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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 
13

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 
14

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)
15

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.
17

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 
18

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 18,683 
Segment income before income taxes44,333 56,597 123,154 115,267 
Shared Resources(3,881)(1,919)(5,671)(3,855)
Total$40,452 $54,678 $117,483 $111,412 
 
October 31, 2023January 31, 2023
 (in thousands)
Total Assets
Agriculture$1,069,180 $788,265 
Construction239,516 187,739 
Europe322,559 170,647 
Segment assets1,631,255 1,146,651 
Shared Resources18,483 42,044 
Total$1,649,738 $1,188,695 
20

NOTE 18 - SUBSEQUENT EVENTS
On October 2, 2023, the Company, through a newly organized, wholly-owned Australian subsidiary, Titan Machinery Holdings Australia Pty Ltd., ("Titan Australia") acquired all outstanding equity interests of O’Connors, for cash consideration of $62 million net of cash acquired. O’Connors consists of 15 CaseIH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia. Founded in 1964, O’Connors has been a successful CaseIH complex, and our acquisition of O'Connors provides the Company the opportunity to expand our international presence into the large, well-established Australian market.
Each of the Company’s foreign subsidiaries has fiscal quarters and a fiscal year-end that align with the calendar quarterly periods and year-end. Titan Australia also maintains fiscal quarters and a fiscal year-end that aligns with the calendar periods. The quarterly and annual financial statements of all of the Company's foreign subsidiaries are consolidated into the Company’s U.S. quarterly and annual fiscal periods that end on April 30th, July 31st, October 31st and January 31st. Accordingly, the October 2, 2023 foreign acquisition of O'Connors is a fourth quarter of fiscal 2024 transaction, and therefore no amounts were recognized in the consolidated financial statements of the Company for the quarter ended October 31, 2023.
The acquisition of O'Connors 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. The fair value of the consideration paid exceeded the preliminarily estimated fair value of the assets acquired and liabilities assumed, which resulted in the recognition of $48.5 million of intangible assets. The Company is in the process of completing an intangible asset valuation and is expected to have goodwill, distribution rights, and customer relationships as the primarily intangible assets. The valuation is expected to be completed by January 31, 2024. The entire goodwill amount will be assigned to the Australia segment and is not expected to be deductible for income tax purposes. All acquisition-related costs, which amounted to $1.1 million during the nine months ended October 31, 2023, have been expensed as incurred and recognized as operating expenses in the condensed consolidated statement of operations.
Due to the limited time since the acquisition of O'Connors, the estimated fair values of acquired assets and assumed liabilities are provisional estimates, but are based on the best information currently available. These provisional estimates are subject to change as the Company completes all remaining steps in finalizing the purchase price allocation. The Company expects to finalize the valuation of all assets and liabilities by January 31, 2024. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:
21

(in thousands)
Assets acquired:
Cash$4,333 
Receivables5,741 
Inventories97,832 
Prepaid expenses and other296 
Property and equipment11,063 
Operating lease assets14,496 
Intangible assets48,520 
Other assets
$182,288 
Liabilities assumed:
Accounts payable$4,191 
Floorplan payable74,843 
Current maturities of long-term debt294 
Current operating lease liabilities1,039 
Deferred revenue12,066 
Accrued expenses and other7,204 
Long-term debt, less current maturities2,077 
Operating lease liabilities13,457 
Deferred income taxes965 
$116,136 
Net assets acquired$66,152 
Pro Forma Information
The following summarized unaudited pro forma condensed statement of operations information for the three and nine months ended October 31, 2023 and 2022, assumes that the Heartland Companies and O'Connors acquisitions occurred as of February 1, 2022. The Company prepared the following summarized unaudited pro forma condensed statement of operations information for comparative purposes only. The summarized unaudited pro forma condensed statement of operations information may not be indicative of the results that would have occurred had the Company completed the acquisitions as of February 1, 2022 or that will be attained in the future.
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
(in thousands)
Total Revenues$757,223 $724,416 $2,098,124 $1,959,048 
Net Income$34,027 $44,390 $99,302 $100,913 


22

ITEM 2.                        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report, and the audited consolidated financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023.
Overview
We own and operate a network of full service agricultural and construction equipment stores in the United States and Europe. Based upon information provided to us by CNH Industrial N.V. or its U.S. subsidiary CNH Industrial America, LLC, we are the largest retail dealer of CaseIH Agriculture equipment in the world, one of the largest retail dealers of Case Construction equipment in North America and one of the largest retail dealers of New Holland Agriculture and New Holland Construction equipment in the United States. We operate our business through three reportable segments: Agriculture, Construction and Europe, formerly International. Starting in the fourth quarter fiscal 2024, our fourth segment will be Australia, see Note 1 - Business Activity and Significant Accounting Policies for further details. Within each segment, we have four principal sources of revenue: new and used equipment sales, parts sales, service, and equipment rental and other activities.
Demand for agricultural equipment and, to a lesser extent, parts and service support, is impacted by agricultural commodity prices and net farm income. Based on August 2023 U.S. Department of Agriculture publications, the estimate of net farm income for calendar year 2023 indicated an approximate 22.8% decrease as compared to calendar year 2022, and an approximate 30.7% increase in net farm income for calendar year 2022 as compared to calendar year 2021.
For the third quarter of fiscal 2024, our net income was $30.2 million, or $1.32 per diluted share, compared to a fiscal 2023 third quarter net income of $41.3 million, or $1.82 per diluted share. Significant factors impacting the quarterly comparisons were:
Revenue in the third quarter of fiscal 2024 increased by 3.8% compared to the third quarter of fiscal 2023. The revenue increase was led by additional revenue resulting from the acquisition of Pioneer Farm Equipment, in February 2023. Same-store sales remained stable, on top of the record performance from prior year which saw same-store growth of 34%.
Gross profit margin decreased to 19.9% for third quarter of fiscal 2024, as compared to 20.9% for the third quarter of fiscal 2023. The decrease in gross profit margin is primarily the result of a partial normalization of equipment gross profit margin as supply of many product categories has caught up with demand. Another factor is the prior year equipment gross profit benefited from the recognition of a $2.0 million accrual on the expected achievement of annual manufacturer incentive programs, which is not included in the results for the third quarter of fiscal 2024.
Floorplan interest expense increased by $3.5 million in the third quarter of fiscal 2024 as compared to the same period in fiscal 2023, due to an increase in interest bearing inventory and higher interest rates.
Supply Chain
While we continue to experience less than desired shipments of certain product categories, primarily high-horsepower tractors, self-propelled sprayers and wheel loaders, for most other product categories we have been able to receive enough inventory to meet demand and also have stock available for sale.
Russian-Ukrainian Conflict
In February 2022, Russian military forces invaded Ukraine, and although the length, impact, and outcome of the ongoing conflict in Ukraine is highly unpredictable, this conflict has led, and could continue to lead, to significant market and other disruptions, including instability in financial markets, supply chain interruptions, political and social instability, and increases in cyberattacks. We are actively monitoring the situation in Ukraine and assessing its impact on our business. For the nine months ended October 31, 2023, Titan Machinery Ukraine's revenues are down approximately 10.3% from the prior year period.
As of October 31, 2023, the Company had total assets of $32.3 million in Ukraine. The physical assets (e.g. inventory and fixed assets) are almost exclusively located in central and western areas of the country. Total assets in Ukraine, as of January 31, 2023, were $27.4 million.
23

If the Company cannot provide efficient and uninterrupted services to its customers, this could worsen the conflict's adverse effect on the Company's operations and business in Ukraine. In addition, the Company's ability to maintain adequate liquidity for our operations in Ukraine is dependent on a number of factors, including Titan Machinery Ukraine's revenue and earnings, which have been and could continue to be significantly impacted by the conflict. Further, any major breakdown or closure of utility services, any major threat to civilians in our footprint, disruption of commodity exports from Ukraine, or international banking disruption could materially impact the operations and liquidity of Titan Machinery Ukraine.
Acquisitions
Fiscal 2024
On August 29, 2023, the Company entered into a definitive purchase agreement to acquire J.J. O’Connor & Sons Pty. Ltd. ("O’Connors"), which operates 15 CaseIH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia. In its most recently completed fiscal year ended June 30, 2023, O’Connors generated revenue of approximately $258 million. The Company closed on the acquisition on October 2, 2023, see Note 18 - Subsequent Event for further details. The consideration paid is approximately $62 million, subject to final working capital and other purchase price closing adjustments. The acquisition will be accounted for in accordance with Accounting Standards Codification ("ASC") Topic 805, "Business Combinations". The Company funded the acquisition with cash on hand and using the proceeds of additional indebtedness incurred under the floorplan and working capital loans of the Bank Syndicate Agreement.
On June 1, 2023, the Company acquired certain assets of 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 related to its full-service agriculture dealership businesses 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. 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.
In connection with the acquisition, the Company acquired from CNH Industrial and certain other manufacturers equipment and parts inventory previously owned by Pioneer Farm Equipment. 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 twelve CaseIH commercial application agriculture locations, in 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. The Heartland Companies are included in the Agriculture segment. In the most recent completed fiscal year prior to the acquisition, the Heartland Companies generated revenue of approximately $214 million.
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. In its most recent fiscal year prior to the acquisition, Mark's Machinery, Inc. generated revenue of approximately $34.0 million. The total cash consideration paid for the acquired business was $7.7 million.
24

ERP Transition
The Company is in the process of converting to a new Enterprise Resource Planning ("ERP") application. The new ERP application is expected to provide data-driven and mobile-enabled sales and support tools to improve employee efficiency and deliver an enhanced customer experience. The Company has implemented a phased roll-out plan to integrate all of its domestic stores to the new ERP. We will continue the phased rollout until all remaining domestic locations have been transitioned to the new ERP.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are included in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended January 31, 2023. There have been no changes in our critical accounting policies and estimates since January 31, 2023.
Results of Operations
The results presented below include the operating results of any acquisition made during these periods, from the date of acquisition, as well as the operating results of any stores closed or divested during these periods, up to the date of the store closure. The period-to-period comparisons included below are not necessarily indicative of future results. Segment information is provided later in the discussion and analysis of our results of operations.
Same-store sales for any period represent sales by stores that were part of the Company for the entire comparable period in the current and preceding fiscal years. We do not distinguish between relocated or recently expanded stores in this same-store analysis. Closed stores are excluded from the same-store analysis. Stores that do not meet the criteria for same-store classification are described as excluded stores throughout this Results of Operations section.
Comparative financial data for each of our four sources of revenue are expressed below.
 Three Months Ended October 31,Nine Months Ended October 31,
 2023202220232022
 (dollars in thousands)(dollars in thousands)
Equipment  
Revenue$521,775 $508,996 $1,431,272 $1,240,579 
Cost of revenue454,598 436,156 1,237,660 1,070,378 
Gross profit$67,177 $72,840 $193,612 $170,201 
Gross profit margin12.9 %14.3 %13.5 %13.7 %
Parts
Revenue$114,962 $108,719 $320,077 $254,974 
Cost of revenue78,585 72,146 216,775 172,162 
Gross profit$36,377 $36,573 $103,302 $82,812 
Gross profit margin31.6 %33.6 %32.3 %32.5 %
Service
Revenue$44,767 $38,960 $122,178 $101,847 
Cost of revenue14,393 13,456 41,010 35,288 
Gross profit$30,374 $25,504 $81,168 $66,559 
Gross profit margin67.8 %65.5 %66.4 %65.4 %
Rental and other
Revenue$12,611 $12,098 $32,785 $28,923 
Cost of revenue8,198 7,435 20,549 17,522 
Gross profit$4,413 $4,663 $12,236 $11,401 
Gross profit margin35.0 %38.5 %37.3 %39.4 %
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The following table sets forth our statements of operations data expressed as a percentage of total revenue for the periods indicated:
 Three Months Ended October 31,Nine Months Ended October 31,
 2023202220232022
Revenue  
Equipment75.2 %76.1 %75.1 %76.2 %
Parts16.6 %16.3 %16.8 %15.7 %
Service6.4 %5.8 %6.4 %6.3 %
Rental and other1.8 %1.8 %1.7 %1.8 %
Total Revenue100.0 %100.0 %100.0 %100.0 %
Total Cost of Revenue80.1 %79.1 %79.5 %79.6 %
Gross Profit Margin19.9 %20.9 %20.5 %20.4 %
Operating Expenses13.3 %12.7 %13.8 %13.4 %
Income from Operations6.7 %8.2 %6.7 %7.0 %
Other Expense(0.8)%— %(0.6)%(0.1)%
Income Before Income Taxes5.8 %8.2 %6.2 %6.9 %
Provision for Income Taxes1.5 %2.0 %1.5 %1.7 %
Net Income4.3 %6.2 %4.6 %5.2 %
Three Months Ended October 31, 2023 Compared to Three Months Ended October 31, 2022
Consolidated Results
Revenue
 Three Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Equipment$521,775 $508,996 $12,779 2.5 %
Parts114,962 108,719 6,243 5.7 %
Service44,767 38,960 5,807 14.9 %
Rental and other12,611 12,098 513 4.2 %
Total Revenue$694,115 $668,773 $25,342 3.8 %
Total revenue for the third quarter of fiscal 2024 was 3.8% or $25.3 million higher than the third quarter of fiscal 2023 driven primarily by our acquisition of Pioneer Farm Equipment completed in February 2023.
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 Three Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Gross Profit
Equipment$67,177 $72,840 $(5,663)(7.8)%
Parts36,377 36,573 (196)(0.5)%
Service30,374 25,504 4,870 19.1 %
Rental and other4,413 4,663 (250)(5.4)%
Total Gross Profit$138,341 $139,580 $(1,239)(0.9)%
Gross Profit Margin
Equipment12.9 %14.3 %(1.4)%(9.8)%
Parts31.6 %33.6 %(2.0)%(6.0)%
Service67.8 %65.5 %2.3 %3.5 %
Rental and other35.0 %38.5 %(3.5)%(9.1)%
Total Gross Profit Margin19.9 %20.9 %(1.0)%(4.8)%
Gross Profit Mix
Equipment48.6 %52.2 %(3.6)%(6.9)%
Parts26.3 %26.2 %0.1 %0.4 %
Service22.0 %18.3 %3.7 %20.2 %
Rental and other3.1 %3.3 %(0.2)%(6.1)%
Total Gross Profit Mix100.0 %100.0 %
Gross profit for the third quarter of fiscal 2024 decreased 0.9% or $1.2 million, as compared to the same period last year. Gross profit margin also declined to 19.9% in the current quarter from 20.9% in the prior year quarter. The decrease in gross profit margin is primarily the result of a partial normalization of equipment gross profit margin as supply of many product categories has caught up with demand. Another factor is the prior year equipment gross profit benefited from the recognition of a $2.0 million accrual on the expected achievement of annual manufacturer incentive programs, which is not included in the results for the third quarter of fiscal 2024.
Our Company-wide absorption rate — which is calculated by dividing our gross profit from sales of parts, service and rental fleet by our operating expenses, less commission expense on equipment sales, plus interest expense on floorplan payables and rental fleet debt — decreased to 87.4% for the third quarter of fiscal 2024 compared to 95.9% during the same period last year, led by increased floorplan interest expense in the third quarter of fiscal 2024 compared to the same period last year.
Operating Expenses
 Three Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Operating Expenses$92,115 $84,861 $7,254 8.5 %
Operating Expenses as a Percentage of Revenue13.3 %12.7 %0.6 %4.7 %
Our operating expenses in the third quarter of fiscal 2024 increased 8.5% as compared to the third quarter of fiscal 2023. The increase in operating expenses was primarily the result of the additional operating expenses due to acquisitions that have taken place in the past year as well as an increase in variable expenses associated with increased sales. Operating expenses as a percentage of revenue increased to 13.3% in the third quarter of fiscal 2024 from 12.7% in the third quarter of fiscal 2023.
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 Three Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Interest and other income (expense)$(235)$1,804 $(2,039)(113.0)%
Floorplan interest expense(4,045)(588)3,457 587.9 %
Other interest expense(1,494)(1,257)237 18.9 %
The change in interest and other income (expense) compared to fiscal 2023 was primarily the result of foreign currency fluctuations in the quarter, creating foreign currency losses in fiscal 2024. The increase in floorplan interest expense for the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023 was primarily due to a higher level of interest-bearing inventory and a higher interest rate in the third quarter of fiscal 2024.
Provision for Income Taxes
 Three Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Provision for Income Taxes$10,259 $13,421 $(3,162)(23.6)%
Our effective tax rate was 25.4% and 24.5% for each of the three months ended October 31, 2023 and October 31, 2022, respectively. The effective tax rates for the three months ended October 31, 2023 and 2022 were subject to various factors such as the impact of certain discrete items, mainly the vesting of share-based compensation and the mix of domestic and foreign income.
Segment Results
Certain financial information for our Agriculture, Construction and Europe business segments is presented below. “Shared Resources” in the table below refers to the various unallocated income/(expense) items that we have retained at the general corporate level. Revenue between segments is immaterial.
 Three Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Revenue
Agriculture$531,404 $493,324 $38,080 7.7 %
Construction77,508 86,403 (8,895)(10.3)%
Europe85,203 89,046 (3,843)(4.3)%
Total$694,115 $668,773 $25,342 3.8 %
Income Before Income Taxes
Agriculture$35,130 $42,044 $(6,914)(16.4)%
Construction4,057 6,065 (2,008)(33.1)%
Europe5,146 8,488 (3,342)(39.4)%
Segment Income Before Income Taxes44,333 56,597 (12,264)(21.7)%
Shared Resources(3,881)(1,919)1,962 102.2 %
Total$40,452 $54,678 $(14,226)(26.0)%
Agriculture 
Agriculture segment revenue for the third quarter of fiscal 2024 increased 7.7% compared to the third quarter of fiscal 2023. The higher revenue was driven primarily by the recent acquisition of Pioneer Farm Equipment, completed in February 2023, as well as an increase in same-store sales in our Agriculture segment of 3.5% on top of last year's record performance. Same-store sales was constrained by delayed OEM deliveries and capacity constraints or our service department as we
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prioritized supporting our customers through harvest which limited our ability to process and deliver pre-sold units to customers.
Agriculture segment income before income taxes for the third quarter of fiscal 2024 was $35.1 million compared to $42.0 million for the third quarter of fiscal 2023. The decrease in gross profit is primarily the result of a partial normalization of equipment gross profit margin as supply of many product categories has caught up with demand. Another factor is the prior year equipment gross profit benefited from the recognition of a $2.0 million accrual on the expected achievement of annual manufacturer incentive programs, which is not included in the results for the third quarter of fiscal 2024.
Construction
Construction segment revenue for the third quarter of fiscal 2024 decreased 10.3% compared to the third quarter of fiscal 2023. The year-over-year decrease in revenue was primarily driven by the timing of equipment deliveries which shifted some revenue into the fourth quarter of this year as compared to the third and fourth quarters of the prior year.
Our Construction segment income before taxes was $4.1 million for the third quarter of fiscal 2024 compared to $6.1 million in the third quarter of fiscal 2023. The decrease in segment results was primarily due to a decrease in revenue. The dollar utilization, which is calculated by dividing the rental revenue earned on our rental fleet by the average gross carrying value of our rental fleet (comprised of original equipment costs plus additional capitalized costs) for that period, of our rental fleet decreased slightly from 34.3% in the third quarter of fiscal 2023 to 33.2% in the third quarter of fiscal 2024.
Europe
Europe segment revenue was $85.2 million for the third quarter of fiscal 2024 compared to $89.0 million in the third quarter of fiscal 2023. The decrease in revenue was impacted by a softening demand which was negatively impacted by dry conditions in the region as well as being negatively impacted by a 4.2% decrease in total revenue from our Ukrainian subsidiary due to the Russia-Ukraine conflict, compared to the third quarter of fiscal 2023.
Our Europe segment income before income taxes was $5.1 million for the third quarter of fiscal 2024 compared to segment income before income taxes of $8.5 million for the same period last year. The decrease in segment pre-tax income was primarily the result of increased operating expenses.
Shared Resources/Eliminations
We incur centralized expenses/income at our general corporate level, which we refer to as “Shared Resources,” and then allocate most of these net expenses to our segments. Since these allocations are set early in the year, unallocated balances may occur. Shared Resources loss before income taxes was $3.9 million for the third quarter of fiscal 2024 compared to a loss before income taxes of $1.9 million for the same period last year. The lower shared resources results were primarily from increase in floorplan interest expense as well as $0.6 million of acquisition related expenses incurred for the O'Connors acquisition.
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Nine Months Ended October 31, 2023 Compared to Nine Months Ended October 31, 2022
Consolidated Results
Revenue 
 Nine Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Equipment$1,431,272 $1,240,579 $190,693 15.4 %
Parts320,077 254,974 65,103 25.5 %
Service122,178 101,847 20,331 20.0 %
Rental and other32,785 28,923 3,862 13.4 %
Total Revenue$1,906,312 $1,626,323 $279,989 17.2 %
Total revenue for the first nine months of fiscal 2024 was up 17.2% or $280.0 million compared to the first nine months of fiscal 2023, driven primarily by our acquisitions of Mark's Machinery, the Heartland Companies, and Pioneer Farm Equipment completed in April 2022, August 2022, and February 2023, respectively as well as an increase in Company-wide same-store sales of 4.3%. The same-store sales increase was primarily driven by equipment sales, which benefited from improved availability of inventory in certain product categories and the sustained high demand of both agriculture and construction equipment.
Gross Profit
 Nine Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Gross Profit
Equipment$193,612 $170,201 $23,411 13.8 %
Parts103,302 82,812 20,490 24.7 %
Service81,168 66,559 14,609 21.9 %
Rental and other12,236 11,401 835 7.3 %
Total Gross Profit$390,318 $330,973 $59,345 17.9 %
Gross Profit Margin
Equipment13.5 %13.7 %(0.2)%(1.5)%
Parts32.3 %32.5 %(0.2)%(0.6)%
Service66.4 %65.4 %1.0 %1.5 %
Rental and other37.3 %39.4 %(2.1)%(5.3)%
Total Gross Profit Margin20.5 %20.4 %0.1 %0.5 %
Gross Profit Mix
Equipment49.6 %51.5 %(1.9)%(3.7)%
Parts26.5 %25.0 %1.5 %6.0 %
Service20.8 %20.1 %0.7 %3.5 %
Rental and other3.1 %3.4 %(0.3)%(8.8)%
Total Gross Profit Mix100.0 %100.0 %
 Gross profit increased 17.9% or $59.3 million for the first nine months of fiscal 2024, as compared to the same period last year. Gross profit margin also improved to 20.5% in the first nine months of fiscal 2024 from 20.4% in the same period last year. The increase in gross profit margin was primarily due to gross profit mix shift, to higher margin parts sales relative to equipment sales.
Our Company-wide absorption rate for the first nine months of fiscal 2024 increased to 95.9%, as compared to 89.6% during the same period last year, as the increase in gross profit from parts, rental, and service more than offset the increase in operating expenses and interest expense on floorplan payables, during the nine-month period compared to that of the prior year nine-month period.

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Operating Expenses
Nine Months Ended October 31,Increase/Percent
20232022(Decrease)Change
(dollars in thousands)
Operating Expenses$262,182 $217,841 $44,341 20.4 %
Operating Expenses as a Percentage of Revenue13.8 %13.4 %0.4 %3.0 %
Our operating expenses for the first nine months of fiscal 2024 increased $44.3 million as compared to the first nine months of fiscal 2023. The increase in operating expenses was a result of an increase in variable expenses associated with increased sales as well as acquisitions that have occurred in the last twelve months. Operating expenses as a percentage of revenue increased slightly to 13.8% in the first nine months of fiscal 2024 from 13.4% in the first nine months of fiscal 2023.
Other Income (Expense)
Nine Months Ended October 31,Increase/Percent
20232022(Decrease)Change
(dollars in thousands)
Interest and other income (expense)$1,129 $3,169 $(2,040)(64.4)%
Floorplan interest expense(7,774)(1,087)6,687 615.2 %
Other interest expense(4,008)(3,802)206 5.4 %
The change in interest and other income (expense) compared to fiscal 2023 was primarily the result of foreign currency fluctuations in the nine months period, creating foreign currency losses in fiscal 2024. Floorplan interest expense increased $6.7 million for the first nine months of fiscal 2024, as compared to the same period last year, primarily due to increased interest bearing borrowings, resulting from higher inventory levels, as well as a higher interest rate environment.
Provision for Income Taxes
Nine Months Ended October 31,Increase/Percent
20232022DecreaseChange
(dollars in thousands)
Provision for Income Taxes$29,004 $27,656 $1,348 4.9 %
Our effective tax rate was 24.7% for the first nine months of fiscal 2024 and 24.8% for the same period last year. The effective tax rate for the nine months ended October 31, 2023 and 2022 was subject to variation due to factors such as the impact of certain discrete items, mainly the vesting of share-based compensation and the mix of domestic and foreign income.
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Segment Results
Certain financial information for our Agriculture, Construction and Europe business segments is presented below. “Shared Resources” in the table below refers to the various unallocated income/(expense) items that we have retained at the general corporate level. Revenue between segments is immaterial.
 Nine Months Ended October 31,Increase/Percent
 20232022(Decrease)Change
 (dollars in thousands) 
Revenue
Agriculture$1,423,669 $1,160,829 $262,840 22.6 %
Construction232,368 223,389 8,979 4.0 %
Europe250,275 242,105 8,170 3.4 %
Total$1,906,312 $1,626,323 $279,989 17.2 %
Income Before Income Taxes
Agriculture$92,311 $83,387 $8,924 10.7 %
Construction13,746 13,197 549 4.2 %
Europe17,097 18,683 (1,586)(8.5)%
Segment Income Before Income Taxes123,154 115,267 7,887 6.8 %
Shared Resources(5,671)(3,855)1,816 47.1 %
Total$117,483 $111,412 $6,071 5.4 %
Agriculture 
Agriculture segment revenue for the first nine months of fiscal 2024 increased 22.6% compared to the same period last year. The higher revenue was driven primarily by the acquisitions of Mark's Machinery, the Heartland Companies, and Pioneer Farm Equipment in April 2022, August 2022, and February 2023, respectively, as well as an increase in same-store sales of 4.7% for the first nine months of fiscal 2024, as compared to the same period last year. The same-store sales increase was primarily driven by equipment sales, which benefited from improved availability of inventory in certain product categories and the sustained high demand for new and used equipment.
Agriculture segment income before income taxes was $92.3 million for the first nine months of fiscal 2024 compared to $83.4 million over the first nine months of fiscal 2023. The improvement in segment results was primarily the result of higher equipment revenue.
Construction
Construction segment revenue for the first nine months of fiscal 2024 increased 4.0% compared to the same period last year. When accounting for the divestitures of the North Dakota consumer products store in March 2022, same-store sales increased 4.8%. Construction activity in our footprint sustained at healthy levels, which was the primary factor in the same-store sales growth.
Our Construction segment income before income taxes was $13.7 million for the first nine months of fiscal 2024 compared to $13.2 million for the first nine months of fiscal 2023. The increase in segment results was primarily due to an increase in same-store sales, as described above. The dollar utilization of our rental fleet decreased from 30.7% in the first nine months of fiscal 2023 to 30.1% in the first nine months of fiscal 2024.
Europe
Europe segment revenue for the first nine months of fiscal 2024 increased 3.4% compared to the same period last year. The increase in segment revenues benefited from improved availability of inventory in certain product categories and the sustained high demand of equipment in the first nine months of fiscal 2024, which more than offset a 10.3% decrease in revenues from our Ukrainian subsidiary due to the Russia-Ukraine conflict compared to the first nine months of fiscal 2023.
Our Europe segment income before income taxes was $17.1 million for the first nine months of fiscal 2024 compared to $18.7 million for the same period last year. The decrease in segment pre-tax income was primarily the result of increased operating expenses.
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Shared Resources/Eliminations
We incur centralized expenses/income at our general corporate level, which we refer to as “Shared Resources,” and then allocate most of these net expenses to our segments. Since these allocations are set early in the year, and a portion is planned to be unallocated, unallocated balances may occur. Shared Resources loss before income taxes was $5.7 million for the first nine months of fiscal 2024, which included $1.1 million of acquisition related expenses incurred for the O'Connors acquisition, compared to a loss before income taxes of $3.9 million for the same period last year.
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Liquidity and Capital Resources
Sources of Liquidity
Our primary sources of liquidity are cash reserves, cash generated from operations, and borrowings under our floorplan and other credit facilities. We expect these sources of liquidity to be sufficient to fund our working capital requirements, acquisitions, capital expenditures and other investments in our business, service our debt, pay our tax and lease obligations and other commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future, provided that our borrowing capacity under our credit agreements is dependent on compliance with various covenants as further described in the "Risk Factors" section of our Annual Report on Form 10-K.
Equipment Inventory and Floorplan and Working Capital Payable Credit Facilities
As of October 31, 2023, the Company had floorplan payable lines of credit for equipment purchases totaling $923.0 million, which is primarily comprised of a $500.0 million credit facility with CNH Industrial, a $250.0 million floorplan payable line and a $75.0 million working capital line of credit under the Bank Syndicate Agreement, and a $50.0 million credit facility with DLL Finance.
Our equipment inventory turnover decreased from 3.6 times for the rolling 12 month period ended October 31, 2022 to 2.4 times for the rolling 12 month period ended October 31, 2023. The decrease in equipment turnover was attributable to an increase in equipment inventory over the rolling 12 month period ended October 31, 2023 as compared to the same period ended October 31, 2022. Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, decreased to 20.9% as of October 31, 2023 from 51.7% as of January 31, 2023. The decrease in our equity in equipment inventory is primarily due to the stocking of new equipment inventories as availability has improved, as well as drawing on our floorplan loan with the Bank Syndicate in conjunction with the O'Connor acquisition.
Adequacy of Capital Resources
Our primary uses of cash have been to fund our operating activities, including the purchase of inventories and providing for other working capital needs, meeting our debt service requirements, making payments due under our various leasing arrangements, and funding capital expenditures, including rental fleet assets, and funding acquisitions. Based on our current operational performance, we believe our cash flow from operations, available cash and available borrowing capacity under our existing credit facilities will adequately provide for our liquidity needs for, at a minimum, the next 12 months.
As of October 31, 2023, we were in compliance with the financial covenants under our CNH Industrial and DLL Finance credit agreements and we were not subject to the fixed charge coverage ratio covenant under the Bank Syndicate Agreement as our adjusted excess availability plus eligible cash collateral (as defined therein) was not less than 15% of the lesser of (i) aggregate borrowing base and (ii) maximum credit amount as of October 31, 2023. While not expected to occur, if anticipated operating results were to create the likelihood of a future covenant violation, we would expect to work with our lenders on an appropriate modification or amendment to our financing arrangements.
Cash Flow
Cash Flow Used for Operating Activities
Net cash used for operating activities was $82.1 million for the first nine months of fiscal 2024, compared to net cash used for operating activities of $7.1 million for the first nine months of fiscal 2023. The change in net cash used for operating activities is primarily the result of an increase in inventories and a decrease in deferred revenue, which were partially offset by an increase in non-interest bearing floorplan lines of credit from manufacturers and higher net income for the first nine months of fiscal 2024.
Cash Flow Used for Investing Activities
Net cash used for investing activities was $64.1 million for the first nine months of fiscal 2024, compared to $124.0 million for the first nine months of fiscal 2023. The decrease in cash used for investing activities was primarily the result of the acquisition of Mark's Machinery and the Heartland Companies in the first nine months of fiscal 2023 which was partially offset by the acquisitions of Pioneer Farm Equipment, MAREP, and Midwest Truck in the first nine months of fiscal 2024.
Cash Flow Provided by Financing Activities
Net cash provided by financing activities was $170.3 million for the first nine months of fiscal 2024 compared to $34.3 million for the first nine months of fiscal 2023. The increase in cash provided by financing activities was primarily the result of increased non-manufacturer floorplan payables in the first nine months of fiscal 2024, as the Company drew on its Bank Syndicate Agreement floorplan loan in fiscal 2024, to finance higher inventory levels.
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Information Concerning Off-Balance Sheet Arrangements
As of October 31, 2023, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Therefore, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Forward-looking statements are contained in this Quarterly Report on Form 10-Q, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in our Annual Report on Form 10-K for the year ended January 31, 2023, and in other materials filed by the Company with the Securities and Exchange Commission (and included in oral statements or other written statements made by the Company).
Forward-looking statements are statements based on future expectations and specifically may include, among other things, the impact of farm income levels on customer demand for agricultural equipment and services, the effectiveness and expected benefits of our new ERP system and the timing of the phased roll-out of the ERP system to the Company's domestic locations, the general market conditions of the agricultural and construction industries, equipment inventory levels, and our primary liquidity sources, and the adequacy of our capital resources and sources of liquidity. Any statements that are not based upon historical facts, including the outcome of events that have not yet occurred and our expectations for future performance, are forward-looking statements. The words “potential,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “will,” “plan,” “anticipate,” and similar words and expressions are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of our management. These forward-looking statements involve important risks and uncertainties that could significantly affect anticipated results or outcomes in the future and, accordingly, actual results or outcomes may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, the impact of the Russia -Ukraine conflict on our Ukrainian subsidiary, our ability to successfully integrate and realize growth opportunities and synergies in connection with the O'Connors acquisition, the risk that we have assumed unforeseen or other liabilities in connection with the O'Connors acquisition and the impact of those conditions and obligations imposed on us under the CaseIH dealer agreements entered into in connection with the Heartland Companies acquisition for the commercial application equipment business, our substantial dependence on CNH Industrial, including CNH Industrial's ability to design, manufacture and allocate inventory to our stores in quantities necessary to satisfy our customer's demands, disruptions of supply chains and associated impacts on the Company's supply vendors and their ability to provide the Company with sufficient and timely inventory to meet customer demand, adverse market conditions in the agricultural and construction equipment industries, and those matters identified and discussed under the section titled “Risk Factors” in our Annual Report on Form 10-K. In addition to those matters, there may exist additional risks and uncertainties not currently known to us or that we currently deem to be immaterial that may materially adversely affect our business, financial condition or results of operations and may cause results to differ materially from those contained in any forward-looking statement. Other than as required by law, we disclaim any obligation to update such risks and uncertainties or to publicly announce results of revisions to any of the forward-looking statements contained in this Quarterly Report on Form 10-Q to reflect future events or developments.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks, including changes in interest rates and foreign currency exchange rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates.
Interest Rate Risk
Exposure to changes in interest rates results from borrowing activities used to fund operations. For fixed rate debt, interest rate changes affect the fair value of financial instruments but do not impact earnings or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant. We have both fixed and floating rate financing. Some of our floating rate credit facilities contain minimum rates of interest to be charged. Based upon our interest-bearing balances and interest rates as of October 31, 2023, holding other variables constant, a one percentage point increase in interest rates for the next 12-month period would decrease pre-tax earnings and cash flow by approximately $3.1 million. Conversely, a one percentage point decrease in interest rates for the next 12-month period would result in an increase to pre-tax earnings and cash flow of approximately $3.1 million. At October 31, 2023, we had floorplan payables of $705.6 million, of which approximately $305.9 million was variable-rate floorplan payable and $399.7 million was non-interest bearing. In addition, at October 31, 2023, we had total long-term debt, including finance lease obligations, of $112.5 million, primarily all of which was fixed rate debt.
Foreign Currency Exchange Rate Risk
Our foreign currency exposures arise as the result of our foreign operations. We are exposed to transactional foreign currency exchange rate risk through our foreign entities’ holding assets and liabilities denominated in currencies other than their functional currency. In addition, the Company is exposed to foreign currency transaction risk as a result of certain intercompany financing transactions. The Company attempts to manage its transactional foreign currency exchange rate risk through the use of derivative financial instruments, primarily foreign exchange forward contracts, or through natural hedging instruments. Based upon balances and exchange rates as of October 31, 2023, holding other variables constant, we believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates would not have a material impact on our results of operations or cash flows. As of October 31, 2023, our Ukrainian subsidiary had $0.1 million of net monetary assets denominated in Ukrainian hryvnia ("UAH"). We have attempted to minimize our net monetary asset position in Ukraine through reducing overall asset levels in Ukraine and at times through borrowing in UAH which serves as a natural hedging instrument offsetting our net UAH denominated assets. Many of the currency and payment controls the National Bank of Ukraine imposed in February 2022, have been relaxed, making it more practicable to manage our UAH exposure. However, the continuation of the Russia/Ukraine conflict could lead to more significant UAH devaluations, similar to the 24% devaluation that occurred in July 2022, or more stringent payment controls in the future. The inability to fully manage our net monetary asset position and continued UAH devaluations for an extended period of time, could have a significant adverse impact on our results of operations and cash flows.
In addition to transactional foreign currency exchange rate risk, we are also exposed to translational foreign currency exchange rate risk as we translate the results of operations and assets and liabilities of our foreign operations from their functional currency to the U.S. dollar. As a result, our results of operations, cash flows and net investment in our foreign operations may be adversely impacted by fluctuating foreign currency exchange rates. We believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates, holding all other variables constant, would not have a material impact on our results of operations or cash flows.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. After evaluating the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer, with the participation of the Company’s management, have concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) are effective.
(b) Changes in internal controls. There has not been any change in the Company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during its most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1.                LEGAL PROCEEDINGS
We are, from time to time, subject to claims and suits arising in the ordinary course of business. Such claims have, in the past, generally been covered by insurance. There can be no assurance that our insurance will be adequate to cover all liabilities that may arise out of claims brought against us, or that our insurance will cover all claims. We are not currently a party to any material litigation.
ITEM 1A.             RISK FACTORS
In addition to the other information set forth in this Quarterly Report, including the important information in “Forward-Looking Statements,” you should carefully consider the “Risk Factors” discussed in our Form 10-K for the fiscal year ended January 31, 2023, as filed with the Securities and Exchange Commission. Among other things, those factors, if they were to occur, could cause our actual results to differ materially from those expressed in our forward-looking statements in this report, and may materially adversely affect our business, financial condition, or results of operations. In addition to those factors, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition or results of operations.
ITEM 2.                UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
None.
ITEM 3.                DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.                MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.                OTHER INFORMATION
(a) On December 6, 2023, the Company entered into a letter agreement with CNH Industrial Capital America LLC (the “Letter Agreement”) to increase the credit limits under the terms of the Company’s Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007, between CNH Industrial Capital America LLC and the Company, as amended, and the Inventory Finance Agreement dated December 17, 2018, between CNH Industrial Capital Australia PTY Limited and J.J. O’Connor & Sons Pty Ltd. The Letter Agreement increases (i) the Company’s total U.S. wholesale floor plan credit limit to USD $590.0 million; and (ii) the Company’s total Australian floor plan credit limit to USD $140.0 million. The foregoing description of the Letter Agreement is qualified in its entirety by reference to the complete text of the Letter Agreement, a copy of which is filed as Exhibit 10.4 hereto and is incorporated herein by reference
(c) During the fiscal quarter ended October 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6.                EXHIBITS
Exhibits - See “Exhibit Index” on page immediately prior to signatures.
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EXHIBIT INDEX
TITAN MACHINERY INC.
FORM 10-Q
 
No. Description
Amendment dated October 17, 2023, to the Amended and Restated Employment Agreement, between David Meyer and the Company.
Executive Employment Agreement, dated October 17, 2023, by and between Bryan J. Knutson and the Company.
Inventory Finance Agreement, dated December 17, 2018, between CNH Industrial Capital Australia Pty Limited and J.J. O'Connor & Sons Pty Ltd.
Letter Agreement regarding Wholesale Floor Plan Credit Facilities, dated December 6, 2023, between CNH Industrial Capital America LLC and the Company.
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
101Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended October 31, 2023, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Condensed Consolidated Financial Statements.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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SIGNATURES 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated:December 7, 2023 
 TITAN MACHINERY INC.
  
  
 By/s/ Robert Larsen
  Robert Larsen
  Chief Financial Officer
  (Principal Financial Officer)

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