What changed in this filing

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Item 1. Financial Statements

2024-06-07 compared with 2023-12-07 · 162 added, 232 removed, 390 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

October 31, 2023 January 31, 2023

April 30, 2024 January 31, 2024

Current Assets

21 unchanged sentences

Accrued expenses and other 65,402 74,400

Income taxes payable 5,622 3,845

Total current liabilities 1,247,738 1,152,401

8 unchanged sentences

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

22,862,706 shares issued and outstanding at October 31, 2023;

22,818,170 shares issued and outstanding at April 30, 2024;

22,848,138 shares issued and outstanding at January 31, 2024

1 unchanged sentence

Retained earnings 406,666 397,225

Accumulated other comprehensive loss ( 5,311 ) ( 5,019 )

Accumulated other comprehensive income (loss) ( 2,765 ) 1,760

Total stockholders' equity 662,601 657,642

4 unchanged sentences

(in thousands, except per share data)

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

2023 2022 2023 2022

Three Months Ended April 30,

Equipment $ 468,089 $ 429,376

12 unchanged sentences

Income from Operations 22,597 37,265

Other Income (Expense)

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

Other (Expense) Income

Interest and other (expense) income ( 288 ) 720

Floorplan interest expense ( 7,064 ) ( 1,272 )

13 unchanged sentences

(in thousands)

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

2023 2022 2023 2022

Three Months Ended April 30,

Net Income $ 9,441 $ 26,965

Other Comprehensive Income (Loss)

Other Comprehensive (Loss) Income

Foreign currency translation adjustments ( 4,525 ) 1,096

10 unchanged sentences

Net income — — — 9,441 — 9,441

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

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 )

Stock-based compensation expense — — 784 — — 784

Net income — — — 31,321 — 31,321

Other comprehensive income — — — — 550 550

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 — — — — ( 4,525 ) ( 4,525 )

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

Balance at April 30, 2024 22,818 $ — $ 258,700 $ 406,666 $ ( 2,765 ) $ 662,601

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

1 unchanged sentence

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

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 )

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

Stock-based compensation expense — — 659 — — 659

Net income — — — 26,965 — 26,965

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

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

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

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 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)

Nine Months Ended October 31,

Three Months Ended April 30,

Operating Activities

37 unchanged sentences

Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities $ 508 $ 1,473

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

Net transfer of assets to property and equipment from inventories $ ( 746 ) $ ( 935 )

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 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.

Therefore, operating results for the three-months ended April 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2025.

The information contained in the consolidated balance sheet as of January 31, 2024 was derived from the audited consolidated financial statements of the Company for the fiscal year then ended.

17 unchanged sentences

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, FASB issued ASU No.

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

Disclosure of Supplier Finance Program Obligations.

This new standard requires that the buyer in a supplier finance program discloses information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption of this ASU is permitted.

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 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.

Under these agreements, the Company receives extended payment terms and agrees to pay the financial institution a stated amount of confirmed invoices from its designated suppliers.

The Company may incur interest in accordance with the terms of the agreements.

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 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.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires additional income tax disclosures in the rate reconciliation table for federal, state and foreign income taxes, in addition to more details about the reconciling items in some categories when items meet a certain quantitative threshold.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted.

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

In March 2024, the SEC adopted new rules that will require registrants to provide certain climate-related information in their registration statements and annual reports.

The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.

The required information about climate-related risks will also include disclosure of a registrant's greenhouse gas emissions.

In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements.

The Company is currently evaluating the rules and the impact on its future consolidated statements.

NOTE 2 - EARNINGS PER SHARE

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,

2023 2022 2023 2022

Three Months Ended April 30,

(in thousands, except per share data)

13 unchanged sentences

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

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

Agriculture Construction Europe Total Agriculture Construction Europe Total

(in thousands) (in thousands)

Three Months Ended April 30, 2024

Agriculture Construction Europe Australia (1)

(in thousands)

Equipment $ 338,713 $ 47,095 $ 47,499 $ 34,782 $ 468,089

6 unchanged sentences

Total revenue $ 447,687 $ 71,492 $ 65,105 $ 44,419 $ 628,703

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

Agriculture Construction Europe Total Agriculture Construction Europe Total

(in thousands) (in thousands)

(1) Australia segment was acquired through the J.J.

O’Connor & Sons Pty.

("O’Connors") acquisition that closed in October 2023.

Three Months Ended April 30, 2023

Agriculture Construction Europe Total

(in thousands)

Equipment $ 325,660 $ 45,458 $ 58,258 $ 429,376

6 unchanged sentences

Unbilled Receivables and Deferred Revenue

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.

Unbilled receivables from contracts with customers amounted to $ 30.1 million and $ 22.3 million as of April 30, 2024 and January 31, 2024, 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 $ 43.2 million and $ 118.1 million as of October 31, 2023 and January 31, 2023, respectively.

Deferred revenue from contracts with customers amounted to $ 83.8 million and $ 114.6 million as of April 30, 2024 and January 31, 2024, 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, 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.

During the three months ended April 30, 2024 and 2023, the Company recognized $ 76.7 million and $ 66.4 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2024 and January 31, 2023, respectively.

No material amount of revenue was recognized during the three months ended April 30, 2024 or 2023 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.

October 31, 2023 January 31, 2023

April 30, 2024 January 31, 2024

(in thousands)

15 unchanged sentences

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

Agriculture Construction Europe Total

Agriculture Construction Europe Australia (1)

(in thousands)

4 unchanged sentences

Foreign exchange impact — — ( 10 ) (6) ( 16 )

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

Balance at April 30, 2024 $ 198 $ 221 $ 2,744 $ 90 $ 3,253

(1) Australia segment was acquired through the O'Connors acquisition that closed in October 2023.

Agriculture Construction Europe Total

4 unchanged sentences

Credit loss recoveries collected 12 1 2 15

Acquisition 94 — — 94

Foreign exchange impact — — 11 11

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

Balance at April 30, 2023 $ 365 $ 145 $ 2,778 $ 3,288

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

Three Months Ended April 30,

(in thousands)

2 unchanged sentences

Receivables from rental contracts 115 52

$ 381 $ 246 $ 855 $ 1,277

NOTE 5 - INVENTORIES

October 31, 2023 January 31, 2023

April 30, 2024 January 31, 2024

(in thousands)

5 unchanged sentences

NOTE 6 - PROPERTY AND EQUIPMENT

October 31, 2023 January 31, 2023

April 30, 2024 January 31, 2024

(in thousands)

7 unchanged sentences

$ 304,472 $ 298,774

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 includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 1.9 million and $ 1.8 million for the three months ended April 30, 2024 and 2023, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 6.0 million and $ 4.8 million for the three months ended April 30, 2024 and 2023, 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 nine months ended October 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 months ended April 30, 2024 or 2023.

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 October 31, 2023 and January 31, 2023:

October 31, 2023 January 31, 2023

The following is a summary of intangible assets with finite lives as of April 30, 2024 and January 31, 2024:

April 30, 2024 January 31, 2024

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

3 unchanged sentences

$ 12,909 $ (1,627) $ 11,282 $ 13,445 $ (1,157) $ 12,288

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

Fiscal Year Ended January 31,

Total expense related to the amortization of intangible assets, which is recorded in operating expenses in the condensed consolidated statements of operations, was $0.5 million and $0.1 million for the three months ended April 30, 2024 and 2023, respectively.

Future amortization expense, as of April 30, 2024, is expected to be as follows:

Fiscal Year Ending January 31,

(in thousands)

2025 (remainder) $ 1,449

Thereafter 2,773

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, 2023:

Agriculture Construction Total

The following is a summary of the changes in indefinite-lived intangible assets, by segment, for the three months ended April 30, 2024:

Agriculture Construction Australia Total

(in thousands)

January 31, 2024 $ 18,154 $ 72 $ 22,842 $ 41,068

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

Foreign currency translation — — (1,049) (1,049)

April 30, 2024 $ 18,154 $ 72 $ 21,793 $ 40,019

The following presents changes in the carrying amount of goodwill, by segment, for the three months ended April 30, 2024:

Agriculture Europe Australia Total

(in thousands)

2 unchanged sentences

Foreign currency translation — ( 11 ) (1,185) ( 1,196 )

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

April 30, 2024 $ 37,820 $ 533 $ 24,626 $ 62,979

NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

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

As of April 30, 2024, the Company had floorplan and working capital lines of credit totaling $ 1.4 billion, which is primarily comprised of three floorplan lines of credit:

(i) a $ 875.0 million credit facility with CNH Industrial, (ii) a $ 275.0 million floorplan line of credit and a $75.0 million working capital line of credit under the Third Amended and Restated Credit Agreement (the "Bank Syndicate Agreement"), and (iii) a $ 80.0 million credit facility with DLL Finance LLC.

The Company's outstanding balances of floorplan lines of credit as of April 30, 2024 and January 31, 2024, consisted of the following:

April 30, 2024 January 31, 2024

(in thousands)

4 unchanged sentences

$ 1,024,999 $ 893,846

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

As of April 30, 2024, the interest-bearing U.S.

floorplan payables carried a variable interest rate with a range of 7.19 % to 10.68 % compared to a range of 7.22 % to 10.70 % as of January 31, 2024.

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.

As of April 30, 2024, foreign floorplan payables carried a variable interest rate with a range of 5.26 % to 8.25 %, compared to a range of 5.24 % to 8.27 % as of January 31, 2024, on multiple lines of credit.

The Company had non-interest-bearing floorplan payables of $ 546.8 million and $ 507.7 million, as of April 30, 2024 and January 31, 2024, respectively.

On May 17, 2024, the Company entered into a Fourth Amended and Restated Credit Agreement (the "Bank Syndicate Agreement") with a group of banks, which replaced the previous Third Amended and Restated Credit Agreement (the "Existing Credit Facility") the Company had entered into in April 2020.

The Credit Agreement provides for a secured credit facility in an amount of up to $500.0 million, consisting of $395.0 million floorplan facility and $105.0 million revolving operating line which can be used by both the U.S.

Borrowers and the Australian Borrower.

The maximum aggregate facility for the Australian Borrower cannot exceed $100.0 million and the U.S.

Borrowers aggregate facility cannot exceed $485.0 million.

The outstanding indebtedness under the Credit Agreement matures on May 17, 2029.

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

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

borrowings under the Credit Agreement, the Company elects at the time of any advance to choose a Base Rate Loan or a SOFR Rate Loan.

The SOFR Rate is based upon one month, three month or six-month SOFR plus an adjustment (0.11448% for one-month term;

0.26161% for three-month term;

and 0.42826% for six-month term), as chosen by the Company, but in no event shall the SOFR Rate be less than zero.

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

(b) the Federal Funds Rate plus 0.5%, and (c) one-month SOFR plus 1.0%, but in no event shall the Base Rate be less than zero.

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

The applicable margin is determined based on excess availability as determined under the Credit Agreement and ranges from 0.75% to 1.25% for Base Rate Loans and 1.75% to 2.25% for SOFR Rate Loans.

The applicable margins for the U.S.

loans under the Bank Syndicate Agreement are 0.25% higher than the margins under the Existing Credit Facility.

For the Australian borrowings under the Credit Agreement, the Company elects at the time of the advance to choose an Australian Base Rate Loan or an Australian Bill Rate Loan.

The Australian Bill Rate is based on the Bank Bill Swap Reference Bid Rate with an equivalent term of the loan, but in no event shall the Australian Bill Rate be less than zero.

The Australian Base Rate is the sum of 1% plus the interbank overnight cash rate calculated by the Reserve Bank of Australia (but in no event shall the Australian cash rate be less than zero).

The effective interest rate on the Australian’s borrowings is then calculated by adding an applicable margin to the Australian Bill Rate or the Australian Base Rate.

The applicable margin is determined based on excess availability as determined under the Credit Agreement and ranges from 1.75% to 2.25%.

NOTE 9 - LONG TERM DEBT

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

The following is a summary of the Company's long-term debt as of April 30, 2024 and January 31, 2024:

Description Maturity Dates Interest Rates April 30, 2024 January 31, 2024

(in thousands)

2 unchanged sentences

Sale-leaseback financing obligations Various through December 2030 3.4% to 10.3%

10,353 11,252

Vehicle loans, secured Various through September 2029 2.1% to 7.3%

15,211 14,433

Other Various through July 2039 3.6%

Other Various through July 2039 1.2% to 7.0%

Total debt 119,330 120,113

8 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 October 31, 2023 was $ 4.0 million.

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

As of October 31, 2023 and January 31, 2023, the fair value of the Company's outstanding derivative instruments was not material.

The notional value of outstanding foreign currency contracts was $ 26.6 million and $25.3 million as of April 30, 2024 and January 31, 2024, respectively.

As of April 30, 2024 and January 31, 2024, 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 nine months ended October 31, 2023 and 2022.

The following table sets forth the gains and losses recognized in income from the Company’s derivative instruments for the three months ended April 30, 2024 and 2023.

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

Three Months Ended April 30,

(in thousands)

1 unchanged sentence

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 nine month periods ended October 31, 2023 and 2022:

The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the three month periods ended April 30, 2024 and 2023:

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

3 unchanged sentences

Balance, April 30, 2024 ( 5,476 ) 2,711 ( 2,765 )

Other comprehensive income (loss) 550 — 550

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)

3 unchanged sentences

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

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

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 - Revenue.

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, 2023 and January 31, 2023:

October 31, 2023 January 31, 2023

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 sheets, of our Construction segment as of April 30, 2024 and January 31, 2024:

April 30, 2024 January 31, 2024

(in thousands)

3 unchanged sentences

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.

As of April 30, 2024, 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 October 31, 2023 and January 31, 2023.

The carrying amounts of these financial instruments approximated their fair values as of April 30, 2024 and January 31, 2024.

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:

October 31, 2023 January 31, 2023

April 30, 2024 January 31, 2024

(in thousands)

2 unchanged sentences

NOTE 14 - INCOME TAXES

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.

Our effective tax rate was 26.2 % and 23.9 % for the three months ended April 30, 2024 and 2023, respectively.

The effective tax rate for the three months ended April 30, 2024 and 2023 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").

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 Europe 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 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 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.

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 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.

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.

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.

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 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.

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.

The Company acquired Gose Landtechnik e.K.

on March 1, 2024, which consists of one location in Germany and is included in the Europe segment.

This acquisition is not considered material to the overall consolidated financial statements during the three months ended April 30, 2024 and has been included in the condensed consolidated financial statements from the date of the acquisition.

On October 2, 2023, we acquired all of the outstanding equity interests of O’Connors.

The acquired business consisted of 15 Case IH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia.

O'Connors has been a successful Case IH complex, and our acquisition of O'Connors provides the Company the opportunity to expand our international presence into the large, well-established Australian agricultural market.

Total cash consideration paid for O'Connors was $ 66.5 million, which was financed through available cash resources and line of credit availability.

The 15 O’Connors stores locations are included within our Australia segment.

The Company incurred $ 1.1 million in acquisition related expenses in connection with this acquisition, which are included in operating expenses in the consolidated statements of operations for the year ended January 31, 2024.

The Company completed acquisitions that were not considered material, individually or collectively, to the overall consolidated financial statements during the year ended January 31, 2024.

These acquisitions consisted of five locations of Pioneer Farm Equipment Co.

on February 1, 2023, in the state of Idaho, one location of Midwest Truck Parts Inc.

on June 1, 2023, in the state Minnesota and one location of Scott Supply Co.

on January 10, 2024, in the state of South Dakota, all of which are included in the Agriculture segment.

The Company also acquired MAREP GmbH on May 1, 2023, which included two locations in Germany and is included in the Europe segment.

These acquisitions have been included in the condensed consolidated financial statements from the date of the respective acquisition.

Purchase Price Allocation

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 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

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, 2024, the purchase price allocation for all business combinations from fiscal year 2024 and prior are complete with the exception of the O'Connors acquisition for which we are still finalizing the closing tax balances and intangible asset valuations.

The following summarizes the acquisition date fair value of consideration transferred and the acquisition date fair value of the identifiable assets acquired and liabilities assumed, including an amount for goodwill (in thousands):

October 2, 2023

(in thousands)

Assets acquired:

Cash $ 4 $ 1,584

Receivables 8,323

3 unchanged sentences

Operating lease assets 14,798

Intangible assets — 8,017

Intangible assets acquired:

Customer Relationships 10,928

Distribution Rights 21,470

Goodwill 24,261

29,583 176,534

Total assets 192,511

Liabilities assumed:

6 unchanged sentences

Operating lease liabilities 13,733

Other long-term liabilities — 5,152

Total liabilities 125,977

Net assets acquired $ 66,534

Goodwill recognized by segment:

Agriculture $ 69 $ 21,670

Europe $ 471 $ —

Australia $ 24,261

Goodwill expected to be deductible for tax purposes $ —

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 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.

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 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.

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 acquired customer relationship intangible assets are being amortized on a straight line basis over a useful life of seven years.

The distribution rights assets are indefinite-lived intangible assets not subject to amortization, but are tested for impairment annually, or more frequently upon the occurrence of certain events or when circumstances indicate that impairment may be present.

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

Pro Forma Information

The following summarized unaudited pro forma condensed statement of operations information for the three months ended April 30, 2024 and 2023, assumes that the O'Connors acquisition occurred as of February 1, 2023.

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, 2023 or that will be attained in the future.

Three Months Ended April 30,

(in thousands)

Total Revenues $ 628,703 $ 611,086

Net Income $ 9,441 $ 27,706

NOTE 16 - CONTINGENCIES

3 unchanged sentences

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

NOTE 17 - SEGMENT INFORMATION

The Company has three reportable segments:

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.

NOTE 17 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company has four reportable segments:

Agriculture, Construction, Europe and Australia.

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 October 31, Nine Months Ended October 31,

2023 2022 2023 2022

(in thousands) (in thousands)

Three Months Ended April 30,

(in thousands)

Agriculture $ 447,687 $ 423,195

1 unchanged sentence

Europe 65,105 74,440

Australia (1)

Total $ 628,703 $ 569,631

3 unchanged sentences

Europe 1,350 6,384

Australia ( 486 ) —

Segment income before income taxes 14,177 35,069

1 unchanged sentence

Total $ 12,786 $ 35,439

October 31, 2023 January 31, 2023

(1) Australia segment was acquired through the O'Connors acquisition that closed in October 2023.

April 30, 2024 January 31, 2024

(in thousands)

2 unchanged sentences

Europe 293,999 280,354

Australia 208,479 225,421

Segment assets 2,038,311 1,946,284

1 unchanged sentence

Total $ 2,087,667 $ 1,992,261

NOTE 18 - SUBSEQUENT EVENTS

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:

Net sales and long-lived assets, by geographic area were as follows:

Revenue Long-lived assets

Three Months Ended

2024 2023 April 30, 2024 January 31, 2024

(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,

United States $ 519,179 $ 495,191 $ 309,205 $ 305,512

Australia (1)

44,419 — 26,768 27,637

(in thousands)

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

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

Other international countries 65,105 74,440 21,265 21,233

$ 628,703 $ 569,631 $ 357,238 $ 354,382

(1) Australia segment was acquired through the O'Connors acquisition that closed in October 2023.

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