The Toro Company (TTC) delivered a pleasant surprise for investors Wednesday, posting fourth-quarter results that cleared Wall Street's bar and showcasing impressive cash generation capabilities. Shares jumped more than 7% as the lawn and landscape equipment maker demonstrated operational discipline even as overall revenue edged lower.

For the quarter ended October 31, 2025, Toro reported net sales of $1.07 billion, a modest dip from $1.08 billion in the same period last year. Full-year sales came in at $4.51 billion versus $4.58 billion in fiscal 2024, with the company pointing to prior asset divestitures as the primary culprit for the decline.

The earnings picture looked considerably brighter. Fourth-quarter adjusted diluted earnings hit 91 cents per share, topping the analyst consensus of 87 cents. That compared favorably to 95 cents per share in the prior-year quarter. Reported diluted earnings were 74 cents per share versus 87 cents a year earlier.

For the full fiscal year, Toro delivered adjusted diluted EPS of $4.20, slightly ahead of the previous year's $4.17 and exceeding the company's own expectations. Reported diluted EPS came in at $3.17 compared with $4.01 in fiscal 2024.

Management Highlights Productivity Gains

"We delivered fourth quarter and full-year performance that exceeded our expectations, driven by strength in our Professional segment and strategic investments in productivity improvement measures," said Richard M. Olson, chairman and chief executive officer.

Olson highlighted an important development in the company's efficiency drive: "Additionally, due to the accelerated performance of our AMP initiative, we are increasing our run-rate savings goal to $125 million by fiscal 2027, up from the original target of $100 million."

Tale of Two Segments

The Professional segment remained resilient, with fourth-quarter net sales holding steady at $910 million. For the full year, Professional segment sales climbed 1.9% to $3.62 billion, while the earnings margin improved to 19.4%.

The Residential segment faced headwinds, with fourth-quarter sales declining 5% to $147 million. Full-year Residential segment sales dropped 14% to $858 million, and the earnings margin contracted to 4.2%.

Cash Flow Steals the Show

Perhaps the most impressive number in the release was the company's free cash flow generation. Toro produced $578 million in free cash flow for fiscal 2025—a record—driven largely by working capital improvements. Operating cash flow totaled $662 million.

The balance sheet remains solid, with cash and cash equivalents of $341 million at year-end against long-term debt of approximately $922 million.

"We generated record free cash flow in fiscal 2025, largely due to working capital improvements. Our long-standing financial discipline is evident in our strong balance sheet position and contributed to positive momentum in our return on invested capital," Olson noted.

Looking Ahead to Fiscal 2026

For fiscal 2026, management expects adjusted EPS in the range of $4.35 to $4.50, which came in below the analyst estimate of $4.65. Revenue is projected between $4.601 billion and $4.736 billion, roughly in line with the $4.632 billion consensus.

TTC Price Action: Toro shares were up 7.06% at $77.78 at the time of publication Wednesday.