Titan Machinery (NasdaqGS:TITN) FY 2026 Conference January 13, 2026 09:00 AM ET Company ParticipantsBo Larsen - CFOBo LarsenBased in Australia. The philosophy, at first it was a small handful of dealerships, but then, Dave and Peter, kind of got together and started working on a vision to help consolidate the CNH network. And we're a leader in that space, and we are the largest, CNH dealer in the world. So the thought process was, buy the neighboring, dealerships, and then let's move back office support fun ...

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $546.4 million, a 14% decrease from $633.7 million in the prior year period [13] - Gross profit decreased to $93.6 million from $112.4 million, with a gross profit margin of 17.1% compared to 17.7% in the prior year [13] - The net loss for the quarter was $6 million, resulting in a loss per diluted share of $0.26, compared to adjusted net income of $4 million or adjusted diluted earnings per share of $0.17 for the same period last year [14] Business Line Data and Key Metrics Changes - Domestic Agriculture segment saw a same-store sales decrease of 18.7% to $345.8 million, with a pretax loss of $12.3 million compared to adjusted pretax income of $6.7 million in the prior year [15] - Construction segment's same-store sales decreased 10.2% to $72 million, resulting in a pretax loss of $1.2 million compared to adjusted pretax income of $200,000 in the prior year [15] - Europe segment experienced a 44% increase in same-store sales to $98.1 million, with a pretax income of $5.1 million compared to a pretax loss of $2.3 million in the prior year [16] - Australia segment's same-store sales decreased 50.1% to $30.6 million, with a pretax loss of $2.1 million compared to pretax income of $1.4 million in the prior year [17] Market Data and Key Metrics Changes - Farmer sentiment in the domestic agriculture segment remains cautious due to low commodity prices, with net income heavily dependent on uncertain government support programs [8] - The construction segment is experiencing weaker demand as customers are cautious with capital expenditures amid broader economic uncertainty [9] - The European segment, particularly Romania, is performing well due to EU stimulus programs [9] Company Strategy and Development Direction - The company is focused on inventory reduction initiatives, targeting a reduction of $100 million for the fiscal year, with expectations to exceed this target [6][17] - The strategy includes optimizing the used equipment portfolio and enhancing customer experience through a customer care initiative [7] - The company aims to emerge from the current cycle stronger and better positioned for fiscal 2027 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving inventory reduction targets and improving equipment margins in the future [18] - The company expects equipment margins to remain subdued through the rest of fiscal 2026, with a revised full-year equipment margin expectation of approximately 6.6% [18] - Management highlighted the importance of government support and crop health for the agriculture segment's performance [8][33] Other Important Information - The company has reduced inventory by approximately $365 million over the past year [11] - Cash on hand was $33 million, with an adjusted debt to tangible net worth ratio of 1.8 as of July 31, 2025 [17] Q&A Session Summary Question: What conditions are needed for equipment margins to improve? - Management indicated that mix optimization, pricing discipline, and geographic optimization are key factors for margin recovery [24][26] Question: How much does the company expect to exceed the $100 million inventory reduction target? - Management stated that internal goals for inventory reduction are significantly higher than $100 million, but external factors will influence the final outcome [46] Question: What is the outlook for OEM pricing and incentives? - Management noted that OEMs are discussing price increases of 2% to 4%, and the company is working closely with suppliers to manage these costs [50] Question: How is the company handling trade-ins and used equipment? - Management confirmed that they are actively managing trade-ins and have seen success in moving late-model used equipment [66] Question: What is the impact of the pending farm bill on farmer support? - Management highlighted ongoing debates about the farm bill, emphasizing the need for permanent support and increased funding for research in crop utilization [91]