Titan Machinery Inc.

and Bo Larson, Chief Financial Officer. By now, everyone should have access to the earnings release for the fiscal first quarter ended April 30th, 2025, which is also available on Titan's investor relations website at ir.titanmachinery.com. In addition, we're providing a supplemental presentation to accompany today's prepared remarks, along with webcast and replay information, which can also be found on Titan's IR website within the events and presentations section. We would also 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. The statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These forward-looking statements are based on management's current expectations and involve inherent risks and uncertainties, including those identified in the forward-looking statement section of today's earnings release and the company's filings with the SEC to include the risk factors section of Titan's most recently filed annual report on Form 10-K and quarterly reports on Form 10-Q. These risks and uncertainties 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. Please note that during today's call, we may discuss non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater transparency into Titan's ongoing financial performance, particularly when comparing underlying results from period to period. We've included reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures in today's release and supplemental presentation. At the conclusion of our prepared remarks, we'll open the call to take your questions. And with that, I'd now like to turn the call over to the company's president and CEO, Brian Knudson. Brian, please go ahead.

Thank you, Jeff. And good morning to everyone on the call. I'll start today by covering our performance for the quarter, followed by an update on our strategic initiatives and operational focus points for the year. I'll then discuss the current market environment and performance across each of our operating segments before turning the call over to Beau for his financial review and comments on our fiscal 2026 modeling assumptions. Our first quarter results demonstrated our ability to advance our short-term goals in a challenging market environment. And while headwinds persist across the agricultural sector, Our team remains focused on continuing to execute upon our initiative to optimize inventory and navigate through the trough of the cycle. We continue to anticipate a very subdued retail environment given the ongoing likelihood of weak farmer profitability with government support programs remaining an important but still very much undefined variable. While challenges persist in the marketplace, Our team's relentless focus on disciplined execution of our inventory reduction initiatives and our customer care strategy is allowing us to manage key variables of the business that will improve our position as we navigate this cycle. With that, I will now transition to our current inventory position. As you can see on our balance sheet, Total inventories were $1.1 billion as of April 30, 2025, essentially flat compared to fiscal 2025 year end. This is very much in line with our previously communicated expectations, as we've been receiving pre-sold units from the factory for delivery to customers in the first half of the year, while simultaneously taking in trades as we deliver those new units to customers. Overall, I'm quite pleased with our inventory progress, which has significantly improved our overall position over the last three quarters. Our customer care initiative remains a key focal point for us, with parts and service providing a stable foundation, even as equipment sales face cyclical pressure. This stability is critical in environments such as this, as parts and service will make up about a quarter of our total revenue mix, but well over half of our gross profit dollars this year. We are leveraging our scale and service capacity across our footprint, which is helping us maintain strong customer engagement. CNH recently validated these efforts by recognizing Tite Machinery with two of their top dealer awards, both centered around superior customer service, which is something that we take great pride in. In our domestic agriculture segment, while industry equipment demand remains subdued, the first quarter revenue was stronger than initially expected due to the timing of pre-sold equipment deliveries. On our last call, we mentioned that Q1 domestic ag could be down 40% to 45%, but noted that high volumes of pre-sales could significantly impact results. Indeed, we received and delivered a substantial amount of pre-sold equipment in Q1, which includes a pull forward of revenue we had in our plan for the second quarter. In the near term, we are still working through our backlog of pre-sold units. However, the back half of the year appears challenging with lower visibility and currently sluggish order activity. Farmers remain in a wait and see mode, with near-term sentiment hinging on commodity prices, moisture levels, and the potential of government farm aid. We are encouraging OEM partners to enhance programming for Q3 and Q4 to help stimulate demand in this environment. But absent that, it will remain challenging in the near term. It is helpful that spring planting across our domestic footprint has gone relatively well for our customers, However, we have received below average precipitation in much of our footprint. So timely rains throughout the growing season will remain critical. Before turning to construction, I'd also like to welcome the team from Farmers Implement and Irrigation. We closed on this two-store acquisition on May 15th, and it allows us to expand our New Holland presence in the productive Eastern South Dakota region. In our construction segment, Performance was largely in line with our expectations, and we anticipate that to continue throughout the year. Revenue showed modest growth over the prior year period, reflecting relative stability in this segment despite broader economic uncertainty as infrastructure projects continue to provide a base level of demand. However, as we experienced in domestic ag, We are seeing customers take a more cautious approach to capital expenditures, given interest rate concerns and broader economic uncertainty. Our European segment was a bright spot, particularly in Romania, where EU stimulus funds have increased buying activity, which we expect will extend through the end of September. While we anticipated a lift, the degree to which was hard to determine. However, it is clear this support will be meaningful for our operations in Romania. Our business in Ukraine is also continuing to drive growth despite the ongoing conflict with Russia. It has been impressive what our team is able to accomplish given those circumstances. Planting conditions across our European footprint are off to a good start, and industry volumes in Europe are expected to be more stable than in the United States. In our Australia segment, we're navigating through market conditions similar to our domestic ag segment. Additionally, the normalization of self-propelled sprayer deliveries that we discussed last quarter is playing out as expected, with the segment transitioning from working through nearly three years of delayed order backlog to selling in line with subdued retail demand. New order activity is modestly weaker than we had anticipated due to dry conditions combined with low commodity prices. And as a result, we are revising down our full-year revenue expectations, as Beau will discuss further. Sowing is well underway in Australia's winter crop season. But as previously mentioned, conditions are currently quite dry in much of our footprint. And thus, precipitation is very much needed to initiate crop development. In closing, while we are operating in a down market, the progress we've made on our inventory reduction and optimization initiatives reinforces our belief that we'll be well positioned by fiscal year end. Our confidence stems from the disciplined execution throughout our organization, the continued success of our parts and service businesses, and the progress we've made in positioning Titan to manage through this phase of the cycle. I want to express my sincere gratitude to our entire team for their tremendous focus and dedication during this more challenging period. Their ability to execute while maintaining exceptional customer service has been a key differentiator for us. Consequently, we remain steadfast in emerging from this period as a stronger company and delivering long-term value to our shareholders. With that, I will turn the call over to Beau for his financial review.

Thanks Brian and good morning everyone. Starting with our consolidated results for the fiscal 2026 first quarter. Total revenue is $594.3 million compared to $628.7 million in the prior year period. Reflecting a 5.5% decrease in same store sales driven by the factors that Brian discussed earlier. Gross profit for the first quarter was $90.9 million. compared to $121.8 million in the prior year period, and gross profit margin was 15.3%. These decreases were primarily driven by lower equipment margins, particularly in our domestic ag segment, resulting from our continued efforts to manage inventory to targeted levels. Operating expenses were $96.4 million for the first quarter of fiscal 2026. compared to $99.2 million in the prior year period. The year-over-year decrease of 2.8% was driven by lower variable expenses associated with the year-over-year decline in revenue and profitability. Floor plan and other interest expense was $11.1 million, as compared to $9.5 million in the prior year period. However, on a sequential basis, floor plan and other interest expense decreased 15.3%, reflecting our continued efforts to reduce interest-bearing inventory over the past few quarters. Floor plan interest expense is expected to continue to decline as we make additional progress on inventory reduction and mix optimization, and this is building toward a more meaningful decrease in floor plan interest expense next fiscal year. Net loss for the first quarter of fiscal 2026 was $13.2 million, or 58 cents per diluted share, compared to last year's first quarter net income of $9.4 million, or 41 cents per diluted share. Now turning to a brief overview of our segment results for the first quarter. Our agriculture segment realized a same-store sales decrease of 14.1%, to $384.4 million and benefited from a pull forward of pre-sold equipment deliveries, as Brian already mentioned. Agriculture segment pre-tax loss was $12.8 million compared to pre-tax income of $13 million in the first quarter of the prior year, resulting from softer retail demand and continued efforts to manage inventory at the targeted levels, both of which impacted equipment margins although to a lesser degree than the more intense margin contraction we experienced in the fourth quarter of last year. In our construction segment, same-store sales increased 0.9% to $72.1 million. As Brian mentioned, we continue to see relative stability in this segment despite broader macro uncertainty. Pre-tax loss was $4.2 million compared to pre-tax income of $0.3 million in the first quarter of the prior year. In our European segment, sales increased 44.2% to $93.9 million, which reflects a same-store sales increase of 44%, partially offset by a slight negative foreign currency impact. On a constant currency basis, revenue increased 47.5% and was led by Romania, which was bolstered by EU stimulus programs. Pre-tax income for the segment was $4.7 million, compared to pre-tax income of $1.4 million in the first quarter of last year. In our Australia segment, same-store sales decreased 1% to $44 million, which included a 4.6% negative foreign currency impact. On a constant currency basis, revenue increased $1.6 million, or 3.6%. Despite these results, retail demand was somewhat softer than we had anticipated, and we expect that that incremental softness will continue throughout the rest of the year. Additionally, the quarterly comparables get more challenging in this segment as we progress through the year, as last year was bolstered by nearly three years' worth of sprayer backlog. Pre-tax loss was $0.6 million compared to pre-tax loss of $0.5 million in the first quarter of last year. Now on to our balance sheet and inventory position. We had cash of $22 million and an adjusted debt to tangible net worth ratio of 1.8 as of April 30, 2025, which is well below our bank covenant of 3.5 times. Regarding inventory, in the first quarter, we reduced our equipment inventory by approximately $13 million sequentially to $913 million. bringing our cumulative equipment inventory reduction to approximately $406 million from peak levels in Q2 of the prior year. This was consistent with our expectations at the beginning of the year. The $100 million of additional equipment inventory reductions we discussed last quarter remains our target, with most of that reduction expected to come in the second half of this fiscal year. We continue to maintain strong corporate oversight and controls around inventory management. working to stay ahead of the aging curve created by the heavy influx of equipment shipments as supply chains normalized post-pandemic. Throughout this process, we continue to optimize our inventory composition by reducing aged inventory while building toward an optimal mix that better aligns with customer demand, which will have the added benefit of further reducing floor plan interest expense. With that, I'll finish by commenting on our fiscal 2026 full year guidance, which we are reiterating from an adjusted loss per diluted share perspective, but modifying in terms of revenue modeling assumptions for our international segments. Starting with our top line assumptions, for domestic agriculture segment, we continue to expect revenue to be down in the range of 20 to 25%. North America large ag industry volume is still expected to be down approximately 30% year over year, which aligns with the midpoint of our expectations for cash crop new equipment revenue. Our parts and service business continue to perform well, and we expect flattish revenue in these areas. For the construction segment, we are maintaining our expectations to be in the range of down 5% to down 10%. The Federal Infrastructure Bill continues to provide healthy support for industry fundamentals, but near-term economic uncertainty is impacting construction activity. We are updating revenue assumptions for our international segments based on localized dynamics. Our European segment is now expected to be up 23% to up 28%. This improved outlook is led by the aforementioned strength in Romania. For our Australia segment, we are updating our expected revenue to be down 20 to down 25%, as market conditions remain challenging and farmer sentiment is lower given dry conditions across much of our footprint. From a margin perspective, our fiscal 2026 assumptions for consolidated full year equipment margin are to be approximately 8%. Now turning to the Ag segment specifically. In the first quarter, equipment margins came in lower than expected at 3.3%, and we expect that the ag segment will have similar equipment margins in the second quarter. However, we expect their margins will improve in the back half of the year as we optimize our inventory mix and work toward our year-end targets. We are pleased with the progress we are making on this important initiative, and we are prioritizing this proactive approach to reducing used equipment levels. Consistent with our prior expectations, operating expenses are expected to decrease year over year on an absolute basis, which is expected to translate to approximately 17% of sales due to the lower revenue base we are forecasting as compared to the prior year. In summary, while we are making some refinements to Europe and Australia's revenue assumptions, We remain on track with our expectations for adjusted diluted loss per share in the range of $1.25 to $2. We remain focused on ensuring we're well positioned heading into fiscal 2027, where we expect to drive toward more normalized levels of profitability relative to the demand environment at that time.