TORO CO

We operate in two reportable business segments: Professional and Residential. Segment earnings for our Professional and Residential segments are defined as earnings from operations plus other income, net. Our remaining activities are presented as "Other" due to their insignificance. Operating loss for our Other activities included earnings (loss) from our wholly-owned domestic distribution company, Red Iron joint venture, corporate activities, other income, and interest expense. Corporate activities include general corporate expenditures, such as finance, human resources, legal, information services, public relations, and similar activities, as well as other unallocated corporate assets and liabilities, such as corporate facilities and deferred tax assets and liabilities. The following tables summarize net sales for our reportable business segments and Other activities:

The following tables summarize segment earnings for our reportable business segments and operating (loss) for our Other activities:

Professional Segment

Segment Net Sales

Worldwide net sales for our Professional segment for the second quarter of fiscal 2025 increased 0.8 percent compared to the second quarter of fiscal 2024. This increase was driven primarily by higher shipments of golf and grounds products, partially offset by lower shipments of underground and specialty construction products and the prior year construction equipment dealer divestitures. Worldwide net sales for our Professional segment for the year-to-date period of fiscal 2025 increased 1.2 percent compared to the same period of fiscal 2024. This increase was driven primarily by higher shipments of golf and grounds products and zero-turn mowers, along with net price realization, partially offset by lower shipments of underground and specialty construction products and the prior year construction equipment dealer divestitures.

Segment Earnings

Professional segment earnings for the second quarter of fiscal 2025 increased 6.0 percent compared to the second quarter of fiscal 2024, and Professional segment earnings margin increased to 19.9 percent from 19.0 percent in the second quarter of fiscal 2024. The increase in Professional segment earnings margin was primarily due to product mix and productivity improvements, partially offset by higher material and manufacturing costs. Professional segment earnings for the year-to-date period of fiscal 2025 increased 8.5 percent compared to the same period of fiscal 2024, and Professional segment margin increased to 18.5 percent from 17.2 percent for the year-to-date period of fiscal 2024. The increase in Professional segment earnings margin was primarily due to productivity improvements, product mix, and net sales leverage, partially offset by higher material, manufacturing, and freight costs.

Residential Segment

Segment Net Sales

Worldwide net sales for our Residential segment for the second quarter of fiscal 2025 decreased 11.4 percent compared to the second quarter of fiscal 2024. The decrease in Residential segment net sales was primarily driven by lower shipments of walk power mowers, zero-turn mowers, and portable power products, due to lower demand from homeowners, as well as the prior year divestiture of the Pope Products ("Pope") garden watering and irrigation business, partially offset by higher shipments of snow products and lower sales promotions and incentives. Worldwide net sales for our Residential segment for the year-to-date period of fiscal 2025 decreased 10.0 percent compared to the same period of fiscal 2024. The decrease in Residential segment net sales was primarily driven by lower shipments of portable power products, walk power mowers, and zero-turn mowers, as well as the prior year Pope divestiture.

Segment Earnings

Residential segment earnings for the second quarter of fiscal 2025 decreased 55.4 percent compared to the second quarter of fiscal 2024, and Residential segment earnings margin decreased to 5.4 percent from 10.8 percent in the second quarter of fiscal 2024. The decrease in Residential segment earnings margin for the second quarter of fiscal 2025 was largely driven by higher material, manufacturing, and freight costs, lower net sales volume, and inventory valuation adjustments, partially offset by productivity improvements and lower sales promotions and incentives. Residential segment earnings for the year-to-date period of fiscal 2025 decreased 44.1 percent compared to the same period of fiscal 2024, and Residential segment earnings margin decrease to 6.4 percent from 10.4 percent in the year-to-date period of fiscal 2024. The decrease in Residential segment earnings margin for the year-to-date period of fiscal 2025 was largely driven by higher material, manufacturing, and freight costs, lower net sales volume, and inventory valuation adjustments, partially offset by productivity improvements and lower sales promotions and incentives.

Other Activities

Other Net Sales

Net sales for our Other activities includes sales from our wholly-owned domestic distribution company net of intersegment sales from the Professional and Residential segments to the distribution company. Net sales for our Other activities in the second quarter of fiscal 2025 decreased by $1.4 million compared to the second quarter of fiscal 2024. Net sales for our Other activities in the year-to-date period of fiscal 2025 decreased by $1.5 million compared to the same period in fiscal 2024.

Other Operating Loss

The operating loss for our Other activities for the second quarter of fiscal 2025 increased $1.9 million compared to the second quarter of fiscal 2024, primarily due to prior year net gains on divestitures which did not recur in the current year, higher productivity initiative charges, and higher corporate expenses, partially offset by the favorable impact from derivative instruments, lower incentive compensation, and lower interest expense. The operating loss of our Other Activities for the year-to-date period of fiscal 2025 increased $24.0 million compared to same period in fiscal 2024, primarily due to higher productivity initiative charges and higher corporate expenses, partially offset by lower incentive compensation and lower interest expense.