Executive Summary

Q2 FY26 revenue of $546.4M declined 13.8% YoY but improved gross margin sequentially to 17.1% (from 15.3% in Q1); diluted EPS was ($0.26) vs ($0.19) LY; EBITDA was $12.4M . Versus S&P Global consensus, TITN beat on revenue ($546.4M vs $503.8M*) and EPS ([$0.26] vs [$0.48]* loss), with EBITDA materially above expectations ([$12.4M] vs [$2.4M]* loss). Values retrieved from S&P Global.*
Management narrowed FY26 adjusted diluted EPS (loss) guidance to ($1.50)-($2.00) and raised segment revenue assumptions for U.S. Ag (now down 15–20%), Construction (down 3–8%), and Europe (up 30–40%), maintaining Australia (down 20–25%) .
Inventory optimization remains the central strategy; company expects to exceed the $100M FY26 inventory reduction target, albeit at the expense of lower equipment margins through year-end; parts and service continue to stabilize earnings .
Key near-term catalysts: a Q3 Europe surge as Romania EU funds are deployed before a September deadline (double YoY expected in Q3, then decline in Q4), and continued used inventory normalization; risks include weak commodity prices, OEM price increases/tariffs, and sustained margin compression until inventory normalizes .

What Went Well and What Went Wrong

What Went Well

Europe strength: Q2 Europe revenue +44% YoY to $98.1M (FX +$4.1M) driven by Romania EU stimulus; segment swung to $5.1M pre-tax income from a loss LY .
Sequential margin improvement and cost control: Gross margin rose to 17.1% from 15.3% in Q1; operating expenses down YoY to $92.7M, reflecting variable cost discipline .
Management conviction on inventory plan: “We are positioned to exceed our initial $100 million target for the full year… majority of that progress still expected toward the end of the fiscal year,” with parts/service providing stability .

What Went Wrong

U.S. Agriculture softness: Ag revenue down 18.5% YoY to $345.8M with pre-tax loss of $12.3M, reflecting weak demand and pricing concessions to move inventory .
Consolidated profitability pressure: Net loss widened to ($6.0M) vs ($4.3M) LY (LY included a non-cash sale-leaseback charge); equipment margins remained compressed by inventory actions and soft retail .
Australia normalization headwind: Revenue fell 50.1% YoY to $30.6M due to prior-year sprayer backlog catch-up; segment posted a $2.1M pre-tax loss .

Financial Results

Consolidated P&L (oldest → newest)

Metric	Q4 FY25	Q1 FY26	Q2 FY26
Revenue ($M)	$759.9	$594.3	$546.4
Gross Profit ($M)	$51.0	$90.9	$93.6
Gross Margin (%)	6.7%	15.3%	17.1%
Operating Expenses ($M)	$96.7	$96.4	$92.7
Income (Loss) from Operations ($M)	$(45.8)	$(5.7)	$0.7
Net (Loss) Income ($M)	$(43.8)	$(13.2)	$(6.0)
Diluted EPS ($)	$(1.93)	$(0.58)	$(0.26)
EBITDA ($M)	$(44.5)	$2.6	$12.4

Q2 FY26 vs Prior Periods and Consensus

Metric	Q2 FY25 Actual	Q1 FY26 Actual	Q2 FY26 Actual	Q2 FY26 Consensus*
Revenue ($M)	$633.7	$594.3	$546.4	503.8*
Diluted EPS ($)	$(0.19)	$(0.58)	$(0.26)	$(0.4775)*
EBITDA ($M)	$18.3	$2.6	$12.4	$(2.44)*
Values retrieved from S&P Global.*

Segment Performance (Q2 FY26 vs Q2 FY25)

Segment	Revenue Q2 FY25 ($M)	Revenue Q2 FY26 ($M)	YoY %	Pre-Tax (Loss) Income Q2 FY25 ($M)	Pre-Tax (Loss) Income Q2 FY26 ($M)
Agriculture	$424.0	$345.8	(18.5)%	$0.6	$(12.3)
Construction	$80.2	$72.0	(10.2)%	$(4.9)	$(1.2)
Europe	$68.1	$98.1	44.0%	$(2.3)	$5.1
Australia	$61.3	$30.6	(50.1)%	$1.4	$(2.1)
Total	$633.7	$546.4	(13.8)%	$(4.3) pre-tax total	$(8.2) pre-tax total

Mix and Balance Sheet KPIs

KPI	Q2 FY26
Equipment Revenue ($M)	$376.3
Parts Revenue ($M)	$109.2
Service Revenue ($M)	$48.8
Rental & Other Revenue ($M)	$12.1
Cash ($M)	$32.7
Inventories ($B)	$1.14
Floorplan Payables ($M)	$852.2
Diluted Shares (000s)	22,764
CFO comment: Adjusted debt/TNW	1.8x (as of 7/31/25)
Operating Cash Flow (6M) ($M)	$49.9

Non-GAAP note: Prior-year Q2 FY25 had an $8.3M non-cash sale-leaseback financing expense; adjusted EPS was $0.17 vs GAAP ($0.19) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Agriculture Segment Revenue	FY26	Down 20% – Down 25%	Down 15% – Down 20%	Raised
Construction Segment Revenue	FY26	Down 5% – Down 10%	Down 3% – Down 8%	Raised
Europe Segment Revenue	FY26	Up 23% – Up 28%	Up 30% – Up 40%	Raised
Australia Segment Revenue	FY26	Down 20% – Down 25%	Down 20% – Down 25%	Maintained
Adjusted Diluted Loss per Share	FY26	($1.25) – ($2.00)	($1.50) – ($2.00)	Narrowed lower end

Additional color: Management now assumes consolidated full-year equipment margin ~6.6% (down ~100 bps from prior assumption) and U.S. Ag equipment margin ~3.8% for FY26, reflecting continued pricing concessions to drive inventory optimization .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY25 and Q1 FY26)	Current Period (Q2 FY26)	Trend
Inventory optimization	Accelerated reduction in Q4 FY25 (~$304M in Q4; ~$419M from peak) to enter FY26 leaner . Q1 reiterated focus and flat inventories vs FY25 YE .	On track to exceed $100M FY26 reduction; mix optimization and used portfolio focus; modest Q2 inventory uptick due to OEM shipment timing .	Continued execution; confidence increased
Equipment margins	Q4 acknowledged margin pressure from destocking . Q1 noted lower gross margin 15.3% due to equipment margins .	Expect subdued equipment margins through FY26; consolidated equipment margin ~6.6%; U.S. Ag ~3.8% for FY26 .	Depressed near term; improvement expected in FY27
Parts & Service resilience	FY25 service revenue +14.5% YoY; key stabilizer .	Parts/service providing “stability” and >50% of gross profit dollars in H1 .	Stable anchor
Europe/Romania EU stimulus	Q1 raised Europe outlook on Romania EU programs .	Strong Q2; Q3 Europe expected to double YoY, then decline in Q4 post September funds .	Near-term surge then normalization
Macro: commodity prices/farmer profitability	Entering FY26 with subdued North American demand expectations .	Farmer sentiment cautious; net farm income and government programs key variables .	Still a headwind
OEM pricing/tariffs	N/A in Q4/Q1 disclosures.	OEM pricing +2–4% typical; tariffs/cost pressures complicate pass-through; discipline on presales and margins emphasized .	Potential margin/demand pressure
Used equipment values	N/A prior.	Values down sharply last 18 months but stabilizing; strategic mix/geo optimization in used .	Stabilizing; strategic redeployment

Management Commentary

Strategy and tone: “We are positioned to exceed our initial $100 million target for the full year… parts and service businesses continue to provide stability during this trough in the equipment cycle” .
Margin/Inventory trade-off: “Continuation of pricing concessions… will hold equipment margins at lower levels through the balance of the year” as the company prioritizes inventory health; consolidated equipment margin ~6.6%, U.S. Ag ~3.8% for FY26 .
Europe dynamics: Romania EU stimulus a major driver; Q3 to double YoY followed by Q4 pullback as funds expire .
Long-term recovery path: Margin recovery building blocks include mix optimization, pricing discipline as inventory normalizes, used value stability, geographic optimization, OEM partnership programs, and lower floorplan interest as aging profile improves .

Selected quotes:

“We are on track with our inventory reduction strategy, and we are positioned to exceed our initial $100 million target for the full year…” — Bryan Knutson, CEO .
“From a margin perspective, our fiscal 2026 assumptions for consolidated full year equipment margin are now approximately 6.6%… domestic Ag… approximately 3.8%.” — Bo Larsen, CFO .
“Our parts and service businesses together are generating well over half of our gross profit dollars through the first half of the year…” — Bryan Knutson, CEO .

Q&A Highlights

Margin recovery path: CFO outlined levers—inventory/mix normalization, pricing discipline, used value stabilization, geographic optimization, OEM programs, and lower floorplan interest—expecting significant improvement through FY27 if executed .
Europe cadence: Management expects Europe revenue to double YoY in Q3 then fall ~20% YoY in Q4 as stimulus expires, driving mix/profitability shifts between Q3 and Q4 .
Revenue outlook vs margins: Higher revenue outlook largely from used equipment momentum and Europe strength; overall equipment margin lowered ~100 bps with U.S. Ag down more, partially offset by Europe’s stronger margins .
OEM pricing/tariffs: OEMs discussing ~2–4% price increases; passing through increases is challenging amid weak farmer profitability; TITN emphasizes presale discipline and deal-by-deal OEM partnership .
Inventory mix and used strategy: Used inventory down ~$50M in H1; focus on late-model used turn, presales, and selective trade-ins to capture share while maintaining discipline .

Estimates Context

Q2 FY26 actuals vs S&P Global consensus: Revenue $546.4M vs $503.8M*; Diluted EPS ($0.26) vs ($0.4775); EBITDA $12.4M vs ($2.44M). Beat driven by Europe strength and used equipment execution, offset by continued equipment margin pressure in U.S. Ag. Values retrieved from S&P Global.*
Forward considerations: Management’s Europe Q3 spike and Q4 drop suggest intra-year mix shifts; consolidated equipment margin assumption (~6.6%) and narrowed EPS loss range imply consensus may need to reflect sustained margin compression near term despite better top-line mix .

Key Takeaways for Investors

Inventory-first playbook remains intact; exceeding the $100M FY26 reduction target is the main pivot to re-normalize margins into FY27, albeit with ongoing pricing pressure in H2 FY26 .
Q2 beat vs consensus on revenue/EPS/EBITDA was powered by Europe/Romania stimulus and used equipment momentum; U.S. Ag remains the drag on profitability .
Guidance raised for segment revenues (Ag, Construction, Europe) and narrowed for EPS loss; watch equipment margin trajectory vs the ~6.6% FY26 assumption and domestic Ag margin recovery curve .
Expect a Q3 revenue/margin mix tailwind from Europe, then a Q4 air pocket as EU funds roll off; intra-year cadence matters for trading setups around the print .
Parts and service are the stabilizers (>50% of H1 gross profit dollars), limiting downside earnings volatility through the trough .
Macro sensitivity remains high: farmer profitability (commodities, yields, gov’t programs), OEM pricing/tariffs, and rates will influence demand elasticity and margin pass-through .
Stock catalysts: execution on used mix/turns, confirmation of Europe Q3 surge, pace of inventory reduction vs floorplan interest benefits, and any signs of margin stabilization in U.S. Ag .

Titan Machinery Inc. (TITN)·Q2 2026 Earnings Summary