John Mills - Investor Relations, ICR David Meyer - Chairman and Chief Executive Officer Mark Kalvoda - Chief Financial Officer

Neil Frohnapple - Longbow Research Steve Dyer - Craig Hallum Mircea Dobre - Baird Rick Nelson - Stephens Joe Mondillo - Sidoti & Company Tyler Etten - Piper Jaffray Aaron Steele - Feltl & Company

Good day and welcome to the Titan Machinery Inc.'s First Quarter 2018 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to John Mills of ICR. Please go ahead.

Thank you. Good morning, ladies and gentlemen and welcome to the Titan Machinery first quarter fiscal 2018 earnings conference call. On the call today from the company are David Meyer, Chairman and Chief Executive Officer; and Mark Kalvoda, Chief Financial Officer. By now everyone should have access to the earnings release for the fiscal first quarter ended April 30, 2017, which went out this morning at approximately 6:45 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're providing a presentation to accompany today's prepared remarks. And you can access the presentation now by going to Titan's website and clicking on the Investor Relations tab. The presentation is directly below the webcast information in the middle of the page. You will see on Slide 2 of the presentation, our Safe Harbor Statement. 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. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These forward-looking statements are based on current expectations of management and involve inherent risk and uncertainties, including those identified in the risk factors section of Titan's most recently filed Annual Report on Form 10-K. These risk factors contain more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. Except as may be required by applicable law Titan assumes no obligation to update any forward-looking statements that may be made in today's release or call. Please note that during today's call, we'll 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 Titans ongoing results of operation, particularly, when comparing underlying results from period to period. We’ve included reconciliations of these non-GAAP financial measures in today's release and have provided information regarding the adjustments that are added back or excluded in these non-GAAP financial measures. Today’s call will last approximately 45 minutes. At the conclusion of our prepared remarks, we will open the call to take your questions. Lastly, due to the number of participants on today's call, we ask that you keep your question period to two questions and then rejoin the queue. Now, I'd like to introduce the company's Chairman and CEO, Mr. David Meyer. Go ahead David.

Thank you, John. Good morning everyone. Welcome to our first quarter fiscal 2018 earnings conference call. On today’s call I will provide a brief summary of our results and then an overview of each of our business segments. Mark will then review financial results for the first quarter of fiscal 2018, and update you on the status of our inventory. He will conclude with a review of our updated modeling assumptions for fiscal 2018. If you turn to Slide 3, you will see an overview of our first quarter financial results. Our first quarter revenue was $264 million, with an adjusted pre-tax loss of $6.5 million and adjusted loss per diluted share of $0.19. Overall, these results along with our expectations reflect continued industry challenges and domestic agriculture and construction segments. This includes a timing delay and restructuring cost savings, but also earlier than expected equipment margin improvement enabled by aggressive equipment inventory reduction and the overall industry inventory environment. Equipment demand in our international segment has also grown ahead of expectations. I will say more on each of these, but foremost, we remain committed to a profitable and I’m pleased with our progress. Now I would like to provide additional detail for our three operating segments, including our domestic agriculture and construction segments and our international segments. On Slide 4, is an overview of our domestic agriculture segment. Despite late snow and intermittent rains, planting and early crop development appears on track. Overall business conditions are consistent with our expectations with continued low commodity prices continuing to dampen equipment demand. Strong South American production contributes to the impact on commodity prices. However, we are seeing used equipment value stabilizing helping margins. We are executing target and marketing and product are foreseeing and flexible financing to stimulate demand, while with an expanded focus on product support and precision Ag. We continue to manage our new and used inventories to reduce demand and to implement cost savings and efficiency improvements as part of our recent restructuring. Turning to Slide 5, you will see an overview of our domestic construction segment. Although there is some segment that construction will be strengthened by federal infrastructure programs heading into 2018, we don’t expect this to translate into broad based growth in our territory this fiscal year as evidenced by our first quarter results. Overall, we are seeing revenues declining slightly and in line with our expectations with ongoing residual impact of dom Agriculture and energy markets in our footprint. However, we are seeing a few bring spots, including solid growth in major metro areas and modest increases in the oil and natural gas productions. We will continue to expand rental focus and target increasing contract demand with a strong line-up of construction equipment in growth areas. By continuing to optimize our rental fleet mix to increase utilization, and to achieving our restructuring expense reductions and efficiency gains we are well positioned for profitability in our construction segment. With our expansive construction store foot print recently from Canada and Mexico across the Western and Central United States, this will allow us to fully capitalize and grow as the market turns up. On Slide 6, we have an overview of our international segment, including Ukraine and the Bakken countries of Bulgaria, Romania, and Serbia, The overall business climate in Eastern Europe continues to improve and we have seen the results on our first quarter performance versus last year. It’s also been a favorable start to the growing year in our four countries. In Ukraine, Romania and off late Serbia we are seeing a combination of a sustained economic growth available financing, and favorable growing conditions that is encouraging strong equipment sales growth. We as taking steps to optimize our sales coverage and expand our product support business to further improve customer royalty and margins. In Bulgaria, strong economic uncertainty is contributing to a slower equipment market than the other three countries. The market remains similar to what we have experienced last year. We have taken advantage of specific customer sales opportunities, while continuing to manage our equipment inventories and expenses based on current demand. Altogether, our overall company performance is in line with expectations with international growth somewhat ahead. We continue to execute on our initiative to remove structural cost in the business, which I would like to revisit. We remain confident that we will remove $25 million of annual cost, while continuing to meet customer needs. Although there is a timing delay in store closings due to customer service demand in advance spring planting, the expected store closures were completed towards the end of the quarter and related inventories are in the final stages of being reallocated or sold. With our new expert team operating structure and all in place, we are executing our cost reduction plan and we will receive the benefits of improved efficiencies and decreased cost throughout the remaining three quarters of this fiscal year and beyond. I’m satisfied that these and previous restructuring efforts in combination with our ongoing disciplined inventory management that put us in a favorable cash position with a strong balance sheet to achieve sustained profitability even at the bottom of industry cycles. If business conditions improve, we are poised to capitalize our growth and deliver increasing returns. Finally, I would like to thank our dedicated employees in the United States and Europe for your outstanding efforts and the contributions you are making everyday to our customers and company. I will now turn the call over to Mark to review our financial results and our continued success of inventory reduction and finally to update you on the updated modeling assumptions. Mark?

Thanks David. Turning to Slide 7. Our total revenue for the fiscal 2018 first quarter was $264 million, a decrease of 7.3%, compared to last year. Equipment sales declined 9.2% quarter-over-quarter, which is primarily driven by the industry factors David discussed. Our parts revenue decreased 1.6% in the quarter and service revenue decreased 7.2%. Our parts and service business is still being impacted by lower overall equipment revenue levels providing a lower level of service opportunities on pre-delivery and warranty works. Our parts and service business was also affected in the first quarter as we close stores related to our restructuring plan and began transitioning customers to adjacent stores. Our rental and other revenue decreased 5.5% in the first quarter, primarily reflecting the factors David discussed and slightly lower rental lease dollar utilization of 19.3% for the current quarter, compared to 19.7% in the same period last year. On Slide 8, our gross profit for the quarter was $49 million, compared to $54 million in the same quarter last year. Our gross profit margin was 18.5%, a decrease of 30 basis points, compared to the same quarter last year. The gross profit margin decrease was primarily due to the lower new equipment revenues, equipment margins, which we expected due to the industry factors David discussed earlier. Our operating expenses decreased by $2.5 million to $52 million for the first quarter. As a percentage of revenue, operating expenses in the first quarter of fiscal 2018 were 19.6%, compared to 19.1% for the same quarter last year. The increase in operating expenses as a percentage of revenue was primarily due to the decrease in revenue in the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017, which affected our ability to leveraging our fixed operating cost. In addition, our store closing is related to our restructuring occurred later in the first quarter than we initially expected. And this delayed the initial cost savings reducing the cost benefits in the first quarter compared to earlier expectations. We still anticipate reducing annual expenses by $25 million, but now anticipate $13 million to $17 million to benefit fiscal year 2018, compared to our original expectation of $20 million. Restructuring cost were $2.3 million for the first quarter in fiscal 2018, compared to $200,000 for the same period last year. Restructuring costs recognized in the first quarter of fiscal 2018 are the results of our restructuring plan announced in February to consolidate certain dealership locations and to implement a reorganization of our operating structure. We estimate the additional restructuring cost to be approximately $7 million for the remainder of fiscal 2018. Floor plan and other interest expense was relatively flat at $4.8 million in the first quarter of this year, compared to $4.7 million in the prior year quarter. Our floor plan and other interest expense would have shown a meaningful improvement year-over-year due to the large decrease in our interest-bearing equipment inventory and reduce the level of convertible notes. However, we recorded a $2.1 million gain in last year's period associated with the repurchase of our convertible notes. For the first quarter of fiscal 2018, we generated adjusted EBITDA of $1.6 million, which compares to $1.8 million in the first quarter of last year. We calculate adjusted EBITDA by adding back our floor plan interest expense and excluding nonrecurring items. You can find a reconciliation of adjusted EBITDA in the appendix to the slide presentation. In the first quarter of fiscal 2018, our adjusted net loss, including non-controlling interest was $4.2 million, compared to adjusted net loss, including non-controlling interest of $4.8 million for the first quarter of fiscal 2017. Adjusted loss for diluted share was $0.19 for the first quarter of fiscal 2018, which excludes certain non-GAAP items as outlined in the reconciliation table in the appendix of the slide presentation. This compares to adjusted loss per diluted share of $0.21 in the first quarter of last year. At the bottom of the page, you will see our absorption, which reflects the ability of parts, service, and rental gross profits to absorb fixed operating cost. We believe this is a good metrics, it is a good indicator of our progress towards growing our higher margin product support business while also achieving more cost effective operations. This makes us more resilient to both the current and future market downturns and associated equipment pricing pressures and delayed equipment purchasing. Our absorption for the first quarter of fiscal 2018 was 73.1%, compared to 72.1% in the same period last year, as our reduction in fixed operating cost and floor plan interest expense more than offset our decrease in gross profit from parts, service, and rental and other. We expect to continue to improve our absorption rate throughout the year as we fully implement our restructuring plan and focus more on parts, service, and rental, while reducing our operating cost structure. On Slide 9, you will see an overview of our segment results for the first quarter of fiscal year 2018. Agricultural sales were $164 million a decrease of 8.5%. Our Ag segment had an adjusted pretax loss of $2.4 million, compared to an adjusted pretax loss of $3.9 million in the prior year period. Revenue decrease was primarily due to lower equipment sales. The improvement in our pre-tax loss was substantially driven by lower levels of operating and floor plan interest expense. Turning to our construction segment, our revenue was $63 million, a decrease of 18.7%. Reduction in quarter-over-quarter revenue decline was primarily due to $8.6 million of equipment revenue associated with our expanded marketing of aged equipment inventory in the prior year and the current industry conditions David discussed earlier. Our adjusted pretax loss for our construction segment was $2.5 million, compared to $2 million in the same period last year. In the first quarter of fiscal 2018, our international revenue was $37 million, which increased 32%, compared to the prior year period. These results exceeded our expectations particularly in Romania where we are beginning to generate stronger customer demand through our recent build-out of our distribution footprint, as well as our customers having availability of European Union Subvention funds. Our adjusted pretax income was $600,000 compared to adjusted pretax loss of $300,000 in the prior year period. Turning to Slide 10, here we provide an overview of our balance sheet highlights at the end of the first quarter of fiscal 2018. We had cash of $56 million as of April 30, 2017. Our equipment inventory at the end of the quarter was $403 million and increase of $7 million from January 31, 2017. This reflects a seasonal increase in new equipment inventory of $23 million, partially offset by a $16 million or 9.7% decrease in used equipment inventory. In a few minutes, I will provide additional color on our inventory outlook for fiscal 2018. Our rental fleet assets at the end of the first quarter were $126 million, compared to $124 million at the end of the fourth quarter of fiscal 2017. We continue to expect the size of our rental fleet to remain relatively flat in the current year. We had $260 million, outstanding floor plan payables on $808 million total discretionary floor plan lines of credit as of April 30, 2017. As a result of our successful equipment inventory reduction in fiscal year 2017 and current year inventory plans, we lowered our floor plan capacity by $70 million in the month of May, resulting in current available floor plan lines of $738 million. We continue to maintain a health total liability to tangible net worth ratio of 1.5. During the first quarter of fiscal 2018, the company repurchased $20.3 million face value of convertible notes with $19.3 million in cash. The company has now retired a total of $74.5 million or approximately 50% of the original face value of our convertible notes. Slide 11 provides an overview of our cash flow statement for the first three months of fiscal 2018. The GAAP reported cash flow provided by operating activities for the period was $41 million, primarily attributable to the changing mix of manufacturer versus non-manufacturer of floor plan financing. As part of our adjusted cash flow provided by operating activities, we include all equipment inventory financing, including non-manufacture of floor plan activity. Our adjustments for non-manufacturer of floor plan payable amounted to a reduction of cash of $26 million. We accurately reflect cash flow provided by operating activities. We adjust our cash flow to reflect the constant equity in our equipment inventory. By providing this adjustment, we are able to show cash flow provided by operating activities, exclusive of changes in equipment inventory financial decisions. The equity in our equipment inventory decreased 5.5% during the three-month period and represents a $22 million adjustment to our cash flow provided by operating activities. Making these adjustments, our adjusted cash flow used by operating activities was $7 million for the three-month period ended April 30, 2017, compared to $6 million for the same period last year. Turning to Slide 12, I would like to provide an overview and update on our equipment inventory. This chart outlines our ending equipment inventory position for five years, including our ending inventory target for fiscal 2018. In the first quarter of 2018, our equipment inventory increased $7 million, which I indicated earlier consisted of $23 million increase in new inventory and a notable decrease in used inventory of $16 million or 9.7% reduction. Our inventory is in the best position it’s been for many years and we continue to anticipate further improvements with an additional $15 million reduction of equipment inventory in fiscal 2018. By the end of fiscal 2018, we expect to have reduced our equipment inventory by nearly $600 million or 63%, compared to the end of fiscal 2014, representing a major improvement in our balance sheet in the face of very challenging market conditions. The improvement in our inventory level is generating improved equipment inventory terms as we now moved up to 1.5 times in the current quarter despite lower revenues. This is reflected in the black line on the chart. The benefits of higher inventory turns are lower carrying cost and less compression and equipment margins. We will continue to see lower floor plan and other interest expenses as a result of our efforts in this area and are now beginning to see some strengthening of used margins as well. Slide 13 shows our updated fiscal 2018 annual modeling assumptions. We are updating the modeling assumptions reflecting our first quarter results and increased visibility of current market conditions. We continue to expect our Ag segment sales to be down 10% to 15% and our construction segment sales to be down 5% to 10%. The expected declines in these two segments include the impact of closed stores and anticipated lower equipment revenue. We are updating our expectations for our international segments following the better-than-expected performance during the first quarter of fiscal 2018 with forecasted sales now anticipated to be up 13% to 18%, compared to our prior forecast of 3% to 8%, reflecting the improving results in our international countries particularly in Romania and Ukraine markets. We are also updating our expectations for equipment margins for the full year to a new range of 7% to 7.5%, compared to our prior forecast in the range of 6.32% to 6.8%. The anticipated increase in margins primarily reflects our improved inventory conditions, as well as used Ag equipment values stabilizing in the market. We are maintaining our expectations for diluted earnings per share to be slightly positive with higher anticipated equipment margins offsetting the delay in restructuring benefits. Our expectation for positive diluted earnings per share is exclusive of the anticipated charges associated with our restructuring activities. Operator, we are now ready for the question-and-answer session of our call.

Thank you. [Operator Instructions] We will take our first question from Neil Frohnapple, Longbow Research.

Hi good morning guys. Within the Ag segment, could you elaborate more on these equipment value is stable with some uptick helping margins, is that broad-based including larger equipment, I mean any color that you could provide would be great?

I think across the board we are seeing at - on all products, I think machinery P&G comes with all these indexes and I see - as you see - number of years where you have seen that down curve and all of a sudden that is only flattening out, but it is starting to uptick a little bit. I think self [indiscernible] forward drives where as probably maybe that mid-range to that 100, 200 some horse power, low cap tractor maybe not quite as much as the other ones that I mentioned there.

Okay and I was hoping you could talk more about the construction segment, I mean we have seen a few of the OEMs significantly increase the revenue forecast for this business over the last month, so was the 18% same-store sales decline in the quarter below your expectations and I guess more importantly are you more bullish on the outlook from here or is it just the ban driven by farmers and lower activity in energy markets just tempering your outlook?

I think first of all - and we did kind of call it out where last year we did have some of those ended marketing units that we spoke in the first quarter, particularly [indiscernible] first quarter last year [indiscernible] adjusting those [indiscernible] still down 7.5% but not near to that level of that 19%. In the second [indiscernible] I think there is positive sentiment up there, It just hasn't translated to sales yet. Even in oil areas, particularly [indiscernible] we are starting to see more activities [indiscernible] sales. I think there is the optimism out there. I think some of the [indiscernible] when they are talking about some of the positives they are talking about [indiscernible] may be in the southern part of the energy activity out there down in the Texas area, but there is optimism and we do believe it will translate to sales as we go throughout the year. So, I don't think we were, it was probably a little bit lower than expectations in the fourth, in our first quarter, but not of significantly.

Okay, thanks. I'll pass it on.

We'll go next to Steve Dyer, Craig Hallum.

Thanks, good morning. I’m wondering, you know you talked about a little bit about inventory, wondering what you are seeing sort of an off lease machinery coming back, are you handling that, if you feel like it is a challenge or if it is at a, sort of good pace so far?

I think its being well managed, and I think proactively being planned for, I think it is totally anticipated and baked into our numbers. If that is going to be coming back, some of these are being sold back to the original customers because our inventory is in good shape, opportunistically purchasing and selecting units to meet some of our retail demand, so it’s out there and they are coming back, but I do think it’s being managed pretty well.

Okay. Do you feel like, as far as the equipment gross margins this is I think the first upward [ph] revision we have seen in a few years even, does it feel like you're margins have at least bottomed there not necessarily that they are going to go significantly higher in the near term, but does it feel like kind of the worst is behind you and maybe an update on the inventory liquidation program that you guys put in place last year?

Yes first of all may be to respond to the latter part of your question first, we did finish that whole program where we identified on those units to go through the extended marketing channel that was completed. There was little bit that flowed through the first quarter here, but not much. We are past that and we always had some level of inventory where we use different marketing channels through, but as far as that chunk that we called out here just over a year ago we are complete with that. I think as far as our strengthening equipment margins, first of all it is probably two reasons, the biggest is some of the Ag used margins that we are seeing and it’s not because of the lift in demand out there. It is more for a balancing of the supply with demand that’s occurring out there. That combined with specifically our inventory getting down and turns coming up in our used. The other smaller piece to kind of our equipment margins range coming up is the strength of International with International coming up, those tend to be a little bit higher margins over there on the equipment that we’re selling. So borrowing any type of big downturn in demand, which we are not expecting, outside of our decrease that we have in our guidance assumptions, we think, we are comfortable with that range from margins that we put out there.

Got it. And then lastly from me, could you comment a little bit on sort of the progress in planting so far, I know a lot of the country has seen a lot of rain, how are you feeling sort of in your footprint and how you anticipate that may or may not impact corn prices going forward?

I think in our footprint I think we are really fortunate. I think overall if you look at - as far as [indiscernible] in Minnesota and Iowa and Nebraska and North, South Dakota mostly crops in, they've got in, we're not seeing these big floods. I would say as you move from west to east, some of the western part of a market is actually a little bit [indiscernible] Western South Dakota then as you move more towards the east you get more moisture. In the Far Eastern parts which are really a little bit of our market then it gets a little bit to web. So I would say for the most part in our markets we are on track, crops coming up, crops growing and things are looking good, people are [indiscernible] on schedule. So, I would say we are pretty fortunate right now and the nice thing there is good ample moisture in all with even Western South Dakota picked up some range, so I think overall we are pretty optimistic from where we are, especially when you compare to as you see some of the other parts in the Eastern Corn Belt and you hear about Illinois where the replanting as flooded of corn and all of that. So, it’s probably a little too early to see what the impacts are going to have in the market, but I think right now I would say I like the spot, we are pretty fortunate right now in most of our markets.

Okay, sounds good. Thanks.

We will go next to Mircea Dobre, Baird.

Yes, good morning gentleman just wanted to make sure that we get all the guidance elements right. So you are increasing gross margin call it 65 basis points to the midpoint that adds 5 million or so of pre-tax income and you’re taking 5 million out in terms of savings which get delayed and that 5 million would come out of SG&A, Mark am I correct?

Yes that pretty much sums it up.

Okay and you are still expecting SG&A to be roughly $50 million lower on a year-over-year basis for fiscal 2018?

Right, there is some subtleties with the equipment margins being up, some variable expenses like commissions will also push expenses up a little bit, you know so there is a couple million there as well as 1 million to 1.2 million something like that.

All right, so I guess you know my question, thank you for the clarification, is this, you know we sort of have a kind of one step forward, one step back dynamic here, something has obviously gotten a little bit better in your business guiding equipment margins higher, but I'm trying to understand why the pace of the savings or the restructuring is slower does this have to do with you may be dragging your feet a little bit visa-a-vies store closures as potentially your [indiscernible] they have to do with the pace of planting and supporting your former customer or is it simply related to execution bandwidth, what’s really going on here?

I think our initial thoughts we were potentially looking at some store closings in early part of the quarter, let's [indiscernible] that February, March timeframe, with that said, our stores and we have to give them credit for this, the shops were full of equipment getting in advance of spring planting season and that continued and these as we started to announce some of the store closings in advance to some of our customers, you know all of a sudden they kept bringing their equipment in. So rather than kind of load up equipment and some of it was torn down and you have got engines in half repair or whatever, you know we just made the decision to kind of target that April 1 time frame March 31, which is pretty much in line with when people are going to have another field and then really try to finish all of the build all of that equipment in prior frame planning. So, I’d say for the most that is where the delays came in. Really what it did is that help for a really orderly transition was both our customers and our employees by doing that's all - all-in-all I think was the right decision.

So you are saying this was basically customer driven and you were attempting to service that customer, this has nothing to do with some of the things from an execution standpoint internally vis-a-viz those savings?

I would say we are right on plan and basically the demand for that - the servers works in our shops and those potentially closed or consolidated stores that could complete that work prior to the spring planting season.

So related to this, as the customer is reacted to the news that you are closing stores, they rush to bring in equipment, I'm sure that there were some conversations surrounding the fallout of these closed stores and what will happen post April, can you maybe give us an update as to how customers are taking it, are they kind of accepting this idea that they are going to have to go elsewhere for service any color here is helpful.

Well first of all change is difficult for everybody right, correct, but at the same time I think with our expert team models I think what we can bring for customer support in these stores that we are consolidated into which typically is our larger stores, larger staffs, more resources, more expertise, our expert team model, you know some of these customers are doing business in some of these stores already, so overall we are putting a lot of efforts into the whole customer retention area we are doing some things that contact and I think there is probably always a little bit of a delay and people need to get used to this, and will 100% of the people will be happy? Probably not, but allowing share [ph] and it’s our job to go out and really show them we could do a better job of supporting their customers, the expertise, what we bring to the table and at the end of the day it is all about scale and just doing a better job and I think we are proving that we can do that. So, we are leveraging our best sales people across their bigger foot print and I think they are starting to work pretty well and we see the evidences of that.

Alright. I guess last question for me, got two parts here, you know you really have not changed same store outlook, even though I would argue the OEMs on a pretty broad base it sounded more positive. So I guess, I am wondering if you are seeing something different in OEMs or if it is simply a factor of OEMs under producing demand last year and having a bit of a snap back that they are recognizing this year and then the second portion of the question is, your assessment for used equipment inventories beyond what you have got on the lot rather, what are you seeing from your competitors is it fair to say that your competing dealers have also worked down a good chunk of that used equipment sitting on their lots or is there still something that the industry has to broadly deal with this year?

Okay. So if we look at what the OEMs, they are probably - if you look at United States or say North America, say most of them talk about North America, they are talking what down 5 is what I am seeing most of the time. So they are basically talking down, right, they may have one of the more recent ones that put some of the guidance but when we talk about North America I think we really need to look at the difference between Canada, United States, and I can give you some examples like, so year-to-date industry numbers for Canada and say South of [indiscernible] is up 46% in the United States was down 11.5, Canada is up 48, United States is down 10, if you look at 100 horsepower plus trackers Canada up 9.8, the United States down 11, so when the OEMs include both US and Canada in terms of, when you get that stronger numbers in Canada that tends to - and we don’t have that going on in our markets right now and now if you look at the commodity prices right now, really what the customers are getting at the elevator on corn, most of our markets are going to be right on that $3 mark and in soya beans you are seeing that 8.30, 8.40 at the elevator and actually soy beans, you compare that to say January, that’s $1 off. So we are really not seeing our commodity side, anything is going to say all of a sudden their customers are going to be jumping up and down and running all around, so it is becoming more of a replacement demand market out there and I think we are pretty confident in our numbers.

And on the used equipment inventory side?

We’ve done and we have done a really good job. I know when you drive around the country you do see that some of our competitors, you know some pretty good numbers, [indiscernible] so I guess we can manage what we are doing and we just really feel good that the position that we are in and our inventory and all we have done a great job and that really positions us on a good spot to trade in future equipment as the cycle starts moving hopefully positive.

Fair enough, good luck guys.

We’ll go next to Rick Nelson, Stephens.

Thanks, good morning. Like to follow up on the restructuring there is a fairly big range now to the cost savings relative to which you provided previously, if you could provide some color around that what goes into that?

Right. So first of all the 25 million is constant that’s kind of the overall and it’s mostly structural savings that we are expecting to get over last year on a full-year annual basis that stays the same. The part is the timing within the year that’s going to affect the current year and before what we indicated was $20 million positive impact to the current year, now basically with the midpoint that we had a range there of 13 to 17 midpoint of call it 15 million that we are putting out there today, some of that just depends on. So even with the stores closed today, they are still kind of giving the assets out of those locations that is moving as an example parts around shop towards giving everything prepared where we can find alternative uses for that real estate property out there. So there is - some of that range is how soon we can get all those done and some of them are going to vary earlier, some are going to vary later. And then also there is just other initiatives that we have and when they come into play in the second quarter and third quarter, number of initiatives in this restructuring plan that’s planned for the next kind of two quarters here, so it’s the timing of how those all fall where there could be some variability and that’s the reason for that range.

Thanks for that Mark. I would like to talk, if you could speak to your thoughts about acquisitions at this point, a bulk of your capital is going to reduce those converts but what point do you step-in and say it is time to buy some of these dealerships?

Right now there is starting to become - I'm getting phone calls there is a lot of discussion going on current views looking for some type of succession solution retirement, and things like that. So there is definitely some discussion going on in the marketplace and we are going to continue to look at these. I think we have definitely have our balance sheet and our capital and our cash flow, we are definitely in the position where we can execute on some M&As, some acquisitions out there, Rick. So I guess it is definitely, I think that’s something we like to do, I think we have demonstrated we would do a good job of that and we are positioned to do it. So I think let’s continue to evaluate markets and make sure if we do acquisitions, we are getting the right ones and they make a lot of sense and we are into that right now and actually hopefully we can show something, sometime in the near future on some acquisition announcements.

Is it more likely to be in your current territory for which you look beyond to [indiscernible]?

Well I think predominantly if you looked in the five state area that we have our Ag stores in, Minnesota, Iowa, Nebraska, and North, South Dakota, I think there is plenty activities, we like that market, like - I think they are contiguous to some of their current locations and I think that makes a lot of sense. I guess predominantly that’s the market we’re looking in on the Ag side of the business. This goes really on the construction side, we have a pretty enviable footprint right now, all the way from Arizona and New Mexico, all the way up to Colorado, Montana, Wyoming then in addition to the five state area we have our Ag, we also have construction so, we’ve got a pretty good footprint there right now.

Thanks a lot and good luck.

Thanks Rick.

We will go next to Joe Mondillo with Sidoti & Company.

Hi guys, good morning. I just had a question related to the restructuring and I have sort of a follow-up from one of the prior questions, I wasn't sure if it was exactly clear. Relative to your expectations several months ago, do you have a clear idea if you are retaining customers, particularly on the service and parts side of things related to these store closings or is it just too early mainly?

It is a little early. We are talking about one month basically right now, so it is a little bit earlier, but our marketing department on our CRM and we are really identifying the customers in the coal stores, we are monitoring that. We've got a lot of plans in place, we have got off of that way ahead of time and I think we have done some really, identifying specific customers and some actions between our people and some things we have done and so I think we are - and we're going to continue to really monitor them and it is important to us. I mean that was one of the first things on our early discussions of this and to lay out a plan and I think we have done that and the team is doing a good job of executing on that. So, I am confident we are going to hit the retention numbers that we are anticipating.

Okay. And then just sort of a bigger level sort of question, over the last three years, it has been a long downturn here, the timing of this restructuring and relative to this quarter in particular that we have seen you bring up your equipment margins pretty significantly, looking back to sort of the last three years and in particular sort of this latest restructuring, it seems like this restructuring is a bit late from our perspective anyways, can you comment on that and do you have any sort of regrets or did you think about maybe slowing down this restructuring given the stabilization that you are seeing in equipment margins purely on the used side of things, which has been the tougher side of the market, any thoughts on that regarding restructuring?

The first part of your question is was this late in the game, I think you have to remember that this is really probably the third, this is our third round of doing this. You know two years ago we talk about $50 million out of the system. And that was our second-round and just a year before that we did announce some consolidations, what we will see on the construction side and two years ago both Ag and construction and now this. So we have been I think serious about that. So, I would say right now we are looking at, I think it’s really about the size and the revenue coming out of these stores and the revenue per rooftops, so if you really look at, if you are going to really, truly be successful in the business and you’re going to get that scale on the leverage across your - you’ve got to have a certain amount of minimum revenues in these rooftops, so really looked at this, and as you look at other some - consolidations is not new to our industry, there is few of our larger farmers, now this equipment is getting larger more complex, and we're seeing this increase technology, data, GPS, and precision and some of that is pretty new right now. And we, so this is a real thought through and I think it is really about scale, it’s a revenue per location and really run the numbers on that. I definitely think it is the smart move, and I am going to say this is really a third realm in the last four years that we’ve done this.

Right. And I understand that and you guys have done a pretty good job over the last couple of years. I guess just the odd thing for me is that one of the prior questions, just before me was related to acquisitions and we are starting to think about and talk about acquisitions because we are seeing support in the equipment margins, we are seeing sort of a turnaround in the overall macro sense of the market, yes we are sort of still in the midst of still initiating this latest round of restructuring, and I’m just wondering sort of I guess, going forward, are we going to start making acquisitions in the regions? I guess what’s your long-term strategy? In terms of acquisitions, are you going to be focused on areas where you are not even close to or are we going to be going back into regions where we are just closing over the last couple of months?

Well we like areas that have really productive farmland and we think that we have very well capitalized farmers or really good balance sheet, okay, and there are markets like that. So one of the first things you look at it is, what is the industry potentials so if you do this acquisition and you get a certain level of share, you know what kind of new and used equipment revenue again and that translates and we usually delay our model on top of that, you are going to get with your mix and certain [indiscernible] so when you run the pro forma statements on that, and the first thing at all is that to have that market potential and you tend to get that market potential in these really good farming areas. So I would say when you look at the delivering value in North Dakota, you know the State of Iowa, the irrigation and the land and the productivity you see out in Nebraska, what we have in Dakota is also done with irrigation, but really I think it is a pretty productive areas. We are in some pretty sweet spot and it is a - and some of these markets they have consolidated. I think we're getting bigger trade areas per rooftop. I think we get that market potential, so this is a pretty good area to go into, and I'd say there are other areas in United States that are pretty good and we are working at some of these and keep in mind to there is, there has over the last 10 to 15 years been some dealership consolidation. So now there is some of these 6 to 8, 10, 12 store dealer groups some are doing 200 million, some got $300 million in revenue, but there could be some opportunities in some of those groups also. So not only the one and two store tuck-in operations, but there is also some nice dealer groups out there that may or may not be looking for capital solutions. So there is succession solution, retirement solution, things like that. So there are a number of different ones out there and we are going to be really smart about that, but we are definitely not going to, if we are going to look at a situation why we closed the store because maybe the market was too small and maybe it was an area that didn’t really have long term from a production agriculture standpoint, maybe it wasn't going to be there and some of the considerations that we did, you know part of the machinery, the competitive landscape around that dealership, all those things that we took in a consideration, we're going to continue and evaluate future acquisitions and our idea is to go in and do an acquisition how to turned around and shut it down. We want to go in to where you got long-term market potential and can really do a good job with that and benefit our bottom line.

Okay thanks a lot. I appreciate that. Just lastly, I don't know if I missed this, or I might have missed it, but the reorganization part of this whole thing, regarding the personnel and sales managers and such, where are we in terms of that process of reorganizing the structure of personnel and the structure there?

I would say most of that was completed in the month of February and early March. So all that was well done and in place before we actually closed the stores, so we’ve got some really good people, over the last probably through the end of the March early part of April, you know I think there are a lot of focus on the store closings, some of the assets, some of the people retaining customers are pretty busy, but they are after I think we have got some good people in place, we are getting good traction they are doing a lot of right things, but we are seeing some wins out there, which are good. So I would say it has all been in place and we are ready to keep improving the business with what they bring to the table and I would say it is a pretty impressive team that we have out there right now.

Okay great, thanks a lot appreciate you taking my questions.

We will go next to Tyler Etten, Piper Jaffray.

Hi, thanks guys for fitting me in here. We are running out of time, maybe just a couple of quick ones, since we have talked enough about M&A specifically on the North American side, maybe if there is, or do you see any opportunities in the international segment now that we’ve seen a nice inflection in that market, haven't seen any acquisitions since the fiscal 2014 year, just curious if you guys are feeling out any prices in that area?

So what we have been focused on in the last couple of years is really building out our existing footprint, so whether you picked this [indiscernible] let's say the Ukraine for example, and due to some of the geopolitical stuff going on few years ago, we did not have facilities of brick and mortar in two of the four old blocks, so basically those are all completed up and running, so we are actually physically in four of the old blocks than Ukraine are. In Romania - we build all our footprint in Romania and now we’ve got three additional locations in Romania that we did not have three years ago. So, we are building out the footprint and that’s really starting to show its dividend and at the same time what we are seeing really an uptick in the business over there. So, we’ve got a good team in place we've got good European management in place, so yes we are in the position I think that we continue to just likely analyze North American acquisitions, we do the same thing in Europe and I just really feel good about what we have done with our people, our team, bill all our current footprint, and now it’s starting, in some of these developing countries starting to provide some contributions at the bottom line, which is fairly good to see.

Got it, understood. And then last one here, may be if you could talk about the pricing pressure you saw in the rental markets, just curious what areas you are seeing this pricing pressure given we all see the optimism out of the industry although we don't know when it’s actually going to be impacted. Has any of that rental weakness continued into the second quarter and just your expectations from that? Thanks.

First of all, I think it is, you realize the discussion about very competitive business, there is still an overhang of equipment and so we saw that in the first quarter, but in busy with their team in the field we are starting to see that stabilize, I think we are seeing signs of excitement, signs of improvement out there. At the same time we're really taking a hard look at our fleet and the mix in our fleet and de-fleeting, some of the units that have been getting utilization replacing them with some of the higher utilization, some of the area equipment, light plans generators some of that type of equipment, may be a little less on some of the dirt in a fleet itself, so we are doing at the same time and I think as if some of the planned infrastructure spend in terms of petition, there is going to be some really good positives in our own business and just we're hopefully us and all our competitors all can take advantage of that with some of the pricing out there, which like I say was very competitive in the first quarter.

Got it, thank you.

We’ll take our final question from Aaron Steele, Feltl & Company.

Good morning guys thanks for taking the call. I was just hoping if you could provide maybe a little bit more detail on the restructuring efforts for the rest of the year, could you give us any detail on the cadence of the store closures and then kind of an overall view of what would you say, what type of any would you say, how far long you are in the process of restructuring plan and completing that?

Well I think as we talked about, you're going to see the benefits over the next three quarters, we’re on track, we have got a number of levers to pull. We want to make sure we are very thoughtful, we do it right, and we have done that and I would say everything is in a position, from a competitive standpoint, there is some sensitive information there that I think you just have to understand that we’ve identified the levels, we know what they are and we're very confident we are going to execute on our plan and you are going to see that over the next three quarters.

All right. And then looking at the $50 million expected decrease in inventory, how does that mix kind of look going between the used and new equipment sales for the remainder of the year?

You know I think, we did bring up the new in the current quarter, it is typically when we kind of stock up as earlier in the year, and we continue to anticipate to make progress on our used inventory, but I think, overall I think the mix will probably turn a little bit, it probably won't change drastically, but probably see, will probably remain relatively stable. So, as we solve down some of the inventory that we just currently brought-in in the first quarter on new, that will sell down and we will see similar reduction in used as we continue to move throughout the year with our focus on the used inventory.

All right, thanks for taking the call.

Alright, thank you.

I’d like to turn it back to the presenters for closing remarks.

Okay. Well thank you for everybody for your time today and your interest in Titan. We look forward to updating you on our progress on our next call. So have a good day.

That concludes today's conference. We thank you for your participation. You may now disconnect.