The Toro Company (NYSE: TTC) raised its fiscal 2026 guidance following stronger-than-expected third-quarter results, as productivity gains from its Amplifying Maximum Productivity (AMP) initiative helped mitigate $120 million in tariff headwinds.
Net sales rose 8.4% year-over-year to $1.23 billion in the quarter, beating consensus estimates of $1.19 billion. Adjusted earnings per share (EPS) reached $1.33, exceeding the $1.30 forecast. The Professional segment, which accounts for 81% of total sales, grew 8.8% while the Residential segment expanded 8.6%. Adjusted operating margin expanded 30 basis points to 13.9%, with the Residential segment margin improving 400 basis points to 5.9%.
Full-year guidance was raised to a net sales growth range of 6.3% to 6.6%, up from the prior 4% to 6.5% range. Adjusted diluted EPS guidance was increased to $4.60–$4.65 from $4.50–$4.62. The Professional segment growth projection was lifted to 7.5%–7.8%, while the Residential segment outlook was revised to 1.5%–1.8% growth. Free cash flow conversion is expected to remain at least 120%, with CapEx projected at $90 million for the year.
The company’s AMP program delivered $125 million in annualized savings, exceeding its original $100 million target. These gains helped offset gross tariff costs of $120 million in fiscal 2026, though International Emergency Economic Powers Act (IEEPA) tariff refunds were reduced to $15 million for the year, down from $20 million previously. Q4 refunds are now expected at $7 million, compared with an earlier estimate of $12 million.
Toro also announced leadership changes, with Chief Executive Officer Rick Olson stepping down and Edric Funk set to assume the role. Chief Financial Officer Angie Drake highlighted the durability of earnings improvements from the AMP program, stating it had "created really durable earnings and margin improvements throughout our business" while helping offset tariff and inflation pressures.
Shares fell 6.78% to $91.89 in after-hours trading, bringing the 52-week decline to approximately 12.8% from a high of $105.19. Year-to-date free cash flow reached $425 million, with a conversion rate of 128%. The company maintained a leverage ratio of 1.3x as of Q3 fiscal 2026, within its target range of 1.0x to 2.0x.
