Toro’s Red Iron originations rise 2.6% in fiscal 2025

The joint financing venture of outdoor power equipment manufacturer The Toro Co. saw originations grow in its fiscal 2025, driven by increased professional segment sales at the parent company.  

Red Iron, owned 45% by Toro and 55% by Huntington Distribution Finance, also cleaned up its portfolio as money owed to the venture decreased, according to Toro’s 10-K filing with the SEC.  

The uptick in originations came despite a decline in Toro’s residential segment sales, which was partly attributed to weak consumer and homeowner sentiment, Vice President and Chief Financial Officer Angela Drake said during Toro’s Dec. 17 earnings call. 

“We remain cautious about macro factors, including inflation and interest rates that may continue to pressure consumer confidence,” she said. 

BY THE NUMBERS: Bloomington, Minn.-based Toro reported these financing results for its fiscal 2025, which ended Oct. 31: 

• Net receivables financed for dealers and distributors under Red Iron landed at $2.7 billion, up 2.6% year over year; 
• Total Red Iron outstandings dropped 17.6% YoY to $807.6 million; 
• Total receivables due from Red Iron to Toro declined 16.9% YoY to $21.6 million; 
• Net receivables financed for dealers and distributors by third-party financial institutions increased 16.4% YoY to $712.5 million; 
• Total third-party financial institution outstandings rose 13.3% YoY to $308.3 million; and 
• Toro’s total investment in Red Iron fell 16.7% YoY to $41 million.  

Other full-year results for Toro include:  

• Net sales totaling $4.5 billion, down 1.6% YoY; 
• Professional segment sales rose 1.9% YoY to $3.6 billion; 
• Residential segment sales dropped 14% YoY to $858.4 million; and 
• Net earnings decreased 24.5% YoY to $316.1 million.  

Meanwhile, for the fourth quarter Toro reported: 

• Net sales fell 0.9% YoY to $1.1 billion; 
• Professional segments sales dipped 0.4% YoY to $910.3 million; and 
• Residential segment sales fell 5.1% YoY to $147.2 million.  

BIGGER PICTURE: Higher professional segment sales was attributed to sustained “momentum in the underground construction business and better than anticipated growth in snow and ice management,” Chairman and Chief Executive Richard Olson said during the call.  

To build on this momentum, Toro recently acquired Tornado Infrastructure Equipment, a Canadian manufacturer of hydrovac excavation solutions for the underground construction, power transmission and energy markets. Toro finalized the CA$279 million ($202.6 million) acquisition on Dec. 8.  

Tornado’s “products are designed to safely excavate around critical infrastructure to minimize the risk of damage,” Olson said. “We’re excited to expand our geographic presence and product portfolio as we welcome tornado to the Toro company.” 

Demand for underground construction equipment is being driven by infrastructure projects, data center growth and telecommunications projects, Chief Operating Officer Edric Funk said during the call.  

Other OEMs, like Caterpillar, are also strategizing to capitalize on the data center boom and infrastructure growth, attracting lenders as well.  

MARKET REACTION: Shares of The Toro Company [NYSE: TTC] were down 2.8% from market open to $78.19 as of market close today. It has a market capitalization of $7.7 billion. 

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