The Toro Company (NYSE: TTC) reported third-quarter fiscal 2026 net sales of $1.23 billion, beating the consensus estimate of $1.191 billion. Adjusted earnings per share (EPS) of $1.33 exceeded the analyst estimate of $1.31. The stock fell 6.7% to $92.50 following the release.

Financial Performance

Net sales rose 8.4% year over year, including 6.2% organic growth. The adjusted operating margin expanded by 30 basis points to 13.9%. This improvement was driven by the AMP productivity initiative, which has already reached its target of $125 million in run-rate savings. However, CFO Angie Drake noted that tariffs and commodity inflation have absorbed some of these gains in fiscal 2026.

Adjusted EPS growth included a 12-cent benefit from operational performance and 5 cents from share repurchases. An additional 6 cents came from tariff refunds. These gains were partially offset by a higher adjusted tax rate and other corporate items. The company excluded a non-cash impairment charge of $43 million related to network optimization.

Segment Highlights

In the Professional segment, net sales rose 8.8%, with organic growth of 6.1%. Landscape contractor sales grew at a double-digit pace, fueled by strong adoption of the Exmark Radius zero-turn mower and GrandStand Multi Force line. Ventrac continued to gain traction, with demand for its new fence post mower exceeding the initial production run. Underground construction sales increased mid-single digits, with HammerHead Blue Light technology growing over 30% year-to-date. Golf shipments declined modestly against a strong prior-year comparison.

The Professional segment’s adjusted operating margin contracted 40 basis points to 20.9% due to product mix shifts and higher manufacturing costs.

In the Residential segment, net sales grew 8.6%. The adjusted operating margin expanded significantly by 400 basis points to 5.9%, driven by productivity improvements, pricing actions, volume leverage, and a favorable year-over-year comparison.

Cash Flow and Capital Allocation

Toro generated $425 million in free cash flow year to date. Working capital improved by $217 million year over year, aided by a $153 million reduction in inventory balances. The company utilized this liquidity to execute $358 million in share repurchases.

What the Numbers Show

The divergence between segment margins highlights shifting profitability drivers. While the Professional segment faced margin compression from cost inflation despite top-line growth, the Residential segment demonstrated significant operating leverage. The 400-basis-point margin expansion in Residential outpaced its 8.6% sales growth, suggesting that productivity initiatives are currently more impactful on bottom-line results in this division than in the Professional business.

Outlook and Guidance

Management raised full-year guidance for adjusted EPS to a range of $4.60 to $4.65, up from the prior range of $4.50 to $4.62. This is above the consensus estimate of $4.61. Full-year net sales outlook was increased to $4.794 billion-$4.808 billion from $4.691 billion-$4.804 billion, beating the consensus estimate of $4.762 billion.

Full-year net sales growth is now expected between 6.3% and 6.6%, compared to the previous forecast of 4% to 6.5%. The implied fourth-quarter guidance projects net sales growth of 3.9% to 5.1% and adjusted EPS of $0.93 to $0.98. The updated guidance includes $7 million in anticipated IEIPA refunds, reduced from the previously expected $12 million due to classification changes.

Toro (NYSE: TTC) reported third-quarter adjusted earnings per share of $1.33, beating the analyst consensus estimate of $1.31 by 1.53 percent.

The company also logged quarterly sales of $1.223 billion, surpassing the $1.191 billion estimate by 2.67 percent.

Financial Performance

Toro’s adjusted EPS rose 7.26 percent year-over-year from $1.24 in the same period last year. Revenue growth outpaced earnings growth, with sales increasing 8.13 percent from $1.131 billion in the prior-year quarter.

What the Numbers Show

Revenue growth of 8.13 percent slightly exceeded the 7.26 percent rise in adjusted EPS, suggesting stable margin dynamics despite the top-line expansion. Both metrics beat analyst estimates, indicating stronger-than-expected operational performance for the quarter.