Titan Machinery Inc. Announces Fiscal Third Quarter Ended October 31, 2012 Results -Third Quarter Revenue Increased 38% to $582 Million- -Pre-Tax Income Increased 11% to $23.8 Million and Earnings Per Share was $0.66- -Company Raises Annual Revenue and Reiterates Earnings Per Share Guidance- -Company Continues Domestic Acquisition Strategy and Expands International Distribution Network- Business Wire WEST FARGO, N.D. -- December 06, 2012 Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal third quarter and first nine months ended October 31, 2012. Fiscal 2013 Third Quarter Results For the third quarter of fiscal 2013, revenue increased 37.6% to $582.1 million from revenue of $423.0 million in the third quarter last year. All four of the Company’s revenue sources—equipment, parts, service, and rental and other—contributed to this period-over-period revenue growth. Equipment sales were $456.2 million for the third quarter of fiscal 2013, compared to $312.3 million in the third quarter last year. Parts sales were $72.1 million for the third quarter of fiscal 2013, compared to $64.5 million in the third quarter last year. Revenue generated from service was $33.4 million for the third quarter of fiscal 2013, compared to $29.8 million in the third quarter last year. Revenue from rental and other increased to $20.5 million from $16.3 million in the third quarter last year. Gross profit for the third quarter of fiscal 2013 was $94.1 million, compared to $74.0 million in the third quarter last year. The Company’s gross profit margin was 16.2% in the third quarter of fiscal 2013, compared to 17.5% in the third quarter last year. The decrease in gross profit margin was primarily due to the change in sales mix, in which the higher margin parts and service businesses generated a smaller percentage of sales compared to the same quarter last year. Operating expenses were 11.0% of revenue or $64.0 million for the third quarter of fiscal 2013, compared to 11.8% of revenue or $50.1 million for the third quarter of last year. Floorplan interest expense increased to $3.7 million for the third quarter of 2013 compared to $2.6 million for the same period last year due to increased levels of interest-bearing equipment inventory. Other interest expense increased to $2.9 million for the third quarter of fiscal 2013 compared to $0.3 million for the same period last year due to the Company’s April 2012 convertible debt offering. Pre-tax income for the third quarter of fiscal 2013 was $23.8 million, compared to $21.3 million in the third quarter last year. Pre-tax margin was 4.1% for the third quarter of fiscal 2013, compared to 5.0% in the third quarter last year. Pre-tax Agriculture segment income was $26.1 million for the third quarter of fiscal 2013, compared to $20.1 million in the third quarter last year. Pre-tax Construction segment income was $0.5 million for the third quarter of fiscal 2013, compared to $3.3 million in the third quarter last year. Net income attributable to common stockholders for the third quarter of fiscal 2013 was $13.9 million, compared to $12.7 million in the third quarter last year. Earnings per diluted share for the third quarter of fiscal 2013 were $0.66 compared to $0.61 per diluted share in the third quarter last year. Fiscal 2013 First Nine Months Results For the nine months ended October 31, 2012, revenue increased 34.4% to $1.41 billion from $1.05 billion for the same period last year. Gross margin for the first nine months of fiscal 2013 was 16.6%, compared to 17.4% in the same period last year. Pre-tax income for the first nine months of fiscal 2013 was $44.9 million for a pre-tax margin of 3.2%, compared to $43.9 million, or a pre-tax margin of 4.2%, for the same period last year. Net income attributable to common stockholders for the first nine months of fiscal 2013 was $26.6 million, or $1.27 per diluted share, compared to $26.1 million, or $1.31 per diluted share, for the same period last year. The nine-month weighted average diluted common shares outstanding for the first nine months of fiscal 2013 was 21.0 million, compared to 19.9 million weighted average diluted common shares outstanding in the same period last year. Balance Sheet The Company ended the third quarter of fiscal 2013 with cash and cash equivalents of $115.7 million. The Company’s inventory level was $1.05 billion as of October 31, 2012, compared to $748.0 million at the end of fiscal 2012. This inventory level primarily reflected an increase in new equipment, which increased to $726.9 million at October 31, 2012 from $445.5 million at January 31, 2012, while used equipment decreased slightly to $218.4 million at October 31, 2012 from $219.8 million at January 31, 2012. The Company expects its new equipment inventory will decrease, excluding acquisitions, during the fourth quarter of fiscal 2013. The Company will continue to manage used equipment levels and valuations regularly but due to seasonally higher new equipment demand in the fourth quarter of the year, the Company anticipates the used equipment inventory level to increase by the end of fiscal 2013. The Company had available $188.9 million of its $925.0 million total discretionary floorplan lines of credit as of October 31, 2012. Acquisitions & New Store Openings In fiscal 2013 to date, the Company completed seven acquisitions, consisting of six agriculture equipment dealership locations in the United States, five construction equipment dealership locations in the United States, one independent rental yard location in the United States, and seven agriculture equipment dealership locations in Europe. The Company also opened a new construction dealership in Windsor, Colorado and three new agriculture dealership locations in Romania. In addition, the Company contracted with CNH to distribute Case Construction equipment in Romania and Bulgaria and to distribute CaseIH Agricultural products in Ukraine. Management Comments David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, “In the third quarter, we generated solid top and bottom line growth and ended the quarter with a strong balance sheet. Our Agriculture segment continued to maintain strong sales activity, despite the impact of drought conditions on customer sentiment, and we also successfully managed our margins, leveraged expenses and improved our Agriculture pre-tax income by 30% compared to the prior year quarter. Our Construction business also experienced solid top line growth, but increased equipment inventory levels across this industry as well as our recent strategic acquisitions in large metro areas have pressured the bottom line results of this segment. Based on our year-to-date results and outlook for the final quarter of the year, we are raising our annual revenue range and reiterating our earnings per share outlook.” Mr. Meyer continued, “As we enter the fourth quarter we expect our inventory management strategy will reduce new equipment inventory levels by the end of fiscal 2013. In addition, we expect to improve the construction segment of our business which will enable us to generate stronger operating results in the fourth quarter. We have executed on our organic and acquired growth strategy with strategic acquisitions, both in the United States and internationally. We recently expanded our domestic footprint into Arizona with the acquisition of Falcon Power. We are excited about our growing dealership network and are confident that our new locations will contribute to our future top and bottom line growth.” Fiscal 2013 Outlook 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. The Company is raising its previous revenue guidance and expects its revenue for the full year ending January 31, 2013 to be in the range of $2.0 billion to $2.15 billion from the previous range of $1.95 billion to $2.1 billion. Net income attributable to common stockholders is expected to be in the range of $44.1 million to $48.3 million. Earnings per diluted share is expected to be in the range of $2.10 to $2.30 based on estimated weighted average diluted common shares outstanding of 21.0 million. For comparative purposes, the Company generated revenue of $1.66 billion in fiscal year 2012 and net income attributable to common stockholders for fiscal 2012 was $43.8 million, or $2.18 per diluted share, based on weighted average diluted common shares outstanding of 20.1 million. 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). 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 30 days following the audio webcast. Investors interested in participating in the live call can dial (888) 417-8516 from the U.S. International callers can dial (719) 325-2484. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, December 20, 2012, by dialing (877) 870-5176 from the U.S., or (858) 384-5517 from international locations, and entering confirmation code 7983584. About Titan Machinery Inc. Titan Machinery Inc., founded in 1980 and headquartered in West Fargo, North Dakota, is a multi-unit business with mature locations and newly-acquired locations. The Company owns and operates a network of full-service agricultural and construction equipment stores in the United States and Europe. The Titan Machinery network consists of 104 North American dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin, Colorado, and Arizona, including two outlet stores, and 12 European dealerships in Romania and Bulgaria. The Titan Machinery dealerships represent one or more of the CNH Brands (NYSE: CNH), a majority-owned subsidiary of Fiat Industrial (Milan: FI.MI), including CaseIH, New Holland Agriculture, Case Construction, New Holland Construction, Kobelco and CNH 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. Forward-looking statements made herein, which include statements regarding new and used equipment inventory levels, additional growth and domestic and international acquisition opportunities and the Company’s ability to capitalize on such opportunities, growth and profitability expectations, and the expected results of operations for the fiscal year ending January 31, 2013 and the components of such expected results of operations, involve known and unknown risks and uncertainties that may cause Titan Machinery’s actual results in current or future periods to differ materially from forecasted results. The Company’s risks and uncertainties include, among other things, 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 Construction segment, the uncertainty and fluctuating conditions in the capital and credit markets, difficulties in conducting international operations, governmental agriculture policies, seasonal fluctuations, climate 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. 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. Titan Machinery disclaims any obligation to update such factors or to publicly announce results of revisions to any of the forward-looking statements contained herein to reflect future events or developments. TITAN MACHINERY INC. Consolidated Balance Sheets (in thousands, except per share data) October 31, January 31, 2012 2012 ASSETS (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 115,668 $ 79,842 Receivables, net 96,568 82,518 Inventories 1,048,004 748,047 Prepaid expenses and other 4,225 2,108 Income taxes receivable - 3,140 Deferred income taxes 5,182 5,370 Total current assets 1,269,647 921,025 INTANGIBLES AND OTHER ASSETS Noncurrent parts inventories 3,480 2,792 Goodwill 29,547 24,404 Intangible assets, net of accumulated 12,477 10,793 amortization Other 7,641 2,776 Total intangibles and other assets 53,145 40,765 PROPERTY AND EQUIPMENT, net of accumulated 185,656 126,282 depreciation TOTAL ASSETS $ 1,508,448 $ 1,088,072 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 34,597 $ 28,424 Floorplan notes payable 782,357 552,428 Current maturities of long-term debt 10,123 4,755 Customer deposits 25,063 49,540 Accrued expenses 32,527 26,735 Income taxes payable 5,023 - Total current liabilities 889,690 661,882 LONG-TERM LIABILITIES Senior convertible notes 124,887 - Long-term debt, less current maturities 69,345 57,405 Deferred income taxes 38,656 28,592 Other long-term liabilities 1,870 2,854 Total long-term liabilities 234,758 88,851 STOCKHOLDERS' EQUITY Common stock, par value $.00001 per share; authorized - 45,000 shares, issued and outstanding - 21,047 at October 31, 2012 and authorized - 25,000 shares, issued and outstanding - - - 20,911 at January 31, 2012 Additional paid-in-capital 235,892 218,156 Retained earnings 145,118 118,251 Accumulated other comprehensive loss (631 ) (70 ) Total Titan Machinery Inc. stockholders' 380,379 336,337 equity Noncontrolling interest 3,621 1,002 Total stockholders' equity 384,000 337,339 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,508,448 $ 1,088,072 TITAN MACHINERY INC. Consolidated Statements of Operations (in thousands, except per share data) Three Months Ended Nine Months Ended October 31, October 31, 2012 2011 2012 2011 (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUE Equipment $ 456,168 $ 312,304 $ 1,084,866 $ 786,816 Parts 72,101 64,468 188,840 155,670 Service 33,365 29,843 93,583 76,202 Rental and 20,478 16,345 46,617 33,286 other TOTAL REVENUE 582,112 422,960 1,413,906 1,051,974 COST OF REVENUE Equipment 414,028 283,690 985,397 711,421 Parts 49,266 44,389 130,276 108,535 Service 11,611 10,304 32,448 27,175 Rental and 13,148 10,580 30,953 22,192 other TOTAL COST OF 488,053 348,963 1,179,074 869,323 REVENUE GROSS PROFIT 94,059 73,997 234,832 182,651 OPERATING 63,950 50,060 175,313 133,556 EXPENSES INCOME FROM 30,109 23,937 59,519 49,095 OPERATIONS OTHER INCOME (EXPENSE) Interest and 258 307 865 859 other income Floorplan interest (3,704 ) (2,625 ) (9,022 ) (5,121 ) expense Other interest (2,886 ) (283 ) (6,453 ) (899 ) expense INCOME BEFORE 23,777 21,336 44,909 43,934 INCOME TAXES PROVISION FOR (9,418 ) (8,536 ) (17,786 ) (17,575 ) INCOME TAXES NET INCOME INCLUDING NONCONTROLLING 14,359 12,800 27,123 26,359 INTEREST LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING 298 - 256 - INTEREST NET INCOME ATTRIBUTABLE TO TITAN $ 14,061 $ 12,800 $ 26,867 $ 26,359 MACHINERY INC. NET INCOME ALLOCATED TO PARTICIPATING (150 ) (113 ) (270 ) (238 ) SECURITIES NET INCOME ATTRIBUTABLE TO COMMON $ 13,911 $ 12,687 $ 26,597 $ 26,121 STOCKHOLDERS EARNINGS PER SHARE - $ 0.66 $ 0.61 $ 1.27 $ 1.31 DILUTED WEIGHTED AVERAGE COMMON 20,988 20,890 20,982 19,903 SHARES - DILUTED TITAN MACHINERY INC. Segment Results (in thousands) Three Months Ended October 31, Nine Months Ended October 31, 2012 2011 % Change 2012 2011 % Change (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue Agriculture $ 503,518 $ 361,601 39.2 % $ 1,200,148 $ 914,932 31.2 % Construction 94,852 77,435 22.5 % 271,728 181,395 49.8 % Segment 598,370 439,036 36.3 % 1,471,876 1,096,327 34.3 % revenue Eliminations (16,258 ) (16,076 ) (1.1 %) (57,970 ) (44,353 ) (30.7 %) Total $ 582,112 $ 422,960 37.6 % $ 1,413,906 $ 1,051,974 34.4 % Income Before Income Taxes Agriculture $ 26,060 $ 20,068 29.9 % $ 50,971 $ 43,964 15.9 % Construction 519 3,254 (84.1 %) 767 4,482 (82.9 %) Segment income 26,579 23,322 14.0 % 51,738 48,446 6.8 % before income taxes Shared (2,340 ) (1,772 ) (32.1 %) (4,843 ) (3,786 ) (27.9 %) Resources Eliminations (462 ) (214 ) (115.9 %) (1,986 ) (726 ) (173.6 %) Total $ 23,777 $ 21,336 11.4 % $ 44,909 $ 43,934 2.2 % Note: The Company reports its revenue and income before income taxes at the segment level before inter-company eliminations. Contact: Investor Relations Contact: ICR, Inc. John Mills Senior Managing Director 310-954-1105 firstname.lastname@example.org
Titan Machinery Inc. Announces Fiscal Third Quarter Ended October 31, 2012 Results
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