The Toro Company (TTC): Business Model Canvas [Dec-2025 Updated]

As a financial analyst, you know a company's true structure lives in its business model, not just the P&L. For The Toro Company (TTC), the story in late 2025 is clear: the Professional segment is the powerhouse, driving $930.8 million in Q3 revenue, while the Residential side is definitely softer at $192.8 million. We need to see how their deep R&D in battery tech and the ongoing cost-cutting via the AMP initiative fit into their key resources and activities. Dive into this canvas to see the exact nine blocks that explain how The Toro Company (TTC) is balancing its high-touch professional dealer network against mass retail to manage this near-term divergence. It's a masterclass in managing a complex, multi-brand portfolio, so let's look closer.

The Toro Company (TTC) - Canvas Business Model: Key Partnerships

You're looking at The Toro Company's network of allies, the crucial external relationships that keep the gears turning, especially as the Residential segment navigates macro headwinds. Honestly, these partnerships are the backbone for market access and innovation delivery.

Professional distributors and dealers for sales and service

The professional channel remains a profit driver. For the third quarter of fiscal 2025, the Professional segment delivered net sales of $931 million, marking an increase of about 6% year-over-year, driven by higher shipments in Golf & Grounds and Underground Construction. The earnings margin for this segment in Q3 2025 hit 21.3%, up from 18.8% in the prior year period, showing strong operational leverage through these distribution channels. Management noted taking decisive actions to strengthen resilience as distribution partners sell through current stocks, positioning for the 2026 spring selling season.

Strategic retail partners like Lowe's for Residential channel expansion

The strategic retail partnership with Lowe's Companies, Inc., announced in September 2023, is key for the Residential channel. This deal secured placement for The Toro Company's zero-turn riding mowers, walk mowers, portable power equipment, and snow blowers across all Lowe's stores nationwide and online starting in Spring 2024. This move was specifically intended to bolster placement of the powerful 60V battery portfolio in a key customer market. Despite this, the Residential segment faced pressure, with net sales for Q3 2025 dropping to $192.8 million, down 27.9% from $267.5 million in the same period last year.

Ace Hardware, a long-term corporate partner since 2015

The relationship with Ace Hardware is a long-standing one, underpinning The Toro Company's presence in the independent retail space. For their consistent contributions, The Toro Company was recognized as an Ace Hardware 2024 Vendor of the Year, announced in March 2025. This recognition highlights the partner's crucial role in helping Ace retailers stand out through service and quality.

GCSAA Foundation for turfgrass research and industry education

The Toro Company Foundation maintains a deep commitment to turfgrass advancement through the Golf Course Superintendents Association of America (GCSAA) Foundation. The Toro Company is the exclusive presenting partner of the Rounds 4 Research (R4R) program. In 2025, The Toro Company Foundation made a $50,000 gift to R4R and an additional $8,849 donation in March 2025 to honor the GCSAA CEO's Mount Everest summit. Since 1987, The Toro Company has donated more than $2.7 million to the GCSAA Foundation, which has helped raise over $3 million for scientific research since R4R's launch in 2012.

TerraRad for exclusive soil moisture sensing technology integration

Innovation in the Golf & Grounds space is being driven by an exclusive technology partnership with TerraRad, announced in February 2025. This collaboration integrates TerraRad's turfRad smart sensors with The Toro Company's Lynx® Central Control platform via the new Spatial Adjust software. This system allows for real-time soil moisture mapping while mowing, providing superintendents with individual sprinkler adjustment recommendations to optimize water use and cut costs. This is designed to help courses meet sustainability goals and cut costs.

Here's a quick look at the scale of the Professional segment supporting these industry partnerships:

The company's overall financial health shows a focus on operational efficiency, targeting at least $100 million in annualized savings from its AMP program by 2027.

• GCSAA Foundation Cumulative Giving Since 1987: More than $2.7 million.
• Rounds 4 Research Program Total Raised Since 2012: More than $3 million.
• 2025 GCSAA Foundation Donation (R4R): $50,000.
• 2025 GCSAA Foundation Donation (Everest Honor): $8,849.

The Toro Company (TTC) - Canvas Business Model: Key Activities

Manufacturing and global distribution of outdoor environment solutions is central to The Toro Company's operations. As of fiscal year 2024, The Toro Company reported total net sales of $4.58 billion, a slight increase from $4.55 billion in fiscal 2023. The company's global footprint spans more than 125 countries. A key aspect of their manufacturing strategy is significant localization, with 85% of their products being U.S.-manufactured, which helps insulate them from escalating tariffs on imported goods. The Professional segment, which includes underground construction and golf equipment, represented nearly 80 percent of fiscal 2024 new sales. The company employed approximately 11,000 people as of late 2024.

Executing the Amplifying Maximum Productivity (AMP) cost-saving initiative is a major ongoing activity. Launched in the first quarter of fiscal 2024, the AMP program delivered $75 million in annualized cost savings by the third quarter of fiscal 2025. The target for this initiative is to deliver at least $100 million in run-rate cost savings by fiscal 2027. A portion of these savings is deliberately reinvested to drive further innovation and growth.

Research and development focuses heavily on technology to address labor shortages and sustainability needs. The company is actively reinvesting AMP savings into R&D for smart irrigation systems and electric-powered equipment. Specific product innovations launched in early 2025 include the Toro® Turf Pro™ autonomous mower, which targets up to 40% labor cost reduction on golf courses, and the Toro® Range Pro™ golf ball picker. Furthermore, The Toro Company launched new battery-powered gardening equipment with extended runtime in August 2025, and they are developing data-driven soil moisture sensors through a partnership with TerraRad.

Strategic portfolio management involves both acquisitions and divestitures to sharpen focus on core growth areas. In August 2025, The Toro Company divested its Trencor equipment brand and the auger boring product category from its American Augers brand. Conversely, in October 2025, the company entered an agreement to acquire publicly held Tornado Infrastructure Equipment Ltd. for $279 million (CAD), a move intended to expand the underground construction product lineup. This acquisition is expected to yield annual run-rate cost synergies of $3 million (USD) over three years.

Managing a complex, multi-brand global portfolio requires distinct operational focus across different market segments. The company manages a family of brands including Toro, Ditch Witch, Exmark, BOSS Snowplow, Ventrac, American Augers, and others. The performance divergence between segments is a key management focus:

• Professional segment operating margin reached 21.3% in Q3 2025, up from 18.8% in the prior year period.
• Full-year fiscal 2024 Professional segment earnings margin was 18.0%.
• Fiscal 2024 Residential segment net sales were $998.3 million, a 16.9% increase year-over-year.
• The Residential segment experienced a 28% year-over-year net sales decrease in the third quarter of fiscal 2025.

Here's a quick look at key financial and operational metrics from recent reporting periods:

The company's ability to generate cash supports shareholder returns; free cash flow through the third quarter of fiscal 2025 was $292 million, with a conversion rate for the quarter of 90%.

The Toro Company (TTC) - Canvas Business Model: Key Resources

Extensive portfolio of global brands and intellectual property (IP)

The Toro Company maintains a family of global brands serving diverse end markets.

• Toro
• Ditch Witch
• Exmark
• Spartan
• BOSS
• Ventrac
• American Augers
• Subsite
• HammerHead
• Radius
• Perrot
• Hayter
• Unique Lighting Systems
• Irritrol
• Lawn-Boy

The Toro Company generated net sales of $4.6 billion in fiscal 2024. Management expects fiscal 2025 total company net sales to be flat to down 3%.

Global manufacturing and distribution network spanning over 125 countries

The Toro Company's global presence extends to more than 125 countries. This network includes manufacturing facilities, regional sales offices, and authorized dealers providing parts, service, and support.

Significant R&D investment in electrification and autonomy

The Toro Company invests in research and development to advance battery-powered engines, precision irrigation controllers, and software platforms. Acquisitions of Left Hand Robotics and TURFLYNX have helped accelerate the innovation pipeline of autonomous technologies.

Strong, long-standing relationships with professional channel partners

The Professional segment represented nearly 80 percent of fiscal 2024 new sales. Third-quarter fiscal 2025 Professional segment earnings were $198.5 million, representing 21.3% of segment net sales.

Financial capacity to fund acquisitions like the $279 million (CAD) Tornado deal

The Toro Company entered a definitive agreement to acquire Tornado Infrastructure Equipment Ltd. for a fully diluted equity value of $279 million (CAD). The transaction is planned to be financed with debt from existing credit facilities and additional financial arrangements. Expected annual run-rate cost synergies from the deal are $3 million (USD) over three years.

The Toro Company (TTC) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose The Toro Company, and the numbers from late 2025 definitely show where the strength is right now. The value proposition is clearly anchored in the professional side of the business, which is outperforming the residential market significantly.

Trusted performance and durability for professional-grade equipment

The Professional segment is the engine, showing consistent growth and margin expansion, which speaks directly to the perceived quality and reliability of that equipment. For the third quarter of fiscal 2025, net sales in the Professional segment grew to $930.8 million, marking a 5.7% increase year-over-year. Furthermore, the earnings margin for this segment expanded to 21.3% of net sales, up from 18.8% in the prior-year period, showing that the premium, durable products are translating into better profitability. This segment's strength is what management pointed to as a primary driver of profitability for the quarter.

The contrast with the Residential segment is stark, which underscores the focus on professional-grade value. Residential segment net sales for the same period fell by 27.9% to $192.8 million, with the earnings margin dropping to just 1.9% of net sales.

Here's a quick look at the segment performance for Q3 Fiscal 2025:

Labor and cost savings via autonomous golf and grounds solutions

The Toro Company is delivering on innovation that directly reduces customer operating expenses. This is evidenced by the introduction of new technology aimed at automation. During the first quarter of fiscal 2025, the company showcased new robotic solutions, including the Toro® Turf Pro™ autonomous mower and the Toro® Range Pro™ golf ball picking robot. The company's productivity initiative, named AMP, is also a direct cost-saving value proposition for its internal operations, targeting at least $100 million in run-rate cost savings by fiscal 2027, with $75 million in annualized savings already delivered.

Water-efficient irrigation and smart water management technology

For irrigation, the value is in efficiency and data-driven resource management. The company announced an exclusive partnership with TerraRad in Q1 2025 to introduce a data-driven soil moisture sensing and irrigation control technology. This technology is designed to recommend and enable real-time sprinkler adjustments, helping customers optimize water usage. The Toro Company's global presence, extending to more than 125 countries, means this efficiency value is available across a massive installed base.

Comprehensive product lines for all-season outdoor environment solutions

The breadth of the portfolio supports year-round revenue stability, even if some lines face headwinds. The Professional segment's growth in Q3 2025 was driven by underground construction and golf and grounds products, showing demand outside of just turf maintenance. The full portfolio includes solutions for:

• Turf and landscape maintenance machinery.
• Snow and ice management equipment.
• Underground utility construction machinery.
• Irrigation and outdoor lighting solutions.

The company's total net sales for the trailing twelve months ending August 1, 2025, were $4.52 billion, up 0.65% year-over-year, reflecting the stability provided by this diverse offering despite residential softness.

Broad distribution and after-sale parts/service support

The ability to service and supply parts is critical for professional uptime. The Toro Company supports its products through a network that spans over 125 countries. This network includes manufacturing facilities, regional sales offices, and authorized dealers. This infrastructure ensures that customers relying on their equipment for commercial operations-like golf course superintendents-receive the necessary agronomic expertise and service support to maintain their landscapes effectively.

Finance: draft 13-week cash view by Friday.

The Toro Company (TTC) - Canvas Business Model: Customer Relationships

The Toro Company manages distinct relationship strategies tailored to its diverse customer base, ranging from highly specialized professional service to standardized retail support. This approach is critical given the split in performance, where the Professional segment drives profitability while the Residential segment faces headwinds.

Dedicated professional distributor/dealer support for complex equipment

The relationship with professional distributors and dealers is foundational for complex, high-value equipment in the Professional segment. This segment, which includes underground construction and golf and grounds machinery, accounted for 77.6 percent of The Toro Company's consolidated net sales in fiscal 2024. The company supports this channel with specialized service and parts access, which is vital for minimizing downtime on job sites. The strength in this area is evident in the Q3 2025 results, where the Professional segment's net sales grew 5.7 percent year-over-year to $930.8 million, leading to an operating margin expansion of 250 basis points to 21.3 percent in that quarter.

Long-term, high-touch relationships with golf course and construction pros

For golf course superintendents and construction professionals, The Toro Company emphasizes long-term partnership, often through product innovation that directly addresses labor and efficiency concerns. This high-touch approach is supported by the success of specialized product lines. For example, new autonomous equipment like the Turf Pro™ mower and the Range Pro™ ball-collecting robot are designed to save labor, with the Range Pro capable of collecting over 15,000 balls in 24 hours. The company's global distribution network, spanning more than 125 countries, facilitates this close relationship through authorized dealers providing parts, service, and support.

Standardized retail sales and customer service for homeowners

Customer relationships in the Residential segment rely on standardized retail sales and service, often through mass channel partnerships. This contrasts sharply with the professional focus. In the third quarter of fiscal 2025, the Residential segment net sales were down 27.9 percent from the prior-year period, indicating increased homeowner and channel caution. For context, in fiscal 2024, the Residential segment represented 21.8 percent of total consolidated net sales.

Digital engagement for product information and remote asset management

Digital engagement is increasingly important, particularly for professional asset management. Innovations include the Toro Spatial Adjust Irrigation Control Software and wireless monitoring capabilities integrated into new professional equipment. These digital tools help customers track and adjust performance via computer or mobile device, moving the relationship beyond just the physical product sale to ongoing operational support. The company's ongoing investment in R&D for smart irrigation controllers and software platforms supports this digital relationship evolution.

Brand-specific loyalty programs and warranties across the portfolio

Warranties and associated service costs are a direct measure of the post-sale relationship commitment. While specific loyalty program details aren't public, the financial impact of product quality is reflected in operating expenses. For instance, in the fourth quarter of fiscal 2024, Selling, General & Administrative (SG&A) expense as a percentage of net sales was negatively impacted, partially offset by lower marketing costs, due to higher warranty expense.

The operational efficiency drive, the Amplifying Maximum Productivity (AMP) initiative, is also a relationship factor, as the $75 million in annualized cost savings achieved by Q3 2025 allows for reinvestment into product quality and innovation, which ultimately benefits the customer relationship.

Here's a quick look at the segment focus that dictates relationship intensity:

• Professional segment operating margin expanded 250 basis points in Q3 2025.
• Residential segment net sales fell 27.9 percent in Q3 2025.
• AMP initiative delivered $75 million in annualized savings by Q3 2025.
• FY2024 Professional segment was 77.6 percent of total net sales.
• FY2025 Adjusted diluted EPS guidance is around $4.15.

The difference in segment performance highlights where the high-touch relationship investment is yielding the best financial return:

Finance: draft 13-week cash view by Friday.

The Toro Company (TTC) - Canvas Business Model: Channels

You're looking at how The Toro Company moves its products to market as of late 2025, which is a mix of specialized professional channels and broad consumer retail. The overall picture shows a split focus, with the Professional segment driving profitability even as the Residential side faces volume headwinds.

The Toro Company's global reach extends to over 125 countries, supported by a multi-faceted distribution system including distributors, dealers, retailers, and rental stores. This structure helps them serve diverse end-markets like golf courses, commercial properties, and construction sites. For instance, one of their key professional brands, Ditch Witch, relies on a dedicated dealer network of over 175 locations worldwide to support its specialized equipment. This network is crucial for the Professional segment, which posted net sales of $930.8 million in the third quarter of fiscal 2025. That Q3 performance represented a 5.7% increase year-over-year for that segment. To be fair, the Residential segment sales for the same quarter were significantly lower at $192.8 million, a drop of 27.9%. This disparity highlights the channel strength in the professional space.

Here's a quick look at how the segment sales, which map to different channels, stacked up in the third quarter of fiscal 2025:

The company's full-year fiscal 2025 net sales guidance, as of the third quarter report, was set to be flat to down 3%, reflecting the macro factors impacting the lower-volume channels.

The specific channel structures supporting these segments include:

• Network of authorized professional distributors and specialty dealers: These are the primary route for the high-value Professional segment, including turf, underground construction, and irrigation solutions.
• Major home centers and mass retailers like Lowe's for Residential sales: The strategic retail partnership with Lowe's Companies, Inc. ensures broad consumer access for products like zero-turn mowers and snow blowers, aiming to bolster placement of the 60V battery portfolio.
• Rental stores for construction and specialty equipment: This channel supports the sale and service of equipment used in the rental and specialty construction markets, often through specialized dealer/distributor arms like those supporting Ditch Witch.
• Direct sales to large institutional customers (e.g., government, universities): This is often managed through specialized sales teams or dedicated distributors focusing on large-scale fleet purchases for grounds maintenance or construction projects.
• E-commerce platforms for parts, accessories, and select products: While not the largest revenue driver, this channel supports aftermarket service and direct-to-consumer sales for smaller items and parts, often integrated through dealer websites or the main company site.

The professional channel strength is evident when you look at the first quarter of 2025, where Professional segment net sales were $768.8 million, up from $756.5 million the prior year, while the Residential segment saw a drop to $221.0 million from $240.1 million. The professional segment's earnings margin reached 16.5% in that quarter, showing the channel's importance to overall profitability.

Finance: draft 13-week cash view by Friday.

The Toro Company (TTC) - Canvas Business Model: Customer Segments

You're looking at the customer base for The Toro Company as of late 2025, and the picture is definitely split. The Professional side is carrying the weight, while the Residential side is feeling significant macroeconomic pressure.

The Professional Segment, which serves commercial and institutional users, is the primary revenue engine. This group includes entities that require heavy-duty, reliable equipment for large-scale maintenance and infrastructure work.

Here's a snapshot of the segment performance for the third quarter of fiscal 2025, which ended August 1, 2025:

Professional Segment: Golf courses, sports fields, and groundskeepers

This group is a key driver within the overall Professional Segment. Demand here remains strong, supported by new product introductions and sustained operational needs.

• Net sales for the entire Professional Segment in Q3 2025 were $930.8 million.
• The segment delivered a strong earnings margin of 21.3% in Q3 2025.
• Growth in this area was propelled by higher shipments of golf and grounds products.

Professional Segment: Underground construction and specialty contractors

Contractors working on infrastructure projects are another vital part of the Professional Segment, showing resilience despite broader economic softness.

• Underground construction products were a primary driver of net sales and profitability for the quarter ending August 1, 2025.
• The overall Professional Segment saw net sales increase by 5.7% year-over-year in Q3 2025.

Residential Segment: Homeowners and small landscaping firms

The Residential Segment, which includes sales to homeowners, is experiencing significant headwinds. Small landscaping firms, if served through the residential channel, are likely included here, though they may also overlap with the Pro segment.

The drop in this segment is stark; net sales for Q3 2025 were only $192.8 million, a decline of 27.9% year-over-year. The earnings margin for this segment collapsed to just 1.9% in Q3 2025. Lower demand from homeowners was the primary driver for the sales decrease.

Rental companies and government/educational institutions

These customers fall under the broader Professional umbrella, relying on the same durable equipment lines. While not broken out separately in the latest reports, their purchasing patterns influence the Professional Segment's performance.

• The overall Professional Segment achieved $198.5 million in earnings for Q3 2025.
• The full-year fiscal 2025 guidance for total company net sales is set at the low end, flat to down 3%.

Agricultural growers and commercial property managers

These users are served through the Professional Segment portfolio, which includes turf and landscape maintenance equipment. Their purchasing decisions contribute to the segment's overall revenue stream.

The company is relying on operational improvements, like the AMP program which delivered $75 million in annualized savings as of the Q3 2025 report, to support profitability across all customer groups.

The Toro Company (TTC) - Canvas Business Model: Cost Structure

You're looking at the cost side of The Toro Company's operations as of late 2025, which is heavily influenced by productivity programs and external trade pressures. Honestly, the numbers show a clear split between managing input costs and driving internal efficiency.

Significant cost of goods sold (COGS) from manufacturing and materials is a primary driver. The reported gross margin for the third quarter of fiscal 2025 stood at 33.7%, with the adjusted gross margin at 34.4%. The change in gross margin from the prior year was driven by factors including higher material and manufacturing costs, which the company moderated through productivity improvements and net price realization.

The company's focus on internal cost control centers on the Amplifying Maximum Productivity (AMP) initiative. This program is delivering tangible results in offsetting rising expenses. As of the third quarter of fiscal 2025, the AMP program had already delivered $75 million in annualized cost savings. The target remains firm: achieving at least $100 million in run-rate savings by fiscal 2027. This efficiency drive is also visible in Selling, General, and Administrative (SG&A) expenses; for the third quarter, SG&A as a percentage of net sales improved to 20.8%, down from 22.0% in the prior-year period, driven by these deliberate AMP program measures and lower marketing costs.

Here's a quick look at some of the key cost-related financial metrics we have for the recent period:

R&D investment to advance battery and autonomous technology is being supported by the AMP savings, with a portion intended to be prudently reinvested to drive further innovation and growth. This focus is evident in the early 2025 launch of robotic solutions, such as the Toro Turf Pro autonomous mower, which targets labor cost reduction for golf customers. Full-year fiscal 2025 interest expense is projected to be about $60 million.

Distribution and logistics costs for a global network are being managed through strategic shifts. The company has been implementing supply chain strategies since 2018 to limit exposure in the current global tariff environment, alongside strategic capacity alignment. Full-year fiscal 2025 capital expenditures are expected to be about $90 million.

The impact of trade policy remains a direct cost factor. For fiscal 2025, the company's guidance is inclusive of anticipated tariff impacts, estimated at approximately $70 million. The Toro Company noted that while 85% of its products are U.S.-manufactured, mitigating some risk, they are working diligently to offset the effects of tariffs through productivity improvements and selective price increases.

You should note the following specific cost-related elements:

• AMP program run-rate savings delivered to date: $75 million.
• AMP program target savings by 2027: at least $100 million.
• Fiscal 2025 full-year expected interest expense: about $60 million.
• Fiscal 2025 full-year expected capital expenditures: about $90 million.
• Estimated tariff impact factored into fiscal 2025 guidance: $70 million.

Finance: draft 13-week cash view by Friday.

The Toro Company (TTC) - Canvas Business Model: Revenue Streams

You're looking at how The Toro Company brings in the cash, and right now, it's a story of two very different markets. The professional side is carrying the weight, while the residential side is taking a breather. Honestly, understanding this split is key to valuing the company right now.

The Professional Segment product sales were the star performer in the third quarter of fiscal 2025, driving revenue of $930.8 million. That's up 5.7% from the prior year, fueled by strong shipments in underground construction and golf and grounds equipment, plus they realized better pricing. This segment's profitability also expanded, with earnings as a percentage of net sales hitting 21.3% for the quarter.

In sharp contrast, the Residential Segment product sales saw a significant pullback. For Q3 2025, residential sales totaled $192.8 million, marking a steep 27.9% decrease year-over-year. This weakness is tied to homeowners being cautious about big-ticket purchases. Still, the company is focused on efficiency to manage through this, with its AMP program on track to deliver savings.

To give you a clear snapshot of the top-line drivers for that quarter, here's the breakdown of the major components we have hard numbers for:

The Toro Company pulls revenue from several other important areas, which contribute to the overall financial picture, even if we don't have the specific Q3 2025 dollar amounts for every single one right here. These streams are critical for margin health and customer retention, you know.

Here are the other defined revenue streams that make up the full model:

• Aftermarket parts, service, and maintenance revenue (noted as high-margin).
• Sales of irrigation and outdoor lighting solutions.
• Distributions from the finance affiliate, net (which was $22.5 million in Q3 2025).

The financing income, specifically the distributions from the finance affiliate, Red Iron Acceptance, LLC, is a steady contributor, showing $22.5 million in net distributions for the third quarter. Red Iron itself saw originations volume increase 15.5% year-over-year for the first six months of fiscal 2025, financing $1.3 billion for dealers and distributors. That's a good sign for future sales pipeline health, even if the immediate revenue recognition is complex.

Finance: draft 13-week cash view by Friday.