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 third quarter of fiscal 2025 increased 5.7 percent compared to the third quarter of fiscal 2024. This increase was driven primarily by higher shipments of underground construction and golf and grounds products, as well as net price realization, partially offset by prior year divestitures. Worldwide net sales for our Professional segment for the year-to-date period of fiscal 2025 increased 2.7 percent compared to the same period of fiscal 2024. This increase was driven primarily by higher shipments of golf and grounds products, underground construction products, and zero-turn mowers, as well as net price realization, partially offset by lower shipments of specialty construction products and prior year divestitures.

Segment Earnings

Professional segment earnings for the third quarter of fiscal 2025 increased 19.8 percent compared to the third quarter of fiscal 2024, and Professional segment earnings margin increased to 21.3 percent from 18.8 percent in the third quarter of fiscal 2024. The increase in Professional segment earnings margin was primarily due to productivity improvements, net price realization, net sales leverage, cost savings measures, and lower marketing costs, partially offset by higher material and manufacturing costs. Professional segment earnings for the year-to-date period of fiscal 2025 increased 12.5 percent compared to the same period of fiscal 2024, and Professional segment margin increased to 19.4 percent from 17.8 percent for the year-to-date period of fiscal 2024. The increase in Professional segment earnings margin was primarily due to productivity improvements, net sales leverage, net price realization, cost savings measures, lower marketing costs, and product mix, partially offset by higher material and manufacturing costs and inventory valuation adjustments.

Residential Segment

Segment Net Sales

Worldwide net sales for our Residential segment for the third quarter of fiscal 2025 decreased 27.9 percent compared to the third quarter of fiscal 2024. The decrease in Residential segment net sales was primarily driven by lower shipments broadly across the segment. Worldwide net sales for our Residential segment for the year-to-date period of fiscal 2025 decreased 15.7 percent compared to the same period of fiscal 2024. The decrease in Residential segment net sales was primarily driven by lower shipments broadly across the segment as well as the prior year Pope divestiture.

Segment Earnings

Residential segment earnings for the third quarter of fiscal 2025 decreased 88.7 percent compared to the third quarter of fiscal 2024, and Residential segment earnings margin decreased to 1.9 percent from 12.2 percent in the third quarter of fiscal 2024. The decrease in Residential segment earnings margin for the third quarter of fiscal 2025 was primarily due to lower net sales volume, higher material and manufacturing costs, inventory valuation adjustments, and higher sales promotions and incentives, partially offset by productivity improvements and cost savings measures. Residential segment earnings for the year-to-date period of fiscal 2025 decreased 59.9 percent compared to the same period of fiscal 2024, and Residential segment earnings margin decreased to 5.2 percent from 10.9 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 primarily due to lower net sales volume, higher material and manufacturing costs, and inventory valuation adjustments, partially offset by productivity improvements and cost savings measures.

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 third quarter of fiscal 2025 decreased by $0.8 million compared to the third quarter of fiscal 2024. Net sales for our Other activities in the year-to-date period of fiscal 2025 decreased by $2.3 million compared to the same period in fiscal 2024.

Other Operating Loss

The operating loss for our Other activities for the third quarter of fiscal 2025 increased $90.3 million compared to the third quarter of fiscal 2024, primarily due to the non-cash impairment charge and higher productivity initiative charges. The operating loss of our Other Activities for the year-to-date period of fiscal 2025 increased $114.3 million compared to same period in fiscal 2024, primarily due to the non-cash impairment charge and higher productivity initiative charges.