What changed in this filing

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Item 1. Financial Statements

2023-09-07 compared with 2023-06-01 · 145 added, 100 removed, 416 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

April 30, 2023 January 31, 2023

July 31, 2023 January 31, 2023

Current Assets

32 unchanged sentences

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

22,669 shares issued and outstanding at April 30, 2023;

22,863,628 shares issued and outstanding at July 31, 2023;

22,697,761 shares issued and outstanding at January 31, 2023

8 unchanged sentences

(in thousands, except per share data)

Three Months Ended April 30,

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

2023 2022 2023 2022

Equipment $ 480,122 $ 375,216 $ 909,498 $ 731,582

29 unchanged sentences

(in thousands)

Three Months Ended April 30,

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

2023 2022 2023 2022

Net Income $ 31,321 $ 24,959 $ 58,287 $ 42,499

14 unchanged sentences

BALANCE, April 30, 2023 22,669 $ — $ 256,207 $ 311,749 $ ( 3,923 ) $ 564,033

Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax 195 ( 7 ) ( 7 )

Stock-based compensation expense 784 784

Net income 31,321 31,321

Other comprehensive income 550 550

BALANCE, July 31, 2023 22,864 — $ 256,984 $ 343,070 $ ( 3,373 ) $ 596,681

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 and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax 126 — ( 5 ) — — ( 5 )

Stock-based compensation expense — — 803 — — 803

Net income — — — 24,959 — 24,959

Other comprehensive loss — — — — ( 2,963 ) ( 2,963 )

BALANCE, July 31, 2022 22,695 — $ 255,188 $ 225,415 $ ( 6,326 ) $ 474,277

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Three Months Ended April 30,

Six Months Ended July 31,

Operating Activities

13 unchanged sentences

Accounts payable, accrued expenses and other and other long-term liabilities ( 14,166 ) ( 9,182 )

Net Cash Provided by (Used for) Operating Activities ( 77,704 ) 5,321

Net Cash Used for Operating Activities ( 122,695 ) ( 20,953 )

Investing Activities

32 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-months ended April 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2024.

Therefore, operating results for the six-months ended July 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2024.

The information contained in the consolidated balance sheet as of January 31, 2023 was derived from the audited consolidated financial statements of the Company for the fiscal year then ended.

3 unchanged sentences

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

Russia/Ukraine Geopolitical Conflict

In February 2022, the Russia/Ukraine conflict significantly intensified, and the sustained conflict and disruption in the region is ongoing.

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

The conflict has caused disruptions in our Ukrainian operations, with our revenues for the three months ended April 30, 2023 down 10.7% from the prior year period.

These disruptions have not been material to the Company's consolidated financial statements.

However, if the conflict intensifies in western and central Ukraine, it could significantly increase the adverse effect on the Company in future periods.

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.

11 unchanged sentences

Entities must apply the amendments of this ASU retrospectively to all periods in which a balance sheet is presented, with the exception of the amendment on disclosure of rollforward information, which entities only need to apply prospectively.

On February 1st, 2023 we adopted ASU No.

2022-04 with no impact to our consolidated financial statements.

The Company has agreements with financial institutions to facilitate the purchase of inventory from designated suppliers under certain terms and conditions.

2 unchanged sentences

Additionally, the Company has no involvement in establishing the terms or conditions of the arrangements between its suppliers and the financial institution.

The amounts outstanding under these agreements as of April 30, 2023 and January 31, 2023 were $26.3 million and $13.0 million, respectively, and are presented as Floorplan payable on the Condensed Consolidated Balance Sheet.

The amounts outstanding under these agreements as of July 31, 2023 and January 31, 2023 were $ 42.1 million and $ 13.0 million, respectively, and are presented as Floorplan payable on the Company's condensed consolidated balance sheet.

NOTE 2 - EARNINGS PER SHARE

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,

2023 2022 2023 2022

(in thousands, except per share data)

10 unchanged sentences

NOTE 3 - REVENUE

Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to collect in exchange for those goods or services.

Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to collect in exchange for those goods or services.

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

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

Three Months Ended April 30, 2023

Agriculture Construction International Total

(in thousands)

Three Months Ended July 31, 2023 Six Months Ended July 31, 2023

Agriculture Construction International Total Agriculture Construction International Total

(in thousands) (in thousands)

Equipment $ 352,533 $ 53,697 $ 73,892 $ 480,122 $ 678,193 $ 99,155 $ 132,150 $ 909,498

5 unchanged sentences

Rental 529 8,694 219 9,442 1,085 14,872 315 16,272

Total revenues $ 423,195 $ 71,996 $ 74,440 $ 569,631

Three Months Ended April 30, 2022

Agriculture Construction International Total

(in thousands)

Total revenue $ 469,069 $ 82,863 $ 90,636 $ 642,568 $ 892,266 $ 154,860 $ 165,073 $ 1,212,199

Three Months Ended July 31, 2022 Six Months Ended July 31, 2022

Agriculture Construction International Total Agriculture Construction International Total

(in thousands) (in thousands)

Equipment $ 270,472 $ 43,184 $ 61,560 $ 375,216 $ 521,565 $ 87,002 $ 123,015 $ 731,582

4 unchanged sentences

Rental 326 8,220 97 8,643 522 13,177 193 13,892

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

Total revenue $ 348,956 $ 70,022 $ 77,565 $ 496,543 $ 667,503 $ 136,986 $ 153,060 $ 957,549

Unbilled Receivables and Deferred Revenue

Unbilled receivables from contracts with customers amounted to $ 29.5 million and $ 19.8 million as of April 30, 2023 and January 31, 2023, respectively.

Unbilled receivables from contracts with customers amounted to $ 32.1 million and $ 19.8 million as of July 31, 2023 and January 31, 2023, 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 $ 96.2 million and $ 118.1 million as of April 30, 2023 and January 31, 2023, respectively.

Deferred revenue from contracts with customers amounted to $ 62.0 million and $ 118.1 million as of July 31, 2023 and January 31, 2023, 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 three months ended April 30, 2023 and 2022, the Company recognized $ 66.4 million and $ 64.6 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2023 and January 31, 2022, respectively.

No material amount of revenue was recognized during the three months ended April 30, 2023 or 2022 from performance obligations satisfied in previous periods.

During the six months ended July 31, 2023 and 2022, the Company recognized $ 107.7 million and $ 105.1 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2023 and January 31, 2022, respectively.

No material amount of revenue was recognized during the six months ended July 31, 2023 or 2022 from performance obligations satisfied in previous periods.

NOTE 4 - RECEIVABLES

9 unchanged sentences

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, 2023 January 31, 2023

July 31, 2023 January 31, 2023

(in thousands)

18 unchanged sentences

Balance at January 31, 2023 $ 367 $ 124 $ 2,589 $ 3,080

Current expected credit loss provision 30 62 191 283

Current expected credit loss (benefit) provision ( 15 ) 123 244 352

Write-offs charged against allowance 143 56 53 252

1 unchanged sentence

Foreign exchange impact — — 15 15

Balance at April 31, 2023 $ 365 $ 145 $ 2,778 $ 3,288

Balance at July 31, 2023 $ 222 $ 192 $ 2,837 $ 3,251

Agriculture Construction International Total

5 unchanged sentences

Foreign exchange impact — — ( 49 ) ( 49 )

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

The increase in the credit loss provision in the International segment, during the three months ended April 30, 2023, was driven by a $ 0.2 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 April 30,

Balance at July 31, 2022 $ 309 $ 135 $ 2,278 $ 2,722

The following table presents impairment losses (recoveries) on receivables arising from sales contracts with customers and receivables arising from rental contracts reflected in Operating Expenses in the Condensed Consolidated Statements of

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

2023 2022 2023 2022

(in thousands)

Impairment losses (recoveries) on:

Impairment losses on:

Receivables from sales contracts $ 69 $ 186 $ 351 $ 999

Receivables from rental contracts 71 43 123 32

$ 140 $ 229 $ 474 $ 1,031

NOTE 5 - INVENTORIES

April 30, 2023 January 31, 2023

July 31, 2023 January 31, 2023

(in thousands)

5 unchanged sentences

NOTE 6 - PROPERTY AND EQUIPMENT

April 30, 2023 January 31, 2023

July 31, 2023 January 31, 2023

(in thousands)

7 unchanged sentences

$ 252,187 $ 217,782

The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 1.8 million and $ 1.5 million for the three months ended April 30, 2023 and 2022, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 4.8 million and $ 3.5 million for the three months ended April 30, 2023 and 2022, respectively.

The Company includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 2.2 million and $ 2.0 million for the three months ended July 31, 2023 and 2022, and $ 3.9 million and $ 3.5 million for the six months ended July 31, 2023 and 2022, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 5.2 million and $ 3.6 million for the three months ended July 31, 2023 and 2022, and $ 10.0 million and $ 7.1 million for the six months ended July 31, 2023 and 2022, 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.

Due to the results of the analyses, the Company concluded no impairments were necessary, thus no impairment was recognized for the three months ended April 30, 2023 and 2022.

Due to the results of the analyses, the Company concluded no impairments were necessary, thus no impairment was recognized for the three and six months ended July 31, 2023 and 2022.

NOTE 7 - INTANGIBLE ASSETS AND GOODWILL

1 unchanged sentence

The Company's finite-lived intangible assets consist of customer relationships and covenants not to compete.

The following is a summary of intangible assets with finite lives as of April 30, 2023 and January 31, 2023.

April 30, 2023 January 31, 2023

The following is a summary of intangible assets with finite lives as of July 31, 2023 and January 31, 2023.

July 31, 2023 January 31, 2023

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

3 unchanged sentences

$ 1,671 $ (567) $ 1,104 $ 1,563 $ (402) $ 1,161

Future amortization expense, as of April 30, 2023, is expected to be as follows:

Future amortization expense, as of July 31, 2023, is expected to be as follows:

Fiscal Year Ended January 31, Amount

3 unchanged sentences

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 three months ended April 30, 2023:

The following is a summary of the changes in indefinite-lived intangible assets, by segment, for the six months ended July 31, 2023:

Agriculture Construction Total

1 unchanged sentence

January 31, 2023 $ 17,178 $ 72 $ 17,250

April 30, 2023 $ 17,178 $ 72 $ 17,250

The following presents changes in the carrying amount of goodwill, by segment, for the three months ended April 30, 2023:

Agriculture Total

July 31, 2023 $ 17,178 $ 72 $ 17,250

The following presents changes in the carrying amount of goodwill, by segment, for the six months ended July 31, 2023:

Agriculture International Total

(in thousands)

1 unchanged sentence

Arising from business combinations 69 471 540

April 30, 2023 $ 30,691 $ 30,691

Foreign currency translation — ( 5 ) ( 5 )

July 31, 2023 $ 30,691 $ 466 $ 31,157

NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

As of April 30, 2023, the Company had floorplan lines of credit totaling $ 781.0 million, which is primarily comprised of three floorplan lines of credit:

(i) a $ 500.0 million credit facility with CNH Industrial, (ii) a $ 185.0 million line of credit under the Bank Syndicate Agreement, and (iii) a $ 50.0 million credit facility with DLL Finance LLC.

The Company's outstanding balances of floorplan lines of credit as of April 30, 2023 and January 31, 2023, consisted of the following:

April 30, 2023 January 31, 2023

As of July 31, 2023, the Company had floorplan lines of credit totaling $ 781.0 million, which is primarily comprised of three floorplan lines of credit:

(i) a $ 500.0 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.

The Company's outstanding balances of floorplan lines of credit as of July 31, 2023 and January 31, 2023, consisted of the following:

July 31, 2023 January 31, 2023

(in thousands)

4 unchanged sentences

$ 595,728 $ 258,372

As of April 30, 2023, the interest bearing U.S.

floorplan payables carried a variable interest rate of 6.42% compared to 5.94% as of January 31, 2023.

As of April 30, 2023, foreign floorplan payables carried a variable interest rate with a range of 5.37 % to 5.72 %, compared to a range of 4.16 % to 4.96 % as of January 31, 2023 on multiple lines of credit.

The Company had non-interest bearing floorplan payables of $ 303.8 million and $ 213.0 million, on April 30, 2023 and January 31, 2023, respectively.

As of July 31, 2023, the interest-bearing U.S.

floorplan payables carried a variable interest rate with a range of 6.72 % to 11.00 % compared to a range of 5.94 % to 10.25 % as of January 31, 2023.

As of July 31, 2023, foreign floorplan payables carried a variable interest rate with a range of 5.36 % to 6.17 %, compared to a range of 4.16 % to 4.96 % as of January 31, 2023, on multiple lines of credit.

The Company had non-interest-bearing floorplan payables of $ 360.4 million and $ 213.0 million, as of July 31, 2023 and January 31, 2023, respectively.

NOTE 9 - LONG TERM DEBT

The following is a summary of long-term debt as of April 30, 2023 and January 31, 2023:

Description Maturity Dates Interest Rates April 30, 2023 January 31, 2023

The following is a summary of long-term debt as of July 31, 2023 and January 31, 2023:

Description Maturity Dates Interest Rates July 31, 2023 January 31, 2023

(in thousands)

3 unchanged sentences

10,658 11,252

Vehicle loans, secured Various through November 2028 2.1% to 6.2%

Vehicle loans, secured Various through May 2029 2.1% to 6.8%

13,295 12,659

3 unchanged sentences

Long-term debt, net $ 87,052 $ 89,950

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 July 31, 2023 was $ 5.1 million.

There were no outstanding foreign currency contracts as of January 31, 2023.

As of July 31, 2023 and January 31, 2023, 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 three and six months ended July 31, 2023 and 2022.

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

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

2023 2022 2023 2022

(in thousands)

Foreign currency contract gain (loss) $ 21 $ — $ ( 39 ) $ —

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 three month periods ended April 30, 2023 and April 30, 2022:

The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the six month periods ended July 31, 2023 and July 31, 2022:

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

3 unchanged sentences

Balance, April 30, 2023 ( 6,634 ) 2,711 ( 3,923 )

Other comprehensive income (loss) 550 550

Balance, July 31, 2023 $ ( 6,084 ) $ 2,711 $ ( 3,373 )

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 (loss) ( 2,963 ) — ( 2,963 )

Balance, July 31, 2022 $ ( 9,037 ) $ 2,711 $ ( 6,326 )

NOTE 12 - LEASES

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 April 30, 2023 and January 31, 2023:

April 30, 2023 January 31, 2023

July 31, 2023 January 31, 2023

(in thousands)

3 unchanged sentences

NOTE 13 - FAIR VALUE MEASUREMENTS

As of April 30, 2023, 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, 2023, 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.

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, 2023 and January 31, 2023.

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

The carrying amounts of these financial instruments approximated their fair values as of July 31, 2023 and January 31, 2023.

The 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:

April 30, 2023 January 31, 2023

July 31, 2023 January 31, 2023

(in thousands)

2 unchanged sentences

NOTE 14 - INCOME TAXES

Our effective tax rate was 23.9 % and 25.6 % for the three months ended April 30, 2023 and 2022, respectively.

The effective tax rates for the three months ended April 30, 2023 and 2022 were subject to various other factors such as the impact of certain discrete items, mainly the vesting of share-based compensation, the mix of domestic and foreign income , and the change of valuation allowances in certain foreign jurisdictions.

Our effective tax rate was 24.7 % for each of the three months ended July 31, 2023 and 2022 and was 24.3 % and 25.1 % for the six months ended July 31, 2023 and 2022, respectively.

The effective tax rate for the three and six months ended July 31, 2023 and 2022 were subject to various other factors such as the impact of certain discrete items, mainly the vesting of share-based compensation, the mix of domestic and foreign income , and the change of valuation allowances in certain foreign jurisdictions.

NOTE 15 - BUSINESS COMBINATIONS

On February 1, 2023, the Company acquired certain assets of Pioneer Farm Equipment Co.

On June 1, 2023, the Company acquired certain assets of Midwest Truck Parts Inc., ("Midwest Truck").

The acquired business consists of one location in Dawson, Minnesota.

This location is included in the Company's Agriculture segment.

The total consideration transferred for the acquired business was $4.0 million paid in cash, which includes the purchase of the real estate.

On May 1, 2023, the Company, through its German subsidiary, Titan Machinery Deutschland GmbH, acquired certain assets of MAREP GmbH ("MAREP") related to its full-service agriculture dealership business located in Mühlengeez and Radelübbe, Germany.

Our acquisition of these assets from MAREP further expands our presence in the German market.

The total consideration transferred for the acquired business was $4.4 million paid in cash, which includes the real estate of the Mühlengeez location.

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

On February 1, 2023, the Company acquired certain assets of Pioneer Farm Equipment Co., ("Pioneer Farm Equipment").

The acquired business consists of five agriculture equipment stores in American Falls, Blackfoot, Idaho Falls, Rexburg, and Rupert, Idaho.

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

The total consideration transferred for the acquired business was $10.1 million paid in cash.

The Company has agreed to acquire the real estate of Pioneer Farm Equipment Co., subject to customary closing conditions, for a purchase price of $9.4 million.

The Company anticipates completing the one remaining real estate acquisition by July 31, 2023.

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

The total consideration transferred for the acquired business was $19.5 million paid in cash, which includes $9.4 million for the purchase of the real estate.

In connection with the acquisition, the Company acquired from CNH Industrial and certain other manufacturers equipment and parts inventory previously owned by Pioneer Farm Equipment Co.

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

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

In total, the Company acquired inventory and recognized a corresponding liability of $12.7 million.

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

On August 1, 2022, the Company acquired all interests of three entities, Heartland Agriculture, LLC, Heartland Solutions, LLC, and Heartland Leveraged Lender, LLC, (collectively referred to as "Heartland Companies") for $ 94.4 million in cash consideration.

On August 1, 2022, the Company acquired all outstanding equity interests of three entities, Heartland Agriculture, LLC, Heartland Solutions, LLC, and Heartland Leveraged Lender, LLC, (collectively referred to as "Heartland Companies") for $ 94.4 million in cash consideration.

The Heartland Companies consist of 12 CaseIH commercial application agriculture locations in the states of Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, and Wisconsin.

1 unchanged sentence

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

In the most recent completed fiscal year prior to the acquisition, the Heartland Companies generated revenue of approximately $214 million.

In the most recently completed fiscal year prior to the acquisition, the Heartland Companies generated revenue of approximately $214 million.

The Company incurred $1.1 million in acquisition-related expenses in connection with this acquisition, which are included in operating expenses in the condensed consolidated statement of operations.

4 unchanged sentences

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.

Upon acquiring these 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.

2 unchanged sentences

Each of the above acquisitions have 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, 2023, the purchase price allocation for all business combinations completed in fiscal year 2024 are preliminary as we finalize the valuation of our intangible assets acquired.

The purchase price allocation for all business combinations completed in fiscal year 2023 are complete.

The following table presents the purchase price allocations for all acquisitions completed during the fiscal year ended January 31, 2023 and the three months ended April 30, 2023:

April 30, 2023 January 31, 2023

The purchase price allocation for all business combinations completed in the six months ended July 31, 2023 are preliminary as we finalize the valuation of our intangible assets acquired.

The purchase price allocations for all business combinations completed in fiscal year 2023 are complete.

The following table presents the purchase price allocations for all acquisitions completed during the fiscal year ended January 31, 2023 and the six months ended July 31, 2023:

July 31, 2023 January 31, 2023

(in thousands)

Assets acquired:

7 unchanged sentences

Goodwill 540 21,670

Other $ 110 —

29,583 176,534

11 unchanged sentences

Agriculture $ 69 $ 21,670

International $ 471 $ —

Goodwill expected to be deductible for tax purposes $ 540 $ 21,670

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 combinations occurring during the year ended January 31, 2023, the Company recognized a non-competition intangible asset of $0.8 million and a customer relationship intangible asset of $0.2 million.

The non-competition and customer relationship assets will be amortized over five year periods.

For the business combinations completed during the six months ended July 31, 2023, the Company recognized a non-competition intangible asset of $0.1 million in its International segment, which will be amortized over a three year period.

For the business combinations completed during the fiscal year ended January 31, 2023, the Company recognized a non-competition intangible asset of $0.8 million and a customer relationship intangible asset of $0.2 million.

The 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.

Acquisition related costs, amounted to $1.1 million for the period ended January 31, 2023, and acquisition related costs for the period ended April 30, 2023, were not material.

Acquisition related costs for the six month period ended July 31, 2023 amounted to $0.5 million, primarily related to the O'Connors, see Subsequent Event Note 18, acquisition.

Acquisition related costs amounted to $1.1 million for the fiscal year ended January 31, 2023.

All acquisition-related costs have been expensed as incurred and recognized as Operating Expenses in the condensed consolidated statements of operations.

Pro Forma Information

The following summarized unaudited pro forma condensed statement of operations information for the three months ended April 30, 2023 and 2022, assumes that the Heartland Companies acquisition occurred as of February 1, 2021.

The following summarized unaudited pro forma condensed statement of operations information for the three months ended July 31, 2023 and 2022, assumes that the Heartland Companies acquisition occurred as of February 1, 2021.

The Company prepared the following summarized unaudited pro forma financial results for comparative purposes only.

The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed the acquisition as of February 1, 2021 or that will be attained in the future.

Three Months Ended April 30,

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

2023 2022 2023 2022

(in thousands)

13 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,

2023 2022 2023 2022

(in thousands) (in thousands)

Agriculture $ 469,069 $ 348,956 $ 892,266 $ 667,503

9 unchanged sentences

Total $ 41,591 $ 33,150 $ 77,032 $ 56,734

April 30, 2023 January 31, 2023

July 31, 2023 January 31, 2023

(in thousands)

6 unchanged sentences

NOTE 18 - SUBSEQUENT EVENTS

On May 1, 2023, the Company, through its German Subsidiary, Titan Machinery Deutschland GmbH, acquired certain assets of MAREP GmbH "MAREP" related to full-service agriculture dealership businesses located in the following cities of Germany:

Mühlengeez and Radelübbe.

Our acquisitions of MAREP further expands our presence in the German market.

The total consideration transferred for the acquired business was $2.1 million paid in cash.

The business assets acquired consisted of $0.5 million of inventory and $1.6 million of other tangible assets.

The real estate of the Mühlengeez location was also purchased for $2.3 million.

Due to the limited time since the acquisition, the estimated fair values of acquired assets are provisional estimates but are based on the best information currently available.

These provisional estimates are subject to changes as the Company completes all remaining steps in finalizing the purchase price allocation.

Acquisition-related transaction costs were not material.

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

On August 29, 2023, the Company entered into a definitive purchase agreement to acquire J.J.

O’Connor & Sons Pty.

("O’Connors"), which operates 15 CaseIH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia.

In its most recently completed fiscal year ended June 30, 2023, O’Connors generated revenue of approximately $258 million.

The Company plans to close on the acquisition in the fourth quarter of calendar 2023.

The consideration paid is estimated to be $63 million, subject to final working capital and other purchase price closing adjustments.

The acquisition will be accounted for in accordance with Accounting Standards Codification ("ASC") Topic 805, "Business Combinations".

The Company plans to fund the acquisition with cash on hand and additional indebtedness under the floorplan and working capital loans of the Bank Syndicate.

On September 1, 2023, the Company entered into Amendment No.

3 to the Third Amended and Restated Credit Agreement with the Bank Syndicate, the amendment increased the Floorplan loan capacity from $185 million to $250 million and the Revolver loan capacity from $65 million to $75 million.

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