Titan Machinery Inc.

Previous wording

Demand for agricultural equipment and, to a lesser extent, parts and service support, is impacted by agricultural commodity prices and net farm income. Based upon September 2025 publications by U.S. Department of Agriculture, the total crop receipts is projected to decline 2.5% year-over-year and a cumulative decline of approximately 16% since the peak levels reached in 2022.

Current wording

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 the February 2026 U.S. Department of Agriculture ("USDA") publications, the most recent estimate of farm cash receipts for calendar year 2025 is estimated to increase 3.0% compared with calendar year 2024. The USDA projects farm cash receipts for calendar year 2026 to decrease 2.7%, as compared to the estimated results for calendar year 2025.

Previous wording

Although the overall impact of these trade measures remains uncertain, we recognize the possibility of increases in the wholesale prices that we pay for our equipment and parts inventory. These higher wholesale prices could compress our margins if we are unable to fully pass on these cost increases to our retail customers. Additionally, retaliatory tariffs may negatively affect U.S. agricultural exports, which could have downstream effects on our core customer base in the farming sector. Some analysts have also cautioned that prolonged disruptions to global trade could increase the risk of broader macroeconomic challenges, including the possibility of a recession.

Current wording

The U.S. federal government has imposed significant tariffs on imports from a broad range of countries. In response, some countries have enacted or are expected to enact retaliatory tariffs on U.S. exports. Although the overall impact of these trade measures remains uncertain, we recognize the possibility of increases in the wholesale prices that we pay for our equipment and parts inventory. Higher wholesale prices could compress our margins if we are unable to fully pass on these cost increases to our retail customers. Additionally, retaliatory tariffs may negatively affect U.S. agricultural exports, which could have downstream effects on our core customer base in the farming sector. Some analysts have also cautioned that prolonged disruptions to global trade could increase the risk of broader macroeconomic challenges, including the possibility of a recession.

Previous wording

For the third quarter of fiscal 2026, our net income was $1.2 million, or $0.05 per diluted share, compared to a fiscal 2025 third quarter net income of $1.7 million, or $0.07 per diluted share. Significant factors impacting the quarterly comparisons were:

Current wording

For the first quarter of fiscal 2027, our net loss was $12.6 million, or a loss of $0.55 per diluted share, compared to a fiscal 2026 first quarter net loss of $13.2 million, or a loss of $0.58 per diluted share. Significant factors impacting the quarterly comparisons were:

Previous wording

•Revenue in the third quarter of fiscal 2026 decreased by 5.2% compared to the third quarter of fiscal 2025. The revenue decrease was led by softening of demand for equipment purchases due to decline in total crop receipts over the past few years which is expected to continue in 2025.

Current wording

•Revenue in the first quarter of fiscal 2027 decreased by 12.1% compared to the first quarter of fiscal 2026. The revenue decrease was led by softening of demand for equipment purchases due to a decline in farmer profitability over the past few years, which is expected to remain challenged in 2026.

Previous wording

•Gross profit margin increased to 17.2% for the third quarter of fiscal 2026, as compared to 16.3% for the third quarter of fiscal 2025. The increase was primarily related to an equipment gross profit margin increase from 7.4% in the third quarter of fiscal 2025 to 8.1% in the third quarter of fiscal 2026, which was impacted by a $3.7 million benefit recognized on the expected achievement of annual manufacturer incentive programs. No such accrual was recorded in third quarter of fiscal 2025.

Current wording

•Gross profit margin increased to 17.1% for the first quarter of fiscal 2027, as compared to 15.3% for the first quarter of fiscal 2026. The increase was primarily related to an equipment gross profit margin increase from 6.8% in the first quarter of fiscal 2026 to 7.8% in the first quarter of fiscal 2027 and a change in sales mix, with a greater proportion of revenue earned from our higher margin parts and service business during the first quarter of fiscal 2027 as compared to same period last year.

Previous wording

•Floorplan interest expense decreased by $3.8 million in the third quarter of fiscal 2026 as compared to the same period in fiscal 2025. The decrease is primarily due to lower interest-bearing inventory levels as well as lower variable interest rates.

Current wording

•Floorplan interest expense decreased by $3.0 million in the first quarter of fiscal 2027 as compared to the same period in fiscal 2026. The decrease is primarily due to lower inventory levels subject to interest.

Previous wording

Our critical accounting policies and estimates are included in Item7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025. There have been no changes in our critical accounting policies and estimates since January 31, 2025.

Current wording

Our critical accounting policies and estimates are included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. There have been no changes in our critical accounting policies and estimates since January 31, 2026.

Previous wording

Absorption is an industry term that refers to the percentage of an equipment dealer's operating expense covered by the combined gross profit from parts, service and rental fleet activity. We calculate absorption 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 rental fleet debt. This calculation of absorption does not include floorplan interest expense. We believe that absorption is an important management metric because during economic down cycles our customers tend to postpone new and used equipment purchases while continuing to run, maintain and repair their existing equipment. Thus, operating at a high absorption rate enables us to operate profitably throughout economic down cycles.

Current wording

Absorption is an industry term that refers to the percentage of an equipment dealer's operating expense covered by the combined gross profit from parts, service and rental fleet activity. We calculate absorption by dividing our gross profit from sales of parts, service and rental fleet by our operating expenses, less commission expense on equipment sales and incentive expense, plus interest expense on rental fleet debt. This calculation of absorption does not include floorplan interest expense. We believe that absorption is an important management metric because during economic down cycles our customers tend to postpone new and used equipment purchases while continuing to run, maintain and repair their existing equipment. Thus, operating at a high absorption rate enables us to operate profitably throughout economic down cycles.

Previous wording

Total revenue for the first nine months of fiscal 2026 decreased by 8.1%, or $156.9 million, compared to same period last year. The decrease was primarily attributable to challenging industry conditions, including decreases in agricultural commodity prices and projected total crop receipts, which negatively impacted customer sentiment.

Current wording

Total revenue for the first quarter of fiscal 2027 decreased by 12.1%, or $72.0 million, compared to the same period last year. The decrease was primarily attributable to challenging industry conditions, including sustained lower agricultural commodity prices and projected total crop receipts, which negatively impacted customer sentiment.

Previous wording

Our operating expenses for the first nine months of fiscal 2026 decreased $3.5 million as compared to the same period last year. The decrease was led by lower variable expenses associated with the year-over-year decline in revenue and profitability due to challenging industry fundamentals, as well as management's expense reduction efforts. Operating expenses as a percentage of revenue increased to 16.2% in the first nine months of fiscal 2026 from 15.1% in the first nine months of fiscal 2025.

Current wording

Our operating expenses in the first quarter of fiscal 2027 decreased 2.1% as compared to the same period last year. Operating expenses as a percentage of revenue increased to 18.1% in the first quarter of fiscal 2027 from 16.2% in the first quarter of fiscal 2026. The increase in operating expenses as a percentage of total revenue was due to lower revenue primarily related to the challenging agricultural industry conditions.

Previous wording

In the third quarter of fiscal 2026, we recognized $0.2 million in impairment expense related to long-lived assets in our Agriculture segment.

Current wording

In the first quarter of fiscal 2026, we recognized $0.3 million in impairment expense related to long-lived assets in our Agriculture segment.

Previous wording

Floorplan interest expense decreased in the first nine months of fiscal 2026 compared to the same period last year due to lower interest-bearing inventory levels.

Current wording

Floorplan interest expense decreased in the first quarter of fiscal 2027 compared to the same period last year due to lower inventory levels subject to interest.

Previous wording

Our effective tax rate was 57.3% and 522.9% for the three months ended October 31, 2025 and 2024, respectively. The effective tax rate in both periods was impacted by several items, including the vesting of share-based compensation, the mix of domestic and foreign income, and the recognition of valuation allowances on foreign deferred tax assets.

Current wording

Our effective tax rate was 1.1% and 23.6% for the three months ended April 30, 2026 and 2025, respectively. The effective tax rate is subject to variation due to the impact of several items, mainly the mix of domestic and foreign income and the impact of the recognition of valuation allowance on our domestic and foreign deferred tax assets. In the three months ended April 30, 2026, we recorded a valuation allowance of $0.7 million on our Australian subsidiary due to the presence of historical losses and the Company’s expected future sources of taxable income.

Previous wording

Agriculture segment revenue for the third quarter of fiscal 2026 decreased 12.7% compared to the same period last year, which was primarily driven by a decrease in equipment revenue. This decrease resulted from challenging industry conditions, such as lower agricultural commodity prices and projected total crop receipts, which negatively affected customer sentiment in the third quarter of fiscal 2026, as compared to the same period in the prior year. Changes in actual or anticipated crop receipts and farmer profitability generally have a direct correlation with the retail demand for equipment.

Current wording

Agriculture segment revenue for the first quarter of fiscal 2027 decreased 10.4% compared to the same period last year. This decrease in revenue was primarily due to a decrease in equipment revenue resulting from challenging industry conditions, such as sustained lower agricultural commodity prices and total crop receipts, which continue to negatively impact customer sentiment. Changes in actual or anticipated crop receipts and farmer profitability generally have a direct correlation with the retail demand for equipment.

Previous wording

Agriculture segment income before income taxes for the third quarter of fiscal 2026 was $6.1 million compared to $1.9 million for the third quarter of fiscal 2025. The improvement in segment results was led by lower floorplan interest expense and lower operating expenses compared to the prior year.

Current wording

Agriculture segment loss before income taxes for the first quarter of fiscal 2027 was $6.2 million compared to $12.8 million for the first quarter of fiscal 2026. The improvement in segment results was driven by an improved inventory position, which helped to generate higher equipment gross profit margins as well as a decrease in floorplan interest expense.

Previous wording

Europe segment revenue for the third quarter of fiscal 2026 increased 87.6% compared to the same period last year. The increase in revenue resulted from an increase in equipment demand, which was driven by a strong response to European Union stimulus programs in Romania.

Current wording

Europe segment revenue for the first quarter of fiscal 2027 decreased 35.6% compared to the same period last year. The decrease in revenue was primarily due to lower equipment demand compared to prior year period, which had been driven by a strong response to European Union stimulus programs in Romania.

Previous wording

Our Australia segment loss before income taxes was $6.4 million for the third quarter of fiscal 2026 compared to income before income taxes of $0.6 million in the third quarter of fiscal 2025.The decrease in segment pre-tax loss was primarily the result of decrease in revenue as noted above.

Current wording

Our Europe segment loss before income taxes was $0.9 million for the first quarter of fiscal 2027 compared to income before income taxes of $4.7 million in the first quarter of fiscal 2026. The decrease in segment results was primarily the result of a decrease in equipment sales.

Previous wording

Our Australia segment loss before income taxes was $3.8 million for the third quarter of fiscal 2026 compared to $0.3 million in the third quarter of fiscal 2025.

Current wording

Our Australia segment loss before income taxes was $1.8 million for the first quarter of fiscal 2027 compared to $0.6 million in the first quarter of fiscal 2026. The decrease in segment results was primarily the result of softer equipment margins compared to same period last year.

Previous wording

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 $1.3 million for the third quarter of fiscal 2026 compared to income before income taxes $0.8 million for the same period last year.

Current wording

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 $3.0 million for the first quarter of fiscal 2027 compared to $4.5 million for the same period last year.

Previous wording

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. However, our borrowing capacity under our floorplan and other credit facilities is dependent on compliance with various covenants as further described in Item 1A, “Risk Factors,” and Note 8, Floorplan Payable/Lines of Credit, to our Condensed Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2025.

Current wording

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. However, our borrowing capacity under our floorplan and other credit facilities is dependent on compliance with various covenants as further described in Item 1A, “Risk Factors,” and Note 8, Floorplan Payable/Lines of Credit, to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2026.

Previous wording

As of October 31, 2025, the Company had floorplan payable lines of credit for equipment purchases totaling $1.5 billion, which is primarily comprised of a $875.0 million credit facility with CNH, a $390.0 million floorplan payable line and a $110.0 million working capital line of credit under the Bank Syndicate Agreement, and a $80.0 million credit facility with DLL Finance.

Current wording

As of April 30, 2026, the Company had floorplan payable lines of credit for equipment purchases totaling $1.5 billion, which is primarily comprised of a $875.0 million credit facility with CNH, a $390.0 million floorplan payable line and a $110.0 million working capital line of credit under the Bank Syndicate Agreement, and a $67.5 million credit facility with DLL Finance.

Previous wording

Our equipment inventory turnover was 1.9 and 1.6 times for the rolling 12 month period ended October 31, 2025 and October 31, 2024, respectively. Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, decreased to 18.0% as of October 31, 2025 from 25.9% as of January 31, 2025.

Current wording

Our equipment inventory turnover was 1.9 and 1.7 times for the rolling 12 month period ended April 30, 2026 and April 30, 2025, respectively. Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, decreased to 24.0% as of April 30, 2026 from 31.9% as of January 31, 2026.

Previous wording

During fiscal 2025, we received various letters from CNH and DLL Finance that waived the consolidated fixed charge coverage ratio covenant for the periods through January 31, 2026, and therefore as of October 31, 2025, we were not subject to this financial covenant under our CNH and DLL Finance credit agreements. We were also 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, 2025. The financial covenants also require us to maintain an adjusted debt to tangible net worth ratio of 3.5:1.00, which is measured on a quarterly basis.

Current wording

During fiscal year 2027, letters were received from CNH Capital America LLC (“CNH Capital”) and DLL Finance to waive the Consolidated Fixed Charge Coverage Ratio covenants in the separate credit agreements with CNH Capital and DLL Finance in each case for the reporting periods between February 1, 2026 to January 31, 2027. Notwithstanding these waivers, as of April 30, 2026, we were in compliance with the financial covenants under our CNH Industrial and DLL Finance credit agreements and we were also 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 April 30, 2026. The financial covenants also require us to maintain an adjusted debt to tangible net worth ratio of 3.5:1.00, which is measured on a quarterly basis.

Previous wording

Net cash provided by operating activities was $83.9 million for the first nine months of fiscal 2026, compared to net cash used for operating activities of $56.2 million for the nine months ended October 31, 2024. The change in cash from operating activities was primarily attributable to changes in inventory and a changing mix in floorplan financing, which was partially offset by a decrease in net income for the first nine months of fiscal 2026 compared to the prior year period.

Current wording

Net cash used for operating activities was $23.1 million for the first three months of fiscal 2027, compared to net cash provided by operating activities of $6.2 million for the three months ended April 30, 2025. The change in cash from operating activities was primarily attributable to timing of inventory receipts and changing mix in floorplan financing, which was partially offset by receivable collections compared to the prior year period.

Previous wording

Cash Flow Used for Investing Activities

Current wording

Cash Flow Provided by (Used for) Investing Activities

Previous wording

Net cash used for investing activities was $17.0 million for the first nine months of fiscal 2026, compared to $29.4 million for the first nine months of fiscal 2025. The decrease in net cash used for investing activities was primarily due to the decrease of purchases of property and equipment compared to the prior year period and proceeds from business divestitures in the third quarter of fiscal 2026. This was partially offset by the Farmers Implement and Irrigation acquisition in the second quarter of fiscal 2026.

Current wording

Net cash provided by investing activities was $1.1 million for the first three months of fiscal 2027, compared to net cash used for investing activities of $5.2 million for the first three months of fiscal 2026. The change in net cash used for investing activities was primarily attributable to the reduced purchases of property and equipment and proceeds from business divestiture received during the first quarter of fiscal 2027.

Previous wording

Net cash used for financing activities was $55.7 million for the first nine months of fiscal 2026 compared to net cash provided by financing activities of $71.0 million for the first nine months of fiscal 2025. The change in cash from financing activities was primarily driven by lower non-manufacturing floorplan payables during the first nine months of fiscal 2026.

Current wording

Net cash provided by financing activities was $23.4 million for the first three months of fiscal 2027 compared to net cash used for financing activities of $15.8 million for the first three months of fiscal 2026. The change in cash from financing activities was primarily driven by lower non-manufacturer floorplan payables during the first three months of fiscal 2027.

Previous wording

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, 2025, and in other materials filed by the Company with the SEC (and included in oral statements or other written statements made by the Company).

Current wording

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 fiscal year ended January 31, 2026, and in other materials filed by the Company with the SEC (and included in oral statements or other written statements made by the Company).

Previous wording

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 general market conditions of the agricultural and construction industries, equipment inventory levels and our ability to manage inventory down to target levels and the effects of these actions on future results, and our primary liquidity sources being sufficient to meet future business needs for the foreseeable future, and the adequacy of our capital resources to provide for our liquidity needs for the next 12 months. 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, our ability to reduce inventory levels and improve profitability, the impact of the Russia-Ukraine conflict on our Ukrainian operations, 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, the impact of those conditions and obligations imposed on us under the CaseIH dealer agreements entered into in connection with our acquisition of the Heartland companies' commercial application equipment business, our substantial dependence on CNH, including CNH'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 for fiscal 2025. 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 statemen…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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 general market conditions of the agricultural and construction industries, equipment inventory levels and our ability to manage inventory down to target levels and the effects of these actions on future results, and our primary liquidity sources being sufficient to meet future business needs for the foreseeable future, and the adequacy of our capital resources to provide for our liquidity needs for the next 12 months. 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, our ability to reduce inventory levels and improve profitability, the impact of the Russia-Ukraine conflict on our Ukrainian operations, the impact of those conditions and obligations imposed on us under the CaseIH dealer agreements entered into in connection with our acquisition of the Heartland companies' commercial application equipment business, our substantial dependence on CNH, including CNH's ability to design, manufacture and allocate inventory to our stores in quantities necessary to satisfy our customers' 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 for fiscal 2026. 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 applicable 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…

Excerpt shortened here; the source contains the full paragraph.