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Titan Machinery (TITN) Q4 Earnings & Revenues Beat Estimates

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Titan Machinery Inc.’s TITN fourth-quarter fiscal 2021 adjusted earnings per share were 23 cents, which marked a substantial improvement from earnings of 2 cents per share in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of 17 cents by a margin of 35%. The improved performance was mainly due to the strength in the Agriculture segment.

On a reported basis, the company delivered earnings per share of 3 cents in the reported quarter, flat with the prior-year quarter.

Total revenues in the quarter were $437 million, up 24% from the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $377 million. Equipment revenues rose 5% year over year to $354 million, while parts revenues dipped 5% to $49.8 million. Revenues generated from service were $22.9 million in the reported quarter, up 5% from the last year quarter. However, rental revenues slumped 29% to $9.9 million.

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

Costs and Margins

Cost of sales was up 27% to $369 million from the prior-year quarter. Gross profit increased 11% year over year to $68 million. Gross margin was 15.5% compared with 17.4% in the year-ago quarter mainly due to an unfavorable mix. In the fourth quarter of fiscal 2021, the company witnessed a greater proportion of equipment revenues compared with the year-ago quarter, while the proportion of parts and service revenues (which carry higher margins) came in lower than the fourth quarter last year. This impacted margins in the quarter under review.

Operating expenses inched up 0.7% year over year to $60.5 million. Adjusted EBITDA improved 69% year over year to $13.7 million. Adjusted EBITDA margin in the quarter was 3.1% compared with 2.3% in the prior-year quarter.

Segment Performance

The Agriculture segment’s revenues rose 41% to $303 million from $215 million in the year-ago quarter. The segment’s adjusted income before taxes soared 214% year over year to around $8 million.

The Construction segment’s revenues rose 2% year over year to $89 million in fourth-quarter fiscal 2021. The segment reported adjusted income before taxes of $0.6 million, which was a turnaround from the loss of $1 million in the fourth quarter of fiscal 2020.

The International segment’s revenues were $44.6 million compared with $48.2 in the year-ago quarter. The segment reported an adjusted loss before taxes of $2.7 million compared with a loss of $2.3 million in the fourth quarter of fiscal 2020.

Financial Position

Titan Machinery generated a record adjusted operating cash flow of $148.5 million in fiscal 2021, reflecting a significant improvement from $17.8 million in the prior fiscal year. The company ended fiscal 2021 with a cash balance of $79 million compared with $44 million at the end of fiscal 2020.
Long-term debt as of Jan 31, 2021, was $45 million compared with $38 million as of Jan 31, 2020.

Fiscal 2021 Results

Titan Machinery reported adjusted earnings per share of $1.26 in fiscal 2021, up 50% from the prior year’s figure of 84 cents. The bottom line also beat the Zacks Consensus Estimate of $1.18. Including one-time items, the company delivered earnings per share of 86 cents in fiscal 2021 compared with 63 cents in fiscal 2020. Sales were up 8% year over year to $1.4 billion from the prior-year figure of $1.3 billion and also surpassed the Zacks Consensus Estimate of $1.35 billion.

Guidance for fiscal 2022

Titan Machinery expects the Agriculture segment’s revenues to increase 10-15% and the International segment’s revenues to go up 12-17% in fiscal 2022, both on a year-over-year basis. The Construction segment’s revenues are expected to be down 0-5% from fiscal 2020. The company expects adjusted earnings per share between $1.25 and $1.45 in fiscal 2022. The mid-point of the guided range reflects year-over-year growth of 7%.

Share Price Performance

Over the past year, shares of Titan Machinery have gained 42.8% compared with the industry’s growth of 39.0%.

Zacks Rank & Stocks to Consider

Titan Machinery currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industrial products sector are AGCO Corporation AGCO, Astec Industries, Inc. ASTE and Caterpillar Inc. CAT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AGCO Corporation has an expected earnings growth rate of 30% for the current fiscal year. The company’s shares have gained around 43% in the past three months.

Astec Industries has a projected earnings growth rate of 14.3% for the current fiscal year. The stock has appreciated around 28% over the past three months.

Caterpillar has an estimated earnings growth rate of 21.8% for the current fiscal year. The company’s shares have rallied nearly 28% over the past three months.

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