Titan Machinery Inc.

Greetings and welcome to the Titan Machinery third quarter fiscal 2026 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 with ICR. Thank you. You may begin.

Thank you. Welcome to the Titan Machinery third quarter fiscal 2026 earnings conference call. On the call today from the company are Brian Knutson, President and Chief Executive Officer, and Bo Larson, Chief Financial Officer. By now, everyone should have access to the earnings release for the fiscal third quarter ended October 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 the webcast and replay information, which can also be found on Titan's Investor Relations website, within the Events and Presentations section. We would 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. 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, 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 presentations. At the conclusion of our prepared remarks, we will open the call to take your questions. And with that, I'd now like to introduce the company's president and CEO, Brian Knudson. Please go ahead, Brian.

Thank you, Jeff, and good morning to everyone on the call. I'll start by providing an update on our inventory optimization progress and operational focus areas. and then discuss the current environment across our segments before turning the call over to Beau for his financial review and comments on our fiscal 2026 modeling assumptions. Nine months into the fiscal 2026, we're making meaningful progress on our inventory optimization initiatives, which will position us to emerge from this cycle leaner and stronger. Our team did an excellent job executing in what remains a very challenging market environment. As we head into the final quarter of the year, our focus is on finishing strong and continuing to drive inventory optimization while maintaining the customer relationships and service excellence that differentiate us in the market. We've made substantial progress through the first nine months of the fiscal year, reducing total inventory by $98 million. As I just mentioned, I'm extremely proud of the disciplined work our teams have been doing all year to move equipment in a very difficult demand environment, and we are confident we'll significantly exceed our $100 million full-year reduction target. As such, we are raising our inventory reduction target to $150 million. The quality of our inventory also continues to improve. It's fresher and has an increased mix of more high-demand categories. But we're not stopping there. We still have excess inventory in certain seasonal new equipment categories, as well as our overall used equipment level. Our focus remains on finishing this fiscal year in a healthier inventory position so that we can return to the more normalized equipment margins that we've historically achieved. Regarding equipment margins, they beat expectations for the quarter, driven largely by a more favorable sales mix and our improved inventory position. Bo will provide further details, but I do expect equipment margins to moderate somewhat in the fourth quarter, given less favorable sales mix and additional inventory optimization efforts as we finish the year. The work we're doing now on inventory optimization is about setting ourselves up properly for next year over maximizing near-term margins. Our customer care initiative continues to demonstrate its strategic value and remains central to our operating strategy. While equipment demand remains under pressure at this phase of the cycle, our parts and service businesses are generating well over half of our gross profit dollars. The stabilizing force of our parts and service business is essential in times like these. keeping us closely engaged with our customers, allowing us to add value to their operations, and positioning us well for when equipment demand eventually recovers. This relentless focus on our customers dovetails with our recent activity surrounding footprint optimization, both domestically and abroad. As you may recall, we acquired Heartland Ag Systems in 2022, which allowed us to gain access to the full product line of Case IH application equipment. including self-propelled sprayers and fertilizer applicators, along with incremental sales opportunities to the commercial application segment of the market. As a part of the integration process of that business, we have recently divested certain stores outside of our core footprint and sold them to local C&H dealers in the respective areas. This change will allow us to focus our resources on markets where we can best leverage our broader service network to provide best in class service and support to our customers and deliver improved shareholder returns. In that same vein, we have also taken an objective look at our international operations to ensure we are allocating capital to high performing markets. Our German operations have faced challenges that have historically weighed on returns within our year operating segment. And as such, we are in the process of divesting our dealership operations located in Germany, working in close coordination with C&H and local New Holland dealers in the region. An additional part of our footprint optimization is continuing to build upon the dual brand strategy that we previously implemented in approximately one-third of our U.S. store network over the years. For instance, in Australia, we recently gained access to the New Holland distribution rights in six of our 15 rooftops. While we're not adding new rooftops in country, we now have both Case H and New Holland brands available in these markets, helping us provide better scale and customer service through improved coverage to drive increased market share while capturing synergies from both brands. We remain focused on organic growth through market share gains and focusing on our customer care strategy to drive higher parts and service revenues. At the same time, we are well positioned to continue to execute on M&A opportunities that align within our strategy that focuses on leveraging our service network to provide best-in-class customer service while driving scale and efficiencies to achieve higher levels of profitability. With that, I'll now turn to our segments. In domestic ag, the quarter performed within our expected range. despite an environment that remains challenging for our farmer customers. While the harvest season is now largely complete and yields were generally solid across our footprint, farmers continue to face multiple headwinds. These include depressed commodity prices, which is the fundamental issue pressuring farm profitability, as well as the government shutdown, which slowed payments to farmers, adding to current cash flow challenges, along with higher interest expense. While we have seen some improvement in commodity prices recently, they generally remain below break-even levels for our customers. And while it's encouraging to see China committing to resume soybean purchases, it's unlikely that this will result in a sustainable inflection in commodity prices in the near term. Further, while the reinstatement of 100% bonus depreciation is a positive for those customers who find themselves in a taxable position, Many simply don't have the income to take advantage of it this year. The bottom line is that without a significant improvement in commodity prices or substantial additional government support, equipment demand is likely to remain at trough-type levels for the near term. Now turning to our construction segment, which continues to face some softness reflecting the broader economic uncertainty. Equipment margins remain subdued, pressured by some of the same variables that are impacting our domestic ag segment. Infrastructure and data center projects are providing a baseline level of activity, while the overall demand environment remains somewhat softer than the highs of recent years, but still at healthy levels. Europe had a strong third quarter as Romania continued to drive segment performance as customers capitalized on EU subvention funds up to the September deadline. However, absent this temporary stimulus, the underlying demand in the region remains soft and is tied to the broader ag cycle. Australia continues to experience a similar backdrop as their domestic ag business with industry volumes below prior trough levels. However, the third quarter also reflected some difficult comparables relative to the prior year. The market remains challenging, but the fourth quarter revenues should be closer to what we saw in the prior year. In closing, we've accomplished a great deal over the past year, reducing total inventory by over $500 million from peak levels in Q2 of prior year. This has been a full team effort, and I want to express my appreciation for how our people have maintained exceptional customer service while executing these initiatives by outperforming the market. The agricultural equipment market remains challenging, and the industry is not expecting a near-term recovery. However, we are staying disciplined in our execution, managing what we can control, and positioning the business to perform well when market conditions eventually improve. With that, I'll turn the call over to Beau for his financial review.