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TM

Titan Machinery Inc. (TITN)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue of $594.3M declined 5.5% YoY but was well above S&P Global consensus ($445.8M) driven by timing of presold equipment deliveries; diluted EPS was -$0.58 versus consensus -$0.88, as equipment margins remained compressed amid inventory optimization . Values retrieved from S&P Global.*
  • Management reiterated FY26 adjusted diluted loss per share guidance at ($1.25)-($2.00); raised Europe revenue assumptions to Up 23–28% on Romania stimulus; lowered Australia to Down 20–25%; Domestic Ag (Down 20–25%) and Construction (Down 5–10%) maintained .
  • Gross margin improved to 15.3% from 6.7% in Q4 FY25; floorplan and other interest expense fell 15.3% sequentially on continued inventory reductions, though margins in Domestic Ag (3.3% equipment margin) remain at trough levels in 1H with planned improvement in 2H as mix normalizes .
  • Stock reaction catalysts: apparent top-line “beat” from presold timing (non-demand signal), reiterated loss guidance, EU-driven upside in Europe, and continued progress on inventory reductions and interest expense decline .

What Went Well and What Went Wrong

  • What Went Well

    • Europe outperformed: revenue +44% YoY to $93.9M with ~47.5% constant-currency growth, led by Romania’s EU stimulus; pretax income up to $4.7M . “It is clear this support will be meaningful for our operations in Romania” .
    • Sequential financing cost relief: floorplan and other interest expense decreased 15.3% sequentially as inventory optimized; management expects further declines with progress on mix and aging .
    • Presold deliveries supported top line: Domestic Ag revenue stronger than expected due to delivery timing of presold units; parts/service remain a stable, high-margin base, representing ~¼ of revenue and well over half of gross profit dollars .

  • What Went Wrong

    • Consolidated loss and margin pressure: net loss of $13.2M; domestic Ag equipment margin 3.3% in Q1 and expected similar in Q2 before improving in 2H; consolidated EBITDA $2.6M, adjusted EBITDA -$4.0M .
    • Australia demand softer than anticipated: revised FY26 segment revenue Down 20–25% given dry conditions and normalized sprayer backlog; pretax loss of $0.6M .
    • Construction profitability compressed: pretax loss of $4.2M despite modest same-store sales growth; inventory normalization and competitive pricing pressured equipment margins .

Financial Results

Sequential comparison (oldest → newest):

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($USD)$679.8M $759.9M $594.3M
Diluted EPS ($)$0.07 -$1.93 -$0.58
Gross Profit ($USD)$110.5M $51.0M $90.9M
Gross Margin (%)16.3% 6.7% 15.3%
Operating Expenses ($USD)$98.8M $96.7M $96.4M
OpEx as % Revenue (%)14.5% 12.7% 16.2%
Floorplan + Other Interest ($USD)$14.3M $13.1M $11.1M
EBITDA ($USD)$14.7M -$44.5M $2.6M
Adjusted EBITDA ($USD)$14.7M -$46.0M -$4.0M

Q1 YoY comparison (Q1 FY26 vs Q1 FY25):

MetricQ1 FY25Q1 FY26
Revenue ($USD)$628.7M $594.3M
Gross Profit ($USD)$121.8M $90.9M
Gross Margin (%)19.4% 15.3%
Net Income ($USD)$9.4M -$13.2M
Diluted EPS ($)$0.41 -$0.58
EBITDA ($USD)$30.9M $2.6M
Adjusted EBITDA ($USD)$23.9M -$4.0M

Vs. S&P Global consensus (oldest → newest):

MetricQ3 FY25 EstimateQ3 FY25 ActualQ4 FY25 EstimateQ4 FY25 ActualQ1 FY26 EstimateQ1 FY26 Actual
Revenue ($USD)$675.3M*$679.8M $728.6M*$759.9M $445.8M*$594.3M
Primary EPS ($)$0.058*$0.07 -$0.63*-$1.93 -$0.88*-$0.58

Values retrieved from S&P Global.*

Segment breakdown (Q1 FY26 vs Q1 FY25):

SegmentRevenue Q1 FY25Revenue Q1 FY26YoY ChangePretax Q1 FY25Pretax Q1 FY26
Agriculture$447.7M $384.4M -14.1% $13.0M -$12.8M
Construction$71.5M $72.1M +0.9% $0.3M -$4.2M
Europe$65.1M $93.9M +44.2% $1.4M $4.7M
Australia$44.4M $44.0M -1.0% -$0.5M -$0.6M

KPIs and operating metrics (Q1 FY26):

KPIQ1 FY26Reference
Consolidated same-store sales change-5.5%
Domestic Ag equipment margin3.3% (Q1), similar in Q2; improvement in 2H
Cash$21.5M
Inventories (net)$1.099B
Floorplan payable$769.6M
Net cash from operating activities$6.2M
Equipment inventory reduction~$13M seq. to $913M; ~$406M from peak
Floorplan + other interest expense$11.1M; -15.3% seq.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Domestic Agriculture Segment RevenueFY26Down 20% – Down 25% Down 20% – Down 25% Maintained
Construction Segment RevenueFY26Down 5% – Down 10% Down 5% – Down 10% Maintained
Europe Segment RevenueFY26Flat – Up 5% Up 23% – Up 28% Raised
Australia Segment RevenueFY26Down 15% – Down 20% Down 20% – Down 25% Lowered
Adjusted Diluted Loss Per ShareFY26($1.25) – ($2.00) ($1.25) – ($2.00) Maintained
Consolidated Equipment Margin %FY26~7.7% ~8% Raised
Operating Expenses as % of SalesFY26~17.3% ~17% Lowered
Floorplan Interest Expense (YoY)FY26Reduce ~15–20% Continue sequential declines; more meaningful reduction in FY27 Maintained trajectory

Earnings Call Themes & Trends

TopicQ3 FY25 (Prev Mentions)Q4 FY25 (Prev Mentions)Q1 FY26 (Current)Trend
Inventory reductionInitiated aggressive inventory reductions; -$115M in Q3; margin compression anticipated Accelerated -$304M in Q4; cumulative -$419M; targeting additional -$100M; focus on aging/mix Equipment inventory -$13M seq to $913M; cumulative -$406M; optimization continues Improving position; optimization phase
Domestic Ag demand/ marginsSoft demand; equipment margins guided to trough levels Domestic Ag equipment margins ~4.5% Q1, ~6% 2H FY26 Domestic Ag equipment margin 3.3% Q1; similar Q2; improve in 2H Near-term trough; 2H improvement
Europe (Romania stimulus)Drought pressuring Romania; outlook modest Europe flattish to down; cautious Raised guidance; EU subvention funds driving demand; ~47.5% cc revenue growth Positive inflection
AustraliaWeather challenges; frost and dry conditions Demand soft; normalized sprayer backlog Lowered segment revenue guidance (Down 20–25%); pretax loss Negative
ConstructionRelative stability; timing effects; margins ~10% Flattish outlook; inventory normalization Same-store +0.9%; pretax loss; cautious customers Stable-to-soft
Government support/subsidiesMonitoring assistance and tariffs; sentiment mixed USDA payments underpin outlook but not direct equipment demand ECAP ~$10B; broader assistance uncertain; may stabilize growers but not spur demand Watchful/uncertain
Financing costsFloorplan interest rising with inventory; reclassification impacts Expect 15–20% YoY reduction in FY26; more meaningful drop in FY27 -15.3% seq; expected continued decline with mix optimization Declining sequentially

Management Commentary

  • “We continue to anticipate a very subdued retail environment given the ongoing likelihood of weak farmer profitability…The stronger than expected top-line performance…primarily reflects the timing of delivery on pre-sold equipment” — Bryan Knutson .
  • “Floorplan interest expense is expected to continue to decline as we make additional progress on inventory reduction and mix optimization…building toward a more meaningful decrease…next fiscal year” — Bo Larsen .
  • “Our European segment is now expected to be up 23% to up 28%…led by Romania, which was bolstered by EU stimulus programs” — Bo Larsen .
  • “Domestic ag equipment margins came in lower than expected at 3.3%, and we expect…similar…in the second quarter. However…margins will improve in the back half of the year” — Bo Larsen .

Q&A Highlights

  • Government assistance and ECAP: Management cited ~$10B ECAP payments beginning, with broader USDA assistance uncertain; such payments support stability but typically do not directly drive equipment purchases .
  • Cycle trough commentary: Large Ag volumes down ~30% YoY place industry near or slightly below trough levels seen in 2016–2017; timing of recovery uncertain .
  • Inventory reduction and margin path: Continued aggressive actions (pricing, programs) to reduce aged/used inventory; expect Domestic Ag margins to remain low in 1H and improve in 2H as mix normalizes .
  • OEM support and programs: CNH programs and dealer efforts aim to bridge profitability gap; potential for back-half demand stimulation via incentives and financing .
  • Parts and service resilience: Traffic and growth proved more resilient than expected; aiming for flattish full-year despite equipment down ~30% .

Estimates Context

  • Q1 FY26 beat vs consensus: Revenue $594.3M vs $445.8M*; EPS -$0.58 vs -$0.88*. The revenue beat reflects presold equipment delivery timing rather than improved end demand, tempering its signal quality . Values retrieved from S&P Global.*
  • Prior quarters: Q4 FY25 revenue modestly ahead of consensus ($759.9M vs $728.6M*), but EPS missed (-$1.93 vs -$0.63*), reflecting accelerated inventory actions and compressed equipment margins . Values retrieved from S&P Global.*
  • Implications: Given reiterated adjusted EPS loss range and ongoing margin pressure in Domestic Ag, estimate revisions are more likely to adjust segment mix and margins than revenue, with Europe upwardly revised and Australia downwardly revised .

Key Takeaways for Investors

  • Q1’s top-line “beat” is not demand-driven; presold timing pulled forward revenue and should not be extrapolated to 2H trajectory .
  • Margin recovery is a 2H story: Domestic Ag equipment margin at 3.3% in Q1 and expected similar in Q2, improving as inventory aging and mix are addressed .
  • Europe is a relative bright spot; raised FY26 revenue assumptions (Up 23–28%) on Romania EU funds support; watch program cadence and FX .
  • Australia outlook weakened (Down 20–25%); weather and normalized sprayer backlog weigh on volumes and profit .
  • Financing costs should trend down as inventory optimization progresses; sequential -15.3% in Q1 is a positive signal, with greater benefit in FY27 .
  • Parts and service provide resilient, high-margin ballast; management expects flattish performance despite equipment down ~30% .
  • Near-term trading lens: Expect the market to fade the headline revenue beat given management tone on subdued retail and reiterated loss guidance; watch for updates on EU stimulus execution, inventory aging metrics, and OEM incentive programs as catalysts .