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 profit/(loss) for our Professional and Residential reportable segments is defined as adjusted earnings before interest and taxes "segment profit/(loss)". 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 segment profit/(loss) for our reportable business segments and Other activities:

1 Presentation of segment profit/(loss) for the third 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 third quarter of fiscal 2026 increased 8.8 percent compared to the third quarter of fiscal 2025. This increase was driven primarily by higher volume, net price realization, and the Tornado acquisition. Worldwide net sales for our Professional segment for the year-to-date period of fiscal 2026 increased 8.5 percent compared to the same period of fiscal 2025. This increase was driven primarily by net price realization, the Tornado acquisition and higher volume of underground construction equipment, snow and ice management products, and stand-on mowers.

Segment Profit/(Loss)

Professional segment profit for the third quarter of fiscal 2026 increased 6.7 percent compared to the third quarter of fiscal 2025, and Professional segment profit margin decreased to 20.9 percent from 21.3 percent in the third quarter of fiscal 2025. The decrease in Professional segment profit margin was primarily due to higher material and manufacturing costs and product mix, partially offset by net price realization, productivity improvements, and net sales leverage. Professional segment profit for the year-to-date period of fiscal 2026 increased 8.7 percent compared to the same period of fiscal 2025, and Professional segment margin increased to 19.5 percent from 19.4 percent for the year-to-date period of fiscal 2025. The increase in Professional segment profit margin was primarily due to net price realization, productivity improvements, and net sales leverage, partially offset by higher material and manufacturing costs and product mix.

Residential Segment

Segment Net Sales

Worldwide net sales for our Residential segment for the third quarter of fiscal 2026 increased 8.6 percent compared to the third quarter of fiscal 2025. The increase in Residential segment net sales was primarily driven by higher volume of walk power mowers and net price realization. Worldwide net sales for our Residential segment for the year-to-date period of fiscal 2026 increased 2.0 percent compared to the same period of fiscal 2025. The increase in Residential segment net sales was primarily driven by net price realization and higher snow product volume, partially offset by lower lawn-care product volume.

Segment Profit/(Loss)

Residential segment profit for the third quarter of fiscal 2026 increased 235.1 percent compared to the third quarter of fiscal 2025, and Residential segment profit margin increased to 5.9 percent from 1.9 percent in the third quarter of fiscal 2025. The increase in Residential segment profit margin for the third quarter of fiscal 2026 was largely driven by productivity improvements, net price realization, net sales leverage, and prior year inventory valuation adjustments that did not recur, partially offset by higher material and manufacturing costs. Residential segment profit for the year-to-date period of fiscal 2026 increased 51.1 percent compared to the same period of fiscal 2025, and Residential segment profit margin increased to 7.7 percent from 5.2 percent in the year-to-date period of fiscal 2025. The increase in Residential segment profit 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 and manufacturing 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 third quarter of fiscal 2026 decreased by $3.8 million compared to the third quarter of fiscal 2025. Net sales for our Other activities in the year-to-date period of fiscal 2026 decreased by $1.4 million compared to the same period in fiscal 2025.

Other Profit (Loss)

The operating loss for our Other activities for the third quarter of fiscal 2026 decreased $25.8 million compared to the third quarter of fiscal 2025, primarily due to the prior year non-cash impairment charge, partially offset by higher productivity initiative charges and higher corporate expenses in the current year. The operating loss of our Other Activities for the year-to-date period of fiscal 2026 decreased $16.6 million compared to same period in fiscal 2025, primarily due to the non-cash impairment charge in the prior year, partially offset by higher productivity initiative charges and higher corporate and incentive expenses.