Titan Machinery Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS TITAN MACHINERY INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) April 30, 2025 January 31, 2025 Assets Current Assets Cash $ 21,514 $ 35,898 Receivables, net of allowance for expected credit losses 124,007 119,814 Inventories, net 1,099,394 1,108,672 Prepaid expenses and other 27,903 28,244 Total current assets 1,272,818 1,292,628 Noncurrent Assets Property and equipment, net of accumulated depreciation 376,917 379,690 Operating lease assets 29,222 27,935 Deferred income taxes 7,664 2,552 Goodwill 61,608 61,246 Intangible assets, net of accumulated amortization 48,300 48,306 Other 1,158 1,581 Total noncurrent assets 524,869 521,310 Total Assets $ 1,797,687 $ 1,813,938 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 49,268 $ 37,166 Floorplan payable 769,613 755,698 Current maturities of long-term debt 11,354 10,920 Current operating lease liabilities 5,879 5,747 Deferred revenue 57,829 91,933 Accrued expenses and other 61,975 59,492 Total current liabilities 955,918 960,956 Long-Term Liabilities Long-term debt, less current maturities 153,900 157,767 Operating lease liabilities 26,586 25,588 Finance lease liabilities 44,279 44,894 Deferred income taxes 8,959 8,818 Other long-term liabilities 2,601 1,838 Total long-term liabilities 236,325 238,905 Commitments and Contingencies Stockholders' Equity Common stock, par value $ .00001 per share, 45,000,000 shares authorized; 23,085,586 shares issued and outstanding at April 30, 2025; 23,124,768 shares issued and outstanding at January 31, 2025 — — Additional paid-in-capital 263,007 262,097 Retained earnings 347,110 360,314 Accumulated other comprehensive income ( 4,673 ) ( 8,334 ) Total stockholders' equity 605,444 614,077 Total Liabilities and Stockholders' Equity $ 1,797,687 $ 1,813,938 See Notes to Condensed Consolidated Financial Statements 3 Table of Contents TITAN MACHINERY INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended April 30, 2025 2024 Revenue Equipment $ 436,840 $ 468,089 Parts 105,629 108,226 Service 44,017 45,079 Rental and other 7,850 7,309 Total Revenue 594,336 628,703 Cost of Revenue Equipment 407,349 412,239 Parts 73,080 73,151 Service 16,609 16,776 Rental and other 6,363 4,782 Total Cost of Revenue 503,401 506,948 Gross Profit 90,935 121,755 Operating Expenses 96,404 99,158 Impairment of Intangible and Long-Lived Assets 266 — (Loss) Income from Operations ( 5,735 ) 22,597 Other Income (Expense) Interest and other (expense) income ( 488 ) ( 288 ) Floorplan interest expense ( 6,526 ) ( 7,064 ) Other interest expense ( 4,533 ) ( 2,459 ) (Loss) Income Before Income Taxes ( 17,282 ) 12,786 (Benefit) Provision for Income Taxes ( 4,078 ) 3,345 Net (Loss) Income $ ( 13,204 ) $ 9,441 (Loss) Earnings per Share: Basic $ ( 0.58 ) $ 0.41 Diluted $ ( 0.58 ) $ 0.41 Weighted Average Common Shares: Basic 22,669 22,542 Diluted 22,669 22,546 See Notes to Condensed Consolidated Financial Statements 4 Table of Contents TITAN MACHINERY INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in thousands) Three Months Ended April 30, 2025 2024 Net (Loss) Income $ ( 13,204 ) $ 9,441 Other Comprehensive (Loss) Income Foreign currency translation adjustments 3,661 ( 4,525 ) Comprehensive (Loss) Income $ ( 9,543 ) $ 4,916 See Notes to Condensed Consolidated Financial Statements 5 Table of Contents TITAN MACHINERY INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) (in thousands) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Shares Outstanding Amount Balance at January 31, 2025 23,125 $ — $ 262,097 $ 360,314 $ ( 8,334 ) $ 614,077 Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax ( 39 ) — ( 681 ) — — ( 681 ) Stock-based compensation expense — — 1,591 — — 1,591 Net loss — — — ( 13,204 ) — ( 13,204 ) Other comprehensive income — — — — 3,661 3,661 Balance at April 30, 2025 23,086 $ — $ 263,007 $ 347,110 $ ( 4,673 ) $ 605,444 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Shares Outstanding Amount Balance at January 31, 2024 22,848 $ — $ 258,657 $ 397,225 $ 1,760 $ 657,642 Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax ( 30 ) — ( 794 ) — — ( 794 ) Stock-based compensation expense — — 837 — — 837 Net income — — — 9,441 — 9,441 Other comprehensive loss — — — — ( 4,525 ) ( 4,525 ) Balance at April 30, 2024 22,818 $ — $ 258,700 $ 406,666 $ ( 2,765 ) $ 662,601 See Notes to Condensed Consolidated Financial Statements 6 TITAN MACHINERY INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Three Months Ended April 30, 2025 2024 Operating Activities Net (loss) income $ ( 13,204 ) $ 9,441 Adjustments to reconcile net (loss) income to net cash provided by operating activities Depreciation and amortization 8,915 8,715 Impairment 266 — Deferred income taxes ( 5,080 ) ( 379 ) Stock-based compensation expense 1,591 837 Noncash interest expense 244 88 Noncash lease expense 1,027 2,374 Other, net ( 1,022 ) 1,393 Changes in assets and liabilities, net of effects of acquisitions Receivables ( 3,828 ) 20,115 Prepaid expenses and other assets ( 357 ) 6,815 Inventories 16,428 ( 137,760 ) Manufacturer floorplan payable 18,721 92,084 Deferred revenue ( 34,375 ) ( 30,670 ) Accounts payable, accrued expenses and other and other long-term liabilities 16,869 ( 5,407 ) Net Cash Provided by (Used for) Operating Activities 6,195 ( 32,354 ) Investing Activities Rental fleet purchases — ( 2,968 ) Property and equipment purchases (excluding rental fleet) ( 7,988 ) ( 10,757 ) Proceeds from sale of property and equipment 2,432 950 Acquisition consideration, net of cash acquired — ( 260 ) Other, net 322 131 Net Cash Used for Investing Activities ( 5,234 ) ( 12,904 ) Financing Activities Net change in non-manufacturer floorplan payable ( 9,146 ) 46,442 Proceeds from long-term debt borrowings 1,318 — Principal payments on long-term debt and finance leases ( 7,253 ) ( 2,567 ) Other, net ( 700 ) ( 794 ) Net Cash (Used for) Provided by Financing Activities ( 15,781 ) 43,081 Effect of Exchange Rate Changes on Cash 436 ( 205 ) Net Change in Cash ( 14,384 ) ( 2,382 ) Cash at Beginning of Period 35,898 38,066 Cash at End of Period $ 21,514 $ 35,684 Supplemental Disclosures of Cash Flow Information Cash paid during the period Income taxes, net of refunds $ 578 $ 1,043 Interest $ 10,843 $ 9,458 Supplemental Disclosures of Noncash Investing and Financing Activities Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities $ ( 1,680 ) $ 508 Net transfer of assets to property and equipment from inventories $ 416 $ ( 746 ) See Notes to Condensed Consolidated Financial Statements 7 Table of Contents TITAN MACHINERY INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. The quarterly operating results for Titan Machinery Inc. (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 three-months ended April 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2026. The information contained in the consolidated balance sheet as of January 31, 2025 was derived from the audited consolidated financial statements of the Company for the fiscal year then ended. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025 as filed with the SEC. 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, 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. Estimates 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. Actual results could differ from those estimates, particularly related to realization of inventory, impairment of long-lived assets, goodwill, or indefinite lived intangible assets, collectability of receivables, and income taxes. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material accounts, transactions and profits between the consolidated companies have been eliminated in consolidation. Recently issued accounting pronouncements not yet adopted In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ( “ 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 November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in ASU 2024-03 require public entities to disclose specified information about certain costs and expenses. Additionally, in January 2025, FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date to clarify the effective date of ASU 2024-03. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated statements. 8 Table of Contents In May 2025, the FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“VIE”), which provides clarifying guidance on determining the accounting acquirer in certain transactions involving VIEs. The update aims to improve consistency and comparability in financial reporting. The guidance will be effective for annual periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. Upon adoption, the guidance will be applied prospectively. The Company is currently evaluating the provisions of the amendments 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 April 30, 2025 2024 (in thousands, except per share data) Numerator: Net (loss) income $ ( 13,204 ) $ 9,441 Allocation to participating securities — ( 123 ) Net (loss) income attributable to Titan Machinery Inc. common stockholders $ ( 13,204 ) $ 9,318 Denominator: Basic weighted-average common shares outstanding 22,669 22,542 Plus: incremental shares from vesting of restricted stock units — 4 Diluted weighted-average common shares outstanding 22,669 22,546 (Loss) Earnings Per Share: Basic $ ( 0.58 ) $ 0.41 Diluted $ ( 0.58 ) $ 0.41 Anti-dilutive shares excluded from diluted weighted-average common shares outstanding: Restricted stock units 10 — 9 Table of Contents NOTE 3 - REVENUE Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to collect in exchange for those goods or services. Sales, value added and other taxes collected from our customers concurrent with our revenue activities are excluded from revenue. The following tables present our revenue disaggregated by revenue source and segment: Three Months Ended April 30, 2025 Agriculture Construction Europe Australia Total (in thousands) Equipment $ 277,765 $ 46,684 $ 77,278 $ 35,113 $ 436,840 Parts 73,033 12,683 13,372 6,541 105,629 Service 32,419 6,790 2,625 2,183 44,017 Other 919 294 417 126 1,756 Revenue from contracts with customers 384,136 66,451 93,692 43,963 588,242 Rental 250 5,678 166 — 6,094 Total revenue $ 384,386 $ 72,129 $ 93,858 $ 43,963 $ 594,336 Three Months Ended April 30, 2024 Agriculture Construction Europe Australia Total (in thousands) Equipment $ 338,713 $ 47,095 $ 47,499 $ 34,782 $ 468,089 Parts 74,965 11,830 14,524 6,907 108,226 Service 32,943 6,800 2,757 2,579 45,079 Other 875 316 153 151 1,495 Revenue from contracts with customers 447,496 66,041 64,933 44,419 622,889 Rental 191 5,451 172 — 5,814 Total revenue $ 447,687 $ 71,492 $ 65,105 $ 44,419 $ 628,703 Unbilled Receivables and Deferred Revenue Unbilled receivables from contracts with customers amounted to $ 31.1 million and $ 24.6 million as of April 30, 2025 and January 31, 2025, 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 $ 57.6 million and $ 91.7 million as of April 30, 2025 and January 31, 2025, 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, 2025 and 2024, the Company recognized $ 61.6 million and $ 76.7 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2025 and January 31, 2024, respectively. No material amount of revenue was recognized during the three months ended April 30, 2025 or 2024 from performance obligations satisfied in previous periods. NOTE 4 - RECEIVABLES The Company provides an allowance for expected credit losses on its nonrental receivables. To measure the expected credit losses, receivables have been grouped based on shared credit risk characteristics as shown in the table below. Trade and unbilled receivables from contracts with customers have credit risk and the allowance is determined by applying expected credit loss percentages to aging categories based on historical experience that are updated each quarter. The rates may also be adjusted to the extent future events are expected to differ from historical results. In addition, the allowance is adjusted based on information obtained by continued monitoring of individual customer credit. 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 10 Table of Contents credit quality and have no need for any allowance for expected credit losses. Management continually monitors these receivables and should information be obtained that identifies potential credit risk, an adjustment to the allowance would be made if deemed appropriate. Trade and unbilled receivables from rental contracts are primarily in the United States and are specifically excluded from the accounting guidance in determining an allowance for expected losses. 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, 2025 January 31, 2025 (in thousands) Trade and unbilled receivables from contracts with customers Trade receivables due from customers $ 60,142 $ 49,777 Unbilled receivables 31,063 24,584 Less allowance for expected credit losses ( 2,159 ) ( 1,994 ) 89,046 72,367 Short-term receivables due from finance companies 18,640 16,793 Trade and unbilled receivables from rental contracts Trade receivables 3,630 4,015 Unbilled receivables 743 580 Less allowance for expected credit losses ( 599 ) ( 578 ) 3,774 4,017 Other receivables Due from manufacturers 11,890 25,692 Other 657 945 12,547 26,637 Receivables, net of allowance for expected credit losses $ 124,007 $ 119,814 Following is a summary of allowance for credit losses on trade and unbilled accounts receivable by segment: Agriculture Construction Europe Australia Total (in thousands) Balance at January 31, 2025 $ 605 $ 209 $ 1,132 48 $ 1,994 Current expected credit loss provision 4 ( 15 ) 182 10 181 Write-offs charged against allowance ( 30 ) ( 53 ) — — ( 83 ) Credit loss recoveries collected 2 6 — — 8 Foreign exchange impact — — 58 1 59 Balance at April 30, 2025 $ 581 $ 147 $ 1,372 $ 59 $ 2,159 Agriculture Construction Europe Australia Total (in thousands) Balance at January 31, 2024 $ 164 $ 177 $ 2,638 59 $ 3,038 Current expected credit loss provision 51 64 121 37 273 Write-offs charged against allowance ( 17 ) ( 22 ) ( 5 ) — ( 44 ) Credit loss recoveries collected — 2 — — 2 Foreign exchange impact — — ( 10 ) (6) ( 16 ) Balance at April 30, 2024 $ 198 $ 221 $ 2,744 $ 90 $ 3,253 11 Table of Contents 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 April 30, 2025 2024 (in thousands) Impairment losses (recoveries) on: Receivables from sales contracts $ 181 $ 274 Receivables from rental contracts 28 115 $ 209 $ 389 NOTE 5 - INVENTORIES April 30, 2025 January 31, 2025 (in thousands) New equipment $ 610,977 $ 611,916 Used equipment 302,277 313,867 Parts and attachments 180,922 177,719 Work in process 5,218 5,170 $ 1,099,394 $ 1,108,672 NOTE 6 - PROPERTY AND EQUIPMENT April 30, 2025 January 31, 2025 (in thousands) Rental fleet equipment $ 74,916 $ 76,447 Machinery and equipment 38,239 38,306 Vehicles 118,574 114,402 Furniture and fixtures 30,302 29,840 Land, buildings, and leasehold improvements 290,034 288,761 552,065 547,756 Less accumulated depreciation ( 175,148 ) ( 168,066 ) $ 376,917 $ 379,690 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 for the three months ended April 30, 2025 and 2024. All other depreciation expense is included in Operating Expenses, which was $ 6.1 million and $ 6.0 million for the three months ended April 30, 2025 and 2024, respectively. 12 Table of Contents NOTE 7 - INTANGIBLE ASSETS AND GOODWILL Finite-Lived Intangible Assets 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, 2025 and January 31, 2025: April 30, 2025 January 31, 2025 Cost Accumulated Amortization Net Cost Accumulated Amortization Net (in thousands) (in thousands) Covenants not to compete 975 (518) 457 1,125 (642) 483 Customer relationships $ 11,110 $ (2,545) $ 8,565 $ 11,137 $ (2,278) $ 8,859 $ 12,085 $ (3,063) $ 9,022 $ 12,262 $ (2,920) $ 9,342 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 for the three months ended April 30, 2025 and 2024. Future amortization expense, as of April 30, 2025, is expected to be as follows: Fiscal Year Ending January 31, Amount (in thousands) 2026 (remainder) $ 1,294 2027 1,765 2028 1,698 2029 1,578 2030 1,539 Thereafter 1,148 $ 9,022 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 three months ended April 30, 2025: Agriculture Construction Australia Total (in thousands) January 31, 2025 $ 18,154 $ 72 $ 20,738 $ 38,964 Foreign currency translation — — 314 314 April 30, 2025 $ 18,154 $ 72 $ 21,052 $ 39,278 Goodwill The following presents changes in the carrying amount of goodwill, by segment, for the three months ended April 30, 2025: Agriculture Australia Total (in thousands) January 31, 2025 $ 37,820 $ 23,426 $ 61,246 Foreign currency translation — 362 362 April 30, 2025 $ 37,820 $ 23,788 $ 61,608 13 Table of Contents NOTE 8 - FLOORPLAN PAYABLE/LINES OF CREDIT As of April 30, 2025, 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 N.V. (“CNH”), (ii) $ 390.0 million floorplan line of credit and $110.0 million working capital line of credit under its credit agreement with a syndicate of banks “Bank Syndicate Agreement”), and (iii) $ 80.0 million credit facility with DLL Finance LLC (“DLL Finance”). The Company's outstanding balances of floorplan lines of credit as of April 30, 2025 and January 31, 2025, consisted of the following: April 30, 2025 January 31, 2025 (in thousands) CNH $ 536,820 $ 520,927 Bank Syndicate Agreement Floorplan Loan 119,682 127,154 DLL Finance 48,680 37,859 Other outstanding balances with manufacturers and non-manufacturers 64,431 69,758 $ 769,613 $ 755,698 As of April 30, 2025, the interest-bearing floorplan payables carried a variable interest rate with a range of 3.95 % to 7.45 % compared to a range of 4.06 % to 9.15 % as of January 31, 2025. The Company had non-interest-bearing floorplan payables of $ 321.7 million and $ 302.4 million, as of April 30, 2025 and January 31, 2025, respectively. NOTE 9 - LONG TERM DEBT The following is a summary of the Company's long-term debt as of April 30, 2025 and January 31, 2025: Description Maturity Dates Interest Rates April 30, 2025 January 31, 2025 (in thousands) Mortgage loans, secured Various through May 2039 2.1% to 7.3% $ 126,022 $ 129,604 Sale-leaseback financing obligations December 2028 to December 2030 6.1% to 6.2% 9,745 9,804 Vehicle loans, secured Various through February 2031 2.1% to 7.6% 27,515 27,198 Other Various through September 2029 2.4% to 7.4% 1,972 2,081 Total debt 165,254 168,687 Less: current maturities ( 11,354 ) ( 10,920 ) Long-term debt, net $ 153,900 $ 157,767 NOTE 10 - DERIVATIVE INSTRUMENTS The Company holds derivative instruments for the purpose of minimizing exposure to fluctuations in foreign currency exchange rates to which the Company is exposed in the normal course of its operations. From time to time, the Company uses foreign currency forward contracts to hedge the effects of fluctuations in exchange rates on outstanding intercompany loans. The Company does not formally designate and document such derivative instruments as hedging instruments; however, the instruments are an effective economic hedge of the underlying foreign currency exposure. Both the gain or loss on the derivative instrument and the offsetting gain or loss on the underlying intercompany loan are recognized in earnings immediately, thereby eliminating or reducing the impact of foreign currency exchange rate fluctuations on net income. The Company's foreign currency forward contracts generally have one-month to three-month maturities. The notional value of outstanding foreign currency contracts was $ 34.9 million and $ 46.1 million as of April 30, 2025 and January 31, 2025, respectively. As of April 30, 2025 and January 31, 2025, 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, 2025 and 2024. Gains and losses are recognized in Interest and other income (expense) in the Condensed Consolidated Statements of Operations: Three Months Ended April 30, 2025 2024 (in thousands) Foreign currency contract (loss) gain $ ( 2,046 ) $ 153 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, 2025 and 2024: Foreign Currency Translation Adjustment Net Investment Hedging Gain Total Accumulated Other Comprehensive Income (Loss) (in thousands) Balance, January 31, 2025 $ ( 11,045 ) $ 2,711 $ ( 8,334 ) Other comprehensive income 3,661 — 3,661 Balance, April 30, 2025 ( 7,384 ) 2,711 ( 4,673 ) Foreign Currency Translation Adjustment Net Investment Hedging Gain Total Accumulated Other Comprehensive Income (Loss) (in thousands) Balance, January 31, 2024 $ ( 951 ) $ 2,711 $ 1,760 Other comprehensive loss ( 4,525 ) — ( 4,525 ) Balance, April 30, 2024 ( 5,476 ) 2,711 ( 2,765 ) NOTE 12 - LEASES As Lessor 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, 2025 and January 31, 2025: April 30, 2025 January 31, 2025 (in thousands) Rental fleet equipment $ 74,916 $ 76,447 Less accumulated depreciation ( 26,831 ) ( 26,327 ) $ 48,085 $ 50,120 14 Table of Contents NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS As of April 30, 2025, 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 Condensed 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, 2025 and January 31, 2025. 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, 2025 January 31, 2025 (in thousands) Carrying amount $ 155,509 $ 158,883 Fair value $ 143,432 $ 145,010 NOTE 14 - INCOME TAXES Our effective tax rate was 23.6 % and 26.2 % for the three months ended April 30, 2025 and 2024, respectively. The effective tax rate for the three months ended April 30, 2025 and 2024, is subject to variation of the impact of certain discrete items, mainly the vesting of share-based compensation, the mix of domestic and foreign income and the impact of the recognition of valuation allowance on our foreign deferred tax assets. NOTE 15 - BUSINESS COMBINATIONS Fiscal 2025 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. NOTE 16 - CONTINGENCIES The Company is engaged in legal proceedings incidental to the normal course of business. Due to their nature, these legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention. Based upon the information available to the Company and discussions with legal counsel, it is the Company's opinion that the outcome of these various legal actions and claims will not have a material impact on its financial position, results of operations or cash flows. These matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable. 15 Table of Contents NOTE 17 - BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION The Company has four reportable segments: Agriculture, Construction, Europe and Australia. Revenue between segments is immaterial. The Company retains various unallocated income/(expense) items and assets at the general corporate level, which the Company refers to as “Shared Resources” in the table below. Shared Resources assets primarily consist of cash and property and equipment. Net sales and long-lived assets by geographic area were as follows: Revenue Three Months Ended April 30, 2025 2024 (in thousands) United States $ 456,515 $ 519,179 Australia 43,963 44,419 Other international countries 93,858 65,105 $ 594,336 $ 628,703 Long-lived assets April 30, 2025 January 31, 2025 (in thousands) United States $ 359,899 $ 363,672 Australia 26,327 24,512 Other international countries 20,602 20,323 $ 406,828 $ 408,507 16 Table of Contents Certain financial information for each of the Company's business segments is set forth below. Three Months Ended April 30, 2025 (in thousands) Agriculture Construction Europe Australia Total Revenue Equipment $ 277,765 $ 46,684 $ 77,278 $ 35,113 $ 436,840 Parts 73,033 12,683 13,372 6,541 105,629 Service 32,419 6,790 2,625 2,183 44,017 Rental and other 1,169 5,972 583 126 7,850 $ 384,386 $ 72,129 $ 93,858 $ 43,963 $ 594,336 Cost of Revenue Equipment $ 268,602 $ 43,040 $ 64,630 $ 31,078 Parts 49,287 9,195 10,117 4,481 Service 12,119 2,269 1,467 754 Rental and other 1,497 4,247 360 258 Operating expense 59,548 15,157 11,208 7,115 Impairment charge (1) 266 — — — Floorplan interest expense 3,865 1,186 764 569 Other segment expense (income), net (2) 1,979 1,215 602 269 Segment (loss) income before taxes $ ( 12,777 ) $ ( 4,180 ) $ 4,710 $ ( 561 ) $ (12,808) Shared resources unallocated expense ( 4,474 ) Loss before taxes $ ( 17,282 ) Depreciation and amortization $ 4,270 $ 2,243 $ 831 $ 829 Capital expenditures $ 2,236 $ 867 $ 602 $ 374 $ 4,079 Shared Resources Assets Capital expenditures 3,909 Total Capital expenditures $ 7,988 (1) Impairment charge related to long-lived assets. (2) Balance consists of other interest income (expense) and foreign currency. 17 Table of Contents Three Months Ended April 30, 2024 (in thousands) Agriculture Construction Europe Australia Total Revenue Equipment $ 338,713 $ 47,095 $ 47,499 $ 34,782 $ 468,089 Parts 74,965 11,830 14,524 6,907 108,226 Service 32,943 6,800 2,757 2,579 45,079 Rental and other 1,066 5,767 325 151 7,309 $ 447,687 $ 71,492 $ 65,105 $ 44,419 $ 628,703 Cost of Revenue Equipment $ 301,668 $ 39,957 $ 39,667 $ 30,947 Parts 50,026 8,090 10,377 4,658 Service 12,287 2,095 1,540 855 Rental and other 868 3,531 159 223 Operating expense 64,744 15,621 10,605 7,290 Floorplan interest expense 5,113 1,259 1,000 509 Other segment expense (income), net (1) ( 64 ) 671 407 423 Segment income (loss) before taxes $ 13,045 $ 268 $ 1,350 $ ( 486 ) $ 14,177 Shared resources unallocated expense ( 1,391 ) Income before taxes $ 12,786 Depreciation and amortization $ 3,249 $ 2,106 $ 810 $ 912 Capital expenditures $ 2,302 $ 115 $ 840 $ 1,462 $ 4,719 Shared Resources Assets Capital expenditures 6,038 Total Capital Expenditures $ 10,757 (1) Balance consists of other interest income (expense) and foreign currency. Total Assets April 30, 2025 January 31, 2025 (in thousands) Agriculture $ 1,052,399 $ 1,060,180 Construction 248,516 252,471 Europe 249,681 248,282 Australia 194,335 192,331 Shared Resources Assets (1) $ 52,756 $ 60,674 $ 1,797,687 $ 1,813,938 (1) Agriculture and Construction cash balances are held at Shared Resources. 18 Table of Contents