Q4 2024 Titan Machinery Inc Earnings Call

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Operator: BF-WATCH TV 2021 Greetings. Welcome to the Titan Machinery Inc. Fourth Quarter, for it, at this time, all parts A question and answer session will follow the formal presentation. If anyone should require operator assistance, sorry, Joe. Please note this conference is being held, and I'll now turn it over to you. Thank you, and welcome to Titan Machinery's fourth quarter fiscal 2024 earnings conference call today. We have from the company Bryan Knutson, President and Chief Executive Officer, and Beau Larson, Chief Financial Officer. By now, everyone should have access to the earnings release for the fiscal fourth quarter ended January 31st, 2024. If you've not received the release, it's available on the IR tab of Titan's website at ir.titanmachinery.com, is being webcast, and a replay will be available on the company's website as well.

Greeting.

Going to the Titan machinery, Inc, fourth quarter fiscal 2024 earnings call.

At this time, all participants on a listen only mode.

A question and answer session will follow the formal presentation.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now.

Gift Sonic: I'll turn the conference over to your host gift Sonic from IR you may begin.

Gift Sonic: Oh, Thank you and welcome to Titan machinery fourth quarter fiscal 2024 earnings conference call today.

Gift Sonic: We have from the company, Brian can knutson, President and Chief Executive Officer, and Bo Larsen Chief Financial Officer.

Gift Sonic: By now everyone should have access to the earnings release for the fiscal fourth quarter ended January 31st 2024th if you've not received the release it's available on the IR tab of Titans website at IR Dot tightened machinery Dot com. This call is being webcast and replay will be available on the company's website as well. Additionally, we are providing a presentation to accompany.

Operator: Additionally, we're providing a presentation to accompany today's prepared remarks, which can also be found on the same website, ir.titanmachinery.com. The presentation is located directly below the webcast information in the middle of the webinar. I would like to remind everyone that the prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such 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 Titan's most recently filed annual report on form 10. These factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statement, and the Note that during today's call, we may discuss non-GAAP financial measures, including results on an adjusted basis.

Gift Sonic: Today's prepared remarks, which can be found also on the same website IR dot type machinery dotcom presentation is located directly below the webcast information in the middle of the page.

I'd like to remind everyone that the prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions.

Gift Sonic: The statements do not guarantee future performance and therefore undue reliance should be placed upon them.

Gift Sonic: Forward looking statements are based on current expectations of management and involve inherent risks and uncertainties included excuse me, including those identified in the risk factors section of Titans. Most recently filed annual report on Form 10-K. These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially.

Gift Sonic: From those projected in any forward looking statements.

Gift Sonic: Except as may be required by applicable law Titan assumes no obligation to update any forward looking statements that may be made in today's release or call. Please note that during today's call. We may discuss non-GAAP financial measures, including results on an adjusted basis.

Gift Sonic: We believe these adjusted financial measures can facilitate a more complete analysis and greater transparency in the Titans ongoing financial performance, particularly when comparing underlying results from period to period.

Operator: We believe these adjusted financial measures can facilitate a more complete analysis and greater transparency into Titan's ongoing financial performance, particularly when comparing underlying results from the period included reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures, in today's call. We'll open the call to take your questions, and now I'd like to introduce the company's president and CEO, Mr. Bryan Knutson. Bryan, please go ahead.

Gift Sonic: <unk> reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures in today's release at the conclusion of our prepared remarks, we'll open the call to take your questions and now I'd like to introduce the company's president and CEO, Mr. Brian Congrats and Brian. Please go ahead.

Bryan J. Knutson: Thank you Jeff.

Bryan J. Knutson: Thank you, Jeff. Good morning, everyone. I want to begin today's call by providing some historical context, which will help put our recent earnings performance into perspective. Then I will offer some thoughts on our fiscal 2025 outlook that we are providing today and finish with a summary of our segment performance before passing the call to Beau for his financial review and incremental thoughts on our modeling assumptions. We finished fiscal year 2024 with a strong performance that was driven by growth across all of our legacy operating segments and resulted in record revenue of $2.8 billion and record earnings per share of $4.93. This marked the third consecutive year of achieving record earnings per share while achieving a pre-tax margin of greater than 5%.

Bryan J. Knutson: Good morning, everyone.

Bryan J. Knutson: I want to begin today's call by providing some historical context, which will help put our recent earnings performance into perspective.

Bryan J. Knutson: Then I will offer some thoughts on our fiscal 'twenty 25 outlook that we're providing today and finish with a summary of our segment performance before passing the call to Bob for his financial review and incremental thoughts on our modeling assumptions.

Bryan J. Knutson: We finished fiscal year 2024, with a strong performance that was driven by growth across all of our legacy operating segments and resulted in record revenue of $2.8 billion and record earnings per share of $4.93.

This marked the third consecutive year of achieving record earnings per share, while achieving a pretax margin of greater than 5%.

Bryan J. Knutson: Our business remains in a position of strength and we expect to demonstrate the durability of our earnings through this cycle following a multiyear effort to implement greater efficiency across our organization.

Bryan J. Knutson: Our business remains in a position of strength, and we expect to demonstrate the durability of our earnings through this cycle following a multi-year effort to implement greater efficiency across our organization. Moreover, this is exactly the level of execution that we outlined at our 2017 Investor Day. I'd remind everyone that back then we were working hard on expense and inventory optimization as a means of driving higher levels of profitability through the cycle. At that meeting, we also outlined a path to $2 earnings per share.

Bryan J. Knutson: Moreover, this is exactly the level of execution that we outlined at our 2017 Investor day.

I would remind everyone that back then we were working hard on expense and inventory optimization as it means to driving higher levels of profitability through the cycle.

Bryan J. Knutson: At that meeting, we also outlined the path to $2 earnings per share.

Bryan J. Knutson: Conceptually we wanted to ensure we made the adjustments necessary to drive an acceleration in operating leverage so that we were in a strong position once the next cycle right.

Bryan J. Knutson: Conceptually, we wanted to ensure we made the adjustments necessary to drive an acceleration and operating leverage so that we were in a strong position once the next cycle arrived. Our business today is nearly twice as large as those projections from 2017 in terms of revenue, and I'm proud to say our earnings power of nearly $5 per share is higher by two and a half times. Those principles remain in place today.

Bryan J. Knutson: Our business today is nearly twice as large as those projections from 2017 in terms of revenue.

Bryan J. Knutson: And I'm proud to say our earnings power of nearly $5 per share is higher by two and a half times.

Bryan J. Knutson: Those principles remain in place today that is positioning the business to drive greater and more sustainable levels of profitability in all demand environments.

Bryan J. Knutson: That is positioning the business to drive greater and more sustainable levels of profitability in all demand environments, which leads me to some brief commentary on our outlook for fiscal 2025 that we are introducing today. First of all, I'd like to highlight a few key differences between this cycle and the last one for both Titan and the industry in general and why both are in a healthier position today than the previous cycle. First, for the industry as a whole. As has been well documented, supply chain constraints significantly limited OEM production volumes, restricting the amount of new equipment that was going into the market over the past few years. Because of this, fleet age for categories such as high-horsepower tractors is still above long-term averages. There has been less short-term leasing activity, further limiting the amount of late-mile used equipment for sale.

Bryan J. Knutson: Which leads me to some brief commentary on our outlook for fiscal 'twenty 25 that we are introducing today.

Bryan J. Knutson: First of all I'd like to highlight a few key differences between this cycle and the last one for both Titan and the industry in general and why bolt or in a healthier position today than the previous cycle.

Bryan J. Knutson: First for the industry as a whole.

Bryan J. Knutson: As has been well documented supply chain constraints significantly limited OEM production volumes restricting the amount of new equipment that was going into the market over the past few years.

Bryan J. Knutson: Because of this fleet age for categories, such as high horsepower tractors.

We're still above long term averages.

Bryan J. Knutson: There has been less short term leasing activity further limiting the amount of late model used equipment for sale.

Bryan J. Knutson: Farmers have had three highly profitable years to bolster their balance sheets, and advancements in precision ag technology continue to drive productivity gains, providing ROI on new equipment and aftermarket upgrades. For Titan specifically, as the industry continues to consolidate with larger, higher horsepower, and more technologically advanced equipment, we optimized our footprint and removed costs from the business through these restructuring efforts during the last cycle. We doubled down on our customer care strategy, driving more sustainable growth in our parts and service business, and we bolstered our professional back office team, who focus on managing inventory levels and using trade-in valuation. Well, all of these factors I just mentioned put us in a healthier spot today than we were a decade ago. Net farm income is expected to be at or possibly below the 20-year average in calendar year 2024.

Farmers have had three highly profitable years to bolster their balance sheets and advancements in precision AG technology continue to drive productivity gains, providing ROI of new equipment and aftermarket upgrades.

For tightened specifically as the industry continues to consolidate with larger higher horsepower and more technologically advanced equipment, we optimized our footprint and remove costs from the business through these restructuring efforts during the last cycle.

Bryan J. Knutson: We doubled down on our customer care strategy driving more sustainable growth in our parts and service business.

Bryan J. Knutson: And we bolstered our professional and back office team, who focus on managing inventory levels and used trading valuations.

Bryan J. Knutson: Well all of these factors I, just mentioned put us a healthier spot today than we were a decade ago.

Bryan J. Knutson: Net farm income is expected to be at or possibly below the 20 year average in calendar year 2024.

Bryan J. Knutson: And interest rates don't appear to be dropping as fast as our customers would like to see. The general consensus by industry participants is that egg volumes will be around mid-cycle levels this year. As such, we don't expect to repeat the success we enjoyed over the past two fiscal years, but we remain in a strong position heading into our current fiscal year 2025. We believe this year will prove to be best described as a year of transition. We have rapidly moved out of a period characterized by restricted supply and high demand to one that reflects ample to even excess supply and mid-cycle demand. We continue to have good visibility into demand for the first half of the fiscal year given our healthy backlog and pre-sale activity.

Bryan J. Knutson: And interest rates don't appear to be dropping as fast as our customers would like to see.

Bryan J. Knutson: General consensus by industry participants is that AG volumes will be around mid cycle levels. This year.

Bryan J. Knutson: As such we don't expect to repeat the success, we enjoyed over the past two fiscal years, but we remain in a strong position heading into our current fiscal 2025.

Bryan J. Knutson: We believe this year will prove to be best described as year of transition.

Bryan J. Knutson: We have rapidly moved out of a period characterized by restricted supply and high demand to one that reflects ample to even excess supply and mid cycle demand.

Bryan J. Knutson: We continue to have good visibility into demand for the first half of the fiscal year, given healthy backlog and presale activity.

Bryan J. Knutson: However, the supply chain has caught up quickly in recent months, and OEM lead times have normalized, whereas they had extended out 12 to 18 months not that long ago. In a broader sense, this normalized supply environment is a welcome change after years of excessive delays and the additional uncertainty with allocation. This allows us to significantly improve our in-stock levels of high horsepower equipment, self-propelled sprayers, and wheel loaders across our footprint.

Bryan J. Knutson: However, the supply chain has caught up quickly in recent months and OEM lead times have normalized whereas they had extended out 12 to 18 months not that long ago.

Bryan J. Knutson: In a broader sense. This normalized supply environment is a welcome change after years of excessive delays and the additional uncertainty with allocations.

Bryan J. Knutson: This allows us to significantly improve our in stock levels of high horsepower equipment self propelled sprayers and wheel loaders across our footprint.

Bryan J. Knutson: But the pace of the improved supply creates challenges in the near term as we will be working through a rapid influx of equipment deliveries, which will be visible in our new and used inventory balances throughout this fiscal year. Additionally, as we meet demand from our existing backlog, those new unit sales to customers also generate trade-ins of used equipment. The guidance we are providing today reflects anticipated margin compression, in part so that we can manage inventory levels through this transitional period. Our team will proactively manage through these factors in order to drive strong financial results and position us to maintain the higher levels of pre-tax margin that we've worked so hard to produce. Bo will provide some additional depth on the assumptions that underpin our modeling guidance for fiscal 2025.

Bryan J. Knutson: But the pace of the improved supply creates challenges in the near term as we will be working through our rapid influx of equipment deliveries, which will be visible in our new and used inventory balances throughout this fiscal year.

Bryan J. Knutson: As we meet demand from our existing backlog those new unit sales to customers also generate trade ins of used equipment.

Bryan J. Knutson: The guidance, we're providing today reflects anticipated margin compression in part so that we can manage inventory levels through this transitional period.

Bryan J. Knutson: Our team will proactively manage through these factors in order to drive strong financial results and position us to maintain the higher levels of pre tax margin that we've worked so hard to produce.

Speaker Change: Paul will provide some additional depth on the assumptions that underpin our modeling guidance for fiscal 2025, but before I pass the call to him I want to briefly walk through our customary update on each of our reporting segments, starting with domestic agriculture.

Bryan J. Knutson: But before I pass the call to him, I want to briefly walk through our customer update on each of our reporting segments, starting with domestic agriculture. We had a great finish to the year, growing segment same-store revenue by 36% in the fourth quarter. This was largely a function of the team's strong execution on improving the pace of customer deliveries following a concerted effort to complete pre-delivery inspections on new machinery. As we've discussed during the past several quarters, balancing the limitations of our service capacity between our ongoing needs of customers with incremental demands for pre-delivery inspections has been a challenge. So with that in mind, in addition to the strong equipment deliveries, I'm particularly pleased with our ability to continue to advance our customer care strategy and drive a double-digit same-store sales increase in our recurring parts and service business. Investing in people and CapEx to increase our service network capacity remains a key priority for our organization.

Speaker Change: We had a great finish to the year growing segment same store revenue by 36% in the fourth quarter.

Speaker Change: This was largely a function of the team's strong execution on improving the pace of customer deliveries following a concerted effort to complete pre delivery inspections on new machinery.

Speaker Change: As we discussed during the past several quarters balancing the limitations of our service capacity between our ongoing needs of customers with incremental demands for pre delivery inspections has been a challenge.

Speaker Change: So with that in mind. In addition to the strong equipment deliveries I'm, particularly pleased with our ability to continue to advance our customer care strategy and drive a double digit same store sales increase and a reoccurring parts and service business.

Speaker Change: Investing in people and Capex to increase our service network capacity remains a key priority for our organization.

Speaker Change: As such we will continue to focus on recruiting hiring and training skilled technicians in the coming fiscal year as well as investing in related capital expenditures to support that growth.

Bryan J. Knutson: As such, we will continue to focus on recruiting, hiring, and training skilled technicians in the coming fiscal year, as well as investing in related capital expenditures to support that growth. Shifting to our domestic construction segment, as expected, our construction segment produced a strong fourth quarter with same-store sales growth of 18%.

Speaker Change: Shifting to our domestic construction segment.

As expected our construction segment produced a strong fourth quarter with same store sales growth of 18%.

Speaker Change: This was due in part to timing of OEM deliveries this year versus last and our focus on getting these units turned around and out to our customers.

Bryan J. Knutson: This was due in part to timing of OEM deliveries this year versus last and our focus on getting these units turned around and out to our customers. We are pleased with the execution of our construction team, who have continued to drive growth and maintain healthy pre-tax margins. Although there's been some recent softening, as we look ahead, we see general stability in the construction markets that we serve. In addition, we also anticipate benefiting from improved availability of equipment from our OEM partners. Now moving on to an overview of our Europe segment, which represents our business within the countries of Bulgaria, Germany, Romania, and Ukraine. As discussed on our third quarter call, the growing season varied this year. With timely precipitation driving above average yields in Germany and Ukraine, while dry conditions create some headwinds in Bulgaria and Romania.

Speaker Change: We are pleased with the execution of our construction team who have continued to drive growth and maintained healthy pretax margins.

Speaker Change: Although there's been some recent softening as we look ahead, we see general stability in the construction markets that we serve.

Speaker Change: Further we also anticipate benefiting from improved availability of OA of equipment from our OEM partners.

Speaker Change: Now moving on to an overview of our Europe segment, which represents our business within the countries of Bulgaria, Germany, Romania and Ukraine.

Speaker Change: As discussed on our third quarter call. The growing season buried this year with timely precipitation driving above average yields in Germany in Ukraine, well dry conditions created some headwinds in Bulgaria and Romania.

Bryan J. Knutson: As expected, we saw a slowdown in demand in the fourth quarter but still achieved modest year-over-year sales growth on a same-store basis. Turning to our new Australia segment, the O'Connor's acquisition is now consolidated into our financials for the first time this quarter, so you will be able to monitor our progress in our segment reporting going forward. The segment's fourth quarter came in as expected, and plentiful rainfall has provided healthy subsoil moisture across our footprint heading into the next growing season. We've completed initial integration discussions across departments, sharing best practices and setting the stage for future collaboration. In the coming months, we will initiate the branding transition to Titan Machinery, and I'd like to reiterate how excited we are to have O'Connor join the Titan team.

Speaker Change: As expected we saw a slowdown in demand in the fourth quarter, but still achieve modest year over year sales growth on a same store basis.

Speaker Change: Turning to our new Australia segment.

Speaker Change: <unk> acquisition is now consolidated into our financials for the first time. This quarter. So you will be able to monitor our progress in our segment reporting going forward.

Speaker Change: The segment's fourth quarter came in as expected and plentiful rainfall has provided healthy subsoil moisture across our footprint heading into the next growing season.

Speaker Change: We've completed initial integration dis discussions across department sharing best practices and setting the stage for future collaboration.

Speaker Change: In the coming months, we will initiate the branding transition to tape machinery and I'd like to reiterate how excited we are to have the habit of Congress joined the Titan team.

Speaker Change: Finally, I want to sincerely thank our employees for their tremendous efforts that drove our record revenue and earnings.

Bryan J. Knutson: Finally, I want to sincerely thank our employees for their tremendous efforts that drove our record revenue and earnings. With that, I will turn the call over to Beau for his financial review. Thanks, Bryan, and good morning, everyone.

Speaker Change: With that I will turn the call over to Bo for his financial review.

Robert Larsen: Thanks, Brian and good morning, everyone.

Robert Larsen: I'll start with a brief review of our fiscal 2024 full-year results. As Bryan noted in his commentary, we had another exceptional year and are proud of the performance the team delivered. While we don't expect to repeat this performance in the coming year, we are focused on demonstrating improved results relative to that of the previous cycle as we move forward. Total revenue increased 24.9% to a record $2.8 billion, driven by balanced growth across each of our revenue categories. Equipment grew 25.3% for the full year and was complemented by solid contributions from our recurring parts and service businesses, which increased 25.6% and 21.2%, respectively. Additionally, Rental and Other was up 10.4%. Earnings per diluted share increased 9.8% to $4.93 for fiscal 2024.

Robert Larsen: I'll start with a brief review of our fiscal 2020 for full year results.

Robert Larsen: As Brian noted in his commentary we had another exceptional year and are proud of the performance the team delivered.

Robert Larsen: While we don't expect to repeat this performance in the coming year. We are focused on demonstrating improved results relative to that of the previous cycle as we move forward.

Robert Larsen: Total revenue increased 24, 9% to a record $2 $8 billion driven by balanced growth across each of our revenue categories.

Robert Larsen: Equipment grew 25, 3% for the full year and was complemented by solid contributions from our recurring parts and service businesses, which increased 25, 6% and 21, 2% respectively.

Robert Larsen: Additionally, rental and other was up 10, 4%.

Robert Larsen: Earnings per diluted share increased nine 8% to $4 93 for fiscal 2024.

Robert Larsen: This was a record for Titan, and it was also right in line with the midpoint of the guidance we established at the beginning of fiscal 2024 after adjusting for the O'Connor acquisitions. Shifting to our consolidated results for the fiscal 2024 fourth quarter, total revenue was $852.1 million, an increase of 46.2% compared to the prior year period. Growth was driven by a 29.9% increase in same-source sales, with the balance reflecting the contribution from the O'Connors and other acquisitions.

Robert Larsen: This was a record for Titan and it was also right in line with the midpoint of the guidance. We established at the beginning of fiscal 2024 after adjusting for the <unk> acquisition.

Robert Larsen: Shifting to our consolidated results for the fiscal 2020 for fourth quarter total revenue was $852 $1 million, an increase of 46, 2% compared to the prior year period.

Robert Larsen: Growth was driven by a 29, 9% increase in same store sales with the balance reflecting the contribution from the O'connor and other acquisitions.

Robert Larsen: Our equipment revenue increased 51, 6% versus the prior year period.

Robert Larsen: Our equipment revenue increased 51.6% versus the prior year period. Both parts and service revenue each increased 25.7%, and Rental and Other Revenue was up 3.1% versus the prior year period. Gross profit for the fourth quarter was $141 million, and as expected, gross profit margin contracted year-over-year to 16.6%, driven primarily by lower equipment margins, which are experiencing some normalization as expected at this stage in the cycle. The fourth quarters of fiscal 2024 and fiscal 2023 included benefits related to manufacturer incentive plans of $7.8 million and $1.8 million, respectively. Operating expenses were $100.3 million for the fourth quarter of fiscal 2024, compared to $83.7 million in the prior year period. The year-over-year increase of 19.9% was driven by additional operating expenses related to our acquisitions that have taken place in the past year, as well as an increase in variable expenses associated with increased sales. Floor Plan and other interest expense was $9.3 million as compared to $2.1 million for the fourth quarter of fiscal 2023, with the increase led by a higher level of interest-bearing inventory, the usage of existing floor plan capacity to finance the O'Connor acquisition, and higher interest rates.

Robert Larsen: Both parts and service revenue each increased 25, 7%.

Robert Larsen: And rental and other revenue was up three 1% versus the prior year period.

Gross profit for the fourth quarter was $141 million and as expected gross profit margin contracted year over year to 16, 6% driven primarily by lower equipment margins, what you're experiencing some normalization as expected at this stage in the cycle.

Robert Larsen: The fourth quarters of fiscal 2020 for fiscal 2023 included benefits related to manufacturer incentive plans with $7 8 million and $1 $8 million respectively.

Robert Larsen: Operating expenses were $103 million for the fourth quarter of fiscal 2024 compared to $83 $7 million in the prior year period the.

Robert Larsen: The year over year increase of 19, 9% was driven by additional operating expenses related to our acquisitions that have taken place in the past year as well as an increase in variable expenses associated with increased sales.

Robert Larsen: Floorplan and other interest expense was $9 $3 million as compared to $2 $1 million for the fourth quarter of fiscal 2023.

Robert Larsen: With the increase led by a higher level of interest bearing inventory the usage of existing floor plan capacity to finance, the <unk> acquisition and higher interest rates.

Robert Larsen: Net income for the fourth quarter of fiscal of 'twenty 'twenty, four was $24 million or $1.05 per diluted share, which included approximately 26 cents of benefits associated with manufacturing incentive plans.

Robert Larsen: Net income for the fourth quarter of fiscal 2024 was $24 million, or $1.05 per diluted share, which included approximately 26 cents of benefits associated with manufacturer incentive plans. This compares to last year's fourth quarter net income of $18.1 million, or $0.80 per diluted share, which included approximately $0.06 of benefits associated with the Manufacturer Incentive Plan. Now turning to our segment results for the fourth quarter. In our agriculture segment, sales increased 40.8% to $620.6 million. Growth was led by a strong same-store sales increase of 35.5%, which was further supported by contributions from the acquisitions of Pioneer Farm Equipment in February 2023 and Scott Supply in January 2024. Agriculture Segment Pre-Tax Income was $28.8 million and compared to $19.3 million in the fourth quarter of the prior year.

Robert Larsen: This compares to last year's fourth quarter net income of $18 $1 million or 80 cents per diluted share, which included approximately six tenths of benefits associated with manufacturing incentive plans.

Speaker Change: Now turning to our segment results for the fourth quarter.

Speaker Change: In our agriculture segment sales increased 48% to $626 million.

Speaker Change: Growth was led by strong same store sales increase of 35, 5%.

Speaker Change: Which was further supported by contributions from the acquisitions of Pioneer farm equipment in February 2023, and Scott supply in January 2024.

Speaker Change: Agricultural segment pretax income was $28 $8 million and compared to $19 $3 million in the fourth quarter of the prior year.

Speaker Change: In our construction segment same store sales increased 17, 7% to $100 $1 million led.

Robert Larsen: In our construction segment, same-store sales increased 17.7% to $100.1 million, led by the timing of equipment deliveries which shifted some revenue into the fourth quarter of this year as compared to the timing of deliveries to customers in the second half of last year. Pre-tax income was $4.6 million, compared to $5.4 million in the fourth quarter of the prior year.

Led by the timing of equipment deliveries, which shifted some revenue into the fourth quarter of this year as compared to the timing of deliveries to customers in the second half of last year.

Speaker Change: Pretax income was $4 $6 million and compared to $5 $4 million in the fourth quarter of the prior year.

Speaker Change: In our Europe segment sales increased eight 1% to $61 $6 million, which reflects a five 5% currency tailwind on the strengthening euro.

Speaker Change: Net of the effect of these foreign currency fluctuations revenue increased $2 $1 million or three 6%.

Robert Larsen: In our Europe segment, sales increased 8.1% to $61.6 million, which reflects a 5.5% currency tailwind on a strengthening euro. Net of the effect of these foreign currency fluctuations, revenue increased $2.1 million, or 3.6%. Pre-tax loss was $600,000, and this compares to pre-tax income of $1.5 million in the fourth quarter of fiscal 2023.

Speaker Change: Pre tax loss was $600000 in compared to pretax income of $1 $5 million in the fourth quarter of fiscal 2023.

Speaker Change: The decrease in profitability was driven primarily by a partial normalization of equipment margins and higher operating expenses.

Speaker Change: And our Australia segment sales were $69 $8 million and pre tax income was $4 $1 million.

Speaker Change: This was in line with the lower end of the range. We provided on the Q3 call primarily due to timing of OEM deliveries.

Speaker Change: This segment is well positioned to start fiscal 2025 with a good amount of presale orders on hand.

Now onto our balance sheet and inventory position.

Speaker Change: We had cash of $38 million and an adjusted debt to tangible net worth ratio of one five times as of January 31.

Robert Larsen: The decrease in profitability was driven primarily by a partial normalization of equipment margins and higher operating expenses. In our Australia segment, sales were $69.8 million, and pre-tax income was $4.1 million. This was in line with the lower end of the range we provided on the Q3 call, primarily due to timing of OEM deliveries. This segment is well positioned to start fiscal 2025 with a good amount of pre-sale orders on hand. Now on to our balance sheet and inventory position. We had cash of $38 million in an adjusted debt to tangible net worth ratio of 1.5 times as of January 31st, which is well below our bank covenant of 3.5 times. Equipment Inventory Increased Approximately $200 Million in the Fourth Quarter, of which approximately $87 million is attributable to acquisitions made during the fourth quarter.

Speaker Change: Which is well below our bank covenant of three five times.

Speaker Change: Equipment inventory increased approximately $200 million in the fourth quarter.

Speaker Change: Of which approximately $87 million is attributable to acquisitions made during the fourth quarter.

Speaker Change: As Brian mentioned, we were pleased to be able to improve the pace of customer deliveries following a conservative effort to complete pre delivery inspections of new machinery.

Speaker Change: But as expected our high volume of deliveries to customers was more than offset by receipts from our OEM partners as they were rapidly catching up on production backlog as they finished the calendar year.

Speaker Change: With that I'll finish by sharing a few comments on our fiscal 2025 full year guidance, which we are providing today.

Speaker Change: First some segment specific color on the top line.

Speaker Change: Yeah.

Speaker Change: For the Agriculture segment, our initial assumption is for revenue to be flat to up 5%.

Speaker Change: This includes the full year revenue contribution from Scotts supply, which closed in January of 2024, and achieved revenues of approximately $40 million for calendar year 2023.

Robert Larsen: As Bryan mentioned, we were pleased to be able to improve the pace of customer deliveries following a concerted effort to complete pre-delivery inspections of new machinery. But, as expected, our high volume of deliveries to customers was more than offset by receipts from our OEM partners as they were rapidly catching up on production backlog as they finished the calendar year. With that, I'll finish by sharing a few comments on our fiscal 2025 full-year guidance, which we are providing today. First, some segment specific color on the top line.

Speaker Change: It also assumes mid to high single digit growth on our parts and service business as we continue to advance our customer cash strategy.

Speaker Change: As for equipment revenues, it assumes industry equipment volumes to be down, 10% to 15% and pricing on new equipment to be up low single digits.

Speaker Change: The underlying growth for equipment revenue is expected to be driven by market share gains aided by improved availability of high horsepower equipment.

Speaker Change: As well as proactive posture on selling through the use of credit equipment that will be generated through trade ins.

Speaker Change: The construction segment has diverse exposure to various end markets and construction activity.

Robert Larsen: For the agriculture segment, our initial assumption is for revenue to be flat to up 5%. This includes a full year revenue contribution from Scott Supply, which closed in January of 2024 and achieved revenues of approximately $40 million for calendar year 2023. It also assumes mid to high single-digit growth in our parts and service business as we continue to advance our customer care strategy. As for equipment revenues, it assumes industry equipment volumes to be down 10 to 15 percent and pricing on new equipment to be up low single digits. The underlying growth for equipment revenue is expected to be driven by market share gains aided by improved availability of high-horsepower equipment, as well as a proactive posture on selling used equipment that will be generated through trade-in. The construction segment has diverse exposure to various end markets and construction activity, and Titan's Midwest footprint remains at levels supporting healthy demand.

Speaker Change: And Titans Midwest footprint remains at levels supporting healthy demand.

Speaker Change: Our initial assumption is for revenue growth in the range of up 3% to 8%.

Speaker Change: Here again, we assume mid to high single digit growth of our parts and service business and a low single digit increase in pricing on new equipment.

Speaker Change: Construction should also benefit from improved availability of key equipment categories for which we have been not been able to fulfill demand in recent years.

Speaker Change: For the Europe segment, our initial assumption is for revenue to be flat to up 5%.

Speaker Change: Our European business being predominantly egg based has most of the same semantics as we laid out today for our AG segment.

Speaker Change: One difference being that each country has its own nuances and are at different points in terms of maturation of our business operations.

Speaker Change: For instance, while our operations in Romania, and Bulgaria are more mature.

Speaker Change: Ukraine is being impacted by ongoing conflict with Russia and in Germany. We are in the earlier innings of establishing our presence across our footprint.

Robert Larsen: Our initial assumption is for revenue growth in the range of 3 to 8 percent. Here again, we assume mid to high single-digit growth of our parts and service business and a low single-digit increase in pricing on new equipment. Construction should also benefit from improved availability of key equipment categories for which we have not been able to fulfill demand in recent years. For the Europe segment, our initial assumption is for revenue to be flat to up 5%. Our European business, being predominantly agricultural, has most of the same themes as we laid out today for our ag segment, with one difference being that each country has its own nuances and is at different points in terms of maturing its business operations.

Speaker Change: As for the Australia segment, which made its debut in Q4 with the acquisition of O'canas.

Speaker Change: We currently expect FY 'twenty five revenue to be in the range of $250 million to 270 million U S dollars.

Speaker Change: Which is right in line with the $258 million that they achieved in their most recently completed fiscal year prior to acquisition.

Speaker Change: This business has a strong foundation in place with a focused operations team and is positioned well to deliver a solid first year performance as part of Titan machinery.

Speaker Change: Now on for some overall commentary across our segments.

Speaker Change: From a gross margin perspective, we expect equipment margins to normalize across all four of our segments. As there is now ample supply of inventory available for sale on dealer lots.

Robert Larsen: For instance, while our operations in Romania and Bulgaria are more mature, Ukraine is being impacted by the ongoing conflict with Russia, and in Germany, we are in the early innings of establishing our presence across our foothills. As for the Australia segment, which made its debut in Q4 with the acquisition of O'Connor's, we currently expect FY25 revenue to be in the range of $250 million to $270 million U.S. dollars, which is right in line with the $258 million that they achieved in their most recently completed fiscal year prior to the acquisition. This business has a strong foundation in place with a focused operations team and is positioned well to deliver a solid first year performance as part of Titan Machinery. Now on to some overall commentary across our segment. From a gross margin perspective, we expect equipment margins to normalize across all four of our segments as there is now an ample supply of inventory available for sale on dealer lots. An additional impact on the agriculture side is that U.S. net farm income is expected to decrease by approximately 25%, which has started to impact demand for equipment purchases.

Speaker Change: An additional impact on the agricultural side is the U S. Net farm income is expected to decrease approximately 25%.

Speaker Change: Which has started to impact demand for equipment purchases.

Speaker Change: As such we expect incremental compression on equipment margins and this transition area period.

Speaker Change: As for operating expenses, we continue to take action to retain and recruit talent and are consistently tight labor market, especially with service technicians.

Speaker Change: We also expect a ramp up in expenses as we look to complete the rollout of our new ERP across our remaining U S locations.

Speaker Change: From a year over year comparison perspective, it's also worth noting that our Australia segment has a similar level of operating expenses as a percentage of sales as the rest of the business, implying an annualized run rate of about $30 million for that segment.

Speaker Change: Taken together these impacts are expected to result in operating expenses as a percentage of sales about 40 basis points higher than it was realized in fiscal 2024.

Speaker Change: Cost of the company as a whole.

Speaker Change: Moving to interest expense I would expect similar levels of quarterly Floorplan interest expense in the first half of fiscal 2025, because we incurred in the fourth quarter of fiscal 2024.

And then see it reduce from there as the OEM interest free terms normalize and interest rates are expected to reduce modestly in the back half of the year.

Robert Larsen: As such, we expect incremental compression on equipment margins in this transitionary period. As for operating expenses, we continue to take action to retain and recruit talent in a consistently tight labor market, especially with service technicians. We also expect a ramp-up in IT expenses as we look to complete the rollout of our new ERP across our remaining US locations. From a year-over-year comparison perspective, it's also worth noting that our Australia segment has a similar level of operating expenses as a percentage of sales as the rest of the business, implying an annualized run rate of about $30 million for that segment. Taken together, these impacts are expected to result in operating expenses as a percentage of sales about 40 basis points higher than was realized in fiscal 2024 across the company as a whole.

Speaker Change: What I mean by normalization of interest returns is that in recent years due to low equipment availability Oems provided shorter than typical interest free periods, but that has started to shift back to more normal terms and is expected to be a benefit to interest expense.

Speaker Change: Bringing it all together on a diluted earnings per share basis.

Speaker Change: We are introducing a fiscal 2025 range of $3 to $3 50 per share, which implies a pretax margin of three two to three 5%.

Speaker Change: Overall, we believe the variables just discussed are reasonably factored into the ranges, we are providing today they'll both risk and opportunity still exist.

Speaker Change: The midpoint of our guidance at $3 25 earnings per share.

Speaker Change: It reflects a mid cycle AG environment, along with some added transitional pressures would be the third highest EPS in company history.

Speaker Change: And continues to build on a solid foundation for more sustainable and profitable growth through the cycle.

Speaker Change: To provide more color on this important topic, we have added a slide in the back of our earnings presentation.

Robert Larsen: Moving to interest expense, I would expect similar levels of quarterly floor plan interest expense in the first half of fiscal 2025 as we incurred in the fourth quarter of fiscal 2024 and then see it reduce from there as OEM interest-free terms normalize and interest rates are expected to reduce modestly in the back half of the year. What I mean by normalization of interest-free terms is that in recent years, due to low equipment availability, OEMs provided shorter-than-typical interest-free periods, but that has started to shift back to more normal terms and is expected to be a benefit to interest accounts.

Speaker Change: <unk> provides a comparison of recent years versus the prior AG cycle.

Speaker Change: It also summarizes some of the key reasons for the improved profitability as has already been discussed today.

Speaker Change: Overall, we are focused on executing the plan and driving higher levels of profitability through the cycle.

Speaker Change: This concludes our prepared remarks, operator, we are now ready for the question and answer session of our call.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session.

Speaker Change: If you would like to ask a question. Please press star one on your telephone.

A confirmation tone will indicate your line is in your question.

Operator: Bringing it all together on a diluted earnings per share basis, we are introducing a fiscal 2025 range of $3 to $3.50 per share, which implies a pre-tax margin of 3.2 to 3.5%. Overall, we believe the variables just discussed are reasonably factored into the ranges we are providing today, though both risk and opportunity still exist. The midpoint of our guidance at $3.25 earnings per share, which reflects a mid-cycle ag environment along with some added transitional pressures, would be the third highest EPS in company history and continues to build on a solid foundation for more sustainable and profitable growth through the cycle. To provide more color on this important topic, we have added a slide at the back of our earnings presentation that provides a comparison of recent years versus the prior agricultural cycle.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment it may.

Speaker Change: To be necessary to pick up your handset before pressing the star.

Speaker Change: Okay.

Our first question comes from the line of Terry Jackson.

Speaker Change: Please proceed with your question.

Edward Randolph Jackson: Thanks, very much congratulations on the quarter and congratulations on all the work you've done in the last several years to position yourself to work your way through you know change in the cycle if you would.

Edward Randolph Jackson: I just wanted to touch base quickly on some of the commentary around margin.

Edward Randolph Jackson: I know you highlighted that you were gonna see more pressure on margin on the equipment side as farm income goes down and Theres lesser demand first of all with regards to that.

Edward Randolph Jackson: This across the board with regards to both new and used I assume that's a bigger driver of this would be used more than new mice.

Edward Randolph Jackson: My second point within margin is what does it mean with regards to rental and then my third kind of looking at your parts and services in the last quarter.

Operator: It also summarizes some of the key reasons for the improved profitability, as has already been discussed today. Overall, we are focused on executing the plan and driving higher levels of profitability through the cycle. 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'll be conducting, If you would like to Press star, and the rest of the team will give a confirmation tone. You may press star again if you would like to remove. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Edward Randolph Jackson: It was a little below margin relative to kind of recent periods. When we see margin pressure with regards to parts and services also thanks.

Speaker Change: Yeah. Good morning, Ted Thanks for the question.

Speaker Change: From an overall margin perspective in terms of new and used we don't really split that out and it's really a function of how you evaluate they use which impacts the new overall your commentary makes sense right. The pressure comes from selling through the used side.

So we don't really split it out, but I mean, thats how were thinking about it and overall, that's why we talk about a total equipment margin.

Operator: Our first question comes from the line of, Thanks very much. Congratulations on the quarter. And congratulations on all the work you've done in the last several years to position yourself to work your way through, you know, changing the cycle.

Speaker Change: From a parts and service perspective, I would expect a similar margins. This next year as we had in fiscal 'twenty four maybe slightly down.

Operator: I just wanted to touch base quickly on some of the commentary around margin. I know you highlighted that you were going to see more pressure on margin on the equipment side as farm income goes down and there's less demand. First of all, with regard to that, is this across the board with regard to both new and used? I assume that a bigger driver of this would be used more than new.

But we're not talking about the same factors that are impacting our equipment margins.

Speaker Change: And then from a rental perspective also feeling good about where that's at and would expect a similar margins to last year.

Speaker Change: Or maybe also referencing there.

Speaker Change: Margin changes in Q4, specifically for parts and service.

Speaker Change: And may be mainly service.

Speaker Change: Some of that can really be a function of the seasonality, which we really see in the business and where our team is focusing their time between delivering new equipment.

Robert Larsen: My second point on margin is, what does it mean with regard to rental? And then, in my third point, kind of looking at your parts and services in the last quarter, it was a little below margin relative to kind of recent periods, but we see margin pressure with regard to parts and services also. Yeah, good morning, Ted.

Speaker Change: Versus our service revenue.

Speaker Change: And I wouldn't read anything into that the margins. We have seen are pretty similar to what we would expect them, perhaps slightly down again as we have seen some some.

Robert Larsen: Thanks for the question. From an overall margin perspective, in terms of new and used, we don't really split that out, and it's really a function of how you evaluate the used, which impacts the new. Overall, your commentary makes sense, right? The pressure comes from selling through the used side.

Speaker Change: Some pressure and then we're wanting to make sure that we're one of the ones that front, leading the labor market in recruiting and retaining our service techs.

Speaker Change: Okay.

Speaker Change: That's really it for me thanks very much.

Speaker Change: Yes, Ted this is Brian I would just add on the on the rental as Bill commented Oh.

Bryan J. Knutson: Recall that if you go back to FY 18, we had a much higher rental fleet and <unk>.

Robert Larsen: So, we don't really split them out, but that's how we're thinking about it, and overall, that's why we talk about a total equipment margin. From a parts and service perspective, I would expect similar margins this next year as we had in fiscal 24, maybe slightly down, but we're not talking about the same factors that are impacting our equipment margins. And then from a rental perspective, also feeling good about where that's at and would expect similar margins to last year. I think you were maybe also referencing there, you know, margin changes in Q4 specifically for parts and service, and maybe mainly service. Some of that can really be a function of the seasonality, which we really see in the business and where our team is focusing their time between delivering new equipment versus service revenue. And I wouldn't read anything into that.

Bryan J. Knutson: <unk> gotten that really lean and reduced it down by.

Bryan J. Knutson: Over 35% down to just under that $80 million that we have today and really driven over the last few years much higher utilization rates.

Bryan J. Knutson: Both in terms of dollar in physical utilization and so we expect that to continue.

Again, with a very lean and agile rental fleet that we have today.

Speaker Change: Okay. Thank you very much.

Bryan J. Knutson: Okay.

Bryan J. Knutson: Thank you. Our next question comes from the line of Larry.

Larry: Jim Maria with William Blair. Please proceed with your question.

Larry: Thanks, Good morning.

Larry: I have a few questions.

Larry: First.

Larry: I guess can you talk about I know you talked about lead times.

Bryan J. Knutson: The margins we've seen are pretty similar to what we would expect, perhaps slightly down, again, as we've seen some pressure and we're wanting to make sure that we're one of the ones in front leading the labor market in recruiting and retaining our service techs. Okay, that's really it for me. Thanks very much. Yeah, Ted, this is Bryan.

Lawrence Tighe De Maria: Some degree can you talk about other any pockets, where theres still extended or is everything normal at this point and are you guys.

Lawrence Tighe De Maria: Significantly slowing down or canceling orders at this point.

Lawrence Tighe De Maria: Hey, Larry This is Brian good morning, Thank you for the question.

Bryan J. Knutson: I would just add on the rental, as Bo commented. You know, recall that if you go back to FY18, we had a much higher rental fleet, and we've gotten that really lean and, you know, reduced it by over 35% down to just under that $80 million that we have today, and really driven much higher utilization rates over the last few years, both in terms of dollar and physical utilization. And so we expect that to continue again with their very lean and agile rental fleet that we have today. Okay, thank you very much.

Lawrence Tighe De Maria: Yeah.

Bryan J. Knutson: Generally everything across the board has now normalized Larry.

Bryan J. Knutson: As you know.

Bryan J. Knutson: Domestic Midwest plants versus overseas production plants.

Bryan J. Knutson: He's a very lead times, but.

Bryan J. Knutson: The supply chain as we mentioned has really quickly caught up here and so going from even towards the last at the end of last year is still being extended out.

Bryan J. Knutson: Now generally everything normalized.

Bryan J. Knutson: Even though the large bore will drive its tigers and all that stuff is relatively easy to get.

Operator: Thank you. Our next question comes from Larry with William Blair and C. Thanks. I have a few questions. First, I guess. I know you talked about it, and many more, and are you guys and Gowen. Hey Larry, this is Bryan.

Bryan J. Knutson: Yeah.

Not easy for the OEM still still some production challenges for them.

Bryan J. Knutson: But.

Bryan J. Knutson: Yeah now are no longer allocation.

Bryan J. Knutson: Believe from any of the Oems on a product categories.

Bryan J. Knutson: Good morning. Thank you for the question. Yeah, generally, everything across the board is now normalized, Larry. As you know, Domestic Midwest plants versus overseas production plants always have varying lead times, but the supply chain, as we mentioned, has really quickly caught up here. And so going from even towards the end of last year still being extended out to now, generally everything is normalized. Even though it's a large four-wheel drive, it's staggering

Bryan J. Knutson: And just to make sure we address the one point I mean, there is a.

Bryan J. Knutson: Not a cancellation of orders have already what we've done right is adjust the dials and that started last year. So.

Bryan J. Knutson: We're just we've kind of referred to this as a transition period when the supply chain catches up and you see.

Bryan J. Knutson: Kind of a a condensing of when that equipment arrives right. So it's kind of a matter of timing and it will play itself through but feel good about our ability to do so and that's one of the main focuses this year.

Bryan J. Knutson: Yeah, you know, it's not easy for the OEMs. There are still some production challenges for them. But yeah, now there's no longer any allocation from any of the OEMs on a product category. Yeah, and just to make sure we address the one point, I mean, there's... Not a cancellation of orders here. What we've done right is adjust the dials, and that started last year. So we've kind of referred to this as a transitionary period or when the supply chain catches up with you, and a number of other people. So, it's kind of a condensing of when that equipment arrives, right? So it's kind of a matter of timing, and it'll play itself out, but I feel good about our ability to do so, and that's one of the main focuses. Larry, I'd just add, as you know, we were short on inventory in many categories for two plus years. We've talked a lot about that over the past two years. And so it took us a long time to get here.

Speaker Change: And Larry I'd just add.

Larry: As you know.

Larry: We were short on inventory for in many categories for two plus years, we've talked a lot about that over the past two years.

Larry: So it took us a long time to get here and so.

Larry: So as things have rapidly normalize it it's going to take a while to manage through these in and so that's why you hear us talking about the the transition year and and.

Larry: It's become a lot of equipment coming in a short period of time.

Larry: The orders that we have placed all throughout 2023 and even back into 2022 coming in a short period here.

Larry: But just to your point about the dialing back and as Bob said.

Larry: <unk>.

Larry: Some of the market is starting to soften late last summer, we started to pull levers and dial things back and put actions into place. So we feel really good about the proactive measures we've taken in and.

Bryan J. Knutson: And so as things have rapidly normalized, it's going to take a while to manage through this. And so that's why you're here talking about the transition year. And just it's become a lot of equipment coming in a short period of time.

Larry: And the visibility we have into the order board for the first half of the year and the strong pre sales coming in and so again theres just will be a lot of inventory.

Bryan J. Knutson: Orders that we have placed all throughout 2023 and even back into 2022 coming in a short period here. But, you know, just to your point about the dialing back, and as Bo said, you know, as we saw some of the markets starting to soften late last summer, we started to pull levers and dial things back and put actions into place. So we feel really good about the proactive measures we've taken and, you know, and the visibility we have into the order board for the first half of the year and the strong pre-sales coming in. And so, again, there's just going to be a lot of inventory that's recently come in and will be coming out throughout this year that we've got built into our modeling that we, you know, are just going to get after and sell to, Yeah, so, you know, the cancellations are very low.

Larry: Recently come in and we'll be coming out in throughout this year that we've got built into our modeling.

Larry: That we are just going to get after and sell through.

Speaker Change: Got you thanks for that color and then maybe asking from the customer's perspective.

Speaker Change: How did orders kind of come in through the quarter as they you know how you guys are trying to.

Speaker Change: Understand and they fallen off a cliff.

Speaker Change:

Slowly continuing to get weak and how they sort of felt like they've bottomed stabilized and are you seeing any cancellations from customers.

Speaker Change: Yes so.

Speaker Change: The cancellations are are very low.

Speaker Change: Generally as.

Speaker Change: As we've talked in the past that ties back to you.

Speaker Change: A death or a divorce or unexpected health issues and so.

Bryan J. Knutson: You know, generally, as we've talked in the past, that ties back to, you know, a death or a divorce or unexpected health issues. And so... Those just continue. But it has not fallen off a cliff by any means.

Speaker Change: Those.

Speaker Change: Continue but it.

Speaker Change: It has not fallen off a cliff by any means.

Speaker Change: Commodity prices.

Speaker Change: Have you.

Speaker Change: Ben been pretty steady here for the last.

Bryan J. Knutson: Commodity prices have been pretty steady here for the last few weeks, and so farmers, again, have had three really good years here. And balance sheets are really strong, recording a lot of record land sale prices throughout our footprint, and they're carrying over a lot of good income into this year. And that will help stabilize as well. And then just a lot of new products from our OEMs and technology that's really helping with productivity and supporting demand as well. Okay, fantastic. If I could just ask one final question, and more.

Speaker Change: A few weeks in.

Speaker Change: And so.

Speaker Change: Farmers again had three really good good years here and balance sheets are really strong.

Speaker Change: Recording a lot of record land sale prices throughout our footprint and.

Speaker Change: They're carrying over a lot of good income into this year and that will help stabilize as well and then just.

Speaker Change: A lot of the new products from our Oems and the technology, that's really helping with the productivity and supporting demand as well.

Speaker Change: Okay, Fantastic and if I could if I could.

Speaker Change: I just had one final question, sorry for asking one more but.

Speaker Change: In your deck chart, where you showed the margins you know our future drops in revenue and breakeven margins at sales about half of where were looking now.

Robert Larsen: But in your chart where you show the margin and the revenue, keeping margins at sales about half of where we're looking now, is that meant to be indicative of where you think the market's going, or is that more illustrative of the work you've done, Sykes? Yeah, no. I appreciate the opportunity to clarify that. And it was a bit challenging to perfectly capture something that you could digest relatively quickly.

Speaker Change: It's meant to be indicative of where you think the market is going or is that more illustrative of what you've the work you've done cycle the cycle.

Speaker Change: Yes, no I appreciate the opportunity to clarify that and there was a bit challenging to perfectly capture something that you could digest relatively correctly.

Robert Larsen: That future state in that trough there, right, is not trying to provide any indication of the level of revenue. It's simply trying to provide the pre-tax margin percentage range. And we also have the budget in there as a reference, right? So we're coming off of our recent peaks, and we saw an ability to produce pre-tax profits north of 6%. This year's budgeting, you know, a mid-cycle assumption with some added transitionary pressure at the midpoint at about 3.4%. The guidance range here from zero to three is supposed to be indicative of kind of that pre-tax range. And in terms of where it falls in that range, right, it all comes down to kind of the timing and the factors at the time, right? Like, what is the trough?

Speaker Change: That future state and that transfer rate is not trying to provide any indication on the.

Speaker Change: The level of revenue it simply trying to provide the pretax margin percentage range.

So and we also have the budget and there is a reference rate. So we're coming off of our recent peaks and we saw an ability to produce pretax north of 6% this year budgeting amid.

Speaker Change: Mid cycle assumption with some added transition area of pressure at that.

Speaker Change: At the midpoint at about three 4%.

Speaker Change: The guidance range here from zero to three years is supposed to be indicative of kind of that pre tax range of in in terms of where it falls in that range right. All comes down to kind of the timing and the factors at the time right like what is the trough what does that look like.

Speaker Change: Equipment inventory levels at where interest rates at at that point in time, but overall, what we're trying to illustrate it.

Speaker Change: It is both from peak to peak perspective.

Robert Larsen: What does that look like? Where are equipment inventory levels at? Where are interest rates at at that point? But overall, what we're trying to illustrate is both from a peak to peak perspective and then trough to trough perspective and all the way through the cycle delivering significantly higher profitability. And that's what we're excited and focused on executing here over the next few years. Okay, perfect.

Speaker Change: And then trough to trough perspective, and all the way through the cycle delivering significantly higher profitability and that's what we're excited and focused on executing here over the next few years.

Speaker Change: Okay perfect. Thank you very much and good luck.

Speaker Change: Thanks, Larry.

Speaker Change: Thank you. Our next question comes from the line of Mig <unk> with R. W. Baird. Please proceed with your question.

Speaker Change: Hey, good morning, guys. Thanks, Joe Grabowski on for Mig This morning.

Speaker Change: Joe Hi, Joe Hey, Good morning, I guess I wanted to start with the quarter.

Joseph Michael Grabowski: Guidance you gave in late November.

Implied your AD revenue would have been up about 20% in the fourth quarter came in at over 40% I guess I'm just checking did the equipment availability really.

Joseph Michael Grabowski: Improve that much more than you were correct and in late November kind of one time Warner.

Operator: Thanks, Larry. Thank you. Our next question comes from the line, with R&W Bayer: Hey, good morning guys, it's Joe Grabowski on for MIG this morning.

Joseph Michael Grabowski: Played out in the quarter and did you maybe pull any revenue forward that you might have gotten in the current fiscal year.

Yeah, I think just quickly for me and now Boeing expound further Joe but.

Operator: Hi Joe. Hey, good morning. So I guess I wanted to start with the quarter. You know, the guidance you gave in late November would have implied your ag revenue would have been up about 20% in the fourth quarter. It came in up over 40%. I guess I'm just checking, did the equipment availability really improve that much more than you were expecting in late November? Kind of how it played out in the quarter.

Speaker Change: To your question yes.

Speaker Change: The equipment has been really tricky to forecast timing of deliveries the past two years.

Speaker Change: And so with with supply chain, improving and so on it did come in better than anticipated. So that certainly was a part of it.

Speaker Change: And then also again as I mentioned in our prepared comments just credit to our team who.

Bryan J. Knutson: And did you maybe pull in any revenue forward that you might have gotten in the current fiscal year? Yeah, I think just quickly from me and then I'll Bo expound further, Joe. But to your question, yes, the equipment has been really tricky to forecast the timing of deliveries the past two years. And so with the supply chain improving and so on, it did come in better than anticipated. So that certainly was a part of it.

Speaker Change: <unk> really worked hard to reduce our backlog that has been at a record levels the past two years and.

Speaker Change: Putting in the hours and getting that equipment out to our customers.

Speaker Change: Yeah, Yeah, I don't think I have anything to add there I think you covered it well.

Speaker Change: Great. Thank you and my next question how are you.

Walk through why your revenue.

Speaker Change: Our revenue guidance for the current fiscal year, it's so much better than the Oems and industry forecasts and it seems like.

Speaker Change: Big component of that is market share gains that you're expecting maybe talk about your confidence in those market share gains in <unk>.

Speaker Change: Yes.

Speaker Change: Is it predicated on better equipment availability.

Bryan J. Knutson: And also, again, as I mentioned, our prepared comments, just credit to our team who, you know, really worked hard to reduce our backlog that has been at a record level for the past two years. And, you know, putting in the hours and getting that equipment out to our customers. Yeah, yeah. I don't think I have anything to add there. I think you covered it well. Okay, great.

Speaker Change: Equipment availability improving for everybody.

Speaker Change: Your thoughts on that.

Speaker Change: Yes.

Speaker Change: Stripping everything back in setting the acquisition to the side right equipment revenues on the AG segment is about flat to slightly down versus I think youre referencing the industry volume expectation of like 10% to 15%.

Robert Larsen: And my next question is, you know, can you walk us through why your ag revenue guidance for the current fiscal year is so much better than the OEM's industry forecasts? And it seems like a big component of that is the market share gains that you're expecting. Maybe talk about your confidence in those market share gains. And I guess if it's predicated on better equipment availability, I mean, isn't equipment availability improving for everybody? So, just your thoughts on that. Yeah, so, you know, stripping everything back and setting the acquisition to the side, right?

Speaker Change: And yes, we are better positioned with our equipment and specifically for our customers. We serve so it's really looking at those relationships in the equipment that theyre looking for and in some cases, our inability to get it in previous years and now our ability to execute and serve those specific customers.

Speaker Change: So it's not just a broad statement.

Speaker Change: And we feel pretty good with line of sight and as we mentioned with our presale activity through the first half of the year, what we're looking to achieve here.

Speaker Change: Alright.

Speaker Change: My last question.

Speaker Change: Any early learnings from Neocon Earth acquisition and your maybe.

Robert Larsen: Equipment revenues on the ag segment are about flat to slightly down versus I think you're referencing the industry volume expectation of like 10 to 15%. And yeah, we are better positioned with our equipment, right? And specifically for customers we serve.

Speaker Change: Maybe your broader thoughts about the Australia market.

Speaker Change: Yeah.

Speaker Change: As we continue to.

Speaker Change: Good to know the team better than and collaborate with them an honor.

Speaker Change: Best practice sharing and leveraging each.

Bryan J. Knutson: So it's really looking at those relationships and the equipment that they're looking for, and in some cases, our inability to get it in previous years and now our ability to execute and serve those specific customers. It's not just a broad statement, and we feel pretty good with line of sight and, as we mentioned with our pre-sale activity through the first half of the year, what we're looking to achieve. All right, and my last question: any early learnings from the O'Connor acquisition and your, maybe, broader thoughts about the Australian market. Yeah, I think just as we continue to get to know the team better and collaborate with them on our... Best Practice: Sharing and leveraging each other's knowledge and skill sets.

Speaker Change: Each other's knowledge and skill sets. It's just all been extremely positive where we're really pleased with the acquisition. We're really pleased with the leadership team and the employees over there and.

Speaker Change: Very similar business philosophies are two companies have and so that's really helped with the integration and transition we really like the market over there.

Speaker Change: We're very excited to grow over there and continue to invest over over in Australia, and we just couldnt be happier Julien and really pleased with that acquisition, we're excited about going forward.

Speaker Change: Alright, great. Thank you.

Speaker Change: You bet.

Speaker Change: Thank you. Our next question comes from the line of Ben Cleveland Lake Street Capital Markets. Please proceed with your question.

Bryan J. Knutson: It's just all been extremely positive. We're really pleased with the acquisition. We're really pleased with the leadership team and the employees over there, and we have very similar business philosophies that our two companies have. And so that's really helped with the integration and transition. We really like the market over there. We're very excited to grow there and continue to invest in Australia. And yeah, we just couldn't be happier, Joe, and really pleased with that acquisition and excited about going forward. All right, great.

Benjamin David Klieve: Thanks for taking my questions. A couple from me first of all regarding the 25 outlook I'm.

Benjamin David Klieve: I'm wondering if you can kind of help us a bit with topline seasonality.

Benjamin David Klieve: Last year was a was a.

Benjamin David Klieve: You know a very lumpy one I'm wondering if you can kind of point to any historic year to give us a kind of a bit of a benchmark for kind of how we should look at CS.

Benjamin David Klieve: Seasonality here in fiscal 'twenty, five because I suspect, it's going to be off quite a bit from fiscal 'twenty four.

Operator: Thank you. You bet. Thank you. Our next question comes from the line of Ben Klieve with Lake Street Capital Market. Please proceed. Alright, thanks for taking my questions. A couple for me.

Speaker Change: Yeah. So.

Speaker Change: Certainly when you look at it in things like the strength of the fourth quarter definitely come into play there with your comments.

Speaker Change: Picture Wise surprisingly and as you know we look at things as average over the last six years last three years last couple of years.

Robert Larsen: First of all, regarding the 25 outlook, I'm wondering if you can kind of help us a bit with top line seasonality. Last year was a very lumpy one. I'm wondering if you can kind of point to any historic year to give us kind of a bit of a benchmark for kind of how we should look at seasonality here in fiscal 25, because I suspect it's going to be off quite a bit from fiscal 24th. Yeah, so certainly when you look at it, and things like the strength of the fourth quarter definitely come into play there with your comments. Big picture wise, surprisingly, and as you know, we look at things average over the last six years, last three years, last couple of years, a whole bunch of different ways.

Speaker Change: A bunch of different ways, but.

Speaker Change: As we see it traditionally our revenues are about 45% in the first half of the year, 55% in the second half of the year.

Speaker Change: And Australia, even when you overlay, Australia with our financials, we expect something very similar with 45% ish in the first half of the year of 55% ish in that in the second half of the year.

Speaker Change: New ones here I think is youre definitely right. There was some strength in the fourth quarter in our U S AG segment, which kind of made Q4 stand out so I think that that normalizes a bit in Q3, and Q4 look more similar in FY 'twenty five than they did in FY 'twenty four.

Robert Larsen: But, you know, as we see it, traditionally, our revenues are about 45 percent in the first half of the year, 55 percent in the second half of the year, and Australia, even when you overlay Australia with our financials, we expect something very similar with 45% ish in the first half of the year, 55% ish in the second half of the year. The nuance here, I think is you're definitely right.

Speaker Change: Better overall back half of the year about 55%.

Speaker Change: And then from a first half of the year perspective that first 45%.

Speaker Change: Q1 is traditionally and expected to be lower than Q2, and a lot of that is seasonality and timing of activity and purchasing.

Speaker Change: So overall big picture wise it it won't change drastically from what we've seen but there is some nuances and certainly more of a level setting between Q3 and Q4 is probably the best expectation at this point.

Robert Larsen: There was some strength in the fourth quarter in our US Ag segment, which kind of made Q4 stand out. So I think that that normalizes a bit, and Q3 and Q4 look more similar in FY25 than they did in FY24. But overall, back half of the year, about 55%.

Speaker Change: Got it.

Speaker Change: Very helpful. Thanks, Bob and then one more for me and I'll get back in queue. I'm wondering if you can talk about the.

Speaker Change: The M&A opportunities today, and maybe in the context of kind of how.

Bryan J. Knutson: And then from a first half of the year perspective, that first 45%, Q1 is traditionally and expected to be lower than Q2. And a lot of that is seasonality and timing of activity and purchasing. So overall, big picture-wise, it won't change drastically from what we've seen. But there are some nuanced details, and certainly, more of a level setting between Q3 and Q4 is probably the best expectation. Got it. That's very helpful. Thanks, though.

The M&A environment was.

Speaker Change: Good cycle.

Speaker Change: And in the.

Midpoint of the previous cycle as.

Speaker Change: As well as the outlook kind of more favorable less favorable than it was at this point in the prior cycle or any big takeaways you can point to there.

Speaker Change: Yes, Thanks Ben.

Bryan J. Knutson: And then one more from me, and I'll get back in queue. I'm wondering if you can talk about the M&A opportunities today, and maybe in the context of kind of how the M&A environment was at mid-cycle, in the midpoint of the previous cycle as well. Is the outlook kind of more favorable, less favorable than it was at this point in the prior cycle, or any big takeaways you can point to there? Yeah, thanks, Ben. Yeah, certainly, I believe there'll start to be a greater number of opportunities here as we go forward, and also, you know, we could see a little bit of a change in the multiples and so on as we go more towards the mid-cycle here and as margins come down a little bit for the other dealers as well.

Benjamin David Klieve: Yeah, certainly I believe there is they'll start to be a greater amount of opportunities here as we go forward.

Benjamin David Klieve: And also you know us.

Benjamin David Klieve: We could see a little bit of a changing in the multiples and so on as we go more towards mid cycle here and as margins come down a little bit for the other dealers as well.

Benjamin David Klieve: But the real drivers still remain in place you are the back office challenges in the.

Benjamin David Klieve: A lot of the the single store the smaller and the traditional operation struggling with the technology and all the HR and government regulations.

Benjamin David Klieve: And.

Bryan J. Knutson: But the real drivers still remain in place, all the back office challenges and a lot of the single store, the smaller, and the traditional operations struggling with technology and all the HR and government regulations and just a lot of that back office function that really ties in nicely with our models. And so those drivers just continue to be present.

Benjamin David Klieve: Just a lot of that back office function that really.

Ties in nicely with our model and so those drivers just continue to be ever ever present.

Benjamin David Klieve: So as we again go towards my mid cycle here as those get highlighted even further so we do believe there'll be an increased amount of opportunities.

Benjamin David Klieve: We go forward here, but I would reiterate for the the.

Bryan J. Knutson: And as we, again, go towards more mid-cycle here, those get highlighted even further. So we do believe there'll be an increased number of opportunities as we go forward here. But I would reiterate, for the immediate year ahead, as we laid out in our prepared comments, we're really focused on our customer care strategy and continuing to focus on driving our parts and service business and increasing our parts and service revenues, increasing our service revenue, and increasing our service revenue. And so we're really focused on increasing our support capabilities for our customers. And we're going to continue to invest in that and be really focused on our customer care strategy and just really keen on expenses and, again, inventory management. So those are the three priorities.

Benjamin David Klieve: The immediate year here as we laid out in our prepared comments, we're really focused on our customer care strategy in <unk>.

Benjamin David Klieve: Continuing to focus on driving our parts and service business and increasing our parts and service revenues, increasing our support capabilities for our customers and we're going to continue to invest in that would be really focused on our customer care strategy and just really keen on expenses and again inventory management. So those are the three.

Benjamin David Klieve: <unk>, we certainly will be opportunistic with acquisitions and then as we manage through that inventory that will free up room on the balance sheet that will generate.

Benjamin David Klieve: Quite a bit of cash as we exit the year and go throughout next year as well, so, we'll certainly be ready and and going to be very selective.

Benjamin David Klieve: With acquisitions as we go forward.

Speaker Change: Very good I appreciate that color.

Bryan J. Knutson: We certainly will be opportunistic with acquisitions. And as we manage through that inventory, that'll free up room on the balance sheet. That'll generate quite a bit of cash as we exit the year and go throughout next year as well. So we'll certainly be ready. And we will be very selective with acquisitions as we go forward. Very good. I appreciate that caller. Thanks for taking my questions. I'll get back and kill

Thanks for taking my questions I'll get back in queue.

Speaker Change: Thanks Ben.

Speaker Change: Thank you. Our next question comes from the line of Alex.

Alex: <unk> <unk> with B Riley. Please proceed with your question.

Alex: Thank you good morning, a couple of quick questions. Here first can you talk a little bit about your expectations for inventory increasing throughout the year.

Alex: Yeah, I mean from the color we are trying to provide today.

Alex: Is generally right that we still have inventory coming in.

Operator: Thanks, Ben. Thank you. Our next question comes from the line of, and Ryan Gale with B. Reilly. Thank you. Good morning.

Bryan J. Knutson: And obviously, we have expectations for good sales pull through in terms of quarter to quarter that remains to be seen a little bit again, as we've said lead times have normalized some but theres still some.

Robert Larsen: A couple quick questions here. First, can you talk a little bit about your expectations for inventory increasing throughout the year? Yeah, I mean, from the color we're trying to provide today, it's generally right that we still have inventory coming in. And obviously, we have expectations for good sales pull through. In terms of quarter to quarter, you know, that remains to be seen a little bit. Again, as we've said, lead times have normalized some, but there's still some inconsistency in terms of when things would arrive.

Bryan J. Knutson: Some inconsistency in terms of when things with arrived but as it stands I would expect that we do see some uptick in inventory here in the first half of the year assuming.

Bryan J. Knutson: All of those things stay on schedule.

Bryan J. Knutson: And then we and then we.

Bryan J. Knutson: Would play it out and see some inventory reduction from there in the back half of the year all of that subject to again, the timing of how everything plays out and we will continue to provide an update for you on a quarterly basis.

Speaker Change: Thank you and then what's your appetite these days to increase investment in our rental fleet.

Robert Larsen: But as it stands, I would expect that we do see some uptick in inventory here in the first half of the year, assuming that all of those things stay on schedule. And then we, and then we would play it out and see some inventory reduction from there in the back half of the year. All of that is subject to, again, the timing of how everything plays out. And we'll continue to provide an update for you on a quarterly basis. Thank you.

Speaker Change: Yeah, So Alex we monitor that closely on a real time basis and and it just ultimately is a function of our utilization and so are.

Speaker Change: Our team.

Speaker Change: It does a great job building relations and relationships and being out there in the market and we really look to continue to push and promote our rental fleet. It continues to improve every year and so we're just very mindful, though of the utilization rates in.

Bryan J. Knutson: And then what's your appetite these days to increase investment in the? Yeah, so Alex, we monitor that closely on a real-time basis, and it just ultimately is a function of our utilization. And so our team does a great job building relationships and relationships and being out there in the market, and we really look to continue to push and promote our rental fleet. It continues to improve every year, and so we're just very mindful, though, of the utilization rates. And as long as we can keep those up and keep improving them, we'll continue to add fleet. And as we see them start to taper off or pull back a little bit, we'll turn the valves, decrease the valves back down. And again, just really a function of utilization. Thank you. Thank you. And our final question. Thanks.

Speaker Change: As long as we can keep those up and keep improving those will continue to add fleet in and as we see them start to taper off or pull back a little bit.

The valves.

Decrease the valves back down again.

Speaker Change: Just really a function of the utilizations.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our final question comes from the line of Jackson.

Jackson: Please proceed with your question.

Jackson: Thanks, you kind of touched on it a little bit with your inventory comment, but I did want to circle back with regards to kind of working capital levels as we roll through 2000 for fiscal 2025, and that's obviously tied to inventory levels, a little bit surprised that you would see inventories trending up late in the first half given the jump you had in the fourth quarter.

Operator: You kind of touched on it a little bit with your inventory comment, but I did want to circle back with regard to kind of, you know, working capital levels as we roll through 2000 or fiscal 2025. And that's obviously tied to inventory levels. I'm a little bit surprised that you would see inventories trending up like in the first half, given the jump you had in the fourth quarter. But kind of taking that and tying it together, is it fair to assume that we'll see, you know, a drop in working capital and an improvement in free cash flow during fiscal 2025? What can we expect in terms of a free cash flow number for the year? And how would that be weighted out in terms of first half to second?

Jackson: What kind of take taken that tying it together is it fair to assume that we will see you know a drop in working capital and an improvement in free cash flow during fiscal 2025 and.

Jackson: Will we what kind of what can we expect in terms of you know our free.

Jackson: Free cash flow number for the year.

Jackson: And how would that be weighed it out in terms of sort of first half to second half. Thanks.

Speaker Change: Yeah. So I mean overall at the heart of your question is would we see.

Speaker Change: Operating cash flow generation and ultimately it all comes down to what the inventory balances going to look like so this year, we saw a significant increase year over year in inventory, we certainly wouldn't expect to see the same thing occur in FY 'twenty five right. So that's going to be a real positive to the dynamics on the cash.

Robert Larsen: Yeah, so the heart of your question is, would we see better operating cash flow generation, right? And ultimately, that all comes down to what the inventory balance is going to look like. So this year we saw a significant increase year over year in inventory. We certainly wouldn't expect to see the same thing occur in FY25, right? So that's going to be a real positive to the dynamics on the cash flow side. Just a bit more on that, I guess, as we look at this.

Speaker Change: <unk> side.

Speaker Change: Just a bit more on that I guess as we as we look at there. So again, we mentioned a little bit earlier about 45% of revenue in the first half of the year 55 in the back half of the year.

Speaker Change: The inverse is true in terms of expectations for deliveries again because of the supply chain catch up right. So when you have.

Speaker Change: More a larger portion of inventory coming in in the period, where you have a lower portion of yourselves Thats just mathematically, yes against it that would lead to a continued.

Robert Larsen: So again, we mentioned a little bit earlier about 45% of revenue in the first half of the year, and 55% in the back half of the year. Well, kind of the inverse is true in terms of expectations for deliveries, again because of the supply chain cash up, right? So when you have more, a larger portion of inventory coming in at a period where you have a lower portion of your sales, that's just mathematically what's against this, right? So that would lead to a continued increase here in the near term. But overall, as we step back and take a look at this, right, and we talk about the team that we have in place and the controls we have in place and everything that we focus on, The dynamics that have kind of come together here in terms of the cycle turning and then the catch up with the supply chain ultimately just lead to a situation where it takes a little time to play through, right? So, big picture wise, we talk about maintaining healthy inventory turns and And I think this year we'll see that inventory turns are lower than our targeted levels, and it probably takes, you know, working through FY26 to get the turns back up, just the dynamics of how, you know, those ratios are even calculated.

Speaker Change: The increase here in the near term, but overall as we step back and take a look at this right and we talk about the team that we have in place and the controls we have in place and.

And everything that we that we focus on.

Speaker Change: The dynamics that have kind of come together here in terms of the cycle, turning and then the catch up with the supply chain.

Speaker Change: Ultimately just lead to a situation where it takes a little time to play through right. So big picture Wise, we talk about maintaining healthy inventory turns.

Speaker Change: Staying out of interest bearing inventory and I think this year, we will see that inventory turns are lower than our targeted levels.

Speaker Change: And it probably takes you know working through FY 'twenty six to get the turns back up just the dynamics with how those ratios or even calculated so we see that transition area appeared in kind of a two year journey to get back on that turn level, but very much seeing it play out something we can manage to deliver the higher <unk>.

Speaker Change: <unk> ability that we're talking about today be well positioned for FY 'twenty six and beyond.

Speaker Change: And ultimately all of that is going to lead to.

Speaker Change: Better cash flow generation that we had seen recently, but in terms of specifically now in the quarters.

Speaker Change: I mean, we'll have to continue to see how that plays out here in 'twenty five.

Speaker Change: Do you think you can generate positive free cash flow.

Speaker Change: The entire year.

Robert Larsen: So we see the transitionary period and kind of a two-year journey to get back on that turn level, but very much seeing it play out something we can manage to deliver the higher profitability that we're talking about today and be well-positioned for FY26 and beyond. And ultimately, all of that is going to lead to better cash flow generation than we have seen recently. But in terms of specifically now in the quarters, I mean, we'll have to continue to see how that plays out here in 25.

Speaker Change: Yeah again, it ultimately all comes down to it.

Speaker Change: Inventory levels, but we.

Speaker Change: We feel good about being able to manage those and achieve that.

Speaker Change: Okay.

Speaker Change: Bob.

Speaker Change: Thank you and we have reached the end of the question and answer session. I will now turn the call back over to management for closing remarks.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you for your interest in Titan machinery, and we look forward to updating you with our progress on our next call.

Speaker Change: And have a great day everyone.

Speaker Change: And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Robert Larsen: Do you think you can generate positive free cash flow for the entire Yeah, again, it ultimately all comes down to inventory levels, but we feel good about being able to manage those. Thanks, Bob. Thank you. We have reached the end of the question and answer session, and back over to management for a close. Okay, thank you for your interest in Titan Machinery, and we look forward to updating you with our progress on our next call. Thank you, and have a great day, everyone. And this concludes today's conference, and you may disconnect your line, for your part. BF-WATCH TV 2021

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