Toro Lowers Full-Year Outlook As Residential Sales Slump, Costs Weigh on Margins
The Toro Company (NYSE:TTC) reported second-quarter fiscal 2025 sales decreased 2% year-over-year (Y/Y) to $1.32 billion on Thursday, missing the consensus of $1.35 billion.
Residential segment sales fell 11.4% year over year to $297.4 million, owing to lower shipments of walk power mowers, zero-turn mowers, and portable power products and the prior year’s Pope Products sale.
Segment earnings declined to $16.1 million from $36.1 million, impacted by higher material, manufacturing, and freight costs, along with weak net sales volume, and inventory valuation adjustments.
Professional segment sales increased 0.8% year over year to $1.014 billion, driven by higher shipments of golf and grounds products. This was partly negated by a decline in underground and specialty construction product shipments and the prior year’s construction equipment dealer divestitures.
Segment earnings rose to $202.1 million from $190.7 million, fueled by product mix and productivity gains.
Adjusted gross margin for the quarter decreased to 33.4% from 33.6% last year, impacted by higher material and manufacturing costs, along with inventory valuation adjustments.
Adjusted operating margin for the quarter was 13.7%, down from 14.2% in the same period last year. As of May 2, 2025, cash and equivalents stood at $176.5 million.
Adjusted EPS of $1.42 (+1% Y/Y) beat the consensus of $1.40.
FY25 Outlook: Toro lowered its guidance for FY25 adjusted EPS from $4.25-$4.40 to $4.15-$4.30, compared to the consensus of $4.31.
The company now sees an FY25 net sales growth outlook of flat to -3%, compared to 0% to 1 % earlier.
Richard M. Olson, chairman and chief executive officer said, “We are taking decisive steps to strategically position the company to navigate near-term headwinds. Our strong portfolio and disciplined execution continue to sustain our performance, and we remain confident in our ability to manage controllable factors while mitigating macroeconomic risks.”
Investors can gain exposure to the stock via Invesco Water Resources ETF (NASDAQ:PHO) and Neuberger Berman ETF Trust Neuberger Berman Small-Mid Cap ETF (NYSE:NBSM).
Price Action: TTC shares are down 1.8% at $74.22 in early trading Thursday.
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