Toro CEO-Elect Sees Infrastructure, Automation Driving Next Growth Phase

Infrastructure and professional markets are central to Toro’s next growth phase, with demand supported by water-system replacement, broadband expansion, data centers and other underground construction projects. Toro has achieved its raised $125 million AMP productivity-savings target and expects to return to double-digit earnings growth through continued margin expansion, productivity gains and healthy end markets. Incoming CEO Edric Funk plans to accelerate adoption of autonomous, connected and electrified equipment while remaining selective on acquisitions, supported by Toro’s strong balance sheet and a reported 1.3-times leverage ratio.

Toro NYSE: TTC is positioning its professional businesses, underground infrastructure operations and technology investments as key drivers of future growth, incoming Chief Executive Officer Edric Funk said at D.A. Davidson’s Diversified Industrials & Services Conference in Nashville. Funk, who is currently Toro’s chief operating officer and will become CEO on Nov. 1, described the company as a supplier of products serving land management, irrigation, underground infrastructure and snow removal markets. While Toro is widely associated with lawn mowers, he said its strategic emphasis is on professional customers, including golf-course operators, landscape contractors, municipalities and underground construction companies.

Funk highlighted Toro’s underground specialty construction business, including the Ditch Witch brand acquired through the company’s purchase of Charles Machine Works. He said the business serves demand related to power, water and fiber infrastructure, as well as data-center development.

According to Funk, underground infrastructure demand extends beyond data centers, supported by new development, aging U.S. infrastructure and efforts to expand high-speed internet access. He cited the need to repair and replace water systems, noting an American Society of Civil Engineers estimate that 6 billion gallons of drinking water are lost daily between treatment plants and consumers’ taps. The company also sees its BOSS snow-removal business as complementary to its landscape operations. BOSS sells truck-mounted plows and sidewalk-clearing equipment. Funk said the business carries attractive, accretive margins and benefited from a stronger snow season that helped reduce channel inventory. Toro is seeing “nice load into the channel” ahead of the coming winter season, he said, while emphasizing a disciplined approach to production and forecasting.

Funk acknowledged that Toro has operated through a difficult period marked by unusual post-pandemic demand, supply-chain disruption and inflation. However, he said the company has improved inventories, expanded margins and generated more than 120% free-cash-flow conversion. Toro’s AMP productivity initiative was initially intended to produce $100 million in annual run-rate savings. The company later raised that objective to $125 million and has already achieved that level, Funk said. He characterized the savings as permanent and durable, adding that the formal initiative will end with the current fiscal year but that productivity efforts will remain.