Greetings, and welcome to the Titan Machinery Inc. Third Quarter Fiscal 2024 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, Mr. Jeff Sonnek of ICR. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and welcome to Titan Machinery's third quarter fiscal 2024 earnings conference call. On the call today from the Company are David Meyer, Chairman and Chief Executive Officer; Bryan Knutson, President and Chief Operating Officer; and Bo Larsen, Chief Financial Officer. By now, everyone should have access to the earnings release for the fiscal third quarter ended October 31, 2023, which went out earlier this morning at approximately 6:45 a.m. Eastern Time. If you've not received the release, it's available on our Investor Relations page 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. You may access this presentation now by going to Titan's website again at ir.titanmachinery.com. The presentation is available directly below the webcast information in the middle of the page. You will see on slide two of the presentation a safe harbor statement. We'd 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 as updated in subsequent filed quarterly reports on Form 10-Q. 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 may be required by applicable law, Titan assumes no obligation to update any forward-looking statements that may be made in today's release or call. The call lasts 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 introduce the Company's Chairman and CEO, Mr. David Meyer. David, please go ahead.

Thank you, Jeff. Good morning, and welcome to our third quarter fiscal 2024 earnings conference call. On today's call, I will provide a summary of our results, then Bryan Knutson, our current President and Chief Operating Officer, who will be transitioning to the CEO post on February 1st, will give an overview for each of our business segments. Bo Larsen, our CFO, will conclude the call with a review of our financial results for the third quarter of fiscal 2024 and some commentary around our updated fiscal 2024 full-year expectations. We accomplished a great deal this quarter, completing our acquisition of the Australia-based O'Connors Group in October and solidifying our leadership succession plan, which we announced last month, while delivering solid financial results. Bryan and his team have been instrumental in jumpstarting our integration with O'Connors, and we couldn't be more pleased with the quality of the O'Connors team. We recognized an alignment of our strategies during the O'Connors due diligence process, and the first couple of months of operations have proven out how well our organizations mesh. We are thrilled to have them on board and look forward to a bright future together. As it relates to CEO succession, I am very proud of what our team at Titan Machinery has achieved since my early days in a dealership nearly 50 years ago, and the breadth and depth of our operations is a testament to the talent that we have attracted to the organization. Through the process of planning for this transition over the last several years with our Board of Directors, we felt it was critical to fill the role with someone who deeply understands the dealership business and our customers. Bryan is a natural leader with a successful track record and has proven his ability to excel across all aspects of the business and our company culture, and our employee engagement has never been better. I am extremely confident in Bryan's capabilities and have watched his development over the last 20 years as he has excelled in both store and central leadership roles, which makes him uniquely qualified to lead Titan Machinery in our next stage of growth. Moving to our fiscal third financial performance, we achieved record revenues of $694 million and diluted earnings per share of $1.32. These results came in below our full potential due to delayed OEM deliveries, prioritizing customer uptime throughout the harvest and end-of-season construction projects, and increased preparation time to complete pre-delivery inspections of new machinery. This dynamic is also visible in our inventory balance at the end of the quarter, as the amount of on-hand pre-sold inventory being prepped in our service shops continues to trend above normal levels. Notwithstanding, customer uptime is our top priority, and our team did a great job meeting our customers' immediate service needs and minimizing downtime during the all-important fall season. Heading into year-end, we continue to see demand in excess of OEM production for high horsepower tractors and wheel loaders, which we expect will continue to at least the first half of calendar year 2024. While we are positioned well for a strong fourth quarter, our recognition of equipment revenue will be dependent on both the timing of new machinery received from the OEMs and our ability to manage service department workflows. We continue to experience substantially longer preparation times to complete the quality pre-delivery inspection and setup process required before delivery to our customers due to ongoing supply chain challenges. Overall, we expect year-over-year revenue growth in each of our segments in the fourth quarter, and we have narrowed the range of our revenue modeling assumptions to reflect our latest expectations for fourth-quarter OEM deliveries and demands on our service departments. Looking forward, both our Ag and CE customers are experiencing the carryover of three exceptionally strong years, placing them in excellent financial positions and creating optimism as I look to the future. Additionally, over the last 24 months, we have completed some high-quality and strategic acquisitions, which will strengthen our bottom line as they get fully integrated into our system. With that, I'll turn the call over to Bryan Knutson for his segment review.

Thank you, David, and good morning everyone. Today, I will provide a recap of our fiscal third-quarter segment drivers and then review some of our high-level expectations for the balance of fiscal year 2024 across our respective segments. I'll begin with our domestic agriculture segment. We achieved another record revenue performance on top of last year's outstanding results driven by a combination of positive same-store sales and contribution from the Pioneer acquisition made earlier in the year. As you heard from David, these results were constrained by a few factors. While improving, limited OEM production remains a factor preventing us from meeting the existing demand for high horsepower tractors and self-propelled sprayers. And for those new units that we are receiving, our service team is having to spend more preparation time on each pre-sold new unit before delivering it to our customers due to supply side challenges. While this isn't a new phenomenon for us, as the additional prep time has been something we have faced throughout this fiscal year, our service department capacity was stretched in the third quarter, given the seasonally higher volumes and a need to prioritize supporting existing customer equipment throughout harvest. Now that our customers are mostly done with harvest activities, we expect to catch up on delivering some of the incremental buildup of pre-sold units throughout the fourth quarter. Bolstering our service network and capacity remains a key priority for our organization, and as such, we will continue to focus on recruiting, hiring, and training skilled technicians. With respect to harvest and customer sentiment, favorable crop development in the later part of the growing season produced average to above-average yields throughout our footprint. Although corn pricing has softened throughout the year, there was quite a bit of corn that was forward contracted in the $5 to $6 per bushel range, and current prices for soybeans, sugar beets, potatoes, and edible beans remain very attractive as well as cattle prices. Yield trends continue to be positive, and some input costs have been decreasing, and with three consecutive years of historically high net farm income, farmers' balance sheets are in great shape with debt-equity ratios historically low and are furthered by increasing land values. Overall, our customers are in a great position to post another solid year of income. Looking to the balance of fiscal 2024 for our agriculture segment, we remain in a position to deliver a strong fourth quarter based on positive fundamentals such as healthy farmer cash receipts, which are supporting net farm income at levels well above historical averages, continued tax incentives surrounding Section 179 and bonus depreciation, and the additional backlog of pre-sold units awaiting pre-delivery inspection and final delivery to our customers. Shifting to our domestic construction segment, similar dynamics to what I just described for the agricultural segment are also relevant here. OEM wheel loader production does not yet meet demand. Preparation time to get new units ready for delivery to customers is longer than normal, and with a busy fall construction season to complete projects ahead of winter, our service departments were balancing competing demands while always keeping existing customer machinery running as the top priority. I'd also note that there was a shift in timing of equipment deliveries this year versus last, which has some influence on the comparable growth rates. For instance, last year, we had a really strong third-quarter performance whereas we expect a stronger fourth-quarter performance in the current year. As a result, we realized a year-over-year same store sales decrease of 10.3% in the third quarter this year. Despite third-quarter year-over-year comparisons, we achieved rental fleet dollar utilization of 33.2% and absorption of 88.5%, both of which are very high compared to historical levels for this segment and showed the sustained improvement in these areas. General construction activity across our footprint remains at healthy levels and infrastructure energy and agriculture activity continue to support demand for construction equipment. Looking ahead to the fourth quarter, we expect the timing dynamic I mentioned to be a tailwind for us and result in year-over-year growth on a same-store basis, allowing us to finish this fiscal year on a high note for our construction segment. Now moving to an overview of our Europe segment, which was formerly known as our international segment prior to our acquisition of O’Connors in Australia. Our Europe segment represents our business within the countries of Bulgaria, Germany, Romania, and Ukraine. Rainfall throughout the growing season varied across these countries, which helped drive above-average yields in Germany and Ukraine. However, dry conditions in Bulgaria and Romania caused yields to be below average. These lower yields negatively impacted farmer profitability, resulting in a softening in demand for new equipment purchases in these two countries. Overall, same-store sales decreased 7.5% in our fiscal third quarter. Looking to expectations for the rest of the year, we continue to expect European agricultural fundamentals to moderate. However, last year's fiscal fourth quarter was significantly impacted by limited equipment availability and did not follow normal revenue seasonality patterns for our Europe segment. This dynamic should normalize this year and is the basis for our expectation to achieve year-over-year growth in this year's fourth quarter. Last but not least is our new Australia segment. Although we closed on the O'Connor's acquisition in October, those results won't be consolidated into our financials until the fourth quarter. Harvest has now started in Australia and is providing evidence that the O'Connor's footprint is one of the most consistent areas in the country. Growers in our footprint are seeing above-average yields as they begin harvest activities, while the same cannot be said for much of the rest of the country. Recent moisture is presenting some challenges to the current harvest, but it is helpful in restoring moisture levels in the region for next year's crop. We continue to be extremely excited about the Australian market and the opportunity to build upon what the O'Connors team has accomplished. We are working through our integration strategy and are grateful for the entire team's eagerness as we come together. With that, I just want to thank all the members of our Titan family for their hard work and focus as we kept growers and contractors up and running during the important fall season. Now, I will turn the call over to Bo to review our financial results in more detail.

Thanks, Bryan. Good morning everyone. Starting with our consolidated results for the fiscal 2024 third quarter. Total revenue was $694.1 million, an increase of 3.8% compared to the prior year period. Our equipment revenue rose 2.5% year-over-year, driven by additional revenue from our recent acquisitions and positive same-store sales growth in our Agriculture segment. We also saw growth across our other revenue streams, with parts revenue increasing 5.7%, service up 14.9%, and rental and other revenue up 4.2% compared to the prior year. Gross profit for the third quarter was $138 million, and as expected, gross profit margin fell by 100 basis points to 19.9%, largely due to lower margins in equipment and parts, partially offset by higher service and rental margins. It's worth noting that the equipment gross profit last year included a $2 million accrual for expected annual manufacturer incentive programs, which is not in this year’s third quarter results. As a reminder, we recognized $6.4 million of manufacturer incentives in the previous fiscal year across Q2, Q3, and Q4. Our guidance includes a similar level of manufacturing incentives for the current fiscal year, all of which, if earned, will be recognized in the fourth quarter. The timing difference is related to the progress in meeting the targets. Our updated guidance incorporates the full year's impact of manufacturing incentives to be recognized in the fourth quarter, which is part of the reason our EPS guidance remains unchanged. Operating expenses were $92.1 million for the third quarter in fiscal 2024, up from $84.9 million in the previous year. The 8.5% increase was primarily due to additional operating costs from recent acquisitions and higher variable expenses related to increased sales. Additionally, inconsistent OEM deliveries and longer prep times for pre-delivery inspections of new equipment have created temporary inefficiencies, which we are addressing to return to normal conditions quickly. I expect operating expenses as a percentage of sales in the fourth quarter to be similar to or slightly lower than the 13.3% realized in the third quarter. Over the past two years, our seven acquisitions accounted for about $670 million in annualized revenue. These acquisitions typically come with a higher operating expense as a percentage of sales compared to our base business, though some have favorable gross margin offsets. As mentioned earlier, we are focused on integrating these businesses and reallocating resources to optimize operations for efficiency. We have a strong history of acquiring businesses and improving their financial metrics to align with our overall targets, and I expect we will continue to demonstrate that in the future. Floor plan and other interest expenses amounted to $5.5 million, up from $1.8 million for the third quarter of fiscal 2023, mainly due to increased interest-bearing floor plan borrowings linked to higher inventory levels. We also utilized our existing Bank Syndicate floor plan facility for financing the O’Connor's acquisition. Net income for the third quarter of fiscal 2024 was $30.2 million or $1.32 per diluted share, compared to last year’s net income of $41.3 million or $1.82 per diluted share. Now turning to our segment results for the third quarter. In our agriculture segment, sales increased 7.7% to $531.4 million, driven by our acquisition of Pioneer Equipment and same-store sales growth of 3.5%, on top of a strong 46.4% same-store sales increase in the previous year and 28% growth the year before that. As discussed, third-quarter revenues were impacted by delayed OEM deliveries and capacity constraints in our service department. Agriculture segment pre-tax income was $35.1 million compared to $42 million in the third quarter of the previous year, which results in a pre-tax margin decrease of 190 basis points to 6.6%. In our construction segment, sales fell 10.3% to $77.5 million. As noted, the timing of equipment deliveries in the latter half of this year compared to last year adds variability in year-over-year comparisons. We anticipate this headwind will become a tailwind in the fourth quarter, with expected year-over-year growth. Pre-tax income was $4.1 million compared to $6.1 million in the third quarter of the previous year, with a year-over-year pre-tax margin decrease of approximately 180 basis points to 5.2%. In our Europe segment, sales decreased by 4.3% to $85.2 million, influenced by a 7.9% currency tailwind from a strengthening Euro. Accounting for currency fluctuations, revenue dropped 10.4%, reflecting weaker demand in Bulgaria and Romania, affected by dry conditions and lower yields. Pre-tax income was $5.1 million compared to $8.5 million in the third quarter of fiscal 2023, resulting in a pre-tax margin decrease of 350 basis points to 6%. Year-to-date margins across our segments offer a clearer picture. Through the first nine months, the AG segment's pre-tax margin is 6.5%, down 70 basis points from the previous year. CE's pre-tax margins remain flat at 5.9%, while Europe's pre-tax margins are 6.8%, down 90 basis points from the first nine months of last year. Turning to our balance sheet and inventory positions, we held cash of $70 million and an adjusted debt to tangible net worth ratio of 1.1x as of October 31, 2023, well below our bank covenant of 3.5x. Equipment inventory increased by $98.8 million in the third quarter. As mentioned in our second quarter earnings call, our domestic Ag segment was still slightly short of targeted inventory levels, and we anticipated a modest increase in inventories during the third quarter due to planned OEM ship dates and projected customer deliveries. We also aimed to start reducing the amount of pre-sold equipment and inventory back to normal levels. However, as discussed earlier, delays in preparation times and prioritization of service for existing customers have hindered progress. With the busy fall season mostly behind us, we expect to have more time to deliver pre-sold equipment to customers in the fourth quarter. The inventory balance at the end of the fiscal year will depend on the timing of additional equipment deliveries from OEMs and the pace of our pre-delivery inspections. Overall, we anticipate an increase in our total ending inventory similar to what we observed in the third quarter, followed by stabilization as conditions normalize. We will also incorporate the O'Connor's balance sheet into our financials in the fourth quarter. Moving on to our fiscal 2024 full-year guidance, we have updated it to reflect year-to-date performance. We are well-positioned for a robust fourth quarter and have narrowed expected revenue ranges for each segment, considering ongoing limited availability of some key equipment categories and longer prep times for inspections. We now expect our Ag segment to finish up 20% to 23%, our construction segment at 4% to 7%, and our Europe segment at 4% to 7%. Regarding our new Australia segment, we completed the O'Connor's transaction on October 2nd. Similar to Europe, these results will be reported on a one-month lag, resulting in three months of activity reflected in our fiscal 2024 results. Therefore, we are refining our fiscal 2024 revenue estimate to be $70 million to $80 million, with a diluted EPS contribution between $0.10 and $0.15, accounting for financing and integration-related expenses. Typically, fourth-quarter gross margins are a few hundred basis points lower than in the third quarter due to mix and larger tax-incentivized purchases with multi-unit discounts, and this trend is expected to continue this year. Furthermore, we anticipate a modest normalization of equipment margins in line with improved inventory levels and availability. Gross margin in the third quarter was about a hundred basis points lower than the same quarter last year, and a similar 100 basis point normalization is expected in the fourth quarter, partially offset by the anticipated incremental manufacturer incentives previously mentioned. Overall, with strong margins offsetting slightly lower sales expectations for the year, our underlying EPS guidance, excluding the impact from the O'Connor's transaction, remains unchanged compared to the initial guidance set at the beginning of the fiscal year. We look forward to closing the year on a high note and achieving the record results we committed to nine months ago, and we are very proud of that. This concludes our prepared remarks, and we are now ready to take questions.

Our first question comes from Ted Jackson with Northland Securities. Please go ahead with your question.

Thank you. Good morning. So I have two questions. The first one is just going into the issues regarding prep time, which I wanted to get a little more color around. Is it just a labor issue needing more people? Is it equipment that's being delivered and needs extra work for some reason because it is coming in a lesser state than normal? Just kind of what's driving that aspect with regards to delay in top line?

Sure. Ted, it is really a combination of all the things that you mentioned. As an example, if you fly over the global flywheel drive plant here in Fargo, you see a lot of units outside and, typically, what you're going to find is they are either waiting on a truck for delivery due to the shortage of truckers out there right now and/or they are missing a component, some of the supply chain challenges that are still out there, and they have to keep the assembly line moving or the quality of the component received from one of the suppliers didn't pass inspection. So again, they kept the line moving and caught it at the plant. So, they are having those delays on their side, and that creates some of these timing issues we have talked about. Then as we get those units, as far as the additional prep time that we are seeing on our end, anytime you have had one of those units where you can't go through the normal build process, and you've heard a lot of commentary from Deere and CNH and AgCo on this in previous quarters, you always have a risk then of quality issues or other things. So, we just take a lot of pride in our commitment to our customers and excellence in the units when we deliver to them. And so, that's really increased the inspection time to make sure we go through a multipoint inspection. We are catching things, and then we have to fix those issues, which just adds to the time. Additionally, we add a lot of different technology and enhancements that we commonly do for our customers, and the supply chain is still constrained with delays on certain components, both within technology, as well as certain casting components like weights, tires, and wheels. So, you're still waiting on some of those components. But collectively, that all is what's leading to that significant increase in prep time.

And I would just add to that, general supply chain has improved over time, and that's definitely the case. As we look into next year and get past the first half of the year, we largely see a lot of these issues being behind us and getting us back towards normalized conditions. We specifically called it out here because given the higher seasonality volumes, it did create a pinch point in terms of the amount of equipment we could get delivered, which prevented us from reaching the full potential for the quarter.

And then my second question is around O'Connors in Australia. I'm curious as to why you've narrowed your guidance range taking the top down by $10 million. Is that a result of a change in macro dynamics within Australia? Or is that due to having gotten further into the weeds with regards to the business and gaining a better understanding of it? Just provide some color in terms of what prompted you to take the top end of that range down.

It is definitely the latter. It is really just getting into the details, understanding what equipment is in inventory, what equipment needs to get into the country, and the expected timing of delivery to customers. So really just being able to take the time as we got through close to just sharpen the pencil on exactly what would unfold for these three months resulted in narrowing that range.

Our next question comes from the line of Mig Dobre with Robert W. Baird. Please proceed with your question.

Just a quick clarification. I thought I heard you talk about inventories coming up again sequentially in the fourth quarter, and if I heard that correctly, I guess what I'm trying to figure out is when I look seasonally in your business, typically inventories come down sequentially in the fourth quarter. That feels a little bit different this year. And I guess I'm also wondering if you sort of had these disruptions that kind of prevented you from delivering some machines in Q3, wouldn't you be able to hopefully catch up on some of that in Q4, which again, at least in theory, should bring inventories down sequentially?

First of all, to start with and maybe a clarifier, right? As we talk about pre-sold equipment awaiting delivery to customers, that's always turning. So, the unit that was there in the first quarter has been delivered to a customer. It's not still sitting there. Units that were there in Q2 aren't still sitting there. What we're seeing is a continued delivery from the OEMs and we need to process everything through the chute. So definitely in the fourth quarter, we look to be able to chip away at the amount of pre-sold that we have in our inventory balance. But again, as we looked at how timing looks for everything, and with OEM deliveries, right? The OEMs are looking to finish their year strong and get as much out as they can. I think we're still seeing some push to make up for some of those supply chain challenges that had otherwise held them back in parts of the year. If you recall, last year, we received a tremendous amount of equipment toward the end of the calendar year, and between really Christmas and the end of December, there was a short period to really be able to turn that around and deliver to customers. So, it's really those factors that we're talking about. You heard it right. We expect another incremental increase in inventory there and that kind of stabilizing in that range and looking to continue to normalize that pre-sold backlog as we work through the first part of next year.

Yes. Mig, I would just point out that adding O'Connor's to the balance sheet as Bo mentioned in the prepared remarks, as well as our other acquisitions, but also just the timing that we've talked about here. You're right; historically, we would come down by fiscal year-end. But everything's kind of delayed, especially on certain products, a quarter or so. So I build that in as you look at your modeling; we typically would then be more flattish and then build back up throughout the year again. So I think just the delay in all that as we get into the end of the year and into Q1.

Understood. Thank you for that. So my follow-up, if we're looking at inventories going up again in the fourth quarter, I guess I'm curious as to how you're thinking about fiscal '25, and I'm not looking for you to provide your own guidance in terms of the top line. But obviously, Deere commented on next year. DNH, your OEM is thinking that volumes are going to be down as well. So I guess with the inventory built that you have, if indeed volumes are going to be a little bit lower in your fiscal '25, how do you think about managing that inventory and your own order placing with the OEM? Thank you.

Yes, you're correct. The OEMs shared insights during their latest earnings calls, and Deere provided a detailed outlook for the upcoming year at the end of their fiscal period. We have been consistently assessing where things are headed, always looking a year ahead. In terms of finalizing our orders for next year, we've been actively working on that for some time and feel confident about our position and the adjustments we've been making. We will definitely manage our inventory closely and prioritize that. Overall, as we've mentioned, we are pleased with our current inventory levels. On the agriculture side, we need more four-wheel drive tractors, and on the construction equipment side, we require additional wheel loaders. For context, our inventory of combines is around 55% lower than during the last peak cycle, reflecting industry challenges. Our back-office team is dedicated to managing both new orders and valuations of used equipment. When comparing numbers with previous peaks, we should consider the significant price increases over the decade and our acquisitions. Overall, we are very satisfied with our inventory levels, but we acknowledge the need to adapt as industry volumes decrease. We aim to maintain high inventory turns, keep interest-free terms, and ensure our balance sheet stays strong.

Yes, and Mig, I would just add that as Bo mentioned, when you're talking about 6 to 12 and greater months lead time here, you better already have done the actions in place, and we've done that and we feel really good about that heading into next year. As he mentioned, our professional team that just focuses on inventory management does so because they are always watching a lot of analytics and metrics and running the dials on our inventory. So, we feel really good about the actions we have taken. As we mentioned on our previous call and as Scott Wine mentioned on the CNH call, there are a few pockets of that lower-torque horsepower tractor inventory we are a little longer on than we'd like, but we have actions in place on that as well to clean that up. And, as we mentioned, with four-wheel drives and wheel loaders, there are some pockets where we are still a little short on certain categories. However, overall, we feel good about where we are positioned to deliver the fourth quarter results we need, and then as we transition into next year with what we anticipate the market will do next year.

Our next question comes from the line of Alex Rygiel with B. Riley Securities. Please proceed with your question.

Thank you and good morning, gentlemen. A couple of quick questions here. First, your full EPS guidance includes a range of $0.65, of which I believe $0.22 could be from the incentives. So if you could maybe talk about some of the catalysts being at the high-end or low-end of that $0.43 difference.

This isn't going to sound overly sophisticated, but it is related to the revenue and where that comes in regarding whether it is toward the top end or the low end of the range. We feel pretty good in terms of our operating margins. Operating expenses are pretty well honed in. So it really is just a function of how much of that equipment gets delivered.

That is helpful. And then, as it relates to inventory walking up a little bit in the fourth quarter, I believe you might have thought that it would tail off from the third quarter and decline into the fourth quarter. But it sounds like you are expecting it to increase a little bit. Maybe I guess my question is: what has changed? And then, what's the mix of inventory across Ag versus construction? Is one higher or lower than where you would like the optimal level to be?

Maybe addressing the latter first. I don't think so. I mean, in general, we are feeling pretty good about our inventory levels. On the CE side, the one that's short, as we mentioned, but otherwise across the board in general, it is good. There are probably a couple of areas just like on the Ag side, for example, low horsepower tractors, where we want to continue to look to trim as we anticipate trends going into next year. On the Europe side, also some areas there that we would be looking at trimming as we are seeing some softness specifically in Bulgaria and Romania. But on the whole, there is not a drastic difference in terms of our thoughts or level of health between Ag and CE as you asked.

Thank you. Our next question comes from the line of Daniel Imbro with Stephens Inc. Please proceed with your question.

Hey guys, and thanks for the question. We were just wondering how much visibility do you all have into these OEM deliveries improving as we move into the fourth and first quarters? Since we could have a similar dynamic to last year with maybe a heavier fourth quarter, do you foresee timing delivery being a problem again in the first quarter since you might get a large influx in the fourth quarter?

So, we definitely anticipate a strong fourth quarter revenue-wise compared to the prior year. And even a bit, if you do the math from where we were in the third quarter, obviously, we have more equipment available and we have backlog there. So in terms of the confidence in the fourth quarter, we are feeling good about that stuff. And I think at the same time, we have talked a little bit about today in terms of anticipating that inventory increases a bit from where we're at. So I think both of those we’re saying is what our expectations are. In terms of setting up for next year, again, we are feeling like we're ending the year in a healthy spot inventory-wise. We'll provide more context guidance-wise as we get into the March year-end call. Did that answer your question?

Yes. That's perfect. And then on the service delay side, you mentioned wanting to hire more technicians. How is that going? How is the technician availability? And are you having trouble that could limit your ability to catch up on this throughput?

Yes, there's a real shortage out there, just technicians in general, whether you're talking about the airline industry or trucking industry or marine power sports, or automotive. We really hit hard into this with our customer care strategy several years ago and have just a lot of actions in place that we feel really good about, and have been the pilot and cutting edge for many in our industry who are trying to follow suit and keep up with us on a lot of the things we're doing. We just now came out with the first accredited apprentice program for our industry. We have the first student tech scholarship sponsorship program that we started years ago that we're really starting to see the fruits of now, as well as our internship programs and recruitment efforts that we're doing. We're sponsoring that effort with tech schools and relationships we have with high schools and tech schools. All of this takes time, and thankfully we put a lot of the actions in place that we did that we're now seeing some fruits of our labor. You have many baby boomers and a lot of workers that are retiring now, exiting the workforce. As you can imagine, it takes a lot to grow the technician base and add the number of technicians we need to offset these retirements. We feel good about the traction and momentum we've got in that, and that remains an absolute front and center priority for us as we go forward.

Our final question this morning comes from the line of Steve Dyer with Craig Hallum Capital Group. Please proceed with your question.

Curious about the $6 million of manufacturer incentives that you expect to achieve in Q4. I guess, is that dependent on CNH and your OEM partners meeting their delivery schedules to you? Or is that fully within your control?

For competitive reasons and others, we don't really get into a lot of the mechanics on that, but I guess what I would say is we have it in our guidance, and that reflects our confidence in achieving the number. There are definite timing differences between this year and last year, and that's why we put a little bit more perspective on that.

Then for a second question, what percent of equipment is leased versus sold today? And how has that mix trended over the past several years?

Right now, we're in single digits on leasing versus sold, just a tremendously low amount being leased. That has trended way down. I think Deere mentioned also on their call, the big difference between today and 10 years ago is not only the level of leasing but the quality of the leases. So, one- and two-year leases were very common and problematic back then. Then, of course, when the downturn hit, those lease returns were coming back in addition to a glut of supply from overselling of new equipment which all happened, and none of that trifecta is in place today. So, we have way fewer leases and the leases we do have are minimum three-year, mostly five-year very quality leases. And again, as Bo mentioned, with a combine example, there is simply a lot lower levels of used equipment in play today. Unfortunately, it has constrained our revenue opportunity over the last year or two; the limited production capabilities just didn't put out the amount of new units, resulting in an older fleet in most categories except to a degree, combines. The limited production also just didn't get the amount of new units into the market. So, all those components are tremendously healthy and very supportive factors as we go into next year.

Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Meyer for final comments.

Okay, well, thank you everybody for your time today and your interest in Titan Machinery.

Thank you. This concludes today's conference call.

That concludes our call.

Thank you. This concludes our conference call. Thank you for your participation. You may now disconnect your lines.