Titan Machinery Inc. Announces Results for Fiscal First Quarter Ended April 30, 2024
Titan Machinery (Nasdaq: TITN) reported its fiscal Q1 2025 results, showing a revenue increase to $628.7M from $569.6M YoY. Equipment revenue rose to $468.1M, parts to $108.2M, and services to $45.1M. However, the gross profit margin decreased to 19.4% from 20.8%, and net income dropped to $9.4M from $27.0M. Operating expenses increased to $99.2M due to past acquisitions.
Segment-wise, agriculture revenue grew by 5.8%, construction remained flat, Europe saw a 13.4% decline, and Australia reported $44.4M in revenue. The company updated its fiscal 2025 assumptions, lowering expected revenue and diluted EPS ranges. Cash at quarter-end was $35.7M, with inventory rising to $1.4B. Net cash used for operating activities decreased to $32.4M.
- Revenue increased to $628.7 million, up from $569.6 million.
- Equipment revenue rose to $468.1 million.
- Parts revenue increased to $108.2 million.
- Service revenue grew to $45.1 million.
- Agriculture segment revenue grew by 5.8%.
- Gross profit margin decreased to 19.4% from 20.8%.
- Net income dropped to $9.4 million from $27.0 million.
- Operating expenses increased to $99.2 million.
- Construction segment revenue remained flat.
- European segment revenue decreased by 13.4%.
- Australia segment reported a pre-tax loss of $0.5 million.
- Floorplan interest expenses increased significantly to $9.5 million from $2.5 million.
- Updated fiscal 2025 modeling assumptions lowered revenue and EPS expectations.
- Inventories increased to $1.4 billion.
- Net cash used for operating activities was $32.4 million.
Insights
The financial results for Titan Machinery Inc. show a mixed performance in the fiscal first quarter ended April 30, 2024. Revenue growth of
The drop in gross profit margin to
From a balance sheet perspective, the increase in inventories to
Titan Machinery’s results reflect broader industry trends, such as softening demand and inventory challenges. The agriculture segment showed a modest revenue increase, but the expected decline in net farm income could further dampen demand. Notably, the company's same-store growth of
The construction segment remained nearly flat, indicating stability but lacking significant growth drivers in the short-term. The Europe segment saw a notable revenue decrease, driven by weakening new equipment demand and currency fluctuations, pointing to macroeconomic pressures that may persist.
In terms of future outlook, the company's adjustment of its fiscal 2025 modeling assumptions, including lower revenue projections in agriculture and Europe and a revision in diluted EPS range to
The update provided by Titan Machinery indicates significant operational challenges. The key issues stem from higher inventory levels and increased operating expenses. Inventory management remains critical, with the company reporting
Higher operating expenses due to recent acquisitions reflect strategic growth but also necessitate efficient integration to control overheads. The company's focus on controlling fixed overhead and improving service capacity is prudent, though it hinges on execution efficiency. As the market adjusts, achieving better alignment between inventory and demand will be vital for financial health.
Investors should monitor how well Titan Machinery can streamline operations, optimize inventory turnover and mitigate interest expenses in the coming quarters.
- Updates Fiscal 2025 Modeling Assumptions -
WEST FARGO, N.D., May 23, 2024 (GLOBE NEWSWIRE) -- Titan Machinery Inc. (Nasdaq: TITN) ("Titan" or the "Company"), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal first quarter ended April 30, 2024.
"Our first quarter results reflected an industry-wide transition to a more challenging market environment, characterized by softening demand and excess supply of inventory in many product categories as OEM delivery timelines returned to normal and as new sales converted to used trade-ins," stated Bryan Knutson, Titan Machinery’s President and Chief Executive Officer. "Lower net farm income and the extended duration of higher interest rates are impacting farmer sentiment and influencing farmers' equipment purchasing decisions across our geographic footprint. As the cycle progresses, our entire team remains focused on advancing our customer care strategy to ensure we have the service capacity available to meet our customers' needs, controlling the aspects of the business that we can such as our fixed overhead and managing our inventory to align with demand. We believe that the combination of these levers will allow us to generate significantly improved financial results versus the prior cycle, and demonstrate the numerous strategic improvements we've made to our business over the past several years."
Fiscal 2025 First Quarter Results
Consolidated Results
For the first quarter of fiscal 2025, revenue increased to
Gross profit for the first quarter of fiscal 2025 was
Operating expenses were
Floorplan interest expense and other interest expense aggregated to
In the first quarter of fiscal 2025, net income was
The Company generated
Segment Results
Agriculture Segment - Revenue for the first quarter of fiscal 2025 was
Construction Segment - Revenue for the first quarter of fiscal 2025 was
Europe Segment - Revenue for the first quarter of fiscal 2025 was
Australia Segment - Revenue for the first quarter of fiscal 2025 was
Balance Sheet and Cash Flow
Cash at the end of the first quarter of fiscal 2025 was
For the first three months ended April 30, 2024, the Company's net cash used for operating activities was
Additional Management Commentary
Mr. Knutson continued, "We remain focused on serving our customers who feed and build the world while navigating the declining market environment. In consideration of the incrementally softer demand than we initially anticipated, we are updating our full year modeling assumptions for revenue, and also modifying our underlying assumptions for equipment margins and floorplan interest expense. We are laser focused on utilizing the tools at our disposal to improve our inventory levels as efficiently as possible to ensure we are well positioned moving forward.”
Fiscal 2025 Modeling Assumptions
The following are the Company's current expectations for fiscal 2025 modeling assumptions.
Previous Assumptions | Current Assumptions | ||
Segment Revenue | |||
Agriculture | Flat - Up | Down | |
Construction | Up 3 - | Flat - Up | |
Europe | Flat - Up | Down | |
Australia | |||
Diluted EPS | |||
Conference Call and Presentation Information
The Company will host a conference call and audio webcast today at 7:30 a.m. Central time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial (877) 704-4453 from the U.S. International callers can dial (201) 389-0920. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, June 6, 2024, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from international locations, and entering confirmation code 13746660.
A copy of the presentation that will accompany the prepared remarks on the conference call is available on the Company’s website under Investor Relations at www.titanmachinery.com. An archive of the audio webcast will be available on the Company’s website under Investor Relations at www.titanmachinery.com for 30 days following the audio webcast.
Non-GAAP Financial Measures
This press release and the attached financial tables contain disclosure of the Company's EBITDA, which is a non-GAAP financial measure as defined under SEC rules. As required by SEC rules, the Company has provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure in the schedule included in this press release. The Company believes that presentation of this non-GAAP financial measure improves the transparency of the Company’s disclosures and provides a meaningful presentation of the Company’s results.
About Titan Machinery Inc.
Titan Machinery Inc., founded in 1980 and headquartered in West Fargo, North Dakota, owns and operates a network of full service agricultural and construction equipment dealer locations in North America, Europe and Australia, servicing farmers, ranchers and commercial applicators. The network consists of US locations in Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin and Wyoming. The international network includes European stores located in Bulgaria, Germany, Romania, and Ukraine and Australian stores located in New South Wales, South Australia, and Victoria in Southeastern Australia. The Titan Machinery locations represent one or more of the CNH Industrial Brands, including Case IH, New Holland Agriculture, Case Construction, New Holland Construction, and CNH Industrial Capital. Additional information about Titan Machinery Inc. can be found at www.titanmachinery.com.
Forward Looking Statements
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “potential,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “will,” “plan,” “anticipate,” and similar words and expressions are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of our management. Forward-looking statements made in this release, which include statements regarding modeling assumptions and expected results of operations for the fiscal year ending January 31, 2025 statements regarding the Company's ability to generate improved mid-cycle financial results, as compared to prior cycles, and may include statements regarding Agriculture, Construction, Europe and Australia segment initiatives and improvements, segment revenue realization, growth and profitability expectations, inventory availability and consumer demand expectations, and agricultural and construction equipment industry conditions and trends, involve known and unknown risks and uncertainties that may cause Titan’s actual results in future periods to differ materially from the forecasted assumptions and expected results. The Company’s risks and uncertainties include, among other things, our ability to successfully integrate, and realize growth opportunities and synergies in connection with the O'Connors acquisition and the risk that we have assumed unforeseen or other liabilities in connection with the O'Connors acquisition. In addition, risks and uncertainties also include the impact of the Russia-Ukraine conflict on our Ukrainian subsidiary, our substantial dependence on CNH Industrial including CNH Industrial's ability to design, manufacture and allocate inventory to our stores necessary to satisfy our customers' demands, supply chain disruptions impacting our suppliers, including CNH Industrial, the continued availability of organic growth and acquisition opportunities, potential difficulties integrating acquired stores, industry supply levels, fluctuating agriculture and construction industry economic conditions, the success of recently implemented initiatives within the Company’s operating segments, the uncertainty and fluctuating conditions in the capital and credit markets, difficulties in conducting international operations, foreign currency risks, governmental agriculture policies, seasonal fluctuations, the ability of the Company to manage inventory levels, weather conditions, disruption in receiving ample inventory financing, and increased competition in the geographic areas served. These and other risks are more fully described in Titan’s filings with the Securities and Exchange Commission, including the Company’s most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. Titan conducts its business in a highly competitive and rapidly changing environment. Accordingly, new risks and uncertainties may arise. It is not possible for management to predict all such risks and uncertainties, nor to assess the impact of all such risks and uncertainties on Titan’s business or the extent to which any individual risk or uncertainty, or combination of risks and uncertainties, may cause results to differ materially from those contained in any forward-looking statement. Other than as required by law, Titan disclaims any obligation to update such risks and uncertainties or to publicly announce results of revisions to any of the forward-looking statements contained in this release to reflect future events or developments.
Investor Relations Contact:
ICR, Inc.
Jeff Sonnek, jeff.sonnek@icrinc.com
646-277-1263
TITAN MACHINERY INC. | |||||||
Consolidated Condensed Balance Sheets | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
April 30, 2024 | January 31, 2024 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 35,684 | $ | 38,066 | |||
Receivables, net of allowance for expected credit losses | 134,142 | 153,657 | |||||
Inventories, net | 1,429,762 | 1,303,030 | |||||
Prepaid expenses and other | 15,301 | 24,262 | |||||
Total current assets | 1,614,889 | 1,519,015 | |||||
Noncurrent Assets | |||||||
Property and equipment, net of accumulated depreciation | 304,472 | 298,774 | |||||
Operating lease assets | 51,858 | 54,699 | |||||
Deferred income taxes | 517 | 529 | |||||
Goodwill | 62,979 | 64,105 | |||||
Intangible assets, net of accumulated amortization | 51,301 | 53,356 | |||||
Other | 1,651 | 1,783 | |||||
Total noncurrent assets | 472,778 | 473,246 | |||||
Total Assets | $ | 2,087,667 | $ | 1,992,261 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 47,629 | $ | 43,846 | |||
Floorplan payable | 1,024,999 | 893,846 | |||||
Current maturities of long-term debt | 13,890 | 13,706 | |||||
Current operating lease liabilities | 10,918 | 10,751 | |||||
Deferred revenue | 84,900 | 115,852 | |||||
Accrued expenses and other | 65,402 | 74,400 | |||||
Total current liabilities | 1,247,738 | 1,152,401 | |||||
Long-Term Liabilities | |||||||
Long-term debt, less current maturities | 105,440 | 106,407 | |||||
Operating lease liabilities | 47,693 | 50,964 | |||||
Deferred income taxes | 21,740 | 22,607 | |||||
Other long-term liabilities | 2,455 | 2,240 | |||||
Total long-term liabilities | 177,328 | 182,218 | |||||
Stockholders' Equity | |||||||
Common stock | — | — | |||||
Additional paid-in-capital | 258,700 | 258,657 | |||||
Retained earnings | 406,666 | 397,225 | |||||
Accumulated other comprehensive loss | (2,765 | ) | 1,760 | ||||
Total stockholders' equity | 662,601 | 657,642 | |||||
Total Liabilities and Stockholders' Equity | $ | 2,087,667 | $ | 1,992,261 |
TITAN MACHINERY INC. | |||||||
Consolidated Condensed Statements of Operations | |||||||
(in thousands, except per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended April 30, | |||||||
2024 | 2023 | ||||||
Revenue | |||||||
Equipment | $ | 468,089 | $ | 429,376 | |||
Parts | 108,226 | 96,606 | |||||
Service | 45,079 | 34,933 | |||||
Rental and other | 7,309 | 8,716 | |||||
Total Revenue | 628,703 | 569,631 | |||||
Cost of Revenue | |||||||
Equipment | 412,239 | 368,262 | |||||
Parts | 73,151 | 65,103 | |||||
Service | 16,776 | 12,409 | |||||
Rental and other | 4,782 | 5,277 | |||||
Total Cost of Revenue | 506,948 | 451,051 | |||||
Gross Profit | 121,755 | 118,580 | |||||
Operating Expenses | 99,158 | 81,315 | |||||
Income from Operations | 22,597 | 37,265 | |||||
Other (Expense) Income | |||||||
Interest and other (expense) income | (288 | ) | 720 | ||||
Floorplan interest expense | (7,064 | ) | (1,272 | ) | |||
Other interest expense | (2,459 | ) | (1,274 | ) | |||
Income Before Income Taxes | 12,786 | 35,439 | |||||
Provision for Income Taxes | 3,345 | 8,474 | |||||
Net Income | $ | 9,441 | $ | 26,965 | |||
Diluted Earnings per Share | $ | 0.41 | $ | 1.19 | |||
Diluted Weighted Average Common Shares | 22,546 | 22,448 |
TITAN MACHINERY INC. | |||||||
Consolidated Condensed Statements of Cash Flows | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended April 30, | |||||||
2024 | 2023 | ||||||
Operating Activities | |||||||
Net income | $ | 9,441 | $ | 26,965 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 8,715 | 6,948 | |||||
Other, net | 4,313 | 1,482 | |||||
Changes in assets and liabilities, net of effects of acquisitions | |||||||
Inventories | (137,760 | ) | (140,107 | ) | |||
Manufacturer floorplan payable | 92,084 | 86,259 | |||||
Receivables | 20,115 | (32,307 | ) | ||||
Other working capital | (29,262 | ) | (26,944 | ) | |||
Net Cash Used for Operating Activities | (32,354 | ) | (77,704 | ) | |||
Investing Activities | |||||||
Property and equipment purchases | (13,725 | ) | (10,928 | ) | |||
Proceeds from sale of property and equipment | 950 | 2,850 | |||||
Acquisition consideration, net of cash acquired | (260 | ) | (17,463 | ) | |||
Other, net | 131 | (759 | ) | ||||
Net Cash Used for Investing Activities | (12,904 | ) | (26,300 | ) | |||
Financing Activities | |||||||
Net change in non-manufacturer floorplan payable | 46,442 | 97,266 | |||||
Net proceeds from long-term debt and finance leases | (2,567 | ) | 1,924 | ||||
Other, net | (794 | ) | (994 | ) | |||
Net Cash Provided by Financing Activities | 43,081 | 98,196 | |||||
Effect of Exchange Rate Changes on Cash | (205 | ) | 252 | ||||
Net Change in Cash | (2,382 | ) | (5,556 | ) | |||
Cash at Beginning of Period | 38,066 | 43,913 | |||||
Cash at End of Period | $ | 35,684 | $ | 38,357 |
TITAN MACHINERY INC. | ||||||||||
Segment Results | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended April 30, | ||||||||||
2024 | 2023 | % Change | ||||||||
Revenue | ||||||||||
Agriculture | $ | 447,687 | $ | 423,195 | 5.8 | % | ||||
Construction | 71,492 | 71,996 | (0.7 | )% | ||||||
Europe | 65,105 | 74,440 | (12.5 | )% | ||||||
Australia | $ | 44,419 | $ | — | *N/M | |||||
Total | $ | 628,703 | $ | 569,631 | 10.4 | % | ||||
Income (Loss) Before Income Taxes | ||||||||||
Agriculture | $ | 13,045 | $ | 24,152 | (46.0 | )% | ||||
Construction | 268 | 4,533 | (94.1 | )% | ||||||
Europe | 1,350 | 6,384 | (78.9 | )% | ||||||
Australia | (486 | ) | — | *N/M | ||||||
Segment Income Before Income Taxes | 14,177 | 35,069 | (59.6 | )% | ||||||
Shared Resources | (1,391 | ) | 370 | 475.9 | % | |||||
Total | $ | 12,786 | $ | 35,439 | (63.9 | )% | ||||
*N/M = Not Meaningful |
TITAN MACHINERY INC. | ||||||||
Non-GAAP Reconciliations | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended April 30, | ||||||||
2024 | 2023 | |||||||
EBITDA | ||||||||
Net Income | $ | 9,441 | $ | 26,965 | ||||
Adjustments | ||||||||
Interest expense, net of interest income | 2,351 | 1,165 | ||||||
Provision for income taxes | 3,345 | 8,474 | ||||||
Depreciation and amortization | 8,715 | 6,948 | ||||||
EBITDA | $ | 23,852 | $ | 43,552 | ||||
FAQ
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