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Titan Machinery (TITN) Beats on Q3 Earnings, Hikes '22 View

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Titan Machinery Inc. TITN reported third-quarter fiscal 2022 (ended as of Oct 31, 2021) adjusted earnings per share (EPS) of 96 cents, up 81% year over year. The upside can be attributed to solid performance across all three segments — Agricultural, Construction and International. Earnings also beat the Zacks Consensus Estimate of 61 cents.

On a reported basis, the company delivered EPS of 97 cents in the reported quarter compared with 44 cents in the prior-year quarter.

Total revenues in the quarter were $454 million, up 26% from the year-ago quarter’s levels. The top line also surpassed the consensus mark of $430 million. Equipment revenues rose 37% year over year to $329.8 million and parts revenues were up 5% to $81 million. Revenues generated from service were $32 million in the reported quarter, up 4.6% from the year-ago quarter’s levels. However, rental revenues declined 7.2% year over year to $12 million.

Costs and Margins

Cost of sales was up 25% to $361 million from the prior-year quarter’s figure. Gross profit increased 26% year over year to $92.5 million. The gross margin was 20.4% compared with 20.1% in the year-ago quarter.

Operating expenses increased 16% year over year to $63 million due to higher variable expenses on increased revenues. Adjusted EBITDA increased 42% year over year to $35 million. Adjusted EBITDA margin in the quarter was 7.8% compared with 6.8% in the prior-year quarter.

Titan Machinery Inc. Price, Consensus and EPS Surprise

Titan Machinery Inc. Price, Consensus and EPS Surprise
Titan Machinery Inc. Price, Consensus and EPS Surprise

Titan Machinery Inc. price-consensus-eps-surprise-chart | Titan Machinery Inc. Quote

Segmental Performance

Agriculture revenues rose 28% to $282 million from $221 million in the year-ago quarter, driven by strong demand for equipment. The segment’s adjusted income before taxes rose 42% year over year to around $20 million.

Construction revenues were $79.7 million in the fiscal third quarter compared with the year-ago quarter’s $79 million. Same-store sales increased on strong equipment demand, offset by the lost contributions from the company's Arizona stores following the January 2021 divestiture. The segment reported adjusted income before taxes of $3.6 million compared with the prior-year quarter’s $1.4 million.

International revenues were $93 million, reflecting growth of 51.4% from the year-ago quarter’s levels, attributable to strong equipment sales. The segment reported an adjusted income before taxes of $6.1 million compared with $0.2 million in the year-ago quarter.

Financial Position

Cash generated from operating activities was $72 million in the nine-months period ended on Oct 31, 2021, compared with the prior-year $61 million. Titan Machinery ended third-quarter fiscal 2022 with a cash balance of around $91 million compared with $79 million at the end of fiscal 2021. Long-term debt as of Oct 31, 2021, was around $71 million compared with $45 million as of Jan 31, 2021.

Guidance Raised for Fiscal 2022

Titan Machinery now expects Agriculture revenues to increase 23-28% year over year compared with its previous guidance of 18-23% growth. The Construction segment’s year-over-year revenue growth is projected to be 2-7%, in line with the previous guidance. The International segment’s revenues are expected to increase 35-40% year over year in fiscal 2022, up from the prior guidance of 27-32% growth.

Backed by the ongoing momentum in its markets, the company expects EPS for fiscal 2022 between $2.40 and $2.60, higher than the previous range of $2.00-$2.20.

Share Price Performance

In the past year, shares of Titan Machinery have gained 106.6% compared with the industry’s growth of 44.9%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank & Other Stocks to Consider

Titan Machinery currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the Retail - Wholesale sector are Boot Barn Holdings BOOT, Tractor Supply Company TSCO and Costco COST. While Boot Barn and Tractor Supply sport a Zacks Rank #1, Costco carries a Zacks Rank #2.

Boot Barn has an expected earnings growth rate of around 183% for fiscal 2022. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised 24% upward in the past 60 days to $5.44 per share, suggesting year-over-year growth of 183.3%.

Boot Barn’s shares have surged 202.1% in the past year. The company has a trailing four-quarters earnings surprise of 35.3%, on average.

Tractor Supply Company has a projected earnings growth rate of around 24% for 2021. The Zacks Consensus Estimate for current-year earnings has been revised upward by 7.8% in the past 60 days to $8.51 per share, calling for a year-over-year rise of 23.8%.

The company’s shares have appreciated 70.1% in a year. Tractor Supply Company has a trailing four-quarter earnings surprise of 22.8%, on average. It has a long-term earnings growth of 9.6%.

Costco has an estimated earnings growth rate of around 9.7% for the fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 3.8% to $12.15 per share, indicating a year-over-year increase of 9.7%.

The company’s shares have returned 45.3% in the past year. Costco has a trailing four-quarter earnings surprise of 7.7%, on average. It has a long-term earnings growth of 8.6%.


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