Titan Machinery (TITN) 27 Aug 202021 Q2 Earnings call transcript

Hello, and welcome to the Titan Machinery Inc.

Second Quarter 2021 Earnings Call. [Operator Instructions] I would now like to turn the call over to your host, John Mills with ICR. John, please go ahead.

Great, thank you. gentlemen, XXXX to Earnings and Second Titan ladies Fiscal Quarter Conference morning, and the welcome Machinery Good Call.

approximately Chief Officer; On company the to out quarter Mark the Executive fiscal for have which went ended are the Time. By at Kalvoda, and second David Meyer, earnings this everyone call Chairman X:XX and access today should Eastern Financial Officer. from July a.m. the XXXX, now, release Chief morning XX,

is have available as ir.titanmachinery.com. available the call a not page received Titan's you is company's and well. it of release, If Relations on the webcast, website on the be Investor website This replay at will being

In to addition, today's presentation we prepared accompany providing remarks. are a

ir.titanmachinery.com. in is webcast The below the You middle the directly presentation going may access the at now available information presentation the by page. of website to Titan's

forward-looking cause may presentation therefore, You'll and current safe most more Factors detailed management statements, involve everyone upon the as risk uncertainties, of should more analysis guarantee today's adjusted these reconciliations to prepared may law, results no our a into statements. we'll facilitate obligation an a statements measures during discuss contain remarks to in Except made adjusted call. financial report and of that today's differ These the Please basis. actual complete factors required Titan and statements in These call, future any in filed do transparency and results to We by those based including on questions. are projected financial Titan's on in discussion including factors annual update harbor applicable may section can not financial or release not The non-GAAP that GAAP non-GAAP ongoing inherent These reliance measures from measures, statement. of And management be remarks, additional see identified X their results recently our note risks those materially Titan's included be could forward-looking forward-looking approximately to that call remind of assumes greater any believe on these forward-looking upon would like expectations comparing Risk of of will release. period. the from We've in conclusion Form we call comparable open the last response the to take them. will XX-K. to when particularly minutes. financial placed that XX today's directly performance, make at statements performance questions. Slide contain underlying be prepared financial your undue measures period your to forward-looking statements most the We and

to ahead, like David. Mr. company's I'd CEO, Go Chairman Meyer. Now, David and the introduce

Thank summary everyone. for results Earnings Welcome overview will review you, XXXX our financial then I results John. of Call. each will morning, call, of Fiscal our today's an Second the On of provide XXXX. Conference fiscal to a second business quarter then and our Good Quarter Mark for segments.

has providing also the full are the improved. visibility as modeling We for year assumptions

turn see you financial our of quarter will you overview If second X, results. Slide an to

Adjusted $XXX an $X.XX. was earnings diluted per decreased year million adjusted resulting $X.X $XX.X is million, revenue of quarter over which prior in the pretax million, second Our period. an share million to decrease $X.X income

a Before wanted overview, COVID-XX. few my address I segment comments to to high-level related

potential safety the May, in active education of very We're I CDC-recommended customers very earnings our early and risk safety we most and took call in employee and employees As on the our shared procedures guidance, putting place. important, the customer and, QX in COVID-XX messaging, seriously.

important Fortunately, and spring stepped our and customers healthy, our through season. up, support we employees stayed to able the summer were

especially on a ag able business. equipment we with result, were to our a deliver solid As quarter, domestic

exception world. footprint, the X of and the ranchers industry a most conditions our support and option and insurance. planting across We domestic areas was the followed of footprint, conjunction contractors ideal Spring critical as some extremely multi with across we farmers, feed wet plant overview in the of yield is Titan's excellent a were within with Slide in that crop Likewise, or parallel their crop who with On development segment. elected our agriculture this potential near-record an where northern our essential farmers summer record markets. preventable are build

rainfall are a of the crop. potential, yield of an will there While need for lot footprint areas above average additional there's to that our optimism finish

season both as for reported and potential resulting its soybeans. oversupply the August August price crop developing, high XX in of and yields for corn USDA reflecting scenario conditions With average Xst, report, WASDE

As you and are hit it's started windstorm probably through With in Indiana. were XXX Iowa hard that estimated miles of and hour, soybeans impacted. XXth, Illinois continued million August corn approximately on aware, and winds Nebraska, derecho there was per Iowa Wisconsin, Iowa a X straight-line of million over acres rare acres of over Eastern X.X

Iowa. collapse its a was in both harvest in took September with as be which fallen will commercial damage windstorm a equipment and equipment, machine on grain disaster require billion declaration derecho substantial harvest. replacement. could soybeans either Not signed Iowa damage or total and storage damage, toll from this its to widespread which shops, facilities, a only wind updated trees close the Iowa will we there mangled USDA Crop $X service President expect Production have Report. for recently repairs also difficult problematic was fields, also the there and parts corn corn in farm for addition, do to XX post-storm In data Trump but

low assistance farmers diesel environment, from ranchers support along who receiving the and phosphate commodities in participate and There early applicants as providing submit are today's are these PPP, CFAP, fuel. payments While in $XX approval. XXX% programs application Program, number to dates farmers interest propane input coronavirus, Cares in direct of a prices a payment of and rate XX% Act. received Protection applicants are also billion the reductions Program, for will ranchers payments livestock with due such federal Coronavirus final still and USDA and to drop upon fertilizer, and open Farmers are costs, to and for benefiting from for nitrogen the current have of Payroll receive and CFAP farmers ranchers Assistance Food applications

As late-model equipment. age, replacement see we and equipment fleets used new for continued demand

in the intelligence IH machines. of connected In fleet the increased hours excited current data to addition, Holland technology with about New aftermarket PLM Connect, tractor in business. the continue are aging these Growers Case a service and drive and our our new models high-performance latest precision, parts AFS

As yields, and end markets. our you are prices customers' crop dynamics agriculture, affecting can commodity see, there multiple

customers efficiencies and equipment yields, support cycles life to provide productivity, our costs to maximize that to due of continue their We the technology equipment, and enables the fleets.

to X, Turning to COVID-XX fuel oil see overview our equipment you'll prices. the Slide Construction economic and of segment. of impact an depressed segment Construction continues domestic

and of through are last able in and central Even lower expenses construction However, operational the there reduction our that improvement experiencing we quarter though to closings revenue. and COVID-XX are a disruptions to over shutdowns. implementing a the equipment a in improvements reduce couple industry years, business team interest we despite due pretax second from state customers in environment, have been the were slight our has generate been income rate

construction markets. dry being conditions also with and profitable normal. operational disruptions weather the Slide an impacted continue within important business our to of the inventory overview There harvest, wheat, and we average by late segment business and partially Black international the development the the offsetting is We Romania, Serbia were were including of Bulgaria, benefit in returns the Balkans, roll has crops On the to segment, Ukraine of to experiencing industry X, markets in equipment COVID-XX. below ultimately countries the have late when International Germany, where Sea of to position Ukraine. growers in rains and parts precipitation stay focused the be experience management, of regions, of pockets aftermarket activity improvements our Summer on associated service us yields. wheat welcome, rental. believe very of We the the most construction well the some recent season benefited and wheat but are and too level impact are our that

of we countries our and mature, in machine business continue invest and to service base. the we business continues developing grow As the parts part support as customers these model to to our

some Mark, the everyone fiscal year. new our for I'd supporting I integrated system pilot all to excellent our like our a during ERP into store customers next I to full COVID-XX producing their domestic crisis, employees to implementation thank challenging our know safe dealer and staying the call want results. for financial track time, we efforts same and very successfully and at management this Before turn on are in

like to detail. our review to over I'd turn to the financial more in results call Mark Now

David. Thanks,

a the After our May slow were X.X% decrease second revenues revenue all macroeconomic volatility, total last we of Turning from second Slide pick to to We quarter, saw in noted up was $XXX.X fiscal quarter, a for XXXX current month-to-month Improvements X. which compared in highlights year. conditions. in million our start given very segments the and and generated to May of July. June

this our parts business we and the and from segment recent equipment aging in acquisitions grow an service prior agriculture from were numbers. in contraction slightly quarter, continued service category. and X.X%, parts increase respectively, to second Our X.X% the The increasing experienced offsetting our business not of fleet as year came to customer in area benefit our that our and revenue continued in

the oil rental due compared the business year. to and of regardless lower and year, which of lower to driven Rental declined driven overall last versus in continues to by by lesser was be difficult demand our On environment. for extent, equipment in year was decreased gross the construction construction lower Equipment The prices such smaller million XX.X% the prior by our for fleet supported due due the pandemic. energy rental the quarter a international replacement X.X% business conditions, and our revenue decreased prior an Our slide sales. to compared segment. segment a fleet our an our to the X, economy overall equipment slowdown to current other XX.X% rental to profit and prior industry and revenue our same segment X.X% utilization construction impacting $XX.X largely dollar as decreased agriculture equipment segment markets This within utilization period year. difficult to quarter XX.X% versus to

and Despite various growth store and to for benefited were expenses caused operating expenses operating segments in which $X.X ERP remeasurement net we million. of transition as excluded was rate to expense of second costs. income by Ukraine more April in to the adjusted spread with adjustments, However, HorizonWest, in second as a than million under versus last dollar. year the consists where which such year locations, due our mix, prior fiscal expense gross for XXXX well other business. $X.X $XX.X same revenue by decreased a lower our quarter due the The in currency $X.X of costs associated $X.X margin lower essentially basis we to million which from XXXX, X reduced reductions compared travel of million revenue the higher of lower service new flat Floorplan year percentage versus our by XXXX. environment excludes We agreement operational that of adjusted adjustments our taxes. XX and a net the construction rate the million XXXX and in we similar net X-year credit the restated to profit second a $XXX,XXX in at finalized $XXX,XXX $X.X U.S. parts compares fiscal decreased our of to from quarter prior realized offset of to to interest amended Northwood rate recent as the quarter increase margin figure managed exchange point was expenses acquisitions XX.X%. COVID-XX, changes operating the million prior XXXX, in Ukraine's fiscal fiscal quarter decrease fuel and compared resulting additional quarter our second XX.X% interest by of international taxes, In of and This and costs gains and The related year. the to interest as

earnings for compared was in $X.XX to the $X.XX adjusted per quarter quarter Our last year. second diluted of the share

in The XXXX fiscal the of million $XX.X year. last second adjusted $XX.X to quarter increased second EBITDA X.X% million quarter of compared to

overview diluted second to most can the will the adjusted to reconciliation appendix You and segment GAAP a Slide results quarter an in per of comparable income, presentation. adjusted On X, find slide of income the adjusted EBITDA net year their our amounts you see XXXX. fiscal of share for

I the income increased addition Our the million, level previously agriculture service $X.X compared driven three-month operating to $X.X acquisition mentioned. ongoing of million relatively in period. to increased segment well expenses, revenue and the of as flat four X% our parts prior in A as pretax to parts stores combined the and year momentum by $XXX.X million with service, higher

Construction the softness our business the stable, decrease quarter, the the quarter and expenses, and expense XX.X% rental macroeconomic The $XX.X The in loss pretax Adjusted versus challenges year sales while seeing persisted prior pandemic decrease of Revenue year declined decrease interest to reductions, to down our International throughout adjusted lower but costs, results slight are to income reduction. of loss decreased to segment COVID-related to prior expense We compared in still result segment difficult and I our first quarter. the $XXX,XXX in yields of improvement operating more second Turning drove David income the began result to period. including this the service million lower segment. primarily our the lower equipment the despite conditions, year in including was in in decreased of revenue of to compared a Equipment Managed overall demand In of of allowed in revenue $X.X areas it parts crop revenue. quarter in fiscal million with in uncertainty, and slightly. the in X.X% and combined quarter pretax prior $XXX,XXX $XX.X footprint. second late were $X.X due this despite earlier. million. second second to XXXX, segment period the and lower million and the market lower a of the interest spoke end

Slide to Turning XX.

You year. lower see compared increased rental parts and segment revenue parts month the our last results. Construction generated strong A other rental increased and Total categories Year-to-date sales increased XX.X%. first segment six X.X%; increases period service decreased our rental ag and equipment, in X.X% revenue service first the drove revenue X.X%; decreased the to the equipment quarter our in increased in and other. in while X.X%; same of revenue revenue results

Turning to Slide XX.

gross compared the Our X.X% increase for same $XXX.X period last was X first months to a year. the profit million,

quarter driven by to and of to occurred basis versus equipment year-over-year fiscal XX.X% XXXX to gross months in by the profit decreased margin primarily the XX which used XXXX, equipment Our prior margins due agriculture lower points margins for fiscal first move was Lower six efforts first of equipment. year. were increased

by decreased Our $X.X X.X% operating months or XXXX the to first X for fiscal million expenses of $XXX.X million.

of highlights savings X On in these of period months balance XXXX, a million our Adjusted period. fiscal resulting floorplan offset leveraging the As by were improvement lower cash XXXX. of $X.XX to a of construction of to expenses $XX.X of due XX, prior conditions balance from interest of payables. performance of at in provide same strong XXXX. the prior our overall the period. increased interest We second On XX.X% percentage the fiscal $XXX,XXX lower our well retirement XX.X% remaining X notes million of expense the X first overview of $XX.X as or in segment, Slide our down the for $X.XX our other months income in X segment market in result provide to revenue, international for Slide year. $X.X Overall, year and in end per and decreased segments. pretax Floorplan slightly the expense our for reflecting the we fiscal July This million compared a XX, convertible of months the first had revenues. the XX, compared XX.X% agriculture was the an we adjusted $X company's to share to over in of was year, was quarter drove of last those revenues rates diluted somewhat as as overview on XXXX, the as X-month revenue million performance expenses lower earnings interest compared sheet first the

reflecting new the our million a inventory $XX little inventory end were equipment. quarter a second $XX X.X a the from versus in million slide. used was the in equipment color at the decrease prior on a provide year inventory next period. turns decrease Equipment XX, $XXX $X January decrease XXXX, Our in more I'll million on of and equipment of million, X.X

Our reducing to around assets our of quarter end by rental fleet anticipate the We the at at further end to million second $XXX compared the million, $XXX.X $XXX.X of XXXX. million decreased end to of fiscal fiscal XXXX. fleet the

credit. on of As outstanding we had of million lines $XXX.X of floorplan $XXX July million payables XX, total of floorplan XXXX,

ratio to leverage worth year syndicate below and compared Our covenant period which adjusted is the floorplan outside is in to agreement. X.X, tangible facilities bank net credit X our prior a X.X our of requirement is debt largest healthy X.X well the

The XX. reflected the in versus red bars year. of reduction used the amount second are of this a quarter and inventories managing of down million additional Slide new size to made the and our progress Turning on beginning equipment inventories on with fiscal We slide. blue in the $XX the

since pleased with the levels we year. increased the reduction are historically, We first have our half this inventory of in

remains which compared with to seen The in the fiscal overall to inventory the and the on under May healthy. revenues. noninterest-bearing XXXX of acquisition end terms, position slide. inventory bar quality We be levels despite pressure are sitting by of on a our our the year can good of end Currently, is gray our decreased XX.X% inventory

operating reported activities operating of by million should Slide levels six fiscal flows see the activities an the XXXX to percentage well. for level overview provides operating noninterest-bearing we was the this satisfied cash of procurement compared equipment for are in levels flow the rise our this period. for of period from We $X.X XX year-to-date as The current lower given increase, with $XX stocking. provided months cash XXXX. million used first activities of GAAP cash fiscal Once

be $XX.X operating adjusted compared our us changes year. equipment As our inventory activities period is we due flow XXXX, inventory fiscal first six-month activities year fiscal the cash the by challenging part operating impacted environment. to uncertainty COVID-XX, last to our and cash first used these operating for around the by economy to floorplan prior material the pandemic. prior for XX, during to following million will guidance year for cash reflect the include change stocking provided to normal decisions. inventory, million believe half continue inventory creating adjustments, suspension July activity exclusive the equipment a of temporary all used year. higher equipment the initiating in non-manufacturer year in for to the applying we in our evaluate XXXX, to current our $XX.X of including in allowing modeling of was for COVID-XX modeling equity our the these a fiscal this constant period destocking After adjust to of flows our the of activities, due of to half The cash flow equipment Slide ended XX compared financing summarizes inventory We of financing, cash same assumptions degree operating that adjusted due versus are to global the of assumptions assumptions a of compared the this uncertainty

the revenue half first of were follows: delayed up for X%. to agriculture fiscal purchases unusually flat due segment quarter XXXX, prior XX% This from We segment year of results the are and fiscal customer revenue up to as XXXX our growth deceleration assumes growth as providing from year. full a revenue strong, first expectations

as Additionally, recently from for which October XXXX. HorizonWest May their location, assuming closed of are year. in well year businesses Both In a acquisition Northwood, approximately $XX most construction to closed North recently revenues to Dakota in that XX% full segment, the in decrease had completed as of remember X% year. these the full account million contribution full our XXXX fiscal the revenues for we please acquired

induced challenged to revenue remain pandemic We fourth and the weakness expect macroeconomic to in our segment improve primarily third quarter, through to due quarter.

from to efforts. mitigate lower quarter, in second our, of will through saw some you reduction some we As expense continue of the revenues the pressure

to a the prepared to New month-to-month quarter. revenues our basis our the international risks to anticipated In first ERP-related by expenses to on we third half underway XXXX we in of expected with lower of event. degree, remarks. of historically $X.XX which the earnings ready conditions that the This in during operating are expense of uncertainties XXXX. be easing We in This variability generated line being headwinds that the domestic per Expense to than our to fiscal than the customers offset segment, see present that revenue help more call. amount pandemic. concludes reductions. important has now a due to fiscal operations. realized XX%. are earnings contain with estimates are due our are question-and-answer consider, session to Operator, to of and we the of to our of that where $X.XX expect share our realities by Additionally, more we looking impacted outlook store, modeling some controls outlook quarter these changing is unprecedented completion a be expecting From reminder stress of compared divestiture expect to to for the proportion occurring construction, guidance $X.X that fourth XXXX. an business higher Similar an date macroeconomic environment, we top noticed the the on uncertainties earnings global we are expenses expected We It and can the decrease mitigate is segment a for have January reflects Albuquerque, this past of perspective, fiscal assumptions Mexico revenues our revenues believe this be XX% continue range to to approximately the in to some for share pressured excludes in but reduced variable of approximately XXXX. adjusted diluted per a $X.XX million

Dyer from Craig-Hallum. first from Steve Our Instructions] is coming question [Operator today

guess ag strong see margins the in margins you I something exceptionally that there. you sort inventory the of segment we'll that the quarter. in as as year? down rest rest unusual sort of the throughout equipment Is for what the were draw out good modeling guess a of Equipment sustainable start trying figure I year. I'm to of Or inventory there? is the was what's anything there assumption

here. Yes, Mark Steve,

was stronger the had little as anticipated. than bit it goes, we far quarter a As

quarter, the As we kind and as fourth new call we last we call, softer we deals But indicated ag, equipment the the going equipment agriculture because forward, far and margins did on the think, at of push on the had little was it the equipment margins. last bigger a on lower as to bit of have typically, happened on some smaller that I of some of end of because the more side. where tend used year side the recall in in

what year, So we're up at at. year, just XX that the looking is last we for I full bit a year, for think of south X. the overall, around ended probably little We're

mid- of XXs. So that kind

that? have guys Got of it. a strength you the business Is anything that parts bit just May here. there little be mean, then sustained And and to structurally Is fleet are if doing and service seems we momentum continue. of of or of drive kind me understand is that's I should help there, to that expect to timing? sort the or something age

December, into even mud think that's And where they're fleet, recall, in aged first was business. some this challenging quarter, an get helped the we all into as definitely the fall think it's too, had pretty the think there it is I as we've of snow drive you harvest the ice. seasons, combined company. Steve, and strategy overall But I seasons, a corn, I Yes. in that

the how care. can I I customer think we from, improve mean

and think, parts customers overall an that Our also is high-margin strategy. I business, drive service

so continue got that to we've business. going initiatives on And lot internal of a to drive

there you sort you is then Are M&A, me, of how And more approach I particularly forward, of as about just you now? for feeling like do guess, what's causing of disruption within Or your think look opportunities? the sort kind right last ag?

think the a bit out of travel there's I I We just think PPP, Well, and plan, of of out protection know stuff, distancing some some it a and of Steve. less the the think principal they apply of of a that that. pause little I social my there, some running for. all I friends and and see dealer lot working through payroll

So definitely I think they're out there.

these aged groups dealer succession principal are solutions. looking You've sophistication of of an the for group, Many got equipment.

engaged. I we're number yes, say, definitely some think number stuff of potential I like this they year, a through of and through talking engaged a have work of say, we're But this and to get We're So that with PPP people. like definitely, I get kind through to there. sellers of and out

Our Rick today Nelson is next from Stephens. coming question from

guidance. for So

third fourth relatively like So, from it what quarter, is it's quarter at your seems last flat plan looking with year and the midpoint.

quarter about should speak look could you we estimates. quarter be If that as third fourth to we that? and And factors at seasonal any thinking

Yes.

seasonality of kind break seasonally a business. to it period. is at Obviously, of looking think I QX out, the the better

would expect better fourth. to in our much results our third we So compared

as international year, in compare the pressure out we you last our quarter, the in think, when that's However, there this particularly construction business. and from of some we I do stress indicated, more macroeconomic third expect,

I look in to you coming you're when So see think last to fourth. being than last at the but relative third still more it going in obviously, to pressure year, third relative stronger year, quarter quarter,

of at, midpoint kind of the quarter kind So probably looking and of closer that being third the guidance, at look quarter balance. as it, you're call breakeven to fourth a in you our

into rolled you ERP store The a successfully. system helpful. That's pilot it

for the store in completion. come But numbers you sort If kind expect discuss of next the rollout could that what of and plans ERP? you in ramp continued your should expect first year, half of on we to

the integrated of of the of in July. really early a Very Well, functionality the and comments efficiencies was the good successfully, positive system. pilot on some fully store lot

know go in some We're steps our all, on a with that. to of sensitive some So it's busy across business, starting I stuff. the Like, to are the the that. our full data months. the to transfers, of fourth footprint. really equipment work All of the It's we're next quarter, now lot training. And

I'm targeting time it's really between that bit quieter are things next we're fiscal first year, and out. can over say, to so nice rollout So roll XXXX fiscal quarter off-season in the little the that now then, everything And then. and the going successful really, training, a it frame when in a and going that, early to really in transfer, have be data getting we to it's

Okay.

like nice service and you to Very parts. I'd finally, So ask about growth.

that acquisitions part I of growth. of driver the you being mentioned think

If that you and as you are could we still and see speak you're seeing service to forward? same-store sustainability sales, parts in could push what

I quarter. don't have all that, of the wasn't so numbers from in the X in was It Northwood X.X%. those as pretty wasn't the We year in full much service in for last HorizonWest me overall, right was benefit well. in those our our last and quarter, year of up locations for front on But parts X.X% up Rick. as did numbers

would So estimate from that that it's to those that I pretty acquisitions. came close full amount

down up parts service, with a flat overall. and bit the little still same-store in on international ag segment relatively on With, a in and and construction. So standpoint from same-store both

is Mig today coming question next Baird. from Our Dobre from

quarter. the on done Well

what's than down I of bit a mean, all about guess terms flavor little out get standpoint. expectation you've we the for with through maybe obviously look, from in seen, taken demand revenue sharper in from where kind I is vertical terms And a guess hit of from really, you've have talk was COVID? have this, lot more going your of decline there a this of first far Bakken. want my my experienced exposure you quarter. to a happening X%. I energy customers going than would on of your what mean, I know in one question, construction been So you I'm a a little the and in that I what's a And heavy

anything Or, can of? here there sense is for been So give kind that items that Is think onetime you don't aware business? relevant? we helping you be I us to any need know, of else a what's your

and ago, about we our think here bit did Sure, surprise included. the, Mig. the how first was months well, segments, on I think, all saw all, coming of across Yes, but board us especially as I both as in it in, construction May sat a X

kind of did lot that there June, holding that bit and things back rebound pretty there up on our back us, in just opened happening a June strong the on time. sales and from And of we Some things up field purchases. the they that as uncertainty of in and is because it then, of pent-up demand for was June, purchases ended and heard far a come the that is some at a as in executed

maybe to compared that as us we in talking little high Obviously, the as down in here the at probably driving, And look then couple But I think maybe areas are of the those you communities, we see. well, if when are down of that's sales a as interior of COVID. bigger I cycle maybe some the we're of a didn't is a will, think depressed the ag been like but of bottom are of you think as more of I OEMs much. that relatively part there. numbers, that some store well, and positives at about OEMs big kind we're think as locked were of construction Also it's some the as I well drivers. years recent as that's from as well. I also country the the kind the our where of think insulated, aren't some things of those smaller coming don't we it's in for from drove the coastal bit

from as there well. So there going down as isn't and, stress much much isn't there further

some in anything quarter. no, items, of deals I seen no to think we've no big unusual it the think are speak of about And we what those or like and things that the So that.

cities said, When demand you're variances for instance, of rural of out in looking community at the some sort kind of the of footprint your coming your geographically, any there? like exposure you noticed between versus, have you purely construction the larger and

Yes.

of that. some is I think there

more. much of as I we the see the you mentioned certain pockets have affected some we our for into as we But us. were see Certainly didn't stores, with think rental larger before, smaller service the was pullback. in think communities, more Bakken, yes, get did in that, you certain that cities we where construction those interior particularly in stressed I

your the second And in wondering And the informs view your XX%. of your of half? down guess this view outlook, the with I'm What informs of half for second outlook? sort terms I again, X% for is what this to construction. you How year? came up

think through in yes, additional I We don't these I we right? in some expect the look we easing all. But go think all, as it's at QX. see here sure ahead. in things third to just it's, pressure accurate times. it, that I'm But probably did quarter. And at First difficult, and we're not did additional pressure of it QX think And in overall, was it's a, XXX%

No, so to seeing least, theory, going at in fourth to the we flat revenue-wise. quarter I could was be close say, year-over-year

still close bit, year-over-year. it to little yes, Yes, down I getting we flat have a but think close,

at I talked right? construction. one may, on see. I'm margin question, I quarter. cost if the your And looking in X.X, management And then last you about still at

So hear you've be in equipment equipment been for go-forward I'd love basis. how there might what in related this little have is and how doing the and pricing that the to vertical looking wondering both more I'm on this, new about and margin a that to what used played a sustainable might role in Also bit quarter?

part Maybe first. Yes. the first, the last

we're average good. go fleet have As say, side, side, rental good, far rental margins seeing I of the been, construction the to would utilization some as, maybe that on where overall, Except on down. our

still and first because remains quarter. used year-over-year, ag and that's the it's did that the some On on we there first inventory, the some. used first And side, the some on of the of to in kind aggressive move So some they strengthened that trying being second both down of quarter less quarter. of creating are pressure's. challenged from of kind Otherwise, everybody fine. international conditions Because just and new margins over

the diligent call, coming with of would And what down then And with kind there we're there. are here. at Titan. I the activity those. are our down revenues a in on entertainment that here lower lower As the those, construction some of of lower of practices really so looking level those a more areas in lockdown of at of looking then, managing of being kind Headcount, there that on out goes and some and travel promotional side, of overtime, out some far naturally just on headcount, prices some of fuel with as expenses really COVID-related level looking kind of sales items course, travel at what's and

would time. certain As could as, come that period structural of some far maintained of of little I to when would I comes it be some a there's of these expense But for revenues of those level up, bit a kind say variable, of say, locations. over time, all if headcount of are reductions at

it clear posted understand I'm of that to margin what So much envisioned just X Is in probably would the Mark, done that Because pricing, would margin market? sort pricing is pricing how line? that be to That's have margin you impact to trying in, that Is equipment in But, mean, actual in years, year. almost it have the what, prices Is construction, what's on getting that the deteriorates, this terms here, be costs what construction best would out worse right? here, equipment take with you better? versus in what you if is equipment at. itself, it I'm negative like, earlier I the of the mean, I right, happening because a of presume. than I your in

the, Yes. far equipment And coming is through, say seeing of I as is is so going. would What the line pricing. we're in far line in as most that pricing it's thus

is on talked saving like bottom I enhancement expenses, getting like floorplans. the no in we're line and also about we're operational So on there and like where

the lower with rates rates the new credit with frankly, on our there, on side lower more the construction getting is that. well. And So out our quite inventor line facility, in as

that line. is on of helping bottom the All

final De coming Our today Larry William is Blair. from question from Maria

questions. of couple A

in as of you net First, derecho this new If if you potential impact the already? I have vertical. positive. do positive you heard are you you it to as But anything model and from guys could that? a mentioned what you for for would seeing And kind And used? that are of see the parse just a right, now you demand through expect viewing

I of that insurance Larry, enough we're, still gone adjusters, insurance we're adjusters getting mean, have there been kind through, Well, aren't wrong. just

and in cabs. bringing shops replace some to know in tractors hoods, I So combines of our they're Iowa, already replace

So we're definitely see. going to

do people is continuing of to are and as lot of get out right that that tell of to we're because now to But done into any first only a just getting damage but guidance it's I it's think anyways. there. going and because to and early damaged, think I not be typically, because the We equipment really quarter, through going has to good they've I all the got. some, right moved some for big harvest uptime now. our we fourth there's there this quarter shops we've ready to gets this a see demand our be out know insurance stuff going on adjusters on We're what are doing demand, haven't and they're get pretty full. into But But get the then passed And inspections trying is working there there's factored there equipment up, the stuff been whatever. then a

to some Our shops are moved the around workload really busy. And handle we've stuff. technicians and actually

So for going while. it's out definitely there, to continue and it's a

to and bottom pandemic on digital you're good things a things this did assume, the it on your sounds doing very of obviously, using like on. obviously, and parts connectivity job, that's of line guys the by towards service. go Or service tools, as middle if for you then parts revenue other the And you like guys historically, going usual, to change And helping? lot drop the et if a business I'm in trying if spot, in parts cetera, to differently of and business understand the do this. way have going done terms and what's of what's And Did guys it's digital expectations? and of words, in you the back cost in because I

in some to doing But pandemic. trends. in of world we're and that's things e-commerce, invest we're whole increased those think virtual and have these stores We're balance I digital but the away, through the then room not piece see comes you're space a to of the there's definitely, parts traditional-type Lawrence, of we We're in traditional come is that's picked up the networking and continue continued some in going the and our drop the boxes doing, But that play. definitely, kind that into that. when farmer to really going and investing I where contractors, before yes, all peek think that. and doing to of definitely and we're that. digital And that the the also you're Well, the even and some going e-commerce investing see parts,

a margins, neutral? positive for be Which you could Or it think? net is

of say, people those pretty a No, types of with parts to still being with parts the I neutral. and to management, be inventory and that. lean able of all still departments the go a have right can going got you and pretty still and that. I'd ship see it's inventory receive and mean say traditional, don't We've things some now. amount lot going to displace I you're certain to parts the parts the But have all

How what are rates. David. trending? that seeing charges take ag last to versus up of they you're ask Okay, taking? take And precision are And rates the are the What kind thing wanted I the the base. about was

could that bit more. just you little if So parse out a

pretty Well, mainstream. equipment. right? if like it's it's machinery, becoming you be going look air standard conditioning, at Pretty to It's just the going be new soon, much to

So tools goes there application Case the with the take we're insecticides, that of getting from only seeing raven self-propelled the herbicides in size at a definitely on planners And the the up. think the good and the with investment are, precision automation yes, our take too. combines, aims seeing Then also, all equipment the area. seed and not aftermarket, the monitors that that. sprayers we're the Harvest on IH return getting and the New of things growers we're retrofitting got out are the and are a I there on from with some rates the equipment, also, equipment and Holland that was rates command, some that, with partner with of with we've uptake with, command of and some the big

yes, Holland, And see with tractors whether going the to a from the the New yes, these the connected board, that's the and across it's rates one rate precision the Connect take equipment intelligent technology you're big the that AFS tillage on our all huge it's tractors is that planners, So PLM addition driving a It's Command of technology. on lot another to replacement The really, take that's on. demand. in purchases. on equipment Soil

So to going yes, equipment equipment, driving I to Larry. is purchases. stuff definitely the that, some be And the just of a we're and seeing standard that's on I that lot increases of like start say, think

becoming it... is that in of sense. Yes. and I of over And where capture margin your becoming or guess value? Is obviously, service extra you parts that? it's more goes have piece with Are this any expensive. the you higher towards capturing OE to that going Or dollars and I'm it's incremental with more makes time, the standard but That

yes, of going out I I to stuff, you OEMs the can and type and as it if I real and based and partnership that relationships the the margins that. this, And provide these people think drive retrofit I going you with I we with of this and a can with going to like this side. the to and of margins aftermarket help this think leading customers really capturing benefit to I bottom add your and definitely your to we're continue out be there on there how some is them think, level want of and on precision our, to the you equipment ahead. us are think increase really sophistication, it's through able out to positive think. build our as maintain be expertise there how the and relationships for say, the line I And think Because, relationship the get growers

the side, But new than more on side on likely aftermarket the right?

Well, revenues. that's That's increased immediate. an

dollars there. of some are, that's big these And out

a that to seeing to easily you're $XX,XXX going you're planer $XX,XXX, tends or a If out business. precision, $XX,XXX, retrofit there. And higher-margin plant a be

Thank back closing or floor you. for question-and-answer session. I'd comments. to We our the like turn further any appreciate over

a progress your want along forward to updating our we our families, on for everyone. challenges pandemic. thank wish all this all want Again, day, I call. our through to the employees, customers COVID-XX their and with next we Machinery everybody to look And good and as work on interest suppliers, you Have in Titan Okay. best the of

That does Thank today's conclude you. teleconference.

disconnect participation have thank you line at this your We wonderful and may for day. time, a You today. your