EPS for Q4 was $2.80, up 5.9% year-over-year and beating guidance by nearly 5%.
Fiscal 2025 achieved record sales, EBITDA, and EPS with full year EPS growth of 4%, exceeding high-end guidance.
Fourth quarter sales increased 5.5% year-over-year, with organic daily sales up 0.2%, reversing prior declines.
Free cash flow reached a record $465 million, up 34% year-over-year, supporting $560 million in capital deployment including acquisitions and share buybacks.
Gross margins expanded nearly 50 basis points, surpassing 30% for the first time in company history.
Net leverage ended at 0.3x EBITDA, slightly higher than prior year but stable.
Reported EBITDA margin declined 73 basis points year-over-year to 12.5%, impacted by higher AR provisioning and LIFO expense.
Service Center segment sales declined 0.4% organically, while Engineered Solutions segment sales grew 1.8% organically.
Inventory Reduction Initiative and Its Impact on Margins
Titan Machinery has reduced inventory by approximately $365 million since the peak in Q2 of the previous year, demonstrating disciplined execution of inventory management.
The company expects to exceed its initial $100 million inventory reduction target, with most progress anticipated by the end of fiscal 2026.
Despite inventory reductions, equipment margins are expected to remain subdued at around 6.6% for the full year, reflecting ongoing pricing concessions.
Management emphasizes that inventory optimization is crucial for improving equipment margins and lowering floorplan interest expenses in fiscal 2027.
The inventory reduction strategy is also aimed at positioning Titan for a more normalized margin environment once the cycle improves.
Dafinchi