John Mills – IR, ICR, Inc. David Meyer - Chairman, Chief Executive Officer Peter Christianson - President Mark Kalvoda - Chief Financial Officer

Rick Nelson - Stephens Brett Wong - Piper Jaffray Mig Dobre - Robert Baird Joe Mondillo - Sidoti & Company Larry De Maria - William Blair

Good day, everyone. Welcome to the Titan Machinery Incorporated Fourth Quarter Fiscal Year 2015 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Mr. John Mills of ICR. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to the Titan Machinery fourth quarter fiscal 2015 earnings conference call. On the call today from the company are David Meyer, Chairman and Chief Executive Officer; Peter Christianson, President; and Mark Kalvoda, Chief Financial Officer. By now, everyone should have access to the earnings release for the fiscal fourth quarter ended January 31, 2015, which went out this morning at approximately 6:45 a.m. Eastern Time. If you have not received the release, it is available on the Investor Relations portion of Titan's website at titanmachinery.com. This call is being webcast and a replay will be available on the company's website as well. In addition, we are providing a presentation to accompany today's prepared remarks. We suggest you access the presentation now by going to Titan's website and clicking on the Investor Relations tab. The presentation is under the Events and Presentation tab. Before we begin, we would 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. The statements do not guarantee future performance and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of management and involve inherent risks and uncertainties, including those identified in the Risk Factor section of Titan's most recently filed Annual Report on Form 10-K. These risk factors contain more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. Titan assumes no obligation to update any forward-looking statement that may be made in today's release or call. Please note that during today's call, we will 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 in the Titan's ongoing results of operations, particularly when comparing underlying results from period-to-period. We have included reconciliation of these non-GAAP measures for today's release and have provided as much detail as possible on any addendums that are added back. Lastly, due to the number of participants on the call today, we ask that you keep your question period to one or two questions and then rejoin the queue. The call will last approximately 45 minutes. David Meyer will provide highlights of the Company's fourth quarter results and a general update on the Company's business. Then Peter Christianson will discuss the Company's international overview and segment operating results. Next, Mark Kalvoda will discuss the Company’s financial results in more detail and the fiscal 2015 annual modeling assumptions. At the conclusion of the prepared remarks, we will open the call to take your questions. Now, I would like to introduce the company's Chairman and CEO, Mr. David Meyer. Go ahead, David.

Thank you, John. Good morning, everyone. Welcome to our fourth quarter fiscal 2015 earnings conference call. As John mentioned, to help you follow today's prepared remarks, we have provided a slide presentation, which you can access on the Investor Relations portions of our website at titanmachinery.com. If you turn to Slide 3, you will see our fourth quarter financial results, which came in as expected in our prerelease a few weeks ago. Revenue was $491 million, primarily reflecting lower agricultural equipment sales in North America. Adjusted pre-tax loss was $5 million and adjusted loss per diluted share was $0.20. For the full year, we generated revenue of $1.9 billion. Our adjusted operating cash flow was $82 million. Adjusted pre-tax income was $2.3 million and adjusted loss per diluted share was $0.09. Mark will provide additional color to our financial results later in the release. For the fourth quarter and full year, our financial results were impacted by ongoing headwinds in the ag industry. Throughout the year, in order to help us navigate the challenging environment, we focused on managing the controllable aspects of our business. We reduced our inventory by $168 million, which enable us to significantly improve our cash flow from operations, which we will review later in our remarks. Slide 4 lists the discussion points for today's call. First we’ll discuss the challenges we are facing in our agricultural segment as well as provide an update on the construction industry. Next, we will review our realignment plan that we announced last month. Peter will also provide an update our international segment discussing the challenges in these markets as well as an update on our initiatives we began implementing last year to improve this segment of our business. Mark will review financial results and will provide an update on progress we continue to make with reducing our inventory as well as modeling assumptions for fiscal 2016. Now, I would like to provide some more color for you today on the agriculture and construction industries in which we operate. Peter will provide color on the industry within our International segment. On Slide 5, is an overview of agriculture industry, spring planting is expected to be on schedule. However, we are currently experiencing low moisture levels in the majority of our footprint. Timely rains will be required to support ongoing crops development. USDA recently reported prospective planning for this year and it reflected lower corn acres with an increase in soybean acres and other crops. Commodity prices continue to reflect the increased ending stocks as a result of last year's large crop. USDA report which was updated in February, projects calendar year 2015 net farm income to be $73.6 billion, which represents a 31.8% decrease from projected net farm income in calendar 2014 of $108 billion. For 2015, net farm income projections reflect and expect to continue to decline in crop cash receipts and a slight decrease of livestock cash receipts. We believe this lower projected net farm income will pressure overall new and used equipment revenues in the ag industry. The lower net farm income continues to impact farmers' spending, resulting in lower end user demand that continue to affect used equipment prices and compressed margins. Bonus depreciation and Sections 179 were reinstated at the end of the calendar year of 2014. However, because of [rate] [ph] reinstatement many farmers were not able to take full advantage of this tax incentive. Bonus depreciation expired as of December 31, 2014 and Section 179 was reduced to $25,000. There is currently legislation in progress to increase Section 179 on a permanent basis. In summary, agriculture industry continues to face a number of headwinds, including lower projected net farm income as a result of lower commodity prices. We believe that we have taken appropriate steps to navigate through the current climate and position our business for improved long-term results. We are focused on managing the controllable aspects of our business, including inventory levels and operating expense structure. We remain confident in the long-term agriculture industry outlook as farmers continue to carry strong balance sheets and the underlined macro trends are projected to continue driving long-term demand for agriculture commodities. Now, I would like to turn to the Construction segment of our business. On Slide 6, we provide an overview of the construction industry and our markets. We are currently experiencing improvement in our Metro markets reflecting increased residential and commercial activity. The strength of the livestock markets continues to support construction equipment sales activity in our agricultural-driven markets, which we anticipate to be flat year-over-year. The recent decrease in oil and gas pricing is causing lower sales and rental activity in our energy market. In calendar year 2014, the housing industry experience an increase in housing permits in our footprint, which is the positive indicator for medium and light equipment product offerings. We expect this trend to continue in calendar year 2015, but at a reduced growth rate. Similar to our ag segment last year, our construction equipment is transitioning to Tier-4 pricing on its new product offerings. A small portion of our new product has this pricing now, but the majority of the transitioned volume is projected to continue throughout fiscal 2016. We believe the rollout of Tier-4 throughout the industry is a positive for the company due to the competitive advantage CNH Industrial's Tier-4 technology. There is continued strength in used construction equipment pricing throughout the industry. The favorable pricing environment is resulting in higher equipment margins. As I mentioned in our ag industry overview, the late reinstatement of bonus depreciation and Section 179 was late in the year, minimizing the potential positive impact of our fourth quarter construction equipment sales. Overall, we made meaningful improvements with our construction business operating results in fiscal year 2015 and remain focused on continuing to improve our Construction segment sales and profitability as we enter fiscal 2016. Slide 7 provides an overview of our recently announced realignment plan, which better aligns our business cost structure in certain markets. First, reduced our headcount by approximately 14%, this includes headcount reductions at stores in each segment as well as at our shared resource center. We also closed three ag stores and one construction store. We expect the headcount reductions will generate a pro forma benefit of approximately $20 million or $0.56 a share in fiscal year 2016. In addition, we restructured certain employee compensation plans to better align pay with performance. For modeling purposes, it is important to note that the realignment costs associated with the headcount reduction in store closings are estimated to total approximately $2 million of what $0.1 million was recognized in the fourth quarter of fiscal 2015 and $1.9 million $0.05 per diluted share is expected to be recognized in the first quarter of fiscal 2016. With the implementation of our realignment, we are confident we are taking the right steps to manage through to the current ag climate improve the cost structure of our business. We believe that this combined with further inventory reductions and the recently implemented initiatives for International segment positions our business for improved operational and long-term financial performance. Now I would like to turn the call over to Peter Christiansen, our President, to discuss the progress we are making with the recently implemented initiatives in our international segment as well as provide an update on our agriculture, construction and international operating segments. Peter?

Thanks, David. On Slide 8, we have an overview of the industry in our International segment, which includes stores in Bulgaria, Romania, Serbia and Ukraine. Spring planning is underway and on schedule in all of our markets with the exception of Bulgaria experiencing some delays, due to early rains. All of our international markets had adequate moisture to begin the 2015 growing season. Lower global commodity prices continue to impact customers in all of our international markets, which is reflected in reduced farmer spending. This has also led to higher industry-wide equipment inventory levels, resulting in equipment margin pressure as we strive to achieve our revenue targets in this segment. Offsetting some of the challenges, the European Union Subvention Funds are becoming available in some of our markets, with Romania having access to these funds beginning in the third quarter of fiscal 2015. We anticipate Bulgaria to have access to the Subvention Funds beginning in the second quarter of fiscal 2016. As you may recall, the Subvention Funds are monies the European Union has budgeted over a five-year period to support investment in agriculture production in the developing markets of Eastern Europe, providing up to 50% of the cost of qualifying new equipment purchases In Ukraine, continued geopolitical and financial turmoil are negatively impacting our customers and operations. Limited credit availability, rising interest rates and the further devaluation of the local currency, are affecting all businesses throughout the country. Although the Ukrainian farmers had good yields in calendar 2014, they are limited in their ability to finance purchases of equipment and purchase crop inputs for calendar year 2015. As we discussed on our third quarter earnings call, we outlined $7 million of annual cost savings initiatives in our International segment to better align cost with current market conditions. The majority of these initiatives have been implemented and we anticipate the $7 million of cost savings will be reflected in our fiscal 2016 financial results. On Slide 9, you will see an overview of our segment results for the fourth quarter. Agriculture sales were $360 million, a decrease of 37.9%, reflecting the headwinds David discussed earlier. We generated ag adjusted pre-tax income of $2.8 million compared to $25.1 million in the prior year period. Primary factor impacting our ag segment results were lower equipment sales and used equipment margins. Our operating expenses decreased on an absolute basis compared to the same period a year ago, but were higher as a percent of sales due to lower equipment sales. Following the realignment, we believe, we now have an improved cost structure in place given the current market conditions. Turning to our Construction segment, our revenue was $109 million, which is 5.2% lower than that in the prior year period. The slight improvement in same-store sales was offset by the lower store count. Adjusted pre-tax loss for our Construction segment was $4.7 million, an improvement from an adjusted pre-tax loss of $8.2 million in the same period last year. The improved results primarily reflects stronger equipment margins, along with the initial benefits of cost savings from our realignment implemented earlier this fiscal year. We remain confident that the Construction segment of our business will be an important long-term contributor to our overall growth and profitability. In the fourth quarter of fiscal 2015, our international revenue was $39.1 million, which is a 2.9% increase compared to the prior year period. Our adjusted pre-tax loss was $3.5 million compared to an adjusted pre-tax loss of $2.3 million in the prior year period. The slight increase in revenue was more than offset by reduced equipment margins and increased operating expenses. We expect the cost savings from the initiatives, I previously mentioned, will begin to benefit our results in the first quarter of fiscal 2016. Adjusted pre-tax loss excludes $0.8 million re-measurement charge from the balance sheet impact of the Ukrainian hryvnia devaluation. Turning to Slide 10, you will see our segment results for the full year fiscal 2015. Agriculture revenue was $1.37 billion, a decrease of 22.3% compared to the same period last year and adjusted pre-tax income decreased to $17.4 million, reflecting the same headwinds discussed earlier. Construction segment revenue improved 7.1% and adjusted pre-tax loss, which excludes our closing cost of $2.6 million decrease to $8 million, a significant improvement over an adjusted pre-tax loss of $19.8 million last year. Our International revenue increased 14% to $166 million and our adjusted pre-tax loss was $10.5 million compared to an adjusted pre-tax loss of $3.8 million in the prior year period. In addition to the factors that impacted our fourth quarter results are full-year results reflect the annual cost of our European operation center, which opened in the second half of fiscal 2014 and the impact of challenging market conditions in Bulgaria and Ukraine. The adjusted pre-tax loss excludes the $5.8 million re-measurement charge from the balance sheet impact of the Ukrainian hryvnia devaluation. Turning to Slide 11, this shows our same-store results for the fourth quarter of fiscal 2015. Our overall same-store sales decreased 29.4%, primarily reflecting a 37.6% decrease in ag same-store sales. This was partially offset by same-store sales growth in our Construction and International segments. For the fourth quarter of fiscal 2015, overall same-store gross profit decreased 28.3% compared to the prior year. The Ag segment same-store gross profit decreased 39.3%, reflecting lower equipment margins offset by a favorable change in mix to higher-margin parts and service. The 13.9% improvement in the Construction segment same-store gross profit reflects the growth in same-store sales as well as improvements in gross profit margin for construction equipment. Regarding International, same-store gross profit decreased 12.4%, primarily reflecting lower equipment margins. On Slide 12, you will see our same-store results for the full-year. Total company same-store sales decreased 14.1% and total company same-store gross profit decreased 9.3%. Ag same-store sales decreased 22%, while construction same-store sales increased 14.9% in fiscal 2015. Our International same-store sales increased 21.8%. The same factors that affected the fourth quarter same-store gross profit in ag and construction also impacted our full-year same-store gross profits. International full year same-store gross profit increased 11.8%, which reflects increased sales partially offset by lower equipment margins. For modeling purposes, it is important to remember that we calculate same-store sales by including stores that were with Titan for the entire period of both fiscal years, which we are comparing. In other words, only stores that were part of Titan for the entire three months of the fourth quarter of fiscal 2014 and the fourth quarter of fiscal 2015 are included in the fourth quarter same-store comparison. The stores which were closed in the first quarter of fiscal 2015 are also excluded from this year's same-store sales calculation for both periods reported. In the fourth quarter of fiscal 2015, a total of nine locations were not included in our fourth quarter same-store results, consisting of two ag locations and seven construction stores. For the full-year fiscal 2015, a total of 13 stores were not included, consisting of two ag locations, nine construction locations and two international locations. Now, I will turn the call over to Mark Kalvoda, our CFO to review results in more detail, provide an update our reduction in inventory and other key balance sheet items and to discuss our fiscal 2016 modeling assumptions. Mark?

Thanks Peter. Turning to Slide 13, our total revenue for the fiscal 2015 fourth quarter was $491 million, a decrease of 30.8% compared to last year. Equipment sales decreased 33.7% quarter-over-quarter, primarily reflecting the ag headwinds David discussed in his remarks. Our part sales decreased 17.5% in the quarter while service revenue decreased 19.6%. This quarter softness in parts and service is primarily attributed to a decreased amount of customer preventative maintenance as well as reduced service business associated with the pre-delivery of sold new equipment. Our rental and other revenue decreased 8.1% in the fourth quarter, primarily due to the lower utilization of our rental fleet. Our rental fleet dollars utilization was 24.5% for the current quarter compared to 28.7% in the same period last year. The decreased utilization was partially due to the lower oil prices affecting rental demand in our oil-producing markets. On Slide 14, our gross profit for the quarter was $68 million and our gross profit margin was 13.9%, an increase of 20 basis points compared to the same quarter last year. The improvement in gross margin was due to higher margin parts and service mix compared to the prior year period, partially offset by a decrease in equipment margins of 90 basis points. Our operating expenses as a percentage of revenue in the fourth quarter of fiscal 2015 was 13.2% compared to 10.9% for the same quarter last year even though we decreased our operating expense by $12.3 million or 15.9%. The increase in operating expenses as a percentage of revenue was primarily due to the deleveraging of our fixed expenses as total revenue decreased from the prior year. We are focused on reducing our overall operating expenses and I believe the cost-saving initiatives we have implemented in the first quarter of fiscal 2016, as part of our realignment plan combined with the previously implemented initiatives in our International segment, will enable us to better align our operating expenses to the expected market conditions in fiscal year 2016. In the fourth quarter of fiscal 2015, we recognized $31 million non-cash charge primarily related to impairment of goodwill and other intangible assets within the Ag segment. In addition, we also recorded a $1.3 million charge from the balance sheet re-measurement impact of the fourth quarter currency devaluation in Ukraine as well as certain realignment costs. As a reminder in the fourth quarter of fiscal 2014, we recognized a non-cash charge of $10 million, primarily related to the impairment of goodwill and other intangible assets within the Construction and International segments. Floorplan and other interest expense increased 60 basis points as a percent of revenue, which is primarily due to lower revenue, higher interest rates and higher percent of Floorplan that is interest-bearing. In the fourth quarter of fiscal 2015, interest-bearing Floorplan was 75% of overall Floorplan compared to 56%, this period last year. This increase is due to a reduced level of new inventory shipments from our suppliers, which initially carry non-interest-bearing terms. It is important to note that we significantly reduced our inventory level in fiscal 2015. We anticipate a reduction in our Floorplan interest expense in fiscal 2016. Beginning this quarter, we are also reporting our adjusted EBITDA. We calculate adjusted EBITDA by including our Floorplan interest expense and excluding non-recurring items such as re-measurements, impairments and realignment costs as we believe, this reflects the ongoing operations of our business. For the fourth quarter of fiscal 2015, we generated adjusted EBITDA of $6.4 million, which compares to $23.9 million in the fourth quarter of last year. You can find a reconciliation of adjusted EBITDA on Slide 22. Our adjusted loss per diluted share was $0.20 for the fourth quarter of fiscal 2015, which excludes certain non-GAAP items as outlined in the reconciliation table on Slide 22. This compares to adjusted earnings per diluted share of $0.35 in the fourth quarter last year. Turning to Slide 15, we are seeing overview of our full-year revenue results. Total revenue decreased 14.7% compared to last year, primarily driven by lower equipment sales. Over the course of the full-year, our parts and service remained relatively stable as parts were down 2% and service was down 1.2%. On Slide 16, our full-year gross profit was $308 million, an 11.4% decrease compared to the prior year period. Our gross profit margin increased 60 basis points to 16.2%, primarily reflecting the shift in sales mix for [ph] our higher-margin parts and service business, partially offset by lower Ag equipment margins. Operating expenses were 14.4% of revenue compared to 13.1% in the same period last year, primarily reflecting the deleveraging of fixed expenses I spoke to earlier. In fiscal year 2015, we recognized a $40.6 million charge consisting of a $31.2 million impairment charge related to goodwill and intangibles, realignment costs of $3.6 million and $5.8 million from the balance sheet re-measurement impact of the Ukrainian currency devaluation. Our adjusted diluted loss per share was $0.9. This excludes $1.42 per share for charges primarily associated with the impairment of intangible assets, realignment costs and Ukrainian currency re-measurement. Even though we recognize positive adjusted pre-tax earnings, our adjusted diluted earnings per share reflects a loss due to the recognition of a full reserve against current year net operating losses in our International segment and the inability to use such losses to reduce our U.S. income tax liability. At the end of our slide presentation, we have included a reconciliation table to help illustrate the adjustments to our GAAP numbers. Turning to Slide 17, here we provide an overview of our balance sheet highlights at the end of the year. In light of the headwinds we are currently facing from the ag industry, improving our balance sheet was and remains one of our key areas of focus. We had cash of $128 million as of January 31, 2015. Our equipment inventory decreased to $772 million compared to equipment inventory of $939 million as of January 31, 2014. Inventory change includes a decrease in new equipment of $126.3 million and a decrease in used equipment of $41.5 million from the end of fiscal 2014. This includes inventory amounts classified on our balance sheet as held for sale, which are held in stores, in markets Titan is exiting. In a few minutes, I will provide an update on our inventory reduction in fiscal 2015 and our anticipated reduction in fiscal 2016. Our rental fleet assets at the end of the fourth quarter were $148 million, which is relatively flat compared to $145 million at the end of fiscal 2014. We anticipate maintaining a similar fleet size for fiscal 2016. As of January 31, 2015, we had $627 million of outstanding Floorplan payables on $1.2 billion of Floorplan lines of credit. We recently amended our bank syndicate credit facility and we are in compliance with all financial covenants of our credit facilities effective for the period ended January 31, 2015. We reduced our total discretionary Floorplan lines of credit to $1.1 billion in April 2015, reflecting lower current and expected equipment inventory levels. The reduced Floorplan levels combined with the lower long-term debt at the end of fiscal 2015 has improved our total liabilities to tangible net worth of 2.6 as of January 31, 2015 from 3.1 as of the end of the prior year period. I will provide some additional commentary on this metric in a moment. Slide 18 gives an overview of our cash flow statement for fiscal 2015. When we evaluate our business, we look at our cash flow related to equipment inventory, net of financing activities, with both manufacturers and other sources, including non-manufacturer Floorplan notes payable which are reported on our statement of cash flow as both operating and financing activities. When considering our non-manufacturer Floorplan proceeds, non-GAAP net cash provided by inventories was $55.3 million in fiscal 2015. Our GAAP cash provided by inventories was $171.6 million. In our statement of cash flows, the GAAP reported net cash provided by operating activities for the period was $41.1 million. We believe including all equipment inventory financings as part of our operating cash flow better reflects the net cash flow of our operations. Making these adjustments, our non-GAAP adjusted net cash provided by operating activities was $82.2 million. We successfully improved our non-GAAP operating cash flow for fiscal year 2015 through a reduction in equipment inventory and working capital. We are pleased with our ability to generate strong cash flow despite the fact that the industry conditions have put pressure on our earnings. Going forward, we plan to use a portion of our cash balance and cash flow from operations in fiscal 2016 to reduce inventory financing and continue to de-lever our balance sheet. Turning to Slide 19, I would like to provide an update on our company equipment inventory initiative. Similar to what we have provided in the past, you will see a chart outlining our equipment inventory position for the last four years as well as our ending inventory target for fiscal 2016. The chart shows that we reduced year end equipment inventory for fiscal 2015 by $168 million compared to the end of fiscal 2014. This is represented by the solid trend line. The amount of our inventory reduction for fiscal 2015 represents a significant improvement, but was short of our previous goal due to the lower than anticipated fourth quarter equipment sales. We anticipate a further $150 million reduction of equipment inventory in fiscal 2016 and expect the quarterly inventory stocking trend to be similar to that of fiscal 2015, with most of that the reduction occurring in the fourth quarter. We were able to decrease our used inventory in fiscal 2015 and will continue to focus on moving used equipment in fiscal 2016. Turning to Slide 20, you will see a chart showing our total liabilities to tangible net worth ratio over the past four years. This chart shows a notable improvement in this ratio from a high of 3.3 in the second quarter of fiscal 2015 to 2.6 at the end of fiscal 2015. Based on a consistent level of tangible net worth, we expect to further reduce the ratio to approximately 1.9 at the end of fiscal 2016. The improvement in our fiscal 2016 total liabilities to tangible net worth ratio primarily reflects our anticipated cash generation and the use of this cash to reduce inventory financing that I spoke about previously. Given the current market conditions, particularly in the ag sector, we believe, using a portion of our cash to de-lever our balance sheet, positions the company to capitalize on long-term opportunities. Slide 21 shows our fiscal 2016 annual modeling assumptions. Given the recent market fluctuations, we have decided to provide a number of modeling assumptions rather than specific total company outlook ranges for revenue and earnings per share. The company believes these significant modeling assumptions will provide investors with the necessary information regarding anticipated business trends affecting our financial results. Our modeling assumptions for fiscal 2016 are as follows. We expect our ag same-store sales to decrease 20% to 25%. This primarily reflects lower anticipated results from our equipment revenue as well as slight decrease in our parts and service revenue. We expect both, our construction and international same stores sales to be flat. Modeling assumptions for equipment margins for the full-year is projected to be in the range of 7.7% to 8.3%. We expect to be profitable on an adjusted diluted earnings per share basis for fiscal 2016. This concludes the prepared comments for our call. Operator, we are now ready for the question-and-answer session of our call.

Thank you, sir. [Operator Instructions] Our first question is from Rick Nelson with Stephens.

Good morning. Dave, I would like to ask you about current year appetite for acquisitions at this point. I am sure you are getting more calls. How you are responding to those? Do you keep your powder dry here for a while or do you in fact step up turning this downturn?

Rick, our main focus right now is the realignment, the expense reduction, reducing inventory and growing the cash. When we think down the road there is going to be some consolidation, but we think our ability to really do a good job with that is going to be dependent on really getting our balance sheet and our positions, so we can really capitalize on these opportunities.

So you think the opportunities might be better down the road than it might be today?

I believe so.

I am curious also how much of your construction revenue is tied to the energy sector and whether you expect that business to be profitable in the current year.

I think overall, we have talked before in the Bakken specifically there is four of our stores that kind of reach out to the Bakken market there and then we have some down in Colorado in some energy areas there as well. I think, if you look at it in total, it is probably around 10% of what makes up the Construction segment, so definitely it is a meaningful portion, but we have got other areas there as well in that segment of our business.

Got you. Okay. Thanks a lot and good luck.

Next we go Brett Wong with Piper Jaffray.

Hey, guys. Thanks a lot for taking my questions. I appreciate it. First, I was wondering if you can kind of talk to the inventory expectations. One, you are kind of classifying the held for sale here now and then you had mentioned that that's around excluding inventory in markets you plan to exit. Can you just provide a little more color around that classification? Then ultimately as you look at used equipment through this year, and the expectation to reduce those inventory levels, what are you thinking and how you are going to be able to do that and looking at this chart, it does not seem like there is expectations of too much of a reduction in used mostly coming from new.

Yes. I think, first of all, there is a lot you kind of asked there. Hopefully, I will all hit on all of it. First of all, yes, it is important on these assets held for sale. Like I said on the call, there's inventory, there is other assets that are included in that particular classification, so these are in stores we are looking to exit, those particular markets, so what we didn't want to do is, we didn't want to take credit for any kind of classification change. If you look at specifically on the balance sheet for inventory, it may look like we reduced it by more than $168 million, but there is some inventory that is in that category and the balance sheet, so we did not want to take credit for that, so the $168 million represents the full amount of inventory kind of regardless of whether it is an inventory line or in that assets held for sale. For next year, we anticipate reducing roughly approximately around that $150 million and that of course is kind of dependent on hitting those revenue targets we gave those by segments to you, so if we surpass that, we may be able to do better than that. If we do not surpass it, we may fall short of it somewhat, but $150 million is kind of baked in our assumptions that we put out there. Regarding used; I think you asked about used as well. Used is always a little more difficult to continue to kind of chew down. You can see we have methodically kind of moved that down throughout the year. It was a little bit up in our fiscal fourth quarter for fiscal '15, and we constantly have that conversion of new to used that we always have to address as well, so it is always easier to move the new down quicker than it is the used, because you can just kind of stop ordering the new or the used you continue to generate with selling the new. Hopefully that answers. Anything I missed there, Brett?

No. That is great. There were so many questions actually at once. I appreciate that. Just one last from me just wondering if you are seeing any impact from the weakness in dairy or pork, you mentioned that livestock continues to be good, but just wondering if you are seeing any impact there.

We have not seen. I mean, in our markets that is not a big driver, so it has not been significant there.

Okay. Great. Thanks a lot guys.

Next, we take a question from Mig Dobre with Robert Baird.

Good morning, everyone. Just sort of going back to the rental fleet, you mentioned only about 10% of it is exposed to energy, but dollar utilization was up 400 basis points year-over-year and you mentioned in your prepared remarks that a lot of that had to do with energy, so the impact to me seems pretty significant. When I am looking at your other segment, how should we think about not only the top-line here, but margin because margin has contracted significantly in the fourth quarter and I am wondering why is not this level a better run rate going forward or is it?

Dave may want to add onto it, but first of all when I responded to that 10%, I was looking at total revenue. I would say there is a little bit higher component there from rental in that energy area, specifically in the Bakken. Yes, the rental utilization was off. It was lower than what we had anticipated. It was off like you said for 4% versus the prior year. A lot of that has to do with the Bakken there. As far as going forward and the connection with margin, certainly if the utilization is down, you have got the fixed expense there with the depreciation and the margins will contract there as well, so that is certainly how some of the math works with the lower utilization. We have to recall, and we are down 4% from last year, but the fourth quarter and first quarter tend to be the lowest utilization quarters that we have on that rental fleet.

Well, yes, but since we are talking about year-over-year numbers here, we do not have some sort of weather or seasonality impact to it and I am wondering if oil prices do not recover and activity is what it is, why shouldn't we think that utilization is going to be down 400 basis points year-over-year for the full-year? Is there a reason to think otherwise?

A couple of things here, Mig, first of all, if you look at the snowpack in the upper Midwest, there basically was not any and that contributes too. A lot of our customers out there rent quite bit equipment for snow removal and there just was not any of that. Then like Mark said that we do our disproportional amount of equipment associated with oil in these oil markets. Now, we are moving that. In the comments, I said we are seeing a big improvement in the metropolitan areas, so we are moving a lot of that machinery into those markets, so a combination of snow and then the mix in those markets and disproportionate high amount associated with oil that came out as fairly rapidly you know, but I think they have done a good job of certainly move that equipment around here in the last term two quarters or so.

That is helpful. Thank you. Moving to Parts and Service, I also was a little surprised with the top-line swings here in both areas and you mentioned some deferrals. From my perspective, I am wondering whether or not it is fair to assume just a slight decline in this business as we are thinking about fiscal '16. I am really wondering why we would not see frankly something closer to a double-digit decline just based on the fourth quarter performance alone.

I think, for the whole year this year, it ended up relatively flat. I think it was down 1% or 2% on both, Parts and Service. The winter months, where you get into that fourth quarter, it is more reliant on some of that preventative maintenance, so I think it is more reliant on the preventative maintenance and it is more reliant on what we call it pre-delivery inspection with a lot of the new going out in the fourth quarters. If new is down quite a bit and kind of that off-season where that preventative maintenance is big, it is more heavily impacting the fourth quarter than what we believe would impact some of the other quarters which has the harvest in it and the plant it, so yes we do not believe it is going to be down near to the level that it was down in the fourth quarter for next year.

Yes. That makes sense. Then last question for me is on international. Looking to clarify a couple of things here, you are talking about flat revenue. I am wondering what FX assumptions is embedded in here, so what are you are actually saying about volume. Then as we are looking at pre-tax income, we saw $11 million loss in the fiscal '15, $7 million of cost savings that you talked about, so is it fair to think that we could be looking at something below $5 million in terms of pre-tax loss for fiscal '16?

I will address the first part of that question on the FX. First of all, you know, when you are close to a breakeven in the overall results over there, the FX does not have a big impact in that the revenues, gross profit is coming over at a - so the euro has weakened recently for instances, so the revenues are going to come over less, gross profit is going to come over less, but the expenses will come over less as well, so it does not have a real big impact on the close to a breakeven business scenario. The other thing is, in Ukraine which is one of our bigger markets that we are in over there, the functional currency that we use over there it is actually U.S. dollar, and so the exchange rate coming over in the P&L, it won't have a big impact.

When we are talking about volume and I am sorry if I do not understand this, I am trying to figure out if you are actually guiding for flat volume in international or if you are guiding for a volume growth, excluding top-line FX impact?

I would say it is relatively flat to maybe up a little bit, is what we are guiding for as far as volume.

The pre-tax margin?

Pre-tax margin, we do not give individual by segment. We do not give profitability, but based on the flat sales and improving the expense structure, it would be improved from last year on an adjusted basis.

Okay. Thank you.

[Operator Instructions] Next, we will go to Larry De Maria with William Blair. Mr. De Maria your line is open. Larry, if using a speaker phone, please make sure your mute function is turned off. Okay. We will go now to Joe Mondillo with Sidoti & Company.

Hi, guys. Good morning.

Good morning Joe.

Regarding the international segment, I am not sure if I heard the answer to one of the last questions, which was if you saw $11 million or $12 million loss in fiscal '15 and you are looking for a $7 million of savings, does that translate into sort of a $5 million loss. I apologize if I missed your answer to that?

Yes. That would be the assumption if everything else was held constant. Flat sales and improved expenses by $7 million, yes, it would be somewhere around $3 million loss.

Okay. My question regarding, just the jump on that, in terms of international, you have lost pre-tax roughly over $20 million for last two years. You are looking for another loss this year. I am just wondering in terms of an investment like this, at what point in time would you guys feel like maybe we should put on the brakes and sort of bail temporarily as opposed to continue pushing forward and just accruing these losses?

Well, when we assess our international operations, we have made an investment into the distribution footprint that we have on the ground there and we have inventory and assets that are there, so we continue to evaluate that. For instance in Ukraine, we are selling down on the amount of inventory that we have in country and holding other inventory outside of Ukraine, so we have to evaluate that, but there is an ongoing operation there and we have not been expanding the footprint, but we would just evaluate that on an ongoing basis.

Okay. In terms of the construction side of the business, outside of your oil and gas, you have not touched much on that. You have talked about how oil and gas is weighed on the overall business, but outside of oil and gas, how has that been trending?

Well, as we commented, we are seeing uptick in used equipment valuations in the margin in used. The industry seems much healthier. In your large metro areas, there is just a lot of activity. If you go through our used markets, you are seeing investment, you are seeing all kinds of building activity, you are seeing cranes on top of buildings, you are seeing commercial, you are seeing apartments, you are seeing hotels, you are seeing major industrials, you are seeing stadiums, you are just seeing a lot of activities in these metro markets, so that is a really a positive. The livestock piece of, which we have a lot of markets that has been a positive to that segment, so outside of the energy piece it is actually fairly healthy industry right now.

Okay. Then just lastly, Mark, in terms of the Floorplan interest expense, I was wondering if you could - you give us the average for the quarter, I am wondering what that interest expense was trending at on a run rate at the end of the quarter and what the interest-bearing as a percent, in terms of that 75%, what was that at the end of the quarter?

That is what it was. At the end of the quarter, that is what I was referring to as the 75%.

Okay, so that is what.

Okay. Yes. As far as trending, so it has been down now for the last couple of quarters. July was kind of our peak there in our second quarter it did go up a little bit in October. It has been down from October and I would anticipate that to continue to come down as the fourth quarter was our big inventory reduction, and certainly a portion of that was interest-bearing Floorplan, so I would continue to expect a reduction to occur throughout fiscal '16.

Right. I guess what I was getting at was, considering that you did reduce a lot of inventory in the fourth quarter I would imagine that $5.1 million number, which was an average interest over the quarter, at the end of the quarter I would imagine that the run rate was lower than the 5.1, so I was wondering if you had that number that run rate at the end of the quarter on hand?

No. I mean, I do, but I don't get that by month or anything like that, but you are right. I mean, it would have started trailing down towards the end of the quarter as we sold inventory, particular in our December month but yes so I mean it is trending down.

Okay. Okay. Thanks.

Now, we will take our final question from Larry De Maria with William Blair.

Hi. Thanks. Sorry about that before. First clarifications, if I heard you correct, we should expect inventory to go up before it goes down this year, also the cadence of adjusted profits? Obviously, you said for the full-year you expect adjusted profits to be positive. Do we start off with losses and get profitable through the year or do we expect the adjusted profits all year?

Yes. You are correct that with the cadence that we had in the inventory throughout the year last year, we would expect some degree of increase here for the first, maybe, second quarter and then starting to drop off third and substantially in the fourth. Regarding profitability by quarter, we do not give quarterly guidance, but for the first quarter it will be our most difficult quarter from a revenue standpoint and it is [ph]. We got tougher comps. Last year, it fell off quite a bit more in the third and fourth quarters last year, so first quarter will fall off and then we will get more of that parts and service into the spring and harvest then we will get more a part and service, tougher in first quarter, better, second third should be good. Then fourth quarter is kind of dependent on that equipment revenue coming in.

Okay. That is good. Thank you. Then I was wondered if this get improved a little bit further into the pricing pressure you are seeing a new and used. If you could delineate the two for us, how it is trending, give us some color there. Then are we expecting down pricing year-over-year for a new and used in this fiscal year?

Well. First of all, we are seeing some fairly good stability in the new pricing out there, which actually benefit some of the late-model used out there, so we looked at this and actually beginning I would say in the third quarter calendar year 2013, we really started addressing this used equipment trying to get out in front of it, so I think we were a little bit ahead of the game and really proactive of trying to get this used inventory in line with the markets for both and a level standpoint and I think we have been successful at that. I think you are going to see some pressure, some of the lower end new seems to be a good demand for that and holding its prices pretty there. Again, and you take that fairly new equipment, that tends to be somewhat aligned with what the new is, then you have got that area in between. Yes. There is going to pressure and there is less demand for used. That does affect price. Like I said that part of the business, I think we have done a good job of managing that and understanding that. As we sold less new, then also there is less used trading coming in, so we feel pretty good about the position we are in. We think we are in better shape than most of the industries on that and have done a pretty good job and we expect to be able to manage through this next year with that, Larry.

Okay. That is helpful. Thank you. I guess where I am trying to get towards also is, is there any kind of industry discounting. If you guys think you are in better shape than some other competitors out there, what is the reaction is there discounting, trying to get bulk sales and are we seeing any kind of shifts in market share, because of competitive nature?

Again, I think you are seeing some pretty good stability out there on the new side, which is a positive and I think you follow the main suppliers of farmer equipment, you actually see what they are doing with some headcount reductions and what they are talking about their production level, so I think that bodes well for keeping some stability and then new pricing. What you see out there in a typical marketing would see - whether it would be leasing or financing or some of those types of things out there which is just typical in all of the cycles, but now I would say you are seeing some real good stability on the pricing side.

Okay, so it sound likes you are still pretty rational, yes, and that people are not using price to try to shift market share at all at this point?

Yes. Correct. Right. I think, we are going on with what the value of the product, some of the new model and instructions out there, some of these advantages we are seeing with some of the Tier-4 technology and engines of the fuel economies. On the planner side, you are seeing some of the technology improvements, joint venture with precision in Montana, I think is a positive, so you are seeing so many things that is going to drive the business for no more so than just price. I think that is real positive because it really helps that late model used pricing out there.

Right. At this point are you guys specking any thin edge planers with precision planning implements or controls on them yet?

Well, I think you have to look at their announcement and their timing of introducing these miles as we go on, but yes definitely it is a part of our portfolio. Now, we have got access to the precision, which is really a positive out there with our growers.

Okay. Thank you.

Unfortunately, that is all the time we have for questions today, so I would like to turn it back over to our speakers for any closing remarks.

I want to thank everyone for your interest in Titan and look forward to updating you on our progress on our next call, so have a good day.

That does conclude today's conference. We thank everyone, again, for their participation.