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Titan Equipment Inc. (NASDAQ:TITN) Q2 2023 Earnings Convention Name August 25, 2022 8:30 AM ET
Firm Contributors
Jeff Sonneck – ICR Investor Relations
David Meyer – Chairman, Chief Government Officer
Mark Kalvoda – Chief Monetary Officer, Treasurer
Bryan Knutson – Chief Working Officer
Convention Name Contributors
Daniel Imbro – Stephens Inc.
Larry De Maria – William Blair
Mig Dobre – Baird
Operator
Greetings, and welcome to the Titan Equipment Second Fiscal Quarter 2023 Earnings Name. Right now all members are in pay attention solely mode. A matter-and-answer session will observe the formal presentation. [Operator Instructions] As a reminder, this convention is being recorded.
I’d now like to show the convention over to your host, Jeff Sonneck of ICR. Thanks. You could start.
Jeff Sonneck
Thanks. Good morning girls and gents and welcome to Titan Equipment second quarter fiscal 2023 earnings convention name. On the decision at present from the corporate are David Meyer, Chairman and Chief Government Officer, Mark Kalvoda Chief Monetary Officer, and Bryan Knutson, President and Chief Working Officer.
By now everybody ought to have entry to the earnings launch for the second quarter ended July 31, 2022 which went out this morning at roughly 6:45 AM Japanese time. If you happen to’ve not obtained the discharge, it is obtainable on the investor relations web page and Titan’s web site at ir.titanmachinery.com. This name is being webcast and replay will likely be obtainable on the corporate’s web site as nicely.
Along with offering a presentation to accompany at present’s ready remarks, you might entry the presentation now by going to settings web site at ir.titanmachinery.com. The presentation is on the market instantly under the webcast data in the course of the web page.
You will see on slide two of the presentation our Protected Harbor assertion. We wish to remind everybody that the ready remarks include forward-looking statements and administration could make further forward-looking statements in response to your questions. These statements don’t assure future efficiency and subsequently undue reliance shouldn’t be positioned upon them.
These forward-looking statements are based mostly on present expectations of administration and contain inherent dangers and uncertainties together with these recognized within the danger issue part of Titan’s most just lately filed annual report on Kind 10-Ok, and up to date and subsequently filed quarterly reviews on Kind 10-Q.
These danger elements include a extra detailed dialogue of the elements that might trigger precise outcomes to vary materially from these projected in any forward-looking statements. Besides as possibly required by relevant regulation, Titan assumes no obligation to replace any ahead trying statements which may be made in at present’s press launch or name.
Please notice that in at present’s name, we’ll focus on non-GAAP monetary measures, together with outcomes on an adjusted foundation. I consider these adjusted monetary measures can facilitate a extra full evaluation and higher transparency in Titan’s ongoing monetary efficiency, notably when evaluating underlying outcomes from interval to interval.
We have included reconciliations of those non-GAAP monetary measures to their most instantly comparable GAAP monetary measures in at present’s launch. The decision will final roughly 45 minutes. On the conclusion of our ready remarks. We’ll open the decision to take your questions.
With that, I might now wish to introduce the corporate’s Chairman and CEO, Mr. David Meyer. David, go forward.
David Meyer
Thanks, Jeff. Good morning, everybody. Welcome to our second quarter fiscal 2023 earnings convention name. On at present’s name, I will present a abstract of the outcomes. After which Bryan Knutson, our President and Chief Working Officer offers you an outline for every of our enterprise segments. Mark Kalvoda, our CFO will then evaluate monetary outcomes for the second quarter of fiscal 2023 and supply an replace to our full yr modeling assumptions.
If you happen to flip to slip three, you will notice an outline of a second quarter monetary outcomes. This was a fantastic quarter for Titan throughout the board and demonstrates the continued momentum we’re having fun with in reference to a robust farm economic system.
Income grew 32% to $496.5 million in fiscal second quarter, and we’re happy to ship a second quarter earnings per share of $1.10, which marks the very best quarterly earnings efficiency in our 42-year historical past.
It is a results of our staff’s unrelenting give attention to customer support and working efficiencies, which translated right into a consolidated pre-tax margin of 6.7%, which is a superb accomplishment.
On the phase stage, our agriculture phase was a transparent beneficiary of a robust demand we’re seeing, which was supported by well timed deliveries of stock. Our building phase additionally skilled robust same-store gross sales progress pushed by strong demand for tools, notable strengths and elements service and rental.
Likewise, the improved pre-tax margin in our building phase displays the improved working effectivity that we have been specializing in driving over the previous a number of years throughout the optimized footprint.
Whereas income targets in our worldwide project stays impacted because of the ongoing battle in Ukraine, our enterprise continues to be resilient as demonstrated by the same-store gross sales progress in second quarter.
Additional, our potential to drive increased phase pre-tax margins can also be notable, whereas that is partially on account of combine, our enterprise continues to enhance throughout the area, and we like to acknowledge the exhausting work by our working staff to execute on this assist elements and repair, buyer assist progress technique.
By resolve and perseverance, the farm ministry in Ukraine is customized to the meals surroundings and we proceed to be impressed by the dedication of our prospects and our staff to assist preserve precious tools up and operating as the vast majority of the farmland and our Ukrainian markets proceed to be farmed.
On August 1, we accomplished our acquisition of Heartland Ag Programs for $95.5 million, giving us entry to the total product line of Case IH business utility tools, which incorporates self-propelled sprayers and fertilizer applicators.
Our integration is already nicely underway and our groups are working exhausting to effectively set up an entire distribution mannequin that covers each the farmer and business applicator.
This gives us potential to generate long-term income synergies by tools packaging alternatives with the business applicator buyer together with the total portfolio of Case IH utility merchandise to our conventional farmer rancher buyer, and likewise gives further avenues of progress as we leverage our expansive elements and repair community.
We share remarkably, related cultures centered on distinctive customer support and sit up for the Heartland staff’s future contributions. There continues to be pipeline of potential acquisitions, and we proceed to focus on high quality Ag dealerships.
In abstract, our outcomes showcase the enhancements we have made to our enterprise over the previous a number of years to drive increased ranges of profitability by the cycle and reveal the worth we have added by natural progress, and accretive acquisitions. We stay assured in our potential to construct on our momentum within the second half and we’re rising our modeling assumptions to a brand new EPS vary of $3.70 to $4.
And I will flip the decision over to Bryan Knutson.
Bryan Knutson
Thanks, David. Good morning and good afternoon, everybody. I’ll begin with an replace on our home agriculture phase, which is our largest phase, after which we’ll observe with some further coloration on our home building and worldwide enterprise segments.
On slide 4, you will see an outline of our home agriculture phase. To-date, we proceed to see exceptionally robust demand for each new and used agricultural tools, primarily supported by the continued elevated ranges of commodity costs.
Moreover, at present’s new tools applied sciences and precision parts, which enhance yields productiveness, and efficiencies turn out to be much more essential in these instances of upper finish consumer enter prices, and consequently one other key issue that’s driving new tools demand.
As our prospects proceed to search for options to improve their Aged fleets with new and late mannequin used tools with at present’s superior expertise, the present aged and higher-houred fleet that’s on the market stays a catalyst for elements and repair income progress.
As a reminder, even with the robust business volumes now we have skilled, the present fleet age continues to be nicely above historic common. Crop growth and yield potential varies throughout our footprint relying on climate occasions and rainfall timeliness. Whereas dry situations persist in a few of our markets, the moisture scenario general is healthier than final yr.
Moreover, for these prospects which have prevented plant acres or skilled different crop losses, most have obtainable multi-crop insurance coverage and USDA security internet packages. Whereas corn and soybeans are the first crops grown in our markets, now we have growers that raised sunflowers, edible beans, canola, wheat, barley, alfalfa, potatoes and sugar beets. This crop variety permits growers the pliability to adapt crops to the sector situations, moisture ranges, timing of planting and seeding, variable enter prices and finish markets.
As most individuals are conscious new tools provide continues to be difficult and considerably unpredictable as unfinished models stay on the factories ready for finishing elements and parts, which might transfer deliveries from quarter-to-quarter, and in some instances, calendar-year-to-calendar yr.
This volatility and ensuing unknowns are additional sophisticated by new tools allocations and shorter pricing home windows by our main provider, which is a change from historic practices.
Gear allocation is on the discretion of our suppliers, and relying on manufacturing capabilities has the potential of limiting the provision of excessive demand money crop merchandise.
Conversely, we see higher availability of hay tools, and underneath 140 horsepower tractors, which is the biggest tractor business phase by way of models. We really feel assured we are going to obtain pre-sold models and tools orders wanted in step with our elevated modeling assumptions for the present fiscal yr.
We proceed to work with our major suppliers and short-line producers to supply future stock to satisfy the present robust demand. We could have extra visibility on subsequent yr’s stock availability as we enter calendar yr 2023 and we’ll present extra particulars once we focus on our FY 2024 modeling assumptions, as we historically do on our This autumn earnings name.
As David said, now we have begun integration of Heartland Ag Programs acquisition that we introduced on August 1 and we’re excited for the long run alternatives we see within the utility tools house.
Turning to slip 5, you will see an outline of our home building phase. Much like our North American Ag phase, see, tools demand outpaces provide is experiencing lengthy lead instances and allocation for brand new tools.
We’re seeing power associated building exercise in our oil and pure fuel producing markets within the Colorado Entrance Vary and Western North Dakota Bakken fields. Though moderating from peak ranges, we’re nonetheless seeing good residential housing exercise together with strong business building going down throughout our footprint.
Street building and different infrastructure initiatives are in full swing all through our markets and farmers and ranchers are persevering with to buy tools for land enchancment, feedlots, and materials dealing with.
Moreover, the robust general business additionally proceed to drive demand for rental tools, which produce one other strong quarter for fleet utilization. I am very happy with our North American agriculture and building staff and their potential to place up a document second quarter and general and excellent first half efficiency for our home segments.
We’re trying ahead to a busy harvest with what has the potential to provide above common yields in a lot of our footprint and a really robust fall building season as we go into the again half of our fiscal yr.
On slide six, now we have an outline of our worldwide phase, which represents our enterprise throughout the nations of Bulgaria, Germany, Romania and Ukraine. The spring small grain harvest is full with common yields general.
Late season crop growth varies between nations as our prospects are experiencing dry climate situations in Japanese Germany, Romania and Southern Ukraine.
Like North America, our European prospects are additionally benefiting from the upper international commodity costs, however the availability of recent money crop tools in Europe is extraordinarily tight.
Ukrainian growers proceed to farm as we assist them with elements and repair and restricted tools gross sales, whereas Ukrainian grain exports are starting to maneuver by safe corridors which is a crucial growth for farmers who have to monetize their crops.
Our operational enhancements and excellent staff in Europe are permitting us to ship wonderful Q2 and first half ends in the midst of those geopolitical, financial and climate challenges.
Subsequent, I’ll flip the decision over to Mark to evaluate our monetary ends in extra element. However earlier than I do, I might wish to sincerely thank all our Titan staff who’ve completed such a incredible job navigating by these unprecedented provide chain challenges.
Our phenomenal staff labored very carefully with our prospects, received out of the gate early to execute on pre gross sales, in addition to tools procurement. And at last, I might wish to thank our key suppliers and their staff who labored so exhausting to provide product. Sadly not protecting tempo with our demand, however a powerful fleet nonetheless.
Now, I’ll flip the decision over to Mark to disclose our monetary ends in extra element. Mark?
Mark Kalvoda
Thanks, Bryan. Turning to slip eight. Whole income elevated 31.5% to $496.5 million for the second quarter of fiscal 2023. Our tools enterprise elevated 37.6% versus prior yr, pushed primarily by robust same-store gross sales in our agriculture phase and additional supported by contribution from our Jaycox and Mark’s Equipment acquisitions, which weren’t within the prior years second quarter outcomes.
Progress in our elements and repair enterprise improved within the second quarter, rising 18.9% and 12.4% respectively, which was anticipated given the later begin to the planting season this yr.
Rental and different income elevated 3.7% versus prior yr with greenback utilization of our building phase rental fleet rising to 31.9% in comparison with 26.6% within the prior yr quarter. This materials enchancment and utilization allowed us to develop revenues on a notably smaller fleet, which in flip drove robust margin enlargement.
On slide 9, our gross revenue for the quarter elevated 36.9% to $103 million and gross revenue margin elevated by 80 foundation factors pushed by the enlargement of apparatus, elements and rental margins.
Gear margins had been supported by a $2.6 million profit acknowledged on the anticipated achievement of annual producer incentives. Greater margins in these income classes had been partially offset by a shift in gross sales blended towards tools. Gear margins continued to be supported by superb finish market situations and wholesome inventories.
Working bills elevated $11.8 million versus the prior yr to $68.8 million for the second quarter of fiscal 2023 on account of increased variable bills and acquisition associated prices related to the Heartland Ag Programs transaction that closed earlier this month.
Nonetheless, this enhance was greater than offset by income progress and result in 120 foundation factors of working expense leverage in comparison with the prior yr lowering our working bills to 13.9% as a share of income in comparison with 15.1% within the prior yr interval.
Given the energy in elements and repair and our self-discipline on bills, we proceed to construct on an enhancing absorption price. A chart reflecting this annual progress may be discovered within the appendix to this slide presentation. Floorplan and different curiosity expense remained comparatively flat at $1.6 million in comparison with the prior yr interval.
Within the second quarter of fiscal 2023, our adjusted internet earnings practically doubled to $25 million, which equated to adjusted earnings per diluted share for the quarter of $1.10 when compares to final yr’s $0.56 efficiency.
Adjusted EBITDA elevated 71.1% to $40.2 million in comparison with the second quarter of final yr. You’ll find a reconciliation of adjusted internet earnings, adjusted earnings per diluted share and adjusted EBITDA to their most comparable GAAP quantities within the appendix to the slide presentation.
On slide 10, you will notice an outline of our phase outcomes for the second quarter of fiscal yr 2023. Agriculture segments gross sales elevated 59.1% to $349 million and helped drive good working leverage, leading to phase adjusted pre-tax earnings rising 106.3% to $24.9 million which represents a pre-tax earnings margin of seven.1%.
Past the intensive enhancements we have made to our operations because the final cycle, second quarter robust margin efficiency was additionally supported by the aforementioned recognition of the producer incentives.
Turning to our building phase. Income decreased 13.5% to $70 million in comparison with the prior yr interval, because of the loss gross sales contributions from the corporate’s latest divestitures on this phase.
On the identical retailer foundation, excluding the divested shops within the prior yr interval, revenues had been up 14.9% for the quarter. Pre-tax earnings grew 39.4% to $3.9 million versus the prior yr interval, representing a margin of 5.6%, which is a 210 foundation level enchancment versus the prior yr quarter.
We’re happy with the continued margin enchancment on this phase and count on to see additional margin enlargement as we proceed to give attention to this space of our enterprise. The income of our worldwide phase was basically flat at $77.6 million versus the prior yr, regardless of an 11% forex headwind on a weakening Euro, and the disruption inside our Ukraine enterprise because of the ongoing battle in that market.
Regardless of this stress, our worldwide staff greater than tripled our adjusted pre-tax earnings to $5.9 million. This represents a sturdy pre-tax earnings margin of seven.6% and displays improved tools margins, in addition to ongoing focus and enchancment in our elements and repair enterprise on this phase.
Turning to slip 11. You’ll be able to see our first six month outcomes. Whole income elevated 27.6% in comparison with the identical interval final yr. 12 months-to-date, tools gross sales elevated 33.3%, elements elevated 14.3%, service income elevated 9.6% and rental and different income elevated 3.2%. The six months greenback utilization of our devoted rental fleet improved 570 foundation factors to twenty-eight.6% as in comparison with 22.9% in the identical interval final yr.
Turning to slip 12. Our gross revenue for the primary six months was $191.4 million, a 31.1% enhance in comparison with the identical interval final yr. Our gross revenue margin elevated 50 foundation factors to twenty% for the primary six months of fiscal 2023.
Our working bills elevated by 17.2% for the primary six months of fiscal 2023 to $133 million. Nonetheless, this enhance was greater than offset by income progress and result in 120 foundation factors of working expense leverage in comparison with the prior yr, lowering our working bills as a share of income to 13.9%.
Adjusted diluted earnings per share elevated 85.3% to $1.89 for the primary six months of fiscal 2023 in comparison with $1.03 within the prior yr interval. Our six month adjusted EBITDA elevated 62.5% to $70.4 million in comparison with $43.3 million within the prior yr.
On slide 13, we offer our phase overview for the six month interval. Total, our adjusted pre-tax earnings elevated 86.3% to $57 million for the primary six months of fiscal 2023, representing a margin of 6% and demonstrating the effectivity of our operations.
On slide 14, we offer an outline of our stability sheet highlights. We had money of $142 million, as of July 31, 2022. We did go into our financial institution syndicate line on the finish of the quarter to make sure satisfactory money for the August 1 closing of the Heartland acquisition, by which we use money of $95.5 million.
Unique of future acquisitions, I’d not count on to be in our line on the finish of our fiscal yr, as we at the moment are getting into the seasonally stronger money era interval within the again half of our fiscal yr.
Our tools stock on the finish of the second quarter was $444 million, a rise of $121 million from January 31, 2022, reflecting the web impact of a $130 million enhance in new tools, partially offset by a $9 million lower in used tools.
Robust gross sales proceed to drive tools stock turns increased, which elevated to three.6 versus 2.7 within the prior yr. I’ll present somewhat extra coloration on our stock on the subsequent slide.
Elements stock elevated to $109 million on the finish of the second quarter fiscal 2023 from $96 million on the finish of fiscal 2022. This increased stage of elements stock is the results of a concerted procurement effort to higher guarantee elements availability, in addition to the primary quarter acquisition of Mark’s Equipment.
Our rental fleet belongings on the finish of the second quarter elevated to $73 million, in comparison with $65 million on the finish of fiscal 2022. Given the wholesome will increase in utilization, which has pushed margins in our rental fleet enterprise [Indiscernible] now we have elevated the anticipated fleet dimension on the finish of fiscal 2023 to be round $78 million.
With respect to our Ukraine enterprise and associated belongings, we’re seeing complete belongings and in nation belongings and buyer receivables stabilize at $33 million and $25 million, respectively. That is in line with our replace from final quarter and down because the starting of the battle.
Battle continues because it has over the previous few months, I’d count on these belongings will stay round these ranges for the stability of the fiscal yr. To-date, now we have had no materials loss or injury to our inventories or dealership areas. I’ll replace you on high and backside line earnings assertion expectations for Ukraine in a couple of minutes.
Turning to slip 15. The quantity of recent and used tools inventories are mirrored within the dimension of the blue and crimson bars on this slide. We had been very happy with the extent of stock shipments obtained from our suppliers through the second quarter.
The receipt of those orders generated the upper gross sales efficiency and are mirrored within the $130 million enhance in new tools stock, which features a excessive share of pre-sold models awaiting pre-delivery setup from our service staff with deliveries to prospects anticipated within the again half of the yr.
On the finish of the second quarter, stock turns now attain 3.6 instances. Given the favorable business situations, well being of our stock and ongoing provide chain challenges, I proceed to count on we are going to function at increased flip ranges all through the stability of the yr.
Slide 16 exhibits our up to date fiscal 2023 annual modeling assumptions, which we’re elevating at present. For the agriculture phase, we’re rising our income progress assumptions up 50% to 55%, from up 37% to 42%, which means continued momentum by the second half of our fiscal yr.
As a reminder, we up to date our assumptions in mid-July in reference to the announcement of our Heartland acquisition. Nonetheless, that replace was restricted to the affect of the transaction on our prevailing fiscal 2023 outlook. At the moment’s replace may be thought-about the incremental construct off that forecast to replicate our year-to-date efficiency and optimistic outlook for the second half.
Additionally, as you contemplate the expansion charges versus prior yr, please understand that progress is benefiting from the total yr income contribution from our Jaycox acquisition, which closed in December 2021, the partial yr income contribution for the Mark’s Equipment acquisition, which closed in April 2022 and the anticipated partial yr influence of the Heartland acquisition which closed this month.
For the development phase, we elevated our assumption for income to enhance from a variety of down 10% to fifteen% to our present assumption of down 5% to 10%. Impacting this assumption is the divestment of our 5 building tools shops in Montana, Wyoming and North Dakota in January and March of calendar 2022, which accounted for roughly $73 million of mixed income.
Excluding these revenues from the prior yr base, our assumption equates to same-store gross sales progress of roughly 15% to twenty%. For the worldwide phase we’re reiterating our income progress assumption of down 0% to five%. We’re fairly happy that our expectation for this phase stays close to flat ranges, given the forex headwinds inside this phase and the continuing battle in Ukraine.
Relating to Ukraine, we at the moment are modeling revenues to be down roughly 45% versus 50% beforehand, and earnings per share to enhance to a lack of roughly $0.05 per share versus $0.15 per share beforehand. The disproportionate raise within the backside line versus high line expectations is because of an enchancment in income combine and a rise in margins.
Given the improved modeling assumptions, and the anticipated achievement of the annual manufacturing incentives, we’re rising our diluted earnings per share assumption by $0.80 on the midpoint to a brand new vary of $3.70 to $4 for fiscal 2023.
This concludes our ready remarks. Operator, we at the moment are prepared for the query and reply session of our name.
Query-and-Reply Session
Operator
Thanks. Right now, we’ll be conducting a query and reply session. [Operator Instructions]. Our first query comes from line of Daniel Imbro with Stephens Inc. Please proceed along with your query.
Unidentified Analyst
Hey, guys, that is Reed [ph] on for Daniel. Building has seen a number of years of improved profitability. David, what levers do you could have left to tug internally to drive margins additional there?
Bryan Knutson
Hello, Daniel, that is Bryan, I will take it after which Dave can weigh in with something I missed right here. Sure, respect, as Mark identified, we’re actually happy with the continued year-over-year enhancements in our building enterprise. I believe that is displaying by within the numbers right here. And for those who take a look at the rental fleet, was a robust contributor once more this quarter. A number of initiatives we have had there in enhancing our rental fleet utilization, the combination of our fleet. And so, that’d be one other lever we are going to proceed to work driving, rising our fleet with demand and because the provide chain opens up somewhat bit, however as acceptable with the utilizations and once more specializing in these increased utilization merchandise.
Likewise, with elements and repair, Mark talked about, our absorption charges proceed to have good year-over-year progress and our absorption protection on the development aspect. And so much alternative there as we — if we are able to get that close to the place our agriculture phase ranges are. And so plenty of initiatives on the elements and repair aspect that proceed to give attention to that and drive that aspect of the enterprise. After which additionally, simply with our suppliers working carefully with them, they have plenty of nice merchandise popping out right here, and proceed to fill with some product gaps that we have had. And so good alternative on the tools aspect.
After which simply lastly, with what you have seen with our stock turns and the return on belongings on that aspect of the enterprise. So the initiatives we have completed round stock administration and likewise driving by to the upper margins that you just see in our numbers. And on each a kind of, we consider we have got extra room on the development aspect.
Unidentified Analyst
Proper. And I suppose, referring to these stock turns, as provide begins to normalize, the place can we count on the stock turns to stabilize sooner or later going into just like the again half of subsequent yr and forwards?
Bryan Knutson
Sure. I believe as soon as we get again to extra of a traditional provide aspect timeframe, I believe what we have all the time talked about is that thrice flip. I believe we’re very comfy at thrice. You get to, particularly on the Ag aspect, you get to a few of our worldwide and building the place there may be some rental inside our stock. Possibly it is just below that. So I’d say comfortably name it to 2.75 to three.25. So proper round that three time flip is what we’re concentrating on for regular time.
Unidentified Analyst
Superior, congrats on the quarter.
Bryan Knutson
Thanks.
Operator
Thanks. Our subsequent query comes from line of Larry De Maria with William Blair. Please proceed along with your query.
Larry De Maria
Hey, thanks. Good morning, all people. And good job. Hello guys. Very first thing first, clearly, robust same-store gross sales. You all the time had some important provide chain challenges like all people else. So I am simply sort of curious, like about what the driving force is that we’re getting higher — you’re getting higher allocations than different sellers. Is it used tools being the massive driver or is it worth or what’s behind the surge of same-store gross sales contemplating the availability chain challenges?
Bryan Knutson
Sure. I believe, Larry, that is Brian. I believe you simply hit on a variety of them there. So that you do see pulling by within the margin. So it is actually worth has been a little bit of an element each in our potential to actually go that by to the shopper, after which really somewhat little bit of a rise in our margins that you just see. After which simply, as I discussed on ready remarks, a fantastic effort by our staff getting out of the gate early, and doing pre-sales, and simply staying actually shut with our prospects and getting our orders in early. Our staff right here in Fargo actually staying near these order books and the pricing and when the home windows open up having the information from our groups within the discipline, once more staying shut with the purchasers to get these orders in instantly.
After which simply working with the purchasers to know what their wants are after which to acquire the tools that’s obtainable. As you recognize, there’s pockets, a number of the crops expertise completely different parts shortages versus different crops. And so, planning the enterprise actually with our prospects and capitalizing on these alternatives. So that you see it, I believe each in income, and margin, and the stock turns, all actually pulling by to that increased same-store gross sales.
Larry De Maria
Okay, thanks. After which clearly expressed optimism within the subsequent fiscal yr. Are you able to focus on sort of present orders, how they’re shaping up year-over-year possibly? And because it pertains to the allocations, which they’re opening up I suppose, periodically. How’s the allocation tie in to your potential to efficiently bundle with Heartland, which is clearly a giant gross sales engine subsequent yr? So any replace within the allocation with synergy outlook and your potential to execute on that and the orders that we’re seeing possibly year-over-year?
Bryan Knutson
Certain. Sure, Larry we really feel actually good with our modeling assumptions right here too for this fiscal yr. In order we take a look at FY 2024 and the top of FY 2024, being 18 months, it will get to be an extended look, as I discussed, we’ll be coming with steerage right here, as we normally do on the finish of our This autumn. However we be ok with the order home windows which have opened up thus far. As you recognize, with like C IH for instance, by Q1. And we do not have allocations for the remainder of the yr but. However as I discussed, simply, we management what we are able to management on that. Our staff works actually exhausting to remain shut with the purchasers and be prepared to leap on these alternatives.
And once more, I simply need to credit score our staff for what they’ve completed and with the presale and likewise with the producers as I discussed, only a ton of challenges you heard it on Deere’s name and AGCO’s name, CNH’s name and what they’re all managing by and so actual credit score to our suppliers, and once more, need to thank them for what they have been in a position to produce. It is fairly a problem proper now. And as you may see in our numbers, they’re getting us the stock. And we anticipate simply working in lockstep with them as we go over the subsequent stability of this yr and thru subsequent yr.
Larry De Maria
Thanks. Final fast query. I can sneak yet one more in. Because it pertains to the Germany enterprise and I suppose, you are upwardly onto Germany small. However any change in sentiment you are seeing there from the power rationing, power shortages, and any issues in regards to the potential for this point in time produce, I do not know if they’ve rolling shutdown et cetera. So, simply an replace on Germany particularly, and the flexibility to provide that you have heard?
Mark Kalvoda
Sure. Take the small grain crop was fairly good in Germany, and I believe the southern was good, Larry. Undoubtedly the financial backdrop and all of Europe as problem proper now, you may see the devaluation of the Euro. After which additionally we have got a few of this drought sort of creeping within the jap a part of Germany, Romania, southern a part of Ukraine, simply a few of these areas. So, sure, we proceed to look at that somewhat bit. However one factor about Germany, I believe we have got — we have been making some fairly severe enhancements in our operation in that nation. In order that’s a optimistic. However I believe now we have to proceed to look at the climate and the event of the late season crop. I believe that is going to be the largest variable in Germany this yr.
Larry De Maria
Okay. Thanks and good luck.
Operator
Thanks. Our subsequent query comes from the road of Steve Dyer with Craig Hallum Capital Group. Please proceed along with your query.
Unidentified Analyst
Good morning guys. Ryan on for Steve. Good quarter.
Bryan Knutson
Sure. Good morning.
Unidentified Analyst
Mark, I believe I heard you talked about Ag dimension producer incentives once more this quarter. If that is proper? I suppose how a lot was that profit within the quarter? After which secondly, is there any incremental for that assumed within the second half steerage?
Mark Kalvoda
Sure. Hello, Ryan. Sure, we did. I did point out the producer incentives. So at this level, we’re anticipating to earn them for this yr. It seems superb. And because it seems superb and possible we did guide $2.6 million into the second quarter. We do have some baked in for the total yr, for those who recall final yr. And that is only for our home enterprise that we’re speaking about simply our Ag phase. Final yr, we had, like $5.1 million that we booked on the Ag aspect and $1.3 for the total yr in worldwide. This pertains simply to the Ag phase and so $2.6 is what we booked thus far, I’d count on at the least that for the again half of the yr. So name it at the least like $3 million is what we’d have assumed within the steerage for the remaining six months interval.
Unidentified Analyst
After which possibly Mark, what had been you beforehand assuming? Or was is that every one incremental relative to the earlier steerage?
Mark Kalvoda
It’s all incremental. As you recognize, as we talked about final yr, these manufacturing incentives are sort of a cliff sort scenario that both you hit them or you do not hit them. And so, we’re very conservative and never placing them within the steerage or not reserving them till there is a excessive diploma of certainty there. And sure, we hit it. So it is all incremental at this level to what we had in our earlier information.
Unidentified Analyst
Good. Is smart. On the — so for the total yr steerage on gross sales, you gave the development phase, you gave the same-store gross sales 15% to twenty%. There was plenty of shifting items in Ag, I can try to do the mathematics, however you could have sort of what the implied identical retailer gross sales is throughout the Ag steerage on the sale aspect?
Mark Kalvoda
Sure. There are with all these acquisition, acquisition we had final yr, acquisition we had within the second quarter, after which clearly, the massive Heartland acquisition. Adjusting for all that or placing that in there, and we sort of offered the numbers for that, it might equate to about assume 30% for the total yr in Ag for same-store gross sales progress.
Unidentified Analyst
Useful. Final one for me. You talked about plenty of pre-sold for the second half of this yr. How a lot visibility? You talked about some sort of stuff that wants configuration that is simply ready to be shipped. However how a lot visibility do you must getting the tools out of your OEMs and there is Case IH or others however getting the tools you’ll want to fulfill these pre-orders?
Mark Kalvoda
We’re in fixed contact with our suppliers in addition to the completely different techniques now we have in place to have good visibility to that. With that mentioned, as I discussed, you do see motion from quarter-to-quarter after which — and probably as we get nearer to the top of the yr right here then motion from one quarter to a different. So, we really feel actually good about that we are going to obtain these. It does actually get choppier, which quarters there will likely be an or once more as we get to the top of the yr, which yr there will likely be in as there does are typically some motion simply as you have seen with the OEMs and their reporting.
Unidentified Analyst
Nice. Thanks guys. Good luck.
Mark Kalvoda
Thanks.
Operator
Thanks. Girls and gents, our ultimate query this morning comes from the road of Mig Dobre with Baird. Please proceed along with your query.
Mig Dobre
Good morning. Thanks for placing me in right here. I suppose, I might wish to ask a query on the steerage as nicely. So, you raised your core assumptions on Ag by 13%. And I am kind of curious for those who can sort of assist us perceive the shifting items right here. How a lot of this was possibly incremental realized pricing? How a lot of that is actually sort of pushed by new tools versus used? As a result of clearly this can be a fairly materials increase with simply sort of six months left.
Mark Kalvoda
Sure. So to start with, Mig, with that 13%, I’d say about half of it occurred within the present quarter. The remaining half is for the again half of the yr. And I’d say, it is sort of throughout the board largely not essentially as a lot on the pricing. I do not assume that is modified as a lot in our assumptions. However between new and used, it was sort of throughout the board. As you recognize, as the brand new is available in, we get the used. And it sort of frees up the used with the commerce to promote to the shopper there as nicely. Possibly simply so far as the same-store sale that was sort of on the final name to or the final caller there. So 30 — about 30% proper now we’re at about 36% same-store sale progress for the yr. So, once more, there’s simply — there’s nonetheless some stage of uncertainty so far as the deliveries, the timing as BJ talked about on the decision between quarters between fiscal years, however that is sort of our greatest estimate at this level.
Mig Dobre
That is useful. Thanks for that. After which, on the dialogue that you just had on producer incentives, the way in which I heard it’s 2.6 clearly in 1 / 4, you count on at the least 3 million. However that appears to be kind of the identical quantity that you have acknowledged final yr in incentives. And possibly that is the place you may educate me somewhat bit as to how these work. Is not it truthful to imagine that your incentives would really be increased this yr, because you’re clearly promoting much more tools?
Mark Kalvoda
So sure , so to start with, the three — So final yr, we had 5.1. So with the three million on the again, that may be 5, six up somewhat bit. And we won’t get into how these producer incentives are for aggressive causes. We simply we do not get into the make-up and the main points of it. However sure, I’d count on that there can be some progress there. Now we have some progress sort of in-built from final yr and the numbers in our steerage now. And positively it might develop from there.
Mig Dobre
Okay. I am sorry, I’ve two extra. Considered one of them, you talked about your provider with the ability to ship tools, and it was fairly clear in 1 / 4. After I’m new tools stock that is actually the very best stock you have had in a pair years now. And I suppose, I am questioning, why is it that you just’re seeing this? As a result of it strikes me that every thing that we have heard from the OEMs broadly not simply your provider is that frankly issues have remained fairly tough, fairly uneven, and manufacturing nonetheless wrestle to ramp sequentially. So that you appear to be in higher form by way of your deliveries than just about anyone else that I’ve seen. And I am questioning why that’s?
Mark Kalvoda
Sure, Mig, you’re proper. And once more, actually happy with the deliveries now we have gotten and the hassle from our suppliers and actually, like I mentioned again to our staff. So plenty of pre-sales coming by right here. And plenty of these return to ordered a very long time in the past and our staff received out of the gate actually early. And likewise when order books got here out in some instances right here, we’re nicely over a yr in the past, and ordered up instantly and received orders in early once more from staying near our prospects, in addition to plenty of the initiatives we have had round stock administration right here and simply carefully monitoring what our wants are, and once more, getting these orders in actually early. So we’re beginning to see a few of these shipments come by on these orders that had been positioned a very long time in the past.
After which somewhat little bit of that uptick, after all, that you just see on the stock is gross sales whip that’s constructed into our modeling that then will come by and guide by right here within the second half of the yr in addition to it simply takes us somewhat little bit of time to get the machines pre-delivered and get them out to the shopper. And so throughout that transition interval these used been on our stability sheet even on the pre-sales. However sure, simply working actually carefully with our suppliers and actually managing what we are able to management as tightly as we are able to and hope to proceed to execute that going ahead and hope this provide chain begins to open up right here, one among lately, it is as you recognize, actually been a problem for producers.
Mig Dobre
Understood. Final query. And I perceive that you just’re not offering fiscal 2024 steerage. However I’m curious as to the way you’re managing into enterprise as you are fiscal 2024, proper. As a result of presumably, the conversations you are having with prospects proper now, they’re not likely involving close to time period tools deliveries. If persons are placing in an order now, they most likely do not get billed till 2024. So, can you pre-sell tools proper now? If you happen to’re not, how are you managing the demand pipeline? And may you give us extra context by way of how that demand pipeline is shaping up your buyer conversations into fiscal 2024 or calendar 2023 because it had been? Thanks.
Mark Kalvoda
Sure. So our staff such as you mentioned, staying actually near the purchasers having these conversations, planning the enterprise. We do as we all know, our present pricing at present keep shut with our producers, plenty of dialog round anticipated worth enhance after which work with our prospects as finest we are able to to anticipate worth and anticipate deliveries and each of these have been very fluid. So, simply doing one of the best job. We may give them a directional thought on worth of their companies, realizing what they want and pay instantly this is the worth, this may work for them in that space, after which the timing, simply securing it as quick as we are able to then and make clear expectations with the shopper, in order that they know, hey, that is could not make it in time for harvest for instance, with a mix or spring planting with a planter, however then working with them proactively to make provisions for utilizing their outdated one or no matter we have to do if the deliveries do get delayed, which has been a quite common factor that our groups are getting fairly good at working by now.
Mig Dobre
Sorry to press you on this simply, however I perceive this. Can you kind of take a agency order and a agency dedication from prospects now for fiscal 2024 deliveries? Can you do this? Or is it simply kind of a indication of curiosity and you may come again to it when the OEM decides that they are sort of opening the order books?
Mark Kalvoda
So agency orders for Q1, Mig, we are able to take. After which as you get past that, so for those who go the opposite finish of the spectrum, This autumn begins to be as I describe extra of a enterprise planning collectively and directional if you’ll, will get the orders after which warning them and simply work collectively and hey, we all know they need it. They know this is in regards to the worth and we will get it as quickly as we are able to and we will work with them on the timing. However sure, so far as agency simply comes because the order books launch, if you’ll, and so we’ll get into Q2 and Q3 order books right here anticipated someday quickly in Q3 right here.
Mig Dobre
Understood. Okay. Thanks guys.
Bryan Knutson
Thanks, Mig.
Operator
Thanks, girls and gents, that concludes our time allowed for questions. I will flip the ground again to Mr. Meyer for ultimate feedback.
David Meyer
Nicely, thanks, everybody to your curiosity in Titan Equipment and your timing to name at present and we sit up for updating you on our progress on our subsequent name. So have a fantastic day.
Operator
Thanks. This concludes at present’s convention. You could disconnect your strains at the moment. Thanks to your participation.
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