The Toro Company’s third quarter was met with a positive market reaction, as management cited improved execution in its Professional segment and better-than-expected results from snow and underground construction businesses. CEO Rick Olson emphasized operational excellence, noting that “sustained momentum in the underground construction business and better-than-anticipated growth in snow and ice management” helped offset lower volumes in traditional product categories. Management also highlighted successful cost savings from its Amplifying Maximum Productivity (AMP) initiative and a strong cash flow performance, reflecting the company’s ongoing focus on productivity and efficiency.
Is now the time to buy TTC? Find out in our full research report (it’s free for active Edge members).
The Toro Company (TTC) Q3 CY2025 Highlights:
- Revenue: $1.07 billion vs analyst estimates of $1.05 billion (flat year on year, 2% beat)
- Adjusted EPS: $0.91 vs analyst estimates of $0.87 (4.2% beat)
- Adjusted EBITDA: $165.6 million vs analyst estimates of $148.6 million (15.5% margin, 11.4% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $4.43 at the midpoint, missing analyst estimates by 5.1%
- Operating Margin: 8.7%, down from 10.1% in the same quarter last year
- Market Capitalization: $7.69 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From The Toro Company’s Q3 Earnings Call
- David MacGregor (Longbow Research) questioned volume expectations for each business line in light of guidance. CEO Rick Olson explained that while Tornado and pricing would support topline growth, organic volume growth would be muted, with residential remaining cautious due to macroeconomic factors.
- David MacGregor (Longbow Research) asked about the AMP program’s increased cost savings target and whether volume growth was required to achieve it. CFO Angie Drake responded that additional savings would derive from supply chain and operational efficiencies, not from higher volumes.
- David MacGregor (Longbow Research) inquired about the reinvestment rate of AMP program savings. Drake clarified that up to 50% would be reinvested, primarily into innovation and technology, but recent years saw a higher reinvestment due to inflation and transition expenses.
- Joshua Wilson (Raymond James) sought clarity on channel inventory levels and backlog normalization. Olson reported that channel inventory is healthy across segments, and lead times have improved, allowing customers to order closer to actual need.
- Ted Jackson (Northland) asked about the impact and mitigation of tariffs in 2026. Olson detailed that most tariffs relate to steel, aluminum, and China, and emphasized that management has built mitigation strategies and variability assumptions into guidance.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will be watching (1) how quickly cost savings from AMP translate into sustained margin improvement, (2) the integration progress and top-line contribution of the Tornado acquisition, and (3) signs of stabilization or recovery in residential demand amid ongoing macroeconomic uncertainty. Performance of new product launches and the company’s ability to mitigate rising tariff costs will also be important indicators of execution.
The Toro Company currently trades at $78.59, up from $72.65 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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