Titan Machinery Inc. Announces Results for Fiscal Fourth Quarter and Full Year Ended January 31, 2024
- Record revenue of $2.8 billion for fiscal 2024, up 24.9%.
- EPS of $4.93 for fiscal 2024, an increase of 9.8%.
- Fiscal 2025 Modeling Assumptions provided for segment revenue and diluted EPS.
- Consolidated revenue growth driven by acquisitions and parts/service business growth.
- Operating expenses increased due to acquisitions but decreased as a percentage of revenue.
- Net income for fiscal 2024 was $112.4 million, an increase from the prior year.
- Cash at the end of Q4 fiscal 2024 was $38.1 million, while inventories increased significantly.
- Net cash used for operating activities in fiscal 2024 was $32.3 million, a decrease from the prior year.
- Conference call and webcast details provided for investors.
- Non-GAAP financial measure EBITDA disclosed in the PR.
- None.
Insights
The reported revenue surge of 24.9% to $2.8 billion for Titan Machinery Inc. signifies a robust growth trajectory, indicative of the company's expansion strategy and operational efficiency. This substantial increase in revenue, coupled with a record Fiscal 2024 EPS of $4.93, reflects a solid financial performance that is likely to capture the attention of investors and market analysts alike. The growth can be attributed to strong sales across all segments and successful acquisitions, such as O'Connors, which seem to align with the strategic vision of the company.
The impact of these financial results on the stock market could be significant, as investors often react positively to companies that outperform expectations and show strong year-over-year growth. Moreover, the company's forward-looking statements, including the Fiscal 2025 modeling assumptions, suggest confidence in continued growth, particularly in the parts and service business, which is known for providing stable recurring revenue. However, the forecasted compression of equipment margins and the emphasis on investing in customer care strategy may indicate future expenditures that could affect profitability.
It is also important to note the increase in inventories and floorplan payables, which signals a strategic stockpiling of inventory to meet anticipated demand but also raises questions about cash flow management and debt levels, especially in the context of higher interest rates. These are critical factors for investors to monitor, as they can have implications for the company's liquidity and financial health in the long term.
The record earnings per share (EPS) increase of 9.8% to $4.93 is a strong indicator of Titan Machinery's profitability and operational leverage. This performance metric is often scrutinized by investors as it represents the portion of a company's profit allocated to each share of common stock, serving as a barometer of the company's financial health and efficiency. Moreover, the reported EBITDA increase of 14.6% further underscores the company's earning potential and ability to generate cash flows from its core business operations without the effects of financing and accounting decisions.
However, the decrease in gross profit margin from 18.7% to 16.6% year-over-year warrants attention, as it suggests a reduction in profitability per unit of sales, possibly due to the normalization of equipment margins. While this decrease could be a concern for margin sustainability, the reduction in operating expenses as a percentage of revenue from 14.4% to 11.8% is a positive offsetting factor, indicating improved operational efficiency and cost control.
Investors should also consider the company's balance sheet strength, particularly the significant increase in inventories, which could be a strategic response to supply chain challenges or an anticipation of higher sales volumes. The rise in floorplan payables and the use of credit lines for financing acquisitions such as O'Connors must be balanced against the company's cash reserves and ability to manage debt servicing, especially in an environment of rising interest rates.
The reported results from Titan Machinery Inc. reflect broader trends in the agricultural and construction equipment industry. The strong demand and improved equipment availability that contributed to the 40.8% revenue increase in the Agriculture Segment aligns with the global agricultural equipment market's growth, driven by technological advancements and increased farming activities.
The Construction Segment's revenue increase by 17.7% is also reflective of the rebound in construction activities post-pandemic and the strategic timing of equipment deliveries. The Europe Segment's modest revenue increase, affected by foreign currency fluctuations and the Australia Segment's performance post-acquisition provide insights into the geographic diversification of Titan Machinery's operations and the varying market conditions it navigates.
Given the cyclical nature of the agricultural industry, the company's commentary on the shifting Ag cycle dynamics and the expectation of equipment margin compression could be indicative of the industry's transition period. This suggests that while the current performance is strong, stakeholders should remain cognizant of the inherent volatility in the industry and the company's strategic initiatives, such as the customer care strategy, to mitigate these effects and maintain service revenue streams.
- Revenue for Fiscal 2024 increased
- Record Fiscal 2024 EPS of
- Provides Fiscal 2025 Modeling Assumptions -
WEST FARGO, N.D., March 21, 2024 (GLOBE NEWSWIRE) -- Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal fourth quarter and full year ended January 31, 2024.
"We finished fiscal year 2024 with a strong performance that was driven by growth across all of our legacy operating segments and resulted in record revenue of
Fiscal 2024 Fourth Quarter Results
Consolidated Results
For the fourth quarter of fiscal 2024, revenue increased to
Gross profit for the fourth quarter of fiscal 2024 was
Operating expenses were
Floorplan and other interest expense aggregated to
In the fourth quarter of fiscal 2024, net income was
The Company generated
Segment Results
Agriculture Segment - Revenue for the fourth quarter of fiscal 2024 was
Construction Segment - Revenue for the fourth quarter of fiscal 2024 was
Europe Segment - Revenue for the fourth quarter of fiscal 2024 was
Australia Segment - Revenue for the fourth quarter of fiscal 2024 was
Fiscal 2024 Full Year Results
Revenue increased
Balance Sheet and Cash Flow
Cash at the end of the fourth quarter of fiscal 2024 was
For the fiscal year ended January 31, 2024, the Company’s net cash used for operating activities was
Additional Management Commentary
Mr. Knutson concluded, "Looking ahead to fiscal 2025, we are forecasting consolidated revenue growth primarily led by annualization of the O'Connors acquisition as well as steady growth in our parts and service business. In consideration of the shifting Ag cycle dynamics, we believe Titan and the industry are significantly healthier than the prior cycle. However, we do expect compression of equipment margins in this transition period and will continue investing in our customer care strategy to build out additional service capacity across our network. As such, we are setting expectations for earnings per share that we believe are appropriate and achievable. Our business remains in a position of strength and we expect to demonstrate the durability of our earnings through this cycle following a multi-year effort to implement greater efficiency across our organization."
2025 Modeling Assumptions
The following are the Company's current expectations for fiscal 2025 modeling assumptions.
| Current Assumptions | |
| Segment Revenue | |
| Agriculture (1) | Flat - Up |
| Construction | Up 3 - |
| Europe | Flat - Up |
| Australia (2) | |
| Diluted EPS | |
| (1) Includes the full year impact of the Scott Supply acquisition, which closed in January 2024. | |
| (2) Represents the range of expected revenue for our Australia segment, which was acquired through the O'Connors acquisitions that closed in October 2023. | |
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, April 4, 2024, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from international locations, and entering confirmation code 13744324.
A copy of the presentation that will accompany the prepared remarks from 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 across three continents -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; European stores located in Bulgaria, Germany, Romania, and Ukraine; and Australian stores located in the regions of Victoria, New South Wales, and South Australia. Titan Machinery's 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 the financial impact on the Company of the O'Connors acquisition during future periods, modeling assumptions, segment revenues and diluted earnings per for the fiscal year ending January 31, 2025, and the level of equipment margins in future periods, and may include statements regarding Agriculture, Construction, Europe (formerly "International) and Australia segment initiatives and improvements, segment revenue realization, growth and profitability expectations, the performance of our Ukrainian subsidiary within our Europe segment, inventory availability and consumer demand expectations, our service department capacity leverage 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 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
Managing Director
646-277-1263
| TITAN MACHINERY INC. | ||||||
| Consolidated Condensed Balance Sheets | ||||||
| (in thousands) | ||||||
| (Unaudited) | ||||||
| January 31, 2024 | January 31, 2023 | |||||
| Assets | ||||||
| Current Assets | ||||||
| Cash | $ | 38,066 | $ | 43,913 | ||
| Receivables, net of allowance for expected credit losses | 153,657 | 95,844 | ||||
| Inventories | 1,303,030 | 703,939 | ||||
| Prepaid expenses and other | 24,262 | 25,554 | ||||
| Total current assets | 1,519,015 | 869,250 | ||||
| Noncurrent Assets | ||||||
| Property and equipment, net of accumulated depreciation | 298,774 | 217,782 | ||||
| Operating lease assets | 54,699 | 50,206 | ||||
| Deferred income taxes | 529 | 1,246 | ||||
| Goodwill | 64,105 | 30,622 | ||||
| Intangible assets, net of accumulated amortization | 53,356 | 18,411 | ||||
| Other | 1,783 | 1,178 | ||||
| Total noncurrent assets | 473,246 | 319,445 | ||||
| Total Assets | $ | 1,992,261 | $ | 1,188,695 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current Liabilities | ||||||
| Accounts payable | $ | 43,846 | $ | 40,834 | ||
| Floorplan payable | 893,846 | 258,372 | ||||
| Current maturities of long-term debt | 13,706 | 7,241 | ||||
| Current maturities of operating leases | 10,751 | 9,855 | ||||
| Deferred revenue | 115,852 | 119,845 | ||||
| Accrued expenses and other | 74,400 | 62,004 | ||||
| Total current liabilities | 1,152,401 | 498,151 | ||||
| Long-Term Liabilities | ||||||
| Long-term debt, less current maturities | 106,407 | 89,950 | ||||
| Operating lease liabilities | 50,964 | 48,513 | ||||
| Deferred income taxes | 22,607 | 9,563 | ||||
| Other long-term liabilities | 2,240 | 6,212 | ||||
| Total long-term liabilities | 182,218 | 154,238 | ||||
| Stockholders' Equity | ||||||
| Common stock | — | — | ||||
| Additional paid-in-capital | 258,657 | 256,541 | ||||
| Retained earnings | 397,225 | 284,784 | ||||
| Accumulated other comprehensive income (loss) | 1,760 | (5,019 | ) | |||
| Total stockholders' equity | 657,642 | 536,306 | ||||
| Total Liabilities and Stockholders' Equity | $ | 1,992,261 | $ | 1,188,695 | ||
| TITAN MACHINERY INC. | |||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended January 31, | Twelve Months Ended January 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | |||||||||||||||
| Equipment | $ | 714,044 | $ | 470,980 | $ | 2,145,316 | $ | 1,711,559 | |||||||
| Parts | 90,763 | 72,222 | 410,841 | 327,196 | |||||||||||
| Service | 35,137 | 27,955 | 157,315 | 129,803 | |||||||||||
| Rental and other | 12,188 | 11,825 | 44,973 | 40,748 | |||||||||||
| Total Revenue | 852,132 | 582,982 | 2,758,445 | 2,209,306 | |||||||||||
| Cost of Revenue | |||||||||||||||
| Equipment | 626,898 | 407,161 | 1,864,558 | 1,477,539 | |||||||||||
| Parts | 63,146 | 48,256 | 279,921 | 220,418 | |||||||||||
| Service | 12,971 | 10,920 | 53,981 | 46,208 | |||||||||||
| Rental and other | 8,082 | 7,780 | 28,631 | 25,302 | |||||||||||
| Total Cost of Revenue | 711,097 | 474,117 | 2,227,091 | 1,769,467 | |||||||||||
| Gross Profit | 141,035 | 108,865 | 531,354 | 439,839 | |||||||||||
| Operating Expenses | 100,328 | 83,675 | 362,509 | 301,516 | |||||||||||
| Income from Operations | 40,707 | 25,190 | 168,845 | 138,323 | |||||||||||
| Other Income (Expense) | |||||||||||||||
| Interest and other income | 2,173 | 694 | 3,300 | 3,862 | |||||||||||
| Floorplan interest expense | (6,028 | ) | (788 | ) | (13,802 | ) | (1,875 | ) | |||||||
| Other interest expense | (3,294 | ) | (1,267 | ) | (7,303 | ) | (5,069 | ) | |||||||
| Income Before Income Taxes | 33,558 | 23,829 | 151,040 | 135,241 | |||||||||||
| Provision for Income Taxes | 9,595 | 5,717 | 38,599 | 33,373 | |||||||||||
| Net Income | $ | 23,963 | $ | 18,112 | $ | 112,441 | $ | 101,868 | |||||||
| Diluted Earnings per Share | $ | 1.05 | $ | 0.80 | $ | 4.93 | $ | 4.49 | |||||||
| Diluted Weighted Average Common Shares | 22,517 | 22,405 | 22,499 | 22,380 | |||||||||||
| TITAN MACHINERY INC. | |||||||
| Consolidated Condensed Statements of Cash Flows | |||||||
| (in thousands) | |||||||
| (Unaudited) | |||||||
| Year Ended January 31, | |||||||
| 2024 | 2023 | ||||||
| Operating Activities | |||||||
| Net income | $ | 112,441 | $ | 101,868 | |||
| Adjustments to reconcile net income to net cash (used) provided by operating activities | |||||||
| Depreciation and amortization | 31,479 | 25,197 | |||||
| Other, net | 12,941 | 19,995 | |||||
| Changes in assets and liabilities, net of effects of acquisitions | |||||||
| Inventories | (476,389 | ) | (180,929 | ) | |||
| Manufacturer floorplan payable | 368,111 | 69,633 | |||||
| Other working capital | (80,863 | ) | (24,948 | ) | |||
| Net Cash (Used) Provided by Operating Activities | (32,280 | ) | 10,816 | ||||
| Investing Activities | |||||||
| Property and equipment purchases | (62,361 | ) | (37,211 | ) | |||
| Proceeds from sale of property and equipment | 7,134 | 3,756 | |||||
| Acquisition consideration, net of cash acquired | (107,548 | ) | (100,471 | ) | |||
| Other, net | (597 | ) | (139 | ) | |||
| Net Cash Used for Investing Activities | (163,372 | ) | (134,065 | ) | |||
| Financing Activities | |||||||
| Net change in non-manufacturer floorplan payable | 183,148 | 22,334 | |||||
| Net proceeds from long-term debt | 6,554 | 778 | |||||
| Other, net | (1,125 | ) | (1,153 | ) | |||
| Net Cash Provided by Financing Activities | 188,577 | 21,959 | |||||
| Effect of Exchange Rate Changes on Cash | 1,228 | (946 | ) | ||||
| Net Change in Cash | (5,847 | ) | (102,236 | ) | |||
| Cash at Beginning of Period | 43,913 | 146,149 | |||||
| Cash at End of Period | $ | 38,066 | $ | 43,913 | |||
| TITAN MACHINERY INC. | |||||||||||||||||||||
| Segment Results | |||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended January 31, | Twelve Months Ended January 31, | ||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||||
| Revenue | |||||||||||||||||||||
| Agriculture | $ | 620,593 | $ | 440,891 | 40.8 | % | $ | 2,044,263 | $ | 1,601,720 | 27.6 | % | |||||||||
| Construction | 100,095 | 85,067 | 17.7 | % | 332,463 | 308,457 | 7.8 | % | |||||||||||||
| Europe | 61,635 | 57,024 | 8.1 | % | 311,910 | 299,129 | 4.3 | % | |||||||||||||
| Australia | 69,809 | — | *n/m | 69,809 | — | *n/m | |||||||||||||||
| Total | $ | 852,132 | $ | 582,982 | 46.2 | % | $ | 2,758,445 | $ | 2,209,306 | 24.9 | % | |||||||||
| Income (Loss) Before Income Taxes | |||||||||||||||||||||
| Agriculture | $ | 28,761 | $ | 19,345 | 48.7 | % | $ | 121,072 | $ | 102,733 | 17.9 | % | |||||||||
| Construction | 4,599 | 5,372 | (14.4 | )% | 18,346 | 18,569 | (1.2 | )% | |||||||||||||
| Europe | (610 | ) | 1,514 | *n/m | 16,487 | 20,197 | (18.4 | )% | |||||||||||||
| Australia | 4,115 | — | *n/m | 4,115 | — | *n/m | |||||||||||||||
| Segment income before income taxes | 36,865 | 26,231 | 40.5 | % | 160,020 | 141,499 | 13.1 | % | |||||||||||||
| Shared Resources | (3,307 | ) | (2,402 | ) | 37.7 | % | (8,980 | ) | (6,258 | ) | 43.5 | % | |||||||||
| Total | $ | 33,558 | $ | 23,829 | 40.8 | % | $ | 151,040 | $ | 135,241 | 11.7 | % | |||||||||
| *n/m = not meaningful | |||||||||||||||||||||
| TITAN MACHINERY INC. | |||||||||||
| Non-GAAP Reconciliations | |||||||||||
| (in thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended January 31, | Twelve Months Ended January 31, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||
| EBITDA | |||||||||||
| Net Income | $ | 23,963 | $ | 18,112 | $ | 112,441 | $ | 101,868 | |||
| Adjustments | |||||||||||
| Interest expense, net of interest income | 3,104 | 1,167 | 6,759 | 4,730 | |||||||
| Provision for income taxes | 9,595 | 5,717 | 38,599 | 33,373 | |||||||
| Depreciation and amortization | 8,608 | 6,842 | 31,479 | 25,197 | |||||||
| EBITDA | $ | 45,270 | $ | 31,838 | $ | 189,278 | $ | 165,168 | |||
FAQ
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