Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported September 3, 2026 · Beat 6 of last 6 quarters
The Toro Company reported Q3 FY2026 revenue of $1.23B, a beat of 2.9% against consensus, and EPS of $1.33, a beat of 1.5%.
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Toro's underground construction business, anchored by Ditch Witch and the Tornado acquisition, is directly tied to data center buildout activity — not just on-site work but the trenching, drilling, and utility routing needed to bring power and connectivity to facilities. Management's example of a 14-mile, 25-drill, 160-person project in Frederick, Maryland illustrates the scale of underground infrastructure work that data centers require. The company's pipe relining technology, growing over 30% year-to-date, also addresses the rehabilitation of aging utility infrastructure that supports expanding power and data networks.
The Toro Company reported Q3 FY2026 net sales of $1.23 billion, up 8.4% year-over-year, with adjusted EPS of $1.33. Professional segment net sales rose 8.8% (6.1% organic) with adjusted operating margin of 20.9%, down 40 basis points on product mix and higher manufacturing costs. Residential net sales grew 8.6% with adjusted operating margin of 5.9%, up 400 basis points year-over-year. The company generated $425 million in free cash flow year-to-date at a 128% conversion rate and executed $358 million of share repurchases. Adjusted earnings excluded a $43 million noncash impairment charge tied to AMP-related network optimization and product portfolio rationalization.
Management raised full-year net sales guidance to 6.3%–6.6% growth from a prior range of 4%–6.5%, and lifted adjusted EPS guidance to $4.60–$4.65 from $4.50–$4.62, bringing the midpoint up over $0.07 to $4.63. The implied Q4 guidance puts net sales between 3.9% and 5.1% and adjusted EPS between $0.93 and $0.98. Professional net sales are expected up mid-single digits, while Residential is expected approximately flat as the company laps last year's strong snow-related demand. The AMP program will exceed its $125 million run-rate savings target by year-end, and management said those savings should carry into fiscal 2027 to support continued margin expansion. Management also said it expects the Residential business to return to double-digit profitability and that tariffs should not have a meaningful impact next year, becoming part of the overall inflationary picture rather than an outsized factor.
“Our strong year-to-date performance gives us the confidence to raise our adjusted EPS guidance to a range of $4.60 to $4.65, up from our prior range of $4.50 to $4.62, bringing the midpoint up over $0.07 to $4.63.”
on Guidance Raise
“The program has delivered meaningful benefits across each of these areas and has also been instrumental in helping mitigate tariff-related impacts. While AMP will conclude in fiscal 2026, our commitment to continuous improvement will not.”
on AMP Program
“We've now placed hundreds of autonomous products across golf facilities worldwide, including the Turf Pro, Range Pro and GeoLink Autonomous Fairway Mower.”
on Autonomous Products
Can you talk about where the underground construction business is in terms of margin contribution and whether there is further upside, and is underground growing as a priority within capital allocation?
Rick Olson said the company is extraordinarily excited about underground, citing data center, utility, and broadband demand plus internal profitability improvements since the Charles Machine Works acquisition. He noted data centers are one slice of demand, with the Frederick, Maryland example of 14 miles, 25 drills, 160 people over 10 months. He said underground is a high priority for both organic capacity investment and inorganic opportunities across small, medium, and large sizes.
Now that AMP has reached its stated goals, is there a new named program in the works, and could it be a sales-related growth program rather than a margin-related one?
Edric Funk said the company has been giving that a lot of consideration and is working on what's next. He said the intention was always for AMP to become ingrained in the culture and operationalized over time, and the company does not expect to lose ground. He said they are looking at what might be next, are not ready to announce anything specific today, but anticipate another initiative likely with some element of growth.
How much of the professional contractor volume growth was snow versus product-specific, and how would you assess field inventories exiting the season given drought in some areas?
Rick Olson said demand was broad-based across mowing products, with contractors entering the prime season healthy after a good snow season. He highlighted the Exmark Radius refresh and Ventrac as strong contributors, and said BOSS shipments were strong with liquid deicing and Snowrator leading. Edric Funk said the company entered the season in good condition and is leaving in great condition, setting up for direct demand impact in the spring.