Titan Machinery Inc.

Greetings and welcome to the Titan Machinery Incorporated second quarter fiscal 2026 earnings call. At this time, all participants are in a listen-only mode. A brief question after session will follow the formal presentation. If anyone should require operators to assist during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Sonick with ICR. Thank you, sir. You may begin.

Thank you. Welcome to Titan Machinery's second quarter fiscal 2026 earnings conference call. On the call today from the company are Brian Knudson, President and CEO, and Bo Larson, CFO. By now, everyone should have access to the earnings release for the second quarter ended July 31st, 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 Investor Relations website within the Events and Presentations section. 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 management's current expectations and involve inherent risks and uncertainties, including those identified in the forward-looking statements section of today's earnings release and the company's filings with the SEC, including 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 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 introduce the company's president and chief executive officer, 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 operational initiatives and focus points for the remainder of the year. I'll then discuss the current market environment and its impact on 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 second quarter results reflect the execution of our operational plan in what remains a challenging market environment. Six months into fiscal 2026, I'm pleased with the progress we've made. As we transition into the second half of the year, we're entering the next phase of our inventory reduction initiative with a heightened focus on optimizing our used equipment portfolio to ensure we're well positioned heading into next year. Consistent with our previously communicated expectations, our equipment inventory levels have remained relatively flat through the first half of the year, albeit we experienced a modest increase in inventory during the second quarter. The quarterly increase was largely due to the timing of OEM shipments ahead of deliveries to our end customers in the second half of this fiscal year. Not only do we remain confident that we will achieve our previously communicated inventory reduction target of $100 million for the full year, we are positioned to exceed it, with the majority of that progress still expected toward the end of this fiscal year. As we continue down this path, we now expect our equipment margins to remain subdued through the rest of fiscal 2026, which is the primary variable that underpins the narrowed EPS guidance that we've updated today. This disciplined approach is fundamental to our plan of emerging from this cycle stronger and better positioned for fiscal 2027. Although we've been spending a lot of our time with you over the past several quarters talking about the cycle and its influences on inventory, I do not want to lose sight of our long-term effort to enhance the customer experience. Our customer care initiative continues to demonstrate its critical value during this equipment downturn. We focused on how to best leverage our scale and service capacity across our footprint, which is helping us maintain strong customer engagement, even as equipment sales face cyclical pressure. Notably, our parts and service businesses together are generating well over half of our gross profit dollars through the first half of the year, while representing about a quarter of our revenue mix, providing valuable stability during the trough in this equipment cycle. Turning to our segments. In our domestic agriculture segment, performance tracked within our expected range, though farmer sentiment remains very cautious given the low commodity prices our customers are facing. Exactly where net income comes in for the year remains heavily dependent on government support programs as the additional $20 to $30 billion in potential aid remains uncertain and will be important in determining the near-term trajectory of whole good equipment demand. However, we've seen some encouraging developments with timely moisture across much of our footprint, which has improved crop health and yield outlook for the current growing season. Additionally, the reinstatement of 100% bonus depreciation is also a positive, as it provides an offset opportunity for those growers who do find themselves in a taxable income position at the end of the year. All of that said, without an additional catalyst, we continue to expect industry volumes for large ag equipment to be at levels slightly lower than the trough of the prior down cycle. However, we remain very engaged with our customers and are poised to capture opportunities that may arise as the year progresses. Our construction segment experienced weaker demand in the second quarter as customers took a more cautious approach to capital expenditures given the broader economic uncertainty. That said, infrastructure projects continue to provide a base level of demand that supports relative stability in this segment. Our European segment remains a bright spot, with Romania continuing to drive strong performance as customers capitalize on EU stimulus programs before the September deadline. Absent this catalyst, the underlying demand would be much weaker, albeit more stable than we are experiencing domestically. Our Australia segment continues to track similarly to our North American egg business, with industry volumes somewhat below prior trough levels. However, the primary reason for our year-over-year decline in the second quarter was driven by the normalization of sprayer deliveries in fiscal 2026 after having caught up on a multi-year backlog of deliveries during fiscal 2025. Positively, we've seen some encouraging developments brought about by rainfall across much of our footprint, which has improved crop health and yield outlook for the current growing season. In closing, we're making solid progress on our inventory optimization initiatives, which will put us in a significantly stronger position as we enter fiscal 2027. I want to express my sincere gratitude to our entire team for their tremendous effort and disciplined execution over the past year, where we reduced inventory by approximately $365 million, which was no easy task. Their ability to maintain exceptional customer service while executing our strategic and operational initiatives continues to be a key differentiator for us, and we remain confident in emerging from this cycle as a stronger company. With that, I will turn the call over to Beau for his financial review.