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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, 2023
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)
Delaware 45-0357838
(State or Other Jurisdiction of
Incorporation or Organization)
 (IRS Employer
Identification No.)

644 East Beaton Drive
West Fargo, ND 58078-2648
(Address of Principal Executive Offices)
 
Registrant’s telephone number (701) 356-0130

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par value per shareTITNThe Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer ☒
Non-accelerated filerSmaller reporting company 
Emerging growth company 

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No  

As of December 1, 2023, 22,849,387 shares of Common Stock, $0.00001 par value, of the registrant were outstanding.


TITAN MACHINERY INC.
QUARTERLY REPORT ON FORM 10-Q
 Table of Contents
 Page No.
PART I.
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
 Condensed Consolidated Balance Sheets
 Condensed Consolidated Statements of Operations
 Condensed Consolidated Statements of Comprehensive Income
 Condensed Consolidated Statements of Stockholders' Equity
 Condensed Consolidated Statements of Cash Flows
 Notes to Condensed Consolidated Financial Statements
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.
CONTROLS AND PROCEDURES
PART II.
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
ITEM 1A.
RISK FACTORS
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
ITEM 4.
MINE SAFETY DISCLOSURES
ITEM 5.
OTHER INFORMATION
ITEM 6.
EXHIBITS
Exhibit Index
Signatures

2

PART I. FINANCIAL INFORMATION
 
ITEM 1.                FINANCIAL STATEMENTS
 
TITAN MACHINERY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share data)
October 31, 2023January 31, 2023
Assets
Current Assets
Cash$69,981 $43,913 
Receivables, net of allowance for expected credit losses129,399 95,844 
Inventories, net 1,071,088 703,939 
Prepaid expenses and other15,080 25,554 
Total current assets1,285,548 869,250 
Noncurrent Assets
Property and equipment, net of accumulated depreciation 267,155 217,782 
Operating lease assets40,835 50,206 
Deferred income taxes4,969 1,246 
Goodwill31,144 30,622 
Intangible assets, net of accumulated amortization18,266 18,411 
Other1,821 1,178 
Total noncurrent assets364,190 319,445 
Total Assets$1,649,738 $1,188,695 
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable$38,016 $40,834 
Floorplan payable 705,610 258,372 
Current maturities of long-term debt11,586 7,241 
Current operating lease liabilities9,395 9,855 
Deferred revenue43,964 119,845 
Accrued expenses and other71,211 58,159 
Income taxes payable5,622 3,845 
Total current liabilities885,404 498,151 
Long-Term Liabilities
Long-term debt, less current maturities 87,591 89,950 
Operating lease liabilities38,688 48,513 
Deferred income taxes9,561 9,563 
Other long-term liabilities2,661 6,212 
Total long-term liabilities138,501 154,238 
Commitments and Contingencies
Stockholders' Equity
Common stock, par value $.00001 per share, 45,000,000 shares authorized; 22,862,706 shares issued and outstanding at October 31, 2023; 22,697,761 shares issued and outstanding at January 31, 2023
  
Additional paid-in-capital257,881 256,541 
Retained earnings373,263 284,784 
Accumulated other comprehensive loss(5,311)(5,019)
Total stockholders' equity 625,833 536,306 
Total Liabilities and Stockholders' Equity$1,649,738 $1,188,695 
 See Notes to Condensed Consolidated Financial Statements
3

TITAN MACHINERY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
 Three Months Ended October 31,Nine Months Ended October 31,
 2023202220232022
Revenue
Equipment$521,775 $508,996 $1,431,272 $1,240,579 
Parts114,962 108,719 320,077 254,974 
Service44,767 38,960 122,178 101,847 
Rental and other12,611 12,098 32,785 28,923 
Total Revenue694,115 668,773 1,906,312 1,626,323 
Cost of Revenue
Equipment454,598 436,156 1,237,660 1,070,378 
Parts78,585 72,146 216,775 172,162 
Service14,393 13,456 41,010 35,288 
Rental and other8,198 7,435 20,549 17,522 
Total Cost of Revenue555,774 529,193 1,515,994 1,295,350 
Gross Profit138,341 139,580 390,318 330,973 
Operating Expenses92,115 84,861 262,182 217,841 
Income from Operations46,226 54,719 128,136 113,132 
Other Income (Expense)
Interest and other income (expense)(235)1,804 1,129 3,169 
Floorplan interest expense(4,045)(588)(7,774)(1,087)
Other interest expense(1,494)(1,257)(4,008)(3,802)
Income Before Income Taxes40,452 54,678 117,483 111,412 
Provision for Income Taxes10,259 13,421 29,004 27,656 
Net Income$30,193 $41,257 $88,479 $83,756 
Earnings per Share:
Basic$1.32 $1.82 $3.88 $3.70 
Diluted$1.32 $1.82 $3.88 $3.70 
Weighted Average Common Shares:
Basic22,512 22,393 22,487 22,365 
Diluted22,517 22,399 22,493 22,372 
 See Notes to Condensed Consolidated Financial Statements

4

TITAN MACHINERY INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
 Three Months Ended October 31,Nine Months Ended October 31,
 2023202220232022
Net Income$30,193 $41,257 $88,479 $83,756 
Other Comprehensive Income (Loss)
Foreign currency translation adjustments(1,938)(5,132)(292)(9,285)
Comprehensive Income$28,255 $36,125 $88,187 $74,471 
 See Notes to Condensed Consolidated Financial Statements

5

TITAN MACHINERY INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
(in thousands)
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Shares OutstandingAmount
Balance at January 31, 202322,698 $— $256,541 $284,784 $(5,019)$536,306 
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax(29)— (993)— — (993)
Stock-based compensation expense— — 659 — — 659 
Net income— — — 26,965 — 26,965 
Other comprehensive income— — — — 1,096 1,096 
Balance at April 30, 202322,669 $— $256,207 $311,749 $(3,923)$564,033 
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax195 — (7)— — (7)
Stock-based compensation expense— — 784 — — 784 
Net income— — — 31,321 — 31,321 
Other comprehensive income— — — — 550 550 
Balance at July 31, 202322,864 $— $256,984 $343,070 $(3,373)$596,681 
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax(1)— 1 — — 1 
Stock-based compensation expense— — 896 — — 896 
Net income— — — 30,193 — 30,193 
Other comprehensive loss— — — — (1,938)(1,938)
Balance at October 31, 202322,863 $— $257,881 $373,263 $(5,311)$625,833 
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Shares OutstandingAmount
Balance at January 31, 202222,588 $— $254,455 $182,916 $(2,172)$435,199 
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax(19)— (685)— — (685)
Stock-based compensation expense— — 620 — — 620 
Net income— — — 17,540 — 17,540 
Other comprehensive loss— — — — (1,191)(1,191)
Balance at April 30, 202222,569 $— $254,390 $200,456 $(3,363)$451,483 
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax126 — (5)— — (5)
Stock-based compensation expense— — 803 — — 803 
Net income— — — 24,959 — 24,959 
Other comprehensive loss— — — — (2,963)(2,963)
Balance at July 31, 202222,695 $— $255,188 $225,415 $(6,326)$474,277 
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax12 —  — —  
Stock-based compensation expense— — 885 — — 885 
Net income— — — 41,257 — 41,257 
Other comprehensive loss— — — — (5,132)(5,132)
Balance at October 31, 202222,707 $— $256,073 $266,672 $(11,458)$511,287 
See Notes to Condensed Consolidated Financial Statements
6


TITAN MACHINERY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 Nine Months Ended October 31,
 20232022
Operating Activities
Net income$88,479 $83,756 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization22,871 18,356 
Deferred income taxes(3,731)(1,835)
Stock-based compensation expense2,339 2,308 
Noncash interest expense206 182 
Other, net5,628 7,072 
Changes in assets and liabilities, net of effects of acquisitions
Receivables(31,947)(10,507)
Prepaid expenses and other assets5,774 10,675 
Inventories(358,837)(115,734)
Manufacturer floorplan payable274,968 78,972 
Deferred revenue(77,425)(83,029)
Accounts payable, accrued expenses and other and other long-term liabilities(10,386)2,650 
Net Cash Used for Operating Activities(82,061)(7,134)
Investing Activities
Rental fleet purchases(5,154)(8,601)
Property and equipment purchases (excluding rental fleet)(36,770)(16,829)
Proceeds from sale of property and equipment6,451 2,110 
Acquisition consideration, net of cash acquired(27,935)(100,471)
Other, net(643)(176)
Net Cash Used for Investing Activities(64,051)(123,967)
Financing Activities
Net change in non-manufacturer floorplan payable174,353 32,212 
Proceeds from long-term debt borrowings7,721 8,415 
Principal payments on long-term debt and finance leases(10,685)(5,596)
Other, net(1,121)(698)
Net Cash Provided by Financing Activities170,268 34,333 
Effect of Exchange Rate Changes on Cash1,912 (3,529)
Net Change in Cash26,068 (100,297)
Cash at Beginning of Period43,913 146,149 
Cash at End of Period$69,981 $45,852 
Supplemental Disclosures of Cash Flow Information
Cash paid during the period
Income taxes, net of refunds$28,890 $15,711 
Interest$10,480 $4,595 
Supplemental Disclosures of Noncash Investing and Financing Activities
Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities$5,479 $5,436 
Long-term debt to acquire finance leases$ $7,119 
Net transfer of assets to property and equipment from inventories$(400)$(4,686)
See Notes to Condensed Consolidated Financial Statements
7

TITAN MACHINERY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. The quarterly operating results for Titan Machinery Inc. (the “Company”) are subject to fluctuation due to varying weather patterns, which may impact the timing and amount of equipment purchases, rentals, and after-sales parts and service purchases by the Company’s agriculture, construction and international customers. Therefore, operating results for the nine-months ended October 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2024. The segment formerly known as "International" has been updated to "Europe" as of October 31, 2023 and a fourth segment "Australia" will be added starting in the fourth quarter fiscal 2024 reporting, as a result of the Company's acquisition of J.J. O’Connor & Sons Pty. Ltd. ("O’Connors"), refer to Note 18 - Subsequent Event for further details. The information contained in the consolidated balance sheet as of January 31, 2023 was derived from the audited consolidated financial statements of the Company for the fiscal year then ended. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023 as filed with the SEC.
Nature of Business
The Company is engaged in the retail sale, service and rental of agricultural and construction machinery through its stores in the United States, Europe, and Australia. The Company’s North American stores are located in Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin, and Wyoming. Internationally, the Company's European stores are located in Bulgaria, Germany, Romania, and Ukraine and the Company's Australian stores are located in New South Wales, South Australia, and Victoria in Southeastern Australia.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, particularly related to realization of inventory, impairment of long-lived assets, goodwill, or indefinite lived intangible assets, collectability of receivables, and income taxes.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material accounts, transactions and profits between the consolidated companies have been eliminated in consolidation.
Recently issued accounting pronouncements not yet adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated statements.
8

Recently Adopted Accounting Guidance
In September 2022, FASB issued ASU No. 2022-04, Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This new standard requires that the buyer in a supplier finance program discloses information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption of this ASU is permitted. Entities must apply the amendments of this ASU retrospectively to all periods in which a balance sheet is presented, with the exception of the amendment on disclosure of rollforward information, which entities only need to apply prospectively. On February 1, 2023, the Company adopted ASU No. 2022-04 to our consolidated financial statements.
The Company has agreements with financial institutions to facilitate the purchase of inventory from designated suppliers under certain terms and conditions. Under these agreements, the Company receives extended payment terms and agrees to pay the financial institution a stated amount of confirmed invoices from its designated suppliers. The Company may incur interest in accordance with the terms of the agreements. Additionally, the Company has no involvement in establishing the terms or conditions of the arrangements between its suppliers and the financial institution.
The amounts outstanding under these agreements as of October 31, 2023 and January 31, 2023 were $42.1 million and $13.0 million, respectively, and are presented as Floorplan payable on the Company's condensed consolidated balance sheet.
NOTE 2 - EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted earnings per share (EPS):
 Three Months Ended October 31,Nine Months Ended October 31,
 2023202220232022
 (in thousands, except per share data)
Numerator:
Net income$30,193 $41,257 $88,479 $83,756 
Allocation to participating securities(465)(563)(1,153)(1,039)
Net income attributable to Titan Machinery Inc. common stockholders$29,728 $40,694 $87,326 $82,717 
Denominator:
Basic weighted-average common shares outstanding22,512 22,393 22,487 22,365 
Plus: incremental shares from vesting of restricted stock units5 6 6 7 
Diluted weighted-average common shares outstanding22,517 22,399 22,493 22,372 
Earnings Per Share:
Basic$1.32 $1.82 $3.88 $3.70 
Diluted$1.32 $1.82 $3.88 $3.70 
9

NOTE 3 - REVENUE
Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to collect in exchange for those goods or services. Sales, value added and other taxes collected from our customers concurrent with our revenue activities are excluded from revenue.
The following tables present our revenue disaggregated by revenue source and segment:
Three Months Ended October 31, 2023Nine Months Ended October 31, 2023
AgricultureConstructionEuropeTotalAgricultureConstructionEuropeTotal
(in thousands)(in thousands)
Equipment$408,648 $47,364 $65,763 $521,775 $1,086,840 $146,519 $197,913 $1,431,272 
Parts86,173 12,943 15,846 114,962 237,966 39,144 42,967 320,077 
Service34,718 7,084 2,965 44,767 93,510 20,767 7,901 122,178 
Other1,333 547 318 2,198 3,735 1,496 869 6,100 
Revenue from contracts with customers
530,872 67,938 84,892 683,702 1,422,051 207,926 249,650 1,879,627 
Rental532 9,570 311 10,413 1,618 24,442 625 26,685 
Total revenue$531,404 $77,508 $85,203 $694,115 $1,423,669 $232,368 $250,275 $1,906,312 
Three Months Ended October 31, 2022Nine Months Ended October 31, 2022
AgricultureConstructionEuropeTotalAgricultureConstructionEuropeTotal
(in thousands)(in thousands)
Equipment$380,007 $56,534 $72,455 $508,996 $901,574 $143,536 $195,469 $1,240,579 
Parts81,420 13,350 13,949 108,719 178,474 37,229 39,271 254,974 
Service29,831 6,807 2,322 38,960 76,514 18,932 6,401 101,847 
Other1,201 639 89 1,929 2,881 1,441 540 4,862 
Revenue from contracts with customers492,459 77,330 88,815 658,604 1,159,443 201,138 241,681 1,602,262 
Rental865 9,073 231 10,169 1,386 22,251 424 24,061 
Total revenue$493,324 $86,403 $89,046 $668,773 $1,160,829 $223,389 $242,105 $1,626,323 
Unbilled Receivables and Deferred Revenue
Unbilled receivables from contracts with customers amounted to $33.0 million and $19.8 million as of October 31, 2023 and January 31, 2023, respectively. This increase in unbilled receivables is primarily the result of a seasonal increase in the volume of our service transactions in which we recognize revenue as our work is performed and prior to customer invoicing.
Deferred revenue from contracts with customers amounted to $43.2 million and $118.1 million as of October 31, 2023 and January 31, 2023, respectively. Our deferred revenue most often increases in the fourth quarter of each fiscal year due to a higher level of customer down payments or prepayments and longer time periods between customer payment and delivery of the equipment asset, and the related recognition of equipment revenue, prior to its seasonal use. During the nine months ended October 31, 2023 and 2022, the Company recognized $118.0 million and $126.3 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2023 and January 31, 2022, respectively. No material amount of revenue was recognized during the nine months ended October 31, 2023 or 2022 from performance obligations satisfied in previous periods.     
NOTE 4 - RECEIVABLES
The Company provides an allowance for expected credit losses on its nonrental receivables. To measure the expected credit losses, receivables have been grouped based on shared credit risk characteristics as shown in the table below.
Trade and unbilled receivables from contracts with customers have credit risk and the allowance is determined by applying expected credit loss percentages to aging categories based on historical experience that are updated each quarter. The rates may also be adjusted to the extent future events are expected to differ from historical results. In addition, the allowance is adjusted based on information obtained by continued monitoring of individual customer credit.
Short-term receivables from finance companies, other receivables due from manufacturers, and other receivables have not historically resulted in any credit losses to the Company. These receivables are short-term in nature and deemed to be of good credit quality and have no need for any allowance for expected credit losses. Management continually monitors these receivables and should information be obtained that identifies potential credit risk, an adjustment to the allowance would be made if deemed appropriate.
10

Trade and unbilled receivables from rental contracts are primarily in the United States and are specifically excluded from the accounting guidance in determining an allowance for expected losses. The Company provides an allowance for these receivables based on historical experience and using credit information obtained from continued monitoring of customer accounts.
October 31, 2023January 31, 2023
(in thousands)
Trade and unbilled receivables from contracts with customers
Trade receivables due from customers$60,385 $47,298 
Unbilled receivables32,985 19,764 
Less allowance for expected credit losses3,515 3,080 
89,855 63,982 
Short-term receivables due from finance companies22,513 11,212 
Trade and unbilled receivables from rental contracts
Trade receivables3,614 3,629 
Unbilled receivables1,060 776 
Less allowance for expected credit losses399 360 
4,275 4,045 
Other receivables
Due from manufacturers11,781 15,007 
Other975 1,598 
12,756 16,605 
Receivables, net of allowance for expected credit losses$129,399 $95,844 
Following is a summary of allowance for credit losses on trade and unbilled accounts receivable by segment:
AgricultureConstructionEuropeTotal
(in thousands)
Balance at January 31, 2023$367 $124 $2,589 $3,080 
Current expected credit loss provision64 155 495 714 
Write-offs charged against allowance191 95 56 342 
Credit loss recoveries collected15 7 52 74 
Foreign exchange impact— — (11)(11)
Balance at October 31, 2023$255 $191 $3,069 $3,515 
AgricultureConstructionEuropeTotal
(in thousands)
Balance at January 31, 2022$244 $193 $1,542 $1,979 
Current expected credit loss provision47 74 1,036 1,157 
Write-offs charged against allowance41 147 148 336 
Credit loss recoveries collected24 9  33 
Acquisition94 — — 94 
Foreign exchange impact— — (113)(113)
Balance at October 31, 2022$368 $129 $2,317 $2,814 
11

The following table presents impairment losses on receivables arising from sales contracts with customers and receivables arising from rental contracts reflected in Operating Expenses in the Condensed Consolidated Statements of Operations:
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
(in thousands)
Impairment losses on:
Receivables from sales contracts$362 $197 $714 $1,196 
Receivables from rental contracts19 49 141 81 
$381 $246 $855 $1,277 
NOTE 5 - INVENTORIES
October 31, 2023January 31, 2023
 (in thousands)
New equipment$675,547 $369,828 
Used equipment216,947 164,761 
Parts and attachments171,586 164,553 
Work in process7,008 4,797 
$1,071,088 $703,939 
NOTE 6 - PROPERTY AND EQUIPMENT
October 31, 2023January 31, 2023
 (in thousands)
Rental fleet equipment$77,231 $75,386 
Machinery and equipment31,601 27,220 
Vehicles89,870 80,122 
Furniture and fixtures57,062 53,937 
Land, buildings, and leasehold improvements185,991 140,773 
441,755 377,438 
Less accumulated depreciation174,600 159,656 
$267,155 $217,782 
The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $2.5 million and $2.6 million for the three months ended October 31, 2023 and 2022, respectively, and $6.5 million and $6.0 million for the nine months ended October 31, 2023 and 2022, respectively. All other depreciation expense is included in Operating Expenses, which was $5.3 million and $4.2 million for the three months ended October 31, 2023 and 2022, respectively, and $15.3 million and $11.3 million for the nine months ended October 31, 2023 and 2022, respectively.
The Company reviews its long-lived assets for potential impairment whenever events or circumstances indicate that the carrying value of the long-lived asset (or asset group) may not be recoverable. Due to the results of the analyses, the Company concluded no impairments were necessary, thus no impairment was recognized for the three and nine months ended October 31, 2023 and 2022.
12

NOTE 7 - INTANGIBLE ASSETS AND GOODWILL
Finite-Lived Intangible Assets
The Company's finite-lived intangible assets consist of customer relationships and covenants not to compete. The following is a summary of intangible assets with finite lives as of October 31, 2023 and January 31, 2023:
October 31, 2023January 31, 2023
CostAccumulated AmortizationNetCostAccumulated AmortizationNet
(in thousands)(in thousands)
Customer relationships$538 $(261)$277 $538 $(180)$358 
Covenants not to compete1,131 (392)739 1,025 (222)803 
$1,669 $(653)$1,016 $1,563 $(402)$1,161 
Future amortization expense, as of October 31, 2023, is expected to be as follows:
Fiscal Year Ended January 31,
Amount
(in thousands)
2024 (remainder)$86 
2025325 
2026282 
2027232 
202891 
Thereafter— 
$1,016 
Indefinite-Lived Intangible Assets
The Company's indefinite-lived intangible assets consist of distribution rights assets. The following is a summary of the changes in indefinite-lived intangible assets, by segment, for the nine months ended October 31, 2023:
AgricultureConstructionTotal
(in thousands)
January 31, 2023$17,178 $72 $17,250 
October 31, 2023$17,178 $72 $17,250 
Goodwill
The following presents changes in the carrying amount of goodwill, by segment, for the nine months ended October 31, 2023:
AgricultureEuropeTotal
(in thousands)
January 31, 2023$30,622 $ $30,622 
Arising from business combinations69 471 540 
Foreign currency translation (18)(18)
October 31, 2023$30,691 $453 $31,144 
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NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT
As of October 31, 2023, the Company had floorplan and working capital lines of credit totaling $923.0 million, which is primarily comprised of three floorplan lines of credit: (i) a $500.0 million credit facility with CNH Industrial (amended as of December 6, 2023, to increase the total available domestic limit to $640 million, which includes $590 million for floorplan financing and a $50 million revolver for working capital, and an overall global limit to $875 million), (ii) a $250.0 million floorplan line of credit and a $75 million working capital line of credit under the Third Amended and Restated Credit Agreement (the "Bank Syndicate Agreement"), and (iii) a $50.0 million credit facility with DLL Finance LLC.
The Company's outstanding balances of floorplan lines of credit as of October 31, 2023 and January 31, 2023, consisted of the following:
October 31, 2023January 31, 2023
(in thousands)
CNH Industrial$421,305 $177,337 
Bank Syndicate Agreement Floorplan Loan152,410 35,550 
DLL Finance38,110 9,914 
Other outstanding balances with manufacturers and non-manufacturers93,785 35,571 
$705,610 $258,372 
As of October 31, 2023, the interest-bearing U.S. floorplan payables carried a variable interest rate with a range of 7.18% to 8.37% compared to a range of 5.94% to 10.25% as of January 31, 2023. As of October 31, 2023, foreign floorplan payables carried a variable interest rate with a range of 5.51% to 6.38%, compared to a range of 4.16% to 4.96% as of January 31, 2023, on multiple lines of credit. The Company had non-interest-bearing floorplan payables of $399.7 million and $213.0 million, as of October 31, 2023 and January 31, 2023, respectively.
On September 1, 2023, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the Bank Syndicate Agreement. Among other items, Amendment No. 3 (i) increased the Bank Syndicate Agreement lenders’ aggregate floorplan loan commitments under the Bank Syndicate Agreement from $185.0 million to $250.0 million and the Bank Syndicate Agreement lenders’ aggregate revolving loan commitments under the Bank Syndicate Agreement from $65.0 million to $75.0 million and (ii) amended the terms of the Bank Syndicate Agreement to permit the Company’s acquisition of O’Connors.
NOTE 9 - LONG TERM DEBT
The following is a summary of the Company's long-term debt as of October 31, 2023 and January 31, 2023:
DescriptionMaturity DatesInterest RatesOctober 31, 2023January 31, 2023
(in thousands)
Mortgage loans, securedVarious through May 2039
2.1% to 7.3%
$70,221 $68,689 
Sale-leaseback financing obligationsVarious through December 2030
3.4% to 10.3%
10,353 11,252 
Vehicle loans, securedVarious through September 2029
2.1% to 6.8%
14,012 12,659 
OtherVarious through July 2039
3.6%
4,591 4,591 
Total debt99,177 97,191 
Less: current maturities11,586 7,241 
Long-term debt, net$87,591 $89,950 
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NOTE 10 - DERIVATIVE INSTRUMENTS
The Company holds derivative instruments for the purpose of minimizing exposure to fluctuations in foreign currency exchange rates to which the Company is exposed in the normal course of its operations.
From time to time, the Company uses foreign currency forward contracts to hedge the effects of fluctuations in exchange rates on outstanding intercompany loans. The Company does not formally designate and document such derivative instruments as hedging instruments; however, the instruments are an effective economic hedge of the underlying foreign currency exposure. Both the gain or loss on the derivative instrument and the offsetting gain or loss on the underlying intercompany loan are recognized in earnings immediately, thereby eliminating or reducing the impact of foreign currency exchange rate fluctuations on net income. The Company's foreign currency forward contracts generally have three-month maturities, maturing on the last day of each fiscal quarter. The notional value of outstanding foreign currency contracts as of October 31, 2023 was $4.0 million. There were no outstanding foreign currency contracts as of January 31, 2023.
As of October 31, 2023 and January 31, 2023, the fair value of the Company's outstanding derivative instruments was not material. Derivative instruments recognized as assets are recorded in prepaid expenses and other in the condensed consolidated balance sheets, and derivative instruments recognized as liabilities are recorded in accrued expenses and other in the condensed consolidated balance sheets.
The following table sets forth the gains and losses recognized in income from the Company’s derivative instruments for the three and nine months ended October 31, 2023 and 2022. Gains and losses are recognized in Interest and other income (expense) in the condensed consolidated statements of operations:
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
 (in thousands)
Foreign currency contract gain (loss)$(1,006)$1,058 $(1,104)$1,058 
NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the nine month periods ended October 31, 2023 and 2022:
Foreign Currency Translation AdjustmentNet Investment Hedging GainTotal Accumulated Other Comprehensive Income (Loss)
(in thousands)
Balance, January 31, 2023$(7,730)$2,711 $(5,019)
Other comprehensive income (loss)1,096 — 1,096 
Balance, April 30, 2023(6,634)2,711 (3,923)
Other comprehensive income (loss)550 — 550 
Balance, July 31, 2023(6,084)2,711 (3,373)
Other comprehensive income (loss)(1,938)— (1,938)
Balance, October 31, 2023$(8,022)$2,711 $(5,311)
Foreign Currency Translation AdjustmentNet Investment Hedging GainTotal Accumulated Other Comprehensive Income (Loss)
(in thousands)
Balance, January 31, 2022$(4,883)$2,711 $(2,172)
Other comprehensive income (loss)(1,191)— (1,191)
Balance, April 30, 2022(6,074)2,711 (3,363)
Other comprehensive income (loss)(2,963)— (2,963)
Balance, July 31, 2022(9,037)2,711 (6,326)
Other comprehensive income (loss)(5,132)— (5,132)
Balance, October 31, 2022$(14,169)$2,711 $(11,458)
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NOTE 12 - LEASES
As Lessor
Revenue generated from leasing activities is disclosed, by segment, in Note 3 - Revenue. The following is the balance of our dedicated rental fleet assets, included in Property and equipment, net of accumulated depreciation in the condensed consolidated balance sheet, of our Construction segment as of October 31, 2023 and January 31, 2023:
October 31, 2023January 31, 2023
(in thousands)
Rental fleet equipment$77,231 $75,386 
Less accumulated depreciation(28,969)(26,959)
$48,262 $48,427 
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS
As of October 31, 2023, the fair value of the Company's foreign currency contracts, which are either assets or liabilities measured at fair value on a recurring basis, was not material. These foreign currency contracts were valued using a discounted cash flow analysis, which is an income approach, utilizing readily observable market data as inputs, which is classified as a Level 2 fair value measurement.
The Company also has financial instruments that are not recorded at fair value in the consolidated balance sheets, including cash, receivables, payables and long-term debt. The carrying amounts of these financial instruments approximated their fair values as of October 31, 2023 and January 31, 2023. The fair value of these financial instruments was estimated based on Level 2 fair value inputs. The estimated fair value of the Company's Level 2 long-term debt, which is provided for disclosure purposes only, is as follows:
October 31, 2023January 31, 2023
(in thousands)
Carrying amount$84,233 $81,349 
Fair value$73,487 $70,434 
NOTE 14 - INCOME TAXES
Our effective tax rate was 25.4% and 24.5% for each of the three months ended October 31, 2023 and 2022, respectively, and was 24.7% and 24.8% for the nine months ended October 31, 2023 and 2022, respectively. The effective tax rate for the three and nine months ended October 31, 2023 and 2022 were subject to various other factors such as the impact of certain discrete items, mainly the vesting of share-based compensation, the mix of domestic and foreign income, and the change of valuation allowances in certain foreign jurisdictions.
NOTE 15 - BUSINESS COMBINATIONS
Fiscal 2024
On June 1, 2023, the Company acquired certain assets of Midwest Truck Parts Inc. ("Midwest Truck"). The acquired business consists of one location in Dawson, Minnesota. This location is included in the Company's Agriculture segment. The total consideration transferred for the acquired business was $4.0 million paid in cash, which includes the purchase of the real estate.
On May 1, 2023, the Company, through its German subsidiary, Titan Machinery Deutschland GmbH, acquired certain assets of MAREP GmbH ("MAREP") related to its full-service agriculture dealership business located in Mühlengeez and Radelübbe, Germany. Our acquisition of these assets from MAREP further expands our presence in the German market. The total consideration transferred for the acquired business was $4.4 million paid in cash, which includes the real estate of the Mühlengeez location. These locations are included in the Company's Europe segment.
On February 1, 2023, the Company acquired certain assets of Pioneer Farm Equipment Co., ("Pioneer Farm Equipment"). The acquired business consists of five agriculture equipment stores in American Falls, Blackfoot, Idaho Falls, Rexburg, and Rupert, Idaho. These locations are included in the Company's Agriculture segment. The total consideration transferred for the acquired business was $19.5 million paid in cash, which includes $9.4 million for the purchase of the real estate.
16

In connection with the acquisition of Pioneer Farm Equipment, the Company acquired from CNH Industrial and certain other manufacturers equipment and parts inventory previously owned by Pioneer Farm Equipment Co. Upon acquiring these inventories, the Company was offered floorplan financing by the manufacturer. In total, the Company acquired inventory and recognized a corresponding liability of $12.7 million. The recognition of these inventories and associated financing liabilities are not included as part of the accounting for the business combination.
Fiscal 2023
On August 1, 2022, the Company acquired all outstanding equity interests of three entities, Heartland Agriculture, LLC, Heartland Solutions, LLC, and Heartland Leveraged Lender, LLC, (collectively referred to as "Heartland Companies") for $94.4 million in cash consideration. The Heartland Companies consist of 12 CaseIH commercial application agriculture locations in the states of Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, and Wisconsin. The Heartland Companies have been a successful CaseIH commercial application dealer group and our acquisition of these entities provides the Company the opportunity for synergies due to the overlap of our footprints, as it allow us to package deals that include both commercial application equipment as well as other agricultural and construction equipment to commercial customers within our core footprint. These locations are included in the Company's Agriculture segment. In the most recently completed fiscal year prior to the acquisition, the Heartland Companies generated revenue of approximately $214 million. The Company incurred $1.1 million in acquisition-related expenses in connection with this acquisition, which are included in operating expenses in the condensed consolidated statement of operations.
On April 1, 2022, the Company acquired certain assets of Mark's Machinery, Inc. The acquired business consisted of two agricultural equipment stores in Wagner and Yankton, South Dakota. These locations are included in the Company's Agriculture segment. The total cash consideration transferred for the acquired business was $7.7 million.
In connection with the acquisition of Mark's Machinery, Inc, the Company acquired from CNH Industrial and certain other manufacturers equipment and parts inventory previously owned by Mark's Machinery, Inc. Upon acquiring these inventories, the Company was offered floorplan financing by the respective manufacturers. In total, the Company acquired inventory and recognized a corresponding financing liability of $3.2 million. The recognition of these inventories and the associated financing liabilities are not included as part of the accounting for the business combination.
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Purchase Price Allocation
Each of the above acquisitions have been accounted for under the acquisition method of accounting, which requires the Company to estimate the acquisition date fair value of the assets acquired and liabilities assumed. The purchase price allocation for all business combinations completed in fiscal year 2023 and the nine months ended October 31, 2023. The purchase price allocation for the O'Connors acquisition, which is still preliminary, is not included in these numbers as the acquisition will be accounted for based on a calendar year end and will be reflected in the fourth quarter fiscal 2024 financials, refer to Note 18 - Subsequent Event for further details. The following table presents the purchase price allocations for all acquisitions completed during the fiscal year ended January 31, 2023 and the nine months ended October 31, 2023:
October 31, 2023January 31, 2023
(in thousands)
Assets acquired:
Cash$4 $1,584 
Receivables885 9,485 
Inventories11,237 106,890 
Prepaid expenses and other 668 
Property and equipment16,659 24,292 
Operating lease assets148 3,928 
Intangible assets 8,017 
Goodwill540 21,670 
Other110  
29,583 176,534 
Liabilities assumed:
Accounts payable 18,547 
Floorplan payable 31,699 
Current operating lease liabilities58 541 
Deferred revenue1,499 7,039 
Accrued expenses and other 3,523 
Long-term debt 4,591 
Operating lease liabilities91 3,387 
Other long-term liabilities 5,152 
1,648 74,479 
Net assets acquired$27,935 $102,055 
Goodwill recognized by segment:
Agriculture$69 $21,670 
Europe$471 $ 
Goodwill expected to be deductible for tax purposes$540 $21,670 
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The recognition of goodwill in the above business combinations arose from the acquisition of an assembled workforce and anticipated synergies expected to be realized. For the business combinations completed during the nine months ended October 31, 2023, the Company recognized a non-competition intangible asset of $0.1 million in its Europe segment, which will be amortized over a three year period. For the business combinations completed during the fiscal year ended January 31, 2023, the Company recognized a non-competition intangible asset of $0.8 million and a customer relationship intangible asset of $0.2 million. The distribution rights assets are indefinite-lived intangible assets not subject to amortization. The Company estimated the fair value of the intangible assets using a multi-period excess earnings model, which is an income approach. Acquisition related costs for the three and nine month period ended October 31, 2023 amounted to $0.6 million and $1.1 million, respectively, primarily related to the O'Connors acquisition, refer to Note 18 - Subsequent Event for additional details. Acquisition related costs amounted to $1.1 million during the fiscal year ended January 31, 2023. All acquisition-related costs have been expensed as incurred and recognized as operating expenses in the condensed consolidated statements of operations.
NOTE 16 - CONTINGENCIES
The Company is engaged in legal proceedings incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention. Based upon the information available to the Company and discussions with legal counsel, it is the Company's opinion that the outcome of these various legal actions and claims will not have a material impact on its financial position, results of operations or cash flows. These matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable.
19

NOTE 17 - SEGMENT INFORMATION
The Company has three reportable segments: Agriculture, Construction and Europe. Starting in the fourth quarter of fiscal 2024, our fourth segment will be Australia, see Note 1 - Business Activity and Significant Accounting Policies for further details. Revenue between segments is immaterial. The Company retains various unallocated income/(expense) items and assets at the general corporate level, which the Company refers to as “Shared Resources” in the table below. Shared Resources assets primarily consist of cash and property and equipment.
Certain financial information for each of the Company’s business segments is set forth below.
 Three Months Ended October 31,Nine Months Ended October 31,
 2023202220232022
 (in thousands)(in thousands)
Revenue
Agriculture$531,404 $493,324 $1,423,669 $1,160,829 
Construction77,508 86,403 232,368 223,389 
Europe85,203 89,046 250,275 242,105 
Total$694,115 $668,773 $1,906,312 $1,626,323 
Income (Loss) Before Income Taxes
Agriculture$35,130 $42,044 $92,311 $83,387 
Construction4,057 6,065 13,746 13,197 
Europe5,146 8,488 17,097