In reporting financial results for its fiscal second quarter ending July 31, 2025, Titan Machinery Inc., reported a net loss of $6.0 million compared to net loss of $4.3 million for the same period last year. Results for the second quarter of fiscal 2025 included a non-cash sale-leaseback financing expense of approximately $8.3 million.

According to Baird Equity Research Sr. Research Analyst Mircea (Mig) Dobre, CFA and his analyst team, inventory destocking is the key driver for FY26. 

“The stock reaction today (-7% vs. S&P 500 +0.1%) is a response to a slight sequential inventory increase (all driven by new equipment and a function of normal seasonality); new equipment deliveries are expected to pick up in 3/4Q relative to 2Q,” writes Mircea. “Importantly, used equipment inventories are now near two-year lows while used prices stabilized (this was a key source of margin/EPS risk that is abating). As the destock further materializes in 2H, we see continued valuation expansion closer to tangible book, which should push the shares towards $25.”

Baird’s Mircea further notes, “Today’s stock pullback is driven by a slight sequential increase in inventory — while this is in line with normal seasonality, investors are at this point laser focused on destocking progress, and here the print lagged expectations.”

Titan Machinery provided the following overview of earnings for its agriculture segment:

Revenue for the second quarter of fiscal 2026 was $345.8 million, compared to $424.0 million in the second quarter last year, reflecting a same-store sales decrease of 18.7%. The revenue decrease resulted from a softening of demand for equipment, driven by lower commodity prices and sustained high interest rates, both of which are reducing farmer profitability. Pre-tax loss for the second quarter of fiscal 2026 was $12.3 million, compared to $0.6 million of pre-tax income in the second quarter last year. Included in the results for the second quarter of fiscal 2025 was a $6.1 million non-cash sale-leaseback expense.

The company's current expectations for fiscal 2026 modeling assumptions for revenue in the agriculture segment noted that previous assumptions were down 20-25% while current assumptions are down 15-20%.

“We produced solid second quarter results amid a challenging market environment, and remain focused on the execution of our operational plan to optimize inventory, ensuring we are in an improved position exiting this fiscal year," stated Bryan Knutson, Titan Machinery's President and Chief Executive Officer. "While we experienced a modest increase in inventory during the second quarter, our inventory levels have remained relatively consistent through the first half of the year, and in line with our previously communicated expectations. 

Knutson notes the quarterly increase was largely due to timing of OEM shipments ahead of deliveries to its end customers in the second half of 2025. 

“We are on track with our inventory reduction strategy, and we are positioned to exceed our initial $100 million target for the full year, with the majority of that progress still expected toward the end of the fiscal year,” Knutson says. “Importantly, our parts and service businesses continue to provide stability during this trough in the equipment cycle, as we remain focused on delivering best-in-class service and support for our customers."

Fiscal 2026 Second Quarter Results — Consolidated Results

For the second quarter of fiscal 2026, revenue was $546.4 million compared to $633.7 million in the second quarter last year. Equipment revenue was $376.3 million for the second quarter of fiscal 2026, compared to $465.2 million in the second quarter last year. Parts revenue was $109.2 million for the second quarter of fiscal 2026, compared to $109.8 million in the second quarter last year. Service revenue was $48.8 million for the second quarter of fiscal 2026, compared to $47.3 million in the second quarter last year. Rental and other revenue was $12.1 million for the second quarter of fiscal 2026, compared to $11.4 million in the second quarter last year.

Gross profit for the second quarter of fiscal 2026 was $93.6 million, compared to $112.4 million in the second quarter last year. The Company's gross profit margin was 17.1% in the second quarter of fiscal 2026, compared to 17.7% in the second quarter last year. The year-over-year decrease in gross profit margin was primarily due to lower equipment margins, driven by softer retail demand and the Company's initiatives to manage inventory to targeted levels.

Operating expenses were $92.7 million for the second quarter of fiscal 2026, compared to $95.2 million in the second quarter last year. The decrease was led by lower variable expenses associated with the year-over-year decline in revenue, as well as management's expense reduction efforts. Operating expense as a percentage of revenue was 17.0% for the second quarter of fiscal 2026, compared to 15.0% of revenue in the second quarter last year.

Floorplan interest expense and other interest expense was $11.5 million in the second quarter of fiscal 2026, compared to $13.0 million for the same period last year. Floorplan interest expense decreased in the second quarter of fiscal 2026 compared to the same period last year due to lower interest-bearing inventory levels.

Excluding this non-recurring item, adjusted net income for the prior year quarter was $4.0 million, or adjusted earnings per diluted share of $0.17. Additionally, EBITDA in the second quarter of fiscal 2026 was $12.4 million, compared to $18.3 million in the second quarter last year.

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