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SEC filingThe Toro Company reported Q1 2026 net sales of $1.04 billion, a 4.2% increase from $995.0 million in Q1 2025. Net earnings were $67.9 million, up 28.6% from $52.8 million in the prior-year quarter. Gross profit was $336.5 million with a gross margin of 32.5%, slightly down from 33.7% in Q1 2025. Operating earnings improved to $87.1 million from $77.8 million, driven by lower selling, general and administrative expenses. The company completed the acquisition of Tornado Infrastructure Equipment Ltd. for $210.3 million, funded through borrowings under its revolving credit facility. Cash flow from operations was $26.1 million, a significant improvement from negative $48.6 million in Q1 2025. The company repurchased $94.9 million of common stock and paid $38.3 million in dividends during the quarter.
The Toro Company delivered solid Q1 2026 results with net sales of $1.04 billion, representing a 4.2% increase from $995.0 million in Q1 2025. Net earnings showed strong growth at $67.9 million, up 28.6% from $52.8 million in the prior-year quarter. Operating earnings improved to $87.1 million from $77.8 million, driven by a reduction in selling, general and administrative expenses to $249.4 million from $257.8 million. Basic and diluted earnings per share were $0.69, compared to $0.52 in Q1 2025. The company's weighted-average shares outstanding decreased to 98.0 million basic shares from 101.3 million in the prior year, reflecting share repurchase activity.
The company's revenue growth of 4.2% was achieved despite challenging market conditions. While specific segment revenue breakdown is not provided in this 10-Q filing, the document indicates that the Professional segment includes the recently acquired Tornado Infrastructure Equipment operations, which contributed $19.0 million in net sales during the quarter. The acquisition expands the company's presence in the hydrovac excavation solutions industry and strengthens its Professional segment offerings. The company notes that due to seasonality within its industries, Q1 results cannot be annualized to determine expected full-year performance.
Gross profit was $336.5 million with a gross margin of 32.5%, slightly lower than the 33.7% margin in Q1 2025. The modest margin compression reflects the impact of the acquisition and potentially higher input costs. Operating margin improved to 8.4% from 7.8% in the prior-year quarter, benefiting from disciplined expense management. Selling, general and administrative expenses decreased to $249.4 million from $257.8 million, representing 24.1% of sales compared to 25.9% in Q1 2025. The effective tax rate was 21.9% on earnings before income taxes of $86.9 million.
Operating cash flow was $26.1 million, a significant improvement from negative $48.6 million in Q1 2025. The improvement was driven by better working capital management, including a $100.0 million reduction in receivables and a $48.6 million increase in accounts payable. Investing activities used $210.4 million, primarily for the Tornado Infrastructure Equipment acquisition ($210.3 million). Financing activities provided $25.1 million, including $220.0 million in borrowings and $70.0 million in debt repayments. The company ended the quarter with $189.0 million in cash and cash equivalents, down from $341.0 million at the beginning of the period. Total debt was $1.07 billion, with stockholders' equity of $1.42 billion.
The company completed the acquisition of Tornado Infrastructure Equipment Ltd. on December 8, 2025, for $210.3 million, funded through borrowings under its revolving credit facility. The acquisition is expected to broaden and strengthen the Professional segment and expand the dealer network. Management notes that the preliminary purchase price allocation is subject to change as additional analysis is performed, with finalization expected within one year from the closing date. The company is evaluating several new accounting standards that will become effective in future periods but does not expect them to have a material impact. No specific forward-looking guidance is provided in this 10-Q filing.