMP program aims to achieve $125 million in cost savings, with $95 million already realized [7][16] - The company is expanding its offerings in underground and specialty construction, anticipating multi-year growth in these areas [9][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate external pressures while maintaining operational efficiency [11][26] - The outlook for fiscal 2026 has been raised, with expected net sales growth of 3% to 6.5% and adjusted EPS guidance of $4.40-$4.60 [17][18] - Management noted some softness in international markets but remains optimistic about overall performance [57][58] Other Important Information - The company is committed to returning value to shareholders, having repurchased approximately $95 million of common stock [7][16] - The introduction of innovative products, such as the BOSS plows with Cold Front Technology, has been well received by customers [8][9] Q&A Session Summary Question: What was the organic growth in professional sales excluding Tornado effects? - Management indicated that organic growth was approximately 5%, with Tornado contributing about 1-2% [29][31] Question: How much was snow and ice up in the quarter? - Management confirmed that snow and ice products were the largest portion of sales growth across both segments [32][33] Question: Why was the residential guidance raised but not the professional guidance? - Management noted softness in international markets affecting the professional segment, while strong snow performance led to an increase in residential guidance [41] Question: What is the current state of field inventory? - Management reported a healthy field inventory position, which provides confidence for the second half of the year [68] Question: What is the outlook for international markets? - Management acknowledged some weakness in international markets but remains optimistic about recovery [57][58] Question: What is the strategy for M&A moving forward? - The company remains open to M&A opportunities, focusing on areas where it can compete effectively [64][65]

Financial Data and Key Metrics Changes - Consolidated net sales increased by more than 4% to $1.04 billion, exceeding expectations [4][11] - Adjusted earnings per share (EPS) rose to $0.74, up from $0.65 a year ago, driven by higher earnings in the professional segment [5][12] - Free cash flow for the quarter was $14.6 million, with a conversion rate of 22%, marking a significant year-over-year increase of over $80 million [13] Business Line Data and Key Metrics Changes - Professional segment net sales were $824 million, while residential segment net sales were $206 million, both benefiting from higher shipments of snow and ice products [11] - Professional segment earnings reached $137.6 million, and residential segment earnings were $13.2 million, both exceeding expectations [12] - The consolidated adjusted operating earnings margin improved to 9.8%, up from 9.4% a year ago [11] Market Data and Key Metrics Changes - Strong execution in both professional and residential segments allowed the company to capitalize on seasonal demand for snow and ice products [4][6] - The integration of Tornado Infrastructure Equipment contributed positively to the professional segment's growth [5][11] - International markets showed some softness, impacting overall performance, particularly in Europe and Asia [54] Company Strategy and Development Direction - The company is focused on operational excellence, leveraging its portfolio of leading brands for profitable growth and competitive advantage [4][6] - Continued investment in technology and innovation is a priority, with a multi-year AMP program aimed at achieving $125 million in cost savings [5][8] - The company is raising its sales and earnings outlook for fiscal 2026, expecting total company net sales growth of 3% to 6.5% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic direction and ability to deliver sustainable, profitable growth [23][18] - The company is optimistic about strong customer demand in underground construction and specialty markets, anticipating multi-year growth [7][19] - External factors such as the economy and geopolitical environment are ongoing considerations, but the company is committed to aligning inventories with expected demand [9][54] Other Important Information - The company repurchased approximately $95 million of common stock, reflecting its commitment to returning value to shareholders [5] - The recent launch of innovative products, such as the BOSS plows with Cold Front Technology, has been well received by customers [6][7] - The company is actively pursuing opportunities in the growing global demand for underground construction equipment [19] Q&A Session Summary Question: What was the organic growth in professional sales excluding Tornado effects? - Management indicated that organic growth was approximately 5%, with Tornado contributing about 1-2% [26][27] Question: How much was snow and ice up in the quarter? - Snow and ice products were the largest portion of sales growth in both segments, with shipments well above the 10-year average [29][30] Question: Why was the residential guide raised but not the professional guide? - Management noted softness in international markets for the professional segment, while residential saw upside from snow events [38] Question: What is the overlap between snow contractors and lawn and garden contractors? - There is significant overlap, and strong snow performance is expected to positively impact the professional landscape business [39][40] Question: What is the outlook for autonomous solutions in golf? - There is growing interest in autonomous solutions due to labor challenges, and the company is optimistic about future growth in this area [42][44] Question: What improvements are seen in the Ditch Witch business margins? - The Ditch Witch business has shown steady profitability growth since its acquisition, with continued improvements expected [52] Question: What is the strategy regarding leverage and capital allocation? - The company maintains a disciplined capital allocation strategy, prioritizing investments in innovation and productivity improvements [60][61] Question: What is the current field inventory position? - The company is in a healthy field inventory position, which provides confidence for the second half of the year [64][65]

Investor Presentation March 5, 2026 Q1 Fiscal 2026 Note on Forward-looking Statements and Non-GAAP Financial Measures This presentation 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 "achieve," "believe," "boost," "continue," "drive," "estimate," ...

Core Viewpoint - Toro (TTC) reported quarterly earnings of $0.74 per share, exceeding the Zacks Consensus Estimate of $0.65 per share, marking a year-over-year increase from $0.65 per share [1] Financial Performance - The company achieved revenues of $1.04 billion for the quarter ended January 2026, surpassing the Zacks Consensus Estimate by 3.38% and showing growth from $995 million in the previous year [2] - Toro has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] Stock Performance - Toro shares have increased approximately 28% since the beginning of the year, significantly outperforming the S&P 500, which gained only 0.4% [3] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $1.45 for the upcoming quarter and $4.59 for the current fiscal year [7] - The Zacks Rank for Toro is currently 2 (Buy), indicating expectations for the stock to outperform the market in the near future [6] Industry Context - The Tools - Handheld industry, to which Toro belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Group 1 - The Toro Company (TTC) raised its adjusted earnings and net sales guidance for the full-year 2026, projecting adjusted earnings between $4.40 and $4.60 per share and net sales growth of 3 to 6.5 percent from last year's $4.51 billion, implying net sales between $4.65 billion and $4.80 billion [1][2] - Previously, the company had expected adjusted earnings in the range of $4.35 to $4.50 per share on net sales growth of 2 to 5 percent [2] - The impact of the Tornado acquisition is expected to add approximately 2 percent to total company net sales and be modestly accretive to adjusted earnings per share [3] Group 2 - The company is investing in innovation to enhance customer productivity, capitalizing on market opportunities and customer demand, and leveraging its diverse portfolio of leading brands for profitable growth and competitive advantage, as stated by Richard Olson, chairman and CEO [2] - In pre-market trading, TTC is trading on the NYSE at $102.89, up $2.09 or 2.07 percent [3]

Core Insights - The Toro Company reported strong fiscal 2026 first-quarter results, exceeding expectations in both Professional and Residential segments, with net sales of $1.04 billion, a 4% year-over-year increase [1] - The company raised its full-year guidance for net sales growth to a range of 3% to 6.5% and adjusted EPS to a range of $4.40 to $4.60, reflecting positive market conditions and strategic initiatives [1][3] - The company returned $133 million to shareholders through dividends and stock repurchases, indicating a commitment to shareholder value [1] Financial Highlights - First-quarter net sales reached $1,036.3 million, up from $995.0 million in the same period last year, marking a 4% increase [1] - Adjusted EPS increased by 14% year-over-year to $0.74, while reported EPS was $0.69, a 33% increase from $0.52 [1] - Net earnings for the first quarter were $67.9 million, up 29% from $52.8 million in the prior year [1] Segment Performance - Professional segment net sales were $824.0 million, a 7.2% increase from $768.8 million, driven by higher shipments of snow and ice management products and the Tornado acquisition [1] - Residential segment net sales decreased by 6.8% to $206.0 million, primarily due to lower shipments of lawn care products, despite higher shipments of snow and ice management products [1] - Professional segment earnings increased to $137.6 million, while Residential segment earnings decreased to $13.2 million, reflecting higher material costs in the Residential segment [1] Operational Efficiency - Gross margin for the first quarter was 32.5%, down from 33.7% in the prior year, attributed to higher material and manufacturing costs [1] - Selling, general and administrative (SG&A) expenses as a percentage of net sales improved to 24.1% from 25.9% in the prior year, indicating better cost management [1] - Operating earnings as a percentage of net sales increased to 8.4%, compared to 7.8% in the same prior-year period [1] Strategic Outlook - The company is focusing on investing in technology and innovation to enhance customer productivity and capitalize on market opportunities [1] - The acquisition of Tornado Infrastructure Equipment is expected to contribute approximately 2% to total company net sales and be modestly accretive to adjusted EPS [1] - The company aims to leverage its diverse portfolio of brands for profitable growth and competitive advantage [1]

Financial Performance - First-quarter net sales increased by 4% year-over-year to $1.04 billion[3] - Reported EPS for the first quarter was $0.69, while adjusted EPS rose 14% year-over-year to $0.74[3] - Full-year net sales growth guidance raised to a range of 3% to 6.5%, up from 2% to 5%[5] - Adjusted EPS guidance for the full year increased to a range of $4.40 to $4.60, up from $4.35 to $4.50[5] - Net sales for the three months ended January 30, 2026, increased to $1,036.3 million, up from $995.0 million in the same period last year, representing a growth of 4.3%[25] - Net earnings for the quarter were $67.9 million, an increase from $52.8 million year-over-year, resulting in a basic and diluted net earnings per share of $0.69, up from $0.52[25] Segment Performance - Professional segment net sales for the first quarter were $824.0 million, up 7.2% from $768.8 million in the prior year[14] - Residential segment net sales for the first quarter decreased by 6.8% to $206.0 million, primarily due to lower shipments of lawn care products[14] - Professional segment net sales increased to $824.0 million, while residential segment sales decreased to $206.0 million[27] - Total segment earnings before interest and taxes improved to $101.1 million, compared to $81.1 million in the prior year[27] Shareholder Returns - The company returned $133 million to shareholders during the first quarter[3] Cost and Margin Analysis - Gross margin for the first quarter was 32.5%, down from 33.7% in the prior-year period, primarily due to higher material and manufacturing costs[9] - SG&A expense as a percentage of net sales improved to 24.1%, compared to 25.9% in the prior-year period[10] - Gross profit remained stable at $336.5 million, with a gross margin of 32.5%, down from 33.7% in the prior year[25] Cash Flow and Assets - Cash and cash equivalents at the end of the period were $189.0 million, a decrease from $341.0 million at the beginning of the fiscal period[31] - Free cash flow for the quarter was $14.6 million, with a free cash flow conversion percentage of 21.5%[34] - The company reported an increase in goodwill to $592.1 million, up from $449.8 million year-over-year[29] - Total assets increased slightly to $3,702.5 million from $3,696.7 million in the previous year[29] Acquisitions and Initiatives - The Tornado acquisition is expected to contribute approximately 2% to total company net sales and be modestly accretive to adjusted EPS[6] - The company completed the acquisition of Tornado Infrastructure Equipment on December 8, 2025, with related costs impacting the financials for the three-month period ending January 30, 2026[35] - The "Amplifying Maximum Productivity" (AMP) initiative was launched in Q1 fiscal 2024, with associated expenses deemed non-recurring and not representative of ongoing operations[35] Employee Compensation and Charges - Productivity initiative charges for the three-month periods ended January 30, 2026, and January 31, 2025, included facility exit-related costs, severance benefits, and third-party consulting costs[35] - Employee stock-based compensation can significantly impact net earnings and effective tax rate, with excess tax deductions recorded during the three-month periods ended January 30, 2026, and January 31, 2025[35]