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What changed in Titan Machinery Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Titan Machinery Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+351 added−351 removedSource: 10-K (2025-04-07) vs 10-K (2024-04-03)

Top changes in Titan Machinery Inc.'s 2025 10-K

351 paragraphs added · 351 removed · 284 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

108 edited+15 added−10 removed58 unchanged
Biggest changeMuch of our focus on aftermarket campaigns is promoting proactive equipment inspections designed to spot and address mechanical issues before they result in costly downtime. Other proactive aftermarket initiatives include offering extended warranty and equipment maintenance packages with the equipment we sell.
Biggest changeParts Sales Managers and Service Managers Our parts sales managers and service managers at our stores are involved in our efforts to market our parts and service offerings, including our seasonal marketing campaigns. Much of our focus on aftermarket campaigns is promoting proactive equipment inspections designed to spot and address mechanical issues before they result in costly downtime.
Customers can search and view equipment based on type, manufacturer, price and/or store location. Pictures and descriptions of each piece of equipment are displayed, along with the equipment specifications, price and store location. Parts manufactured by the CNH Industrial brands and other suppliers are marketed and can be purchased directly through our website.
Customers can search and view equipment based on type, manufacturer, price or store location. Pictures and descriptions of each piece of equipment are displayed, along with the equipment specifications, price and store location. Parts manufactured by the CNH Industrial brands and other suppliers are marketed and can be purchased directly through our website.
We ensure that safety performance data is tracked, aggregated, and reviewed on an ongoing basis across our organization. Our risk/management team collects data on recordable injury rates, serious injury rates, and near misses from each of our facilities, and engages in a root cause analysis and identifies corrective action to prevent future occurrences.
We ensure that safety performance data is tracked, aggregated, and reviewed on an ongoing basis across our organization. Our safety/risk management team collects data on recordable injury rates, serious injury rates, and near misses from each of our facilities, and engages in a root cause analysis and identifies corrective action to prevent future occurrences.
We seek to generate growth in same-store sales and market share through the following: • employing significant marketing and advertising programs, including targeted direct mailings, Titan website efforts, internet based marketing, advertising with targeted local media outlets, participation in and sponsorship of trade shows and industry events, regular direct mail advertising, and by hosting open houses, service clinics, equipment demonstrations, product showcases and customer appreciation outings. • supporting and providing customers with training on evolving technologies, such as precision farming and farm data management, which can be difficult for small dealers to make available; 4 Table of Contents • maintaining state-of-the-art service facilities, mobile service trucks and trained service technicians to maximize our customers’ equipment uptime through preventative maintenance programs and seasonal 24/7 service support; and • centrally managing our inventory to optimize the availability of equipment and parts for our customers.
We seek to generate growth in same-store sales and market share by: • employing significant marketing and advertising programs, including targeted direct mailings, Titan website efforts, internet based marketing, advertising with targeted local media outlets, participation in and sponsorship of trade shows and industry events, regular direct mail advertising, and by hosting open houses, service clinics, equipment demonstrations, product showcases and customer appreciation outings; • supporting and providing customers with training on evolving technologies, such as precision farming and farm data management, which can be difficult for small dealers to make available; 4 Table of Contents • maintaining state-of-the-art service facilities, mobile service trucks and trained service technicians to maximize our customers’ equipment uptime through preventative maintenance programs and seasonal 24/7 service support; and • centrally managing our inventory to optimize the availability of equipment and parts for our customers.
We believe that the following capabilities enable us to better service our customers: • our ability to staff a large number of highly-trained service technicians across our network of stores, which makes it possible to schedule repair services on short notice without affecting our technician utilization rates; • our ability to staff and leverage product and application specialists across our network of stores, which makes it possible to offer valuable pre-sale and aftermarket services, including equipment training, best practices education and precision farming technology support; and • our ability to innovate and lead our industry through initiatives such as precision farming and farm data management products and services, which provide our customers with the latest advances in technology and operating practices.
We believe that the following capabilities enable us to better serve our customers: • our ability to staff a large number of highly-trained service technicians across our network of stores, which makes it possible to schedule repair services on short notice without affecting our technician utilization rates; • our ability to staff and leverage product and application specialists across our network of stores, which makes it possible to offer valuable pre-sale and aftermarket services, including equipment training, best practices education and precision farming technology support; and • our ability to innovate and lead our industry through initiatives such as precision farming and farm data management products and services, which provide our customers with the latest advances in technology and operating practices.
Agricultural equipment manufacturers typically grant dealers in the United States defined sales and marketing territories with designated store locations to distribute their products. 2 Table of Contents We believe there are many factors that influence demand for agricultural equipment, parts, and repair and maintenance services, including net farm income, commodity markets, production yields, tariffs and trade policies, interest rates, government policies, European Union subvention funds and individual European country subsidies, tax policies, local growing conditions, and general economic conditions.
Agricultural equipment manufacturers typically grant dealers in the United States defined sales and marketing territories with designated store locations to distribute their products. 2 Table of Contents We believe there are many factors that influence demand for agricultural equipment, parts, and repair and maintenance services, including net farm income, commodity markets, production yields, tariffs and trade policies, interest rates, government policies, availability of European Union subvention funds and individual European country subsidies, tax policies, local growing conditions, and general economic conditions.
Our Agriculture stores in the U.S. are located in Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin, and Wyoming and include several highly productive farming regions, such as the Red River Valley in eastern North Dakota and northwestern Minnesota, portions of the corn belt in Iowa, eastern South Dakota and southern Minnesota, the I-80 corridor region in Nebraska, which sits on top of the Ogallala Aquifer, and the Snake River Valley in eastern Idaho.
Our Agriculture stores in the U.S. are located in Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin, and Wyoming and in several highly productive farming regions, such as the Red River Valley in eastern North Dakota and northwestern Minnesota, portions of the corn belt in Iowa, eastern South Dakota and southern Minnesota, the I-80 corridor region in Nebraska, which sits on top of the Ogallala Aquifer, and the Snake River Valley in eastern Idaho.
We provide proactive and comprehensive customer service by maintaining service histories for each piece of equipment owned by our customers, maintaining 24/7 service hours in times of peak equipment usage, providing on-site repair services, scheduling off-season maintenance activities with customers, notifying customers of periodic service requirements and providing training programs to customers in order to educate them on standard maintenance requirements.
We provide proactive and comprehensive customer service by maintaining service histories for each piece of equipment owned by our customers, maintaining 24/7 service hours in times of peak equipment usage, providing on-site repair services, scheduling off-season maintenance activities with customers, notifying customers of periodic service requirements and providing training programs to customers to educate them on standard maintenance requirements.
If we acquire a Case IH full-line dealer location within any of the territories for which we then possess the Non-Footprint Commercial Application Distribution Rights, as part of its approval process, Case IH may require Titan to pay an agreed upon amount for the inclusion of the commercial application sprayer distribution rights in the new dealer agreement for the acquired location. 6 Table of Contents CNH Industrial has the right to terminate its dealer agreements with us immediately in certain circumstances, including in the event of (i) our insolvency or bankruptcy, (ii) a material breach by us of the provisions of a CNH Industrial Dealer Agreement or (iii) our failure to secure the consent of CNH Industrial prior to the occurrence of a “change in control” event.
If we acquire a Case IH full-line dealer location within any of the territories for which we then possess the Non-Full Line Commercial Application Distribution Rights, as part of its approval process, Case IH may require Titan Machinery to pay an agreed upon amount for the inclusion of the commercial application sprayer distribution rights in the new dealer agreement for the acquired location. 6 Table of Contents CNH Industrial has the right to terminate its dealer agreements with us immediately in certain circumstances, including in the event of (i) our insolvency or bankruptcy, (ii) a material breach by us of the provisions of a CNH Industrial Dealer Agreement or (iii) our failure to secure the consent of CNH Industrial prior to the occurrence of a “change in control” event.
CNH Industrial Capital charges variable market rates of interest based on the prime rate on balances outstanding after any interest-free periods and receives a security interest in inventory and other assets. Interest-free periods are generally four months in duration for both new and used agriculture and construction equipment.
CNH Industrial Capital charges variable market interest rates based on the prime rate on balances outstanding after any interest-free periods and receives a security interest in inventory and other assets. Interest-free periods are generally four months in duration for both new and used agriculture and construction equipment.
Employee Recruitment and Inclusion We strive to attract the best talent from a variety of sources to meet the current and future needs of our business. We have established relationships with many high schools, trade schools and colleges across our footprint, which we utilize as a source for entry-level talent.
Employee Recruitment We strive to attract the best talent from a variety of sources to meet the current and future needs of our business. We have established relationships with many high schools, trade schools and colleges across our footprint, which we utilize as a source for entry-level talent.
Seasonality & Weather The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results and our cash flow to fluctuate during the year. Our customers generally purchase and rent equipment in preparation for, or in conjunction with, their busy seasons. For farmers, the busy seasons are the planting and harvesting seasons.
Seasonality & Weather The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results and our cash flow to fluctuate during the year. Our customers generally purchase, rent, and repair equipment in preparation for, or in conjunction with, their busy seasons. For farmers, the busy seasons are the planting and harvesting seasons.
In addition, the fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of funds from completed harvests and construction projects.
In addition, our fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax considerations, the timing of dealer incentives and the increase in availability of funds from completed harvests and construction projects.
We generally sell used equipment "as is" and without OEM warranty unless the original warranty period has not expired and is transferable. We also offer extended warranty programs on certain used equipment through various third-party warranty providers.
We generally sell used equipment "as is" and without an OEM warranty unless the original warranty period has not expired and is transferable. We also offer extended warranty programs on certain used equipment through various third-party warranty providers.
For purposes of this Form 10-K, the granted distribution rights for the commercial application sprayers and floaters in territories without full-line dealer locations are referred to as the “Non-Full-Line Footprint Commercial Application Distribution Rights”.
For purposes of this Form 10-K, the granted distribution rights for the commercial application sprayers and floaters in territories without full-line dealer locations are referred to as the “Non-Full-Line Commercial Application Distribution Rights”.
Subject to protections provided under state dealer protection laws, in the event that CNH Industrial offers a new dealer agreement or an amendment to the existing CNH Industrial Dealer Agreements to all authorized CNH Industrial dealers located in the state, CNH Industrial is permitted to terminate our existing CNH Industrial Dealer Agreements for stores located in that state upon at least 180 days prior written notice if we refuse or otherwise fail to enter into such new agreements or amendments.
Subject to protections provided under state dealer protection laws, in the event that CNH Industrial offers a new dealer agreement or an amendment to the existing CNH Industrial Dealer Agreements to all authorized CNH Industrial dealers located in the state, CNH Industrial is permitted to terminate our existing CNH Industrial Dealer Agreements for stores located in that state upon at least 180 days' prior written notice if we refuse or otherwise fail to enter into such new agreements or amendments.
Seasonal weather trends, particularly severe wet or dry conditions, can have a significant impact on regional agricultural and construction market performance by affecting crop production yields and the ability to undertake construction projects. Weather conditions that adversely affect the agricultural or construction markets would have a negative effect on the demand for our products and services.
Seasonal weather trends, particularly severe wet or dry conditions, can have a significant impact on regional agricultural and construction market performance by affecting crop production yields and the ability to undertake construction projects. Weather conditions that adversely affect the agricultural or construction markets would have a negative effect on the demand for our products and services in the affected markets.
Products and Services Within each of our segments, we have four principal sources of revenue: new and used equipment sales, parts sales, equipment repair and maintenance services, and equipment rental and other business activities. 1 Table of Contents New and Used Equipment Sales We sell new agricultural and construction equipment manufactured under the CNH Industrial family of brands as well as equipment from a variety of other manufacturers.
Products and Services Within each of our segments, we have four principal sources of revenue: new and used equipment sales, parts sales, equipment repair and maintenance services, and equipment rental and other business activities. 1 Table of Contents New and Used Equipment Sales We sell new agricultural and construction equipment manufactured under the CNH Industrial family of brands and equipment from a variety of other manufacturers.
In addition, to the extent CNH Industrial determines that we are not meeting our obligations under the CNH Industrial Dealer Agreement with respect to a particular product, CNH Industrial may, upon 60 days prior written notice to us, remove such product from the authorized product list allowed to be sold or serviced by us.
In addition, to the extent CNH Industrial determines that we are not meeting our obligations under the CNH Industrial Dealer Agreement with respect to a particular product, CNH Industrial may, upon 60 days' prior written notice to us, remove such product from the authorized product list allowed to be sold or serviced by us.
Our CNH Industrial Dealer Agreements require us to operate any material business activities not related to sales of CNH Industrial products or services to customers in agricultural, construction, industrial or similar markets separately from our CNH Industrial dealership business. CNH Industrial and other equipment suppliers frequently provide to its dealers interest free financing on equipment purchases.
Our CNH Industrial Dealer Agreements require us to operate any material business activities not related to sales of CNH Industrial products or services to customers in agricultural, construction, industrial or similar markets separately from our CNH Industrial dealership business. CNH Industrial and other equipment suppliers frequently provide their dealers interest free financing on equipment purchases.
We spend significant time and resources training our employees to effectively service our customers in each of our local markets. Our training program involves active participation in all manufacturer-sponsored training programs, the use of industry experts for customized training programs, and a centralized training team to assist in training programs and the integration of newly-acquired dealerships.
We spend significant time and resources training our employees to effectively serve our customers in each of our local markets. Our training program involves active participation in all manufacturer-sponsored training programs, the use of industry experts for customized training programs, and a centralized training team to assist in training programs and the integration of newly-acquired dealerships.
We have built a large amount of content related to the equipment we sell and service, the technology used by our customers in conjunction with the equipment, and information about our Company and what we have to offer prospective employees. Used equipment inventories are one of the most highly trafficked sections of our website.
We maintain a large amount of content related to the equipment we sell and service, the technology used by our customers in conjunction with the equipment, and information about our Company and what we have to offer prospective employees. Used equipment inventories are one of the most highly trafficked sections of our website.
We make available, free of charge, copies of our annual report on Form 10-K (the "Form 10-K"), quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on our website, www.titanmachinery.com, as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the Securities and Exchange Commission ("SEC").
We make available, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on our website, as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the Securities and Exchange Commission ("SEC").
If we sell a portion of our commercial sprayer application business related to the Non-Full-Line Commercial Application Distribution Rights prior to the expiration date of August 1, 2030 (or such later date as agreed to by the parties), then we are required to pay to CNH Industrial the sales consideration paid by such buyer for the applicable commercial application distribution rights; provided that Titan would receive sales consideration from the buyer in an amount not less than the fair value of the facilities, fixed assets, current assets, and other investments applicable to the location and market being sold.
If we sell a portion of our commercial sprayer application business related to the Non-Full-Line Commercial Application Distribution Rights prior to the expiration date of August 1, 2030 (or such later date as agreed to by the parties), then we are required to pay to CNH Industrial the sales consideration paid by such buyer for the applicable commercial application distribution rights; provided that Titan Machinery is entitled to receive sales consideration from the buyer in an amount not less than the fair value of the facilities, fixed assets, current assets, and other investments applicable to the location and market being sold.
The CNH Industrial Dealer Agreements governing Case Construction equipment grant CNH Industrial the right to terminate these CNH Industrial Dealer Agreements for any reason upon 120 days prior written notice. In addition, we have the right to terminate any of the CNH Industrial Dealer Agreements at any time, with or without cause, upon 60 days prior written notice.
The CNH Industrial Dealer Agreements governing Case Construction equipment grant CNH Industrial the right to terminate these CNH Industrial Dealer Agreements for any reason upon 120 days' prior written notice. In addition, we have the right to terminate any of the CNH Industrial Dealer Agreements at any time, with or without cause, upon 60 days' prior written notice.
Programs and benefits differ for our international operations for various reasons, such as national and local legal requirements, economic conditions, and market practices. Training and Development We devote significant resources to staff training and development, including tuition assistance for career-enhancing academic programs.
Programs and benefits differ for our international operations for various reasons, such as national and local legal requirements, economic conditions, and market practices. Training and Development We devote significant resources to employee training and development, including tuition assistance for career-enhancing academic programs.
Floorplan Payable Financing The cost of floorplan payable financing is an important factor affecting our financial results. CNH Industrial Capital offers floorplan payable financing to CNH Industrial dealers to finance the purchase of inventory from CNH Industrial and for used equipment inventory purchased on trade-ins from our customers.
Floorplan Payable Financing The cost of floorplan payable financing is an important factor affecting our financial results. CNH Industrial Capital offers floorplan payable financing to CNH Industrial dealers to finance the purchase of new inventory from CNH Industrial and for the purchase of used equipment inventory on trade-ins from our customers.
We are not including the information on our website as a part of, or incorporating it by reference into, this Form 10-K.Our SEC filings are also available at www.sec.gov. 9 Table of Contents Intellectual Property We have registered trademarks for certain names and designs used in our business and have trademark applications pending for certain others.
We are not including the information on our website as a part of, or incorporating it by reference into, this Form 10-K. Our SEC filings are also available at www.sec.gov. Intellectual Property We have registered trademarks for certain names and designs used in our business and have trademark applications pending for certain others.
We service our rental fleet through our on-site parts and services team and market our rental equipment through our retail sales force. Our rental activities create cross-selling opportunities in equipment sales, including rent-to-own purchase options on our non-fleet rentals.
We service our rental fleet through our on-site parts and services team and market our rental equipment through our retail sales force. Our rental activities create cross-selling opportunities in equipment sales, including rent-to-own purchase options.
CNH Industrial is the world’s second largest manufacturer of agricultural equipment, manufacturing the Case IH Agriculture and New Holland Agriculture brands of equipment. Case IH Agriculture, recognized by the red color of its equipment, possesses over 170 years of farm equipment heritage.
CNH Industrial is the world’s second largest manufacturer of agricultural equipment, manufacturing the Case IH Agriculture and New Holland Agriculture brands of equipment. Case IH Agriculture, recognized by the red color of its equipment, has over 170 years of farm equipment heritage.
For our full-line distribution dealer locations, these distribution rights are granted through amendments to our full-line dealer agreements adding floaters and sprayers as authorized products permitted to be sold to commercial application customers.
For our full-line distribution dealer locations, these distribution rights were granted through amendments to our full-line dealer agreements adding floaters and sprayers as authorized products permitted to be sold to commercial application customers.
CNH Industrial makes available to us any floorplan programs, parts return programs, sales or incentive programs or similar plans or programs it offers to its other dealers and provides us with promotional items and marketing materials. The CNH Industrial Dealer Agreements for our international operations, with the exception of Ukraine and Australia, grant to us exclusive territories.
CNH Industrial makes available to us any floorplan programs, parts return programs, sales or incentive programs or similar plans or programs it offers to its other dealers and provides us with promotional items and marketing materials. The CNH Industrial Dealer Agreements for our European operations, with the exception of Ukraine, grant us exclusive territories.
While the Australian government is further investigating the potential adoption of increased disclosures related to climate change and mitigation efforts, the European Union (EU) recently adopted the European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Reporting Directive (CSRD) that will require robust disclosure of certain social and environmental information and data.
While the Australian government is further investigating the potential adoption of increased disclosures related to climate change and mitigation efforts, the European Union ("EU") recently adopted the European Sustainability Reporting Standards and the Corporate Sustainability Reporting Directive ("CSRD") that may require robust disclosure of certain social and environmental information and data.
In addition, we have robust compensation tools that allow us to react to rapidly changing market conditions and reward employees for high performance. We believe that our efforts in these areas will enable us to attract and retain superior employees necessary for us to be successful in our industry. See “Human Capital”.
In addition, we have robust compensation tools that allow us to react to rapidly changing market conditions and reward employees for high performance. We believe that our efforts in these areas will enable us to attract and retain superior employees necessary for us to be successful in our industry.
Customers Our North America agriculture customers vary from small, single machine owners to large farming operations to large commercial application operations, primarily in the states of Idaho, Iowa, Kansas, Missouri, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin, and Wyoming. In fiscal 2024, no single agriculture customer accounted for more than 2.0% of our Agriculture revenue.
Customers Our North America agriculture customers vary from small, single machine owners to large farming operations and commercial application operations, primarily in the states of Idaho, Iowa, Kansas, Missouri, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin, and Wyoming. In fiscal 2025, no single agriculture customer accounted for more than 1.0% of our Agriculture revenue.
We are one of the established regional-scale agricultural and construction equipment dealers in the United States. The number of other agricultural and construction equipment dealers operating on a regional scale is limited.
We are one of the established regional-scale agricultural and construction equipment dealers in the United States. There are a limited number of other agricultural and construction equipment dealers operating on a regional scale.
We believe a favorable climate for dealership consolidation will continue to exist in the future due to several factors, including the competitiveness of our industry, increased dealer capitalization requirements, increased sophistication and complexity of equipment and related technologies, increased expectations from our customers and our equipment suppliers, and the lack of succession alternatives for many current owners.
We believe a favorable climate for dealership consolidation will continue to exist in the future due to several factors, including the competitiveness of our industry, significant industry cyclicality, including prolonged downturns, increased dealer capitalization requirements, increased sophistication and complexity of equipment and related technologies, increased expectations from our customers and our equipment suppliers, and the lack of succession alternatives for many current owners.
We believe that these various federal policies reduce financial volatility in the agriculture industry and assist farmers in continuing to operate their farms during economic down cycles and through the adverse headwinds caused by trade policies and tariffs.
We believe that these various governmental programs reduce financial volatility in the agriculture industry and assist farmers in continuing to operate their farms during economic down cycles and through the adverse headwinds caused by trade policies and tariffs.
In every business decision and transaction, we expect our employees and business partners to do the right thing by conducting business with integrity, while complying with all laws, rules and standards of conduct that apply to our Company in the many countries where we do business.
In every business decision and transaction, we expect our employees and business partners to do the right thing by conducting business with integrity, and to comply with all laws, rules and standards of conduct that apply to our Company in the many countries where we do business.
The core goal of our performance management process is to develop and maintain a high-performing organization that is positioned to meet our business objectives.
The core goal of our performance management program is to develop and maintain a high-performing organization that is positioned to meet our business objectives.
The construction equipment we sell and service includes heavy construction machinery, light industrial machinery for commercial and residential construction, and road and highway construction machinery. Equipment sales generate cross-selling opportunities by populating our markets with equipment that will be in need of service and parts.
The construction equipment we sell and service includes heavy construction machinery, light industrial machinery for commercial and residential construction, and road and highway construction machinery. Equipment sales generate cross-selling opportunities by populating our markets with equipment that will need service and parts.
New Holland Agriculture, recognized by the blue color of its tractors and the yellow color of its harvesting and hay equipment, has over 120 years of farm equipment industry experience. The Case Construction and New Holland Construction brands are also owned and operated by CNH Industrial.
New Holland Agriculture, recognized by the blue color of its tractors and the yellow color of its harvesting and hay equipment, has over 120 years of farm equipment industry heritage. The Case Construction, New Holland Construction and Steyr brands are also owned and operated by CNH Industrial.
At the time equipment is purchased, we also offer customers the option of purchasing extended warranty protection provided by the OEM or through various third-party warranty providers. We are paid by the OEM for repairs we perform on equipment under warranty.
At the time equipment is purchased, we also offer customers the option of purchasing extended warranty protection provided by the OEM or through various third-party warranty providers. We are paid by the OEM for repairs we perform on equipment that is covered by warranty.
CNH Industrial and industry reports show that demand for construction equipment in our markets is driven by several factors, including (i) public spending on roads, highways, sewer and water projects, and other public works projects; (ii) public and private expenditures for the energy, mining, and forestry industries; (iii) business conditions in the agriculture industry; and (iv) general economic and market conditions of the construction sector for residential and commercial buildings.
Industry reports show that demand for construction equipment in our markets is driven by several factors, including (i) public spending on infrastructure, such as, roads, highways, sewer and water, and other public works projects; (ii) public and private expenditures for the energy, mining, and forestry industries; (iii) business conditions in the agriculture industry; and (iv) general economic and market conditions of the construction sector for residential and commercial buildings.
Equipment Rental and Other Business Activities We rent equipment to our customers, primarily in the Construction segment, for periods ranging from a few days to seasonal rentals. We manage the size, quality, age and composition of our rental fleet and closely monitor and analyze customer demand and rate trends.
Equipment Rental and Other Business Activities We rent equipment to our customers, primarily in the Construction segment, for periods ranging from a few days to full seasons. We manage the size, quality, age and composition of our rental fleet and closely monitor and analyze customer demand and rate trends.
Our aftermarket repair and maintenance services have historically provided a high-margin and stable source of revenue through changing economic cycles. Service revenue represented 5.7%, 5.9% and 6.8% of total revenue for the fiscal years ended January 31, 2024, 2023 and 2022.
Our aftermarket repair and maintenance services have historically provided a high-margin and stable source of revenue through changing economic cycles. Service revenue represented 6.7%, 5.7% and 5.9% of total revenue for the fiscal years ended January 31, 2025, 2024 and 2023, respectively.
The Farm Management Deposit scheme is used by farmers in Australia to help deal with uneven income flows by making deposits during more profitable years and receiving repayments during years with lower profitability.
In Australia, the Farm Management Deposit program is used by farmers to help with uneven income flows by making deposits during more profitable years and receiving repayments during years with lower profitability.
Our Construction stores are located in Colorado, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, and Wisconsin. Internationally, the Company's European stores are located in the countries of Bulgaria, Germany, Romania, and Ukraine, and our Australian stores are located in the states of New South Wales, South Australia, and Victoria in Southeastern Australia. We have a history of growth through acquisitions.
Our Construction stores are located in Colorado, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, and Wisconsin. Internationally, our European stores are located in Bulgaria, Germany, Romania, and Ukraine, and our Australian stores are located in New South Wales, South Australia, and Victoria in Southeastern Australia. We have a history of growth through acquisitions.
Our training and development programs are designed to facilitate the development and advancement of talent from within our organization to ensure we continuously fill our ranks with qualified employees for critical positions in the organization. Employees are supported for growth within their current positions through technical and skill-specific training.
Our training and development programs are designed to facilitate the development and advancement of talent from within our organization to ensure we continuously fill our ranks with qualified employees for 10 Table of Contents critical positions. Employees are supported for growth within their current positions through technical and skill-specific training.
We also offer a federally regulated and approved service technician apprenticeship program that provides our employees with the opportunity to obtain a national, industry recognized credential through full-time on-the-job-training with us. 3 Table of Contents Ability to Act on Acquisition Opportunities We believe that our experienced management team and access to capital enable us to be opportunistic in responding to accretive growth opportunities, primarily arising from the continued consolidation of the equipment dealer network.
We also offer a federally regulated and approved service technician apprenticeship program that provides our employees with the opportunity to obtain a national, industry recognized certification earned through full-time on-the-job-training with Titan Machinery. 3 Table of Contents Ability to Act on Acquisition Opportunities We believe that our experienced management team and access to capital enable us to be opportunistic in responding to accretive growth opportunities, primarily arising from the continued consolidation of the agriculture and construction equipment dealer network.
Other sales and financing programs are also marketed through our website. Customers can view construction rental equipment rates and specifications on the website and submit rental requests by completing a simple form. All external job openings are listed as well as detailed information about our apprenticeship and internship programs, tech school sponsorships and other student programs.
Other sales and financing programs are also marketed through our website. Customers can view construction rental equipment availability, rates, and specifications on the website and submit rental requests by completing a simple form. All external job openings are listed on our website, as well as detailed information about our apprenticeship and internship programs, technical college sponsorships and other student programs.
In addition to the CNH Industrial Capital floorplan line of credit, as of January 31, 2024, we also had a $275.0 million wholesale floorplan line of credit under the Bank Syndicate Agreement, and a $80.0 million credit facility with DLL Finance LLC that can be used to finance inventory purchases.
In addition to the CNH Industrial Capital floorplan line of credit, as of January 31, 2025, we also had a $390.0 million wholesale floorplan line of credit under the Bank Syndicate Agreement, and an $80.0 million credit facility with DLL Finance LLC ("DLL Finance") that can be used to finance inventory purchases.
The results are shared with employees at respective store locations, and the data is reviewed monthly by the executive leadership team and shared with the Board on a quarterly basis. Performance Management We have developed an employee performance management program that is consistently applied throughout our U.S. operations.
The results are shared with employees at respective store locations, and the data is reviewed regularly by the executive leadership team and shared with the Board on an annual basis. Performance Management We have developed an employee performance management program that is consistently applied throughout our U.S. operations.
We operate our business in four reportable segments, Agriculture, Construction, Europe (formerly known as "International"), and Australia, within which we engage in four principal business activities: • new and used equipment sales; • parts sales; • equipment repair and maintenance services; and • equipment rental and other activities.
We operate our business in four reportable segments, Agriculture, Construction, Europe and Australia, within which we engage in four principal business activities: • new and used equipment sales; • parts sales; • equipment repair and maintenance services; and • equipment rental and other activities.
Our construction customers include a wide range of construction contractors, public utilities, forestry, energy companies, farmers, municipalities and maintenance contractors, primarily in the states of Colorado, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, and Wisconsin. They vary in size from small, single machine owners to large firms.
Our North American construction customers include a wide range of construction contractors, public utilities, forestry, energy companies, farmers, municipalities and maintenance contractors, primarily in the states of Colorado, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, and Wisconsin. These customers vary in size from small, single machine owners to 7 Table of Contents large firms.
The turnover rate of our service technicians is also monitored closely by management, as the retention of skilled service technicians is critical to our success. Demand for service technicians across the country is very high, and turnover in this role is also traditionally high for all equipment dealers.
The turnover rate of our service technicians is monitored closely by management, as the retention of skilled service technicians is critical to our success. Demand for service technicians across the country is very high, and turnover in this role is also traditionally high for all equipment dealers. Health and Safety Employee health and safety is very important to us.
Strategic Acquisitions Since January 1, 2003, we have completed over 60 acquisitions located in 15 U.S. states, four European countries and three Australian states. In addition, we have added dealership locations in Ukraine through new start-up operations. The agricultural and construction equipment dealership industries are fragmented and consist of many relatively small, independent businesses serving discrete local markets.
Strategic Acquisitions Since January 1, 2003, we have completed approximately 60 acquisitions with locations in 15 U.S. states, four European countries and three Australian states. In addition, we have developed our dealership network in Ukraine through new start-up operations. The agricultural and construction equipment dealership industries are fragmented and consist of many relatively small, independent businesses serving discrete local markets.
In fiscal 2024, no single European customer accounted for more than 1.0% of our Europe revenue. Our Australian customers vary from small, single machine owners to large farming operations, primarily in the states of New South Wales, South Australia, and Victoria. In fiscal 2024, no single Australian customer accounted for more than 4.0% of our Australia revenue.
In fiscal 2025, no single European customer accounted for more than 2.0% of our Europe revenue. Our Australian customers vary from small, single machine owners to large farming operations, primarily in New South Wales, South Australia, and Victoria. In fiscal 2025, no single Australian customer accounted for more than 1.0% of our Australia revenue.
We believe that our operations currently are conducted in substantial compliance with all applicable regulations. None of our dealerships has been subject to any material liabilities in the past, nor do we know of any fact or condition that would result in any material liabilities being incurred in the future.
We believe that our operations currently are conducted in substantial compliance with all applicable regulations. None of our dealerships has been subject to any material liabilities in the past, nor are we currently aware of any fact or condition that would result in any material liabilities arising in the future.
Suppliers CNH Industrial—Case IH Agriculture, Case Construction, New Holland Agriculture and New Holland Construction CNH Industrial is a publicly-traded, global leader in the agricultural and construction equipment industries. In 2023, CNH Industrial generated $22.1 billion in revenue from its equipment operations.
Suppliers CNH Industrial—Case IH Agriculture, Case Construction, New Holland Agriculture, New Holland Construction and Steyr CNH Industrial is a publicly-traded, global leader in the agricultural and construction equipment industries. In 2024, CNH Industrial generated $17.1 billion in revenue from its equipment operations.
In fiscal 2024, no single construction equipment customer accounted for more than 3.0% of our Construction revenue. 7 Table of Contents Our European customers vary from small, single machine owners to large farming operations, primarily in the countries of Bulgaria, Germany, Romania, and Ukraine. We also sell Case Construction equipment in Bulgaria and Romania.
In fiscal 2025, no single construction equipment customer accounted for more than 2.0% of our Construction revenue. Our European customers vary from small, single machine owners to large farming operations, primarily in the countries of Bulgaria, Germany, Romania, and Ukraine. We also sell Case Construction equipment in Bulgaria and Romania.
In addition, we have other lines of credit offered by various financial institutions as well as floorplan payable financing programs offered by manufacturers and suppliers, or their third party lenders, from which we purchase equipment inventory.
In addition, we have other lines of credit offered by various financial institutions as well as floorplan payable financing programs offered by manufacturers and suppliers, or their third party lenders.
We provide ancillary equipment support activities such as equipment transportation, Global Positioning System ("GPS") signal subscriptions and other precision farming products, farm data management products, and CNH Industrial finance and insurance products. Equipment rental and other revenue represented 1.6%, 1.8% and 2.2% of total revenue for the fiscal years ended January 31, 2024, 2023 and 2022.
We provide ancillary products and services such as equipment transportation, Global Positioning System ("GPS") signal subscriptions and other precision farming products, farm data management products, and CNH Industrial finance and insurance products. Rental and other revenue represented 1.5%, 1.6% and 1.8% of total revenue for the fiscal years ended January 31, 2025, 2024 and 2023, respectively.
Those acquisitions vary from single dealerships to larger dealership groups with locations in multiple states. Since January 1, 2003, we have completed over 60 acquisitions located in 15 U.S. states, four European countries, and three Australian states, along with establishing a new network of dealership locations in Ukraine.
Those acquisitions vary from single dealerships to larger dealership groups with multiple locations. Since January 1, 2003, we have completed approximately 60 acquisitions with locations in 15 U.S. states, four European countries, and three Australian states, and have established a network of dealership locations in Ukraine.
Our shared resources group provides centralized sales and marketing support for our field operations, and coordinates centralized media buys, strategic planning, sales support, training, and manages advertising reimbursement opportunities from our suppliers. In addition, we enable our regional and area managers and their sales teams to develop localized sales and marketing strategies.
Our shared resources marketing group provides centralized support for our field operations, including media buys, strategic planning, sales support, training, and management of advertising reimbursement opportunities from our suppliers. In addition, we encourage our regional and area managers and their sales teams to develop localized sales and marketing strategies.
We also believe our scale, customer service, centralized resources, and experienced management team provide us with a competitive advantage in many of our local markets. Throughout our 43-year operating history, we have built an extensive network of 94 full service stores in the United States, 39 stores in Europe and 15 stores in Australia.
We also believe our scale, customer service strategy, centralized resources, and experienced management team provide us with a competitive advantage in many of our local markets. Over our 44-year operating history, we have built an extensive network of 93 full service stores in the United States, 40 stores in Europe and 15 stores in Australia.
We believe that we are currently in material compliance with laws and regulations applicable to our business operations.
We believe that we are currently in material compliance with laws and regulations applicable to our business operations. 12 Table of Contents
Our program is overseen by our Human Resources Department and managed at the enterprise level by our EHS Manager and assisting team who in turn directly collaborate with individual store coordinators to communicate new policies and directives, respond to questions and incidents, conduct mandatory monthly safety meetings, and provide on-site training.
Our health and safety program is overseen by our Human Resources Department and managed at the enterprise level by our Environmental Health and Safety Manager and assisting team who in turn directly collaborate with store personnel to communicate new policies and directives, respond to questions and incidents, conduct mandatory monthly safety meetings, conduct on-site compliance evaluations, and provide on-site and company-wide training.
As of January 31, 2024, we had a $875.0 million floorplan credit facility with CNH Industrial Capital.
As of January 31, 2025, we had an $875.0 million floorplan credit facility with CNH Industrial Capital.
We also actively look to the armed forces for opportunities to hire hard-working, responsible veterans. Additionally, we believe it is incumbent upon all of our managers to continuously monitor their local markets for experienced individuals who might be successful additions to our organization.
We also actively look to the armed forces for opportunities to hire hard-working, responsible veterans. Additionally, our store managers continuously monitor their local markets for experienced individuals who might be successful additions to our organization.
U.S federal legislation, such as the 2018 Farm Bill and its subsequent extensions, attempts to stabilize the agriculture industry through various policies including (i) commodity programs consisting of direct, counter-cyclical and price support payments to farmers; (ii) conservation programs; (iii) crop insurance programs; and (iv) disaster relief programs.
Farm Bill and its subsequent extensions, along with other federal programs, attempt to stabilize the U.S. agriculture industry through various programs including (i) commodity programs consisting of direct, counter-cyclical and price support payments to farmers; (ii) conservation programs; (iii) crop insurance programs; and (iv) disaster relief programs.
We do not regularly use independent contractors in our business operations. To date, we have not experienced any work stoppages as a result of labor disputes, and we consider our relationship with our employees to be good. Our employees are not covered by a collective bargaining agreement.
To date, we have not experienced any work stoppages as a result of labor disputes, and we consider our relationship with our employees to be good. None of our employees are covered by a collective bargaining agreement.
We partner with many technical colleges to offer scholarships and sponsor students who we plan to eventually employ as service technicians.
We partner with many technical colleges to offer financial aid to students who we plan to eventually employ as service technicians.
Approximately 29% of our total new equipment sales in fiscal 2024 resulted from sales of products manufactured by companies other than CNH Industrial, with our single largest manufacturer other than CNH Industrial representing approximately 3% of our total new equipment sales during fiscal 2024.
Approximately 25% of our total new equipment sales in fiscal 2025 resulted from sales of products manufactured by companies other than CNH Industrial, with our single largest manufacturer other than CNH Industrial representing approximately 4% of those total new equipment sales.
Our competitors range from multi-location, regional operators to single-location dealers and include dealers and distributors of competing equipment brands, including Deere, Caterpillar, Kubota, and the AGCO brands, as well as other dealers and distributors of the CNH Industrial family of brands.
Competition The agricultural and construction equipment sales and distribution industries are highly competitive and fragmented. Our competitors range from multi-location, regional operators to single-location dealers and include dealers and distributors of competing equipment brands, including Deere, Caterpillar, Kubota, and the AGCO brands, as well as other dealers and distributors of the CNH Industrial family of brands.
Typically, in an acquisition, we have acquired only the working capital and fixed assets that we believe are necessary to run an efficient store, and we do not generally assume any indebtedness. On occasion, we have acquired all of the outstanding equity of a company.
Typically, in an acquisition, we acquire only the working capital and fixed assets that we believe are necessary to run an efficient store, and we do not generally assume any indebtedness. On occasion, we have acquired all of the outstanding equity of a company. Acquisitions are typically financed with available cash, floorplan line of credit capacity, and long-term debt.
Equipment revenue represented 77.8%, 77.5% and 75.4% of total revenue for the fiscal years ended January 31, 2024, 2023 and 2022. Parts Sales We maintain an extensive in-house parts inventory to provide timely parts and repair and maintenance support to our customers. Our parts sales provide a revenue stream that is less sensitive to economic cycles than our equipment sales.
Equipment revenue represented 75.9%, 77.8% and 77.5% of total revenue for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. Parts Sales We maintain an extensive in-house parts inventory to provide timely parts and repair and maintenance support to our customers.
We operate our North American and European stores under the Titan Machinery name, and plan to convert our Australian stores to the Titan brand in the near future. Case IH, Case and New Holland are registered trademarks of CNH Industrial, which we are authorized to use pursuant to the terms of the CNH Industrial Dealer Agreements.
We operate our North American and European stores under the Titan Machinery name, and have 9 Table of Contents continued to operate our Australian stores under the J.J. O’Connors name. Case IH, Case and New Holland are registered trademarks of CNH Industrial, which we are authorized to use pursuant to the terms of the CNH Industrial Dealer Agreements.
Additionally, the consent of our lender group, consisting of a number of national and regional banks (the “Bank Syndicate”), is required for acquisitions over certain thresholds or other criteria as defined in our credit agreement.
The consent of CNH Industrial is required to acquire any CNH Industrial dealership. Additionally, the consent of our lender group, consisting of a number of national and regional banks (the “Bank Syndicate”), is required for acquisitions over certain thresholds or other criteria as set forth in our Bank Syndicate agreement.
For our non-full-line dealer locations, our distribution rights are set forth in new Case IH dealer agreements granting us distribution rights to sell floaters and sprayers to commercial application customers.
For the acquired Heartland Ag locations not within our full line dealership territory, our distribution rights were set forth in new Case IH dealer agreements granting us distribution rights to sell floaters and sprayers to commercial application customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMoving from our normal retail marketing channel to more aggressive marketing channels for specific pieces or categories of equipment inventory, particularly as equipment inventory ages, will generally result in lower sales prices. Pricing and other terms of sale of used equipment can be significantly adversely affected by the limited market for certain types of used equipment.
Biggest changeDue to the length and severity of the current downturn, or in any future downturn, it is possible that we may need to change from our normal retail marketing channel to more aggressive marketing channels (such as auctions) for specific pieces or categories of equipment inventory, particularly as equipment inventory ages.
In addition, our CNH Industrial Dealer Agreements for domestic Case Construction equipment and our CNH Industrial Dealer Agreements for international Case Construction equipment prohibit us from carrying other suppliers' products (new equipment and parts) at our domestic and international Case Construction stores that are competitive with CNH Industrial's products, unless consented to by CNH Industrial.
In addition, our CNH Industrial Dealer Agreements for domestic and international Case Construction equipment prohibit us from carrying other suppliers' products (new equipment and parts) at our domestic and international Case Construction stores that are competitive with CNH Industrial's products, unless consented to by CNH Industrial.
Our variable rate indebtedness exposes us to interest rate risk. A substantial portion of our floorplan and working capital borrowings, including the credit facilities with CNH Industrial Capital, the Bank Syndicate, DLL Finance, and our international floorplan facilities are at variable rates of interest and expose us to interest rate risk.
Our variable rate indebtedness exposes us to interest rate risk. A substantial portion of our floorplan and working capital borrowings, including the credit facilities with CNH Industrial Capital, the Bank Syndicate, DLL Finance, and our international floorplan facilities are at variable interest rates and expose us to interest rate risk.
Adverse weather conditions may result in fewer acres being planted or harvested by farmers, reduced crop yields on those acres that are planted, and in delays or cancellations of construction projects. This in turn could result in lower demand for our agricultural and construction equipment and services and adversely affect our results of operation.
Adverse weather conditions may result in fewer acres being planted or harvested by farmers, reduced crop yields on those acres that are planted, and delays or cancellations of construction projects. This in turn could result in lower demand for our agricultural and construction equipment and services and adversely affect our results of operation.
The unionization of all or a substantial portion of our workforce could result in work slowdowns or stoppages, increased overall costs, reduced operating margins and reduced efficiency of our operations at the affected locations, and reduced flexibility in running our business competitively.
The unionization of all or a substantial portion of our workforce could result in work slowdowns or stoppages, increased overall costs, reduced operating margins, reduced efficiency of our operations at the affected locations, and reduced flexibility in running our business competitively.
Under our CNH Industrial Dealer Agreements, we are obligated to actively promote the sale of CNH Industrial equipment within our designated geographic areas of responsibility, fulfill the product warranty obligations of CNH Industrial (subject to CNH Industrial’s payment to us of the agreed upon reimbursement), maintain adequate facilities and workforce to service the needs of our customers, maintain equipment and parts inventories at the level deemed necessary by CNH Industrial to meet sales goals as stated in the annual business plan mutually agreed upon by us and CNH Industrial, maintain adequate working capital, and maintain stores only in authorized locations.
Under our CNH Industrial Dealer Agreements, we are obligated to actively promote the sale of CNH Industrial equipment within our designated geographic areas of responsibility, fulfill the product warranty obligations of CNH Industrial (subject to CNH Industrial’s payment to us of the agreed upon reimbursement), maintain adequate facilities and workforce to service the needs of our customers, stock equipment and parts inventories at the level deemed necessary by CNH Industrial to meet sales goals as stated in the annual business plan mutually agreed upon by us and CNH Industrial, maintain adequate working capital, and maintain stores only in authorized locations.
The Company’s effective tax rate has been and may continue to be affected by changes in the mix of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets, and changes in tax laws or their interpretation, such as the 15% global minimum tax under the Organization for Economic Cooperation and Development ("OECD") Pillar Two, Global Anti-Base Erosion Rules.
The Company’s effective tax rate has been and may continue to be affected by changes in the mix of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets, and changes in tax laws or their interpretation, such as the 15% global minimum tax under the Organization for Economic Cooperation and Development Pillar Two, Global Anti-Base Erosion Rules.
Our commercial liability insurance may not be adequate to cover significant product liability claims, or we may not be able to secure such insurance on economically reasonable terms. An uninsured or partially insured claim for which indemnification from the manufacturer is not available could have a material adverse effect on our financial condition or results of operations.
Our commercial liability insurance may not be adequate to cover significant liability claims, or we may not be able to secure such insurance on economically reasonable terms. An uninsured or partially insured claim for which indemnification from the manufacturer is not available could have a material adverse effect on our financial condition or results of operations.
In addition, the fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of farmers’ funds from completed harvests and construction customers' funds from completed projects.
In addition, the fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax considerations, the timing of dealer incentives and the increase in availability of farmers’ funds from completed harvests and construction customers' funds from completed projects.
While we have experienced cybersecurity incidents in the past, to date, none have materially impacted the Company or our financial position, results of operations and/or cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
While we have experienced cybersecurity incidents in the past, to date, none has materially impacted the Company or our financial position, results of operations and/or cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Proposed state and federal legislation has been introduced, including in states in our footprint, that generally would require the manufacturers of products to provide the purchaser and/or independent repair technicians with documents, diagnostic software, and other information that would allow the equipment to be repaired without having it returned to the dealer for repair.
In the past, state and federal legislation has been introduced, including in states in our footprint, that generally would require the manufacturers of products to provide the purchaser or independent repair technicians with documents, diagnostic software, and other information that would allow the equipment to be repaired without having it returned to the dealer for repair.
Furthermore, our financial performance and future success are highly dependent on the overall reputation, brand and success of CNH Industrial in the agricultural and construction equipment manufacturing industries, including its ability to maintain a competitive position in product innovation, product quality, and product pricing.
Therefore, our financial performance and future success are highly dependent on the overall reputation, brand and success of CNH Industrial in the agricultural and construction equipment manufacturing industries, including its ability to maintain a competitive position in product innovation, product quality, and product pricing.
ITEM 1A. RISK FACTORS The following risks should be considered in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, including the risks and uncertainties described in the forward-looking statements, and our financial statements and the related notes appearing under Item 8, Financial Statements and Supplementary Data, of this Form 10-K.
ITEM 1A. RISK FACTORS The following risks should be considered in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, including the risks and uncertainties described under the heading "Information Regarding Forward-Looking Statements", and our financial statements and the related notes appearing under Item 8, Financial Statements and Supplementary Data, of this Form 10-K.
The Memorandum of Understanding follows a similar format as agreed to by Deere in January 2023 which, in turn, follows the auto industry format. It is difficult to predict the long-term impact that right to repair legislation, if enacted in any area of our footprint, or the Memorandum of Understanding, will have on our repair services business.
The Memorandum of Understanding follows a similar format as agreed to by Deere in January 2023 which, in turn, follows the auto industry format. It is difficult to predict the long-term impact of the Memorandum of Understanding, or right to repair legislation if enacted in any area of our footprint, on our repair services business.
These risks include: • difficulties in implementing our business model in foreign markets and operating our business across a significant number of different time zones; • costs and diversion of domestic management attention related to oversight of international operations; • unexpected adverse changes in export duties, currency or payment controls that impact our ability to repatriate funds from the country, quotas and tariffs and difficulties in obtaining import licenses; • cyclicality of demand in European Union member states for agricultural equipment, based on availability of European Union government subsidy programs and tax incentives; • unexpected adverse changes in foreign laws or regulatory requirements; 16 Table of Contents • compliance with a variety of tax regulations, foreign laws and regulations; • compliance with the U.S.
These risks include: • difficulties in implementing our business model in foreign markets and operating our business across a significant number of different time zones; • costs and diversion of domestic management attention related to oversight of international operations; • unexpected adverse changes in export duties, currency controls that impact our ability to repatriate funds from the country, quotas and tariffs and difficulties in obtaining import licenses; • the cyclical demand in European Union member states for agricultural equipment, based on availability of European Union government subsidy programs and tax incentives; • unexpected adverse changes in foreign laws or regulatory requirements; • compliance with a variety of tax regulations, foreign laws and regulations; • compliance with the U.S.
Each of our credit agreements include cross-default provisions which state that certain types of defaults under any other indebtedness agreement will also constitute a default under that credit agreement. If an event of default occurred, and the lender demanded accelerated payment, we may not be able to satisfy a pay-off request, whether through internal funds or new financing.
Each of our credit agreements include cross-default provisions which provide that certain types of defaults under any other indebtedness will also constitute a default under that credit agreement. If a default occurred, and the lender demanded accelerated payment, we may not be able to satisfy a pay-off request, whether through internal funds or new financing.
Foreign Corrupt Practices Act of 1977, as amended, and other U.S. laws that apply to the international operations of U.S. companies which may be difficult and costly to implement and monitor, can create competitive disadvantages if our competitors are not subject to such laws, and which, if violated, may result in substantial financial and reputational harm; • fluctuations in foreign currency exchange rates to which we are exposed may adversely affect the results of our operations, the value of our foreign assets and liabilities and our cash flows; • the laws of the European countries in which we operate, unlike U.S. states, do not include specific dealer protection laws and, therefore, we may be more susceptible to actions of suppliers that are adverse to our interests such as termination of our dealer agreements for any reason or installing additional dealers in our designated territories; and • geopolitical or economic instability in the regions in which we operate, including the impact of the Russian invasion of Ukraine.
Foreign Corrupt Practices Act of 1977, as amended, and other U.S. laws that apply to the international operations of U.S. companies which may be difficult and costly to implement and monitor, can create competitive disadvantages if our competitors are not subject to such laws, and which, if violated, may result in substantial financial and reputational harm; • fluctuations in foreign currency exchange rates to which we are exposed may adversely affect the results of our operations, the value of our foreign assets and liabilities and our cash flows; • the laws of the European countries in which we operate, unlike U.S. states, do not include specific dealer protection laws and, therefore, we may be more susceptible to actions of suppliers that are adverse to our interests such as termination of our dealer agreements for any reason or installing additional dealers in our designated territories; and • geopolitical or economic instability in the regions in which we operate, including the impact of the Russian invasion of Ukraine. 16 Table of Contents The Russian-Ukraine conflict has presented significant challenges and risks for our Ukraine operations.
When lead times condense, our manufacturers may be able to produce and deliver more of our orders in a shorter period of time than originally anticipated, causing variability in our inventory balances from quarter to quarter or year over year. Risks of International Operations Our international operations expose us to risks and uncertainties.
When lead times condense, our manufacturers may be able to produce and deliver more of our orders in a shorter period of time than originally anticipated, which, in turn, results in variability in our inventory balances from quarter to quarter or year over year. Risks of International Operations Our international operations expose us to risks and uncertainties.
Because the impact of any future GHG legislative, regulatory or product standard requirements is dependent on the timing and design of mandates or standards, we are unable to predict with any specificity their potential impact at this time. Risks of our Growth Strategy If our acquisition plans are unsuccessful, we may not achieve our planned long-term revenue growth.
Because the impact of any future climate disclosure laws and regulatory or product standard requirements is dependent on the timing and design of mandates or standards, we are unable to predict with any specificity their potential impact at this time. Risks of our Growth Strategy If our acquisition plans are unsuccessful, we may not achieve our planned long-term revenue growth.
The military conflict and related political instability, if it intensifies, may make it impossible for us to effectively operate our Ukraine dealerships, which may result in our decision to cease operations in Ukraine. This would result in asset write-offs and a loss in revenues and profits.
The military conflict and related political instability, if it intensifies, may make it impossible for us to effectively operate our Ukraine dealerships, which may result in our decision to cease operations or dispose of our assets in Ukraine. This would result in asset write-offs and a loss in revenues and profits.
Second, CNH Industrial supports our business by providing inventory financing, financial assistance and marketing support including the following: • Floorplan payable financing for the purchase of a substantial portion of our equipment inventory; • Retail financing used by many of our customers to purchase CNH Industrial equipment from us; • Incentive, financing, and discount programs offered from time to time that enable us to price our products more competitively; and • Promotional and marketing activities on national, regional and local levels.
CNH Industrial, directly or through its financing affiliate, supports our business by providing financial assistance and marketing support including the following: • Floorplan payable financing for the purchase of a substantial portion of our equipment inventory; • Retail financing used by many of our customers to purchase CNH Industrial equipment from us; • Incentive, financing, and discount programs offered from time to time that enable us to price our products more competitively; and • Promotional and marketing activities on national, regional and local levels.
To the extent we do not successfully avoid or overcome the risks or problems related to acquisitions, our results of operations and financial condition could be adversely affected.
To the extent we do not successfully avoid or overcome the risks or problems 19 Table of Contents related to acquisitions, our results of operations and financial condition could be adversely affected.
The secure operation of these information technology networks and the systems of the third parties with whom we do business and the processing and maintenance of information is critical to our operations.
The secure operation of these information technology networks and the systems of the third parties with whom we do business and 20 Table of Contents the processing and maintenance of information is critical to our operations.
Separately, the American Farm Bureau Federation and CNH Industrial brands, Case IH and New Holland, signed a memorandum of understanding in March 2023 (the “Memorandum of Understanding”) that allows farmers and independent repair shops to access CNH Industrial's brand manuals, tools, product guides and information to self-diagnose and self-repair machines, as well as provides support from CNH Industrial brands for farmers and independent repair shops to directly purchase diagnostic tools.
Separately, the American Farm Bureau Federation and CNH Industrial brands, Case IH and New Holland, signed a memorandum of understanding in March 2023 (the “Memorandum of Understanding”) that allows farmers and independent repair shops to access CNH Industrial's brand manuals, tools, product guides and information to self-diagnose and self-repair machines, and enables farmers and independent repair shops to directly purchase diagnostic tools.
The Russian-Ukraine conflict has presented significant challenges and risks for our Ukraine operations. The Russian military occupation of Ukraine has significantly disrupted our Ukrainian operations. While all of our Ukrainian stores are open, the outcome of the Russian military operation remains unclear, and we cannot predict the impact this conflict will have on our Ukrainian operations.
The Russian military occupation of Ukraine has significantly disrupted our Ukrainian operations. While all of our Ukrainian stores are open, the outcome of the Russian military operation remains unclear, and we cannot predict the impact this conflict will have on our Ukrainian operations.
The nature of the agricultural industry is such that a downturn in equipment demand can occur suddenly, resulting in negative impacts on dealers in the form of declining revenues, reduced or negative profit margins, excess new and used equipment inventories, lower inventory turns, and increased floorplan interest expenses.
As evidenced by the current downturn in the demand for agricultural equipment, the nature of the agricultural industry is such that a downturn in equipment demand can occur suddenly, resulting in negative impacts on dealers in the form of declining revenues, reduced or negative profit margins, excess new and used equipment inventories, lower inventory turns, and increased floorplan interest expense.
Stock Price Volatility Our common stock price has fluctuated significantly and may continue to do so in the future.
Risks Related to our Common Stock Our common stock price has fluctuated significantly and may continue to do so in the future.
Any failure of CNH Industrial to offer competitive products, or delays in bringing strategic new products to market or delivery of ordered products to our stores could have a material adverse effect on our business, results of operations and financial condition.
Any failure of CNH Industrial to offer competitive products, or delays in bringing strategic new products to market or delivery of ordered products to our stores could have a material adverse effect on our business, results of operations and financial condition. We are dependent upon CNH Industrial’s financial and marketing support.
The price at which our common stock trades may be volatile and could be subject to significant fluctuations in response to our operating results and financial condition as set forth in our earnings releases, guidance estimates released by agricultural or construction equipment manufacturers that serve the markets in which we operate, announcements by our competitors, analyst recommendations, our ability to meet or exceed analysts’ or investors’ expectations, fluctuations in the price of crop commodities and natural resources, the condition of the financial markets, and other factors.
The price at which our common stock trades is subject to significant fluctuations in response to our operating results and financial condition, guidance estimates released by agricultural or construction equipment manufacturers that serve the markets in which we operate, announcements by our competitors, analysts’ recommendations, our ability to meet or exceed analysts’ or investors’ expectations, fluctuations in the price of crop commodities and natural resources, the condition of the financial markets, and other factors.
As such, our results of operations are sensitive to movements in interest rates. There are many economic factors outside our control that have in the past and may, in the future, impact rates of interest including publicly announced indices that underlie the interest obligations related to a certain portion of our debt.
There are many factors outside our control that have in the past and may, in the future, impact interest rates including publicly announced indices that underlie the interest obligations related to a certain portion of our debt.
Risks Related to the Competitive Conditions of the Equipment Distribution Industry The equipment distribution market is subject to sudden supply-demand imbalances arising from factors over which we have no control, which can affect our equipment sales and margins.
Risks Related to the Competitive Conditions of the Equipment Distribution Industry As evidenced by the current downturn in the demand for agricultural equipment, the equipment distribution market is subject to sudden supply-demand imbalances arising from factors over which we have no control, which can affect our equipment sales and margins.
The associated compliance costs are currently uncertain, we expect that they will be substantial. Various stakeholders, including legislators and regulators, shareholders and non-governmental organizations, as well as companies in many business sectors are continuing to look for ways to reduce GHG emissions.
We expect our European subsidiaries to be subject to the CSRD disclosure rules beginning in 2028. The associated compliance costs are currently uncertain, but we expect that they will be substantial. Various stakeholders, including legislators and regulators, shareholders and non-governmental organizations, as well as companies in many business sectors are continuing to look for ways to reduce GHG emissions.
If CNH Industrial were to terminate all or any of its CNH Industrial Dealer Agreements with us, our business would be severely harmed.
If CNH Industrial were to 13 Table of Contents terminate, including non-renewal, all or any of its CNH Industrial Dealer Agreements with us, our business would be severely harmed.
We currently operate dealership locations in Bulgaria, Germany, Romania, Ukraine and Australia. In fiscal 2024, total Europe and Australia segment revenues were 13.8% of our consolidated total revenue. As of January 31, 2024, total Europe and Australia segment assets were 25.4% of our consolidated total assets.
We currently operate dealership locations in Bulgaria, Germany, Romania, Ukraine and Australia. In fiscal 2025, total Europe and Australia segment revenues were 17.8% of our consolidated total revenue. As of January 31, 2025, total Europe and Australia segment assets were 24.3% of our consolidated total assets.
Our level of indebtedness could limit our financial and operational flexibility. As of January 31, 2024, our indebtedness included floorplan payable financing, real estate mortgage financing arrangements that are secured by real estate assets and other long-term debt. In addition, we have obligations under our lease agreements for many of our store locations and corporate headquarters.
As of January 31, 2025, our indebtedness included floorplan payable financing, real estate mortgage financing secured by real estate assets, and other long-term debt. In addition, we have obligations under our lease agreements for many of our store locations and corporate headquarters. Our level of indebtedness could have important consequences.
Our dealership network requires substantial inventories of equipment and parts to be maintained at each store and Company-wide to facilitate sales to customers on a timely basis. Our equipment inventory has traditionally represented a significant portion of our total assets.
Risks Related to Financial Matters Our financial performance is dependent on our ability to effectively manage our inventory. Our dealership network requires substantial inventories of equipment and parts to be maintained at each store and Company-wide to facilitate sales to customers on a timely basis. Our equipment inventory has traditionally represented a significant portion of our total assets.
Our success in executing our operating and strategic plans depends on the efforts and abilities of our management team and key employees, including the managers of our field operations and our country managers in our international operations.
Our success in executing our operating and strategic plans depends on the efforts and abilities of our management team and key employees, including the managers of our field operations and our country managers in our international operations. The failure to attract and retain members of our management team and key employees will harm us.
The efficient operation of our business is dependent on our information technology systems. We use information technology systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.
We use information technology systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.
Our financial performance is dependent on CNH Industrial's continued commitment to these offerings, at a level that allows us to be competitive in our markets. Third, CNH Industrial provides product warranties and, in some cases, extended warranties to our customers.
Our financial performance is dependent on CNH Industrial's continued commitment to these offerings, at a level that allows us to be competitive in our markets. We are dependent on CNH Industrial’s ongoing commitment to its product warranties and reimbursement of dealers for warranty repairs. CNH Industrial provides product warranties and, in some cases, extended warranties to our customers.
In addition, climate change may also reduce the availability or increase the cost of insurance for weather-related events as well as impact the global economy, including as a result of disruptions to supply chains.
In addition, climate change may also reduce the availability or increase the cost of insurance for weather-related events as well as impact the global economy, including potential disruptions to supply chains. We anticipate that climate change-related risks will increase over time.
We anticipate that climate change-related risks will increase over time. 20 Table of Contents New or more stringent greenhouse gas emission standards designed to address climate change could increase costs of the equipment we purchase from our suppliers and increase our customers’ costs of operations.
New or more stringent greenhouse gas emission standards designed to address climate change could increase costs of the equipment we purchase from our suppliers and increase our customers’ costs of operations.
The following is a cautionary discussion of risks, uncertainties and assumptions that we believe are material to our business. These risks may affect our operating results and, individually or in the aggregate, could cause our actual results to differ materially from past and projected future results.
The following is a discussion of the material factors that we believe make an investment in our common stock risky. These risks may affect our operating results and, individually or in the aggregate, could cause our actual results to differ materially from past and projected future results.
Over-production of equipment by one or more manufacturers, or a sudden reduction in demand for equipment, can dramatically disrupt the equipment market, cause downward pressure on our equipment profit margins and increase our carrying costs of higher inventory levels. Customer leasing arrangements in the agriculture and construction equipment industries may also impact the level of industry-wide equipment inventory supplies.
Over-production of equipment by one or more manufacturers, or a sudden reduction in demand for equipment, can dramatically disrupt the equipment market, cause downward pressure on our revenue and equipment profit margins and increase our carrying costs of higher inventory levels.
We need to maintain a proper balance of new and used equipment to assure satisfactory inventory turnover and to minimize floorplan financing costs. Our orders for the purchase of new equipment and parts are based primarily on projected demand.
We need to maintain a proper balance of new and used equipment to assure satisfactory inventory turnover and to minimize floorplan financing costs. Our orders for the purchase of new equipment and parts are based primarily on pre-sold equipment and projected demand. Our equipment orders from CNH Industrial typically must be slotted months in advance of actual delivery.
Net farm income is influenced by factors such as: 14 Table of Contents • the price of agricultural commodities and the ability to competitively export agricultural commodities; • the cost of farm inputs including value of land, seed, fertilizer, fuel, labor and other inputs; • the demand for food products and other products made with farm commodities such as biofuels; ▪ the availability of stocks from previous harvests; and • agricultural policies, including aid and subsidies to agricultural enterprises provided by governments, policies impacting commodity prices or limiting the export or import of commodities, and alternative fuel mandates.
Net farm income is influenced by factors such as: • the price of agricultural commodities and the ability to competitively export agricultural commodities; • the cost of farm inputs including value of land, seed, fertilizer, fuel, labor and other inputs; • the demand for food products, livestock feed, and other products made with farm commodities such as biofuels; ▪ the availability of stocks from previous harvests; • agricultural policies, including aid and subsidies to agricultural enterprises provided by governments, policies impacting commodity prices or limiting the export or import of commodities, and alternative fuel mandates; and • foreign government tariffs that affect export markets for U.S. farm products In addition to macroeconomic drivers of net farm income, local growing conditions also influence farmers’ buying sentiment.
For example, it could: • increase our vulnerability to adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and • limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes.
For example, it could: • increase our vulnerability to adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and • limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes. 17 Table of Contents We expect to use cash flow from operations and borrowings under our credit facilities to fund our operations, debt service and capital expenditures.
CNH Industrial typically evaluates management, historical performance, and capitalization of a prospective acquirer in determining whether to consent to the sale of a CNH Industrial dealership. We may not obtain the consent of CNH Industrial or our lenders for certain acquisitions we may propose. Our acquisitions may not be successful. There are risks associated with acquisitions of new dealerships.
CNH Industrial typically evaluates management, historical performance, and capitalization of a prospective acquirer, along with CNH Industrial’s desired make-up of its distribution network, in determining whether to consent to the sale of a CNH Industrial dealership. We may not obtain the consent of CNH Industrial or our lenders for certain acquisitions we may propose.
When leased equipment comes off lease, there may be an increase in the availability of late-model used equipment, which can create a used equipment inventory over-supply condition and put pressure on our used equipment sales and margins, and have an adverse effect on values of our used equipment inventory and rental fleet equipment.
This supply demand disruption may also lead to an increase in the availability of late-model used equipment, which can create a used equipment inventory over-supply condition and put pressure on our used equipment sales and margins, and have an adverse effect on values of our used equipment inventory.
In addition, in recent years it has been increasingly difficult to hire and retain employees, which we believe is primarily attributable to market conditions which in turn has created increased competition in labor markets.
Moreover, the technician shortage may increase our service technician compensation expense, and reduce our gross margins on service work. In addition, in recent years it has been increasingly difficult to hire and retain employees, which we believe is primarily attributable to market conditions which in turn has created increased competition in labor markets.
These downturns may be prolonged, and during these periods, our revenues and profitability could be harmed, including severely . Demand for our parts and repair services, although not as cyclical as equipment purchases, also can be negatively affected in agricultural industry downturns and in regions affected by adverse weather or growing conditions, which result in fewer acres planted or harvested.
Similar market downturns may occur in the future, adversely affecting our revenue and profitability at that time. Demand for our parts and repair services, although not as cyclical as equipment purchases, also can be negatively affected in agricultural industry downturns and in regions affected by adverse weather or growing conditions, which result in fewer acres planted or harvested.
The terms of our CNH Industrial dealer agreements subject us to restrictions that may adversely impact our business. We have entered into CNH Industrial Dealer Agreements under which we sell CNH Industrial’s branded agricultural and construction equipment, along with aftermarket parts and repair services.
We have entered into CNH Industrial Dealer Agreements under which we sell CNH Industrial’s branded agricultural and construction equipment, along with aftermarket parts and repair services.
Risks Related to Supply Chain Our business has been adversely impacted by supply chain distributions. Our business has been adversely impacted by supply chain disruptions which has caused variability and unpredictability in lead times. Starting in calendar year 2020, our suppliers experienced significant disruptions in upstream supply chain production and shipping delays.
Risks Related to Supply Chain Our business is susceptible to supply chain disruptions. Our business is susceptible to supply chain disruptions, which may cause variability and unpredictability in product lead times. For example, in calendar year 2020, our suppliers experienced significant disruptions in upstream supply chain production and shipping delays.
The agricultural and construction equipment distribution (including parts and service) and rental industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local basis.
We have no control over or ability to significantly influence any of the foregoing factors affecting the equipment distribution markets. Our industry is highly competitive. The agricultural and construction equipment distribution (including parts and service) and rental industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local basis.
Quarterly fluctuations resulting from the seasonality of our business may cause our results of operations and cash flows to underperform in relation to the expectations of financial analysts or investors, which may cause volatility or decreases in our stock price. 22 Table of Contents Data Security Risks Security breaches and other disruptions could compromise our information systems and expose us to liability, which would cause our business and reputation to suffer.
Quarterly fluctuations resulting from the seasonality of our business may cause our results of operations and cash flows to underperform in relation to the expectations of financial analysts or investors, which may cause volatility or decreases in our stock price.
Risks Related to our Reliance on CNH Industrial We are substantially dependent upon CNH Industrial, our primary supplier of equipment and parts inventory. The substantial majority of our business involves the sale and distribution of new equipment and aftermarket parts supplied by CNH Industrial and the servicing of equipment manufactured by CNH Industrial.
The substantial majority of our business involves the sale and distribution of new equipment and aftermarket parts supplied by CNH Industrial and the servicing of equipment manufactured by CNH Industrial.
Some of these risks and uncertainties could affect particular revenue sources or segments, while others could affect our full business. Although risks are organized by headings, and each risk is discussed separately, many are interrelated.
Some of these risks could affect particular revenue sources or segments, while others could affect our full business. Although risks are organized by headings, and each risk is discussed separately, many are interrelated. Furthermore, additional risks not currently known to us or that we currently consider immaterial also may materially adversely affect our business in the future.
In addition to macroeconomic drivers of net farm income, local growing conditions also influence farmers’ buying sentiment. Therefore, droughts, excess rain, hail, and other unfavorable climatic conditions affecting certain geographic regions will adversely impact the local farmers’ buying sentiment.
Therefore, droughts, excess rain, hail, and other unfavorable weather conditions affecting certain geographic regions will adversely impact the local farmers’ buying sentiment.
If the Company’s effective tax rate were to increase, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s results of operations, cash flows and financial condition could be adversely affected.
In addition, the U.S. government could adopt changes to international trade agreements, tariffs, taxes and 18 Table of Contents other related regulations. If the Company’s effective tax rate were to increase, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, our financial results could be adversely affected.
Also, numerous external factors such as credit markets, commodity prices, weather conditions, and other circumstances may disrupt normal purchasing practices and customers’ sentiment, further contributing to the seasonal fluctuations. We are exposed to customer credit risks.
Also, numerous external factors such as credit markets, commodity prices, weather conditions, and other circumstances may disrupt normal purchasing practices and customers’ sentiment, further contributing to the seasonal fluctuations. Changes in tax rates or the adoption of new tax legislation may adversely affect our financial results.
If this trend worsens and we are not able to hire and retain qualified service technicians at acceptable levels, our ability to satisfy customers' service needs would be negatively impacted. Moreover, the technician shortage may increase our service technician compensation expense, and reduce our gross margins on service work.
In recent years, the equipment industry has experienced a shortage of qualified service technicians. If this trend worsens and we are not able to hire and retain qualified service technicians at acceptable levels, our ability to satisfy customers' service needs would be negatively impacted.
The regulation of GHG emissions from the equipment we sell could result in additional manufacturing costs to our suppliers who, in turn, will likely pass along those costs to us. We may not be successful in passing along the equipment price increases to our customers, which could impact our results of operation and margins.
The regulation of GHG emissions from the equipment we sell could result in additional manufacturing costs to our suppliers who, in turn, will likely pass along those costs to us through higher wholesale prices of the equipment.
The credit agreements governing our indebtedness contain covenants that, among other things, may limit or place conditions on our ability to: • incur more debt; • make investments; • create liens; • merge, consolidate, or make certain acquisitions; • transfer and sell assets, or divest of dealership stores; • pay dividends or repurchase stock; and • issue equity instruments. 18 Table of Contents Our credit facilities with CNH Industrial Capital, DLL Finance, and certain of our real estate lenders require us to satisfy a net leverage ratio and fixed charge coverage ratio on an ongoing basis, measured at the end of each fiscal quarter.
The credit agreements governing our indebtedness contain covenants that, among other things, may limit or place conditions on our ability to: • incur more debt; • make investments; • create liens; • merge, consolidate, or make certain acquisitions; • transfer and sell assets, or divest of dealership stores; • pay dividends or repurchase stock; and • issue equity instruments.
See additional information in Note 1 to the Consolidated Financial Statements at Item 8, Financial Statements and Supplementary Data, of this Form 10-K. Even if we continue operations, the military conflict has significantly impacted, and we expect that it will continue to impact, our customers' liquidity and purchasing decisions for our products and services.
Even if we continue operations, the military conflict has significantly impacted, and we expect that it will continue to impact, our customers' liquidity and purchasing decisions for our products and services.
The construction industry in many of our geographical areas has experienced periodic, and sometimes prolonged, economic down cycles. During these downturns, our revenues and profitability could be adversely impacted. Inflationary increases to cost of equipment combined with higher interest rates may negatively impact our customers' equipment purchasing decisions. Many of our customers finance their equipment purchases.
The construction industry in many of our geographical areas has experienced periodic, and sometimes prolonged, economic down cycles. During these downturns, our revenues and profitability could be adversely impacted.
These considerations have led to certain regulatory responses, including but not limited to the EU Corporate Sustainability Reporting Directive ("CSRD") and the SEC recently finalized rules requiring public companies to make disclosures regarding climate risks and related matters. We expect to be subject to the CSRD and new SEC disclosure rules beginning in 2026.
These considerations have led to certain regulatory responses, including but not limited to the EU Corporate Sustainability Reporting Directive and the SEC’s finalized rules (March 6, 2024) requiring public companies to make disclosures regarding climate risks and related matters (such rules are currently stayed pending the outcome of litigation).
Tax Rates and New Tax Legislation - Changes in tax rates or the adoption of new tax legislation may affect our results of operations, cash flows and financial condition. The Company is subject to taxes in the U.S. and a number of foreign jurisdictions where it conducts business.
The Company is subject to taxes in the U.S. and a number of foreign jurisdictions where it conducts business.
In addition, e-commerce companies selling parts have negatively impacted dealers' parts sales and margins, and we expect that this competitive pressure will continue to increase in the future.
In addition, e-commerce companies selling parts have 15 Table of Contents negatively impacted dealers' parts sales and margins, and we expect that this competitive pressure will continue to increase in the future. The recent agreements of equipment manufacturers, including CNH Industrial, to provide farmers and independent repair shops access to diagnostic tools could negatively impact our repair services business.
The credit agreements governing our indebtedness restrict our ability to engage in certain corporate and financial transactions, and require us to satisfy financial covenants.
However, our cash flow and ability to borrow depends on our future performance, which is affected by financial, business, economic and other factors, many of which are beyond our control. The credit agreements governing our indebtedness restrict our ability to engage in certain corporate and financial transactions, and require us to satisfy financial covenants.
Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results. The agricultural and construction equipment industries are highly seasonal, which can cause significant fluctuations in our results of operations and cash flow.
The adverse impact of higher rates on our financial performance is magnified during industry downcycles, such as we are experiencing now, when we have an oversupply of inventory. The agricultural and construction equipment industries are highly seasonal, which can cause significant fluctuations in our results of operations and cash flow.
Removed
Except as required by applicable law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. You should, however, consult any subsequent disclosures we make from time to time in materials filed with the SEC.
Added
As a result, the trading price of our common stock could decline, and you could lose all or part of your investment in our common stock Risks Related to our Reliance on CNH Industrial We are dependent upon CNH Industrial to supply competitive products.
Removed
In fiscal 2024, CNH Industrial supplied approximately 75% of the new equipment sold in our Agriculture segment, 81% of the new equipment sold in our Construction segment, 51% of the new equipment sold in our Europe segment and 58% of the new equipment sold in our Australia segment, and supplied a significant portion of our parts inventory.
Added
CNH Industrial’s ongoing commitment to its product warranties and timely payment for warranty work is important to both our market share success and our warranty related parts and service revenue. Our CNH Industrial Dealer Agreements may be terminated by CNH Industrial and subject us to restrictions that may adversely impact our business.
Removed
The success of our stores, and our business as a whole, is dependent on CNH Industrial in several key respects. First, we rely on CNH Industrial for new equipment and parts inventory.
Added
We cannot predict when the current agriculture equipment downturn will end, as we 14 Table of Contents believe that this is largely dependent on the improvement of farmer profitability which, in turn, is subject to numerous market, political, and macroeconomic factors. During the current downturn, we have experienced significant reductions in our revenues and profitability.
Removed
CNH Industrial’s commitment to its product warranties is important to both our market share success and our warranty related parts and service revenue. 13 Table of Contents CNH Industrial may be adversely impacted by global economic conditions and economic downturns, industry declines, natural disasters, labor strikes or similar disruptions, changes in interest rates, energy prices, inflation, financial performance and liquidity concerns, supply shortages or rising raw materials costs, failed strategic initiatives, or other adverse events.
Added
Inflationary increases in the cost of equipment combined with a depressed used equipment market (resulting in lower trade values of used equipment) and higher interest rates have negatively impacted our customers' equipment purchasing decisions. Many of our customers finance their equipment purchases.
Removed
Our business, results of operations, and financial condition could be materially adversely affected as a result of any event that has a materially adverse effect on CNH Industrial.
Added
The affordability of new equipment is influenced by three factors: (i) the cost of the new equipment, which has increased significantly due to inflation and other factors over the past few years, and may experience additional increases due to tariffs on imported materials, parts and components that are required to manufacture the equipment; (ii) the trade value granted to the customer by the dealer for the used equipment being traded (and in the current down cycle, the value of used equipment has fallen significantly, resulting in less trade value and requiring a greater cash contribution in the transaction); and (iii) the interest rate applied to the amount financed in the transaction.
Removed
Periods of elevated inflation and increased interest rates will increase financing costs and installment payment obligations of our customers, which may make equipment purchases less affordable for customers and impact or delay purchasing decisions and, as a result, our revenue and profitability may decrease.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhile we have experienced cybersecurity incidents in the past, to date, none have materially impacted the Company or our financial position, results of operations and/or cash flows.
Biggest changeWhile we have experienced cybersecurity incidents in the past, based upon the information that we have as of the end of fiscal 2025, we are not aware of any cybersecurity incident that has materially affected or that is reasonably likely to materially affect our business' financial position or results of operations.
The Audit Committee reports to the Board at minimum semi-annually the cybersecurity initiatives, efforts and security risks. In addition, we have an Incident Response Policy in place to inform senior management and the Board of material issues related to cybersecurity matters and to develop an appropriate response plan.
The Audit Committee reports to the Board at least semi-annually on our cybersecurity initiatives, efforts and security risks. In addition, we have an Incident Response Policy in place to inform senior management and the Board of material issues related to cybersecurity matters and to develop an appropriate response plan.
The Audit Committee is responsible for board-level oversight of cybersecurity risk. The Audit Committee reports back to the full Board about cybersecurity and other areas within their responsibility. 23 Table of Contents Our cybersecurity governance program is led by our Vice President of Information Technology (“VP of IT”).
The Audit Committee is responsible for board-level oversight of cybersecurity risks. The Audit Committee reports back to the full Board about cybersecurity and other areas within their responsibility. Our cybersecurity governance program is led by our Vice President of Information Technology (“VP of IT”).
Team members who support our cybersecurity governance program have relevant education and industry experience. The team provides regular reports to senior management and other relevant teams on various cybersecurity threats, assessments, and findings. Our VP of IT semi-annually and on an ad-hoc basis presents directly to the Audit Committee on cybersecurity initiatives, efforts, and security risks.
This team provides regular reports to senior management and other relevant teams on various cybersecurity threats, assessments, and findings. 21 Table of Contents Our VP of IT semi-annually and on an ad hoc basis presents directly to the Audit Committee on cybersecurity initiatives, efforts, and security risks.
We continue to invest in cybersecurity and the resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain.
We continue to invest in cybersecurity and the resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain. For more information regarding the risks we face from cybersecurity threats, please see Item 1A, Risk Factors, under the heading “Risks Related to Data Security.”
However, the risks from cybersecurity threats and incidents continue to increase, and the preventative actions we have taken and continue to take to reduce the risk of cybersecurity threats and incidents may not successfully protect against all such threats and incidents.
However, the risks from cybersecurity threats and incidents continue to increase, and the preventative actions we have taken and continue to take to reduce the risk of cybersecurity threats and incidents may not successfully protect against all such threats and incidents, and, as a result, there can be no assurances that we or the third parties we interact with will not experience a cybersecurity event in the future that will materially impact us.
Removed
For more information regarding the risks we face from cybersecurity threats, please see Item 1A, Risk Factors, under the heading “Security breaches and other disruptions could compromise our information systems and expose us to liability, which would cause our business and reputation to suffer.” 24 Table of Contents
Added
Our cybersecurity security team includes a dedicated manager with over 15 years of experience, that reports directly to our VP of IT, to help manage cybersecurity risks for the Company. Team members who support our cybersecurity governance program have relevant education and industry experience.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe remainder of our U.S. and international store locations are leased from third parties. 25 Table of Contents As part of our due diligence review prior to a dealership acquisition, we evaluate the adequacy, suitability and condition of the related real estate.
Biggest changeIn acquiring most of these owned facilities, we have incurred debt financing and were granted mortgages in favor of the relevant lender. The remainder of our U.S. and international store locations are leased from third parties. As part of our due diligence review prior to a dealership acquisition, we evaluate the adequacy, suitability and condition of the related real estate.
A majority of the leases provide for fixed monthly rental payments and require us to pay the real estate taxes on the properties for the lease periods. We are generally responsible for utilities and maintenance of the leased premises.
A majority of the leases provide for fixed monthly rental payments and require us to pay the real estate taxes on the 22 Table of Contents properties for the lease periods. We are generally responsible for utilities and maintenance of the leased premises.
We believe our owned and leased facilities are adequate to meet our current and anticipated needs. In recent years, we have been strategically purchasing real estate of certain dealership locations, and have financed those purchases using long term debt. We currently own the store facilities for 68 U.S. dealership locations, six European dealership locations and one Australian dealership location.
We believe our owned and leased facilities are adequate to meet our current and anticipated needs. In recent years, we have been strategically purchasing real estate of certain dealership locations, and have financed those purchases using long term debt. We currently own the store facilities for 73 U.S. dealership locations, six European dealership locations and two Australian dealership locations.
PROPERTIES Equipment Stores As of January 31, 2024, we operated 148 full service agricultural and construction equipment stores globally in the following locations: Agriculture Segment Construction Segment Europe Segment Australia Segment Total United States North Dakota 12 4 — — 16 Minnesota 15 3 — — 18 Iowa 12 3 — — 15 Nebraska 14 2 — — 16 South Dakota 11 2 — — 13 Colorado — 3 — — 3 Idaho 6 — — — 6 Kansas 1 — — — 1 Missouri 1 — — — 1 Montana 1 — — — 1 Washington 1 — — — 1 Wisconsin 1 1 — — 2 Wyoming 1 — — — 1 European Countries Bulgaria — — 8 — 8 Germany — — 7 — 7 Romania — — 14 — 14 Ukraine — — 10 — 10 Australian States New South Wales — — — 1 1 South Australia — — — 4 4 Victoria — — — 10 10 Total 76 18 39 15 148 Store Lease Arrangements As of January 31, 2024, we leased 76 store facilities with lease arrangements expiring at various dates through April 30, 2042.
PROPERTIES Equipment Stores As of January 31, 2025, we operated 148 full service agricultural and construction equipment stores in the following locations: Agriculture Segment Construction Segment Europe Segment Australia Segment Total United States North Dakota 11 4 — — 15 Minnesota 15 3 — — 18 Iowa 12 3 — — 15 Nebraska 14 2 — — 16 South Dakota 11 2 — — 13 Colorado — 3 — — 3 Idaho 6 — — — 6 Kansas 1 — — — 1 Missouri 1 — — — 1 Montana 1 — — — 1 Washington 1 — — — 1 Wisconsin 1 1 — — 2 Wyoming 1 — — — 1 European Countries Bulgaria — — 8 — 8 Germany — — 8 — 8 Romania — — 14 — 14 Ukraine — — 10 — 10 Australia New South Wales — — — 4 4 South Australia — — — 1 1 Victoria — — — 10 10 Total 75 18 40 15 148 Store Lease Arrangements As of January 31, 2025, we leased 67 store facilities with lease arrangements expiring at various dates through April 30, 2042.
We believe there is ample opportunity for expansion in our West Fargo headquarters facility if necessary.
We continually review our location needs, including the adequacy of our headquarters space, to ensure our space is sufficient to support our operations. We believe there is ample opportunity for expansion in our West Fargo headquarters facility if necessary.
Headquarters We currently lease and occupy approximately 48,000 square feet in West Fargo, North Dakota for our headquarters and this lease expires on January 31, 2028. We continually review our location needs, including the adequacy of our headquarters space, to ensure our space is sufficient to support our operations.
Headquarters We currently lease and occupy approximately 48,000 square feet in West Fargo, North Dakota for our headquarters, which expires on January 31, 2028. We have signed a purchase agreement to purchase the facility at or before the termination of the lease.
Removed
We have incurred debt financing and have been granted mortgages on most of those owned facilities in connection with incurring such debt financing.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeLarsen began his career as an accountant with PricewaterhouseCoopers LLP and is a Certified Public Accountant. David Meyer is our Executive Chairman of our Board of Directors.
Biggest changeLarsen began his career as an accountant with PricewaterhouseCoopers LLP and is a Certified Public Accountant. PART II
Bryan has been with Titan Machinery since 2002, and has performed at the highest levels as an Equipment Sales Consultant (ESC), Store Manager, Complex Manager, and held Senior Field positions including Valley Region Manager and Vice President of Titan Machinery’s North American Agriculture Equipment Business.
Bryan has been with Titan Machinery since 2002, and has performed at the highest levels as an Equipment Sales Consultant, Store Manager, Complex Manager, and held Senior Field positions including Valley Region Manager and Vice President of Titan Machinery’s North American Agriculture Equipment Business.
MINE SAFETY DISCLOSURES Not applicable. 26 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages and positions of our executive officers are as follows: Name Age Position Bryan Knutson 45 Chief Executive Officer and President Robert Larsen 38 Chief Financial Officer and Treasurer David Meyer 70 Executive Chairman Bryan Knutson became our Chief Executive Officer in February 2024.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages and positions of our executive officers are as follows: Name Age Position Bryan Knutson 46 Chief Executive Officer and President Robert Larsen 39 Chief Financial Officer and Treasurer Bryan Knutson became our Chief Executive Officer in February 2024.
Removed
David co-founded Titan Machinery in 1980 on the principle of best-in-class product support, and as an early pioneer of dealer consolidation, saw the benefits of consolidating dealership resources to leverage scale, equipment and parts inventories, training, and other industry expertise to provide world-class equipment support to all our agricultural and construction customers.
Removed
David served as Chief Executive Officer from 1985 until transitioning to the Executive Chairman role in February 2024. Prior to incorporating Titan in 1980, David was a partner in a JI Case/New Holland Dealership with locations in Lisbon and Wahpeton, North Dakota. Prior to that, he worked for JI Case Company.
Removed
David has served on both the Case Construction and CaseIH Agriculture Dealer Advisory Boards. He is two-term past chairman and board member of the North Dakota Implement Dealers Association. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSTOCK PERFORMANCE GRAPH The following graph compares the cumulative total return for the last trading day of our last five fiscal years on a $100 investment (assuming dividend reinvestment) on January 31, 2019, the last trading day before our fifth preceding fiscal year, in each of our common stock, the Russell 2000 Index and the S&P 500 Retail Index.
Biggest changeREPURCHASES We did not engage in any repurchases of our common stock during the fiscal quarter ended January 31, 2025. 24 Table of Contents STOCK PERFORMANCE GRAPH The following graph compares the cumulative total return for the last trading day of our last five fiscal years on a $100 investment (assuming dividend reinvestment) on January 31, 2020, the last trading day before our fifth preceding fiscal year, in each of our common stock, the Russell 2000 Index and the S&P 500 Retail Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is listed for trading on the Nasdaq Stock Market and trades under the symbol "TITN".
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is listed for trading on the Nasdaq Global Select Market and trades under the symbol "TITN".
UNREGISTERED SALES OF EQUITY SECURITIES We did not have any unregistered sales of equity securities during the fiscal quarter ended January 31, 2024.
UNREGISTERED SALES OF EQUITY SECURITIES We did not have any unregistered sales of equity securities during the fiscal quarter ended January 31, 2025.
As of March 25, 2024, there were approximately 695 record holders of our common stock, which excludes holders whose stock is held either in nominee name or street name brokerage accounts. DIVIDENDS We have not historically paid any dividends on our common stock.
As of March 24, 2025, there were approximately 718 record holders of our common stock, which excludes holders whose stock is held either in nominee name or in street name by brokers and other institutions. DIVIDENDS We have not historically paid any dividends on our common stock.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS For information on securities authorized for issuance under our equity compensation plans, refer to Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Form 10-K. 27 Table of Contents REPURCHASES We did not engage in any repurchases of our common stock during the fiscal quarter ended January 31, 2024.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS For information on securities authorized for issuance under our equity compensation plans, refer to Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Form 10-K.
January 31, 2019 2020 2021 2022 2023 2024 Titan Machinery Inc. $ 100.00 $ 65.15 $ 113.66 $ 164.35 $ 234.47 $ 142.64 S&P 500 Retail Index 100.00 119.51 167.91 182.83 147.04 188.29 Russell 2000 Index 100.00 107.65 138.30 135.28 128.85 129.87 ITEM 6. [RESERVED] 28 Table of Contents
January 31, 2020 2021 2022 2023 2024 2025 Titan Machinery Inc. $ 100.00 $ 174.45 $ 252.25 $ 359.87 $ 218.92 $ 153.32 S&P 500 Retail Index 100.00 140.50 152.98 123.04 157.55 219.98 Russell 2000 Index 100.00 128.47 125.67 119.69 120.65 141.74 ITEM 6. [RESERVED] 25 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSuch factors include, but are not limited to, the following: • the impact of the Russian-Ukraine military conflict on our operations in Ukraine; • assumptions regarding our cash needs and the amount of inventory we need on hand; • general economic conditions and construction activity in the markets where we operate; • our dependence on CNH Industrial, our primary supplier of equipment and parts inventory, and our relationships with other equipment suppliers; • the terms of the CNH Industrial dealer agreements that subject us to restrictions that may adversely impact our business and growth; • the risks associated with our international operations; • risks resulting from the implementation or design of our new ERP system; • risks resulting from the impact of the enactment of "right to repair" legislation; • the impact of security breaches and other disruptions to our information system; • our level of indebtedness and ability to comply with the terms of agreements governing our indebtedness; • the risks associated with the expansion of our business; • the risks resulting from outbreaks or other public health crises; • risks related to our ability to attract, train, and develop key employees necessary for our success; • the potential inability to integrate any businesses we acquire; • competitive pressures; • significant fluctuations in the price of our common stock; • risks related to our dependence on our information technology systems and the impact of potential breaches and other disruptions; • compliance with laws and regulations; and • other factors discussed under Item 1A, Risk Factors, or elsewhere in this Form 10-K. 43 Table of Contents You should read the risk factors and the other cautionary statements made in this Form 10-K as being applicable to all related forward-looking statements wherever they appear in this Form 10-K.
Biggest changeSuch factors include, but are not limited to, the following: • our dependence on CNH Industrial, our primary supplier of equipment and parts inventory, to supply competitive products, provide financial and marketing support and continue committing to its product warranties and reimbursement of dealers for warrant repairs, and our relationships with other equipment suppliers; • the terms of the CNH Industrial Dealer Agreements that subject us to restrictions that may adversely impact our business and growth; • the impact of net farm income, which is influenced by factors over which we have no control; • market factors, over which we have no control, negatively impacting our construction equipment sales; • increased inflation and higher interest rates negatively impacting our customers’ equipment purchasing decisions; • downturns in the equipment distribution market, which can arise from factors over which we have no control; • the highly competitive nature of our industry; • the recent agreements of equipment manufacturers, including CNH Industrial, to provide farmers and independent repair shops access to diagnostic tools; • supply chain disruptions; • the impact of the Russian-Ukraine military conflict on our operations in Ukraine; • assumptions regarding our cash needs and the amount of inventory we need on hand; • general economic conditions and construction activity in the markets where we operate; 41 Table of Contents • risks and uncertainties arising from our international operations; • our ability to effectively manage our inventory; • our level of indebtedness and ability to comply with the terms of agreements governing our indebtedness; • exposure to interest rate risks as a result of our variable rate indebtedness; • the seasonal nature of the agricultural and construction equipment industries; • customer credit risks; • our ability to manage increased maintenance costs as the age of our rental fleet increases; • our ability to manage changes in tax rates or the adoption of new tax legislation; • risks relating to climate change and weather conditions; • increased government regulations relating to greenhouse gas emission standards and climate change; • the risks associated with the expansion of our business, including the potential inability to integrate any businesses we acquire; • risks relating to our ability to attract, train, and develop key employees necessary for our success; • labor organizing activities; • liability risks arising from products sold, rented or serviced by us, which our commercial liability insurance may not be adequate to cover; • significant fluctuations in the price of our common stock; • risks related to our dependence on our information technology systems and the impact of potential breaches and other disruptions; and • other factors discussed under Item 1A, Risk Factors, and elsewhere in this Form 10-K.
We sell parts and provide in-store and on-site repair and maintenance services. We rent equipment and provide other ancillary services such as equipment transportation, GPS signal subscriptions, farm data management systems, precision farming equipment, and finance and insurance products.
We sell parts and provide in-store and on-site repair and maintenance services. We rent equipment and provide other ancillary products and services such as equipment transportation, GPS signal subscriptions, farm data management systems, precision farming equipment, and finance and insurance products.
The Company's business systems in Ukraine have continued to function but have been, and could continue to be, negatively impacted in the future. To date, the impact of this conflict has not been and is not expected to be material to Titan Machinery’s consolidated business operations and financial performance.
The Company's business systems in Ukraine have continued to function but have been, and could continue to be, negatively impacted in the future. To date, the impact of this conflict has not been, and in the future is not expected to be, material to Titan Machinery’s consolidated business operations and financial performance.
Our forward-looking statements in this Form 10-K generally relate to the following: • our beliefs and intentions with respect to our growth strategies, including growth through strategic acquisitions, the types of acquisition targets we intend to pursue, the availability of suitable acquisition targets, the industry climate for dealer consolidation, and our ability to implement our growth strategies; • our beliefs with respect to factors that will affect demand and seasonality of purchasing in the agricultural and construction industries; • our beliefs with respect to our primary supplier (CNH Industrial) of equipment and parts inventory; • our beliefs with respect to the equipment market, our competitors and our competitive advantages; • our beliefs with respect to the impact of U.S federal government policies on the agriculture economy; • our beliefs with respect to the impact of commodity prices for crops, fossil fuels and other commodities on our operating results; • our beliefs with respect to the impact of government regulations; • our beliefs with respect to our business strengths and the diversity of our customer base; • our plans and beliefs with respect to real property used in our business; • our plans and beliefs regarding future sales, sales mix, and marketing activities; • our beliefs and assumptions regarding the payment of dividends; • our beliefs and assumptions regarding valuation reserves, equipment inventory balances, fixed operating expenses, and absorption rate; 42 Table of Contents • our beliefs and expectations regarding the impact of the Russia-Ukraine military conflict on our Ukrainian operations; • our beliefs and assumptions with respect to our rental equipment operations; • our beliefs with respect to our employee relations; • our assumptions, beliefs and expectations with respect to past and future market conditions, including interest rates, and public infrastructure spending, new environmental standards, and the impact these conditions will have on our operating results; • our beliefs with respect to the impact of our credit agreements, including future interest expense, limits on corporate transactions, financial covenant compliance, and ability to negotiate amendments or waivers, if needed; • our beliefs with respect to the impact of increase or decrease in applicable foreign exchange rates; • our plans and assumptions for future capital expenditures and rental fleet purchases; • our cash needs, sources of liquidity, and the adequacy of our working capital.
Our forward-looking statements in this Form 10-K generally relate to the following: • our beliefs and intentions with respect to our growth strategies, including growth through strategic acquisitions, the types of acquisition targets we intend to pursue, the availability of suitable acquisition targets, the industry climate for dealer consolidation, and our ability to implement our growth strategies; • our beliefs with respect to factors that will affect demand and seasonality of purchasing in the agricultural and construction industries; • our beliefs with respect to our primary supplier (CNH Industrial) of equipment and parts inventory; • our beliefs with respect to the equipment market, our competitors and our competitive advantages; • our beliefs with respect to the impact of U.S federal government policies on the agriculture economy; • our beliefs with respect to the impact of commodity prices for crops, fossil fuels and other commodities on our operating results; 40 Table of Contents • our beliefs with respect to the impact of government regulations; • our beliefs with respect to our business strengths and the diversity of our customer base; • our plans and beliefs with respect to real property used in our business; • our plans and beliefs regarding future sales, sales mix, and marketing activities; • our beliefs and assumptions regarding the payment of dividends; • our beliefs and assumptions regarding valuation reserves, equipment inventory balances, fixed operating expenses, and absorption rate; • our beliefs and expectations regarding the impact of the Russia-Ukraine military conflict on our Ukrainian operations; • our beliefs and assumptions with respect to our rental equipment operations; • our beliefs with respect to our employee relations; • our assumptions, beliefs and expectations with respect to past and future market conditions, including interest rates, and public infrastructure spending, new environmental standards, and the impact these conditions will have on our operating results; • our beliefs with respect to the impact of our credit agreements, including future interest expense, limits on corporate transactions, financial covenant compliance, and ability to negotiate amendments or waivers, if needed; • our beliefs with respect to the impact of increase or decrease in applicable foreign exchange rates; • our plans and assumptions for future capital expenditures and rental fleet purchases; and • our cash needs, sources of liquidity, and the adequacy of our working capital.
Cost of Revenue • Equipment: Cost of equipment revenue is the lower of the acquired cost or the net realizable value of the specific piece of equipment sold. • Parts: Cost of parts revenue is the lower of the acquired cost or the market value of the parts sold, based on average costing. • Service: Cost of service revenue represents costs attributable to services provided for the maintenance and repair of customer-owned equipment and equipment then on-rent by customers. 32 Table of Contents • Rental and other: Costs of other revenue represent costs associated with equipment rental, such as depreciation, maintenance and repairs, as well as costs associated with providing transportation, hauling, parts freight, GPS subscriptions and damage waivers, including, among other items, drivers' wages, truck depreciation, fuel costs, shipping costs and our costs related to damage waiver policies.
Cost of Revenue • Equipment: Cost of equipment revenue is the lower of the acquired cost or the net realizable value of the specific piece of equipment sold. • Parts: Cost of parts revenue is the lower of the acquired cost or the market value of the parts sold, based on average costing. • Service: Cost of service revenue represents costs attributable to services provided for the maintenance and repair of customer-owned equipment and equipment then on-rent by customers. 29 Table of Contents • Rental and other: Costs of other revenue represent costs associated with equipment rental, such as depreciation, maintenance and repairs, as well as costs associated with providing transportation, hauling, parts freight, GPS subscriptions and damage waivers, including, among other items, drivers' wages, truck depreciation, fuel costs, shipping costs and our costs related to damage waiver policies.
Critical Accounting Policies and Use of Estimates In the preparation of financial statements prepared in conformity with U.S. generally accepted accounting principles, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures.
Critical Accounting Policies and Use of Estimates In the preparation of financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures.
Macroeconomic and Industry Factors Our Agriculture and International businesses are primarily driven by the demand for agricultural equipment for use in the production of food, fiber, feed grain and renewable energy.
Macroeconomic and Industry Factors Our Agriculture and International businesses are primarily driven by the demand for agricultural equipment for use in the production of food, fiber, feed grain and feedstock for renewable energy.
Thus, we believe the following factors have a significant impact on our operating results: • CNH Industrial’s product offerings, reputation and market share; • CNH Industrial’s product prices and incentive and discount programs; 30 Table of Contents • CNH Industrial's supply of inventory and ability to match demand levels and delivery timelines; • CNH Industrial's offering of floorplan payable financing for the purchase of a substantial portion of our inventory; and • CNH Industrial's offering of financing and leasing used by our customers to purchase CNH Industrial equipment from us.
Thus, we believe the following factors have a significant impact on our operating results: 27 Table of Contents • CNH Industrial’s product offerings, reputation and market share; • CNH Industrial’s product prices and incentive and discount programs; • CNH Industrial's supply of inventory and ability to match demand levels and delivery timelines; • CNH Industrial's offering of floorplan payable financing for the purchase of a substantial portion of our inventory; and • CNH Industrial's offering of financing and leasing used by our customers to purchase CNH Industrial equipment from us.
Other long-lived assets shared across stores within a segment or shared across segments are reviewed for impairment on a segment or consolidated level as appropriate. During our 2024 fiscal year, we determined that events or circumstances were present that may indicate that the carrying amount of certain of our store long-lived assets might not be recoverable.
Other long-lived assets shared across stores within a segment or shared across segments are reviewed for impairment on a segment or consolidated level as appropriate. During our 2025 fiscal year, we determined that events or circumstances were present that may indicate that the carrying amount of certain of our store long-lived assets might not be recoverable.
However, the full impact of the conflict remains uncertain and will depend on future developments, including the severity and duration of the conflicts and their impact on regional and global economic conditions. The Company will continue to monitor the ongoing conflict between Russia and Ukraine as it is highly complex and continues to evolve.
However, the full impact of the conflict remains uncertain and will depend on future developments, including the severity and duration of the conflicts and its impact on regional and global economic conditions. The Company will continue to monitor the ongoing conflict between Russia and Ukraine as it is highly complex and continues to evolve.
Our repair and maintenance services provide a high-margin, relatively stable source of revenue through changing economic cycles. • Rental and other: We derive other revenue from equipment rentals and ancillary equipment support activities such as equipment transportation, GPS signal subscriptions and reselling financial and insurance products.
Our repair and maintenance services provide a high-margin, relatively stable source of revenue through changing economic cycles. • Rental and other: We derive other revenue from equipment rentals and ancillary equipment products and services, such as equipment transportation, GPS signal subscriptions and reselling financial and insurance products.
Any non-compliance by us under the terms of our debt agreements could result in an event of default which, if not cured, could result in the acceleration of our debt. We have met all financial covenants under these credit agreements as of January 31, 2024.
Any non-compliance by us under the terms of our debt agreements could result in an event of default which, if not cured, could result in the acceleration of our debt. We have met all financial covenants under these credit agreements as of January 31, 2025.
We expect these sources of liquidity to be sufficient to fund our working capital requirements, acquisitions, capital expenditures and other investments in our business, service our debt, pay our tax and lease obligations and other commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future, provided, however, that our borrowing capacity under our credit agreements is dependent on compliance with various financial covenants as further described in Note 8, Floorplan Payable/Lines of Credit , of the Notes to our Consolidated Financial Statements included in this Form 10-K.
We expect these sources of liquidity to be sufficient to fund our working capital requirements, acquisitions, capital expenditures and other investments in our business, service our debt, pay our tax and lease obligations and other commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future, provided, however, that our borrowing capacity under our credit agreements is dependent on compliance with various financial covenants as further described in Note 8, Floorplan Payable/Lines of Credit , to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Form 10-K.
Adequacy of Capital Resources Our primary uses of cash have been to fund our operating activities, including the purchase of inventory and providing for other working capital needs; meeting our debt service requirements; making payments due under our various leasing arrangements; and funding capital expenditures, including the purchase of rental fleet assets.
Adequacy of Capital Resources Our primary uses of cash have been to fund our operating activities, including the purchase of inventory and providing for other working capital needs; meeting our debt service requirements; making payments due under our various leasing arrangements; and funding capital expenditures.
This includes long-term debt used to finance the purchase of real estate and vehicles. 33 Table of Contents Results of Operations Comparative financial data for each of our four sources of revenue for fiscal 2024 and 2023 are presented below. The results include the acquisitions made during these periods.
This includes long-term debt used to finance the purchase of real estate and vehicles. 30 Table of Contents Results of Operations Comparative financial data for each of our four sources of revenue for fiscal 2025 and 2024 are presented below. The results include the acquisitions made during these periods.
As of January 31, 2024, the Company was not subject to the fixed charge ratio covenant under the Bank Syndicate Agreement as our adjusted excess availability plus eligible cash collateral (as defined in the Bank Syndicate Agreement) was not less than 15% of the total amount of the credit facility.
As of January 31, 2025, the Company was not subject to the fixed charge ratio covenant under the Bank Syndicate Agreement as our adjusted excess availability plus eligible cash collateral (as defined in the Bank Syndicate Agreement) was not less than 10% of the total amount of the credit facility.
If the qualitative test indicates there may be an impairment, we perform the quantitative test, which measures the amount of the goodwill impairment, if any. To perform the quantitative test, we calculate the fair value of each reporting unit, primarily utilizing the income approach.
If the qualitative test indicates there may be an impairment, we perform the quantitative test, which measures the amount of the goodwill impairment, if any. To perform the quantitative test, we calculate the fair value of each reporting unit, primarily utilizing the income appro ach and market approach.
As of January 31, 2024, we had floorplan payable lines of credit for equipment purchases totaling $1.4 billion, which includes a $875.0 million credit facility with CNH Industrial Capital, a $275.0 million floorplan payable line under the Bank Syndicate Agreement, a $80.0 million credit facility with DLL Finance, and additional credit facilities related to our foreign subsidiaries.
As of January 31, 2025, we had floorplan payable lines of credit for equipment purchases totaling $1.5 billion, which includes a $875.0 million credit facility with CNH Industrial Capital, a $390.0 million floorplan payable line under the Bank Syndicate Agreement, a $80.0 million credit facility with DLL Finance, and additional credit facilities related to our foreign subsidiaries.
In light of these circumstances, we performed step one of the impairment analysis for these assets, which have a combined carrying value of $11.0 million, to determine if the asset values are recoverable.
In light of these circumstances, we performed step one of the impairment analysis for these assets, which have a combined carrying value of $51.6 million, to determine if the asset values are recoverable.
Sales of new CNH Industrial products accounted for approximately 71% of our new equipment revenue in fiscal 2024, with our single largest manufacturer other than CNH Industrial representing approximately 3% of our total new equipment revenue in fiscal 2024. We acquire used equipment for resale primarily through trade-ins from our customers and in some cases through selective purchases.
Sales of new CNH Industrial products accounted for approximately 75% of our new equipment revenue in fiscal 2025, with our single largest manufacturer other than CNH Industrial representing approximately 4% of our total new equipment revenue in fiscal 2025. We acquire used equipment for resale primarily through trade-ins from our customers and in some cases through selective purchases.
Throughout our 43-year operating history, we have built an extensive, geographically contiguous network of 94 full service stores located in the United States, 39 in Europe and 15 in Australia. We have a history of growth through acquisitions, including over 60 acquisitions in 15 U.S. states, four European countries and three Australian states since January 1, 2003.
Throughout our 44-year operating history, we have built an extensive, geographically contiguous network of 93 full service stores located in the United States, 40 in Europe and 15 in Australia. We have a history of growth through acquisitions, including over 60 acquisitions with locations in 15 U.S. states, four European countries and three Australian states since January 1, 2003.
CNH Industrial regularly offers interest-free periods as well as additional incentives and special offers. As of January 31, 2024, 47.9% of our floorplan payable financing was non-interest bearing. Other Interest Expense Interest expense represents the interest on our debt instruments, other than floorplan payable financing facilities.
CNH Industrial regularly offers interest-free periods as well as additional incentives and special offers. As of January 31, 2025, 44.1% of our floorplan payable financing was non-interest bearing. Other Interest Expense Interest expense represents the interest on our debt instruments, other than floorplan payable financing facilities.
You should review the "Information Regarding Forward-Looking Statements" in this Item 7 and "Risk Factors" presented under Item 1A for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis in this annual report.
You should review the "Information Regarding Forward-Looking Statements" in this Item 7 and the risks and uncertainties described under Item 1A, Risk Factors, of this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis in this Form 10-K.
Please refer to Note 8, Floorplan Payable/Lines of Credit , of the Notes to our Consolidated Financial Statement included in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for further information regarding the Company's line of credit. Our equipment inventory turnover decreased to 2.2 times for fiscal 2024 compared to 3.3 times for fiscal 2023.
Please refer to Note 8, Floorplan Payable/Lines of Credit , to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for further information regarding the Company's line of credit. Our equipment inventory turnover decreased to 1.6 times for fiscal 2025 compared to 2.2 times for fiscal 2024.
In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, if at all.
Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, if at all.
The year-to-year comparison included below is not necessarily indicative of future results. Information regarding segment revenue and income (loss) before income taxes is presented for each fiscal year following our discussion of the consolidated results of operations. Additional information regarding our segments is included in Note 21 of our consolidated financial statements.
The year-to-year comparison included below is not necessarily indicative of future results. Information regarding segment revenue and income (loss) before income taxes is presented for each fiscal year following our discussion of the consolidated results of operations.
Our Australia segment income before income taxes was $4.1 million for fiscal 2024. 37 Table of Contents Shared Resources/Eliminations We incur centralized expenses/income at our general corporate level, which we refer to as “Shared Resources,” and then allocate most of these net expenses to our segments.
Our Australia segment income before income taxes was $2.9 million for fiscal 2025. Shared Resources/Eliminations We incur centralized expenses/income at our general corporate level, which we refer to as “Shared Resources,” and then allocate most of these net expenses to our segments.
We estimate net realizable value of our parts inventories based on various factors including aging and sales history of each type of parts inventory. Impairment of Long-Lived Assets Our long-lived assets consist primarily of property and equipment and operating lease assets.
Parts inventories are valued at the lower of average cost or net realizable value. We estimate net realizable value of our parts inventories based on various factors including aging and sales history of each type of parts inventory. Impairment of Long-Lived Assets Our long-lived assets consist primarily of property and equipment and operating lease assets.
We perform our annual goodwill impairment analysis as of December 31 and when an event occurs or circumstances change that may reduce the fair value of a reporting unit below its carrying amount.
We perform our annual goodwill impairment analysis as of December 31 and when an event occurs or circumstances change that may reduce the fair value of a reporting unit below its carrying amount. In 2025, we elected to perform a quantitative test on all reporting units.
A discussion of changes in our Financial Results and Cash Flow Comparisons from fiscal year 2022 to fiscal year 2023 has been omitted from this Form 10-K, but may be found in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on March 30, 2023.
A discussion of changes in our Financial Results and Cash Flow Comparisons from fiscal year 2023 to fiscal year 2024 has been omitted from this Form 10-K, but may be found in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, filed with the SEC on April 3, 2024.
Since these allocations are set early in the year, and a portion is planned to be unallocated, unallocated balances may occur and cause a difference in reported shared resource expense. Shared Resource loss before income taxes was $9.0 million for fiscal 2024 compared to $6.3 million for fiscal 2023.
Since these allocations are set early in the year, and a portion is planned to be unallocated, unallocated balances may occur. Shared Resources loss before income taxes was $2.6 million for fiscal 2025 compared to $9.0 million for fiscal 2024.
Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, decreased to 18.2% as of January 31, 2024, from 51.7% as of January 31, 2023.
Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, increased to 25.9% as of January 31, 2025 from 18.2% as of January 31, 2024.
Based upon information provided to us by CNH Industrial N.V. or its U.S. subsidiary CNH Industrial America, LLC, collectively referred to in this Form 10-K as CNH Industrial, we are the largest retail dealer of Case IH Agriculture equipment in the world, one of the largest retail dealers of Case Construction equipment in North America and one of the largest retail dealers of New Holland Agriculture and New Holland Construction equipment in the U.S.
Based upon information provided to us by CNH Industrial N.V., we are the largest retail dealer of Case IH Agriculture equipment in the world, one of the largest retail dealers of Case Construction equipment in North America and one of the largest retail dealers of New Holland Agriculture and New Holland Construction equipment in the U.S.
The 12 Heartland Companies store locations are included within our Agriculture segment. 31 Table of Contents Key Financial Metrics In addition to tracking our sales and expenses to evaluate our operational performance, we also monitor the following key financial metrics.
The 12 Heartland Companies store locations are included within our Agriculture segment. 28 Table of Contents Key Financial Metrics In addition to tracking our sales and expenses to evaluate our operational performance, we also monitor the following key financial metrics. The results of some of these metrics are discussed further throughout this Item 7.
Cash Flow Used For Investing Activities Net cash used for investing activities is primarily comprised of cash used for property and equipment purchases, including rental fleet purchases, and for business acquisitions. Net cash used for investing activities was $163.4 million in fiscal 2024, compared to $134.1 million in fiscal 2023.
Cash Flow Used For Investing Activities Net cash used for investing activities is primarily comprised of cash used for property and equipment purchases and for business acquisitions. Net cash used for investing activities was $47.7 million in fiscal 2025, compared to $163.4 million in fiscal 2024.
We describe in Note 1, Business Activity and Significant Accounting Polices, of the Notes to our Consolidated Financial Statements the significant accounting policies used in preparing the consolidated financial statements. We consider the following items in our consolidated financial statements to require significant estimation or judgment.
We describe in Note 1, Business Activity and Significant Accounting Polices , to the Consolidated Financial Statements in Item 8, Financial Information and Supplementary Data , of this Form 10-K the significant accounting policies used in preparing the consolidated financial statements. We consider the following items in our consolidated financial statements to require significant estimation or judgment.
New Accounting Pronouncements Refer to Note 1, Business Activity and Significant Accounting Polices, of the Notes to our Consolidated Financial Statements for a description of new accounting pronouncements recently adopted or not yet adopted and the impact or anticipated impact of such pronouncements to our consolidated financial statements.
New Accounting Pronouncements Refer to Note 1, Business Activity and Significant Accounting Polices , to the Consolidated Financial Statements in Item 8, Financial Information and Supplementary Data , of this Form 10-K for a description of new accounting pronouncements recently adopted or not yet adopted and the impact or anticipated impact of such pronouncements to our consolidated financial statements.
Such obligations include, but are not limited to, debt arrangements, leasing arrangements, and costs related to Information Technology ("IT"), including ERP expenses. The Notes to the Consolidated Financial Statements provide additional information in regard to Long Term Debt (Note 10) and Leases (Note 13).
Such obligations include, but are not limited to, debt arrangements, leasing arrangements, and costs related to Information Technology ("IT"), including enterprise resource planning (“ERP”) expenses. The Notes to the Consolidated Financial Statements in Item 8, Financial Information and Supplementary Data, of this Form 10-K provide additional information in regard to Long Term Debt (Note 10) and Leases (Note 13).
In fiscal 2024, CNH Industrial supplied approximately 71% of our new equipment revenue on a consolidated basis and 75%, 81%, 51%, and 58% in our Agriculture, Construction, Europe, and Australia segments, respectively, and represented a significant portion of our parts revenue.
In fiscal 2025, CNH Industrial supplied approximately 75% of our new equipment revenue on a consolidated basis and 76%, 79%, 65% and 74% in our Agriculture, Construction, Europe, and Australia segments, respectively. CNH Industrial also represented a significant portion of our parts revenue.
The 15 O’Connors store locations are included within our new Australia segment. Heartland Acquisition On August 1, 2022, we acquired all of the outstanding equity interests of three entities, Heartland Agriculture, LLC, Heartland Solutions, LLC, and Heartland Leveraged Lender, LLC, (collectively referred to as "Heartland Companies").
Heartland Acquisition On August 1, 2022, we acquired all of the outstanding equity interests of three entities, Heartland Agriculture, LLC, Heartland Solutions, LLC, and Heartland Leveraged Lender, LLC, (collectively referred to as "Heartland Companies").
Other purchase obligations consist primarily of IT related expenses with estimated cash payments of $4.1 million for fiscal 2025, as well as a combined $0.7 million for fiscal 2026, 2027, and 2028. 39 Table of Contents Cash Flow Cash Flow (Used For) Provided By Operating Activities Net cash used for operating activities in fiscal 2024 was $32.3 million compared to net cash provided by operating activities of $10.8 million in fiscal 2023.
Other purchase obligations consist primarily of IT related expenses with estimated cash payments of $5.2 million for fiscal 2026, as well as a combined $15.3 million through fiscal 2030. 37 Table of Contents Cash Flow Cash Flow (Used For) Provided By Operating Activities Net cash provided by operating activities in fiscal 2025 was $70.3 million compared to net cash used for operating activities of $32.3 million in fiscal 2024.
The property and equipment purchases in fiscal 2024 primarily related to improvements to, or purchases of, real estate assets and the purchase of vehicles. In fiscal 2023, we used $10.0 million in cash for rental fleet purchases, $27.2 million in cash for property and equipment purchases, and financed $6.4 million in property and equipment purchases with long-term debt.
In fiscal 2025, we used $51.8 million in cash for property and equipment purchases and financed $36.0 million in property and equipment purchases with long-term debt and finance leases. The property and equipment purchases in fiscal 2025 primarily related to improvements to, or purchases of, real estate assets and the purchase of vehicles.
Absorption Absorption is an industry term that refers to the percentage of an equipment dealer's operating expense covered by the combined gross profit from parts, service and rental fleet activity.
We do not distinguish relocated or newly-expanded stores in this same-store analysis. Absorption Absorption is an industry term that refers to the percentage of an equipment dealer's operating expense covered by the combined gross profit from parts, service and rental fleet activity.
The Company works with various lenders to finance the purchase of real estate we currently lease or are acquiring through an acquisition. The Company may also decide in the future to finance a portion of our rental fleet as well as our capital expenditures using long-term debt from various lenders.
The Company may also decide in the future to finance a portion of our rental fleet as well as our capital expenditures using long-term debt from various lenders.
We calculate it by dividing cost of sales on equipment for the last twelve months by the average of the month-end balances of our equipment and parts inventories for the same twelve-month period. We believe that inventory turnover is an important management metric in evaluating the efficiency at which we are managing and selling our inventories.
Inventory Turnover Inventory turnover measures the rate at which inventory is sold during the year. We calculate it by dividing cost of sales on equipment for the last twelve months by the average of the month-end balances of our equipment and parts inventories for the same twelve-month period.
As of January 31, 2024, the Company was in compliance with the financial covenants under its credit agreements. Additional details on each of these credit facilities are disclosed in Note 8 to our consolidated financial statements included in this Form 10-K.
Due to the waivers listed above, as of January 31, 2025, the Company was not subject to the financial covenants under its credit agreements. Additional details on each of these credit facilities are disclosed in Note 8, Floorplan Payable/Lines of Credit, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data , of this Form 10-K.
Certain External Factors Affecting our Business We are subject to a number of factors that affect our business including those factors discussed in the sections in this Form 10-K entitled Item 1A, "Risk Factors" and "Information Regarding Forward-Looking Statements." Certain of these external factors include, but are not limited to, the following: 29 Table of Contents Russia/Ukraine Geopolitical Conflict Since the onset of the active conflict in February 2022, most of Titan Machinery Ukraine's customers have been able to continue their work, although at a reduced capacity and schedule.
Certain of these external factors include, but are not limited to, the following: 26 Table of Contents Russia/Ukraine Geopolitical Conflict Since the onset of the active conflict in February 2022, most of Titan Machinery Ukraine's customers have been able to continue their work, although at a reduced capacity and schedule.
Generally, used equipment prices are more volatile to changes in market conditions than prices for new equipment due to incentive programs that may be offered by manufacturers to assist in the sale of new equipment.
Generally, used equipment prices are more volatile to changes in market conditions than prices for new equipment due to incentive programs that may be offered by manufacturers to assist in the sale 38 Table of Contents of new equipment. We review our equipment inventory values and adjust them whenever the carrying amount exceeds the estimated net realizable value.
Provision for Income Taxes Year Ended January 31, Percent 2024 2023 Increase Change (dollars in thousands) Provision for Income Taxes $ 38,599 $ 33,373 $ 5,226 15.7 % Our effective tax rate increased from 24.7% in fiscal 2023 to 25.6% in fiscal 2024.
(Benefit from) Provision for Income Taxes Year Ended January 31, Increase/ Percent 2025 2024 (Decrease) Change (dollars in thousands) (Benefit from) Provision for Income Taxes $ (13,074) $ 38,599 $ (51,673) (133.9) % Our effective tax rate increased from 25.6% in fiscal 2024 to 26.2% in fiscal 2025.
The income approach is based on discounted cash flow models that use reporting unit estimates for forecasted future financial performance, including revenues, margins, operating expenses, capital expenditures, depreciation, amortization, tax and discount rates. These estimates are developed as part of our planning process based on assumed growth rates, along with historical data and various internal estimates.
The income approach is based on discounted cash flow models that use estimates for forecasts of future operating performance for the reporting units. These forecasts include estimates of revenues, margins, operating expenses, capital expenditures, depreciation, amortization, tax and discount rates.
The actual amount of our fiscal 2025 capital expenditures will depend upon factors such as general economic conditions, growth prospects for our industry and our decisions regarding financing and leasing options. We currently expect to finance property and equipment purchases with borrowings under our existing credit facilities, financing with long-term debt, with available cash or with cash flow from operations.
We expect our cash expenditures for property and equipment for fiscal 2026 to be approximately $40.0 million. The actual amount of our fiscal 2026 capital expenditures will depend upon factors such as general economic conditions, growth prospects for our industry and our decisions regarding financing and leasing options.
Year Ended January 31, 2024 2023 (dollars in thousands) Equipment Revenue $ 2,145,316 $ 1,711,559 Cost of revenue 1,864,558 1,477,539 Gross profit $ 280,758 $ 234,020 Gross profit margin 13.1 % 13.7 % Parts Revenue $ 410,841 $ 327,196 Cost of revenue 279,921 220,418 Gross profit $ 130,920 $ 106,778 Gross profit margin 31.9 % 32.6 % Service Revenue $ 157,315 $ 129,803 Cost of revenue 53,981 46,208 Gross profit $ 103,334 $ 83,595 Gross profit margin 65.7 % 64.4 % Rental and other Revenue $ 44,973 $ 40,748 Cost of revenue 28,631 25,302 Gross profit $ 16,342 $ 15,446 Gross profit margin 36.3 % 37.9 % The following table sets forth our statements of operations data expressed as a percentage of revenue for the fiscal years indicated.
Year Ended January 31, 2025 2024 (dollars in thousands) Equipment Revenue $ 2,050,298 $ 2,145,316 Cost of revenue 1,912,803 1,864,558 Gross profit $ 137,495 $ 280,758 Gross profit margin 6.7 % 13.1 % Parts Revenue $ 428,457 $ 410,841 Cost of revenue 294,233 279,921 Gross profit $ 134,224 $ 130,920 Gross profit margin 31.3 % 31.9 % Service Revenue $ 180,107 $ 157,315 Cost of revenue 66,823 53,981 Gross profit $ 113,284 $ 103,334 Gross profit margin 62.9 % 65.7 % Rental and other Revenue $ 43,260 $ 44,973 Cost of revenue 32,633 28,631 Gross profit $ 10,627 $ 16,342 Gross profit margin 24.6 % 36.3 % 31 Table of Contents The following table sets forth our statements of operations data expressed as a percentage of revenue for the fiscal years indicated.
The Construction segment income before income taxes was $18.3 million for fiscal 2024 compared to income of $18.6 million for the prior year.
Construction Construction segment revenue for fiscal 2025 decreased 0.3%, or $0.9 million, compared to fiscal 2024 Our Construction segment loss before income taxes was $6.7 million for fiscal 2025 compared to $18.3 million of income before income taxes for fiscal 2024.
Seasonality & Weather The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results and our available cash flow to fluctuate during the year.
Likewise, any decline in federal allocations to public infrastructure spending over the next few years should negatively impact our future results of operations. Seasonality & Weather The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results and our available cash flow to fluctuate during the year.
Our Construction business is primarily impacted by the demand for construction equipment for use in private and government commercial, residential, and infrastructure construction; demolition; maintenance; energy and forestry operations. Industry reports show that demand for construction equipment in our markets is driven by several factors, one of which is public infrastructure spending, including roads and highways, sewer and water.
Industry reports show that demand for construction equipment in our markets is driven by several factors, one of which is public infrastructure spending, including roads and highways, sewer and water. Any growth in federal allocations to public infrastructure spending over the next few years should positively impact our future results of operations.
Other than as required by law, we undertake no obligation to update these forward-looking statements, even though our situation may change in the future. 44 Table of Contents
Other than as required by law, we undertake no obligation to update these forward-looking statements, whether as a result of new information, future events, or otherwise. 42 Table of Contents
Department of Agriculture ("USDA") publications, the most recent estimate of net farm income for calendar year 2023 decreased 16% compared to calendar year 2022. The commodity prices of corn and soybeans, which are the predominant crops in our Agriculture store footprint, were at or near record prices in fiscal 2023 but decreased during fiscal 2024.
The commodity prices of corn and soybeans, which are the predominant crops in our Agriculture store footprint, were at or near record prices in fiscal 2023 but declined in fiscal 2024 and have remained depressed in fiscal 2025.
To date, in those instances in which we have experienced cost increases, we have been able to increase selling prices to offset much of the increases and expect to continue to do so in the future. Significant Items Impacting Our Financial Position and Results of Operations J.J. O’Connor & Sons Pty. Ltd.
Inflation Inflationary pressures have led to rising inventory and supply costs as well as increased labor costs. To date, in those instances in which we have experienced cost increases, we have been able to increase selling prices to offset much of the increases and expect to continue to do so in the future.
The increase in other interest expense in fiscal 2024 is the result of an increased amount of long term debt resulting from real estate purchased via acquisition or the buyout of previously leased facilities in fiscal 2023 and 2024.
The increase in other interest expense in fiscal 2025 is the result of an increased amount of long term debt outstanding resulting from purchases of previously leased facilities during fiscal 2024 and fiscal 2025 as well as increased borrowing on our CNH Industrial Capital revolving line of credit.
Year Ended January 31, 2024 2023 Revenue Equipment 77.8 % 77.5 % Parts 14.9 % 14.8 % Service 5.7 % 5.9 % Rental and other 1.6 % 1.8 % Total Revenue 100.0 % 100.0 % Total Cost of Revenue 80.7 % 80.1 % Gross Profit Margin 19.3 % 19.9 % Operating Expenses 13.1 % 13.6 % Income from Operations 6.2 % 6.3 % Other Income (Expense) (0.7) % (0.2) % Income Before Income Taxes 5.5 % 6.1 % Provision for Income Taxes 1.4 % 1.5 % Net Income 4.1 % 4.6 % 34 Table of Contents Fiscal Year Ended January 31, 2024 Compared to Fiscal Year Ended January 31, 2023 Consolidated Results Revenue Year Ended January 31, Increase/ Percent 2024 2023 (Decrease) Change (dollars in thousands) Equipment $ 2,145,316 $ 1,711,559 $ 433,757 25.3 % Parts 410,841 327,196 83,645 25.6 % Service 157,315 129,803 27,512 21.2 % Rental and other 44,973 40,748 4,225 10.4 % Total Revenue $ 2,758,445 $ 2,209,306 $ 549,139 24.9 % The increase in total revenue for fiscal 2024, as compared to fiscal 2023, was primarily the result of Company-wide same-store sales increase of 10.1% over the prior fiscal year and our acquisitions of the Heartland Companies, Pioneer Farm Equipment Co.
Year Ended January 31, 2025 2024 Revenue Equipment 75.9 % 77.8 % Parts 15.9 % 14.9 % Service 6.7 % 5.7 % Rental and other 1.5 % 1.6 % Total Revenue 100.0 % 100.0 % Total Cost of Revenue 85.4 % 80.7 % Gross Profit Margin 14.6 % 19.3 % Operating Expenses 14.5 % 13.1 % Income from Operations 0.1 % 6.2 % Other Income (Expense) (1.9) % (0.7) % (Loss) Income Before Income Taxes (1.8) % 5.5 % (Benefit from) Provision for Income Taxes (0.4) % 1.4 % Net (Loss) Income (1.4) % 4.1 % Fiscal Year Ended January 31, 2025 Compared to Fiscal Year Ended January 31, 2024 Consolidated Results Revenue Year Ended January 31, Increase/ Percent 2025 2024 (Decrease) Change (dollars in thousands) Equipment $ 2,050,298 $ 2,145,316 $ (95,018) (4.4) % Parts 428,457 410,841 17,616 4.3 % Service 180,107 157,315 22,792 14.5 % Rental and other 43,260 44,973 (1,713) (3.8) % Total Revenue $ 2,702,122 $ 2,758,445 $ (56,323) (2.0) % Total revenue for fiscal 2025 decreased by 2.0%, or $56.3 million, compared to fiscal 2024, driven primarily by the decrease in Company-wide same-store sales of 9.1%, which largely offsets the revenue accretion from the O'Connors acquisition completed in October 2023.
In fiscal 2024, we used $10.8 million in cash for rental fleet purchases and $51.5 million in cash for property and equipment purchases and financed $17.9 million in property and equipment purchases with long-term debt and finance leases.
In fiscal 2024 , we used $62.4 million in cash for property and equipment purchases, and financed $17.9 million in property and equipment purchases with long-term debt. The property and equipment purchases in fiscal 2024 primarily related to the purchase of vehicles, trucks and real estate.
Same-Store Results Same-store results for any period represent results of operations by stores that were part of our Company for the entire comparable period in the preceding fiscal year. We do not distinguish relocated or newly-expanded stores in this same-store analysis.
We believe that inventory turnover is an important management metric in evaluating the efficiency at which we are managing and selling our inventories. Same-Store Results Same-store results for any period represent results of operations by stores that were part of our Company for the entire comparable period in the preceding fiscal year.
The primarily driver was due to an increase of $25.2 million in cash used for purchases of property and equipment and increase of $7.1 million in acquisition activity compared to prior year.
The primarily driver of the decrease was due to the fiscal 2024 acquisitions of $107.5 million compared to $0.3 million in fiscal 2025. There was also year over year decrease of $10.5 million in cash used for purchases of property and equipment compared to the prior year.
Gross Profit Year Ended January 31, Increase/ Percent 2024 2023 (Decrease) Change (dollars in thousands) Gross Profit Equipment $ 280,758 $ 234,020 $ 46,738 20.0 % Parts 130,920 106,778 24,142 22.6 % Service 103,334 83,595 19,739 23.6 % Rental and other 16,342 15,446 896 5.8 % Total Gross Profit $ 531,354 $ 439,839 $ 91,515 20.8 % Gross Profit Margin Equipment 13.1 % 13.7 % (0.6) % (4.4) % Parts 31.9 % 32.6 % (0.7) % (2.1) % Service 65.7 % 64.4 % 1.3 % 2.0 % Rental and other 36.3 % 37.9 % (1.6) % (4.2) % Total Gross Profit Margin 19.3 % 19.9 % (0.6) % (3.0) % Gross Profit Mix Equipment 52.8 % 53.2 % (0.4) % (0.8) % Parts 24.6 % 24.3 % 0.3 % 1.2 % Service 19.4 % 19.0 % 0.4 % 2.1 % Rental and other 3.2 % 3.5 % (0.3) % (8.6) % Total Gross Profit Mix 100.0 % 100.0 % Gross profit increased 20.8% or $91.5 million from fiscal 2023 to fiscal 2024, primarily due to higher revenue and gross profit from our equipment, parts, and service business.
Gross Profit Year Ended January 31, Increase/ Percent 2025 2024 (Decrease) Change (dollars in thousands) Gross Profit Equipment $ 137,495 $ 280,758 $ (143,263) (51.0) % Parts 134,224 130,920 3,304 2.5 % Service 113,284 103,334 9,950 9.6 % Rental and other 10,627 16,342 (5,715) (35.0) % Total Gross Profit $ 395,630 $ 531,354 $ (135,724) (25.5) % Gross Profit Margin Equipment 6.7 % 13.1 % (6.4) % (48.9) % Parts 31.3 % 31.9 % (0.6) % (1.9) % Service 62.9 % 65.7 % (2.8) % (4.3) % Rental and other 24.6 % 36.3 % (11.7) % (32.2) % Total Gross Profit Margin 14.6 % 19.3 % (4.7) % (24.4) % Gross Profit Mix Equipment 34.8 % 52.8 % (18.0) % (34.1) % Parts 33.9 % 24.6 % 9.3 % 37.8 % Service 28.6 % 19.4 % 9.2 % 47.4 % Rental and other 2.7 % 3.2 % (0.5) % (15.6) % Total Gross Profit Mix 100.0 % 100.0 % Gross profit for fiscal 2025 decreased 25.5%, or $135.7 million, as compared to fiscal 2024.
The Revolver Loan is used to finance our working capital requirements and fund certain capital expenditures, as needed. As of January 31, 2024, the Company did not have a need to utilize any of the Revolver Loan, as such the outstanding balance was zero.
As of January 31, 2025, the Company did not have a need to utilize any of the Revolver Loan, and, as such the outstanding balance was zero. The Company works with various lenders to finance the purchase of real estate we currently lease or purchase through an acquisition.
However, if retail interest rates continue to rise, our business may be negatively affected by customers who find financing purchases of our equipment less attractive due to higher borrowing costs. Our business is also particularly dependent on our access to credit markets to manage inventory and finance acquisitions.
However, high retail interest rates negatively impact customer demand due to higher borrowing costs, which makes purchasing equipment less attractive. Our business is also particularly dependent on our access to credit markets to manage inventory and finance acquisitions. We cannot predict what future changes will occur in credit markets or how these changes will impact our business.
Our test indicated that there is no goodwill impairment in any of our reporting units as of our annual assessment date. 41 Table of Contents We had goodwill of $64.1 million and $30.6 million at January 31, 2024 and 2023, respectively.
Our test indicated that all of our goodwill in the Europe segment should be impaired for $0.5 million and the test for our Agriculture and Australia segments did not indicate any impairment in these two reporting units as of our annual assessment date. We had goodwill of $61.2 million and $64.1 million at January 31, 2025 and 2024, respectively.
O'Connors has been a successful Case IH complex, and our acquisition of this entity provides the Company with the opportunity to expand our international presence into the large, well-established Australian agriculture market. Total cash consideration paid for O'Connors was $66.5 million, which was financed through available cash resources and line of credit availability.
The acquired business consisted of 15 CaseIH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia. O'Connors has been a successful Case IH complex, and our acquisition of this entity provides the Company with the opportunity to expand our international presence into the large, well-established Australian agriculture market.
We cannot assure you that the forward-looking statements in this Form 10-K will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material.
You should read the risk factors and the other cautionary statements made in this Form 10-K as being applicable to all related forward-looking statements wherever they appear in this Form 10-K. We cannot assure you that the forward-looking statements in this Form 10-K will prove to be accurate.
Acquisition On October 2, 2023, we acquired all of the outstanding equity interests of J.J. O’Connor & Sons Pty. Ltd. ("O’Connors"). The acquired business consisted of 15 CaseIH dealership locations and one parts center in the states of New South Wales, South Australia, and Victoria in Southeastern Australia.
Significant Items Impacting Our Financial Position and Results of Operations J.J. O’Connor & Sons Pty. Ltd. Acquisition On October 2, 2023, we acquired all of the outstanding equity interests of J.J. O’Connor & Sons Pty. Ltd. ("O’Connors").
Our Europe segment income before income taxes was $16.5 million for fiscal 2024, compared to $20.2 million for fiscal 2023. The decrease in segment pre-tax income was primarily the result of increased operating expenses. Australia We entered into the Australian market in October 2023 with the O'Connor acquisition. Australia segment revenue for fiscal 2024 was $69.8 million.
Our Europe segment loss before income taxes was $3.9 million for fiscal 2025 compared to $16.5 million of income before income taxes for fiscal 2024. The decrease in segment pre-tax income was primarily the result of decreased equipment sales as noted above.
The decrease in our equity in equipment inventory is primarily due to the stocking of new equipment inventories as availability has improved, as well as drawing on our floorplan loan with the Bank Syndicate in conjunction with the O'Connors acquisition. 38 Table of Contents Long-Term Debt Facilities As of January 31, 2024, we had a $75.0 million working capital line of credit under the Bank Syndicate Agreement (the "Revolver Loan").
Long-Term Debt Facilities As of January 31, 2025, we had a $110.0 million working capital line of credit under the Bank Syndicate Agreement (the "Revolver Loan"). The Revolver Loan is used to finance our working capital requirements and fund certain capital expenditures, as needed.
Cash Flow Provided By Financing Activities Net cash provided by financing activities was $188.6 million in fiscal 2024, compared to $22.0 million in fiscal 2023. the increase in net cash provided by financing activities was the result of increased non-manufacturer floorplan payables in fiscal 2024, as the Company drew on its Bank Syndicate Agreement floorplan loan in fiscal 2024, to finance higher inventory levels.
Cash Flow (Used for) Provided By Financing Activities Net cash used for financing activities was $23.6 million in fiscal 2025, compared to $188.6 million net cash provided by in fiscal 2024. The change was primarily driven by a $220.8 million decrease in non-manufacturer floorplan payables, which represents the Company's other credit lines including its Bank Syndicate Agreement.
The lower absorption rate in fiscal 2024 compared to fiscal 2023, was primarily impacted by a significant rise in floorplan interest expense in fiscal 2024, the fiscal 2023 absorption rate was also favorably impacted by a gain of $1.4 million recognized on the divestiture of our consumer products store in North Dakota in the first quarter of fiscal 2023. 35 Table of Contents Operating Expenses Year Ended January 31, Increase/ Percent 2024 2023 (Decrease) Change (dollars in thousands) Operating Expenses $ 362,509 $ 301,516 $ 60,993 20.2 % Operating Expenses as a Percentage of Revenue 13.1 % 13.6 % (0.5) % (3.7) % Operating expenses for fiscal 2024 increased $61.0 million, as compared to fiscal 2023.
Operating Expenses Year Ended January 31, Increase/ Percent 2025 2024 (Decrease) Change (dollars in thousands) Operating Expenses $ 389,780 $ 362,509 $ 27,271 7.5 % Operating Expenses as a Percentage of Revenue 14.4 % 13.1 % 1.3 % 9.9 % Operating expenses for fiscal 2025 increased by 7.5%, or $27.3 million, as compared to fiscal 2024.
Other Income (Expense) Year Ended January 31, Increase/ Percent 2024 2023 (Decrease) Change (dollars in thousands) Interest and other income (expense) $ 3,300 $ 3,862 $ (562) (14.6) % Floorplan interest expense (13,802) (1,875) 11,927 636.1 % Other interest expense (7,303) (5,069) 2,234 44.1 % The decrease in interest and other income (expense) compared to fiscal 2023 was primarily the result of changes in foreign currency fluctuations.
Other Income (Expense) Year Ended January 31, Increase/ Percent 2025 2024 (Decrease) Change (dollars in thousands) Interest and other income (expense) $ (4,178) $ 3,300 $ (7,478) (226.6) % Floorplan interest expense (34,710) (13,802) 20,908 151.5 % Other interest expense (15,105) (7,303) 7,802 106.8 % Interest and other income (expense) for fiscal 2025 decreased by approximately $7.5 million as compared to fiscal 2024.
The effective tax rate for each of the years ended January 31, 2024 and 2023, is subject to variation primarily due to the impact of items related to the vesting of share-based compensation, limitation on the tax deductibility of officers' compensation and the mix of domestic and foreign income. 36 Table of Contents Segment Results Year Ended January 31, Increase/ Percent 2024 2023 (Decrease) Change (dollars in thousands) Revenue Agriculture $ 2,044,263 $ 1,601,720 $ 442,543 27.6 % Construction 332,463 308,457 24,006 7.8 % Europe 311,910 299,129 12,781 4.3 % Australia 69,809 — 69,809 *N/M Total $ 2,758,445 $ 2,209,306 $ 549,139 24.9 % Income Before Income Taxes Agriculture $ 121,072 $ 102,733 $ 18,339 17.9 % Construction 18,346 18,569 (223) (1.2) % Europe 16,487 20,197 (3,710) (18.4) % Australia 4,115 — 4,115 *N/M Segment income before income taxes 160,020 141,499 18,521 13.1 % Shared Resources (8,980) (6,258) (2,722) 43.5 % Total $ 151,040 $ 135,241 $ 15,799 11.7 % *N/M = Not Meaningful Agriculture Agriculture segment revenue for fiscal 2024 increased 27.6%, or $442.5 million, compared to the same period last year.
The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability. 34 Table of Contents Segment Results Year Ended January 31, Increase/ Percent 2025 2024 (Decrease) Change (dollars in thousands) Revenue Agriculture $ 1,888,428 $ 2,044,263 $ (155,835) (7.6) % Construction 331,574 332,463 (889) (0.3) % Europe 261,005 311,910 (50,905) (16.3) % Australia 221,115 69,809 151,306 N/M Total $ 2,702,122 $ 2,758,445 $ (56,323) (2.0) % (Loss) Income Before Income Taxes Agriculture $ (39,773) $ 121,072 $ (160,845) (132.9) % Construction (6,652) 18,346 (24,998) (136.3) % Europe (3,893) 16,487 (20,380) (123.6) % Australia 2,889 4,115 (1,226) (29.8) % Segment (loss) income before income taxes (47,429) 160,020 (207,449) (129.6) % Shared Resources (2,556) (8,980) 6,424 (71.5) % Total $ (49,985) $ 151,040 $ (201,025) (133.1) % *N/M = Not Meaningful Agriculture Agriculture segment revenue for fiscal 2025 decreased 7.6%, or $155.8 million, compared to fiscal 2024.
The increase in floorplan interest expense for fiscal 2024, as compared to fiscal 2023, was primarily due to increased interest-bearing borrowings, resulting from higher inventory levels, as well as a higher interest rate environment.
Treasury Department’s New Market Tax Credit Program. Floorplan interest expense increased $20.9 million for fiscal 2025, as compared to fiscal 2024, primarily due to a higher level of interest-bearing inventory, including the usage of existing floorplan capacity to finance the O'Connors acquisition in October 2023.
The decrease in operating expenses as a percentage of total revenue was due to the increase in total revenue in fiscal 2024 compared to fiscal 2023, which positively affected our ability to leverage our fixed operating costs.
The revenue decrease was due to a same-store sales decrease of 9.2% during the fiscal 2025 as compared to fiscal 2024.
Removed
Based on its February 2024 report, the USDA projected net farm income for calendar year 2024 to decrease 25.5%, as compared to calendar year 2023, but remain in line with the average inflation adjusted net farm income for the previous 20 years.
Added
Certain External Factors Affecting our Business We are subject to a number of factors that affect our business including those factors discussed in this Form 10-K under Item 1A, Risk Factors, and under the heading “Information Regarding Forward-Looking Statements” in this Item 7.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed7 unchanged
Biggest changeMany of the currency and payment controls the National Bank of Ukraine imposed in February 2022, have been relaxed, making it more practicable to manage our UAH exposure. However, the continuation of the Russia/Ukraine conflict could lead to more significant UAH devaluations, similar to the 24% devaluation that occurred in July 2022, or more stringent payment controls in the future.
Biggest changeMany of the currency and payment controls that the National Bank of Ukraine imposed in February 2022 have been relaxed, making it more practicable to manage our UAH exposure.
Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant. We have both fixed and floating rate financing. Some of our floating rate credit facilities contain minimum rates of interest to be charged.
Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant. We have both fixed and floating rate financing. Some of our floating rate credit facilities contain minimum interest rates to be charged.
As of January 31, 2024, our Ukrainian subsidiary had $1.0 million of net monetary liabilities denominated in Ukrainian hryvnia (UAH). We have attempted to minimize our net monetary asset position through reducing overall asset levels in Ukraine and through borrowing in UAH which serves as a natural hedging instrument offsetting our net UAH denominated assets.
As of January 31, 2025, our Ukrainian subsidiary had $0.1 million of net monetary liabilities denominated in Ukrainian hryvnia ("UAH"). We have attempted to minimize our net monetary asset position through reducing overall asset levels in Ukraine and through borrowing in UAH which serves as a natural hedging instrument offsetting our net UAH denominated assets.
Based upon balances and exchange rates as of January 31, 2024, holding other variables constant, we believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates would not have a material impact on our results of operations or cash flows.
Based upon balances and exchange rates as of January 31, 2025, holding other variables constant, we believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates would not have a material impact on our results of operations or cash flows.
We believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates, holding all other variables constant, would not have a material impact on our results of operations or cash flows. 45 Table of Contents
We believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates, holding all other variables constant, would not have a material impact on our results of operations or cash flows. 43 Table of Contents
Based upon our interest-bearing balances and interest rates as of January 31, 2024, holding other variables constant, a one percentage point increase in interest rates for the next 12-month period would decrease pre-tax earnings and cash flow by approximately $3.9 million.
Based upon our interest-bearing balances and interest rates as of January 31, 2025, holding other variables constant, a one percentage point increase in interest rates for the next 12-month period would decrease pre-tax earnings and cash flow by approximately $4.5 million.
In addition, at January 31, 2024, we had total long-term debt outstanding and finance lease liabilities of $122.1 million, primarily all of which is fixed rate debt. Foreign Currency Exchange Rate Risk Our foreign currency exposures arise as the result of our foreign operations.
In addition, at January 31, 2025, we had total long-term debt outstanding and finance lease liabilities of $215.3 million, primarily all of which was fixed rate debt. Foreign Currency Exchange Rate Risk Our foreign currency exposures arise as the result of our foreign operations.
Conversely, a one percentage point decrease in interest rates for the next 12-month period would result in an increase to pre-tax earnings and cash flow of approximately $3.9 million. At January 31, 2024, we had total floorplan payables outstanding of $893.8 million, of which $386.0 million was interest-bearing at variable interest rates and $507.7 million was non-interest bearing.
Conversely, a one percentage point decrease in interest rates for the next 12-month period would result in an increase to pre-tax earnings and cash flow of approximately $4.5 million. At January 31, 2025, we had total floorplan payables outstanding of $755.7 million, of which $453.3 million was interest-bearing at variable interest rates and $302.4 million was non-interest bearing.
Added
However, the continuation of the Russia/Ukraine conflict could lead to more significant UAH devaluations, similar to the 24% devaluation that occurred in July 2022, or more stringent payment controls in the future.

Other TITN 10-K year-over-year comparisons