Executive Summary
Titan Machinery reported Q2 FY2026 results reflecting a challenging macro backdrop in the agricultural equipment cycle, with a 14% year-over-year revenue decline and a net loss of $6.0 million (-$0.26 per share). The quarter underscored the company’s disciplined inventory-reduction program and a strategic shift toward inventory and service-led profitability, supported by a sizable contribution from parts and service (over half of gross profit despite ~1/4 of revenue). Management reiterated its inventory-reduction target of $100 million for the year and signaled the potential to exceed it, with the bulk of progress expected into the fiscal year-end. Europe remained a bright spot, driven by Romania and EU stimulus programs, while domestic Ag exposures remained structurally weaker due to farm-income and policy uncertainty. The company guided toward a mid-single-digit equipment-margin run-rate for the full year (about 6.6% total equipment margin, with domestic Agriculture margins around ~3.8%), implying meaningful margin recovery into FY2027 as inventory health improves and pricing discipline normalizes. The results and commentary point to a bifurcated thesis: near-term earnings softness from cyclicality and inventory overhang, but a pathway to improved profitability and cash-generation as the cycle normalizes and presales discipline takes hold.
Key Performance Indicators
QoQ: -8.06% | YoY:-13.77%
QoQ: 111.54% | YoY:-95.80%
QoQ: 54.56% | YoY:-39.41%
QoQ: 55.17% | YoY:-36.84%
Key Insights
Revenue: $546.4 million in Q2 FY2026, down 13.8% YoY and 8.1% QoQ. Gross profit: $93.6 million, down 16.7% YoY and up 3.0% QoQ. Gross margin: 17.1% in the quarter (vs. 17.7% prior year). Operating income: $0.66 million (0.12% of revenue; down sharply YoY; QoQ improvement). Net income: -$6.0 million; EPS: -$0.26. EBITDA: $12.7 million; EBITDA margin ≈ 2.3%. Consolidated equipment margin guidance for full year 2026: ~6.6% (down ~100 bps vs prior). Domestic Agriculture equipment margin, full year...
Financial Highlights
Revenue: $546.4 million in Q2 FY2026, down 13.8% YoY and 8.1% QoQ. Gross profit: $93.6 million, down 16.7% YoY and up 3.0% QoQ. Gross margin: 17.1% in the quarter (vs. 17.7% prior year). Operating income: $0.66 million (0.12% of revenue; down sharply YoY; QoQ improvement). Net income: -$6.0 million; EPS: -$0.26. EBITDA: $12.7 million; EBITDA margin ≈ 2.3%. Consolidated equipment margin guidance for full year 2026: ~6.6% (down ~100 bps vs prior). Domestic Agriculture equipment margin, full year: ~3.8% (first half 3.1%), implying limited near-term improvement but improvement path from ~8-12% historical range. Inventory: equipment inventory at $954 million as of 7/31/2025; cumulative reduction from peak levels is $365 million; six-month inventory essentially flat with a modest uptick in Q2 due to OEM shipments. Cash and liquidity: cash of $33 million; adjusted debt-to-tangible net worth ratio of 1.8x (covenant 3.5x). Segments: Domestic Agriculture revenue de-risked by inventory actions but with an 18.7% same-store decline; Europe up 38.1% ex-FX (44% reported); Europe FX contribution +$4.1 million; Romania robust due to EU stimulus funds; Australia down 50.1% (normalization of sprayer deliveries); Construction down 10.2%. Management commentary emphasizes customer care and service mix as a stabilizing force. Revenue revisions: Europe raised to +30-40% for the year; Domestic Agriculture down 15-20%, Construction down 3-8%, Australia down 20-25%, with continued expectation of 16% of sales in operating expenses; guidance narrowed to a consolidated adjusted diluted loss per share of $1.50 to $2.00.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
546.43M |
-13.77% |
-8.06% |
| Gross Profit |
93.65M |
-16.67% |
2.98% |
| Operating Income |
662.00K |
-95.80% |
111.54% |
| Net Income |
-6.00M |
-39.41% |
54.56% |
| EPS |
-0.26 |
-36.84% |
55.17% |
Management Commentary
- Inventory reduction and margin normalization: The CEO emphasized transitioning into the second half of the year with inventory-reduction momentum and a belief that the $100 million target will be exceeded, with majority progress toward year-end. Quote: “we are positioned to exceed the $100 million inventory reduction target we set at the beginning of the fiscal year.” (Bryan J. Knutson)
"we are positioned to exceed the $100 million inventory reduction target we set at the beginning of the fiscal year."
— Bryan J. Knutson
"Our parts and service businesses together are generating well over half of our gross profit dollars through the first half of the year, while representing about 1/4 of our revenue mix."
— Bryan J. Knutson
Forward Guidance
- Margin trajectory: Management guided to a full-year consolidated equipment margin of ~6.6%, with domestic Agriculture margins around ~3.8% as the year progresses, reflecting ongoing pricing discipline and inventory mix optimization. - Revenue by segment: Domestic Agriculture down 15-20%; Construction down 3-8%; Europe up 30-40%; Australia down 20-25%, implying a two-speed revenue mix with Europe offsetting domestic weakness. - Pass-through of OEM pricing: Model-year 2026 pricing reportedly in the 2-4% range with incentives; Titan intends to partner with OEMs to preserve margins where possible, recognizing that some pass-through may be offset by discounts or incentives. - Key risks to watch: farm bill developments and government support; commodity prices and net farm income (driven by yields, prices, and subsidies); used-equipment value stability; currency and FX effects in Europe and Australia. - Expectation of sequential margin improvement into FY2027 as inventory health normalizes and floorplan costs decline; focus on presales and service profitability to support earnings during the downturn.