TORO CO

As more fully described in Note 3, Segment Data, of the Notes to the Condensed 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 tables summarize net sales for our reportable business segments and Other activities:

The following tables summarize EBIT (Loss) for our reportable business segments and Other activities:

1 Presentation of EBIT (Loss) for the second quarter of fiscal 2025 has been conformed to the current year presentation.

Professional Segment

Segment Net Sales

Worldwide net sales for our Professional segment for the second quarter of fiscal 2026 increased 9.1 percent compared to the second quarter of fiscal 2025. This increase was driven primarily by net price realization, the Tornado acquisition, and higher shipments of underground construction equipment and zero-turn mowers. Worldwide net sales for our Professional segment for the year-to-date period of fiscal 2026 increased 8.3 percent compared to the same period of fiscal 2025. This increase was driven primarily by net price realization, the Tornado acquisition and higher shipments of underground construction equipment, zero-turn mowers, and snow and ice management products.

Segment EBIT

Professional segment EBIT for the second quarter of fiscal 2026 increased 11.0 percent compared to the second quarter of fiscal 2025, and Professional segment earnings margin increased to 20.3 percent from 19.9 percent in the second quarter of fiscal 2025. The increase in Professional segment earnings margin was primarily due to net price realization, productivity improvements, and net sales leverage, partially offset by product mix and higher material, manufacturing, and freight costs. Professional segment EBIT for the year-to-date period of fiscal 2026 increased 9.9 percent compared to the same period of fiscal 2025, and Professional segment margin increased to 18.8 percent from 18.5 percent for the year-to-date period of fiscal 2025. The increase in Professional segment earnings margin was primarily due to net price realization, productivity improvements, and net sales leverage, partially offset by product mix and higher material, manufacturing, and freight costs.

Residential Segment

Segment Net Sales

Worldwide net sales for our Residential segment for the second quarter of fiscal 2026 increased 4.4 percent compared to the second quarter of fiscal 2025. The increase in Residential segment net sales was primarily driven by net price realization and higher shipments of zero-turn mowers, partially offset by lower shipments of snow products. Worldwide net sales for our Residential segment for the year-to-date period of fiscal 2026 decreased (0.4) percent compared to the same period of fiscal 2025. The decrease in Residential segment net sales was primarily driven by lower shipments of turf products, partially offset by higher shipments of snow products and net price realization.

Segment EBIT

Residential segment EBIT for the second quarter of fiscal 2026 increased 88.2 percent compared to the second quarter of fiscal 2025, and Residential segment earnings margin increased to 9.8 percent from 5.4 percent in the second quarter of fiscal 2025. The increase in Residential segment earnings margin for the second quarter of fiscal 2026 was largely driven by net price realization, productivity improvements, prior year inventory valuation adjustments that did not recur, cost savings measures, and net sales leverage, partially offset by higher material, manufacturing, and freight costs. Residential segment EBIT for the year-to-date period of fiscal 2026 increased 30.6 percent compared to the same period of fiscal 2025, and Residential segment earnings margin increased to 8.4 percent from 6.4 percent in the year-to-date period of fiscal 2025. The increase in Residential segment earnings margin for the year-to-date period of fiscal 2026 was largely driven by net price realization, productivity improvements, cost savings measures, and product mix, partially offset by higher material, manufacturing, and freight costs.

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 2026 increased by $1.3 million compared to the second quarter of fiscal 2025. Net sales for our Other activities in the year-to-date period of fiscal 2026 increased by $2.4 million compared to the same period in fiscal 2025.

Other EBIT (loss)

The operating loss for our Other activities for the second quarter of fiscal 2026 increased $22.8 million compared to the second quarter of fiscal 2025, primarily due to higher corporate expenses, higher productivity initiative charges, and lower other income, partially offset by lower interest expense. The operating loss of our Other Activities for the year-to-date period of fiscal 2026 increased $9.2 million compared to same period in fiscal 2025, primarily due to higher corporate expenses and lower other income, partially offset by lower interest expense and lower productivity initiative charges.