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Item 1. Financial Statements

2024-09-05 compared with 2024-06-07 · 171 added, 96 removed, 456 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

Current Assets

31 unchanged sentences

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

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

23,127,895 shares issued and outstanding at July 31, 2024;

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

8 unchanged sentences

(in thousands, except per share data)

Three Months Ended April 30,

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

2024 2023 2024 2023

Equipment $ 465,233 $ 480,122 $ 933,322 $ 909,498

11 unchanged sentences

Operating Expenses 95,156 88,751 194,314 170,066

Impairment of Goodwill 531 — 531 —

Impairment of Intangible and Long-Lived Assets 942 — 942 —

Income from Operations 15,750 44,648 38,345 81,913

3 unchanged sentences

Other interest expense ( 3,734 ) ( 1,241 ) ( 6,193 ) ( 2,514 )

Income Before Income Taxes 12,786 35,439

(Loss) Income Before Income Taxes ( 4,250 ) 41,591 8,535 77,032

Provision for Income Taxes 54 10,270 3,399 18,745

Net Income $ 9,441 $ 26,965

Earnings per Share:

Net (Loss) Income $ ( 4,304 ) $ 31,321 $ 5,136 $ 58,287

(Loss) Earnings per Share:

Basic $ ( 0.19 ) $ 1.38 $ 0.22 $ 2.56

5 unchanged sentences

TITAN MACHINERY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)

Three Months Ended April 30,

Net Income $ 9,441 $ 26,965

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

2024 2023 2024 2023

Net (Loss) Income $ ( 4,304 ) $ 31,321 $ 5,136 $ 58,287

Other Comprehensive (Loss) Income

Foreign currency translation adjustments 58 550 ( 4,467 ) 1,646

Comprehensive Income $ 4,916 $ 28,061

Comprehensive (Loss) Income $ ( 4,246 ) $ 31,871 $ 669 $ 59,933

See Notes to Condensed Consolidated Financial Statements

10 unchanged sentences

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

Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax 310 — ( 51 ) — — ( 51 )

Stock-based compensation expense — — 1,262 — — 1,262

Net loss — — — ( 4,304 ) — ( 4,304 )

Other comprehensive income — — — — 58 58

Balance at July 31, 2024 23,128 $ — $ 259,911 $ 402,362 $ ( 2,707 ) $ 659,566

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

6 unchanged sentences

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

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Three Months Ended April 30,

Six Months Ended July 31,

Operating Activities

2 unchanged sentences

Depreciation and amortization 18,413 14,637

Impairment 1,473 —

Deferred income taxes ( 650 ) ( 2,495 )

1 unchanged sentence

Noncash interest expense 493 129

Sale-leaseback finance modification expense 11,159 —

Gain on extinguishment of debt ( 3,585 ) —

Other, net 7,319 3,250

18 unchanged sentences

Principal payments on long-term debt and finance leases ( 11,853 ) ( 8,701 )

Payment of debt issuance costs ( 3,745 ) ( 9 )

Other, net ( 956 ) ( 1,000 )

10 unchanged sentences

Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities $ 8,415 $ 5,175

Long-term debt to acquire finance leases $ 42,182 $ —

Net transfer of assets to property and equipment from inventories $ ( 7,201 ) $ ( 1,232 )

8 unchanged sentences

The quarterly operating results for Titan Machinery Inc.

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

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

(the “Company”) are subject to fluctuation due to varying weather patterns and other factors influencing customer profitability, 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, 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.

25 unchanged sentences

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.

A federal court has stayed the implementation of the SEC rules, pending the outcome of litigation challenging the rules.

The Company will continue to monitor the litigation process.

NOTE 2 - EARNINGS PER SHARE

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

Three Months Ended April 30,

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

2024 2023 2024 2023

(in thousands, except per share data)

Net income $ 9,441 $ 26,965

Net (loss) income $ ( 4,304 ) $ 31,321 $ 5,136 $ 58,287

Allocation to participating securities — ( 400 ) ( 78 ) ( 689 )

Net income attributable to Titan Machinery Inc.

Net (loss) income attributable to Titan Machinery Inc.

common stockholders $ ( 4,304 ) $ 30,921 $ 5,058 $ 57,598

2 unchanged sentences

Diluted weighted-average common shares outstanding 22,617 22,484 22,583 22,480

Earnings Per Share:

(Loss) Earnings Per Share:

Basic $ ( 0.19 ) $ 1.38 $ 0.22 $ 2.56

Diluted $ ( 0.19 ) $ 1.38 $ 0.22 $ 2.56

Anti-dilutive shares excluded from diluted weighted-average common shares outstanding:

Restricted stock units 12 — — —

NOTE 3 - REVENUE

2 unchanged sentences

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

Three Months Ended April 30, 2024

Three Months Ended July 31, 2024

Agriculture Construction Europe Australia (1)

5 unchanged sentences

Revenue from contracts with customers 423,556 71,627 67,827 61,298 624,308

447,496 66,041 64,933 44,419 622,889

Rental 480 8,564 322 — 9,366

Total revenue $ 424,036 $ 80,191 $ 68,149 $ 61,298 $ 633,674

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

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

O’Connor & Sons Pty.

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

Three Months Ended April 30, 2023

Six Months Ended July 31, 2024

Agriculture Construction Europe Australia Total

(in thousands)

Equipment $ 651,269 $ 99,939 $ 96,645 $ 85,469 $ 933,322

Parts 150,395 22,879 29,931 14,827 218,032

Service 67,512 14,014 5,833 4,987 92,346

Other 1,875 836 351 435 3,497

Revenue from contracts with customers 871,051 137,668 132,760 105,718 1,247,197

Rental 670 14,015 494 — 15,179

Total revenue $ 871,721 $ 151,683 $ 133,254 $ 105,718 $ 1,262,376

Three Months Ended July 31, 2023

Agriculture Construction Europe Total

7 unchanged sentences

Total revenue $ 469,069 $ 82,863 $ 90,636 $ 642,568

Six Months Ended July 31, 2023

Agriculture Construction Europe Total

(in thousands)

Equipment $ 678,193 $ 99,155 $ 132,150 $ 909,498

Parts 151,793 26,202 27,121 205,116

Service 58,793 13,683 4,935 77,411

Other 2,402 948 552 3,902

Revenue from contracts with customers 891,181 139,988 164,758 1,195,927

Rental 1,085 14,872 315 16,272

Total revenue $ 892,266 $ 154,860 $ 165,073 $ 1,212,199

Unbilled Receivables and Deferred Revenue

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.

Unbilled receivables from contracts with customers amounted to $ 30.8 million and $ 22.3 million as of July 31, 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 $ 83.8 million and $ 114.6 million as of April 30, 2024 and January 31, 2024, respectively.

Deferred revenue from contracts with customers amounted to $ 57.0 million and $ 114.6 million as of July 31, 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 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.

During the six months ended July 31, 2024 and 2023, the Company recognized $ 85.6 million and $ 107.7 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 six months ended July 31, 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.

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

(in thousands)

22 unchanged sentences

Foreign exchange impact — — ( 26 ) ( 1 ) ( 27 )

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.

Balance at July 31, 2024 $ 266 $ 199 $ 2,546 $ 65 $ 3,076

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

Agriculture Construction Europe Total

5 unchanged sentences

Foreign exchange impact — — 15 15

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 April 30,

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

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 Operations:

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

2024 2023 2024 2023

(in thousands)

Impairment losses on:

Impairment losses (recoveries) on:

Receivables from sales contracts $ ( 61 ) $ 69 $ 213 $ 351

Receivables from rental contracts 16 71 130 123

$ ( 45 ) $ 140 $ 343 $ 474

NOTE 5 - INVENTORIES

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

(in thousands)

5 unchanged sentences

NOTE 6 - PROPERTY AND EQUIPMENT

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

(in thousands)

7 unchanged sentences

$ 357,346 $ 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 $ 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 includes depreciation expense related to its rental fleet and its trucking fleet, for hauling equipment, in Cost of Revenue, which was $ 2.4 million and $ 2.2 million for the three months ended July 31, 2024 and 2023, respectively, and $ 4.3 million and $ 3.9 million for the six months ended July 31, 2024 and 2023, respectively.

All other depreciation expense is included in Operating Expenses, which was $ 6.1 million and $ 5.2 million for the three months ended July 31, 2024 and 2023, respectively, and $ 12.2 million and $ 10.0 million for the six months ended July 31, 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 months ended April 30, 2024 or 2023.

The Company determined, based on changing expectations regarding the future use of certain long-lived assets, that the $12.7 million carrying value of these assets may not be fully recoverable.

Accordingly, the Company performed step two of the impairment analysis and estimated the fair value of the asset using an income approach.

As a result, the Company recognized an impairment charge of $0.9 million within the Europe segment in the second quarter of fiscal 2025, which is reflected in the Impairment of Intangibles and Long-Lived Assets amount in the Condensed Consolidated Statements of Operations.

NOTE 7 - INTANGIBLE ASSETS AND GOODWILL

1 unchanged sentence

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

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

April 30, 2024 January 31, 2024

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

July 31, 2024 January 31, 2024

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

3 unchanged sentences

$ 13,018 $ (2,097) $ 10,921 $ 13,445 $ (1,157) $ 12,288

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:

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 July 31, 2024 and 2023, respectively.

Total expense related to the amortization of intangible assets, which is recorded in Operating Expenses in the Condensed Consolidated Statements of Operations, was $1.0 million and $0.2 million for the six months ended July 31, 2024 and 2023, respectively.

The Company performed an interim impairment test in the second quarter of fiscal 2025 with respect to its German subsidiary's assets and recorded an impairment charge of $ 0.1 million within the Europe segment, which is reflected in Impairment of Intangible and Long-Lived Assets in the Condensed Consolidated Statements of Operations.

Future amortization expense, as of July 31, 2024, is expected to be as follows:

Fiscal Year Ending January 31,

4 unchanged sentences

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

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

The following is a summary of the changes in indefinite-lived intangible assets, by segment, for the six months ended July 31, 2024:

Agriculture Construction Australia Total

2 unchanged sentences

Foreign currency translation — — (622) (622)

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:

July 31, 2024 $ 18,154 $ 72 $ 22,220 $ 40,446

The following presents changes in the carrying amount of goodwill, by segment, for the six months ended July 31, 2024:

Agriculture Europe Australia Total

2 unchanged sentences

Arising from business combinations — 70 — 70

Impairment — (531) — (531)

Foreign currency translation — ( 13 ) (702) ( 715 )

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

July 31, 2024 $ 37,820 $ — $ 25,109 $ 62,929

The Company performed an interim impairment test in the second quarter of fiscal 2025 for the German reporting unit.

Under the impairment test, the fair value of the reporting unit is estimated using an income approach in which a discounted cash flow analysis is utilized, which includes a five-year forecast of future operating performance for the reporting unit and a terminal value that estimates sustained long-term growth.

The discount rate applied to the estimated future cash flows reflects an estimate of the weighted-average cost of capital of comparable companies.

The quantitative goodwill impairment analysis for the German reporting unit indicated that the estimated fair value of the reporting unit was less than the carrying value.

The implied fair value of the goodwill associated with the reporting unit approximated zero, thus requiring a full impairment charge of the goodwill carrying value of the reporting unit.

As such, a goodwill impairment charge of $ 0.5 million was recognized within the Europe segment, which is reflected in Impairment of Goodwill in the Condensed Consolidated Statements of Operations.

NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT

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)

CNH Industrial $ 672,905 $ 567,677

Bank Syndicate Agreement Floorplan Loan 194,550 162,845

DLL Finance 46,394 38,528

Other outstanding balances with manufacturers and non-manufacturers 111,150 124,796

$ 1,024,999 $ 893,846

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 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.

3 unchanged sentences

Borrowers aggregate facility cannot exceed $485.0 million.

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

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.

15 unchanged sentences

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

As of July 31, 2024, the Company had floorplan and working capital lines of credit totaling $ 1.5 billion, which is primarily comprised of three floorplan lines of credit:

(i) $ 875.0 million credit facility with CNH Industrial, (ii) $ 410.0 million floorplan line of credit and $90.0 million working capital line of credit under the Fourth Amended and Restated Credit Agreement, and (iii) $ 80.0 million credit facility with DLL Finance LLC.

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

July 31, 2024 January 31, 2024

(in thousands)

CNH Industrial $ 803,665 $ 567,677

Bank Syndicate Agreement Floorplan Loan 237,400 162,845

DLL Finance 43,362 38,528

Other outstanding balances with manufacturers and non-manufacturers 84,013 124,796

$ 1,168,440 $ 893,846

As of July 31, 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 July 31, 2024, foreign floorplan payables carried a variable interest rate with a range of 5.18 % to 7.51 %, 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 $ 594.1 million and $ 507.7 million, as of July 31, 2024 and January 31, 2024, respectively.

NOTE 9 - LONG TERM DEBT

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

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

Description Maturity Dates Interest Rates July 31, 2024 January 31, 2024

(in thousands)

2 unchanged sentences

Sale-leaseback financing obligations Various through December 2030 6.1% to 6.2%

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

19,608 10,043

Other Various through July 2039 1.2% to 7.0%

Vehicle loans, secured Various through June 2030 2.1% to 7.4%

21,732 14,433

Other Various through February 2029 1.2% to 7.0%

Total debt 126,606 120,113

1 unchanged sentence

Long-term debt, net $ 116,666 $ 106,407

In the second quarter of fiscal year 2025, the Company signed an agreement to purchase 13 of its leased facilities at the end of the respective lease terms, resulting in an increase of the Sale-leaseback financing obligation by $11.2 million which is recorded to Current maturities of long-term debt and Long-term debt, less current maturities in the Condensed Consolidated Balance Sheet.

The sale-leaseback finance modification expense was recorded to Interest and other income (expense) in the Condensed Consolidated Statements of Operations.

Additionally, in the second quarter of fiscal year 2025, the Company decreased the Other debt balance by $3.6 million for the debt cancellation in relation to a New Market Tax Credit Program, which is recorded to Current maturities of long-term debt in the Condensed Consolidated Balance Sheet.

The gain in debt cancellation was recorded to Interest and other income (expense) in the Condensed Consolidated Statements of Operations.

NOTE 10 - DERIVATIVE INSTRUMENTS

4 unchanged sentences

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

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

The notional value of outstanding foreign currency contracts 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.

The Company's foreign currency forward contracts generally have one month to three-month maturities.

The notional value of outstanding foreign currency contracts was $ 65.1 million and $25.3 million as of July 31, 2024 and January 31, 2024, respectively.

As of July 31, 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 months ended April 30, 2024 and 2023.

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, 2024 and 2023.

Gains and losses are recognized in Interest and other income (expense) in the Condensed Consolidated Statements of Operations:

Three Months Ended April 30,

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

2024 2023 2024 2023

(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 three month periods ended April 30, 2024 and 2023:

The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the six month periods ended July 31, 2024 and 2023:

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

1 unchanged sentence

Balance, January 31, 2024 $ ( 951 ) $ 2,711 $ 1,760

Other comprehensive income (loss) ( 4,525 ) — ( 4,525 )

Other comprehensive loss ( 4,525 ) — ( 4,525 )

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

Other comprehensive income 58 — 58

Balance, July 31, 2024 ( 5,418 ) 2,711 ( 2,707 )

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

1 unchanged sentence

Balance, January 31, 2023 $ ( 7,730 ) $ 2,711 $ ( 5,019 )

Other comprehensive income (loss) 1,096 — 1,096

Other comprehensive income 1,096 — 1,096

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

Other comprehensive income 550 — 550

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

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

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

(in thousands)

3 unchanged sentences

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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.

As of July 31, 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 April 30, 2024 and January 31, 2024.

The carrying amounts of these financial instruments approximated their fair values as of July 31, 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:

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

(in thousands)

2 unchanged sentences

NOTE 14 - INCOME TAXES

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.

Our effective tax rate was 1.3 % and 24.7 % for the three months ended July 31, 2024 and 2023, respectively.

Our effective tax rate was 39.8 % and 24.3 % for the six months ended July 31, 2024 and 2023, respectively.

The effective tax rate for the three and six months ended July 31, 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

1 unchanged sentence

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.

This acquisition is not considered material to the overall consolidated financial statements during the three and six months ended July 31, 2024 and has been included in the Condensed Consolidated Financial Statements from the date of the acquisition.

On October 2, 2023, the Company 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 15 O’Connors store locations are included within the 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.

The Company completed other 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.

6 unchanged sentences

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.

As of July 31, 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 the Company is in the process of 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):

30 unchanged sentences

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 following summarized unaudited pro forma condensed statement of operations information for the three and six months ended July 31, 2024 and 2023, assuming 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,

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

2024 2023 2024 2023

(in thousands)

Total Revenues $ 633,674 $ 737,920 $ 1,262,376 $ 1,349,005

Net Income $ 9,441 $ 27,706

Net (Loss) Income $ ( 4,304 ) $ 35,456 $ 5,136 $ 63,162

NOTE 16 - CONTINGENCIES

10 unchanged sentences

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

Three Months Ended April 30,

(in thousands)

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

2024 2023 2024 2023

(in thousands) (in thousands)

Agriculture $ 424,036 $ 469,069 $ 871,721 $ 892,266

2 unchanged sentences

Australia (1)

61,298 — 105,718 —

Total $ 633,674 $ 642,568 $ 1,262,376 $ 1,212,199

7 unchanged sentences

Total $ ( 4,250 ) $ 41,591 $ 8,535 $ 77,032

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

April 30, 2024 January 31, 2024

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

July 31, 2024 January 31, 2024

(in thousands)

7 unchanged sentences

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

July 31, Six Months Ended

2024 2023 2024 2023

(in thousands)

4 unchanged sentences

$ 633,674 $ 642,568 $ 1,262,376 $ 1,212,199

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

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

Long-lived assets

July 31, 2024 January 31, 2024

(in thousands)

United States $ 347,810 $ 305,512

Australia 26,988 27,637

Other international countries 21,099 21,233

$ 395,897 $ 354,382

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