Greetings and welcome to the Titan Machinery Fourth Quarter Fiscal 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeff Sonnek of ICR. Thank you. You may begin.

Thank you and good morning. Welcome to the Titan Machinery fourth quarter fiscal 2022 earnings conference call. On the call today from the company are David Meyer, Chairman and CEO; Mark Kalvoda, CFO; and Bryan Knutson, COO. By now everyone should have access to the earnings release for the fiscal fourth quarter ended January 31, 2022, which went out this morning at approximately 6:45 AM Eastern Time. If you’ve not received the release, it is available on the Investor Relations tab of Titan's website at ir.titanmachinery.com. This call is being webcast and a replay will be available on the company's website as well. In addition, we're providing a presentation to accompany today's prepared remarks. We suggest you access the presentation now by going to Titan's website again at ir.titanmachinery.com. The presentation is directly below the webcast information in the middle of the page. You'll see on Slide 2 of the presentation our Safe Harbor Statement. We would like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These forward-looking statements are based on current expectations of management and involve inherent risks and uncertainties including those identified in the Risk Factors section of Titan's most recently filed Annual Report on Form 10-K. These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. Except as maybe required by applicable law, Titan assumes no obligation to update any forward-looking statements that may be made in today's release or call. Please note that during today's call, we'll discuss non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater transparency into Titan's ongoing financial performance, particularly when comparing underlying results from period-to-period. We've included reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures in today's release. The call will last approximately 45 minutes. At the conclusion of our prepared remarks, we will open the call to take your questions. With that I would now like to turn the call over to the company's Chairman and CEO, Mr. David Meyer. David, please go ahead.

Thank you, Jeff. Good morning, everyone. Welcome to our fourth quarter of fiscal 2022 earnings conference call. On today’s call, I will provide a summary of our results, and then Bryan Knutson, our Chief Operating Officer, will give an overview for each of our business segments. Mark Kalvoda, our CFO, will then review financial results for the fourth quarter and full year of fiscal 2022 and conclude with some commentary on our fiscal 2023 modeling assumptions. If you turn to Slide 3, you'll see an overview of our fourth quarter and full year financial results. We generated fourth quarter revenue of $507.6 million, increasing 16% versus the prior year due to strong equipment sales in our agriculture and international segments, which is further supported by growth in our parts and service business across all our reporting segments. The stronger revenue, coupled with a powerful combination of gross margin expansion and operating expense leverage, drove a remarkable $22 million increase in adjusted pre-tax income to $28.8 million. This had a corresponding positive impact on our adjusted earnings per diluted share, which is a new quarterly record for the company at $0.99, compared to $0.09 last year. While this call is focused on our fiscal fourth quarter, I want to emphasize that we experienced exceptional performance each quarter this year, driving revenue across all our businesses and perhaps most importantly, all our segments demonstrated significant operational improvement with each posting strong increases in pretax income, which in turn expanded margins. This is also apparent in our full year results. We generated full year revenue of $1.71 billion, which was up 21.3% compared to fiscal 2021. Adjusted pre-tax income grew 131.3% to $88.1 million versus $38.1 million for the prior year, driving adjusted earnings per share of $2.98 compared to $1.09 last year. This is a product of tremendous effort by our team whose unwavering focus provided the fuel to generate these record results. Furthermore, the resultant growth of our cash flows and strong balance sheet has provided us with greater flexibility to engage in accretive acquisitions such as the recently closed Jaycox acquisition and anticipated closing of our upcoming acquisition of Mark's Machinery, which is scheduled to close in early April of this year. While we do not include future acquisitions in our guidance, I have a number of dealer groups I am in active discussions with, and I am hopeful on executing additional acquisitions in our current fiscal year. Again, with our strong balance sheet, cash position, and proven operating model, I expect acquisitions to be part of our growth story in the years ahead. Before I turn the call over to Bryan, I want to recognize how proud I am of our growing team for navigating through an extremely fluid operating environment, their commitment to serving our customers, and that we look forward to building on the momentum in fiscal 2023. I will now turn the call over to Bryan to review our three segments in more detail.

Thank you, David, and good morning, everyone. I'm excited to cover our three business segments this morning. Slide 4 is an overview of our domestic agriculture segment. Although somewhat tempered by rising input costs and dry weather concerns in some of our markets, farmer sentiment remains positive due to excellent commodity prices. In much of our footprint, last year's crop yielded better than expected, and our customers were able to sell it at favorable prices. Corn, soybean, and wheat prices remain elevated going into spring planting, which has allowed our customers an opportunity to lock in very good prices for current year 2022 production; in some cases, customers are already locking in prices for calendar year 2023 crops. As planting season begins, customers are signing up for multi-peril crop insurance programs and USDA safety net farm programs, and fields are in great shape due to an extended fall season for tillage and land preparation. There is strong demand for parts and services as the equipment fleets continue to age. We are completing a successful winter of uptime inspections in our service departments, and despite some parts supply side issues, our parts and service departments are well prepared to support our customers during the upcoming farming season. New and used equipment demand continues to be very strong, outpacing supply. This is again being driven by the current high level of commodity prices. In addition, we are seeing some carryovers from a strong 2021 net farm income supported not only by price and yield but a number of USDA program payments. With this income, farmers are looking to Section 179 and bonus depreciation to help with their tax planning. Farmers are investing in products that increase yields, productivity, and efficiencies in their operations. While there are product shortages and long lead times, we have a solid order book and do not believe that product shortages will impact our ability to meet the revenue modeling assumptions that Mark will share with you shortly. Many of you were able to see firsthand at CNH Industrial's February 22nd Capital Markets Day the investment and focus CNH Industrial is putting into technology, data solutions, precision, automation, electrification, and connected machines. Farmers and ranchers are investing in this technology, and we are excited about the commitment our main supplier is making towards having industry-leading products and technology solutions for our customers. I'm excited to announce the pending acquisition of Mark's Machinery, the two-store Case IH Group with locations in Yankton and Wagner, South Dakota, which David alluded to earlier. Located in Southeast South Dakota, these stores are contiguous to our diversified crop livestock markets in Platts, South Dakota; Sufal, South Dakota; Wayne, Nebraska; and Lamar, Iowa, and have a five-decade history of profitably serving customers. They have a great team, and we are scheduled to close in early April. As you can see, we have a lot going on in our domestic Ag segment. We had a great FY 2022 in our domestic Ag segment, and I expect much of the same in FY 2023. Turning to Slide 5, you will see an overview of our domestic construction segment. This segment continues to improve, and as David stated, was a strong contributor to our Q4 and full year financial results. As our economy opens up post-pandemic, we are seeing increased construction activity in our CE markets. Not only do we see continued housing and commercial activity, but we are seeing the start of some significant infrastructure projects in our markets. We have exposure to the oil business in the Bakken and the Colorado front range, which is creating construction equipment retail and rental demand. And with our Upper Midwest CE stores and Ag markets, we are seeing farmer demand for construction equipment being used for material handling, feedlots, and land improvement. The operational improvements that our team has implemented over the past couple of years produced another year of improved adjusted pretax income. Late in the fiscal fourth quarter, we divested our CE stores in Montana and Wyoming. While a fairly small CE market, we sold the stores to a well-respected Case IH New Holland dealer in Montana, who can utilize the synergies of having all the CNH Industrial brands in the same market. In March, we also divested our small non-core CE consumer product store in Fargo, North Dakota, due to our brand consolidation strategy. Over the last several years, we have been working towards optimizing our CE footprint, which is now complete with these transactions. We feel positive about our current CE footprint. Our locations now include the large and growing Colorado markets as well as our CE stores located in the Upper Midwest, where we have the heritage and synergies of our Ag store coverage. Before we turn to Slide 6, international overview, I want to share a couple of comments on our ERP implementation which impacts our domestic Ag and CE business. We have been successfully operating our pilot stores since July of 2020 on our new ERP platform. We added five more stores in December of 2021 and plan to continue a phased approach again in April of this year, continuing to add stores until implementation is fully complete. We feel this phased approach will provide not only a quality of minimal risk implementation but also provide the best employee and customer experience through the process. Now moving to Slide 6. We have an overview of our international segment, which represents our business within the countries of Bulgaria, Germany, Romania, and Ukraine. Our international segment turned in excellent Q4 and full year financial results. Above-average crops and strength in global commodity prices created strong demand for new and used equipment. This, combined with our operational improvements, inventory reduction, and continued execution of our parts and service growth strategy, all contributed to a much-improved bottom line. The Russia-Ukraine conflict is top of mind for all of us. While there is total business disruption in Ukraine, this market is less than 5% of our company's total revenues and assets and less than 25% of the revenues and assets of our international segment. With the safety and well-being of our Ukrainian employees being a top priority, we initially closed our Ukraine stores to allow employees to attend to their family needs and safety. We continued to advance payroll, and some employees are able to work from home both in and out of the country. Some farms continue to operate, and we have partially opened some stores to support our customers with parts and service on a limited basis. In addition, we are beginning to finalize equipment sales to customers at their request, taking into consideration safety and risk. Like much of the world, we are carefully observing the near-term and long-term geopolitical and economic situation in Ukraine. Concurrently, we look forward to continued success from the Balkan countries of Bulgaria and Romania and improved operational results in Germany. Before I turn the call over to Mark, I would like to thank all of our employees, both domestically and abroad, for a very successful fiscal 2022. In the face of adversity, our employees stepped up and outperformed at all levels of the organization, producing outstanding results while supporting our customers and their operations. Finally, please keep our Ukrainian employees and customers in your thoughts and prayers during this very difficult time. With that, I will turn the call over to Mark to review our financial results in more detail.

Thanks, Bryan. Turning to Slide 7. Total revenue for the fiscal 2022 fourth quarter was $507.6 million, an increase of 16.2% compared to last year. Our equipment business increased 16.7% versus prior year, which was driven by strength in our Agriculture and International segments. We are particularly pleased with our parts and service business, which generated growth across each of our operating segments, increasing 17.3% and 14.3%, respectively compared to the prior year period. These robust increases were due to the addition of the Jaycox stores in early December as well as same-store increases of 18.8% for parts and 15.9% for service compared to the prior year quarter. Rental and other revenue decreased 1.4% versus prior year quarter due to a decrease in inventory rentals. Despite slightly lower revenues, the dollar utilization of our construction segment rental fleet improved significantly to 28.4% for the current quarter compared to 22.4% in the same period last year and drove margins in this revenue category up 530 basis points compared to the prior year quarter. On Slide 8, our gross profit for the quarter increased by 39.2% to $94.2 million. Our gross profit margin increased 310 basis points primarily due to strong equipment margins as a result of favorable end market conditions, healthy inventories, and increased amounts earned under manufacturer incentive programs, which for the quarter represented approximately $6.4 million. We did see improved margins in our parts, service, and rental categories as well. Operating expenses increased $4.1 million versus the prior year to $64.6 million for the fourth quarter of fiscal 2022 and includes a benefit from the recognition of a $5.7 million pretax gain on the sale of the company's Montana and Wyoming construction equipment stores. As a result of increased revenue and this gain, our operating expenses as a percent of revenue was 12.7% compared to 13.9% of revenue in the prior year period. Despite this improvement, we continue to see inflationary pressures, particularly in the areas of fuel, wages, and employee benefits. Floorplan and other interest expense decreased 6.4% to $1.4 million compared to the same period last year due to lower floorplan borrowings. In the fourth quarter of fiscal 2022, our adjusted net income increased to $22.5 million, which includes a $1.3 million benefit from a partial release of an income tax valuation allowance in our international business. This compared to adjusted net income of $1.9 million from the prior year quarter. Our adjusted earnings per diluted share was $0.99 for the quarter, which includes approximately $0.47 of benefits associated with the previously mentioned increased manufacturer incentives, gain on sale of Montana and Wyoming construction store divestitures, and a partial release of an income tax valuation allowance. This compares to last year's adjusted $0.09 performance. Fourth quarter of fiscal 2022, adjusted EBITDA increased over 160% to $35.9 million, which compares to $13.7 million in the prior year. You can find a reconciliation of adjusted net income, adjusted income per diluted share, and adjusted EBITDA to the most comparable GAAP amounts in the appendix to the slide presentation. On Slide 9, you will see an overview of our segment results for the quarter. Agriculture segment sales increased 14.2% to $346.3 million, helping to drive a significant increase in our segment adjusted pretax income from $8 million to $17.7 million, which included a $5.1 million benefit earned through increased manufacturing incentives. Turning to our construction segment, revenue decreased 1.1% to $87.9 million compared to the prior year period, reflecting the lost contributions from the company's Arizona stores following the January 2021 divestiture. On a same-store basis, excluding those stores, revenues were up 7.2% for the quarter. We are pleased with the continued improvement in this segment's adjusted pretax income, which improved by $8.4 million to $9 million. Even after excluding the $5.7 million gain associated with the fiscal 2022 fourth quarter sale of four store locations in Montana and Wyoming, this segment is showing strong improvement over the prior year quarter. Our international segment also benefited from improved agriculture market conditions and generated revenue growth of 64.4% to $73.4 million. The combination of strong equipment sales and margins, coupled with solid growth in our higher-margin parts and services businesses, yielded a $5.8 million improvement in adjusted pretax income to a positive $3.1 million. This profit improvement also included a $1.3 million benefit earned through increased manufacturer incentives. The adjusted pretax results for the comparable period in the prior year was a pretax loss of $2.7 million. Turning to Slide 10, you will see our full year results. Fiscal 2022 total revenue increased 21.3% compared to last year, driven by 27.1% growth in equipment revenue and was further supported by solid contributions from our parts and service businesses, which increased 9.1% and 7.8%, respectively. Rental and other was down 12.9% due to reduced inventory rentals and a smaller dedicated rental fleet. Full year dollar utilization of our rental fleet improved to 26.5% compared to 22.2% last year. Turning to Slide 11, our full year gross profit was $332.7 million, a 27.3% increase compared to last year. Our gross profit margin increased 90 basis points to 19.4% for the full year of fiscal 2022. Higher margins across all categories of revenue, primarily equipment margins, are more than offsetting the shift in revenue mix. Our operating expenses increased by $20.2 million or 9.2% for the full year of fiscal 2022 compared to the prior year. This increase was more than offset by revenue growth, leading to 150 basis points of operating expense leverage improvement compared to the prior year, reducing our operating expenses as a percent of revenue to 14.1% in fiscal 2022. Impairment expenses decreased from $3.2 million in the prior year to $1.5 million in the current full year period. Floorplan and other interest expense decreased 20.5% to $5.7 million in the full year period, primarily due to overall lower floorplan borrowings. For the full year of fiscal 2022, our adjusted net income was $67.3 million, an increase of 174.9% from the prior year. Our adjusted earnings per diluted share was a record $2.98 for fiscal 2022, representing a 173.4% increase compared to $1.09 in the prior year. Once again, recall the positive $0.47 per share benefit we realized in the fourth quarter, which enhanced our fiscal 2022 results. For fiscal 2022, adjusted EBITDA grew 75.1% to $114.5 million compared to $65.4 million in fiscal 2021. Turning to Slide 12. We provide our segment results for the full year fiscal 2022. Overall, our adjusted pretax income increased 131.3% to $88.1 million for the full 2022 fiscal year and resulted in a pretax margin of 5.1%. The improvement was generated by all three of our business segments but was led by strong agriculture segment performance. Turning to Slide 13. Here, we provide an overview of our balance sheet highlights at the end of the year. We had cash of $146 million as of January 31, 2022. Our equipment inventory at the end of fiscal 2022 was $324 million, a decrease of approximately $14 million from January 31, 2021, reflecting the combination of an $11 million decrease in new equipment and a $3 million decrease in used equipment. Strong sales and lower inventory levels continue to drive the equipment inventory turns, which increased to 3.4 versus 2.0 in the prior year. I will provide a little more color on our equipment inventory on the next slide. Parts inventory has increased to $96 million at the end of fiscal 2022 from $79 million at the end of the prior year. This increase is the result of a concerted procurement effort to better ensure parts availability for our customers during the current global supply chain challenges, as well as the fourth quarter acquisition of Jaycox. Our rental fleet assets at the end of the fourth quarter decreased to $65 million compared to $78 million at the end of fiscal 2021. The decrease of $13 million was due to the fourth quarter divestiture of our four Montana and Wyoming construction equipment stores. We anticipate our fleet size to increase slightly by the end of fiscal 2023 to around $70 million. As of January 31, 2022, we had $135 million of outstanding floorplan payables on $752 million of floorplan lines of credit, which leaves us with considerable capacity in our credit lines to handle our equipment financing needs. Our adjusted debt to tangible net worth ratio is a strong 1.0 and is well below 3.5, which is the leverage covenant requirement of our two largest floorplan facilities outside our bank syndicate agreement. Turning to Slide 14. The amount of new and used equipment inventories are reflected in the size of the red and blue bars on this slide. As we've discussed during the past couple of quarters, our inventory turns have accelerated due to the combination of increased customer demand and a tighter industry supply of equipment. At the end of this fiscal year, we drove an inventory turn of 3.4 times. Given the favorable industry conditions, health of our inventory, and ongoing supply chain challenges, I would anticipate further increases in our equipment turns going forward. On Slide 15, we've provided some additional information around our Ukraine exposure given the ongoing conflict in the region that's impacting our operations. As we've stated previously, this market is less than 5% of our total revenues and assets. We are providing some additional context around our assets to help with your understanding of what could be at risk. In terms of total exposure, we currently have approximately $39 million of assets in our Ukraine business. Of that, approximately 70%, or about $28 million, is what we would consider higher risk. These represent in-country inventories, fixed assets such as vehicles, and other assets such as customer receivables. Physical assets of our inventories and vehicles are primarily dispersed across the Northern and Western sections of Ukraine. From a currency perspective, our exposure is limited, as our net monetary assets denominated in hryvnia is currently below $2.5 million. However, due to currency conversion restrictions on the hryvnia, this amount may grow in the future. Importantly, due to the Ukraine government's classification of agriculture as a critical industry, our operations in Ukraine have very recently been able to convert some hryvnia to U.S. dollars to pay for critical parts invoices. This is an improvement in restrictions from just a few days ago. On an operating basis, we are still making efforts to help our customers, and where possible, keep our doors open. As you can appreciate, the environment is very fluid, but we are seeing farmers preparing for and in some cases, beginning spring planting activities in less impacted areas of our footprint. That said, activity is understandably much lower than normal, and we believe we have taken a conservative approach to our current year expectations for these operations. We have modeled Ukraine revenues to be down approximately 75% versus the prior year, which would result in an associated loss of approximately $0.25 per share in fiscal 2023 due to unabsorbed expenses. Such unabsorbed expenses include the assumption that full labor costs for all employees will be incurred for the full year. Please note that this estimated loss does not account for any possible asset impairments that may arise. With that, I'll shift to Slide 16 and take you through our formal fiscal 2023 full year modeling assumptions. While our business is carrying significant momentum into the new year, the environment remains fluid. Supply chains have yet to recover, inflationary pressures continue to grow, and as I just discussed, the level of disruption of our business in Ukraine remains to be seen. Thus, please keep in mind that there is a higher degree of uncertainty in these assumptions compared to a normal operating environment. For the agriculture segment, our initial assumption is for revenue growth in the range of 22% to 27%, which importantly includes a full year revenue contribution from our Jaycox acquisition that closed in December 2021, as well as a partial year revenue contribution from the Mark's Machinery acquisition, which is anticipated to close in April 2022. For the construction segment, our initial assumption is for revenue to decrease in the range of down 12% to 17%. Impacting this assumption is the divestment of our five construction equipment stores in Montana, Wyoming, and North Dakota in January and March of calendar 2022, which accounted for approximately $73 million of combined revenue. Excluding these revenues from the prior year base, our assumption equates to same-store sales growth of up approximately 8% to 13%. We believe these divestitures will further strengthen our construction segment. We are excited about the construction footprint we have today. For the international segment, our initial assumption is for revenue growth in the range of down 8% to 13%, which includes the assumption I mentioned on the previous slide of revenue down approximately 75% for our Ukrainian business. From a diluted earnings per share perspective, we are introducing a fiscal 2023 range of $2.55 to $2.85 per share. This range includes the revenue assumptions just discussed, inflationary expense pressure, particularly in labor-related costs, and the $0.25 per share loss modeled for our business in Ukraine. It does not include the recurrence of the fourth quarter items making up the $0.47 of EPS I previously discussed. We will update the EPS range and the developments within our Ukrainian business activity as the year progresses. Regarding tax, we anticipate an effective tax rate for the fiscal 2023 of approximately 27%. This rate will likely vary quarter-to-quarter as profit and loss mix fluctuate due to seasonality within our various international tax jurisdictions where corporate tax rates vary and valuation allowances exist. We will provide future updates as necessary regarding any change in our tax rate expectation. This concludes our prepared remarks.

Thank you. Our first question has come from the line of Rick Nelson with Stephens. Please proceed with your questions.

Hi, guys. This is Joe Enderlin on for Rick. Thanks for taking our questions. We're wondering if we could get some color on what you're seeing in terms of health for the Ag customer given the elevated commodity prices and then what you're seeing in terms of pre-sales?

Hi, Joe, this is Bryan. The Ag economy barometer did pull back a little bit in January due to the rising input costs and some of the different pressures customers are facing. But shortly after that report came out, commodity prices moved sharply upward, and so we believe there is a very positive sentiment based on the feedback from the growers in our footprint. As I mentioned in my prepared comments, many of them have sold crops at these higher prices recently, and they've also taken this opportunity to lock in some calendar year 2023 crop. And if you look at just yesterday at one of the local elevators here, you had corn over $7—well over $7, soybeans starting to approach $17, and wheat over $10. So the strong commodity prices are really bolstering customer sentiment. Again, it was somewhat mitigated by the input costs, and thus we're seeing really strong demand. We're getting as many order slots as we can, and we have a strong order board of pre-sales; certainly, demand is outpacing supply at this point.

Thank you. That's super helpful. As a follow-up in relation to the sale of the two construction stores in the quarter, do you think you have any room for further divestiture of stores?

Yes. Both Mark and I mentioned that we started a strategy and a plan about three years ago with the divestiture of our New Mexico stores, followed by our Arizona stores, and now our Montana and Wyoming stores. Most recently, we focused on our consumer product store in Fargo, North Dakota, which aligned with our brand strategy. We've put in a lot of effort into this, and we really like our current footprint. Our Colorado stores are performing exceptionally well, with a vibrant economy and significant activity in the front range and our locations there. The rest of our presence is in the Upper Midwest, primarily in agricultural markets with strong economies, where we maintain a solid reputation among our customers that aligns well with our agricultural focus. We've accomplished a lot in this area, and credit goes to the team for completing that project. We feel very positive about our construction footprint moving forward.

Thank you. Our next question is coming from the line of Mig Dobre with Baird. Please proceed with your questions.

Hey, good morning, everyone. Thanks for taking the questions here.

Good morning, Mig.

I'd like to go back to Slide 4 of your presentation. At the very bottom, you talked about supply chain challenges impacting the timing of deliveries. Maybe you can give us a little more context in terms of what that means relative to your outlook, your full year outlook? And then related to this, you mentioned here that you locked in 2022 new equipment orders in line with availability and revenue forecast. I guess what I'm sort of curious to understand is, are you essentially saying that at this point, you kind of have the full year 2022 kind of locked in, in terms of pre-orders and you have high visibility on deliveries or is this me reading too much into this statement?

Yes Mig, I'll take that, and then Mark might want to expand a little bit. Thank you for the question. As you know, the supply side has been very challenged. Yes, we do have quite good visibility to the model year 2022 production. And I think, as you know, CNH starts their model year 2023 into Q4, and so there'll still be some questions around the model year 2023 production. But we've got a lot of our allocation slides, good visibility to that, a lot of pre-sales in the pipeline. Again, that's what we've based our modeling on. There have been some timing moves. We've had some build delays, shipping delays, as all the OEMs have had, which can push up from one quarter to the next, and so we do anticipate that continuing throughout the year. But overall, we've got a nice supply of pre-sales, nice supply of orders coming in, and then the trade-ins on those pre-sales and a good amount of lease returns that are expiring this year as well.

And maybe just a little bit more on that. I think going back to our fourth quarter just ended, there was some impact on equipment sales. It did come in lower than what we expected within our Ag and construction segments. And some of that is due to the equipment availability and getting the machines and getting the units in. So that push, so it's just kind of a timing of those revenues that will go into the current year. That was considered into our modeling assumptions here of that up 22% to 27% on the Ag side and what we indicated here on the construction side. So that was part of the consideration for the guidance modeling assumptions for the current year as well.

Yes. So I appreciate that. That's essentially what I'm trying to figure out here because the fourth quarter revenue was a bit light, and, like you said, some of it seems to have slipped into fiscal 2023. Maybe you can give us a sense for how much that was relative to your plan, but then as we're thinking about your statement here that you expect the supply chain challenges to continue through the first half of 2022, based on what you know today, how should we be thinking about your revenue cadence through the year, more back-end loaded than normal seasonality? I mean, can you give us maybe a little bit of help first half, second half? And again, presumably, you're talking to the OEM and you have an idea as to kind of how they're thinking about delivering this equipment to you; that's really what I'm asking?

Yes, there are still many uncertainties. We aren't sure exactly when things will take place. The crop this year and commodity prices will influence some of this as well. In general, I believe the seasonality of our equipment sales will be similar to previous years. While the supply chain is expected to remain tight until the latter half, we do have a healthy amount of pre-sales, and some of that push from the fourth quarter into the early part of the year should be beneficial. Overall, we currently see no significant changes in the seasonality of our domestic equipment sales compared to last year, with the exception of the fourth quarter, which could potentially see an increase if issues are resolved.

Alright. The other question I wanted to ask was on inventory turns. And Mark, you mentioned that you expect inventory turns to move yet again higher this year. And I'm sort of curious as to how much higher do you think you can move these inventory turns? Presumably, there's a limit to where this metric can go; can you comment on that at all?

Yes, it's a bit challenging to quantify. Currently, when we receive pre-sales, they are quickly dispatched. Once they go out, we receive the trades, and a significant portion of those trades are sold. This creates a multiplication effect that can significantly influence our turn number. As for how high it can go, I believe we are currently exceeding our desired level, which indicates a shortage in available inventory. I think we could potentially reach a turn of four this year, although that might be optimistic given the challenges posed by the situation in Ukraine, which has led to a substantial decrease in sales. Still, I don't believe a four-time turn is entirely unattainable for the year.

That's helpful. And last question. I appreciate all the color on Ukraine. If I'm sort of looking at your international modeling assumptions though, it seems to me like you're embedding pretty good growth in the Balkans, Germany in order to get to your guidance if we're indeed assuming that Ukraine is down 75%. And I'm just curious as to what gives you confidence that the growth is going to be there. And I'm thinking about the Balkans in particular, Romania, Bulgaria. I mean, don't you think that some of this conflict could potentially sap farmer confidence in terms of CAPEX in those regions as well? Thank you.

I think that is a good question, and we'll kind of see how things unravel. I guess maybe, first of all, backing up to the first part of your question. So Ukraine isn't our largest market over there. We've got other territories that are larger than that. So that 75% decrease certainly is impacting it, but maybe not quite as much as you would expect. As far as the other markets, I would say, yes, in all of them, we are expecting some level of increase over the prior year. And quite frankly, so far this year, we're seeing that. I think things are looking good. We'll see how this spillover with the geopolitical events in Ukraine, how that spills over going forward. We're not seeing a big impact right now. One of the impacts more from the positive side is just obviously the impact on commodity prices. So there's a lot of wheat grown in some of those surrounding Balkan countries that you mentioned. And they're benefiting right now and being able to sell their wheat at higher prices and the possibility of their crop this year being sold at higher prices as well. But that's something—certainly that's part of the risk or the unknowns to our— or added risk, I should say, to our modeling assumptions for this year, and we'll be monitoring it closely as you will. And we'll keep you updated throughout the year.

Yes. And Mark, I would just add, certainly, there is some anxiety, but the commodity price is excellent, and they're experiencing that as well. But also just the growing conditions, very ample moisture, much improved growing conditions. The fall-seeded crop came through the winter very well. And so that's looking very positive as well.

Mig, also, we've had some recent expansion in Romania and there's some really, really good farming areas and stuff. And we're starting to get some of the return on some of those store expansions in some really good farming areas too. So I think that's helping that country a lot.

Alright, appreciate it guys. Good luck.

Thanks, Mig.

Thank you. Our next questions come from the line of Steve Dyer with Craig-Hallum. Please proceed with your questions.

Thanks. Good morning guys. As you sort of sit here going into the main planting season, how do your preorders from end customers this year sort of compare to previous years at this time? And have you seen any changes in the last month or two sort of given the commodity spikes?

Hey Steve, this is Bryan. Yes, as I mentioned, the pre-sales are very strong, as strong as they've ever been. There was a month ago there, farmer sentiment had backed off just a little bit from some extremely high levels that we experienced all throughout Q4 last year after the crop came in with better-than-expected yields throughout our footprint, as the prices have continued to climb. And also then inputs had continued to climb. So as prices backed off a little bit there in January, that had ticked downward and we had a little bit of let up. But again, still, demand still well outpacing supply. So we could afford a little bit of that. But then they took off again here in the last 40 days or so, and now, as an example, with corn, we're up well over another $1 since then, and wheat another $2, and soybeans another $2.50 since then. So very, very robust again. And then you just take the planting conditions out there. Again, we had a nice fall in a lot of our footprint. The land got worked really well. They got a lot of land improvements done. Some of the moisture got replenished with some good snowfall and the snow is coming off well here. The looks like farmers could potentially get in a very timely fashion and potentially have a very nice spring planting. So that's also driving positive sentiment. So a lot of activity on our order board. And as I mentioned, we're trying to get our hands on everything we can.

Got it. That's helpful. So the supply side obviously remains pretty tight from an inventory perspective. Does your guidance sort of imply that it loosens a little bit in the back half of the year, similar to Mig's question, or is it sort of assumed that it's pretty tight all year long? I guess what I'm trying to get at is demand remains strong and probably will, given commodity prices. If the inventory starts to flow a little bit better than expected in the second half of the year, is there sort of upside to your plan and what you guys are thinking, or does it feel pretty locked from here?

Yes. Steve, I'll just comment quick and let Mark primarily weigh in there. But yes, it is fluid, and we certainly could see some puts and takes from quarter-to-quarter here as things shift. But it is strong looking throughout the year, again, as farmers can lock in even into 2023 pricing. And with these price levels, it really behooves them to do that, and there are a lot of growers working closely with their advisers and doing that. So certainly could be some potential uptick if things did really loosen up in the back half.

Right. Yes. So I would just say the same. I think we've got it modeled pretty tight to what we expect the deliveries to be. And if there's upside in those deliveries and we get more than expected, I think there's some upside potential to our guidance.

And Steve, if you listen to our main supplier's call here, the recent call or last call, we've talked about the supply side being tighter in the first half and probably getting some improvement in the second half. And we tend to be somewhat aligned with that. So we can pretty much sell what we can get. So the more we can get, the more we'll sell. And like I say, that's good news. I think the back half could potentially be a little bit better.

Got it. Thanks guys. Last one for me, the increase in manufacturing incentives—was that a one-time benefit or is that something we should sort of assume going into fiscal 2023 here from a margin perspective? Thanks.

Yes. So the manufacturer incentives—so this is kind of an incremental item that happened. No, this isn't something that happens very often. It's been a while since we've achieved something like this. It is—it has metrics involved with it that is more cliffed in nature—that either you get it and it's at the kind of a higher amount like this or you don't. And then there's nothing. That's why it kind of lumped into the fourth quarter here on us. We do not have this embedded in our guidance for the current year. It is available in the current year, would be available, but we are not building it into our guidance for the current year.

Thank you. Our final questions of the call will come from the line of Larry De Maria with William Blair. Please proceed with your questions.

Hi, thanks. Good morning, everybody. Just picking up where that one left off, manufacturing incentives were obviously a significant benefit of the $0.47 benefit overall. What are some of the puts and takes why you would or would not get it this year? Obviously, it's a surprise—a positive surprise and now it's become a tough comp. But are there—if it's available this year, and obviously, you have nice growth embedded, what are the drivers going to be to get that?

Yes, Larry, just for competitive reasons, we don't want to get into that. Our suppliers don't want us to get into it publicly as far as what the drivers of that metric is. There are other incentive programs, if you will from manufacturers that exist out there. That's part of our regular kind of business. This particular metric involved with this is more of a cliff type event like I mentioned but for competitive reasons, we just can't get into that, the details of that.

Okay. Shifting over maybe to Ukraine, what are some of the options around the business to limit losses and stay there, not stay there, etcetera? And what are the kind of—what kind of help are you getting from CNH at this point? And then finally, the inventory you have on order for Ukraine, presumably you had some, can you divert that to other regions or is that more or less been taken by CNH?

I'll maybe talk a little bit to begin with that maybe $0.25 and maybe puts and takes there. So obviously, the revenue side, we commented on. From an expense standpoint, it does have some reduced expenses involved, but it's more from a variable-type expense standpoint. The assumption that we have in here is, like I mentioned, we continue to pay all employees throughout the year, even with the lower level of the revenue base that we're talking about. The other thing that's on here too is—and the reason why it's making a little bit higher bottom line EPS impact is the fact that we've got a valuation allowance. So there's no income tax benefit assumed in that $0.25 there as well. I'll let Dave comment.

Yes. I guess most of the machinery there, Larry, is Tier 2 engines in it, so which is—there are still other markets that have two engines, and some of those engines can be converted or upgraded to the Tier 4 and Tier 4B to allow sales in other countries. But we have—I think we've done a really good job of minimizing our exposure and moving some of the inventories down, and they're pretty much spread all around. So we feel pretty good where we're at there right now. As we've been working on this for basically all of last year and potentially it's like something that could happen.

And is CNH doing much to help you guys, obviously, it impacts you guys’ financials, but you're supporting the...?

They're always good partners. And I think they've made—they came out and made a nice humanitarian donation to Ukraine. So yes, I'd say they're always good partners. And I think collaboratively, we will work together and try to make the best out of a pretty tough situation over there. But like I say, in the most part, we're just really focused on our employees, the well-being of our employees and the safety of our employees and our customers. So—and we'll know more. I mean, every week, things kind of change over a little bit and we'll keep everybody abreast of the developments.

Yes, okay. Last quick question here. Specifically, to the orders, how long are the orders out to either in calendar or fiscal year into next year? It sounds like there's obviously completion into next year. How long are we looking? How long do the order book extend? And you said that the industry is short of equipment, so—and is your guidance assumes something that you think you can hit, but how short do you think the availability of the equipment is versus what you could do this year?

Yes, Larry, supplies are really tight. As far as the lead times, it varies a lot by product category. So some of the overseas products—overseas-built products, some of the batch-built products, and then if you take an overseas batch-built product, you can get into some very long lead times, well over a year out. Others, we still can get yet in this calendar year, albeit towards the end of the calendar year at this point. But so it very much is product-specific and even manufacturer-specific.

Okay, thank you.

Thank you. We have reached the end of our question-and-answer session. I would now like to turn the call back over to Mr. David Meyer for any closing comments.

Okay. Thank you, everyone, for your time today and your interest in Titan Machinery, and we look forward to updating you on our progress on our next call. So have a good day, everybody.

This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.