Titan Machinery (TITN) 31 Aug 232024 Q2 Earnings call transcript

Greetings, and welcome to the Titan Machinery Inc.

Second Quarter Fiscal 2024 Earnings Call. At this time all participants’ are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

to conference like host, to now Mr. would turn over the your I ICR. Sonnek Jeff of you. Thank Please ahead. go

Thank morning, conference Machinery second you. to quarter welcome Good fiscal ladies and XXXX earnings call. and gentlemen, Titan

the On the Chief Officer; Operating Knutson, Larsen, Bo Officer. are Bryan Meyer, Financial and and Chairman Executive Officer; company Chief President call and David from today Chief

morning a.m. XX, By fiscal second the Time. earnings release XXXX, went now, which for everyone X:XX should have access at out this ended Eastern the July approximately to quarter

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

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

by ir.titanmachinery.com. may and again Titan's that below remind response to now going the of your available the directly to remarks You to The statements, forward-looking webcast is page. contain may at management information in statements the everyone questions. in make prepared the additional middle this website presentation like access We'd presentation forward-looking

including involve the should filed risks not subsequently Titan's annual current These reliance XX-K therefore, updated expectations quarterly undue Form based them. as be management recently statements placed performance, in Risk filed upon of Factors and and section do on guarantee These uncertainties, on in future and forward-looking XX-Q. statements those most not identified are inherent Form of report on reports

law, release the will of that any forward-looking may the statements. our detailed obligation prepared applicable no more call from of be or a factors could take be in open made contain discussion differ factors may required Except questions. results forward-looking to risk the materially any cause assumes we that These your Titan those today's projected conclusion as in by remarks, actual update At to call. statements to

introduce with go please CEO, Chairman ahead. David like I'd now and company's And Meyer. that, the to Mr. David,

overview earnings President Chief conference fiscal call. to summary morning, results, our I'll will you, provide a financial some an Officer, our second full results segments. business around our our On XXXX with year everyone. of conclude and fiscal Larson, Good second then the review will expectations. call, Operating quarter Welcome XXXX give Knutson, Jeff. of today's our of and XXXX quarter Thank for commentary CFO, fiscal each Bryan for then Bo

all with follow-up also operating overview. same-store will We O'Connors segments This contribution double-digit We into the our a combined XX.X% million. $XXX.X Heartland across reflects second that a increasing strong Pioneer carried yesterday of acquisition the quarter with announced performance was three on $XX the revenue acquisitions. million momentum to growth revenue high-level and from

revenue balanced parts organic growth was of and and which delivered healthy service, performed equipment, gross across margins. Our well also each also

$X.XX, a which per performance which again of Taken organization diluted our together, of consolidated which efficiency strength X.X% and XX% we of pretax we the earnings last margin in once over second demonstrates are and is year's share more increase than the a generated business. operating quarter earnings the

seeing Consistent do units. wheel on sprayers categories, orders some an availability receiving Next, our self-propelled I'd equipment our shipments horsepower expectations, high in like are we or equipment equipment in but improvement of provide prior inventory. anticipate customer update of several of retail excess tractors, to with not

We to continue continue to these next expect levels into see at that demand and products sustained for high year.

results targeted our doubly constraints. given these levels. capacities equipment of This anticipate limiting calendar of these levels these replenishment limited, towards stocking very for proud categories being all the do on production minimum With we is year of sales until second-half least at for our achieving I'm XXXX. the suppliers’ not team record

leader group have are definitive the agreement in a Case our to equipment. acquire IH high very seen may dealership market horsepower night, also largest Now O'Connors, Australia about we as you last excited and in

over O'Connor's team decades. organic and performance through goals a has record a driving for financial track proven solid acquisitive combination of a six seasoned nearly management with of

the great partner core ended and our fiscal which Additionally, operating highly Australian for market. June developed. of into $XX.X entry on $XXX of generated aligns own, scale of the their agriculture a XXXX, metrics, them values In focused the with they've EBITDA making network revenue O'Connor's year, demonstrates our and which an XX, million customer-centric million, the

largest approximately to $XXX Combined, annualized the O'Connors is $X.X billion, construction acquisition, including more the approximately produces producer adjusted XX% Southern Australia in third an agriculture largest only the located grain a enterprise, which are of dealer. in player is formidable of Australia's behind Russia. makes O'Connor productive even which EBITDA, generate the and Hemisphere us wheat. exporter Australia's stores million and equipment expected Titan wheat belt, Machinery the in as wheat highly and global revenue and Europe

horsepower yields. is strong enhanced focus and over our The and farmer belt cash shared very Australia's grain equipment by Australia's values with native coupled seamless production crop agriculture driven of focus. of similar English language being European being technology bodes well by expansions adoption productivity, and and Australian supported for customer-centric that are into precision region and market a These and integration high of system, that that combined trends profitability. O'Connor's benefiting from crop is fundamentals transaction scale ag comparable farm and on business economies increasing productivity are enhances this and to that carries Titan's legal domestic

consolidation approach where unique global across Titan's a synergy capacity gains. to to believe customer bear, market team positioned on it capitalize to through we believe Titan Australian bring capabilities service to broader operational combined provides expand O'Connor's we and we unlock and continued dealer with market leadership and are is resources early to and opportunities the while synergies opportunities well at network. the The existing driving of are capabilities network our leverage able the share We also stages

of our Belt best the Australian markets operational global capitalize we the across Together, we shareholders. value build the will some our for upon consisting on generating to of Grain believe and agricultural be synergies in heart footprint continent significant able presence of their X

family, We and are and a excited we welcome Titan integration forward management process. the closing and Machinery look to O'Connors transaction to to the team smooth employees

expect to closing of calendar QX in completed year be We XXXX.

we the by and highly working we're looking are to our schedules encouraged allow. in and ongoing delivery as closing, business, -- we customers demand hard remain production get seeing our In equipment OEM their

Our team of support through customers very harvest a second-half in is the year-end construction ready fiscal to seasons year. our and our busy

the Bryan call that, With segment will his turn to Knutson for review. over I

the you, year respective XXXX segment review expectations then segments. drivers good of across And will second I quarter Thank our some Today, balance fiscal fiscal everyone. our David. and our morning, high-level for of a recap provide of

I begin organic same-store sales segment, growth agriculture that our with will domestic which XX%. strong increased produced with

be the acquisitive O'Connors heard from transaction exciting. you continue particularly David, is As to and we

organic ag domestic Our our the in market. further in was bolstered segment by growth acquisitions recent contributions revenue our from

pleased We which strong prior ability maintain to at margin are our X%. consistent with particularly remained the with also pre-tax our execution, year period

got to year off our our Although of progress start late some Northern timely across following back crop spring in this footprint some precipitation. markets, a on largely planting track is

this and Midwest, the is inconsistent improved helping farmer was sentiment. yield earlier from across has precipitation which encouraging summer, potential Upper is this improve Although

realized that QX, QX we in growth delay, moved some strong also reflected into is service reported which additional from planting that the the with parts today. Additionally, and activity we

of commentary, categories. supply in are our highest tight his still in on touched we equipment selling David several As experiencing

returned tirelessly to categories as our procurement Most appropriate levels, the and normalized partners, do team so of this made to the dealers, to more units procurement optimize trends equipment same inventory Our other has continues volumes basis. dedicated team and been lease used through many inventory to on we forward-looking and inventory as continue levels obtain work OEM adjustments monitoring can purchasing those other and have to of a returns market. from will have inventory to

have especially in stocking While landed our remain crop cash about focused and happy good that where yet to have we levels many feel equipment not we cash on being product despite well, categories. able are procure key can crop to categories presell, equipment, we enough for serve for our replenished customers equipment we

offer inventory process mark-to-market, to well unit. a in dedicated to team should trade-in have regards determining customer a We as our we a also as what price valuation ongoing for

intensely our real-time basis trade equipment ensure market on a pricing healthy future also margins external team This on and to used continually in internal adjusting is trends and sales. monitors

management Our inventory are used scale, decades our improvements. equipment inventories result are our of to processes, in a industry-leading which very position. healthy and experience Due continuous the of

setting we to the of modeling well remain income Looking the above balance beginning at continues segment, Net averages for out on Agriculture throughout and up with in laid healthy with farm our of support demand we farmer of and profitability year. the bonus remaining track the that environment the for assumptions depreciation, remains historical fiscal the XXXX for is tax Further, purchases. strong in continued a with XXX year. Section incentives second-half equipment well place, coupled to

categories do the Nonetheless, positioned lead to our is board increase in through year expected equipment expectation consistent calendar available times, we XXXX. Although move as persist, industry with our cash crop with order shortages year. coupled are fundamentals heading long we foresee in have strong prevailing slots that an into well next

of X.X%. second throughout our of points our the and our to business areas was in performance expansion growth activity we fiscal generated shifting domestic with segment. margin during XX.X% excellent quarter, Now all great same-store Construction footprint another basis to sales strong construction of and pre-tax XX

of fleet XX.X%. achieved also dollar We of absorption XX.X% and rental utilization

we General strong in infrastructure, growth fiscal continues the which year-to-date and of remains support revenue the segment is which demand equipment, has modeling above to XXXX assumptions activity construction construction the resulted XX%, projects agriculture for beginning and year. energy initial at provided of

a a for in near of Although result, a as certain equipment see for equipment, this today. segment and the continue construction result a as are year also assumptions modeling backdrop availability favorable increasing we to types is limiting full term our factor

XX.X% within margin the an segment, Same-store our Ukraine. Romania Bulgaria, Now of the overview and moving which second our quarter, sales remained pretax X.X%. countries very and increased business to of fiscal in represents at Germany, healthy International

Germany conditions, lesser those contrasting Southeastern of Romania, extent. excellent is varied growing in across European with which also growing are footprint experiencing Conditions to Bulgaria, which our present and Ukraine, conditions a although in with dry

second a acquired build-out our of in current we an our the complex dealership German in during As quarter. market, part Germany two-store footprint adjacent strategy

was prior the at are which our Looking modeling we of to year, the X.X%, growth balance of of our reflect conservatism somatic range. the forward given our assumptions low-end year-to-date updating to

We continue availability across moderate see and challenges equipment to in given segments that European other industry volumes of with to business. the the ongoing expect the conflict Ukraine fundamentals with flat we ag our

Before Bo, comments echo privilege the with who O'Connors people A so, call special. respect David's make their of had entire I few of landscape, met their highly I my I'd Doing months to to confirm team. like number stores the back, the over wonderfully their footprint. all turn to I expectations agriculture their and and talented so a organization traveled of touring productive

Throughout my focus our encouraged to which brought visit, testament similar cultures leadership team years. I a how that their company the by has was business very the their over is to are,

to welcome produced fantastic just I We that, With and to results. year-to-date family are to the extremely Titan want to of their the and them dedication Titan our a members excited customers hard our smooth integration. family for all work have look to forward thank which

turn I call the more our in to will over review detail. to financial Bo Now results

Thanks, fiscal million, with period. the quarter, to increase Starting an results total $XXX.X was compared Brian. And year everyone. second for XX.X%, our XXXX morning, good of prior consolidated revenue the

well from segments, versus basis. our for increase on prior led revenue across revenue which double-digit incremental XX.X% equipment same-store combined of as the sales our three increased Our as reporting year XX% recent growth a same-store acquisitions, period, all a by

streams This basis second million. XX.X% period. to revenue sales. other service driven XX.X% profit visible our well, revenue, was and a also to to versus Gross increasing XX.X%, as our mix growth revenue slight up prior equipment XX margin shift increased year profit with the increased higher-margin quarter XX.X% parts rental parts primarily XX.X% and up by the for to other by relative $XXX sales points Gross across

increase increase prior the in were to the expenses second expenses due in for that The compared year-over-year with variable of the Operating taken an of operating to XXXX, additional $XX.X expenses million sales. past XX.X% associated million quarter as well the was primarily year, year. have in $XX.X increased acquisitions fiscal as place

levels. as XX some versus was a leverage of basis percentage That said, $X.X operating of million million other quarter achieve to fiscal compared to points second the plan pleased and interest Floor floor inventory year of sales. prior are interest-bearing we plan driven higher as to the $X.X XXXX, borrowings due primarily expense by higher modest for

million per $XX.X year's $X.XX fiscal or Net quarter compares quarter diluted the $X.XX net income of XXXX last million and or income diluted share. for to $XX of second was per share second

In segment, achieved driven on acquisitions for equipment, sales growth segment $XXX.X second Now strong well to Ag was sales year increased our the quarter. turning performance to XX.X% by and was This Pioneer the results as Heartland our top same-store our Systems of a which of prior growth as in period. million. Agriculture XX%, of

strong be of cash constrained X%. to categories implies a the quarter $XX continue availability product margin call. compared pretax high-demand to performance, of quarter basis revenues second the decrease million year, on million of Despite equipment the in prior touched and has quarterly income second points Agriculture segment which pretax the was already during to XX $XX.X this by

period. $XX.X million million, improved year XX.X%, Benefiting broad-based continued equipment availability segment Pre-tax second in by basis Construction to equipment of pretax and year-over-year activity $X.X its prior year and approximately the million quarter in from the to Our second XX X.X%. construction income some sales compared the categories. to the up was and compared in margin quarter grew momentum and prior to points our $X.X increased

by to as $XX.X $X.X XXX pretax of Pre-tax Ukraine included year-over-year of X.X%. the second Net in which on growth implies of foreign conflict. to X.X% remains compares the effect of million decline of basis XXXX modest by strengthening XX.X% reflects In it currency fiscal which these in XX.X%, and $X.X segment, the a million the points sales euro. income International decrease fluctuations, impacted sales tailwind our a which ongoing currency achieved segment a quarter and margin the was million to increased

of balance to to sheet XXXX, our well X.X is had debt on covenant position. our million below of tangible worth ratio Now and of We adjusted $XX July inventory of bank and cash net which as an X.X. XX,

This an $XXX.X $XXX.X Our of fiscal of million, parts was this the the $XX the equipment growth in balance increase total of million, increase respectively. million end $XXX.X at via during of inventory year. second months and approximately million inventories came quarter six first and

equipment are partners still $XX the primary equipment and in high quarter. categories Of the largely first Pioneer was is both they up driver that total improvement of production on the those mentioned, have new acquisition, availability to the outside million increase, which caught The made David Brian allocation. horsepower from increase OEM the as during is of attributable key our which on

cost is units new inventory we industry the average or used for good categories. we stocking display available-for-sale $X are lack we we of inventory. by at it equipment dealerships bit put million ag stocking Overall, And short in two targeted have of to our loaner ag To a Driving one have is minimum of our target levels locations, demonstration some which of volumes on a still whole of and store units need for notable. or demand and sale the today's highest per location, XX perspective, of high horsepower domestically. clearly combined

backlog in of $XXX to are for predelivery implies versus account work we the about of inspection get to about segment, our today a a $XXX domestic million. ag which Add for million $XX target couple and of you shortage our million at weeks'

then if targeted inventory backlog levels, turnaround about we levels. continue consider available-for-sale However, of that short above you million to times, while targeted $XXX our normalize is remains actually those

and construction inventory targeted international, with are while segments, shortages or levels less more aligned there their other are key impacting for still As current levels.

we is Note inventory those have stocking to to few these targeted as higher equipment that and the we those categories Brian normalize that remain of more levels touched that still again, provide and continue to replenish turns. consideration activities of earlier a maintaining presale future excellent short. key that amount inventory in opportunity But as of presale focused into on visibility well into categories. do take sales backlog an are on key Overall, want levels inventory levels

our year-to-date businesses O'Connor's has growth assumption to share segment. segment have consistent expectations, acquisition, on fourth our year XXXX impact that, updated performance a the strong business performance. report we underpinned Agriculture and by full-year of of with to and The the been an I'll as we reflect for With year-to-date operating fiscal comments the to of which partial include few which guidance organic our expect a our performance

to through this We of that half year. back the continue expect fiscal

to has expect expectations, Our activity the to support been for Construction segment exceeding construction year. continue we that and trend of the rest

range. As for performing our previous the our guidance segment, lower International well it is of but end toward

up modifying X%. flat to assumptions we compared segment to be up to our Agriculture up up that As of to previous XX%, such, our compared previous to of for increasing XX%, Europe to our XX%. international for X% are of as And X% our with assumption volume as more to us industry brings reaffirming construction guidance in XX% the the forecast for up for to XX% guidance to adjustment region. be segment line assumption X% This

Before O'Connor midpoint adding per the impact for year transaction, with partial we share are maintaining $X.XX. expectation earnings diluted of the the our of

has we performance and in execution to of year. beginning added that focused the on first-half the confidence the of year, our remain fiscal we the at the numbers for Our achieving presented remainder

$X.XX of all of being of result in fiscal which With in million, expenses. revenue financing $XX reported to earnings per diluted factoring to close we estimate, expect reported for provided impact O'Connor of of in XXXX purposes year. partial to estimate integration-related would and one-month it the the Their on the $XX this have in million share anticipated lag, October to X. closing date translates that these respect the we in a of $X.XX. will activity Win quarter to With this fourth assuming said, three a our transaction, are so range And year results. we assumptions results initial of calendar of for be a contribution months an

to year acquisition O'Connor's million arised EBITDA the of first-half ended XX% O'Connor have range for come $X.XX and guidance, revenue year of tightened our the year. revenues produced million of $X.XX. XX, historically $XXX in historical $XX.X in June of pre-tax for Seasonality about that O'Connors, the business to fiscal the in of million. similar $XX.X the is and of the Adding to second-half XX% has XXXX, income to in business the seasonality come

$XX the provides million forma estimated financing earnings for of these XX-months expenses pro $X.XX integration of pre-tax and to results, of run or ownership income Adding diluted per for a share. first rate

excited providing and further to O'Connor's earnings this to future on to updates the segment Titan look are team welcome forward calls. members We business on

prepared and This take concludes now to comments, our we questions. are ready

Thank this comes Klieve conducting Lake with you. question-and-answer from the At Our a we’ll your Street Markets. Please [Operator first Ben line time Capital session. question. with of proceed Instructions] question

taking this kind on I'd as opportunity you of this a kind a like looking like acquisition lot thanks and decided my Was function looks Or was a a Australia actively acquisition. the move with to great of Hi, to of of that you it act considering kind guys and a questions of start unique acquisition. options? congratulations and quarter I'm well. the for curious genesis of great on? to into O'Connors

is This Yes. Dave.

So got I little to a wind bit. actually

I I and out family of really professional I has had management you have situations a O'Connor, that where had classic think off retired. They've business. know put Dennis team in didn't been family think brothers two owners, And of two it's both XX-years. been one for succession. the these the

bit, Heartland I and -- together. those completed, -- last got recall, we be But of horsepower got that just O'Connor with to the really for And that reach come case think couple looking a a important O'Connor but systems year I their so down once integrated, hands you were didn't ago business little to it, we of I a and they acquisition. going you definitely, when probably high was we out understand stock in want this size some -- tried didn't pretty that years And some -- Dennis Australia, equipment. two new we that, earlier business as when were could at in into you strategic leader knew the you get the I had is look if sell year, of to shares So to. they in market we --

Every an New they dealers, year, for last together and all have a well, meeting, the for that have in the annual Zealand five they O'Connor years top a award get won dealer Australian row. and

down operating proven belt arguably grain professional And best Southeastern the farmland has you team important the is five and the So experienced of I Australia. in couple think that that for the in with and over in most been now. years the management place country in

of old this brainer. really an Add together, all

down of it's almost people, And low Brian with for So metrics and metrics English just mean everything or law, turn it financial -- on went was a scale. we I English there base the to in sense us. just really or products, ours just met cultures team. Candy the the their the made dealership. corruption or just and language, lot identical

state in are if backyard that you rate facing. are being inventory and at understand of Yes, kind the it just on you. of farmer general interest Thank all sounds appreciate sentiment comment But guys the of now like that's Follow-up wondering buying very kind I kind helpful environment. by patterns but O'Connors right impacted state to sentiment. of farmer unrelated your the I'm dynamics and the color. sentiment your

rates If be you their are buying interest patterns, helpful. especially on last, the that over impacting can how elaborate six would months

Brian. ticket manufacturer-supported some having actually lower and then is the programs right on as these horsepower This do cash and lot you historically as products. have of get or still items, a lifestyle Yes. higher transactions into we amount We're more larger especially well now of rural of the

little a something which up. price just And have with the impact It's it's into other an along producers and contributing cutting net so is It factors, farm a lot farmers their our of are one of bit. are definitely, the -- income watching. things

into out good last where still depending but down still pace a But XX% anticipating tax place, going there for year a in income push of of a did on pushing next urea this year. good yields we're even on of a there They of And pace and come lot around are for was between really a a still Maybe in and different year. helping, from XX% estimates contracting. year's really income year. below fertilizer being lot is and last from record year farmers forward And be lot on incentives year. that this lot to there's and into we're

So yes, still out robust, of on minds, a there, pretty are still and amount financing but help a with do fair rates tools different lot interest cash of to we people's have that.

Yes. The you're only pretty thing OEMs and maybe cost the when I'd Interest add a to of add that talking this -- farm small equation broken that, expense some about the to of earlier income. the think portion year only nicely. the thing too, I'd I down for fairly is

while at more has -- much here. it increased, play other there's So that factors it's are

Congratulations doubt in that. very good. Well, quarter, that's I'll No great about again on and yes. helpful. queue. Yes, Very a all get back

Thanks, Ben.

Thank you, Ben.

Thank you.

with question next Please Securities. proceed B. your the with comes of line question. from Riley Rygiel Alex Our

and congratulations and gentlemen good you the O'Connor morning on Thank transaction.

Good morning, Alex.

here. Questions

target all that to very step right and You this helpful. But think at do rate level environment back, you is talked inventory that's a that a now? we're lot higher appropriate about being quick was levels a comparable historical why in inventory in very, taking

inventory back to to which about historical I our are and doing I would people some it that with talking prior total level. so take comparable you the aren't comparing if we're peak, want saying a start think levels to naturally

about have ago. location number we're per a think to significantly than unit, cost factor the units of in talking right? smaller you decade a So we I per were

years If larger than about the on much pricing you the X% increase we a being know with be decade, of over seen simply the math past that you'd a XX% that. like-for-like we've ran talking been a over higher. equipment couple has And

available So about number levels, a or out less we that on even display at And we're are and categories, loaner there, really it's we units. about as the talking one-third demonstration, sure, right, that focused then targeted from on conservative main our you're basis, two making one again, talk have or locations. for very of units

what don't just that's we're volume than the We're on sales right? items what they high because about. those in today. missing would if that's order be to higher horsepower even our And you we we need drive did, of on are so high opportunities out And sales, really our sales talking lots. And have

So taking perspective. it's a all keep step important think to of back, I that in

to as efficient to focus and continue all we'll improve model, is we we forward. on be as want going and certainly and of we that continue to presale do business our business possible, So to want activities good practices that

you're caught had very it's That's back helpful. do but delivery to I hard delays. in know And quantify of in you kind January, those, then delivery you some think all up those delays?

No, Alex. not yet,

In comments, actually spoke our to up fact, sequentially. bit backlog is his Bo prepared little a

anticipate before up least So of get no, likely quarters at another we couple we can caught on that.

good just up. lot add to anything we're little on shops which But Just Bo, our and will it take selling time end? good are of a And really iron, busy, thing. a thing is which is your a a

Yes. No.

half I at on we wanting We normalize the available-for-sale to inventory year. and and continue that's think right. talked about of back opportunity focus the mix to see and to that that our backlog, that

much. Thank you very

the started think that's probably now. too. it to them normal we're And coming some get had little conditions, the end to substantially the back year, per of some seeing some we to of equipment be shops that I factories, more the and improve of through side supply to going to, taken out do comment one of with towards a our too, us issues it's longer the And of right when unit and it's the bit,

So that will help a lot.

Thank you.

Thank you.

proceed Northland with Ted Securities. your Please question. Our next question of comes Jackson the from with line

Thank morning. you and good

the a in sense locations to kind questions Australia there of maybe network as who's network. little number many relates to kind dealer, it give dealer So I'm one Case color metrics like International Harvester. give just of first largest back the across IH to of maybe terms of just the kind the you largest Can are dealer domestic it a how my us Australia going two, the average to Case locations sense the some some how throw that the now compares with regards next on two us acquisition. to O'Connor per you for have kind And more dealer like who's is of

So in through future our different conversations I'd But States. owners. They've acquisitions different say much growth in pretty with discussions a it's well-defined identified there, with the they been United team in management had locations. like the strategy

You've some you on don't least maybe competition. dealer the groups, got of so side, really lot have a big the case on of -- more at

family it's what more of much business, of lot we've the a experienced think States. a family owned. a here robust So groups, even I consolidation businesses. in smaller I And lot say, story And smaller what United than

I for continue think And to and just good consolidation they some between the some relationships as adjacent now. there's where good owners of our I existing from team And that's really and think are right camaraderie. you

the we -- so is timely to that But want think we -- managed the and And no, that's just of about I positives do approach. one a M&A on opportunities. story future

on would Yes. Ted, And just add to David. I

largest. asked you think the I what's next

footprint rooftops. there grain CNH there's dealership average you then And asked the the six would a be so belt in O'Connor's is. And with what

per. more is average three around locations two the so And to

location just don't any at have know, curiosity, are Australia, you size number just, least of whole like locations just that do a in in like of of kind terms kind standpoint? of from market, I that And the bit of Okay. sense the the of

large where O'Connor's where will fair to interest mentioned, just there our definitely amount a and number side that And belt David as as has in back go well. here. John equipment locations we're time we're the footprint out dealer, -- I'll Deere very seeing a just grain Fargo headquartered for likely level That's XX know over long We in has here that with is a that the of time. Deere of area the RDO consolidation is. as Australia in Yes. be There's well. in

to basically know You in remember Australian and XX Deere service dealer continue Canada entered the and then us when continue add John has what, large And side us. Australia. North in way their they I here now just they back so either build of market, they're every year on presence locations, equipment, locations of to

North us American RDO of now presence amount fair a is there and there in So service. between

at terms question I like Or that cetera, business that higher-margin would revenue in the look a your do a is you it mix different, skew you When business? they're et similar mix. internationally -- of more international relative equipment sort parts, equipment bit here in just of second mean stuff but have that's O'Connor's from mean, the domestically. domestic to is some rental, My ag? much a of not than services, you it I it more to you of towards is

get could give I'm of just mix And of then so queue on color you some O'Connor's business the if in curious kind and of I'll kind again. Thanks.

breaks similar pretty deck down our The domestic business. nicely. It's posted Yes. that pretty supplemental website on that our to we ag

the is at XX% was looking So sales mix versus more historical equipment a three-year XX%, U.S. on average side, XX%. there, ours like

domestic one business. ag have So the that points a And similarities percentage just couple metrics our of but that's business different, to and very many similar. of their profile

the acquisition. and quarter Okay. Congrats the on

proceed Imbro Our next Please with your from question of the Daniel comes Stephens question. Inc. with line

Hey, guys. is for Reid Daniel. This on

on couple a of here. Just margins questions

inventory, should forward, gross should SG&A As ratio. this better a lot a low? going Or should stays to how lower that? to your ratio thinking seeing you a translate we benefit which sustainable be Is margin assuming and margin inventory about gross noted, we're that

is sales. a of and little line we I same story in expenses. bit from And prior that operating margin this a below operating or we we fact as of be for be the probably some year those year's talking expectations, full-year, sales perspective. perspective, below from last But point gross line expect to that would do year percentage touched or in on mean, of in the at an percentage in expense expect our to half moderation about true remain back the

thank synergies? Okay, with the slightly O'Connors expect little a synergies Just margin? some more looks acquisition, touch to you. you bit great. a margin you And that margin today, finished color low. Do would like fiscal all on see last uplift on year some there gross can be Or maybe gross it

Yes.

they So had in of supplemental in the we the that gross financials XX.X%. margin deck, provided

what a referencing, think of ours and pretax actually I below you're X.X%. that's then margin slightly had

us things the one of management the really the is of and operating their business profitability that So to their team model. many attracted

pretty skewed equipment in you if factor to a to bit a margin, little is us. lot fact sales that they That similar more the are and sense makes of

perspective on there what in provide global we're execute synergies, team able consolidated We and we to had on looking a look from strategy the service type are they at of leadership terms a different operating continue customers at that mean, focused unique at that I we're XX/X perspective. front really the well. support looking In management from And is business as growth support some to executive zones in that now being to the a time as want team to model then opportunities them. of senior

for you all color. Thank the Right.

Thank you.

from Dobre Baird. Our the your comes with Please with question. proceed of Mig next line question

Good the question here. you morning. And for thank

Hi, Mig.

for like I the available. like inventory the think you to sort more want will to as back discussion. It curious you the go sounds of of to And inventories for remainder I'm progress if you'd how year. inventory,

sort is the year-end. you here to the as OEM, through going for inventories chain So are build continue supply to better that of inferring getting you're

So one. I that's part number guess

related that follow-ups. in much presale you year 'XX to comment your now presell, you. all America? then I And equipment can so model on about business given some have And at your Thanks activity then this, North is of

inventory Yes, might on the I'll then and start with Brian presales. touch maybe question, the

course, and that case. of fourth sequentially receive see little perspective, going customers, everything to the then So turn predelivery probably the to Of mention to high there the increase the inventories most around perspective down in we We come inspection. retail be third would that quarter is we're We an quarter. did that to from from a with expect horsepower bit we from inventory speaking, largely in that typically a that need will

-- of we're would able would that factors increase versus at increase, back that what and some that first-half. to on smaller half of saw in are the expect what perspective we be see from are picture less very year-to-date back again, other we'll what categories, us was than first-half the in again, lot backlog. backlog. the again, So seen And bigger half a these play welcome the those the should to normalizing of modest focusing replenished in levels with do back really get a we've terms the that of the kind on -- we normalizing a half, And year,

categories Yes. there that really in. as Mig, to this the we're is talked other pretty we're feeling now. Bryan. you I But low smaller of areas to finally short We've of a product some get call last those. would of at. good categories, those certain have that clear we just more about categories are tractors where looking about been in while trying are product product for where excess And little running we couple that other there that add key are we quite then know, we're a are bit we're and a be definitely in

And think implied in the our being in just little guidance proactive here, mix so that you is bit. about a I us cleaning see it second-half up

product will up. of these So next we're year for open really well key categories some hope that positioned and

that. the I and smaller that they few these see wouldn't categories dealers, addressing proactively little what we're so most margins that's a in know anticipated got you we've reflected do And long, we're where

stuff They wouldn't yet the pressure be isn't aged. feeling that

cognizant They're mix really very are tight just to categories And on And far not the order are so our are you healthy product allocation. here. really these of your we question, there. out OEMs -- are know, -- to the as key books proactive want presale being and keeping

category said, are as our names first so those tranche of into And with finally product 'XX early Bo orders just all now. on key we're there, we've out units. we And got

you matters volumetrically XX. balance context relative of sheet the model building demand inventories the your industry and I the a 'XX that in more is ask it year And But within get again, for do up sense on to broadly. question because

No, still been normalized product the how a those. key those it's I to in for other has then demand But very product is importantly, And now say on categories. supply been would demand similar long in outpacing categories. time

demand got And in key boards demand side, as I have So net here see farm the we're don't little product mentioned, still everything I those get again, for order as a categories, incomes far. we but yes, bit increasing can likewise construction is we the still strong. selling so and our lower on allocation we've

David, XXXX, comment. sold how or until wheel just in reiterate tight of the getting all earliest us that's see of my any quantities sprayers, orders at stock don't it forward-drive tractors, I I'll is. second-half

Thank you.

Please William with line your comes with question of Blair. question. next Our proceed from the De Larry Maria

Yes, thanks. Good morning.

left let's where we First there. off question, just up pick

sort I programs you're order short there's mean orders obviously, understand on of in and I supply. what presales early calendar is the we're message -- the -- seeing there's that On that and XXXX.

seeing are calendar point. are BJ's about of that there there out the any on talking to next order we're What's you first I a about what demand seeing? don't year? all, the know telling are not programs And messaging So about this question flat getting point XXXX cancellations at stronger, we specific

out so, to still long demand this up perspective. then is a need But no at is 'XX for I that yes, keep fleet been and product again, first you and so kind increase to fact categories. our we of question, to Yes, your product that's demand that we at Larry, anticipation got ways answer to in think cancellation the this key flattish and point point those able categories, there work in to production older with get in availability continues these certain haven't but

a were Maybe there's much things I'd it farmer asking the noise demand is much bit, out that, tempered I of and in but and off a what farmers so But good. be still below settlement supply They're production like say, but always like But outpacing said a that. peaks demand still there. noise pretty might XX sentiment bit, is might a There's you're farmer before for over out so years. levels But a you that maybe little some previous little demand horsepower. lot the interest is say be little have high there the deal with there still bit, negative. rates,

Dave. point, Yes, good

not going up, little So you. be can core the XQ would is sales And you getting Construction production flat second-half actually Or second-half? then it like the fiscal should guide, staying the give not which expectation Obviously, looking quarter. confidence for It the can in and second-half? expectations split? good Thank Okay. in us color deceleration? in maybe or then the about you you're Or year, production than a ex-O'Connor a a a on lower. a lower seems imply not some XQ talk is versus really numbers? the just the having Thanks. consensus about there and stronger

on sales right? a I'd commentary of business, that, about -- X% if at first-half in year. on Yes, a growth same-store pieces from look perspective, our couple been line say the you ag of top the domestic it's

about you similar on something year. some their given from which of the the Heartland perspective, growth Then layer growth of sprayer expected levels. in commentary expect a the those production, second-half expect be any We to north of we'd

the been a that's comes margin the Mathematically it, of play get some perspective, speaking, we've to touching But to results. math where from into on right?

the since moderation So of and is we've the talking the discussing reiterated something been And top line is what very we've much about margin guidance. gross the year. beginning been

reasons, be touching in a would was earlier. bit on than what year. and year-over-year Bryan margins a And the QX they number we QX including So be would little expect that of prior for lower in were to

we then quarter than just the than what a QX be expect we that, QX to in from little split second perspective, and highest would quarter. to more be our a And less saw but

So put had with out the consistent previously. that we that's expectations also there

we help certainly, other higher doing as the is expect an expectation to out period. prior and just year in expense as you and your where getting quarter come we did and to well, thing fourth second the quarter, math the comparing out other that from you and The to you're third see to in interest would perspective

you in at we're where where earnings about about record really top share prior together talk zoom $X.XX, doing were the per out that we're if of all and O'Connors results. acquisition, back, were looking a $X of is we year's with good. our And on outside we step and midpoint take power a guidance which put is talking the is versus today, really what of So peak, last which reiterating

average we've again, north confidence margins in of spoken pretax So cycle. achieving about the higher this through year X%

share getting our why we growth execute in reasons to our through pipeline. market and on have on confidence there, gains The organic continuing focusing

to us, how going So for we're execute up to rest well excited I continue you nothing to the how hope positioned of and the be hear we're shapes about next and but year. it, year

Thank you.

the this proceed final morning question with your Please Steve line question. comes Dyer from with Our Craig-Hallum of Capital Group.

Brian, Bo. morning, Steve. Ryan for Good on

excluding want And highest the be will follow highest, up is that that on business, to revenue? the made Just you last QX time. or acquisition QX all when say the guess is in core I of just that O'Connors

That Yes. a No, that. me clarify acquisition. that's to opportunity the was point, great O'Connors expectation, allowing the and our thanks excluding for

on then of So top the we layer that. acquisition O'Connor's

So I appreciate that.

half guidance Good. And regarding the assumptions a then And then back year just incentives quick the what Could follow-up. are your incentives? in for manufacturing any QX? within you realize of

Yes.

there. me clarify opportunity to Another for

a started increase of we This yet cadence year, last with from for production to back haven't volume of the done aligning in just quarter $X.X expecting year, that, the the larger accrue tune second talked So that we the and we're second-half about and expectations again in in i.e., million. manufacturer second-half the than to the for that our half perspective, to the of incentives we to continue just being year, first-half. the

the in year as a the to to year, that back we the the last definitely million fall to So opposed year in quarter. year will of expect $X.X it recognize incrementally Overall similar recognize starting for levels. just half

Great. luck guys. Thanks, Bo. Good

Thank you.

floor turn any that Thank back final you. question-and-answer I'll Ladies concludes our comments. and for Meyer to Mr. the gentlemen, session.

everybody, participation in your we call. next to and Machinery, and on right. our look updating you our forward progress interest for your Titan All Thanks, on

So day. have great a

concludes Thank you. today. This our conference

disconnect your at participation. you your Thank may time. You lines this for