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- **Professional Segment Strength**: 6% YoY growth, 250bps margin expansion to 21.3%, driven by underground construction and golf/grounds demand.
- **Residential Challenges**: 28% YoY decline, 1.9% margin (vs. 12.2% prior year), impacted by homeowner caution and inventory liquidation.
- **AMP Productivity Success**: $75M annualized savings (on track for $100M by 2027), 2025 in-year savings $47M reinvested in innovation.
- **Tariff Mitigation**: 2025 incremental cost $45M, 50% offset by pricing and 50% by productivity, targeting margin-neutral by year-end.
- **2026 Outlook**: Residential recovery contingent on interest rates, pro segment growth driven by infrastructure and golf participation.

**【CEO Opening Remarks】**
- Q3 net sales $1.13B (-2.2% YoY), driven by 6% growth in professional segment (underground construction, golf/grounds) offset by 28% decline in residential.
- Adjusted EPS $1.24 vs. $1.18 prior year, beating internal expectations.
- Professional segment margin expanded 250bps to 21.3%, residential margin contracted to 1.9% due to lower volume and promotions.
- 2025 guidance: total sales flat to -3%, adj. EPS $4.15 (low end of range), free cash flow conversion 110%.
- AMP productivity program delivered $75M annualized savings, on track for $100M by 2027.
- Tariff mitigation strategies limiting margin impact, 2025 incremental tariff cost ~$45M.

**【CFO Financial Commentary】**
- GAAP EPS $0.54 (-53% YoY) due to $81M non-cash impairment of Spartan trade name.
- Adj. gross margin 34.4% (-10bps YoY), driven by lower volume and higher material costs.
- SG&A expense rate 20.8% (220bps improvement YoY), benefiting from AMP savings.
- Free cash flow $292M (90% conversion), share buybacks $290M YTD.
- 2025 outlook: professional segment revenue up slightly, residential down mid-teens.

**【COO Operational Update】**
- New product launches: Ventrac 45RC, Attract eDingo, Toro GeoLink Mow.
- Underground construction output improving, golf/grounds orders healthy.
- AMP program driving $47M in-year savings, reinvesting 50% in innovation.
- Inventory management: residential channel inventory down significantly, setting up for 2026 spring.

**【Q&A Highlights】**
- **AMP Progress**: $75M annualized savings, 2027 target $100M. 2025 in-year savings $47M, 50% reinvested in R&D.
- **Tariff Mitigation**: 2025 incremental tariff cost $45M (steel/aluminum 50%, China 30%, Mexico 20%). On track for margin-neutral by year-end.
- **Residential Recovery**: 2026 outlook positive if interest rates stabilize. Dealer inventory down 30% YoY, field inventory at healthy levels.
- **Backlog**: Pro segment backlog reduced to normal levels, underground construction orders extend into 2026.
- **Snow Products**: 2025 snow inventory at normal preseason levels, despite 2 years of low snowfall.

The Toro Company (TTC) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

TTC

TTC fundamentals

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