The Toro Company (TTC) Q2 2025 earnings summary

Executive summary

• Adjusted EPS for Q2 2025 grew to $1.42, exceeding expectations despite a 2.3% revenue decline and macro headwinds, with Professional segment growth offsetting Residential weakness.

• Professional segment momentum and profitability improvements, driven by golf and grounds, offset Residential declines; innovation and operational excellence remain strategic priorities.

• Returned $276.3M to shareholders in H1 2025 via dividends and share repurchases, including $200M in share repurchases, the highest mid-year allocation in company history.

• Updated full-year adjusted diluted EPS guidance to $4.15–$4.30, reflecting additional macro headwinds in homeowner products.

Financial highlights

• Q2 2025 net sales were $1,317.9M, down 2.3% year-over-year; adjusted gross margin was 33.4%, down 20 bps; operating margin was 13.3% (reported) and 13.7% (adjusted).

• Adjusted diluted EPS rose 1.4% to $1.42; reported EPS was $1.37, nearly flat year-over-year.

• Free cash flow for the first six months was $84.7M, with a free cash flow conversion of 44.7%.

• Cash and cash equivalents at quarter-end were $176.5M; available liquidity totaled $899.4M.

• Leverage ratio stood at 1.6x, within the target range of 1.0x–2.0x.

Outlook and guidance

• FY25 net sales expected to be flat to down 3%; Professional segment up slightly, Residential down mid-teens; adjusted diluted EPS guidance set at $4.15–$4.30.

• Q3 net sales expected to be flat to slightly up year-over-year; Professional segment up mid-single digits, Residential down high teens.

• Adjusted operating margin for Q3 expected to be similar year-over-year; adjusted EPS slightly higher than last year's $1.18.

• AMP productivity initiative targets $100M+ annualized cost savings by FY27; $70.5M annualized savings achieved as of Q2 2025.

• Guidance assumes normal weather, $59M interest expense, and 19% adjusted effective tax rate.