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Titan Machinery Inc (TITN) Reports Record Third Quarter Revenue with Updated Fiscal 2024 Outlook

  • Record third-quarter revenue of $694.1 million, a 3.8% increase year-over-year.

  • Diluted earnings per share (EPS) of $1.32, down from $1.82 in the same quarter last year.

  • Net income for the quarter stood at $30.2 million, compared to $41.3 million in the prior year.

  • EBITDA of $50.1 million, a decrease from $63.2 million in the third quarter of the previous fiscal year.

On November 30, 2023, Titan Machinery Inc (NASDAQ:TITN) released its 8-K filing, announcing financial results for the fiscal third quarter ended October 31, 2023. The company reported a record third-quarter revenue of $694.1 million, marking a 3.8% increase from the $668.8 million reported in the same quarter of the previous year. Despite challenges such as delayed OEM deliveries and increased pre-delivery inspection times due to supply chain issues, TITN achieved growth across its equipment, parts, and service revenues.

Financial Highlights and Segment Performance

Equipment revenue rose to $521.8 million, parts revenue to $115.0 million, and service revenue to $44.8 million. However, gross profit margin experienced a slight dip to 19.9% from 20.9% year-over-year, primarily due to lower equipment and parts margins. Operating expenses increased to $92.1 million, or 13.3% of revenue, up from 12.7% in the previous year, largely due to acquisitions and variable expenses.

The Agriculture Segment saw a revenue increase to $531.4 million, up 7.7% year-over-year, with pre-tax income at $35.1 million. The Construction Segment experienced a decrease in revenue to $77.5 million, with pre-tax income at $4.1 million. The Europe Segment reported a revenue of $85.2 million, with pre-tax income at $5.1 million, impacted by dry conditions and below-average yields in Bulgaria and Romania.

Balance Sheet and Cash Flow

Cash at the end of the quarter was $70.0 million. Inventories rose significantly to $1,071.1 million, reflecting increases in new, used, and parts inventory, including $23.9 million attributable to recent acquisitions. Floorplan payables stood at $705.6 million, with net cash used for operating activities at $82.1 million for the first nine months of the fiscal year.

Management Commentary and Outlook

David Meyer, Chairman and CEO of Titan Machinery, commented on the quarter's achievements, including the acquisition of the O'Connors group and the company's solid financial results. Meyer noted, "We accomplished a great deal this quarter, completing our acquisition of the Australia-based O'Connors group and solidifying our leadership succession plan, while delivering solid financial results." He also highlighted the company's commitment to customer uptime and service needs.

We expect year-over-year revenue growth in each of our segments in the fourth quarter, and we have narrowed the range of our revenue modeling assumptions to reflect our latest expectations for fourth quarter OEM deliveries and demands on our service departments.

For Fiscal 2024, TITN updated its revenue modeling assumptions, expecting Agriculture Segment revenue to increase by 20-23%, Construction Segment by 4-7%, Europe Segment by 4-7%, and Australia Segment (O'Connors) to contribute $70-80 million. The diluted EPS is projected to be between $4.60 and $5.25.

Investor Relations and Non-GAAP Measures

The company will host a conference call and audio webcast to discuss the results. Additionally, the press release includes a reconciliation of non-GAAP financial measures, such as EBITDA, to the most directly comparable GAAP financial measures, providing a clearer understanding of the company's financial performance.

Titan Machinery Inc (NASDAQ:TITN), with its network of full-service agricultural and construction equipment stores across North America, Europe, and Australia, continues to navigate industry challenges while focusing on strategic growth and customer service excellence.

Explore the complete 8-K earnings release (here) from Titan Machinery Inc for further details.

This article first appeared on GuruFocus.