Titan Machinery Inc. today reported financial results for the fiscal fourth quarter and full year ended January 31, 2025, with a focus on its ability to significantly reduce inventory by approximately $304 million during the fourth quarter.
“Looking ahead, we expect to make further headway on our equipment inventory initiatives both domestically and abroad this fiscal year,” said Bryan Knutson, Titan Machinery's President and Chief Executive Officer in a statement released by the company.
In its agriculture segment, Titan reported that revenue for the fourth quarter of fiscal 2025 was $534.7 million, compared to $620.6 million in the fourth quarter last year.
Fiscal 2025 Fourth Quarter Results
For the fourth quarter of fiscal 2025, revenue was $759.9 million, compared to $852.1 million in the fourth quarter of last year. Equipment revenue was $621.8 million for the fourth quarter of fiscal 2025, compared to $714.0 million in the fourth quarter last year. Parts revenue was $89.3 million for the fourth quarter of fiscal 2025, compared to $90.8 million in the fourth quarter last year. Revenue generated from service was $36.6 million for the fourth quarter of fiscal 2025, compared to $35.1 million in the fourth quarter last year. Revenue from rental and other was $12.1 million for the fourth quarter of fiscal 2025, compared to $12.2 million in the fourth quarter last year.
Gross profit for the fourth quarter of fiscal 2025 was $51.0 million compared to $141.0 million in the fourth quarter last year. The Company's gross profit margin was 6.7% in the fourth quarter of fiscal 2025, compared to 16.6% in the fourth quarter last year. The year-over-year decrease in gross profit margin was primarily due to lower equipment margins, particularly on used equipment, driven by softer retail demand and the Company's initiative to accelerate its inventory reduction efforts to achieve targeted levels sooner.
Ag Segment Snapshot
In its agriculture segment, Titan reported that revenue for the fourth quarter of fiscal 2025 was $534.7 million, compared to $620.6 million in the fourth quarter last year. The decrease reflects a same-store sales decrease of 15.5%, partially offset by contributions from the acquisition of Scott Supply in January 2024, according to the March 20 company statement. It further noted that the revenue decrease resulted from a softening demand for equipment being driven by the decline of net farm income and sustained high interest rates. Pre-tax loss for the fourth quarter of fiscal 2025 was $55.3 million, compared to $28.8 million pre-tax income in the fourth quarter of the prior year, the decrease was driven by accelerated inventory reduction measures.
Titan CEO Comments on 4th Quarter Results and Ag Industry Outlook
In a statement announcing the results, Bryan Knutson, Titan Machinery's President and Chief Executive Officer, said:
"Our fiscal fourth quarter results reflect a significant step forward in the execution of our inventory reduction initiative, particularly in our domestic agriculture segment. We reduced inventory by approximately $304 million during the fourth quarter, bringing our total reduction since our fiscal second quarter peak to approximately $419 million. While this accelerated reduction came at the expense of our equipment margins in the short-run, this was a key lever that we felt was necessary to improve our position as we transition into fiscal 2026 with a more subdued demand environment. Looking ahead, we expect to make further headway on our equipment inventory initiatives both domestically and abroad this fiscal year. This will be comprised of a further reduction in absolute dollars and optimizing our product mix to best meet demand in this phase of the industry cycle."
Knudson also offered commentary on the outlook for the ag industry overall, saying:
"We are introducing modeling assumptions for fiscal 2026 that are consistent with industry forecasts which are suggesting that demand for North American large agriculture equipment will be down approximately 30% year-over-year. Although the demand environment is expected to weaken in the near-term, the acceleration of significant inventory reduction efforts achieved in fiscal 2025 will allow us to be much more nimble as we seek to operate in tandem with evolving market conditions. Our outlook implies continued margin pressure associated with our ongoing inventory reduction and mix optimization efforts. While we will be working hard to mitigate this impact, we believe it is prudent to set expectations conservatively in this fluid environment where demand is subdued. Our aim is to ensure that we are well positioned heading into fiscal 2027 where we expect to drive toward more normalized levels of profitability relative to the demand environment at that time."
Fiscal 2025 Full Year Results
According to the company statement, revenue was $2.7 billion for fiscal 2025 compared to $2.8 billion for fiscal 2024. Net loss for fiscal 2025 was $36.9 million, or $1.63 loss per diluted share. This compares to prior year net income of $112.4 million, or $4.93 earnings per diluted share. Adjusted net loss, which excludes the net impact of items related to sale-leaseback financing expenses, was $29.7 million or $1.31 loss per diluted share for fiscal 2025. The Company generated adjusted EBITDA of $12.8 million in fiscal 2025 compared to EBITDA of $189.3 million in fiscal 2024.
Industry Analysts Weigh In
In its first take summary after the earnings report, Baird Equity Research-Machinery & Diversified Industrial’s Mircea (Mig) Dobre, CFA, Sr. Research Analyst, offered detailed analyses, excerpts of which follow:
While a significant 4QFY25 loss and FY26 guidance below consensus (EPS guided to a $1.25-2.00 loss) weigh on the stock pre-market, management is making tangible progress in lowering the risk to book value by reducing inventory. Equipment inventories were lowered nearly $300 million sequentially in 4QFY25, by our math inventory units per location exited FY25 just 13% above pre-COVID levels, likely to reach pre-COVID exiting 1HFY26. Below consensus FY26 guide is not a deterrent, that’s what destocking bottoms look like.
Inventory declines substantially, this is the key element to focus on: total equipment inventories were lowered nearly $300 million sequentially to $926 billion (-15% year/year, -$167 million vs FYE24), new equipment inventory declined $225 million, used equipment inventory declined by $67 million on a sequential basis. Notably, with store count +38% vs. pre-covid and with CNH pricing up 35%, units per location are now ~13% above pre-Covid levels. Management has now achieved its $400 million inventory reduction goal early and is currently targeting another $100 million reduction in FY26.
Initial FY26 guide issued, EPS midpoint ($1.625) well below consensus ($0.85). Adj. EPS expected in the range of $(1.25)-(2.00) with midpoint ($1.625) well below consensus ($0.85). Guidance incorporates continued margin pressure associated with ongoing inventory reduction and mix optimization efforts.
The full year outlook in the agriculture segment forecast a 20-25% decline, Dobre added.
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