• Titan Machinery Inc. Announces Results for Fiscal First Quarter Ended April 30, 2021

    Source: Nasdaq GlobeNewswire / 27 May 2021 06:45:00   America/New_York

    - Revenue for First Quarter of Fiscal 2022 Increased 20.1% to $372.7 million -

    - GAAP EPS for First Quarter of Fiscal 2022 was $0.47 and Adjusted EPS was $0.46 -

    - Company Increases Fiscal 2022 Modeling Assumptions -

    WEST FARGO, N.D., May 27, 2021 (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 first quarter ended April 30, 2021.

    David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, "The fiscal first quarter exceeded our expectations on all fronts with impressive operating leverage that showcases the earnings power of our efficient dealership network. On a consolidated basis, we drove a 26% increase in equipment sales and a 10% increase in our combined parts and service business during the quarter compared to the prior year. At the segment-level, we are very happy with our Agriculture segment, which generated pre-tax income growth of 82%. We are also pleased with the continued progress we are making in our Construction segment, which generated solid top-line growth and drove another quarter of positive pre-tax income and builds upon the momentum from its profitable fiscal 2021 performance. Our International segment experienced a resurgence during the quarter with strong equipment demand and delivered a corresponding improvement in pre-tax income as well. I'm proud of our team's performance and pleased to share this success with all our stakeholders."

    Fiscal 2022 First Quarter Results

    Consolidated Results
    For the first quarter of fiscal 2022, revenue increased to $372.7 million compared to $310.2 million in the first quarter last year. Equipment sales were $276.0 million for the first quarter of fiscal 2022, compared to $218.5 million in the first quarter last year. Parts sales were $62.6 million for the first quarter of fiscal 2022, compared to $56.6 million in the first quarter last year. Revenue generated from service was $27.7 million for the first quarter of fiscal 2022, compared to $25.6 million in the first quarter last year. Revenue from rental and other was $6.4 million for the first quarter of fiscal 2022, compared to $9.5 million in the first quarter last year.

    Gross profit for the first quarter of fiscal 2022 was $71.0 million, compared to $58.4 million in the first quarter last year. Gross profit margin increased 20 basis points to 19.0% versus the comparable period last year. The increase in gross profit was primarily the result of increased equipment sales and improved equipment margins compared to the first quarter of last year.

    Operating expenses increased by $3.4 million to $56.4 million for the first quarter of fiscal 2022, compared to $53.1 million in the first quarter last year primarily due to higher variable expenses on increased revenues. Operating expenses as a percentage of revenue decreased 200 basis points to 15.1% for the first quarter of fiscal 2022, compared to 17.1% of revenue in the prior year period.

    Floorplan and other interest expense was $1.5 million in the first quarter of fiscal 2022, compared to $2.1 million for the same period last year. The decrease was due to lower borrowings and a lower interest rate environment.

    In the first quarter of fiscal 2022, net income was $10.5 million, or earnings per diluted share of $0.47, compared to net income of $2.3 million, or earnings per diluted share of $0.10, for the first quarter of last year.

    On an adjusted basis, net income for the first quarter of fiscal 2022 was $10.4 million, or adjusted earnings per diluted share of $0.46, compared to adjusted net income of $3.4 million, or adjusted earnings per diluted share of $0.15, for the first quarter of last year. Adjusted first quarter fiscal 2022 net income excludes a $0.1 million Ukraine remeasurement gain, while the adjusted first quarter fiscal 2021 net income excludes $1.7 million of expenses, including ERP transition costs, impairment charges, and a Ukraine remeasurement loss.

    Adjusted EBITDA was $19.8 million in the first quarter of fiscal 2022, compared to $11.1 million in the first quarter of last year.

    Segment Results
    Agriculture Segment - Revenue for the first quarter of fiscal 2022 was $229.6 million, compared to $193.6 million in the first quarter last year. The increase in revenue was primarily driven by strong demand for equipment. Pre-tax income for the first quarter of fiscal 2022 was $11.2 million, compared to $6.2 million of pre-tax income in the first quarter last year.

    Construction Segment - Revenue for the first quarter of fiscal 2022 was $68.6 million, compared to $60.1 million in the first quarter last year. The increase in revenue was driven by increased equipment sales partially offset by lower rental revenue. Pre-tax income for the first quarter of fiscal 2022 was $0.1 million, compared to a pre-tax loss of $2.9 million and an adjusted pre-tax loss of $2.7 million in the first quarter last year.

    International Segment - Revenue for the first quarter of fiscal 2022 was $74.5 million, compared to $56.5 million in the first quarter last year. The increase in revenue was driven by strong equipment sales. Pre-tax income for the first quarter of fiscal 2022 was $2.8 million, compared to a pre-tax loss of $0.3 million in the first quarter last year. Adjusted pre-tax income for the first quarter of fiscal 2022 was $2.7 million, compared to adjusted pre-tax income of $0.5 million in the first quarter last year.

    Balance Sheet and Cash Flow

    Cash at the end of the first quarter of fiscal 2022 was $89.7 million. Inventories decreased to $415.7 million as of April 30, 2021, compared to $418.5 million as of January 31, 2021. This inventory decrease includes a $7.7 million decrease in equipment inventory, which reflects an increase in new equipment inventory of $5.3 million and a $13.0 million decrease in used equipment inventory. Outstanding floorplan payables were $169.1 million on $770.0 million total available floorplan lines of credit as of April 30, 2021, compared to $161.8 million outstanding floorplan payables as of January 31, 2021.

    In the first three months of fiscal 2022, net cash provided by operating activities was $27.0 million, compared to net cash used for operating activities of $5.4 million in the first three months of fiscal 2021. The Company evaluates its cash flow from operating activities net of all floorplan payable activity and maintaining a constant level of equity in its equipment inventory. Taking these adjustments into account, adjusted net cash provided by operating activities was $7.0 million in the first three months of fiscal 2022, compared to adjusted net cash used for operating activities of $3.6 million in the first three months of fiscal 2021.

    Mr. Meyer concluded, "The renewed strength across the agriculture complex, following an improved commodity outlook, is having a positive impact on all our businesses. The positive shift in industry conditions is recognized by our customers, and we are beginning to see some of the pent-up demand come back after several years of more conservative posturing. Titan Machinery continues to be in a strong position to serve our customers, while simultaneously serving shareholders with higher levels of profitability that we knew were possible following our multi-year effort to streamline our organization and improve our balance sheet."

    Fiscal 2022 Modeling Assumptions

    The following are the Company's current expectations for fiscal 2022 modeling assumptions.

     Current AssumptionsPrevious Assumptions
    Segment Revenue  
    Agriculture(1)Up 15-20%Up 10-15%
    Construction(2)Up 2-7%Down 0-5%
    InternationalUp 17-22%Up 12-17%
       
    Diluted EPS(3)$1.65 - $1.85$1.25 - $1.45
       
    (1) Includes the full year impact of the HorizonWest acquisition completed in May 2020.
    (2) Includes the full year impact of the Phoenix and Tucson, AZ store divestitures in January 2021. Adjusting full year fiscal 2021 net sales by $27 million, representing the 2021 net sales of these divested stores, results in a same-store sales assumption of up 10-15%.
    (3) Includes expenses related to ERP implementation.

    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) 705-6003 from the U.S. International callers can dial (201) 493-6725. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, June 10, 2021, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from international locations, and entering confirmation code 13719598.

    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

    Within this release, the Company refers to certain adjusted financial measures, which have directly comparable GAAP financial measures as identified in this release. The Company believes that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP financial measures. Generally, the non-GAAP financial measures include adjustments for items such as valuation allowances for income tax, costs associated with impairment charges, Ukraine remeasurement gains/losses and charges associated with our Enterprise Resource Planning (ERP) system transition for fiscal 2021. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute, for the GAAP financial measures presented in this release and the Company's financial statements and other publicly filed reports. Non-GAAP financial measures presented in this release may not be comparable to similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of adjusted financial measures used in this release to their most directly comparable GAAP financial measures. These reconciliations are attached to this release. The tables included in the Non-GAAP Reconciliations section reconcile adjusted net income (loss), adjusted EBITDA, adjusted diluted earnings (loss) per share, adjusted income (loss) before income taxes, and adjusted net cash provided by (used for) operating activities (all non-GAAP financial measures) for the periods presented, to their respective most directly comparable GAAP financial measure.

    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 and Europe. The network consists of US locations in Colorado, Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming and its European stores are located in Bulgaria, Germany, Romania, Serbia and Ukraine. 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 may include statements regarding Agriculture, Construction, and International segment initiatives and improvements, segment revenue realization, growth and profitability expectations, inventory expectations, leverage expectations, agricultural and construction equipment industry conditions and trends, and modeling assumptions and expected results of operations for the fiscal year ending January 31, 2022, involve known and unknown risks and uncertainties that may cause Titan Machinery’s actual results in current or future periods to differ materially from the forecasted assumptions and expected results. The Company’s risks and uncertainties include, among other things, the duration, scope and impact of the COVID-19 pandemic on the Company's operations, a substantial dependence on a single distributor, 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 reduce 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 Machinery’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 Machinery conducts its business in a highly competitive and rapidly changing environment. Accordingly, new risk factors may arise. It is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on Titan Machinery’s business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Other than required by law, Titan Machinery disclaims any obligation to update such factors 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.
    John Mills, jmills@icrinc.com
    Managing Partner
    646-277-1254

     
     
    TITAN MACHINERY INC.
    Consolidated Balance Sheets
    (in thousands, except per share data)
    (Unaudited)
        
     April 30, 2021 January 31, 2021
    Assets   
    Current Assets   
    Cash$89,729   $78,990 
    Receivables, net of allowance for expected credit losses71,928   69,109 
    Inventories415,660   418,458 
    Prepaid expenses and other11,275   13,677 
    Total current assets588,592   580,234 
    Noncurrent Assets   
    Property and equipment, net of accumulated depreciation158,364   147,165 
    Operating lease assets68,962   74,445 
    Deferred income taxes4,613   3,637 
    Goodwill1,433   1,433 
    Intangible assets, net of accumulated amortization7,696   7,785 
    Other1,081   1,090 
    Total noncurrent assets242,149   235,555 
    Total Assets$830,741   $815,789 
        
    Liabilities and Stockholders' Equity   
    Current Liabilities   
    Accounts payable$24,618   $20,045 
    Floorplan payable169,108   161,835 
    Current maturities of long-term debt5,128   4,591 
    Current operating lease liabilities10,624   11,772 
    Deferred revenue49,109   59,418 
    Accrued expenses and other37,110   48,791 
    Income taxes payable14,508   11,048 
    Total current liabilities310,205   317,500 
    Long-Term Liabilities   
    Long-term debt, less current maturities64,868   44,906 
    Operating lease liabilities69,030   73,567 
    Other long-term liabilities7,555   8,535 
    Total long-term liabilities141,453   127,008 
    Stockholders' Equity   
    Common stock—   — 
    Additional paid-in-capital252,547   252,913 
    Retained earnings127,416   116,869 
    Accumulated other comprehensive income (loss)(880)  1,499 
    Total stockholders' equity379,083   371,281 
    Total Liabilities and Stockholders' Equity$830,741   $815,789 


     
     
    TITAN MACHINERY INC.
    Consolidated Condensed Statements of Operations
    (in thousands, except per share data)
    (Unaudited)
        
     Three Months Ended April 30,
     2021 2020
    Revenue   
    Equipment$275,980   $218,505 
    Parts62,626   56,614 
    Service27,702   25,600 
    Rental and other6,398   9,489 
    Total Revenue372,706   310,208 
    Cost of Revenue   
    Equipment243,676   197,046 
    Parts44,440   39,617 
    Service9,294   8,345 
    Rental and other4,318   6,790 
    Total Cost of Revenue301,728   251,798 
    Gross Profit70,978   58,410 
    Operating Expenses56,442   53,058 
    Impairment of Intangible and Long-Lived Assets—   216 
    Income from Operations14,536   5,136 
    Other Income (Expense)   
    Interest and other income665   130 
    Floorplan interest expense(418)  (1,152)
    Other interest expense(1,104)  (966)
    Income Before Income Taxes13,679   3,148 
    Provision for Income Taxes3,132   886 
    Net Income10,547   2,262 
        
    Diluted Earnings per Share$0.47   $0.10 
    Diluted Weighted Average Common Shares22,179   22,012 


     
     
    TITAN MACHINERY INC.
    Consolidated Condensed Statements of Cash Flows
    (in thousands)
    (Unaudited)
        
     Three Months Ended April 30,
     2021 2020
    Operating Activities   
    Net income$10,547   $2,262 
    Adjustments to reconcile net income to net cash provided by (used for) operating activities   
    Depreciation and amortization5,207   5,375 
    Impairment of long-lived assets—   216 
    Other, net2,359   3,568 
    Changes in assets and liabilities   
    Inventories(1,615)  11,941 
    Manufacturer floorplan payable19,657   (10,669)
    Other working capital(9,199)  (18,135)
    Net Cash Provided by (Used for) Operating Activities26,956   (5,442)
    Investing Activities   
    Property and equipment purchases(9,126)  (5,414)
    Proceeds from sale of property and equipment135   313 
    Other, net7   (21)
    Net Cash Used for Investing Activities(8,984)  (5,122)
    Financing Activities   
    Net change in non-manufacturer floorplan payable(9,141)  18,781 
    Net proceeds from (payments on) long-term debt and finance leases3,281   (197)
    Other, net(974)  (870)
    Net Cash Provided by (Used for) Financing Activities(6,834)  17,714 
    Effect of Exchange Rate Changes on Cash(399)  (36)
    Net Change in Cash10,739   7,114 
    Cash at Beginning of Period78,990   43,721 
    Cash at End of Period$89,729   $50,835 


     
     
    TITAN MACHINERY INC.
    Segment Results
    (in thousands)
    (Unaudited)
      
     Three Months Ended April 30,
     2021 2020 % Change
    Revenue     
    Agriculture$229,554   $193,627   18.6%
    Construction68,608   60,114   14.1%
    International74,544   56,467   32.0%
    Total$372,706   $310,208   20.1%
          
    Income (Loss) Before Income Taxes     
    Agriculture$11,224   $6,162   82.1%
    Construction138   (2,873)  n/m
    International2,808   (280)  n/m
    Segment income before income taxes14,170   3,009   n/m
    Shared Resources(491)  139   n/m
    Total$13,679   $3,148   n/m


     
     
    TITAN MACHINERY INC.
    Non-GAAP Reconciliations
    (in thousands, except per share data)
    (Unaudited)
         
      Three Months Ended April 30,
      2021 2020
    Adjusted Net Income    
    Net Income $10,547   $2,262 
    Adjustments    
    ERP transition costs —   721 
    Impairment of long-lived assets —   216 
    Ukraine remeasurement (gain) / loss (129)  765 
    Total Pre-Tax Adjustments (129)  1,702 
    Less: Tax Effect of Adjustments (1) —   580 
    Total Adjustments (129)  1,122 
    Adjusted Net Income $10,418   $3,384 
         
    Adjusted Diluted EPS    
    Diluted EPS $0.47   $0.10 
    Adjustments (2)    
    ERP transition costs —   0.03 
    Impairment charges —   0.01 
    Ukraine remeasurement (gain) / loss (0.01)  0.04 
    Total Pre-Tax Adjustments (0.01)  0.08 
    Less: Tax Effect of Adjustments (1) —   0.03 
    Total Adjustments (0.01)  0.05 
    Adjusted Diluted EPS $0.46   $0.15 
         
    Adjusted Income Before Income Taxes    
    Income Before Income Taxes $13,678   $3,148 
    Adjustments    
    ERP transition costs —   721 
    Impairment of long-lived assets —   216 
    Ukraine remeasurement (gain) / loss (129)  765 
    Total Adjustments (129)  1,702 
    Adjusted Income Before Income Taxes $13,549   $4,850 
         
    Adjusted Loss Before Income Taxes - Construction    
    Income (Loss) Before Income Taxes $138   $(2,873)
    Impairment of long-lived assets —   216 
    Adjusted Income (Loss) Before Income Taxes $138   $(2,657)
         
    Adjusted Income Before Income Taxes - International    
    Income (Loss) Before Income Taxes $2,808   $(280)
    Ukraine remeasurement (gain) / loss (129)  765 
    Adjusted Income Before Income Taxes $2,679   $485 
         
         
    Adjusted EBITDA    
    Net Income $10,547   $2,262 
    Adjustments    
    Interest expense, net of interest income 1,052   853 
    Provision for income taxes 3,132   886 
    Depreciation and amortization 5,207   5,375 
    EBITDA 19,938   9,376 
    Adjustments    
    ERP transition costs —   721 
    Impairment charges —   216 
    Ukraine remeasurement (gain) / loss (129)  765 
    Total Adjustments (129)  1,702 
    Adjusted EBITDA $19,809   $11,078 
         
    Adjusted Net Cash Provided by (Used for) Operating Activities    
    Net Cash Used for Operating Activities $26,956   $(5,442)
    Net Change in Non-Manufacturer Floorplan Payable (9,141)  18,781 
    Adjustment for Constant Equity in Inventory (10,850)  (16,907)
    Adjusted Net Cash Provided by (Used) for Operating Activities $6,965   $(3,568)
         
       
    (1) The tax effect of U.S. related adjustments was calculated using a 26% tax rate, determined based on a 21% federal statutory rate and a 5% blended state income tax rate. Included in the tax effect of the adjustments is the tax impact of foreign currency changes in Ukraine of $0.3 million for the three months ended April 30, 2020.  
    (2) Adjustments are net of amounts allocated to participating securities where applicable.   


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