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Rating Action: Moody's upgrades Toro's ratings (Senior Unsecured to Baa2); outlook positiveGlobal Credit Research - 16 Feb 2022New York, February 16, 2022 -- Moody's Investors Service ("Moody's") upgraded its ratings for The Toro Company ("Toro"), including the company's senior unsecured debt rating to Baa2 from Baa3. The ratings outlook remains positive.The ratings upgrades reflect Toro's strong recent track record of growth, both organic and through acquisition that has enhanced the company's scale as well as its diversity of end-markets and offerings. Moody's believes that favorable tailwinds will persist, supporting continued growth over the next 12-18 months. Further, Moody's expects deleveraging following the recent acquisition of The Intimidator Group such that debt/EBITDA will decline to the 2.0x range.Moody's took the following rating actions:Upgrades:..Issuer: Toro Company (The)....7.8% debentures due June 2027, Upgraded to Baa2 from Baa3....6.625% senior notes due May 2037, Upgraded to Baa2 from Baa3 Outlook Actions: ..Issuer: Toro Company (The) ....Outlook, Remains Positive RATINGS RATIONALE Toro's Baa2 senior unsecured rating reflects the company's strong brand recognition, product innovation and diversified geographic footprint. These characteristics solidify the company's strong market position in the turf maintenance market. Further, the company has made strides in diversifying its product offerings, particularly within its professional segment that constitutes approximately three quarters of the company's sales. Moody's expects that the diversification will lower the company's overall seasonality. Moody's also expects that the company will continue to follow a balanced capital allocation policy with its strong cash generation providing the company with latitude to fund acquisitions and shareholder remuneration with internal sources of cash rather than borrowings.At the same time, Toro's revenue scale (annual sales approximate $4.0 billion) is moderate compared to some other large industrial manufacturers, and it has inherent seasonality, particularly in its landscaping and irrigation end-markets. Further, Moody's expects macro-economic related supply chain and inflationary cost pressures to continue to present near-term headwinds to profit margins.The positive outlook is based on Moody's expectation that the company will continue to maintain a conservative leverage profile while making and integrating acquisitions that enhance scale and diversity.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe ratings could be upgraded if Toro continues to increases its revenue scale and product diversity. Strong cash flow to debt and debt/EBITDA maintained at or below 2.0x could also lead to an upgrade.Weakening market conditions, increasing competitive threats or more aggressive financial policies that lead to weakening profit margins and cash flow or debt/EBITDA that is sustained above 3.0x could pressure the ratings downward.The principal methodology used in these ratings was Manufacturing published in September 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1287885. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Headquartered in Bloomington, MN, Toro designs, manufactures, and markets professional turf maintenance equipment and services, turf and micro irrigation systems, landscaping equipment and residential yard care products worldwide. The company also manufactures and markets snow and ice management products and rental and specialty construction equipment including underground construction equipment. Revenues approximate $4.0 billion.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Jadijhe (Gigi) Adamo Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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