TITN - Earnings call transcript Q1 2022

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Operator

Greetings. Welcome to the Titan Machinery First Quarter Fiscal 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the to turn ICR. Mills now will conference John over of I you. Thank

You may begin.

John Mills

morning, and call. and Titan you. ladies Thank Good gentlemen, quarter XXXX Machinery fiscal welcome earnings conference first the to

are out first On today release to went Executive Mark XXXX, now morning Chief Chief the Kalvoda, the everyone quarter for approximately XX, X:XX Knutson, Chairman Officer; which Bryan Officer. from company earnings Officer; and call Financial ended Operating at and April David this Eastern the should Chief fiscal Time. Meyer, the By access have AM

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

to we're prepared a today's addition, remarks. providing presentation accompany In

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

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

David Meyer

then our fiscal of overview year first the to assumptions. our conference Bryan call, everyone. Thank Welcome provide a and Chief XXXX, for provide Kalvoda, our update then I our for of full business financial On of Officer our Good results summary quarter will call. Knutson, earnings will morning, fiscal give XXXX an you, John. will CFO, today's each results quarter segments. an first our Operating to review Mark modeling

visible continued our across sales, earnings coupled strong in network. million the lower of that increase of growth The XXX% share quarter on $XX.X impressive segments. results. of sales interest our modest million all to see consolidated which and improvement we our pre-tax an $XXX basis, adjusted a XX% $X.XX. of and by adjusted equipment momentum overview financial fiscal turn our XXX% diluted first operating a leverage you power and is income in X, expense showcases dealership to with per grew our each On first resulted our a our I operating The fronts expectations efficient quarter exceeded of call am to by Bryan you earnings proud review of If over our now to with revenue all in Slide success will stakeholders. with in share our to detail. the turn will I and performance team’s to more pleased three this segments expenses driven

Bryan Knutson

increases adding corn our collectively available segments quarter, compelling These have you, payment on with conjunction everyone. to cash saw And X overview which And equipment. for a conditions have fact excited our first upgrade this current and precision the to becoming prices of healthy reached this to robust prices, fleets currently provided benefits Agriculture, a soybean commodity seen new and technology equipment morning. is the favorable our reasons and International driven have big by we planting I levels David, Further morning, from very from equipment. positive demand customer government farm am ROI for cover purchases not and slide is extremely making you XXXX. we The equipment tax sentiment. in result, both Agriculture crop new used aged are The as in and with good during the equipment. Thank demand an news our Construction, all and XXXX domestic is segment. carryover large that since business

While this for into for sell, equipment year we of orders QX slots high XXXX. pre-sold book year fiscal in we fiscal equipment for all types starting and QX are horsepower delivery production to have we of

the and precision partnered our with on on focus fleets along continue to aged service and Our earlier, mentioned retrofit to the repairs business. bolster needed technology business continues service and the parts aftermarket pay maintenance dividend

of conditions, rains tremendous our need our the growing season, in are exceptionally timely Dakota a some optimism Ag While and customers during of our amount North is will business. dry American markets experiencing there

will X, domestic our of Turning segment. overview see to Slide an construction you

economy, factors an our for going overview continued and countries our used rental profitability new along On housing with equipment to-date make business from about Ukraine. us for construction investments. continues The rental to lower Construction produce infrastructure in and our the our smaller We implemented demand improvement, equipment new with material with construction bottom-line another initiatives segment live activity contributions Germany, equipment and opening and operational our oil optimistic are helped utilization to the stock for rates, The improved footprint. to our and land Bulgaria, Serbia, seeing segment, operations increased of internal of the increase interest just construction Slide of which we Romania, have has forward farmers our starts, due International X, up fleet. rental mentioned, of improvements most I potential from prices look handling, consecutive that market have along improved in quarter Demand represents forward. and we team of ranchers

further As off conditions year drought with much European this weather. better from by yields purchases. along equipment is moisture year’s year, benefiting crop customers we robust demand and commodity affected with for in creating poor some global are the last saw last areas our improved conditions starting Also, our development, markets of European early dry prices key in strong

our demand you bottom-line As this results. strong top QX and see, is International reflected in segment can

growing adoption in timing similar some Europe. are we is side in rate the deliveries. for Also, new challenges there to of there precision domestically, interruption U.S., supply As technology also a equipment with are experiencing causing

in developing of areas service are higher for support and focus the We of these partnered technologically as on becomes International our to markets business as looking more product advanced. continue equipment sophisticated customers levels

great for season. detail. thank Before another of important I review to like I will quarter the over through as our Mark and that, customers spring more Mark, Mark? With our sincerely over turn our turn all this to call call in to results employees the support I they would to financial busy

Mark Kalvoda

Bryan. Thanks,

XX.X% quarter total of increased to for XXXX. revenue to X, fiscal first million Slide $XXX.X Turning the

segments, growth Our which equipment of versus business International. Agriculture by each year-over-year significant XX.X% prior Construction driven and increased across was our year,

environment. XXXX to lower the our The with quarter leverage points. our same offset decrease, first $XX other our compared the $XX.X higher by our points quarter, basis of current first utilization increased borrowings our due quarter XX.X% smaller performed XXXX compared prior income quarter increased our Service stores year. Arizona. margin In than for inventory modest the to solid fleet fiscal of our a $XX.X was to the XXXX, of the gross by the interest and coupled to last our the expenses enhanced a and of XXXX, led quarter decrease end-markets, rental XX.X% profit to our to X.X%, offset and Rental from adjusted lower for revenue businesses. XX.X% to increased the XX.X% and to year fiscal performance XXX.X% net expenses margins, Construction period in which decreased million as million, quarter Floorplan the million XXXX. to to quarter generated rate increased current in interest prior last XX.X%. while of Parts Service of the revenue rental of was revenue $X.X first net XX compared The and prior XX.X% away to dollar Despite XXX to due our Operating XX.X% prior basis quarter fiscal Our our expense mix expense slightly last the well income the to $X.X segment of to sales a of the year. growth Parts year construction the increase compared operating profit excludes remeasurement favorable $X.X margin net gross other million year. impact adjusted growth of same equipment reducing taxes. as construction fiscal and fleet Service increased operating adjusted increase Ukraine versus Slide versus XX.X% against $XXX,XXX and in XXXX current income excluded also first in in increase a due Parts January of percentage year decreased X% first business to more The versus footprint, the and fleet as X, gain, expenses million fiscal healthy reduced This net led improved for divestiture million. year a in prior On a year.

Our earnings compared the million, EBITDA diluted to to for compared XX.X% the per to $XX.X share $XX.X year. $X.XX of in in $X.XX, was adjusted first increased the quarter last million year. of last quarter quarter Adjusted first

the Agriculture first income overview $XX.X for Slide adjusted significant income to of EBITDA an You see of per income, X, our XX.X% helping a most drive in increased the to to million. net XX.X% pre-tax increase million, diluted fiscal to results adjusted can year XXXX. in slide presentation. of adjusted our quarter reconciliation you adjusted segment of sales $XXX.X amounts to the their a and segment comparable appendix share, GAAP will find On

equipment higher plan In the Equipment, strong Parts sales across addition from expense. the and Service, bottom-line lower and margins floor benefited to also interest

to costs, Arizona, two prior $X.X quarter revenue, with loss to the in Construction $XX.X segment. divestiture prior positive XX.X% Revenue our to pre-tax to stores million, Turning despite combined in drove of compared The adjusted lower the in interest year. compared stronger increased to $XXX,XXX, period. of the the $X.X segment a income of million a million improvement year first January

Our XX% International million. to and segment $XX.X increased quarter revenue in rebounded first

of $X.X strong As and XX, Ag cash quarter sheet activity our in fiscal highlights adjusted equipment million of conditions provided sales footprint. The had the Bryan as positive improvement April XXXX. an a to discussed the equipment across $XX.X sales heightened end a have of income equipment XX, $X.X our overview in balance of his solid On international growing and We XXXX. Slide margins at fundamentals generated of yielded improved first strong remarks, the million we pre-tax global million.

lower and to a in next inventory our on which $XX to a from increase of inventory the in inventory million, on the that equipment I equipment provide Our new more the the drive decrease sales continued than reflecting little net the quarter XXXX of versus increased Strong first X.X million quarter the prior January first decrease was by at of $X a offset million end effect more levels $X use. period. slide. inventory was color equipment XX a will in XX, in $XXX turns, million year

XXXX. the at end fleet first anticipate the fiscal at fiscal around XXXX. to of Our assets still $XX rental million size $XX We the million, compared be end million to fleet quarter of increased slightly of the our $XX to at end

us floor of As outstanding $XXX XX, of of financing capacity of plan to in million handle lines $XXX leaves XXXX, million plan our needs. which on payables April equipment credit lines floor had considerable we credit, with our

covenant well prior net and syndicate is largest requirement X.X, below X.X the of Our floor credit worth strong adjusted ratio debt-to-tangible facilities which compared agreement. is a is our X.X, plan leverage our in to year period the bank outside two

size amount reflected of red slide in XX, used bars are and slide. equipment on inventories the to the blue new and this the Turning of

and and supply due As customer an in call, on to we higher of modeling strong positioned and overall part turn this demand equipment and tighter due resurgence earlier used equipment has us We inventory fiscal last to us helped meet created supply for the pandemic industry assumptions commodities of generate our our have to quarter, orders pre-sells, discussed chain XXXX. level the well X.X. of a revenue of equipment disruptions agricultural inventory year believe

healthy. to XXXX. levels, Given our of end-markets The will stronger inventory and full quality our our turn for segments, fiscal each overall of current inventory very expect inventory year continue in we remains increase the

XX.X%. on gray terms, slide ended at which be non-interest quarter seen the bar by under the first inventory Our can bearing

cash by XXXX. in Given fiscal the with purchases. suppliers in activities flow level cash million an discounts inventory. compared used have GAAP of period our certain for The the our we elected position, activities period. margins bearing cash of practice but of $XX flows activities enhances $X.X operating our percentage cash decreases cash prior provided first equipment on XX, overview million, from for to comparable provides forego was current our non-interest for to exchange of terms Slide bearing operating and three for equipment months the operating non-interest reported This

cash inventory floor to allowing our last performing inventory applying and year. we the ended $X activities As flows our plan our Slide adjust cash across used exclusive by After including XXXX than compared years end-markets board. fiscal evaluate to in improvements XXXX, changes of provided shows by better of the was period raising for are million great for are us cash reflect the Improving we activities adjusted adjusted activities, XX, are to flow equipment in which April XX equipment months cash part adjusted operating $X.X expected operating are start financing combined fiscal bottom-line annual our of for million adjustments, inventory to operating activity assumptions, generate modeling same period Each of the results. our and with segments business strong of combining decisions. equipment a to provided all operational off XXXX. non-manufacturer updated cash constant in our equity these three financing our flow operating include

XXXX our For revenue closed growth year May revenue to XX%, full segment, range assumption the XX% XX% includes to Agriculture our are to increasing XXXX. contribution up up we that HorizonWest from growth XX%. The from acquisition a fiscal in

Construction from the to the to combined Impacting this construction in divestment accounted of of million X%. at to our revenue equipment Arizona up for which assumption stores increasing are fiscal revenue. segment, the X% of two is down we flat end XXXX, $XX X% of approximately For our assumption

up XX% Excluding range of the these a to modeling XX%. our to year sales revenues same-store base, from equates prior

are to from midpoint From diluted For assumption earnings up of per we XX%. revenue XX% to $X.XX fiscal assumption share increasing XX% are $X.XX the per share at up our our a $X.XX International range increasing XX% segment, earnings perspective, XXXX. to for to to an new by the we

As call. session ready all concludes our Operator, a question-and-answer we of costs. prepared the ERP includes reminder, this now for implementation are our This remarks. range

Operator

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

Ryan Sigdahl

for on the Sigdahl Ryan on congrats guys. morning, Good Steve, results. and

David Meyer

Ryan. Hello,

Ryan Sigdahl

locked harvest your benefit driving think greater demand is but corn purchases this soybean is of realize equipment but that fall good, expectation, break potentially you’ve out what you you some know the seen higher two Curious you a may of benefit? mentioned in standpoint. and after those from quarter pricing be sale and now, from there the can bookings, I versus already kind prices of futures

Bryan Knutson

really as the this think, definitely, and new you they some and you solid has tax and year It has come And Hey, year more the Ryan, customer now. like into XXXX, can to here. the right corn calendar as into guide, which continue mentioned I year a been positively going as this is here are prices, to put impacted to Bryan. play sales. year together I been next lock in Yes, significantly said actually helps by sentiment book out up benefits, soybean the really which well prices

that of their driving So, and think but out the fleet bottom-line. the that’s yes, efficiency to also aged opportunity can it, for the update then I what then to benefits technology the just and do newer

think it’s of combination long both commodity prices helpful. definitely overdue So, really I are and a these

Ryan Sigdahl

versus said? much maintenance buying of long equipment the you overdue then, that equipment new of of how kind And kind replacing old that the like

Bryan Knutson

It’s because the the tax maintenance perspective, aged picks really purchase technology at the fleet with versus of the of from benefit along exactly sometimes both what to the their time hard update same to discern up because a grower benefits.

together too. the but three really the really So, compelling reason, make for downtime a is expensive

So, the aged fleet problematic standpoint. the growers from that becomes for

technology, So, but are updating would two. the drivers, to the definitely downtime biggest technology and the the again maintenance newer precision just big was requiring three equipment then be and newer the really all

Ryan Sigdahl

And their XX% industry then John Canada Ag Deere was for to plus outlook large XXXX year-over-year. sales and U.S.

how versus Ag we kind the guidance those XX% Your of delta about between should two Ag, the – OEM to side? retail the between think updated XX%, for

Bryan Knutson

we guidance experiencing current said, is that the and our business XXXX we which OEM. XX% large now Deere good Canada months Yes, horsepower Parts it’s versus question, including for stable are America prior Service also, stronger are is keep and which includes our at reported lower FY looking the Ag also It’s you North guidance retailer Ryan. in production which Deere’s its our precision year not well, growth. up is hay our to the on was apples-to-apples tightened And and forage. three then, results, Also, commenting as reflected equipment is compared dealer growth mind Ag al QX guidance. that same – like on the U.S. don’t as tractors, large Deere, period the year than in have right typically more in

that between just the anything the than on quarter kind that timing of to to So, Mark, lagged fiscal year a add that? them. in was reporting

Mark Kalvoda

Good. you think, it covered all. I No,

Ryan Sigdahl

Great. Helpful. I’ll hop luck. in Thanks queue. guys the and back good

Bryan Knutson

Thanks, Ryan.

Operator

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

Mig Dobre

this looking would you I guess, is behind I was at Agriculture in XXX morning. fiscal to guidance of basis there slightly different. the increase assumptions, question relative orders true ask is so XXXX? is, way demand XXXX previous the fiscal going point so I limiting carry are meaning, on your on could forth, am equipment wondering availability based increase constrained if of a Good reflect some where for sort and any your or maybe does this guidance segment view of vis-à-vis revenue increase, incoming this When factor into degree that to retail be

Bryan Knutson

Yes. Hey, is This Mig. Bryan.

are we current believe as I and think that right. returns leads those on to inventory will you have and demand do demand will but move units. as to a year But we assumption. We’ve our pre-sell we that some year those modeled customers until that well XXXX some January industry into continue hand got production down to sell bit. inventory access although production calendar into exceed

that guidance. modeled into we’ve our yes, So,

keep logistic labor in are jumping that. through going. to chain Their enough and with on. keep components shortages are the so limit lot that constant CNH issues of component guys are groups Obviously, availability material that We a there communication plants on and supply

in are communication again, We the close really of that with They job a them. us. are good in with stay state really and proud doing

– that transfers, of will So, dealer increased additional orders again, additional incremental. we’ve lease get any or in be any then an or those guided we returns

Mig Dobre

am because still Just little a here. bit to confused I clarify,

a with customers and hey, and are stand different Your ERPs well, and or factor QX you XXXX. am of equipment is saying, customers’ naturally the don’t trying backlog demand those saying, in this to sort it I and are you that a sense to of QX sort QX your that’s But look, availability? if two here. XXXX. you we with Or I different have making is part year am to going put this am mean, constraints in just QX than really fiscal to are I equipment than in deliver need at, I understand great. is understand I supply terms normal trying ago if associated basically I into am dealing the on and if I is basically quarters? taking just of of of know

Bryan Knutson

getting us It’s longer desire Yes. product is first there on what other both the customer But out so times you then production out but the It may, category while and of that – production bit so will the prevalent the more cluster lead the some depending and QX would bullet up, into that a QX. filled are depending point. said little schedules on get times more product be categories. are on

Mig Dobre

seasonally my what question one the Alright. the $X.XX than has is earnings on, And well, see, from better expected. all of quite I just second guess, is done strong then, not guidance. business I relative guess, and in QX us mean, historically, I the normal of your right, I quarters to of seasonality can

reason fourth has look quarter QX – QX is how So, as guidance, the Is that do for lower think been? there about a than you relative other instance think has in relative to your to you full year quarters? anyway to

Mark Kalvoda

Yes.

over and job has by that that promoting things of And first doing done this that. so done what the and have we over years the of we’ve into of the years, gradually in we the moved done quarter. a have quarter but more been kind have really some that, of that fourth nice we past that that talked we’ve for pre-sell while, this done Some and a pre-sell moved and about the pushing

as the first have quarter the shifted you somewhat the equipment quarter quarter the fourth kind to somewhat on from seasonality activity. and that of pre-sell we will if second of So, some with well into the

quarter. certainly doesn’t quarter, to be first year So, our yes, soft this the appear

Mig Dobre

this, Mark, question I going final offline. at guess, together XXXX, of here, more few a back I about be able you to I am Analyst talking Well, put and But remember the to you were about last to I’ll rightsizing to And clearly, on if looking deliver are think at are revenue. of about And margins, about $X.X than X% revenue anticipated in XXXX that’s those billion. equipment your you they we we also here targets when of you pre-tax back time, I in years structure Day billion together. better cost you and the put better Okay. margin kind guys my talk $X.X are the back talking shape

question have to for able is, of four you over revenue? my realistic that’s volume how the for So Mark it And how margins Thank of years? things to kinds than past better changed these $X.X is billion you. be pre-tax you on attain

Mark Kalvoda

Yes.

think, of and we kind when gave I about conditions back we we mid-cycle entering XXXX, that. so, presentation that in think I talked are

that EPS at Construction get total both to up segment. we’ve we to and further Ag way we very we this getting time there surpassing to even more the us of International to still and and Ag shot that some there to side side we’ve on are quite on We Where it close maybe year think I a get need the bit. about of the total get still we company. still the what is X% a a talked for think on But improvement the traction frankly, good come getting need to I long little got our level traction and need $X

we’ve on now think I Construction. on profitability four as the mentioned of call, think quarters I got So, Bryan

has We looking resurgence are International been build and the in moving certainly here to that a from direction. there right nice on

with think, likely possibility other more could year year, back this probably we market a it’s maybe I there. and conditions we talked So, for be about certainly in then reach two but or within and similar

Mig Dobre

Good guys. Alright. luck

Mark Kalvoda

Thanks, Mig.

Operator

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

Rick Nelson

up of Good could the now kind and the start curious on I heat the environment am to congrats us you update year. those starting to slowed if acquisition are if But Thanks. you easing, things on morning cover discussions. terrific there? a covered

Mark Kalvoda

most on at of the some for and if really the hasn’t eight are and think, that look out of of demographics successional But and of the the doing now right acquisitions. financially dealer you lack dealers, now. cycle OEM pricing requirements, are in of who terms, there, the equipment, sophistication which Well, part I the both changed impactful of really the capital requirements, right timing consumer Rick, well, principles the profiles the the much

talked not is they Like are the if or a I the pause there away. of of So, calls, in bit last about couple dealers are little many now going of right those all don’t the lot through working PPP and banks there some been from has process a forgiveness of activity in to of and the loan I think get at through process.

So, – we number We’ve engaged. out on. going got of we lot targets a of are discussions and continue there

changed haven’t the So, the demographics like you principle. say, dealer and

I a think there is still lot of opportunity.

seeing We are industry consolidation taking place.

was we’ve that. we got nice acquisitions year through of and nice, a acquisition one HorizonWest deploy cash did and and that strong balance to sheet. So, yes, We’ve over all a the we we want are some we Northwood doing had all definitely got last

got it’s place is timing pricing that and to So, be for going to our in the team. right discipline make the to more both it just and seller We smart and the sure happen. about

Rick Nelson

quite that constraints. into of Thanks for inventory year More this so, talked the a XXXX equipment building a a positive margin bit What’s for color. smart carry fiscal that guidance? you about merchants with implications seen has supply that bubble

Mark Kalvoda

Yes.

quarter So was were anticipating a as we good well. from better the first very an than equipment perspective, margin quarter

we sales side, certainly equipment some limiting in about sales used benefit talking which conditions We on kind the here. in then, in get the International we Ag. like that generally And strong of both they end-market So from some of very over inventory quarter, strong, and did helped margins for were then new XX.X% there quite mix get the the equipment we at higher it pricing adjustments. did and the are was first also in

certainly, mix do something So, it certainly with as to had well.

So this we maintaining don’t anticipate XX.X%.

However, kind we’d of still last to in I expect year, off lower some mid think which of tens. that nice improvement was

that around that ticketed to overall of landing down closer to when that well. that will is going as still those well XX% have some think I the higher the of toward XX% bigger we those the items deals be that take of end have that some right we as number, we get year year are full happen

of So, blended are looking we XX% kind is around a overall, right what at.

Rick Nelson

potentially And the times. above top been situation potentially I end going Do has that tight X.X of times. three the you turn Great. inventory your know, inventory three goal see times? with

Mark Kalvoda

south the for where year. Nonetheless, possible three is – the of to year but get this above limits full supply this we at chain equipment now certainly improvement, year going to tightness need are amount It’s the looking with these some in is Getting good environment, still with this of of that right probably, also difficult. we just especially challenges. But be write-downs, certainly supply.

looking we equipment that So to are possible. as as much get

Rick Nelson

normalizing, quarter, now Great. And I last you inventory think it the year. fourth until like sounds of timing suggesting maybe early call next were

thoughts that? Your on

Mark Kalvoda

and bit get a that product last starting a and we call times that now And forward, lot to we’ve pre-sell we to ordered and both. QX. say, a the on We’ll those the of book and talked just as of see evolve, so, coming move certain get and categories QX we some those schedules was, little but of continued The into did sales sales of in into equipment calendar the are lot rolls lead got did QX.

Rick Nelson

and Thanks good sense. luck. Makes

Mark Kalvoda

Thanks, Rick.

Operator

Please Blair. De is with next Instructions] William proceed. question Our [Operator Larry Maria from

Larry De Maria

Thanks. everybody. Good morning,

Bryan Knutson

morning, Good Larry.

Larry De Maria

clarify. to Just

put is latter. already a or new part early a On we can – for something get orders become are now next function are price? do But just the or have norm of Or Thank you. place so, environment discounts – the into build program? year, what orders to then those doing the it’s of you can retail on in or the I think and this if pre-sales that and you for they

David Meyer

guidance Yes, get internal Larry, little a the so are and demand. the But our function and turns, It’s future bit a which to latter. pre-sell, the inventory also you more environment visibility the to revenues. It’s helped right. mentioned, so more also helps our lead Mark in cash more initiatives as of flow, the times us helps just drive more to of

are yes, drive So, that. continue we going to to

an to commit, incentivized their margins on driver OEM the it. more the to wanted. There customer the would But on so and very of up spec is automobile options As equipment to bigger order be name an There it’s the there, as customer. for so. we far the to fare going is times when equipment even then lots today you different out similar they get they often put more

get They get they want. and availability with their to they get banker they’ll spec ensure plan want then So help business to when of to it. their up they

Larry De Maria

more into turn both. let’s maybe And a – helpful. very of That’s the Okay.

little As far I the let’s bit, gross the side. margins equipment know, about but as was on talk a margins, equipment obviously the delta

think help understand a bit mentioned but more difference to that the more you because the maybe the is mix used equipment in maybe impacts that used couple I the between upside new, versus obviously, You cost now? are of cuts are some leading and that of could a the maybe International money you sales. structural are that’s growth equipment in and sustainable, equipment margins. much What it have little prices historically surging us on is in to new temporary, making it of the more factors What from importantly,

pull kind help of that just all you can together? So,

Mark Kalvoda

on so, Yes. but happen the quarter little have we margins for month, bit and every have write-downs purposes, – our I’ll use a there, price. Larry. and try the lower equipment more, have we on a market cost elaborate so that on specifically external we Yes, to used,

because pricing write-downs this of some different lower strong, much of in than The are environment, are the of parts demand. they is in certainly those of the cycle. what So, level where limited

on the the together our then, had We with have It’s aging So, And can on of are pressure same the very side, pricing is swinging that the the there we’ve to at not inventory level in point there where less equipment. lot a past. giving aging. of types this pricing don’t healthy up, extent adjustments. the those when with pricing hold quite of is you there and nicely combined

So, are factors certainly equipment those overall margins. lift the that

between I strong with was and where higher the margins. equipment new products do and get of maybe On segments particularly just the new, kind mentioned different there we segments international

asked the of overall is just business. helpful I you about And So, margin then mix there well. kind certainly think that in as

come moving more three had anticipated benefiting point And are so on floor to to basically years expenses, year years over down paying bottom. at But help domestic nicely we more we done our the contributing this bottom-line with can off converts see two the different that plan from the prior year of expenses from and are we just interest the some that of the to with And expenses, of some some all you certainly this some bring on generation cash last and certainly through. couple there. took to cost relative and year, that well, more of ago significantly that the a those initiatives of in out that lines before that’s the expense, as years finally initiatives then, were

Larry De Maria

obviously, to answer. a Thanks inventory sense guess from inventory year my hear Great. trying like to for have would more question, Last get of industry more and at Okay. you’d and you. just curious have that now end. is, detailed to the inventory, And but like to

could have much – year. and where way, you inventory in end, be into higher inventory at you going next maybe this If how now like the your year would

of and next you how get trying the think to in year? you short comfortable and is industry short the to sense feel how you into Just to think demand and need going are a the guys satisfy where be you really industry

Mark Kalvoda

maybe And it, can and then, Larry, I’ll add Dave on. PJ start

getting the have I the been things – things think coming I and as right fine customer far now, and getting as think sale done. the – are in to inventory

more time cause risk to then, I type And that I and want the this demand to that want that and the would enough for even if more that done. of the at available we’ve We about are equipment things every half that. of want, sale that me risks that’s some and to we year. to of for demand inventory unknown like level know the got get hearing the there think the new think we’d to of certainly be out cause exact going that as it’s don’t back something to increases take or about kind of

So, are that. with they end something the and way as year we things stayed like around $XXX steady the million,

in, in kind be we’d think time for I that. It’s fine. of getting just it

there are know sales as is in don’t those inventory. kind a feels I million that of magic for we me it So, as getting $XXX number about between. long right to satisfy

Larry De Maria

and Understood. Okay. luck. Thank you good

Operator

proceed. Dobre We Please Baird. now from Mig question follow-up a have with

Mig Dobre

to update Just a rollout on Where we ERP Can be you the follow-up. a one. are with do Maybe you in the think for get taking done quick progress? here? this? quick your updated of of Thanks terms When an with in you’ll drag on benefits – of what be are price have we much quick cost to view how fiscal this initiative? update going the as what and a XXXX? And a out

David Meyer

and is off customer going this the start see more Dave. to I’ll increased BI. benefits are functionality, are going Mig, see are improved experience, we so, to we

movements are and all tie from at ability of with on digital what we the value. a think, I there into functionality some think tie assets better different going the long-term precision I the or telematic much – the up and some in if enterprise both tie you of we look seeing our it’s to add and integrate in that things standpoint even or stuff, to

pretty about are positive that. we So,

now. on one we’ve that’s As store our test running very call, talked we got last well right

get so out. think roll of roll rental full it bring and that a development both segment, within of sometime the our when next calendar out, a more potentially months few full we takes some and we XX want We and the are definitely the out happen on the CE Ag in – – do in then continuing stores they try with to all the this to tested I will for full for or roll

we So, really roll happen or about When could it’s minimizing risk feel out. what that comfortable potentially timing. all in

that’s where are and are we So, excited about we that.

I’ll to a financial be how it. Mark the he So, I should talk looking mean, of let side little bit at

Mark Kalvoda

that’s we quarter, bit involved over so last going higher similar to Yes, that from as looking than year, far talked a guidance we the talked had still numbers about above what it’s expectation We $X changed perspective, to year. with million current be be a that. million, year, our as just it ERP. hasn’t $X.X last in $X cost This little for to a about really lot and million, the

Mig Dobre

Mark, far progress here There in we costs delays your to down I And scheduled are something with as should expect to to see. we issues going sort How about coming be be still think these I expectations. And though, based is are roll of no – fiscal XXXX, clarify that. should David the just line on or was am or it? what as the saying they presuming in like out.

Mark Kalvoda

Yes.

yes, into don’t months, this from – thing. – I not year expect much capitalizing consulting as perspective, would see next they building the system. costs roll A the would that’s new want that when live. it to And I make down think in our some a of you a well, type be and lot that get anything will come big much in that cost of But of external are initial I XX like if yes, as as necessary. assets. There we ERP or supported I support expect the year whatever well lot area teams to wouldn’t any and down kind of support go done like should within of on decrease sure we that’s come

David Meyer

happen I Mig, team risk robust interruption. - there to and I a out of roll really will and our of that like any start are type enough. think any sure am – Yes, - our we our making of I training ERP, sure, But testing, really in never fast on

we so, right. to it but we want and to like progressing got say, fine that’s want sure never fast and that I get I make we think it enough, think, is everything dialing I happens and

we where that’s So, are.

Mig Dobre

Great. Thank that, you for Dave.

Operator

Question-And-Answer like of would end Mr. closing for the over have to reached our turn Meyer to Session. I the back comments. We conference

David Meyer

to the Alright. updating on call next and Thanks Titan for our call. We interest look Machinery. on in progress everybody your on our being you forward

have So, good day a everybody.

Operator

Thank today's conclude conference. does you. This

time for You may you disconnect participation. your this and lines your thank at

Titan Machinery (TITN) 27 May 212022 Q1 Earnings call transcript