The Toro 2025 Q2 Earnings Declines as Net Income Falls 5.5%

The Toro Company (TTC) reported its fiscal 2025 Q2 earnings on June 5, 2025. The company saw a decrease in total revenue to $1.32 billion, down 2% from the same period last year. Net income fell to $136.8 million, a 5.5% decline from the previous year. Despite these challenges, The Toro Company slightly exceeded earnings expectations with an adjusted EPS of $1.42, compared to analysts' estimates. The company has adjusted its guidance for fiscal 2025, now expecting a flat to 3% decrease in net sales and adjusted diluted EPS between $4.15 and $4.30.

Revenue

In the second quarter of fiscal 2025, The Toro Company recorded a total revenue of $1.32 billion, reflecting a 2.3% decrease from the $1.35 billion reported in the same quarter of the previous year. The Professional segment led the performance with $1.01 billion in revenue, while the Residential segment contributed $297.40 million. Other revenues totaled $6.40 million.

Earnings/Net Income

The Toro's earnings per share (EPS) declined slightly by 1.4% to $1.37 in Q2 2025 from $1.39 in the same quarter of 2024, while net income dropped 5.5% to $136.80 million from $144.80 million. The adjusted EPS at $1.42 indicates a moderately positive outlook.

Price Action

The stock price of The Toro edged down 1.28% during the latest trading day and dropped 3.57% over the most recent full trading week. However, it has climbed 3.25% month-to-date.

Post-Earnings Price Action Review

A strategy involving the purchase of TTC shares when revenues exceed expectations and holding them for 30 days has proven effective, yielding a 20.56% gain. This performance aligns well with the consensus target price, suggesting that the strategy is in harmony with analysts' expectations and forecasts. This method capitalizes on the post-earnings momentum that can occur when a company exceeds market expectations, offering a potentially lucrative opportunity for investors. The consistency of these results reinforces confidence in this approach, especially in the context of The Toro's ongoing efforts to optimize its operations and financial performance amidst challenging economic conditions. Investors might consider this strategy as part of a broader investment plan, taking into account individual risk tolerance and market conditions.

CEO Commentary

Richard M. Olson, Chairman, President & CEO, emphasized that The Toro Company has focused on leveraging its diverse portfolio and driving operational excellence, resulting in adjusted earnings per share of $1.42, surpassing expectations. He acknowledged challenges such as a 2.3% decline in revenue to $1.3 billion due to weak consumer confidence and delayed spring weather, while highlighting strength in the Golf and Grounds businesses. Olson expressed confidence in the company's future, citing successful cost-saving initiatives and ongoing product innovation, underscoring the commitment to enhance customer productivity through technology and innovation amidst a dynamic macroeconomic environment.

Guidance

The Toro Company anticipates total revenue for fiscal 2025 to be flat to down 3% from fiscal 2024, with professional segment growth expected to be mild while residential segment revenue is projected to decline in the mid-teens. For Q3, adjusted diluted EPS is expected to be slightly higher than last year's $1.18. The company is adjusting its fiscal 2025 guidance for adjusted diluted EPS to range between $4.15 and $4.30, reflecting anticipated macroeconomic headwinds impacting homeowner-related products.

Additional News

In recent developments, The Toro Company has made notable strides in enhancing shareholder value through its capital allocation strategy. The company announced a $200 million share repurchase program, reinforcing its commitment to returning value to shareholders. Additionally, The Toro Company has continued to focus on strengthening its executive team by promoting key leaders within the organization. The promotion of Branden Happel to Senior Manager of Public Relations underscores the company's dedication to effective communication and brand management. These strategic moves align with The Toro's long-term vision of maintaining a robust market position while adapting to evolving industry dynamics. The company's proactive approach to managing capital and talent reflects its broader strategy to navigate current economic challenges and seize future growth opportunities.