TITN - Earnings call transcript Q2 2025

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Operator

Greetings, and welcome to Titan Machinery Inc.

Second Quarter Fiscal 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Sonnek. Thank you.

You may begin.

Jeff Sonnek

you. thank Well, Machinery's Titan Fiscal Earnings 'XX Welcome Second Call. Conference to Quarter are from CFO. President call today's Bryan the Larsen, On Bo company Knutson, and and CEO;

now, release the access should July XX, XXXX. By earnings everyone have dated to

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

like filed Titan's call page. therefore, presentation to forward-looking statements, upon Factors a These discussion annual also statements statements. the addition, to undue statements guarantee Those expectations including reliance accompany in may a into complete financial in Relations contain forward-looking remarks These forward-looking adjusted financial of additional that and release our prepared remarks, to underlying reconciliations below and providing applicable results response contain results not financial your can questions. webcast materially prepared Risk GAAP remind measures particularly the could note conclusion middle forward-looking on Titan's non-GAAP and everyone that that In should open which by measures from today's Titan's discuss presentation. At measures inherent President that when analysis take your based in factors the release And XX-K. actual or differ with required cause any current in Bryan, be those basis. in risks risk be Form assumes we involve them. found questions. from be we'll the and the non-GAAP made obligation the We've and uncertainties, statements factors make today's and today's update to financial may Titan to these now today's management company's CEO, can call, Investor during most We period. statements performance, most recently section believe as that, and directly We'd on the no transparency may including website detailed to the those Bryan do may ahead. we're of these an period be Except prepared of on more in management's financial placed forward-looking included to of law, future Knutson. I'd comparing information any projected to performance, introduce call. Please a go on the comparable Mr. ongoing identified of report like to greater results are adjusted please more facilitate remarks, measures, the

Bryan Knutson

[Audio modeling our Then Gap] remainder performance and pass our his will the assumptions year. outlook. incremental for thoughts and Bo our the quarter call second the for to of near-term financial review I on

of footprint, combined much to for demand are have farmer shifted purchases. Through have a retail demand, in industry used expense. to quarter footprint, with equipment largely actively targeted growing our and fundamentals across decrease equipment year. weakened, have floorplan of proactive as reduce side, weeks anticipated softening which and sustained declined adjusting we ago higher lower net to the farm farm X margins. second on aggressive significantly decrease our requires conditions strategy mix in to our interest our especially softening manifested crops The for As being These commodity the shared reducing materially most will approach is turn equipment in driven compression cash have levels, in as we beginning income interest and rates. lower more income net elements, prices driven the period the demand in in key the negatively is agriculture equipment inventory by steadily sentiment pre-announcement, the near-term to This work the agriculture by we impacting since this

However, and cycle our on the return lower accelerate performance actions this during to implementing our will period progresses. demand we of as impact margin the will industry profile the shorten a inherently are more normalized

navigate significant by and As seeing differences highlighting sector. the worth last cycle, downturn, improved we the the and the which management cycle, of underscore the dealers the the inventory across the preparedness current approach proactive Unlike previous from it's health coordinated, a OEMs. At entire are we industry strategies we and with to suppliers will not financing also our but particularly reduce The interest inventory, demand customers. with analyzing our only trends, adjusting are inventory on efficiently by aligning on expense. terms working collective of focused reduce Titan, for carefully market will our actions closely result these pricing both

like that mark would implementation strategies to home our in is early these the previous I to quick a that cycles. of drive relative and Importantly, adjustment approach significant recognition

inventory levels store to currently have in it inventory terms absolute dollars on them units than per basis, While higher than important did want we less a of are be, to note the we the we end significantly of the that of watermark average cycle. of per had of $X.X prior up the is heading X% into quarter, downturn. At the approximately second last from high This approximately we inventory million an store. is

we less However, per decade units mentioned, have past store the as have been as over substantial. increases significantly OEM I price

tractor drive For of the last example, up cost the a approximately is downturn. since X-wheel XX%

healthier. against industry this consecutive are years off much coming fundamentals them and Farmers land sheets, providing heading excellent this buffer some last and between by current that difference headwinds. bolstered cycle key into favorable further Another balance values, stronger more the entered the with cycle cycle is profitability

the X of in progress through age that aggregate, Secondly, recall levels to Thus, OEM purchases replacement production that we disruptions as please cycle. closer were averages. to the support the past continues America fleet In mid-cycle severely limited North over these the chain supply production years. volumes

inventory were in the which being previous OEMs as investment. equipment today's agriculture higher further garner aligned and to earlier in calls, operations, both not their I proactive Thirdly, developed farmers that demand not and do are and have the short-term returns, lease would on finally, managing helping previous downturn. Fourth, cycle, earlier, exacerbated the cycle. And mentioned are I levels as impact dealers of solutions and in more further the aggressively mentioned are that future in as supporting last note returns precision solutions we

remains are we primary of the other actions business. focus, control grow also inventory and areas decisive taking our our to costs While

We process long-term we and continue drive factors, year, customer importantly, lean this into not to our know cycle. it our compress our of possible. targeted levels this This inventory achieve the combined cycle improvements the care to only impacts enhance parts performance to fuel we we to high-margin of as business, with growth. downturn, undoubtedly an imperative businesses. strategy will where that the through we've said, service ability we can more is These growth and optimized integrated since but create sustainable reoccurring area efficiencies our is as that last believe reach quickly That

and update footprint. I'd on within to an gears conditions Now like provide crop our change

varying not wet altogether America, to this plant has And spring there of store our drowned fields in rainfall previously growing planting to some in Overall, were planted, wide delayed to below-average each to footprint did conditions, are yields. looking those impacted are experiencing another. In lead Germany produce within continued then the one all to Ukraine. will mentioned, better Bulgaria or in conditions out from Europe, even As and yields widely looking too recover. abnormally of average to to North And America, above-average season. conditions been variations whereas overall did by North cases, areas in significant regions. get In some Romania negatively an drought Australia, areas to our are in leading other areas plentiful conditions, average produce yields. In be severe exceptional and of much while we're and rainfall is drought crop, to and

off construction to the financing recent highs moderated costs extended believe we our the uncertainty industry environment, regarding fundamentals period of business due have and Finally, around underlying economy. of somewhat higher

shareholders want committed will more previous cycle, the strategy, and to can downturn. With which the ensure highly actions efforts success have Their care thank our for the is to I'm challenging made learned we stable to our However, our call financial times. effectively, to with from crucial work that, want delivering providing lessons new through of the a hard our and employees over our segment this supported the these actions introductions cycle turn we is Construction prior support sincerely outlook long-term remain best-in-class the are by suppliers. In our availability product customer are this stronger from dedication we for review. us our have I for to and our navigate combined versus during to and to to his to will to company I have value been confident I we and reiterate taking decisive customers. service effectively customers our actions that taking, with and their taken, equipment now revenue that closing, year and navigate Bo we

Bo Larsen

Total the morning, acquisition the $XXX.X decrease was October was of largely net Good period. farm compared This X.X% we a with results due consolidated to was fiscal decline second by to Starting demand growing everyone. Bryan. XXXX. expected equipment for the a this performance purchases quarter. in driven season. by Underlying of Thanks, XX.X%, revenue same-store our year the for that income prior this completed sales XXXX lower decrease million, of of offset O'Connors

across lower down resulting XXXX, $XX.X higher profit million compared period. to driven by inventory, were the and to was European acquisitions incurred million by for from net income contracted expenses higher of capacity net the of the O'Connors earlier. Operating inventory increase per net the income increase This noncash interest-bearing onetime our margins of Floorplan proactive included Bryan to executed industries fiscal we of assets was segment. $XX.X $X.XX to usage million second year-over-year share compared second certain diluted or loss $XX in financing the the for to second diluted fiscal the year $X.XX as existing sales profit $XX.X expenses interest reported compares floorplan million the levels, in quarter The to last XX.X%, $X.X we inventory quarter managing XXX to in levels share year's quarter's million the quarter led $X.X to quarter reported second includes gross basis level and impairment XXXX of current targeted for million operating a quarter. quarter $XXX led leaseback or and other million impact or $X.X The share. per finance acquisition. GAAP the of the diluted as of the noncash related XXXX margin months. expense serve year's stance Gross million last quarter expense a per year-over-year was X.X% in fiscal $X.XX that related our including by with prior loss and for we've was our of also second points second primarily expense discussed $XX.X XX equipment by on million

an the $X.X also $X.XX Excluding gain million which tax net basis net the this $X income adjusted includes income for impact, this completion forecast million second program, year. related on throughout to and a was our or share. Reported diluted per in a credit of anticipated included new market was quarter year's

lease As date through we over of into of on expiration years the mentioned occur of year XX future several respective our expire expiration on previously, the facility before of or for purchase closing agreement which leased next reflects the XXXX. facilities all current purchase the the lease, the our accounting for expense calendar each lease will entering of The leases.

the I'd earnings, like for high-margin growth agreement and investing strategy shop initial supports strategic the noncash and and the long-term is of and by to impact transaction care our parts reported a company's continued in reduces temporarily in facilities customer GAAP this this businesses. While that expense, required purchase emphasize service is space financially

which versus I inventory the Agriculture pretax and noncash which manifested adjusted softer million in higher interest XX.X% of decreased same-store overview higher year-over-year mentioned our This levels for previously. The sales, brief XX.X% in compared lower expense. In second results declined to year. segment, million financing $XX income sales the the that profitability $X.X equipment demand million figure second $XXX quarter. the increase of prior the equipment Agriculture included segment, sales $XX.X margins, a prior a sales underlying environment, sales reflects to lower retail floorplan to in in decline In leaseback in our decrease an was and turning million, second same-store of Construction segment of million our adjusted Now the quarter. X.X% expense $X.X X.X% quarter of year. excludes segment to

in stability year-over-year seeing generally are We segment. this

However, for supply as driven the has inventory both for Titan. catch-up whole construction a industry chain levels and higher

Eastern loss for segment segment assets. year noncash as the results margin this the was in So income expect $X.X in quarter half approximately well. was million XXXX. the $X.X million of Adjusted segment year. in income for have to and fiscal continue we targeted pretax Europe conditions The the $X.X of back the are inventory started second we in this that pretax expense proactively drought impact half income in to down the $X.X managing These the the subdued are levels year. first XXXX, compares and of sales compares million, sales levels of prior seeing through current mentioned that million, which a last include compression in XX.X% of second $X.X through fiscal leaseback which $XX.X related second XX.X% persisted to versus adjusted million, certain year. previously. In demand Europe quarter Severe noncash of XX.X% to fiscal sales prior expense included figure for million excludes financing of year. Pretax impairment $X.X quarter to decline retail rest the to growth million of segment, I Europe demand decreased of This our same-store the which

impacts, segment these segment, million million loss higher period, I with domestic and Excluding ag were softer million. underlying ag is just year domestic demand decrease the pre-acquisition. in presales, and inventory figures dynamics, income comparative expense. In the sales substantial $X.X which regarding $X.X This quarter. prior segment which retail pretax in the as $XX.X similar environment, higher mentioned, mix a was for maintain but The very reflects similar of with sales our as the profitability year-over-year second our customer and Australia interest similar segment, floorplan helping levels customer to segment, was is pretax dynamics our was facing

$XX July bank is X.Xx. debt to our and below net Now sheet of on of inventory which million to and of our XX, We as cash balance tangible adjusted ratio of position. worth had covenant well X.Xx

regarding that recently lead believe our of our approximately the equipment arrivals. timing OEM beginning order at from times the we This billion. peaked the has the aligns of level our inventory, year from Regarding with inventory $X.X expectation and partners normalization of

to year, growing characterized recognized our prices, leaseback noncash on environment softer to demand conditions in This fiscal rates begin latest of the half demonstrating and on before view sentiment. for fiscal in second performance, in this year, we the negatively impacted to first second expect for the reduction modestly compared expectations of results full our XX October recently XXXX. With our earnings second finish half our to I'll moving the quarter XXXX interest more account We shared market sustained by this substantial we in decreases back quarter our with during second actions footprint that, industry the resulted farmer retail of the onetime sales updated inventories lower commodity we across financing quarter conditions, guidance, in mix in year account reviewing our which fiscal inventory noticeably our high lower concurrent with call. pre-announcement have realize the expense quarter. Current by and we

levels subdued throughout the these the of backdrop, the now more see Given persisting demand fiscal current rest year. we

our year in the As includes the domestic which agriculture, in of contribution which Supply acquisition, is our such, down range Scott revenue of X% to for closed from assumption January XX%, XXXX. full

growth fiscal continue single-digit efforts Despite service business year. we're for the stimulate For the of will range And to reflects in be headwinds, fiscal in to more XXXX the expect the these these our be down the million assumptions environment revenue XX%. high $XXX segment, of Europe for Australia to revenue partially demand. the million. range full assumption by to segment, offset XX% is our challenging we $XXX facing, we Each our in expect see for to segment we to

to is year. X.X%, outlook prior Construction similarly in stable flattish but cautious up macroeconomic our updated reflects the overall which of X.X% range revenue the segment, For assumption the prior for down than to be given generally the assumptions to more environment, compared our a

commentary. we broader some gross equipment. remain to Now our inventory margin particularly in for used position, improving From committed perspective, a

for supply margin are margins lower half equipment the inventory half this updated basis points of such Given in consolidated we fiscal XXX in to year. now assumptions for further back that of expectations are softer compression channel and in of building approximately demand, as back the equipment the excess year compared the last equipment our

XXX For ag the approach in business comparison, lower in consolidated we compared equipment realized the year year. We margins were domestic points equipment and first lows basis historical half XXXX. approximately of our anticipate of margins half this for last the first years XXXX fiscal fiscal to to now

to approach this shorten performance, of will this duration we the downturn previous short-term inventory will managing to compared our believe this cycle. the While impact

we are can, being we where optimizing any with resources expenses, operating implementing Regarding controls cost vigilant decisions. on focused and headcount

be implies of Our now to outlook. sales revised expenses about guidance operating XX.X% our

interest expense. to Moving

that are commensurate interest to Given anticipated. the expense and working impact our incurring on revenue we floorplan inventory expectations revised levels we are improve, than previously higher

to at Although more we the as of normalized more decreases of expect substantial interest in interest before be more that benefit for And believe in see a back industry tailwind expense. provide than play. we the returns we inventory it begin floorplan year, through next expense we this continue progress fiscal levels interest to take will the dynamics half by will improved offset will year

in on decisive in assumptions, million loss XXXX. Taking the of of believe noncash to impact will with all impact interest full Our diluted guidance the to excluding diluted our On account, sales fiscal margin range breakeven we managing our earnings to the quarter, taking financing return recognized to per focused to for of into be per performance, respect actions in profile, of shorten expect $X.XX factors expense of we earnings ready earnings floorplan more $X.XX of $X.XX. contemplated adjusted year was modeling and a is $X.XX. We we call. share our help session of leaseback second approximately we in share contemplates normalized to expense inventory the these for between million for comments. our not cycle are the and basis, now are range this the a are a and on adjusted originally delivering. This concludes potentially Operator, accelerating which for an approximately other is our of prepared GAAP our $XX $XX assumptions what the XXXX question-and-answer the compares now fiscal that

Operator

question first Our Ted Instructions] [Operator comes Securities. from Jackson Northland from

Edward Jackson

questions. and seasonality. regards just is challenged of have look -- or you seasonal typical will fourth question. we that that half first so see spending as we When of with the That's of you spend see to in in not seasonal I kind do My likely question thinking that still ag 'XX, pattern? that of flush is are typical will flush market the you X some that the is level at quarter kind my second it's typically a that Or first get? think we

Bryan Knutson

Thank and morning. you, good Ted, Yes.

really, quarter see varied crop we And up, North the and talked back throughout their Iowa, So all about, the farmers footprint, certain here to Minnesota half South how we're there's Nebraska, as Dakota and accountants. in areas that still of anticipating shaped go fourth of really meet Dakota, conditions we year those good you look they and yields. of pockets spending if our western by contractors as with

that some a of some update equipment needs lot because the even we we'll spending of certain couple to supply growers past had, So looking have those the able be And will those prices, the weren't years. well. update equipment. Also with as to subdued constraints farmers, of

will But from see to levels the in modeling the got those So them. yields, some we here. do that we've the get purchasing subdued good that traditional growers

timing the of the I lower but yes, similar, So just, definitely than here end the be very trend, patterns -- the year. normal will towards purchases think in the

Bo Larsen

Yes.

what's at take similar said, look as he the a you look guidance of So very half seasonality the the there. at back of and is in as then terms year implied,

But than specifically, In our XX%. of down full coming presales is year got half down of about down drill X%. lot right? So second a a saw ag were the essentially of we're about first was in we significantly. to you the but domestic year, total XX% applying about a a we the back with more sales half in there, the we've again, decrease year if equipment the business the that year, which into of not little So being decrease quarter, bit

kind purchases cyclicality but year-over-year the at of remains. point of stabilized So and terms in of this comps, timing

Edward Jackson

My Okay. inventory. question next is on just

inventory think good a before look And when inventory I'm that you so come your thought vis-a-vis expect actually, peak demand? -- it we 'XX, have and and crystal you take this. be news the accelerating sure get to high-definition I normalized that more start could by that can your think then down. you'll into and you I that longer? that's when you're And Or in ball, a to was do of actually it at half like we with is television, behind would to something do what see you to to it's second sharp going one clear get that Is level 'XX? something see And hear

Bryan Knutson

that I'll together inventory chain that you Ted. driven strike led to into maybe factors our the are by to a spike, take set the mirror Bo Yes, let issues, at of this came points unprecedented CNH, stage, which look at But up abnormal supply rearview is working just all this, times. the lead couple record leading to long lead to the of confluence now to just that plant COVID one, the

really unpredictable my And X months nearly more the XX this, or past the of over we dozen most doing had. boards in that years order

over in we boards, not months. clear have for more inventory lead secondly, order much we an times. shorter now And X placed order have stock So

end in XXXX. were many throughout that, been the those year, in finished last However, back this what placed is all year through facing cases, working in of we've orders

orders. starting And so of the to last just are those now receive we

were just at these deal through. we've have more task don't old we through and now have will, orders, now And of that got, So business actually and to very in what we can to if hand start with things any clear the you changing we work is coming started to placed as plan before accordingly. the work

Bo Larsen

bit more Yes. then color. maybe a And little

I talked about as call a would on equipment turn in the side, level. it domestic So in terms That billion about call Roughly regional $X.X that million difference. $XXX at targeted a the inventory. good of X.Xx comments, and about then opening differences $XXX we're assume there's how million shakes. But -- about total speaking, would some a in so that be

look in through working we the of million to for more $XXX towards year, the the toward we'll As to to us. rest think, year, leaving executing mean million at what to $XXX commentary about I able of go, to a base like. But levels target on end for year, have and by the next terms is idea the really fiscal close year decrease achieving the the be those provide end looks year good of the of I get point next

of 'XX, went in the downturn so 'XX, $XXX history, to the comparison, in a last FY we to back back reduction we if the as 'XX, drove million. FY got FY by end inventory about an Just of at looking we time

period in about talking instead And that proactive, we're of XX-month a talking million an time. being time So doing less $XX XX-month of we're period driving million incremental more here. about of change in is what $XX about than right,

this color would progress set that for it's since give we we'll you we execute, today, know certainly done that guidance So year. in through the as I year and and provide stage we've playbook more the on next the guidance the for and something then we as past that's to

Operator

from Mig Baird. Our from Dobre next question comes

Mircea Dobre

I about itself. points clarification quarter guess I'd just with of to of couple like maybe the a start

other, at there looking expense. in other a trying year. you the had that If margins we here. also items X the what with lower was seen the quarter, to and understand quite rental And of progressing we've happening what's margin higher related see bit than to So a level forward? And subsegment that how and the going gross I'm in I'm prior

that mistaken. in if I'm curious of not and what back north item of half? kind it's the million, think to And I out is how that $X specifically as line I'm plays

Bo Larsen

and $X that and million expense, Yes. the netted that. new $XX.X the question tax clarify essentially, purposes, chance to $X.X net all it's No, of leaseback million for intents market I That appreciate is against the million credit sales completion. the

account gets to $X that And amount a you that activity really, be otherwise. million. that significant of in shouldn't So there

the year the that's of would And Again, as a to say we industry. expect It's I back our in somewhat what the others you've as you're next down that size. perspective, fleet to work in persist for manage the other we elsewhere, half through on finish year. doing this is into focused what we're down fleet managing I seeing well. as utilization similar probably heard year. you've and thanks We'll developing to probably outlook we get rental rental we're this would to side, something certainly margin So there. From fleet that similar what us on mean seen

Mircea Dobre

here? utilization there remind And down you've Or in fleet? why me increase factors your are if a experienced Can in is significant that is maybe rental? it you other

Bryan Knutson

Our fleet is flat. basically

So of utilization, the physical it's Mig. purely a function

construction softening some industry, of rental utilization. a really much business in the very be can sector of in in the other the function our in -- is that directly areas residential warehouse high-margin and and news areas So to for especially very softening plays. Good just rental about tie business us a the that, it

a utilization dip a in can margin slight to swing in big So and versa. vice pretty lead

you'll see the when just there job on what keep that's working But machines is typically and got out there to keep So sites. softening. the really a pushing

customers use contractor really world. And they economy, and think they the fleets. you're and that's their things seeing when builds stronger the rent. then core with fleets back pull I And in where have as Our swings similar quicker so -- core it and of really swing some Uniteds up or some softens, their

Bo Larsen

underlying much right, he's construction our flat. pretty think that, the is it's million, $XX largely a is I about pretty But covered got And there. is And rental much size fleet and it business. rental

Mircea Dobre

generate see and you But color curious equipment back going million decline do sort getting OEM to in in help Maybe 'XX? the the helpful. compression, as going of And that understand back inventory of of half it the pretty down to with appreciate how you it only back What decline. the the inventory on is me this maybe the the you're relatively fiscal do to on this here. related we're I of why half progression inventory have is is work margin in more Very year? Can I'm you talked that discussion. $XXX fiscal in to in 'XX. a such what's seeing to as then this, to actually notable shipments half $XXX million the terms of back as inventory small about, from you decline,

Bo Larsen

Yes.

-- of time. those of of lead about So right, at terms But the we in we earlier -- this had out, times. the I'll the that orders beginning Bryan address on terms points, how that right? is in and in sure compression talked plays going extension placed of make year, then back both we mentioned the

half and to placed. I that talked Inventory with go increases see listen to if those back forward the the year. projecting about March, had inventory the we based we receiving in start already an that. But in you all decrease So and QX familiar think and QX, orders then back we'd we're in call, on of

we're of The the of going really much first half off. In to expected, to orders had start the And kind year pretty the that right, tail despite were going previously. year, that the of to see the revenue out we're the we QX, you rest placed finish finish. how miss. Back receiving then of half played

new, be a and equipment get deliver in. that to be half sell you we'll the which that an it. Once of it lot the cycle, is that work we've and sell years, of for for typical selling there's will and in use use we'll but in, in normalized what into us QX, back right? used going Once of you targeted new do got here, that right, move get portion equipment new partially through year our So you which but the to be a you to as So we'll equipment, a presold, right? And receive decrease of the receive prescribing trade that more bit to goods we're an effect X increase larger doing, everything as the we're substantially get see offset and of is than trade you see used you numbers next mix then our it, in received you is by that a that where through to downward levels. first portion you sales use, then whole

sales also answers, don't play how it's year? you to back sort the of more of Well, into see latest bit that. out, right? the year. our going would half the the taken effect quite in there's bit of a of certainly, out And year, we half exactly that's guidance the a and decrease X-stage why of has have, a prescribed So But of a going to back that

larger So assuming that new a outlook, not that's seeing you're why decrease.

Bryan Knutson

just add a as It's would well. very to you. I the times of much function lead

long unprecedented with record times. we So lead dealing were

also you work -- through to got orders to just you these shut fascia. all since that also Mig, you coming mentioned, have I been -- we as year in the have so And

our in to -- aggressively that's modeling what's modeling -- into the it. And baked that's the as margin of baked got we've and add that our all and also well. modeling, inventory in that's all basically So priced,

at that So want. and and down this the we've we add and your line we of well path, positioned lead very long orders that started time unfortunately, after point, to we have. And longer that, to feel takes just those I'll the goals that in all to times because hit hit task hand come it than our

Mircea Dobre

that is then, to case, your your inventory that in in 'XX right? going calendar So fiscal already half case, But pressure going saying the next significant to year you're basically bulk normalization this back the experiencing of at or being of 'XX, margin pretty as it's your occur we're Is occur looking year? the you're 'XX.

where is, is question most compression most 'XX actually frankly, to that's destock your margin the should guess I 'XX, in if is fiscal the of in going destock of happen? So expect because, happening further investors

Bo Larsen

be work But the terms that in the of back we down coming of into I less year, at next in to move what going terms year of persists inventory dynamics needing to going Yes, to the make that's have right? is have targeted decrease think biggest the will in in the actually the inventory half in top.

Base of similar of a cases that be we're really of right to back what we'll I lot be compressed population exit guidance substantially for you margins that the of see have next as next coming speaking, our the assume is year. would until think of more equipment, not that same our opposed forward into -- I And we're But we'll less it a and the decline. But now, generally we're guiding portion the the in focusing inventory see going I we'll would next to year right year those price which here less back providing -- again, half see carry what way. of on we shall now, right come good would we're So in and similar prescribe year. suggest before -- more seeing inventory to inventory inventory on year. decline we to simply -- already used we

Mircea Dobre

Okay. for me. Last question

do customer you actually orders placing? that In have OEM, today of your one here, again, or 'XX circumstances of orders of you're that for each into you're And any with the sometime are these a fiscal industry inventory? with orders associated orders Or placing that delivery are given terms these name placing the whenever? that future for are we already today that of the these covered you're the

Bryan Knutson

other for do. minimal less would we purposes a Yes, than keep much, very to customer any extremely stock loaner An much customers year of and much demo but amount, going units, Mig, name. some units

all and or customers units them presale of limited majority very keeping units display we're going. or not extremely the name. are stock walk-in ordering for So purpose of customer the again, We're the ordering great for the sale. Any are stock with just intentional, of

Bo Larsen

question. Yes. mean, you I asked good think a you that clearly I and clarifying heard And

We're be on. to Just we leading what right? always still want activity, absolutely on presale to that's focused and generating emphasize that,

continue to customer's been going name we're them, So to place the and throughout we presale orders year. a have have that on

is Bryan was And all then pulled targeted right that on, And here, and activity of of will asking you stock mentioned side progress of through stock as get really it we about that no you're what comes back there. XX together little kind and it's and there's we the down take things as to in -- the the months. next

Bryan Knutson

margin back targets. I'll the thing in your Mig, as to inventory one function go baked then, of reduction against more just orders coming a question. Really up And on

baked look what are we've the if And because industry. coming what half of of to orders in. you and so this been And got into needed we've those done we've back the at outpacing year, we've that legacy

out into legacy transition and we we coming next and have our haven't placed still as industry so because with stock and these those not to now line deal start outpacing down don't can have we with, we also we that industry that the year, orders orders the have from And sell pressure to work margin in further. inventories

Operator

next Klieve comes Street Capital Lake Ben from from question Our Markets.

Benjamin Klieve

A couple from me.

the front. on one margin of First more equipment all,

on about intentionally driving maybe your high wondering in materially you range you focus balanced contributing line? environment, margins kind about compression factors can equipment a of high-end down inventory precision range equipment one margin I'm that of if of the that the perspective, really throughout margins product across side? the control compression. of talk perhaps from Is categories those staying are the almost kind expanding, the kind the much Or firm? your an end, board you categories of are more -- on the talked the are You explicit from is of supply-demand current to the being to seeing on in

Bryan Knutson

It the Sure. across Thanks, is the Ben. generally on board equipment.

were little we're categories the market. it's function outpace to aggressive longer of where back I However, on a again, more to go which being is a specific product

lower depending any faster, need higher ticket to to we higher there degree to then So margin just is but what the items, your to compression crop a overall. And outpace there categories. And in is the cash in percentage, market a would I margin little those dollar go more category. of are still on back dollars -- those so inventory higher amount typically, again, reduce have third then products

that that products some seeing still margins some in are were some decent really are product those underproduced and on there So demand still of still categories.

we're again, need be that. others category, outpace So every prescriptive more areas on product at how every to bucket we very certainly some the market And really depending looking than being in and aggressive, here. on quickly

Bo Larsen

terms we I But just on net themselves, to driving help that's don't really that It and the to. purchasing absolutely Certainly, and technology a something as see next to bit decisions, something that. in that's progress OEMs it several positive much a all precision asking alluded of see factor, continue the we're whole as continued have over to is take were dollars-wise farmers. on good think of a you Yes, alluded a about little rates precision the like side, is goods Relative for years, driving we and you the equipment bit. going grow necessarily talking profitability to here. what it's positive it's automation, efficiencies we and

Benjamin Klieve

good. Very

compelled in any benefit much-needed the in both me. what the the less business, a are kind environment about at facing environment ag outsource of given to way service? helpful. for wondering business. weak are of I'm kind so terms does then you And being you good that economy? here, It's of this that economy this ag to ag the is you individually Okay. optimistic in -- of this other one kind in state And see the for That's is this very seeing of on one labor farmers throughout still of -- securing challenging all impact service

Bryan Knutson

yes. Yes,

little mindset is certainly and banker's it's as as now. right Ben, their their mindset possible to yes, So spend

as repairs. not to wanting are they do in So much

X short. On goes certainly so can windows mindful of they're deadlines the equipment the planting of up stakes sites, the windows piece and However, construction and and are penalties. everything the high, harvest the so job are the down, side, tie

downtime on done is them job And with that. And great value they the again, a we've in see really they customers, so for get us and working and that. them partnering so really with our expensive

keep to that's been such years able we up our for we've few to not So quite shops, a in combined technicians. have had why now, a push that, add and with

our changes some markets helped. you've are So the general has off then full economy it in falls as still board. And tightened, shops across and the that even bit, if on, so job generally rates seen little and really third, the unemployment a the has

some getting applicants. We are additional

the You that combine actions that got the we're success. first-ever Titan. We've doing huge which at camp has program, been with diesel

program which XX first-ever in industry. First been apprenticeship in there. accredited leading, in lot pioneered internship program to industry technicians program of good candidates that's year. We've got new about we that's led industry. a federal getting sponsorship our our we're this for student has tech the our -- been We've got us

there. see some so that's really And to been constraint service of labor to our of starting we're biggest fruits the And our our revenues.

long-term So initiative being is value for customers the again, the we us. because And feel growth of a see just again, about that really downtime optimistic, it so the critical.

Operator

from Our next Alex question Riley B. comes Securities. from Rygiel

Min Chung Cho

couple actually quick of questions is for And Alex. a This here. just Min, on

was but come probably Just the first, average out the what floorplan queue, that I will in the rate quarter? financing know this your in on

Bo Larsen

Yes. I it's X.X, roughly X.XX. mean,

Min Chung Cho

guys provide CNH have in the down you strong relationship dealership, provide or any additional in they also them. have extending that the know with frame? of just a largest the past, you Okay. like you're just noninterest-bearing market there? a concessions given kind with time they anything And you obviously Or do I

Bryan Knutson

their healthy their able to the and dealers business strong and healthy. be Yes. and through see stay CNH profitable this be able again, perform to down cycle wants in certainly dealers see and to and to reinvest

that So us financing partnering help like you and extended helping with programs, together et cetera. examples exactly are things they floorplan yes, us they certainly can levers or and interest out partner with on terms the mentioned of where good with

Bo Larsen

and sold right? picture, big through I focused ultimately, inventory win-win on. what And we're The to production, get manage think Yes. is

in to which pull-through, that drive So comments, for lot financing we earlier we in focus providing on were customers really want. alluding what the is also of a

Min Chung Cho

And cost you I quantify terms how maybe But this out you've can costs at last of take next? you this initiatives, are Excellent. downturn. fiscal you're that since looking Also your the in point? the considering divestitures much of cost-cutting in to year lot or understand a got any

Bo Larsen

Yes.

a will dollars. a we added overall forecast And an of perspective, assumes you set million OpEx from couple our which So acquisition, -- to Supply our that $X still even the expense X% includes Scott million. increase have Australia about about year-over-year, if in side,

on So cost right, people we're generally much decreasing. so year-over-year. When which our producing our you about equipment, we're speaking, structure, OpEx aren't is saying flat focused of our is think people. and

Our the customer and service and have people are focused on selling the that providing equipment support. we

moves the on go. But guidance We'll through lays you of OpEx of on. next give focused big on And that year. for kind not year we're continue what -- we again, play the better But the as continues -- than the on groundwork no the very So where closely. get we speaking, next this to say, need we'll sharp through, to Hiring, rest at there. done. as depending that. in progress for there. change a our spending been OEMs down And XX We continue we dynamics department. to single-digit I maintaining drive. lean sure to into continue have that to people seeing that order growth to drastic a tight at And in get certainly, that also got staff. on some keep make certainly headcount pencil. we're just that wouldn't We're some different eye somewhat whittled to discretionary do. industry we're looking generally months, has managing and down high want service we're expect need our But We we to Any

And expenses. so would on I that's what say operating

Min Chung Cho

just that of definitely segment from rentals? your of can and then percentage sense. makes kind you related Construction comes us what sales remind revenue also, non-agriculture No, Okay. And

Bryan Knutson

half. just over It's

Min Chung Cho

start that's will the Okay. stability all kind hopefully you're infrastructure growth And seeing 'XX fiscal of given hopefully obviously and spending segment some point? still at of into the some that going where that kind

Bryan Knutson

Yes. Yes.

Operator

question from Steve next comes from Craig-Hallum. Our Dyer

Matthew Raab

Steve. This for is Matthew Raab on

then for P&S Or just service that outlook fiscal parts for Thanks on the 'XX? growth. on half? for second question the one color year And secondly, that any Is business? the is Just the business.

Bo Larsen

Yes.

of growth well. year as good mean, service saw in So a no, I we the this first half

saw. as growth we those a well, right, And clarify of repeat half what are And of is basis. so same-store second assumptions more to bit of a just the

adds well. own component their So obviously, Australia as

on we've in making years forward. So customer tax. service up means strategy, been the term, people about no, what for on mean, driving ultimately, we care focus best-in-class of support. right I deliver to be our and to excited what as It's working parts. then we providing the on everything dividends customers increase It's field. you're service for our the that for about and everything the been has in regardless have it's sure the able where building will cycle, talking long that and that that that's have pay really and it's at the It's It's we the customer we'll continue go what for shareholders we're company that in

Bryan Knutson

fruits aggressively are see of laid a here the we've and [indiscernible] Yes, of to the that good what that. And going been one see. the in actually care few of the look and at right especially that place it strategy that's out customer now, our affirmation at our rates fill was we're increase years really their I of for has the to percentages is And been Recently, their higher to the the have X a one kind top industry laid has of side, parts after of quite as competitors right and exactly than X out. starting our components initiatives on the parts time. numbers,

our leading And benefits customers too. And so are that, seeing -- industry of really there. the that's

So having the and competitive part get to having for off, pricing, right for hand the them and to it's parts too. pay reputation a starting starting on

Operator

to This the concludes our remarks. question-and-answer closing back turn session. I floor would to for like management

Bryan Knutson

Titan, we and look Have great your next with everyone. a you forward Thank day, interest updating for our you in on call. our progress to

Operator

Thank We your participation. you. you thank for today's This teleconference. conclude does

your may lines this at You disconnect time.

Titan Machinery (TITN) 29 Aug 242025 Q2 Earnings call transcript