TORO CO

As more fully described in Note 3, Segment Data, of the Notes to Consolidated Financial Statements, we operate in two reportable business segments: Professional and Residential. Segment earnings (loss) before interest and taxes ("EBIT") for our Professional and Residential reportable segments are defined as earnings from operations plus other income, net. Our remaining activities consisting of a wholly-owned domestic distribution company, Red Iron joint venture, certain corporate activities, impairment charges, and the elimination of intersegment revenues and expenses, are presented as "Other" due to their insignificance. Corporate activities include general corporate expenditures, such as finance, human resources, legal, information technology, public relations, business development, and similar activities, productivity initiative charges, and other unallocated corporate assets and liabilities, such as corporate facilities and deferred tax assets and liabilities. The following information provides perspective on the net sales and results of our reportable business segments and Other activities.

Professional Segment

Professional segment net sales represented 80.3 percent and 77.6 percent of consolidated net sales for fiscal 2025 and 2024, respectively. The following table presents our Professional segment's net sales, EBIT, and EBIT margin (dollars in millions):

Professional Segment Net Sales

Net sales for our Professional segment in fiscal 2025 increased 1.9 percent compared to fiscal 2024. This increase was primarily driven by higher shipments of golf, grounds, and underground construction products, as well as net price realization, partially offset by prior year divestitures and lower shipments of specialty construction products.

Professional Segment EBIT

Professional segment EBIT increased 10.0 percent in fiscal 2025 compared to fiscal 2024, and Professional segment EBIT margin increased to 19.4 percent from 18.0 percent. The increase in Professional segment EBIT margin for fiscal 2025 was primarily due to net price realization, productivity improvements, cost savings measures, partially offset by higher material and manufacturing costs and inventory valuation adjustments.

Residential Segment

Residential segment net sales represented 19.0 percent and 21.8 percent of consolidated net sales for fiscal 2025 and 2024, respectively. The following table presents our Residential segment's net sales, EBIT, and EBIT margin (dollars in millions):

Residential Segment Net Sales

Net sales for our Residential segment in fiscal 2025 decreased by 14.0 percent compared to fiscal 2024. This decrease was primarily driven by lower shipments broadly across the segment, as well as the prior year Pope divestiture.

Residential Segment EBIT

Residential segment EBIT decreased 54.3 percent in fiscal 2025 compared to fiscal 2024, and Residential segment EBIT margin decreased to 4.2 percent from 7.9 percent. The decrease in Residential segment EBIT margin for fiscal 2025 was primarily driven by lower net sales volume, higher material and manufacturing costs, and inventory valuation adjustments, partially offset by productivity improvements and cost savings measures.

Other Activities

Net sales for our Other activities consist of sales from a wholly-owned domestic distribution company less intercompany sales from our Professional and Residential business segments to a wholly-owned domestic distribution company. Net sales for our Other activities represented 0.7 percent and 0.6 percent of consolidated net sales for fiscal 2025 and 2024, respectively.

The following table presents net sales and EBIT (Loss) for our Other activities (dollars in millions):

1 Presentation of fiscal 2024 EBIT (Loss) has been conformed to the current year presentation.

Other Net Sales

Net sales for our Other activities includes sales from a 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 fiscal 2025 decreased $0.6 million compared to fiscal 2024.

Other EBIT (Loss)

The loss before interest and taxes for our Other activities increased $159.0 million in fiscal 2025 compared to fiscal 2024. This year-over-year loss increase was primarily driven by the non-cash impairment charge, higher productivity initiative charges, and higher incentive expenses.