Titan Machinery Inc.TITN
Titan Machinery Inc. Goodwill & Intangibles Disclosure
INTANGIBLE ASSETS AND GOODWILL
Finite-Lived Intangible Assets
The Company's finite-lived intangible assets consist of customer relationships and covenants not to compete. The following is a summary of intangible assets with finite lives as of as of January 31, 2026 and 2025:
| January 31, 2026 | January 31, 2025 | ||||||||||||||||||||||||||||||||||
| Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||||||||||||||
| Covenants not to compete | $ | 805 | $ | (539) | $ | 266 | $ | 1,125 | $ | (642) | $ | 483 | |||||||||||||||||||||||
| Customer relationships | 11,738 | (3,922) | 7,816 | 11,137 | (2,278) | 8,859 | |||||||||||||||||||||||||||||
| $ | 12,543 | $ | (4,461) | $ | 8,082 | $ | 12,262 | $ | (2,920) | $ | 9,342 | ||||||||||||||||||||||||
Intangible asset amortization expense was $1.8 million, $1.9 million and $0.7 million for the years ended January 31, 2026, 2025 and 2024, respectively. The covenants not to compete and customer relationships assets for the year ended January 31, 2026 have a weighted-average amortization period of 4.8 years and 6.9 years, respectively.
The Company reviews its long-lived assets for potential impairment whenever events or circumstances indicate that the carrying value of the long-lived asset (or asset groups) may not be recoverable. In fiscal 2025, the Company performed an impairment assessment of these asset groups and as a result recognized an impairment charge of $0.1 million with respect to its German subsidiary's assets within the Europe segment, which is reflected in Impairment of Intangible and Long-Lived Assets in the Consolidated Statements of Operations. No impairment charges were recognized in fiscal 2026.
As of January 31, 2026, future amortization expense is expected to be as follows:
| Fiscal years ending January 31, | Amount | ||||
| (in thousands) | |||||
| 2027 | $ | 1,854 | |||
| 2028 | 1,737 | ||||
| 2029 | 1,650 | ||||
| 2030 | 1,623 | ||||
| 2031 | 1,218 | ||||
| $ | 8,082 | ||||
Indefinite-Lived Intangible Assets
The Company's indefinite-lived intangible assets consist of distribution rights assets. Changes in the carrying amount of distribution rights during the years ended January 31, 2026 and 2025 are as follows:
| Agriculture | Construction | Australia | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Balance, January 31, 2024 | $ | 18,154 | $ | 72 | $ | 22,842 | $ | 41,068 | |||||||||||||||
| Foreign currency translation | — | — | (2,104) | (2,104) | |||||||||||||||||||
| Balance, January 31, 2025 | 18,154 | 72 | 20,738 | 38,964 | |||||||||||||||||||
| Arising from business combinations | — | — | 2,546 | 2,546 | |||||||||||||||||||
| Foreign currency translation | — | — | 1,641 | 1,641 | |||||||||||||||||||
| Balance, January 31, 2026 | $ | 18,154 | $ | 72 | $ | 24,925 | $ | 43,151 | |||||||||||||||
The Company performs at least an annual impairment testing of its indefinite-lived distribution rights intangible assets. Under the impairment test, the fair value of distribution rights intangible assets is estimated based on a multi-period excess earnings model, an income approach. This model allocates future estimated earnings of the store/complex amongst working capital, fixed assets and other intangible assets of the store/complex and any remaining earnings (the "excess earnings") are allocated to the distribution rights intangible assets. The earnings allocated to the distribution rights are then discounted to arrive at the present value of the future estimated excess earnings, which represents the estimated fair value of the distribution rights intangible asset. The discount rate applied reflects the Company's estimate of the weighted-average cost of capital of comparable companies plus an additional risk premium to reflect the additional risk inherent in the distribution right asset. The results of the Company's annual distribution rights impairment test for the year ended January 31, 2026, indicated no impairment.
During the years ended January 31, 2026, 2025 and 2024, no impairment charges were recognized in association with indefinite-lived intangible assets.
The Company had gross indefinite-lived intangible assets of $44.3 million and accumulated impairments of $1.1 million as of January 31, 2026.
Goodwill
Changes in the carrying amount of goodwill during the years ended January 31, 2026 and 2025 are as follows:
| Agriculture | Europe | Australia | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Balance, January 31, 2024 | $ | 37,820 | $ | 474 | $ | 25,811 | $ | 64,105 | |||||||||||||||
| Arising from business combinations | — | 70 | — | 70 | |||||||||||||||||||
| Foreign currency translation | — | (13) | (2,385) | (2,398) | |||||||||||||||||||
| Impairment | — | (531) | — | (531) | |||||||||||||||||||
| Balance, January 31, 2025 | 37,820 | — | 23,426 | 61,246 | |||||||||||||||||||
| Arising from business combinations | 1,400 | — | 1,112 | 2,512 | |||||||||||||||||||
| Foreign currency translation | — | — | 1,825 | 1,825 | |||||||||||||||||||
| Balance, January 31, 2026 | $ | 39,220 | $ | — | $ | 26,363 | $ | 65,583 | |||||||||||||||
The Company performs at least an annual impairment testing of goodwill as of December 31st of each year. Under the quantitative impairment test, the fair value of the reporting units were estimated using an income and market approach. The income approach is based on discounted cash flow models that use estimates for forecasts of future operating performance for the reporting units. These forecasts include estimates of revenues, margins, operating expenses, capital expenditures, depreciation, amortization, tax and discount rates. Projected future cash flows are then discounted to a present value employing a discount rate that properly accounts for the estimated risk-adjusted weighted-average cost of capital relevant to each reporting unit. The market approach is based on assumptions related to earnings before interest, taxes, depreciation, and amortization multiples or revenue multiples. These estimates are developed as part of our planning process based on assumed growth rates, along with historical data and various internal estimates.
Due to ongoing losses, an interim test was completed in the second quarter of fiscal 2025, for our German reporting unit. The results of the Company's impairment test for the German reporting unit indicated that the estimated fair value of the reporting unit was less than the carrying value. The implied fair value of the goodwill associated with the reporting unit approximated zero, thus requiring a full impairment charge of the goodwill carrying value of the reporting unit. As such, a goodwill impairment charge of $0.5 million was recognized, which is included in Impairment of Goodwill in the Consolidated Statement of Operations. The impairment charge arose as the result of lowered expectations of the future financial performance of this reporting unit, which was impacted by the current year operating performance and challenging industry conditions. This removed all remaining goodwill in our Europe segment.
The annual impairment testing of the Agriculture and Australia reporting units exceeded their carrying values, therefore there were no impairments in these two reporting units. During the years ended January 31, 2026 and 2025, the Company did not recognize any Goodwill impairment charges.
The gross goodwill balance was $67.6 million and $63.2 million as of January 31, 2026 and 2025, respectively. The accumulated goodwill impairment loss was $2.0 million as of January 31, 2026 and 2025Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 31, 2026 | Showing above |
| 2025 | Apr 7, 2025 | |
| 2023 | Mar 30, 2023 | |
| 2022 | Apr 1, 2022 | |
| 2021 | Mar 31, 2021 | |
| 2020 | Apr 7, 2020 | |
| 2019 | Apr 5, 2019 | |
| 2018 | Apr 6, 2018 | |
| 2017 | Apr 7, 2017 | |
| 2016 | Apr 13, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.