Titan Machinery Inc., a network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal third quarter ended October 31, 2025.

"Our third quarter results demonstrate continued progress on our inventory optimization initiatives, with cumulative inventory reductions of $98 million through the first nine months of the fiscal year, positioning us to increase our reduction target from $100 million up to $150 million for the full year fiscal 2026," stated Bryan Knutson, Titan's President and Chief Executive Officer. "Equipment margins beat expectations for the quarter driven by a more favorable sales mix and our improved inventory position, though we expect margins to moderate a bit in the fourth quarter as we look to continue our inventory optimization efforts. Additionally, as part of our broader footprint optimization strategy, we made select divestitures both domestically and in Germany, allowing us to focus our resources in markets where we can better leverage our operational expertise while delivering improved returns for our shareholders. Despite a challenging environment for the agriculture industry, our parts and service businesses continue to provide critical stability - keeping us closely engaged with our customers. We remain focused on positioning the business to emerge from this cycle stronger and better prepared for improved market conditions."

Commenting on the results in a note to investors, Baird analyst Mircea (Mig) Dobre noted that Titan reported good destocking progress and said “used inventory reduction is notable, lowering the risk of write-downs.” Total inventories fell by $129.3 million sequentially, or by 11.3%, to $1.011 billion (–28.5% year-over-year). “Equipment inventories (down 32% year-over-year) have been reduced by $98 million through 9 months; notably, used inventories have been reduced by $96 billion, which is important since used inventories carry the highest write-down risk,” he wrote. “Management upped its equipment inventory reduction target to $150 million for FY26 (previously $100 million).”

Fiscal 2026 Third Quarter Results

Consolidated Results

For the third quarter of fiscal 2026, revenue was $644.5 million compared to $679.8 million in the third quarter last year. Equipment revenue was $459.9 million for the third quarter of fiscal 2026, compared to $495.1 million in the third quarter last year. Parts revenue was $122.3 million for the third quarter of fiscal 2026, compared to $121.1 million in the third quarter last year. Service revenue was $48.9 million for the third quarter of fiscal 2026, compared to $51.1 million in the third quarter last year. Rental and other revenue was $13.3 million for the third quarter of fiscal 2026, compared to $12.5 million in the third quarter last year.

Gross profit for the third quarter of fiscal 2026 was $111.0 million, compared to $110.5 million in the third quarter last year. The Company's gross profit margin was 17.2% in the third quarter of fiscal 2026, compared to 16.3% in the third quarter last year. The third quarter of fiscal 2026 included a partial accrual for expected benefits related to manufacturer incentive plans of $3.7 million; there were no related accruals in the prior year comparative period.

Operating expenses were $100.5 million for the third quarter of fiscal 2026, compared to $98.8 million in the third quarter last year. Operating expense as a percentage of revenue was 15.6% for the third quarter of fiscal 2026, compared to 14.5% of revenue in the third quarter last year.

Floorplan interest expense and other interest expense was $10.9 million in the third quarter of fiscal 2026, compared to $14.3 million for the same period last year. Floorplan interest expense decreased in the third quarter of fiscal 2026 compared to the same period last year due to lower interest-bearing inventory levels.

In the third quarter of fiscal 2026, net income was $1.2 million, with earnings per diluted share of $0.05, compared to net income of $1.7 million, with earnings per diluted share of $0.07, for the same period last year.

EBITDA in the second quarter of fiscal 2026 was $23.4 million, compared to $24.7 million in the third quarter last year.

Segment Results

Agriculture Segment - Revenue for the third quarter of fiscal 2026 was $420.9 million, compared to $482.0 million in the third quarter last year, reflecting a same-store sales decrease of 12.3%. 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 income for the third quarter of fiscal 2026 was $6.1 million, which includes the aforementioned $3.7 million accrual for benefits from manufacturer incentives, compared to $1.8 million of pre-tax income in the third quarter last year.

Construction Segment - Revenue for the third quarter of fiscal 2026 was $76.7 million, compared to $85.3 million in the third quarter last year, reflecting a same-store sales decrease of 10.1%. The decrease was driven by lower equipment sales. Pre-tax loss for the third quarter of fiscal 2026 was $1.7 million, compared to $0.9 million in the third quarter last year.

Europe Segment - Revenue for the third quarter of fiscal 2026 was $117.0 million, compared to $62.4 million in the third quarter last year, which includes a $6.1 million positive impact related to foreign currency fluctuations. Net of the effect of these foreign currency fluctuations, revenue increased $48.5 million, or 77.8%, largely driven by European Union stimulus programs in Romania. Pre-tax income for the third quarter of fiscal 2026 was $3.5 million, compared to pre-tax loss of $1.2 million in the third quarter last year.

Australia Segment - Revenue for the third quarter of fiscal 2026 was $29.9 million, compared to $50.1 million in the third quarter last year, which includes a $0.6 million negative impact related to foreign currency fluctuations. Net of the effect of these foreign currency fluctuations, revenue decreased $19.6 million or 39.1%. The decrease was driven by the normalization of sprayer deliveries in fiscal 2026 after having caught up on a multi-year backlog of deliveries during fiscal 2025. Pre-tax loss for the third quarter of fiscal 2026 was $3.8 million, compared to $0.3 million in the third quarter last year.

Balance Sheet & Cashflow

Cash at the end of the third quarter of fiscal 2026 was $48.8 million. Total inventories decreased by $97.9 million to $1.0 billion as of third quarter end, as compared to January 31, 2025. Equipment inventories decreased by $96.9 million in the year-to-date period ended October 31, 2025. Outstanding floorplan payables were $739.6 million on $1.5 billion total available floorplan and working capital lines of credit as of October 31, 2025, compared to $755.7 million outstanding floorplan payables as of January 31, 2025.

For the nine months ended October 31, 2025, the Company's net cash provided by operating activities was $83.9 million, compared to net cash used for operating activities of $56.2 million for the nine months ended October 31, 2024. The change in cash from operating activities was primarily attributable to changes in inventory and a changing mix in floorplan financing, which was partially offset by a decrease in net income for the first nine months of fiscal 2026 compared to the prior year period.

Additional Management Commentary

Mr. Knutson continued, "Equipment margins in the third quarter were stronger than previously anticipated and this improvement has been reflected in our updated guidance. However, this improvement is being offset by an anticipated recognition of a non-cash valuation allowance that is expected to be recognized in the fourth quarter and result in an increase in our tax expense by approximately ($0.35) to ($0.45) per share, reflecting a variable that was not considered in our previous assumptions. We are also updating our segment revenue expectations to reflect year-to-date performance as we head into the final quarter of the fiscal year. This updated outlook reflects what we've been able to accomplish in a challenging demand environment, despite industry volumes below prior downturn levels. I am pleased that we've made significant progress on our inventory reduction initiatives as well as our footprint optimization, all of which position the business for improved performance as we move into fiscal 2027."