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What changed in TORO CO's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TORO CO's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+328 added−296 removedSource: 10-K (2025-12-17) vs 10-K (2024-12-18)

Top changes in TORO CO's 2025 10-K

328 paragraphs added · 296 removed · 271 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

63 edited+11 added−5 removed113 unchanged
Biggest changeFor additional information regarding our foreign currency exchange rate risk exposure, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of this Annual Report on Form 10-K. 6 Table of Contents Engineering, Research and Innovation We believe that our longstanding commitment to innovation and quality in our products has been a key driver of our market success.
Biggest changeAs a result of our international operations, we are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business. For additional information regarding our foreign currency exchange rate risk exposure, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of this Annual Report on Form 10-K.
International Operations We currently manufacture our products in the U.S., Mexico, the United Kingdom, Italy, Romania, Germany, Poland, Australia, and China for sale throughout the world. We maintain sales offices in the U.S., the United Kingdom, Australia, Japan, China, Italy, Poland, Germany, Spain, and Belgium. New product development is pursued primarily in the U.S. with the intention of global distribution.
International Operations We currently manufacture our products in the U.S., Mexico, the United Kingdom, Italy, Romania, Germany, Poland, and China for sale throughout the world. We maintain sales offices in the U.S., the United Kingdom, Australia, Japan, China, Italy, Poland, Germany, Spain, and Belgium. New product development is pursued primarily in the U.S. with the intention of global distribution.
However, our 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.
However, our 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, and the related demand for such products.
In addition, by selling our products through a network of distributors, dealers, mass retailers, hardware retailers, and home centers, as well as online and direct to end-users, users are offered comprehensive service support during and after the warranty period.
In addition, by selling our products through a network of distributors, dealers, mass retailers, hardware retailers, and home centers, as well as online and direct to end-users, users of our products are offered comprehensive service support during and after the warranty period.
Our 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®, 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 we market our products branded under such trademarks.
Our 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®, 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 we market our products branded under such trademarks.
In addition to annual base salaries, our total rewards, which vary by country/region, can include annual incentive opportunities, stock-based compensation awards, a 401(k) plan with employee matching opportunities, discretionary profit-sharing contribution to employee retirement plan accounts, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption and surrogacy assistance, employee assistance programs, tuition assistance, and on-site services, such as health centers and fitness centers, among many others.
In addition to annual base salaries, our total rewards, which vary by country/region, can include annual incentive opportunities, stock-based compensation awards, a 401(k) plan with employee matching opportunities, discretionary profit-sharing contribution to employee retirement plan accounts, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption and surrogacy assistance, employee assistance programs, tuition assistance, and certain on-site services, such as health centers and fitness centers, among many others.
Underground Construction Market We design, manufacture, market, and sell 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.
Underground Construction Market We design, manufacture, market, and sell a range of professional grade products to serve the underground construction market under the Ditch Witch, American Augers, 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.
DFM/A principles are used throughout the product development process to optimize product quality and reduce cost. We spend considerable effort to reduce manufacturing costs through Lean methods and process improvement, product and platform design, application of advanced technologies, enhanced environmental management systems, safety improvements, and improved supply-chain management.
DFM/A principles are used throughout the product development process to optimize product quality and reduce cost. We spend considerable effort to reduce manufacturing costs and enhance quality through Lean methods and process improvement, product and platform design, application of advanced technologies, enhanced environmental management systems, safety improvements, and improved supply-chain management.
Our current marketing strategy is to maintain distinct brands and brand identification for Toro, Ditch Witch, eXmark, Spartan, BOSS, Ventrac, American Augers, Trencor, Subsite, HammerHead, Radius, Perrot, Hayter, Unique Lighting Systems, Irritrol, and Lawn-Boy products.
Our current marketing strategy is to maintain distinct brands and brand identification for Toro, Ditch Witch, eXmark, Spartan, BOSS, Ventrac, American Augers, Subsite, HammerHead, Radius, Perrot, Hayter, Unique Lighting Systems, Irritrol, and Lawn-Boy products.
For further information on these inventory financing arrangements, refer to Note 11, Commitments and Contingencies , of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. End-User Financing We have agreements with third-party financing companies to provide financing options to end-customers throughout the world.
For further information on these inventory financing arrangements, refer to Note 11, Commitments and Contingencies , of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. 10 Table of Contents End-User Financing We have agreements with third-party financing companies to provide financing options to end-customers throughout the world.
Commodities, Components, Parts, and Accessories We purchase commodities, components, parts, and accessories for use in our manufacturing process and end-products or to be sold as stand-alone end-products.
Commodities, Components, Parts, and Accessories We purchase commodities, components, parts, and accessories for use in our manufacturing process and end-products to be sold as stand-alone end-products.
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 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, stand-on skid steers, and front-end loaders; and all-wheel drive articulating tractors, sidewalk snow and ice solution vehicles, and related attachments and accessories.
Effects of Weather From time to time, seasonal weather conditions in particular geographic regions or markets, specifically severe wet or dry conditions, as well as significant weather events such as fires, hurricanes, tornados, drought, rainfall, unseasonably warm winter months, or other weather events, including those exacerbated by global climate change, may adversely or positively affect sales, demand, and field inventory levels of some of our products.
Effects of Weather From time to time, seasonal weather conditions in particular geographic regions or markets, specifically severe wet or dry conditions, as well as significant weather events such as fires, hurricanes, tornados, drought, rainfall, unseasonably warm winter 9 Table of Contents months, or other weather events, including those exacerbated by global climate change, may adversely or positively affect sales, demand, and field inventory levels of some of our products.
Many models of our residential zero-turn riding mowers are available with a variety of engines, decks, transmissions, and accessories. Snow Thrower Products We design, manufacture, market, and sell 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.
Many models of our residential zero-turn riding mowers are available with a variety of engines, decks, transmissions, and accessories. 6 Table of Contents Snow Thrower Products We design, manufacture, market, and sell 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.
In order to utilize our manufacturing facilities and technology more efficiently and effectively, we pursue continuous improvements in our manufacturing processes with the use of Lean methods that are intended to streamline work and eliminate waste. Additionally, we use computer-aided design and manufacturing systems to shorten the time between initial concept and final production.
In order to utilize our manufacturing facilities and technology more efficiently and effectively, we pursue continuous improvements in our manufacturing processes with the use of Lean methods that are intended to streamline work and eliminate waste. Additionally, we use computer-aided design and manufacturing systems to shorten the time between initial concept and 7 Table of Contents final production.
Our production levels and inventory management goals are based on estimates of wholesale and retail demand for our products, taking into account production capacity; commodity, component part, and labor availability; timing of shipments; and field inventory levels.
Our production levels and inventory management goals are based on estimates of wholesale and retail demand for our products, taking into account production capacity; commodity, component parts, and labor availability; timing of shipments; and field inventory levels.
TTC is a reporting entity under these laws and management is monitoring the development of implementing regulations. • The U.S. federal government, several U.S. states, and certain international jurisdictions in which we sell our products, including the EU and each of its member states, 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 our products, at the end of their useful life, including, but not limited to (i) the Waste Electrical and Electronic Equipment directive, which mandates the labeling, collection, and disposal of specified waste electrical and electronic equipment; (ii) 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; (iii) 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; (iv) the Battery Directive, which regulates the manufacture and disposal of batteries; (v) country of origin laws, rules, or regulations, which require certification of the geographic origin of our finished goods products and/or components used in our products through documentation and/or physical markings, as applicable; (vi) 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; (vii) outdoor noise laws, which are intended to reduce noise emissions in the environment from outdoor equipment; (viii) 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; (ix) other product substance restriction laws, some of which require certain labeling of products, such as California Proposition 65; (x) electromagnetic compatibility laws and regulations, such as the EU Electromagnetic Compatibility directive, and similar laws and regulations in other markets; (xi) 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 (xii) supply chain transparency laws and regulations addressing modern slavery and human trafficking. • Our products may be subject to various federal, state, and international laws, rules, and regulations that are designed to protect users, including rules and regulations of the U.S.
TTC is a reporting entity under CBAM and management is monitoring the development of implementing regulations. • The U.S. federal government, several U.S. states, and certain international jurisdictions in which we sell our products, including the EU and each of its member states, have implemented one or more of the following: extended producer responsibility 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 our products, at the end of their useful life, including, but not limited to (i) the Waste Electrical and Electronic Equipment (WEEE) Directive, 14 Table of Contents which mandates the labeling, collection, and disposal of specified waste electrical and electronic equipment; (ii) the Restriction on the use of Hazardous Substances (RoHS) 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; (iii) the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Regulation 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; (iv) the Battery Regulation, which regulates the manufacture and disposal of batteries; (v) country of origin laws, rules, or regulations, which require certification of the geographic origin of our finished goods products and/or components used in our products through documentation and/or physical markings, as applicable; (vi) 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; (vii) outdoor noise laws, which are intended to reduce noise emissions in the environment from outdoor equipment; (viii) 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; (ix) other product substance restriction laws, some of which require certain labeling of products, such as California Proposition 65; (x) electromagnetic compatibility laws and regulations, such as the EU Electromagnetic Compatibility (EMC) Directive, and similar laws and regulations in other markets; (xi) 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 (xii) supply chain transparency laws and regulations addressing modern slavery and human trafficking. • Our products may be subject to various federal, state, and international laws, rules, and regulations that are designed to protect users, including rules and regulations of the U.S.
We generally purchase commodities, components, parts, and accessories based upon market prices that are established with suppliers as part of the purchase process and generally attempt to obtain firm pricing from most of our suppliers for volumes consistent with 7 Table of Contents planned production and estimates of wholesale and retail demand for our products.
We generally purchase commodities, components, parts, and accessories based upon market prices that are established with suppliers as part of the purchase process and generally attempt to obtain firm pricing from most of our suppliers for volumes consistent with planned production and estimates of wholesale and retail demand for our products.
We believe our commitment to employee wellness and environmental stewardship create a sense of community, allowing employees to take pride in their jobs and live the TTC values. We believe our commitment to our human capital resources is key to: Our Purpose: To help our customers enrich the beauty, productivity and sustainability of the land.
We believe our commitment to employee wellness and environmental stewardship create a sense of community, allowing employees to take pride in their jobs and live the TTC values. 11 Table of Contents We believe our commitment to our human capital resources is key to: Our Purpose: To help our customers enrich the beauty, productivity and sustainability of the land.
We also market and sell 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 4 Table of Contents products predominantly consist of sprinkler heads, controllers, turf sensors, valves and operating software.
We also market and sell 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.
Seasonal weather patterns can impact the timing of the key selling seasons of our channel partners, which may cause 8 Table of Contents our quarterly financial results to differ between fiscal years as demand for our products and related shipment volumes can shift between quarters.
Seasonal weather patterns can impact the timing of the key selling seasons of our channel partners, which may cause our quarterly financial results to differ between fiscal years as demand for our products and related shipment volumes can shift between quarters.
To help our employees make a meaningful impact on organizations that are important to them and us, we provide eligible employees in the U.S. up to 20 hours paid time off to volunteer. 12 Table of Contents As part of our "Land. Water.
To help our employees make a meaningful impact on organizations that are important to them and us, we provide eligible employees in the U.S. up to 20 hours paid time off to volunteer. As part of our "Land. Water.
We also provide corporate governance and other information, including our sustainability report, on our website. The information contained on our website or connected to our website is not incorporated by reference into, and should not be considered part of, this Annual Report on Form 10-K. 14 Table of Contents
We also provide corporate governance and other information, including our sustainability report, on our website. The information contained on our website or connected to our website is not incorporated by reference into, and should not be considered part of, this Annual Report on Form 10-K.
Our net sales outside the U.S. were 20.1 percent, 20.8 percent, and 19.5 percent of total consolidated net sales for fiscal 2024, 2023, and 2022, respectively.
Our net sales outside the U.S. were 19.5 percent, 20.1 percent, and 20.8 percent of total consolidated net sales for fiscal 2025, 2024, and 2023, respectively.
Although we regularly monitor the adequacy of the supply of our commodities, components, parts, and accessories, and the financial health of the companies in our supply chain, and use alternative suppliers when necessary and available, financial hardship, insufficient demand planning, and/or the inability of companies throughout our supply chain to deliver on supply commitments, requirements, and/or demands has caused disruptions in our ability to procure the commodities, components, and parts required to manufacture our products.
Although we regularly monitor the adequacy of the supply of our commodities, components, parts, and accessories, and the financial health of the companies in our supply chain, and use alternative suppliers when necessary and available, financial hardship, insufficient demand planning, and/or the inability of companies throughout our supply chain to deliver on supply commitments, requirements, and/or demands may cause disruptions in our ability to procure the commodities, components, and parts required to manufacture our products.
Such products are utilized by specialty contractors worldwide to install water, gas, electric, telecommunication, fiber optic, broadband, and other utility distribution systems. Rental and Specialty Construction Market We design, manufacture, market, and sell Toro and Ditch Witch-branded equipment products that are intended to provide innovative solutions to serve the rental and specialty construction market.
Such products are utilized by specialty contractors worldwide to install water, gas, electric, telecommunication, fiber optic, broadband, and other utility distribution systems. 5 Table of Contents Rental and Specialty Construction Market We design, manufacture, market, and sell Toro and Ditch Witch-branded equipment products that are intended to provide innovative solutions to serve the rental and specialty construction market.
The following is a summary of our products, by market, for our Professional segment and our products for our Residential segment. Professional Segment We design professional turf maintenance; landscape and lighting; rental, specialty, and underground construction; snow and ice management; and agricultural products.
The following is a summary of our products, by market, for our Professional segment and our products for our Residential segment. 4 Table of Contents Professional Segment We design professional turf maintenance; landscape and lighting; rental, specialty, and underground construction; snow and ice management; and agricultural products.
In addition to our irrigation products, we market and sell Unique Lighting Systems-branded products primarily consisting of a line of lighting fixtures and transformers designed for 5 Table of Contents commercial and residential landscapes.
In addition to our irrigation products, we market and sell Unique Lighting Systems-branded products primarily consisting of a line of lighting fixtures and transformers designed for commercial and residential landscapes.
We may also periodically shut down production at our manufacturing facilities in order to allow for maintenance, rearrangement, capital equipment installation, seasonality, and as needed, to adjust for market demand, facility renovation projects, and other factors. Production shut downs of this nature are generally not materially disruptive to our business and are considered to be normal.
We may also periodically idle production at our manufacturing facilities in order to allow for maintenance, rearrangement, capital equipment installation, seasonality, and as needed, to adjust for market demand, facility renovation projects, and other factors. Production pauses of this nature are generally not materially disruptive to our business and are considered to be normal.
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.
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 versatile debris blowers.
Unions and Collective Bargaining Agreements As of October 31, 2024, approximately 10.5 percent of our employees were represented by a union under a collective bargaining agreement. Our collective bargaining agreements typically are for terms of three to five years, and from time to time, our collective bargaining agreements expire and come up for renegotiation.
Unions and Collective Bargaining Agreements As of October 31, 2025, approximately 9.4 percent of our employees were represented by a union under a collective bargaining agreement. Our collective bargaining agreements typically are for terms of three to five years, and from time to time, our collective bargaining agreements expire and come up for renegotiation.
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.
These irrigation products are supported by software, artificial intelligence, and apps 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 certain markets, these 9 Table of Contents same products are sold to distributors for resale to hardware retailers and dealers. Yard tools and garden equipment products are primarily sold to home centers, mass retailers, and hardware retailers. We operate one wholly-owned domestic distribution company.
In certain markets, these same products are sold to distributors for resale to hardware retailers and dealers. Yard tools and garden equipment products are primarily sold to home centers, mass retailers, and hardware retailers. We operate a wholly-owned domestic distribution company.
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.
Equipment products for the golf market include large reel and rotary riding mowers for fairway, rough, and trim cutting, including autonomous solutions; 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; other specialty turf equipment; and Intelli360 for telematics and fleet management.
Our goal is to foster a culture of trust and respect for all stakeholders and create a productive, supportive and thriving work environment for all TTC employees. Number of Employees During fiscal 2024, we employed an average of 11,464 employees. The total number of employees as of October 31, 2024 was 11,108.
Our goal is to foster a culture of trust and respect for all stakeholders and create a productive, supportive and thriving work environment for all TTC employees. Number of Employees During fiscal 2025, we employed an average of 9,791 employees. The total number of employees as of October 31, 2025 was 9,227.
These Other activities consist of earnings (loss) from a wholly-owned domestic distribution company, certain corporate activities, and the elimination of intersegment revenues and expenses. Net sales of our reportable segments and Other activities accounted for the following percentages of our consolidated net sales for fiscal 2024: Professional, 77.6 percent; Residential, 21.8 percent; and Other, 0.6 percent.
These Other activities consist of earnings (loss) from a wholly-owned domestic distribution company, certain corporate activities, and the elimination of intersegment revenues and expenses. Net sales of our reportable segments and Other activities accounted for the following percentages of our consolidated net sales for fiscal 2025: Professional, 80.3 percent; Residential, 19.0 percent; and Other, 0.7 percent.
The dollar value of our order backlog is equal to the gross sales value that we expect to bill to the customer and is not reduced for expected variable consideration related to certain of our sales promotions and incentives programs.
Order Backlog Our order backlog represents unfulfilled customer orders at a point in time. The dollar value of our order backlog is equal to the gross sales value that we expect to bill to the customer and is not reduced for expected variable consideration related to certain of our sales promotions and incentives programs.
Environmental Matters and Other Governmental Regulation Our business, operations, facilities, and products are subject to numerous international, federal, state, and other governmental laws, rules, and regulations relating to, among others, climate change; emissions to air, including Tier 4 or similar engine emission regulations; discharges to water; restrictions placed on water usage and water availability; product and associated packaging; use of certain chemicals; restricted substances, including "conflict minerals" disclosure rules; recycling and waste disposal; import and export compliance, including country of origin certification requirements; worker and product user health and safety; energy efficiency; product life-cycles; outdoor noise laws; and the generation, use, handling, labeling, collection, management, storage, transportation, treatment, and disposal of hazardous substances, wastes, and other regulated materials.
Information contained or referenced on our website, including in our Sustainability Report, is not incorporated by reference and does not form a part of this Annual Report on Form 10-K. 13 Table of Contents Environmental Matters and Other Governmental Regulation Our business, operations, facilities, and products are subject to numerous international, federal, state, and other governmental laws, rules, and regulations relating to, among others, climate change; emissions to air, including Tier 4 or similar engine emission regulations; discharges to water; restrictions placed on water usage and water availability; product and associated packaging; use of certain chemicals; restricted substances, including "conflict minerals" disclosure rules; recycling and waste disposal; import and export compliance, including country of origin certification requirements; worker and product user health and safety; energy efficiency; extended producer responsibility; outdoor noise laws; and the generation, use, handling, labeling, collection, management, storage, transportation, treatment, and disposal of hazardous substances, wastes, and other regulated materials.
Product Safety and Liability We have rigorous product safety standards and continually work to improve the safety and reliability of our products. We monitor for accidents and possible claims, and establish liability estimates based on internal evaluations of the merits of individual claims. We purchase insurance coverage for catastrophic product liability claims for incidents that exceed our self-insured retention levels.
Product Safety and Liability We have rigorous product safety standards and continually work to improve the safety and reliability of our products. We monitor for accidents and possible claims, and establish liability estimates based on internal evaluations of the merits of individual claims.
Employee Safety The safety of our employees is paramount to us. We provide mandatory safety trainings each month in our production facilities, which are designed to focus on empowering our employees with the knowledge and tools they need to make safe choices and to mitigate risks. Supervisors also complete safety management courses.
We have not experienced any strikes or work stoppages in the past five years. Employee Safety The safety of our employees is paramount to us. We provide mandatory safety trainings each month in our production facilities, which are designed to focus on empowering our employees with the knowledge and tools they need to make safe choices and to mitigate risks.
Senate Bill 253 (SB 253) requires that CARM develop and adopt regulations to require the annual disclosure of Scope 1, 2 and 3 GHG emissions, with certain GHG emissions data subject to third party assurance.
Senate Bill 253 (SB 253) requires CARB to develop and adopt regulations mandating annual disclosure of Scope 1, 2, and 3 GHG emissions, with certain emissions data subject to third-party assurance. Disclosure of Scope 1 and 2 emissions begins in 2026 for the 2025 reporting year, and Scope 3 emissions disclosure begins in 2027 for the 2026 reporting year.
In September 2024, Australian regulators adopted the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, which requires large and medium-sized companies to begin reporting on climate-related risks and opportunities, and greenhouse gas (GHG) emissions, in their annual reports for financial years commencing after January 1, 2025. • In March 2024, the SEC adopted rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires the disclosure of material Scope 1 and Scope 2 GHG emissions and other climate-related topics in annual reports and registration statements.
CARB's two-phase implementation of net-zero emissions requirements for small off-road engines, like those contained in lawn and garden equipment, began for all products with model year 2024 and onward. • In September 2024, Australian regulators adopted the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, which requires large and medium-sized companies to begin reporting on climate-related risks and opportunities, and greenhouse gas (GHG) emissions, in their annual reports for financial years commencing after January 1, 2025. • In March 2024, the SEC adopted rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors.
We have continued to complement our brands, enhance our product portfolios, and improve our technologies through innovation and strategic acquisitions over the more than 100 years we have been in business.
We have continued to complement our brands, enhance our product portfolios, and improve our technologies through innovation and strategic acquisitions over the more than 100 years we have been in business, including most recently our acquisition of Tornado Infrastructure Equipment Ltd. (“Tornado Infrastructure Equipment”), as discussed below.
The state of California passed two bills that will require certain companies doing businesses in the state to disclose GHG emissions and climate-related financial risk information.
As a result, the rule never took effect, and its future remains uncertain. • The state of California passed two bills that will require certain companies doing business in the state to disclose GHG emissions and climate-related financial risk information.
Patents and Trademarks We own patents, trademarks, and trade secrets related to our products in the U.S. and certain countries outside the U.S. in which we conduct business. We expect to apply for future patents and trademarks, as appropriate, in connection with the development of innovative new products, services, and enhancements.
We expect to apply for future patents and trademarks, as appropriate, in connection with the development of innovative new products, services, and enhancements.
We plan to continue to leverage a strategic and disciplined approach to pursue targeted acquisitions that add value to TTC by complementing our existing brands, enhancing our product portfolio, and/or improving our technologies. We classify our operations into two reportable business segments: Professional and Residential. Our remaining activities are presented as "Other" due to their insignificance.
We plan to continue to leverage a strategic and disciplined approach to pursue targeted acquisitions that add value to TTC by complementing our existing brands, enhancing our product portfolio, and/or improving our technologies.
The European Union Corporate Sustainability Reporting Directive applies to both EU and non-EU in-scope entities and would require them to disclose various metrics relating to climate change, biodiversity, workforce, 13 Table of Contents supply chain, and business ethics.
CARB continues to evaluate stakeholder feedback on threshold definitions, reporting timelines, Scope 3 methodologies, and assurance requirements. • The European Union Corporate Sustainability Reporting Directive (CSRD) applies to both EU and non-EU in-scope entities and would require disclosure of various metrics relating to climate change, biodiversity, workforce, supply chain, and business ethics.
Open Account Terms Additionally, we continue 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 Our order backlog represents unfulfilled customer orders at a point in time.
The purpose of these agreements is to provide end-users of our products alternative financing options when purchasing our products. Open Account Terms Additionally, we 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.
Our four collective bargaining agreements expire in October 2025, March 2026, May 2026, and October 2026. We consider our employee relations to be good and currently do not expect any significant difficulties in renewing these agreements. We have not experienced any strikes or work stoppages in the past three years.
We have four collective bargaining agreements set to expire in March 2026, May 2026, October 2026, and October 2028, as well as one agreement with an indefinite term. We consider our employee relations to be good and currently do not expect any significant difficulties in renewing these agreements.
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 turf application, 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.
Equipment products for the landscape contractor market include gas and battery powered zero-turn radius riding mowers, heavy-duty and mid-size walk behind mowers including autonomous versions, gas and battery powered stand-on mowers, and manual and remote controlled all-wheel drive articulating tractors, as well as turf application, turf renovation, and tree care equipment.
Results of the survey are measured and analyzed to enhance the employee experience, promote employee retention, drive change and leverage the overall success of our organization.
Employee Engagement We provide all employees with the opportunity to share their opinions and feedback on our culture through an engagement survey. Results of the survey are measured and analyzed to enhance the employee experience, promote employee retention, drive change and leverage the overall success of our organization.
Compensation and Benefits We conduct compensation market benchmarking on a regular basis to provide competitive pay to attract and retain superior talent.
Together, we strive to foster a company culture and industry reputation that embodies collaboration and a genuine sense of belonging for all. Compensation and Benefits We conduct compensation market benchmarking on a regular basis to provide competitive pay to attract and retain superior talent.
Additional Information Additional information is included in our Fiscal 2023 Sustainability Report, which is available on our website under the "Sustainability" section of our website located at www.thetorocompany.com . Information contained or referenced on our website, including in our Sustainability Report, is not incorporated by reference and does not form a part of this Annual Report on Form 10-K.
Additional Information Additional information is included in our Fiscal 2024 Sustainability Report, which is available on our website under the "Sustainability" section of our website located at www.thetorocompany.com .
Our team members are encouraged to leverage their unique strengths and experiences to address challenges and drive innovation. We celebrate the diverse cultures and backgrounds of those who enrich our world daily. Together, we strive to foster a company culture and industry reputation that embodies collaboration and a genuine sense of belonging for all.
We strive to nurture an inclusive community where everyone thrives – our colleagues, customers, partners, and communities. Our team members are encouraged to leverage their unique strengths and experiences to address challenges and drive innovation. We celebrate the diverse cultures and backgrounds of those who enrich our world daily.
We are committed to the development of innovative new products and improvements in the quality and performance of existing products.
Engineering, Research and Innovation We believe that our longstanding commitment to innovation and quality in our products has been a key driver of our market success. We are committed to the development of innovative new products and improvements in the quality and performance of existing products.
Accordingly, estimating the number of competitors or precise market share is challenging; however, we believe that we are a principal competitor in most of our industries and markets. 10 Table of Contents The principal competitive factors in our markets are product innovation; quality and reliability; pricing and sales programs; product support and customer service; warranty; brand and reputation; channel relationships, shelf space, and product availability; and financing options.
Accordingly, estimating the number of competitors or precise market share is challenging; however, we believe that we are a principal competitor in most of our industries and markets.
Such programs are designed to support employees’ physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors.
Such programs are designed to support employees’ physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors. 12 Table of Contents Inclusion and Belonging Our culture, rooted in excellence, integrity, and belonging, promotes a safe and welcoming environment where all employees can be their authentic self, both at work and beyond.
EPA implementation of Tier 4 emission requirements applicable to diesel engines, China, the European Union ("EU") and its member states, and the United Kingdom have adopted similar regulations. CARB's two phase implementation of net-zero emissions requirements for small off-road engines, like those contained in many lawn and garden equipment, will begin for all products with model year 2024 and onward.
EPA implementation of Tier 4 emission requirements applicable to diesel engines, China, the European Union ("EU") and its member states, and the United Kingdom have adopted similar regulations.
In addition to traditional training, we use safety scorecards, standardized signage, and visual management throughout our facilities.
Supervisors also complete safety management courses. In addition to traditional training, we use safety scorecards, standardized signage, and visual management throughout our facilities. Safety best practices are also regularly reviewed by management and TTC's Board of Directors, and featured in our employee newsletters and town halls.
Senate Bill 261 (SB 261) requires biennial disclosures posted on a company’s website related to climate-related financial risks and the measures a company has adopted to reduce and adapt to such risks. The bill requires disclosure of the climate-related financial risk disclosures beginning in 2026 for the 2025 reporting year.
SB 253 applies to public and private companies with total annual revenues exceeding $1 billion that do business in California. • Senate Bill 261 (SB 261) requires biennial disclosures posted on a company’s website related to climate-related financial risks and measures adopted to reduce and adapt to such risks.
We believe we offer total solutions and full service packages with high quality products that have the latest technology and design innovations.
The principal competitive factors in our markets are product innovation; quality and reliability; pricing and sales programs; product support and customer service; warranty; brand and reputation; channel relationships; shelf space and product availability; and financing options. We believe we offer total solutions and full service packages with high quality products that have the latest technology and design innovations.
SB 219 extends the time in which CARB has to promulgate implementing regulations for SB 253 until July 1, 2025, a delay of six months, but does not otherwise change the reporting deadlines in SB 253 or SB 261.
District Court for the Central District of California. On September 27, 2024, the California Governor signed Senate Bill 219 (SB 219), which extended CARB’s deadline to promulgate implementing regulations for SB 253 until July 1, 2025 but did not change the reporting deadlines.
SB 261 is effective for public and private companies with total annual revenues exceeding $500 million. Both SB 253 and 261 have been challenged in the U.S. District Court for the Central District of California. Further, on September 27, 2024, the California Governor amended both SB 253 and SB 261 by signing into law Senate Bill 219 (SB 219).
SB 261 applies to companies with total annual revenues exceeding $500 million. The Ninth Circuit Court of Appeals has granted a stay of enforcement of the January 1, 2026 filing deadline for SB 261 pending the outcome of an appeal process. • Both SB 253 and SB 261 have been challenged in the U.S.
Removed
As a result of our international operations, we are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business.
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We also plan to continue our commitment to disciplined portfolio management and prudent capital allocation strategies, resulting in our disposition from time to time of non-core product lines. We classify our operations into two reportable business segments: Professional and Residential. Our remaining activities are presented as "Other" due to their insignificance.
Removed
The purpose of these agreements is to provide end-users of our products alternative financing options when purchasing our products.
Added
Acquisitions On December 8, 2025, we acquired Tornado Infrastructure Equipment Ltd., a Calgary, Alberta, Canada-based manufacturer in the hydrovac excavation solutions industry for a purchase price of $279.3 million Canadian dollars.
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Safety best practices are also regularly reviewed by management and TTC's Board of Directors, and featured in our employee newsletters and town halls. 11 Table of Contents Employee Engagement We provide all employees with the opportunity to share their opinions and feedback on our culture through an engagement survey.
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Tornado Infrastructure Equipment manufactures hydrovac excavation solutions and industrial equipment solutions for the underground construction, power transmission, and energy markets and provides innovative product offerings that broaden and strengthen the company's Professional segment and expands its dealer network. The company funded the acquisition with borrowings under its existing revolving credit facility and additional financial arrangements.
Removed
Inclusion and Belonging Our culture, rooted in excellence, integrity, and belonging, promotes a safe and welcoming environment where all employees can be their authentic self, both at work and beyond. We strive to nurture an inclusive community where everyone thrives – our colleagues, customers, partners, and communities.
Added
For additional information regarding the acquisition and the financing agreements utilized to fund the aggregate merger consideration, refer to Note 16, Subsequent Events , in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Removed
The bill requires disclosure of Scope 1 and 2 GHG emissions beginning in 2026 for the 2025 reporting year and disclosure of Scope 3 GHG emissions beginning in 2027 for the 2026 reporting year. SB 253 would be effective for public and private companies with total annual revenues exceeding $1 billion and that do business in California.
Added
These equipment products are primarily sold to distributors and dealers, who then sell to landscape contractors engaged in turf maintenance activities. These equipment products are primarily sold to distributors and dealers, who then sell to landscape contractors engaged in turf maintenance activities.
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We purchase insurance coverage for catastrophic product liability claims for incidents that exceed our self-insured retention levels. 8 Table of Contents Patents and Trademarks We own patents, trademarks, and trade secrets related to our products in the U.S. and certain countries outside the U.S. in which we conduct business.
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Shortly after adoption, the SEC voluntarily stayed the rule, and the current administration has chosen not to defend the rule in court.
Added
In October 2025, CARB staff indicated that adoption of final regulations under SB 253 and SB 261 will move to Q1 2026 rather than late 2025 as previously anticipated.
Added
In addition to CSRD, the EU has proposed other sustainability-related measures, including the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy. In February 2025, an Omnibus simplification package related to CSRD, CSDDD and the EU Taxonomy was proposed.
Added
In December 2025, The EU Council and Parliament reached a provisional agreement on the Omnibus simplification package, significantly amending the CSRD, CSDDD and the EU Taxonomy to reduce the scope and reporting burdens for many companies. The agreement is expected to be formally approved and published in late 2025 or early 2026.
Added
Accordingly, if the agreement is formally approved, TTC would not be subject to the reporting requirements of CSRD, CSDDD and the EU Taxonomy. Lastly, the EU implemented the Carbon Border Adjustment Mechanism (CBAM), which is expected to impose additional compliance obligations in the future.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+21 added−7 removed160 unchanged
Biggest changeEconomic and Operational Risks • Our net sales and earnings have been and will likely continue to be adversely affected by economic conditions and outlook in the locations in which we conduct business. • If we are unable to enhance existing products and develop and market new products, demand for our products may decrease adversely impacting our net sales and earnings. • Disruption and/or shortages in commodities, components, parts, or accessories has adversely affected and could continue to adversely affect our business. • Weather conditions, including conditions exacerbated by global climate change, present chronic and acute physical risks, and have previously impacted, and may continue to impact, demand for some of our products and/or cause disruptions in our operations. • Our Professional segment net sales are dependent on several factors, including changes to the golf, grounds, irrigation, and construction markets. • Our Residential segment net sales are dependent on several factors, including product placement, consumer confidence and spending levels and changing customer buying patterns. • Changes in our product mix have adversely impacted and could continue to adversely impact our operating results. • We face intense competition, which could harm our business and operating results. • Increases in the cost of commodities, components, parts, and accessories have adversely affected and could continue to adversely affect our profit margins. • We are dependent upon our facilities and those of our suppliers and other third parties. • We are dependent upon a strong, effective labor force. • Our net sales and other operating results are dependent upon us and our channel customers maintaining appropriate inventory levels. • We are dependent upon our channel customers. • We are dependent upon the availability and terms of credit offered to our customers. • We are dependent upon effective information systems. • Our international operations involve risk. • We experience disruptions to our operations from time to time as result of facility changes and renovations. • There are risks associated with the recent U.S. presidential election, including the imposition, or threat of imposition, of additional tariffs.
Biggest changeRisk Factor Summary This summary is not complete and should be read in conjunction with the more detailed risk factors set forth below. 15 Table of Contents Economic and Operational Risks • Our net sales and earnings have been and will likely continue to be adversely affected by economic conditions and outlook in the locations in which we conduct business. • If we are unable to enhance existing products and develop and market new products, demand for our products may decrease adversely impacting our net sales and earnings. • Disruption and/or shortages in commodities, components, parts, or accessories has adversely affected and could continue to adversely affect our business. • Weather conditions, including conditions exacerbated by global climate change, present chronic and acute physical risks, and have previously impacted, and may continue to impact, demand for some of our products and/or cause disruptions in our operations. • Our Professional segment net sales are dependent on several factors, including changes to the golf, grounds, irrigation, and construction markets. • Our Residential segment net sales are dependent on several factors, including product placement, consumer confidence and spending levels and changing customer buying patterns. • Changes in our product mix have adversely impacted and could continue to adversely impact our operating results. • We face intense competition, which could harm our business and operating results. • Increases in the cost of commodities, components, parts, and accessories have adversely affected and could continue to adversely affect our profit margins. • We are dependent upon our facilities and those of our suppliers and other third parties. • We are dependent upon a strong, effective labor force. • Our net sales and other operating results are dependent upon us and our channel customers maintaining appropriate inventory levels. • We are dependent upon our channel customers, and changes in their purchasing patterns could negatively impact sales. • We are dependent upon the availability and terms of credit offered to our customers, which affect purchasing behavior and could adversely impact our net sales. • We are dependent upon effective information systems and our domain names. • Our international operations expose us to currency, regulatory, and political risks that could impact our business. • We experience disruptions to our operations from time to time as result of facility changes and renovations. • There are risks associated with the imposition of, or changes to, tariffs, which have impacted and could further negatively impact trade between, or increase the cost of operating in, or increase the cost of or negatively impact the demand for, our products or our customers’ products in the countries in which we or our customers do business. • We may face challenges in harmonizing information technology systems, compliance frameworks, and corporate governance practices related to Tornado Infrastructure Equipment.
If we determine that the anticipated future cash flows from our reporting units, indefinite-lived intangible assets or asset groups, or long-lived asset groups may be less than their respective carrying values, our goodwill, indefinite-lived intangible assets, and/or long-lived assets may be deemed to be impaired.
If we determine that the anticipated future cash flows from our reporting units, indefinite-lived intangible assets, or long-lived asset groups may be less than their respective carrying values, our goodwill, indefinite-lived intangible assets, and/or long-lived assets may be deemed to be impaired.
Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
Increasing governmental and societal attention to sustainability matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
Climate change legislation, regulations, accords, mitigation efforts, or other legislation may adversely impact our operations and could impact the competitive landscape within our markets and affect demand for our products. We are currently subject to rules limiting exhaust and other emissions and other climate-related rules and regulations in certain jurisdictions where we operate.
Climate change legislation, regulations, accords, mitigation efforts, or other legislation may adversely impact our operations and could impact the competitive landscape within our markets and affect demand for our products. We are currently subject to rules limiting exhaust and evaporative emissions and other climate-related rules and regulations in certain jurisdictions where we operate.
Any one or a combination of the following factors, among others, have in the past resulted and could in the future result in a decrease in spending and demand for our products, resulting in an adverse effect on our Professional segment net sales and earnings: • reduced revenue for golf courses resulting from a reduction in the level of interest in the game of golf and/or a decrease in rounds played, memberships, and/or food and beverage sales, as applicable; • reduced investment in golf course renovations and improvements; • the level of new golf course development and golf course closures; • reduced consumer and business spending on property maintenance, such as lawn care and snow and ice removal activities; 17 Table of Contents • low or reduced levels of infrastructure improvements and other construction activities; • decreased construction activities for oil, gas, telecommunication, and other utility distribution systems; • a decline in acceptance of, and demand for, ag-irrigation solutions for agricultural production; • availability of cash or credit on acceptable terms for our customers to finance new product purchases; and • customer and/or government budgetary constraints resulting in reduced spending for grounds maintenance or construction equipment.
Any one or a combination of the following factors, among others, have in the past resulted and could in the future result in a decrease in spending and demand for our products, resulting in an adverse effect on our Professional segment net sales and earnings: • reduced revenue for golf courses resulting from a reduction in the level of interest in the game of golf and/or a decrease in rounds played, memberships, and/or food and beverage sales, as applicable; • reduced investment in golf course renovations and improvements; • the level of new golf course development and golf course closures; • reduced consumer and business spending on property maintenance, such as lawn care and snow and ice removal activities; • low or reduced levels of infrastructure improvements and other construction activities; • decreased construction activities for oil, gas, telecommunication, and other utility distribution systems; 18 Table of Contents • a decline in acceptance of, and demand for, ag-irrigation solutions for agricultural production; • availability of cash or credit on acceptable terms for our customers to finance new product purchases or rent equipment; and • customer and/or government budgetary constraints resulting in reduced spending for grounds maintenance or construction equipment.
Increased costs and/or inflation, increased tariff, duties, or other charges as a result of changes to U.S. or international trade policies or trade agreements, trade regulation and/or industry activity, or antidumping and countervailing duty petitions on certain products imported from foreign countries, including certain engines imported into the U.S. from China, or the inability of suppliers to continue operations or otherwise remain in business, have affected our profit margins, operating results and businesses and could continue to result in declines in our profit margins, operating results and businesses.
Increased costs and/or inflation, increased tariffs, duties, or other charges as a result of changes to U.S. or international trade policies or trade agreements, trade regulation and/or industry activity, or antidumping and countervailing duty petitions on certain products imported from foreign countries, including certain engines imported into the U.S. from China, or the inability of suppliers to continue operations or otherwise remain in business, have affected our profit margins, operating results and businesses and could continue to result in declines in our profit margins, operating results and businesses.
We also set goals and objectives for the timing of certain accomplishments, initiatives and milestones regarding our business or operating results, including without limitation our "Amplifying Maximum Productivity" or AMP initiative, which is a multi-year productivity initiative intended to result in annualized cost savings of more than $100 million by fiscal 2027, driven by sustainable supply-base, design-to-value, route-to-market, and operational efficiency transformation.
We also set goals and objectives for the timing of certain accomplishments, initiatives and milestones regarding our business or operating results, including without limitation our "Amplifying Maximum Productivity" or AMP initiative, which is a multi-year productivity initiative intended to result in annualized cost savings of more than $125 million by fiscal 2027, driven by sustainable supply-base, design-to-value, route-to-market, and operational efficiency transformation.
If we do not complete these activities in a timely manner, or do not realize anticipated cost savings, synergies and efficiencies, business disruption occurs during or following such activities, or we incur unanticipated charges, this may negatively impact our business, financial condition, operating results, and cash flows. Increased scrutiny regarding our ESG practices could impact our reputation.
If we do not complete these activities in a timely manner, or do not realize anticipated cost savings, synergies and efficiencies, business disruption occurs during or following such activities, or we incur unanticipated charges, this may negatively impact our business, financial condition, operating results, and cash flows. Increased scrutiny regarding our sustainability practices could impact our reputation.
Goodwill and indefinite-lived intangible assets are not amortized, but are tested at least annually for impairment or more frequently as events and circumstances dictate. Goodwill is tested for impairment at the reporting unit level, which is generally an operating segment or underlying business component.
Goodwill and indefinite-lived intangible assets are not amortized, but are tested at least annually for impairment or more frequently as events and circumstances dictate. Goodwill is tested for impairment at the reporting unit level, which is generally an operating segment or underlying business component. Indefinite-lived intangible assets are tested for impairment at the individual indefinite-lived intangible asset level.
However, the security measures we have implemented may not be effective and our systems may be 20 Table of Contents vulnerable to theft, loss, damage, and interruption from a number of potential sources and events, including unauthorized access or security breaches, data privacy breaches, natural or man-made disasters, cyber attacks, computer viruses, malware, phishing, denial of service attacks, power loss, or other disruptive events.
However, the security measures we have implemented may not be effective and our systems may be vulnerable to theft, loss, damage, and interruption from a number of potential sources and events, including unauthorized access or security breaches, data privacy breaches, natural or man-made disasters, cyber attacks, computer viruses, malware, phishing, denial of service attacks, power loss, or other disruptive events.
In addition, while most of our commodities, components, parts, or accessories are generally commercially available from a number of sources, certain items are sourced from single suppliers, which has limited, and could continue to limit, the availability of commodities, components, parts, and accessories when such suppliers are unable to meet our production requirements and we are unable to source such items from an alternative supplier in a timely manner to meet our production needs.
In addition, while most of our commodities, components, parts, or accessories are generally commercially available from a number of sources, certain items are sourced 17 Table of Contents from single suppliers, which has limited, and could continue to limit, the availability of commodities, components, parts, and accessories when such suppliers are unable to meet our production requirements and we are unable to source such items from an alternative supplier in a timely manner to meet our production needs.
For additional information regarding the company's cybersecurity risk management, strategy, and governance, refer to Item 1C. Cybersecurity. 21 Table of Contents Our international operations require significant management attention and financial resources, expose us to difficulties presented by international economic, political, legal, regulatory, accounting, and business factors, and may not be successful or produce desired levels of net sales and earnings.
For additional information regarding the company's cybersecurity risk management, strategy, and governance, refer to Item 1C. Cybersecurity. Our international operations require significant management attention and financial resources, expose us to difficulties presented by international economic, political, legal, regulatory, accounting, and business factors, and may not be successful or produce desired levels of net sales and earnings.
We cannot currently predict whether any such legislation will be enacted, the specific terms and conditions of such legislation, such legislation's impact on the competitive landscape within our markets, or how, if at all, any such legislation might ultimately affect customer demand for our products or our operating results. Our compliance with applicable environmental laws is costly and not guaranteed.
We cannot currently predict whether any such legislation will be enacted, the specific terms and conditions of such legislation, such legislation's impact on the competitive landscape within our markets, or how, if at all, any such legislation might ultimately affect customer demand for our products or our operating results. 29 Table of Contents Our compliance with applicable environmental laws is costly and not guaranteed.
In addition, due to limited workforce populations in areas around the locations where we, or our suppliers and channel partners, manufacture products or conduct business, or other factors, we, or our suppliers and channel partners, may not have a sufficient pool of individuals with the right skills and experience available to fulfill labor requirements on a cost-effective basis or otherwise.
In addition, due to limited workforce populations in areas around the locations where we, or our suppliers and channel partners, manufacture products or conduct 20 Table of Contents business, or other factors, we, or our suppliers and channel partners, may not have a sufficient pool of individuals with the right skills and experience available to fulfill labor requirements on a cost-effective basis or otherwise.
In addition, if adverse economic conditions, business conditions or other events cause a decline in sales by our channel customers or weakens their financial condition, our net sales and earnings could be adversely affected. Such situation could adversely affect the ability of such customers to pay amounts owed, which could require us to repurchase financed product.
In addition, if adverse economic conditions, business conditions or other events cause a decline in sales by our channel customers or weakens their financial condition, including insolvency or bankruptcy, our net sales and earnings could be adversely affected. Such situation could adversely affect the ability of such customers to pay amounts owed, which could require us to repurchase financed product.
Furthermore, such impacts hinder our ability 19 Table of Contents to meet customer demand, result in the loss of customers, and could cause us to incur charges associated with inventory valuation adjustments for excess and obsolete inventories. Our business and operating results are subject to the inventory management decisions of our channel customers.
Furthermore, such impacts hinder our ability to meet customer demand, result in the loss of customers, and could cause us to incur charges associated with inventory valuation adjustments for excess and obsolete inventories. Our business and operating results are subject to the inventory management decisions of our channel customers.
We cannot predict whether such approvals would be forthcoming or the terms on which the lenders would approve such acquisitions. These risks, among others, could be heightened if we complete a large acquisition or other business venture or multiple transactions within a relatively short period of time.
We cannot predict whether such approvals would be forthcoming or the terms on which the lenders would approve such acquisitions. These risks, among others, 25 Table of Contents could be heightened if we complete a large acquisition or other business venture or multiple transactions within a relatively short period of time.
Strategic Risks • Our strategy to pursue acquisitions and alliances, strong customer relations, and new joint ventures, investments, and partnerships and our recent activities in this regard involve risk and may prove to be unsuccessful. • Climate, environmental, health and safety laws and regulations as well as the impact of increased scrutiny on our environmental, social and governance (“ESG”) practices, our ability to meet our ESG company goals, and public perceptions that our products are not environmentally friendly or that our practices are not sustainable could impact our reputation. • Stock price volatility, including in response to the risks described herein or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry or general economic conditions, and other factors beyond our control. • There are risks associated with our ability to achieve our financial projections or other business initiatives, including our Amplifying Maximum Productivity (“AMP”) initiative, in the time periods that we anticipate or at all.
Strategic Risks • Our strategy to pursue acquisitions and alliances, strong customer relations, and new joint ventures, investments, and partnerships and our recent activities related to Tornado Infrastructure Equipment in this regard involve risk and may prove to be unsuccessful. • Climate, environmental, health and safety laws and regulations as well as the impact of increased scrutiny on our sustainability practices, our ability to meet our company sustainability goals, and public perceptions that our products are not environmentally friendly or that our practices are not sustainable could impact our reputation. • Stock price volatility, including in response to the risks described herein or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry or general economic conditions, and other factors beyond our control. • There are risks associated with our ability to achieve our financial projections or other business initiatives, including our Amplifying Maximum Productivity (“AMP”) initiative, in the time periods that we anticipate or at all.
Our net sales outside the U.S. were 20.1 percent, 20.8 percent, and 19.5 percent of our total consolidated net sales for fiscal years 2024, 2023, and 2022, respectively.
Our net sales outside the U.S. were 19.5 percent, 20.1 percent, and 20.8 percent of our total consolidated net sales for fiscal years 2025, 2024, and 2023, respectively.
We are subject to numerous international, federal, state, municipal and other governmental laws, rules, policies, regulations, and orders ("Laws") relating to, among other things; climate change; emissions to air, including engine emission requirements; discharges to water; restrictions placed on water usage and water availability; product and associated packaging; use of certain chemicals; restricted substances, including "conflict minerals" disclosure rules; import and export compliance, including country of origin certification requirements; worker and product user health and safety; energy efficiency; product life-cycles; outdoor noise laws; the generation, use, handling, labeling, collection, management, storage, transportation, treatment, and disposal of hazardous substances, wastes, and other regulated materials; and the registration of certain technologies with various government agencies throughout the world and operation of those technologies within the limits imposed by those agencies, including but not limited to radio frequency, broadband or other wireless technologies and technologies within the airspace of commercial airplanes, such as unmanned aerial systems.
We are subject to numerous international, federal, state, municipal and other governmental laws, rules, policies, regulations, and orders ("Laws") relating to, among other things; climate change; emissions to air, including engine emission requirements; 28 Table of Contents discharges to water; restrictions placed on water usage and water availability; product and associated packaging; use of certain chemicals; restricted substances, including "conflict minerals" disclosure rules; import and export compliance, including country of origin certification requirements; worker and product user health and safety; energy efficiency; extended producer responsibility; outdoor noise laws; the generation, use, handling, labeling, collection, management, storage, transportation, treatment, and disposal of hazardous substances, wastes, and other regulated materials; and the registration of certain technologies with various government agencies throughout the world and operation of those technologies within the limits imposed by those agencies, including but not limited to cybersecurity, radio frequency, broadband or other wireless technologies and technologies within the airspace of commercial airplanes, such as unmanned aerial systems.
We purchase commodities, components, parts, and accessories for use in our manufacturing process and end-products or to be sold as stand-alone end-products, such as steel, aluminum, petroleum and natural gas-based resins, linerboard, copper, lead, rubber, engines, transmissions, transaxles, hydraulics, electrification components, and other commodities, components, parts 18 Table of Contents and accessories.
We purchase commodities, components, parts, and accessories for use in our manufacturing process and end-products or to be sold as stand-alone end-products, such as steel, aluminum, petroleum and natural gas-based resins, linerboard, copper, lead, rubber, engines, transmissions, transaxles, hydraulics, electrification components, and other commodities, components, parts and accessories.
These risks include: • weakened economic conditions; • pandemics and/or epidemics; • increased costs of customizing products for foreign countries; • difficulties in managing and staffing international operations and increases in infrastructure costs including legal, tax, accounting, and information technology; • the imposition of additional U.S. and foreign governmental controls or regulations; • new or enhanced trade restrictions and restrictions on the activities of foreign agents, representatives, and channel customers; • withdrawal from or revisions to international trade policies or agreements and the imposition or increases in import and export licensing and other compliance requirements, customs duties and tariffs, import and export quotas and other trade restrictions, license obligations, other non-tariff barriers to trade; • the imposition of U.S. and/or international sanctions against a country, company, person, or entity with whom we do business that would restrict or prohibit our business with the sanctioned country, company, person, or entity; • international pricing pressures; • foreign trade or other policy changes between the U.S. and other countries, trade regulation, and/or industry activity that favors domestic companies, including antidumping and countervailing duty petitions on certain products imported from foreign countries, including certain engines imported into the U.S. from China; • adverse currency exchange rate fluctuations; • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • potentially higher tax rates and adverse tax consequences, including restrictions on repatriating cash and/or earnings to the U.S.; • fluctuations in our operating performance based on our geographic mix of sales; • transportation delays and interruptions; • national and international conflicts, including the war between Ukraine and Russia, the war between Israel and Hamas, geopolitical tensions and foreign policy changes, acts of war or terrorist acts; • difficulties in protecting, enforcing or defending intellectual property rights; and • multiple, changing, and often inconsistent enforcement of laws, rules, regulations and standards, including rules relating to taxes, environmental, health and safety matters.
These risks include: • weakened economic conditions; • pandemics and/or epidemics; • increased costs of customizing and/or certifying products for foreign countries; • difficulties in managing and staffing international operations and increases in infrastructure costs including legal, tax, accounting, and information technology; • the imposition of additional U.S. and foreign governmental controls or regulations; • new or enhanced trade restrictions and restrictions on the activities of foreign agents, representatives, and channel customers; • withdrawal from or revisions to international trade policies or agreements and the imposition or increases in import and export licensing and other compliance requirements, customs duties and tariffs, import and export quotas and other trade restrictions, license obligations, other non-tariff barriers to trade; • the imposition of U.S. and/or international sanctions against a country, company, person, or entity with whom we do business that would restrict or prohibit our business with the sanctioned country, company, person, or entity; • international pricing pressures; • foreign trade or other policy changes between the U.S. and other countries, trade regulation, and/or industry activity that favors domestic companies, including antidumping and countervailing duty petitions on certain products imported from foreign countries, including certain engines imported into the U.S. from China; • adverse currency exchange rate fluctuations; • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; 23 Table of Contents • potentially higher tax rates and adverse tax consequences, including restrictions on repatriating cash and/or earnings to the U.S.; • fluctuations in our operating performance based on our geographic mix of sales; • transportation delays and interruptions; • national and international conflicts, political instability or tensions (such as the current geopolitical tensions involving China and Taiwan, the ongoing war between Russia and Ukraine, and Middle East conflicts and wars), foreign policy changes, acts of war or terrorist acts; • difficulties in protecting, enforcing or defending intellectual property rights; and • multiple, changing, and often inconsistent enforcement of laws, rules, regulations and standards, including rules relating to taxes, environmental, health and safety matters.
Global supply chain disruptions, natural disasters, antidumping and countervailing duty petitions regarding certain engines imported into the U.S. from China, and other tariffs have, to various and differing degrees, impacted the availability of 16 Table of Contents commodities, components, parts, and accessories used in our products.
Global supply chain disruptions, natural disasters, antidumping and countervailing duty petitions regarding certain engines imported into the U.S. from China, and other tariffs have, to various and differing degrees, impacted the availability and price of commodities, components, parts, and accessories used in our products.
Other Laws impacting our supply chain, such as the United Kingdom Modern Slavery Act, or data privacy requirements, such as the EU's General Data Protection Regulation, the California Consumer Privacy Act, and other emerging domestic and global data privacy and cybersecurity laws, may have similar consequences.
Other Laws impacting our supply chain, such as the United Kingdom Modern Slavery Act (and equivalent laws in California, Australia, and Canada) or data privacy requirements, such as the EU's General Data Protection Regulation, the California Consumer Privacy Act, and other emerging domestic and global data privacy and cybersecurity laws, may have similar consequences.
Our Residential segment products generally face a higher volume of competition than our Professional segment products given the low barriers to entry resulting in numerous other manufacturers selling products that compete directly with our products.
Our Residential segment products generally face a higher and increasing volume of competition compared to our Professional segment products given the low barriers to entry resulting in numerous other manufacturers selling products that compete directly with our products.
Acquisitions, alliances, joint ventures, investments, and partnerships may involve a number of risks, the occurrence of which could adversely affect our business, reputation, financial condition, and operating results, including: • diversion of management's attention to manage and integrate the acquired business; • disruption to our existing operations and plans; • inability to effectively manage our expanded operations; • difficulties, delays, or unanticipated costs in integrating and assimilating information and financial systems, internal controls, operations, manufacturing processes and products or in realizing projected efficiencies, growth prospects, cost savings, and other synergies; • inability to successfully integrate or develop a distribution channel for acquired product lines; • loss of key employees, customers, distributors, or dealers of the acquired businesses or adverse effects on existing business relationships with suppliers, customers, distributors, and dealers; • write-off of significant amounts of goodwill, other indefinite-lived intangible assets, and/or long-lived assets because of deterioration in the performance of an acquired business or product line, adverse market conditions, changes in the competitive landscape, changes in laws or regulations that restrict activities of an acquired business or product line, or other circumstances; • delays or challenges in transitioning distributors and dealers of acquired businesses to available floor plan financing arrangements; • violation of confidentiality, intellectual property, and non-compete obligations or agreements by employees of an acquired business or lack of or inadequate formal intellectual property protection mechanisms in place at an acquired business; • adverse impact on overall profitability if our expanded operations do not achieve, or are delayed in achieving, the growth prospects, net sales, net earnings, cost and/or revenue synergies, or other financial results projected in our valuation models; • reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage and debt service requirements to pay acquisition purchase prices or other business venture investment costs, which could restrict our ability to access additional capital when needed, result in a decrease in our credit rating, or limit our ability to pursue other important elements of our business strategy; • failure by acquired businesses or other business ventures to comply with applicable international, federal, and state product safety or other regulatory standards; • infringement by acquired businesses or other business ventures of valid intellectual property rights of others; • inaccurate assessment of additional post-acquisition or business venture investments, undisclosed, contingent or other liabilities or problems, unanticipated costs associated with an acquisition or other business venture, and despite the existence of representations, warranties and indemnities in any definitive agreement and/or a representation and warranty insurance policy, if applicable, an inability to recover or manage such liabilities and costs; and • impacts as a result of purchase accounting adjustments, incorrect estimates made in the accounting for acquisitions, occurrence of non-recurring charges, or other potential financial accounting or reporting impacts. 23 Table of Contents For example, during the third quarter of fiscal 2023, we recorded non-cash impairment charges of $18.0 million related to the indefinite-lived Spartan® trade name intangible asset and $133.3 million related to Intimidator goodwill.
Acquisitions, alliances, joint ventures, investments, and 24 Table of Contents partnerships may involve a number of risks, the occurrence of which could adversely affect our business, reputation, financial condition, and operating results, including: • diversion of management's attention to manage and integrate the acquired business; • disruption to our existing operations and plans; • inability to effectively manage our expanded operations; • difficulties, delays, or unanticipated costs in integrating and assimilating information and financial systems, internal controls, operations, manufacturing processes and products or in realizing projected efficiencies, growth prospects, cost savings, and other synergies; • challenges in harmonizing information technology systems, compliance frameworks, and corporate governance practices related to Tornado Infrastructure Equipment; • inability to successfully integrate or develop a distribution channel for acquired product lines; • loss of key employees, customers, distributors, or dealers of the acquired businesses or adverse effects on existing business relationships with suppliers, customers, distributors, and dealers; • write-off of significant amounts of goodwill, other indefinite-lived intangible assets, and/or long-lived assets because of deterioration in the performance of an acquired business or product line, adverse market conditions, changes in the competitive landscape, changes in laws or regulations that restrict activities of an acquired business or product line, or other circumstances; • delays or challenges in transitioning distributors and dealers of acquired businesses to available floor plan financing arrangements; • delays in integration related to Tornado Infrastructure Equipment; • new regulators of businesses that we have acquired or may acquire in the future; • violation of confidentiality, intellectual property, and non-compete obligations or agreements by employees of an acquired business or lack of or inadequate formal intellectual property protection mechanisms in place at an acquired business; • adverse impact on overall profitability if our expanded operations do not achieve, or are delayed in achieving, the growth prospects, net sales, net earnings, cost and/or revenue synergies, or other financial results projected in our valuation models; • reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage and debt service requirements to pay acquisition purchase prices or other business venture investment costs, which could restrict our ability to access additional capital when needed, result in a decrease in our credit rating, or limit our ability to pursue other important elements of our business strategy; • failure by acquired businesses or other business ventures to comply with applicable international, federal, and state product safety or other regulatory standards; • infringement by acquired businesses or other business ventures of valid intellectual property rights of others; • inaccurate assessment of additional post-acquisition or business venture investments, undisclosed, contingent or other liabilities or problems, unanticipated costs associated with an acquisition or other business venture, and despite the existence of representations, warranties and indemnities in any definitive agreement and/or a representation and warranty insurance policy, if applicable, an inability to recover or manage such liabilities and costs; and • impacts as a result of purchase accounting adjustments, incorrect estimates made in the accounting for acquisitions, occurrence of non-recurring charges, or other potential financial accounting or reporting impacts.
These agreements may be breached, and we may not have adequate remedies for any such breach. Even if these confidentiality agreements are not breached, our trade secrets may otherwise become known or be independently developed by competitors. We are subject to extensive laws, rules, policies, and regulations, with which our compliance is costly and not guaranteed.
Even if these confidentiality agreements are not breached, our trade secrets may otherwise become known or be independently developed by competitors. We are subject to extensive laws, rules, policies, and regulations, with which our compliance is costly and not guaranteed.
Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting in our sustainability report for fiscal 2022, which is not incorporated by reference into and does not form any part of this report.
Certain challenges we face in the achievement of our sustainability objectives are also captured within our sustainability reporting in our most recent sustainability report, which is not incorporated by reference into and does not form any part of this report.
For example, we have the transition risk of developing and marketing electric and alternative fuel products to meet market demands for less greenhouse gas intensive products.
For example, we have the risks related to developing and marketing electric and alternative fuel products to meet market demands for less greenhouse gas intensive products.
Further leveraging our capital structure could result in a downgrade to our credit ratings. For instance, if our credit rating falls below investment grade and/or our leverage ratio rises above 1.50, the interest rate we currently pay on outstanding debt under our revolving credit facility could increase.
For instance, if our credit rating falls below investment grade and/or our leverage ratio rises above 1.50, the interest rate we currently pay on outstanding debt under our revolving credit facility could increase.
If the content, analyses, or recommendations that AI programs assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations and our reputation may be adversely affected. AI programs may be costly and require significant expertise to develop, may be difficult to set up and manage, and require periodic upgrades.
If the content, analyses, or recommendations that AI programs assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations and our reputation may be adversely affected.
Our international operations may not produce desired levels of net sales or, among other things, the factors listed above may harm our business and operating results.
Our international operations may not produce desired levels of net sales or, among other things, the factors listed above may harm our business and operating results. Any material decrease in our international sales or profitability could also adversely impact our operating results.
Any material changes in the availability or terms of credit offered to our customers by our floor plan financing providers, challenges or delays in transferring new distributors and dealers from any business we might acquire or otherwise to our available financing platforms, any termination or disruption of our floor plan arrangements, or any delay in securing replacement credit sources could adversely affect our sales and operating results.
Any material changes in the availability or terms of credit offered to our customers by our floor plan financing providers, challenges or delays in transferring new distributors and dealers from any business we might acquire or otherwise to our available financing platforms, any termination or disruption of our floor plan arrangements, or any delay in securing replacement credit sources could adversely affect our sales and operating results. 21 Table of Contents We are dependent upon the effective operation of our information systems, software, or information security practices and those of our business partners or third-party service providers.
Additionally, market deterioration or other factors could jeopardize the counterparty obligations of one or more of the banks participating in our revolving credit facility, which could have an adverse effect on our business if we are not able to replace such revolving credit facility or find other sources of liquidity on acceptable terms. 25 Table of Contents If we do not comply with the terms of our credit arrangements and indentures, they could be terminated and amounts thereunder could become due and payable.
Additionally, market deterioration or other factors could jeopardize the counterparty obligations of one or more of the banks participating in our revolving credit facility, which could have an adverse effect on our business if we are not able to replace such revolving credit facility or find other sources of liquidity on acceptable terms.
One of our strategies is to drive growth in our businesses and expand our global presence through targeted acquisitions and alliances, strong customer relations, and new joint ventures, investments, and partnerships that add value and complement our existing brands and product portfolio. For example, in September 2023, we announced a strategic partnership with Lowe's.
One of our strategies is to drive growth in our businesses and expand our global presence through targeted acquisitions and alliances, strong customer relations, and new joint ventures, investments, and partnerships that add value and complement our existing brands and product portfolio. For example, on December 8, 2025, we announced the close of our acquisition of Tornado Infrastructure Equipment.
For example, during the third quarter of fiscal 2023, we recorded non-cash impairment charges of $18.0 million related to the indefinite-lived Spartan trade name intangible asset and $133.3 million related to Intimidator goodwill. These impairment charges resulted in a $36.7 million income tax benefit (deferred tax asset) associated with the remaining tax deductible basis in goodwill and other intangible assets.
For example, during the third quarter of fiscal 2025, we recorded a non-cash impairment charge of $81.1 million related to the indefinite-lived Spartan trade name intangible asset. This impairment charge resulted in a $19.7 million income tax benefit (deferred tax asset) associated with the remaining tax deductible basis in other intangible assets.
Others may initiate litigation to challenge the validity of our patents, allege that we infringe their 26 Table of Contents patents, or use their resources to design comparable products that do not infringe our patents. Additionally, we may initiate proceedings to protect our proprietary rights.
Others may initiate litigation to challenge the validity of our patents, allege that we infringe their patents, or use their resources to design comparable products that do not infringe our patents. Additionally, we may initiate proceedings to protect our proprietary rights. Any litigation, whether initiated by us or others, may cause us to incur substantial costs and possible damages.
These impairment charges resulted in a $36.7 million income tax benefit (deferred tax asset) associated with the remaining tax deductible basis in goodwill and other intangible assets. In addition, we need effective internal controls to provide reliable and accurate financial reports and to effectively prevent fraud.
This impairment charge resulted in a $19.7 million income tax benefit (deferred tax asset) associated with the remaining tax deductible basis in intangible assets. In addition, we need effective internal controls to provide reliable and accurate financial reports and to effectively prevent fraud. Integrating acquired businesses may make our systems and controls more complex and difficult to manage.
We are dependent upon the effective operation of our information systems, software, or information security practices and those of our business partners or third-party service providers. We have many information systems and other software that are critical to our business and certain of our products, some of which are managed by third parties.
We have many information systems and other software that are critical to our business and certain of our products, some of which are managed by third parties.
Integrating acquired businesses may make our systems and controls more complex and difficult to manage. We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002.
We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002.
We have set certain aspirations and goals related to ESG matters, such as goals to increase battery and hybrid product sales, plans to reduce certain GHG emissions over time, and goals to increase the number of women and racial and ethnic minorities in leadership positions.
Failure to achieve our financial projections could have an adverse effect on our business, operating results, and financial condition. 30 Table of Contents We have set certain aspirations and goals related to sustainability matters, such as goals to increase battery and hybrid product sales, plans to reduce certain GHG emissions over time, and goals to increase the number of women and racial and ethnic minorities in leadership positions.
Significant violations of these laws, or allegations of such violations, could harm our reputation, disrupt our business, and result in significant fines and penalties that could have a material adverse effect on our operating results or financial condition. 28 Table of Contents General Risk Factors We may not achieve our financial projections, sustainability goals, or other business and productivity initiatives, which could have an adverse effect on our business, operating results, and financial condition.
Significant violations of these laws, or allegations of such violations, could harm our reputation, disrupt our business, and result in significant fines and penalties that could have a material adverse effect on our operating results or financial condition.
If such laws or regulations are more stringent than current legal or regulatory requirements, we may be subject to curtailment or reduced access to resources or experience increased compliance burdens and costs to meet the regulatory obligations, which may adversely affect our business and operating results. 27 Table of Contents Additionally, various other legislative proposals, if enacted, could put us in a competitively advantaged or disadvantaged position and affect customer demand for our products.
If such laws or regulations are more stringent than current legal or regulatory requirements, we may be subject to curtailment or reduced access to resources or experience increased compliance burdens and costs to meet the regulatory obligations, which may adversely affect our business and operating results.
Strategic Risks Our strategy to pursue acquisitions and alliances, strong customer relations, and new joint ventures, investments, and partnerships and our recent activities in this regard involve risk and may not prove to be successful.
Any of these impacts or changes could materially and adversely affect our business, financial condition and results of operations. Strategic Risks Our strategy to pursue acquisitions and alliances, strong customer relations, and new joint ventures, investments, and partnerships and our recent activities related to Tornado Infrastructure Equipment in this regard involve risk and may not prove to be successful.
In addition, any amounts outstanding pursuant to our credit arrangements and indentures could become due and payable if we were unable to obtain a covenant waiver or refinance our debt under such arrangements. A downgrade in our credit ratings could increase our cost of funding and/or adversely affect our access to funding.
The banks could condition such waiver on terms that may be unfavorable to us. In addition, any amounts outstanding pursuant to our credit arrangements and indentures could become due and payable if we were unable to obtain a covenant waiver or refinance our debt under such arrangements.
Unfavorable ratings may lead to negative investor sentiment, which could negatively impact our stock price. Any failure, or perceived failure, to respond to ESG concerns could harm our business and reputation.
Additionally, organizations that inform investors on sustainability matters have developed rating systems for evaluating companies on their approach to sustainability. Unfavorable ratings may lead to negative investor sentiment, which could negatively impact our stock price. Any failure, or perceived failure, to respond to sustainability concerns could harm our business and reputation.
If we fail to comply with any covenant required by our credit arrangements following any applicable cure periods, the banks could terminate their commitments unless we could negotiate a covenant waiver. The banks could condition such waiver on terms that may be unfavorable to us.
Our ability to comply with such terms depends on the success of our business and our operating results, as well as various risks, uncertainties, and events beyond our control. If we fail to comply with any covenant required by our credit arrangements following any applicable cure periods, the banks could terminate their commitments unless we could negotiate a covenant waiver.
Additional risks not presently known to us or that we currently deem immaterial may also impair our business, reputation, operating results, industry, financial position, or future financial or operational performance. Risk Factor Summary This summary is not complete and should be read in conjunction with the more detailed risk factors set forth below.
Additional risks not presently known to us or that we currently deem immaterial may also impair our business, reputation, operating results, industry, financial position, or future financial or operational performance.
We are continually renovating and, where appropriate or necessary, expanding our facilities, primarily driven by the growth of our business and the need to expand our manufacturing capacity. We have historically financed, and expect to continue to finance, such efforts with cash on hand and cash from operating activities.
We are renovating and expanding certain office, manufacturing, and other facilities and could experience disruptions to our operations in connection with such efforts. We are continually renovating and, where appropriate or necessary, expanding our facilities, primarily driven by the growth of our business and the need to expand our manufacturing capacity.
Our credit ratings are important to our cost and availability of capital. The major rating agencies routinely evaluate our credit profile and assign credit ratings to us. This evaluation is based on a number of factors, which include financial strength, business and financial risk, transparency with rating agencies, and timeliness of financial reporting.
This evaluation is based on a number of factors, which include financial strength, 27 Table of Contents business and financial risk, transparency with rating agencies, and timeliness of financial reporting. Further leveraging our capital structure could result in a downgrade to our credit ratings.
No assurance can be provided that we will achieve our new sustainability goals. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive.
It is possible that we may be unsuccessful in the achievement of our sustainability goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our initiatives or efforts or the speed at which we are progressing towards any such aspirations and goals.
We generally provide financial projections such as our expected revenue growth and adjusted diluted earnings per share. These financial projections are based on management’s assumptions and expectations at the time made. Failure to achieve our financial projections could have an adverse effect on our business, operating results, and financial condition.
General Risk Factors We may not achieve our financial projections, sustainability goals, or other business and productivity initiatives, which could have an adverse effect on our business, operating results, and financial condition. We generally provide financial projections such as our expected revenue growth and adjusted diluted earnings per share.
Financial Risks • We incur impairment, restructuring, and other charges from time to time which harm our operating results. • Foreign currency exchange rate fluctuations may harm our operating results. • We are dependent upon the availability and cost of our credit arrangements and any downgrade in our credit ratings could adversely affect our access to and increase the cost of such arrangements. 15 Table of Contents • Changes in accounting or tax standards and policies and/or assumptions underlying estimates could harm our results of operations.
Financial Risks • We incur impairment, restructuring, and other charges from time to time which harm our operating results. • Foreign currency exchange rate fluctuations may harm our operating results. • We are dependent upon the availability and cost of our credit arrangements and any downgrade in our credit ratings could adversely affect our access to and increase the cost of such arrangements. • Changes in accounting or tax standards and policies and/or assumptions underlying estimates could harm our results of operations. • Delays in integration related to Tornado Infrastructure Equipment may erode expected synergies and shareholder value. 16 Table of Contents Legal, Regulatory, and Compliance Risks • Our patents, trademarks, and contractual provisions may be insufficient to protect our proprietary rights, or we may infringe the proprietary rights of others. • Our business, which is subject to extensive regulation, including new regulators of businesses that we have acquired or may acquire in the future, involves legal and regulatory risks. • We are subject to product quality issues, product liability claims, and other litigation from time to time.
As of October 31, 2024, we had goodwill of $450.3 million, which is maintained in various reporting units, and indefinite-lived intangible assets of $271.6 million, which together comprise 20.1 percent of our total assets as of October 31, 2024. Any future impairment charges could be significant and could adversely affect our future consolidated operating results and financial condition.
As of October 31, 2025, we had goodwill of $450.9 million, which is maintained in various reporting units, and indefinite-lived intangible assets of $190.6 million, which together comprise 18.7 percent of our total assets as of October 31, 2025.
In June 2023, we released our sustainability report for fiscal 2022, which highlights certain aspirations and goals related to ESG matters, such as goals to increase battery and hybrid product sales, plans to reduce certain GHG emissions over time, and goals to increase the number of women and racial and ethnic minorities in leadership positions.
Each year, we release our sustainability report, which highlights certain aspirations and goals related to sustainability matters, such as goals to increase battery and hybrid product sales and plans to reduce certain GHG emissions over time. No assurance can be provided that we will achieve our sustainability goals.
Competitors may move manufacturing operations to low cost countries for significant cost and price reductions, and we may not be able to compete, which could harm our business and operating results. Increases in the cost of commodities, components, parts, and accessories or our other costs of doing business, have, and could continue to, adversely affect our profit margins and businesses.
If these activities lead to consumer confusion, unauthorized transactions, or data compromise, our business, financial condition, and results of operations could be materially adversely affected. Increases in the cost of commodities, components, parts, and accessories or our other costs of doing business, have, and could continue to, adversely affect our profit margins and businesses.
We could also be forced to develop an alternative that could be costly and time-consuming, or acquire a license, which we might not be able to do on terms favorable to us, or at all. We rely on trade secrets and proprietary know-how that we seek to protect, in part, by confidentiality agreements with our employees, suppliers, consultants, and others.
If the outcome of any such litigation is unfavorable to us, our business, operating results, and financial condition could be adversely affected. We could also be forced to develop an alternative that could be costly and time-consuming, or acquire a license, which we might not be able to do on terms favorable to us, or at all.
We cannot assure that we will be able to comply with all of the terms of our credit arrangements and indentures, particularly the financial covenants. Our ability to comply with such terms depends on the success of our business and our operating results, as well as various risks, uncertainties, and events beyond our control.
If we do not comply with the terms of our credit arrangements and indentures, they could be terminated and amounts thereunder could become due and payable. We cannot assure that we will be able to comply with all of the terms of our credit arrangements and indentures, particularly the financial covenants.
We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas.
We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain sustainability priority issue areas. To address this growing set of matters, we continue to devote dedicated employee resources while utilizing a cross-functional/business sustainability leadership team to further develop and implement an enterprise-wide sustainability strategy.
Removed
Legal, Regulatory, and Compliance Risks • Our patents, trademarks, and contractual provisions may be insufficient to protect our proprietary rights, or we may infringe the proprietary rights of others. • Our business, which is subject to extensive regulation, involves legal and regulatory risks. • We are subject to product quality issues, product liability claims, and other litigation from time to time.
Added
Competitors may move manufacturing operations to low cost countries for significant cost and price reductions, and we may not be able to compete, which could harm our business and operating results. Our domain names are critical assets for informing consumers about our brand, but they are increasingly targeted by scams.
Removed
Any material decrease in our international sales or profitability could also adversely impact our operating results. 22 Table of Contents We are renovating and expanding certain office, manufacturing, and other facilities and could experience disruptions to our operations in connection with such efforts.
Added
We face significant risks from cybersquatting, typosquatting, and other domain name scams that target our trademarks, trade names, and brand identity. These activities involve registering domain names that are identical or confusingly similar to our 19 Table of Contents intellectual property, often for resale at inflated prices or to mislead consumers.
Removed
To address this growing set of matters, we have taken several actions, including hiring a new executive officer with responsibility for sustainability in July 2023, devoting additional dedicated employee resources, and creating a cross-functional/business sustainability leadership team to further develop and implement an enterprise-wide sustainability strategy.
Added
Common schemes include: cybersquatting (registering our marks as domain names to demand payment for transfer); typosquatting and look-alike domains (using minor variations of our legitimate domains to divert traffic); and homograph attacks (exploiting internationalized domain names to create visually deceptive domains). These fraudulent domains may host phishing sites, distribute malware, sell counterfeit goods, or disseminate false information.
Removed
Furthermore, our stakeholders may not be satisfied with our initiatives or efforts or the speed at which we are progressing towards any such aspirations and goals. Additionally, organizations that inform investors on ESG matters have developed rating systems for evaluating companies on their approach to ESG.
Added
Such activities can result in: reputational harm through loss of consumer trust and brand dilution; operational disruption through increased costs for monitoring, enforcement, and litigation; and regulatory exposure through potential scrutiny under consumer protection and cybersecurity regulations. Despite our monitoring and enforcement programs, we cannot guarantee complete prevention or timely remediation of these abuses.
Removed
Financial Risks We incurred non-cash impairment charges during the third quarter of fiscal 2023 which adversely affected our third quarter and full year fiscal 2023 operating results and we may be required to incur additional future impairment and other charges, which could adversely affect our operating results.
Added
AI programs may be costly and require significant expertise 22 Table of Contents to develop, may be difficult to set up and manage, and require periodic upgrades.
Removed
Indefinite-lived intangible 24 Table of Contents assets are tested for impairment at the individual indefinite-lived intangible asset or asset group level, as appropriate.
Added
We have historically financed, and expect to continue to finance, such efforts with cash on hand and cash from operating activities.
Removed
Any litigation, whether initiated by us or others, may cause us to incur substantial costs and possible damages. If the outcome of any such litigation is unfavorable to us, our business, operating results, and financial condition could be adversely affected.
Added
Recently announced and future tariffs and other trade restrictions could materially and adversely affect our business, financial condition and results of operations. In 2025, the U.S. government announced a series of tariffs, including tariffs targeting a broad range of imports and targeted tariffs on goods from specific countries and industries.
Added
In response, many countries imposed reciprocal tariffs and other trade restrictions on the United States.
Added
Although many of these tariffs, countermeasures and other trade restrictions have since been eased or paused, their initial announcements triggered considerable volatility in global markets and heightened economic uncertainty, and the global trade situation, particularly between the United States and China, continues to be highly dynamic.
Added
These changes have, and similar changes in the future may continue to, increase the cost or reduce the availability of raw materials and supplies we need to operate, cause customers to advance, delay, reduce, or cancel orders, shift buying patterns, impact demand in our end markets, complicate demand forecasting for us and our customers, increase supply chain complexity and contribute to volatility, a broader economic slowdown or recession.
Added
Our ability to realize any of the anticipated benefits from the acquisition of Tornado Infrastructure Equipment depends on us successfully integrating Tornado Infrastructure Equipment into our business.
Added
If we cannot successfully integrate or are delayed in integrating newly acquired businesses or fail to execute our business plan, it would negatively impact our ability to manufacture new products for and to grow our business, which would materially adversely affect our financial condition, results of operations or cash flows.
Added
Even if Tornado Infrastructure Equipment is successfully integrated, the benefits of such acquisition may not be realized within the anticipated time frame or at all.
Added
Any of these risks could cause our strategic transactions, including the Tornado Infrastructure Equipment acquisition, not to be as profitable or accretive as expected or planned. For example, during the third quarter of fiscal 2025, we recorded a non-cash impairment charge of $81.1 million related to the indefinite-lived Spartan trade name intangible asset.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+3 added−1 removed13 unchanged
Biggest changeWe leverage an industry leading framework, the National Institute of Standards and Technology Cybersecurity Framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover. We assess our maturity against that framework in partnership with an independent firm on at least an annual basis.
Biggest changeCybersecurity risks are reviewed at least quarterly by the Enterprise Risk Management and Compliance team and escalated to senior management as appropriate. We leverage an industry leading framework, the National Institute of Standards and Technology Cybersecurity Framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover.
Additional information on cybersecurity risks we face is included in Part I, Item 1A, "Risk Factors," which should be read in conjunction with the information in this section. 30 Table of Contents
Additional information on cybersecurity risks we face is included in Part I, Item 1A, "Risk Factors," which should be read in conjunction with the information in this section. 32 Table of Contents
We maintain established information security policies and processes; deploy regular network and endpoint software updates on all company-managed systems and workstations to detect and prevent, among others, viruses, malicious code, unauthorized access, and phishing attempts; maintain a disaster recovery plan, and perform at least two disaster recovery exercises annually to validate and optimize our recovery efforts in event of a cybersecurity incident; and regularly engage third-party cybersecurity experts to conduct vulnerability assessments and penetration testing on our information networks, systems, and applications. 29 Table of Contents Our internal audit team performs regular assessments of our program and selected components.
We maintain established information security policies and processes; deploy regular network and endpoint software updates on all company-managed systems and workstations to detect and prevent, among others, viruses, malicious code, unauthorized access, and phishing attempts; maintain a disaster recovery plan, and perform at least two disaster recovery exercises annually to validate and optimize our recovery efforts in event of a cybersecurity incident; and regularly engage third-party cybersecurity experts to conduct vulnerability assessments and penetration testing on our information networks, systems, and applications.
We recognize the importance of continued monitoring and improvement of our cybersecurity program, and will continue to invest in our security controls, incident response capabilities, and third-party vendor management protocols.
We have also developed internal policies to mitigate cybersecurity incidents, including providing clear guidelines for incident classification and response. We recognize the importance of continued monitoring and improvement of our cybersecurity program, and will continue to invest in our security controls, incident response capabilities, and third-party vendor management protocols.
He has strategic and operational responsibility for all aspects of the company’s cybersecurity program, including how cyber risks are identified and assessed and how the company prepares for, detects, responds, and recovers from cyber threats. Quarterly cybersecurity program updates and as-needed reporting on cybersecurity incidents are provided to the Chief Executive Officer, Chief Financial Officer, and General Counsel.
He has strategic and operational responsibility for all aspects of the company’s cybersecurity program, including how cyber risks are identified and assessed and how the company prepares for, detects, responds, and recovers from cyber threats.
We train our employees through annual security training, phishing simulations, and regular communications about timely cybersecurity topics and threats. We have a documented and well-tested cybersecurity incident response plan that guides us in responding, containing, and eradicating cybersecurity threats that have breached our preventative controls.
We have a documented and well-tested cybersecurity incident response plan that guides us in responding, containing, and eradicating cybersecurity threats that have breached our preventative controls.
The Audit Committee of our Board of Directors provides oversight for our cybersecurity program. The Audit Committee receives regular updates from management on the effectiveness of our cybersecurity program, reviews plans on how management will continually advance the program, and receives updates on special topics that help the committee provide effective oversight of the program.
The Audit Committee receives regular updates from management on the effectiveness of our cybersecurity program, reviews plans on how management will continually advance the program, and receives updates on special topics that help the committee provide effective oversight of the program. Despite our best efforts, we cannot guarantee that our security measures will prevent all potential cybersecurity incidents or breaches.
We also leverage retrospectives from previous cybersecurity incidents to understand weaknesses and to improve our security controls. We assess our critical suppliers regularly for cybersecurity risk and prescribe remediation activities when necessary. As a part of a collaborative defense approach, we regularly participate in multiple cybersecurity forums to share threat intelligence, best practices, and points of caution.
Our internal audit team performs regular assessments of our program and selected components. We also leverage retrospectives from previous cybersecurity incidents to understand weaknesses and to improve our security controls. We assess our critical suppliers regularly for cybersecurity risk and prescribe remediation activities when necessary.
Despite our best efforts, we cannot guarantee that our security measures will prevent all potential cybersecurity incidents or breaches. Like most companies, our systems are continually subjected to sophisticated and evolving cybersecurity threats, such as phishing, ransomware, social engineering, and advanced persistent threats.
Like most companies, our systems are continually subjected to sophisticated and evolving cybersecurity threats, such as phishing, ransomware, social engineering, and advanced persistent threats. However, to date, we have not been subject to any incidents or successful cyber-attacks that materially impacted our operations or financial condition.
However, to date, we have not been subject to any incidents or successful cyber-attacks that materially impacted our operations or financial condition. Vulnerabilities could lead to significant additional expenses and an adverse effect on our reputation, business, results of operations, financial condition and cash flows.
Vulnerabilities could lead to significant additional expenses and an adverse effect on our reputation, business, results of operations, financial condition and cash flows. The Company has invested in developing and acquiring cybersecurity capabilities allowing us to monitor threats and manage incident response.
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The Company has invested in developing and acquiring cybersecurity capabilities allowing us to monitor threats and manage incident response. We have also developed internal policies to mitigate cybersecurity incidents, including providing clear guidelines for incident classification and response.
Added
We assess our maturity against that framework in partnership with an independent firm on at least an annual basis.
Added
As a part of a collaborative defense approach, we regularly participate in multiple cybersecurity forums to share threat intelligence, best practices, and points of caution. 31 Table of Contents We train our employees through annual security training, phishing simulations, and regular communications about timely cybersecurity topics and threats.
Added
Quarterly cybersecurity program updates and as-needed reporting on cybersecurity incidents are provided to the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and General Counsel. The Audit Committee of our Board of Directors provides oversight for our cybersecurity program.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeOur significant facilities are listed below by location, ownership, and function as of October 31, 2024: Location Reportable Segment Facility Type/Use Ownership United States: Batesville, Arkansas Professional Manufacturing facility, office, and warehouse Owned/Leased El Cajon, California Professional Manufacturing facility and test site Owned/Leased Riverside, California Professional Office and test site Owned/Leased Sanford, Florida Professional Manufacturing facility Leased Ankeny, Iowa Professional & Residential Distribution center Leased Mount Sterling, Kentucky Professional Manufacturing facility Leased Iron Mountain, Michigan Professional Manufacturing facility, office, test site, and warehouse Owned/Leased Bloomington, Minnesota Other activities Corporate headquarters, test site, and warehouse Owned/Leased Shakopee, Minnesota Professional & Residential Manufacturing facility Owned Windom, Minnesota Professional & Residential Manufacturing facility Owned/Leased Beatrice, Nebraska Professional Manufacturing facility, office, and test site Owned/Leased Orrville, Ohio Professional Manufacturing facility and office Owned West Salem, Ohio Professional Manufacturing facility and office Owned Perry, Oklahoma Professional Manufacturing facility, office, and test site Owned/Leased El Paso, Texas Professional & Residential Manufacturing facility and distribution center Owned/Leased Laredo, Texas Professional & Residential Distribution center Leased Weatherford, Texas Professional Manufacturing facility Owned Baraboo, Wisconsin Professional & Residential Distribution center Leased Lake Mills, Wisconsin Professional Manufacturing facility Owned Plymouth, Wisconsin Professional & Residential Distribution center Owned Tomah, Wisconsin Professional Manufacturing facility and distribution center Owned/Leased International Countries: Beverley, Australia Professional Manufacturing facility and office Owned Braeside, Australia Professional & Residential Distribution center Leased Oevel, Belgium Professional & Residential Distribution center Owned/Leased Xiamen City, China Professional & Residential Manufacturing facility Leased Althengstett, Germany Professional Manufacturing facility and office Owned Fiano Romano, Italy Professional Manufacturing facility and office Owned/Leased Juarez, Mexico Professional & Residential Manufacturing facility Leased Monterrey, Mexico Professional & Residential Manufacturing facility Leased Ustron, Poland Professional Manufacturing facility Owned Ploiesti, Romania Professional Manufacturing facility and test site Owned Hertfordshire, United Kingdom Professional & Residential Manufacturing facility, office, and test site Owned
Biggest changeOur significant facilities are listed below by location, ownership, and function as of October 31, 2025: Location Reportable Segment Facility Type/Use Ownership United States: Batesville, Arkansas Professional Manufacturing facility, office, and warehouse Owned/Leased El Cajon, California Professional Manufacturing facility Owned Fresno, California Professional Warehouse Leased Riverside, California Professional Manufacturing facility, office, and test site Owned/Leased Sanford, Florida Professional Manufacturing facility Leased Ankeny, Iowa Professional & Residential Distribution center Leased Mount Sterling, Kentucky Professional Manufacturing facility Leased Iron Mountain, Michigan Professional Manufacturing facility, office, test site, and warehouse Owned/Leased Bloomington, Minnesota Other activities Corporate headquarters, test site, and warehouse Owned/Leased Brooklyn Center, Minnesota Other activities Service center, distribution center, and office Leased Shakopee, Minnesota Professional & Residential Manufacturing facility Owned Windom, Minnesota Professional & Residential Manufacturing facility Owned/Leased Beatrice, Nebraska Professional Manufacturing facility, office, and test site Owned/Leased Orrville, Ohio Professional Manufacturing facility and office Owned West Salem, Ohio Professional Manufacturing facility and office Owned Perry, Oklahoma Professional Manufacturing facility, office, and test site Owned El Paso, Texas Professional & Residential Manufacturing facility and distribution center Owned/Leased Weatherford, Texas Professional Manufacturing facility Owned Baraboo, Wisconsin Professional & Residential Distribution center Leased Lake Mills, Wisconsin Professional Manufacturing facility Owned Plymouth, Wisconsin Professional & Residential Distribution center Owned Tomah, Wisconsin Professional Manufacturing facility and distribution center Owned/Leased International Countries: Braeside, Australia Professional & Residential Office, distribution center, service center & warehouse Leased Oevel, Belgium Professional & Residential Distribution center Owned Xiamen City, China Professional & Residential Manufacturing facility Leased Althengstett, Germany Professional Manufacturing facility and office Owned Fiano Romano, Italy Professional Manufacturing facility and office Owned Juarez, Mexico Professional & Residential Manufacturing facility Leased Monterrey, Mexico Professional & Residential Manufacturing facility Leased Ustron, Poland Professional Manufacturing facility Owned Ploiesti, Romania Professional Manufacturing facility and test site Owned Hertfordshire, United Kingdom Professional & Residential Manufacturing facility, office, and test site Owned

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

12 edited+4 added−3 removed3 unchanged
Biggest changeMoeller 47, Group Vice President, Underground and Specialty Construction Group Vice President, Underground and Specialty Construction since March 2023. From November 2020 to February 2023, he served as Vice President, International. From November 2019 to October 2020, he served as Vice President, Sitework Systems. Kurt D. Svendsen 58, Vice President, Technology Vice President, Technology since March 2023.
Biggest changeMoeller 48, Group Vice President, Underground and Specialty Construction and International Group Vice President, Underground, Specialty Construction and International since October 2025. He previously served as Group Vice President, Underground and Specialty Construction from March 2023 to September 2025. From November 2020 to February 2023, he served as Vice President, International.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The list below identifies those persons designated by our Board of Directors as executive officers of the company.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The list below identifies those persons designated by our Board of Directors as executive officers of the company.
The list sets forth each such person's age and position with the company as of December 11, 2024, as well as other positions held by the executive for at least the last five years. There are no family relationships between any director, executive officer, or person nominated to become a director or executive officer of the company.
The list sets forth each such person's age and position with the company as of December 10, 2025, as well as other positions held by the executive for at least the last five years. There are no family relationships between any director, executive officer, or person nominated to become a director or executive officer of the company.
Prior to joining the company, she held several roles at Cooper-Standard Holdings, a leading manufacturer of sealing, fuel and brake delivery, and fluid transfer systems, serving as Senior Vice President, Chief Legal and Transformation Officer and Secretary from November 2022 to May 2023, and Senior Vice President, Chief Legal and Compliance Officer and Secretary from July 2019 to October 2022. 32 Table of Contents PART II
Prior to joining the company, she held several roles at Cooper-Standard Holdings, a leading manufacturer of sealing, fuel and brake delivery, and fluid transfer systems, serving as Senior Vice President, Chief Legal and Transformation Officer and Secretary from November 2022 to May 2023, and Senior Vice President, Chief Legal and Compliance Officer and Secretary from July 2019 to October 2022.
Drake 52, Vice President and Chief Financial Officer Vice President and Chief Financial Officer since March 2023. She previously served as Vice President, Finance from July 2022 to February 2023. From April 2020 to June 2022, she served as Vice President, Construction and from April 2019 through March 2020, she served as Senior Managing Director, Integration.
Angela C. Drake 53, Vice President and Chief Financial Officer Vice President and Chief Financial Officer since March 2023. She previously served as Vice President, Finance from July 2022 to February 2023. From April 2020 to June 2022, she served as Vice President, Construction and from April 2019 through March 2020, she served as Senior Managing Director, Integration.
Carpenter 50, Vice President, Global Operations and Integrated Supply Chain Vice President, Global Operations and Integrated Supply Chain since December 2021.
Carpenter 51, Vice President, Global Operations and Integrated Supply Chain Vice President, Global Operations and Integrated Supply Chain since December 2021.
From November 2020 to February 2023, he served as Vice President, Strategy, Corporate and Channel Development. From June 2013 to October 2020, he served as Vice President, Information Technology. Joanna M. Totsky 56, Vice President, General Counsel, and Corporate Secretary Vice President, General Counsel, and Corporate Secretary since June 2023.
From June 2013 to October 2020, he served as Vice President, Information Technology. Joanna M. Totsky 57, Vice President, General Counsel, and Corporate Secretary Vice President, General Counsel, and Corporate Secretary since June 2023.
He previously served as General Manager, Sitework Systems from November 2020 to November 2022, and prior to that led the company’s Center for Technology, Research and Innovation from July 2017 to October 2020. Gregory S. Janey 46, Group Vice President, Landscapes and Contractor Group Vice President, Landscapes and Contractor since November 2022.
He previously served as Group Vice President, Golf, Grounds, and Irrigation from November 2022 to September 2025. From November 2020 to November 2022, he served as General Manager, Sitework Systems, and prior to that led the company’s Center for Technology, Research and Innovation from July 2017 to October 2020. Gregory S.
From February 2011 through March 2019, she served as Chief Financial Officer for The Charles Machine Works, Inc., an underground construction company acquired by the company in April 2019. Edric C. Funk 52, Group Vice President, Golf, Grounds, and Irrigation Group Vice President, Golf, Grounds, and Irrigation since November 2022.
From February 2011 through March 2019, she served as Chief Financial Officer for The Charles Machine Works, Inc., an underground construction company acquired by the company in April 2019. Edric C. Funk 53, President and Chief Operating Officer President and Chief Operating Officer since September 2025.
He previously served as Vice President, Residential and Landscape Contractor Businesses from November 2019 to November 2022. From November 2017 to October 2019, he served as General Manager, Residential and Landscape Contractor Businesses. Margeaux M. King 47, Vice President, Human Resources Vice President, Human Resources since August 2022.
Janey 47, Group Vice President, Landscapes and Contractor Group Vice President, Landscapes and Contractor since November 2022. He previously served as Vice President, Residential and Landscape Contractor Businesses from November 2019 to November 2022. From November 2017 to October 2019, he served as General Manager, Residential and Landscape Contractor Businesses. Peter D.
Olson 60, Chairman of the Board, President and Chief Executive Officer Chairman of the Board since November 2017 and President and Chief Executive Officer since November 2016. From September 2015 through October 2016, he served as President and Chief Operating Officer.
Olson 61, Chairman of the Board and Chief Executive Officer Chairman of the Board since November 2017 and Chief Executive Officer since November 2016. From September 2015 through October 2016, he served as President and Chief Operating Officer. From June 2014 through August 2015, he served as Group Vice President, International Business, Global Ag-Irrigation Business and Distributor Development. Jason P.
From June 2014 through August 2015, he served as Group Vice President, International Business, Global Ag-Irrigation Business and Distributor Development. Jason P. Baab 49, Vice President, Strategy, Corporate Development, and Sustainability Vice President, Strategy, Corporate Development, and Sustainability since July 2023.
Baab 50, Vice President, Strategy, Corporate Development, and Sustainability Vice President, Strategy, Corporate Development, and Sustainability since July 2023.
Removed
Amy E. Dahl 50, Vice President, International Vice President, International since June 2023. She previously served as Vice President, International, General Counsel and Corporate Secretary from March 2023 to June 2023. From August 2022 to February 2023 she served as Vice President, General Counsel and Corporate Secretary.
Added
From November 2019 to October 2020, he served as Vice President, Sitework Systems. Lori A. Riley 60, Vice President, Human Resources Vice President, Human Resources since April 2025.
Removed
From November 2020 through August 2022, she served as Vice President, Human Resources, General Counsel, and Corporate Secretary and from January 2020 through October 2020, she served as Vice President, Human Resources, Distributor Development, General Counsel, and Corporate Secretary. From December 2016 through December 2019, she served as Vice President, Human Resources and Distributor Development. Angela C.
Added
Prior to joining the company, she served as Chief People and Administrative Officer at Northern Tool + Equipment, a manufacturer and retailer of light industrial equipment and DIY supplies, from August 2024 to March 2025 and as Senior Vice President, People, Communications and Legal from December 2021 to September 2024.
Removed
Prior to joining the company, she held several roles at Ecolab, a global provider in water, hygiene and infection prevention solutions and services, serving as Senior Vice President, Human Resources, Global Total Rewards & Talent from February 2022 to July 2022, and Senior Vice President, Human Resources, Global Total Rewards from September 2019 to January 2022. Peter D.
Added
She served as Senior Vice President, Human Capital at Optum from May 2019 to December 2021 and Chief People Officer at Rally Health from November 2019 to November 2021. Kurt D. Svendsen 59, Vice President, Technology Vice President, Technology since March 2023. From November 2020 to February 2023, he served as Vice President, Strategy, Corporate and Channel Development.
Added
Grant M. Young 56, Group Vice President, Golf, Grounds and Irrigation Group Vice President, Golf, Grounds and Irrigation since September 2025. He previously served as Vice President, Commercial from November 2023 to September 2025. From April 2019 to October 2023, he served as General Manager, Commercial. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+1 added−0 removed0 unchanged
Biggest changeThe following table sets forth information with respect to shares of our common stock purchased by the company during each of the three fiscal months in our fourth quarter ended October 31, 2024: Period Total Number of Shares (or Units) Purchased 1, 2, 3, 4 Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs 1, 2, 3 Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 1, 2, 3 August 3, 2024 through August 30, 2024 447,818 $ 89.32 447,818 9,323,599 August 31, 2024 through October 4, 2024 623,330 85.02 623,330 8,700,269 October 5, 2024 through October 31, 2024 529,771 83.29 528,312 8,171,957 Total 1,600,919 $ 85.65 1,599,460 1 On December 4, 2018, the company’s Board of Directors authorized the repurchase of up to 5,000,000 shares under the share repurchase program.
Biggest changeThe following table sets forth information with respect to shares of our common stock repurchased by the company during each of the three fiscal months in our fourth quarter ended October 31, 2025: Period Total Number of Shares (or Units) Repurchased 1, 2, 3, 4 Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Repurchased As Part of Publicly Announced Plans or Programs 1, 2, 3 Maximum Number of Shares (or Units) that May Yet Be Repurchased Under the Plans or Programs 1, 2, 3 August 2, 2025 through August 29, 2025 — $ — — 10,391,790 August 30, 2025 through October 3, 2025 — — — 10,391,790 October 4, 2025 through October 31, 2025 1,604 75.77 — 10,391,790 Total 1,604 $ 75.77 — 1 On December 13, 2022, the company’s Board of Directors authorized the repurchase of up to 5,000,000 shares of common stock under the stock repurchase program.
The share repurchase program has no expiration date but may be terminated by the company's Board of Directors at any time. Shares of the company's common stock surrendered by employees to satisfy minimum tax withholding obligations upon vesting of certain stock-based compensation awards are not a part of the share repurchase program.
The stock repurchase program has no expiration date but may be terminated by the company's Board of Directors at any time. Shares of the company's common stock surrendered by employees to satisfy minimum tax withholding obligations upon vesting of certain stock-based compensation awards are not a part of the stock repurchase program.
Restrictions on our ability to pay dividends are disclosed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Preferred Stock As of October 31, 2024 and 2023, we had 1,000,000 voting shares and 850,000 non-voting shares of preferred stock, par value $1.00 per share, authorized, none of which were outstanding.
Restrictions on our ability to pay dividends are disclosed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Preferred Stock As of October 31, 2025 and 2024, we had 1,000,000 voting shares and 850,000 non-voting shares of preferred stock, par value $1.00 per share, authorized, none of which were outstanding.
The total returns on TTC common stock depicted in the stock performance graph and table are not necessarily indicative of future performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among The Toro Company, the S&P 500 Index, and the S&P 500 Industrial Machinery Index *$100 invested on 10/31/19 in stock or index, including reinvestment of dividends.
The total returns on TTC common stock depicted in the stock performance graph and table are not necessarily indicative of future performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among The Toro Company, the S&P 500 Index, and the S&P 500 Industrial Machinery Index *$100 invested on 10/31/20 in stock or index, including reinvestment of dividends.
No shares were repurchased under this tranche of the share repurchase program during the time period indicated above. 4 Includes 1,459 shares of the company's common stock purchased in open-market transactions at an average price of $82.66 per share on behalf of a rabbi trust formed to pay benefit obligations of the company to participants in the company's deferred compensation plans.
No shares of common stock were repurchased under this tranche of the stock repurchase program during the time period indicated above. 4 Includes 1,604 shares of the company's common stock repurchased in open-market transactions at an average price of $75.77 per share on behalf of a rabbi trust formed to pay benefit obligations of the company to participants in the company's deferred compensation plans.
These 1,459 shares were not repurchased under the share repurchase program. 33 Table of Contents The Toro Company Common Stock Comparative Performance Graph The following stock performance graph and table depict the cumulative total shareholder return (assuming reinvestment of dividends) on $100 invested in each of TTC common stock, the S&P 500 Index, and the S&P 500 Industrial Machinery Index for the five-year period from October 31, 2019 through October 31, 2024.
These 1,604 shares were not repurchased under the stock repurchase program. 35 Table of Contents The Toro Company Common Stock Comparative Performance Graph The following stock performance graph and table depict the cumulative total shareholder return (assuming reinvestment of dividends) on $100 invested in each of TTC common stock, the S&P 500 Index, and the S&P 500 Industrial Machinery Index for the five-year period from October 31, 2020 through October 31, 2025.
As announced on December 10, 2024, our Board of Directors increased our fiscal 2025 first quarter common stock cash dividend by 5.6 percent to $0.38 per share. Future common stock cash dividends will depend upon our financial condition, results of operations, capital requirements, and other factors deemed relevant by our Board of Directors.
As announced on December 9, 2025, our Board of Directors increased our fiscal 2026 first quarter common stock cash dividend by 2.6 percent to $0.39 per share. Future common stock cash dividends will depend upon our financial condition, results of operations, capital requirements, and other factors deemed relevant by our Board of Directors.
Shareholders As of December 11, 2024, we had 2,372 shareholders of record. Issuer Purchases of Equity Securities Periodically, the company's Board of Directors authorizes the repurchase of shares of the company's common stock in open-market or privately negotiated transactions under the company's Board authorized share repurchase program ("share repurchase program").
Shareholders As of December 10, 2025, we had 2,250 shareholders of record. Issuer Purchases of Equity Securities Periodically, the company's Board of Directors authorizes the repurchase of shares of the company's common stock in open-market or privately negotiated transactions under the company's Board authorized stock repurchase program ("stock repurchase program").
In each quarter of fiscal 2024, our Board of Directors declared a common stock cash dividend of $0.36 per share, which was a 5.9 percent increase over our common stock cash dividend of $0.34 per share paid in each quarter of fiscal 2023.
In each quarter of fiscal 2025, our Board of Directors declared a common stock cash dividend of $0.38 per share, which was a 5.6 percent increase over our common stock cash dividend of $0.36 per share paid in each quarter of fiscal 2024.
The company repurchased 771,417 shares under this tranche of the share repurchase program during the period indicated above and as a result, no shares remained available to repurchase as of October 31, 2024. 2 On December 13, 2022, the company’s Board of Directors authorized the repurchase of up to an additional 5,000,000 shares under the share repurchase program.
No shares of common stock were repurchased under this tranche of the stock repurchase program during the time period indicated above, and as a result, 391,790 shares of common stock remained available to repurchase as of October 31, 2025. 2 On December 10, 2024, the company’s Board of Directors authorized the repurchase of up to an additional 4,000,000 shares of common stock under the stock repurchase program.
Fiscal Years Ended October 31 2019 2020 2021 2022 2023 2024 The Toro Company $ 100.00 $ 107.94 $ 126.82 $ 141.99 $ 110.40 $ 111.61 S&P 500 100.00 109.71 156.79 133.88 147.46 203.52 S&P 500 Industrial Machinery Index $ 100.00 $ 109.69 $ 144.78 $ 125.70 $ 137.64 $ 187.53 The information contained in The Toro Company Common Stock Comparative Performance Graph section shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically request that it be treated as soliciting material or incorporate it by reference into a document filed under the Securities Act or the Exchange Act.
Fiscal Years Ended October 31 2020 2021 2022 2023 2024 2025 The Toro Company $ 100.00 $ 117.50 $ 131.55 $ 102.29 $ 103.41 $ 97.99 S&P 500 100.00 142.91 122.03 134.41 185.51 225.31 S&P 500 Industrial Machinery Index $ 100.00 $ 131.99 $ 114.60 $ 125.49 $ 170.97 $ 174.04 The information contained in The Toro Company Common Stock Comparative Performance Graph section shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically request that it be treated as soliciting material or incorporate it by reference into a document filed under the Securities Act or the Exchange Act.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock and Cash Dividends Our common stock is listed for trading on the New York Stock Exchange and trades under the symbol "TTC." As of October 31, 2024 and 2023, we had 175,000,000 shares of common stock, par value $1.00 per share, authorized, and 101,472,125 and 103,843,485 shares of common stock outstanding, respectively.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock and Cash Dividends Our common stock is listed for trading on the New York Stock Exchange and trades under the symbol "TTC".
The company repurchased 828,043 shares under this tranche of the share repurchase program during the period indicated above and as a result, 4,171,957 shares remained available to repurchase as of October 31, 2024. 3 On December 10, 2024, the company’s Board of Directors authorized the repurchase of up to an additional 4,000,000 shares under the share repurchase program.
No shares of common stock were repurchased under this tranche of the stock repurchase program during the time period indicated above. 3 On December 9, 2025, the company’s Board of Directors authorized the repurchase of up to an additional 6,000,000 shares of common stock under the stock repurchase program.
Added
As of October 31, 2025 and 2024, we had 175,000,000 shares of common stock, par value $1.00 per share, authorized, and 97,888,105 and 101,472,125 shares of common stock outstanding, respectively.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 54 Management's Report on Internal Control over Financial Reporting 54 Report of Independent Registered Public Accounting Firm 55 Consolidated Statements of Earnings 57 Consolidated Statements of Comprehensive Income 57 Consolidated Balance Sheets 58 Consolidated Statements of Cash Flows 59 Consolidated Statements of Stockholders' Equity 60 Notes to Consolidated Financial Statements 61
Biggest changeFinancial Statements and Supplementary Data 55 Management's Report on Internal Control over Financial Reporting 55 Report of Independent Registered Public Accounting Firm 56 Consolidated Statements of Earnings 58 Consolidated Statements of Comprehensive Income 58 Consolidated Balance Sheets 59 Consolidated Statements of Cash Flows 60 Consolidated Statements of Stockholders' Equity 61 Notes to Consolidated Financial Statements 62
ITEM 6. [Reserved] 34 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Company Overview 35 Results of Operations 36 Business Segments 37 Financial Position 39 Non-GAAP Financial Measures 43 Critical Accounting Policies and Estimates 46 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 52 ITEM 8.
ITEM 6. [Reserved] 36 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Company Overview 37 Results of Operations 38 Business Segments 40 Financial Position 41 Non-GAAP Financial Measures 45 Critical Accounting Policies and Estimates 47 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 52 ITEM 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGAAP to the most directly comparable non-GAAP financial performance measures for the fiscal years ended October 31, 2024 and 2023 (dollars in millions, except per share and percentage data): 44 Table of Contents Fiscal Years Ended October 31, 2024 October 31, 2023 Gross profit $ 1,549.3 $ 1,577.6 Acquisition-related costs 1 — 0.2 Restructuring charges 2 — 1.2 Productivity initiative 3 5.7 — Adjusted gross profit $ 1,555.0 $ 1,579.0 Gross margin 33.8 % 34.6 % Restructuring charges 2 — % 0.1 % Productivity initiative 3 0.1 % — % Adjusted gross margin 33.9 % 34.7 % Operating earnings $ 533.3 $ 430.7 Acquisition-related costs 1 — 0.4 Restructuring charges 2 — 5.0 Productivity initiative 3 27.2 — Non-cash impairment charges 4 — 151.3 Adjusted operating earnings $ 560.5 $ 587.4 Operating earnings margin 11.6 % 9.5 % Restructuring charges 2 — % 0.1 % Productivity initiative 3 0.6 % — % Non-cash impairment charges 4 — % 3.3 % Adjusted operating earnings margin 12.2 % 12.9 % Earnings before income taxes $ 512.8 $ 400.5 Acquisition-related costs 1 — 0.4 Restructuring charges 2 — 5.0 Productivity initiative 3 23.1 — Non-cash impairment charges 4 — 151.3 Adjusted earnings before income taxes $ 535.9 $ 557.2 Income tax provision $ 93.9 $ 70.8 Restructuring charges 2 — 1.1 Productivity initiative 3 3.3 — Non-cash impairment charges 4 — 36.7 Tax impact of stock-based compensation 5 3.5 5.1 Adjusted income tax provision $ 100.7 $ 113.7 Net earnings $ 418.9 $ 329.7 Acquisition-related costs 1 — 0.4 Restructuring charges 2 — 3.9 Productivity initiative 3 19.8 — Non-cash impairment charges 4 — 114.6 Tax impact of stock-based compensation 5 (3.5) (5.1) Adjusted net earnings $ 435.2 $ 443.5 Net earnings per diluted share $ 4.01 $ 3.13 Restructuring charges 2 — 0.04 Productivity initiative 3 0.19 — Non-cash impairment charges 4 — 1.09 Tax impact of stock-based compensation 5 (0.03) (0.05) Adjusted net earnings per diluted share $ 4.17 $ 4.21 Effective tax rate 18.3 % 17.7 % Productivity initiative 3 (0.2) % — % Non-cash impairment charges 4 — % 1.5 % Tax impact of stock-based compensation 5 0.7 % 1.2 % Adjusted effective tax rate 18.8 % 20.4 % 45 Table of Contents 1 On January 13, 2022, we completed our acquisition of Intimidator.
Biggest changeGAAP to the most directly comparable non-GAAP financial performance measures for the fiscal years ended October 31, 2025 and 2024 (dollars in millions, except per share and percentage data): Fiscal Years Ended October 31, 2025 October 31, 2024 Gross profit $ 1,504.8 $ 1,549.3 Productivity initiative 1 31.6 5.7 Adjusted gross profit $ 1,536.4 $ 1,555.0 Gross margin 33.4 % 33.8 % Productivity initiative 1 0.7 % 0.1 % Adjusted gross margin 34.1 % 33.9 % Operating earnings $ 409.9 $ 533.3 Productivity initiative 1 48.1 27.2 Non-cash impairment charge 2 81.1 — Adjusted operating earnings $ 539.1 $ 560.5 Operating earnings margin 9.1 % 11.6 % Productivity initiative 1 1.1 % 0.6 % Non-cash impairment charge 2 1.8 % — % Adjusted operating earnings margin 12.0 % 12.2 % Earnings before income taxes $ 377.6 $ 512.8 Productivity initiative 1 51.7 23.1 Non-cash impairment charge 2 81.1 — Adjusted earnings before income taxes $ 510.4 $ 535.9 Income tax provision $ 61.5 $ 93.9 Productivity initiative 1 9.3 3.3 Non-cash impairment charge 2 19.7 — Tax impact of stock-based compensation 3 0.3 3.5 Adjusted income tax provision $ 90.8 $ 100.7 Net earnings $ 316.1 $ 418.9 Productivity initiative 1 42.4 19.8 Non-cash impairment charge 2 61.4 — Tax impact of stock-based compensation 3 (0.3) (3.5) Adjusted net earnings $ 419.6 $ 435.2 Net earnings per diluted share $ 3.17 $ 4.01 Productivity initiative 1 0.42 0.19 Non-cash impairment charge 2 0.61 — Tax impact of stock-based compensation 3 — (0.03) Adjusted net earnings per diluted share $ 4.20 $ 4.17 Effective tax rate 16.3 % 18.3 % Productivity initiative 1 — % (0.2) % Non-cash impairment charge 2 1.4 % — % Tax impact of stock-based compensation 3 0.1 % 0.7 % Adjusted effective tax rate 17.8 % 18.8 % 1 In the first quarter of fiscal 2024, we launched a significant productivity initiative named AMP, as discussed in more detail under the heading "Company Overview-AMP Initiative" in this section.
If the carrying value of a reporting unit exceeds its fair value, an impairment charge would be recognized for the amount by which the carrying value of the reporting unit exceeds the its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
If the carrying value of a reporting unit exceeds its fair value, an impairment charge would be recognized for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
Generally, the cost of a 46 Table of Contents program is recorded as a reduction from gross sales when revenue is recognized and thus is considered to be variable consideration if the expense is determined to represent a price concession because the program either: (i) results in an immediate reduction of the transaction price with no anticipated future costs or consideration to be provided to the customer or (ii) we anticipate a future cost based on historical or expected future business practice for which we do not receive a distinct good or service in exchange for the future consideration provided to the customer under the program.
Generally, the cost of a program is recorded as a reduction from gross sales when revenue is recognized and thus is considered to be variable consideration if the expense is determined to represent a price concession because the program either: (i) results in an immediate reduction of the transaction price with no anticipated future costs or consideration to be provided to the customer or (ii) we anticipate a future cost based on historical or expected future business practice for which we do not receive a distinct good or service in exchange for the future consideration provided to the customer under the program.
Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax benefits recorded as excess tax deductions for stock-based compensation during the fiscal years ended October 31, 2024 and 2023.
Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax benefits recorded as excess tax deductions for stock-based compensation during the fiscal years ended October 31, 2025 and 2024.
As such estimates are sensitive to changes in the underlying inputs and assumptions, we performed sensitivity analyses to address this risk. The discount rate could be increased by 270 basis points with no impairment indicated for any of our indefinite-lived intangible assets.
As such estimates are sensitive to changes in the underlying inputs and assumptions, we performed sensitivity analyses to address this risk. The discount rate could be increased by 170 basis points with no impairment indicated for any of our indefinite-lived intangible assets.
Discussion of fiscal 2022 items and the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended October 31, 2023 and 2022 can be found in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.
Discussion of fiscal 2023 items and the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended October 31, 2024 and 2023 can be found in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.
As of October 31, 2024, the unrecognized deferred tax liabilities for temporary differences related to our investment in non-U.S. subsidiaries, and any withholding, state, or additional federal taxes upon any future repatriation, are not material and have not been recorded.
As of October 31, 2025, the unrecognized deferred tax liabilities for temporary differences related to our investment in non-U.S. subsidiaries, and any withholding, state, or additional federal taxes upon any future repatriation, are not material and have not been recorded.
During the fourth quarter of fiscal 2024, consistent with prior fiscal years, we performed our annual quantitative goodwill impairment assessment, which is a one-step process. In performing the quantitative analysis, we compare the carrying value of a reporting unit, including goodwill, to its fair value.
During the fourth quarter of fiscal 2025, consistent with prior fiscal years, we performed our annual quantitative goodwill impairment assessment, which is a one-step process. In performing the quantitative analysis, we compare the carrying value of a reporting unit, including goodwill, to its fair value.
Based on the fourth quarter annual quantitative goodwill impairment analysis, we determined there was no impairment of goodwill for any of our reporting units as the fair value of each reporting unit exceeded its respective carrying value, including goodwill. Further, the fair value of each reporting unit exceeded its respective carrying value, including goodwill, in excess of 15 percent.
Based on the fourth quarter annual quantitative goodwill impairment analysis, we determined there was no impairment of goodwill for any of our reporting units as the fair value of each reporting unit exceeded its respective carrying value, including goodwill. Further, the fair value of each reporting unit exceeded its respective carrying value, including goodwill, in excess of 11 percent.
Unless expressly stated otherwise, the comparisons presented in this MD&A refer to the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended October 31, 2024 and 2023.
Unless expressly stated otherwise, the comparisons presented in this MD&A refer to the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended October 31, 2025 and 2024.
The company tested goodwill of the new reporting units for impairment both before and following the change in reporting unit structure, and no impairment was identified. Seven of our reporting units contained goodwill on their respective balance sheets as of October 31, 2024.
The company tested goodwill of the new reporting units for impairment both before and following the change in reporting unit structure, and no impairment was identified. Seven of our reporting units contained goodwill on their respective balance sheets as of October 31, 2025.
Based on our fourth quarter quantitative impairment analysis, we determined that our indefinite-lived intangible assets were not impaired as the estimated fair value of each of our indefinite-lived intangible assets exceeded its carrying value. Further, the fair value of each of our indefinite-lived intangible assets exceeded its carrying value in excess of 32 percent.
Based on our fourth quarter quantitative impairment analysis, we determined that our indefinite-lived intangible assets were not impaired as the estimated fair value of each of our indefinite-lived intangible assets exceeded its carrying value. Further, the fair value of each of our indefinite-lived intangible assets exceeded its carrying value in excess of 14 percent.
In other circumstances, the anticipated future cost of a program based on historical or expected future business practice is recorded as SG&A expense because we receive a distinct good or service in exchange for the future consideration provided to the customer under the program.
In other circumstances, the anticipated future cost of a program based on historical or expected future business practice is recorded as SG&A expense 47 Table of Contents because we receive a distinct good or service in exchange for the future consideration provided to the customer under the program.
If the fair value of the indefinite-lived intangible asset, or asset group, is less than its carrying value, an impairment loss is recognized in an amount equal to the excess.
If the fair value of the indefinite-lived intangible asset is less than its carrying value, an impairment loss is recognized in an amount equal to the excess.
We believe that our $150.2 million warranty accrual as of October 31, 2024 is adequate and historically has been adequate; however, due to the inherent uncertainty in the accrual estimation process, including projecting future warranty claims, costs associated with servicing future warranty claims, and unexpected major rework campaigns that may arise in the future, our actual warranty costs incurred may differ from our warranty accrual estimate.
We believe that our $152.2 million warranty accrual as of October 31, 2025 is adequate and historically has been adequate; however, due to the inherent uncertainty in the accrual estimation process, including projecting future warranty claims, costs associated with servicing future warranty claims, and unexpected major rework campaigns that may arise in the future, our actual warranty costs incurred may differ from our warranty accrual estimate.
Share Repurchases Our share repurchase program provides shares for use in connection with our stock-based compensation plans, among other uses, and has no expiration.
Common Stock Repurchases Our stock repurchase program provides shares for use in connection with our stock-based compensation plans, among other uses, and has no expiration.
Our estimate of the cost of future warranty claims is based primarily on the estimated number of products under warranty, historical average costs incurred to service warranty claims, the trend in the historical ratio of warranty claims to sales, and the historical length of time between the sale and resulting warranty claim.
Our estimate of the cost of future warranty claims is based primarily on the estimated number of products under warranty, historical average costs incurred to service warranty claims, the trend in the historical ratio of 50 Table of Contents warranty claims to sales, and the historical length of time between the sale and resulting warranty claim.
If necessary, purchase price allocation revisions that occur 51 Table of Contents outside of the measurement period are recorded within cost of sales or selling, general and administrative expense within the Consolidated Statements of Earnings depending on the nature of the adjustment.
If necessary, purchase price allocation revisions that occur outside of the measurement period are recorded within cost of sales or selling, general and administrative expense within the Consolidated Statements of Earnings depending on the nature of the adjustment.
While our annual impairment assessment performed in the fourth quarter of fiscal 2024 supported the carrying amount of our indefinite-lived intangible assets, we may be required to re-evaluate the carrying amounts in future periods utilizing different 49 Table of Contents inputs and assumptions that reflect the then current market conditions and expectations regarding our operating performance, which may result in a future impairment that could be material.
While our annual impairment assessment performed in the fourth quarter of fiscal 2025 supported the carrying amount of our indefinite-lived intangible assets, we may be required to re-evaluate the carrying amounts in future periods utilizing different inputs and assumptions that reflect the then current market conditions and expectations regarding our operating performance, which may result in a future impairment that could be material.
We expect that $47.1 million of cash and cash equivalents held by our foreign subsidiaries will be indefinitely reinvested. Should these cash and cash equivalents be distributed in the future in the form of dividends or otherwise, we may be subject to foreign withholding taxes, state income taxes, and/or additional federal taxes for currency fluctuations.
We expect that $45.8 million of cash and cash equivalents held by our foreign subsidiaries will be indefinitely reinvested. Should these cash and cash equivalents be distributed in the future in the form of dividends or otherwise, we may be subject to foreign withholding taxes, state income taxes, and/or additional federal taxes for currency fluctuations.
We currently expect to continue share repurchases in fiscal 2025, depending on our cash balance, debt repayments, common stock price and other market conditions, our anticipated working capital needs, and/or other factors.
We currently expect to continue stock repurchases in fiscal 2026, depending on our cash balance, debt repayments, common stock price and other market conditions, our anticipated working capital needs, and/or other factors.
We believe our current liquidity position, including the funds available through existing, and potential future, financing arrangements and projected cash flows from operations will be sufficient to provide the necessary capital resources for our anticipated working capital needs, payroll, and other administrative costs, capital expenditures, lease payments, purchase commitments, contractual obligations, acquisitions, investments, establishment of new facilities, expansion and renovation of existing facilities, financing receivables from customers that are not financed with Red Iron or other third-party financial institutions, contingent consideration payments, debt repayments, interest payments, quarterly cash dividend payments, and common stock repurchases, all as applicable, for at least the next twelve months. 40 Table of Contents Indebtedness The following is a summary of our indebtedness (dollars in millions): October 31 2024 2023 Revolving credit facility, due October 2029 $ — $ 40.0 Term loan, due October 2029 200.0 270.0 Term loan, due April 2027 200.0 200.0 3.81% series A senior notes, due June 2029 100.0 100.0 3.91% series B senior notes, due June 2031 100.0 100.0 3.97% senior notes, due June 2032 100.0 100.0 7.8% debentures, due June 2027 100.0 100.0 6.625% senior notes, due May 2037 124.2 124.2 Less: unamortized debt issuance costs 2.4 2.7 Long-term debt $ 921.8 $ 1,031.5 Less: current portion of long-term debt 10.0 — Long-term debt, less current portion $ 911.8 $ 1,031.5 Principal payments required on our outstanding indebtedness, based on the maturity dates defined within our debt arrangements, for each of the succeeding fiscal years is as follows (dollars in millions): Succeeding fiscal year Principal payments 2025 $ 10.0 2026 20.0 2027 270.0 2028 20.0 2029 280.0 Thereafter 325.0 Total principal payments $ 925.0 Interest payments required on our outstanding indebtedness, assuming no prepayments of indebtedness, for each of the succeeding fiscal years is as follows (dollars in millions): Succeeding fiscal year Interest payments 2025 $ 50.6 2026 49.6 2027 43.3 2028 31.0 2029 29.1 Thereafter 95.2 Interest on variable rate debt was calculated using the interest rate as of October 31, 2024.
We believe our current liquidity position, including the funds available through existing, and potential future, financing arrangements and projected cash flows from operations will be sufficient to provide the necessary capital resources for our anticipated working capital needs, payroll, and other administrative costs, capital expenditures, lease payments, purchase commitments, contractual obligations, acquisitions, investments, establishment of new facilities, expansion and renovation of existing facilities, financing receivables from customers that are not financed with Red Iron or other third-party financial institutions, contingent consideration payments, debt repayments, interest payments, quarterly cash dividend payments, and common stock repurchases, all as applicable, for at least the next twelve months. 42 Table of Contents Indebtedness The following is a summary of our indebtedness (dollars in millions): October 31 2025 2024 Revolving credit facility, due October 2029 $ — $ — Term loan, due October 2029 200.0 200.0 Term loan, due April 2027 — 200.0 3.81% series A senior notes, due June 2029 100.0 100.0 3.91% series B senior notes, due June 2031 100.0 100.0 3.97% senior notes, due June 2032 100.0 100.0 5.27% senior notes, due September 2032 200.0 — 7.8% debentures, due June 2027 100.0 100.0 6.625% senior notes, due May 2037 124.3 124.2 Less: unamortized debt issuance costs 2.8 2.4 Long-term debt $ 921.5 $ 921.8 Less: current portion of long-term debt — 10.0 Long-term debt, less current portion $ 921.5 $ 911.8 Principal payments required on our outstanding indebtedness, based on the maturity dates defined within our debt arrangements, for each of the succeeding fiscal years is as follows (dollars in millions): Succeeding fiscal year Principal payments 2026 $ — 2027 100.0 2028 20.0 2029 280.0 2030 — Thereafter 525.0 Total principal payments $ 925.0 Interest payments required on our outstanding indebtedness, assuming no prepayments of indebtedness, for each of the succeeding fiscal years is as follows (dollars in millions): Succeeding fiscal year Interest payments 2026 $ 48.3 2027 48.3 2028 45.3 2029 38.5 2030 29.0 Thereafter $ 82.8 Interest on variable rate debt was calculated using the interest rate as of October 31, 2025.
In fiscal 2024, cash provided by operating activities increased $263.1 million from fiscal 2023. This increase was mainly due to net favorable fluctuations in working capital. Cash Flows from Investing Activities Acquisitions and capital expenditures are a significant use of our capital resources.
In fiscal 2025, cash provided by operating activities increased $92.1 million from fiscal 2024. This increase was mainly due to net favorable fluctuations in working capital. Cash Flows from Investing Activities Acquisitions and capital expenditures are a significant use of our capital resources.
Based on the resulting impairment assessment performed, we recorded an impairment charge of $18.0 million related to the indefinite-lived Spartan trade name intangible asset in the third quarter of fiscal 2023. For additional information regarding the impairment charge, refer to Note 1, Summary of Significant Accounting Policies and Related Data , of the Notes to Consolidated Financial Statements.
Based on the resulting impairment assessment performed, we recorded an impairment charge of $81.1 million related to the indefinite-lived Spartan trade name intangible asset in the third quarter of fiscal 2025. For additional information regarding the impairment charge, refer to Note 1, Summary of Significant Accounting Policies and Related Data , of the Notes to Consolidated Financial Statements.
We believe that these non-GAAP financial measures, when considered in conjunction with our Consolidated Financial Statements prepared in accordance with U.S. GAAP, provide investors with useful supplemental financial information to better understand our core operational performance and cash flows.
We believe that these non-GAAP financial measures, when considered in conjunction with our Consolidated Financial Statements prepared in accordance with U.S. GAAP, provide investors with useful supplemental financial information to better 45 Table of Contents understand our core operational performance and cash flows.
Projected sales demand and production requirements can also be affected by the significant redesign of our existing products or the replacement of an existing product by an entirely new 50 Table of Contents generation of product.
Projected sales demand and production requirements can also be affected by the significant redesign of our existing products or the replacement of an existing product by an entirely new generation of product.
Reconciliation of Non-GAAP Liquidity Measures We define free cash flow as net cash provided by operating activities less purchases of property, plant, and equipment, net of proceeds from insurance claim. Free cash flow conversion percentage represents free cash flow as a percentage of net earnings.
Reconciliation of Non-GAAP Liquidity Measures We define free cash flow as net cash provided by operating activities less purchases of property, plant, and equipment, net of proceeds from insurance claim. Free cash flow conversion percentage represents free cash flow as a percentage of net earnings, excluding the non-cash impairment charge.
We have also entered into inventory repurchase agreements with the other third-party financial institutions under which we have agreed to repurchase certain repossessed products. As of October 31, 2024 and 2023, we were contingently liable to repurchase up to a maximum amount of $29.5 million and $32.2 million of repossessed inventory, respectively.
We have also entered into inventory repurchase agreements with the other third-party financial institutions under which we have agreed to repurchase certain repossessed products. As of October 31, 2025 and 2024, we were contingently liable to repurchase up to a maximum amount of $29.0 million and $29.5 million of repossessed inventory, respectively.
Segment earnings 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, and the elimination of intersegment revenues and expenses, are presented as "Other" due to their insignificance.
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.
The WACC rate could be increased by 140 basis points with no impairment indicated for any of our reporting units. Additionally, the terminal growth rate could be decreased by 210 basis points with no impairment indicated for any of our reporting units.
The WACC rate could be increased by 95 basis points with no impairment indicated for any of our reporting units. Additionally, the terminal growth rate could be decreased by 135 basis points with no impairment indicated for any of our reporting units.
Refer to Note 1, Summary of Significant Accounting Policies and Related Data , of the Notes to Consolidated Financial Statements within the section entitled "Cost of Sales," for a description of expenses included in cost of sales. Gross profit for fiscal 2024 was $1,549.3 million, down 1.8 percent compared to gross profit of $1,577.6 million in fiscal 2023.
Refer to Note 1, Summary of Significant Accounting Policies and Related Data , of the Notes to Consolidated Financial Statements within the section entitled "Cost of Sales," for a description of expenses included in cost of sales. Gross profit for fiscal 2025 was $1,504.8 million, down 2.9 percent compared to gross profit of $1,549.3 million in fiscal 2024.
Rates are generally indexed to the Secured Overnight Financing Rate ("SOFR"), or an alternative variable rate, plus a fixed percentage that differs based on whether the financing is for a distributor or dealer. Rates may also vary based on the product that is financed.
Rates are generally indexed to the Secured Overnight Financing Rate ("SOFR"), or an alternative variable rate, plus a fixed percentage that differs based on whether the financing is for a distributor or dealer.
Although we believe our inventory valuation reserve for excess, slow-moving, and obsolete inventory is adequate at $47.8 million as of October 31, 2024, projecting sales demand and production requirements involves significant management judgment regarding future events.
Although we believe our inventory valuation reserve for excess, slow-moving, and obsolete inventory is adequate at $60.5 million as of October 31, 2025, projecting sales demand and production requirements involves significant management judgment regarding future events.
Interest Expense Interest expense primarily consists of interest costs incurred on outstanding borrowings related to our fixed and variable interest rate debt arrangements, as well as amortization of the debt issuance costs associated with our debt arrangements. Interest expense for fiscal 2024 increased $3.2 million compared to fiscal 2023.
Interest Expense Interest expense primarily consists of interest costs incurred on outstanding borrowings related to our fixed and variable interest rate debt arrangements, as well as amortization of the debt issuance costs associated with our debt arrangements. Interest expense for fiscal 2025 decreased $2.8 million compared to fiscal 2024.
Adjusted net earnings for fiscal 2024 were $435.2 million, or $4.17 per diluted share, compared to $443.5 million, or $4.21 per diluted share, in fiscal 2023. BUSINESS SEGMENTS As more fully described in Note 3, Segment Data , of the Notes to Consolidated Financial Statements, we operate in two reportable business segments: Professional and Residential.
Adjusted net earnings for fiscal 2025 were $419.6 million, or $4.20 per diluted share, compared to $435.2 million, or $4.17 per diluted share, in fiscal 2024. BUSINESS SEGMENTS As more fully described in Note 3, Segment Data , of the Notes to Consolidated Financial Statements, we operate in two reportable business segments: Professional and Residential.
The adjusted effective tax rate for fiscal 2024 was 18.8 percent, compared to an adjusted effective tax rate of 20.4 percent in fiscal 2023. The decrease in the adjusted effective tax rate was primarily due to a more favorable geographic mix of earnings.
The adjusted effective tax rate for fiscal 2025 was 17.8 percent, compared to an adjusted effective tax rate of 18.8 percent in fiscal 2024. The decrease in the adjusted effective tax rate was primarily due to a more favorable geographic mix of earnings.
The increase in the effective tax rate for fiscal 2024 was primarily due to the impact of non-cash impairment charges in the prior year and lower tax benefits recorded as excess tax deductions for stock compensation in the current year, partially offset by a more favorable geographic mix of earnings in the current year.
The decrease in the effective tax rate for fiscal 2025 was primarily due to the impact of the non-cash impairment charge and a more favorable geographic mix of earnings in the current year, partially offset by lower tax benefits recorded as excess tax deductions for stock compensation.
On December 10, 2024, our Board of Directors increased our fiscal 2025 first quarter common stock cash dividend by 5.6 percent to $0.38 per share. Future common stock cash dividends will depend upon our financial condition, results of operations, capital requirements, and other factors deemed relevant by our Board of Directors.
On December 9, 2025, our Board of Directors increased our fiscal 2026 first quarter common stock cash dividend by 2.6 percent to $0.39 per share. Future common stock cash dividends will depend upon our financial condition, results of operations, capital requirements, and other factors deemed relevant by our Board of Directors.
Cash Dividends In each quarter of fiscal 2024, our Board of Directors declared a common stock cash dividend of $0.36 per share, which was a 5.9 percent increase over our common stock cash dividend of $0.34 per share paid each quarter in fiscal 2023.
Cash Dividends In each quarter of fiscal 2025, our Board of Directors declared a common stock cash dividend of $0.38 per share, which was a 5.6 percent increase over our common stock cash dividend of $0.36 per share paid each quarter in fiscal 2024.
These investments are intended to enable sales growth in new, existing, and expanding markets, help us meet product demand, and increase our manufacturing efficiencies and capacity. In fiscal 2024, cash used in investing activities decreased $98.0 million from fiscal 2023.
These investments are intended to enable sales growth in new, existing, and expanding markets, help us meet product demand, and increase our manufacturing efficiencies and capacity. In fiscal 2025, cash used in investing activities increased $17.7 million from fiscal 2024.
Our maximum exposure for credit collection under those arrangements as of October 31, 2024 and 2023 was $2.9 million and $5.2 million, respectively.
Our maximum exposure for credit collection under those arrangements as of October 31, 2025 and 2024 was $4.1 million and $2.9 million, respectively.
Our order backlog (including shipments beyond 12 months) decreased $0.8 billion to $1.2 billion as of October 31, 2024 from $2.0 billion as of October 31, 2023, primarily driven by improved manufacturing output.
Our order backlog (including shipments beyond 12 months) decreased $0.4 billion to $0.8 billion as of October 31, 2025 from $1.2 billion as of October 31, 2024, primarily driven by improved manufacturing output and more normalized order patterns.
Goodwill is not amortized, but is assessed for impairment at the reporting unit level at least annually during the fourth quarter of each fiscal year unless events or changes in circumstances indicate that impairment may have occurred prior to the annual assessment.
As of October 31, 2025, our goodwill balance was $450.9 million. Goodwill is not amortized, but is assessed for impairment at the reporting unit level at least annually during the fourth quarter of each fiscal year unless events or changes in circumstances indicate that impairment may have occurred prior to the annual assessment.
The following table highlights several key measures of our working capital performance (dollars in millions): Fiscal Years Ended October 31 2024 2023 Average receivables, net $ 480.0 $ 379.2 Average inventories, net $ 1,156.8 $ 1,134.5 Average accounts payable $ 449.0 $ 450.9 Average days outstanding for receivables 38.2 30.4 Average inventory turnover (times per fiscal year) 2.6 2.6 As of the end of fiscal 2024, our average net working capital was 25.9 percent compared to 23.3 percent as of the end of fiscal 2023.
The following table highlights several key measures of our working capital performance (dollars in millions except average days outstanding and turnover): Fiscal Years Ended October 31 2025 2024 Average receivables, net $ 455.2 $ 480.0 Average inventories, net 1,115.6 1,156.8 Average accounts payable $ 427.5 $ 449.0 Average days outstanding for receivables 36.8 38.2 Average inventory turnover (times per fiscal year) 2.7 2.6 As of the end of fiscal 2025, our average net working capital was 25.3 percent compared to 25.9 percent as of the end of fiscal 2024.
These non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the most directly comparable U.S. GAAP financial measures.
These non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the most directly comparable U.S. GAAP financial measures. The non-GAAP financial measures may differ from similar measures used by other companies.
As of October 31, 2024, we had recorded an accrual for sales promotion and incentive programs of $180.4 million within the Consolidated Balance Sheets.
As of October 31, 2025, we had recorded an accrual for sales promotion and incentive programs of $168.6 million within the Consolidated Balance Sheets.
The following table summarizes our results of operations as a percentage of our consolidated net sales: Fiscal Years Ended October 31 2024 2023 Net sales 100.0 % 100.0 % Cost of sales (66.2) (65.4) Gross margin 33.8 34.6 SG&A expense (22.2) (21.8) Non-cash impairment charges — (3.3) Operating earnings 11.6 9.5 Interest expense (1.3) (1.3) Other income, net 0.9 0.6 Earnings before income taxes 11.2 8.8 Provision for income taxes (2.1) (1.6) Net earnings 9.1 % 7.2 % Gross Profit and Gross Margin Gross profit represents net sales less cost of sales and gross margin represents gross profit as a percentage of net sales.
Changes in foreign currency exchange rates resulted in a decrease in our net sales of $4.2 million in fiscal 2025. 38 Table of Contents The following table summarizes our results of operations as a percentage of our consolidated net sales: Fiscal Years Ended October 31 2025 2024 Net sales 100.0 % 100.0 % Cost of sales (66.6) (66.2) Gross margin 33.4 33.8 SG&A expense (22.5) (22.2) Non-cash impairment charge (1.8) — Operating earnings 9.1 11.6 Interest expense (1.3) (1.3) Other income, net 0.6 0.9 Earnings before income taxes 8.4 11.2 Provision for income taxes (1.4) (2.1) Net earnings 7.0 % 9.1 % Gross Profit and Gross Margin Gross profit represents net sales less cost of sales and gross margin represents gross profit as a percentage of net sales.
Refer to Note 1, Summary of Significant Accounting Policies and Related Data , of the Notes to Consolidated Financial Statements within the section entitled "Selling, General and Administrative Expense" for a description of expenses included in SG&A expense.
Selling, General and Administrative ("SG&A") Expense SG&A expense decreased $2.2 million, or 0.2 percent, in fiscal 2025 compared to fiscal 2024. Refer to Note 1, Summary of Significant Accounting Policies and Related Data , of the Notes to Consolidated Financial Statements within the section entitled "Selling, General and Administrative Expense" for a description of expenses included in SG&A expense.
We assess indefinite-lived intangible assets for impairment at the individual indefinite-lived intangible asset or asset group level, as appropriate. During the fourth quarter of fiscal 2024, consistent with prior fiscal years, we performed our annual quantitative impairment assessment for indefinite-lived intangible assets by comparing the carrying amounts of each respective asset, or asset group, to its estimated fair value.
Annual Impairment Analysis During the fourth quarter of fiscal 2025, consistent with prior fiscal years, we performed our annual quantitative impairment assessment for indefinite-lived intangible assets by comparing the carrying amounts of each respective asset to its estimated fair value.
Liquidity and Capital Resources As of October 31, 2024, we had available liquidity of $1,096.8 million, consisting of cash and cash equivalents of $199.5 million, of which $136.0 million was held by our foreign subsidiaries, and availability under our revolving credit facility of $897.3 million.
Liquidity and Capital Resources As of October 31, 2025, we had available liquidity of $1,238.9 million, consisting of cash and cash equivalents of $341.0 million, of which $141.3 million was held by our foreign subsidiaries, and availability under our revolving credit facility of $897.9 million.
Goodwill represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination. Assigning estimated fair values to the net assets acquired requires the use of significant estimates, judgments, inputs, and assumptions regarding the fair value of intangible assets that are separately identifiable from goodwill, inventory, and property, plant, and equipment.
Assigning estimated fair values to the net assets acquired requires the use of significant estimates, judgments, inputs, and assumptions regarding the fair value of intangible assets that are separately identifiable from goodwill, inventory, and property, 51 Table of Contents plant, and equipment.
Fiscal 2024 capital expenditures of $103.5 million were $46.0 million lower than our fiscal 2023 capital expenditures of $149.5 million. 39 Table of Contents Cash Flows Cash flows provided by/(used in) operating, investing, and financing activities during the past two fiscal years are shown in the following table (dollars in millions): Cash Provided by/(Used in) Fiscal Years Ended October 31 2024 2023 Operating activities $ 569.9 $ 306.8 Investing activities (59.7) (157.7) Financing activities (505.1) (147.5) Effect of exchange rates on cash 1.3 3.3 Net increase in cash and cash equivalents 6.4 4.9 Cash and cash equivalents as of the end of the fiscal period $ 199.5 $ 193.1 Cash Flows from Operating Activities Our primary source of funds is cash generated from operations.
Cash Flows Cash flows provided by/(used in) operating, investing, and financing activities during the past two fiscal years are shown in the following table (dollars in millions): Cash Provided by/(Used in) Fiscal Years Ended October 31 2025 2024 Operating activities $ 662.0 $ 569.9 Investing activities (77.4) (59.7) Financing activities (446.1) (505.1) Effect of exchange rates on cash 3.0 1.3 Net increase in cash and cash equivalents 141.5 6.4 Cash and cash equivalents as of the end of the fiscal period $ 341.0 $ 199.5 Cash Flows from Operating Activities Our primary source of funds is cash generated from operations.
GAAP for the fiscal years ended October 31, 2024 and October 31, 2023 (dollars in millions, except percentage data): Fiscal Years Ended October 31, 2024 October 31, 2023 Net cash provided by operating activities $ 569.9 $ 306.8 Less: Purchases of property, plant and equipment, net of proceeds from insurance claim 99.2 142.4 Free cash flow 470.7 164.4 Net earnings $ 418.9 $ 329.7 Free cash flow conversion percentage 112.4 % 49.9 % CRITICAL ACCOUNTING POLICIES AND ESTIMATES In preparing our Consolidated Financial Statements in conformity with U.S.
GAAP for the fiscal years ended October 31, 2025 and October 31, 2024 (dollars in millions, except percentage data): Fiscal Years Ended October 31, 2025 October 31, 2024 Net cash provided by operating activities $ 662.0 $ 569.9 Less: Purchases of property, plant, and equipment, net of proceeds from insurance claim 83.7 99.2 Free cash flow 578.3 470.7 Net earnings, excluding the non-cash impairment charge of $81.1 million $ 397.2 $ 418.9 Free cash flow conversion percentage 145.6 % 112.4 % CRITICAL ACCOUNTING POLICIES AND ESTIMATES In preparing our Consolidated Financial Statements in conformity with U.S.
The following table provides information with respect to repurchases of our common stock during the past two fiscal years (dollars in millions, except share and per share data): Fiscal Years Ended October 31 2024 2023 Shares of Board authorized common stock purchased 2,777,534 577,115 Cost to repurchase common stock $ 245.5 $ 60.0 Average price paid per share $ 88.39 $ 103.97 As of October 31, 2024, 8,171,957 shares remained available for repurchase under our share repurchase program.
The following table provides information with respect to repurchases of our common stock during the past two fiscal years (dollars in millions, except share and per share data): Fiscal Years Ended October 31 2025 2024 Shares of Board authorized common stock repurchased 3,780,167 2,777,534 Cost to repurchase common stock $ 290.0 $ 245.5 Average price paid per share $ 76.72 $ 88.39 As of October 31, 2025, 4,391,790 shares of our common stock remained available for repurchase under our stock repurchase program.
GAAP financial measures are included in the section titled "Non-GAAP Financial Measures." COMPANY OVERVIEW Executive Summary Our fiscal 2024 results included the following items of significance that are provided in summary format here and described in greater detail throughout the "Results of Operations," "Business Segments," and "Financial Position" sections: • Consolidated net sales for fiscal 2024 were $4,583.8 million, an increase of 0.7 percent compared to $4,553.2 million in fiscal 2023. • Professional segment net sales for fiscal 2024 were $3,556.9 million, a decrease of 3.2 percent compared to $3,674.6 million in fiscal 2023. • Residential segment net sales for fiscal 2024 were $998.3 million, an increase of 16.9 percent compared to $854.2 million in fiscal 2023. • Gross margin was 33.8 percent in fiscal 2024, a decrease of 80 basis points compared to 34.6 percent in fiscal 2023. • Adjusted gross margin was 33.9 percent in fiscal 2024, a decrease of 80 basis points compared to 34.7 percent in fiscal 2023. • SG&A expense as a percentage of net sales in fiscal 2024 was 22.2 percent, an increase of 40 basis points compared to 21.8 percent in fiscal 2023. • Net earnings for fiscal 2024 were $418.9 million, or $4.01 per diluted share, compared to $329.7 million, or $3.13 per diluted share, in fiscal 2023. • Adjusted net earnings for fiscal 2024 were $435.2 million, or $4.17 per diluted share, compared to $443.5 million, or $4.21 per diluted share, in fiscal 2023. 35 Table of Contents • Field inventory was higher as of the end of fiscal 2024 compared to the end of fiscal 2023, primarily due to increased shipments of golf and grounds and construction products driven by improved manufacturing output and increased shipments of lawn care equipment to our mass channel partners, partially offset by lower shipments of snow and ice management products and reductions in dealer field inventories of lawn care equipment. • Our order backlog represents unfulfilled customer orders at a point in time.
GAAP financial measures are included in the section titled "Non-GAAP Financial Measures." COMPANY OVERVIEW Executive Summary Our fiscal 2025 results included the following items of significance that are provided in summary format here and described in greater detail throughout the "Results of Operations," "Business Segments," and "Financial Position" sections: • Consolidated net sales for fiscal 2025 were $4,510.4 million, a decrease of 1.6 percent compared to $4,583.8 million in fiscal 2024. • Professional segment net sales for fiscal 2025 were $3,624.0 million, an increase of 1.9 percent compared to $3,556.9 million in fiscal 2024. • Residential segment net sales for fiscal 2025 were $858.4 million, a decrease of 14.0 percent compared to $998.3 million in fiscal 2024. • Gross margin was 33.4 percent in fiscal 2025, a decrease of 40 basis points compared to 33.8 percent in fiscal 2024. • Adjusted gross margin was 34.1 percent in fiscal 2025, an increase of 20 basis points compared to 33.9 percent in fiscal 2024. • SG&A expense as a percentage of net sales in fiscal 2025 was 22.5 percent, an increase of 30 basis points compared to 22.2 percent in fiscal 2024. • Net earnings for fiscal 2025 were $316.1 million, or $3.17 per diluted share, compared to $418.9 million, or $4.01 per diluted share, in fiscal 2024. • Adjusted net earnings for fiscal 2025 were $419.6 million, or $4.20 per diluted share, compared to $435.2 million, or $4.17 per diluted share, in fiscal 2024. 37 Table of Contents • Field inventory was lower as of the end of fiscal 2025 compared to the end of fiscal 2024, primarily due to decreased balances of golf and grounds and turf products, partially offset by higher balances of underground construction products. • Our order backlog represents unfulfilled customer orders at a point in time.
The following table presents our Professional segment's net sales, earnings, and earnings margin (dollars in millions): Fiscal Years Ended October 31 2024 2023 Net sales $ 3,556.9 $ 3,674.6 Percentage change from prior year (3.2) % 7.1 % Segment earnings $ 638.9 $ 509.1 Segment earnings margin 18.0 % 13.9 % Professional Segment Net Sales Net sales for our Professional segment in fiscal 2024 decreased 3.2 percent compared to fiscal 2023.
The following table presents our Professional segment's net sales, EBIT, and EBIT margin (dollars in millions): Fiscal Years Ended October 31 2025 2024 Net sales $ 3,624.0 $ 3,556.9 Percentage change from prior year 1.9 % (3.2) % EBIT $ 702.5 $ 638.9 EBIT margin 19.4 % 18.0 % Professional Segment Net Sales Net sales for our Professional segment in fiscal 2025 increased 1.9 percent compared to fiscal 2024.
The following table presents our Residential segment's net sales, earnings, and earnings margin (dollars in millions): Fiscal Years Ended October 31 2024 2023 Net sales $ 998.3 $ 854.2 Percentage change from prior year 16.9 % (20.1) % Segment earnings $ 78.4 $ 68.9 Segment earnings margin 7.9 % 8.1 % Residential Segment Net Sales Net sales for our Residential segment in fiscal 2024 increased by 16.9 percent compared to fiscal 2023.
The following table presents our Residential segment's net sales, EBIT, and EBIT margin (dollars in millions): Fiscal Years Ended October 31 2025 2024 Net sales $ 858.4 $ 998.3 Percentage change from prior year (14.0) % 16.9 % EBIT $ 35.8 $ 78.4 EBIT margin 4.2 % 7.9 % 40 Table of Contents Residential Segment Net Sales Net sales for our Residential segment in fiscal 2025 decreased by 14.0 percent compared to fiscal 2024.
As of October 31, 2023 we had $40.0 million outstanding borrowings under the revolving credit facility and $2.6 million outstanding under the sublimit for standby letters of credit, resulting in $557.4 million of unutilized availability under our revolving credit facility.
As of October 31, 2025 we had no outstanding borrowings under the revolving credit facility and $2.1 million outstanding under the sublimit for standby letters of credit, resulting in $897.9 million of unutilized availability under our revolving credit facility.
We believe that our accrual for sales promotion and incentive programs is adequate as of October 31, 2024 and historically has been adequate; however, due to the inherent uncertainty in the accrual estimation process, actual results may differ from these estimates if competitive factors dictate the need to enhance or modify sales promotion and incentive programs or if customer usage, product mix, or field inventory levels vary from historical trends.
We believe that our accrual for sales promotion and incentive programs is adequate as of October 31, 2025 and historically has been adequate; however, due to the inherent uncertainty in the accrual estimation process, actual results may differ from these estimates if competitive factors dictate the need to enhance or modify sales promotion and incentive programs or if customer usage, product mix, or field inventory levels vary from historical trends. 48 Table of Contents Impairment Goodwill Goodwill is initially recognized as a result of the excess of purchase consideration transferred over the estimated fair value of the net assets acquired in a business combination.
As of October 31, 2024, our debt ratings for long-term unsecured senior, non-credit enhanced debt by Standard and Poor's Ratings Group and by Moody's Investors Service were BBB and Baa1, respectively, and in both cases with a stable outlook. The agreements governing our outstanding indebtedness are described in Note 6, Indebtedness , of the Notes to Consolidated Financial Statements.
As of October 31, 2025, our debt ratings for long-term unsecured senior, non-credit enhanced debt by Standard and Poor's Ratings Group and by Moody's Investors Service were BBB and Baa1, respectively, and in both cases with a stable outlook.
As of October 31, 2024, our indefinite-lived intangible asset balances, which consist of certain trade names, were $271.6 million. Indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually during the fourth quarter of each fiscal year unless events or changes in circumstances indicate that impairment may have occurred prior to the annual assessment.
Indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually during the fourth quarter of each fiscal year unless events or changes in circumstances indicate that impairment may have occurred prior to the annual assessment. We assess indefinite-lived intangible assets for impairment at the individual indefinite-lived intangible asset.
As a final corroboratory step, we reconcile the aggregate estimated fair value of our reporting units resulting from the income approach to our company's market capitalization. 48 Table of Contents While our annual impairment assessment performed in the fourth quarter of fiscal 2024 supported the carrying amount of our goodwill, we may be required to re-evaluate the carrying amounts in future periods utilizing different inputs and assumptions that reflect the then current market conditions and expectations regarding our operating performance, which may result in a future impairment that could be material.
While our annual impairment assessment performed in the fourth quarter of fiscal 2025 supported the carrying amount of our goodwill, we may be required to re-evaluate the carrying amounts in future periods utilizing different inputs and assumptions that reflect the then current market conditions and expectations regarding our operating performance, which may result in a future impairment that could be material.
The non-GAAP financial measures may differ from similar measures used by other companies. 43 Table of Contents Reconciliation of Non-GAAP Financial Measures The following table provides a reconciliation of financial performance measures calculated and reported in accordance with U.S.
Reconciliation of Non-GAAP Financial Measures The following table provides a reconciliation of financial performance measures calculated and reported in accordance with U.S.
The increase in net earnings per diluted share for fiscal 2024 was primarily due to the non-cash impairment charges in the prior year and higher Residential segment earnings in the current year, partially offset by lower Professional segment earnings and higher corporate expenses in the current year.
The decrease in net earnings per diluted share for fiscal 2025 was primarily due to the non-cash impairment charge, higher productivity initiative charges, lower Residential segment earnings, and higher incentive expenses, partially offset by higher Professional segment earnings and lower shares outstanding.
Based on a change made to our operating segments during the third quarter of fiscal 2024, as discussed in Note 3, Segment Data , of the Notes to Consolidated Financial Statements, we also changed our reporting units which became the same as our nine operating segments.
Based on a change made to our operating segments during the fourth quarter of fiscal 2025, as discussed in Note 3, Segment Data , of the Notes to Consolidated Financial Statements, we have eight operating segments.
Corporate activities include general corporate expenditures, such as finance, human resources, legal, information technology, public relations, business development, and similar activities, as well as other unallocated corporate assets and liabilities, such as corporate facilities and deferred tax assets and liabilities.
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 information provides perspective on the net sales and results of our reportable business segments and Other activities.
As a percentage of net sales, SG&A expense was 22.2 percent in fiscal 2024 compared to 21.8 percent in fiscal 2023, an increase of 40 basis points. The increase in SG&A expense as a percentage of net sales was primarily driven by higher corporate expenses, partially offset by lower marketing costs.
As a percentage of net sales, SG&A expense was 22.5 percent in fiscal 2025 compared to 22.2 percent in fiscal 2024, an increase of 30 basis points. The increase in SG&A expense as a percentage of net sales was primarily due to lower net sales volume and higher incentive expenses, partially offset by cost savings measures.
This net sales increase was primarily driven by higher shipments of Residential segment products, partially offset by lower shipments of Professional segment products. Net sales in international markets were $923.0 million for fiscal 2024 compared to $947.7 million in fiscal 2023, a decrease of 2.6 percent.
Net sales in international markets were $878.3 million for fiscal 2025 compared to $923.0 million in fiscal 2024, a decrease of 4.8 percent. The international net sales decrease was primarily driven by lower shipments of both Residential and Professional segment products.
The royalty rate could be decreased by 70 basis points with no impairment indicated for any of our indefinite-lived intangible assets. Fiscal 2023 Impairment During the preparation of the financial statements for the third quarter of fiscal 2023, we concluded that impairment indicators existed for our indefinite-lived Spartan trade name intangible asset.
Fiscal 2025 Impairment During the preparation of the financial statements for the third quarter of fiscal 2025, we concluded that impairment indicators existed for our indefinite-lived Spartan trade name intangible asset.
Determining the estimated fair values of our reporting units and indefinite-lived intangible assets, or asset groups, requires considerable judgment and such estimates are sensitive to changes in the underlying inputs and assumptions.
The royalty rate could be decreased by 35 basis points with no impairment indicated for any of our indefinite-lived intangible assets. Determining the estimated fair values of our reporting units and indefinite-lived intangible assets requires considerable judgment and such estimates are sensitive to changes in the underlying inputs and assumptions.
We continued our history of paying quarterly cash dividends throughout fiscal 2024 and increased our fiscal 2024 quarterly cash dividend by 5.9 percent to $0.36 per share compared to $0.34 per share paid in fiscal 2023. We also repurchased shares of our common stock under our share repurchase program, thereby reducing our total shares outstanding.
We continued our history of paying quarterly cash dividends throughout fiscal 2025 and increased our fiscal 2025 quarterly cash dividend by 5.6 percent to $0.38 per share compared to $0.36 per share paid in fiscal 2024.
As of October 31, 2024, we had a strong liquidity profile with available liquidity of $1,096.8 million, consisting of cash and cash equivalents of $199.5 million and availability under our revolving credit facility of $897.3 million.
As of October 31, 2025, we had a strong liquidity profile with available liquidity of $1,238.9 million, consisting of cash and cash equivalents of $341.0 million and availability under our revolving credit facility of $897.9 million. Tariffs The tariff environment is complex and evolving.
Net Earnings and Net Earnings Per Diluted Share Fiscal 2024 net earnings were $418.9 million compared to $329.7 million in fiscal 2023, an increase of 27.1 percent. Fiscal 2024 diluted net earnings per share were $4.01, an increase of 28.1 percent from $3.13 per diluted share in fiscal 2023.
Net Earnings and Net Earnings Per Diluted Share Fiscal 2025 net earnings were $316.1 million compared to $418.9 million in fiscal 2024, a decrease of 24.5 percent. Fiscal 2025 diluted net earnings per share were $3.17, a decrease of 20.9 percent from $4.01 per diluted share in fiscal 2024.
Non-Cash Impairment Charges We recorded non-cash impairment charges of $151.3 million within our Professional segment in fiscal 2023. No impairment charges were recognized in fiscal 2024.
Non-Cash Impairment Charge We recorded a non-cash impairment charge of $81.1 million within our Other activities in fiscal 2025. No impairment charges were recognized in fiscal 2024.
Professional Segment Earnings Professional segment earnings increased 25.5 percent in fiscal 2024 compared to fiscal 2023, and Professional segment earnings margin increased to 18.0 percent from 13.9 percent.
Professional Segment EBIT Professional segment EBIT increased 10.0 percent in fiscal 2025 compared to fiscal 2024, and Professional segment EBIT margin increased to 19.4 percent from 18.0 percent.
Specifically, our rebate programs are primarily sensitive to fluctuations in historical payment and rebate claims experience as compared to actual realized payment and rebate claims, field inventory levels, and projected wholesale and retail sales volumes and the quantity or mix of products. 47 Table of Contents Adjustments to sales promotions and incentive accruals are made from time to time as actual usage becomes known in order to properly estimate the amounts necessary to generate consumer demand based on market conditions as of the balance sheet date.
Adjustments to sales promotions and incentive accruals are made from time to time as actual usage becomes known in order to properly estimate the amounts necessary to generate consumer demand based on market conditions as of the balance sheet date.
The total amount of receivables due from Red Iron to us as of October 31, 2024 and 2023 were $26.0 million and $34.4 million, respectively. 42 Table of Contents The net amount of receivables financed for dealers and distributors under the arrangements with HCFC and the other third-party financial institutions during fiscal 2024 and 2023 was $612.1 million and $545.4 million, respectively.
The net amount of receivables financed for dealers and distributors under the arrangements with HCFC and the other third-party financial institutions during fiscal 2025 and 2024 was $712.5 million and $612.1 million, respectively. As of October 31, 2025 and 2024, $308.3 million and $272.2 million, respectively, of receivables financed by HCFC and the other third-party financial institutions were outstanding.
The following factors impacted our average net working capital during fiscal 2024 as compared to fiscal 2023: • Average net receivables increased by 26.6 percent, primarily driven by increased mass channel and international shipments, as well as payment terms to our mass channel.
The following factors impacted our average net working capital during fiscal 2025 as compared to fiscal 2024: • Average net receivables decreased by 5.2 percent, primarily driven by timing of shipments and lower net sales volume.
This increase in other income, net was primarily due to net gains on divestitures in fiscal 2024 and higher income from our Red Iron joint venture in fiscal 2024 as compared to fiscal 2023. Provision for Income Taxes The effective tax rate for fiscal 2024 was 18.3 percent compared to 17.7 percent in fiscal 2023.
This decrease in other income, net was primarily due to prior year net gains on divestitures, current year net losses on divestitures, prior year net favorable legal settlement activity, and lower income from our Red Iron joint venture, partially offset by the favorable impact from derivative instruments. 39 Table of Contents Provision for Income Taxes The effective tax rate for fiscal 2025 was 16.3 percent compared to 18.3 percent in fiscal 2024.
We are in compliance with our debt covenants and other requirements of our revolving credit facility and term loan credit agreements, indentures, and private placement note purchase agreements. 41 Table of Contents Capital Structure The following table details the components of our capital structure and debt-to-capitalization ratio (dollars in millions, except percentage data): October 31 2024 2023 Long-term debt $ 921.8 $ 1,031.5 Stockholders' equity $ 1,551.9 $ 1,510.9 Debt-to-capitalization ratio 37.3 % 40.6 % Our debt-to-capitalization ratio decreased in fiscal 2024 compared to fiscal 2023 primarily due to fiscal 2024 debt repayments and our continued profitability.
Capital Structure The following table details the components of our capital structure and debt-to-capitalization ratio (dollars in millions, except percentage data): October 31 2025 2024 Long-term debt $ 921.5 $ 921.8 Stockholders' equity $ 1,453.3 $ 1,551.9 Debt-to-capitalization ratio 38.8 % 37.3 % Our debt-to-capitalization ratio increased in fiscal 2025 compared to fiscal 2024 primarily due to shareholder buybacks and dividends partially offset by our continued profitability.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+0 added−0 removed20 unchanged
Biggest changeAs of October 31, 2024, the average contracted rate, notional amount, fair value, and the gain (loss) at fair value of outstanding derivative instruments were as follows (dollars in millions, except average contracted rate): Average Contracted Rate Notional Amount Fair Value Gain (Loss) at Fair Value Buy U.S. dollar/Sell Australian dollar 0.6652 $ 82.5 $ 83.4 $ 0.9 Buy U.S. dollar/Sell Canadian dollar 1.3485 48.9 50.0 1.1 Buy U.S. dollar/Sell Euro 1.1094 160.5 160.8 0.3 Buy U.S. dollar/Sell British pound 1.2716 62.4 61.6 (0.8) Buy Mexican peso/Sell U.S. dollar 19.6210 69.4 64.7 (4.7) Buy Japanese yen/Sell U.S. dollar 152.4370 $ 0.2 $ 0.2 $ — Our net investment in foreign subsidiaries translated into U.S. dollars is not hedged.
Biggest changeAs of October 31, 2025, the average contracted rate, notional amount, fair value, and the gain (loss) at fair value of outstanding derivative instruments were as follows (dollars in millions, except average contracted rate): Average Contracted Rate Notional Amount Fair Value Gain (Loss) at Fair Value Buy U.S. dollar/Sell Australian dollar 0.6535 $ 93.1 $ 93.0 $ (0.1) Buy U.S. dollar/Sell Canadian dollar 1.3651 49.2 49.9 0.7 Buy U.S. dollar/Sell Euro 1.1402 188.8 183.6 (5.2) Buy U.S. dollar/Sell British pound 1.2980 60.2 59.5 (0.7) Buy Mexican peso/Sell U.S. dollar 20.3299 $ 65.9 $ 69.7 $ 3.8 Our net investment in foreign subsidiaries translated into U.S. dollars is not hedged.
These changes may be affected by several factors, including, for example, demand; inflation; deflation; changing prices; foreign currency fluctuations; tariffs; duties; trade regulatory actions; industry actions; the inability of suppliers to absorb incremental costs related to inefficiencies, continue operations or otherwise remain in business; financial difficulties; changes to international trade policies, agreements, and/or regulation; and competitor activity, including antidumping and countervailing duties on certain products imported from foreign countries, such as certain engines imported into the U.S. from China.
These changes may be affected by several factors, including, for example, demand; inflation; deflation; changing prices; foreign currency fluctuations; tariffs; duties; trade regulatory actions; industry actions; the inability of suppliers to absorb incremental costs related to inefficiencies, continue operations or otherwise remain in business; financial difficulties; changes to international trade policies, agreements, and/or 53 Table of Contents regulation; and competitor activity, including antidumping and countervailing duties on certain products imported from foreign countries, such as certain engines imported into the U.S. from China.
Refer to Note 9, Stock-Based Compensation , and Note 1, Summary of Significant Accounting Policies and Related Data , in the Notes to Consolidated Financial Statements for additional information regarding our stock-based compensation awards and our goodwill impairment analysis, respectively. 53 Table of Contents
Refer to Note 9, Stock-Based Compensation , and Note 1, Summary of Significant Accounting Policies and Related Data , in the Notes to Consolidated Financial Statements for additional information regarding our stock-based compensation awards and our goodwill impairment analysis, respectively. 54 Table of Contents
Interest Rate Risk Our interest rate risk relates primarily to fluctuations in variable interest rates on our revolving credit facility and term loan credit agreements, as well as the potential increase in the fair value of our fixed-rate long-term debt resulting from a potential decrease in interest rates.
Interest Rate Risk Our interest rate risk relates primarily to fluctuations in variable interest rates on our revolving credit facility and a term loan credit agreement, as well as the potential increase in the fair value of our fixed-rate long-term debt resulting from a potential decrease in interest rates.
For additional information regarding our derivative instruments, refer to Note 13, Derivative Instruments and Hedging Activities , in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. The foreign currency exchange contracts in the table below have maturity dates in fiscal 2025 through fiscal 2027.
For additional information regarding our derivative instruments, refer to Note 13, Derivative Instruments and Hedging Activities , in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. The foreign currency exchange contracts in the table below have maturity dates in fiscal 2026 through fiscal 2028.
Interest rate risk for fixed-rate, long-term debt is estimated as the potential increase in the fair value of gross fixed rate debt, resulting from a hypothetical 10 percent decrease in interest rates, and amounts to $16.3 million.
Interest rate risk for fixed-rate, long-term debt is estimated as the potential increase in the fair value of gross fixed rate debt, resulting from a hypothetical 10 percent decrease in interest rates, and amounts to $19.5 million.
Foreign Currency Exchange Rate Risk We are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business, such as sales to third-party customers, sales and loans to wholly-owned foreign subsidiaries, costs associated with foreign plant operations, and purchases from suppliers.
See further discussion on these market risks below. 52 Table of Contents Foreign Currency Exchange Rate Risk We are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business, such as sales to third-party customers, sales and loans to wholly-owned foreign subsidiaries, costs associated with foreign plant operations, and purchases from suppliers.
As of October 31, 2024, the estimated fair value of gross long-term debt with fixed interest rates was $520.4 million compared to its carrying amount of $524.2 million.
As of October 31, 2025, the estimated fair value of gross long-term debt with fixed interest rates was $733.1 million compared to its carrying amount of $724.3 million.
Our indebtedness as of October 31, 2024 included $524.2 million of gross fixed rate debt that is not subject to variable interest rate fluctuations and $400.0 million of gross variable rate debt under our term loan credit agreements and revolving credit 52 Table of Contents facility.
Our indebtedness as of October 31, 2025 included $724.3 million of gross fixed rate debt that is not subject to variable interest rate fluctuations and $200.0 million of gross variable rate debt under our term loan credit agreement and revolving credit facility.
Changes in these factors could cause fluctuations in our earnings and cash flows. See further discussion on these market risks below.
Changes in these factors could cause fluctuations in our earnings and cash flows.

Other TTC 10-K year-over-year comparisons