Adjusted EBITDA declined 7.6% in Q4 to $14.2 million and 11.6% for the year to $52.1 million, with margins around 28%.
Cash flow from operations increased 18% to $53.5 million for the year, with $99.1 million in cash and no debt at year-end.
Equipment sales declined 5.5% in Q4 to $28.3 million and 15.7% for the full year to $95.3 million due to distributor destocking and project timing.
Full fiscal year 2025 net sales decreased 3.8% to $181.6 million from $188.8 million in 2024.
Gross margin for recurring revenue remained strong at 91% for both Q4 and full year, while equipment gross margin declined to 23% in Q4 and 24% for the year.
Net income decreased 14% in Q4 to $11.6 million ($0.33 per share) and 13% for the year to $43.4 million ($1.19 per share).
Net sales for Q4 2025 increased slightly by 0.8% to $50.7 million compared to $50.3 million last year.
Recurring monthly service revenue grew 10% in Q4 to $22.4 million and 14% for the full year to $86.3 million, driven by StarLink radios.
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