Titan Machinery, a network of full-service agricultural and construction equipment stores, last week reported financial results for the second quarter and first six months ended July 31. For the second quarter of fiscal 2012, revenue increased 48.3 percent to $310.8 million from revenue of $209.7 million in the second quarter last year.
All three of the company’s main revenue sources — equipment, parts and service — contributed to this period-over-period revenue growth. Equipment sales were $225.3 million for the second quarter of fiscal 2012, compared to $153.1 million in the second quarter last year. Parts sales were $49.3 million for the second quarter of fiscal 2012, compared to $33.9 million in the second quarter last year. Revenue generated from service was $25.4 million for the second quarter of fiscal 2012, compared to $17.5 million in the second quarter last year.
“We are pleased with the performance of our business in the first half of fiscal 2012, as both organic and acquired growth contributed to our improved results,” said David Meyer, chairman and CEO. “In addition, we are encouraged by improvements in the construction industry, as well as the positive impact from our internal improvements to this segment of our business.”
Gross profit for the second quarter of fiscal 2012 was $55.9 million, compared to $36.0 million in the second quarter of last year. The company’s gross profit margin increased to 18 percent in the second quarter of fiscal 2012, compared to 17.2 percent in the second quarter last year, due to higher gross margins for service, rental and other. Gross profit from parts and service revenue for the second quarter of fiscal 2012 increased to $31.3 million from $20.3 million in the second quarter of last year.
Net income for the second quarter of fiscal 2012 was $6.3 million, compared to net income of $2.7 million in the second quarter last year. Earnings per diluted share for the second quarter of fiscal 2012 was $0.30 on approximately 20.8 million weighted average diluted shares outstanding compared to $0.15 on approximately 18.1 million weighted average diluted shares outstanding in the second quarter last year. The increase in weighted average diluted shares outstanding was primarily due to the company’s May 2011 follow-on offering.
For the six months ended July 31, revenue increased 51.5 percent to $629.0 million from $415.1 million for the same period last year. Net income for the first six months of fiscal 2012 was $13.6 million, or $0.69 per diluted share, compared to $4.3 million, or $0.24 per diluted share, in the same period last year.
Titan Machinery ended the second quarter of fiscal 2012 with an inventory level of $622.5 million compared to $429.8 million at the end of fiscal 2011. The increase in inventory primarily reflects an increase in new machinery to support the company’s expected increased sales volume in the second half of fiscal 2012.
On May 11, the company completed its follow-on offering of common stock at a price of $28.75 per share. The underwriters exercised, in full, their option to purchase up to an additional 360,000 shares to cover over-allotments, resulting in a total sale of 2.76 million shares of common stock. The company intends to use the net proceeds of $74.9 million from the offering for strategic acquisitions and business development initiatives, working capital and general corporate purposes.
In the second quarter, the company completed two acquisitions, consisting of six construction equipment dealerships, and completed its previously announced consolidation of its Belgrade, Mont., location into its Bozeman, Mont., location, which was planned after its acquisition of independent rental company ABC Rental in April. In addition, subsequent to the end of the second quarter of fiscal 2012, the company completed two acquisitions consisting of two agriculture equipment locations, opened one new construction equipment dealership in Dickinson, N.D., and consolidated and closed its Elk River, Minn., location.
“Year-to-date, we have made solid progress in expanding our footprint in the Upper Midwest, as we completed seven strategic acquisitions, including establishing our first store in Wisconsin, and expanded our exposure to the Bakken and Three Forks oil formations with the addition of another construction store,” Meyer said.
Based on year-to-date results and its outlook for the remainder of fiscal 2012, the company is raising its revenue, net income and diluted earnings per share guidance range for the full year ending Jan. 31, 2012. The company now expects to achieve revenue for the full year in a range of $1.33 billion to $1.41 billion compared to the previous estimate of $1.31 billion to $1.39 billion. Earnings per diluted share are now expected to be in the range of $1.56 to $1.66 compared to the previous range of $1.53 to $1.63 based on estimated weighted average diluted shares outstanding of 20.4 million.Headquartered in West Fargo, N.D., Titan Machinery owns and operates a network of full-service agricultural and construction equipment stores in the United States. The Titan Machinery network consists of 89 dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming and Wisconsin, including two outlet stores, representing one or more of the CNH brands.