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Titan Machinery (TITN) Tops Q2 Earnings Estimates, Ups FY23 View

·5 min read

Titan Machinery Inc. TITN reported adjusted earnings per share (EPS) of $1.10 in second-quarter fiscal 2023 (ended Jul 31, 2022), beating the Zacks Consensus Estimate of 71 cents. The bottom line increased 96% from EPS of 56 cents reported in the year-ago quarter. The upside can be attributed to solid performances across all three segments, namely Agricultural, Construction and International.

On a reported basis, TITN delivered an EPS of $1.10 in the quarter, marking the highest quarterly earnings performance in the company’s history. The bottom line surged 120% year over year.

Total revenues in the reported quarter were $496.5 million, up 32% from the year-ago quarter’s levels. The top line surpassed the consensus mark of $488 million.

Equipment revenues rose 38% year over year to $375 million, while parts revenues were up 19% to $78 million. Revenues generated from service were $33 million in the reported quarter, up 12% from the year-ago quarter’s levels. Meanwhile, rental revenues were up 4% year over year to $10.3 million.

Costs and Margins

Cost of sales was up 30% to $394 million from the prior fiscal year’s quarterly reading. Gross profit increased 37% year over year to $103 million. Gross margin was 20.6%, up from 19.8% in the last fiscal year’s quarter, driven by strong equipment margins, partially offset by revenue mix.

Operating expenses increased 20% from the earlier fiscal year’s tally to $69 million. Adjusted EBITDA surged 71% year over year to $40 million. Adjusted EBITDA margin in the fiscal second quarter was 8% compared with 6% 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 59% to $349 million from the last fiscal year’s comparable quarter on strong demand. The segment’s income before taxes flared up 106% year over year to $25 million.

Construction revenues were $70 million in the fiscal second quarter, down 13% from the comparable quarter in the prior fiscal year. Same-store sales increased 15% on strong equipment demand, offset by the lost contributions from the divestiture of construction stores in Montana and Wyoming and consumer products stores in North Dakota. The segment reported income before taxes of $3.9 million, up from the prior-year quarter’s $2.8 million.

International revenues were $78 million compared with the year-ago quarter’s $77 million. The segment reported income before taxes of $5.9 million compared with $0.4 million reported in the previous year’s quarter.

Financial Position

Cash used for operating activities was $21 million in the first half of fiscal 2023 compared with cash generation of $28 million in the prior-year period. Titan Machinery ended the reported quarter with a cash balance of around $142 million. Long-term debt, as of Jul 30, 2022, was around $87 million compared with $75 million as of Jan 31, 2022.

Guidance for Fiscal 2023

Titan Machinery now expects Agriculture revenues to increase 50-55% in fiscal 2023, up from the previous guidance of 37-42%. The Construction segment’s revenue growth is projected to be down 5-10% from the last fiscal year’s actuals. It suggests an improvement from the 10-15% decline expected earlier. The International segment’s revenues are expected to decline by 0-5%. TITN expects EPS for fiscal 2023 to be between $3.70 and $4.00, up from the previous guidance of $2.90-$3.20.

Share Price Performance

In the past year, shares of Titan Machinery have gained 11.6% compared with the industry’s growth of 6.8%.

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Zacks Rank & Other Stocks to Consider

Titan Machinery currently carries a Zacks Rank #1 (Strong 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 Tecnoglass TGLS, Costco COST and Sprouts Farmers SFM.

Tecnoglass, a leading manufacturer of architectural glass, windows and associated aluminum products serving the global residential and commercial end markets, presently sports a Zacks Rank #1. TGLS has a trailing four-quarter earnings surprise of 24.4%, on average.

The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and EPS suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s reported numbers.

Costco, which is engaged in the operation of membership warehouses, carries a Zacks Rank #2 (Buy). COST has an expected EPS growth rate of 9.2% for three to five years.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 15.4% and 18.2%, respectively, from the year-ago period. COST has a trailing four-quarter earnings surprise of 9.7%, on average.

Sprouts Farmers, which provides fresh, natural and organic food products, currently carries a Zacks Rank #2. SFM has an expected EPS growth rate of 7.4% for three to five years.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year revenues and EPS suggests growth of 4.3% and 5.2%, respectively, from the year-ago reported figure. Sprouts Farmers has a trailing four-quarter earnings surprise of 15.6%, on average.


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