Titan Machinery Inc. [TITN] Filings

10-Q 1 titn-20220731.htm 10-Q titn-20220731

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, 2022

☐ 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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value per share	TITN	The 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 filer

☐

Smaller 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 August 31, 2022, 22,567,932 shares of Common Stock, $0.00001 par value, of the registrant were outstanding.

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TITAN MACHINERY INC.

QUARTERLY REPORT ON FORM 10-Q

Table of Contents


		Page No.
PART I.	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4.	CONTROLS AND PROCEDURES	36
PART II.	OTHER INFORMATION	37
ITEM 1.	LEGAL PROCEEDINGS	37
ITEM 1A.	RISK FACTORS	37
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	37
ITEM 4.	MINE SAFETY DISCLOSURES	37
ITEM 5.	OTHER INFORMATION	37
ITEM 6.	EXHIBITS	37
Exhibit Index		38
Signatures		39

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TITAN MACHINERY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)


	July 31, 2022		January 31, 2022

Assets
Current Assets
Cash	$	142,057	$	146,149
Receivables, net of allowance for expected credit losses	96,369		94,287
Inventories, net	556,383		421,758
Prepaid expenses and other	17,736		28,135


Total current assets	812,545		690,329
Noncurrent Assets
Property and equipment, net of accumulated depreciation	188,964		178,243
Operating lease assets	51,888		56,150
Deferred income taxes	2,239		1,328
Goodwill	9,535		8,952
Intangible assets, net of accumulated amortization	11,480		10,624
Other	1,220		1,041
Total noncurrent assets	265,326		256,338
Total Assets	$	1,077,871	$	946,667

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	28,344	$	25,644
Floorplan payable	274,244		135,415

Current maturities of long-term debt	6,650		5,876
Current operating lease liabilities	9,465		9,601
Deferred revenue	91,819		134,146
Accrued expenses and other	42,856		59,339
Income taxes payable	6,289		4,700
Total current liabilities	459,667		374,721
Long-Term Liabilities
Long-term debt, less current maturities	86,500		74,772
Operating lease liabilities	50,998		55,595
Deferred income taxes	1,991		2,006
Other long-term liabilities	4,438		4,374
Total long-term liabilities	143,927		136,747
Commitments and Contingencies (Note 15)
Stockholders' Equity
Common stock, par value $.00001 per share, 45,000 shares authorized; 22,695 shares issued and outstanding at July 31, 2022; 22,588 shares issued and outstanding at January 31, 2022	—		—
Additional paid-in-capital	255,188		254,455
Retained earnings	225,415		182,916
Accumulated other comprehensive loss	(6,326)		(2,172)
Total stockholders' equity	474,277		435,199
Total Liabilities and Stockholders' Equity	$	1,077,871	$	946,667

See Notes to Condensed Consolidated Financial Statements

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TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)


	Three Months Ended July 31,				Six Months Ended July 31,
	2022		2021		2022		2021
Revenue
Equipment	$	375,216	$	272,733	$	731,582	$	548,713
Parts	77,693		65,317		146,255		127,942
Service	33,365		29,676		62,887		57,379
Rental and other	10,269		9,904		16,825		16,300
Total Revenue	496,543		377,630		957,549		750,334
Cost of Revenue
Equipment	323,988		240,332		634,222		484,008
Parts	52,706		46,089		100,015		90,529
Service	11,072		9,771		21,832		19,065
Rental and other	6,078		6,420		10,087		10,737
Total Cost of Revenue	393,844		302,612		766,156		604,339
Gross Profit	102,699		75,018		191,393		145,995
Operating Expenses	68,828		57,074		132,980		113,516

Impairment of Intangible and Long-Lived Assets	—		1,498		—		1,498

Income from Operations	33,871		16,446		58,413		30,981
Other Income (Expense)
Interest and other income	873		654		1,365		1,320
Floorplan interest expense	(245)		(350)		(499)		(768)
Other interest expense	(1,349)		(1,118)		(2,545)		(2,222)
Income Before Income Taxes	33,150		15,632		56,734		29,311
Provision for Income Taxes	8,191		4,383		14,235		7,515
Net Income	$	24,959	$	11,249	$	42,499	$	21,796

Earnings per Share:
Basic	$	1.10	$	0.50	$	1.88	$	0.97
Diluted	$	1.10	$	0.50	$	1.88	$	0.97

Weighted Average Common Shares:
Basic	22,387		22,261		22,350		22,209
Diluted	22,392		22,276		22,357		22,220

See Notes to Condensed Consolidated Financial Statements

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TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


	Three Months Ended July 31,				Six Months Ended July 31,
	2022		2021		2022		2021
Net Income	$	24,959	$	11,249	$	42,499	$	21,796
Other Comprehensive Income (Loss)
Foreign currency translation adjustments	(2,963)		937		(4,153)		(1,441)
Comprehensive Income	$	21,996	$	12,186	$	38,346	$	20,355

See Notes to Condensed Consolidated Financial Statements

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TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

(in thousands)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares Outstanding	Amount
BALANCE, January 31, 2021	22,553	$	—	$	252,913	$	116,869	$	1,499	$	371,281
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	(33)	—		(975)		—		—		(975)
Stock-based compensation expense	—	—		609		—		—		609
Net Income	—	—		—		10,547		—		10,547
Other comprehensive loss	—	—		—		—		(2,379)		(2,379)
BALANCE, April 30, 2021	22,520	$	—	$	252,547	$	127,416	$	(880)	$	379,083
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	76	—		(2)		—		—		(2)
Stock-based compensation expense	—	—		584		—		—		584
Net Income	—	—		—		11,249		—		11,249
Other comprehensive income	—	—		—		—		938		938
BALANCE, July 31, 2021	22,596	—		253,129		138,665		58		391,852


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares Outstanding	Amount
BALANCE, January 31, 2022	22,588	$	—	$	254,455	$	182,916	$	(2,172)	$	435,199
Common stock issued on grant of restricted stock, 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, April 30, 2022	22,569	$	—	$	254,390	$	200,456	$	(3,363)	$	451,483
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax	126	—		(5)		—		—		(5)
Stock-based compensation expense	—	—		803		—		—		803
Net income	—	—		—		24,959		—		24,959
Other comprehensive income	—	—		—		—		(2,963)		(2,963)
BALANCE, July 31, 2022	22,695	—		255,188		225,415		(6,326)		474,277

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Six Months Ended July 31,
	2022		2021
Operating Activities
Net income	$	42,499	$	21,796
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	10,987		10,602
Impairment	—		1,498
Deferred income taxes	(1,005)		(1,645)
Stock-based compensation expense	1,423		1,193
Noncash interest expense	121		110


Other, net	4,583		5,235
Changes in assets and liabilities
Receivables, prepaid expenses and other assets	5,444		(12,384)
Inventories	(137,708)		(17,166)
Manufacturer floorplan payable	105,415		56,436
Deferred Revenue	(43,530)		(21,063)
Accounts payable, accrued expenses and other and other long-term liabilities	(9,182)		(16,051)


Net Cash Provided by (Used for) Operating Activities	(20,953)		28,561
Investing Activities
Rental fleet purchases	(6,020)		(8,946)
Property and equipment purchases (excluding rental fleet)	(8,487)		(10,888)
Proceeds from sale of property and equipment	1,628		420
Acquisition consideration, net of cash acquired	(7,675)		—
Other, net	(182)		12
Net Cash Used for Investing Activities	(20,736)		(19,402)
Financing Activities
Net change in non-manufacturer floorplan payable	35,716		(22,731)

Proceeds from long-term debt borrowings	8,415		6,451
Principal payments on long-term debt and finance leases	(3,879)		(5,117)
Payment of debt issuance costs	—		—
Other, net	(689)		(976)
Net Cash Provided by (Used for) Financing Activities	39,563		(22,373)
Effect of Exchange Rate Changes on Cash	(1,966)		(192)
Net Change in Cash	(4,092)		(13,406)
Cash at Beginning of Period	146,149		78,990
Cash at End of Period	$	142,057	$	65,584
Supplemental Disclosures of Cash Flow Information
Cash paid during the period
Income taxes, net of refunds	$	11,116	$	17,378
Interest	$	2,851	$	2,797
Supplemental Disclosures of Noncash Investing and Financing Activities
Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities	$	2,667	$	9,014
Long-term debt to acquire finance leases	$	6,776	$	7,454
Net transfer of assets from (to) property and equipment to (from) inventories	$	(2,849)	$	1,269

See Notes to Condensed Consolidated Financial Statements

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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 six-months ended July 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2023. The information contained in the consolidated balance sheet as of January 31, 2022 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, 2022 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 and Europe. 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 and its European stores are located in Bulgaria, Germany, Romania, and Ukraine.

Russia/Ukraine Geopolitical Conflict

In February, 2022, the ongoing Russia/Ukraine conflict significantly intensified, and the sustained conflict and disruption in the region is ongoing. Titan Machinery Ukraine, LLC ("Titan Machinery Ukraine"), the Company's wholly owned Ukrainian subsidiary, has ten locations throughout Ukraine primarily in western and central Ukraine. The conflict has caused disruptions in our Ukrainian operations, with our revenues for the six-months ended July 31, 2022 down 37.7% from the prior year period. These disruptions have not been material to the Company's consolidated financial statements. However, if the conflict intensifies in western and central Ukraine, it could significantly increase the adverse effect on the Company in future periods.

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.

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NOTE 2 - EARNINGS PER SHARE

The following table sets forth the calculation of basic and diluted earnings per share (EPS):


	Three Months Ended July 31,				Six Months Ended July 31,
	2022		2021		2022		2021
	(in thousands, except per share data)
Numerator:
Net income	$	24,959	$	11,249	$	42,499	$	21,796
Allocation to participating securities	(291)		(156)		(502)		(334)
Net income attributable to Titan Machinery Inc. common stockholders	$	24,668	$	11,093	$	41,997	$	21,462
Denominator:
Basic weighted-average common shares outstanding	22,387		22,261		22,350		22,209
Plus: incremental shares from vesting of restricted stock units	5		15		7		11
Diluted weighted-average common shares outstanding	22,392		22,276		22,357		22,220

Earnings Per Share:
Basic	$	1.10	$	0.50	$	1.88	$	0.97
Diluted	$	1.10	$	0.50	$	1.88	$	0.97

NOTE 3 - REVENUE

Revenues are 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 July 31, 2022								Six Months Ended July 31, 2022
	Agriculture		Construction		International		Total		Agriculture		Construction		International		Total
	(in thousands)								(in thousands)
Equipment	$	270,472	$	43,184	$	61,560	$	375,216	$	521,565	$	87,002	$	123,015	$	731,582
Parts	52,548		11,816		13,329		77,693		97,054		23,879		25,322		146,255
Service	24,730		6,302		2,333		33,365		46,683		12,125		4,079		62,887
Other	880		500		246		1,626		1,679		803		451		2,933
Revenue from contracts with customers	348,630		61,802		77,468		487,900		666,981		123,809		152,867		943,657
Rental	326		8,220		97		8,643		522		13,177		193		13,892
Total revenues	$	348,956	$	70,022	$	77,565	$	496,543	$	667,503	$	136,986	$	153,060	$	957,549


	Three Months Ended July 31, 2021								Six Months Ended July 31, 2021
	Agriculture		Construction		International		Total		Agriculture		Construction		International		Total
	(in thousands)								(in thousands)
Equipment	$	156,408	$	54,020	$	62,305	$	272,733	$	325,664	$	98,832	$	124,217	$	548,713
Parts	40,742		11,928		12,647		65,317		80,425		24,036		23,481		127,942
Service	21,150		6,585		1,941		29,676		40,904		12,954		3,521		57,379
Other	758		490		188		1,436		1,478		855		281		2,614
Revenue from contracts with customers	219,058		73,023		77,081		369,162		448,471		136,677		151,500		736,648
Rental	306		7,920		242		8,468		444		12,873		369		13,686
Total revenues	$	219,364	$	80,943	$	77,323	$	377,630	$	448,915	$	149,550	$	151,869	$	750,334

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Unbilled Receivables and Deferred Revenue

Unbilled receivables from contracts with customers amounted to $24.4 million and $17.1 million as of July 31, 2022 and January 31, 2022, 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 $90.7 million and $132.2 million as of July 31, 2022 and January 31, 2022, 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 six months ended July 31, 2022 and 2021, the Company recognized $105.1 million and $50.8 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2022 and January 31, 2021, respectively. No material amount of revenue was recognized during the six months ended July 31, 2022 or 2021 from performance obligations satisfied in previous periods.

The Company has elected as a practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of service of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for parts installed and services performed. The contracts for which the practical expedient has been applied include (i) equipment revenue transactions, which do not have a stated contractual term but are short-term in nature, and (ii) service revenue transactions, which also do not have a stated contractual term but are generally completed within 30 days. For such service contracts, we recognize revenue at the time we perform the work, in the amount for which we have the right to invoice for services completed to date.

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.

Trade 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.

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.

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	July 31, 2022		January 31, 2022
	(in thousands)
Trade and unbilled receivables from contracts with customers
Trade receivables due from customers	$	37,271	$	30,041
Unbilled receivables	24,435		17,129
Less allowance for expected credit losses	2,722		1,979
	58,984		45,191

Trade receivables due from finance companies	15,096		17,937

Trade and unbilled receivables from rental contracts
Trade receivables	3,832		3,055
Unbilled receivables	1,057		538
Less allowance for expected credit losses	375		469
	4,514		3,124
Other receivables
Due from manufacturers	14,556		22,979
Other	3,219		5,056
	17,775		28,035
Receivables, net of allowance for expected credit losses	$	96,369	$	94,287

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Following is a summary of allowance for credit losses on trade and unbilled accounts receivable by segment:


	Agriculture		Construction		International		Total
	(in thousands)
Balance at January 31, 2022	$	244	$	193	$	1,542	$	1,979
Current expected credit loss provision	79		35		846		960
Write-offs charged against allowance	30		97		61		188
Credit loss recoveries collected	16		4		—		20
Foreign exchange impact	—		—		(49)		(49)
Balance at July 31, 2022	$	309	$	135	$	2,278	$	2,722


	Agriculture		Construction		International		Total
	(in thousands)
Balance at January 31, 2021	$	228	$	1,074	$	1,690	$	2,992
Current expected credit loss provision	114		118		(227)		5
Write-offs charged against allowance	50		147		60		257
Credit loss recoveries collected	7		5		—		12
Foreign exchange impact	—		—		(31)		(31)
Balance at July 31, 2021	$	299	$	1,050	$	1,372	$	2,721

The increase in the credit loss provision in the International segment, during the six months ended July 31, 2022, was driven by a $0.7 million bad debt provision placed on the accounts receivables due from customers of Titan Machinery Ukraine, primarily due to the ongoing Russia-Ukraine conflict.

The following table presents impairment losses (recoveries) on receivables arising from sales contracts with customers and receivables arising from rental contracts:


	Three Months Ended July 31,				Six Months Ended July 31,
	2022		2021		2022		2021
	(in thousands)
Impairment losses (recoveries) on:
Receivables from sales contracts	$	186	$	222	$	999	$	320
Receivables from rental contracts	43		3		32		(30)
	$	229	$	225	$	1,031	$	290

NOTE 5 - INVENTORIES


	July 31, 2022		January 31, 2022
	(in thousands)
New equipment	$	325,641	$	195,775
Used equipment	118,757		128,047
Parts and attachments	109,061		95,890
Work in process	2,924		2,046
	$	556,383	$	421,758

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NOTE 6 - PROPERTY AND EQUIPMENT


	July 31, 2022		January 31, 2022
	(in thousands)
Rental fleet equipment	$	73,014	$	65,117
Machinery and equipment	23,769		22,819
Vehicles	62,251		58,650
Furniture and fixtures	51,400		50,228
Land, buildings, and leasehold improvements	129,102		123,323
	339,536		320,137
Less accumulated depreciation	150,572		141,894
	$	188,964	$	178,243

The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $2.0 million and $2.1 million for the three months ended July 31, 2022 and 2021, and $3.5 million and $3.8 million for the six months ended July 31, 2022 and 2021, respectively. All other depreciation expense is included in Operating Expenses, which was $3.6 million and $3.0 million for the three months ended July 31, 2022 and 2021 and $7.1 million and $6.0 million for the six months ended July 31, 2022 and 2021, 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. During the three months ended July 31, 2022, the Company identified two such asset groups in the Agriculture segment, and performed an impairment test, and concluded that no impairment was present, thus the Company did not recognize any impairment for the three and six months ended July 31, 2022. The Company did recognize impairment of long-lived assets of $0.4 million in its International segment for the three and six months ended July 31, 2021.

NOTE 7 - INTANGIBLE ASSETS AND GOODWILL

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 six months ended July 31, 2022:


	Agriculture		Construction		Total
	(in thousands)
January 31, 2022	$	10,136	$	72	$	10,208
Arising from business combinations	842		—		842


July 31, 2022	$	10,978	$	72	$	11,050

Goodwill

The following presents changes in the carrying amount of goodwill, by segment, for the six months ended July 31, 2022:


	Agriculture		Total
	(in thousands)
January 31, 2022	$	8,952	$	8,952
Arising from business combinations	583		583


July 31, 2022	$	9,535	$	9,535

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NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

As of July 31, 2022, the Company had floorplan lines of credit totaling $743.0 million, which is primarily comprised of three floorplan lines of credit: (i) a $450.0 million credit facility with CNH Industrial, (ii) a $185.0 million 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. Additionally, the Company amended its CNH Industrial floorplan line of credit as of August 1, 2022, increasing the total available domestic limit to $410 million and overall limit to $500 million.

The Company's outstanding balances of floorplan lines of credit as of July 31, 2022 and January 31, 2022, consisted of the following:


	July 31, 2022		January 31, 2022
	(in thousands)
CNH Industrial	$	177,983	$	94,054
Bank Syndicate Agreement Floorplan Loan	41,000		—
DLL Finance	9,187		8,558
Other outstanding balances with manufacturers and non-manufacturers	46,074		32,803
	$	274,244	$	135,415

In anticipation of closing the Heartland acquisition on August 1, 2022, the Company drew $41.0 million on its Bank Syndicate Floorplan Loan, which had a variable interest rate of 3.21% as of July 31, 2022. Generally, all U.S. CNH Industrial and DLL Finance amounts outstanding are non-interest bearing. As of July 31, 2022, foreign floorplan payables carried v