Toro (NYSE:TTC) is positioning its professional businesses, underground infrastructure operations and technology investments as key drivers of future growth, incoming Chief Executive Officer Edric Funk said at D.A. Davidson’s Diversified Industrials & Services Conference in Nashville.
Funk, who is currently Toro’s chief operating officer and will become CEO on Nov. 1, described the company as a supplier of products serving land management, irrigation, underground infrastructure and snow removal markets. While Toro is widely associated with lawn mowers, he said its strategic emphasis is on professional customers, including golf-course operators, landscape contractors, municipalities and underground construction companies.
Infrastructure and Professional Markets
Funk highlighted Toro’s underground specialty construction business, including the Ditch Witch brand acquired through the company’s purchase of Charles Machine Works. He said the business serves demand related to power, water and fiber infrastructure, as well as data-center development.
According to Funk, underground infrastructure demand extends beyond data centers, supported by new development, aging U.S. infrastructure and efforts to expand high-speed internet access. He cited the need to repair and replace water systems, noting an American Society of Civil Engineers estimate that 6 billion gallons of drinking water are lost daily between treatment plants and consumers’ taps.
The company also sees its BOSS snow-removal business as complementary to its landscape operations. BOSS sells truck-mounted plows and sidewalk-clearing equipment. Funk said the business carries attractive, accretive margins and benefited from a stronger snow season that helped reduce channel inventory. Toro is seeing “nice load into the channel” ahead of the coming winter season, he said, while emphasizing a disciplined approach to production and forecasting.
Productivity Program and Earnings Outlook
Funk acknowledged that Toro has operated through a difficult period marked by unusual post-pandemic demand, supply-chain disruption and inflation. However, he said the company has improved inventories, expanded margins and generated more than 120% free-cash-flow conversion.
Toro’s AMP productivity initiative was initially intended to produce $100 million in annual run-rate savings. The company later raised that objective to $125 million and has already achieved that level, Funk said. He characterized the savings as permanent and durable, adding that the formal initiative will end with the current fiscal year but that productivity efforts will remain part of the company’s culture.
The company expects to return to double-digit earnings growth, according to Funk. He said Toro is focused on continued productivity, margin expansion and capitalizing on healthy end markets. Its residential business, while a smaller portion of the company, has returned to a path toward double-digit margins, he said.
Technology, Golf and Automation
Golf remains an important market for Toro, which Funk said is the only supplier offering both golf-course equipment and irrigation systems. The company is increasingly integrating those offerings, including technology that can collect moisture data while equipment moves around a course and feed recommendations into irrigation controls.
Funk said golf participation has remained strong following a pandemic-era boost, with increased involvement from younger players, women and other previously underserved demographics. He cited full private-club memberships, waiting lists and high demand for tee times as signs of ongoing investment across the industry.
The company is also seeing continued adoption of electrified golf equipment. Funk said electric greens mowers offer benefits beyond reduced exhaust emissions, including lower noise and reduced risk of hydraulic leaks. Toro’s recently launched all-electric greens roller sold out for the year, he said, prompting plans to increase production.
On autonomous mowing, Funk said Toro has commercialized many of its solutions within the past year and is gaining momentum. He said customers are primarily looking to redeploy workers from routine tasks to higher-value work rather than simply eliminate labor.
“This isn’t a matter of if, it’s a matter of when we see that significant escalation,” Funk said of autonomous technology adoption. Toro expects autonomous products to command higher prices and, over time, provide opportunities for margin expansion, he added.
Leadership Transition and Acquisitions
As he prepares to succeed current CEO Rick Olson, Funk said Toro’s strategy will combine “continuity balanced with evolution.” He plans to preserve the company’s focus on brands, customer relationships, innovation and disciplined execution, while placing greater emphasis on commercializing and accelerating adoption of technologies such as autonomous equipment, connected products and alternative-energy solutions.
Funk also said acquisitions will remain part of Toro’s strategy, particularly in professional markets and underground infrastructure. He pointed to the company’s acquisition of Tornado Infrastructure Equipment Ltd., a Canadian manufacturer specializing in vacuum excavation equipment, as an example of a transaction that has exceeded expectations.
Tornado’s equipment uses high-pressure water and vacuum systems to expose existing infrastructure and support installation work. Funk said the acquisition expanded Toro’s reach in Canada and complements Ditch Witch’s horizontal directional drilling operations.
Funk said Toro has a “robust pipeline” of acquisition opportunities but will be selective, prioritizing cultural fit, returns and strategic alignment. He added that the company’s balance sheet remains strong, with a leverage ratio of 1.3 times, providing flexibility for future investments.
About Toro (NYSE:TTC)
The Toro Company (NYSE:TTC) is a Minnesota-based manufacturer of equipment and solutions for maintaining outdoor environments. Founded in 1914, the company serves professional and residential customers through products sold under brands including Toro, Exmark, and BOSS.
Toro’s product portfolio includes turf and landscape maintenance equipment, commercial and residential lawn mowers, irrigation systems, outdoor lighting, utility vehicles, compact utility loaders, and equipment for snow and ice management.
