TITN - Earnings call transcript Q4 2020

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Operator

Greetings. Welcome to Titan Machinery's Fourth Quarter and Fiscal Year 2020 Earnings Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, John Mills at ICR. Thank you.

begin. may You

John Mills

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

On Kalvoda, the and the from David call Chairman Meyer, company CEO; Financial Chief are Mark Officer. and today

to X:XX By earnings the AM January XXXX, Eastern release ended this out the which now, Time. quarter have went third morning for should XX, everyone access fiscal at approximately

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

directly In you the the in to of access addition, accompany webcast to the presentation now middle suggest page. presentation is We going by remarks. ir.titanmachinery.com. below we're the at a Titan's information today's providing website prepared presentation The

You'll X see statement. our Safe presentation Harbor the on of Slide

remind would do statements, make management statements may may call. forward-looking may forward-looking as like Risk obligation the your and law, Titan's risk could recently cause We not These results Factors factors section actual discussion from of statements. be any today's update assumes uncertainties, in Except in release contain statements to are be to on management that by be projected forward-looking required no statements those Titan them. forward-looking to prepared made any the These Report performance, that expectations These remarks or factors most applicable differ and guarantee current contain response filed future detailed in questions. Form XX-K. Annual of a forward-looking more everyone on to based involve should materially additional undue that in not identified the those inherent risks and reliance including placed and upon therefore, of statements

can comparable including the period. measures when approximately performance, the greater prepared conclusion Please financial today's results your adjusted reconciliations on comparing complete a from at call The an We period the during take non-GAAP ongoing adjusted release. call, directly financial measures financial financial results to GAAP open particularly today's of Titan's most last and transparency we'll their basis. We've note in believe financial facilitate non-GAAP in will these more measures included will today, discuss that analysis to these of the questions. XX minutes we remarks and measures to call underlying

Mr. Now, to Go ahead, CEO, I'd company's and David. David like Chairman the introduce Meyer.

David Meyer

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

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

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

$X.X million same the the with period to of a period loss last prior a to pre-tax quarter $XXX versus was fourth year down loss period. compared year. to $X.XX Our same income was X.X% the last $X.XX Adjusted million $XXX,XXX in in year adjusted EPS to compared improving revenue

$X.XX For generated year, compared billion, fiscal the to of we XXXX. full was X.X% revenue which up

year. prior year. million $X.XX compared was $XX.X pre-tax adjusted versus million to Adjusted $X.XX EPS income last was $XX.X Our for the

In Construction year and a Agriculture, growth International. North three with successful the North America XXXX some across our Fiscal proud was challenging industry all and to the operating I This detail will is provide to of number testament a of the we face to segments, operating post commitment three dynamics, strong revenue more of now are America around able our team. be profit performance line. to a our solid segments. a bottom

On and Slide wet wet XXXX with cool late for culminated of followed with by an a customers. very and America climate delayed year and a our and extremely planting, a It North Calendar summer our an harvest. late is segment. X was difficult started wet overview Agriculture spring causing

substantial fact, and In and waiting units snow left [indiscernible] our to of business, number acres and corn Dakota spring provided support These Farmers North tillage there allow with demand for the are of tracks to to vertical was of South a this year. Minnesota, in corn unharvested equipment. at conditions beginning buying. for melt equipment now [indiscernible]

parts and be which with to categories the business, of service for from extended growth double-digit fleets However, tough both duty fiscal and equipment the our cycle age hours at with XXXX late in net realize the wet greatest and benefit June and USDA July. farm XXXX buoyed harvested commodity from to the income the by stronger that conditions, did in Despite XX.X% prices up adverse and good get forecasts programs, acres USDA earlier and yield be conditions.

to with continue selling sentiment by recent USMCA yield the and of continued commodity the completed of Phase rate X trans are surrounding XXXX program, USDA third low final Farmer facilitation offset unknowns the bill market balanced. payment of agreement, COVID-XX concerns remains trade prices and improve the low the a trends, interest environment. and Current US-China

in in in Replacement for equipment of new and parts support continued near-term. season which demand increase growth window upcoming will equipment we season, service will purchases, expect a the done preparation on catalyst of will the fuel to our a machinery fall, remain put tillage to service last this and our and into Further, demands see departments. spring an broader fleets there continue Working and due will use farming trends and business. parts compressed be pricing lack age the such technology we planting and stability as

forecast that potential given be COVID-XX is a crisis. X.X% We implications prudent near-term to and up the outlook income believe farm approach the net from the to year-over-year. Our uncertainty appropriate, market is

XXXX. trend equipment year adoption fiscal technology of will and growing continue the revenues replacement as demand equipment support such Broader in and to the precision

prior seen equipment. the of tend age in we've as customers of class extend cycles, existing market the [ph] However, to

to operation in put ideally is these we of are extended support place positioned believe favorable. more through Machinery service at that and network profitably take Titan parts we that care incremental returns repair will cycle we and positioned optimally framework manage customers the will this cycle when dealer ensure demand. We the Our and efficient

seen, you to As have M&A active we be more may continue on the front.

is contiguous and Nebraska to on Case three existing Xth. IH and our to our Sydney Dakota fit Wyoming, Nebraska Torrington, HorizonWest In quarter. which the dealer acquisitions perfectly an are addition North May Northwood, agreement expected complex the Imperial to and entered dealerships. the to locations that close profile Case Scottsbluff, and fourth North into These announced dealerships IH we acquire Platte in three-store in We

motivated We ag to an the future acquisitions to as do -- are looking additional see pipeline additional of we increased sellers. domestic in

economy, impacted infrastructure and equipment in we rental drop a for X, being prices. efficient until month fiscal profitability were is Slide Construction platform. an macroeconomic fourth by the with COVID-XX will to global segment. more realizing construction overview February commercial spend along Turning the The this, our position American our of across its quarter remain steep Construction business North Similar to of negatively through markets, improving you and see major stable activity enjoying pandemic, with to Agriculture, potential oil in our and footprint. with metro the consistent continued backdrop Prior global and our nimble the consistent residential demand fairly the

taking OPEC industry. due the coupled has oil of impact sharp in the will which However, to negatively the oil prices, decrease impact oil countries, created equipment within the construction production with war COVID-XX, decreases place a believe in demand we

for areas construction rural our prices in storage impacted the are construction addition, equipment. by commodity lower In rancher being farmer demand negatively and

a are As managing the result, driving focus business cautiously on profitability. with improved we the

in Not logistics, this be where segment in only quarter, locations core profitability advantageous Late equipment the divested our also acquiring of of Albuquerque, customer Mexico. New to operating we our will fourth we can leverage synergies. specifications in construction markets but and equipment similar supports fiscal and strategy our store CE

On European Serbia, have of segment, international overview and Bulgaria, Slide countries our Ukraine X, storage Romania, we the an Germany. within including of

by an results, of weather are not our European lackluster fiscal our Union undesirable economy. were we and overall intervention of markets, some 'XX in key with Brexit While year results negatively lack happy these European funds, impacted European

put in and good dry condition our warm a have rains cereal spring very winter winter. crops most after of in recent European footprint However, the

are markets reform relative Ukrainian continuing land countries Balkan modern, the invest legislation in in farmers and stability productive technology. as We are embracing in our center precision is seeing and front to and machines

ahead, Looking in markets. continue growth our opportunities we to international see long-term

footprint and markets, as high and we in demand the investment select While continue fund aftermarket for which the is this we availability seeing our global Eastern service with to Consistent Ukraine. European fueling high out into more has we in build horsepower parts become subvention products. are trend, in Balkan business regional Germany region, to limited invest and markets the

Mark, effect on migration. comments Before a including I its would I management to our customers dealer and our on to turn operations, update the on employees, system make like call address COVID-XX an over and few

outbreak We COVID-XX and we seriously is are that prepared. taking believe organization our very

our canceling and providing adapting social from options the efforts to distancing, travel, proactive customers. employees by suppliers air in and best our from vendors, access large canceling are practices business We CDC limiting events, home work promoting from

important to While during solutions and we've parts, lower closed technology, are spring staffed to fleets delivery off equipment, fully to temporarily provide and rental we customer our alternative facilities, using season. customers access service and this service our

of precautions We Homeland which critical the national are food is infrastructure. and Security our business industry, by are essential who us to supplies safety our customers Our ensure employees in Department of and support customers as continue alike. allows taking the US an to maintaining and to global operate we categorized and believe it's critical

are communities. operate employees. interaction, Via working spaces We of weather close support with the exposure to are the distances locations, an well to our on. contractor of farmer they outlets customers as quarters our located in due to populated our most are for believe Titan capabilities rural customers. departments retail generally our in-service we and to equipment have we equipment and Tax without customers between our field pandemic sparsely service able -- tax destination personal and size vehicles independently technological a dialogue to employees off-road active large minimum risk utilize close operate, and the large with positioned this service part contact. minimizing Machinery's Our they're

equipment and size investment highly planned which do for delivery contact. that that sales Our allows involve minimal making, and our engagement are systems variety customer process for of the a traffic customers and to not due parts of customer is

supply to parts to deliveries to maintain and high equipment. respect ensure stock our our to sold With ability chain, times. critical feel demand to of challenging increased regard our these of the high good proactively able service throughout to With levels we're parts, we've customers needed about we that complete on-time of

COVID-XX fiscal that will to XXXX and creating uncertainty additional our the our year-end believe temporarily it our introduce within withhold our we is we is industry usually XXXX provide Concerning that color Mark outlook, regarding assumptions reporting. prudent his XXXX fiscal in remarks. due to business, during fiscal modeling

As our North our within part dealer delaying risk also the our America footprint. mitigation efforts, we're new management roll ERP out conversion of system of

Our XXXX. a revised the of a in plan is summer more followed measured half this companywide pilot location system implementation of fiscal the by first with full launch of

global who an proud equipment infrastructure. the build and of uncertainty, to industries operators the integral are part time central this During who farmers of maintain food to be to supply critical and support we're construction

year call the to great in and the Go Mark. I commitment for ahead, the like I discuss States customers. and Europe to our to employees our turn continued their Before United thank a financials, over Mark

Mark Kalvoda

David. Thanks,

fiscal led Turning quarter. profitability during enough fourth strength of top-line our the parts X, during our to Ongoing we the sales completely experienced to X.X% a to quarter not was high the $XXX decrease equipment quarter, was business revenue in offset but margin million, year. XXXX that last improved and service softness for in total Slide to compared

current three-month lower within predominantly Equipment to in period, a our by driven and Construction sales segment, lesser the is International businesses. revenue our decreased which X.X% equipment degree during Agriculture and

to business challenges. Agriculture continues be by International within our and As David ongoing segments our noted, macroeconomic impacted Equipment

difficult the ag and categories in reflects quarter, XX.X% focus Our aging as fourth these within across parts revenue well segments on recent service as environment our an supported was respectively. strong of fleet the The and all in -- increasing and business. continued increased trend customer growth care by parts customer our harvest XX.X% growth

as result quarter. XX.X% is rates. the rental well a increase our increased and segment. of in this as dollar and an XXX to rental fleet in rental last revenue Our utilization in the year experienced X.X% from quarter to the over in inventory focus to in our quarter fourth fleet rightsizing in year assets fleet area our point due improvement rentals quarter our the XX% the prior fourth This Construction improvement in current rental We utilization basis other improve our

million On Slide margin greater gross the profit profit quarter. by These to our X, year-over-year driven and parts by compared increased XX% the quarter year XX.X%. a were our $XX.X service basis revenue by for as improved and to prior and gross increased margins proportion XXX points margin of to higher equipment improvements

increased by million for XXXX. the expenses to fourth of quarter operating Our $XX.X $X.X million fiscal

million increase impacted quarter majority Current $X.X were quarter our operating in current costs expense by impairment not quarter. accounting a quarter to of earlier fiscal year. expenses lease acquired XX.X% to expenses the year for with This year assets, from location, both million in of expenses revenue prior were $X.X related increase which were to transition the the compared of as right use lower with prior initial identified XX% XXXX our were and combined were ERP costs percentage after Impairment costs caused to newly in prior adoption the revenue The rules which the associated of the the the of fourth of year. quarter. Northwood of this

This to lower notes, Floorplan offset of $XXX,XXX X, period the resulting of balance same higher retirement million interest year. to to a level convertible the XXXX other decreased May remaining inventory. our $X.X expense was the from compared by expense due last the of interest interest-bearing and partially reduction

realized loss of as well $XXX,XXX to $XXX,XXX to The of income mentioned. income cost tax impairment a for gain adjusted adjusted ERP figure prior fiscal the of just of that compared the net In as our fourth $X.X the adjusted quarter. we an a excludes of and I year million quarter XXXX, transition related net valuation domestic allowance release

quarter compared diluted adjusted share for $X.XX fourth per an the per adjusted the last share was to earnings of fourth fiscal quarter diluted in XXXX $X.XX Our loss of year.

XXXX, compared million of the fiscal adjusted EBITDA prior million in For was $X.X year. quarter fourth the to $X.X

find diluted comparable of the to can the to adjusted adjusted per GAAP the reconciliation a presentation. EBITDA You net slide adjusted income income, and share amounts in appendix most

improved sales million, XX, segment to segment On were fourth quarter. an will for Agriculture of were see business the $XXX.X million. increase We pre-tax results pre-tax X.X% we $X.X income able in this strength in income last parts of year service compared equipment continued the our to Slide overview able quarter adjusted our but adjusted down this fourth achieve to in were $X.X you segment. to through margins to and and million

$XX.X last prior I bottom to from and increased improvement adjusted Turning was to million the margins over parts to compared The our same that improved the strong line driven increased This to Ag by prior compared segment, results also growth service benefited improved rental year. period. period earlier. equipment spoke revenue segment Similar our loss Construction million to $X year. the to year in X.X% $XXX,XXX $X.X segment, segment's the million pre-tax and to the

In expenses segment the condition year X.X% revenue was higher the earlier. of combined David a International in million. prior equipment as compared the $X.X $XX.X loss of in the The of fourth revenues the by discussed compared quarter of a to fourth with lower prior resulted $X.X year revenue equipment result fiscal quarter. lower A decline million was of loss to operating industry XXXX, million caused our

Equipment realized for and utilization flat increased year increase for service XXXX was strong rental our were will you compared double a XX, dollar and revenue businesses, digits from Slide up with see a smaller results. of driven X.X% full the to last the Turning our total parts an year revenue year, fleet. offsetting which contributions both year. Fiscal slight overview to essentially increased by

million, profit to service gross to businesses fiscal of XX, margin increase our X.X% growth year. points our driven full year increased compared primarily profit the prior year, in to $XXX.X Slide our On gross compared parts and was prior XX.X%. margin an metrics in were these XXXX and basis by higher the Both XX

or of fiscal the by period. full increased the million for compared $XX.X year expenses XX% to year Operating XXXX prior

earlier, full-year the result incurred as $X.X reflect costs impairments our explanation current in in quarter Germany to higher the million interest partial million resulting in notes compared expense year fourth that operations million of earlier senior of the full period mentioned or $X.X fourth in expense the provided full-year fiscal Restructuring XXXX. convertible interest the for XX expenses Floorplan months as were of savings and the addition XX.X% due from other the a a our increased primarily impairment $X.X and year. I decreased earlier. expense to the expenses quarter to to In repayment

net full compared million of the to adjusted fiscal year of year the million For $XX.X full our $XX.X for was fiscal XXXX, income XXXX.

per was for the to a prior Our share compared year. fiscal adjusted diluted XXXX, $X.XX in increase earnings $X.XX XX.X% representing

$XX.X million XXXX, million XXXX. fiscal adjusted For compared EBITDA $XX.X to was in fiscal

reminder, our a as the income release gains as As of ERP allowance. domestic cost, from valuation tax restructuring impairment transition adjusted numbers well exclude our expenses and

the adjustments found presentation. appendix All can of in the slide to these be

improvement from operating offset by primarily and higher our all across contribution parts segments XXXX our results full other fiscal a Turning to These million achieved revenues adjusted all and we XXXX. of Slide of as across to segment the the segment. floorplan for XX; $XX.X full is growth International three service as well were and three higher increased results income XX.X% last our segments results interest to year. year expenses lower pre-tax This we the compared expenses. $XX.X overall and million fiscal provide year Overall, overall partially for our reduced

to Turning XX. Slide

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

$XX.X versus in higher equipment million, of little XXXX January end the XXXX X.X on new inventory fiscal at equipment to the due provide declined a in turns prior prior I slide. year. the XX, X.X was levels more inventory million color the from year. an from equipment of fiscal The on inventory $XXX.X of next inventory increase Our will XXXX our to

million the the quarter fleet $XXX.X decrease size of will We fiscal slightly rental XXXX. end $XXX.X by end the the fleet our fourth to million decreased at of fiscal assets to Our at end compared XXXX. of anticipate

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

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

facility, of credit XXXX. October which Wells million million capital million working $XXX $XX matures current Fargo consists line in line $XXX of and Our floorplan

a working successfully been coming and weeks. within on credit current new have anticipate We the facility facility replacing the

more share agreement will We finalized. information you is the new with when

Our total worth liabilities a tangible net to ratio healthy is X.X.

a impacted by XXXX standard accounting As fiscal the fiscal of first in quarter lease normalize new was and the in which reminder, ratio a place first adoption basis went comparable into will the the of XXXX. beginning this of quarter on

bank Importantly, facilities. our covenant our of below X.X, ratio is is leverage larger which the well requirement

Turning on of the XX. used of in Slide The and blue size reflected and to inventories the amounts the new slide. red equipment are bars

down While ended our than higher the our notably sequentially, current and of prior inventory year over it plan. is level

turns to We in inventory XXXX. higher are fiscal driving committed

fourth operate half XXXX. graph. through the as we to our are on fiscal quality decreased -- fiscal solid the remains year percentage which end Importantly, prior percentage bars margins of over of seasonality. reflected healthy inventory year by improved inventory the of We purple percentages, the the would and first prior expect as end increase quarter again due year non-interest-bearing to an evidenced this In by sequentially XXXX, equipment year

XXXX by for $X million Slide compared an cash was flows and $XX.X provided The cash GAAP million activities last to reported XXXX overview years for XX of fiscal XXXX. year. our fiscal provides operating operating

as inventory reflect by equipment our of adjust all of activities, $XX year our include $XX.X floorplan provided including these activity fourth adjustments, in constant compared working operating provided part allowing our activities the came for changes cash operating by exclusive inventory over levels operating cash quarter flow flows million capital to down. cash equipment As us operating After non-manufacturer to adjusted in evaluate financing, million inventory, the in $XX.X activities decisions. we from applying flow XXXX We adjusted fiscal to financing in cash equity our and our cash equipment the adjusted million prior generated in year. was

However, year-over-year the due year full year that the higher a levels discussed cash inventory generation to I ago. few prior minutes was below

to XX. Turning Slide

providing in As the David are modeling COVID-XX this our earlier, due at business time. XXXX of result fiscal uncertainty breakout, as assumptions mentioned the our to a we not

noteworthy would year However, as business view items business you color we to you to fiscal our as look at for our some XXXX. point well provide like uncertain in how other as I times, these on consider for out

limited impact from of In segment, essential expect a rural growth are which they and Therefore, supply. maintaining in businesses. food crisis stable acres, global ag areas drive we currently populated continue could and customers as our we the a more farmer to to our overall turn anticipate are plant and Agriculture operating normal continue COVID-XX will parts our that help service in in to harvest sparsely levels

However, and it intact. chains part supply employees remain is healthy remain our critical

a X, That be having impacted and acquisition, impact result Northwood remember full we had for year. which crisis, is believe enter which expected our said, year fiscal completed their as of in of location, equipment to the any recently October from this revenues acquired considering this of XXXX, close we and a in into to segment fiscal assumptions customer negatively on XXXX sentiment in recently May businesses HorizonWest contribution these decisions. the business our account Both an do When their $XX most may of expect closed purchasing Ag on for which million our of XXXX. segment in full equipment is to closing anticipated approximately

cancel delay, expect slowdown the we as segment, prevent more prolonged activity. of Construction our a a could significant that given result very in overall a outbreak on projects or economic customer our impact Within well business,

single achieve we January Also that in of Additionally, efforts generated our New of store Mexico in fiscal energy help XXXX XXXX, in this the activity our comparisons negatively approximately revenue serve. location revenue $X.X consider in million of profitability but Albuquerque will to this the this lower overall as impact store sale divestiture oil prices David construction mentioned. negatively segment. will markets store impact The year-over-year

segment perhaps and Our challenges additional than faces domestic Ag our International business. more uncertainties

international our with in in footprint associated teams our logistical are higher Ukraine. There farmer at is credit are access example, with to the uncertainty willingness overall outbreak. of given and is COVID-XX developing there their Also, to to arise, ability these countries economies particularly the the already should stress challenges more Eastern farmers these economic For support regarding borders. put the European if dealing risks limited, liquidity financially due as the need on

Some associated models first of implementation will is include additional XXXX. be for ERP be ERP-related expenses project, our adjusted calculation to for EPS in considerations fiscal implemented the expected expect excluded $X.XX expenses now fiscal with currently fiscal which for half XXXX. We our These from fully about the of XXXX.

rate corporate effective fiscal rates loss within a which as represents due we seasonality international approximately various allowances. more as we have exist. and still anticipate tax, rate quarter-to-quarter will an long-term of We for to tax valuation normalized fluctuates mix tax that released and profit XXXX jurisdictions this rate allowances all our vary where Regarding vary XX%, tax now domestic expect valuation some

our We progress the will year. expectations as update on tax through we you income

that Finally, of level higher equipment earlier. I the mentioned a on inventories comment

We disruption today. any in aren't seeing deliveries equipment

sourcing in they inventory should will future help supply arise. position Our higher disruptions equipment any chain mitigate

begun already critical a have customers. to we addition, In volume our parts ensure and safety uptime high stock of for sourcing

customer stores enables provide on employees, protects our work the parts that necessary still action. safety measures. to are right We course have our to revenue need outbreak customer's the implications them they this to equipment limiting to and to initial be them is customer's business, but are some successful. our customer encouraged our during short-term machinery on access our We're that stores our of access continue to may and but restricting cognizant It by responses convinced our

for This our are prepared Operator, now session remarks. ready of our the question-and-answer call. we concludes

Operator

Thank from Dyer Please with you. Our proceed. first Steve Instructions] Craig-Hallum. [Operator question is

Steve Dyer

how allocation Good think remarks. Very you still about your curious On at I Thanks. your are you one for in prepared or you this are how a of Thanks. changes stock value, much are as down you capital guys. book can bunkered you that morning, half don't environment, to opportunistically detailed tangible looking for own but acquisitions? buy hand, have bit.

Mark Kalvoda

Good time for deal are while. ago. We Yes, some HorizonWest for looking has struck in been capital place The that we at morning different we actually allocation. alternatives that announced morning. this deal a

talk of we a think high we some allocation -- potential well of do Board we look repurchase. different the which So a value opportunities, during the But about in stock maintaining of as share with just share we and and times, lot includes these times. price there's liquidity capital the these our level uncertain

this So, I that's the think around outbreak. us be until of before we'll COVID-XX continue of more conservative gain in regard today that we to kind understanding situation

Steve Dyer

shutdown, what's level of bit supply. With so only it. manufacturing parts on sort I And flow? Got a little your confidence the side of Thanks. or then, having the other one me, much equipment either steady for guess, the Mark, on touched you a part

David Meyer

Yes.

So far is -- this Steve. Dave,

good goods short everything on, of they plank, some out on orders, the the And year back were parts getting those. we visibility come than things with really our in. upped our remarks, up, and equipments so, plan. coming like, And said good. inventory to our are plan, coming China looks is critical looked so on getting our coming far that products in helpful, as in We're at and on demand come stock high is pretty which pre-sold online, ordered -- So whole I we're we inventory. from actually we guess we starting and our our is

ample And looks I the we what started can with pretty first good. So, of off the see year like year, say, at least for we it the half were inventory.

whole good with So we really current and pretty level our for we're inventories really parts year situations -- seeing. probably much the feel

Steve Dyer

guys. Got luck, Good it. Great.

Operator

proceed. Our Mircea next Dobre Please Baird. question is with from

Mircea Dobre

guess, This and failed into guys. that data coronavirus is question. points it to take my my very a properly account. I the morning, Good there guess recent first occurrence, you. still Thank I I out -- understand most of

trended have color you hey, I'm I the give seen equipment canceled essentially So, or the have in I'm given what also uncertainty? of it planned be. wondering, gauge say, week crisis to look, or equipment some farmers us pre-ordered, the might sort you trying want And impact two that's the wondering, to on originally this weeks been any can take of sales delivery being how your later than to of past

David Meyer

fully Yes. well, I so as we're said, mean, now. right I staffed

So, departments our getting and all thing. work, are that's for equipment spring parts out so good a service busy there

and -- kind all everything [ph], bit. parts and probably let's come should the little think out thing see here service we see settlement, a instinct of to obviously of So, comments, natural like little said turned upside a bit, this the begin -- revenues I how it's we but down a farmers' in our

but So was customers that's equipment their on and put -- pre-sold that we're settled names it, delivering bought that. being there's -- out

one only good. we've to-date, think I seen is so cancellation far, which

site, when need typically look and get farmers and And their to we getting get the at the fields the they the see getting then equipment, think gets job job the let's going. done. their planned I contractors crop that

we so, that to anticipate still And continue.

backed probably staying seen look February. January if until the and are engaged. think I you've off at sales they the Our And industry, industry numbers, we really fully haven't people up things in were

is So, looking that good. income And say I year-over-year the net so it's carryover. pretty farm can trends were good good,

guess, we're So, I cautiously optimistic.

we But service people thing keep we side, keep the we out As parts and that be this is healthy the other this main pretty business is to going come going. our good. and

Mircea Dobre

asking I very No. this February, weeks. which is I last of for mean, is lagging, equipment much January and all the that. couple in specifically why I'm understand

point I you provide perspective. but pretty Sorry this that to if this, press think you important at on it's can really

David Meyer

the OEMs pricing, thing was days in just the that there at that. can look And on, last and the these probably -- business really a industries the continue And goes too is don't of a lot a there's as lot a and it gets we of you've two, three We of disclose another been in of month. aware customers typically lot that. done of and negotiations

loaded, back-end a every industry. that's So from the the lot like typical really day, good what's cash kind stuff of this written is we of whole of don't -- the deal, in

daily day. really equipment done. we we're So the still these, there really, And are guys selling the getting [ph], out Worse getting sheets. every job don't but sales we're have

people out day. the and sites, important we're every sales farms, in in are the Our construction sales who seeing

with I don't to It's numbers. those those because don't very a every that on day difficult pretty continue that. we So, numbers. But on the we're month in -- was exact back-loaded going track that

Mircea Dobre

your a more and take well. doing Okay. Can to at you're maybe Are any us what comment bolster looking Mark. on covenants liquidity you're the give liquidity to point? as question company color this position? preserve that down Then the little company's further a of for to actions there enhance the line on you here Maybe you, the

Mark Kalvoda

liquidities finalize weeks our couple looking that inventory things always as I as There's discipline, within situation. we weeks. credit than just at far expense advance today, working deal us should inventories. of discussions of of higher to certainly higher think and and management about that the levels. to be domestic of well. I our as the international talked level one facility, lot couple rates, a of a there's our capital. that a think internally are of working I capital with the and that higher some none managed And And we particularly And greater turns, should mentioned our business level allow where our managing part on -- in we're we're Overall, of a given pull and turns, down

on really that the we're ensure So capital I probably biggest maximize items liquidity. working our think we one to those the are three with that being of focused

Mircea Dobre

Yes.

I'm So specifically. working capital and on inventories curious

maybe you than year that said with inventory exited You more little you a wanted. the

point have patterns do And at see on OEM the about changed your to order need clear yourself you As exiting reflect where you year? order you're this this XXXX, in de-stocking? this for thinking to

Mark Kalvoda

for been us. of mentioned been more. have, it's the We We that in parts the and the think process we orders are plans focus throughout that of I on we parts in bringing adjusted a some here the are adjusting Yes, that have big the for so side, the has year.

the be more just-in-time here to to just we inventory there. parts But are on make on that chain of as that any don't more run we will So sure of year. throughout supply that managing equipment type there challenge side, move into the we

to point, that's that's would a at I I little think say pull it's that year, to uncertainty inventory the at think there. -- I be, us a up. ending it As turns, far very -- What we're as that whatever tough given the give this planning bit ending bit all little out is, with with X.X that our

to that year. this expect do improve certainly we So,

should current from flat little down be overall inventory on bit of So level to or we a able pull year. sales, even that maintain the a

Mircea Dobre

covenant. can Okay. you sorry, there mentioned then I Thanks. Maybe the don't And done. and I'm us you I'm help think

Mark Kalvoda

Yes.

worth. we a is that at our now. net X.X So, our We're sitting liabilities total covenants banks, that have for tangible with right X.X

And covenants It's that liquidity And just have good agreement that's and have there, of to with room close out cushion in kind banks. the new availability we higher of of there, our we're facility. bigger the expect kind in with So more around new We're rates measure, we if more the not you shape. that one testing of time. at excess have. even other should this very we advance is a there, will, a the we one that as

Mircea Dobre

you. Thank Great.

Operator

Our Rick question Stephens. is with Please Nelson next proceed. from

Rick Nelson

you follow-up really morning [ph]. embarge a have this in the and or of seeing? I down new behavior did seeing night COVID-XX, terms XX% XX% morning. last March, to if customer comment in seeing of sales, you're some could Good since big sales declines know used all that [indiscernible] I dealers overall you're Thanks. of equipment behavior since on which car that

David Meyer

I'd A like business of probably don't in more are I purchases, get construction we're that out comparison. high And of know farm, BXB items. our ticket floor traffic. also a said -- a lot comments, good we to These out consumer, Well, site. our we that planned or say, lot customer are don't of not business-to-business, the people to the we're sales times, so as a Rick,

a different like I not So again, business There out it's decisions, whole a there. model it's I think it's lot more of planned. spontaneous said, type

our just sudden, Florida, back the of Arizona, going them talking about were farmers get back where coming before recently and what just getting need, like talking hear, they've of a usually reasons That's back kind -- in our in their from for business ready the from customers fields, of been. equipment to commodity go about I all closed they're that from stuff. outdoor the all the one So, prices coffee coming ready restaurants, talking to in the But go, about coming are facilities. access Hawaii, we cut just coming shops to

So, pretty they've normal. acted

in these. If number look there's some pretty you COVID-XX numbers you give of at examples. like there, I'll cases that of the a in some some low down some of our -- footprint, there's

lot store Nebraska think, of is of Wyoming are those XX, North got This some a our have to three Dakota we really like XX South XXX. North cases. is XX, the noon I there stores count, Dakota, tougher so we've as XXX, cases yesterday, were XX, Iowa XX Dakota compared Colorado Montana XX, states head states in of like

the all. -- core variances We're out where I are to and everybody our think big dispersed are. some But that's sparse AG there. markets seeing due not really probably So how populations

is business the usual. farmers, the from as say, I'd

a little there, think contractors business with the bit the goes economy. I that

floods been looks built they've stuff, business-to-business, not get of there's something I to But some that need drives in enough their there's business. that. operations we're winter, equipment there's think purchases, last certain -- diversions project, for anticipate still be there's for some risk we're their going some to were some infrastructure that jobs like like like customers good want funded. fall There's still last I they planned I or fixed. that some [indiscernible] areas, pretty and say, that it

necessity. of just So it's a more

distraction. our this. want I we're is we and we're what distraction But I healthy out think customers as our prepared stay this So think seeing stay a through make get sure people we to and a that's It's there right and now healthy.

Rick Nelson

Perfect. parts affects Ags to now segment That's right you think that business? allowing your helpful, Dave. do How the And then, of that some stores.

David Meyer

this stay footprint, throughout times there -- Well, now right away do our to not in scattered quite of at can bit people and customers driving boxes have hey, all, all we on that somebody's called the of so you have pick drop phone, because people many up has parts you send by. hired a much our their tell the been

let your exposure you know call of out us for out up what we'll kind of And what in not the up. seeing first, instead we'll might of door or so back us basically up hey, it our them in have we're dealerships, need knowing pull you, what take dealerships hanging load come say, pick up front and the

we're what doing. that's So of kind

to not really, different And to the it's because minimize we're the through just much safe our it's trying really employees it's as have important at of the spring really happened what So end season, the right. before. whether we than just like exposure and keep day, healthy

And take to people. we want don't the unknown of risk

of know. our know, don't what Some know some we customers we

come to stores, in that's one expose of our good. Our and happen vendors, they not they

business their to service going tax and equipment So we at sites by that our farms [ph]. equipment probably on mobile trying the stay to do the from that. shops. out They're or construction way trucks, are they and we're and their service working big really half But the on they're they're on away our installed parts the

lot of So too. out way that a that's going

what a their of don't it's jobs So not interruptions, lot get really get like need we spontaneous to it's type to a they equipment done. It's see business. their

Rick Nelson

you're of right. right, late equipment the side, Right, used on changes any terms pricing? of in And seeing

David Meyer

No, amount last numbers two, three seeing good machinery people that pretty we're new the right. because years, industry even there's and wanting low a still been for

in ones now. in. are the seeing seems So about the trades back like We're And residuals the of level it priced returns back means coming lease less that right are not that right. coming

we're I So, good right now equipment, use and late that. demand there's say, good like seeing good model for

because, news near-term, I new the don't the the so So, pipeline and staying is pretty things we are like changing numbers low, for back a lot coming say, see limited. good into of industry amount the of still

Rick Nelson

Thanks good. luck. and Very Okay. good

David Meyer

Okay. Rick. Thanks,

Operator

Our next with question De Please is Maria William proceed. Blair. from Larry

Larry De Maria

I just being How maybe Good month I'm or cautious know Thanks. out just extending, say looking on through. they're where this conversations, figure differently. up I'm you conversation that ongoing about much I everybody. hope to are curious, that everybody the you the the let's customer is having. it guys because customers short-term what at safe. Hey, get how careful have okay more to have but from say, morning, you prior doing disruption and finish thought conversations look a changed, are let's a customer to ago they as are guess, now,

conversations changed, and the how curious have the So tone if materially? how to so

David Meyer

frustrated that's or probably Well, I prices. in kind contractors, to I of want -- of most weighing think takes the certain distraction tones level, continued think the the This anything that, but probably go they're is farmers to it on I more commodity from away think whether the They go. depressed mode. farmers customers, be of our than level this

and this phase thing. the trade get up of the good done up need The -- corner good, but the USMCA get China closer $XX. we've to to we've the So, to to a bill got that same $X, to is China at is soybeans got get getting closer deal, time, we

probably Larry, that's weighing right now. more growers anything, think than on I our

put lot going the is good on to goes ethanol on plants, what's of now, a of oil probably the into corn this low --with with impacting trumps eye and profitability think say, with we that prices, plants. a low the that's -- that I So, definitely there right ethanol I'd ethanol have

that growers is really markets. weighing COVID-XX because the more say, So COVID-XX, the they're in probably operation on seeing of much I'd not than farming the on their their

Larry De Maria

of placing cautiously how balanced I'm trying technology to prices ended also. year with everything, thinking But ahead, COVID-XX outside optimistic, understand, corn, negatively sub-$X.XX COVID up yes, talking right. it? and that sub just and would more we themselves to imply $X that's sort be negatively due be but more trying I fairly guys to obviously of was wouldn't that are -- the Well, than anything take commodity $X beans, guidance, challenging get your looks, upgrades, you [indiscernible] would probably to else. would you're how would than where mean, I It about... that think I balanced

David Meyer

and corn right. direct I horsepower -- that high Yes. a there's price, equipment relation guess, industry, between

out of extends what if you last that pop that are that really harvest, ago, similar. So, lot from there yes, definitely field of still I away nice talked there. I work that they though it just today can before July, is that, in a done needs said a right my we that's service unforeseen. a in the that do. even look begin -- year, in parts get still can pretty talked Like year all think was some thinking some we now. a with that, there planting but that combing we there's to late here. And definitely But now, weighs But and about to mind the had think farmers corn let's comments, from benefits basically corn ago, right get that I get new up pick get and one there June business But prices starting in planning -- late to these of China the early if deal the happens to shape, compare if I lot residue farm the of commodity combine, happened back of They're year the to the fees, done. that's those And off -- of and buy that growers front guys we the But a starting Larry, see trade a to in to prices the to to get equipment. impact get -- bit little so fields from what get trading a is know see ability for and bit. USMCA, exports our little

Larry De Maria

general. talked and you pre-sell have? of I do only on you less one have a visibility How pre-orders, Okay. you cancellation lot visibility obviously your mean, tend the much just of equipment, right. clarify, to about some case some Understood. think competitors pre-sell to you in And

much visibility this point you how [indiscernible]? So do have at you think

David Meyer

our pre-sells Well, got year. to and good up we've visibility are year-over-year pre-sells, this our

So a good we going that's forward. trend think

with hand orders getting, pretty out we I keep into say, we're inventory year And timeframe almost I year August-September could have too, the we've the good get reminding basically of didn't you ago. that got I'll we've good got visibility. we starting So, we're that on on million told I'd visibility, sure. a think -- $XXX for

we've to going that's add to got. So what

good I of what's on shape growers. think coming we're to have So, meet needs what in the really on and in, hand our we

Larry De Maria

talk you you Senate not about of talk on And a could for and Okay. couple plays and how the in bill being it's about more bill Senate maybe sure, you like the in but ag Ag? maybe MFP, things end impact think payments the up I'm then, can that And there.

David Meyer

just get I they here signed Well, got the House in the right, it's think of And Larry. middle through last night I night. guess, to

a in a comment. I'm year, lot. Farmville, look to guess -- really good addition that position There to lot XX% some helped too. XX:XX:XX nets regular payment on I the is you -- that in a that safety So that at focus I in last if not know goes

the to help So, yes, and year, I appreciate. farmers am think they're it businesses this supported last any that their year, I going sure

Larry De Maria

there Okay. you tools, need into I'll the and capital the here going in in not that's as the chain out parking, it. seat then curious, working sounds average have the worried get farmer the guys like loans, sneak parts we're supply one more to in planning that just general. they do technician about -- I'm season,

many to or stress in in the parts so working things capital that's and crop are the think in to credit, of that? Or are. thinking system You least other are at about their loaded plant you they intentions see you a able How that fully supply be do and availability locked chain. big loans, the

David Meyer

was rock in bottom. buying right morning, I they propanes I is now of are shape. and he the to because huge some think tanks good price No, talking this really storage are grower propane this

going help I demand, of out. down. some of come going fuel to to of are and inputs think is them a coming has you're the Fertilizer bit little good down already because diesel lack gas crop see prices so

big don't of the they look think that they the you doing if I in when get ruts lot at in your field. probably times done yields, is that and a lot a of spring, a volatility are

good if as as tillage. normal get on isn't yields ground the they that Sometimes

a the North on -- is those. a yield once corn hadn't come in bit in I the corn that's from XX% think of probably But So risk that fields in off side weeks, little starting the still the last corn this generally of of the to three Dakota. was some

away of that banging been they've some at and off. So that getting

I'd decent So I'd up. they that's from -- -- this a was helpful. year good had been strong income yet, overall, year, farm got say, sheet balance like But net fairly say they've

Capital, most we've think we've got and as CNH part, the the for relationships financing I we banks good shape. are for the equipment. with plans got their used as new in good far the good And sell, equipment Industrial

combine think to our employees I that We all you up, it's as safe. keep business So, want usual.

COVID-XX. I and America, one of for North this that test say to have positive yet to Europe have morning as in we've both employee

two maybe everybody hired man, a So healthy and the it keep through that's important like we now. aware and really I business have of one, real sure plus. And say, healthy. usual, a just of few end, because the we family and lot something progress of I'm have working. right but I of people lot hired farmers side get construction is members, just coming think more as so that's And can the back don't A on this I'd with that, it's be to back and say, make

Larry De Maria

Best be was of Okay, year safe. this luck good That hear. to great. and Thanks.

David Meyer

Thanks, Okay. Larry.

Operator

no over I for would more Meyer comments. David to like closing to call back the questions this have We time. at turn

David Meyer

in you, our ahead on we and progress stay look call. Thank for And your our today right. and everybody time All Okay. everyone, time your for updating healthy.

Operator

Thank conclude today's This conference. does you.

this disconnect at your may and day. You have lines a time wonderful

Titan Machinery (TITN) 26 Mar 202020 Q4 Earnings call transcript