...Greetings, and welcome to Titan Machinery Inc.'s second quarter fiscal 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Sonnek. Thank you. You may begin. Thank you. Welcome to Titan Machinery's second quarter fiscal 2025 earnings conference call. On today's call from the company are Bryan Knutson, President and CEO, and Bo Larsen, CFO. By now, everyone should have access to the earnings release, dated July 31st, 2024. If you've not received the release, it's 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, which can also be found on Titan's Investor Relations website, directly below the webcast information in the middle of the page. 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. Those statements do not guarantee future performance, and therefore undue reliance should be placed upon them. These forward-looking statements are based on management's current expectations 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 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. Please note that during today's call, we may 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 comparable GAAP financial measures in today's release and presentation. At the conclusion of our prepared remarks, we'll open the call to take your questions, and with that, I'd now like to introduce the company's President and CEO, Mr. Bryan Knutson. Bryan, please go ahead. Our second quarter performance and our near-term outlook. Then I will pass the call to Bo for his financial review and incremental thoughts on our modeling assumptions for the remainder of the year. As we shared two weeks ago in our second quarter pre-announcement, the agriculture equipment industry is adjusting to the softening demand as agriculture fundamentals have materially weakened, driven by the anticipated decrease in net farm income and sustained higher interest rates. The decrease in net farm income is largely being driven by significantly lower commodity prices for most key cash crops in our footprint, which have steadily declined since the beginning of the year. These elements, combined with mixed growing conditions across our footprint, are negatively impacting farmer sentiment and have manifested in lower retail demand for equipment purchases. Through this period of softening demand, we have shifted to a much more proactive and aggressive approach as we actively work to reduce inventory to targeted levels, especially on the used equipment side, while in turn reducing floorplan interest expense. This strategy requires compression to our near-term equipment margins. However, the actions we are implementing will inherently shorten the impact on our performance during this period of lower demand and will accelerate our return to a more normalized margin profile as the industry cycle progresses. As we navigate the current cycle, it's worth highlighting the significant differences from the last downturn, which underscore the improved health and preparedness of the entire sector. Unlike the previous cycle, we are seeing a coordinated, proactive approach to inventory management across the industry by both dealers and the OEMs. At Titan, we are particularly focused on efficiently aligning inventory with demand by carefully analyzing market trends, adjusting pricing strategies, and working closely with our suppliers on financing terms for our customers. The result of these collective actions will not only reduce inventory, but will also reduce our interest expense. Importantly, I would like to drive home that it is the early recognition and quick implementation of these strategies that mark a significant adjustment in our approach relative to previous cycles. While inventory levels in terms of absolute dollars are currently higher than we want them to be, on a units per store basis, it is important to note that we have significantly less inventory than we did heading into the last downturn. At the end of the second quarter, we had an average of approximately $8.9 million of inventory per store. This is up approximately 6% from the high watermark of the prior cycle. However, as I mentioned, we have significantly less units per store as OEM price increases over the past decade have been substantial. For example, the cost of a four-wheel drive tractor is up approximately 80% since the last downturn. Another key difference between this cycle and last is that industry fundamentals heading into the cycle are much healthier. Farmers entered this cycle coming off consecutive years with excellent profitability and stronger balance sheets, further bolstered by more favorable land values, providing them some buffer against the current headwinds. Secondly, please recall the supply chain disruptions that severely limited OEM production volumes over the past two years. In aggregate, these production levels were closer to that of mid-cycle averages. Thus, the fleet age in North America continues to support replacement purchases as we progress through the cycle. Thirdly, and as I mentioned earlier, both dealers and OEMs are aligned in aggressively managing inventory levels to demand and are being more proactive earlier in the downturn. Fourth, as mentioned on previous calls, we do not have short-term lease returns, which further exacerbated the impact of the last cycle. And finally, I would note that precision agriculture solutions were not as developed in the previous cycle, and that today's solutions are helping farmers garner higher returns in their operations, further supporting future equipment investment. While inventory remains our primary focus, we are also taking decisive actions to control costs and grow the other areas of our business. We continue to lean into our customer care strategy to fuel our recurring high-margin parts and service businesses. This is an area where we believe we can not only drive growth this year, but more importantly, create long-term sustainable growth. These factors, combined with the efficiencies and process improvements we've integrated since the last downturn, will undoubtedly enhance our ability to compress the impacts of this cycle. That said, we know that to achieve through-cycle performance of our optimized business, it is imperative that we reach targeted inventory levels as quickly as possible. Now I'd like to change gears and provide an update on crop conditions within our footprint. As previously mentioned, there has been abnormally wide variations in growing conditions within each of our regions. In North America, significant spring rainfall delayed the planting season, and in some cases, fields were too wet to plant altogether or did get planted, then drowned out and did not recover. Overall, in North America, all of this will lead to widely varying yields from even one store to another. In Australia, plentiful rainfall in some areas of our footprint is leading to an exceptional crop, while other areas are experiencing drought conditions, and in those areas are looking to produce average to below average yields. In Europe, Romania and Bulgaria continue to be negatively impacted by severe drought conditions, whereas conditions are overall much better in Germany and Ukraine, who are looking to produce average to above average yields. Finally, regarding our construction business environment, we believe underlying industry fundamentals have moderated somewhat off of recent highs due to the extended period of higher financing costs and uncertainty around the economy. However, our revenue outlook for our construction segment is stable versus the prior year and is supported by equipment availability and new product introductions from our suppliers. In closing, I want to reiterate that we are taking decisive actions to navigate this cycle effectively, and we remain committed to delivering long-term value to our shareholders and to providing best-in-class service to our customers. I want to sincerely thank our employees for their hard work and dedication to support our customers during these more challenging times. Their efforts have been crucial to the success of our customer care strategy, and I'm highly confident that with our lessons learned from the previous cycle, combined with the actions we have taken, which have made us a stronger company, and the actions we are now taking, will ensure we can effectively navigate through this downturn. With that, I will turn the call over to Bo for his financial review. Thanks, Brian. Good morning, everyone. Starting with our consolidated results for the fiscal 2025 second quarter. Total revenue was $633.7 million, a decrease of 1.4% compared to the prior year period. Underlying this performance was a same-store sales decrease of 12.5%, driven by lower demand for equipment purchases due to the expected decline of net farm income this growing season. This was largely offset by the acquisition of O'Connors that we completed in October 2023. Gross profit for the second quarter was $112 million, and gross profit margin contracted by 310 basis points year-over-year to 17.7%, driven primarily by lower equipment margins, resulting from higher levels of inventory across the industries we serve and our proactive stance on managing our inventory down to targeted levels, as Brian discussed earlier. Operating expenses were $95.2 million for the second quarter of fiscal 2025, compared to $88.8 million in the prior year period. The year-over-year increase of 7.2% was led by acquisitions that we've executed in the last 12 months. This year's second quarter operating expenses also included a $1.5 million non-cash impairment expense related to certain assets in our European segment. Floorplan and other interest expense was $13 million, as compared to $3.7 million for the second quarter of fiscal 2024, with the increase led by a higher level of interest-bearing inventory, including the usage of existing floorplan capacity to finance the O'Connors acquisition. GAAP reported net loss for the second quarter of fiscal 2025 was $4.3 million, or $0.19 loss per diluted share, and compares to last year's second quarter net income of $31.3 million, or $1.38 per diluted share. The current quarter's reported net income includes $11.2 million or $0.36 per diluted share impact, related to the one-time non-cash sale-leaseback financing expense we incurred in the quarter. Excluding this impact, net income on an adjusted basis was $4 million or $0.17 per diluted share. Reported net income for this year's second quarter also includes a $2.7 million gain related to the completion of a New Markets Tax Credit program, which was anticipated and included in our forecast throughout the year. As we mentioned previously, the lease accounting expense reflects our entering into agreement for the future purchase of 13 of our lease facilities on expiration of the current leases. The purchase closing date for each leased facility will occur on or before the expiration of the respective lease, all of which expire over the next several years through calendar year 2030. While the initial impact of this purchase agreement temporarily reduces GAAP reported earnings, this is a non-cash expense, and I'd like to emphasize that the transaction is financially strategic and supports the company's long-term customer care strategy by investing in facilities and shop space required for continued growth in our high-margin parts and service businesses. Now turning to a brief overview of our segment results for the second quarter. In our agriculture segment, sales decreased 9.6% to $424 million, which included a same-store sales decline of 11.2% in the second quarter. Agriculture segment adjusted pretax income was $6.7 million, compared to $33 million in the second quarter of the prior year. This adjusted figure excludes $6.1 million of non-cash sale-leaseback financing expense that I mentioned previously. The underlying year-over-year decrease in profitability reflects the softer retail demand environment, which manifested in lower equipment sales, lower equipment margins, higher inventory levels, and higher floorplan interest expense. In our construction segment, same-store sales declined 3.2% to $80.2 million versus an increase of 18.5% in the prior year. We are generally seeing year-over-year stability in this segment. However, supply chain catch-up has driven inventory levels higher for both the construction industry as a whole and for Titan. So we are proactively managing inventory down to targeted levels and are seeing margin compression in this segment as well. Adjusted pretax income for the segment was $0.2 million, which compares to pretax income of $5.2 million in the second quarter of the prior year. This adjusted figure excludes $5.1 million of non-cash sale-leaseback financing expense that I mentioned previously. In our Europe segment, sales decreased 24.8% to $68.1 million, which included a same-store sales decline of 27.7% versus 15.9% growth in the prior year. Severe drought conditions in Eastern Europe started to impact retail demand in the back half of last year. These subdued demand levels have persisted through the first half of fiscal 2025, and we expect that to continue through the rest of this fiscal year. Pre-tax loss for the segment was $2.3 million, which compares to $5.6 million income in the second quarter of fiscal 2024. The current year's second quarter results for Europe include approximately $1.5 million of non-cash impairment expense related to certain assets. Excluding these impacts, pretax loss for the segment was $0.8 million in the second quarter. The underlying year-over-year decrease in profitability reflects similar dynamics as I just mentioned, with our domestic ag segment regarding the softer retail demand environment, higher inventory levels, and higher floorplan interest expense. In our Australia segment, sales were $61.3 million, and pretax income was $1.4 million. This segment is facing very similar customer dynamics as our domestic ag segment, but with a substantial mix of pre-sales, which is helping maintain sales figures similar to the prior year comparative period, which was pre-acquisition.... Now on to our balance sheet and inventory position. We had cash of $31 million and adjusted debt to tangible net worth ratio of 1.8x as of July 31st, which is well below our bank covenant of 3.5x. Regarding inventory, we believe that our equipment inventory level has recently peaked at approximately $1.3 billion. This aligns with our expectation from the beginning of the year regarding the normalization of lead times from our OEM partners and the timing of order arrivals. We expect to begin demonstrating the results of our inventory reduction actions in the back half of this year, with inventories moving modestly lower in the second half of this fiscal year before we realize more substantial decreases in fiscal 2026. With that, I'll finish by reviewing our fiscal 2025 full year guidance, which we recently updated concurrent with our pre-announcement on October fifteenth to account for our second quarter performance, our latest view on industry environment, and to account for the one-time non-cash sale-leaseback financing expense we recognized in the second quarter. Current market conditions, characterized by lower commodity prices, sustained high interest rates, and mixed growing conditions across our footprint, have negatively impacted farmer sentiment. This resulted in noticeably softer retail demand in the second quarter compared to the expectations we shared during our first quarter earnings call. Given the current backdrop, we now see these more subdued demand levels persisting throughout the rest of the fiscal year. As such, for domestic agriculture, our revenue assumption is in the range of down 5%-10%, which includes the full year contribution from our Scott Supply acquisition, which closed in January of 2024. For the Europe segment, our assumption is for revenue to be down 12%-17%. And for the Australia segment, we expect fiscal 2025 revenue to be in the range of $230 million-$250 million. Each of these segment assumptions reflects the more challenging environment we're facing, partially offset by our efforts to stimulate demand. Despite these headwinds, we expect we will continue to see growth in our service business in the high single-digit range for the full fiscal year. For the construction segment, our updated assumption is for revenue to be flattish in the range of down 2.5% to up 2.5%, which similarly reflects a more cautious outlook than our prior assumptions, given the overall macroeconomic environment, but generally stable compared to the prior year. Now for some broader commentary. From a gross margin perspective, we remain committed to improving our inventory position, particularly in used equipment. Given the excess supply of inventory in the channel and softer equipment demand, we are now building in expectations for further equipment margin compression, such that our updated assumptions for consolidated equipment margins are approximately 540 basis points lower in the back half of this year as compared to the back half of last fiscal year. For comparison, consolidated equipment margins were approximately 330 basis points lower in the first half of this year compared to the first half of last fiscal year. We now anticipate equipment margins for our domestic ag business to approach the historical lows we realized in fiscal years 2016 and 2017. While this will impact our short-term performance, we believe this approach to managing inventory will shorten the duration of this downturn compared to the previous cycle. Regarding operating expenses, we are focused on implementing cost controls where we can, optimizing resources, and being vigilant with any headcount decisions. Our guidance now implies operating expenses to be about 14.4% of our revised sales outlook. Moving to interest expense. Given our revised revenue expectations and the commensurate impact on inventory levels that we are working to improve, we are incurring higher floor plan interest expense than previously anticipated. Although we continue to expect that improved interest rates terms will provide a tailwind for interest expense in the back half of the year, we believe this benefit will be more than offset by the industry dynamics at play, and it will take more substantial decreases in inventory as we progress through next fiscal year before we begin to see more normalized levels of floor plan interest expense. Our assumption for floor plan and other interest expense for the full year is now approximately $47 million and compares to approximately $21 million in fiscal 2024. Taking all of these factors into account, our guidance for fiscal 2025 GAAP diluted earnings per share contemplates a range between a loss of $0.36 to earnings of $0.14. On an adjusted basis, excluding the $0.36 non-cash impact of the sale-leaseback financing expense recognized in the second quarter, which was not originally contemplated in our modeling assumptions, we expect adjusted diluted earnings per share to be in the range of breakeven to $0.50. We believe the decisive actions we are taking with respect to managing inventory will help shorten the impact of this cycle on our performance, potentially accelerating to our return of a more normalized margin profile, and that is what we are focused on delivering. This concludes our prepared comments. Operator, we are now ready for the question and answer session of our call. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please, while we pull for questions. Thank you. Our first question comes from Ted Jackson from Northland Securities. Please proceed. Thanks very much. Two questions. My first question is just with regards to ag spending and seasonality. When you look at the second half of 2024, do you think that it's likely that we will still see some level of flush or spend in the fourth quarter, as is typical in a typical kind of seasonal pattern? Or are you thinking that the market is so challenged that we will not see that kind of seasonal flush that we typically get? That's my first question. Thank you, Ted, and good morning. Yeah, so we're still anticipating, you know, fourth quarter spending here by farmers and contractors, you know, as they see how the year shaped up, meet with their accountants, and you know, as we go back to those varied crop conditions that we talked about, you know, certain areas of our footprint, if you look in the western half of South Dakota, all throughout Nebraska, pockets of Minnesota and North Dakota and Iowa, there's really, really good yields. So those farmers, even with the subdued prices, will have some spending needs as well, and will be looking to update some equipment. Also, because of the, you know, the supply constraints that we had, you know, a lot of those growers weren't able to update certain equipment the past couple of years, so those growers that do get the yields, we will see some traditional good purchasing from them, but subdued to the levels that we've got in the modeling here, so I think the trend, the timing patterns will be very similar, but just, yes, definitely lower than normal purchases here towards the end of the year. Yeah, so as you take a look at the guidance and then look at the back half of the year in terms of what's implied, as he said, seasonality is very similar there. So you know, if you drill down to our domestic ag business specifically, you know, we've got a full year total equipment sales being down about 11%. In the first half of the year, that was down about 4%. But again, we were coming into the year with a lot of pre-sales there, right? So we're essentially applying about a 15% decrease in the back half of the year, which is a little bit more of a decrease than we saw in the second quarter, but not significantly. So kind of stabilized at this point in terms of year-over-year comps, but the cyclicality and timing of purchases remains. Okay. My next question is just on inventory, and so, actually, I thought it was good news to hear that you think you're at peak inventory, and you'll start to see that come down and with it accelerating in 2025. When you look into your crystal ball, and I'm sure it's, you know, sharp and clear, like a high-definition television, when do you think you can get your inventory to what would be, you know, a normalized level vis-a-vis demand? Is that something that we could expect to see, you know, before we get, you know, in by the second half of 2025? Or is that something that's gonna take longer, and then I actually do have one more behind this. Yeah, maybe I'll let Bo take that one, Ted, but maybe just to set the stage, you know, a couple points that are now working into our rearview mirror is, leading up to this, you look at just the unprecedented confluence of abnormal factors that came together to lead to this inventory spike. You know, driven by the COVID supply chain issues, the plant strike at CNH, which all led to record long lead times. And really, in my nearly two dozen years of doing this, the most unpredictable order boards, you know, over the past eighteen months or more that we had. So, now we have much more clear order boards, shorter lead times. And secondly, we have not placed an order for inventory stock in over six months. However, what we've been facing, you know, in the end of last year, all throughout this year, is finished working through those orders that, in many cases, were placed back in 2022. And so we are now just starting to receive the last of those orders. So now we can actually start to plan the, you know, the business accordingly. And the task at hand is very clear now, as we just have to work through what we've got, and we don't have any more of these, you know, old orders, if you will, that were placed before things started changing, coming in to deal with and work through. Yeah, and then maybe a little bit more color. So as I talked about in the opening comments, we're at about $1.3 billion in total equipment inventory. You know, roughly speaking, call it $900 million would be a good targeted level. That would assume about a 2.5x turn on the domestic side, and then there's some regional differences in terms of how that shakes. But, so call that about a $400 million difference. As we look through the rest of the year, you know, working towards executing on and achieving close toward a $100 million decrease for the year, leaving about $300 million to go. We'll have to provide more commentary at the end of the year in terms of what the next year really looks like. But I mean, the idea to be able to get to those targeted levels by the end of next fiscal year, I think is a good base point for us. You know, and just as a comparison, looking back in history, if we went back to the last downturn in FY 2014. So at the end of FY 2014, by the time we got to FY 2016, you know, we drove an inventory reduction of about $350 million, so about $50 million less than we're talking about here. And what we're talking about doing is being more proactive, right, in driving that $50 million incremental change in an eighteen-month period of time instead of a 24 month period of time. So yeah, it's something that we've done in the past, and so we know the playbook to execute, and that's the guidance I would give you today, and we'll certainly provide more color on that as we progress through this year and then as we set the stage for guidance for next year. Okay. And I'm gonna just skip my last question. It's irrelevant. Thanks for the time. Talk to you soon. Our next question comes from Mig Dobre from Baird. Please proceed. Good morning. I guess I'd like to maybe just start with a couple of points of clarification about the quarter itself. So two items here. If I'm looking at the margins in rental and other, the gross margin there was quite a bit lower than what we had in the prior year, and I'm trying to understand what's happening with that sub-segment and how you see that progressing going forward. Also related to the quarter, we've seen a higher level of other expense. I think it's north of $7 million, if I'm not mistaken, and I'm kind of curious as to what that line item is specifically and how that plays out in the back half. Yeah. No, I appreciate the question and the chance to clarify that. That $7 million is essentially, for all intents and purposes, it's the net of the $11.2 million sale-leaseback expense, netted against that $3.5 million New Markets Tax Credit completion. So that gets you to that $7 million, and really, there shouldn't be a significant amount of activity in that account otherwise. So that's what you're seeing there. From a margin perspective on the rental and other side, I mean, I would say probably similar to what you've seen elsewhere. Rental fleet utilization is certainly down for us this year. It's something that we're focused on in managing fleet size. And we would expect that to persist through the back half of this year. Again, we're doing similar things to what you've heard others in the industry. We'll probably work to manage the fleet down somewhat, as we finish developing our outlook as we get into next year as well. Why is it that your utilization is down in rental? Can you maybe remind me if you've experienced a significant increase in fleet or are there other factors here? Our fleet is basically flat. So it's purely a function of the physical utilization, Mig. So just and that tied, you know, directly to the softening in the construction industry. You know, softening in residential and warehouse and in some of the areas, other areas that especially our rental business really plays. You know, good news about the rental sector for us is it can be a very high-margin business and very much a function of utilization. So a slight dip in utilization can lead to a pretty big swing in margin and vice versa. So just really got to, you know, keep pushing and keep the machines out there, you know, working on the job sites. But that's what you'll typically see when there's a softening. Our contractor customers have their core fleets, and when things really, you know, swing up, quicker or stronger economy, that's where they really rent. And then as it softens, they pull back in and use their core fleets. And so I think you're, you know, seeing some similar swings with the United and some Sunbelts of the world. So that, and I think you pretty much got it covered there, but underlying that, right, is the rental is largely a construction business, and our rental fleet size is about $80 million, and it's pretty much flat. Very helpful. Maybe going back to the equipment inventory discussion, appreciate the color in terms of how you see progression down $100 million in the back half and then, more work to do in fiscal 2026. But I'm sort of curious as to why we're only seeing $100 million of inventory decline here. Can you maybe help me understand what's going on with the shipment that you're getting from the OEM in the back half of this year? And, you know, related to this, the margin compression, as you talked about, is pretty notable on a relatively small inventory decline. What is it that you actually have to do to generate this inventory decline, such as it is in the back half of fiscal 2025? Yeah, so in terms of, I'll make sure that we address both of those points, right? But in terms of, how this plays out, right, is, at the beginning of the year, we talked about the orders that we had placed going back in time. Brian earlier mentioned on the extension and then compression of lead time. So I think we're all familiar with that. But in March, if you go back and listen to the call, we talked about projecting forward based on receiving those orders that we had already placed, inventory increases in Q1 and Q2, and then we'd start to see an inventory decrease in the back half of the year. The first half of the year pretty much played out how we had expected, you know, despite the revenue miss. Back half of the year, right, we're gonna finish in the Q3, we're gonna finish receiving kind of the rest of the orders that were placed previously, and then you really start to see that tail off. So what we'll be doing, right, is we'll be selling through that new equipment that we've received in the first half of the year and Q3, a lot of which is pre-sold, but you got to receive it and deliver it. Once you receive in that new, you sell it, you get a used trade-in. Once you sell that used, you get a used trade-in, right? So there's a bit of an effect where we'll see our new whole goods decrease more substantially than the numbers we're prescribing here, but we're gonna see that partially offset by an increase in used equipment, which is typical for us as you move into a downward portion of the cycle, right? And then for, you know, the next two years, that used sales will be a larger portion of our equipment mix as you work through that and then get everything normalized and back to targeted levels. So that's exactly how it's gonna play out, and there's a bit of a two-stage effect to that. And that sort of also answers, you know, why don't you see a more prescribed decrease in the back half of the year? You know, going into the year, we would have, right? But certainly, our latest guidance has taken quite a bit of sales out of the back half of the year. So assuming that that new outlook, that's why you're not seeing a larger decrease. Yeah, you know, it's interesting- Well, I would just add, too, you know, it's a function of the lead times very much as well. So we were dealing with unprecedented record-long lead times. And so, you know, as I mentioned, Mig, you just got to, we also have to work through these orders that have been coming in all year, since you shut the faucet off. So basically, add that to it, you know, and that's what's all baked into our modeling, and we've got, you know, all of our inventory aggressively priced, and that's also baked in, you know, that's in the modeling, the margin modeling as well. So we feel positioned very well to hit the task at hand and hit our timeline goals that we have. To your point, unfortunately, because of those long lead times and the orders that I'll add to that that come in, you know, after we've started down this path, it just takes longer than we all want. That being the case, as we're looking at calendar 2025, or in your case, your fiscal 2026, you're basically saying that the bulk of your inventory normalization is gonna occur then, right? So it's gonna occur next year. But you're already experiencing pretty significant margin pressure this year in the back half of 2025. So I guess the question is, if most of the destock is happening in fiscal 2026, should investors expect further margin compression in 2026? Because frankly, that's when most of your destock is, is actually going to happen. Yeah, I think that the dynamics we'll have in terms of needing to work targeted inventory down, you know, what we have in the back half of the year persists into next year, right? But the biggest move that's gonna make in terms of the decrease in inventory is actually gonna be less coming in at the top. So I think we'll see similar... You know, right now, and we're not providing guidance for next year, but right now, what I would prescribe is margins we're seeing in the back half of the year, base cases, you assume that those carry forward into next year until we see more of that inventory decline. But generally speaking, I would suggest it would be similar to what we're guiding to, as opposed to more compressed. And again, we're gonna see a lot of the inventory decline next year, coming on the back of simply less, substantially less inventory coming our way. And we'll really be focusing on that same population of used equipment, a good portion of which we'll already have in our inventory and priced right here before we exit the year. Okay, last question for me. In terms of the orders that you're placing today with the OEM, given the circumstances of the industry that we already covered here, are any of these orders, orders that are, you know, for your inventory? Or do you actually have a customer name associated with each one of these orders that you're placing? And again, these are orders that you're placing today for future delivery, sometime into fiscal 2026 or whenever. Yeah, very much, a customer name. An extremely minimal amount, Mig, of stock units for, you know, loaner purposes, to keep customers going, and some demo units, but much, much less than any other year we would do. So the great majority of them are all presale customer name. We're just not ordering units for stock or display or for the walk-in sale. Any of the stock units we're ordering are extremely limited and very intentional, again, with the purpose of our keeping customers going. Yeah, and I mean, I think you heard that clearly, and you asked a good clarifying question. And just to emphasize that, right? We're absolutely still focused on generating presale activity, and that's what, that's what we always want to be leading on. So we're gonna continue to place presale orders that have a customer's name on them, and we have been throughout the year. And it was, as Brian mentioned, and then you're asking about here, it's the stock side of things that we really pulled back on, and there's little to no activity there. And all of that kinda comes together, right? And the stock is what you get targeted, and we'll take down as we progress through the next eighteen months. And then, Mig, I'll just go back to one more thing on your margin question. It really, you know, a function of orders coming in, as banked up against the inventory reduction targets. And so if you look at what we've done and what we've got baked into the back half of this year, we've been outpacing the industry, and we've needed to because of those legacy orders that are coming in. And so as we transition into next year, because we haven't placed these stock orders, and we don't have those legacy orders coming at us to deal with, we can now start to sell in line with the industry and also, you know, not have that margin pressure that we have from outpacing the industry and still work our inventories down further. Understood. Thank you for taking my questions. Thank you, Mig. Our next question comes from Ben Klieve, from Lake Street Capital Markets. Please proceed. Thanks for taking my questions. A couple from me. First of all, one more on the equipment margin front. I know you talk about kind of an explicit focus on your inventory control being one of the contributing factors to margin compression. I'm wondering if you can kinda talk about the range of equipment margins, you know, from maybe those categories that you are, you know, kind of almost intentionally driving down in the current environment to, on the high end, the categories that are much more balanced from a supply-demand perspective, you know, perhaps from the precision side. Is the range of margins in equipment, you know, materially expanding? Is the high end, you know, staying firm, or, or are you seeing compression really across the board, you know, throughout your product line? Yeah, sure. Thanks, Ben. It's, you know, it is generally across the board on the equipment. However, you know, again, I go back to it's a function of, which specific product categories we're a little longer on is where we're being more aggressive to outpace the market. So, depending on to what degree we need to outpace the market to reduce those faster, there is a little more margin compression in those categories. And then, you know, typically, your higher cash crop products would have, you know, a lower margin percentage, but higher dollar ticket items, so higher dollars overall. And then, third is just, there are still. Again, I go back to the amount of inventory in a category. So there are still some products that, you know, we're really underproduced, that are still in demand and, you know, still seeing some decent margins on some of those product categories. So we're being very prescriptive on that, and again really looking at every product category, every bucket, and being more aggressive, certainly in some areas than others, depending on how quickly we need to outpace the market here. Yeah, and you were asking a little bit on the precision side, and I think we alluded to it a bit. Certainly, you know, automation, continued precision technology that's helped drive inefficiencies, and profitability for farmers is something that, you know, is a net positive in terms of driving purchasing decisions. And we see really good take rates on that. You know, relative dollars-wise to the, whole goods equipment themselves, you don't necessarily see it as much in what we're talking about here, but it's absolutely a positive factor, and it's something that's gonna continue to grow, as we progress over the next several years, just like all the OEMs have alluded to. Very good. Okay. That's very helpful. And then one other one for me. You know, it's good to see, you still being so optimistic about the state of the service business. I'm wondering in this kind of weak, you know, ag environment here, kind of what the impact of, you know, this ag economy is on that business, both in terms of, you know, are you seeing farmers, you know, in any way, you know, less compelled to outsource service? You know, and is this at all a benefit for you in, you know, securing much needed labor, you know, given the challenging environment that, you know, that individuals are facing, kind of throughout the ag economy? Yes and yes. So, yeah, Ben, it's, you know, certainly, their mindset and their banker's mindset is to spend as little as possible right now, so they are not wanting to do as much in repairs. However, they're certainly mindful of the stakes are so high. ... planting windows and the harvest windows are so short. On construction side, you know, the job sites, one piece of equipment goes down, can tie everything up, and the deadlines and the penalties, so again, downtime is so expensive for them, and they get that, and we've really, you know, done a great job partnering with our customers, and they really see the value in us working with them on that, so that combined with, you know, for quite a few years now, we have not been able to keep up in our shops, and that's why we've had such a push to add technicians, so even if it falls off a little bit, you know, our shops are still generally really full across the board. And then, third, as the general economy has tightened, you've seen some changes in the job markets and the unemployment rates and so on. That has helped. We are getting some additional applicants. You combine that with the actions that we're doing at Titan. We've got the, you know, first-ever Diesel Camp program, which has been huge success. First internship program in our industry. We've got our Student Tech Sponsorship program that's been. We pioneered. That's been industry-leading, that's led to about 80 new technicians for us this year. We've got the first-ever accredited federal apprenticeship program in our industry, which we're getting a lot of good candidates in there. And so we're really starting to see some of the fruits of our labor there, and that's been our biggest constraint to our service revenues. So we feel optimistic again, about that being a long-term growth initiative for us. And again, the customers just really see the value of it because the downtime is so critical. Got it. Got it. Very helpful. Very good. Well, I appreciate you taking my questions. Best of luck here in the back half of the fiscal year, and I'll get back to you. Thanks, Ben. Our next question comes from Alex Rygiel from B. Riley Securities. Please proceed. Hi there. Good morning. This is actually Min on for Alex. Hey, Min. Just a couple of quick questions. Hi there. Just first, I know that this will probably come out in the queue, but what was the average rate on your floorplan financing in the quarter? Yeah, I mean, it's roughly seven point five, seven point four or five. Okay. And also, just given that you're the largest CNH kind of dealership, do they provide you, or have they, in the past, provided you with any additional concessions in a down market, like extending, you know, the non-interest bearing timeframe, or just anything there? I know, you know, you guys have, obviously, a strong relationship with them. Yeah, you know, CNH certainly wants to see their dealers healthy and to see their dealers be able to perform through this down cycle and you know, be able to reinvest in the business and again, stay strong and profitable and healthy. So, yeah, they certainly partner with us where they can and help us out with exactly the levers that you mentioned, Min, are good examples. Things like helping with floor plan interest or extended terms and partnering together on financing programs, et cetera. Yeah, and ultimately, big picture, right? The win-win is to get inventory sold through and manage production. I think that's what he's focused on. We were also alluding earlier in the comments, you know, a lot of focus on in providing financing for customers to drive that pull-through, which is really what we want. Excellent. Also, in terms of your cost-cutting initiatives, and I understand that you've cut a lot of costs since the last downturn, but can you quantify how much cost you're looking to take out, maybe in this fiscal year or the next? And are you considering any divestitures at this point? Yeah. So from an overall expense perspective, you know, if you set Australia to the side, we will have. Our forecast assumes about 2% increase in OpEx year-over-year, about $8 million, and that still even includes, you know, our Scott Supply acquisition and ERP, which added a couple million dollars. So generally speaking, we're saying we're flat year-over-year. You know, when you think about our cost structure, so much of our OpEx is people, and our people aren't focused on producing equipment, right? Which is decreasing. Our people are focused on selling the equipment that we have and providing the customer service and support. So we have some different dynamics at play than the OEMs do, and we want to make sure that we're maintaining that staff. But certainly we're got a sharp pencil. Any discretionary spending has certainly been whittled down, and we'll continue to keep a tight eye on that. Hiring, you know, we're also looking at very closely, and generally speaking, managing in headcount down somewhat as we progress through, say, the next eighteen months, again, depending on where the industry continues to go. But not no big moves there. We'll give better guidance on OpEx for next year as we get through the rest of this year, but that kind of lays the groundwork for you on what we're focused on. And I just wouldn't expect some drastic change there. You know, we need to continue to drive. We're seeing that high single-digit growth in our service department. We need to continue to lean into our people in order to get that done, and so that's what I would say on operating expenses. Okay, no, that definitely makes sense. And then also, can you just remind us what percentage of your construction segment revenue comes from non-agricultural related kind of sales and rentals? It's just over half. Okay. And that's obviously the segment where you're still seeing some stability and hopefully some growth kind of going into fiscal 2026, given all the infrastructure spending that hopefully will kind of start at that point. Yeah. Yep. All right, that's it for me. Thank you very much. Thanks. Our next question comes from Steve Dyer from Craig-Hallum. Please proceed. Hi, guys. This is Matthew Robb on for Steve. Just one question on the P&S business. Thanks for the color on the service growth. Is that just second half, or is that for fiscal year 2025? And then secondly, any outlook for the parts business? Yeah. So no, I mean, we saw good service growth in the first half of this year as well. And so second half, you know, is a bit of a repeat of what we saw. And just to clarify as well, right? Those growth assumptions are more of a same store basis, so Australia obviously add their own component as well. So no, I mean, it's everything we've been building up on and talking about customer care strategy. It's driving increase in service sales. It's the focus on providing best in class customer service and support. It's the people that we have in the field. It's making sure that we have the right parts. It's everything that, you know, the company has been working on for years, that will continue to pay dividends, for the long term. And then that's what, you know, we're really excited about. Regardless of where you're at in the cycle, you know, what we'll be able to deliver for our customers and then ultimately what that means for our shareholders, as we go forward. Yeah, it was kind of a good affirmation to see recently, one of our competitors has laid out that one of their top three initiatives is, on the parts side and, especially to increase their fill rates and have the parts in the right place at the right time. And that's actually exactly the one of the components of our customer care strategy that we've been aggressively going after here for quite a few years now, and we're really starting to see the fruits of that. And as I look at, you know, the industry numbers, our counter fill percentages are higher than what has been laid out. And and so industry leading there, and that's our customers are really seeing the benefits of that too. So it's starting to pay off, starting to get a reputation for having the right part and you know, having the parts on hand for them and competitive pricing too. Okay. Thanks, guys. This concludes our question and answer session. I would like to turn the floor back to management for closing remarks. Thank you for your interest in Titan, and we look forward to updating you with our progress on our next call. Have a great day, everyone. Thank you. This does conclude today's teleconference. We thank you for your participation. 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