Titan Machinery Inc.

Greetings and welcome to the Titan Machinery Inc. third quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jeff Sonick of ICR. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and welcome to Titan Machinery's third quarter fiscal 2024 earnings conference call. On the call today from the company are David Meyer, Chairman and Chief Executive Officer, Brian Knudson, President and Chief Operating Officer, and Bo Larson, Chief Financial Officer. By now, everyone should have access to the earnings release for the fiscal third quarter ended October 31, 2023, which went out earlier this morning at approximately 6.45 a.m. Eastern Time. If you've not received the release, it's available on the investor relations page of Titan's website at ir.titanmachinery.com. This call is being webcasted and a replay is available on the company's website as well. In addition, we are providing a presentation to accompany today's prepared remarks. You may access the presentation by going to Titan's website, again, at ir.titanmachinery.com. The presentation is available directly below the webcast information in the middle of the page. You'll see on slide two of the presentation our safe harbor statement. We'd like to remind everyone that the prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. These forward-looking statements are based on current expectations of management and involve inherent risks and uncertainties, including those identified in the risk factors section of Titan's most recently filed annual report on Form 10-K, as updated in subsequent filed quarterly reports on Form 10-Q. These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. Except as may be required by applicable law, Titan assumes no obligation to update any forward-looking statements that may be made in today's release or call. The call lasts approximately 45 minutes, so to the conclusion of our prepared remarks, we'll open the call to take your questions. With that, I'd now like to introduce the company's chairman and CEO, Mr. David Meyer. David, please go ahead.

Thank you, Jeff. Good morning, everyone. Welcome to our third quarter fiscal 2024 earnings conference call. On today's call, I will provide a summary of our results, then Brian Knudsen, our current president and chief operating officer, who will be transitioning to the CEO post on February 1st, will give an overview for each of our business segments. Bo Larson, our CFO, will conclude the call with a review of our financial results for the third quarter of fiscal 2024 and some commentary around our updated fiscal 2024 full year expectations. We accomplished a great deal this quarter, completing our acquisition of the Australia-based O'Connor's Group in October and solidifying our leadership succession plan, which we announced last month, while delivering solid financial results. Brian and his team have been instrumental in jumpstarting our integration with O'Connor's, and we couldn't be more pleased with the quality of the O'Connor's team. We recognize an alignment of our strategies during the O'Connor's due diligence process, and the first couple months of operations have proven out how well our organizations mesh. We're thrilled to have them on board and look forward to a bright future together. As relates to CEO succession, I'm very proud of what our team at Titan Machinery has achieved since my early days in the dealership nearly 50 years ago. And the breadth and depth of our operation is a testament to the talent that we've attracted to the organization. Through the process of planning for this transition over the last several years with our board of directors, We felt it was critical to fill the role with someone who deeply understands the dealership business and our customers. Brian is a natural leader with a successful track record and has proven his ability to excel across all aspects of the business and our company culture, and our employee engagement has never been better. I'm extremely confident in Brian's capabilities and watched his development over the last 20 years as he has excelled in both store and central leadership roles, which makes him uniquely qualified to lead Titan Machinery in our next stage of growth. Moving to our fiscal third quarter financial performance, we achieved record revenues of $694 million, or 30 per share of $1.32. These results came in below our full potential due to delayed OEM deliveries, prioritizing customer uptime throughout the harvest and end of season construction projects, and increased preparation time to complete pre-delivery inspections of new machinery. This dynamic is also visible in our inventory balance at the end of the quarter, as the amount of on-hand pre-sold inventory being prepped in our service shops continues to trend above normal levels. Notwithstanding, customer uptime is our top priority, and our team did a great job on meeting our customers' immediate service needs and minimizing downtime during the all-important fall season. Heading into year end, we continue to see demand in excess of OEM production for high horsepower tractors and wheel loaders, which we expect will continue through at least the first half of calendar year 2024. While we are positioned well for a strong fourth quarter, Our recognition of equipment revenue will be dependent on both the timing of new machinery received from the OEMs, as well as our ability to manage service department workflows. We continue to experience substantially longer preparation time to complete the quality pre-delivery inspection and setup process required before delivery to our customers due to the supply chain challenges. Overall, we expect year-over-year revenue growth in each of our segments in the fourth quarter. and we have narrowed the range of our revenue modeling assumptions to reflect our latest expectations for fourth quarter OEM deliveries and demands on our service departments. Looking forward, both our ag and CE customers are experiencing the carryover of three exceptionally strong years, putting me in an excellent financial position and creating optimism as I look to the future. Additionally, over the last 24 months, we have completed some high-quality and strategic acquisitions, which will strengthen our bottom line as they get fully integrated into our system. With that, I'll turn the call over to Brian Knudson for his segment review.