The Toro Company Q1 2026 Earnings Call Transcript

The Toro Company (NYSE: TTC) Q1 2026 Earnings Call dated Mar. 05, 2026

Presentation

Operator

Good day, ladies and gentlemen, and welcome to The Toro Company’s First Quarter Earnings Conference Call. My name is Daniel, and I will be your coordinator for today. [Operator Instructions].

I would now like to turn the conference over to your host for today’s call, Heather Hille, Vice President, Corporate Affairs and Investor Relations. Please proceed, Ms. Hille.

Heather Hille — Vice President, Corporate Affairs and Investor Relations

Good morning, everyone, and thank you for joining us for The Toro Company’s first quarter 2026 earnings conference call. I’m Heather Hille, Head of Investor Relations. On the line with me today are Rick Olson, Chairman and Chief Executive Officer; Edric Funk, President and Chief Operating Officer; and Angie Drake, Vice President and Chief Financial Officer. Rick, Edric and Angie will provide an overview of our first quarter results, which were released earlier this morning and discuss our priorities and outlook for the remainder of fiscal 2026. Following their remarks, we’ll open the phone lines for a question-and-answer session.

As a reminder, any forward-looking statements that we make this morning are subject to risks and uncertainties, including those described in today’s earnings release, investor presentation and most recent SEC filings and may cause actual results to differ materially from those contemplated by these statements.

Also in our remarks, we’ll refer to certain non-GAAP financial measures, which we believe are important in evaluating the company’s performance. Reconciliations of all non-GAAP numbers to the most directly comparable GAAP number are included in this morning’s press release, which along with the first quarter presentation containing supplemental information is posted in the Investor Information section of our corporate website.

With that, I will now turn the call over to Rick.

Richard M. Olson — Chairman and Chief Executive Officer

Thanks, Heather, and good morning, everyone. Throughout the first quarter of 2026, our teams remain diligently focused on executing our strategic priorities. We capitalized on market opportunities and customer demand, drove operational excellence and leveraged our portfolio of leading brands for profitable growth and competitive advantage. At the same time, we invested in value-creating technology and innovation.

As a result, we beat expectations in both segments and increased consolidated net sales by more than 4% to $1.04 billion. Our outperformance was driven by strong execution in both our Professional and Residential segments, which allowed us to capitalize on incremental demand for snow and ice products and continued growth in underground and specialty construction. We reported better-than-expected adjusted earnings per share of $0.74, up from $0.65 a year ago, due to higher earnings in our Professional segment, which represents about 80% of our portfolio.

We expanded our hydrovac excavation solutions through our acquisition of Tornado Infrastructure Equipment, further strengthening our capabilities. We continue to implement our multi-year AMP program, which is fueling sustainable productivity improvements and has contributed $95 million in cost savings toward our aggregate goal of $125 million. We generated free cash flow of $14.6 million, resulting in an impressive free cash flow conversion rate of 22% in a quarter where our seasonal preparations typically result in a net use of cash and we repurchased approximately $95 million of common stock, reflecting our commitment to return value to shareholders. In summary, through strong execution of our strategic priorities throughout the first quarter, we drove favorable sales and earnings growth and further strengthened our financial position.

During the first quarter, our teams were prepared to deliver snow and ice products and capitalize on incremental demand as a series of winter storms hit in major population areas. This operational agility and strong execution not only contributed to excellent Q1 top line growth, but also positions us well for robust performance in these categories in the back half of this year. Adding to this optimism is our fresh lineup of BOSS plows with new cold front technology, or CFT, which has been well received by customers. The innovative CFT system integrates plow and spreader functionality and is engineered for effortless connections, smart performance and maximum efficiency.

We also continue to invest in underground and specialty construction, reflecting our expectations of multi-year growth in these businesses. Our efforts underscore our focus on broadening our offering to drive both near- and long-term results. During the first quarter, horizontal directional drills like the innovative JT21, which launched last year, contributed to our sales upside, and we expect customer demand to remain strong.

We were very excited to welcome Tornado to The Toro Company during the quarter. As a natural adjacency to our existing businesses, its complementary offering enables us to expand our growth opportunities in this market. And this spring, we look forward to showcasing our recently launched Ditch Witch SK1000, a compact stand-on skid steer with increased lifting capacity and reduced maintenance, making it ideal for utility work as well as landscaping.

To preserve our profit margins and remain price competitive, we continue to pursue deliberate strategies through our AMP program to drive sustainable productivity improvements, cost savings and net price realization. Through the AMP improvements, we are working to moderate the effect of higher material and manufacturing costs and fully offset the effect of tariffs.

We’re also carefully managing inventory at all stages of production as evidenced by our healthy net inventory position at the end of the first quarter. This was a key driver of working capital improvement. While external factors like the economy, geopolitical environment and weather are ongoing considerations, we are committed to maintaining our discipline and aligning our inventories with expected demand as the year unfolds. These actions are strengthening our operations and driving improved financial results, and our teams and channel partners are highly motivated to build on this momentum. I want to thank them for their ongoing commitment to advancing our product and technology innovations as well as our cost savings and productivity initiatives.

Now Angie will share additional insights on our first quarter results and provide our outlook for the year.

Angela C. Drake — Vice President and Chief Financial Officer

Thank you, Rick, and good morning, everyone. Before getting into the details of our results, I’ll highlight three key takeaways from our first quarter performance. First, we delivered better-than-expected top line growth in both our Professional and Residential segments through disciplined execution that enabled us to capitalize on seasonal demand opportunities. Second, we delivered adjusted EPS above expectations and prior year through deliberate productivity improvement initiatives that drove favorable operating leverage. And third, our positive free cash flow and strong balance sheet position underscore our commitment to financial discipline and returning cash to shareholders. In short, our consolidated first quarter results demonstrate the strength of our portfolio and market-leading innovation, our commitment to operational excellence and our thoughtful strategic and financial stewardship.

Now let’s dig into some of the details. Consolidated net sales for the first quarter were $1.04 billion, up 4.2% from prior year and better than expected as sales in both the Professional and Residential segments exceeded our guidance. Professional segment net sales in the first quarter were $824 million, while Residential segment net sales were $206 million. Both segments benefited from higher shipments of snow and ice products and net price realization.

Strength in underground construction, including the successful integration of Tornado and growth in our landscape business also contributed to top line growth in the Professional segment. We delivered a 9.8% consolidated adjusted operating earnings margin in the first quarter, up from 9.4% a year ago. Both Professional segment earnings of $137.6 million and Residential segment earnings of $13.2 million exceeded our expectations.

Year-over-year results in both segments reflect net price realization and the favorable impact of our ongoing productivity improvement and cost savings measures. This was partially offset by higher material and manufacturing costs. Finally, our first quarter adjusted EPS was $0.74, which exceeded both our prior year adjusted EPS of $0.65 and our previous outlook for this period.

Now turning to our balance sheet and cash flow results. Our balance sheet continues to afford us meaningful strategic optionality, enabling us to focus our capital investment on initiatives that generate profitable growth. Our current leverage ratio of 1.5 times remains healthy and well within our stated target range. Our free cash flow for the quarter was $14.6 million, a year-over-year increase of more than $80 million, resulting in a free cash flow conversion rate of 22%.

We achieved this performance through meaningful inventory improvement, driven by our integrated business planning process and seasonal demand for snow products. As a result, our inventory turnover improved to 2.8 times in the quarter. Additionally, we returned $133 million to shareholders in the quarter through dividends and share repurchases, demonstrating continued confidence in our ability to generate cash. Looking ahead, we remain focused on capitalizing on top line growth opportunities, thoughtfully managing our balance sheet and cash flow and integrating AMP operating efficiency benefits that support our $125 million run rate target by the end of 2026.

We are raising our sales and earnings outlook for fiscal 2026 based on our strong execution and the strength of our first quarter performance. We are increasing our expectation for total company net sales growth to 3% to 6.5%. This reflects, first, Professional segment net sales that are expected to grow mid-single digits; and second, Residential segment net sales that are expected to be flat to down 3%. This is an increase from our prior Residential segment net sales guidance, reflecting strong Q1 results and an improved outlook for the balance of the year. We are also raising our full year 2026 adjusted earnings per share guidance to be in the range of $4.40 to $4.60.

This outlook assumes a higher total year adjusted gross margin rate, consistent with our prior guidance and underscoring our ability to navigate cost pressures, while investing in innovation. Higher adjusted operating earnings margin, which reflects annual Professional segment earnings margin between 18.5% and 19.5% and an improved outlook for the Residential segment earnings margin between 6.5% and 8.5%. Interest expense of approximately $60 million, an adjusted effective tax rate of about 21% and capital expenditures of $90 million to $100 million. Furthermore, we now expect an improved free cash flow conversion rate of at least 120%.

For the second quarter of 2026, we expect total company net sales to increase mid-single digits from the same period in 2025, with mid-single-digit net sales growth expected in both segments. Professional segment earnings margin in the second quarter is expected to be similar to a year ago, while Residential segment earnings margin is expected to approach double digits. For the total company, we are expecting mid-single-digit adjusted earnings per share growth in Q2. As a reminder, our second quarter is typically the largest of the year.

As evidenced by our strong first quarter performance, we are managing our business to take advantage of our strengths as well as market opportunities, while mitigating external pressures. With our team’s continued commitment to providing innovative solutions that create value for our customers and drive operational excellence across our business portfolio, I am confident in our ability to deliver sustainable, profitable growth for the long term.

With that, I’ll turn the call over to Edric.

Edric C. Funk — President and Chief Operating Officer

Thank you, Angie, and good morning, everyone. Our results in the first quarter demonstrate our competitive positioning and business resilience, our market leading innovation and our team’s skillful execution of key initiatives. Together, these factors provide a solid foundation for future success.

With our strong balance sheet and free cash flow, we continue to invest in technological innovations and growth markets that provide significant value for customers and The Toro Company. Let me share a few examples. We are actively pursuing opportunities to capitalize on the growing global demand for underground construction equipment, which is being fueled by aging infrastructure, new data centers and a rise in energy and telecommunications projects.

CONEXPO, which is North America’s largest construction trade show is taking place this week. At the show, we are exhibiting our broadest offering ever of underground and specialty construction solutions. With our recent acquisition of Tornado, which is a natural complement to our existing products, we are poised to extend our reach and impact within this category and beyond.

In golf grounds and irrigation, we’re building a pipeline of innovations that help customers maximize workforce productivity and reduce costs. Last November, we introduced our AI-enabled spatial adjust software, which has proven to be in the words of our customers an absolute game-changer. This water management system is simultaneously helping to preserve one of our most precious resources, delivering more consistent playing conditions and bolstering subscription service offerings that provide incremental recurring revenue for The Toro Company.

This spring, we are further expanding our water management suite with the launch of our new RXC irrigation controller. This reliable and contractor-friendly irrigation solution provides modular expandability, advanced flow monitoring and smart features such as predictive weather-based scheduling, seasonal adjustments and intuitive programming. Innovations like this enable our customers to better manage costs, conserve water and maintain the condition of the grounds in their care.

And finally, by coupling targeted acquisitions and strategic partnerships with years of our own internal development, we are incredibly excited that we now offer the market’s broadest range of autonomous turf maintenance solutions. We’ve accomplished this by leveraging multiple localization and navigation technologies across an array of high energy and low-energy product platforms. While most of these innovations are still early in their growth life cycle, we’re very optimistic about their future potential. At the same time, we’re also excited about the near-term opportunities within our core businesses. For example, following the strong performance of our snow categories during Q1 and given the current health of the channel, we’re confident about the prospects for those product lines in the second half of this year.

Finally, our team’s commitment to operational excellence and optimization of our global supply chain will continue to help us mitigate increases in materials and manufacturing costs, streamline our supply chain operations and manage our inventory with exceptional success. Through the steadfast engagement of our team, we are building strong momentum for future growth.

Now Rick has a few closing remarks.

Richard M. Olson — Chairman and Chief Executive Officer

Thank you, Edric. In closing, I want to underscore our confidence in The Toro Company’s strategic direction and continued profitable growth. Our actions are enhancing our customers’ performance, strengthening our competitive advantage and increasing our operational efficiency. Through our disciplined approach to capital allocation and balance sheet flexibility as well as our commitment to strong free cash flow, we are well positioned to deliver significant value to all our stakeholders for many years to come.

Now Edric, Angie, and I would be happy to take your questions.

Question & Answers

Operator

[Operator Instructions]. Our first question comes from Sam Darkatsh with Raymond James. Your line is open.

Samuel Darkatsh — Analyst, Raymond James

Good morning, Rick. Angie, Edric, how are you?

Richard M. Olson — Chairman and Chief Executive Officer

Good morning, Sam.

Angela C. Drake — Vice President and Chief Financial Officer

Morning.

Edric C. Funk — President and Chief Operating Officer

Morning.

Richard M. Olson — Chairman and Chief Executive Officer

How are you?

Samuel Darkatsh — Analyst, Raymond James

I’m well. Thank you. A few quick questions, if I could. First off, Pro sales were up 7% in the quarter. Can you give us a sense of what that was organically, excluding the Tornado effects?

Richard M. Olson — Chairman and Chief Executive Officer

Yes. So, the largest portion of the increase in the quarter was — would be snow and the portion specifically attributed to —

Angela C. Drake — Vice President and Chief Financial Officer

Yeah, we also saw improved underground and pro-contractor shipments. So — and then, of course, you said Tornado. So excluding Tornado, it would be snow and then underground contractor and golf and grounds — I’m sorry, underground construction and Pro contractor.

Samuel Darkatsh — Analyst, Raymond James

So figure maybe 5% or so is organic and a point or two would be Tornado. Would that be fair?

Angela C. Drake — Vice President and Chief Financial Officer

That’s probably close. What I sort of failed to mention though is that we did see some of that offset by some softness that we saw in international. But yes, overall, I think 1% to 2% is probably fair. What we had mentioned in Q4 is that Tornado would contribute about 2% growth for sales. So for inorganic growth would be about 2% and their sales were. We were expecting to be about $100 million for the year. So pretty well in line with what our expectations were for Q1.

Samuel Darkatsh — Analyst, Raymond James

Gotcha. And then on an all in basis, what was snow and ice? I understand it’s a relatively attractive margin category in both segments for you. Can you help us contextualize how much snow and ice was up in the quarter?

Richard M. Olson — Chairman and Chief Executive Officer

Yeah. It was — we did — as Angie said, we had strength across our businesses. On the two, if you look at the two reporting segments, it was the largest portion of each of those segments. On the Residential portion, it would be the largest, but also offset by some shipments of spring products that will be a little bit later rolling into the second quarter. So there was some offset there, but it was definitely the largest portion of the increase there.

Interestingly, on the Residential side, as we talked about, there was field inventory in place. So retail was even stronger than the shipments that we saw. Shipments, if you look at a 10-year average, they’re about on average on the Residential side.

On the Professional side, a little different story. The shipments were well above the 10-year average. And in both cases, it just puts us in a very positive field inventory position as we go into the second half of the year. That gives us confidence in the pre-season fills both for the Professional and the Residential side as we go into the third and the fourth quarter.

So, the largest portion of each of the segments was snow, but really strength across the businesses. And in the case of Residential, kind of back to a more normal snow shipment year for us.

Samuel Darkatsh — Analyst, Raymond James

Got you. And my last question has to do with the annual guide. The 6.5% high end of your range, I’m trying to — first off, I’m trying to get there with the Professional and Residential guide, Professional up mid-single, high end of the Residential is flat. Obviously, that doesn’t get you to 6.5%. So, in order to get to 6.5%, would Pro be closer to high single-digit growth? Or would Resi turn positive? I’m just trying to get a sense of how to think about the high end of the range, Angie?

Angela C. Drake — Vice President and Chief Financial Officer

Yeah, Sam, I think what we can talk to the pieces of that would be, as we think about the full year, Tornado, we expect to contribute about 2%. We expect to get a little bit more than our average 1% to 2% on net realized price. And then the balance of that will be driven by organic growth, and that will be largely in the Professional segment and then the categories that we talked about earlier, underground, Professional contractor, golf and ground and a strong second half snow sell-in.

Samuel Darkatsh — Analyst, Raymond James

Okay, okay. I’ll ask that offline. It’s fine. Thank you all. I appreciate it. Very, very good stuff.

Angela C. Drake — Vice President and Chief Financial Officer

Thank You.

Richard M. Olson — Chairman and Chief Executive Officer

Thank You.

Operator

Thank you. Our next question comes from Tim Wojs with Baird. Your line is open.

Timothy Wojs — Analyst, Baird

Hey, everybody. Good morning. Nice job. Maybe just to kind of piggyback off Sam’s question. Just I guess you raised the Residential guide, but you didn’t raise the Professional guide. Is that just kind of going from one end of the range to the other end of the range? Or is there something in Pro that’s kind of offsetting some of the upside that you saw in the quarter — in Q1?

Angela C. Drake — Vice President and Chief Financial Officer

I’d say that from the Pro, we probably saw a little more softness in international than we expected. So, we are having to offset some of that. But the rest of it is really largely as we expected in the Professional segment for the year. We raised Resi, because we did see some upside in snow that was a little higher than we expected in Q1 based on some of the snow events that we saw across the country.

Timothy Wojs — Analyst, Baird

Okay. Great. And then — okay. I guess, one question, just when you look at your snow contractor base and your lawn and garden kind of contractor base, do you have any sort of sense as to what the overlap between the two is? And if strong snow does kind of help the Professional landscape business and vice versa?

Richard M. Olson — Chairman and Chief Executive Officer

There is — excuse me, there is a lot of overlap. So, I think what you’re kind of getting at is, if you come into the spring season with contractors that do both snow and summer work, they’re going to come in, in a healthy position. And we would anticipate that, that would be the case for the contractors. And one thing to keep in mind is contractors have really been strong throughout the cycle, where we had some softness was with the homeowners that were buying Professional products. So they’ve been pretty solid throughout.

And the current strength is also being bolstered by the new products that we’re introducing, for example, in the Exmark area, the laser that was introduced two years ago and the radius are both selling very, very strongly. So, that put those factors together, and it’s a very positive position for landscape contractor on the pure Pro side.

Timothy Wojs — Analyst, Baird

Got you. Okay. Okay. That’s helpful. And then the last one I had, just — as we kind of did our golf kind of checks this quarter, we got back kind of an abnormally high response rate around autonomous adoption. And I guess, could you just review for us kind of where you are in autonomous and golf? And if there’s any sort of kind of KPIs around how big autonomous is, how it’s growing, kind of the products that golf courses are adopting, I think that would be really helpful. Thanks.

Edric C. Funk — President and Chief Operating Officer

Yeah. Great question, Tim. The response you got is not surprising. There’s a lot of interest, and that wouldn’t surprise any of us knowing that labor represents such a significant portion of golf course budgets, and that for a lot of golf courses, they’re finding it difficult to find and attract the labor. So, that’s clearly the driver, it has been for some time. We’ve seen — it’s kind of difficult to find a golf course that hasn’t at least experimented with some autonomous solutions. And I think they’re still looking for how that ultimately fits into their business. And so, some of what we’re excited about. We’ve been investing in this category because of those drivers for a long time.

And as I mentioned in the prepared remarks, we’re pretty excited now that we cover all the bases. So, if somebody is looking for that traditional mowbot style, whether that’s for around the clubhouse or smaller areas of the rough, we have that. If they’re looking for still low energy, but a more productive piece, we now offer that product as well. If they’re looking to rather than mow collect balls on the range, we’ve got a version of that platform that does that piece.

And then we’re also now offering products up in the higher energy range. So, if it’s about mowing that longer turf that again, you might find in the rough, but they’re looking for an even more productive machine and one with the traditional mowing technology. We’ve got the platform for that, and then all the way now to the fairway mowers. So we’re pretty excited there. As we said, it’s still early days on people, I’d say, being all in across the board, but we only expect additional interest in growth in that area.

Timothy Wojs — Analyst, Baird

Awesome. Thank you. Thanks for the detail, and good luck guys.

Angela C. Drake — Vice President and Chief Financial Officer

Thank you.

Edric C. Funk — President and Chief Operating Officer

Thank you.

Operator

Thank you. Our next question comes from David MacGregor with Longbow Research. Your line is open.

Joseph Nolan

Hey, good morning. This is Joe Nolan on for David. I was just wondering —

Angela C. Drake — Vice President and Chief Financial Officer

Hi, Joe.

Joseph Nolan

With the — Hi, guys. With the bottlenecking investments and other investments you’ve made in the Ditch Witch business, just can you talk about how much improvement you’re seeing on margins today in that business and how much more improvement we could see in 2026?

Richard M. Olson — Chairman and Chief Executive Officer

Yeah. Angie can comment specifically, but we continue to see really from the time of the acquisition in 2019, steady growth in our profitability in that business. And it’s from a number of factors, obviously, leveraging across the scale of The Toro Company, but just also the continued improvement by that business. So, we’re back in the — soundly in the range of the Professional profitability at this point. And the investments that you mentioned like the new paint system and others within the facility are helping us to continue to fuel the growth that we see across a lot of drivers within that business. So business continues to be healthy. We’ve continued to make solid profit improvements, and we’re very optimistic about the outlook for that business going forward with a long runway.

Joseph Nolan

Got it. That’s encouraging. And then on the international business, you mentioned some weakness there. Could you just expand on what markets that’s in and just how that’s factoring into your guidance?

Richard M. Olson — Chairman and Chief Executive Officer

Yeah. Broadly across our businesses, that’s the one area that’s a little bit behind where we would expect them to be at this point in the year, just through the first quarter. And I just looked at that detail actually this morning, and it’s kind of broadly across a number of areas, both in Europe and in Asia across multiple categories. So, it’s more just kind of a general economic environment sort of situation. Our team is still optimistic that they’ll pull that be on track for the year, but we just see some softness there so far this year that we wanted to pass on commentary.

Joseph Nolan

Got it. And then just one last one for me quickly. On M&A, can you just talk about what you’re seeing in terms of valuations and just also update us within the existing enterprise where you see the greatest opportunity to build with inorganic growth?

Richard M. Olson — Chairman and Chief Executive Officer

Our approach to M&A has remained pretty consistent through the year. So the activity has always taken place, building opportunities for M&A. We stay pretty focused in areas where we know we can compete and win. So, it’s close to our existing businesses. And if you pick those out, it’s going to be likely on the Professional side, and we see opportunities within — as evidenced by the Tornado acquisition within the underground specialty construction, particularly, but also opportunities for technology investments and adjacencies that might be there as well. But the key point is process continues on an ongoing basis. Valuations have been high, but some signs of moderating a little bit, just recent data points. So, nothing necessarily statistically valid there, but valuations may be moderating a little bit.

Joseph Nolan

Great. Thanks for answering my questions. I’ll pass it on.

Richard M. Olson — Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Eric Bosshard with Cleveland Research Co. Your line is open.

Eric Bosshard — Analyst, Cleveland Research Co

Thanks. Two things, if I could. First of all, with leverage now 1.5, I’m curious how you’re thinking next 12 months, 18 months. There’s been a handful of acquisitions, tuck-in acquisitions and some bigger ones. But I’m curious, as we move forward, what the strategy is with the leverage opportunity? Is this buying more stock? Is it more acquisitions? If you could just start on that would be helpful.

Richard M. Olson — Chairman and Chief Executive Officer

Yeah. Thanks for the question. Our capital allocation strategy remains the same. We first invest in research and our new products and innovations. We invest in opportunities for productivity improvement and technology within our facilities. We obviously look for opportunities with M&A. And then, of course, we fund our dividends and typically would buy back stock at the end of that list.

With regards to M&A, we are — we have the capacity and we have the interest in M&A of all sizes. It’s really for us, the process that we go through and the discipline that we maintain in that process. So we’re always open to M&A, but it’s really the process that, and the opportunities and the timing for potential sellers that is the gauging factor. So did that answer your question?

Eric Bosshard — Analyst, Cleveland Research Co

Yeah, that helps. The second question is from a field inventory perspective on both the Pro and Residential side, curious what that looks like presently and also the appetite for loading in both the Pro and the Residential side from your partners?

Richard M. Olson — Chairman and Chief Executive Officer

Yeah. We’re actually in a very healthy position from a field inventory standpoint. There are — even in a normal situation, there will be differences by businesses, so some a little high, some a little low, and those businesses are working to adjust those just with the normal flow. But I would say we’re pretty normalized at this point.

And with regard to your question about channel fill, it really, as we mentioned earlier, sets us up and gives us confidence in the second half of the year with the snow, in particular, the Professional products would be going into the pre-season in the third quarter and the Residential products in the fourth quarter. So, it does give us confidence in the second half, de-risk some of those factors for the second half.

Eric Bosshard — Analyst, Cleveland Research Co

Okay. Thank you.

Richard M. Olson — Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Michael Shlisky with D.A. Davidson & Company. Your line is open.

Michael Shlisky

Hi, good morning. Thanks for taking my questions.

Richard M. Olson — Chairman and Chief Executive Officer

Hi, Mike.

Michael Shlisky

Perhaps you have people — hey, guys. Perhaps you have people on your staff who track this, but does the heavy snowfall that we saw most of this winter, does that lead to a potential greener spring, assuming temperatures are somewhat normal?

Richard M. Olson — Chairman and Chief Executive Officer

It does, Mike. So, yeah, obviously, snowfall leads to early spring moisture that gets — obviously, the growth started early in the spring. So, it is typically a positive. And we’ve seen solid snowfall across the US. Interestingly, on average, a little bit below just because of the extremes. The West had little snow, if you think about some of the ski locations. The Midwest was kind of mixed relative to normal. And then you experienced on the East Coast really exceptional winter. So, that would also influence the effect that you talked about. So less snow in the West would be less positive going into the spring.

Michael Shlisky

Got it. Thanks for that. Turning to CONEXPO. I really enjoyed that I checked out the booth the other day at CONEXPO, the Ditch Witch booth. And I was curious about something I saw there called the Orange Intel system, which looks like an interesting fleet management kind of telematics type of system.

The other brands that you have, have similar systems like Horizon360, for example. And I was curious how you feel about your offerings compared to the competition? Are both of those other offerings on shared infrastructure that maybe other people can’t really replicate? And are there any other digital offerings on the way like getting Tornado add to it or other digital offerings that might have a good subscription tailwind here?

Edric C. Funk — President and Chief Operating Officer

Yeah. Great observation, Mike, and thanks for the question on that as well. We get more excited every day with the development of those things. In addition to the ones you referenced, Intelli360 would be another one that we’re using on the golf and ground side of the business. So, some of those grew up in different places. Orange Intel is something that had existed with the Ditch Witch brand and the former Charles Machine Works Company even prior to the acquisition by The Toro Company. But now all of those teams are working together. We execute something within the company that we call our technology forum that brings all of our technology practitioners together to share and continue to co-develop.

So going forward, what you hinted at is absolutely likely that you’ll see more and more commonality, let’s say, and ability for customers who work across different segments of our product lines to be able to use some common infrastructure. So, lots and lots of good stuff going on now and excitement for the future there.

Michael Shlisky

Great. Maybe one last one on the golf business. I think last quarter, you said that grounds would be a little bit more of a growth area than golf just because golf has such tough comps and grounds has been a little bit of a kind of — it was hard to meet that demand when golf was so strong. A quarter later, do you still feel that way? Are golf courses — is ground still going to be a bigger driver than it was before? I’d also be curious about the outlook for international golf courses versus domestic?

Edric C. Funk — President and Chief Operating Officer

Yeah. Another good question. So, I’d say, we’re probably feeling a bit more optimistic on both fronts in golf and grounds. Our efforts in grounds are showing benefits. You remember well that, that was something that we were intending to put more energy toward.

On the golf side, we’ve done some recent research that’s showing actually continued growth in equipment purchase expectations and the budgets to support that. So, we were prepared for some — I guess, you’d say, softening of the incredible growth trajectory that we’ve been on, seeing that normalize more, and it has, but the incoming orders have been a bit more brisk than we probably anticipated.

So, I’d say, we’re probably more optimistic than we were three months ago in that regard.

Michael Shlisky

And just your thoughts on global golf as opposed to domestic. Any differences there?

Edric C. Funk — President and Chief Operating Officer

Oh, yeah, yeah. Thank you. Yeah, connecting back to Rick’s earlier comments, things haven’t been as strong. Now participation internationally has been really good just as it has been in the US. There’s still money going into the industry. But we’ve seen a bit more softness there. Development remains pretty strong. Now given some of the geopolitical things that are going on in the world, we were prepared that, that may slow and defer some of the projects in certain regions. But generally, we think things are just connected back to the macroeconomic environment not being quite as strong and maybe a bit less investment internationally than we’re seeing in the US. Nothing that we’re alarmed about, but something that we’re watching closely.

Michael Shlisky

Thanks for that. I appreciate it. I’ll pass it along.

Operator

Thank you. This concludes the question-and-answer session. Ms. Hille, please proceed to closing remarks.

Heather Hille — Vice President, Corporate Affairs and Investor Relations

Thank you, everyone for your questions and interest in The Toro Company. We look forward to talking with you again in June to discuss our second quarter 2026 results.

Operator

[Operator Closing Remarks]