Equipment dealer Titan Machinery reported decreased revenue in its fiscal 2025, with the slide expected to continue amid tariff concerns and overall economic uncertainty.
BIG PICTURE: The company’s revenue declined as it sacrificed lower margins, which “eroded profitability,” to offload excess inventory, Titan Machinery Chief Executive Bryan Knutson said during today’s earnings call.
The company lowered inventories by $304 million in the fourth quarter, bringing its total reduction to $419 million since they peaked in Q2 of fiscal 2025, he said.
“This is the direct result of decisive actions we took to significantly reduce incoming inventory, as well as an aggressive approach to pricing and internally subsidized finance programs to capitalize on seasonal yearend buying activity within our domestic footprint,” Knutson said.
Agriculture equipment dealers may be better positioned to chip away at high inventory levels in 2025, with numerous OEMs planning to reduce production to support dealers in this regard.
This trend will allow Titan Machinery to shift its focus “to one that further optimizes our inventory mix while proactively addressing the influx of used trade-ins,” Knutson said.
“More specifically, we are focused on select categories of slower turning equipment that are aging and require right-sizing, both domestically and abroad, while at the same time investing in other categories of new equipment that are projected to be below our targeted inventory stocking levels across our footprint,” he said.
BY THE NUMBERS: West Fargo, N.D.-based Titan Machinery reported the following product segment results for its fiscal 2025, which ended Jan. 31, according to its earnings statement and presentation:
- Agriculture revenues totaled $1.9 billion, down 7.6% from fiscal 2024;
- Agriculture same-store sales fell 9.2% year over year to $1.9 billion; and
- Construction revenues and same-store sales dropped 0.3% YoY to $331.6 million.
Other full-year results included:
- Total revenue of $2.7 billion, down 2% YoY;
- Equipment revenue fell 4.4% YoY to $2.1 billion;
- Rental and other revenue declined 3.8% YoY to $43.3 million; and
- Inventory turn rate — the cost of sales on equipment for the past 12 months divided by the average month-end inventory balance — was 1.6, down 27.3% YoY and unchanged from Q3.
Q4 inventory and floorplan results included:
- Equipment inventory dropped 18.2% YoY to $900 million;
- Floorplan payables totaled $755.7 million, down 15.5% YoY; and
- Floorplan and other interest expenses increased 40.9% YoY to $13.1 million.
FUTURE LOOK: The company projects agriculture revenues to decline 20% to 25% and construction revenues to fall 5% to 10% in fiscal 2026.
Despite expectations of increased farm subsidies under President Donald Trump, uncertainty surrounding tariffs is expected to contribute to “significantly lower” demand for new equipment, Knutson said.
“It’s no secret that any material price increases would likely further decrease demand or put more pressure on demand,” he said.
However, “there’s some $10 billion in farm assistance, in commodity assistance” that is likely to be distributed soon. It’s unclear if these payments will help offset the inflationary impact of tariffs and spur equipment purchasing.
“I haven’t talked to a lot of growers that are banking on that or certainly factoring that into any of their equipment purchasing decisions at this point,” Knutson said. “And likely, that’ll be much later in the year as we see how those flow through.”
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