Titan Machinery Revenue Falls 14% in Q2

Key Points

• GAAP revenue fell 13.8% year over year to $546.4 million in Q2 FY2026, driven by declining equipment sales across major markets.

• Adjusted earnings per share dropped to a loss of $0.26, compared to a $0.17 profit in the previous year’s period.

• Management updated guidance, forecasting a deeper full-year loss but signaled progress on inventory reduction targets and improved expectations for several business segments.

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Titan Machinery (NASDAQ:TITN), a major U.S.-based dealer of agricultural and construction equipment, reported its second-quarter fiscal 2026 results on August 28, 2025. The quarter’s earnings reflected sharp declines in revenue and ongoing margin pressure, with consolidated GAAP revenue of $546.4 million coming in below expectations and dropping 13.8% compared to the same period last year. Adjusted earnings per share (EPS) swung to a $0.26 loss, a notable reversal from the $0.17 EPS profit a year ago. The company’s results missed estimates, reflecting weaker equipment demand, especially in its core North American agricultural segment. Overall, the quarter illustrated meaningful progress on inventory and cost controls but also exposed ongoing profitability challenges, with continued losses and margin erosion.

What Titan Machinery Does and What Drives Its Business

Titan Machinery operates one of the largest networks of agricultural and construction equipment dealerships in the United States, while also expanding its reach into Europe and Australia. Its core business revolves around selling new and used equipment, providing parts, delivering repair and maintenance services, and offering equipment rentals. The company earns the majority of its revenue from equipment sales but also benefits from stable, recurring revenue through its service and parts businesses.

In recent years, Titan Machinery has emphasized several strategic priorities to maintain its position in the market. Key elements include its longstanding partnership with manufacturer CNH Industrial, growth through acquisitions that broaden its geographic reach, diversification of its product and service lines, and a strong focus on centralized inventory management. Stability in its service and parts operations has become even more important as equipment sales have become more volatile, especially during cyclical downturns.

Key Developments in the Second Quarter

The quarter saw a continued decline in total GAAP revenue, with the company reporting a 13.8% drop in GAAP revenue from the prior year’s period. This decrease was attributed mainly to lower retail demand for equipment in North America, which management linked to ongoing low commodity prices and persistently high interest rates—factors that reduce farmer profitability. Within the Agriculture segment, revenue fell 18.5%, with same-store sales down 18.7%. Segment profitability also eroded significantly, resulting in a $12.3 million GAAP pre-tax loss compared to $0.6 million in GAAP pre-tax income in Q2 FY2025.

Performance in other segments was mixed. The Construction segment posted a 10.2% revenue drop. but narrowed its pre-tax loss to $1.2 million, an improvement from last year’s $4.9 million GAAP pre-tax loss in Q2 FY2025 (which included a large one-time expense). The Europe segment stood out, as revenue grew 44.0%. and profitability shifted to a $5.1 million pre-tax gain from a prior-year loss. Management cited European Union stimulus programs in Romania as the key driver behind this result. By contrast, Australia saw revenue fall by half, attributed to the end of a multi-year sprayer delivery backlog.

Looking at Titan Machinery’s product lines, equipment sales slid by 19.1% year over year to $376.3 million (GAAP). In contrast, parts sales held steady at about $109 million (GAAP), and service revenue edged up 3.2%. These two areas provided some cushion against the severe downturn in equipment sales, supporting management’s view that diversification into non-equipment lines helps balance the business during industry down cycles. Gross margin narrowed to 17.1%, with management directly linking this to aggressive price concessions required for reducing inventory.

Balance sheet metrics highlighted efforts to stabilize the company’s operating position. Inventory ended the quarter at $1.14 billion, slightly higher than at FY2025 year-end, but in line with plans to time shipments and clear stock over the remainder of the year. Floorplan payables—which represent short-term financing for inventory—rose, signaling increased inventory intake from original equipment manufacturers, especially in anticipation of second-half sales. The company finished the quarter with $32.7 million in cash and positive cash flow from operations.

Looking Ahead: Guidance and Investor Considerations

Management provided updated full-year guidance for FY2026, reflecting persistent margin pressures and a deeper expected adjusted net loss. Forecasted revenue declines in the Agriculture and Construction segments were revised to smaller drops than initially predicted. The expected revenue decline for Agriculture, Titan’s largest business, now ranges from 15% to 20% for FY2026, an improvement from an earlier forecast of 20% to 25%. Construction’s expected revenue drop is now 3% to 8% for FY2026, also a more optimistic range than previously signaled. Europe’s outlook brightened substantially, as management now expects 30% to 40% revenue growth for FY2026—an upward revision driven by continued momentum in Romania.

Despite these improved sales expectations for some segments, the company narrowed its adjusted diluted loss per share guidance to a range of ($1.50) to ($2.00) for FY2026, moving toward the higher end of the loss spectrum. Leaders noted that moving equipment inventory requires ongoing price concessions, a direct drag on profitability: “this approach requires pricing concessions which are continuing to compress equipment margins.” Inventory reduction remains a top operational objective, with management on track to exceed a $100 million reduction target by year-end FY2026.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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