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| Statement |
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| Equipment grew 25.3% for the full year and was complemented by solid contributions from our recurring parts and service businesses, which increased 25.6% and 21.2% respectively |
| The midpoint of our guidance at $3.25 earnings per share, which reflects a mid-cycle ag environment, along with some added transitional pressures would be the third highest EPS in company history and continues to build on a solid foundation for more sustainable and profitable growth through the cycle |
| We finished fiscal year 2024 with a strong performance that was driven by growth across all of our legacy operating segments and resulted in record revenue of $2.8 billion and record earnings per share of $4.93 |
| This marked the third consecutive year of achieving record earnings per share while achieving a pre-tax margin of greater than 5% |
| Our business remains in a position of strength and we expect to demonstrate the durability of our earnings through this cycle following a multiyear effort to implement greater efficiency across our organization |
| So we feel really good about the proactive measures we’ve taken and the visibility we have into the order board for the first half of the year and the strong pre-sales coming in |
| Conceptually, we wanted to ensure we made the adjustments necessary to drive an acceleration in operating leverage, so that we were in a strong position once the next cycle arrived |
| Our business today is nearly twice as large as those projections from 2017 in terms of revenue and I am proud to say our earnings power of nearly $5 per share is higher by 2.5x |
| And ultimately, all of that is going to lead to better cash flow generation that we had seen recently |
| But very much seeing it play out something we can manage deliver the higher profitability that we are talking about today, be well positioned for FY ‘26 and beyond |
| And then from a rental perspective, also feeling good about where that’s at and would expect similar margins to last year |
| So, that’s going to be a real positive to the dynamics on the cash flow side |
| Total revenue increased 24.9% to a record $2.8 billion, driven by balanced growth across each of our revenue categories |
| And they are carrying over a lot of good income into this year and that will help stabilize as well and then just, a lot of the new products from our OEMs and the technology that’s really helping with the productivity and supporting demand as well |
| But overall, what we are trying to illustrate is both from peak-to-peak perspective, and then trough-to-trough perspective, and all the way through the cycle, delivering significantly higher profitability |
| We continue to have good visibility into demand for the first half of the fiscal year given healthy backlog and pre-sale activity |
| This allows us to significantly improve our in-stock levels of high horsepower equipment, self-propelled sprayers and wheel loaders across our footprint |
| Our team will proactively manage through these factors in order to drive strong financial results and position us to maintain the higher levels of pre-tax margin that we have worked so hard to produce |
| We had a great finish to the year growing segment same-store revenue by 36% in the fourth quarter |
| This was largely a function of the team’s strong execution on improving the pace of customer deliveries, following a concerted effort to complete pre-delivery inspections on new machinery |
| So with that in mind, in addition to the strong equipment deliveries, I am particularly pleased with our ability to continue to advance our customer care strategy and drive a double-digit same-store sales increase in our reoccurring parts and service business |
| Shifting to our domestic construction segment, as expected, our construction segment produced a strong fourth quarter with same-store sales growth of 18% |
| We are pleased with the execution of our construction team, who have continued to drive growth and maintain healthy pre-tax margins |
| This business has a strong foundation in place with a focused operations team and is positioned well to deliver a solid first year performance as part of the Titan Machinery |
| Further, we also anticipate benefiting from improved availability of equipment from our OEM partners |
| Construction should also benefit from improved availability of key equipment categories for which we have been – not been able to fulfill demand in recent years |
| And so with supply chain improving and so on, it did come in better than anticipated, so that certainly was a part of it |
| Finally, I want to sincerely thank our employees for their tremendous efforts that drove our record revenue and earnings |
| And so our team does a great job building relations, and relationships and being out there in the market |
| As Bryan noted in his commentary, we had another exceptional year and are proud of the performance the team delivered |
| Statement |
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| First, for the industry as a whole, as has been well documented, supply chain constraints significantly limited OEM production volumes, restricting the amount of new equipment that was going into the market over the past few years |
| Gross profit for the fourth quarter was $141 million and as expected gross profit margin contracted year-over-year to 16.6% driven primarily by lower equipment margins, which are experiencing some normalization as expected at this stage in the cycle |
| The decrease in profitability was driven primarily by a partial normalization of equipment margins and higher operating expenses |
| But the pace of the improved supply creates challenges in the near-term as we will be working through a rapid influx of equipment deliveries, which will be visible in our new and used inventory balances throughout this fiscal year |
| And I think this year, we will see that inventory turns are lower than our targeted levels |
| The guidance we are providing today reflects anticipated margin compression in part so that we can manage inventory levels through this transitional period |
| As we have discussed during the past several quarters, balancing the limitations of our service capacity between our ongoing needs of customers with incremental demands for pre-delivery inspections has been a challenge |
| Again, as we have said, lead times have normalized some, but there is still some inconsistency in terms of when things would arrive |
| net farm income is expected to decrease approximately 25%, which has started to impact demand for equipment purchases |
| I just wanted to touch base quickly on some of the commentary around margin, I know you highlighted that you are going to see more pressure on margin on the equipment side as you know, farm income goes down and there is lesser demand |
| As for equipment revenues, it assumes industry equipment volumes to be down 10% to 15% and pricing on new equipment to be up low single-digits |
| As such, we expect incremental compression on equipment margins in this transitionary period |
| As discussed on our third quarter call, the growing season varied this year, with timely precipitation driving above average yields in Germany and Ukraine, while dry conditions create some headwinds in Bulgaria and Romania |
| So, the cancellations are very low |
| This year budgeting, a mid-cycle assumption with some added transitionary pressure at that the midpoint about 3.4% |
| And then from a first half of the year perspective, that first 45%, Q1 is traditionally and expected to be lower than Q2, and a lot of that is seasonality and timing of activity and purchasing |
| But the real drivers still remain in place, all the back office challenges in the – a lot of the single store, the smaller and the traditional operations struggling with the technology and all the HR and government regulations and just a lot of that back office function that really ties in nicely with our models |
| In a broader sense, this normalized supply environment is a welcome change after years of excessive delays and the additional uncertainty with allocations |
| As expected, we saw slowdown in demand in the fourth quarter, but still achieved modest year-over-year sales growth on a same-store basis |
| Generally as we talked in the past that tied back to a death or a divorce or unexpected health issues and so, those just continue, but it has not fallen off a cliff by any means |
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