About The Toro

The Toro Company (TTC) designs, manufactures, markets and sells professional turf maintenance equipment and services; turf irrigation systems; landscaping equipment and lighting products; snow and ice management products; agricultural irrigation (ag-irrigation) systems; rental, specialty and underground construction equipment; and residential yard and snow thrower products. The company's products are marketed and sold worldwide through a network of distributors, dealers, mass retailers, hardware retailers, equipment rental centers, and home centers, as well as online and direct to end-users under the primary trademarks of Toro, Ditch Witch, eXmark, Spartan, BOSS, Ventrac, American Augers, Trencor, Pope, Subsite, HammerHead, Radius, Perrot, Hayter, Unique Lighting Systems, Irritrol, and Lawn-Boy, most of which are registered in the United States (U.S.) and/or in the primary countries outside the U.S. where the company markets its products branded under such trademarks. Segments The company operates in two segments, Professional and Residential. Professional segment The company designs professional turf; landscape and lighting; rental, specialty, and underground construction; snow and ice management; and agricultural products. The company markets and sells Professional segment products worldwide through a network of distributors and dealers, as well as directly to government customers, rental companies, and large retailers. These channel partners then sell or rent the company's products primarily to professional users engaged in maintaining turf, such as golf courses, sports fields, and municipal properties, as well as residential and commercial landscapes; installing, repairing, and replacing underground pipe and utilities; managing snow and ice demands; irrigating turf and agricultural fields; and creating, renovating, and illuminating landscapes. The following sections describe the company's Professional segment products by market: Golf Market The company designs, manufactures, markets, and sells equipment products under the Toro and Ventrac brands that are intended to provide innovative solutions for golf course turf maintenance. Equipment products for the golf market include large reel and rotary riding mowers for fairway, rough, and trim cutting; riding and walking mowers for greens and specialty areas; greens rollers; all-wheel drive articulating tractors; turf sprayer equipment; utility vehicles; aeration equipment; bunker maintenance equipment, and other specialty turf equipment. The company also markets and sells irrigation products for the golf market under the Toro brand that are designed to provide innovative water application solutions for golf course turf maintenance. These irrigation products predominantly consist of sprinkler heads, controllers, turf sensors, valves and operating software. These equipment and irrigation products are primarily sold to distributors and dealers, who then sell to owners, managers and/or superintendents of golf courses. Sports Fields and Grounds Market The company designs, manufactures, markets, and sells Toro and Ventrac-branded equipment products that are intended to provide innovative turf maintenance solutions to sports fields and grounds customers. Equipment products for the sports fields and grounds market primarily include riding rotary and reel mowers and attachments, aerators, infield grooming equipment, all-wheel drive articulating tractors, multipurpose vehicles and debris management products, which include versatile debris vacuums, blowers, and sweepers. In addition to equipment products, the company markets and sells irrigation products under the Toro and PERROT brands that are designed to provide innovative water application solutions for sports fields and grounds turf maintenance. These irrigation products primarily include sprinkler heads, controllers, turf sensors, valves and operating software. These products are primarily sold to distributors and dealers, who then sell to owners and/or managers of sports fields, governmental properties, and residential and commercial landscapes, as well as directly to government customers. Landscape Contractor Market The company designs, manufactures, markets, and sells equipment products under the Toro, eXmark, Spartan and Ventrac brands that are intended to provide innovative turf management solutions to landscape contractors. Equipment products for the landscape contractor market include zero-turn radius riding mowers, heavy-duty walk behind mowers, mid-size walk behind mowers, stand-on mowers, and all-wheel drive articulating tractors, as well as lawn solution, turf renovation, and tree care equipment. These equipment products are primarily sold to distributors and dealers, who then sell to landscape contractors engaged in turf maintenance activities. Underground Construction Market The company designs, manufactures, markets, and sells a range of professional grade products to serve the underground construction market under the Ditch Witch, American Augers, Trencor, HammerHead, Subsite, and Radius brands, including horizontal directional drills, walk and ride trenchers, vacuum excavators, horizontal directional drilling guidance and support equipment, utility locators, utility inspection systems, pipe rehabilitation and replacement solutions, as well as after-market tools, including drive chucks and sub savers, drill pipe, starter rods and quick connects, bits and blades, rock tools, reamers, and swivels. Such products are utilized by specialty contractors worldwide to install water, gas, electric, telecommunication, fiber optic, and other utility distribution systems. Rental and Specialty Construction Market The company designs, manufactures, markets, and sells Toro and Ditch Witch-branded equipment products that are intended to provide innovative solutions to serve the rental and specialty construction market. These products primarily consist of stand-on skid steers, walk-behind trenchers, stump grinders, and turf renovation products. The company also has a line of Toro-branded rental products that feature concrete and mortar mixers, material handlers, compaction equipment, and other concrete construction equipment. The company's rental and specialty construction equipment products are mainly sold to rental companies and large retailers who subsequently rent the products to end-users, as well as to dealers who market and sell to end-customers primarily consisting of landscape contractors, municipalities, and other government entities. Snow and Ice Management Market The company designs, manufactures, markets, and sells equipment products under the BOSS, Ventrac, and Toro brands that are intended to provide innovative snow removal and ice management solutions for the snow and ice management market. These equipment products primarily consist of snowplows; salt and brine ice control products; accessories for light and medium duty trucks, all-terrain vehicles, utility task vehicles, skid steers, and front-end loaders; and all-wheel drive articulating tractors, sidewalk snow and ice solution vehicles, and related attachments and accessories. These products are mainly sold through distributors and dealers who market and sell to end-customers primarily consisting of landscape contractors, municipalities, and other government entities. Commercial Irrigation and Lighting Market Irrigation products are designed, manufactured, marketed, and sold under the Toro and Irritrol brands and primarily include rotors; sprinkler bodies and nozzles; plastic, brass, and hydraulic valves; drip tubing and subsurface irrigation; electric control devices; and wired and wireless rain, freeze, climate, and soil sensors. These irrigation products are designed to provide innovative water application solutions for both commercial and residential landscapes. Both the Toro and Irritrol brands have received several U.S. Environmental Protection Agency ('EPA') WaterSense awards, as well as the EPA WaterSense certification for numerous irrigation controller families and models. In the year ended October 31, 2023 (fiscal 2023), the company was recognized for the ninth consecutive year with the WaterSense Excellence Award for the company's dedication to offering products that are designed to help its customers save water, in addition to other factors, as well as for the company's excellence in outreach, education, training and public relations. In addition to the company's irrigation products, the company markets and sells Unique Lighting Systems-branded products primarily consisting of a line of lighting fixtures and transformers designed for commercial and residential landscapes. The company's commercial irrigation and lighting products are predominantly sold to distributors and dealers who market and sell to end-customers primarily consisting of landscape contractors that professionally install these products as new systems or use these products to replace or retrofit existing systems. Ag-Irrigation Market Irrigation products for the ag-irrigation market are designed, manufactured, marketed, and sold under the Toro brand and are intended to provide an efficient means of water application and usage in agricultural and greenhouse applications. These irrigation products primarily consist of drip tape, polyethylene tubing, drip line, emitters, filters, and fitting solutions. In addition to these core products, the company offers a complement of design software and connection options to complete the ag-irrigation system. The company's ag-irrigation products are sold through dealers and distributors who then sell to end-users for use primarily in vegetable fields, fruit and nut orchards, and vineyard applications. Residential segment This segment markets and sells the company's Residential segment products to homeowners through a variety of distribution channels, including outdoor power equipment distributors and dealers, mass retailers, hardware retailers, and home centers, as well as online (direct to end-users). The company also licenses its trademark on certain home solutions products as a means of expanding the company's brand presence. The following sections describe the company's Residential segment products: Walk Power Mower Products The company designs, manufactures, markets, and sells walk power mower equipment products under the company's Toro and Lawn-Boy brand names, as well as the Hayter brand in the United Kingdom. The company's walk power mower equipment products are designed to provide innovative turf cutting solutions primarily to homeowners. Models differ as to cutting width, type of starter mechanism, method of grass clipping discharge, deck type, operational controls, and power sources; and are either self-propelled or operator-propelled push mowers. Zero-Turn Riding Mowers The company's residential zero-turn riding mower equipment products are designed, manufactured, marketed, and sold under the Toro brand name; and are intended to provide innovative and time saving turf cutting solutions by using superior maneuverability to navigate around obstacles more efficiently and effectively than tractor technology. Many models of the company's residential zero-turn riding mowers are available with a variety of engines, decks, transmissions, and accessories. Snow Thrower Products The company designs, manufactures, markets, and sells a range of Toro-branded battery, electric, and gas-powered single-stage and two-stage snow thrower equipment products, as well as battery and electric-powered power shovel equipment products. Single-stage snow throwers are walk behind units that are generally designed for small areas of light snow and the company's two-stage snow throwers are generally designed for relatively large areas of deep and heavy snow. The company's battery and electric-powered power shovels are designed to be lightweight and ideal for clearing light snow from decks, steps, sidewalks, and small driveways. Home Solutions Products The company's home solutions equipment products are designed, manufactured, marketed, and sold under the Toro and Pope brand names. The company's Toro-branded home solution equipment products consist of a variety of yard tools that generally include battery, electric, and/or gas-powered options and primarily consist of grass trimmers, hedge trimmers, blower-vacuums, chainsaws, edgers, cultivators, string mowers, and related parts and accessories that are designed to provide innovative yard maintenance solutions to homeowners. In Australia and New Zealand, the company designs, manufactures, markets, and sells Pope-branded garden watering and irrigation products that primarily include hoses; reels, carts and hangers; sprinklers; hand sprays and wands; hose end fittings; tap timers; and various irrigation tools designed to develop and maintain gardens. International Operations The company manufactures its products in the U.S., Mexico, the United Kingdom, Italy, Romania, Germany, Poland, Australia, and China for sale throughout the world. The company maintains sales offices in the U.S., the United Kingdom, Australia, Japan, China, Italy, Poland, Germany, Spain, France, and Belgium. New product development is pursued primarily in the U.S. with the intention of global distribution. Manufacturing and Production The company's Professional segment products and Residential segment lawn and garden products are generally manufactured throughout the year with peak production generally occurring ahead of the key selling seasons for certain of its businesses and product lines that are more subject to seasonality. However, its Residential segment snow thrower products are generally manufactured in the summer and fall months but may be extended into the winter months, depending upon weather conditions in key regions, the related demand for such products and certain impacts from global supply chain disruptions. Commodities, Components, Parts, and Accessories The company purchases commodities, components, parts, and accessories for use in its manufacturing process and end-products or to be sold as stand-alone end-products. Patents and Trademarks Certain TTC trademarks that contribute to the company's identity and the recognition of its products and services, including but not limited to the Toro name and logo, are an integral part of the company's business. The company reviews certain patents issued by the U.S. Patent and Trademark Office (USPTO) and foreign patent offices to help avoid potential liability with respect to others' patents. Seasonality As a result of the company's global presence in key markets that are subject to seasonal weather patterns, some of its businesses are seasonal. Overall, the company's seasonal shipment volumes are generally a function of the key selling seasons of the company's channel partners based on their industry, geographic location, and the nature and intended purpose of the company's products in relation to the correlating season. The company's shipment volumes generally precede and overlap the key selling seasons of its channel partners in order to better allow the company's channel partners to align field inventory levels with the anticipated retail demand from end-customers. As a result, the company's shipment volumes have historically been the highest in the company's fiscal second quarter (year ended October 2023), and retail demand for its products is generally highest in the company's fiscal third quarter. Typically, the company's accounts receivable balances increase between January and April as a result of higher shipment volumes and extended payment terms made available to its customers. Accounts receivable balances typically decrease between May and December when payments are received. The company's financing requirements are subject to variations due to seasonal changes in working capital levels, which typically increase in the first half of the company's fiscal year and decrease in the second half of its fiscal year. Seasonal cash requirements of the company's business are financed from a combination of cash flows from operations, cash on hand, and borrowings under the company's revolving credit facility, as applicable. Shipments of the company's Residential segment products tend to be more seasonal, with shipments of lawn and garden products occurring primarily between February and June, depending upon seasonal weather conditions and demand for the company's products. Shipments of snow thrower products occur primarily between July and January, depending upon pre-season demand, in-season snowfalls, and product availability. Opposite seasons in global markets in which the company sells its Residential products somewhat moderate this seasonality of the company's Residential segment product sales. Seasonality of Professional segment product sales also exists but is slightly tempered because the selling season in the Southern U.S. and the company's markets in the Southern hemisphere generally continue for a longer portion of the year than in Northern regions of the world. The company's BOSS and Ventrac brands offer a portfolio of counter-seasonal snow and ice management products in the company's Professional segment with its shipments of snow and ice management products occurring primarily between April and December, which can result in variability of shipment volumes depending upon pre-season demand, in-season snowfalls, and product availability. Additionally, the company's rental, specialty, and underground construction business is generally less seasonal than certain of the company's Professional segment businesses primarily due to the strong presence of certain of the underlying brands in the Southern U.S. markets and the inherent nature of the underground construction market being less impacted by seasonal factors. Customers, Distribution, and Marketing The company markets and sells the majority of its products through more than 150 distributors worldwide, as well as a large number of equipment dealers, irrigation dealers and distributors, mass retailers, hardware retailers, equipment rental centers, home centers, and online (direct to end-users) in more than 125 countries. Professional segment products are sold to distributors and dealers primarily for resale to golf courses, sports fields, industrial facilities, contractors, and government customers, and in some markets for resale to dealers. The company sells some Professional segment products directly to government customers and municipalities and rental companies, as well as to end-users in certain markets. Select irrigation and lighting products are sold to professional irrigation and lighting distributors and dealers, and certain professional-grade retail irrigation products are sold to home centers. Products for the rental, specialty, and underground construction markets are sold to dealers and rental companies, as well as direct to end-users in certain markets. Landscape contractor turf products are also sold to dealers in certain regions of North America. Snow and ice management products are primarily sold to distributors and dealers for resale to contractors. Residential segment products, such as walk power mowers, zero-turn riding mowers, and snow throwers, are generally sold to home centers, mass retailers, dealers, and hardware retailers, as well as online (direct to end-users). In certain markets, these same products are sold to distributors for resale to hardware retailers and dealers. Home solutions products are primarily sold to home centers, mass retailers, and hardware retailers. Internationally, Residential segment products are sold to dealers and mass merchandisers in Australia, Canada, and select countries in Europe. In most other countries, Residential segment products are mainly sold to distributors for resale to dealers and mass retailers. The company operates one wholly-owned domestic distribution company. The company's marketing strategy is to maintain distinct brands and brand identification for Toro, Ditch Witch, eXmark, Spartan, BOSS, Ventrac, American Augers, Trencor, Pope, Subsite, HammerHead, Radius, PERROT, Hayter, Unique Lighting Systems, Irritrol, and Lawn-Boy products. Across its brands, the company markets its Professional and Residential segment products during the appropriate seasons through multiple channels, including digital and online media, radio, print, direct mail, email, television, and social media. Most of its advertising and marketing efforts emphasize its brands, products, features, and other valuable trademarks. Advertising is purchased by the company, through its agency partners, as well as through cooperative programs with distributors, dealers, and retailers. Customer Financing Inventory Financing Arrangements: The company is party to a joint venture with Huntington Distribution Finance, Inc. (HDF), a subsidiary of The Huntington National Bank, established as Red Iron Acceptance, LLC (Red Iron), the primary purpose of which is to provide inventory financing to certain distributors and dealers of certain of its products in the U.S. The company is party to inventory financing arrangements with Red Iron, Huntington Commercial Finance Canada, Inc. (HCFC), and other third-party financial institutions (collectively, the financial institutions), which provide inventory financing to certain dealers and distributors of certain of its products in the U.S. and internationally. End-User Financing: The company has agreements with third-party financing companies to provide financing options to end-customers throughout the world. The purpose of these agreements is to provide end-users of the company's products alternative financing options when purchasing its products. Open Account Terms: Additionally, the company continues to provide financing in the form of open account terms directly to home centers and mass retailers, general line irrigation dealers, certain domestic and international distributors and dealers, ag-irrigation dealers and distributors, government customers, and rental companies. Order Backlog: The company's order backlog represents unfulfilled customer orders at a point in time. Engineering and Research Expense For the year ended October 31, 2023, the company's engineering and research expenses were $173.9 million. Environmental Matters and Other Governmental Regulation The U.S. EPA, the California Air Resources Board ('CARB'), and similar regulators in other U.S. states and foreign jurisdictions in which the company sells its products have phased in, or are phasing in, emission regulations setting maximum emission standards for certain equipment. Specifically, these agencies from time to time adopt increasingly stringent engine emission regulations. Following the U.S. EPA implementation of Tier 4 emission requirements applicable to diesel engines several years ago, China, the European Union (EU) and related countries, and the United Kingdom also have adopted similar regulations, and similar emission regulations are also being considered in other global markets, including Australia, in which the company sells its products. The U.S. federal government, several U.S. states, and certain international jurisdictions in which the company sells its products, including the EU and each of its member states, and related countries, have implemented one or more of the following: product life-cycle laws, rules, or regulations, which are intended to reduce waste and environmental and human health impact, and require manufacturers to label, collect, dispose, and recycle certain products, including some of the company's products, at the end of their useful life, including, but not limited to the Waste Electrical and Electronic Equipment directive, which mandates the labeling, collection, and disposal of specified waste electrical and electronic equipment; the Restriction on the use of Hazardous Substances directive or similar substance level laws, rules, or regulations, which restrict the use of several specified hazardous materials in the manufacture of specific types of electrical and electronic equipment; the Registration, Evaluation, Authorization and Restriction of Chemicals directive or similar substance level laws, rules, or regulations that require notification of use of certain chemicals, or ban or restrict the use of certain chemicals; the Battery Directive, which regulates the manufacture and disposal of batteries; country of origin laws, rules, or regulations, which require certification of the geographic origin of the company's finished goods products and/or components used in the company's products through documentation and/or physical markings, as applicable; energy efficiency laws, rules, or regulations, which are intended to reduce the use and inefficiencies associated with energy and natural resource consumption and require specified efficiency ratings and capabilities for certain products; outdoor noise laws, which are intended to reduce noise emissions in the environment from outdoor equipment; conflict minerals laws, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules promulgated by the SEC, which require specific procedures for the determination and disclosure of the use of certain minerals, known as 'conflict minerals', which are mined from the Democratic Republic of the Congo and adjoining countries; other product substance restriction laws, some of which require certain labeling of products, such as California Proposition 65; electromagnetic compatibility laws and regulations, such as the EU Electromagnetic Compatibility directive, and similar laws and regulations in other markets; wireless product type approvals and licenses in global markets and the EU Radio Equipment Directive and similar laws and regulations related to wireless and radio usage; and supply chain transparency laws and regulations addressing modern slavery and human trafficking. History The Toro Company was founded in 1914. The company was incorporated in Minnesota in 1935 and reincorporated in Delaware in 1983.