Titan Machinery : Earnings Call Presentation - FY2024-Q2

Second Quarter FY2024 Earnings Conference Call

August 31, 2023

Safe Harbor Statement

Forward-Looking Statements

This presentation contains "forward-looking statements" within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar expressions may constitute forward-looking statements. Except for historical information contained herein, the statements in this presentation are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made herein, which may include statements regarding the impact and benefits of the pending O'Connors acquisition, our segment expectations, in particular, the performance of our Ukrainian subsidiary within our International segment, changes to federal legislation and infrastructure spending, the timing of full implementation of the ERP dealer management system, agriculture and macro-economic trends, M & A opportunities, rental fleet size, the performance of our segments, inventory levels, equipment inventory turns and the percentage of our inventory under non-interest bearing terms, the balance sheet effects of our cash flow from operations, availability of acquisition opportunities, modeling assumptions, projections regarding agricultural production legislation and changes to tax policy, and income, growth, operating expense, cash flow, margin and profitability expectations, and the expected results of operations for the fiscal year ending January 31, 2024, involve known and unknown risks and uncertainties that may cause Titan Machinery's actual results in current or future periods to differ materially from forecasted results. The Company's risks and uncertainties include, among other things, our ability to successfully consummate, integrate and realize growth opportunities and synergies in connection with the O'Connors acquisition, the risk that we assume unforeseen or other liabilities in connection with the O'Connors acquisition and the impact of any conditions or obligations imposed on us under the Case IH dealer agreements entered into in connection with the Heartland Ag Systems acquisition for the commercial application equipment business. In addition, risks also include, among other things, the impact of the Russia-Ukraine conflict on our Ukrainian subsidiary, our substantial dependence on CNH Industrial, including CNH Industrial's ability to design, manufacture, and allocate inventory to our stores necessary to satisfy our customers' demands, supply chain disruptions impacting our suppliers, including CNH Industrial, the continued availability of organic growth and acquisition opportunities, potential difficulties integrating acquired stores, industry supply levels, fluctuating agriculture and construction industry economic conditions, the success of recently implemented performance improvement initiatives, the uncertainty and fluctuating conditions in the capital and credit markets, difficulties in conducting international operations, governmental agriculture policies, seasonal fluctuations, climate conditions, disruption in receiving ample inventory financing, the success of our inventory management efforts and increased competition in the geographic areas served. These and other risks are more fully described in Titan Machinery's filings with the Securities and Exchange Commission, including the Company's most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q. Titan Machinery conducts its business in a highly competitive and rapidly changing environment. Accordingly, new risk factors may arise. It is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on Titan Machinery's business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Except as required by applicable law, Titan Machinery disclaims any obligation to update such factors or to publicly announce results of revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Non-GAAP Financial Measures

Within this presentation, the Company makes reference to certain adjusted financial measures ("non-GAAP financial measures"), specifically, EBITDA for the Company and O'Connors. This adjusted measure is provided so that investors have the same financial data that management uses with the belief that it will assist the investment community in assessing the underlying performance of the Company and O'Connors for the periods being reported. The presentation of this additional information is not meant to be considered a substitute for, or superior to, measures prepared in accordance with GAAP. Included in the Appendix to this presentation is a reconciliation of this non-GAAP financial measure for the Company and O'Connors to its most directly comparable GAAP financial measure.

Industry Information

Information regarding market and industry statistics contained in this presentation is based on information available to us that we believe is accurate.

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Financial Overview

• Second Quarter FY2024 Results
• • Revenue $642.6 Million
  • Pre-TaxIncome $41.6 Million
  • Diluted EPS $1.38
• Conference Call Discussion Points
• • Industry Overviews
  • Financial Results
  • Modeling Assumptions
  • O'Connors Acquisition

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Agriculture Segment Overview

Q2 FY24 Recap

• Precision technology, productivity/yield/efficiency gains, along with an aging fleet, continue to drive strong demand for equipment sales
• Same-storesales growth of 10%
• Equipment availability remained a limiting factor for certain product categories
• Pre-taxmargins of 7.0%, similar to PY period
• Precipitation, while inconsistent, benefited much of our footprint improving yield potential

Rest of Year Expectations

• Farmer profitability remains strong, encouraging equipment purchases
• Section 179 and Bonus Depreciation continue to incentivize year end buying behavior
• Availability of cash crop equipment improves sequentially
• M&A strategy remains intact

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Construction Segment Overview

Q2 FY24 Recap

• Robust construction activity and improved equipment availability helped drive same-store sales growth of 18.5%
• Pre-taxmargins of 6.2%, up 60 bps YOY
• Expense absorption of 91.2%

Rest of Year Expectations

• Construction activity remains strong, supported by infrastructure projects, energy, agriculture, and commercial construction
• Equipment availability remains a limiting factor in the near-term for certain key equipment categories

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