Q3 2022 Titan Machinery Inc Earnings Call
[music].
Greetings and welcome to the Titan machinery third quarter 2022 earnings conference call. At this time, all participants on a listen only mode. A question 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 today, Mr. Jeff Sonic of ICR. Thank you you may begin.
Thank you good morning, ladies and gentlemen, and welcome to Titan machinery third quarter fiscal 2022 earnings conference call on the call today from the company are David Meyer, Chairman and Chief Executive Officer, Mark Kubota, Chief Financial Officer, and Brian Knutson, Chief operating officer by now everyone should have access to the earnings.
At least for the fiscal third quarter ended October 31, 2021, which went out this morning at approximately 645, a M eastern time.
If you've not received the release, it's available on the Investor Relations page of Titans website.
<unk> dot tightened machinery dot com. This call is being webcast and a replay will be available on the company's website as well. In addition, we are providing a presentation to accompany us today to accompany today's prepared remarks, you may access the presentation now by going to Titans website at IR Dot tightened machinery dot com presentation.
Available directly below the webcast information in the middle of the page you'll see on slide two of the presentation, our safe Harbor statement.
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 current expectations of management and involve inherent risks and uncertainties, including those identified in the risk factors section of Titans. Most recently filed annual report on Form 10-K.
As updated and subsequently filed quarterly reports on Form 10-Q.
Risk factors contained a more detailed discussion of the factors that 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 <unk>.
Today's call, we'll 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 Titans ongoing financial performance, particularly comparing underlying results from period to period.
We have included reconciliations of these non-GAAP financial measures to their most comparable direct GAAP financial measures in today's release.
The call will last approximately 45 minutes.
At the conclusion of our prepared remarks, we will open the call to take your questions.
Now I'd like to introduce the company's chairman and CEO, Mr. David Meyer go ahead David.
Thank you Jeff Good morning, everyone welcome to our third quarter of fiscal 2022 earnings conference call on today's call I'll provide a summary of our results and then Bryan Knudsen wall, Our Chief operating officer will give an overview for each of our business segments. Our Kubota. Our CFO will then review financial results for the third.
Quarter of fiscal 2020 to provide an update to our full year modeling assumptions.
If you turn to slide three you'll.
You see an overview of our third quarter financial results.
The ongoing strength of the broader AG sector continues to fuel demand for equipment across our business drove a 26% increase in our consolidated revenue to $454 million in fiscal third quarter 2022.
The commonly used over a larger base of revenues healthy inventory position.
Infrastructure will offer powerful operating leverage drove a 109% increase our pretax income for the quarter.
At the segment level. This operating leverage was especially visible in our agriculture segment.
Benefited from better than unexpected crop yields across our footprint.
Pre tax margin of 7%, which was a record quarterly high water Mark for the segment.
Our construction and international segments are also generating strong gains and profitability.
<unk> produced another solid quarter building upon the approval in Spain fiscal year to date.
The contribution across all of our businesses allowed us to drive record third quarter adjusted diluted earnings per share of 96 cents.
Which represents an increase of 81%.
Compared to the prior year period.
While supply chains remain challenged we are getting factory shipments as well as love or nuclear or parts of our equipment inventories collaboratively across our network of stores. This has allowed us to take care of our customers during the essentially cortlandt call period, which enable us equipment continues to deliver strong topline growth.
We are excited about finishing the fiscal year on a strong note after a successful harvest and construction season.
Dated modeling assumptions reflect an expectation that our momentum will continue to be an important year end tax selling season.
Look forward to closing the previously announced between Cogs. Besides Freestor acquisition in December.
I'm confident that we will be able to sustain our increased sales momentum continue achieving heightened levels of profitability that we believe will allow us to deliver a record or your earnings per share now I will turn the call word or Brian can also.
Yeah.
Okay.
Thank you David.
Good morning, and good afternoon, everyone.
I will first provide an update on our domestic agriculture segment, and then follow with some additional color on our construction and international business segments.
On slide four is an overview of our domestic agriculture segment.
Demand for new and used farm equipment remained strong due to the combination of continued high commodity prices and better than expected crop yields.
Further bolstering demand our section 179 tax incentives and the yield improvement attributed to the increased productivity farmers are seen with the precision technology in today's newer equipment.
Demand continues to outpace the OEM production and at this point most production slots for model year 'twenty two 2022 units are now full.
In the face of increased farmer input costs, such as crop protection products fertilizer seed and fuel and increasing number of growers are locking in prices for next year's crops.
We are currently wrapping up harvest and fall soil preparation and the last areas of our footprint and overall the harvests went extremely well with minimal drying costs.
Our growers were able to complete timely fall field work and receive much needed replenishing, Paul Raines, which further improve next year's spring planting conditions.
In summary on AG, we are optimistic for a solid Q4 as we are seeing continued strength in the used equipment market and with high demand for new equipment, we expect to continue to sell through existing new inventory and should continue to receive scheduled pretzel factory shipments.
In addition, we believe our successful off season machine inspection program will continue to drive parts and service revenues through the upcoming months.
Overall, our AG segment drove outstanding Q3 results and we are looking forward to an exciting Q4 and a strong finish.
Turning to slide five you will see an overview of our domestic construction segment.
As we have discussed in previous calls the operating improvements we've been implementing in our construction equipment stores over the last several years are resulting in significantly improved bottom line results.
The economic backdrop of increased construction activity low interest rates higher oil prices robust new housing starts and a recently signed infrastructure Bill support strong demand for construction equipment.
With our upper Midwest footprint. We're also benefiting from the current AG economy, as farmer ranch or customers and egg retailers purchased construction equipment, such as excavators and wheel loaders, and skid steer loaders and forklifts for land improvement feedlot operations and material handling.
Similar to our AG segment, we are seeing supply side challenges with tight inventories and long lead times.
But are continuing to receive equipment inventory in this high demand market.
With the improved economy stimulus and infrastructure spend we expect to see business to stay healthy for the foreseeable future.
On slide six we have an overview of our international segment, which represents our business within the countries of Bulgaria, Germany, Romania and Ukraine.
Our European customers are also benefiting from the higher global commodity prices and experienced favorable yields from both the early season grain crops and the fall row crops.
We continue to manage through Covid border, Lockdowns and supply side issues, but new and used equipment demand is more than offsetting these challenges.
We continue to drive operational improvement efforts and initiatives to further increase our parts and service revenues and as we continue to further.
The further execution will provide more long term sustainability for our international segment through the cycles.
And finally I'd note that we successfully closed on the sale of our Serbia store in Q3, which going forward will afford us increased focus on our production and agriculture markets in Ukraine, Bulgaria, Romania and Germany.
Before I turn the call over to Mark I want to thank all our employees both domestically and abroad for your continued efforts and tremendous contributions through the first three quarters of our fiscal year.
It is great to see the Bottomline contribution coming from all three of our business segments and I'm confident in continued success as we close out the year.
With that I will turn the call over to Mark to review our financial results in more detail.
Yeah.
Thanks, Brian.
Turning to slide seven.
Total revenue increased 25, 8% to $454 million for the third quarter of fiscal 2022.
Our equipment business increased 36, 9% versus prior year, which was driven by strength in our agriculture and international businesses.
Our parts and service business generated consistent growth, increasing $4 nine and four 3% respectively compared to the prior year period.
We didn't see much as much growth this quarter due to a tougher comp from the from the prior year.
We also saw less parts and service activity in our Western North Dakota, and South Dakota AG stores as these locations were.
Were the hardest hit by drought conditions.
Rental and other revenue decreased seven 1% versus prior year due to a decrease in inventory rentals are smaller rental fleet and our current construction footprint and a reduced fleet due to the January 2021 divestiture of our construction stores in Arizona.
Yeah.
Helping to offset these factors with a higher dollar utilization of our construction segment rental fleet, which improved nicely to 31, 4% for the current quarter compared to 25, 7% in the same period last year.
The improved utilization helped to increase margins in this revenue category.
On slide eight our gross profit for the quarter increased 27, 5% to $92 million.
Gross profit margin increased by 30 basis points, primarily due to stronger equipment margins, but also due to improved margins across all categories of revenue.
Equipment margins were supported by good end market conditions and healthy inventories.
Higher margins were partially offset by a shift in sales mix toward equipment revenue this year versus higher margin parts and service revenue as compared to the third quarter of the prior period.
Operating expenses increased $8 $8 million versus the prior year to $62 $9 million for the third quarter of fiscal 2022.
This increase was more than offset by revenue growth and led to 110 basis points of operating expense leverage compared to the prior year.
<unk>, our operating expenses to 13, 9% as a percent of revenue compared to 15% in the prior year period.
Although expenses are trending well as a percentage of revenue.
Realizing inflationary cost pressures in areas like fuel wages and employee benefits and expect those pressures to intensify in future quarters.
Floorplan and other interest expense decreased 21, 6% to $1 $3 million in the third quarter of fiscal 2022.
To the same quarter last year due to lower Floorplan borrowings.
In the third quarter of fiscal 2022, our adjusted net income increased 88% to $21 $7 million, which accounts for $2 $6 million of impairment costs net of tax in the prior year period.
Our adjusted earnings per diluted share for the quarter was a record 96 cents and compares to last year's 53 performance in.
And adjusted EBITDA increased 42, 1% to $35 $3 million compared to the third quarter of last year.
You can find a reconciliation of adjusted net income adjusted income per diluted share and adjusted EBITDA to their most comparable GAAP amounts in the appendix to the slide presentation.
On slide nine you will see an overview of our segment results for the third quarter of fiscal year 2022.
Agriculture segment sales increased 27, 6% to 281 $5 million, helping to drive a significant increase in segment adjusted pre tax income of 42% to $19 $6 million.
This equates to a pre tax income margin in the third quarter of 7% and.
And demonstrates the extensive improvements we've made to our operations over the course of this last cycle.
Turning to our construction segment.
Revenue increased 9% to $79 $7 million compared to the prior year period.
Despite the January divestiture of two stores in Arizona.
On a same store basis, excluding these those stores' revenues were up 11, 1% for the quarter.
We are pleased with the continued improvement in this segment's adjusted pretax income, which improved nearly 150% to $3 $6 million compared to $1 $4 million in the prior year period.
Our international segment also benefited from the improved agriculture market conditions and generated revenue growth of 51, 5% to $92 $7 million.
The combination of strong equipment sales and margins.
Bold with solid growth in our higher margin parts and service businesses yielded a $5 9 million dollar improvement in adjusted pretax income to a positive $6 $1 million, which compares to $200000 in the prior year period.
Turning to slide 10.
You see our first nine month results.
Total revenue increased 23, 6% compared to the same period last year.
Year to date equipment sales increased 32, 7%.
Parts increased 7% service revenue increased six 1% and rental and other revenue decreased 16, 3%.
The nine months dollar utilization of our dedicated rental fleet improved to 25, 8% compared to 22, 2% in the same period last year.
Turning to slide 11.
Gross profit for the first nine months was $235 million.
23, 1% increase compared to the same period last year.
Our gross profit margin was relatively flat with a 10 basis point decrease versus prior year at 19, 8% for the first nine months of fiscal 2022.
The impact that revenue mix is having an overall gross profit margins as largely being offset by higher equipment margins.
Our operating expenses increased by $16 $2 million or 10, 1% for the first nine months of fiscal 2022 to $176 $5 million.
This increase was more than offset by revenue growth and led to 170 basis points of operating expense leverage compared to the prior year.
Reducing our operating expenses as a percentage of percent of revenue to 14, 7%.
Impairment expenses decreased from $2 $8 million in the prior year to $1 $5 million in the current nine month period.
Floorplan and other interest expense decreased 24, 2% to $4 $3 million in the first nine months, primarily due to overall lower floorplan borrowings.
Our adjusted diluted earnings per share doubled to one to $1 98.
For the first nine months of fiscal 2022.
Paired to 97 cents in the prior year period.
Our nine month, adjusted EBITDA increased 52, 1% to $78 $6 million compared to $51 $7 million in the prior year.
On slide 12, we provide our segment overview for the nine months period.
Overall, our adjusted pretax income was $59.3 million for the first nine months of fiscal 2022.
Compared to $31 $3 million in the same period last year.
This 89, 8% increase was generated as a result of strong improvement in performance across all three segments of our business.
On slide 13, we provide an overview of our balance sheet highlights at the end of the third quarter of fiscal 2022.
We had cash of $91 million as of October 31, 2021.
Our equipment inventory at the end of the third quarter was $323 million a decrease of $15 million from January 31, 2021, reflecting the net effect of a $44 million decrease in used equipment, partially offset by a $29 million in.
Kris and new equipment.
Strong sales and lower inventory levels continue to drive equipment inventory turns which increased to three one versus 1.6 in the prior year.
I will provide a little more color on our inventory on the next slide.
Our rental fleet assets at the end of the third quarter increased slightly to $82 million compared to $78 million at the end of fiscal 2021.
We still anticipate our fleet size to be around $80 million by the end of fiscal 2022.
As of October 31, 2021, we had $175 million of outstanding Floorplan payables on $753 million of total floor plan lines of credit.
Which leaves us with considerable capacity in our credit lines to handle our equipment financing needs.
Our adjusted debt to tangible net worth ratio was <unk> seven at the end of the third quarter compared to 1.0 at the end of the third quarter of fiscal 2021 and is well below three five which is the leverage covenant requirement of our two largest floorplan facilities.
Outside of our Bank Syndicate credit credit agreement.
Turning to slide 14.
The amount of new and used equipment inventories are reflected in the size of the blue and red bars on this slide respectively.
As we've discussed during the past couple of quarters, our inventory turns have accelerated due to the combination of increased customer demand and a tighter in industry supply of equipment.
At the end of the third quarter, we drove an inventory turn of three one times and anticipate this to continue to move higher through the end of the fiscal 2022.
Given current inventory levels and end market conditions.
We believe our equipment orders delivery schedule them level of pre sales and equipment inventory have us positioned to meet our current revenue modeling assumptions for fiscal year 2022.
The overall quality of our inventory remains very healthy.
Our inventory under non interest bearing terms, which can be seen by the gray bar on the slide.
We ended the third quarter at 45, 5%.
Slide 15 shows our updated fiscal 2022 annual modeling assumptions.
Ongoing top line strength in our agriculture and international segments, coupled with anticipated.
With the anticipated addition of the J Cox three store acquisition in early December causes us to raise our revenue growth modelling assumptions for these two segments.
This revenue growth combined with stronger margin performance across all three segments also translated to a raise and expectation for our diluted earnings per share range.
For the Agriculture segment, we are increasing our revenue growth assumption to up 23% to 28% from up 18% to 23%.
The fiscal 2022 growth range includes the full year revenue contribution from our horizon West acquisition that closed in May 2020.
As well as anticipated revenue from the <unk> acquisition.
But the construction segment, we are maintaining our revenue assumption of up to two 7%.
As a reminder, this assumption includes the divestment of our two construction equipment stores in Arizona at the end of fiscal 2021.
Which accounted for approximately $27 million of combined revenue.
Excluding these revenues from the prior year base, a modeling assumption equates to a same store sales range of approximately up 10% to 15%.
For the International segment, we are increasing our revenue assumption to up 35% to 40% from up 27% to 32%.
The strong year to date performance combined with the good crop conditions in our international footprint and a strong global AG commodity prices led to this significant increase in expectations.
As Brian indicated earlier, we sold our single store Serbian business during the third quarter.
The small impact of this divestiture is also reflected in this revised revenue range.
From an earnings per share perspective, we are increasing our diluted earnings per share assumption by 40 cents at the midpoint.
To a new range of $2 40 to $2 60 for fiscal 2022.
As a reminder, this range includes all ERP implementation expenses.
This concludes our prepared remarks, operator, we are now ready for the question and answer session of our call.
Thank you at this time, we will conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary, we could pick up your handset before pressing the stock east once again Thats star one at this time, one moment, while we poll for our first question.
Our first question comes from Mig <unk> with Baird. Please proceed.
Thank you for the question and good morning, everyone.
Good morning Mig.
I guess my my first question you commented earlier on your on your North American AG business that at this point our production slots for calendar 'twenty two.
Our full I'm I'm looking to maybe get a little more perspective on that since apparently you have good visibility here.
How are those production slots looking relative to say calendar 'twenty, one I mean, what sort of volume growth for this pre sold equipment.
Do you have visibility into at this point.
Yeah I'll make this is Brian.
And just to clarify it was for model year 'twenty two.
So you know would cover the.
The first few quarters base or the other.
The year there.
So yes they are.
C N H.
Has come out earlier in respect to the demand that's out there with the programs.
Order boards filled up a little earlier than last year, as well, but you know and and that's especially as I talked on the prepared comments in regards to the cash crop equipment.
And so.
Generally there are some product categories that are still open for model year 'twenty two production, but for the most part we're into the the.
Starting to sell into model year, 'twenty, three here and in certain cash crop categories.
Right, but my question is still stand in terms of where.
Where we should be thinking in terms of you know.
Additional volume of incremental volume in 'twenty, two relative to 'twenty, one because I mean look you Europe.
Understand that you're not providing guidance for your fiscal 'twenty three but there's one quarter left and I think the big question all of us sort of habits.
Hey, you know you've had a really strong 22.
What could the what could next year look like and you know at least for the portion of the business, where you do have visibility because.
The pre sold equipment.
Can you kind of help us out a little bit to understand the kind of growth that we might be looking at next year.
Okay.
Yeah.
Oh, maybe I go back to.
You know our guidance and maybe a little sensitive here with the timing too for forward looking but.
You know.
Yeah, we have.
Yeah.
The supply chain as you know is going to be a crap shoot next year, we feel good about our allocation and our and our orders at this point, we've got a lot of our orders in early.
Our salespeople have been out there.
Doing pre sells with customers so.
Hesitant to.
Talk to the exact percentages as far as.
Next year at this point.
Or we could share some additional color next quarter on that.
Okay. Then my my final question is on.
On inventory turns.
Really strong performance this year and maybe mark.
Can you kind of give us a sense for how you see this metric.
Metric evolved on a go forward basis.
Is there additional efficiency that you think you can get out of this metric.
And.
How does that.
The various investments I think that you've made over time.
The technology backend.
Not just the ERP, but inventory management tools, how is that kind of played out.
<unk>.
And to driving this metric higher basically I'm trying to understand how much of this in your view is driven by the market itself and the tightness of supply relative to the structural improvements that you guys have been making to the business. Thank you.
Yeah, Mig I think so first of all I.
At 3.1, right now given our given the tightness of supply that we talked about it and and.
A lot of these are pre sold at this point, so when they're coming in they're going out right away I certainly see this on this metric increasing.
By the end of the year, you know it could be.
It usually around that $3 five is where we could see it maybe even a little bit higher than that.
<unk> driven in a large part by you know what we're talking about here as far as demand and supply chain, but yes. We've made a lot of a lot of good inventory management improvements over the years.
And I think that is helping our margins today what's.
You know what we're achieving in equipment margin, so even coming into this stronger cycle.
We had.
Very health.
Healthy inventory conditions with aging of inventory being down in <unk>.
Fresh inventory out there.
As far as driving more I think where it's running pretty efficient at at this point that you know call. It a run rate of you know the kind of mid threes, three and a half.
So we don't have a lot of interest bearing inventory out there our margins are very strong.
Might be some smaller level of improvement on each of those but I think.
At this point with where we're at in the cycle and how were running in this area.
We're pretty darn efficient at this point.
Yes, I would agree with that thanks for taking the questions.
Thanks, Craig Our next question comes from Larry de Maria with William Blair. Please proceed.
Hey, Thanks, good morning, everybody.
Just following up on the last one last question.
I appreciate them into next year can you talk about what is the average price increase on new equipment for next year.
The year is obviously already pre sold a lot of it we should know that and is any of that price dropped down to you.
Or do you have to obviously.
Yes sure.
Price spread on the used equipment. That's the first question.
Hey, Good morning, Larry This is Brian. Thank you for the question.
Okay.
Yeah. So we've had price increases here with.
The model year 'twenty one's in and now again into the model year 'twenty twos.
Pretty in line with the competition in terms of the price increases.
And we have been passing that on.
To the customer as well and in fact I think that.
Reflects thus far in our margins in <unk>.
Anticipate that.
What youll continue to see us do.
Okay. So off the equal if you sold the same amount of equipment sales go up probably five to 10, and then youre, capturing some incremental margin on the new equipment.
They use it.
That fair to say.
Yeah mix will play into there a little bit as well, but but generally yes.
Okay, and then secondly.
As we think about that.
And actually being pre sold moving into 2023 calendar at what point.
Too long and we risk cancellations from kind of curious about what protection you have and particularly how are we handling trade ins because you know like what you sell I was going to trade in and that's where you guys make a lot of money Oh are we doing a deal and that's the deal work done or is there any protection for you or the customer.
Trade and it might not happen for another year from today.
Yeah.
Yes so.
That's one of the benefits for the customer as a pre sale as they can.
Block in their production so that they can lock in their pricing.
And and from Orin locking the deal with us so.
We spend a lot of time researching forecasting used equipment values and when we do those presale deals.
They are anticipated.
On the on the trade in at the time that we will receive it.
And so there is generally a little risk there, sometimes the markets come up a little bit sometimes go down a little bit on on the trade ins, but again.
We anticipate the used values and.
And again some of those are some of the benefits for the customers as well with the presale on their end.
Okay. So the deal is done at the time and Theres really no modification from it from them, whether we use pricing goes up or down and then I think that's what you said and then last question did everybody get what they need it through harvest or is there any major issues or were you able to secure more or less all the equipment you needed at that time.
It was ordered or was there any slippage in that.
Thanks.
Yeah, It went pretty well Larry overall, there are there was a lot of headaches along the way.
I want to thank our team a tremendous effort from everyone on our team as well as our manufacturers we work with.
Is the incredible amount of work behind the scenes right now and a lot of extra.
Busy work if you will that we don't traditionally have.
Order too.
I'll find the missing component.
Good things shipped and get them here, but.
Just in time delivery rate in this day and age so.
Everything went pretty well from that regard, but again it did take some doing on everybody's part.
Okay. Thank you.
Once again, ladies and gentlemen to ask a question. Please press star one on your telephone keypad. Our next question comes from Rick Nelson with Stephens. Please proceed.
All right sure.
Good morning, guys.
Okay.
Follow up to your equipment margins are very strong.
Whose work.
Is it used or is it both.
How is it sustainable.
Do you think those margins are.
Yes, Rick Mark here.
<unk> been better than even what we expected than what we kind of model did come in strong again for the quarter.
We're seeing it still mostly on the on the used side, but a big thing that we're experiencing is.
Very little if any kind of write downs that we have on a on a on a monthly basis, when we do our lower of cost or market adjustments. So that's and that's primarily on the used side once in a while and age knew we'd have that as well.
But that is historically very low today.
At very low levels of that so that's certainly helping.
Certainly the other thing and I've mentioned this before but with the strong same store sales growth of our overall sales growth in international.
They they are predominantly new equipment and that higher margins over there so that mix with international is helping us.
As well as help helped in the quarter quite a bit.
So from as.
As far as and sustaining this that for the next quarter I don't see it.
<unk> talked about it earlier.
That fourth quarter, we generally have some of those higher ticket items. We also have a greater mix of.
Domestic eggs in the other segments, particularly less in international.
So if all that holds true and everything else kind of remains the same.
I would expect it to be kind of call it lower elevens.
Instead of the I think we're at like 12, 1% year to date here. So I do expect it to come down and that's what's kind of baked into the.
Modeling assumptions that.
That I provided.
Chunks like or could get an update.
Sure sure.
Environment trade conflicts or plumber, that's going to close here shortly.
Speak to that.
Some color around that.
Multiples that you're paying these days.
Yes, we're pretty excited because it's Dave on the J Cox.
It's continuous to our Marshall and Pipestone, Minnesota locations and those locations will burn, Minnesota and willing to in Minnesota in one location and like Park, Iowa I would just also the border so really good farmland.
No.
Dominic CT beads were a little bit diversified livestock also assorted really fits into or not.
Not only are continuous to our footprint, but similar products to them.
No really quality work for some you know really.
Strong.
Aftermarket parts and service support.
Good culture. So it's got a really good point.
We're really excited about this one and.
I think when we come with our you know your numbers and stuff you will see a little bit more of the detail and the.
The economics wrong I can say we closed in December. So you know, we don't want to get ahead of ourselves here.
You know at the same time.
Model really well.
B E.
Positive to our bottom line right off that gift God, well managed I'm. Good good group of employees. So I can see we're pretty excited about it.
Okay.
They're more in the pipeline.
At current prices.
Your appetite I guess to be more more accurately.
We've got you know we've got a balance sheet is really strong you know, we're not even into some of our.
Some of our bank syndicate and illustrating all we wanted to point some capital on more acquisitions, and I'd say the pipeline and the amount of interest rate and all of the strongest has been in a number of years right now so.
So motivated sellers.
Communications and you know and we wanted just wanted to bring.
I'm trying to get some more deals done and bring them out on a timely.
And to be a little bit of space between them, but you know we're pretty excited about what we think we're gonna be able to do in the near term on the acquisition front.
Great.
Could you equipment market.
Tight supply and new use.
Driving.
People want to use to market.
Cameron Com pricing.
Or are you seeing any pushback.
From your customers.
Higher pricing on used.
Yeah.
Hey, Rick this is Brian yeah.
There's the short supply definitely is also driving their used equipment sales as well.
Bigger contributors would be.
The late model use the growers can still upgrade and get a lot of benefits to the.
Newer technology.
Also the fleet is really aged out there you know as you know it's about the oldest it's been a couple of decades. So growers can also.
Upgrade quite a bit even on a used piece of equipment and then also the section 179 and the tax benefits.
So pertaining to the use.
So we are seeing nice a used equipment pricing that gets carried up similar in line.
Percentage basis with the new equipment.
And then.
We're passing that through to the customers and and.
The net farm income is is supporting it in and they.
They used has provided some nice upgrades for customers.
Okay great.
Great. Thanks for that help.
Good luck.
Push forward.
Thanks, Greg.
Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back to Mr. David Meyer for closing remarks.
Okay. Thank you everyone for your time this morning, and your interest in Titan machinery and look forward to updating you on our progress on our next call.
Good day.
This concludes today's teleconference. You may disconnect your lines at this time.
And thank you for your participation.
Okay.