Titan Machinery Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and related notes included in Item 1,“Financial Statements” of Part I of this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Item 8 and Item 7, respectively, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Previous 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.

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 on the Company 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 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:

Current wording

For the second quarter of fiscal 2027, our net loss was $9.2 million, or a loss of $0.40 per diluted share, compared to a fiscal 2026 second quarter net loss of $6.0 million, or a loss of $0.26 per diluted share. Significant factors impacting the quarterly comparisons were:

Previous 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.

Current wording

•Revenue in the second quarter of fiscal 2027 decreased by 9.2% compared to the second quarter of fiscal 2026. The revenue decrease was led by softening demand for equipment purchases due to a decline in farmer profitability over the past few years, which is expected to continue through the remainder of fiscal 2027.

Previous 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.

Current wording

•Gross profit margin increased to 18.6% for the second quarter of fiscal 2027, as compared to 17.1% for the second quarter of fiscal 2026. The increase was primarily related to an equipment gross profit margin increase from 6.6% in the second quarter of fiscal 2026 to 8.5% in the second 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 second quarter of fiscal 2027 as compared to the same period last year.

Previous 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.

Current wording

•Floorplan interest expense decreased by $3.1 million in the second quarter of fiscal 2027 as compared to the same period in fiscal 2026. The decrease is primarily due to lower interest-bearing inventory levels.

Previous wording

The results presented below include the operating results of each acquisition made during these periods, from the date of acquisition, as well as the operating results of any stores closed or divested during these periods, up to the date of the store closure. The period-to-period comparisons included below are not necessarily indicative of future results. Segment information is provided later in the discussion and analysis of our results of operations. Additional information regarding our segments is included in Note 17, Business Segment and Geographic Information, to our Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Current wording

The results presented below include the operating results of each acquisition made during these periods, from the date of acquisition, as well as the operating results of any stores closed or divested during these periods, up to the date of the store closure. The period-to-period comparisons included below are not necessarily indicative of future results. Segment information is provided later in the discussion and analysis of our results of operations. Additional information regarding our segments is included in Note 17, Business Segment and Geographic Information, to our Condensed Consolidated Financial Statements in Item 1, “Financial Statements,” of Part I of this Quarterly Report on Form 10-Q.

Previous wording

Comparative financial data for each of our four sources of revenue are expressed below.

Current wording

Comparative financial data for each of our four sources of revenue are expressed below for the periods indicated:

Previous 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.

Current wording

Total revenue for the second quarter of fiscal 2027 decreased by 9.2%, or $50.0 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

Gross profit for the first quarter of fiscal 2027 decreased 1.8%, or $1.7 million, compared to the same period last year. Gross profit margin increased to 17.1% in the current quarter compared to 15.3% in the prior year quarter. The increase in gross profit margin 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 higher margin parts and service business during the first quarter of fiscal 2027 as compared to the same period last year.

Current wording

Gross profit for the second quarter of fiscal 2027 decreased 1.3%, or $1.2 million, compared to the same period last year. Gross profit margin increased to 18.6% in the current quarter compared to 17.1% in the prior year quarter. The increase in gross profit margin was primarily related to an equipment gross profit margin increase from 6.6% in the second quarter of fiscal 2026 to 8.5% in the second quarter of fiscal 2027 and a change in sales mix, with a greater proportion of revenue earned from higher margin parts and service business during the second quarter of fiscal 2027 as compared to the same period last year.

Previous wording

Our Company-wide absorption rate was 74.0% for the first quarter of fiscal 2027 compared to 75.5% during the same period last year. The decrease in our absorption rate was primarily due to lower gross profit in the first quarter of fiscal 2027 compared to the same period last year.

Current wording

Our Company-wide absorption rate was 76.5% for the second quarter of fiscal 2027 compared to 83.1% during the same period last year. The decrease in our absorption rate was primarily due to lower gross profit in the second quarter of fiscal 2027 compared to the same period last year.

Previous 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.

Current wording

Our operating expenses in the second quarter of fiscal 2027 increased 1.5% compared to the same period last year. Operating expenses as a percentage of revenue increased to 19.0% in the second quarter of fiscal 2027 from 17.0% in the second 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 first quarter of fiscal 2026, we recognized $0.3 million in impairment expense related to long-lived assets in our Agriculture segment.

Current wording

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

Previous wording

Interest and other income (expense) for the first quarter of fiscal 2027 increased by approximately $1.8 million as compared to the same period last year, primarily due to foreign currency fluctuations in the quarter.

Current wording

Interest and other income (expense) for the second quarter of fiscal 2027 decreased by approximately $1.5 million as compared to the same period last year, primarily due to foreign currency fluctuations in the quarter.

Previous 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.

Current wording

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

Previous 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.

Current wording

Our effective tax rate was 0.1% and 27.1% for the three months ended July 31, 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.

Previous 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.

Current wording

Agriculture segment loss before income taxes for the second quarter of fiscal 2027 was $3.3 million compared to $12.3 million for the second 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

Construction segment revenue for the first quarter of fiscal 2027 decreased 6.5% compared to the same period last year. The decrease in revenue was primarily driven by the timing of equipment deliveries.

Current wording

Construction segment revenue for the second quarter of fiscal 2027 increased 9.2% compared to the same period last year. The increase in revenue was primarily driven by the timing of equipment deliveries.

Previous wording

Our Construction segment loss before income taxes was $0.6 million for the first quarter of fiscal 2027 compared to $4.2 million in 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. The dollar utilization of our rental fleet increased from 20.1% in the first quarter of fiscal 2026 to 23.5% in the first quarter of fiscal 2027.

Current wording

Our Construction segment income before income taxes was $0.4 million for the second quarter of fiscal 2027 compared to loss before income taxes $1.2 million in the second 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. The dollar utilization of our rental fleet increased from 22.4% in the second quarter of fiscal 2026 to 25.6% in the second quarter of fiscal 2027.

Previous 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.

Current wording

Our Europe segment loss before income taxes was $1.3 million for the second quarter of fiscal 2027 compared to income before income taxes of $5.1 million in the second quarter of fiscal 2026. The decrease in segment results was primarily the result of a decrease in equipment sales.

Previous wording

Australia segment revenue for the first quarter of fiscal 2027 increased 14.3% compared to the same period last year. The current year results include additional revenue related to the acquisition of Bellevue Machinery, completed in October 2025.

Current wording

Australia segment revenue for the second quarter of fiscal 2027 increased 35.5% compared to the same period last year. The current year results include additional revenue related to the acquisition of Bellevue Machinery, completed in October 2025, as well as favorable foreign currency impacts from a strengthening Australian Dollar.

Previous 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.

Current wording

Our Australia segment loss before income taxes was $3.4 million for the second quarter of fiscal 2027 compared to $2.1 million in the second quarter of fiscal 2026. The decrease in segment results was primarily the result of softer equipment margins compared to the 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 $3.0 million for the first quarter of fiscal 2027 compared to $4.5 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 $1.5 million for the second quarter of fiscal 2027 compared to income before income taxes $2.2 million for the same period last year.

Previous 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.

Current wording

Agriculture segment revenue for the first six months 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

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.

Current wording

Europe segment revenue for the first six months of fiscal 2027 decreased 34.1% compared to the same period last year. The decrease in revenue was primarily due to lower equipment demand compared to the prior year period, which prior year period demand had been driven by a strong response to European Union stimulus programs in Romania.

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 Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2026.

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 Item 8, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for fiscal 2026.

Previous 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.

Current wording

As of July 31, 2026, the Company had floorplan payable lines of credit for equipment purchases totaling $1.5 billion, which is primarily comprised of an $874.0 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 1.7 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.

Current wording

Our equipment inventory turnover was 1.9 and 1.7 times for the rolling 12 month period ended July 31, 2026, and July 31, 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 20.5% as of July 31, 2026, from 31.9% as of January 31, 2026.

Previous 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.

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 July 31, 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 July 31, 2026. The financial covenants also require us to maintain an adjusted debt to tangible net worth ratio of 3.50:1.00, which is measured on a quarterly basis.

Previous 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.

Current wording

Net cash used for operating activities was $25.1 million for the first six months of fiscal 2027, compared to net cash provided by operating activities of $49.9 million for the six months ended July 31, 2025. The change in cash from operating activities was primarily attributable to timing of inventory receipts and changing mix in floorplan financing compared to the prior year period.

Previous wording

Cash Flow Provided by (Used for) Investing Activities

Current wording

Cash Flow Used for Investing Activities

Previous 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.

Current wording

Net cash used for investing activities was $3.7 million for the first six months of fiscal 2027, compared to $24.9 million for the first six months of fiscal 2026. The change in net cash used for investing activities was primarily attributable to the lower purchases of property and equipment and business acquisitions during the second quarter of fiscal 2027 compared to the prior year period.

Previous 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.

Current wording

Net cash provided by financing activities was $30.4 million for the first six months of fiscal 2027 compared to net cash used for financing activities of $30.0 million for the first six months of fiscal 2026. The change in cash from financing activities was primarily attributable to borrowing on non-manufacturer floorplan payables during the first six months of fiscal 2027, compared to a paydown in the first six months of fiscal 2026.