Titan Machinery Inc. (NASDAQ:TITN) Q4 2021 Earnings Conference Call March 18, 2021 8:30 AM ET Company Participants John Mills - Managing Partner, ICR Investor Relations David Meyer - Chairman & Chief Executive Officer Bryan Knutson - Chief Operating Officer Mark Kalvoda - Chief Financial Officer Conference Call Participants Rick Nelson - Stephens Inc Larry De Maria - William Blair Mig Dobre - Robert W. Baird Ryan Sigdahl - Craig-Hallum Capital Group Operator Greetings and welcome to the Titan Machinery Four ...

Fourth Quarter FY2021 Earnings Conference Call March 18, 2021 Power & Precision to Grow® Safe Harbor Statement Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar expressions may constitute forward-looking statements ...

ICR VIRTUAL INVESTOR CONFERENCE January 12, 2021 Power & Precision to Grow® Safe Harbor Statement 2 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar expressions may constitute forward-looking statements. Except fo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of ...

Titan Machinery Inc. (NASDAQ:TITN) Q3 2021 Earnings Conference Call November 24, 2020 8:30 AM ET Company Participants John Mills - Managing Partner, ICR Investor Relations David Meyer - Chairman and Chief Executive Officer Bryan Knutson - Chief Operating Officer Mark Kalvoda - Chief Financial Officer and Treasurer Conference Call Participants Mig Dobre - Baird Rick Nelson - Stephens Larry De Maria - William Blair Steve Dyer - Craig Hallum Capital Operator Greetings, and welcome to the Titan Machinery Inc. T ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) Indicate by check mark whether the ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) Delaware 45-035 ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Titan Machinery operates full-service agricultural and construction equipment dealerships in the U.S. and Europe - The company is the **largest retail dealer of Case IH Agriculture equipment globally** and the **largest retail dealer of Case Construction equipment in North America**[11](index=11&type=chunk) - Operates through three segments: Agriculture, Construction, and International, with a network of **74 stores in the U.S.** and **33 in Europe**[12](index=12&type=chunk)[13](index=13&type=chunk) Revenue Contribution by Activity (Fiscal Years 2018-2020) | Revenue Source | FY 2020 | FY 2019 | FY 2018 | | :--- | :--- | :--- | :--- | | Equipment | 70.3% | 72.1% | 70.8% | | Parts | 17.9% | 16.7% | 17.0% | | Service | 7.6% | 6.9% | 7.4% | | Rental & Other | 4.2% | 4.3% | 4.7% | - Growth strategy focuses on increasing same-store sales and pursuing strategic acquisitions, having completed **over 50 dealership acquisitions** since January 2003[38](index=38&type=chunk)[39](index=39&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from CNH Industrial dependence, market cyclicality, international operations, and ERP system issues - Substantial dependence on CNH Industrial, which supplied approximately **74% of new Agriculture equipment**, **70% of new Construction equipment**, and **62% of new International equipment** in fiscal 2020[80](index=80&type=chunk) - Agricultural and construction equipment sales are cyclical and affected by external factors like **net farm income**, **commodity prices**, **trade policies**, and **public infrastructure spending**[89](index=89&type=chunk)[90](index=90&type=chunk) - The **COVID-19 pandemic** is identified as a significant risk that could disrupt supply chains, decrease customer demand, and adversely impact business operations and financial condition[93](index=93&type=chunk) - International operations, which accounted for **18.1% of fiscal 2020 revenue**, expose the company to risks including **currency fluctuations**, **political instability** (particularly in Ukraine), and different legal/regulatory environments[101](index=101&type=chunk)[104](index=104&type=chunk) - The company is implementing a new **Enterprise Resource Planning (ERP) system**, and potential problems with its design or implementation could interfere with business operations and financial reporting[116](index=116&type=chunk) [Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - **None**[135](index=135&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) As of January 31, 2020, the company operates 107 equipment stores across the U.S. and Europe, mostly leased Store Count by Segment and Location (as of Jan 31, 2020) | Location | Agriculture | Construction | International | Total | | :--- | :--- | :--- | :--- | :--- | | **US States** | | | | | | North Dakota | 10 | 5 | — | 15 | | Minnesota | 10 | 3 | — | 13 | | Iowa | 10 | 3 | — | 13 | | Nebraska | 11 | 2 | — | 13 | | South Dakota | 8 | 2 | — | 10 | | Other US | — | 9 | — | 9 | | **European Countries** | | | | | | Romania | — | — | 12 | 12 | | Ukraine | — | — | 8 | 8 | | Bulgaria | — | — | 7 | 7 | | Germany | — | — | 5 | 5 | | Serbia | — | — | 1 | 1 | | **Total** | **49** | **25** | **33** | **107** | - The company leases **94 store facilities** and owns **13 store facilities** (9 in the U.S. and 4 in Germany)[138](index=138&type=chunk)[140](index=140&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to routine legal claims, with no material financial impact expected from their resolution - The company is subject to routine claims and suits, but management believes their resolution will **not have a material financial impact**[142](index=142&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[143](index=143&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TITN common stock trades on NASDAQ, has not paid dividends, and underperformed key indices over five years - Common stock is listed on the **NASDAQ Stock Market** under the symbol **"TITN"**[149](index=149&type=chunk) - The company has **not paid dividends** and does not anticipate paying them in the foreseeable future, prioritizing expansion and managing debt[150](index=150&type=chunk) Stock Performance Comparison (Value of $100 Investment) | Date (Jan 31) | Titan Machinery Inc. | Russell 2000 Index | S&P 500 Retail Index | | :--- | :--- | :--- | :--- | | 2015 | $100.00 | $100.00 | $100.00 | | 2016 | $60.08 | $88.84 | $115.56 | | 2017 | $97.74 | $116.86 | $135.00 | | 2018 | $152.09 | $135.15 | $194.19 | | 2019 | $132.63 | $129.01 | $203.54 | | 2020 | $86.41 | $138.71 | $243.26 | [Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data shows fiscal 2020 revenue of $1.31 billion and net income of $14.0 million Selected Statement of Operations Data (in thousands, except per share data) | Fiscal Year Ended Jan 31 | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,305,171 | $1,261,505 | $1,192,606 | $1,201,697 | $1,355,792 | | Income (Loss) from Operations | $21,332 | $27,481 | $925 | $(2,372) | $(23,110) | | Net Income (Loss) | $13,953 | $12,182 | $(7,049) | $(14,179) | $(37,892) | | Diluted EPS | $0.63 | $0.55 | $(0.32) | $(0.65) | $(1.76) | Selected Balance Sheet Data (in thousands) | As of Jan 31 | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | $975,343 | $792,438 | $760,308 | $771,422 | $1,047,875 | | Floorplan payable | $371,772 | $273,756 | $247,392 | $233,228 | $444,780 | | Total stockholders' equity | $345,104 | $335,311 | $321,855 | $321,179 | $338,349 | - The number of stores at fiscal year-end was **107 in 2020**, 104 in 2019, 97 in 2018, 109 in 2017, and 108 in 2016[158](index=158&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses fiscal 2020 performance, noting revenue growth, improved gross margin, increased expenses, and liquidity [Results of Operations (FY2020 vs. FY2019)](index=43&type=section&id=Results%20of%20Operations) Fiscal 2020 revenue increased to $1.31 billion, driven by parts and service, with improved gross margin Revenue by Source (FY2020 vs. FY2019) | Revenue Source | FY 2020 (in thousands) | FY 2019 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Equipment | $917,202 | $909,178 | 0.9% | | Parts | $234,217 | $210,796 | 11.1% | | Service | $99,165 | $86,840 | 14.2% | | Rental and other | $54,587 | $54,691 | (0.2)% | | **Total Revenue** | **$1,305,171** | **$1,261,505** | **3.5%** | Gross Profit and Margin by Source (FY2020 vs. FY2019) | Source | Gross Profit FY20 (k) | Gross Margin FY20 | Gross Profit FY19 (k) | Gross Margin FY19 | | :--- | :--- | :--- | :--- | :--- | | Equipment | $98,495 | 10.7% | $96,711 | 10.6% | | Parts | $69,027 | 29.5% | $61,181 | 29.0% | | Service | $65,719 | 66.3% | $57,804 | 66.6% | | Rental and other | $17,577 | 32.2% | $15,892 | 29.1% | | **Total** | **$250,818** | **19.2%** | **$231,588** | **18.4%** | - Operating expenses increased by **$24.2 million (12.0%)** in fiscal 2020, primarily due to **ERP transition costs**, acquisitions, and costs to support higher business volumes[217](index=217&type=chunk) Segment Income (Loss) Before Income Taxes (FY2020 vs. FY2019) | Segment | FY 2020 (in thousands) | FY 2019 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Agriculture | $18,036 | $16,799 | 7.4% | | Construction | $(2,290) | $(4,400) | 48.0% | | International | $504 | $5,160 | (90.2)% | | **Total Segment Income** | **$16,250** | **$17,559** | **(7.5)%** | [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP measures like Adjusted Net Income and EBITDA, showing improved fiscal 2020 performance Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA (in thousands) | Measure | FY 2020 | FY 2019 | | :--- | :--- | :--- | | Net Income (GAAP) | $13,953 | $12,182 | | Adjustments (pre-tax) | $10,939 | $3,185 | | Tax Effect & Valuation Allowance | $(7,182) | $(636) | | **Adjusted Net Income (Non-GAAP)** | **$17,710** | **$14,731** | | | | | | EBITDA (Non-GAAP) | $46,840 | $46,577 | | Adjustments | $6,261 | $3,185 | | **Adjusted EBITDA (Non-GAAP)** | **$53,101** | **$49,762** | Reconciliation of Diluted EPS to Adjusted Diluted EPS | Measure | FY 2020 | FY 2019 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.63 | $0.55 | | Total Adjustments | $0.16 | $0.12 | | **Adjusted Diluted EPS (Non-GAAP)** | **$0.79** | **$0.67** | [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity relies on operations and credit facilities, with $717.0 million in floorplan lines and a new credit agreement - As of Jan 31, 2020, the company had floorplan payable lines of credit totaling **$717.0 million**, including a **$450.0 million facility with CNH Industrial Capital** and a **$140.0 million line under the Wells Fargo Credit Agreement**[238](index=238&type=chunk) - The remaining outstanding Senior Convertible Notes (**$45.6 million principal**) were repaid on their maturity date of May 1, 2019[241](index=241&type=chunk)[243](index=243&type=chunk) - Subsequent to fiscal year-end, on April 3, 2020, the company entered into a new five-year, **$250 million credit facility**, enhancing liquidity and extending debt maturity[239](index=239&type=chunk)[528](index=528&type=chunk) - Projected capital expenditures for fiscal 2021 are approximately **$20.0 million for property and equipment** and **$15.0 million for the rental fleet**[247](index=247&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations and foreign currency exposure, particularly UAH - A **one percentage point increase in interest rates** would decrease pre-tax earnings and cash flow by approximately **$1.8 million** over a 12-month period[270](index=270&type=chunk) - The company is exposed to foreign currency risk from its international operations, with transactional and translational risks. It holds **$3.8 million of net monetary assets denominated in Ukrainian hryvnia (UAH)** as of Jan 31, 2020[271](index=271&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2018-2020 [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=126&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants on accounting or financial disclosure - **None**[532](index=532&type=chunk) [Controls and Procedures](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that disclosure controls and internal control over financial reporting were effective - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of January 31, 2020[533](index=533&type=chunk) - Management concluded that **internal control over financial reporting was effective** as of January 31, 2020, a conclusion audited and affirmed by Deloitte & Touche LLP[534](index=534&type=chunk)[535](index=535&type=chunk) [Other Information](index=126&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[537](index=537&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=126&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[539](index=539&type=chunk) [Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's 2020 proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[540](index=540&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=126&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[541](index=541&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=127&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[542](index=542&type=chunk) [Principal Accounting Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's 2020 proxy statement - Information required by this item is incorporated by reference from the company's **2020 proxy statement**[543](index=543&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=127&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K - Lists all financial statements, schedules, and exhibits filed with the Form 10-K[545](index=545&type=chunk)[546](index=546&type=chunk) - Key exhibits include **dealer and financing agreements with CNH Industrial**, the **Third Amended and Restated Credit Agreement**, and **executive employment agreements**[548](index=548&type=chunk)[550](index=550&type=chunk)[552](index=552&type=chunk) [Form 10-K Summary](index=134&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - **Not applicable**[555](index=555&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2019 Commission File No. 001-33866 TITAN MACHINERY INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) Delaware No. 45-0357838 (IRS Employer Identification No.) 644 East Beaton Drive West Fargo, ND 58078-2648 (Ad ...

[Table of Contents](index=2&type=section&id=Table%20of%20Contents) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited Q2 2019 financial statements reflect total assets of $1.03 billion, increased revenue to $315.0 million, and net income of $5.5 million, influenced by inventory growth and ASC 842 adoption [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of July 31, 2019, total assets increased to $1.03 billion, primarily due to higher inventories and new operating lease assets from ASC 842 adoption, alongside a rise in total liabilities Consolidated Balance Sheet Highlights (in thousands) | Account | July 31, 2019 | January 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$1,029,196** | **$792,438** | **+$236,758** | | Inventories | $629,246 | $491,091 | +$138,155 | | Operating lease assets | $95,432 | $— | +$95,432 | | **Total Liabilities** | **$693,237** | **$457,127** | **+$236,110** | | Floorplan payable | $451,934 | $273,756 | +$178,178 | | Operating lease liabilities (Current & Long-Term) | $105,432 | $— | +$105,432 | | Senior convertible notes | $— | $45,249 | -$45,249 | | **Total stockholders' equity** | **$335,959** | **$335,311** | **+$648** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2019, total revenue increased 6.0% to $315.0 million, with gross profit and net income also rising, reflecting strong sales across segments Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2019 | Q2 2018 | YoY Change | Six Months 2019 | Six Months 2018 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $314,981 | $297,231 | +6.0% | $593,271 | $540,946 | +9.7% | | Gross Profit | $64,027 | $58,901 | +8.7% | $117,926 | $106,459 | +10.8% | | Income from Operations | $9,172 | $10,547 | -13.0% | $10,381 | $11,378 | -8.8% | | Net Income | $5,511 | $5,180 | +6.4% | $5,066 | $3,566 | +42.1% | | Diluted EPS | $0.25 | $0.23 | +8.7% | $0.23 | $0.16 | +43.8% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended July 31, 2019, net cash used in operations improved to $6.3 million, primarily due to inventory increases, while financing activities provided cash offsetting investing uses Cash Flow Summary for Six Months Ended July 31 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Used for Operating Activities | $(6,303) | $(14,087) | | Net Cash Used for Investing Activities | $(14,638) | $(5,309) | | Net Cash Provided by Financing Activities | $13,647 | $15,717 | | **Net Change in Cash** | **$(7,228)** | **$(3,723)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail ASC 842 adoption, segment revenue, a German acquisition, an antitrust investigation contingency, and a corrected immaterial prior period error - The company adopted the new lease accounting standard ASC 842 on February 1, 2019, resulting in the recognition of **$100.5 million** in operating lease assets and **$98.3 million** in operating lease liabilities on the balance sheet[22](index=22&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - On January 1, 2019, the Company acquired German agriculture equipment dealership ESB Agrartechnik GmbH for **$3.0 million** in cash, resulting in **$0.5 million** of goodwill[68](index=68&type=chunk) - The company is under investigation by the Romania Competition Council (RCC) regarding potential anti-competitive practices, but the outcome or potential loss cannot be estimated[72](index=72&type=chunk) - An immaterial error in prior period financial statements related to the elimination of internal parts and service transactions was identified and corrected, with no impact on gross profit, net income, or EPS for the three and six months ended July 31, 2018[77](index=77&type=chunk)[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 fiscal 2020 revenue growth, margin improvements offset by rising operating expenses, decreased interest costs, and sufficient liquidity for the next 12 months [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q2 revenue grew 6.0% driven by Agriculture and Construction, with improved gross margin offset by a 15.2% increase in operating expenses, impacting operating income Revenue by Segment - Q2 Comparison (in thousands) | Segment | Q2 2019 Revenue | Q2 2018 Revenue | % Change | | :--- | :--- | :--- | :--- | | Agriculture | $165,692 | $151,877 | +9.1% | | Construction | $84,039 | $77,521 | +8.4% | | International | $65,250 | $67,833 | -3.8% | | **Total** | **$314,981** | **$297,231** | **+6.0%** | Income Before Taxes by Segment - Q2 Comparison (in thousands) | Segment | Q2 2019 Income | Q2 2018 Income | % Change | | :--- | :--- | :--- | :--- | | Agriculture | $6,177 | $4,960 | +24.5% | | Construction | $1,334 | $(30) | n/m | | International | $505 | $3,726 | -86.4% | | **Total Segment Income** | **$8,016** | **$8,656** | **-7.4%** | - Operating expenses increased by **$7.2 million** (**15.2%**) in Q2 2020 compared to Q2 2019, primarily due to the AGRAM acquisition, ERP transition costs, and higher costs to support increased business volumes[97](index=97&type=chunk) - Floorplan and other interest expenses decreased by a combined **43.9%** in Q2 2020, mainly due to lower levels of interest-bearing inventory and the full repayment of senior convertible notes in May 2019[83](index=83&type=chunk)[99](index=99&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP adjusted net income and diluted EPS, excluding specific one-time costs, to provide a clearer view of core business performance Reconciliation of GAAP to Non-GAAP Diluted EPS | | Three Months Ended July 31, | Six Months Ended July 31, | | :--- | :--- | :--- | | | **2019** | **2018** | **2019** | **2018** | | Diluted EPS (GAAP) | $0.25 | $0.23 | $0.23 | $0.16 | | ERP transition costs | $0.08 | $— | $0.13 | $— | | Loss on repurchase of senior convertible notes | $— | $0.03 | $— | $0.03 | | Restructuring and impairment charges | $— | $0.03 | $— | $0.03 | | Tax Effect of Adjustments | $(0.02) | $(0.01) | $(0.03) | $(0.01) | | **Adjusted Diluted EPS (Non-GAAP)** | **$0.31** | **$0.28** | **$0.33** | **$0.21** | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash, operating cash flow, and $640.0 million in credit facilities, with senior convertible notes fully repaid, ensuring adequate resources for the next 12 months - Primary sources of liquidity are cash reserves, cash from operations, and borrowings under floorplan and other credit facilities[132](index=132&type=chunk) - As of July 31, 2019, the company had floorplan payable lines of credit totaling **$640.0 million**[133](index=133&type=chunk) - The company's senior convertible notes matured and the outstanding principal balance of **$45.6 million** was repaid in full on May 1, 2019, using available cash and borrowing capacity[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from interest rate fluctuations and foreign currency exposure, particularly the Ukrainian hryvnia, which are managed through various strategies - A one percentage point increase in interest rates would decrease pre-tax earnings and cash flow by approximately **$1.8 million** over a 12-month period[155](index=155&type=chunk) - The company is exposed to foreign currency risk, particularly from its Ukrainian subsidiary's net monetary assets denominated in Ukrainian hryvnia (UAH), which could be impacted by political or economic instability[156](index=156&type=chunk) [Controls and Procedures](index=47&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[158](index=158&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[159](index=159&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=48&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any material litigation, though it handles various claims in the ordinary course of business - The company is not currently a party to any material litigation[160](index=160&type=chunk) [Risk Factors](index=48&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers the reader to the 'Risk Factors' discussed in the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2019, for a detailed discussion of potential risks - The report directs investors to review the Risk Factors section of the Form 10-K for the fiscal year ended January 31, 2019[161](index=161&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities during the period - None[162](index=162&type=chunk) [Exhibits](index=48&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial statements - Exhibits filed include CEO/CFO certifications and XBRL data files[169](index=169&type=chunk)