A maker of turf, lawn, snow, and underground-construction equipment, Toro builds the mowers that groom golf courses and sports fields, the riding mowers and snow throwers in homeowners' garages, and irrigation for farms and landscapes. Founded in Minneapolis in 1914 making "Bull" tractors for farmers, it took the Spanish name Toro, meaning "bull," in honor of that first machine. In late 2025 it added underground-construction gear to its lineup by buying Tornado Infrastructure Equipment.
Professional segment margin widened to 20.3% as Residential earnings nearly doubled, driving adjusted EPS up 12.7% to $1.60.
Residential earnings nearly doubled, reversing a multi-quarter decline. rose 8.1% to $1.42 billion and adjusted grew 12.7% to $1.60, driven by Professional segment to 20.3% and the Tornado acquisition. The Residential recovery is underway, but pressure from input costs persists.
Key takeaways
Residential earnings nearly doubled to $30.4 million, with margin widening to 9.8% from 5.4% a year ago, helped by net price realization, productivity gains, and the non-recurrence of prior-year valuation adjustments.
Professional sales rose 9.1% to $1.11 billion, and segment earnings margin widened 40 to 20.3%, as net price realization, productivity improvements, and volume more than offset higher input costs.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 8.1% to $1.42B on price, Tornado acquisition, and higher Professional shipments; adjusted EPS grew 12.7% to $1.60.
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Consolidated Q2 increased 8.1% to $1,424.7M, driven by net price realization, the Tornado Infrastructure Equipment acquisition, and higher Professional and Residential shipments.
Consolidated improved 80 to 33.9% in the quarter, driven by net price realization and productivity gains, though year-to-date gross margin dipped 10 basis points to 33.3% as higher material, manufacturing, and freight costs weighed.
for the first six months rose to $293.5 million from $123.1 million a year ago, driven by favorable movements and higher , with reaching 124.5%.
The company estimates it may recover approximately $20 million in previously paid IEEPA tariffs, though no benefit has been recognized, and expects refunds to substantially offset incremental tariff headwinds from Q2 regulatory changes.
What changed
The Residential 's earnings margin, which fell to 2.0% in Q3 FY2025 and was flagged as a risk of turning negative, recovered to 9.8% in Q2 FY2026 — its highest level since Q2 FY2024 — as price, productivity, and the absence of prior-year charges took hold.
The Professional 's earnings margin widened to 20.3%, exceeding the 19.9% reported in Q2 FY2025 and answering the question of whether it could return to that level after the Spartan .
pressure flagged in Q1 FY2026 eased in the quarter, improving 80 sequentially to 33.9%, though year-to-date margin remains 10 basis points below the prior year as input costs persist.
Variable-rate debt, flagged as a concern after rising to $350 million in Q1 FY2026 to fund the Tornado acquisition, declined to $295 million as the company paid down borrowings with strong .
What to watch
Whether the Residential 's 9.8% earnings margin can be sustained through the seasonally stronger second half, or if it reflects a one-time benefit from the non-recurrence of valuation adjustments.
The pace at which the estimated $20 million in IEEPA tariff refunds materializes, and whether they offset incremental tariff headwinds as management expects.
Whether can continue the sequential improvement seen in Q2, or if higher material, manufacturing, and freight costs keep year-to-date margin below the prior year.
Integration progress and margin contribution from the Tornado Infrastructure Equipment acquisition, and whether it continues to support Professional growth without diluting segment profitability.
Professional Q2 grew 9.1% to $1,106.6M, with segment margin expanding 40 to 20.3% on price, productivity, and volume , partly offset by higher input costs.
Residential Q2 rose 4.4% to $310.4M, and segment margin nearly doubled to 9.8% from 5.4%, helped by price, productivity, and the non-recurrence of prior-year valuation adjustments.
improved 80 to 33.9% in Q2 on net price and productivity gains, while year-to-date gross margin dipped 10 bps to 33.3% as higher material, manufacturing, and freight costs weighed.
for the first six months surged to $293.5M from $123.1M, driven by favorable movements and higher ; conversion reached 124.5%.
The company estimates it may recover approximately $20M in previously paid IEEPA tariffs, though no benefit has been recognized, and expects refunds to substantially offset incremental tariff headwinds from Q2 regulatory changes.
Quantitative and Qualitative Disclosures About Market Risk
Market risk arises from FX, interest rates, and commodity costs; no material change in equity risk since FY2025 10-K.
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Primary FX exposures are to the Euro, Australian dollar, Canadian dollar, British pound, Mexican peso, Japanese yen, Chinese renminbi, and Romanian new leu; a stronger USD or Mexican peso generally hurts results.
The company uses derivatives with highly rated counterparties to hedge FX risk; as of May 1, 2026, the largest notional was a buy USD/sell Euro contract of $225.8 million.
Net investments in foreign subsidiaries are not hedged; translation adjustments go to other comprehensive loss, not .
Interest rate risk stems from $200.0 million in variable-rate term loans and a $95.0 million ; the company generally does not use interest rate swaps.
Commodity cost risk is concentrated in steel, engines, hydraulics, transmissions, resin, aluminum, and electrification components; the company seeks firm supplier pricing and uses productivity initiatives to mitigate cost increases.
From time to time, we are a party to litigation in the ordinary course of business, including claims for punitive, as well as compensatory, damages arising out of the use of our products; litigation and administrative and judicial proceedings with respect to claims involving asb…
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From time to time, we are a party to litigation in the ordinary course of business, including claims for punitive, as well as compensatory, damages arising out of the use of our products; litigation and administrative and judicial proceedings with respect to claims involving asbestos and the discharge of hazardous substances into the environment; and commercial disputes, employment and employment-related disputes, and patent litigation cases. For a description of our material legal proceedings, refer to Note 14, Commitments and Contingencies, in our Notes to Condensed Consolidated Financial Statements under the heading "Litigation" included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated into this Part II, Item 1 by reference.
We are affected by risks specific to us, as well as factors that affect all businesses operating in a global market. The material risk factors known to us that could materially adversely affect our business, reputation, industry, operating results, or financial position or could…
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We are affected by risks specific to us, as well as factors that affect all businesses operating in a global market. The material risk factors known to us that could materially adversely affect our business, reputation, industry, operating results, or financial position or could cause our actual results to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statement made in this report, are described in our most recently filed Annual Report on Form 10-K, Part I, Item 1A. "Risk Factors." There has been no material change in those risk factors.