What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-09-03 compared with 2021-06-04 · 162 added, 91 removed, 462 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

April 30, 2021 January 31, 2021

July 31, 2021 January 31, 2021

Current Assets

31 unchanged sentences

Common stock, par value $ .00001 per share, 45,000 shares authorized;

22,520 shares issued and outstanding at April 30, 2021;

22,596 shares issued and outstanding at July 31, 2021;

22,553 shares issued and outstanding at January 31, 2021

1 unchanged sentence

Retained earnings 138,665 116,869

Accumulated other comprehensive income (loss) ( 880 ) 1,499

Accumulated other comprehensive income 58 1,499

Total stockholders' equity 391,852 371,281

Total Liabilities and Stockholders' Equity $ 839,371 $ 815,789

See Notes to Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

1 unchanged sentence

(in thousands, except per share data)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2021 2020 2021 2020

Equipment $ 272,733 $ 202,654 $ 548,713 $ 421,159

26 unchanged sentences

Diluted 22,276 22,119 22,220 22,068

See Notes to Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

1 unchanged sentence

(in thousands)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2021 2020 2021 2020

Net Income $ 11,249 $ 6,400 $ 21,796 $ 8,662

Other Comprehensive Loss

Other Comprehensive Income (Loss)

Foreign currency translation adjustments 937 778 ( 1,441 ) 250

Comprehensive Income $ 12,186 $ 7,178 $ 20,355 $ 8,912

See Notes to Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

10 unchanged sentences

BALANCE, April 30, 2020 22,314 — 251,051 99,775 ( 3,748 ) 347,078

Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax 239 — — — — —

Stock-based compensation expense — — 536 — — 536

Net Income — — — 6,400 — 6,400

Other comprehensive income — — — — 778 778

BALANCE, July 31, 2020 22,553 $ — $ 251,587 $ 106,175 $ ( 2,970 ) $ 354,792

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

6 unchanged sentences

BALANCE, April 30, 2021 22,520 — 252,547 127,416 ( 880 ) 379,083

See Notes to Consolidated Financial Statements

Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax 76 — ( 2 ) — — ( 2 )

Stock-based compensation expense — — 584 — — 584

Net income — — — 11,249 — 11,249

Other comprehensive income — — — — 938 938

BALANCE, July 31, 2021 22,596 $ — $ 253,129 $ 138,665 $ 58 $ 391,852

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

1 unchanged sentence

(in thousands)

Three Months Ended April 30,

Six Months Ended July 31,

Operating Activities

2 unchanged sentences

Depreciation and amortization 10,602 11,286

Impairment of long-lived assets — 216

Impairment 1,498 216

Deferred income taxes ( 1,645 ) ( 944 )

14 unchanged sentences

Proceeds from sale of property and equipment 420 489

Acquisition consideration, net of cash acquired — ( 6,790 )

Other, net 12 ( 20 )

17 unchanged sentences

Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities $ 9,014 $ 4,645

Long-term debt to acquire finance leases $ 7,454 $ —

Net transfer of assets from (to) property and equipment to (from) inventories $ 1,269 $ 319

See Notes to Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

TITAN MACHINERY INC.

7 unchanged sentences

(the “Company”) are subject to fluctuation due to varying weather patterns, which may impact the timing and amount of equipment purchases, rentals, and after-sales parts and service purchases by the Company’s Agriculture, Construction and International customers.

Therefore, operating results for the three-month period ended April 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2022.

Therefore, operating results for the six-month period ended July 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2022.

The information contained in the consolidated balance sheet as of January 31, 2021 was derived from the audited consolidated financial statements of the Company for the fiscal year then ended.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2021 as filed with the SEC.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2021 as filed with the SEC.

Nature of Business

5 unchanged sentences

The Company's products and services were determined to be essential in the markets we serve and accordingly operations have been allowed to continue throughout the pandemic.

Certain of the Company's supply vendors are facing production and staffing challenges as they work to achieve production capacity and lead times consistent with pre-pandemic levels.

The pandemic has created other supply chain challenges such as delays in components and supplies and freight markets continue to have challenges with driver shortages, strong demand for consumer goods, extended lead times, and driver retention and recruitment issues.

As a result, the Company has experienced some disruptions and delays on delivery of certain materials.

The Company has assessed the impacts of the COVID-19 pandemic on its results of operations for the three months ended April 30, 2021 and 2020, and although there have been logistical and other challenges, no material adverse impacts were identified.

The extent and duration of the COVID-19 impact, on the operations and financial position of the Company and on the global economy, is uncertain.

Uncertainty remains regarding emerging variant strains of COVID-19, and regarding the length of time it will take for the COVID-19 pandemic to subside.We will continue to take action as necessary as the health and safety of our employees and customers remain our top priority.

Some of the Company's supply vendors are facing production, supply chain and staffing challenges as they work to achieve production capacity and lead times consistent with pre-pandemic levels.

As a result, the Company has experienced some disruptions and delays on delivery of certain inventory.

The Company has assessed the impacts of the COVID-19 pandemic on its results of operations for the three and six months ended July 31, 2021 and 2020, and although there have been logistical and other challenges, no material adverse impacts were identified.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

13 unchanged sentences

The following table sets forth the calculation of basic and diluted Earnings Per Share (EPS):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2021 2020 2021 2020

(in thousands, except per share data)

13 unchanged sentences

The following tables present our revenue disaggregated by revenue source and segment:

Three Months Ended April 30, 2021

Agriculture Construction International Total

(in thousands)

Three Months Ended July 31, 2021 Three Months Ended July 31, 2020

Agriculture Construction International Total Agriculture Construction International Total

(in thousands) (in thousands)

Equipment $ 156,408 $ 54,020 $ 62,305 $ 272,733 $ 110,601 $ 48,478 $ 43,575 $ 202,654

6 unchanged sentences

Total revenues $ 219,364 $ 80,943 $ 77,323 $ 377,630 $ 169,072 $ 77,719 $ 56,674 $ 303,465

Three Months Ended April 30, 2020

Agriculture Construction International Total

(in thousands)

Six Months Ended July 31, 2021 Six Months Ended July 31, 2020

Agriculture Construction International Total Agriculture Construction International Total

(in thousands) (in thousands)

Equipment $ 325,664 $ 98,832 $ 124,217 $ 548,713 $ 250,349 $ 82,732 $ 88,078 $ 421,159

7 unchanged sentences

Unbilled Receivables and Deferred Revenue

Unbilled receivables from contracts with customers were $ 17.0 million and $ 12.9 million as of April 30, 2021 and January 31, 2021.

Unbilled receivables from contracts with customers amounted to $ 20.1 million and $ 12.9 million as of July 31, 2021 and January 31, 2021.

The increase in unbilled receivables is primarily the result of a seasonal increase in the volume of our service transactions in which we recognize revenue as our work is performed and prior to customer invoicing.

Deferred revenue from contracts with customers were $ 47.6 million and $ 57.7 million as of April 30, 2021 and January 31, 2021.

Deferred revenue from contracts with customers amounted to $ 37.1 million and $ 57.7 million as of July 31, 2021 and January 31, 2021.

Our deferred revenue most often increases in the fourth quarter of each fiscal year due to a higher level of customer down payments or prepayments and longer time periods between customer payment and delivery of the equipment asset, and the related recognition of equipment revenue, prior to its seasonal use.

During the three months ended April 30, 2021 and 2020, the Company recognized $37.9 million and $29.7 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2021 and January 31, 2020, respectively.

No material amount of revenue was recognized during the three months ended April 30, 2021 and 2020 from performance obligations satisfied in previous periods.

During the six months ended July 31, 2021 and 2020, the Company recognized $ 50.8 million and $ 37.0 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2021 and January 31, 2020, respectively.

No material amount of revenue was recognized during the six months ended July 31, 2021 and 2020 from performance obligations satisfied in previous periods.

The Company has elected as a practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of service of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for parts installed and services performed.

The contracts for which the practical expedient has been applied include (i) equipment revenue transactions, which do not have a stated contractual term, but are short-term in nature, and (ii) service revenue transactions, which also do not have a stated contractual term but are generally completed within 30 days and for such contracts we recognize revenue over time at the amount to which we have the right to invoice for services completed to date.

The contracts for which the practical expedient has been applied include (i) equipment revenue transactions, which do not have a stated contractual term but are short-term in nature, and (ii) service revenue transactions, which also do not have a stated contractual term but are generally completed within 30 days.

For such service contracts we recognize revenue over time at the amount to which we have the right to invoice for services completed to date.

NOTE 4 - RECEIVABLES

3 unchanged sentences

The rates may also be adjusted to the extent future events are expected to differ from historical results.

Given that the credit terms for these receivables are short-term, changes in credit loss percentages due to future events may not occur on a frequent basis.

In addition, the allowance is adjusted based on information obtained by continued monitoring of individual customer credit.

3 unchanged sentences

Trade and unbilled receivables from rental contracts are primarily in the United States and are specifically excluded from the accounting guidance in determining an allowance for expected losses.

The Company provides an allowance for these receivables based on historical experience and using credit information obtained from continued monitoring of customer accounts.

April 30, 2021 January 31, 2021

The Company provides an allowance for these receivables based on historical experience and using credit information obtained from continued monitoring of customer

July 31, 2021 January 31, 2021

(in thousands)

12 unchanged sentences

Other 1,632 1,767

10,274 10,487

Receivables, net of allowance for expected credit losses $ 82,068 $ 69,109

8 unchanged sentences

Balance at April 30, 2021 241 1,062 1,600 2,903

Current expected credit loss provision 84 50 ( 225 ) ( 91 )

Write-offs charged against allowance 33 64 21 118

Credit loss recoveries collected 7 1 — 8

Foreign exchange impact — — 19 19

Balance at July 31, 2021 $ 299 $ 1,049 $ 1,373 $ 2,721

Agriculture Construction International Total

6 unchanged sentences

Balance at April 30, 2020 230 1,062 1,816 3,108

Current expected credit loss provision 16 95 265 376

Write-offs charged against allowance 47 78 98 223

Credit loss recoveries collected 9 — — 9

Foreign exchange impact — — 23 23

Balance at July 31, 2020 $ 208 $ 1,079 $ 2,006 $ 3,293

The following table presents impairment losses (recoveries) on receivables arising from sales contracts with customers and receivables arising from rental contracts:

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2021 2020 2021 2020

(in thousands)

2 unchanged sentences

Receivables from rental contracts 3 13 ( 30 ) 151

$ 225 $ 390 $ 290 $ 671

NOTE 5 - INVENTORIES

April 30, 2021 January 31, 2021

July 31, 2021 January 31, 2021

(in thousands)

5 unchanged sentences

NOTE 6 - PROPERTY AND EQUIPMENT

April 30, 2021 January 31, 2021

July 31, 2021 January 31, 2021

(in thousands)

8 unchanged sentences

The Company reviews its long-lived assets for potential impairment whenever events or circumstances indicate that the carrying value of the long-lived asset (or asset group) may not be recoverable.

During the three months ended April 30, 2021, the Company identified no such asset groups and no impairment was recorded .

For the three months ended April 30, 2020, the Company recognized an impairment charge of $ 0.2 million within its Construction segment.

During the three months ended July 31, 2021, the Company determined that a current period operating loss combined with historical losses of a certain business unit indicated that the long-lived asset group may not be recoverable.

The Company performed an impairment assessment of this asset group and as a result an impairment charge of $ 0.4 million was recognized within its International segment for the three months ended July 31, 2021.

The Company did not have any impairment charges for the three months ended July 31, 2020 .

For the six months ended July 31, 2021 and July 31, 2020, the Company recognized an impairment charge of $ 0.4 million and $ 0.2 million, respectively.

NOTE 7 - INTANGIBLE ASSETS

Indefinite-Lived Intangible Assets

The Company's indefinite-lived intangible assets consist of distribution rights assets.

The following is a summary of the changes in indefinite-lived intangible assets, by segment, for the six months ended July 31, 2021:

Agriculture Construction International Total

(in thousands)

January 31, 2021 $ 6,265 $ 72 $ 1,161 $ 7,498

Foreign currency translation — — ( 22 ) ( 22 )

Impairment — — ( 1,139 ) ( 1,139 )

July 31, 2021 $ 6,265 $ 72 $ — $ 6,337

The Company performs at least an annual impairment testing of its indefinite-lived distribution rights intangible assets and, due to ongoing losses, an interim test was completed during the three months ended July 31, 2021 for our German distribution rights asset.

Under the impairment test, the fair value of distribution rights intangible assets is estimated based on a multi-period excess earnings model, an income approach.

This model allocates future estimated earnings of the store/complex amongst working capital, fixed assets and other intangible assets of the store/complex and any remaining earnings (the "excess earnings") are allocated to the distribution rights intangible assets.

The earnings allocated to the distribution rights are then discounted to arrive at the present value of the future estimated excess earnings, which represents the estimated fair value of the distribution rights intangible asset.

The discount rate applied reflects the Company's estimate of the weighted-average cost of capital of comparable companies plus an additional risk premium to reflect the additional risk inherent in the distribution rights asset.

The results of the Company's impairment testing for the German distribution rights intangible asset for the three months ended July 31, 2021, indicated that the estimated fair value of the tested distribution rights was below the carrying value of the asset, thus requiring an impairment to be recognized.

Impairment charges of $1.1 million were recognized for the three and six months ended July 31, 2021 and included in Impairment of Intangible and Long-Lived Assets in the condensed consolidated statements of operations.

This impairment removed all remaining indefinite-lived intangible assets from the balance sheet of the German reporting unit.

The impairment charges arose as the result of lowered expectations of the future financial performance of this reporting unit.

There were no indefinite-lived intangible impairment charges for the three and six months ended July 31, 2020.

NOTE 8 - FLOORPLAN PAYABLE/ LINES OF CREDIT

1 unchanged sentence

The Bank Syndicate Agreement provides for a secured credit facility in an amount up to $ 250.0 million, consisting of a $ 185.0 million floorplan facility (the "Floorplan Loan") and a $ 65.0 million operating line (the "Revolver Loan"), and changed the interest rates as compared to the prior credit facility, amongst other things.

The amounts available under the Bank Syndicate Agreement are subject to base calculations and reduced by outstanding standby letters of credit and certain reserves.

The amounts available under the Bank Syndicate Agreement are subject to borrowing base calculations and reduced by outstanding standby letters of credit and certain reserves.

The Bank Syndicate Agreement includes a variable interest rate on outstanding balances, charges a 0.25% non-usage fee on the average monthly unused amount, and requires monthly payments of accrued interest.

The Company elects at the time of any advance to choose a Base Rate Loan or a LIBOR Rate Loan.

The LIBOR Rate is based upon one month, two month, or three month LIBOR, as chosen by the Company, but in no event shall the LIBOR Rate be less than 0.50%.

The Base Rate is the greater of (a) the prime rate of interest announced, from time to time, by Bank of America;

(b) the Federal Funds Rate plus 0.5%, or (c) one month LIBOR plus 1%, but in no event shall the Base Rate be less than zero.

The applicable margin rate is determined based on excess availability under the Bank Syndicate Agreement and ranges from 0.5% to 1.0% for Base Rate Loans and 1.5% to 2.0% for LIBOR Rate Loans.

The Bank Syndicate Agreement does not obligate the Company to maintain financial covenants, except in the event that excess availability (each as defined in the Bank Syndicate Agreement) is less than 15% of the lower of the borrowing base or the size of the maximum credit line, at which point the Company is required to maintain a fixed charge coverage ratio of at least 1.10 :1.00.

The LIBOR Rate is based upon one month, two month, or three month LIBOR, as chosen by the Company, but in no event shall the LIBOR Rate be less than zero.

The Base Rate is the greater of (a) the prime rate of interest announced, from time to time, by Bank of America, (b) the Federal Funds Rate plus 0.5%, or (c) one month LIBOR plus 1%, but in no event shall the Base Rate be less than zero.

The effective interest rate on the Company's borrowings is then calculated by adding an applicable margin to the LIBOR Rate or Base Rate.

The applicable margin is determined based on excess availability under the Bank Syndicate Agreement and ranges from 0.5% to 1.0% for Base Rate Loans and 1.5% to 2.0% for LIBOR Rate Loans.

On June 4, 2021, the Bank Syndicate Agreement was amended to add a benchmark replacement reference rate when the LIBOR Rate is no longer published.

The identified replacement reference rate is the secured overnight financing rate (SOFR).The benchmark transition event will occur at the earliest of (i) the date all available Tenors of LIBOR have been permanently ceased to be reported, (ii) June 30, 2023, or (iii) any agreement by the banks party to the Bank Syndicate agreement and the Company to replace the LIBOR Rate.

The SOFR rate is based upon one month, two month, three month, six month, and 12 month SOFR plus between 11.4 basis points and 71.5 basis points depending on the available tenor used.

In no event shall the SOFR Rate be less than zero.

The applicable margin rate is the same as outlined above for the LIBOR Rate Loans.

The Company does not believe implementation of this new benchmark rate will have a material effect on its results of operations.

In addition, the amendment reduced the current floor of the LIBOR Rate from 0.5% to 0.0%

The Bank Syndicate Agreement does not obligate the Company to maintain financial covenants, except in the event that excess availability (as defined in the Bank Syndicate Agreement) is less than 15% of the lower of the borrowing base or the size of the maximum credit line, at which point the Company is required to maintain a fixed charge coverage ratio of at least 1.10 :1.00.

The Bank Syndicate Agreement includes various restrictions on the Company and its subsidiaries’ activities, including, under certain conditions, limitations on the Company’s ability to make certain cash payments including cash dividends and stock repurchases, issuance of equity instruments, acquisitions and divestitures, and entering into new indebtedness transactions.

3 unchanged sentences

The Revolver Loan under the Bank Syndicate Agreement is used to finance rental fleet equipment and for general working capital requirements of the Company.

Amounts outstanding are recorded as long-term debt, within long-term liabilities on the consolidated balance sheets, as the Company does not have the intention or obligation to repay amounts borrowed within one year.

As of April 30, 2021, the Company had floorplan lines of credit totaling $ 770.0 million, which is primarily comprised of three significant floorplan lines of credit:

Amounts outstanding are recorded as long-term debt, within long-term liabilities on the consolidated balance sheets, as the Company does not intend or have the obligation to repay amounts borrowed within one year.

As of July 31, 2021, the Company had floorplan lines of credit totaling $ 771.0 million, which is primarily comprised of three significant floorplan lines of credit:

(i) a $ 450.0 million credit facility with CNH Industrial, (ii) a $ 185.0 million line of credit under the Bank Syndicate Agreement, and (iii) a $ 60.0 million credit facility with DLL Finance LLC.

As of April 30, 2021 and January 31, 2021, the Company's outstanding balances of floorplan lines of credit consisted of the following:

April 30, 2021 January 31, 2021

In August 2021, the Company entered into an amendment to the credit facility with DLL Finance LLC.

The amendment reduced the available borrowings under this facility from $60.0 million to $50.0 million, increased the variable interest rate on outstanding balances from three-month LIBOR plus an applicable margin of 2.85% per annum to three-month

LIBOR plus an applicable margin of 3.0% per annum, and eliminated the 0.15% non-utilization fee.

DLL Finance LLC may terminate the facility in its sole discretion at any time.

As of July 31, 2021 and January 31, 2021, the Company's outstanding balances of floorplan lines of credit consisted of the following:

July 31, 2021 January 31, 2021

(in thousands)

3 unchanged sentences

$ 185,549 $ 161,835

As of April 30, 2021 and January 31, 2021, the U.S.

As of July 31, 2021 and January 31, 2021, the U.S.

floorplan payables were generally all non-interest bearing.

As of April 30, 2021, foreign floorplan payables carried various interest rates primarily ranging from 1.40 % to 4.81 %, compared to a range of 1.40 % to 4.82 % as of January 31, 2021.

As of April 30, 2021 and January 31, 2021, $ 120.2 million and $ 98.8 million, respectively, of outstanding floorplan payables were non-interest bearing.

As of April 30, 2021, the Company had a compensating balance arrangement under one of its foreign floorplan credit facilities, which requires a minimum cash deposit to be maintained with the lender in the amount of $ 5.0 million for the term of the credit facility.

As of July 31, 2021, foreign floorplan payables carried various interest rates primarily ranging from 1.40 % to 4.79 %, compared to a range of 1.40 % to 4.82 % as of January 31, 2021.

As of July 31, 2021 and January 31, 2021, $ 148.7 million and $ 98.8 million, respectively, of outstanding floorplan payables were non-interest bearing.

As of July 31, 2021, the Company had a compensating balance arrangement under one of its foreign floorplan credit facilities, which requires a minimum cash deposit to be maintained with the lender in the amount of $ 5.0 million for the term of the credit facility.

NOTE 9 - LONG TERM DEBT

The following is a summary of long-term debt as of April 30, 2021 and January 31, 2021:

Description Maturity Dates Interest Rates April 30, 2021 January 31, 2021

The following is a summary of long-term debt as of July 31, 2021 and January 31, 2021:

Description Maturity Dates Interest Rates July 31, 2021 January 31, 2021

(in thousands)

19 unchanged sentences

The notional value of outstanding foreign currency contracts as of January 31, 2021 was $ 8.0 million.

There were no outstanding foreign currency contracts as of April 30, 2021.

There were no outstanding foreign currency contracts as of July 31, 2021.

As of January 31, 2021, the fair value of the Company's outstanding derivative instruments was not material.

Derivative instruments recognized as assets are recorded in prepaid expenses and other in the consolidated balance sheets, and derivative instruments recognized as liabilities are recorded in accrued expenses and other in the consolidated balance sheets.

The following table sets forth the gains and losses recognized in income from the Company’s derivative instruments for the three months ended April 30, 2021 and 2020.

Derivative instruments recognized as assets are recorded in prepaid expenses and other in the condensed consolidated balance sheets, and derivative instruments recognized as liabilities are recorded in accrued expenses and other in the condensed consolidated balance sheets.

The following table sets forth the gains and losses recognized in income from the Company’s derivative instruments for the six months ended July 31, 2021 and 2020.

Gains and losses are recognized in Interest and other income in the consolidated statements of operations:

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2021 2020 2021 2020

(in thousands)

Foreign currency contract loss $ ( 351 ) $ ( 13 )

Foreign currency contract gain (loss) $ 192 $ 202 $ ( 159 ) $ 189

NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the periods ended April 30, 2021 and April 30, 2020:

The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the periods ended July 31, 2021 and July 31, 2020:

Foreign Currency Translation Adjustment Net Investment Hedging Gain Total Accumulated Other Comprehensive Income (Loss)

3 unchanged sentences

Balance, April 30, 2021 ( 3,591 ) 2,711 ( 880 )

Other comprehensive income 938 — 938

Balance, July 31, 2021 $ ( 2,653 ) $ 2,711 $ 58

Foreign Currency Translation Adjustment Net Investment Hedging Gain Total Accumulated Other Comprehensive Income (Loss)

3 unchanged sentences

Balance, April 30, 2020 ( 6,459 ) 2,711 ( 3,748 )

Other comprehensive income 778 — 778

Balance, July 31, 2020 $ ( 5,681 ) $ 2,711 $ ( 2,970 )

NOTE 12 - LEASES

1 unchanged sentence

The Company has elected to not record leases with a lease term at commencement of 12 months or less on the consolidated balance sheet;

such leases are expensed on a straight-line basis over the lease term.

these leases are expensed on a straight-line basis over the lease term.

Many real estate lease agreements require the Company to pay the real estate taxes on the properties during the lease term and require that the Company maintain property insurance on each of the leased premises.

Such payments are deemed to be variable lease payments as the amounts may change during the term of the lease.

These payments are deemed to be variable lease payments as the amounts may change during the term of the lease.

Certain leases include renewal options that can extend the lease term for periods of one to ten years.

7 unchanged sentences

The components of lease expense were as follows:

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

Classification 2021 2020 2021 2020

(in thousands)

(in thousands) (in thousands)

Finance lease cost:

7 unchanged sentences

Right-of-use lease assets and lease liabilities consist of the following:

Classification April 30, 2021 January 31, 2021

Classification July 31, 2021 January 31, 2021

(in thousands)

8 unchanged sentences

Total lease liabilities $ 80,572 $ 98,073

(a) Finance lease assets are recorded net of accumulated amortization of $2.0 million as of April 30, 2021 and $3.0 million as of January 31, 2021.

Maturities of lease liabilities as of April 30, 2021 are as follows:

(a) Finance lease assets are recorded net of accumulated amortization of $1.7 million as of July 31, 2021 and $3.0 million as of January 31, 2021.

Maturities of lease liabilities as of July 31, 2021 are as follows:

Operating Finance

11 unchanged sentences

Present value of lease liabilities $ 77,433 $ 3,139 $ 80,572

The weighted-average lease term and discount rate as of April 30, 2021 are as follows:

April 30, 2021

The weighted-average lease term and discount rate as of July 31, 2021 are as follows:

July 31, 2021

Weighted-average remaining lease term (years):

7 unchanged sentences

Most often, our rental arrangements extend for periods ranging from a few days to a few months.

We maintain a fleet of dedicated rental assets within our Construction segment and, within all segments, may also provide short-term rentals of certain equipment inventory assets.

Certain rental arrangements may include rent-to-purchase options whereby customers are given a period of time to exercise an option to purchase the related equipment at an established price with any rental payments paid applied to reduce the purchase price.

We maintain a fleet of dedicated rental assets within our Construction segment and, within all segments, we may also provide short-term rentals of certain equipment inventory assets.

Some rental arrangements may include rent-to-purchase options whereby customers are given a period of time to exercise an option to purchase the related equipment at an established price with any rental payments paid applied to reduce the purchase price.

All of the Company's leasing arrangements as lessor are classified as operating leases.

3 unchanged sentences

The Company accounts for these non-lease components separate from the rental arrangement and recognizes the revenue associated with these components when the service is performed.

The Company has elected to exclude from rental revenue all sales, value

added and other taxes collected from our customers concurrent with our rental activities.

The Company has elected to exclude from rental revenue all sales, value added and other taxes collected from our customers concurrent with our rental activities.

Rental billings most often occur on a monthly basis and may be billed in advance or in arrears, thus creating unbilled rental receivables or deferred rental revenue amounts.

2 unchanged sentences

Revenue generated from leasing activities is disclosed, by segment, in Note 3.

The following is the balance of our dedicated rental fleet assets, included in Property and equipment, net of accumulated depreciation in the consolidated balance sheet, of our Construction segment as of April 30, 2021 and January 31, 2021:

April 30, 2021 January 31, 2021

July 31, 2021 January 31, 2021

(in thousands)

3 unchanged sentences

NOTE 13 - FAIR VALUE MEASUREMENTS

As of April 30, 2021 and January 31, 2021, the fair value of the Company's foreign currency contracts, which are either assets or liabilities measured at fair value on a recurring basis, was not material.

As of July 31, 2021 and January 31, 2021, the fair value of the Company's foreign currency contracts, which are either assets or liabilities measured at fair value on a recurring basis, was not material.

These foreign currency contracts were valued using a discounted cash flow analysis, which is an income approach, utilizing readily observable market data as inputs, which is classified as a Level 2 fair value measurement.

5 unchanged sentences

The Company also has financial instruments that are not recorded at fair value in the consolidated balance sheets, including cash, receivables, payables and long-term debt.

The carrying amounts of these financial instruments approximated their fair values as of April 30, 2021 and January 31, 2021.

The carrying amounts of these financial instruments approximated their fair values as of July 31, 2021 and January 31, 2021.

Fair value of these financial instruments was estimated based on Level 2 fair value inputs.

The estimated fair value of the Company's Level 2 long-term debt, which is provided for disclosure purposes only, is as follows:

July 31, 2021 January 31, 2021

(in thousands)

Carrying amount 53,245 32,992

Fair value 54,600 34,185

NOTE 14 - INCOME TAXES

Our effective tax rate was 22.9 % and 28.1 % for the three months ended April 30, 2021 and April 30, 2020.

The effective tax rate for the three months ending April 30, 2021 was benefited by the vesting of share-based compensation.

For the three months ending April 30, 2020, the effective tax rate benefited from a weakening hryvnia in our Ukrainian business but was offset by increased tax expense on the vesting of share-based compensation.

Our effective tax rate was 28.0 % and 22.8 % for the three months ended July 31, 2021 and 2020, respectively and was 25.6 % and 24.3 % for the six months ended July 31, 2021 and 2020, respectively.

The effective tax rate for the six months ended July 31, 2021 was benefited by the vesting of share-based compensation but was offset by the recognition of a valuation allowance on certain of our foreign deferred tax assets including recording a valuation allowance on the remaining deferred tax assets of our Germany entity.

For the six months ended July 31, 2020, the effective tax rate benefited from a weakening Ukrainian currency but was offset by increased tax expense on the vesting of share-based compensation.

NOTE 15 - BUSINESS COMBINATIONS

1 unchanged sentence

This acquired CaseIH agriculture dealership complex consisted of three agriculture equipment stores in Scottsbluff and Sidney, Nebraska and Torrington, Wyoming, which expanded the Company's agriculture presence in Nebraska and into Wyoming.

The total consideration transferred for the acquired business was $ 6.8 million paid in cash.

The total consideration paid for the acquired business was $ 6.8 million in cash.

In connection with the acquisition, the Company acquired from CNH Industrial and certain other manufacturers equipment and parts inventory previously owned by HorizonWest Inc.

Upon acquiring such inventories, the Company was offered floorplan financing by the manufacturer.

Upon acquiring those inventories, the Company was offered floorplan financing by the manufacturer.

In total, the Company acquired inventory and recognized a corresponding financing liability of $ 2.7 million.

7 unchanged sentences

Assets acquired:

Receivables —

Inventories 4,260

12 unchanged sentences

For the business combination occurring during the twelve months ended January 31, 2021, the Company recognized a non-competition intangible asset of $0.1 million and a distribution rights intangible asset of $ 0.2 million.

The non-competition assets will be amortized over periods ranging from three to five years.

The distribution rights assets are indefinite-lived intangible assets not subject to amortization.

The non-competition asset will be amortized over periods ranging from three to five years.

distribution rights assets are indefinite-lived intangible assets not subject to amortization.

The Company estimated the fair value of the intangible assets using a multi-period excess earnings model, which is an income approach.

3 unchanged sentences

Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention.

Based upon the information available to the Company and discussions with legal counsel, it is the Company's opinion that the outcome of these various legal actions and claims will not have a material impact on the financial position, results of operations or cash flows.

These matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable with assurance.

Based upon the information available to the Company and discussions with legal counsel, it is the Company's opinion that the outcome of these various legal actions and claims will not have a material impact on it's financial position, results of operations or cash flows.

These matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable.

NOTE 17 - SEGMENT INFORMATION

5 unchanged sentences

Certain financial information for each of the Company’s business segments is set forth below.

Three Months Ended April 30,

(in thousands)

Three Months Ended July 31, Six Months Ended July 31,

2021 2020 2021 2020

(in thousands) (in thousands)

Agriculture $ 219,364 $ 169,072 $ 448,915 $ 362,700

9 unchanged sentences

Total $ 15,632 $ 8,292 $ 29,311 $ 11,441

April 30, 2021 January 31, 2021

July 31, 2021 January 31, 2021

(in thousands)

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements