What changed in this filing

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Item 1. Financial Statements

2023-12-07 compared with 2023-09-07 · 181 added, 120 removed, 441 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

Current Assets

29 unchanged sentences

Total long-term liabilities 138,501 154,238

Commitments and Contingencies (Note 15)

Commitments and Contingencies

Stockholders' Equity

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

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

22,862,706 shares issued and outstanding at October 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 July 31, Six Months Ended July 31,

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

2023 2022 2023 2022

14 unchanged sentences

Other Income (Expense)

Interest and other income 641 873 1,362 1,365

Interest and other income (expense) ( 235 ) 1,804 1,129 3,169

Floorplan interest expense ( 4,045 ) ( 588 ) ( 7,774 ) ( 1,087 )

13 unchanged sentences

(in thousands)

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

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

2023 2022 2023 2022

9 unchanged sentences

Shares Outstanding Amount

BALANCE, January 31, 2023 22,698 $ — $ 256,541 $ 284,784 $ ( 5,019 ) $ 536,306

Balance at January 31, 2023 22,698 $ — $ 256,541 $ 284,784 $ ( 5,019 ) $ 536,306

Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax ( 29 ) — ( 993 ) — — ( 993 )

2 unchanged sentences

Other comprehensive income — — — — 1,096 1,096

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

Balance at 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 )

2 unchanged sentences

Other comprehensive income — — — — 550 550

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

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

Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax ( 1 ) — 1 — — 1

Stock-based compensation expense — — 896 — — 896

Net income — — — 30,193 — 30,193

Other comprehensive loss — — — — ( 1,938 ) ( 1,938 )

Balance at October 31, 2023 22,863 $ — $ 257,881 $ 373,263 $ ( 5,311 ) $ 625,833

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

Shares Outstanding Amount

BALANCE, January 31, 2022 22,588 $ — $ 254,455 $ 182,916 $ ( 2,172 ) $ 435,199

Balance at January 31, 2022 22,588 $ — $ 254,455 $ 182,916 $ ( 2,172 ) $ 435,199

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 ( 19 ) — ( 685 ) — — ( 685 )

2 unchanged sentences

Other comprehensive loss — — — — ( 1,191 ) ( 1,191 )

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

Balance at 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 )

2 unchanged sentences

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

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

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

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 12 — — — — —

Stock-based compensation expense — — 885 — — 885

Net income — — — 41,257 — 41,257

Other comprehensive loss — — — — ( 5,132 ) ( 5,132 )

Balance at October 31, 2022 22,707 $ — $ 256,073 $ 266,672 $ ( 11,458 ) $ 511,287

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Six Months Ended July 31,

Nine Months Ended October 31,

Operating Activities

37 unchanged sentences

Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities $ 5,479 $ 5,436

Long-term debt to acquire finance leases $ — $ 7,119

Net transfer of assets to property and equipment from inventories $ ( 400 ) $ ( 4,686 )

9 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 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.

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

The segment formerly known as "International" has been updated to "Europe" as of October 31, 2023 and a fourth segment "Australia" will be added starting in the fourth quarter fiscal 2024 reporting, as a result of the Company's acquisition of J.J.

O’Connor & Sons Pty.

("O’Connors"), refer to Note 18 - Subsequent Event for further details.

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.

1 unchanged sentence

Nature of Business

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, 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.

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

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.

Internationally, the Company's European stores are located in Bulgaria, Germany, Romania, and Ukraine and the Company's Australian stores are located in New South Wales, South Australia, and Victoria in Southeastern Australia.

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.

3 unchanged sentences

All material accounts, transactions and profits between the consolidated companies have been eliminated in consolidation.

Recently issued accounting pronouncements not yet adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated statements.

Recently Adopted Accounting Guidance

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

In September 2022, FASB issued ASU No.

2022-04, Supplier Finance Programs (Subtopic 405-50):

4 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.

On February 1, 2023, the Company adopted ASU No.

2022-04 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 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.

The amounts outstanding under these agreements as of October 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 July 31, Six Months Ended July 31,

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

2023 2022 2023 2022

14 unchanged sentences

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

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

Agriculture Construction International Total Agriculture Construction International Total

Three Months Ended October 31, 2023 Nine Months Ended October 31, 2023

Agriculture Construction Europe Total Agriculture Construction Europe Total

(in thousands) (in thousands)

7 unchanged sentences

Total revenue $ 531,404 $ 77,508 $ 85,203 $ 694,115 $ 1,423,669 $ 232,368 $ 250,275 $ 1,906,312

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

Agriculture Construction International Total Agriculture Construction International Total

Three Months Ended October 31, 2022 Nine Months Ended October 31, 2022

Agriculture Construction Europe Total Agriculture Construction Europe Total

(in thousands) (in thousands)

7 unchanged sentences

Unbilled Receivables and Deferred Revenue

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.

Unbilled receivables from contracts with customers amounted to $ 33.0 million and $ 19.8 million as of October 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 $ 62.0 million and $ 118.1 million as of July 31, 2023 and January 31, 2023, respectively.

Deferred revenue from contracts with customers amounted to $ 43.2 million and $ 118.1 million as of October 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 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.

During the nine months ended October 31, 2023 and 2022, the Company recognized $ 118.0 million and $ 126.3 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 nine months ended October 31, 2023 or 2022 from performance obligations satisfied in previous periods.

NOTE 4 - RECEIVABLES

4 unchanged sentences

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

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

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

2 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.

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

(in thousands)

4 unchanged sentences

89,855 63,982

Trade receivables due from finance companies 17,556 11,212

Short-term receivables due from finance companies 22,513 11,212

Trade and unbilled receivables from rental contracts

8 unchanged sentences

Following is a summary of allowance for credit losses on trade and unbilled accounts receivable by segment:

Agriculture Construction International Total

Agriculture Construction Europe Total

(in thousands)

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

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

Current expected credit loss provision 64 155 495 714

Write-offs charged against allowance 191 95 56 342

1 unchanged sentence

Foreign exchange impact — — ( 11 ) ( 11 )

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

Agriculture Construction International Total

Balance at October 31, 2023 $ 255 $ 191 $ 3,069 $ 3,515

Agriculture Construction Europe Total

(in thousands)

1 unchanged sentence

Current expected credit loss provision 47 74 1,036 1,157

Write-offs (recoveries) charged against allowance 30 97 61 188

Write-offs charged against allowance 41 147 148 336

Credit loss recoveries collected 24 9 — 33

Acquisition 94 — — 94

Foreign exchange impact — — ( 113 ) ( 113 )

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,

Balance at October 31, 2022 $ 368 $ 129 $ 2,317 $ 2,814

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

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

2023 2022 2023 2022

5 unchanged sentences

NOTE 5 - INVENTORIES

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

(in thousands)

5 unchanged sentences

NOTE 6 - PROPERTY AND EQUIPMENT

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

(in thousands)

7 unchanged sentences

$ 267,155 $ 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 $ 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 includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 2.5 million and $ 2.6 million for the three months ended October 31, 2023 and 2022, respectively, and $ 6.5 million and $ 6.0 million for the nine months ended October 31, 2023 and 2022, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 5.3 million and $ 4.2 million for the three months ended October 31, 2023 and 2022, respectively, and $ 15.3 million and $ 11.3 million for the nine months ended October 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 and six months ended July 31, 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 nine months ended October 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 July 31, 2023 and January 31, 2023.

July 31, 2023 January 31, 2023

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

October 31, 2023 January 31, 2023

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

3 unchanged sentences

$ 1,669 $ (653) $ 1,016 $ 1,563 $ (402) $ 1,161

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

Fiscal Year Ended January 31, Amount

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

Fiscal Year Ended January 31,

(in thousands)

2 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 six months ended July 31, 2023:

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

Agriculture Construction Total

1 unchanged sentence

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

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

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

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

Agriculture Europe Total

(in thousands)

2 unchanged sentences

Foreign currency translation — ( 18 ) ( 18 )

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

October 31, 2023 $ 30,691 $ 453 $ 31,144

NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

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

As of October 31, 2023, the Company had floorplan and working capital lines of credit totaling $ 923.0 million, which is primarily comprised of three floorplan lines of credit:

(i) a $ 500.0 million credit facility with CNH Industrial (amended as of December 6, 2023, to increase the total available domestic limit to $640 million, which includes $590 million for floorplan financing and a $50 million revolver for working capital, and an overall global limit to $875 million), (ii) a $ 250.0 million floorplan line of credit and a $75 million working capital 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 October 31, 2023 and January 31, 2023, consisted of the following:

October 31, 2023 January 31, 2023

(in thousands)

4 unchanged sentences

$ 705,610 $ 258,372

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

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

floorplan payables carried a variable interest rate with a range of 7.18 % to 8.37 % 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.

As of October 31, 2023, foreign floorplan payables carried a variable interest rate with a range of 5.51 % to 6.38 %, 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 $ 399.7 million and $ 213.0 million, as of October 31, 2023 and January 31, 2023, respectively.

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

3 (“Amendment No.

3”) to the Bank Syndicate Agreement.

Among other items, Amendment No.

3 (i) increased the Bank Syndicate Agreement lenders’ aggregate floorplan loan commitments under the Bank Syndicate Agreement from $185.0 million to $250.0 million and the Bank Syndicate Agreement lenders’ aggregate revolving loan commitments under the Bank Syndicate Agreement from $65.0 million to $75.0 million and (ii) amended the terms of the Bank Syndicate Agreement to permit the Company’s acquisition of O’Connors.

NOTE 9 - LONG TERM DEBT

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

The following is a summary of the Company's long-term debt as of October 31, 2023 and January 31, 2023:

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

(in thousands)

3 unchanged sentences

10,353 11,252

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

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

14,012 12,659

10 unchanged sentences

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.

The notional value of outstanding foreign currency contracts as of October 31, 2023 was $ 4.0 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.

As of October 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,

The following table sets forth the gains and losses recognized in income from the Company’s derivative instruments for the three and nine months ended October 31, 2023 and 2022.

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

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

2023 2022 2023 2022

2 unchanged sentences

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 six month periods ended July 31, 2023 and July 31, 2022:

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

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

5 unchanged sentences

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

Other comprehensive income (loss) ( 1,938 ) — ( 1,938 )

Balance, October 31, 2023 $ ( 8,022 ) $ 2,711 $ ( 5,311 )

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

5 unchanged sentences

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

Other comprehensive income (loss) ( 5,132 ) — ( 5,132 )

Balance, October 31, 2022 $ ( 14,169 ) $ 2,711 $ ( 11,458 )

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 July 31, 2023 and January 31, 2023:

July 31, 2023 January 31, 2023

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

October 31, 2023 January 31, 2023

(in thousands)

2 unchanged sentences

$ 48,262 $ 48,427

NOTE 13 - FAIR VALUE MEASUREMENTS

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.

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

As of October 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 July 31, 2023 and January 31, 2023.

The 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 October 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:

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

(in thousands)

2 unchanged sentences

NOTE 14 - INCOME TAXES

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.

Our effective tax rate was 25.4 % and 24.5 % for each of the three months ended October 31, 2023 and 2022, respectively, and was 24.7 % and 24.8 % for the nine months ended October 31, 2023 and 2022, respectively.

The effective tax rate for the three and nine months ended October 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 June 1, 2023, the Company acquired certain assets of Midwest Truck Parts Inc., ("Midwest Truck").

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.

4 unchanged sentences

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.

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

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

2 unchanged sentences

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.

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

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

3 unchanged sentences

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.

The Heartland Companies have been a successful CaseIH commercial application dealer group and our acquisition of these entities provides the Company the opportunity for synergies due to the overlap of our footprints, which will allow us to package deals that will include both commercial application equipment as well as other agricultural and construction equipment to commercial customers within our core footprint.

The Heartland Companies have been a successful CaseIH commercial application dealer group and our acquisition of these entities provides the Company the opportunity for synergies due to the overlap of our footprints, as it allow us to package deals that include both commercial application equipment as well as other agricultural and construction equipment to commercial customers within our core footprint.

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

5 unchanged sentences

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.

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

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

3 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.

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

The purchase price allocation for all business combinations completed in fiscal year 2023 and the nine months ended October 31, 2023.

The purchase price allocation for the O'Connors acquisition, which is still preliminary, is not included in these numbers as the acquisition will be accounted for based on a calendar year end and will be reflected in the fourth quarter fiscal 2024 financials, refer to Note 18 - Subsequent Event for further details.

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

October 31, 2023 January 31, 2023

(in thousands)

8 unchanged sentences

Goodwill 540 21,670

Other $ 110 —

29,583 176,534

11 unchanged sentences

Agriculture $ 69 $ 21,670

International $ 471 $ —

Europe $ 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 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 nine months ended October 31, 2023, the Company recognized a non-competition intangible asset of $ 0.1 million in its Europe 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.

1 unchanged sentence

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 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.

Acquisition related costs for the three and nine month period ended October 31, 2023 amounted to $ 0.6 million and $ 1.1 million, respectively, primarily related to the O'Connors acquisition, refer to Note 18 - Subsequent Event for additional details.

Acquisition related costs amounted to $ 1.1 million during 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 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 July 31, Six Months Ended July 31,

2023 2022 2023 2022

(in thousands)

Total Revenues $ 642,568 $ 561,194 $ 1,212,199 $ 1,117,622

Net Income $ 31,321 $ 27,523 $ 58,287 $ 51,904

NOTE 16 - CONTINGENCIES

5 unchanged sentences

The Company has three reportable segments:

Agriculture, Construction and International.

Agriculture, Construction and Europe.

Starting in the fourth quarter of fiscal 2024, our fourth segment will be Australia, see Note 1 - Business Activity and Significant Accounting Policies for further details.

Revenue between segments is immaterial.

2 unchanged sentences

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

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

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

2023 2022 2023 2022

2 unchanged sentences

Construction 77,508 86,403 232,368 223,389

International 90,636 77,565 165,073 153,060

Europe 85,203 89,046 250,275 242,105

Total $ 694,115 $ 668,773 $ 1,906,312 $ 1,626,323

2 unchanged sentences

Construction 4,057 6,065 13,746 13,197

International 5,568 5,870 11,952 10,195

Europe 5,146 8,488 17,097 18,683

Segment income before income taxes 44,333 56,597 123,154 115,267

1 unchanged sentence

Total $ 40,452 $ 54,678 $ 117,483 $ 111,412

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

(in thousands)

1 unchanged sentence

Construction 239,516 187,739

International 242,177 170,647

Europe 322,559 170,647

Segment assets 1,631,255 1,146,651

2 unchanged sentences

NOTE 18 - SUBSEQUENT EVENTS

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.

On October 2, 2023, the Company, through a newly organized, wholly-owned Australian subsidiary, Titan Machinery Holdings Australia Pty Ltd., ("Titan Australia") acquired all outstanding equity interests of O’Connors, for cash consideration of $ 62 million net of cash acquired.

O’Connors consists of 15 CaseIH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia.

Founded in 1964, O’Connors has been a successful CaseIH complex, and our acquisition of O'Connors provides the Company the opportunity to expand our international presence into the large, well-established Australian market.

Each of the Company’s foreign subsidiaries has fiscal quarters and a fiscal year-end that align with the calendar quarterly periods and year-end.

Titan Australia also maintains fiscal quarters and a fiscal year-end that aligns with the calendar periods.

The quarterly and annual financial statements of all of the Company's foreign subsidiaries are consolidated into the Company’s U.S.

quarterly and annual fiscal periods that end on April 30th, July 31st, October 31st and January 31st.

Accordingly, the October 2, 2023 foreign acquisition of O'Connors is a fourth quarter of fiscal 2024 transaction, and therefore no amounts were recognized in the consolidated financial statements of the Company for the quarter ended October 31, 2023.

The acquisition of O'Connors 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 fair value of the consideration paid exceeded the preliminarily estimated fair value of the assets acquired and liabilities assumed, which resulted in the recognition of $ 48.5 million of intangible assets.

The Company is in the process of completing an intangible asset valuation and is expected to have goodwill, distribution rights, and customer relationships as the primarily intangible assets.

The valuation is expected to be completed by January 31, 2024.

The entire goodwill amount will be assigned to the Australia segment and is not expected to be deductible for income tax purposes.

All acquisition-related costs, which amounted to $ 1.1 million during the nine months ended October 31, 2023, have been expensed as incurred and recognized as operating expenses in the condensed consolidated statement of operations.

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

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

The Company expects to finalize the valuation of all assets and liabilities by January 31, 2024.

The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:

(in thousands)

Assets acquired:

Receivables 5,741

Inventories 97,832

Prepaid expenses and other 296

Property and equipment 11,063

Operating lease assets 14,496

Intangible assets 48,520

Other assets 7

Liabilities assumed:

Accounts payable $ 4,191

Floorplan payable 74,843

Current maturities of long-term debt 294

Current operating lease liabilities 1,039

Deferred revenue 12,066

Accrued expenses and other 7,204

Long-term debt, less current maturities 2,077

Operating lease liabilities 13,457

Deferred income taxes 965

Net assets acquired $ 66,152

Pro Forma Information

The following summarized unaudited pro forma condensed statement of operations information for the three and nine months ended October 31, 2023 and 2022, assumes that the Heartland Companies and O'Connors acquisitions occurred as of February 1, 2022.

The Company prepared the following summarized unaudited pro forma condensed statement of operations information for comparative purposes only.

The summarized unaudited pro forma condensed statement of operations information may not be indicative of the results that would have occurred had the Company completed the acquisitions as of February 1, 2022 or that will be attained in the future.

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

2023 2022 2023 2022

(in thousands)

Total Revenues $ 757,223 $ 724,416 $ 2,098,124 $ 1,959,048

Net Income $ 34,027 $ 44,390 $ 99,302 $ 100,913

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