Greetings, and welcome to Titan Machinery Third Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Mr. Jeff Sonnek of ICR. Thank you. You may begin.
Thank you. Good morning, ladies and gentlemen, and welcome to Titan Machinery's third quarter fiscal 2022 earnings conference call. On the call today from the company are David Meyer, Chairman and Chief Executive Officer, Mark Kalvoda, Chief Financial Officer, and Bryan Knutson, Chief Operating Officer. By now, everyone should have access to the earnings release for the fiscal third quarter ended October 31st, 2021, which went out this morning at approximately 6:45 A.M. Eastern Time. If you've not received the release, it's available on the investor relations page of Titan's website at ir.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. You may access the presentation now by going to Titan's website at ir.titanmachinery.com.
The presentation is available directly below the webcast information in the middle of the page. You'll see on slide two 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 risks and uncertainties, including those identified in the Risk Factors section of Titan's most recently filed annual report on Form 10-K as updated and subsequently filed quarterly reports on Form 10-Q. These risk factors contain a 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 into Titan's ongoing financial performance, particularly comparing underlying results from period to period. We have included reconciliations of these non-GAAP financial measures to their most comparable direct GAAP financial measures in today's release. The call will last approximately 45 minutes. At the conclusion of our prepared remarks, we will open the call to take your questions. Now, I'd like to introduce the company's chairman and CEO, Mr. David Meyer. Go ahead, David.
Thank you, Jeff. Good morning, everyone. Welcome to our third quarter fiscal 2022 earnings conference call. On today's call, I'll provide a summary of our results. Then Bryan Knutson, our Chief Operating Officer, will give an overview for each of our business segments. Mark Kalvoda, our CFO, will then review financial results for the third quarter of fiscal 2022 and provide an update to our full-year modeling assumptions. If you turn to slide three, you'll see an overview of our third quarter financial results. The ongoing strength of the broader ag sector continues to fuel demand for equipment across our business and drove a 26% increase in our consolidated revenue to $454 million in fiscal third quarter of 2022.
The combination of our larger base of revenues, healthy inventory position, and lean infrastructure allowed for powerful operating leverage that drove a 109% increase in pre-tax income for the quarter. At the segment level, this operating leverage is especially visible in our agriculture segment, which benefited from better than expected crop yields across our footprint and produced pre-tax margin of 7%, which is a record quarterly high-water mark for the segment. Our construction and international segments are also generating strong gains in profitability, each producing another solid quarter and building upon the improvements made fiscal year to date. The contribution across all of our businesses allowed us to drive record third quarter adjusted diluted earnings per share of $0.96, which represents an increase of 81% compared to the prior year period.
While supply chains remain challenged, we are getting factory shipments as well as leveraging our parts and equipment inventories collaboratively across our network of stores. This has allowed us to take care of our customers during this seasonally critical period, which enabled us to continue to deliver strong top-line growth. We are excited about finishing the fiscal year on a strong note after a successful harvest and construction season, and our updated modeling assumptions reflect an expectation that our momentum will continue through the important year-end tax selling season. We look forward to closing the previously announced Jaycox-Case IH three-store acquisition in December and remain confident that we will be able to sustain our increased sales momentum, continue achieving heightened levels of profitability that we believe will allow us to deliver record year earnings per share. Now I will turn the call over to Bryan Knutson.
Thank you, David.
Good morning and good afternoon, everyone. I will first provide an update on our Domestic Agriculture segment and then follow with some additional color on our Construction and International business segments. On slide four is an overview of our Domestic Agriculture segment. Demand for new and used farm equipment remains strong due to the combination of continued high commodity prices and better than expected crop yields. Further bolstering demand are Section 179 tax incentives and the yield improvements attributed to the increased productivity farmers are seeing with the precision technology in today's newer equipment. Demand continues to outpace OEM production, and at this point, most production slots for model year 2022 units are now full. In the face of increased farmer input costs, such as crop protection products, fertilizer, seed, and fuel, an increasing number of growers are locking in prices for next year's crops.
We are currently wrapping up harvest and fall soil preparation in the last areas of our footprint. Overall, the harvest went extremely well with minimal drying costs. Our growers were able to complete timely fall field work and receive much-needed replenishing fall rains, which further improve next year's spring planting conditions. In summary on Ag, we are optimistic for a solid Q4 as we are seeing continued strength in the used equipment market. With high demand for new equipment, we expect to continue to sell through existing new inventory and should continue to receive scheduled pre-sold factory shipments. In addition, we believe our successful off-season machine inspection program will continue to drive parts and service revenues through the upcoming months. Overall, our Ag segment drove outstanding Q3 results, and we are looking forward to an exciting Q4 and a strong finish.
Turning to slide five, you will see an overview of our Domestic Construction segment. As we have discussed in previous calls, the operating improvements we've been implementing in our construction equipment stores over the last several years are resulting in significantly improved bottom-line results. The economic backdrop of increased construction activity, low interest rates, higher oil prices, robust new housing starts, and a recently signed infrastructure bill supports strong demand for construction equipment. With our upper Midwest footprint, we are also benefiting from the current Ag economy as farmer rancher customers and Ag retailers purchase construction equipment such as excavators, wheel loaders, skid steer loaders, and forklifts for land improvement, feedlot operations, and material handling. Similar to our Ag segment, we are seeing supply-side challenges with tight inventories and long lead times, but are continuing to receive equipment inventory in this high demand market.
With the improved economy, stimulus, and infrastructure spend, we expect the CE business to stay healthy for the foreseeable future. On slide six, we have an overview of our International segment, which represents our business within the countries of Bulgaria, Germany, Romania, and Ukraine. Our European customers are also benefiting from the higher global commodity prices and experience favorable yields from both the early season grain crops and the fall row crops. We continue to manage through COVID border lockdowns and supply side issues, but new and used equipment demand is more than offsetting these challenges. We continue to drive operational improvement efforts and initiatives to further increase our parts and service revenues. As we continue, the further execution will provide more long-term sustainability for our International segment through the cycles.
Finally, I'd note that we successfully closed on the sale of our Serbia store in Q3, which going forward, will afford us increased focus on our production agriculture markets in Ukraine, Bulgaria, Romania, and Germany. Before I turn the call over to Mark, I want to thank all our employees, both domestically and abroad, for your continued efforts and tremendous contributions to the first three quarters of our fiscal year. It is great to see the bottom line contribution coming from all three of our business segments, and I'm confident in continued success as we close out the year. With that, I will turn the call over to Mark to review our financial results in more detail.
Thanks, Bryan. Turning to slide seven. Total revenue increased 25.8% to $454 million for the third quarter of fiscal 2022. Our equipment business increased 36.9% versus prior year, which was driven by strength in our agriculture and international businesses. Our parts and service business generated consistent growth, increasing 4.9% and 4.3% respectively, compared to the prior year period. We didn't see as much growth this quarter due to a tougher comp from the prior year. We also saw less parts and service activity in our western North Dakota and South Dakota Ag stores as these locations were the hardest hit by drought conditions.
Rental and other revenue decreased 7.1% versus prior year due to a decrease in inventory rentals, a smaller rental fleet in our current construction footprint, and a reduced fleet due to the January 2021 divestiture of our construction stores in Arizona. Helping to offset these factors was a higher dollar utilization of our construction segment rental fleet, which improved nicely to 31.4% for the current quarter compared to 25.7% in the same period last year. The improved utilization helped increase margins in this revenue category. On Slide eight, our gross profit for the quarter increased 27.5% to $92 million. Our gross profit margin increased by 30 basis points, primarily due to stronger equipment margins, but also due to improved margins across all categories of revenue.
Equipment margins were supported by good end market conditions and healthy inventories. The higher margins were partially offset by a shift in sales mix toward equipment revenue this year versus higher margin parts and service revenue as compared to the third quarter of the prior period. Operating expenses increased $8.8 million versus the prior year to $62.9 million for the third quarter of fiscal 2022. This increase was more than offset by revenue growth and led to 110 basis points of operating expense leverage compared to the prior year, reducing our operating expenses to 13.9% as a percent of revenue compared to 15% in the prior year period.
Although expenses are trending well as a percentage of revenue, we are realizing inflationary cost pressures in areas like fuel, wages, and employee benefits and expect those pressures to intensify in future quarters. Floor plan and other interest expense decreased 21.6% to $1.3 million in the third quarter of fiscal 2022 compared to the same quarter last year due to lower floor plan borrowings. In the third quarter of fiscal 2022, our adjusted net income increased 80.8% to $21.7 million, which accounts for $2.6 million of impairment costs net of tax in the prior year period. Our adjusted earnings per diluted share for the quarter was a record $0.96 and compares to last year's $0.53 performance.
Adjusted EBITDA increased 42.1% to $35.3 million compared to the third quarter of last year. You can find a reconciliation of adjusted net income, adjusted income per diluted share, and adjusted EBITDA to their most comparable GAAP amounts in the appendix to the slide presentation. On slide nine, you will see an overview of our segment results for the third quarter of fiscal year 2022. Agriculture segment sales increased 27.6% to $281.5 million, helping to drive a significant increase in segment adjusted pre-tax income of 42% to $19.6 million. This equates to a pre-tax income margin in the third quarter of 7% and demonstrates the extensive improvements we've made to our operations over the course of this last cycle. Turning to our Construction segment.
Revenue increased 0.9% to $79.7 million compared to the prior year period. Despite the January divestiture of two stores in Arizona, on a same-store basis, excluding these, those stores, revenues were up 11.1% for the quarter. We are pleased with the continued improvement in this segment's adjusted pre-tax income, which improved nearly 150% to $3.6 million compared to $1.4 million in the prior year period. Our international segment also benefited from the improved agriculture market conditions and generated revenue growth of 51.5% to $92.7 million.
The combination of strong equipment sales and margins, coupled with solid growth in our higher-margin parts and service businesses, yielded a $5.9 million improvement in adjusted pre-tax income to a positive $6.1 million, which compares to $200,000 in the prior year period. Turning to slide 10, you see our first 9-month results. Total revenue increased 23.6% compared to the same period last year. Year-to-date equipment sales increased 32.7%, parts increased 7%, service revenue increased 6.1%, and rental and other revenue decreased 16.3%. The 9-month dollar utilization of our dedicated rental fleet improved to 25.8% compared to 22.2% in the same period last year.
Turning to slide 11, our gross profit for the first nine months was $238.5 million, a 23.1% increase compared to the same period last year. Our gross profit margin was relatively flat with a 10 basis point decrease versus prior year at 19.8% for the first nine months of fiscal 2022. The impact that revenue mix is having on overall gross profit margins is largely being offset by higher equipment margins. Our operating expenses increased by $16.2 million, or 10.1% for the first nine months of fiscal 2022 to $176.5 million.
This increase was more than offset by revenue growth and led to 170 basis points of operating expense leverage compared to the prior year, reducing our operating expenses as a percent of revenue to 14.7%. Impairment expenses decreased from $2.8 million in the prior year to $1.5 million in the current nine-month period. Floor plan and other interest expense decreased 24.2% to $4.3 million in the first nine months, primarily due to overall lower floor plan borrowings. Our adjusted diluted earnings per share doubled to $1.98 for the first nine months of fiscal 2022, compared to $0.97 in the prior year period.
Our nine month adjusted EBITDA increased 52.1% to $78.6 million, compared to $51.7 million in the prior year. On slide 12, we provide our segment overview for the nine month period. Overall, our adjusted pre-tax income was $59.3 million for the first nine months of fiscal 2022, compared to $31.3 million in the same period last year. This 89.8% increase was generated as a result of strong improvement in performance across all three segments of our business. On slide 13, we provide an overview of our balance sheet highlights at the end of the third quarter of fiscal 2022. We had cash of $91 million as of October 31, 2021.
Our equipment inventory at the end of the third quarter was $323 million, a decrease of $15 million from January 31, 2021, reflecting the net effect of a $44 million decrease in used equipment, partially offset by a $29 million increase in new equipment. Strong sales and lower inventory levels continue to drive equipment inventory turns, which increased to 3.1 versus 1.6 in the prior year. I will provide a little more color on our inventory on the next slide. Our rental fleet assets at the end of the third quarter increased slightly to $82 million compared to $78 million at the end of fiscal 2021. We still anticipate our fleet size to be around $80 million by the end of fiscal 2022.
As of October 31, 2021, we had $175 million of outstanding floor plan payables on $753 million of total floor plan lines of credit, which leaves us with considerable capacity in our credit lines to handle our equipment financing needs. Our adjusted debt to tangible net worth ratio was 0.7 at the end of the third quarter, compared to 1.0 at the end of the third quarter of fiscal 2021, and is well below 3.5, which is the leverage covenant requirement of our two largest floor plan facilities outside of our bank syndicate credit agreement. Turning to slide 14. The amount of new and used equipment inventories are reflected in the size of the blue and red bars on this slide, respectively.
As we've discussed during the past couple of quarters, our inventory turns have accelerated due to the combination of increased customer demand and a tighter in-industry supply of equipment. At the end of the third quarter, we drove an inventory turn of 3.1 times and anticipate this to continue to move higher through the end of the fiscal 2022, given current inventory levels and end market conditions. We believe our equipment orders, delivery schedule, level of pre-sales, and equipment inventory have us positioned to meet our current revenue modeling assumptions for fiscal year 2022. The overall quality of our inventory remains very healthy. Our inventory under non-interest bearing terms, which can be seen by the gray bar on the slide, ended the third quarter at 45.5%. Slide 15 shows our updated fiscal 2022 annual modeling assumptions.
Ongoing top-line strength in our agriculture and international segments, coupled with the anticipated addition of the Jaycox three-store acquisition in early December, causes us to raise our revenue growth modeling assumptions for these two segments. This revenue growth, combined with stronger margin performance across all three segments, also translated to a raise in expectation for our diluted earnings per share range. For the agriculture segment, we are increasing our revenue growth assumption to up 23%-28% from up 18%-23%. The fiscal 2022 growth range includes the full year revenue contribution from our Horizon West acquisition that closed in May 2020.
As well as anticipated revenue from the Jaycox acquisition. For the Construction segment, we are maintaining our revenue assumption of up 2%-7%. As a reminder, this assumption includes the divestment of our two construction equipment stores in Arizona at the end of fiscal 2021, which accounted for approximately $27 million of combined revenue. Excluding these revenues from the prior year base, our modeling assumption equates to a same-store sales range of approximately up 10%-15%. For the International segment, we are increasing our revenue assumption to up 35%-40% from up 27%-32%. The strong year-to-date performance, combined with the good crop conditions in our international footprint and a strong global ag commodity prices led to this significant increase in expectations. As Bryan indicated earlier, we sold our single store Serbian business during the third quarter.
The small impact of this divestiture is also reflected in this revised revenue range. From an earnings per share perspective, we are increasing our diluted earnings per share assumption by $0.40 at the midpoint to a new range of $2.40-$2.60 for fiscal 2022. As a reminder, this range includes all ERP implementation expenses. This concludes our prepared remarks. Operator, we are now ready for the question-and-answer session of our call.
Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the star keys. Once again, that's star one at this time. One moment while we pull for our first question. Our first question comes from Mircea Dobre with Baird. Please proceed.
Thank you for the question and good morning, everyone.
Morning, Mircea Dobre.
I guess my first question. You commented earlier on your North American ag business that at this point the production slots for calendar 2022 are full. I'm looking to maybe get a little more perspective on that. Since apparently you have good visibility here, how are those production slots looking relative to, say, calendar 2021? I mean, what sort of volume growth for this pre-sold equipment do you have visibility into at this point?
Yeah, Mircea, this is Bryan. Just to clarify, it was for model year 2022. It would cover the first few quarters of the year there. CNH has come out earlier with respect to the demand that's out there with the programs. Order boards filled up a little earlier than last year as well. That's especially as I touched upon the prepared comments in regards to the cash crop equipment. Generally, there are some product categories that are still open for model year 2022 production.
For the most part, we're into the you know, starting to sell into model year 2023 here in certain cash crop categories.
Right. My question still stands in terms of where we should be thinking in terms of, you know, additional volume or incremental volume in 2022 relative to 2021. Because, I mean, look, you're not providing guidance for your fiscal 2023, but there's one quarter left, and I think the big question all of us sort of have is, okay, you know, you've had a really strong 2022. What could next year look like? You know, at least for the portion of the business where you do have visibility because, you know, you've got pre-sold equipment, can you kind of help us out a little bit to understand the kind of growth that we might be looking at next year?
You know, Mircea Dobre, I go back to you know, our guidance and maybe a little sensitive here with the timing too for forward-looking. You know, the supply chain, as you know, is gonna be a crapshoot next year. We feel good about our allocation and our orders at this point. We've got a lot of our orders in early. Our salespeople have been out there, you know, doing pre-sales with customers. You know, hesitant to talk to the exact percentages as far as you know, next year at this point. You know, we could share some additional color next quarter on that.
Okay. My final question is on inventory turns. Really strong performance this year. Maybe, Mark, can you kind of give us a sense for how you see this metric evolve on a go-forward basis? You know, is there additional efficiency that you think you can get out of this metric? And you know, how does the various investments, I think that you've made over time, on the technology back-end, not just the ERP, but inventory management tools, how has that kind of played out, into driving this metric higher? Basically, I'm trying to understand how much of this, in your view, is driven by the market itself and the tightness of supply relative to the structural improvements that you guys have been making to the business. Thank you.
Yeah. Mircea Dobre, I think, so first of all, you know, at 3.1 right now, given the tightness of supply that we talked about, and then, you know, a lot of these are pre-sold at this point, so when they're coming in, they're going out right away. I certainly see this metric increasing. By the end of the year, you know, it could be, I would say, easily around that 3.5 is where we could see it, maybe even a little bit higher than that. Definitely driven in a large part by, you know, what we're talking about here as far as demand and supply chain. Yes, we've made a lot of good inventory management improvements over the years.
I think that is helping our margins today, what's, you know, what we're achieving in equipment margins. Even coming into this stronger cycle, we had, you know, very, you know, healthy inventory conditions with aging of inventory being down and fresh inventory out there. As far as driving more, I think it's running pretty efficient at this point. That, you know, call it a run rate of, you know, kind of mid-3s, 3.5. We don't have a lot of interest-bearing inventory out there. Our margins are very strong.
Might be some smaller level of improvement on each of those, but I think, you know, at this point, with where we're at in the cycle and how we're running in this area, you know, we're pretty darn efficient at this point.
Yeah, I would agree with that. Thanks for taking the questions.
Thanks, Mircea Dobre.
Our next question comes from Larry DeMaria with William Blair. Please proceed.
Hey, thanks. Good morning, everybody. Just following up on the last one, last question about, you know, pre-sales next year. Can you talk about what is the average price increase on new equipment for next year? If the year is obviously already pre-sold, a lot of it, we should know that. Does any of that price drop down to you, or do you have to obviously get your price spread on the used equipment? That's the first question.
Yeah. Good morning, Larry. This is Bryan. Thank you for the question. Yeah, so we've had price increases here with the model year 2021s and now again into the model year 2022s, you know, pretty in line with the competition in terms of the price increases. And we have been passing that on to the customer as well. In fact, I think that reflects thus far in our margins and you know, we anticipate that's what you'll continue to see us do.
Okay. All else being equal, if you sold the same amount of equipment, your sales go up probably 5%-10%, and then you're capturing some incremental margin on the new equipment as well as on the used. Is that fair to say?
Yeah. Mig, you know, will play into there a little bit as well, but generally, yes.
Okay. Then secondly, as we think about, you know, a lot of next year being pre-sold, moving into 2023 calendar, at what point is this too long and we risk cancellations? I'm kind of curious about what protection you have. Then secondly, how are we handling trade-ins? Because, you know, a lot of what you sell obviously comes with a trade-in, and that's where you guys make a lot of money. Are we doing a deal, and that's the deal, and it's done, or is there any protection for you or the customer on the value of a trade-in that might not happen for another year from today?
Yeah. You know, that's one of the benefits for the customers of pre-sale, is they can lock in their production slot, they can lock in their pricing, and from our end, you know, lock in the deal with us. We spend a lot of time, you know, researching, forecasting used equipment values. When we do those pre-sale deals, you know, put our anticipated value on the trade-in at the time that we'll receive it. There's generally a little risk there. Sometimes the markets come up a little bit, sometimes, you know, down a little bit on the trade-ins. Again, we anticipate the used values.
Again, those are some of the benefits for the customers as well with the pre-sale on their end.
Okay. The deal is done at the time, and there's really no modification from it then, from then whether used pricing goes up or down. I think that's what you said. Last question, did everybody get what they needed through harvest, or is there any major issues, or were you able to secure more or less all the equipment you needed at that time and it was ordered, or was there any slippage? That's. I'll move on. Thanks.
Yeah, it went pretty well, Larry. Overall, there was a lot of headaches along the way. You know, I wanna thank our team, tremendous effort from everyone on our team as well as our manufacturers we work with. There's an incredible amount of work behind the scenes right now and a lot of extra, you know, busy work, if you will, that we don't traditionally have in order to, you know, find the missing component or get things shipped and get them here. Just in time delivery, right, in this day and age. Everything went pretty well from that regard. Again, it did take some doing on everybody's part.
Okay. Thank you.
Once again, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. Our next question comes from Rick Nelson with Stephens. Please proceed.
Thanks. Good morning.
Good morning.
To follow up on the equipment margins, very strong, that better than expected. Is it new? Is it used? Is it both? How sustainable do you think those margins are?
Yeah. Rick, Mark here. They have been better than even what we expected than what we kinda modeled, did come in strong again for the quarter. We're seeing it still mostly on the used side. A big thing that we're experiencing is very little, if any kind of write-downs that we have on a monthly basis when we do our lower of cost or market adjustments. That's primarily on the used side. Once in a while on aged new, we have that as well. That is historically very low today. We're at very low levels of that's certainly helping.
Certainly the other thing, and I've mentioned this before, but with the strong same-store sale growth or overall sales growth in international, they are predominantly new equipment and at higher margins over there. That mix with international is helping us as well, has helped in the quarter quite a bit. From, you know, as far as sustaining this for the next quarter, I don't see it. I've talked about it earlier. You know that fourth quarter, we generally have some of those higher ticket items. We also have a greater mix of domestic ag than the other segments, particularly less in international.
If all that holds true and everything else kinda remains the same, you know, I'd expect it to be, you know, call it lower elevens, you know, instead of the, I think we're at, like, 12.1% year-to-date here. I do expect it to come down, and that's what's kinda baked into the modeling assumptions that I provided.
I'd also like to get an update on the acquisition environment, Jaycox Implement, that's gonna close here shortly. If you could speak to that and some color around it and the multiples that you're paying these days.
Yeah, we're pretty excited because Dave, on the Jaycox, you know, is, you know, contiguous to our Marshall and Pipestone, Minnesota locations. Those locations, Luverne, Minnesota, and Worthington, Minnesota, then one location in Lake Park, Iowa, just south of the border. You know, really good farmland, you know, predominantly corn and beans, but a little bit, you know, diversified livestock also. It really fits into, you know, not only our, you know, contiguous to our footprint, but you know, similar products, you know, really quality workforce, you know, really strong, you know, aftermarket parts and service support, you know, good culture. Yeah, it's a really good fit, you know, we're really excited about this one.
You know, I think when we come with our year-end numbers and stuff, you'll see a little bit more of the detail in the economics around that. Like I say, we close in December, so you know, we don't wanna get ahead of ourselves here. You know, at the same time, you know, modeled really well. You know, it's gonna be positive to our bottom line right off the get-go. It's well managed, good group of employees. Like I say, we're pretty excited about it.
Are there more in the pipeline at present and your appetite, I guess, to do more acquisitions in the current-
Yeah. We've got, you know, balance sheet's really strong. You know, we're not even into some of our bank syndicate notes right now. We wanna deploy some capital on more acquisitions. I'd say the pipeline and the amount of interest right now is as strong as it's been in a number of years right now. You know, some motivated sellers. You know, we're in communications and we just wanna bring, you know, try to get some more deals done and bring them on a timely basis and to be a little bit of space between them. You know, we're pretty excited about what we think we're gonna be able to do in the near term on the acquisition front.
Great. To the used equipment market, do you think the tight supply on new is driving people into the used market? If you can comment on pricing there, and are you seeing any pushback from your customers, you know, to the higher pricing on used?
Hey, Rick, this is Bryan. Yeah. The short supply definitely is also driving the used equipment sales as well. You know, bigger contributors would be, you know, the late model used. The growers can still upgrade and get a lot of benefits to the newer technology. Also, the fleet is really aged out there. You know, as you know, it's about the oldest it's been in a couple of decades, so growers can also upgrade, you know, quite a bit even on a used piece of equipment. Also, the Section 179 and the tax benefits also pertain to the used. We are seeing nice used equipment pricing. It's carried up similar in line, percentage basis with the new equipment.
You know, we're passing that through to the customers, and you know, the net farm income is supporting it, and you know, the used is providing some nice upgrades for customers.
That's great. Thanks for the help, and good luck as we push forward.
Thanks, Rick.
Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to Mr. David Meyer for closing remarks.
Okay. Thank you, everyone, for your time this morning and your interest in Titan Machinery and look forward to updating you on our progress on our next call. Have a good day.
This concludes today's teleconference. You may disconnect your lines this time, and thank you for your participation.