Titan Machinery, a construction and agricultural equipment dealer with a growing rental program, increased revenue 19.0 percent to $488.2 million in its fiscal second quarter, compared to revenue of $410.1 million in the second quarter last year. All four of the company’s revenue sources — equipment, parts, service, and rental and other — contributed to this period-over-period revenue growth.
Rental revenue and other increased to $19.3 million for the second quarter of fiscal 2014 from $15.5 million in the second quarter last year, a 24.5-percent hike.
“We continue to see growth in rental demand, which is aligned with industry forecast,” David Meyer, founder, chairman and CEO told an investor conference call. “We have increased the size of our rental fleet by 41 percent and have been able to maintain a similar utilization rate year over year. We're in the process of making facility improvements to support growth in key markets.”
Equipment sales were $358.4 million for the second quarter of fiscal 2014, compared to $306.2 million in the second quarter last year. Parts sales were $70.6 million for the second quarter, compared to $57.9 million in the year-ago period. Revenue generated from service was $39.9 million for the second quarter, compared to $30.5 million in Q213.
Gross profit for the fiscal quarter was $83.5 million, compared to $70.4 million in the second quarter last year. The company’s gross profit margin was 17.1 percent in the second quarter of fiscal 2014, compared to 17.2 percent in the second quarter last year. Gross profit from parts, service, and rental and other for the second quarter of fiscal 2014 was 65 percent of overall gross profit and increased to $54.2 million from $43.5 million in the second quarter last year. Solid performance from parts, service, rental and other was offset by softer equipment margins.
“Regarding our Construction segment, we continue to focus on implementing and executing on key initiatives to drive top- and bottom-line improvements for this segment of our business,” said Meyer. “Overall industry conditions remain challenging, but we are confident that we are on the right track to improve this segment of our business and continue to believe that it will be a key structural component of our top and bottom line growth long-term.
“Given the challenges we are facing in both agriculture and construction industries, we are reducing our revenue, net income, and earnings per share expectations for fiscal 2014. This year we have slowed our acquisition pace and are focused on integrating our recent acquisitions into our distribution network and positioning our business to achieve better leverage going forward. We remain confident in the long-term profitable growth potential for Titan Machinery due to our proven operating model and healthy balance sheet.”
For the six months ended July 31, revenue increased 11.8 percent to $929.9 million from $831.8 million for the same period last year. Gross profit margin for the first six months of fiscal 2014 was 16.9 percent, flat compared to the same period last year.
Based in West Fargo, N.D., Titan Machinery is No. 36 on the RER 100.