Titan Reports Fiscal 3Q Results

December 10, 2014

Titan Machinery Inc. reported financial results for the fiscal third quarter ended Oct. 31, 2014.

For the third quarter of fiscal 2015, revenue was $493.1 million, compared to $588.0 million in the third quarter last year. Equipment sales were $343.5 million for the third quarter of fiscal 2015, compared to $441.8 million in the third quarter last year. Parts sales were $80.7 million for the third quarter of fiscal 2015, compared to $80.9 million in the third quarter last year. Revenue generated from service was $42.4 million for the third quarter of fiscal 2015, compared to $40.6 million in the third quarter last year. Revenue from rental and other increased to $26.6 million for the third quarter of fiscal 2015 from $24.7 million in the third quarter last year.

Gross profit for the third quarter of fiscal 2015 was $84.7 million, compared to $93.6 million in the third quarter last year, primarily reflecting a decrease in agriculture equipment revenue.

The company ended the third quarter of fiscal 2015 with cash of $110.2 million. The company’s inventory level decreased to $1.06 billion as of Oct. 31, 2014, compared to inventory of $1.18 billion as of Oct. 31, 2013 and $1.08 billion as of Jan. 31, 2014. The company had $761.2 million outstanding floorplan payables on $1.2 billion total discretionary floorplan lines of credit as of Oct. 31, 2014.

“For our Construction segment, we reported another quarter of improved financial results, including same-store sales growth over 10 percent, higher equipment margins, and an improvement in pre-tax income,” said David Meyer, Titan Machinery’s chairman and CEO. “Our results reflect the success of our operational initiatives and the realignment and consolidation of our Construction segment earlier this year along with ongoing improvements in the overall industry. We remain confident that we have taken the necessary steps to position our Construction segment for long-term growth and profitability. Our International segment continues to be impacted by geopolitical instability in Ukraine; however, we have implemented initiatives to improve this segment of our business and are encouraged by improving trends as compared to the second quarter of this fiscal year.”

The company evaluates its financial performance based on its customers’ annual production cycles as opposed to a quarterly basis, due to weather fluctuations and the seasonal nature of each customer’s business. For the fiscal year ending Jan. 31, 2015, the company is revising its annual outlook. The company expects revenue to be in the range of $1.85 billion to $2.0 billion, compared to its previous range of $1.9 billion to $2.1 billion. The company expects adjusted net income attributable to common stockholders to be in the range of $2.1 million to $6.4 million, compared to its previous range of $6.4 million to $12.7 million. The company also expects adjusted earnings per diluted share to be in the range of $0.10 to $0.30, compared to its previous range of $0.30 to $0.60, based on estimated weighted average diluted common shares outstanding of 21.1 million.

The company expects GAAP net loss attributable to common stockholders to be in the range of $0.5 million to $4.8 million, compared to the previous range of breakeven to $6.3 million GAAP net income attributable to common stockholders, and GAAP loss per diluted share to be in the range of $0.02 to $0.23, compared to the previous range of $0.00 to $0.30 GAAP income per diluted share, based on estimated weighted average diluted common shares outstanding of 21.1 million. GAAP net income and earnings per diluted share guidance includes the impact of the $3.4 million pre-tax charge, or $0.10 per diluted share, associated with the company’s realignment as well as $4.9 million, or $0.23 per diluted share, due to the balance sheet impact of the Ukrainian hryvnia devaluation, which were realized in the first nine months of fiscal 2015.

The company expects to generate annual Non-GAAP cash flow from operations in the range of $40 million to $60 million for fiscal 2015, compared to the previous range of $50 to $70 million. This reflects an improvement of $90.8 million to $110.8 million compared to Non-GAAP cash flow from operations of $(50.8) million in fiscal 2014. The primary driver of the improved cash flow is the company’s anticipated reduction in equipment inventory level of approximately $200 million in fiscal 2015.

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