TITN - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the Titan Machinery, Inc. Fourth Quarter 2018 and Full-Year Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. John Mills of ICR. sir. ahead, go Please

John Mills

Good fourth and conference quarter you. the call. Welcome Titan Machinery fiscal morning, thank gentlemen. ladies to Great, XXXX earnings

Chairman Time. fiscal everyone out approximately should On are access which to Kalvoda, from went today release have ended Financial and for X:XX January earnings Meyer, XXXX, the Chief now the at Mark quarter CEO; am this By the Officer. morning the Eastern and fourth call David Company XX,

it release, This is on you webcast have as the If Titan’s available ir.titanmachinery.com. received Relations well. Investor at and be of website call available tab the will not the being Company’s on a website replay is

now Titan’s Events and to can today’s a take In addition, the We providing website click we the the on and button prepared accompany you are IR tab going to and by presentation. to the you on suggest will it presentation presentation Presentations remarks. you access

forward-looking see on Factors statements would Risk future not section upon presentation should You remarks identified more Except statements applicable will of those and make results of in today’s guarantee XX-K. the cause as complete Harbor risk measures be management most risk measures, and undue non-GAAP projected Form from questions. underlying maybe of reliance a and made call. ongoing assumes inherent could the analysis results on be These in a or performance, Titan’s the on comparing statements We in obligation basis. to law, therefore may discussion update These management transparency them. in period-to-period. Titan’s not no Titan today’s adjusted actual are filed that These these Please placed current detailed to by financial discussing forward-looking additional based during to be greater we’ll contain to involve can of factors including your everyone the believe any like that statement. those do differ Report Annual note more expectations statements release financial prepared that required uncertainties, in contain recently materially including results forward-looking response financial call, may when and the that Safe facilitate our adjusted statements remind from forward-looking statements. performance forward-looking an on any particularly slide two factors We and

financial the prepared We call reconciliations have non-GAAP last measures today’s included remarks, most the financial your The today to about questions. release. conclusion will GAAP of directly we open measures at and of minutes, the call take will the comparable in XX to

Now, to ahead, Mr. Company’s I like Go David. CEO, Meyer. Chairman would David and the introduce

David Meyer

fiscal morning, of Thank to you, Welcome John. everyone. XXXX our Good quarter earnings conference call. fourth

slide we a presentation On call, John prepared you you mentioned, Relations the today’s our access I follow help remarks, a provided of on our provide summary financial review assumptions. As which at results, Investor of Mark quarter XXXX each ir.titanmachinary.com. updated today’s will of can tab to our and review segments. then modeling the will then of of and conclude fiscal fourth overview for results an business for our website with

to results. turn financial overview full-year you quarter fourth If and four, see of you will our slide an

same the versus a period quarter prior million million to fourth up $XXX revenue $X adjusted of in compared to pretax was year. Our million, year, X% the loss last $X.X with loss

with $X.X about we which year. billion, For even last was of revenue the generated full-year,

inventories basis; XXXX, demand expenses domestic, the additional used loss results million versus structural which reducing match our structure. primarily activities Our of will Throughout loss $XX the new was operating operating with as provided restructuring adjusted established of operating adjusted equipment year. net million. at operating we current markets and for full-year, will by market on cash accelerate fiscal $XX.X reduce expenses by coupled the improving our prior improved detail segments. plan now of stabilization worked and million $XX.X fourth quarter three levels annual our our to align I foundation gain $X.X profitability We fourth And reflect quarter approximately In flow have pretax current demand to the strength. for million by completed successfully in environment. we our the our our the and for was provide

prior our and primarily domestic of fourth Our we plan. than International by yields the segment. restructuring and expected Overall In revenues modest equipment five the overview closures, store an sales On and the our segments, our versus domestic quarter, Agriculture saw same into grew replacement parts which Construction saw Agriculture better the slide is demand previously announced segment. service translate improved year. that were of fiscal driven quarter decline, part of

prices level point Net experiencing are we cost will of ranges. our current efficiencies major yields, However, areas anticipate is expected ag-related lowest our expected from be of within to changes improved across to The investment don’t increased decrease uncertainty currently XXXX. centralized trade remain these footprint. our higher its Producer effectiveness to expense X.X% abnormally dry reprisals and/or challenges store may and greater primary vary, Crop positive ahead. possibility And are U.S. to and farm creating delay customers. year grower are focus. will additional decrease ag to but reductions since We conditions by the improved profitability. of further market that fundamentals the tariffs productivity and portion creates another income for response XXXX to

and leasing We’re well-positioned used new equipment with late flexible model and with inventories options. purchase

with equipment extend and are cycles to investing our ag service of choose customers existing investment used increased fleets, precision and equipment to and We in solutions higher to mixed in help and yields their duty we achieve the support, parts profitability. better but field also have data

an slide to our finished, our overview fiscal see with segment. Construction XXXX revenues from Turning down domestic of consistent Fiscal you’ll six, X.X% XXXX, expectations.

in our in growth of rent-to-own major growth pockets as contracts. metros see increase to as by continued modest rental an well have We driven

energy-related and spending. government increase seeing improving by Midwest in prolonged challenged prices, an projects continues local driven footprint be our to modest oil ag we’re by the Although recession

oil growth, economic spending in levels, or a Construction solid territory XXXX. our increased provide and foundation prices above for Continued will current fiscal growth infrastructure in at

We’re this with to demand. inventory support and favorably positioned the meet product capacity on-hand

crop Ukraine. climate operational countries across been segment throughout continue ag improvements further precision an ready been to demand for to incentives take the We demand responded financing have of The rewarded in seven, for in returns. Eastern equipment Romania, investments our of have to Romania modern even better been a the construction customer in Ukraine sales strong European true territories and have of of machinery territory tax exceeded advantage funds equipment Serbia accelerated and of for implement yields. an our horsepower improved their International growing within has slide The these has business ongoing two European the they’ve for availability achieve in On environment. our agriculture high we Growers and equipment year. and Bulgaria, expectations and Overall and overview interest same with increased including EU Eastern markets.

require our availability. service our demands. equipment inventories our meet and increased heightened for improved parts especially We to product with expertise these fleets, Along increased build-out to upgraded footprint demand, support their our and have growing customers accordingly continued equipment

We have fronts. both responded on

and front-line to onboarding technicians. from additional We’re conducting leadership product training senior support

inventories and also analyze diligently optimize to parts working reduce customers’ downtime. our We’re to

a higher machines of the field to and to to the capitalize remains population strategy Our customer simultaneously build downstream product and capabilities capacity support. in required invest in margin,

for conditions we market a and our across both are investing Domestic and In invested are wide uncertainty needs. grower segments. mix growth. products aggressively current of stabilized key to summary, equipment growth Construction demand We causes maximize in have fundamentals profitable Ag future operational to we remain. has to our And several future support meet targeting three more rapid opportunity. match we to International improvements our this have but

Titan the for Finally, and our I United our Company. commitment both the States your wanted Europe team and in to customers to thank

I’m Titan As exceed projects, expert to the while will you’ll to an year customers to be as work expectations into type Machinery. and even they cost effectively. season new running you confident or head turning them Construction planting their of keep build strong our productively team the we a

Officer, Kalvoda, Financial financials. the I’d to Mark. Now, our like Go Chief over ahead, Mark to call turn discuss to our

Mark Kalvoda

David. Thanks,

to eight. Turning slide

Our increases offset in which by fourth compared was X.X% quarter last increase of and an quarter-over-quarter, of XXXX parts X.X% all decreased sales service was fiscal XX.X% slightly equipment revenue, for to and total increase across driven $XXX, increased X.X%, equipment in three the year. by our segments. revenue revenue Equipment respectively. The business sales our

store Our negatively restructuring was parts impacted closings associated our service and by XXXX business fiscal plan. our with

in increase our the increased rental fourth quarter, primarily other inventory revenue Our due in in segment. Construction rentals and to an X.X%

margin our current to million the period utilization quarter year. the to dollar gross the last roughly was slide increased fleet On $XX quarter our at rental year-over-year profit XX.X% X.X% flat by for XX.X% nine, profit for gross to by in same compared and and Our relatively higher a margin XX.X% higher of flat our revenue was the service change remained impact revenue. compared to at offset of which a included as margins profit XX.X% higher gross percentage equipment mix, compared in equipment parts

fiscal million operating by fourth levels our Our quarter commission gross XXXX achieved cost on of offset million was for largely to from sales. increased by restructuring the XXXX, higher $XX.X savings $X.X result plan, of the of somewhat decreased expense expenses from profits equipment which

compared we completed in points $X.X improved reduction outstanding essentially equipment year. to which basis operating and convertible last XXXX. same levels plan be in million have notes. average due restructuring last period decreased inventory the Overall, our lower of or bearing fiscal of interest is expense all the Floorplan the primarily to margin quarter other period place decrease a XX.X% to and expense the XXX will expense in in balance in the interest a same fourth quarter. for fourth We senior our our as compared year, by our This

to million. represents For adjusted $XX year. XXXX, EBITDA compared the quarter of fourth an the fiscal of increase fourth million was last $X This of quarter

of to and fiscal gain December net net the Act million presentation. that figure $X.X fourth as XX, occurred million $X.X XXXX million loss income a net EBITDA fiscal can in for tax was find $X.X the Tax Jobs of $X.X reconciliation our quarter including of benefit In non-controlling interest XXXX XXXX. loss non-controlling the adjusted on a fourth including related of XXXX, result You to quarter allowance. of enacted a interest quarter the adjusted of valuation million slide the adjusted compared The to Cuts and appendix excludes adjusted a fourth for our

the charge For Construction a charges, the the excludes impairment within offset gain to primarily $X.X a which of and related assets by XXXX, fiscal of of segments million, also the recoveries. on adjusted the fourth amount long-lived reflects quarter non-cash Agriculture insurance

items non-GAAP share that certain slide share adjusted loss diluted and in This the of per mentioned of of adjusted as $X.XX gross that metric the loss fiscal rate, was appendix year. $X.XX parts, just XXXX, in profits excludes reflects which per non-cash the operating the fixed to per to our tax rental share, ability our quarter an table the bottom a for and benefits Our diluted compares the reconciliation costs. $X.XX which outlined presentation. see page, the service, you’ll the absorb the of and of I fourth is absorption At to last

our were XX lower expenses, is pretax reduction of our compared Ag pretax absorption quarter. the plan. an significantly improvement expense. earlier improved improved costs XX, to results to quarter income and fourth to income notable, see slide X.X% overview which pretax On to $X.X period, margins $X sales a stores in and equipment operating the interest quarter restructuring XXXX Ag our of our the for adjusted adjusted year our million. of with operating the segment fixed loss prior Agriculture result in associated primarily of increased the interest ag to segment this million XX.X% last compared of year, XX.X% fiscal closure to for floorplan year for expense. considering Our you’ll is lower due an up the adjusted compared floorplan The lower

certain which adjusted of footprint. our markets, year. same improved the is our compared primarily fourth quarter positive availability driven our were of revenue in prior build-out the our due loss in loss the segment increase funds period compared equipment year earlier, fiscal expectations period. interest the million exceeded million, mentioned was expense and to XXXX, of ongoing the our sales an X% margins International Growth and increased EU subvention inventory position. distribution were Construction Construction lower last result the XX.X% was our In in and markets the by to floorplan for prior of and $X million $X.X expenses $XX improved plan; year. restructuring crop of International continues a lower pretax our Adjusted be to our to conditions segment pretax compared the As to

pretax loss as result as was pretax year-end due of the to adjusted $X.X well was a to of year Our prior year. quarter loss in of adjusted costs of an $XXX,XXX compared as increased the reduced ramp-up decrease the level stores prior period. associated partially the with manufacturing a expenses, additional incentives million, in achieving to fourth opening compared This

Turning XX. to slide

You’ll full-year see year lower in an as revenues. revenue improvement overview slight parts equipment compared and revenue last was service revenues was of offset our Total results. the to flat by

slide X.X%. down was million, service equipment full was parts year the and down to our X.X%, full-year the For On profit increase gross X.X%, up up and fiscal a year, prior were X.X% period. X.X% $XXX rental compared revenues was XX, other were

increase last bearing margin Our XX.X% same operating margin higher compared a revenue. points as equipment to and equipment Operating in revenues. and or increased lower expenses restructuring primarily decrease our XX or year. revenue average decreased $X.X expenses were interest to of Floorplan debt million service savings, a to higher to of percent decrease the in from compared in mix fiscal expenses this period on the the as that We to were basis of revenue million for achieve compared and gross fiscal expense year full-year our reflecting the the resulting the declined inventory convertible our despite revenue XX.X%, other prior Operating to levels cost rental in of X.X% due parts, plan. of due period. percentage margins of XX.X% profit interest was a The $X.X XXXX. higher to XXXX able XX.X%, by

full-year $X.X interest adjusted the $XX.X for adjusted was non-controlling million XXXX, net including of of full-year compared million our fiscal XXXX. loss For the loss of to net fiscal including interest non-controlling

$X.XX adjusted $X.XX loss per diluted appendix the was figures of certain for adjusted the the year. non-GAAP per fiscal as outlined presentation. prior in reconciliation Our to items compared in share table loss to in share adjusted slide XXXX These exclude diluted

of million Act Tax As to offset to that with $X.XX reminder, year expenses a adjusted diluted tax benefit our restructuring restructuring were the was realized related fourth fiscal excludes partially share income by fiscal loss in the allowances associated which in of million our per our $X.X tax $XX.X quarter adjustments XXXX valuation the of plan, and XXXX.

year improved Our XX.X% the absorption to period. compared for prior to fiscal XXXX for XX.X%

to million $XX.X adjusted million an of was marketing adjusted to pretax million These to of XX, provide XXXX last adjusted decreased Ag expanded equipment was segment compared and and store income X.X% year construction last revenue prior with of $X.X compared due for loss year. Turning And the compared XXXX. results pre-tax associated were $X.X million loss same our adjusted last full-year loss decreases fiscal construction to the the fiscal restructuring partially aged decreased inventory. revenue period year. our $X.X pre-tax X.X% slide closures we year. to Ag pretax

to to million Our adjusted and International year. XX% last revenue pretax increased increased $XXX,XXX our $X.X income compared

Turning to slide XX.

of provide XXXX. balance of million of at We we an end Here, January sheet of as the the XX, had overview our cash highlights year. $XX

in used inventory. million inventory versus minutes. on the equipment, few decrease a million an new $XX increase Our equipment I’ll flat offsetting position essentially prior $XXX more year equipment with inventory in in at was a our substantially provide

reduce million focus to flat million on fiscal million improving assets of $XXX remained our in plan Our fiscal XXXX. to as around the end at We results relatively utilization $XXX the fleet of to XXXX. rental at we fourth our at $XXX the compared fleet quarter end

on XX, of $XXX outstanding lines January we of credit. of of had floorplan As million XXXX, payables million $XXX floorplan

our We equipment capacity in needs. our ample have credit handle to lines financing

We since senior healthy convertible of continue a worth our of and a XX% have notes of maintain XXXX. total-liabilities-to-tangible of X.X to $XX fiscal or ratio beginning retired million total the net

remaining fiscal notes payable reflecting for XXXX related provided changes and of was flows senior million. in inventory changes As outstanding our million, an reported the value $XX primarily for manufacturer XXXX of of floorplan Slide cash years balances. by XX, overview amount of net The GAAP activities XX operating face XXXX. in XXXX, convertible cash operating fiscal January provides $XX.X was

by adjusted activities, As flow financing part of activity. inventory floorplan we provided our operating cash all include equipment including non-manufacturer

for reduction non-manufacturer adjustment XXXX Our $XX payables fiscal floorplan a for million. amounted to of

end adjusted operating enables operating million full-year of fiscal inventory adjusted fiscal XX.X% our XX.X% financing reflect for net $XX to to equipment Making these decisions. show flow of year. We our in cash. prior changes prior of our in to cash The our from XXXX fiscal constant the retail net cash inventory equipment inventory. adjustments, as the in and $XX XXXX. due and also by equipment million provided X.X% the from the fiscal by represents The higher pricing end provided inventory was activities to cash driven our equipment $XX of XXXX provided a activities the significant exclusive in operating primarily This was fiscal year decreased equity adjust by and flow compared and of use for million used our activities us cash as of to reduction, the aggressive equity XXXX

ending in shows which to inventory XXXX quarter, chart outlines position we which our like from brought Turning fiscal of increased This to bar inventory shows years, million ending fiscal in new year-end an The a for used our of equipment achieved fiscal fiscal XXXX. inventory. slide $XXX inventory equipment turn end million, five a prior fiscal our the XX, equipment a inventory update to position of and equipment represents trade-ins compared in increase current provide for XXXX. I the our inventory would on prior quarter. $X decrease chart including in notable equipment year for our slight the QX The XXXX

happy on our balance our past our segment. four improving years. sheet have XX% end inventory This Agriculture X.X amid our progress Since on we coming XXXX, turns a fiscal improve the driving years turn through a on operating flat black inventory to focused diluted In fiscal shows in fiscal turn by XXXX annual the modeling in for we are XXXX. in turns level are on reflected a XXXX, the nearly very are assumptions. approach At with through prolonged margin our XXXX, Consistent prudent the year our driving model. sales and our and times times at EPS segment for inventory XX total revenues expert revenues, to the Slide the inventory is year-end practice providing reduced We we’ve over the versus position trough modeling higher significantly higher following assumptions of moved chart. XXXX. up X.X with team fiscal of inventory line to this fiscal forecast management equipment year, our providing

years growth four by cycles in and long-awaited We and our If X% our of business sales segment X% first Agriculture in our to be Ag low to range be meet X%. up marking expect flat prices. for segment our revenues stabilization been revenues construction the will perhaps the have to to segment and in burdened in expectations, commodity segment, that milestone, our some construction revenue it six for these years improvement

growth be XX%. International of X%, our We segment up to flat also XXXX segment to expect fiscal sales sales following

fiscal modeling in be finally, for result the margins range margins further for $X.XX of full-year assumptions improvement these we to be range share per from reflects in to projected to of to Our earnings the of expect X.X% equipment assumptions, range And is XXXX’s $X.XX. in as X.X%. This equipment margin of the our a X.X%. diluted modeling

country tax of a profit We by expected and is consolidated this certain XX% domestic the enacted well segment. loss EPS are result applying effective with an loss within of the as and on The annual foreign recently legislation and when profit generating as mix combined our range. rate expectations of International rate lower tax

and valuation jurisdictions. Our that I annual is this to exacerbated allowances and by within loss the is tax that mix tax fact changing rate we rate. certain also consolidated this stress have effective an to profit is subject effective want tax

the tax quarter comments future and now our concludes to may tax effective on the quarterly loss we year, jurisdictions. the Operator, question-and-answer within call. for basis we you through rate profit on as a progress of income This by mix seasonality session various these vary are on as fluctuates We’ll prepared our tax for calls. due call. Our update our expectations ready

Operator

you, Thank We’ll take our caller, Craig-Hallum. [Operator first sir. with Steve Instructions] Dyer

Steve Dyer

farm quarter down income depressed Within with sentiment Ag better, buying perspective guys. despite here? equipment to prices you morning, of or it are is sort getting the be it is forward? and again Ag, sounds we Good pretty of is What, a did like it need up of getting that a I going to like how sort very corn sort five just little last expected corn I from start that farm years, you after modestly Thanks. remain fact mean, frame guess, of bit again. would

David Meyer

cautious think real out I Steve. there is there, a Well, optimism

deals. quoting is as by our what replacement happened This We’re quarter. in real fourth evidenced demand

So, that’s I think positive.

ability going which given to some at we’re that to has growers’ of think, take trend them the of yield from pretty of demand. I this increases, advantages standpoint, it’s been think -- impressive I look replacement

optimism. there’s we manage cost what cautious really, talking So, increases could the growers they about, and talked business. productivity, a yield I about can are the how But, they I like side focused on of they’re think think to do

you’ll current that level at of continue think prices. I to see this commodity

Steve Dyer

of visibility, an tough can of and you of don’t think this your good had do something guidance last conservatism little a year to more flattish and lack again? or sort impressive year your year. part comp modestly up just on for Is obviously, or is that that International, Okay.

David Meyer

see continue year, so be that that good. some of little be that said, we we year-over-year because improvement, on a would can and that think kind same those time, and we maintain improve really I XX% is to momentum Yes. happy bottom-line if will increase last increases something bit and with Like the at

Steve Dyer

lastly, I next a then, from mix And Yeah. sort benefit noninterest-bearing this interest continued was a of you down guess nicely, floorplan year? would perspective assume that on

Mark Kalvoda

should been think was help from out couple from the benefit pulling a some that start inventories that us our our that rate here the as cash happening in of related with we generation drove offset out out offsetting and interest I significant have also the there’s in a fourth of down it rates the is are fourth What going somewhat there quarter. payables some expense. had That increases of to things point. floorplan with we year. higher that that there But the rate standpoint. It’s some quarter

lower So, think some to offsetting level not at the we’ve have decreases interest floorplan. as but much go expense, we’re I going forward, also of of couple we’ll not as in inventory to reduction and rates as the years in that floorplan higher seen last our we see of the tune of the

Operator

Mig will Dobre RW [Operator Baird. Instruction] question from come with next Our

Mig Dobre

would thinking years, to as out was kind and it is wondering want you am I’m gentlemen. four but declines your and how three what years. older about that business, maybe about I years to -- about business because And parts only we’ve I what’s in this fleet call two this fiscal not than you it three in service. four how you’re near-term imagine Good or parts I look thinking embedded and I ‘XX exactly if morning, of wondering I may. in talk seen outlook? of service, mean, into are

Mark Kalvoda

Good question.

first thing ‘XX -- first all, is what’s we’re and the going of at as is closed the partially last think throughout first if assumptions second in looking will have headwind, quarter. remember into the I that kind quarter I our through we think As you have there, year I year of we’re stores to and and answer that the partway certainly fiscal to

start the in continue what’s I likely here to numbers part at will X that that around embedded -- mentioned start next closures some the continue, that anniversary service in into we’ve our kind there, to we year parts quarters X% the of that softness service So, will that expectation. of as first the year. is out will there But, some you and from for offsetting the our and couple older seeing those think been of into we were things territory last getting parts and of is think positive and getting fleet I and to

if with supply having is business. some you that of PDI equipment warranties pressures providing does will, the the on or thing as of we headwinds, going been higher other or overall growth sales in level a sales us some will help not our we That last in service less our service parts or higher parts those growth service The new have growth. in moderate revenues, as business level well or some and a like in have with in helps years and the those and down four position five on of

a some and this warranty should of more on and there. predicated have behind will far kind is their still in out latter have half -- or and that that of of here to asking back of then if level some but service -- cut going the as PDI start in of farm as lot parts fleet us back will, maintenance for part I years down where even work having course second think their part so, we first those forward. year. And the then, year lower the And coming of of the it a of of I positive challenges the or question was So, the you not the having of cash our decent they and and skimp, having they customers some think,

should in business going that our business we going some having see forward. crunch tailwinds part cash forward So, of barring situation, as

Mig Dobre

out was So parse fourth maybe down business you service the store Can down the core X.X%, how quarter, decline is was X.X%, to looking related how this of parts much if we’re at was essentially, operating? closures?

Mark Kalvoda

Yes.

did a it of stores. closed same did those those on very a call to like a was cannibalization look that some care is team in customers remember, stores. you store -- parts and due a If reverse service actually up those areas We we basis, where taking at our job of actually of on bit. we closed good But, little

So, same those we did from our closed in benefit stores. store numbers

to if -- of is of everything hard that think which that an stores. basis I we’d our was stores closed much kind kind kind we And to all overall, of at out. would But, think, say look affecting I closed those call of be walks, the number. X% if to I it you on it’s of kind parse pretty didn’t it that have due of X%, even kind

Mig Dobre

clear to understand I’m think you I back ‘XX flat have this do the the you’ve spend year? ‘XX, you’re business sort half for the enough So, you that of half of can get of just in front similar this, have in but on growth headwinds so to going

Mark Kalvoda

I the think will I good think overall. mean, so, in position I Yes. so. for but service we’re a parts full-year, tell, time I think grow and

Mig Dobre

new conservatism, just than it guiding extrapolating lastly lot in And to growth thinking me, color is the looking what I’ve looks not there frankly us there. here, All equipment sales, of for what And used? if give you you’re X%, large are right. X year-to-date ag how seen then, I’m up a retail to. your ‘XX some guidance about more and Why for growth I’m fiscal Ag inventories when at

Mark Kalvoda

first term didn’t and year. that us we’re X.X is from the we think target, moving growing this of question, nice target equipment That public I really X.X any a inventory, to toward far last year. So, on formal your focusing What here as for that was that this part of now term. move kind as provide

maybe business getting turn. up forward, certain to times areas X.X, that talked X X.X, high as in before Going X we’ve our that as of for about to

going at, the levels year keep don’t given this to But, starting progressing inventory the next towards we’re think that think for I I anticipate moves. any that. we’re major year, out we

I think, it will don’t come equipment down, but any moves major expect we inventory. in

So color on that’s some levels. the kind of the inventory

over of talking what to some far improve just consideration strong that guidance had OEMs, finish probably ag less for As looking they’re We had far next year we’re little is revenues as X%, took we particularly it going the there, about how we’re side, on out to big a to as X year. we as where our than at what which into our there.

a that ours may think little I have bit. brought So, down

I think consider they numbers OEMs, their OEMs, of they’re providing out Canada also part -- as that they’ve got is there. the there certain

into as take think consideration I I have to So, well. that

is the we’re to guide a around. for, this think year what for prudent to X of and business we kind number X% our So, planning

Operator

All right.

Our next question Maria William De come Blair. will from Larry with

Larry De Maria

of you’re we’ve given of that in material forward is increases push price kind expecting down to equipment. tariffs kind caused cost inflation customers, that what Titan OEMs? those your through the of seen what curious to the have higher come ability your And cost Just

there? Thank I’m to you. curious So, thoughts hear

David Meyer

have, little it’s just Well, a early actually in Larry. to going that’s game the announcement to tariff after impact the the steel

that as our of years, the kind we level. anything, on, that and and if typically, at probably much annual impact XX the increases ability passed major they’re XX help that’s the system. increases waiting tariff we’re going But, system, steady current can. higher year-over-year it been to we price of to and hopefully, that. typically experiencing you inventory a too that continue be move last I impact to and unless through think, over X% to But is, that we’re they to look X% that out helps positive we’ve And not do the steel pass see. If than So, to just been all on, going we’ve so get that -- to used into pass of has our

tariffs the impact of more equipment So, cost. wait-and-see the I’m thinking a on little steel

Larry De Maria

Okay.

things So, price guess, I think agree do be the and it and the used, down help to seems - nothing you it now? should coming that manageable or increase and it’s of OEMs in has from like been terms

David Meyer

agree. I

very be yet. think, then manageable. in it’s say, yet, we early going like I anything it’s And seen I to that to as a reaction game, haven’t the

Larry De Maria

when who now spring? mean have next it then, also use equipment thinking the whenever Is and customers you’re or the And breaks about your that knows? are overgrown is does planting are just secondly, trade question, early five of to level Okay. on in that and they’ll equipment season, years and second stuff, the buying but And so seems use breaks, thinking that you’re issue what they as because an customers about farmers which the potentially concern your want that tariffs, maybe they dealers in the talking tax with of just now be place to they the and tax buying to?

David Meyer

Yes.

are I little bit a of tax less probably breaks think current level the of a their at concern income.

head So, out RINs farm with going happen now, NAFTA retaliation right if to think, you ongoing and the potential look and RFS what’s discussions, out to program tariffs. we standards Where then going we’re with don’t yet. there, out finalized the to what’s a these there on going credits have I

think yes, weeks I timing out decisions that in of So, and on the their there. few weighing last the just decisions is definitely the

meetings this. a think that these and trying also. think, volatility up And I’ve lot. more they thinking a cautious we’re to and they’re of typically And to stuff comes bit been I and how organization yes, manage farm I few at little Company so, word looking the different So, a really going as through that’s a definitely and

Larry De Maria

some that it trying bit and incorporating and thinking here, that think weakness, that or actually the we cautious? is could I’m maybe if is some issues move cause more this cause safe little like So, understand guidance there one just a you’re some your little needle to say really around or of you’re tariffs incrementally just concern the maybe out X actually way could another going volatility to a that negotiations trade these are of in X

David Meyer

current in this think, based the are the I is commodity where on prices now. fundamentals No, more right just

We’re X.X% farm seeing income down year-over-year. like

can think say significant stabilization, liquidated I the or beans where don’t I from weeks, of to the continue to and we’re what’s they’re then, the storage I think there, better which of we on-hand on-hand good. I the amount farmers’ see some going willingness I out three large I’d our this available yields underlying been out going the uptick But fairly lenders definitely say, getting really four think really change soybean of -- I part this going about to think some we last positives going better think And is to and some levels think make getting beans on-hand out there’s yields with of we in to the purchases in We to the standpoint. keep anything the and more them prices, keep guidance like get lot let So see the but based work of the year-over-year things? an and say a with And trough of also stand really there. lenders to it’s over any as I’d financing it’s this in is season thinking with our like there. to ability probably the I’d So, low to And say be capital have there. been. the uncertainty But, farmer’s the of what’s on there. some been out

farmer think I the the get really think what is want aggressive they that’s from are into that’s bottom-line, the what So telling to on about growers standpoint. I falls how lenders the CapEx

Larry De Maria

you that goes or question, something right thoughts I’ll like then customers And XXXA hang talk that the that away that going seems up. final is it is Thank issue last for your about just if on you. XXXA Thank your an sorted and Understood. forward out, and now? is answers.

David Meyer

Yes.

just I with part, what -- little is bit. -- we think resend think they us of a just for see the happened that basically the I most were

don’t January was winners retroactively going going to and first some is go it stuff. think back February, losers. back year there some in and they to have now there that the and near So, to But, is be I disparity

where going crops far impact sell So, there I don’t fairly you’re you you crops. away, your probably as of going to to the be each level sitting as do or depending sell on the think be have it’s is but always minimal going to some income and

there think way the right other kind few through degree going one are growers think winners, sorting I and to our that a I or be are some now. of

Operator

Now, closing Meyer back additional to I would or for over like to any David Mr. it turn remarks.

David Meyer

your everybody questions on our call. taking Okay. look and forward next our for answers, I time and to thank and we progress you update your on today

So, have a everybody. good day

Operator

today’s thank everyone conclude does That conference. for We their again participation.

Titan Machinery (TITN) 29 Mar 182018 Q4 Earnings call transcript