01 Dec

Equipment Dealer Posts Record 88% Increase in Q3 EPS

December 1, 2022

Source: Streetwise Reports  (12/1/22)

Shares of Titan Machinery Inc. traded 26% higher yesterday to a new 52-week high after the company reported Q3/23 financial results, highlighting a 47.3% YoY increase in revenue. The firm additionally raised its full-year revenue and earnings estimates.

Agricultural and construction equipment dealer

Titan Machinery Inc. (TITN:NASDA), which owns and operates more than 100 full-service stores in the U.S. and Europe, yesterday announced financial results for the third quarter of 2023, which ended October 31, 2022.

The company’s Chairman and CEO, David Meyer, led off the report by stating, “We delivered another consecutive quarter of record financial results, with third-quarter earnings per share of US$1.82. The ongoing strength of the agriculture sector combined with our customer-centric focus drove consolidated revenue growth of 47%, which was supported by strong contributions across each of our revenue streams – equipment, parts, and service . . . Given these strong third-quarter results, coupled with our expectations for the solid market fundamentals continuing through the fourth quarter, we are increasing our earnings per share modeling assumption for the fiscal year 2023 to a midpoint of US$4.70 per share.”

Gross profit in Q3/23 rose to US$139.6 million (20.9%), up from US$92.5 million (20.4%) in Q3/22. The company indicated that the increases were due mostly to stronger margins from equipment sales.

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The firm reported that total revenue during Q3/23 increased by 47.3% to US$668.8 million, compared to US$454.0 million in Q3/22.

Revenues across almost all business segments increased versus the same period in the prior year and consisted of US$509.0 million from Equipment sales, US$108.7 million from parts sales, US$39.0 from Service, and US$12.1 million from rental and other sales.

Gross profit in Q3/23 rose to US$139.6 million (20.9%), up from US$92.5 million (20.4%) in Q3/22. The company indicated that the increases were due mostly to stronger margins from equipment sales.

Titan Machinery reported that for Q3/23, it recorded a net income of US$41.3 million, or US$1.83 per diluted share, versus a net income of US$21.8 million, or US$0.97 per share in Q3/22.

The firm added that during Q3/23, adjusted EBITDA increased by 80% to US$63.5 million, compared to US$35.3 million in Q3/22.

The company advised that in Q3/23, agriculture segment revenues grew to US$493.3 million, compared to US$281.5 million in Q3/22. The firm said the gains were the result of a combination of positive organic growth and contributions from three separate company acquisitions.

Titan added that during Q3/23, construction segment revenues increased to US$86.4 million, up from US$79.7 million in Q3/22, driven by increased demand for equipment, and listed that it posted revenues of US$89.0 million in its international segment.

CEO Meyer commented further that “The momentum in our business continues to be visible across all aspects of Titan Machinery, as favorable industry conditions combine with several years of operational improvements and solid growth through accretive and strategic acquisitions . . . Looking ahead, we are very well positioned to serve the strong industries that we operate in with our robust balance sheet and powerful operational performance.”

The company offered some upward adjusted forward guidance and stated that for FY/23, it expects that agriculture revenue will be up 55-60% year-over-year, compared to its prior estimates of 50-55%. The firm stated that construction revenue is expected to decrease by 0-5% y-o-y, and international segment revenue is also projected to be down by 0-5% y-o-y. Titan Machinery added that for FY/23, it now expects it will have diluted earnings per share (EPS) of US$4.55-4.85. Prior estimates called for diluted EPS of US$3.70-4.00.

Titan Machinery owns and operates full-service agricultural and construction equipment dealer locations in North America and Europe. The company is based in West Fargo, N.D., and offers products and services to farmers, ranchers, and other commercial customers from its network of over 100 dealer locations in Europe and 13 U.S. midwestern and western states.

The firm’s international stores are located in Bulgaria, Germany, Romania, and Ukraine. Titan noted that each of its store locations represents one or more of CNH Industrial N.V.’s (CNHI:NYSE; CNHI:MI) equipment brands, including Case Construction, Case IH, CNH Capital, New Holland Agriculture, and New Holland Construction.

Titan Machinery started the day with a market cap of around US$787.17 million yesterday with approximately 22.57 million shares outstanding. TITN shares opened 15% higher yesterday at US$40.20 (+US$5.32, +15.25%) over the previous day’s US$34.88 closing price and reached a new 52-week high price yesterday afternoon of US$44.29. The stock traded yesterday between US$38.31 and US$44.29 per share and closed for trading at US$44.03 (+US$9.15, +26.23%).

Disclosures:

1) Stephen Hytha wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

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