Financial Performance & Strategy - The Toro Company's F'19 revenues reached $3.1 billion[13] - The company aims for mid-single-digit organic growth annually, focusing on market share and margin expansion[66] - The company targets a debt-to-EBITDA ratio of 1-2x, balancing operating needs with shareholder returns[52] - The company's investment in Research & Engineering is sustained at 3%+ of net sales[48] Segment Breakdown (F'19) - Professional segment accounted for 78% of revenues, with sales of $2.443 billion and segment earnings of 15.6%[14, 15] - Residential segment contributed 21% of revenues, with sales of $661 million and segment earnings of 9.9%[14, 15] - Equipment makes up 88% of product type revenue, while Irrigation accounts for 12%[16] - United States represents 77% of the geographic market, with International at 23%[17] Fiscal Year 2020 Results (Year-to-Date) - Net sales reached $2.5379 billion, a 5.6% increase from F'19 YTD[37] - Gross profit was $889.4 million, up 10.8% from F'19 YTD, with a gross margin of 35.0%[37] - Operating earnings were $332.9 million, an 18.2% increase from F'19 YTD, resulting in an operating earnings margin of 13.1%[37]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements for The Toro Company, including statements of earnings, balance sheets, cash flows, and detailed notes [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for The Toro Company for the quarterly period ended July 31, 2020 [Condensed Consolidated Statements of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) For Q3 2020, net sales remained flat at **$841.0 million**, while net earnings significantly increased to **$89.0 million** from **$60.6 million** year-over-year Condensed Consolidated Statements of Earnings (Unaudited) | (In thousands, except per share data) | Three Months Ended July 31, 2020 | Three Months Ended August 2, 2019 | Nine Months Ended July 31, 2020 | Nine Months Ended August 2, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $840,972 | $838,713 | $2,537,853 | $2,403,705 | | **Gross profit** | $294,574 | $265,981 | $889,379 | $802,896 | | **Operating earnings** | $115,952 | $73,944 | $332,876 | $281,723 | | **Net earnings** | $88,968 | $60,607 | $257,505 | $235,717 | | **Diluted net earnings per share** | $0.82 | $0.56 | $2.37 | $2.18 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of July 31, 2020, total assets increased to **$2.81 billion** from **$2.31 billion** a year prior, driven by higher cash and acquisitions Condensed Consolidated Balance Sheets (Unaudited) | (In thousands) | July 31, 2020 | August 2, 2019 | October 31, 2019 | | :--- | :--- | :--- | :--- | | **Total current assets** | $1,384,246 | $1,130,403 | $1,122,891 | | **Total assets** | $2,813,863 | $2,309,733 | $2,330,547 | | **Total current liabilities** | $797,112 | $756,403 | $756,970 | | **Total liabilities** | $1,759,831 | $1,465,911 | $1,470,969 | | **Total stockholders' equity** | $1,054,032 | $843,822 | $859,578 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended July 31, 2020, net cash from operating activities increased to **$305.9 million**, with cash at period-end reaching **$394.1 million** Condensed Consolidated Statements of Cash Flows (Unaudited) | (In thousands) | Nine Months Ended July 31, 2020 | Nine Months Ended August 2, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $305,876 | $259,113 | | **Net cash used in investing activities** | ($184,648) | ($744,137) | | **Net cash provided by financing activities** | $119,154 | $339,798 | | **Net increase (decrease) in cash** | $242,313 | ($145,807) | | **Cash and cash equivalents at end of period** | $394,141 | $143,317 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations for the financial statements, covering accounting policies, acquisitions, segment data, and the impact of COVID-19 - The COVID-19 pandemic has materially impacted the company, creating uncertainty that could affect future accounting estimates, financial position, and results of operations[19](index=19&type=chunk) - The company adopted the new lease accounting standard (ASU 2016-02) on November 1, 2019, recognizing **$78.1 million** of right-of-use assets and **$77.1 million** of lease liabilities[22](index=22&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) - On March 2, 2020, the company acquired Venture Products for **$163.2 million**, funded by borrowings, to strengthen the Professional segment[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - On April 1, 2019, the company acquired The Charles Machine Works, Inc. (CMW) for **$685.0 million** to broaden its Professional segment product portfolio[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and the impact of COVID-19 and recent acquisitions [Company Overview](index=45&type=section&id=Company%20Overview) The Toro Company designs, manufactures, and markets products for professional and residential customers, with recent acquisitions and significant COVID-19 impacts - The company's main focus during the COVID-19 pandemic has been employee health and safety, leading to rigorous safety measures like social distancing and remote work[140](index=140&type=chunk) - COVID-19 caused manufacturing inefficiencies and intermittent facility closures, adversely impacting gross margins, with softer demand in the Professional segment but strong retail demand in the Residential segment[141](index=141&type=chunk)[142](index=142&type=chunk) - To mitigate COVID-19's financial impact, the company implemented cost reduction measures, including salary reductions, spending cuts, and a hiring freeze, while managing working capital[144](index=144&type=chunk) - Due to ongoing COVID-19 uncertainty, the company withdrew its fiscal 2020 financial guidance and does not expect to meet its "Vision 2020" operating earnings goal of **$485.0 million**[145](index=145&type=chunk)[155](index=155&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) For Q3 2020, consolidated net sales were flat at **$841.0 million**, while YTD sales grew **5.6%** to **$2.54 billion**, driven by acquisitions and strong Residential demand Key Operating Metrics as a Percentage of Net Sales | | Three Months Ended July 31, 2020 | Three Months Ended August 2, 2019 | Nine Months Ended July 31, 2020 | Nine Months Ended August 2, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Gross profit** | 35.0% | 31.7% | 35.0% | 33.4% | | **Operating earnings** | 13.8% | 8.8% | 13.1% | 11.7% | | **Net earnings** | 10.6% | 7.2% | 10.1% | 9.8% | - Q3 2020 gross margin increased by **330 basis points** to **35.0%**, driven by lower purchase accounting charges, favorable net price realization, and productivity initiatives, partially offset by COVID-19 related manufacturing variances and product mix[161](index=161&type=chunk) - SG&A expense decreased **7.0%** in Q3 2020, primarily due to COVID-19 related cost reduction measures and lower acquisition-related costs[165](index=165&type=chunk) - The effective tax rate for Q3 2020 was **19.8%**, up from **14.9%** in Q3 2019, due to lower discrete tax benefits, including from share-based compensation[168](index=168&type=chunk) [Business Segments](index=54&type=section&id=Business%20Segments) The Professional segment saw a **7.9%** sales decline in Q3 2020, while the Residential segment experienced a significant **38.3%** sales increase Net Sales by Segment (Q3) | (In thousands) | July 31, 2020 | August 2, 2019 | % Change | | :--- | :--- | :--- | :--- | | **Professional** | $623,615 | $676,756 | (7.9)% | | **Residential** | $204,961 | $148,234 | 38.3% | Segment Earnings (Q3) | (In thousands) | July 31, 2020 | August 2, 2019 | % Change | | :--- | :--- | :--- | :--- | | **Professional** | $113,652 | $81,592 | 39.3% | | **Residential** | $28,545 | $16,151 | 76.7% | - Professional segment sales decreased in Q3 due to reduced demand from channel partners in golf, rental, and construction markets as a result of COVID-19, partially offset by the Venture Products acquisition[177](index=177&type=chunk) - Residential segment sales surged in Q3 due to strong retail demand for mowers, driven by favorable weather, new products, customer focus on home care during COVID-19, and an expanded mass retail channel[181](index=181&type=chunk) [Financial Position](index=57&type=section&id=Financial%20Position) The company maintained a strong financial position with available liquidity of **$992.1 million** as of July 31, 2020, and improved cash from operations - Working capital changes reflect COVID-19 impacts: accounts receivable decreased **5.6%** year-over-year due to lower sales in certain professional channels, while inventory increased **5.7%** year-over-year due to acquisitions and reduced demand in the Professional segment[187](index=187&type=chunk) - Cash provided by operating activities increased to **$305.9 million** for the first nine months of fiscal 2020, up from **$259.1 million** in the prior year, mainly due to better management of inventory purchases and accounts receivable[188](index=188&type=chunk) - The company enhanced its liquidity position in response to COVID-19 by refinancing debt with a new **$190.0 million** term loan, reducing capital expenditures, and curtailing share repurchases, with total available liquidity of approximately **$992.1 million** as of July 31, 2020[191](index=191&type=chunk)[144](index=144&type=chunk) - The company amended its Red Iron joint venture agreement, extending the term to 2026 and increasing the credit facility to **$625 million**[213](index=213&type=chunk) [Non-GAAP Financial Measures](index=64&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP financial measures to offer supplemental information on its core operational performance by excluding certain non-recurring items - Non-GAAP measures are used by management to make operating decisions and facilitate internal and competitor comparisons by excluding charges not related to regular, ongoing business[220](index=220&type=chunk) Reconciliation of GAAP to Non-GAAP Net Earnings (Q3) | (In thousands) | Three Months Ended July 31, 2020 | Three Months Ended August 2, 2019 | | :--- | :--- | :--- | | **Net earnings (GAAP)** | **$88,968** | **$60,607** | | Acquisition-related costs | $924 | $23,953 | | Management actions | $0 | $7,351 | | Tax impact of share-based compensation | ($1,173) | ($1,200) | | U.S. Tax Reform | $0 | ($926) | | **Non-GAAP net earnings** | **$88,719** | **$89,785** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates, interest rates, and commodity costs, which are actively managed - The company actively manages foreign currency exchange rate risk (exposures to EUR, AUD, CAD, etc.) by using derivative instruments, primarily forward currency contracts, to hedge transactions[243](index=243&type=chunk)[244](index=244&type=chunk) - As of July 31, 2020, the company had **$470.0 million** of LIBOR-based variable-rate debt and **$424.0 million** of fixed-rate debt, exposing it to fluctuations in interest rates[247](index=247&type=chunk) - The company faces commodity cost risk for materials like steel, aluminum, and engines, mitigating this through supplier collaboration, alternative sourcing, and price adjustments, with expected lower average costs for the remainder of fiscal 2020[248](index=248&type=chunk)[249](index=249&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of July 31, 2020, with ongoing integration of internal controls for recent acquisitions - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[251](index=251&type=chunk) - The company is integrating internal controls for the Venture Products acquisition (expected completion in fiscal 2021) and has substantially completed the integration for the CMW acquisition, which will be included in the year-end assessment[252](index=252&type=chunk)[253](index=253&type=chunk) [PART II. OTHER INFORMATION](index=74&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, updated risk factors, equity security sales, and exhibits filed with the Form 10-Q [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, which management believes will not materially affect its financial condition - The company is party to ordinary course litigation, including claims related to product liability, asbestos, environmental issues, and patents, with management not expecting these proceedings to materially affect its financial results[256](index=256&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) This section highlights two new risk factors: the material adverse impacts of the COVID-19 pandemic and challenges associated with the Venture Products acquisition - A new risk factor details the material adverse impact of COVID-19, which has caused significant volatility, disruption, and weakened economic conditions, affecting demand, supply chains, and operations[258](index=258&type=chunk)[259](index=259&type=chunk) - A new risk factor was added concerning the acquisition of Venture Products, highlighting risks such as integration challenges, potential loss of key employees or customers, and the financial burden of increased debt[262](index=262&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2020, the company did not repurchase shares under its publicly announced program, with a small number purchased for deferred compensation plans Issuer Purchases of Equity Securities (Q3 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased As Part of Publicly Announced Plans | Maximum Number of Shares that May Yet Be Purchased Under the Plans | | :--- | :--- | :--- | :--- | :--- | | May 2 - May 29, 2020 | — | $ — | — | 7,042,256 | | May 30 - July 3, 2020 | — | $ — | — | 7,042,256 | | July 4 - July 31, 2020 | 1,704 | $64.92 | — | 7,042,256 | | **Total** | **1,704** | **$64.92** | **—** | | - No shares were repurchased under the company's authorized stock repurchase program during the third quarter of fiscal 2020[263](index=263&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906[266](index=266&type=chunk) - Financial statements and notes are provided in Inline eXtensible Business Reporting Language (Inline XBRL) format[266](index=266&type=chunk) [Signatures](index=78&type=section&id=Signatures) The report is duly signed on September 3, 2020, by Renee J. Peterson, Vice President, Treasurer and Chief Financial Officer - The Form 10-Q was signed on September 3, 2020, by the company's CFO, Renee J. Peterson[268](index=268&type=chunk)[270](index=270&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended May 1, 2020 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to Commission File Number: 1-8649 THE TORO COMPANY (Exact name of registrant as specified in its charter) State or Other Jurisdiction of Incorporation or Org ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended January 31, 2020 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to Commission File Number: 1-8649 THE TORO COMPANY (Exact name of registrant as specified in its charter) State or Other Jurisdiction of Incorporation o ...

Part I [Business](index=4&type=section&id=ITEM%201.%20Business) The Toro Company designs and markets turf, irrigation, and construction products, expanding its Professional segment with the $685 million CMW acquisition in fiscal 2019 Fiscal 2019 Net Sales by Segment | Segment | Percentage of Consolidated Net Sales (%) | | :--- | :--- | | Professional | 77.8% | | Residential | 21.1% | | Other | 1.1% | - On April 1, 2019, the company completed its acquisition of The Charles Machine Works, Inc. (CMW) for an aggregate merger consideration of **$685.0 million**, broadening the **Professional segment's product portfolio** with offerings for the **underground construction market**[14](index=14&type=chunk) - International net sales accounted for **23.1%** of total consolidated net sales for fiscal 2019, a slight decrease from **24.6%** in fiscal 2018[41](index=41&type=chunk) - The company's backlog of orders increased by **44.6%** to **$112.5 million** as of October 31, 2019, from **$77.8 million** a year prior, primarily due to the CMW acquisition[76](index=76&type=chunk) [Risk Factors](index=16&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant risks from macroeconomic conditions, financial fluctuations, operational challenges including acquisition integration, intense competition, and regulatory compliance - **Adverse economic conditions** in the U.S. and other countries can negatively impact demand for the company's products, affecting net sales and earnings[89](index=89&type=chunk) - **Weather conditions**, such as drought or low snowfall, can significantly reduce demand for certain products like mowing equipment, irrigation systems, and snow throwers[90](index=90&type=chunk)[91](index=91&type=chunk) - The recent **CMW acquisition** involves numerous risks, including **difficulties in integration**, **potential loss of key personnel or customers**, and the risk that **projected synergies and financial results may not be achieved**[106](index=106&type=chunk) - Changes to **international trade policies**, agreements, or the imposition of **tariffs** could result in additional charges on commodities and components, adversely affecting **profit margins**[95](index=95&type=chunk)[124](index=124&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[168](index=168&type=chunk) [Properties](index=29&type=section&id=ITEM%202.%20Properties) The company utilizes 8.3 million square feet of global facility space, an increase primarily due to the CMW acquisition, with facilities deemed sufficient for fiscal 2020 production - The company utilizes approximately **8.3 million square feet** of facility space worldwide as of October 31, 2019, an increase from **6.5 million square feet** at the end of fiscal 2018, mainly due to the **CMW acquisition**[171](index=171&type=chunk) - Significant facilities are located across the **U.S., Mexico, Australia, Europe** (United Kingdom, Italy, Romania, Germany, Poland), and **China**[170](index=170&type=chunk) [Legal Proceedings](index=31&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in various ordinary course litigation, including product liability and environmental claims, which management does not expect to materially impact its financial position - The company is a party to litigation in the ordinary course of business, including **product liability, environmental, commercial, employment, and patent disputes**[174](index=174&type=chunk)[541](index=541&type=chunk) - Management believes that the amount of liability, if any, from these matters will **not materially affect** the company's financial condition or results of operations[542](index=542&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[175](index=175&type=chunk) [Information About Our Executive Officers](index=32&type=section&id=Information%20About%20Our%20Executive%20Officers) This section lists the company's executive officers as of December 13, 2019, including Chairman, President, and CEO Richard M. Olson and CFO Renee J. Peterson - **Richard M. Olson** serves as **Chairman of the Board, President, and Chief Executive Officer**[178](index=178&type=chunk) - **Renee J. Peterson** serves as **Vice President, Treasurer, and Chief Financial Officer**[178](index=178&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=33&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE, increased its quarterly dividend by 12.5% in fiscal 2019, and its five-year total shareholder return significantly outperformed benchmarks - The quarterly cash dividend was increased by **12.5%** in fiscal 2019 to **$0.225 per share** from **$0.20 per share** in fiscal 2018[180](index=180&type=chunk) - As of October 31, 2019, **7,042,256 shares** remained available for repurchase under the company's authorized stock repurchase program, with no shares repurchased in the fourth quarter of fiscal 2019[184](index=184&type=chunk) 5-Year Cumulative Total Return Comparison | Period Ended 10/31/2019 | The Toro Company ($) | S&P 500 ($) | Peer Group ($) | | :--- | :--- | :--- | :--- | | **Total Return** | $267.18 | $166.81 | $169.20 | [Selected Financial Data](index=35&type=section&id=ITEM%206.%20Selected%20Financial%20Data) This section summarizes five years of financial data, showing net sales growth from $2.39 billion to $3.14 billion and increased assets and debt due to the CMW acquisition Selected Financial Data (2015-2019) | Fiscal Year Ended Oct 31 | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales ($M)** | $3,138.1 | $2,618.7 | $2,505.2 | $2,392.2 | $2,390.9 | | **Net Earnings ($M)** | $274.0 | $271.9 | $267.7 | $231.0 | $201.6 | | **Diluted EPS ($)** | $2.53 | $2.50 | $2.41 | $2.06 | $1.78 | | **Total Assets ($M)** | $2,330.5 | $1,571.0 | $1,493.8 | $1,384.6 | $1,300.4 | | **Long-term Debt ($M)** | $700.8 | $312.5 | $331.9 | $351.0 | $374.7 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=36&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2019 net sales increased 19.8% to $3.14 billion, driven by the CMW acquisition, while gross margin declined due to acquisition accounting and higher costs, significantly impacting the balance sheet Fiscal 2019 vs. 2018 Performance | Metric | Fiscal 2019 | Fiscal 2018 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales ($M)** | $3,138.1 | $2,618.7 | +19.8% | | **Gross Margin (%)** | 33.4% | 35.9% | -250 bps | | **Operating Earnings ($M)** | $325.0 | $373.1 | -12.9% | | **Net Earnings ($M)** | $274.0 | $271.9 | +0.8% | | **Diluted EPS ($)** | $2.53 | $2.50 | +1.2% | - The **decrease in gross margin** was mainly due to the impact of purchase accounting from the **CMW acquisition**, **higher commodity and tariff costs**, **unfavorable product mix**, and **manufacturing inefficiencies**[208](index=208&type=chunk)[211](index=211&type=chunk) - The **Professional segment's net sales grew 25.5% to $2.44 billion**, largely due to the **CMW acquisition**, though its **operating margin fell to 15.6% from 20.5%** due to acquisition-related costs and other pressures[227](index=227&type=chunk)[229](index=229&type=chunk) - The company's **debt-to-capitalization ratio increased to 44.9% from 31.8%** at the end of fiscal 2019, primarily due to increased debt to fund the **CMW acquisition**[268](index=268&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from foreign currency fluctuations, interest rates on variable-rate debt, and commodity costs, which are managed through various strategies - The company is exposed to **foreign currency exchange rate risk**, with primary exposures to the **Euro, Australian dollar, Canadian dollar, British pound, and Mexican peso**, using **forward currency contracts** to hedge these risks[314](index=314&type=chunk)[315](index=315&type=chunk) - **Interest rate risk** primarily relates to **LIBOR-based rates** on its revolving credit facility and **$280.0 million** of borrowings under its term loan credit agreement[317](index=317&type=chunk)[318](index=318&type=chunk) - The company faces **commodity cost risk** from materials such as **steel, aluminum, and petroleum-based resins**, with average costs, including tariffs, **higher** in fiscal 2019 than in fiscal 2018[319](index=319&type=chunk)[321](index=321&type=chunk) [Financial Statements and Supplementary Data](index=59&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the fiscal 2019 consolidated financial statements, with management and KPMG affirming effective internal controls, excluding CMW, and highlights increased net sales and assets due to the CMW acquisition - Management's report on internal control over financial reporting concluded that the company's controls were **effective** as of October 31, 2019, but **excluded the operations of The Charles Machine Works, Inc. (CMW)**, acquired on April 1, 2019[329](index=329&type=chunk) - The independent auditor, KPMG LLP, issued an **unqualified opinion** on the consolidated financial statements and the **effectiveness of internal control over financial reporting**, with the audit of internal controls also **excluded CMW**[335](index=335&type=chunk)[336](index=336&type=chunk) Consolidated Statement of Earnings Highlights (Fiscal Year 2019) | Metric | Amount (in thousands) | | :--- | :--- | | Net Sales | $3,138,084 | | Gross Profit | $1,047,963 | | Operating Earnings | $325,029 | | Net Earnings | $273,983 | | Diluted EPS | $2.53 | Consolidated Balance Sheet Highlights (As of Oct 31, 2019) | Metric | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $1,122,891 | | Total Assets | $2,330,547 | | Total Current Liabilities | $756,970 | | Long-term Debt | $620,899 | | Total Stockholders' Equity | $859,578 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=117&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[584](index=584&type=chunk) [Controls and Procedures](index=117&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and internal controls were effective as of October 31, 2019, excluding the newly acquired CMW from the internal control assessment - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of October 31, 2019[587](index=587&type=chunk) - The assessment of internal control over financial reporting **excluded the recently acquired CMW**, which accounted for approximately **35.0% of consolidated total assets** and **14.8% of consolidated net sales**[589](index=589&type=chunk)[592](index=592&type=chunk) [Other Information](index=119&type=section&id=ITEM%209B.%20Other%20Information) Post-fiscal year-end, the company amended its Red Iron joint venture agreements, extending its term and increasing its revolving credit facility to $625 million - On December 20, 2019, the company amended agreements for its **Red Iron financing joint venture**[593](index=593&type=chunk) - Key amendments include **extending the term of the joint venture to October 31, 2026**, and **increasing its revolving credit facility to $625 million**[594](index=594&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=120&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2020 Proxy Statement - Information required by this item is **incorporated by reference** from the company's proxy statement for its 2020 Annual Meeting of Shareholders[599](index=599&type=chunk) [Executive Compensation](index=120&type=section&id=ITEM%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2020 Proxy Statement - Information required by this item is **incorporated by reference** from the company's proxy statement for its 2020 Annual Meeting of Shareholders[601](index=601&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=120&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and related stockholder matters is incorporated by reference from the company's 2020 Proxy Statement - Information required by this item is **incorporated by reference** from the company's proxy statement for its 2020 Annual Meeting of Shareholders[602](index=602&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's 2020 Proxy Statement - Information required by this item is **incorporated by reference** from the company's proxy statement for its 2020 Annual Meeting of Shareholders[603](index=603&type=chunk) [Principal Accounting Fees and Services](index=120&type=section&id=ITEM%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's 2020 Proxy Statement - Information required by this item is **incorporated by reference** from the company's proxy statement for its 2020 Annual Meeting of Shareholders[604](index=604&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=122&type=section&id=ITEM%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report, including key agreements and compensation plans - This item lists **all financial statements, schedules, and exhibits** filed with the annual report[607](index=607&type=chunk) [Form 10-K Summary](index=128&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) The company indicates there is no Form 10-K summary - None[616](index=616&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for The Toro Company [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and equity, with detailed notes on accounting policies and business segments [Condensed Consolidated Statements of Earnings (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20%28Unaudited%29) This statement provides the company's net sales, gross profit, operating earnings, and net earnings for the specified periods | Metric | Three Months Ended Aug 2, 2019 ($ thousands) | Three Months Ended Aug 3, 2018 ($ thousands) | Nine Months Ended Aug 2, 2019 ($ thousands) | Nine Months Ended Aug 3, 2018 ($ thousands) | | :--------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net sales | 838,713 | 655,821 | 2,403,705 | 2,079,347 | | Gross profit | 265,981 | 233,653 | 802,896 | 761,948 | | Operating earnings | 73,944 | 92,894 | 281,723 | 330,089 | | Net earnings | 60,607 | 79,009 | 235,717 | 232,902 | | Basic net earnings per share | 0.57 | 0.75 | 2.21 | 2.19 | | Diluted net earnings per share | 0.56 | 0.73 | 2.18 | 2.14 | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Unaudited%29) This statement details the company's net earnings and other comprehensive income (loss) components, leading to total comprehensive income for the periods | Metric | Three Months Ended Aug 2, 2019 ($ thousands) | Three Months Ended Aug 3, 2018 ($ thousands) | Nine Months Ended Aug 2, 2019 ($ thousands) | Nine Months Ended Aug 3, 2018 ($ thousands) | | :--------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net earnings | 60,607 | 79,009 | 235,717 | 232,902 | | Other comprehensive income (loss) | (1,552) | (2,839) | (2,731) | 541 | | Comprehensive income | 59,055 | 76,170 | 232,986 | 233,443 | [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) This statement presents the company's financial position, including total assets, liabilities, and stockholders' equity at specific dates | Metric | Aug 2, 2019 ($ thousands) | Aug 3, 2018 ($ thousands) | Oct 31, 2018 ($ thousands) | | :--------------------------------- | :------------------------ | :------------------------ | :------------------------- | | Total current assets | 1,130,403 | 873,024 | 894,637 | | Total assets | 2,309,733 | 1,534,757 | 1,570,984 | | Total current liabilities | 756,403 | 511,675 | 532,635 | | Long-term debt, less current portion | 620,804 | 312,481 | 312,549 | | Total stockholders' equity | 843,822 | 650,244 | 668,916 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) This statement outlines the cash flows from operating, investing, and financing activities for the nine-month periods | Metric | Nine Months Ended Aug 2, 2019 ($ thousands) | Nine Months Ended Aug 3, 2018 ($ thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | 259,113 | 259,369 | | Net cash used in investing activities | (744,137) | (89,557) | | Net cash provided by (used in) financing activities | 339,798 | (228,765) | | Net decrease in cash and cash equivalents | (145,807) | (59,385) | | Cash and cash equivalents as of the end of the fiscal period | 143,317 | 250,871 | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Unaudited%29) This statement details changes in the company's total stockholders' equity, including net earnings and cash dividends, between reporting dates | Metric | Balance as of May 3, 2019 ($ thousands) | Balance as of August 2, 2019 ($ thousands) | | :--------------------------------- | :-------------------------------------- | :--------------------------------------- | | Total Stockholders' Equity | 805,277 | 843,822 | | Net earnings | - | 60,607 | | Cash dividends paid on common stock | (24,079) | - | | Other comprehensive loss | - | (1,552) | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 — Basis of Presentation](index=7&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) These unaudited financial statements are prepared under Form 10-Q and U.S. GAAP, incorporating the CMW acquisition and management's estimates - The company adopted ASU 2014-09 (Revenue from Contracts with Customers) effective November 1, 2018, using the modified retrospective method, which did not materially impact revenue recognition or other financial statement line items for the three and nine months ended August 2, 2019[21](index=21&type=chunk)[22](index=22&type=chunk) - The company completed the acquisition of The Charles Machine Works, Inc. (CMW) on April 1, 2019, with CMW's financial results included from the closing date, and its reporting period ending July 31, 2019, for the fiscal third quarter[17](index=17&type=chunk) [Note 2 — Business Combinations](index=8&type=section&id=Note%202%20%E2%80%94%20Business%20Combinations) This note details the April 1, 2019, acquisition of The Charles Machine Works, Inc. (CMW) for $679.3 million, expanding the Professional segment - The Toro Company acquired The Charles Machine Works, Inc. (CMW) on April 1, 2019, for a preliminary purchase price of **$679.3 million**, funded by unsecured senior term loan credit and revolving credit facilities[25](index=25&type=chunk)[26](index=26&type=chunk) Preliminary Purchase Price Allocation for CMW (April 1, 2019) | Asset/Liability | Amount ($ thousands) | | :------------------------ | :------------------- | | Cash and cash equivalents | 16,341 | | Receivables | 65,674 | | Inventories | 242,594 | | Property, plant and equipment | 142,405 | | Goodwill | 154,040 | | Other intangible assets | 227,280 | | Accounts payable | (36,655) | | Accrued liabilities | (46,866) | | Deferred income tax liabilities | (79,628) | | Total purchase price | 679,324 | - Goodwill from the CMW acquisition, primarily attributable to workforce value, brand reputation, growth opportunities, and expected synergies, increased the Professional segment goodwill to **$368.6 million** as of August 2, 2019[28](index=28&type=chunk) CMW Contribution to Operations (Three and Nine Months Ended August 2, 2019) | Period | Net Sales ($ millions) | Segment Loss ($ millions) | | :--------------------------------- | :--------------------- | :------------------------ | | Three Months Ended August 2, 2019 | 199.6 | 8.4 | | Nine Months Ended August 2, 2019 | 270.5 | 12.5 | - The company also completed immaterial acquisitions of a Northeastern U.S. distribution company (November 30, 2018) and L.T. Rich Products, Inc. (March 19, 2018), which broadened its Professional segment portfolio[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3 — Segment Data](index=12&type=section&id=Note%203%20%E2%80%94%20Segment%20Data) The company operates in Professional and Residential segments, with net sales and earnings disaggregated by these categories and an "Other" group Net Sales by Segment (Three Months Ended) | Segment | Aug 2, 2019 ($ thousands) | Aug 3, 2018 ($ thousands) | | :---------- | :------------------------ | :------------------------ | | Professional | 676,756 | 482,494 | | Residential | 148,234 | 166,513 | | Other | 13,723 | 6,814 | | Total | 838,713 | 655,821 | Net Sales by Segment (Nine Months Ended) | Segment | Aug 2, 2019 ($ thousands) | Aug 3, 2018 ($ thousands) | | :---------- | :------------------------ | :------------------------ | | Professional | 1,855,268 | 1,546,536 | | Residential | 525,539 | 521,189 | | Other | 22,898 | 11,622 | | Total | 2,403,705 | 2,079,347 | Earnings (Loss) Before Income Taxes by Segment (Three Months Ended) | Segment | Aug 2, 2019 ($ thousands) | Aug 3, 2018 ($ thousands) | | :---------- | :------------------------ | :------------------------ | | Professional | 81,592 | 97,716 | | Residential | 16,151 | 16,002 | | Other | (26,508) | (20,443) | | Total | 71,235 | 93,275 | Earnings (Loss) Before Income Taxes by Segment (Nine Months Ended) | Segment | Aug 2, 2019 ($ thousands) | Aug 3, 2018 ($ thousands) | | :---------- | :------------------------ | :------------------------ | | Professional | 319,689 | 338,607 | | Residential | 51,253 | 58,019 | | Other | (92,507) | (67,800) | | Total | 278,435 | 328,826 | [Note 4 — Revenue](index=13&type=section&id=Note%204%20%E2%80%94%20Revenue) Revenue is recognized upon product or service transfer, with net sales disaggregated by product type and geographic market, and contract liabilities detailed - Revenue is recognized when control of products or services is transferred, with variable consideration (rebates, incentives, returns) estimated and recorded as a reduction to revenue at the time of initial sale[40](index=40&type=chunk)[46](index=46&type=chunk) Net Sales by Product Type and Geographic Market (Three Months Ended August 2, 2019) | Category | Professional ($ thousands) | Residential ($ thousands) | Other ($ thousands) | Total ($ thousands) | | :---------------- | :------------------------- | :------------------------ | :------------------ | :------------------ | | **Product Type:** | | | | | | Equipment | 582,932 | 143,814 | 8,983 | 735,729 | | Irrigation | 93,824 | 4,420 | 4,740 | 102,984 | | **Geographic Market:** | | | | | | United States | 515,437 | 122,843 | 13,723 | 652,003 | | Foreign Countries | 161,319 | 25,391 | — | 186,710 | Net Sales by Product Type and Geographic Market (Nine Months Ended August 2, 2019) | Category | Professional ($ thousands) | Residential ($ thousands) | Other ($ thousands) | Total ($ thousands) | | :---------------- | :------------------------- | :------------------------ | :------------------ | :------------------ | | **Product Type:** | | | | | | Equipment | 1,588,581 | 502,780 | 13,613 | 2,104,974 | | Irrigation | 266,687 | 22,759 | 9,285 | 298,731 | | **Geographic Market:** | | | | | | United States | 1,409,954 | 423,521 | 22,898 | 1,856,373 | | Foreign Countries | 445,314 | 102,018 | — | 547,332 | - Contract liabilities (deferred revenue) for extended warranties, service contracts, and non-refundable customer deposits totaled **$23.1 million** as of August 2, 2019, up from **$14.0 million** as of October 31, 2018, with an additional **$7.0 million** assumed from the CMW acquisition[50](index=50&type=chunk)[51](index=51&type=chunk) [Note 5 — Goodwill and Other Intangible Assets](index=16&type=section&id=Note%205%20%E2%80%94%20Goodwill%20and%20Other%20Intangible%20Assets) The CMW acquisition significantly increased goodwill and other intangible assets, leading to higher amortization expense in fiscal 2019 - Goodwill increased by **$155.6 million** to **$380.5 million** as of August 2, 2019, primarily due to the CMW acquisition (**$154.0 million**), increasing the Professional segment's goodwill to **$368.6 million**[53](index=53&type=chunk)[54](index=54&type=chunk) Other Intangible Assets, Net (August 2, 2019) | Type | Weighted Average Useful Life (years) | Gross Carrying Amount ($ thousands) | Accumulated Amortization ($ thousands) | Net ($ thousands) | | :-------------------- | :--------------------------------- | :---------------------------------- | :------------------------------------- | :---------------- | | Patents | 9.9 | 18,242 | (12,916) | 5,326 | | Non-compete agreements | 5.5 | 6,879 | (6,792) | 87 | | Customer-related | 18.3 | 195,223 | (29,479) | 165,744 | | Developed technology | 7.6 | 50,279 | (30,203) | 20,076 | | Trade names | 15.5 | 7,590 | (2,004) | 5,586 | | Backlog and other | 0.6 | 7,380 | (5,187) | 2,193 | | Non-amortizable - trade names | - | 120,874 | — | 120,874 | | Total | - | 406,467 | (86,581) | 319,886 | - Amortization expense for definite-lived intangible assets was **$7.4 million** for the third quarter of fiscal 2019 (up from **$1.8 million** in Q3 2018) and **$12.9 million** for the first nine months of fiscal 2019 (up from **$5.4 million** in 9M 2018)[56](index=56&type=chunk) [Note 6 — Indebtedness](index=17&type=section&id=Note%206%20%E2%80%94%20Indebtedness) The company's indebtedness significantly increased to $720.7 million due to new term loans and senior notes issued for the CMW acquisition Summary of Indebtedness ($ thousands) | Debt Type | August 2, 2019 | August 3, 2018 | October 31, 2018 | | :--------------------------------- | :------------- | :------------- | :--------------- | | Revolving credit facility | — | 91,000 | 91,000 | | $200 million term loan | 100,000 | — | — | | $300 million term loan | 200,000 | — | — | | 3.81% series A senior notes | 100,000 | — | — | | 3.91% series B senior notes | 100,000 | — | — | | 7.800% debentures | 100,000 | 100,000 | 100,000 | | 6.625% senior notes | 123,900 | 123,838 | 123,854 | | Total indebtedness, net | 720,681 | 312,481 | 312,549 | - The company entered into a **$200 million** three-year unsecured senior term loan and a **$300 million** five-year unsecured senior term loan in March 2019, and issued **$200 million** in 3.81% Series A and 3.91% Series B Senior Notes in June 2019, primarily to fund the CMW acquisition[63](index=63&type=chunk)[68](index=68&type=chunk) - As of August 2, 2019, the company had prepaid **$100 million** on each term loan facility and reclassified **$99.9 million** of the remaining term loan balance to current portion of long-term debt, intending to prepay it within 12 months[64](index=64&type=chunk) - Interest expense increased significantly due to higher borrowings, with approximately **$3.7 million** for the three months and **$5.3 million** for the nine months ended August 2, 2019, from the term loan credit agreement, and **$0.8 million** from the Senior Notes for the three and nine months ended August 2, 2019[67](index=67&type=chunk)[72](index=72&type=chunk) [Note 7 — Management Actions](index=20&type=section&id=Note%207%20%E2%80%94%20Management%20Actions) The company initiated a wind-down of certain Toro-branded underground construction products, incurring $10.0 million to $13.0 million in pretax charges - The company initiated a 'Toro underground wind down' strategy for its large horizontal directional drill and riding trencher product categories, expecting **$10.0 million to $13.0 million** in total pretax charges[75](index=75&type=chunk) - For the three and nine months ended August 2, 2019, **$7.2 million** in pre-tax charges were recorded for inventory write-downs and accelerated depreciation, and **$1.9 million** for anticipated inventory retail support activities, related to the wind down[75](index=75&type=chunk) [Note 8 — Inventories](index=21&type=section&id=Note%208%20%E2%80%94%20Inventories) Inventories, primarily valued using LIFO, increased to $620.6 million, significantly impacted by the $242.6 million addition from the CMW acquisition - Inventories are valued at the lower of cost or net realizable value, with cost determined by the LIFO method for most inventories[77](index=77&type=chunk) - The CMW acquisition on April 1, 2019, added **$242.6 million** of inventory based on preliminary fair value adjustments[78](index=78&type=chunk) Inventories, Net ($ thousands) | Category | August 2, 2019 | August 3, 2018 | October 31, 2018 | | :-------------------------- | :------------- | :------------- | :--------------- | | Raw materials and work in process | 174,348 | 105,239 | 115,280 | | Finished goods and service parts | 518,465 | 326,059 | 315,179 | | Total FIFO value | 692,813 | 431,298 | 430,459 | | Less: adjustment to LIFO value | 72,201 | 66,801 | 72,200 | | Total inventories, net | 620,612 | 364,497 | 358,259 | [Note 9 — Property and Depreciation](index=21&type=section&id=Note%209%20%E2%80%94%20Property%20and%20Depreciation) Property, plant, and equipment, depreciated using the straight-line method, increased to $426.4 million, including $142.4 million from the CMW acquisition - Property, plant, and equipment are depreciated using the straight-line method over estimated useful lives (e.g., buildings 10-40 years, machinery 2-15 years)[80](index=80&type=chunk) - The CMW acquisition on April 1, 2019, included **$142.4 million** of acquired property, plant, and equipment[81](index=81&type=chunk) Property, Plant and Equipment, Net ($ thousands) | Category | August 2, 2019 | August 3, 2018 | October 31, 2018 | | :--------------------------------- | :------------- | :------------- | :--------------- | | Gross property, plant, and equipment | 1,122,150 | 915,667 | 928,981 | | Less: accumulated depreciation | 695,735 | 666,165 | 657,522 | | Property, plant, and equipment, net | 426,415 | 249,502 | 271,459 | [Note 10 — Warranty Guarantees](index=22&type=section&id=Note%2010%20%E2%80%94%20Warranty%20Guarantees) Warranty expense is accrued at sale, with total accrued warranties increasing to $94.6 million, including $14.3 million from acquisitions - Warranty expense is accrued at the time of sale based on estimated number of products, historical costs, claim trends, and other factors[83](index=83&type=chunk) Changes in Accrued Warranties ($ thousands) | Metric | Three Months Ended Aug 2, 2019 | Three Months Ended Aug 3, 2018 | Nine Months Ended Aug 2, 2019 | Nine Months Ended Aug 3, 2018 | | :---------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Beginning balance | 95,752 | 84,268 | 76,214 | 74,155 | | Provisions | 14,232 | 12,038 | 42,734 | 39,827 | | Acquisitions | — | — | 14,272 | — | | Claims | (17,514) | (13,071) | (39,685) | (31,787) | | Changes in estimates | 2,096 | (40) | 1,031 | 1,000 | | Ending balance | 94,566 | 83,195 | 94,566 | 83,195 | [Note 11 — Investment in Joint Venture](index=22&type=section&id=Note%2011%20%E2%80%94%20Investment%20in%20Joint%20Venture) The company holds a 45% equity interest in Red Iron Acceptance, LLC, a joint venture providing inventory financing to dealers and distributors - The company owns **45%** of Red Iron Acceptance, LLC, a joint venture with TCFIF, which provides inventory financing to dealers and distributors[85](index=85&type=chunk)[86](index=86&type=chunk) - The company's total investment in Red Iron was **$25.1 million** as of August 2, 2019[86](index=86&type=chunk) - Red Iron financed **$1,513.3 million** in receivables for dealers and distributors during the nine months ended August 2, 2019[88](index=88&type=chunk) [Note 12 — Stock-Based Compensation](index=23&type=section&id=Note%2012%20%E2%80%94%20Stock-Based%20Compensation) Stock-based compensation costs totaled $10.3 million for the nine months ended August 2, 2019, covering various equity awards Total Compensation Cost for Stock-Based Awards ($ thousands) | Award Type | Three Months Ended Aug 2, 2019 | Three Months Ended Aug 3, 2018 | Nine Months Ended Aug 2, 2019 | Nine Months Ended Aug 3, 2018 | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Unrestricted common stock awards | — | — | 592 | 530 | | Stock option awards | 1,678 | 1,310 | 4,841 | 3,725 | | Performance share awards | 666 | 1,047 | 2,483 | 2,012 | | Restricted stock unit awards | 890 | 666 | 2,342 | 2,321 | | Total | 3,234 | 3,023 | 10,258 | 8,588 | Weighted-Average Valuation Assumptions for Stock Options | Assumption | Fiscal 2019 | Fiscal 2018 | | :-------------------------- | :---------- | :---------- | | Expected life of option in years | 6.31 | 6.04 | | Expected stock price volatility | 19.83% | 20.58% | | Risk-free interest rate | 2.77% | 2.21% | | Expected dividend yield | 1.18% | 0.97% | | Per share weighted-average fair value at date of grant | $12.83 | $14.25 | [Note 13 — Stockholders' Equity](index=24&type=section&id=Note%2013%20%E2%80%94%20Stockholders%27%20Equity) This note details the components and activity of accumulated other comprehensive loss, primarily from foreign currency translation and derivatives Components of Accumulated Other Comprehensive Loss (AOCL) ($ thousands) | Component | August 2, 2019 | August 3, 2018 | October 31, 2018 | | :--------------------------------- | :------------- | :------------- | :--------------- | | Foreign currency translation adjustments | 33,862 | 23,467 | 29,711 | | Pension and post-retirement benefits | 561 | 1,596 | 561 | | Cash flow derivative instruments | (7,755) | (1,625) | (6,335) | | Total accumulated other comprehensive loss | 26,668 | 23,438 | 23,937 | [Note 14 — Per Share Data](index=26&type=section&id=Note%2014%20%E2%80%94%20Per%20Share%20Data) This section reconciles basic and diluted weighted-average shares outstanding, noting anti-dilutive stock options excluded from EPS calculations Weighted-Average Shares of Common Stock Outstanding (thousands) | Share Type | Three Months Ended Aug 2, 2019 | Three Months Ended Aug 3, 2018 | Nine Months Ended Aug 2, 2019 | Nine Months Ended Aug 3, 2018 | | :--------------------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Basic | 107,005 | 105,751 | 106,630 | 106,457 | | Diluted | 108,253 | 108,070 | 108,024 | 108,930 | - Options to purchase **378,850 shares** (Q3 2019) and **865,648 shares** (9M 2019) were excluded from diluted net earnings per share calculations because they were anti-dilutive[99](index=99&type=chunk) [Note 15 — Contingencies](index=26&type=section&id=Note%2015%20%E2%80%94%20Contingencies) The company is involved in various litigation, including product liability and environmental claims, with management expecting no material financial impact - The company is involved in various litigation, including product liability, environmental claims, commercial disputes, employment disputes, and patent infringement cases[100](index=100&type=chunk) - Liabilities for claims are recorded when a loss is probable and reasonably estimable, with management believing current litigation will not materially affect financial results[101](index=101&type=chunk) [Note 16 — Derivative Instruments and Hedging Activities](index=27&type=section&id=Note%2016%20%E2%80%94%20Derivative%20Instruments%20and%20Hedging%20Activities) The company uses forward currency contracts to manage foreign currency risk, with fair value changes recorded in OCI or net earnings - The company uses forward currency contracts to hedge foreign currency exchange rate risk, primarily for the Euro, Australian dollar, Canadian dollar, British pound, Mexican peso, Japanese yen, Chinese Renminbi, and Romanian New Leu[102](index=102&type=chunk)[104](index=104&type=chunk) - As of August 2, 2019, the notional amount outstanding of forward contracts designated as cash flow hedging instruments was **$250.3 million**[110](index=110&type=chunk) Fair Value of Derivative Assets ($ thousands) | Category | August 2, 2019 | August 3, 2018 | October 31, 2018 | | :--------------------------------- | :------------- | :------------- | :--------------- | | Cash flow hedging instruments | 12,511 | 2,324 | 8,596 | | Not designated as cash flow hedging instruments | 3,920 | 869 | 2,305 | | Total assets | 16,431 | 3,193 | 10,901 | - The company expects to reclassify approximately **$7.3 million** of gains from AOCL to earnings during the next twelve months[113](index=113&type=chunk) [Note 17 — Fair Value Measurements](index=31&type=section&id=Note%2017%20%E2%80%94%20Fair%20Value%20Measurements) Financial assets and liabilities are categorized into a three-level fair value hierarchy, with derivative instruments measured at fair value using Level 2 inputs - The company uses a three-level fair value hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs other than Level 1; Level 3: unobservable inputs)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Forward currency contracts are measured at fair value on a recurring basis using Level 2 inputs[118](index=118&type=chunk) Fair Value Measurements of Forward Currency Contracts (Assets) ($ thousands) | Date | Fair Value | Level 1 | Level 2 | Level 3 | | :---------------- | :--------- | :------ | :------ | :------ | | August 2, 2019 | 16,431 | — | 16,431 | — | | August 3, 2018 | 3,193 | — | 3,193 | — | | October 31, 2018 | 10,901 | — | 10,901 | — | [Note 18 — Subsequent Events](index=32&type=section&id=Note%2018%20%E2%80%94%20Subsequent%20Events) The company has evaluated all subsequent events and found no items requiring recognition or disclosure in the financial statements - No subsequent events requiring recognition or disclosure have occurred[122](index=122&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=33&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of the company's financial condition, operational results, liquidity, and future outlook, including the impact of the CMW acquisition [Company Overview](index=33&type=section&id=Company%20Overview) The Toro Company designs, manufactures, and markets a broad range of professional and residential equipment, with operations classified into two reportable segments - The Toro Company designs, manufactures, and markets professional turf maintenance, irrigation, landscaping, snow/ice management, agricultural irrigation, rental, specialty, underground construction equipment, and residential yard/snow thrower products globally[128](index=128&type=chunk) - Operations are classified into two reportable segments: Professional and Residential, with 'Other' activities including domestic distribution companies and corporate functions[129](index=129&type=chunk) - The acquisition of The Charles Machine Works, Inc. (CMW) on April 1, 2019, for **$679.3 million**, expanded the Professional segment's product portfolio in the underground construction market[130](index=130&type=chunk)[131](index=131&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section details the company's consolidated net sales and net earnings performance, highlighting the impact of the CMW acquisition and other operational factors Consolidated Net Sales and Net Earnings Performance | Metric | Three Months Ended Aug 2, 2019 | Three Months Ended Aug 3, 2018 | % Change (YoY) | Nine Months Ended Aug 2, 2019 | Nine Months Ended Aug 3, 2018 | % Change (YoY) | | :--------------------------------- | :----------------------------- | :----------------------------- | :------------- | :---------------------------- | :---------------------------- | :------------- | | Net sales | $838.7 million | $655.8 million | **27.9%** | $2,403.7 million | $2,079.3 million | **15.6%** | | Net earnings (GAAP) | $60.6 million | $79.0 million | **(23.3)%** | $235.7 million | $232.9 million | **1.2%** | | Diluted EPS (GAAP) | $0.56 | $0.73 | **(23.2)%** | $2.18 | $2.14 | **1.9%** | | Adjusted non-GAAP net earnings | $89.8 million | $73.5 million | **22.2%** | $272.4 million | $255.9 million | **6.5%** | | Adjusted non-GAAP diluted EPS | $0.83 | $0.68 | **22.1%** | $2.52 | $2.35 | **7.2%** | - GAAP net earnings decreased in Q3 2019 primarily due to purchase accounting adjustments and integration expenditures from the CMW acquisition, increased commodity and tariff costs, and charges from the Toro underground wind down[135](index=135&type=chunk)[156](index=156&type=chunk) - Adjusted non-GAAP net earnings increased due to incremental earnings from the CMW acquisition, improved net price realization, productivity initiatives, lower U.S. federal corporate tax rate, and reduced direct marketing and warehousing expenses[136](index=136&type=chunk)[158](index=158&type=chunk) Gross Profit as a Percentage of Net Sales | Period | GAAP Gross Profit % | Adjusted non-GAAP Gross Profit % | | :--------------------------------- | :------------------ | :------------------------------- | | Three Months Ended Aug 2, 2019 | **31.7%** | **35.9%** | | Three Months Ended Aug 3, 2018 | **35.6%** | **35.6%** | | Nine Months Ended Aug 2, 2019 | **33.4%** | **35.3%** | | Nine Months Ended Aug 3, 2018 | **36.6%** | **36.6%** | - GAAP gross profit percentage decreased due to CMW acquisition purchase accounting adjustments, higher commodity and tariff costs, Toro underground wind down charges, unfavorable product mix, and manufacturing inefficiencies[146](index=146&type=chunk) - Interest expense increased by **$4.3 million** (Q3) and **$6.2 million** (9M) due to higher borrowings for the CMW acquisition[151](index=151&type=chunk) - The effective tax rate for 9M 2019 was **15.3%**, down from **29.2%** in 9M 2018, primarily due to the reduction in the U.S. federal corporate tax rate and one-time charges from the Tax Cuts and Jobs Act in 2018[153](index=153&type=chunk) [Business Segments](index=38&type=section&id=Business%20Segments) This section analyzes the net sales and earnings performance of the Professional and Residential segments, along with the "Other" activities Segment Net Sales Growth (YoY % Change) | Segment | Three Months Ended Aug 2, 2019 | Nine Months Ended Aug 2, 2019 | | :---------- | :----------------------------- | :---------------------------- | | Professional | **40.3%** | **20.0%** | | Residential | **(11.0)%** | **0.8%** | | Other | **101.4%** | **97.0%** | - Professional segment net sales growth was primarily driven by the CMW acquisition, price increases, and growth in snow/ice management and rental/specialty construction, partially offset by lower landscape contractor mowers and irrigation products[133](index=133&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Residential segment net sales decreased in Q3 due to lower shipments of zero-turn riding mowers, walk power mowers, and Pope-branded irrigation products, but increased year-to-date due to price increases and strong snow product/walk power mower demand[134](index=134&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) Segment Earnings (Loss) Before Income Taxes Growth (YoY % Change) | Segment | Three Months Ended Aug 2, 2019 | Nine Months Ended Aug 2, 2019 | | :---------- | :----------------------------- | :---------------------------- | | Professional | **(16.5)%** | **(5.6)%** | | Residential | **0.9%** | **(11.7)%** | | Other | **(29.7)%** | **(36.4)%** | - Professional segment earnings decreased due to CMW acquisition impacts (purchase accounting, amortization, administrative expenses), higher commodity/tariff costs, Toro underground wind down charges, and unfavorable product mix[165](index=165&type=chunk) - Residential segment earnings increased in Q3 due to price increases, productivity, duty drawback credits, and lower advertising, but decreased year-to-date due to higher commodity/tariff costs, unfavorable product mix, and increased depreciation/engineering for new products[169](index=169&type=chunk)[170](index=170&type=chunk) - Other activities' operating loss increased due to higher interest expense from CMW acquisition borrowings and integration costs[172](index=172&type=chunk)[173](index=173&type=chunk) [Financial Position](index=41&type=section&id=Financial%20Position) This section discusses changes in the company's balance sheet items, cash flows, indebtedness, and capital allocation strategies - Inventory levels increased by **$256.1 million (70.3%)** as of Q3 fiscal 2019, primarily due to the CMW acquisition, higher work-in-process due to supply chain challenges, and increased finished goods inventory[138](index=138&type=chunk)[174](index=174&type=chunk) - Accounts receivable increased by **$92.8 million (42.3%)** due to the CMW acquisition, sales timing, and higher sales to non-Red Iron financed customers[138](index=138&type=chunk)[174](index=174&type=chunk) - Cash provided by operating activities for the first nine months of fiscal 2019 decreased slightly by **$0.3 million**, while cash used in investing activities increased by **$654.6 million**, mainly due to the CMW acquisition[175](index=175&type=chunk) - Cash provided by financing activities increased by **$568.6 million**, driven by new debt issuances (term loans, senior notes) for the CMW acquisition and reduced common stock repurchases[175](index=175&type=chunk) - The company's total outstanding indebtedness was **$720.7 million** as of August 2, 2019, including new term loans and senior notes, with **$598.1 million** of unutilized availability under its revolving credit facility[180](index=180&type=chunk)[186](index=186&type=chunk) - The Board of Directors approved a **12.5% increase** in the cash dividend to **$0.225 per share** for Q3 fiscal 2019[137](index=137&type=chunk)[188](index=188&type=chunk) - Share repurchases were curtailed in Q3 fiscal 2019 due to the CMW acquisition; **359,758 shares** were repurchased in the first nine months of fiscal 2019[189](index=189&type=chunk) [Non-GAAP Financial Measures](index=45&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP financial measures to offer supplemental information on core operational performance, excluding specific non-recurring or non-cash items - The company provides non-GAAP financial measures to offer supplemental information on core operational performance, excluding non-cash charges, large unpredictable charges, acquisitions/dispositions, legal settlements, and tax positions[194](index=194&type=chunk) Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures (Three Months Ended) | Metric | GAAP (Aug 2, 2019) | Adjustments | Adjusted Non-GAAP (Aug 2, 2019) | GAAP (Aug 3, 2018) | Adjustments | Adjusted Non-GAAP (Aug 3, 2018) | | :--------------------------------- | :----------------- | :---------- | :------------------------------ | :----------------- | :---------- | :------------------------------ | | Gross profit ($ thousands) | 265,981 | 35,289 | 301,270 | 233,653 | — | 233,653 | | Operating earnings ($ thousands) | 73,944 | 38,452 | 112,396 | 92,894 | — | 92,894 | | Net earnings ($ thousands) | 60,607 | 29,188 | 89,785 | 79,009 | (5,525) | 73,484 | | Diluted EPS | 0.56 | 0.27 | 0.83 | 0.73 | (0.05) | 0.68 | | Effective tax rate | 14.9% | 3.2% | 18.1% | 15.3% | 5.9% | 21.2% | Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures (Nine Months Ended) | Metric | GAAP (Aug 2, 2019) | Adjustments | Adjusted Non-GAAP (Aug 2, 2019) | GAAP (Aug 3, 2018) | Adjustments | Adjusted Non-GAAP (Aug 3, 2018) | | :--------------------------------- | :----------------- | :---------- | :------------------------------ | :----------------- | :---------- | :------------------------------ | | Gross profit ($ thousands) | 802,896 | 44,808 | 847,704 | 761,948 | — | 761,948 | | Operating earnings ($ thousands) | 281,723 | 60,206 | 341,929 | 330,089 | — | 330,089 | | Net earnings ($ thousands) | 235,717 | 36,731 | 272,438 | 232,902 | 22,975 | 255,877 | | Diluted EPS | 2.18 | 0.34 | 2.52 | 2.14 | 0.21 | 2.35 | | Effective tax rate | 15.3% | 4.2% | 19.5% | 29.2% | (7.0)% | 22.2% | [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to critical accounting policies and discusses the upcoming adoption of new accounting pronouncements - No material changes to critical accounting policies and estimates since the fiscal year ended October 31, 2018[197](index=197&type=chunk) - The company will adopt ASU No. 2016-02, Leases, in Q1 fiscal 2020, which will materially impact the Consolidated Balance Sheets by recognizing right-of-use assets and lease liabilities for operating leases, but not materially impact the Consolidated Statements of Earnings and Cash Flows[198](index=198&type=chunk)[201](index=201&type=chunk) - The company is evaluating the impact of new accounting pronouncements: ASU No. 2016-03 (Credit Losses, effective Q1 fiscal 2021), ASU No. 2018-07 (Nonemployee Share-Based Payment Accounting, effective Q1 fiscal 2020), ASU No. 2018-13 (Fair Value Measurement Disclosures, effective Q1 fiscal 2021), and ASU No. 2018-14 (Defined Benefit Plans Disclosures, effective Q1 fiscal 2021)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Forward-Looking Information](index=48&type=section&id=Forward-Looking%20Information) This section contains forward-looking statements about future performance, liquidity, and business strategies, highlighting key risks and uncertainties - The report contains forward-looking statements regarding future performance, liquidity, financial condition, business strategies, CMW integration, and the effect of laws/regulations[207](index=207&type=chunk) - Key risks include adverse economic conditions, weather, foreign currency fluctuations, increased raw material/tariff costs, dependence on segment-specific factors, product mix, acquisition integration risks (e.g., CMW, Toro underground wind down), inventory management, competition, international operations, product innovation, operational disruptions, labor needs, information system security, intellectual property, governmental regulations, accounting changes, and debt covenants[208](index=208&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - The company cautions readers not to place undue reliance on forward-looking statements, as actual results may differ materially due to various risks and uncertainties[213](index=213&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=51&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from foreign currency exchange rates, interest rates, and commodity costs, which are managed through various strategies including derivatives - The company is exposed to market risks from foreign currency exchange rates, interest rates, and commodity costs[214](index=214&type=chunk) - Foreign currency exchange rate risk is managed using derivative instruments (forward currency contracts) to hedge exposures in currencies like Euro, AUD, CAD, GBP, MXN, JPY, CNY, and RON[215](index=215&type=chunk)[216](index=216&type=chunk) Outstanding Foreign Currency Exchange Contracts (August 2, 2019) | Currency Pair | Average Contracted Rate | Notional Amount ($ thousands) | Gain at Fair Value ($ thousands) | | :-------------------------- | :---------------------- | :---------------------------- | :------------------------------- | | Buy U.S. dollar/Sell Australian dollar | 0.7269 | 102,489.6 | 5,129.7 | | Buy U.S. dollar/Sell Canadian dollar | 1.3107 | 32,440.0 | 99.4 | | Buy U.S. dollar/Sell Euro | 1.2059 | 134,502.0 | 7,562.9 | | Buy U.S. dollar/Sell British pound | 1.3428 | 43,774.8 | 3,528.8 | | Buy Mexican peso/Sell U.S. dollar | 20.9456 | 1,432.3 | 110.6 | - Interest rate risk primarily relates to LIBOR-based interest rates on the revolving credit facility and term loan credit agreement; as of August 2, 2019, **$300.0 million** of debt was LIBOR-based, with no outstanding balance on the revolving credit facility[219](index=219&type=chunk) - Commodity cost risk, primarily for steel, aluminum, and petroleum-based resins, is mitigated through firm pricing, alternative sourcing, material substitution, and price increases[220](index=220&type=chunk)[221](index=221&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=52&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting, excluding the CMW acquisition - The CEO and CFO concluded that disclosure controls and procedures were effective as of August 2, 2019, providing reasonable assurance for timely and accurate financial reporting[223](index=223&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended August 2, 2019, except for the ongoing integration of CMW[224](index=224&type=chunk) - The acquisition of CMW, a previously privately-held company, is excluded from the assessment of internal control over financial reporting as of October 31, 2019, due to ongoing integration activities[225](index=225&type=chunk) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information beyond the financial statements, including legal proceedings, risk factors, equity security sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=54&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings, including product liability and environmental claims, which management expects will not materially affect financial results - The company is a party to litigation in the ordinary course of business, including claims for product liability, asbestos, hazardous substances, commercial disputes, employment disputes, and patent infringement[228](index=228&type=chunk) - Management believes that the amount of liability, if any, from these legal matters will not materially affect the company's Consolidated Results of Operations, Financial Position, or Cash Flows[229](index=229&type=chunk) [ITEM 1A. RISK FACTORS](index=54&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines specific risks, including new factors related to the CMW acquisition such as integration challenges, operational disruption, and increased leverage - No material changes to risk factors from the most recently filed Annual Report on Form 10-K, except for the addition of risks related to the CMW acquisition[230](index=230&type=chunk) - Risks associated with the CMW acquisition include diversion of management's attention, operational disruption, integration challenges, potential loss of key employees/partners, failure to achieve expected synergies, capital reallocation, increased leverage, inaccurate liability assessments, and purchase accounting impacts[231](index=231&type=chunk)[232](index=232&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=55&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company curtailed share repurchases in Q3 fiscal 2019 due to the CMW acquisition, with a remaining authorization for 7,042,256 shares - Share repurchases were curtailed during Q3 fiscal 2019 due to the CMW acquisition[189](index=189&type=chunk)[233](index=233&type=chunk) Common Stock Purchases (Q3 Fiscal 2019) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------------------------------- | :----------------------------- | :--------------------------- | | May 4, 2019 through May 31, 2019 | — | $ — | | June 1, 2019 through June 28, 2019 | — | — | | June 29, 2019 through August 2, 2019 | 1,310 | $66.14 | | Total | 1,310 | $66.14 | - As of August 2, 2019, **7,042,256 shares** remained available for repurchase under Board-authorized plans[233](index=233&type=chunk)[234](index=234&type=chunk) [ITEM 6. EXHIBITS](index=56&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including the CMW merger agreement, debt instruments, and CEO/CFO certifications - Exhibits include the CMW merger agreement, Restated Certificate of Incorporation, Amended and Restated Bylaws, various debt indentures (7.80% Debentures, 6.625% Notes), CEO/CFO certifications, and financial information in Inline XBRL format[238](index=238&type=chunk) [Signatures](index=57&type=section&id=Signatures) The report is formally signed by Renee J. Peterson, Vice President, Treasurer, and Chief Financial Officer, on September 5, 2019 - The report was signed by Renee J. Peterson, Vice President, Treasurer and Chief Financial Officer, on September 5, 2019[242](index=242&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Table of Contents ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended May 3, 2019 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to THE TORO COMPANY (Exact name of registrant as specified in its charter) Delaware 1-8649 41-0580470 Commission File Number I.R.S. Employer Identification N ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended February 1, 2019 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to THE TORO COMPANY (Exact name of registrant as specified in its charter) Delaware 1-8649 41-0580470 (Commission File Number) (I.R.S. Employer Identifi ...