Delaware | No. 45-0357838 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.00001 par value per share | TITN | The Nasdaq Stock Market LLC |
Large accelerated filer | o | Accelerated filer | x | |
Non-accelerated filer | o | Smaller reporting company | o | |
Emerging growth company | o |
Page No. | ||
PART I. | FINANCIAL INFORMATION | |
ITEM 1. | FINANCIAL STATEMENTS | |
Consolidated Balance Sheets | ||
Consolidated Statements of Operations | ||
Consolidated Statements of Comprehensive Income | ||
Consolidated Statements of Stockholders' Equity | ||
Consolidated Statements of Cash Flows | ||
Notes to Consolidated Financial Statements | ||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |
ITEM 4. | CONTROLS AND PROCEDURES | |
PART II. | OTHER INFORMATION | |
ITEM 1. | LEGAL PROCEEDINGS | |
ITEM 1A. | RISK FACTORS | |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | |
ITEM 4. | MINE SAFETY DISCLOSURES | |
ITEM 5. | OTHER INFORMATION | |
ITEM 6. | EXHIBITS | |
Exhibit Index | ||
Signatures |
October 31, 2019 | January 31, 2019 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 52,420 | $ | 56,745 | |||
Receivables, net of allowance for doubtful accounts | 88,907 | 77,500 | |||||
Inventories | 624,215 | 491,091 | |||||
Prepaid expenses and other | 7,857 | 15,556 | |||||
Total current assets | 773,399 | 640,892 | |||||
Noncurrent Assets | |||||||
Property and equipment, net of accumulated depreciation | 148,090 | 138,950 | |||||
Operating lease assets | 92,124 | — | |||||
Deferred income taxes | 3,398 | 3,010 | |||||
Goodwill | 2,291 | 1,161 | |||||
Intangible assets, net of accumulated amortization | 9,059 | 7,247 | |||||
Other | 1,163 | 1,178 | |||||
Total noncurrent assets | 256,125 | 151,546 | |||||
Total Assets | $ | 1,029,524 | $ | 792,438 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 24,439 | $ | 16,607 | |||
Floorplan payable | 445,726 | 273,756 | |||||
Senior convertible notes | — | 45,249 | |||||
Current maturities of long-term debt | 13,280 | 2,067 | |||||
Current operating lease liabilities | 12,002 | — | |||||
Deferred revenue | 12,878 | 46,409 | |||||
Accrued expenses and other | 39,392 | 36,364 | |||||
Total current liabilities | 547,717 | 420,452 | |||||
Long-Term Liabilities | |||||||
Long-term debt, less current maturities | 35,754 | 20,676 | |||||
Operating lease liabilities | 90,063 | — | |||||
Deferred income taxes | 5,586 | 4,955 | |||||
Other long-term liabilities | 8,125 | 11,044 | |||||
Total long-term liabilities | 139,528 | 36,675 | |||||
Commitments and Contingencies | |||||||
Stockholders' Equity | |||||||
Common stock, par value $.00001 per share, 45,000 shares authorized; 22,352 shares issued and outstanding at October 31, 2019; 22,218 shares issued and outstanding at January 31, 2019 | — | — | |||||
Additional paid-in-capital | 249,984 | 248,423 | |||||
Retained earnings | 97,044 | 89,228 | |||||
Accumulated other comprehensive loss | (4,749 | ) | (2,340 | ) | |||
Total stockholders' equity | 342,279 | 335,311 | |||||
Total Liabilities and Stockholders' Equity | $ | 1,029,524 | $ | 792,438 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
Equipment | $ | 245,986 | $ | 253,793 | $ | 654,376 | $ | 625,188 | |||||||
Parts | 70,788 | 64,609 | 181,928 | 166,923 | |||||||||||
Service | 27,553 | 24,808 | 77,215 | 68,013 | |||||||||||
Rental and other | 16,609 | 17,703 | 40,688 | 41,734 | |||||||||||
Total Revenue | 360,936 | 360,913 | 954,207 | 901,858 | |||||||||||
Cost of Revenue | |||||||||||||||
Equipment | 219,484 | 225,520 | 583,345 | 555,923 | |||||||||||
Parts | 49,834 | 45,666 | 128,380 | 118,254 | |||||||||||
Service | 8,950 | 7,756 | 25,170 | 21,918 | |||||||||||
Rental and other | 10,894 | 12,429 | 27,612 | 29,762 | |||||||||||
Total Cost of Revenue | 289,162 | 291,371 | 764,507 | 725,857 | |||||||||||
Gross Profit | 71,774 | 69,542 | 189,700 | 176,001 | |||||||||||
Operating Expenses | 58,184 | 53,306 | 165,594 | 147,665 | |||||||||||
Impairment of Long-Lived Assets | 51 | 304 | 186 | 459 | |||||||||||
Restructuring Costs | — | (151 | ) | — | 414 | ||||||||||
Income from Operations | 13,539 | 16,083 | 23,920 | 27,463 | |||||||||||
Other Income (Expense) | |||||||||||||||
Interest income and other income (expense) | 1,273 | 160 | 2,687 | 2,002 | |||||||||||
Floorplan interest expense | (1,448 | ) | (1,856 | ) | (3,724 | ) | (4,932 | ) | |||||||
Other interest expense | (955 | ) | (1,617 | ) | (3,562 | ) | (6,137 | ) | |||||||
Income Before Income Taxes | 12,409 | 12,770 | 19,321 | 18,396 | |||||||||||
Provision for Income Taxes | 4,195 | 1,994 | 6,041 | 4,055 | |||||||||||
Net Income | $ | 8,214 | $ | 10,776 | $ | 13,280 | $ | 14,341 | |||||||
Earnings per Share: | |||||||||||||||
Basic | $ | 0.37 | $ | 0.49 | $ | 0.60 | $ | 0.65 | |||||||
Diluted | $ | 0.37 | $ | 0.48 | $ | 0.60 | $ | 0.65 | |||||||
Weighted Average Common Shares: | |||||||||||||||
Basic | 21,973 | 21,835 | 21,936 | 21,799 | |||||||||||
Diluted | 21,976 | 21,842 | 21,942 | 21,806 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Income | $ | 8,214 | $ | 10,776 | $ | 13,280 | $ | 14,341 | |||||||
Other Comprehensive Income (Loss) | |||||||||||||||
Foreign currency translation adjustments | (2,650 | ) | 187 | (2,409 | ) | 80 | |||||||||
Comprehensive Income | $ | 5,564 | $ | 10,963 | $ | 10,871 | $ | 14,421 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||
Shares Outstanding | Amount | |||||||||||||||||||||
BALANCE, January 31, 2018 | 22,102 | $ | — | $ | 246,509 | $ | 77,046 | $ | (1,700 | ) | $ | 321,855 | ||||||||||
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | (22 | ) | — | (598 | ) | — | — | (598 | ) | |||||||||||||
Stock-based compensation expense | — | — | 540 | — | — | 540 | ||||||||||||||||
Net loss | — | — | — | (1,614 | ) | — | (1,614 | ) | ||||||||||||||
Other comprehensive income | — | — | — | — | 1,301 | 1,301 | ||||||||||||||||
BALANCE, April 30, 2018 | 22,080 | — | 246,451 | 75,432 | (399 | ) | 321,484 | |||||||||||||||
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | 138 | — | (11 | ) | — | — | (11 | ) | ||||||||||||||
Stock-based compensation expense | — | — | 709 | — | — | 709 | ||||||||||||||||
Net income | — | — | — | 5,180 | — | 5,180 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (1,408 | ) | (1,408 | ) | ||||||||||||||
BALANCE, July 31, 2018 | 22,218 | — | 247,149 | 80,612 | (1,807 | ) | 325,954 | |||||||||||||||
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | 2 | — | — | — | — | — | ||||||||||||||||
Stock-based compensation expense | — | — | 664 | — | — | 664 | ||||||||||||||||
Net income | — | — | — | 10,776 | — | 10,776 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 187 | 187 | ||||||||||||||||
BALANCE, October 31, 2018 | 22,220 | $ | — | $ | 247,813 | $ | 91,388 | $ | (1,620 | ) | $ | 337,581 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||
Shares Outstanding | Amount | |||||||||||||||||||||
BALANCE, January 31, 2019 | 22,218 | $ | — | $ | 248,423 | $ | 89,228 | $ | (2,340 | ) | $ | 335,311 | ||||||||||
Cumulative-effect adjustment of adopting ASC 842, Leases | — | — | — | (5,464 | ) | (5,464 | ) | |||||||||||||||
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | (34 | ) | — | (492 | ) | — | — | (492 | ) | |||||||||||||
Stock-based compensation expense | — | — | 603 | — | — | 603 | ||||||||||||||||
Net loss | — | — | — | (445 | ) | — | (445 | ) | ||||||||||||||
Other comprehensive loss | — | — | — | — | (771 | ) | (771 | ) | ||||||||||||||
BALANCE, April 30, 2019 | 22,184 | — | 248,534 | 83,319 | (3,111 | ) | 328,742 | |||||||||||||||
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | 170 | — | — | — | — | — | ||||||||||||||||
Stock-based compensation expense | — | — | 694 | — | — | 694 | ||||||||||||||||
Net income | — | — | — | 5,511 | — | 5,511 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 1,012 | 1,012 | ||||||||||||||||
BALANCE, July 31, 2019 | 22,354 | — | 249,228 | 88,830 | (2,099 | ) | 335,959 | |||||||||||||||
Common stock issued on grant of restricted stock, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | (2 | ) | — | (17 | ) | — | — | (17 | ) | |||||||||||||
Stock-based compensation expense | — | — | 773 | — | — | 773 | ||||||||||||||||
Net income | — | — | — | 8,214 | — | 8,214 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (2,650 | ) | (2,650 | ) | ||||||||||||||
BALANCE, October 31, 2019 | 22,352 | $ | — | $ | 249,984 | $ | 97,044 | $ | (4,749 | ) | $ | 342,279 |
Nine Months Ended October 31, | |||||||
2019 | 2018 | ||||||
Operating Activities | |||||||
Net income | $ | 13,280 | $ | 14,341 | |||
Adjustments to reconcile net income to net cash used for operating activities | |||||||
Depreciation and amortization | 21,061 | 17,889 | |||||
Impairment | 186 | 459 | |||||
Deferred income taxes | 629 | 2,657 | |||||
Stock-based compensation expense | 2,070 | 1,913 | |||||
Noncash interest expense | 394 | 2,024 | |||||
Noncash lease expense | 9,251 | — | |||||
Loss on repurchase of senior convertible notes | — | 615 | |||||
Other, net | (63 | ) | 1,116 | ||||
Changes in assets and liabilities | |||||||
Receivables, prepaid expenses and other assets | (4,630 | ) | (11,042 | ) | |||
Inventories | (133,929 | ) | (28,704 | ) | |||
Manufacturer floorplan payable | 113,632 | 28,992 | |||||
Accounts payable, deferred revenue, accrued expenses and other and other long-term liabilities | (20,697 | ) | (18,534 | ) | |||
Operating lease liabilities | (9,473 | ) | — | ||||
Net Cash Provided by (Used for) Operating Activities | (8,289 | ) | 11,726 | ||||
Investing Activities | |||||||
Rental fleet purchases | (12,765 | ) | (4,664 | ) | |||
Property and equipment purchases (excluding rental fleet) | (7,637 | ) | (4,456 | ) | |||
Proceeds from sale of property and equipment | 1,386 | 1,101 | |||||
Acquisition consideration, net of cash acquired | (11,752 | ) | (15,299 | ) | |||
Other, net | 13 | (399 | ) | ||||
Net Cash Used for Investing Activities | (30,755 | ) | (23,717 | ) | |||
Financing Activities | |||||||
Net change in non-manufacturer floorplan payable | 62,387 | 43,896 | |||||
Principal payments on senior convertible notes | (45,644 | ) | (20,025 | ) | |||
Proceeds from long-term debt borrowings | 21,865 | 3,183 | |||||
Principal payments on long-term debt and finance leases | (3,197 | ) | (15,102 | ) | |||
Other, net | (509 | ) | (643 | ) | |||
Net Cash Provided by Financing Activities | 34,902 | 11,309 | |||||
Effect of Exchange Rate Changes on Cash | (183 | ) | (471 | ) | |||
Net Change in Cash | (4,325 | ) | (1,153 | ) | |||
Cash at Beginning of Period | 56,745 | 53,396 | |||||
Cash at End of Period | $ | 52,420 | $ | 52,243 | |||
Supplemental Disclosures of Cash Flow Information | |||||||
Cash paid during the period | |||||||
Income taxes, net of refunds | $ | 4,934 | $ | 2,662 | |||
Interest | $ | 7,162 | $ | 8,965 | |||
Supplemental Disclosures of Noncash Investing and Financing Activities | |||||||
Net property and equipment financed with long-term debt, finance leases, accounts payable and accrued liabilities | $ | 7,652 | $ | 4,391 | |||
Net transfer of assets from (to) property and equipment to (from) inventories | $ | (2,179 | ) | $ | 4,476 |
January 31, 2019 As Reported | ASC 842 Adjustment on February 1, 2019 | February 1, 2019 As Adjusted | |||||||||||
(in thousands) | |||||||||||||
Assets | |||||||||||||
Operating lease assets | $ | — | $ | 100,469 | (a) | $ | 100,469 | ||||||
Liabilities and Stockholders' Equity | |||||||||||||
Current maturities of long-term debt | 3,340 | (1,273 | ) | (b) | 2,067 | ||||||||
Current operating lease liabilities | — | 12,266 | (c) | 12,266 | |||||||||
Accrued expenses and other | 35,091 | 972 | (d) | 36,063 | |||||||||
Long-term debt, less current maturities | 25,812 | (5,136 | ) | (b) | 20,676 | ||||||||
Operating lease liabilities | — | 98,250 | (c) | 98,250 | |||||||||
Deferred income taxes | 4,955 | (374 | ) | (e) | 4,581 | ||||||||
Other long-term liabilities | 5,908 | 1,228 | (f) | 7,136 | |||||||||
Retained earnings | 89,228 | (5,464 | ) | (g) | 83,764 | ||||||||
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 8,214 | $ | 10,776 | $ | 13,280 | $ | 14,341 | |||||||
Allocation to participating securities | (140 | ) | (186 | ) | (207 | ) | (234 | ) | |||||||
Net income attributable to Titan Machinery Inc. common stockholders | $ | 8,074 | $ | 10,590 | $ | 13,073 | $ | 14,107 | |||||||
Denominator: | |||||||||||||||
Basic weighted-average common shares outstanding | 21,973 | 21,835 | 21,936 | 21,799 | |||||||||||
Plus: incremental shares from assumed exercises of stock options and vesting of restricted stock units | 3 | 7 | 6 | 7 | |||||||||||
Diluted weighted-average common shares outstanding | 21,976 | 21,842 | 21,942 | 21,806 | |||||||||||
Earnings Per Share: | |||||||||||||||
Basic | $ | 0.37 | $ | 0.49 | $ | 0.60 | $ | 0.65 | |||||||
Diluted | $ | 0.37 | $ | 0.48 | $ | 0.60 | $ | 0.65 | |||||||
Anti-dilutive shares excluded from diluted weighted-average common shares outstanding: | |||||||||||||||
Shares underlying senior convertible notes | — | 1,057 | — | 1,057 |
Three Months Ended October 31, 2019 | Three Months Ended October 31, 2018 | ||||||||||||||||||||||||||||||
Agriculture | Construction | International | Total | Agriculture | Construction | International | Total | ||||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||
Equipment | $ | 148,680 | $ | 43,299 | $ | 54,007 | $ | 245,986 | $ | 151,247 | $ | 43,331 | $ | 59,215 | $ | 253,793 | |||||||||||||||
Parts | 44,923 | 13,586 | 12,279 | 70,788 | 40,333 | 12,449 | 11,827 | 64,609 | |||||||||||||||||||||||
Service | 18,885 | 6,674 | 1,994 | 27,553 | 16,758 | 6,336 | 1,714 | 24,808 | |||||||||||||||||||||||
Other | 835 | 826 | 50 | 1,711 | 791 | 1,210 | 53 | 2,054 | |||||||||||||||||||||||
Revenue from contracts with customers | 213,323 | 64,385 | 68,330 | 346,038 | 209,129 | 63,326 | 72,809 | 345,264 | |||||||||||||||||||||||
Rental | 750 | 13,646 | 502 | 14,898 | 568 | 13,668 | 1,413 | 15,649 | |||||||||||||||||||||||
Total revenues | $ | 214,073 | $ | 78,031 | $ | 68,832 | $ | 360,936 | $ | 209,697 | $ | 76,994 | $ | 74,222 | $ | 360,913 |
Nine Months Ended October 31, 2019 | Nine Months Ended October 31, 2018 | ||||||||||||||||||||||||||||||
Agriculture | Construction | International | Total | Agriculture | Construction | International | Total | ||||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||
Equipment | $ | 367,754 | $ | 137,742 | $ | 148,880 | $ | 654,376 | $ | 350,435 | $ | 125,596 | $ | 149,157 | $ | 625,188 | |||||||||||||||
Parts | 109,952 | 39,356 | 32,620 | 181,928 | 102,854 | 36,363 | 27,706 | 166,923 | |||||||||||||||||||||||
Service | 51,869 | 20,163 | 5,183 | 77,215 | 46,554 | 17,979 | 3,480 | 68,013 | |||||||||||||||||||||||
Other | 2,248 | 2,238 | 202 | 4,688 | 2,061 | 3,005 | 160 | 5,226 | |||||||||||||||||||||||
Revenue from contracts with customers | 531,823 | 199,499 | 186,885 | 918,207 | 501,904 | 182,943 | 180,503 | 865,350 | |||||||||||||||||||||||
Rental | 1,715 | 33,314 | 971 | 36,000 | 1,622 | 32,617 | 2,269 | 36,508 | |||||||||||||||||||||||
Total revenues | $ | 533,538 | $ | 232,813 | $ | 187,856 | $ | 954,207 | $ | 503,526 | $ | 215,560 | $ | 182,772 | $ | 901,858 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
Trade and unbilled receivables from contracts with customers | |||||||
Trade receivables due from customers | $ | 41,834 | $ | 38,827 | |||
Trade receivables due from finance companies | 15,060 | 10,265 | |||||
Unbilled receivables | 18,744 | 11,222 | |||||
Trade and unbilled receivables from rental contracts | |||||||
Trade receivables | 8,810 | 6,386 | |||||
Unbilled receivables | 1,363 | 828 | |||||
Other receivables | |||||||
Due from manufacturers | 6,906 | 12,950 | |||||
Other | 1,116 | 550 | |||||
Total receivables | 93,833 | 81,028 | |||||
Less allowance for doubtful accounts | (4,926 | ) | (3,528 | ) | |||
Receivables, net of allowance for doubtful accounts | $ | 88,907 | $ | 77,500 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Impairment losses on: | |||||||||||||||
Receivables from sales contracts | $ | 75 | $ | 206 | $ | 1,061 | $ | 536 | |||||||
Receivables from rental contracts | 282 | 62 | 779 | 220 | |||||||||||
$ | 357 | $ | 268 | $ | 1,840 | $ | 756 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
New equipment | $ | 417,681 | $ | 258,081 | |||
Used equipment | 125,992 | 158,951 | |||||
Parts and attachments | 78,651 | 72,760 | |||||
Work in process | 1,891 | 1,299 | |||||
$ | 624,215 | $ | 491,091 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
Rental fleet equipment | $ | 115,361 | $ | 111,164 | |||
Machinery and equipment | 22,434 | 21,646 | |||||
Vehicles | 49,785 | 42,330 | |||||
Furniture and fixtures | 41,360 | 40,645 | |||||
Land, buildings, and leasehold improvements | 66,278 | 63,091 | |||||
295,218 | 278,876 | ||||||
Less accumulated depreciation | (147,128 | ) | (139,926 | ) | |||
$ | 148,090 | $ | 138,950 |
Agriculture | Construction | International | Total | ||||||||||||
(in thousands) | |||||||||||||||
Balance, January 31, 2019 | $ | 250 | $ | — | $ | 911 | $ | 1,161 | |||||||
Arising from business combinations | 699 | — | 499 | 1,198 | |||||||||||
Foreign currency translation | — | — | (68 | ) | (68 | ) | |||||||||
Balance, October 31, 2019 | $ | 949 | $ | — | $ | 1,342 | $ | 2,291 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
CNH Industrial | $ | 245,121 | $ | 120,319 | |||
Wells Fargo Credit Agreement (floorplan payable line) | 98,400 | 49,100 | |||||
DLL Finance | 27,043 | 13,432 | |||||
Other outstanding balances with manufacturers and non-manufacturers | 75,162 | 90,905 | |||||
$ | 445,726 | $ | 273,756 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
Deferred revenue from contracts with customers | $ | 11,866 | $ | 44,893 | |||
Deferred revenue from rental and other contracts | 1,012 | 1,516 | |||||
$ | 12,878 | $ | 46,409 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands except conversion rate and conversion price) | |||||||
Principal value | $ | — | $ | 45,644 | |||
Unamortized debt discount | — | (350 | ) | ||||
Unamortized debt issuance costs | — | (45 | ) | ||||
Carrying value of senior convertible notes | $ | — | $ | 45,249 | |||
Carrying value of equity component, net of deferred taxes | $ | — | $ | 14,923 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Cash Interest Expense | |||||||||||||||
Coupon interest expense | $ | — | $ | 428 | $ | 421 | $ | 1,579 | |||||||
Noncash Interest Expense | |||||||||||||||
Amortization of debt discount | — | 356 | 350 | 1,271 | |||||||||||
Amortization of transaction costs | — | 47 | 45 | 169 | |||||||||||
$ | — | $ | 831 | $ | 816 | $ | 3,019 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
Sale-leaseback financing obligations, interest rates ranging from 3.4% to 10.3% with various maturity dates through December 2030 | $ | 18,093 | $ | 19,010 | |||
Wells Fargo Credit Agreement - Working Capital Line, interest accrues at a variable rate on outstanding balances, requires monthly payments of accrued interest, matures on October 28, 2020. | 10,000 | — | |||||
Real estate mortgage bearing interest at 5.11%, payable in quarterly installments of $0.3 million, maturing on May 15, 2039, secured by real estate assets | 6,827 | — | |||||
Equipment financing loan, payable in monthly installments over a 72-month term for each funded tranche, bearing interest at 3.89%, secured by vehicle assets | 6,369 | — | |||||
Real estate mortgage bearing interest at 4.62%, payable in monthly installments of $0.04 million with a final payment at maturity of $3.4 million, maturing on June 10, 2024, secured by real estate assets | 4,465 | — | |||||
Real estate mortgage bearing interest at 2.09%, payable in monthly installments, maturing on June 30, 2026, secured by real estate assets | 2,549 | 2,978 | |||||
Other long-term debt primarily bearing interest at three-month EURIBOR plus 2.6%, payable in quarterly installments, maturing on January 31, 2021 | 731 | 755 | |||||
49,034 | 22,743 | ||||||
Less current maturities | (13,280 | ) | (2,067 | ) | |||
$ | 35,754 | $ | 20,676 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Foreign currency contract gain (loss) | $ | (3 | ) | $ | 634 | $ | 365 | $ | 1,757 |
Foreign Currency Translation Adjustment | Net Investment Hedging Gain | Total Accumulated Other Comprehensive Income (Loss) | |||||||||
(in thousands) | |||||||||||
Balance, January 31, 2019 | $ | (5,051 | ) | $ | 2,711 | $ | (2,340 | ) | |||
Other comprehensive loss | (771 | ) | — | (771 | ) | ||||||
Balance, April 30, 2019 | (5,822 | ) | 2,711 | (3,111 | ) | ||||||
Other comprehensive income | 1,012 | — | 1,012 | ||||||||
Balance, July 31, 2019 | (4,810 | ) | 2,711 | (2,099 | ) | ||||||
Other comprehensive loss | (2,650 | ) | — | (2,650 | ) | ||||||
Balance, October 31, 2019 | $ | (7,460 | ) | $ | 2,711 | $ | (4,749 | ) |
Foreign Currency Translation Adjustment | Net Investment Hedging Gain | Total Accumulated Other Comprehensive Income (Loss) | |||||||||
(in thousands) | |||||||||||
Balance, January 31, 2018 | $ | (4,411 | ) | $ | 2,711 | $ | (1,700 | ) | |||
Other comprehensive income | 1,301 | — | 1,301 | ||||||||
Balance, April 30, 2018 | (3,110 | ) | 2,711 | (399 | ) | ||||||
Other comprehensive loss | (1,408 | ) | — | (1,408 | ) | ||||||
Balance, July 31, 2018 | (4,518 | ) | 2,711 | (1,807 | ) | ||||||
Other comprehensive income | 187 | — | 187 | ||||||||
Balance, October 31, 2018 | $ | (4,331 | ) | $ | 2,711 | $ | (1,620 | ) |
Classification | Three Months Ended October 31, 2019 | Nine Months Ended October 31, 2019 | ||||||||
(in thousands) | ||||||||||
Finance lease cost: | ||||||||||
Amortization of leased assets | Operating expenses | $ | 373 | $ | 1,080 | |||||
Interest on lease liabilities | Other interest expense | 143 | 421 | |||||||
Operating lease cost | Operating expenses & rental and other cost of revenue | 4,613 | 14,154 | |||||||
Short-term lease cost | Operating expenses | 41 | 201 | |||||||
Variable lease cost | Operating expenses | 689 | 2,024 | |||||||
Sublease income | Interest income and other income (expense) | (146 | ) | (468 | ) | |||||
$ | 5,713 | $ | 17,412 |
Classification | October 31, 2019 | |||||
(in thousands) | ||||||
Assets | ||||||
Operating lease assets | Operating lease assets | $ | 92,124 | |||
Finance lease assets(a) | Property and equipment, net of accumulated depreciation | 6,354 | ||||
Total leased assets | $ | 98,478 | ||||
Liabilities | ||||||
Current | ||||||
Operating | Current operating lease liabilities | $ | 12,002 | |||
Finance | Accrued expenses and other | 1,640 | ||||
Noncurrent | ||||||
Operating | Operating lease liabilities | 90,063 | ||||
Finance | Other long-term liabilities | 4,267 | ||||
Total lease liabilities | $ | 107,972 | ||||
Operating | Finance | |||||||||||
Leases | Leases | Total | ||||||||||
Fiscal Year Ended January 31, | (in thousands) | |||||||||||
2020 (remainder) | $ | 4,555 | $ | 543 | $ | 5,098 | ||||||
2021 | 17,512 | 2,071 | 19,583 | |||||||||
2022 | 16,675 | 1,754 | 18,429 | |||||||||
2023 | 15,615 | 1,108 | 16,724 | |||||||||
2024 | 14,713 | 380 | 15,093 | |||||||||
2025 | 13,587 | 342 | 13,929 | |||||||||
Thereafter | 47,171 | 1,416 | 48,585 | |||||||||
Total lease payments | 129,828 | 7,614 | 137,441 | |||||||||
Less: Interest | 27,763 | 1,707 | 29,470 | |||||||||
Present value of lease liabilities | $ | 102,065 | $ | 5,907 | $ | 107,971 |
October 31, 2019 | ||
Weighted-average remaining lease term (years): | ||
Operating leases | 8.2 | |
Financing leases | 5.5 | |
Weighted-average discount rate: | ||
Operating leases | 6.1 | % |
Financing leases | 10.3 | % |
Nine Months Ended October 31, 2019 | |||
(in thousands) | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ | 13,923 | |
Operating cash flows from finance leases | 421 | ||
Financing cash flows from finance leases | 1,374 | ||
Operating lease assets obtained in exchange for new operating lease liabilities | 1,073 | ||
Finance lease assets obtained in exchange for new finance lease liabilities | 709 |
Operating | Capital | ||||||
Leases | Leases | ||||||
Fiscal year ended January 31, | (in thousands) | ||||||
2020 | $ | 20,117 | $ | 1,933 | |||
2021 | 18,786 | 1,831 | |||||
2022 | 17,994 | 1,524 | |||||
2023 | 17,117 | 882 | |||||
2024 | 16,143 | 342 | |||||
Thereafter | 68,409 | 1,701 | |||||
Total lease payments | $ | 158,566 | 8,213 | ||||
Less: Interest | 1,804 | ||||||
Present value of capital lease liabilities | $ | 6,409 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
Rental fleet equipment | $ | 115,361 | $ | 111,164 | |||
Less accumulated depreciation | 47,557 | 50,399 | |||||
$ | 67,804 | $ | 60,765 |
October 31, 2019 | October 31, 2018 | ||||||
(in thousands) | |||||||
Assets acquired: | |||||||
Cash | $ | — | $ | 3,857 | |||
Receivables | 440 | 5,340 | |||||
Inventories | 6,466 | 21,725 | |||||
Prepaid expenses and other | — | 887 | |||||
Property and equipment | 1,675 | 3,512 | |||||
Intangible assets | 1,973 | 1,944 | |||||
Goodwill | 1,198 | 924 | |||||
Other | — | 61 | |||||
11,752 | 38,250 | ||||||
Liabilities assumed: | |||||||
Accounts payable | — | 1,553 | |||||
Floorplan payable | — | 13,820 | |||||
Deferred revenue | — | 85 | |||||
Accrued expenses and other | — | 1,279 | |||||
Long-term debt | — | 1,725 | |||||
Deferred income taxes | — | 632 | |||||
— | 19,094 | ||||||
Net assets acquired | $ | 11,752 | $ | 19,156 | |||
Goodwill recognized by segment: | |||||||
Agriculture | $ | 699 | $ | — | |||
Construction | — | — | |||||
International | 499 | 924 | |||||
Goodwill expected to be deductible for tax purposes | 1,198 | $ | — |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Revenue | |||||||||||||||
Agriculture | $ | 214,073 | $ | 209,697 | $ | 533,538 | $ | 503,526 | |||||||
Construction | 78,031 | 76,994 | 232,813 | 215,560 | |||||||||||
International | 68,832 | 74,222 | 187,856 | 182,772 | |||||||||||
Total | $ | 360,936 | $ | 360,913 | $ | 954,207 | $ | 901,858 | |||||||
Income (Loss) Before Income Taxes | |||||||||||||||
Agriculture | $ | 10,259 | $ | 9,383 | $ | 18,312 | $ | 15,666 | |||||||
Construction | 347 | 1,154 | (541 | ) | (1,773 | ) | |||||||||
International | 2,061 | 2,596 | 2,783 | 6,235 | |||||||||||
Segment income (loss) before income taxes | 12,667 | 13,133 | 20,554 | 20,128 | |||||||||||
Shared Resources | (258 | ) | (363 | ) | (1,233 | ) | (1,732 | ) | |||||||
Total | $ | 12,409 | $ | 12,770 | $ | 19,321 | $ | 18,396 |
October 31, 2019 | January 31, 2019 | ||||||
(in thousands) | |||||||
Total Assets | |||||||
Agriculture | $ | 462,881 | $ | 316,224 | |||
Construction | 297,703 | 227,261 | |||||
International | 199,168 | 170,187 | |||||
Segment assets | 959,752 | 713,672 | |||||
Shared Resources | 69,772 | 78,766 | |||||
Total | $ | 1,029,524 | $ | 792,438 |
Three Months Ended October 31, 2018 | Nine Months Ended October 31, 2018 | ||||||||||||||||||||||
As Previously Reported | Corrections | As Corrected | As Previously Reported | Corrections | As Corrected | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Equipment | $ | 241,198 | $ | 12,595 | $ | 253,793 | $ | 590,823 | $ | 34,365 | $ | 625,188 | |||||||||||
Parts | 70,118 | (5,509 | ) | 64,609 | 181,651 | (14,728 | ) | 166,923 | |||||||||||||||
Service | 33,560 | (8,752 | ) | 24,808 | 92,187 | (24,174 | ) | 68,013 | |||||||||||||||
Rental and other | 18,773 | (1,070 | ) | 17,703 | 44,558 | (2,824 | ) | 41,734 | |||||||||||||||
Total Revenue | 363,649 | (2,736 | ) | 360,913 | 909,219 | (7,361 | ) | 901,858 | |||||||||||||||
Cost of Revenue | |||||||||||||||||||||||
Equipment | 218,204 | 7,316 | 225,520 | 534,443 | 21,480 | 555,923 | |||||||||||||||||
Parts | 49,481 | (3,815 | ) | 45,666 | 128,683 | (10,429 | ) | 118,254 | |||||||||||||||
Service | 11,841 | (4,085 | ) | 7,756 | 34,475 | (12,557 | ) | 21,918 | |||||||||||||||
Rental and other | 14,581 | (2,152 | ) | 12,429 | 35,617 | (5,855 | ) | 29,762 | |||||||||||||||
Total Cost of Revenue | 294,107 | (2,736 | ) | 291,371 | 733,218 | (7,361 | ) | 725,857 | |||||||||||||||
Gross Profit | $ | 69,542 | $ | — | $ | 69,542 | $ | 176,001 | $ | — | $ | 176,001 |
• | Revenue in the third quarter of fiscal 2020 was flat compared to the third quarter of fiscal 2019. Increased revenue from parts and service was offset by lower equipment and rental and other revenue. Equipment revenue within our Agriculture and International segments in the third quarter of fiscal 2020 was impacted by continued uncertainty in the agriculture sector and crop and weather conditions in certain markets. |
• | Gross profit margin in the third quarter of fiscal 2020 improved to 19.9%, compared to 19.3% for the third quarter of fiscal 2019. The improvement in gross profit margin was primarily the result of a change in gross profit mix with more revenue generated by our higher margin parts and service businesses in the third quarter of fiscal 2020, as compared to the third quarter last year. |
• | Operating expenses increased $4.9 million, or 9.2%, in the third quarter of fiscal 2020, as compared to the third quarter last year. Operating expenses as a percentage of revenue increased from 14.8% in the third quarter of fiscal 2019 to 16.1% in the third quarter of fiscal 2020. The increase in operating expenses is primarily the result of incremental costs associated with our ERP transition and increased costs required to support higher business volumes in our Agriculture and Construction segments. |
• | Floorplan and other interest expense decreased a combined 30.8% in the third quarter of fiscal 2020, as compared to the third quarter last year, primarily due to a decrease in our level of interest-bearing inventory in the third quarter of fiscal 2020, and the repayment in full of our senior convertible notes in the second quarter of fiscal 2020. |
• | Our effective tax rate for the third quarter of fiscal 2020 was 33.8%, compared to 15.6% in the third quarter last year. The increase in our effective tax rate for the third quarter of fiscal 2020 was primarily due to foreign currency gains recognized as a result of a strengthening Ukrainian hryvnia. |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||
Equipment | |||||||||||||||
Revenue | $ | 245,986 | $ | 253,793 | $ | 654,376 | $ | 625,188 | |||||||
Cost of revenue | 219,484 | 225,520 | 583,345 | 555,923 | |||||||||||
Gross profit | $ | 26,502 | $ | 28,273 | $ | 71,031 | $ | 69,265 | |||||||
Gross profit margin | 10.8 | % | 11.1 | % | 10.9 | % | 11.1 | % | |||||||
Parts | |||||||||||||||
Revenue | $ | 70,788 | $ | 64,609 | $ | 181,928 | $ | 166,923 | |||||||
Cost of revenue | 49,834 | 45,666 | 128,380 | 118,254 | |||||||||||
Gross profit | $ | 20,954 | $ | 18,943 | $ | 53,548 | $ | 48,669 | |||||||
Gross profit margin | 29.6 | % | 29.3 | % | 29.4 | % | 29.2 | % | |||||||
Service | |||||||||||||||
Revenue | $ | 27,553 | $ | 24,808 | $ | 77,215 | $ | 68,013 | |||||||
Cost of revenue | 8,950 | 7,756 | 25,170 | 21,918 | |||||||||||
Gross profit | $ | 18,603 | $ | 17,052 | $ | 52,045 | $ | 46,095 | |||||||
Gross profit margin | 67.5 | % | 68.7 | % | 67.4 | % | 67.8 | % | |||||||
Rental and other | |||||||||||||||
Revenue | $ | 16,609 | $ | 17,703 | $ | 40,688 | $ | 41,734 | |||||||
Cost of revenue | 10,894 | 12,429 | 27,612 | 29,762 | |||||||||||
Gross profit | $ | 5,715 | $ | 5,274 | $ | 13,076 | $ | 11,972 | |||||||
Gross profit margin | 34.4 | % | 29.8 | % | 32.1 | % | 28.7 | % |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Revenue | |||||||||||
Equipment | 68.2 | % | 70.3 | % | 68.6 | % | 69.3 | % | |||
Parts | 19.6 | % | 17.9 | % | 19.1 | % | 18.5 | % | |||
Service | 7.6 | % | 6.9 | % | 8.1 | % | 7.5 | % | |||
Rental and other | 4.6 | % | 4.9 | % | 4.3 | % | 4.6 | % | |||
Total Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Total Cost of Revenue | 80.1 | % | 80.7 | % | 80.1 | % | 80.5 | % | |||
Gross Profit Margin | 19.9 | % | 19.3 | % | 19.9 | % | 19.5 | % | |||
Operating Expenses | 16.0 | % | 14.8 | % | 17.4 | % | 16.4 | % | |||
Impairment of Intangible and Long-Lived Assets | — | % | 0.1 | % | — | % | 0.1 | % | |||
Restructuring Costs | — | % | — | % | — | % | — | % | |||
Income from Operations | 3.8 | % | 4.5 | % | 2.5 | % | 3.0 | % | |||
Other Income (Expense) | (0.3 | )% | (0.9 | )% | (0.5 | )% | (1.0 | )% | |||
Income Before Income Taxes | 3.4 | % | 3.5 | % | 2.0 | % | 2.0 | % | |||
Provision for Income Taxes | 1.2 | % | 0.6 | % | 0.6 | % | 0.4 | % | |||
Net Income | 2.3 | % | 3.0 | % | 1.4 | % | 1.6 | % |
Three Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Equipment | $ | 245,986 | $ | 253,793 | $ | (7,807 | ) | (3.1 | )% | |||||
Parts | 70,788 | 64,609 | 6,179 | 9.6 | % | |||||||||
Service | 27,553 | 24,808 | 2,745 | 11.1 | % | |||||||||
Rental and other | 16,609 | 17,703 | (1,094 | ) | (6.2 | )% | ||||||||
Total Revenue | $ | 360,936 | $ | 360,913 | $ | 23 | — | % |
Three Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Gross Profit | ||||||||||||||
Equipment | $ | 26,502 | $ | 28,273 | $ | (1,771 | ) | (6.3 | )% | |||||
Parts | 20,954 | 18,943 | 2,011 | 10.6 | % | |||||||||
Service | 18,603 | 17,052 | 1,551 | 9.1 | % | |||||||||
Rental and other | 5,715 | 5,274 | 441 | 8.4 | % | |||||||||
Total Gross Profit | $ | 71,774 | $ | 69,542 | $ | 2,232 | 3.2 | % | ||||||
Gross Profit Margin | ||||||||||||||
Equipment | 10.8 | % | 11.1 | % | (0.3 | )% | (2.7 | )% | ||||||
Parts | 29.6 | % | 29.3 | % | 0.3 | % | 1.0 | % | ||||||
Service | 67.5 | % | 68.7 | % | (1.2 | )% | (1.7 | )% | ||||||
Rental and other | 34.4 | % | 29.8 | % | 4.6 | % | 15.4 | % | ||||||
Total Gross Profit Margin | 19.9 | % | 19.3 | % | 0.6 | % | 3.1 | % | ||||||
Gross Profit Mix | ||||||||||||||
Equipment | 36.9 | % | 40.7 | % | (3.8 | )% | (9.3 | )% | ||||||
Parts | 29.2 | % | 27.2 | % | 2.0 | % | 7.4 | % | ||||||
Service | 25.9 | % | 24.5 | % | 1.4 | % | 5.7 | % | ||||||
Rental and other | 8.0 | % | 7.6 | % | 0.4 | % | 5.3 | % | ||||||
Total Gross Profit Mix | 100.0 | % | 100.0 | % |
Three Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Operating Expenses | $ | 58,184 | $ | 53,306 | $ | 4,878 | (9.2 | )% | ||||||
Operating Expenses as a Percentage of Revenue | 16.1 | % | 14.8 | % | 1.3 | % | (8.8 | )% |
Three Months Ended October 31, | Increase/ | Percent | |||||||||||
2019 | 2018 | (Decrease) | Change | ||||||||||
(dollars in thousands) | |||||||||||||
Impairment of Long-Lived Assets | $ | 51 | $ | 304 | $ | (253 | ) | 83.0% | |||||
Restructuring Costs | — | (151 | ) | 151 | 100.0% |
Three Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Interest income and other income (expense) | $ | 1,273 | $ | 157 | $ | 1,116 | n/m | |||||||
Floorplan interest expense | (1,448 | ) | (1,856 | ) | (408 | ) | 22.0 | % | ||||||
Other interest expense | (955 | ) | (1,617 | ) | (662 | ) | 40.9 | % |
Three Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Provision for Income Taxes | $ | 4,195 | $ | 1,994 | $ | 2,201 | (110.4 | )% |
Three Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Revenue | ||||||||||||||
Agriculture | $ | 214,073 | $ | 209,697 | $ | 4,376 | 2.1 | % | ||||||
Construction | 78,031 | 76,994 | 1,037 | 1.3 | % | |||||||||
International | 68,832 | 74,222 | (5,390 | ) | (7.3 | )% | ||||||||
Total | $ | 360,936 | $ | 360,913 | $ | 23 | — | % | ||||||
Income Before Income Taxes | ||||||||||||||
Agriculture | $ | 10,259 | $ | 9,383 | $ | 876 | 9.3 | % | ||||||
Construction | 347 | 1,154 | (807 | ) | (69.9 | )% | ||||||||
International | 2,061 | 2,596 | (535 | ) | (20.6 | )% | ||||||||
Segment income (loss) before income taxes | 12,667 | 13,133 | (466 | ) | (3.5 | )% | ||||||||
Shared Resources | (258 | ) | (363 | ) | 105 | 28.9 | % | |||||||
Total | $ | 12,409 | $ | 12,770 | $ | (361 | ) | (2.8 | )% |
Nine Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Equipment | $ | 654,376 | $ | 625,188 | $ | 29,188 | 4.7 | % | ||||||
Parts | 181,928 | 166,923 | 15,005 | 9.0 | % | |||||||||
Service | 77,215 | 68,013 | 9,202 | 13.5 | % | |||||||||
Rental and other | 40,688 | 41,734 | (1,046 | ) | (2.5 | )% | ||||||||
Total Revenue | $ | 954,207 | $ | 901,858 | $ | 52,349 | 5.8 | % |
Nine Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Gross Profit | ||||||||||||||
Equipment | $ | 71,031 | $ | 69,265 | $ | 1,766 | 2.5 | % | ||||||
Parts | 53,548 | 48,669 | 4,879 | 10.0 | % | |||||||||
Service | 52,045 | 46,095 | 5,950 | 12.9 | % | |||||||||
Rental and other | 13,076 | 11,972 | 1,104 | 9.2 | % | |||||||||
Total Gross Profit | $ | 189,700 | $ | 176,001 | $ | 13,699 | 7.8 | % | ||||||
Gross Profit Margin | ||||||||||||||
Equipment | 10.9 | % | 11.1 | % | (0.2 | )% | (1.8 | )% | ||||||
Parts | 29.4 | % | 29.2 | % | 0.2 | % | 0.7 | % | ||||||
Service | 67.4 | % | 67.8 | % | (0.4 | )% | (0.6 | )% | ||||||
Rental and other | 32.1 | % | 28.7 | % | 3.4 | % | 11.8 | % | ||||||
Total Gross Profit Margin | 19.9 | % | 19.5 | % | 0.4 | % | 2.1 | % | ||||||
Gross Profit Mix | ||||||||||||||
Equipment | 37.4 | % | 39.4 | % | (2.0 | )% | (5.1 | )% | ||||||
Parts | 28.2 | % | 27.7 | % | 0.5 | % | 1.8 | % | ||||||
Service | 27.4 | % | 26.2 | % | 1.2 | % | 4.6 | % | ||||||
Rental and other | 7.0 | % | 6.7 | % | 0.3 | % | 4.5 | % | ||||||
Total Gross Profit Mix | 100.0 | % | 100.0 | % |
Nine Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Operating Expenses | $ | 165,594 | $ | 147,665 | $ | 17,929 | (12.1 | )% | ||||||
Operating Expenses as a Percentage of Revenue | 17.4 | % | 16.4 | % | 1.0 | % | (6.1 | )% |
Nine Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | Decrease | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Impairment of Long-Lived Assets | $ | 186 | $ | 459 | $ | (273 | ) | 59.0% | ||||||
Restructuring Costs | — | 414 | (414 | ) | 100.0 | % |
Nine Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Interest income and other income (expense) | $ | 2,687 | $ | 2,003 | $ | 684 | 34.1 | % | ||||||
Floorplan interest expense | (3,724 | ) | (4,932 | ) | (1,208 | ) | 24.5 | % | ||||||
Other interest expense | (3,562 | ) | (6,137 | ) | (2,575 | ) | 42.0 | % |
Nine Months Ended October 31, | Increase/ | Percent | |||||||||||
2019 | 2018 | Decrease | Change | ||||||||||
(dollars in thousands) | |||||||||||||
Provision for Income Taxes | $ | 6,041 | $ | 4,055 | $ | 1,986 | (49.0)% |
Nine Months Ended October 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Revenue | ||||||||||||||
Agriculture | $ | 533,538 | $ | 503,526 | $ | 30,012 | 6.0 | % | ||||||
Construction | 232,813 | 215,560 | 17,253 | 8.0 | % | |||||||||
International | 187,856 | 182,772 | 5,084 | 2.8 | % | |||||||||
Total | $ | 954,207 | $ | 901,858 | $ | 52,349 | 5.8 | % | ||||||
Income Before Income Taxes | ||||||||||||||
Agriculture | $ | 18,312 | $ | 15,666 | $ | 2,646 | 16.9 | % | ||||||
Construction | (541 | ) | (1,773 | ) | 1,232 | 69.5 | % | |||||||
International | 2,783 | 6,235 | (3,452 | ) | (55.4 | )% | ||||||||
Segment income (loss) before income taxes | 20,554 | 20,128 | 426 | 2.1 | % | |||||||||
Shared Resources | (1,233 | ) | (1,732 | ) | 499 | 28.8 | % | |||||||
Total | $ | 19,321 | $ | 18,396 | $ | 925 | 5.0 | % |
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
Adjusted Net Income | ||||||||||||||||
Net Income | $ | 8,214 | $ | 10,776 | $ | 13,280 | $ | 14,341 | ||||||||
Adjustments | ||||||||||||||||
ERP transition costs | 2,062 | — | 4,778 | — | ||||||||||||
Loss on repurchase of senior convertible notes | — | — | — | 615 | ||||||||||||
Restructuring and impairment charges | 51 | 153 | 186 | 873 | ||||||||||||
Total Pre-Tax Adjustments | 2,113 | 153 | 4,964 | 1,448 | ||||||||||||
Less: Tax Effect of Adjustments (1) | 444 | 32 | 1,042 | 280 | ||||||||||||
Total Adjustments | 1,669 | 121 | 3,922 | 1,208 | ||||||||||||
Adjusted Net Income | $ | 9,883 | $ | 10,897 | $ | 17,202 | $ | 15,549 | ||||||||
Adjusted Diluted EPS | ||||||||||||||||
Diluted EPS | $ | 0.37 | $ | 0.48 | $ | 0.60 | $ | 0.65 | ||||||||
Adjustments (2) | ||||||||||||||||
ERP transition costs | 0.09 | — | 0.21 | — | ||||||||||||
Loss on repurchase of senior convertible notes | — | — | — | 0.03 | ||||||||||||
Restructuring and impairment charges | — | 0.01 | 0.01 | 0.04 | ||||||||||||
Total Pre-Tax Adjustments | 0.09 | 0.01 | 0.22 | 0.07 | ||||||||||||
Less: Tax Effect of Adjustments (1) | 0.02 | — | 0.05 | 0.01 | ||||||||||||
Total Adjustments | 0.07 | 0.01 | 0.17 | 0.06 | ||||||||||||
Adjusted Diluted EPS | $ | 0.44 | $ | 0.49 | $ | 0.77 | $ | 0.71 | ||||||||
(1) The tax effect of U.S. related adjustments was calculated using a 21% tax rate, determined based on a 21% federal statutory rate and no impact for state taxes given our valuation allowance against state deferred tax assets. No tax effect was recognized for foreign related items as all adjustments occurred in a foreign jurisdiction that has a full valuation allowance on its deferred tax assets. | ||||||||||||||||
(2) Adjustments are net of amounts allocated to participating securities where applicable. |
Net Cash Provided by (Used for) Operating Activities | Net Cash Provided by (Used for) Financing Activities | ||||||||||||||
Nine Months Ended October 31, 2019 | Nine Months Ended October 31, 2018 | Nine Months Ended October 31, 2019 | Nine Months Ended October 31, 2018 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Cash Flow, As Reported | $ | (8,289 | ) | $ | 11,726 | $ | 34,902 | $ | 11,309 | ||||||
Adjustment for Non-Manufacturer Floorplan | 62,387 | 43,896 | (62,387 | ) | (43,896 | ) | |||||||||
Adjustment for Constant Equity in Equipment Inventory | (89,076 | ) | (54,109 | ) | — | — | |||||||||
Adjusted Cash Flow | $ | (34,978 | ) | $ | 1,513 | $ | (27,485 | ) | $ | (32,587 | ) |
No. | Description | |
Amendment dated November 13, 2018 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC. | ||
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101 | Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended October 31, 2019, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements. |
Dated: | December 5, 2019 | ||
TITAN MACHINERY INC. | |||
By | /s/ Mark Kalvoda | ||
Mark Kalvoda | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
/s/ Mike VanVlaenderen |
/s/ Mark Kalvoda |
1. | I have reviewed this Quarterly Report on Form 10-Q of Titan Machinery Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ David J. Meyer | |
David J. Meyer | |
Board Chair and Chief Executive Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Mark Kalvoda | |
Mark Kalvoda | |
Chief Financial Officer |
/s/ David J. Meyer | |
David J. Meyer | |
Board Chair and Chief Executive Officer |
/s/ Mark Kalvoda | |
Mark Kalvoda | |
Chief Financial Officer |
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DERIVATIVE INSTRUMENTS |
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company holds derivative instruments for the purpose of minimizing exposure to fluctuations in foreign currency exchange rates to which the Company is exposed in the normal course of its operations. The Company uses foreign currency forward contracts to hedge the effects of fluctuations in exchange rates on outstanding intercompany loans. The Company does not formally designate and document such derivative instruments as hedging instruments; however, the instruments are an effective economic hedge of the underlying foreign currency exposure. Both the gain or loss on the derivative instrument and the offsetting gain or loss on the underlying intercompany loan are recognized in earnings immediately, thereby eliminating or reducing the impact of foreign currency exchange rate fluctuations on net income. The Company's foreign currency forward contracts generally have three-month maturities, maturing on the last day of each fiscal quarter. No foreign currency contracts were outstanding as of October 31, 2019. The notional value of outstanding foreign currency contracts as of January 31, 2019 was $14.1 million. As of January 31, 2019, the fair value of the Company's outstanding derivative instruments was not material. Derivative instruments recognized as assets are recorded in prepaid expenses and other in the consolidated balance sheets, and derivative instruments recognized as liabilities are recorded in accrued expenses and other in the consolidated balance sheets. The following table sets forth the gains and losses recognized in income from the Company’s derivative instruments for the three and nine months ended October 31, 2019 and 2018. Gains and losses are recognized in interest income and other income (expense) in the consolidated statements of operations:
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REVENUE (Notes) |
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue [Policy Text Block] | REVENUE Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to collect in exchange for those goods or services. Sales, value added and other taxes collected from our customers concurrent with our revenue activities are excluded from revenue. The following tables present our revenue disaggregated by revenue source and segment:
Unbilled Receivables and Deferred Revenue Unbilled receivables amounted to $18.7 million and $11.2 million as of October 31, 2019 and January 31, 2019. The increase in unbilled receivables is primarily the result of a seasonal increase in the volume of our service transactions in which we recognize revenue as our work is performed and prior to customer invoicing. Deferred revenue from contracts with customers amounted to $11.9 million and $44.9 million as of October 31, 2019 and January 31, 2019. Our deferred revenue most often increases in the fourth quarter of each fiscal year due to a higher level of customer down payments or prepayments and longer time periods between customer payment and delivery of the equipment asset, and the related recognition of equipment revenue, prior to its seasonal use. During the nine months ended October 31, 2019 and 2018, the Company recognized $43.7 million and $30.0 million, respectively, of revenue that was included in the deferred revenue balance as of January 31, 2019 and January 31, 2018, respectively. No material amount of revenue was recognized during the three or nine months ended October 31, 2019 and 2018 from performance obligations satisfied in previous periods. The Company has elected as a practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of service of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The contracts for which the practical expedient has been applied include (i) equipment revenue transactions, which do not have a stated contractual term, but are short-term in nature, and (ii) service revenue transactions, which also do not have a stated contractual term but are generally completed within 30 days and for such contracts we recognize revenue over time at the amount to which we have the right to invoice for services completed to date. |
LINES OF CREDIT / FLOORPLAN PAYABLE |
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LINES OF CREDIT / FLOORPLAN PAYABLE | LINES OF CREDIT As of October 31, 2019, the Company had floorplan lines of credit totaling $660.0 million, which is primarily comprised of three significant floorplan lines of credit: (i) a $400.0 million credit facility with CNH Industrial, (ii) a $140.0 million line of credit with a group of banks led by Wells Fargo Bank, National Association (the "Wells Fargo Credit Agreement"), and (iii) a $60.0 million credit facility with DLL Finance LLC. As of October 31, 2019 and January 31, 2019, the Company's outstanding balances of floorplan payables and lines of credit consisted of the following:
As of October 31, 2019, the interest-bearing U.S. floorplan payables carried various interest rates ranging from 4.28% to 5.60%, compared to a range of 4.77% to 6.30% as of January 31, 2019. As of October 31, 2019, foreign floorplan payables carried various interest rates primarily ranging from 0.86% to 7.88%, compared to a range of 0.94% to 8.51% as of January 31, 2019. As of October 31, 2019 and January 31, 2019, $257.1 million and $151.7 million, respectively, of outstanding floorplan payable were non-interest bearing. As of October 31, 2019, the Company had a compensating balance arrangement under one of its foreign floorplan credit facilities, which requires a minimum cash deposit to be maintained with the lender in the amount of $5.0 million for the term of the credit facility. Wells Fargo Credit Agreement The maturity date of the Wells Fargo Credit Agreement was previously contingent upon the results of a maturity test that was performed on February 1, 2019, a date that was three months prior to the scheduled maturity date of the Company's outstanding senior convertible notes. Pursuant to this test, the maturity date for the Wells Fargo Credit Agreement would be October 28, 2020 so long as (i) the Company's fixed charge coverage ratio for the 12 month period ended December 31, 2018 was at least 1.10 to 1.00 and (ii) a liquidity test, requiring that the Company have unrestricted cash on hand plus excess borrowing availability under the Wells Fargo Credit Agreement (on a pro-forma basis reflecting the Company’s repayment in full of its outstanding senior convertible notes) in an amount that was greater than 20% of maximum credit amount under the facility, was met on February 1, 2019. If both financial tests were not satisfied on February 1, 2019, the Wells Fargo Credit Agreement would immediately mature and all amounts outstanding would become immediately due and payable in full. The Company satisfied the maturity test requirements on February 1, 2019, and therefore the maturity date of the Wells Fargo Credit Agreement is October 28, 2020. CNH Industrial Floorplan Payable Line of Credit In November 2019, the Company amended its credit facility with CNH Industrial to increase the available borrowings under the facility from $400.0 million to $450.0 million. Domestic available borrowings increased as a result of the amendment from $310.0 million to $360.0 million. Available borrowings of our European businesses remained unchanged at $90.0 million. DLL Finance Agreement In October 2019, the DLL Finance agreement was amended and restated to, among other things, increase the available borrowing capacity from $45.0 million to $60.0 million, of which approximately $47.0 million is available for domestic financing and approximately $13.0 million is available for financing in certain of our European markets, to decrease the interest margin on domestic borrowings from 3.00% to 2.85%, and to replace the maximum net leverage ratio covenant with a maximum adjusted debt to tangible net worth covenant of 3.50:1.00. The adjusted debt to tangible net worth covenant is now aligned with the same covenant under our CNH Industrial floorplan financing arrangement. |
DEFERRED REVENUE (Tables) |
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue, by Arrangement, Disclosure [Table Text Block] |
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INVENTORIES (Tables) |
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories |
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GOODWILL (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Oct. 31, 2019 |
Jan. 31, 2019 |
|
Goodwill [Line Items] | ||
Goodwill | $ 2,291 | $ 1,161 |
Goodwill, Acquired During Period | 1,198 | |
Goodwill, Foreign Currency Translation Gain (Loss) | (68) | |
Agricultural Sector [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 949 | 250 |
Goodwill, Acquired During Period | 699 | |
International [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 1,342 | $ 911 |
Goodwill, Acquired During Period | 499 | |
Goodwill, Foreign Currency Translation Gain (Loss) | $ (68) |
LONG TERM DEBT (Details) - USD ($) $ in Thousands |
Oct. 31, 2019 |
Feb. 01, 2019 |
Jan. 31, 2019 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Notes and Loans, Noncurrent | $ 35,754 | $ 20,676 | $ 20,676 |
Current maturities of long-term debt | 13,280 | $ 2,067 | 2,067 |
Notes and Loans Payable | 49,034 | 22,743 | |
Line of Credit, Current | 10,000 | ||
Capital Lease Obligations [Member] | |||
Debt Instrument [Line Items] | |||
Notes and Loans Payable | 18,093 | 19,010 | |
Real Estate Loan [Member] | |||
Debt Instrument [Line Items] | |||
Notes and Loans Payable | 6,827 | ||
Commercial Loan [Member] | |||
Debt Instrument [Line Items] | |||
Notes and Loans Payable | 6,369 | ||
Loans and Finance Receivables [Member] | |||
Debt Instrument [Line Items] | |||
Notes and Loans Payable | 4,465 | ||
Working Capital Line of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Notes and Loans Payable | 2,549 | 2,978 | |
Notes Payable, Other Payables [Member] | |||
Debt Instrument [Line Items] | |||
Notes and Loans Payable | $ 731 | $ 755 |
BUSINESS COMBINATIONS (Tables) |
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table presents the aggregate purchase price allocations for all acquisitions completed during the nine months ended October 31, 2019 and 2018:
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LEASES Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Oct. 31, 2019 |
Oct. 31, 2019 |
|
Leases [Abstract] | ||
Finance Lease, Right-of-Use Asset, Amortization | $ 373 | $ 1,080 |
Finance Lease, Interest Expense | 143 | 421 |
Operating Lease, Cost | 4,613 | 14,154 |
Short-term Lease, Cost | 41 | 201 |
Variable Lease, Cost | 689 | 2,024 |
Sublease Income | (146) | (468) |
Lease, Cost | $ 5,713 | $ 17,412 |
LEASES Other Lease Information (Details) $ in Thousands |
9 Months Ended |
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Oct. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Operating Lease, Payments | $ 13,923 |
Finance Lease, Interest Payment on Liability | 421 |
Finance Lease, Principal Payments | 1,374 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 1,073 |
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability | $ 709 |
INCOME TAXES |
9 Months Ended |
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Oct. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective tax rate was 33.8% and 15.6% for the three months ended October 31, 2019 and 2018, and was 31.3% and 22.0% for the nine months ended October 31, 2019 and 2018. Our effective tax rate can differ from the domestic federal statutory tax rate due to the mix of domestic and foreign income or losses and the impact of valuation allowances on our U.S. federal, state and certain of our foreign deferred tax assets, including net operating losses. In addition, for the three and nine months ended October 31, 2019, the effective tax rate increased by approximately seven percentage points due to foreign currency gains recognized as a result of a strengthening Ukrainian hryvnia. Differences in the amount of Ukrainian hryvnia foreign currency gains recognized for book and tax accounting are permanent differences that accordingly impacts our effective tax rate. The effective tax rate for the three months ended October 31, 2018 was impacted by certain discrete items recognized during the period and from certain tax planning strategies applied to minimize the impact of the global intangible low-taxed income ("GILTI") provisions for the fiscal year ended January 31, 2019. |
IMMATERIAL RESTATEMENT (Notes) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Text Block] | IMMATERIAL RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS As previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2019, the Company identified an immaterial error within its financial statements, including in the results for the three and nine months ended October 31, 2018. The identified error was the result of incorrectly eliminating certain internal parts and service transactions. The adjustments to correct for this error reduce total revenue and cost of revenue by approximately 1.0% and impact the amounts of previously reported equipment, parts, service and rental and other revenue and cost of revenue amounts, but have no impact on total gross profit, operating or net income, earnings per share, or the consolidated balance sheets or statements of cash flows. Management of the Company has evaluated all relevant quantitative and qualitative factors and has concluded that the error is not material to the results of operations for the previously reported periods. The Company has restated its accompanying statement of operations to correct for this immaterial error for the three and nine months ended October 31, 2018. Included below is a summary of the previously reported amounts of revenue and cost of revenue, the impact of correcting for this immaterial error, and the as-corrected amounts for the three and nine month periods ended October 31, 2018:
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SEGMENT INFORMATION AND OPERATING RESULTS (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial information of business segments | Certain financial information for each of the Company’s business segments is set forth below. All revenue amounts for the three and nine months ended October 31, 2018 shown below are presented on an as corrected basis following the correction of an immaterial error identified in previously issued financial statements. Refer to Note 19 for additional details.
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ACCUMULATED OTHER COMPREHENSIVE INCOME AOCI (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||||
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Oct. 31, 2019 |
Jul. 31, 2019 |
Apr. 30, 2019 |
Oct. 31, 2018 |
Jul. 31, 2018 |
Apr. 30, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
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Statement of Other Comprehensive Income [Abstract] | ||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (7,460) | $ (4,810) | $ (5,822) | $ (4,331) | $ (4,518) | $ (3,110) | $ (5,051) | $ (4,411) |
Derivatives used in Net Investment Hedge, Net of Tax | 2,711 | 2,711 | 2,711 | 2,711 | 2,711 | 2,711 | 2,711 | 2,711 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (4,749) | (2,099) | (3,111) | (1,620) | (1,807) | (399) | $ (2,340) | $ (1,700) |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss), before Reclassification and Tax | (2,650) | 1,012 | (771) | 187 | (1,408) | 1,301 | ||
Other Comprehensive Income (Loss), before Reclassifications, before Tax | $ (2,650) | $ 1,012 | $ (771) | $ 187 | $ (1,408) | $ 1,301 |
LEASES Weighted Average Lease Terms (Details) |
Oct. 31, 2019 |
---|---|
Leases [Abstract] | |
Operating Lease, Weighted Average Remaining Lease Term | 8 years 2 months |
Finance Lease, Weighted Average Remaining Lease Term | 5 years 6 months |
Operating Lease, Weighted Average Discount Rate, Percent | 6.10% |
Finance Lease, Weighted Average Discount Rate, Percent | 10.30% |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Oct. 31, 2019 |
Jan. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value, in dollars per share | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 22,352,000 | 22,218,000 |
Common stock, shares outstanding | 22,352,000 | 22,218,000 |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
9 Months Ended |
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Oct. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE MEASUREMENTS As of January 31, 2019, the fair value of the Company's foreign currency contracts, which are either assets or liabilities measured at fair value on a recurring basis, was not material. These foreign currency contracts were valued using a discounted cash flow analysis, an income approach, utilizing readily observable market data as inputs, which is classified as a Level 2 fair value measurement. The Company also valued certain long-lived assets at fair value on a non-recurring basis as of January 31, 2019 as part of its long-lived asset impairment testing. The estimated fair value of such assets was $0.9 million as of January 31, 2019. Fair value was estimated through an income approach incorporating both observable and unobservable inputs, and are deemed to be Level 3 fair value inputs. The most significant unobservable inputs include forecasted net cash generated from the use of the assets and the discount rate applied to such cash flows to arrive at a fair value estimate. In addition, in certain instances the Company estimated the fair value of long-lived assets to approximate zero as no future cash flows were assumed to be generated from the use of such assets and the expected value to be realized upon disposition was deemed to be nominal. The Company also has financial instruments that are not recorded at fair value in the consolidated balance sheets, including cash, receivables, payables, long-term debt and senior convertible notes. The carrying amounts of these financial instruments approximated their fair values as of October 31, 2019 and January 31, 2019. Fair value of these financial instruments was estimated based on Level 2 fair value inputs. |
SEGMENT INFORMATION AND OPERATING RESULTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION AND OPERATING RESULTS | SEGMENT INFORMATION The Company has three reportable segments: Agriculture, Construction and International. Revenue between segments is immaterial. The Company retains various unallocated income/(expense) items and assets at the general corporate level, which the Company refers to as “Shared Resources” in the table below. Shared Resources assets primarily consist of cash and property and equipment. Certain financial information for each of the Company’s business segments is set forth below. All revenue amounts for the three and nine months ended October 31, 2018 shown below are presented on an as corrected basis following the correction of an immaterial error identified in previously issued financial statements. Refer to Note 19 for additional details.
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RECEIVABLES (Notes) |
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivable [Policy Text Block] | RECEIVABLES
The following table presents impairment losses on receivables arising from sales contracts with customers and receivables arising from rental contracts:
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GOODWILL (Notes) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill Disclosure [Text Block] | GOODWILL Changes in the carrying amount of goodwill during the nine months ended October 31, 2019 are as follows:
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