Titan Machinery Inc. [TITN] Filings

10-Q 1 titn-20241031.htm 10-Q titn-20241031

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, 2024

☐ 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 December 2, 2024, 23,125,692 shares of Common Stock, $0.00001 par value, of the registrant were outstanding.

Table of Contents

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 (Loss)	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	22
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

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TITAN MACHINERY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)


	October 31, 2024		January 31, 2024

Assets
Current Assets
Cash	$	23,420	$	38,066
Receivables, net of allowance for expected credit losses	140,295		153,657
Inventories, net	1,413,088		1,303,030
Prepaid expenses and other	19,896		24,262


Total current assets	1,596,699		1,519,015
Noncurrent Assets
Property and equipment, net of accumulated depreciation	357,056		298,774
Operating lease assets	37,520		54,699
Deferred income taxes	535		529
Goodwill	63,865		64,105
Intangible assets, net of accumulated amortization	52,074		53,356
Other	1,654		1,783
Total noncurrent assets	512,704		473,246
Total Assets	$	2,109,403	$	1,992,261

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	44,689	$	43,846
Floorplan payable	1,048,221		893,846

Current maturities of long-term debt	9,500		13,706
Current operating lease liabilities	8,178		10,751
Deferred revenue	41,979		115,852
Accrued expenses and other	59,460		74,400

Total current liabilities	1,212,027		1,152,401
Long-Term Liabilities
Long-term debt, less current maturities	131,134		106,407
Operating lease liabilities	34,814		50,964
Deferred income taxes	19,701		22,607
Other long-term liabilities	43,527		2,240
Total long-term liabilities	229,176		182,218
Commitments and Contingencies
Stockholders' Equity
Common stock, par value $.00001 per share, 45,000,000 shares authorized; 23,125,967 shares issued and outstanding at October 31, 2024; 22,848,138 shares issued and outstanding at January 31, 2024	—		—
Additional paid-in-capital	261,011		258,657
Retained earnings	404,075		397,225
Accumulated other comprehensive income	3,114		1,760
Total stockholders' equity	668,200		657,642
Total Liabilities and Stockholders' Equity	$	2,109,403	$	1,992,261

See Notes to Condensed Consolidated Financial Statements

Table of Contents

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,
	2024		2023		2024		2023
Revenue
Equipment	$	495,147	$	521,775	$	1,428,469	$	1,431,272
Parts	121,086		114,962		339,118		320,077
Service	51,122		44,767		143,468		122,178
Rental and other	12,469		12,611		31,145		32,785
Total Revenue	679,824		694,115		1,942,200		1,906,312
Cost of Revenue
Equipment	458,345		454,598		1,292,821		1,237,660
Parts	83,542		78,585		230,932		216,775
Service	17,833		14,393		50,753		41,010
Rental and other	9,610		8,198		23,068		20,549
Total Cost of Revenue	569,330		555,774		1,597,574		1,515,994
Gross Profit	110,494		138,341		344,626		390,318
Operating Expenses	98,773		92,115		293,087		262,182
Impairment of Goodwill	—		—		531		—
Impairment of Intangible and Long-Lived Assets	264		—		1,206		—

Income from Operations	11,457		46,226		49,802		128,136
Other Income (Expense)
Interest and other (expense) income	3,097		(235)		(4,239)		1,129
Floorplan interest expense	(9,993)		(4,045)		(26,275)		(7,774)
Other interest expense	(4,286)		(1,494)		(10,479)		(4,008)
Income Before Income Taxes	275		40,452		8,809		117,483
(Benefit) Provision for Income Taxes	(1,438)		10,259		1,959		29,004
Net Income	$	1,713	$	30,193	$	6,850	$	88,479

Earnings per Share:
Basic	$	0.07	$	1.32	$	0.30	$	3.88
Diluted	$	0.07	$	1.32	$	0.30	$	3.88

Weighted Average Common Shares:
Basic	22,631		22,512		22,597		22,487
Diluted	22,631		22,517		22,599		22,493

See Notes to Condensed Consolidated Financial Statements

Table of Contents

TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)


	Three Months Ended October 31,				Nine Months Ended October 31,
	2024		2023		2024		2023
Net Income	$	1,713	$	30,193	$	6,850	$	88,479
Other Comprehensive (Loss) Income
Foreign currency translation adjustments	5,821		(1,938)		1,354		(292)
Comprehensive Income	$	7,534	$	28,255	$	8,204	$	88,187

See Notes to Condensed Consolidated Financial Statements

Table of Contents

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 at January 31, 2024	22,848	$	—	$	258,657	$	397,225	$	1,760	$	657,642
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax	(30)	—		(794)		—		—		(794)
Stock-based compensation expense	—	—		837		—		—		837
Net income	—	—		—		9,441		—		9,441
Other comprehensive loss	—	—		—		—		(4,525)		(4,525)
Balance at April 30, 2024	22,818	$	—	$	258,700	$	406,666	$	(2,765)	$	662,601
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax	310	—		(51)		—		—		(51)
Stock-based compensation expense	—	—		1,262		—		—		1,262
Net loss	—	—		—		(4,304)		—		(4,304)
Other comprehensive income	—	—		—		—		58		58
Balance at July 31, 2024	23,128	$	—	$	259,911	$	402,362	$	(2,707)	$	659,566
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax	(2)	—		(4)		—		—		(4)
Stock-based compensation expense	—	—		1,104		—		—		1,104
Net income	—	—		—		1,713		—		1,713
Other comprehensive income	—	—		—		—		5,821		5,821
Balance at October 31, 2024	23,126	$	—	$	261,011	$	404,075	$	3,114	$	668,200


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares Outstanding	Amount
Balance at January 31, 2023	22,698	$	—	$	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, 2023	22,669	$	—	$	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 tax	195	—		(7)		—		—		(7)
Stock-based compensation expense	—	—		784		—		—		784
Net income	—	—		—		31,321		—		31,321
Other comprehensive income	—	—		—		—		550		550
Balance at July 31, 2023	22,864	$	—	$	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, 2023	22,863	$	—	$	257,881	$	373,263	$	(5,311)	$	625,833

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine Months Ended October 31,
	2024		2023
Operating Activities
Net income	$	6,850	$	88,479
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	28,687		22,871
Impairment	1,737		—
Deferred income taxes	(3,003)		(3,731)
Stock-based compensation expense	3,203		2,339
Noncash interest expense	537		206
Noncash lease expense	6,532		7,004
Sale-leaseback finance modification expense	11,159		—
Gain on extinguishment of debt	(3,585)		—

Other, net	(1,255)		(1,376)
Changes in assets and liabilities, net of effects of acquisitions
Receivables	12,541		(31,947)
Prepaid expenses and other assets	9,124		5,774
Inventories	(114,485)		(358,837)
Manufacturer floorplan payable	78,714		274,968
Deferred revenue	(76,838)		(77,425)
Accounts payable, accrued expenses and other and other long-term liabilities	(16,113)		(10,386)


Net Cash Used for Operating Activities	(56,195)		(82,061)
Investing Activities
Rental fleet purchases	(514)		(5,154)
Property and equipment purchases (excluding rental fleet)	(30,284)		(36,770)
Proceeds from sale of property and equipment	1,490		6,451
Acquisition consideration, net of cash acquired	(260)		(27,935)
Other, net	129		(643)
Net Cash Used for Investing Activities	(29,439)		(64,051)
Financing Activities
Net change in non-manufacturer floorplan payable	77,990		174,353

Proceeds from long-term debt borrowings	12,440		7,721
Principal payments on long-term debt and finance leases	(14,748)		(10,685)
Payment of debt issuance costs	(3,754)		(121)
Other, net	(960)		(1,000)
Net Cash Provided by Financing Activities	70,968		170,268
Effect of Exchange Rate Changes on Cash	20		1,912
Net Change in Cash	(14,646)		26,068
Cash at Beginning of Period	38,066		43,913
Cash at End of Period	$	23,420	$	69,981
Supplemental Disclosures of Cash Flow Information
Cash paid during the period
Income taxes, net of refunds	$	5,887	$	28,890
Interest	$	33,899	$	10,480
Supplemental Disclosures of Noncash Investing and Financing Activities
Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities	$	12,484	$	5,479
Long-term debt to acquire finance leases	$	42,182	$	—
Net transfer of assets to property and equipment from inventories	$	(7,626)	$	(400)

See Notes to Condensed Consolidated Financial Statements

Table of Contents

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 and other factors influencing customer profitability, 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, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2025. The information contained in the consolidated balance sheet as of January 31, 2024 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, 2024 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.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires additional income tax disclosures in the rate reconciliation table for federal, state and foreign income taxes, in addition to more details about the reconciling items in some categories when items meet a certain quantitative threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in ASU 2024-03 require public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 with early adoption permitted. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated statements.

Table of Contents

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,
	2024		2023		2024		2023
	(in thousands, except per share data)
Numerator:
Net income	$	1,713	$	30,193	$	6,850	$	88,479
Allocation to participating securities	(37)		(465)		(119)		(1,153)
Net income attributable to Titan Machinery Inc. common stockholders	$	1,676	$	29,728	$	6,731	$	87,326
Denominator:
Basic weighted-average common shares outstanding	22,631		22,512		22,597		22,487
Plus: incremental shares from vesting of restricted stock units	—		5		2		6
Diluted weighted-average common shares outstanding	22,631		22,517		22,599		22,493

Earnings Per Share:
Basic	$	0.07	$	1.32	$	0.30	$	3.88
Diluted	$	0.07	$	1.32	$	0.30	$	3.88

Anti-dilutive shares excluded from diluted weighted-average common shares outstanding:
Restricted stock units	12		—		—		—

Table of Contents

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, 2024
	Agriculture		Construction		Europe		Australia (1)		Total
	(in thousands)
Equipment	$	358,430	$	53,770	$	41,893	$	41,054	$	495,147
Parts	84,763		13,704		16,290		6,329		121,086
Service	37,275		7,730		3,516		2,601		51,122
Other	1,056		490		196		151		1,893
Revenue from contracts with customers	481,524		75,694		61,895		50,135		669,248
Rental	498		9,591		487		—		10,576
Total revenue	$	482,022	$	85,285	$	62,382	$	50,135	$	679,824
(1) Australia segment was created through the Company's acquisition of J.J. O’Connor & Sons Pty. Ltd. ("O’Connors") in October 2023.


	Nine Months Ended October 31, 2024
	Agriculture		Construction		Europe		Australia		Total
	(in thousands)
Equipment	$	1,009,699	$	153,710	$	138,537	$	126,523	$	1,428,469
Parts	235,159		36,583		46,220		21,156		339,118
Service	104,787		21,744		9,350		7,587		143,468
Other	2,931		1,327		546		586		5,390
Revenue from contracts with customers	1,352,576		213,364		194,653		155,852		1,916,445
Rental	1,168		23,607		980		—		25,755
Total revenue	$	1,353,744	$	236,971	$	195,633	$	155,852	$	1,942,200


	Three Months Ended October 31, 2023
	Agriculture		Construction		Europe		Total
	(in thousands)
Equipment	$	408,648	$	47,364	$	65,763	$	521,775
Parts	86,173		12,943		15,846		114,962
Service	34,718		7,084		2,965		44,767
Other	1,333		547		318		2,198
Revenue from contracts with customers	530,872		67,938		84,892		683,702
Rental	532		9,570		311		10,413
Total revenue	$	531,404	$	77,508	$	85,203	$	694,115


	Nine Months Ended October 31, 2023
	Agriculture		Construction		Europe		Total
	(in thousands)
Equipment	$	1,086,840	$	146,519	$	197,913	$	1,431,272
Parts	237,966		39,144		42,967		320,077
Service	93,510		20,767		7,901		122,178
Other	3,735		1,496		869		6,100
Revenue from contracts with customers	1,422,051		207,926		249,650		1,879,627
Rental	1,618		24,442		625		26,685
Total revenue	$	1,423,669	$	232,368	$	250,275	$	1,906,312

Table of Contents

Unbilled Receivables and Deferred Revenue

Unbilled receivables from contracts with customers amounted to $35.0 million and $22.3 million as of October 31, 2024 and January 31, 2024, 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 $41.7 million and $114.6 million as of October 31, 2024 and January 31, 2024, 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, 2024 and 2023, the Company recognized $112.1 million and $118.0 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2024 and January 31, 2023, respectively. No material amount of revenue was recognized during the nine months ended October 31, 2024 or 2023 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.

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, 2024		January 31, 2024
	(in thousands)
Trade and unbilled receivables from contracts with customers
Trade receivables due from customers	$	64,330	$	83,187
Unbilled receivables	34,980		22,324
Less allowance for expected credit losses	(3,413)		(3,038)
	95,897		102,473

Short-term receivables due from finance companies	24,757		28,486

Trade and unbilled receivables from rental contracts
Trade receivables	4,873		3,101
Unbilled receivables	1,236		666
Less allowance for expected credit losses	(525)		(465)
	5,584		3,302
Other receivables
Due from manufacturers	13,137		18,775
Other	920		621
	14,057		19,396
Receivables, net of allowance for expected credit losses	$	140,295	$	153,657

Table of Contents

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


	Agriculture		Construction		Europe		Australia (1)		Total
	(in thousands)
Balance at January 31, 2024	$	164	$	177	$	2,638	59		$	3,038
Current expected credit loss provision	340		174		(41)		19		492
Write-offs charged against allowance	(86)		(185)		(39)		(17)		(327)
Credit loss recoveries collected	10		86		99		3		198
Foreign exchange impact	—		—		10		2		12
Balance at October 31, 2024	$	428	$	252	$	2,667	$	66	$	3,413
(1) Australia segment was created through the Company's acquisition of "O’Connors in October 2023.


	Agriculture		Construction		Europe		Total
	(in thousands)
Balance at January 31, 2023	$	367	$	124	$	2,589	$	3,080
Current expected credit loss provision	64		155		495		714
Write-offs charged against allowance	(191)		(95)		(56)		(342)
Credit loss recoveries collected	15		7		52		74
Foreign exchange impact	—		—		(11)		(11)
Balance at October 31, 2023	$	255	$	191	$	3,069	$	3,515

The following table presents impairment losses (recoveries) 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,
	2024		2023		2024		2023
	(in thousands)
Impairment losses (recoveries) on:
Receivables from sales contracts	$	283	$	362	$	497	$	714
Receivables from rental contracts	(9)		19		121		141
	$	274	$	381	$	618	$	855

NOTE 5 - INVENTORIES


	October 31, 2024		January 31, 2024
	(in thousands)
New equipment	$	836,040	$	745,445
Used equipment	381,539		347,041
Parts and attachments	189,073		203,124
Work in process	6,436		7,420
	$	1,413,088	$	1,303,030

Table of Contents

NOTE 6 - PROPERTY AND EQUIPMENT


	October 31, 2024		January 31, 2024
	(in thousands)
Rental fleet equipment	$	79,865	$	79,308
Machinery and equipment	37,268		31,760
Vehicles	112,492		103,765
Furniture and fixtures	29,362		57,935
Land, buildings, and leasehold improvements	262,270		204,992
	521,257		477,760
Less accumulated depreciation	(164,201)		(178,986)
	$	357,056	$	298,774

The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $2.8 million and $2.5 million for the three months ended October 31, 2024 and 2023, respectively, and $7.1 million and $6.5 million for the nine months ended October 31, 2024 and 2023, respectively. All other depreciation expense is included in Operating Expenses, which was $6.3 million and $5.3 million for the three months ended October 31, 2024 and 2023, respectively, and $18.4 million and $15.3 million for the nine months ended October 31, 2024 and 2023, 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. The Company determined, based on changing expectations regarding the future use of certain long-lived assets, that the $15.4 million carrying value of these assets may not be fully recoverable. The Company performed an impairment assessment of this asset group and as a result recognized an impairment charge of $0.3 million, of which $0.2 million was within the Agriculture segment and $0.1 million was within the Construction segment, for the three months ended October 31, 2024. For the nine months ended October 31, 2024, the Company recognized total impairment charges of $1.2 million, of which $0.2 million was within the Agriculture segment, $0.1 million was within the Construction segment and $0.9 million was within the Europe segment. The impairment charge is reflected in the Impairment of Intangibles and Long-Lived Assets amount in the Condensed Consolidated Statements of Operations.

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, 2024 and January 31, 2024:


	October 31, 2024						January 31, 2024
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
	(in thousands)						(in thousands)
Customer relationships	$	12,315	$	(2,049)	$	10,266	$	12,209	$	(704)	$	11,505
Covenants not to compete	1,125		(592)		533		1,236		(453)		783
	$	13,440	$	(2,641)	$	10,799	$	13,445	$	(1,157)	$	12,288

Total expense related to the amortization of intangible assets, which is recorded in Operating Expenses in the Condensed Consolidated Statements of Operations, was $0.5 million and $0.1 million for the three months ended October 31, 2024 and 2023, respectively. Total expense related to the amortization of intangible assets, which is recorded in Operating Expenses in the Condensed Consolidated Statements of Operations, was $1.5 million and $0.3 million for the nine months ended October 31, 2024 and 2023, respectively.

The Company performed an interim impairment test in the second quarter of fiscal 2025 with respect to its German subsidiary's assets and recorded an impairment charge of $0.1 million within the Europe segment, which is reflected in Impairment of Intangible and Long-Lived Assets in the Condensed Consolidated Statements of Operations.

Table of Contents

Future amortization expense, as of October 31, 2024, is expected to be as follows:

Fiscal Year Ending January 31,


	Amount
	(in thousands)
2025 (remainder)	$	489
2026	1,951
2027	1,925
2028	1,799
2029	1,702
Thereafter	2,933
	$	10,799

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, 2024:


	Agriculture		Construction		Australia		Total
	(in thousands)
January 31, 2024	$	18,154	$	72	$	22,842	$	41,068

Foreign currency translation	—		—		207		207

October 31, 2024	$	18,154	$	72	$	23,049	$	41,275

Goodwill

The following presents changes in the carrying amount of goodwill, by segment, for the nine months ended October 31, 2024:


	Agriculture		Europe		Australia		Total
	(in thousands)
January 31, 2024	$	37,820	$	474	$	25,811	$	64,105
Arising from business combinations	—		70		—		70
Impairment	—		(531)		—		(531)
Foreign currency translation	—		(13)		234		221
October 31, 2024	$	37,820	$	—	$	26,045	$	63,865

The Company performed an interim impairment test in the second quarter of fiscal 2025 for the German reporting unit. Under the impairment test, the fair value of the reporting unit is estimated using an income approach in which a discounted cash flow analysis is utilized, which includes a five-year forecast of future operating performance for the reporting unit and a terminal value that estimates sustained long-term growth. The discount rate applied to the estimated future cash flows reflects an estimate of the weighted-average cost of capital of comparable companies.

In second quarter of fiscal year 2025, the quantitative goodwill impairment analysis for the German reporting unit indicated that the estimated fair value of the reporting unit was less than the carrying value. The implied fair value of the goodwill associated with the reporting unit approximated zero, thus requiring a full impairment charge of the goodwill carrying value of the reporting unit. As such, a goodwill impairment charge of $0.5 million was recognized within the Europe segment, which is reflected in Impairment of Goodwill in the Condensed Consolidated Statements of Operations.

NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

On May 17, 2024, the Company entered into a Fourth Amended and Restated Credit Agreement (the "Bank Syndicate Agreement") with a group of banks, which replaced the previous Third Amended and Restated Credit Agreement (the "Prior Credit Facility") the Company had entered into in April 2020. The Credit Agreement provides for a secured credit facility in an amount of up to $500.0 million. The outstanding indebtedness under the Credit Agreement matures on May 17, 2029. The amounts available under the Bank Syndicate Agreement are subject to borrowing base calculations and reduced by outstanding

Table of Contents

standby letters of credit and certain reserves. The Bank Syndicate Agreement includes a variable interest rate on outstanding balances, charges a 0.25% non-usage fee on the average monthly unused amount, and requires monthly payments of accrued interest.

For the U.S. borrowings under the Credit Agreement, the Company elects at the time of any advance to choose a Base Rate Loan or a SOFR Rate Loan. The SOFR Rate is based upon one-month, three-month or six-month SOFR plus an adjustment (0.11448% for one-month term; 0.26161% for three-month term; and 0.42826% for six-month term), as chosen by the Company, but in no event shall the SOFR Rate be less than zero. The Base Rate is the greater of (a) the prime rate of interest announced, from time to time, by Bank of America; (b) the Federal Funds Rate plus 0.50%, or (c) one-month SOFR plus 1.0%, but in no event shall the Base Rate be less than zero. The effective interest rate on the Company’s borrowings is then calculated by adding an applicable margin to the SOFR Rate or Base Rate. The applicable margin is determined based on excess availability as determined under the Credit Agreement and ranges from 0.75% to 1.25% for Base Rate Loans and 1.75% to 2.25% for SOFR Rate Loans. The applicable margins for the U.S. loans under the Bank Syndicate Agreement are 0.25% higher than the margins under the Prior Credit Facility.

For the Australian borrowings under the Credit Agreement, the Company elects at the time of the advance to choose an Australian Base Rate Loan or an Australian Bill Rate Loan. The Australian Bill Rate is based on the Bank Bill Swap Reference Bid Rate with an equivalent term of the loan, but in no event shall the Australian Bill Rate be less than zero. The Australian Base Rate is the sum of 1% plus the interbank overnight cash rate calculated by the Reserve Bank of Australia (but in no event shall the Australian cash rate be less than zero). The effective interest rate on the Australian’s borrowings is then calculated by adding an applicable margin to the Australian Bill Rate or the Australian Base Rate. The applicable margin is determined based on excess availability as determined under the Credit Agreement and ranges from 1.75% to 2.25%.

On December 3, 2024, the Company entered into Amendment No. 1 to the Bank Syndicate Agreement that lowers the adjusted excess availability metric from 15% to 10% for the period December 15, 2024 to March 15, 2025, and thereafter reverts to 15%.

On December 2, 2024, the Company received a letter from CNH Industrial Capital America LLC that waived the Consolidated Fixed Charge Cover Ratio covenant for the period February 1, 2025 through January 31, 2026. The Company also received a letter from DLL Finance LLC dated December 2, 2024, which waived the Minimum Consolidated Fixed Charge Coverage Ratio covenant for the period April 30, 2025 through January 31, 2026.

On December 2, 2024, the Company amended the Wholesale Floor Plan Credit Facilities with CNH Industrial Capital America LLC to reallocate the global limit of $875.0 million, which consists of a total available domestic limit to $650.0 million, total available Australian limit to $125.0 million and total available European limit to $100.0 million.

As of October 31, 2024, the Company had floorplan and working capital lines of credit totaling $1.5 billion, which is primarily comprised of three floorplan lines of credit: (i) $875.0 million credit facility with CNH Industrial, (ii) $390.0 million floorplan line of credit and $110.0 million working capital line of credit under the Bank Syndicate Agreement, and (iii) $80.0 million credit facility with DLL Finance LLC.

The Company's outstanding balances of floorplan lines of credit as of October 31, 2024 and January 31, 2024, consisted of the following:


	October 31, 2024		January 31, 2024
	(in thousands)
CNH Industrial	$	709,440	$	567,677
Bank Syndicate Agreement Floorplan Loan	214,051		162,845
DLL Finance	34,954		38,528
Other outstanding balances with manufacturers and non-manufacturers	89,776		124,796
	$	1,048,221	$	893,846

As of October 31, 2024, the interest-bearing U.S. floorplan payables carried a variable interest rate with a range of 7.21% to 10.09% compared to a range of 7.22% to 10.70% as of January 31, 2024. As of October 31, 2024, foreign floorplan payables carried a variable interest rate with a range of 4.80% to 7.50%, compared to a range of 5.24% to 8.27% as of January 31, 2024, on multiple lines of credit. The Company had non-interest-bearing floorplan payables of $460.2 million and $507.7 million, as of October 31, 2024 and January 31, 2024, respectively.

Table of Contents

NOTE 9 - LONG TERM DEBT

The following is a summary of the Company's long-term debt as of October 31, 2024 and January 31, 2024:


Description	Maturity Dates	Interest Rates	October 31, 2024		January 31, 2024
			(in thousands)
Mortgage loans, secured	Various through May 2039	2.1% to 7.3%	$	94,400	$	88,669
Sale-leaseback financing obligations	Various through December 2030	6.1% to 6.2%	19,481		10,043

Vehicle loans, secured	Various through September 2030	2.1% to 7.4%	24,336		14,433
Other	Various through February 2029	1.2% to 7.0%	2,417		6,968
Total debt			140,634		120,113
Less: current maturities			(9,500)		(13,706)
Long-term debt, net			$	131,134	$	106,407

In the second quarter of fiscal 2025, the Company signed an agreement to purchase 13 of its leased facilities at the end of the respective lease terms, resulting in an increase of the Sale-leaseback financing obligation by $11.2 million which is recorded to Current maturities of long-term debt and Long-term debt, less current maturities in the Condensed Consolidated Balance Sheets. The sale-leaseback finance modification expense was recorded to Interest and other income (expense) in the Condensed Consolidated Statements of Operations.

Additionally, in the second quarter of fiscal 2025, the Company decreased the Other debt balance by $3.6 million for the debt cancellation in relation to a New Market Tax Credit Program, which is recorded to Current maturities of long-term debt in the Condensed Consolidated Balance Sheets. The gain in debt cancellation was recorded to Interest and other income (expense) in the Condensed Consolidated Statements of Operations.

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 one month to three-month maturities. The notional value of outstanding foreign currency contracts was $54.7 million and $25.3 million as of October 31, 2024 and January 31, 2024, respectively.

As of October 31, 2024 and January 31, 2024, 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, 2024 and 2023. 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,
	2024		2023		2024		2023
	(in thousands)
Foreign currency contract gain (loss)	$	(114)	$	(1,006)	$	14	$	(1,104)

Table of Contents

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, 2024 and 2023:


	Foreign Currency Translation Adjustment		Net Investment Hedging Gain		Total Accumulated Other Comprehensive Income (Loss)
	(in thousands)
Balance, January 31, 2024	$	(951)	$	2,711	$	1,760
Other comprehensive loss	(4,525)		—		(4,525)
Balance, April 30, 2024	(5,476)		2,711		(2,765)
Other comprehensive income	58		—		58
Balance, July 31, 2024	(5,418)		2,711		(2,707)
Other comprehensive income	5,821		—		5,821
Balance, October 31, 2024	$	403	$	2,711	$	3,114


	Foreign Currency Translation Adjustment		Net Investment Hedging Gain		Total Accumulated Other Comprehensive Income (Loss)
	(in thousands)
Balance, January 31, 2023	$	(7,730)	$	2,711	$	(5,019)
Other comprehensive income	1,096		—		1,096
Balance, April 30, 2023	(6,634)		2,711		(3,923)
Other comprehensive income	550		—		550
Balance, July 31, 2023	(6,084)		2,711		(3,373)
Other comprehensive loss	(1,938)		—		(1,938)
Balance, October 31, 2023	$	(8,022)	$	2,711	$	(5,311)

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 Sheets, of our Construction segment as of October 31, 2024 and January 31, 2024:


	October 31, 2024		January 31, 2024
	(in thousands)
Rental fleet equipment	$	79,865	$	79,308
Less accumulated depreciation	(26,514)		(27,282)
	$	53,351	$	52,026

Table of Contents

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

As of October 31, 2024, 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, 2024 and January 31, 2024. 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, 2024		January 31, 2024
	(in thousands)
Carrying amount	$	121,153	$	99,031
Fair value	$	115,116	$	103,102

NOTE 14 - INCOME TAXES

Our effective tax rate was 522.9% and 25.4% for the three months ended October 31, 2024 and 2023, respectively. Our effective tax rate was 22.2% and 24.7% for the nine months ended October 31, 2024 and 2023, respectively. The effective tax rate for the three and nine months ended October 31, 2024 and 2023 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 2025

The Company acquired Gose Landtechnik e.K. on March 1, 2024, which consists of one location in Germany and is included in the Europe segment. This acquisition is not considered material to the overall consolidated financial statements during the three and nine months ended October 31, 2024 and has been included in the Condensed Consolidated Financial Statements from the date of the acquisition.

Fiscal 2024

On October 2, 2023, the Company acquired all of the outstanding equity interests of O’Connors. The acquired business consisted of 15 Case IH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia. Total cash consideration paid for O'Connors was $66.5 million, which was financed through available cash resources and line of credit availability. The 15 O’Connors store locations are included within the Australia segment. The Company incurred $1.1 million in acquisition related expenses in connection with this acquisition, which are included in Operating Expenses in the Consolidated Statements of Operations for the year ended January 31, 2024.

The Company completed other acquisitions that were not considered material, individually or collectively, to the overall consolidated financial statements during the year ended January 31, 2024. These acquisitions consisted of five locations of Pioneer Farm Equipment Co. on February 1, 2023, in the state of Idaho, one location of Midwest Truck Parts Inc. on June 1, 2023, in the state Minnesota and one location of Scott Supply Co. on January 10, 2024, in the state of South Dakota, all of which are included in the Agriculture segment. The Company also acquired MAREP GmbH on May 1, 2023, which included two locations in Germany and is included in the Europe segment. These acquisitions have been included in the Condensed Consolidated Financial Statements from the date of the respective acquisition.

Table of Contents

Purchase Price Allocation

Each of the above acquisitions has 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. As of October 31, 2024, the purchase price allocation for all business combinations from fiscal 2025 and prior are complete. The following summarizes the acquisition date fair value of consideration transferred and the acquisition date fair value of the identifiable assets acquired and liabilities assumed, including an amount for goodwill (in thousands):


	O’Connors
	October 2, 2023
	(in thousands)
Assets acquired:
Cash	$	4,165
Receivables	8,323
Inventories	96,802
Prepaid expenses and other	314
Property and equipment	11,450
Operating lease assets	14,798
Intangible assets acquired:
Customer Relationships	10,928
Distribution Rights	21,470
Goodwill	24,261

Total assets	192,511

Liabilities assumed:
Accounts payable	4,702
Floorplan payable	74,815
Current operating lease liabilities	1,064
Deferred revenue	12,008
Accrued expenses and other	17,284
Long-term debt	2,371
Operating lease liabilities	13,733


Total liabilities	125,977
Net assets acquired	$	66,534

Goodwill recognized by segment:



Australia	$	24,261
Goodwill expected to be deductible for tax purposes	$	—

The recognition of goodwill in the above business combination arose from the acquisition of an assembled workforce and anticipated synergies expected to be realized. The acquired customer relationship intangible assets are being amortized on a straight line basis over a useful life of seven years. The distribution rights assets are indefinite-lived intangible assets not subject to amortization, but are tested for impairment annually, or more frequently upon the occurrence of certain events or when circumstances indicate that impairment may be present. The Company estimated the fair value of these intangible assets using a multi-period excess earnings model, an income approach.

Table of Contents

Pro Forma Information

The following summarized unaudited pro forma Condensed Statement of Operations information for the three and nine months ended October 31, 2024 and 2023, assumes that the O'Connors acquisition occurred as of February 1, 2023. The Company prepared the following summarized unaudited pro forma financial results for comparative purposes only. The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed the acquisition as of February 1, 2023, or the results that will be attained in the future.


	Three Months Ended October 31,				Nine Months Ended October 31,
	2024		2023		2024		2023
	(in thousands)
Total Revenues	$	679,824	$	757,223	$	1,942,200	$	2,098,124
Net Income	$	1,713	$	34,027	$	6,850	$	99,302

NOTE 16 - CONTINGENCIES

The Company is engaged in legal proceedings incidental to the normal course of business. Due to their nature, these 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.

NOTE 17 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company has four reportable segments: Agriculture, Construction, Europe and Australia. 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,
	2024		2023		2024		2023
	(in thousands)				(in thousands)
Revenue
Agriculture	$	482,022	$	531,404	$	1,353,744	$	1,423,669
Construction	85,285		77,508		236,971		232,368
Europe	62,382		85,203		195,633		250,275
Australia (1)	50,135		—		155,852		—
Total	$	679,824	$