What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-06-03 compared with 2021-12-03 · 108 added, 233 removed, 436 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

Current Assets

1 unchanged sentence

Receivables, net of allowance for expected credit losses 84,870 94,287

Inventories 412,674 418,458

Inventories, net 494,167 421,758

Prepaid expenses and other 22,223 28,135

22 unchanged sentences

Operating lease liabilities 53,284 55,595

Deferred income taxes 2,001 2,006

Other long-term liabilities 3,956 4,374

3 unchanged sentences

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

22,592 shares issued and outstanding at October 31, 2021;

22,569 shares issued and outstanding at April 30, 2022;

22,588 shares issued and outstanding at January 31, 2022

1 unchanged sentence

Retained earnings 200,456 182,916

Accumulated other comprehensive income (loss) ( 686 ) 1,499

Accumulated other comprehensive loss ( 3,363 ) ( 2,172 )

Total stockholders' equity 451,483 435,199

1 unchanged sentence

See Notes to Condensed Consolidated Financial Statements

Table of C ontents

TITAN MACHINERY INC.

1 unchanged sentence

(in thousands, except per share data)

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Equipment $ 356,366 $ 275,980

11 unchanged sentences

Operating Expenses 64,152 56,442

Impairment of Goodwill — 1,453 — 1,453

Impairment of Intangible and Long-Lived Assets — 1,102 1,498 1,318

Income from Operations 24,542 14,536

Other Income (Expense)

Interest and other income (expense) 616 ( 360 ) 1,935 333

Interest and other income 492 665

Floorplan interest expense ( 254 ) ( 418 )

10 unchanged sentences

See Notes to Condensed Consolidated Financial Statements

Table of C ontents

TITAN MACHINERY INC.

1 unchanged sentence

(in thousands)

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Net Income $ 17,540 $ 10,547

3 unchanged sentences

See Notes to Condensed Consolidated Financial Statements

Table of C ontents

TITAN MACHINERY INC.

4 unchanged sentences

BALANCE, January 31, 2021 22,553 $ — $ 252,913 $ 116,869 $ 1,499 $ 371,281

Cumulative-effect adjustment of adopting ASC 326, Financial Instruments - Credit Losses — — — ( 204 ) — ( 204 )

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 ( 33 ) — ( 975 ) — — ( 975 )

3 unchanged sentences

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

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 issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax 2 — ( 8 ) — — ( 8 )

Stock-based compensation expense — — 691 — — 691

Net Income — — — 9,912 — 9,912

Other comprehensive income — — — — 2,181 2,181

BALANCE, October 31, 2020 22,555 $ — $ 252,270 $ 116,087 $ ( 789 ) $ 367,568

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

6 unchanged sentences

BALANCE, April 30, 2022 22,569 $ — $ 254,390 $ 200,456 $ ( 3,363 ) $ 451,483

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

Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax ( 4 ) — ( 4 ) — — ( 4 )

Stock-based compensation expense — — 657 — — 657

Net income — — — 21,816 — 21,816

Other comprehensive income — — — — ( 744 ) ( 744 )

BALANCE, October 31, 2021 22,592 $ — $ 253,782 $ 160,482 $ ( 686 ) $ 413,578

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Nine Months Ended October 31,

Three Months Ended April 30,

Operating Activities

Net income $ 17,540 $ 10,547

Adjustments to reconcile net income to net cash provided by (used for) operating activities

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization 5,224 5,207

Impairment 1,498 2,771

Deferred income taxes ( 998 ) ( 1,008 )

1 unchanged sentence

Noncash interest expense 58 54

Noncash lease expense 7,558 8,613

Other, net 2,059 2,704

3 unchanged sentences

Manufacturer floorplan payable 51,069 19,657

Accounts payable, deferred revenue, accrued expenses and other and other long-term liabilities ( 18,532 ) ( 15,555 )

Operating lease liabilities ( 8,303 ) ( 9,248 )

Deferred Revenue ( 6,413 ) ( 10,308 )

Accounts payable, accrued expenses and other and other long-term liabilities ( 7,963 ) 2,132

Net Cash Provided by Operating Activities 5,321 26,956

10 unchanged sentences

Principal payments on long-term debt and finance leases ( 1,743 ) ( 3,181 )

Payment of debt issuance costs — ( 700 )

Other, net ( 683 ) ( 974 )

Net Cash Used for Financing Activities ( 31,315 ) ( 40,779 )

Net Cash Provided by (Used for) Financing Activities 7,989 ( 6,834 )

Effect of Exchange Rate Changes on Cash ( 420 ) ( 399 )

8 unchanged sentences

Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities $ 1,247 $ 15,763

Long-term debt to acquire finance leases $ 7,761 $ —

Net transfer of assets from (to) property and equipment to (from) inventories $ ( 891 ) $ 300

See Notes to Condensed Consolidated Financial Statements

Table of C ontents

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 nine-month period ended October 31, 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 three-month period ended April 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2023.

The information contained in the consolidated balance sheet as of January 31, 2022 was derived from the audited consolidated financial statements of the Company for the fiscal year then ended.

2 unchanged sentences

The Company is engaged in the retail sale, service and rental of agricultural and construction machinery through its stores in the United States and Europe.

The Company’s North American stores are located in Colorado, Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming, and its European stores are located in Bulgaria, Germany, Romania, and Ukraine.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and the President of the United States declared the COVID-19 outbreak as a national emergency.

The nature of COVID-19 led to worldwide shutdowns and halting of commercial and interpersonal activity as governments imposed regulations in efforts to control the spread of the pandemic, such as shelter-in-place orders and quarantines.

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.

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

Uncertainty remains regarding the magnitude and duration of the pandemic and resulting financial effects.

Increased infection rates and any future responses to mitigate the spread of the virus, including any potential vaccination mandates that would apply to our employees, could impact our business and our financial results in future periods.

Recently, the Department of Labor's Occupational Safety and Health Administration ("OSHA") announced an emergency temporary standard requiring all employers with at least 100 employees to ensure their employees are fully vaccinated or require weekly testing for unvaccinated employees.

This standard became effective in November 2021, giving companies 30 days to comply with most requirements and 60 days to comply with the testing requirements.

In response to a court ruling, in mid-November 2021, OSHA announced that it had suspended all activities related to implementation of this new regulation pending further litigation.

The exact impact that this new regulation could have on our Company is uncertain at this time.

However, it could result in employee attrition, difficulty in fulfilling future labor needs, additional costs related to compliance and may have an adverse effect on our future operating results.

Additionally, 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 nine months ended October 31, 2021 and 2020, and although there have been logistical and other challenges, no material adverse impacts were identified.

Table of C ontents

The Company’s North American stores are located in Colorado, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming, and its European stores are located in Bulgaria, Germany, Romania, and Ukraine.

Russia/Ukraine Geopolitical Conflict

On February 24, 2022, the ongoing Russia/Ukraine conflict significantly intensified.

Titan Machinery Ukraine, LLC("Titan Machinery Ukraine"), the Company's wholly owned Ukrainian subsidiary, has ten locations throughout Ukraine primarily in western and central Ukraine.

The Company's ability to maintain adequate liquidity for its operations, in Ukraine, is dependent upon a number of factors, including Titan Machinery Ukraine's revenue and earnings, the impact of the conflict on macroeconomic conditions, and Titan Machinery Ukraine's ability to implement further cost savings measures and cash conservation measures, if necessary.

The conflict could have a significant adverse impact upon the Company.

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.

9 unchanged sentences

ASU 2020-04 is effective upon issuance and can be applied through December 31, 2022.

The Company is amending its credit agreements to include language regarding the successor or alternate rate to LIBOR, and a review of other contracts and agreements is on-going.

The Company has amended most of its credit agreements to include language regarding the successor or alternate rate to LIBOR, and a review of other contracts and agreements is on-going.

The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows, or disclosures.

1 unchanged sentence

The following table sets forth the calculation of basic and diluted earnings per share (EPS):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

(in thousands, except per share data)

12 unchanged sentences

Sales, value added and other taxes collected from our customers concurrent with our revenue activities are excluded from revenue.

Table of C ontents

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

Three Months Ended October 31, 2021 Three Months Ended October 31, 2020

Agriculture Construction International Total Agriculture Construction International Total

(in thousands) (in thousands)

Three Months Ended April 30, 2022

Agriculture Construction International Total

(in thousands)

Equipment $ 251,093 $ 43,819 $ 61,454 $ 356,366

6 unchanged sentences

Total revenues $ 318,548 $ 66,964 $ 75,495 $ 461,007

Nine Months Ended October 31, 2021 Nine Months Ended October 31, 2020

Agriculture Construction International Total Agriculture Construction International Total

(in thousands) (in thousands)

Three Months Ended April 30, 2021

Agriculture Construction International Total

(in thousands)

Equipment $ 169,257 $ 44,812 $ 61,911 $ 275,980

7 unchanged sentences

Unbilled Receivables and Deferred Revenue

Unbilled receivables from contracts with customers amounted to $ 21.8 million and $ 12.9 million as of October 31, 2021 and January 31, 2021, respectively.

Unbilled receivables from contracts with customers amounted to $ 20.6 million and $ 17.1 million as of April 30, 2022 and January 31, 2022, respectively.

This 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 amounted to $ 34.1 million and $ 57.7 million as of October 31, 2021 and January 31, 2021, respectively.

Deferred revenue from contracts with customers amounted to $ 128.2 million and $ 132.2 million as of April 30, 2022 and January 31, 2022, respectively.

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 nine months ended October 31, 2021 and 2020, the Company recognized $ 55.8 million and $ 40.9 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 nine months ended October 31, 2021 or 2020 from performance obligations satisfied in previous periods.

During the three months ended April 30, 2022 and 2021, the Company recognized $ 64.6 million and $ 37.9 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2022 and January 31, 2021, respectively.

No material amount of revenue was recognized during the three months ended April 30, 2022 or 2021 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.

8 unchanged sentences

Trade receivables from finance companies, other receivables due from manufacturers, and other receivables have not historically resulted in any credit losses to the Company.

These receivables are short-term in nature and deemed to be of good

Table of C ontents

credit quality and have no need for any allowance for expected credit losses.

These receivables are short-term in nature and deemed to be of good credit quality and have no need for any allowance for expected credit losses.

Management continually monitors these receivables and should information be obtained that identifies potential credit risk, an adjustment to the allowance would be made if deemed appropriate.

1 unchanged sentence

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

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

(in thousands)

23 unchanged sentences

Balance at April 30, 2022 $ 255 $ 166 $ 2,216 $ 2,637

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

Current expected credit loss provision ( 3 ) 26 ( 8 ) 15

Write-offs charged against allowance 87 29 6 122

Credit loss recoveries collected 2 3 — 5

Foreign exchange impact — — ( 19 ) ( 19 )

Balance at October 31, 2021 $ 211 $ 1,049 $ 1,340 $ 2,600

Table of C ontents

Agriculture Construction International Total

(in thousands)

Balance at February 1, 2020 $ 181 $ 1,016 $ 1,746 $ 2,943

Balance at January 31, 2021 $ 228 $ 1,074 $ 1,690 $ 2,992

Current expected credit loss provision 30 68 ( 2 ) 96

3 unchanged sentences

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

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

Current expected credit loss provision 30 12 ( 256 ) ( 215 )

Write-offs charged against allowance 44 21 48 114

Credit loss recoveries collected 2 18 — 20

Foreign exchange impact — — 67 67

Balance at October 31, 2020 $ 196 $ 1,088 $ 1,769 $ 3,053

The increase in the credit loss provision in the International segment, during the three months ended April 30, 2022, was driven by a $ 0.7 million bad debt provision placed on the accounts receivables due from customers of Titan Machinery Ukraine, primarily due to the ongoing Russia-Ukraine conflict.

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

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

(in thousands)

2 unchanged sentences

Receivables from rental contracts ( 11 ) ( 34 )

$ 74 $ ( 272 ) $ 364 $ 399

NOTE 5 - INVENTORIES

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

(in thousands)

4 unchanged sentences

$ 494,167 $ 421,758

Table of C ontents

NOTE 6 - PROPERTY AND EQUIPMENT

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

(in thousands)

7 unchanged sentences

$ 183,489 $ 178,243

The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 2.6 million and $ 3.1 million for the three months ended October 31, 2021 and 2020 and $ 6.4 million and $ 7.8 million for the nine months ended October 31, 2021 and 2020, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 2.9 million for the three months ended October 31, 2021 and 2020 and $ 8.9 million and $ 8.5 million for the nine months ended October 31, 2021 and 2020, respectively.

The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 1.5 million and $ 1.7 million for the three months ended April 30, 2022 and 2021, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 3.5 million and $ 3.1 million for the three months ended April 30, 2022 and 2021, respectively.

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 October 31, 2021, the Company identified no such asset group and no impairment was recorded.

The Company recognized $0.2 million million in impairment charges for the three months ended October 31, 2020 .

For the nine months ended October 31, 2021 and October 31, 2020, the Company recognized impairment charges of $ 0.4 million and $ 0.5 million, respectively.

NOTE 7 - INTANGIBLE ASSETS

During the three months ended April 30, 2022, the Company identified one such asset group, Titan Machinery Ukraine, and performed an impairment test, and concluded that no impairment was present.

The Company did not recognize any impairment for the three months ended April 30, 2022 and April 30, 2021 .

NOTE 7 - INTANGIBLE ASSETS AND GOODWILL

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 nine months ended October 31, 2021:

Agriculture Construction International Total

The following is a summary of the changes in indefinite-lived intangible assets, by segment, for the three months ended April 30, 2022:

Agriculture Construction Total

(in thousands)

January 31, 2022 $ 10,136 $ 72 $ 10,208

Foreign currency translation — — ( 22 ) ( 22 )

Impairment — — ( 1,139 ) ( 1,139 )

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

The Company performs impairment testing, at least annually, of its indefinite-lived distribution rights intangible assets.

There were no indicators of impairment in the three months ended October 31, 2021.

The Company did not recognize any impairment charges for the three months ended October 31, 2021 and recognized $1.1 million in impairment charges for the nine months ended October 31, 2021, as it fully impaired the remaining indefinite-lived intangible assets of the German reporting unit in the second quarter.

Arising from business combinations 842 — 842

April 30, 2022 $ 10,978 $ 72 $ 11,050

The following presents changes in the carrying amount of goodwill, by segment, for the three months ended April 30, 2022:

Agriculture Total

(in thousands)

January 31, 2022 $ 8,952 $ 8,952

Arising from business combinations 583 583

April 30, 2022 $ 9,535 $ 9,535

NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

As of October 31, 2021, the Company had floorplan lines of credit totaling $ 753.0 million, which is primarily comprised of three significant floorplan lines of credit:

As of April 30, 2022, the Company had floorplan lines of credit totaling $ 751.0 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 Third Amended and Restated Credit Agreement (the "Bank Syndicate Agreement"), and (iii) a $ 50.0 million credit facility with DLL Finance LLC.

Table of C ontents

The Company's outstanding balances of floorplan lines of credit as of October 31, 2021 and January 31, 2021, consisted of the following:

October 31, 2021 January 31, 2021

The Company's outstanding balances of floorplan lines of credit as of April 30, 2022 and January 31, 2022, consisted of the following:

April 30, 2022 January 31, 2022

(in thousands)

3 unchanged sentences

$ 188,881 $ 135,415

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

As of April 30, 2022 and January 31, 2022, the U.S.

floorplan payables were generally all non-interest bearing.

As of October 31, 2021, foreign floorplan payables carried various interest rates primarily ranging from 1.40 % to 4.48 %, compared to a range of 1.40 % to 4.82 % as of January 31, 2021.

The Company had non-interest bearing floorplan payables of $ 147.2 million and $ 98.8 million, on October 31, 2021 and January 31, 2021, respectively.

As of April 30, 2022, foreign floorplan payables carried various interest rates primarily ranging from 1.40 % to 6.80 %, compared to a range of 1.40 % to 4.79 % as of January 31, 2022.

The Company had non-interest bearing floorplan payables of $ 159.5 million and $ 106.8 million, on April 30, 2022 and January 31, 2022, respectively.

The Company has 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.

Bank Syndicate Credit Agreement

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 to occur of (i) the date that all available tenors of LIBOR have permanently ceased to be reported, (ii) June 30, 2023, or (iii) the date of 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 will the SOFR Rate be less than zero.

The applicable margin is determined based on excess availability under the Bank Syndicate Agreement and ranges from 1.5% to 2%.

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%

DLL Finance Floorplan Payable Line of Credit

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.

CNH Industrial Floorplan Payable Line of Credit

Effective October 1, 2021, CNH updated their interest rate structure on the Company's credit facility to a tier-based rate program.

The new interest rate that will be payable by the Company on outstanding borrowings will be dependent on the Company's Retail Finance Market Share and will range from 0.5% to 2.75% plus the prime rate.

Previously, the credit facility charged interest at a rate equal to the prime rate plus 3.25% for the financing of new and used equipment inventories and rental fleet assets.

Table of C ontents

NOTE 9 - LONG TERM DEBT

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

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

The following is a summary of long-term debt as of April 30, 2022 and January 31, 2022:

Description Maturity Dates Interest Rates April 30, 2022 January 31, 2022

(in thousands)

4 unchanged sentences

Vehicle loans, secured Various through September 2027 2.1% to 4.3%

Other January 2021 2.6%

10,620 10,465

Total debt 88,244 80,648

1 unchanged sentence

Long-term debt, net $ 81,974 $ 74,772

The Company purchased buildings and real estate assets of eleven of its U.S.

dealer locations in the first quarter of fiscal 2022 and financed these purchases with long term debt of $17.7 million.

In the third quarter of fiscal 2022, the Company purchased buildings and real estate assets of an additional eleven of its U.S.

dealer locations and financed these purchases with $10.2 million of long term debt.

All of these dealer locations were previously leased from third party lessors.

NOTE 10 - DERIVATIVE INSTRUMENTS

The Company holds derivative instruments for the purpose of minimizing exposure to fluctuations in foreign currency exchange rates to which the Company is exposed in the normal course of its operations.

From time to time, the Company uses foreign currency forward contracts to hedge the effects of fluctuations in exchange rates on outstanding intercompany loans.

The Company does not formally designate and document such derivative instruments as hedging instruments;

however, the instruments are an effective economic hedge of the underlying foreign currency exposure.

Both the gain or loss on the derivative instrument and the offsetting gain or loss on the underlying intercompany loan are recognized in earnings immediately, thereby eliminating or reducing the impact of foreign currency exchange rate fluctuations on net income.

The Company's foreign currency forward contracts generally have three-month maturities, maturing on the last day of each fiscal quarter.

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 October 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 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 nine months ended October 31, 2021 and 2020.

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

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

(in thousands)

Foreign currency contract gain (loss) $ — $ 471 $ ( 159 ) $ 660

Table of C ontents

NOTE 10 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the three month periods ended April 30, 2022 and April 30, 2021:

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

3 unchanged sentences

Balance, April 30, 2022 ( 6,074 ) 2,711 ( 3,363 )

Other comprehensive income 938 — 938

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

Other comprehensive loss ( 744 ) — ( 744 )

Balance, October 31, 2021 $ ( 3,397 ) $ 2,711 $ ( 686 )

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 778 — 778

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

Other comprehensive income 2,181 — 2,181

Balance, October 31, 2020 $ ( 3,500 ) $ 2,711 $ ( 789 )

NOTE 11 - LEASES

12 unchanged sentences

All sublease arrangements are classified as operating leases.

Table of C ontents

The components of lease expense were as follows:

Three Months Ended October 31, Nine Months Ended October 31,

Three Months Ended April 30,

Classification 2022 2021

(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 October 31, 2021 January 31, 2021

Classification April 30, 2022 January 31, 2022

(in thousands)

8 unchanged sentences

Total lease liabilities $ 71,471 $ 74,180

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

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

(a) Finance lease assets are recorded net of accumulated amortization of $1.7 million as of April 30, 2022 and January 31, 2022.

Maturities of lease liabilities as of April 30, 2022 are as follows:

Operating Finance

11 unchanged sentences

Present value of lease liabilities $ 62,765 $ 8,706 $ 71,471

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

October 31, 2021

The weighted-average lease term and discount rate as of April 30, 2022 are as follows:

April 30, 2022

Weighted-average remaining lease term (years):

4 unchanged sentences

Financing leases 4.5 %

Table of C ontents

The Company rents equipment to customers, primarily in the Construction segment, on a short-term basis.

13 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 condensed consolidated balance sheet, of our Construction segment as of October 31, 2021 and January 31, 2021:

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

(in thousands)

3 unchanged sentences

NOTE 12 - FAIR VALUE MEASUREMENTS

As of October 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.

As of April 30, 2022 and January 31, 2022, 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 October 31, 2021 and January 31, 2021.

The carrying amounts of these financial instruments approximated their fair values as of April 30, 2022 and January 31, 2022.

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:

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

(in thousands)

1 unchanged sentence

Fair value $ 71,864 $ 63,237

Table of C ontents

NOTE 13 - INCOME TAXES

Our effective tax rate was 24.3 % and 28.3 % for the three months ended October 31, 2021 and 2020, respectively and was 25.0 % and 26.5 % for the nine months ended October 31, 2021 and 2020, respectively.

The effective tax rate for the three and nine months ended October 31, 2021 and 2020 were subject to variation due to various factors such as the impact of certain discrete items, mainly the vesting of share-based compensation, the mix of domestic and foreign income, recognition of a valuation allowance on certain of our foreign deferred tax assets and foreign currency gains and losses.

Our effective tax rate was 25.6 % and 22.9 % for the three months ended April 30, 2022 and 2021, respectively.

The effective tax rate for the three months ended April 30, 2022 and 2021 were subject to various factors such as the impact of certain discrete items, mainly the vesting of share-based compensation, the mix of domestic and foreign income, and recognition of a valuation allowance on certain of our foreign deferred tax asset s.

NOTE 14 - BUSINESS COMBINATIONS

On May 4, 2020, the Company acquired certain assets of HorizonWest Inc.

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

On April 1, 2022, the Company acquired certain assets of Mark's Machinery, Inc.

The acquired business consisted of two agricultural equipment stores in Wagner and Yankton, South Dakota.

These locations are included in the Company's Agriculture segment.

The total cash consideration transferred for the acquired business was $7.7 million.

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

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

In total, the Company acquired inventory and recognized a corresponding financing liability of $3.2 million.

The recognition of these inventories and the associated financing liabilities are not included as part of the accounting for the business combination.

On December 1, 2021, the Company acquired certain assets of Jaycox Implement, Inc.

The acquired business consisted of three agricultural equipment stores in Worthington and Luverne, Minnesota and Lake Park, Iowa.

These locations are included in the Company's Agriculture segment.

The total cash consideration transferred for the acquired business was $28.2 million.

The Company completed the real estate purchase on December 31, 2021 for a purchase price of $5.5 million, which was partially financed with long-term debt and the remainder was paid in cash.

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

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

In total, the Company acquired inventory and recognized a corresponding financing liability of $5.3 million.

The recognition of these inventories and the associated financing liabilities are not included as part of the accounting for the business combination.

Purchase Price Allocation

The above acquisition has been accounted for under the acquisition method of accounting, which requires the Company to estimate the acquisition date fair value of the assets acquired and liabilities assumed.

The accounting for the purchase price allocation was complete as of January 31, 2021.

The following table presents the aggregate purchase price allocations for the HorizonWest acquisition completed as of January 31, 2021:

January 31, 2021

Each of the above acquisitions has been accounted for under the acquisition method of accounting, which requires the Company to estimate the acquisition date fair value of the assets acquired and liabilities assumed.

As of April 30, 2022, all business combinations completed in fiscal years 2023 and 2022 are preliminary.

The following table presents the aggregate purchase price allocations for all acquisitions completed during the fiscal year ended January 31, 2022 and the period ended April 30, 2022:

April 30, 2022 January 31, 2022

(in thousands)

Assets acquired:

Receivables 478 1,197

Inventories 3,386 13,780

1 unchanged sentence

Property and equipment 4,088 8,236

Operating lease assets 2,006

Intangible assets 917 4,121

Goodwill 583 7,519

Liabilities assumed:

Current operating lease liabilities 159

Operating lease liabilities 1,847

Deferred revenue 1,844 1,261

Net assets acquired $ 7,675 $ 33,643

2 unchanged sentences

Goodwill expected to be deductible for tax purposes $ 583 $ 7,519

The recognition of goodwill in the above business combination arose from the acquisition of an assembled workforce and anticipated synergies expected to be realized.

The recognition of goodwill in the above business combinations arose from the acquisition of an assembled workforce and anticipated synergies expected to be realized.

For the business combination occurring during the period ended April 30, 2022, the Company recognized a non-competition intangible asset of $ 0.1 million and a distribution rights intangible asset of $0.8 million.

For the business combination occurring during the fiscal year ended January 31, 2022, the Company recognized a non-competition intangible asset of $ 0.1 million and a distribution rights intangible asset of $ 3.9 million.

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

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 Company estimated the fair value of the

Table of C ontents

intangible assets using a multi-period excess earnings model, which is an income approach.

Acquisition related costs were not material for the fiscal year ended January 31, 2021, and have been expensed as incurred and recognized as operating expenses in the consolidated statements of operations.

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

Acquisition related costs were not material for the periods ended April 30, 2022 or January 31, 2022, and have been expensed as incurred and recognized as Operating Expenses in the condensed consolidated statements of operations.

NOTE 15 - CONTINGENCIES

10 unchanged sentences

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

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

(in thousands) (in thousands)

Three Months Ended April 30,

(in thousands)

Agriculture $ 318,548 $ 229,554

9 unchanged sentences

Total $ 23,584 $ 13,679

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

(in thousands)

5 unchanged sentences

Total $ 1,010,197 $ 946,667

Table of C ontents

NOTE 18 - SUBSEQUENT EVENTS

On December 1, 2021, the Company acquired certain assets of Jaycox Implement, Inc.

The acquired business consisted of three agricultural equipment stores in Worthington and Luverne, Minnesota and Lake Park, Iowa.

In its most recent fiscal year, Jaycox Implement, Inc.

generated revenue of approximately $ 91 million.

These locations will be included in the Company's Agriculture segment.

The total cash consideration paid for the acquired business was $ 28.2 million.

The Company has committed to acquire the real estate of Jaycox Implement, Inc., subject to customary closing conditions, for a purchase price of $ 5.5 million and anticipates completing the real estate acquisition by January 31, 2022.

The Company has considered the disclosure requirements of ASC 805-10-50-2 and ASC 805-10-50-4 but has not included certain required disclosures in this report due to the timing of the transaction.

Table of C ontents

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