Titan Machinery, a network of full-service agricultural and construction equipment stores, last week reported financial results for the fiscal third quarter and first nine months ended Oct. 31 and also reaffirmed its plan to expand its rental business. For the third quarter of fiscal 2012, revenue increased 35.9 percent to $423.0 million from revenue of $311.3 million in the third 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 $312.3 million for the third quarter of fiscal 2012, compared to $241.1 million in the third quarter last year. Parts sales were $64.5 million for the third quarter of fiscal 2012, compared to $42.0 million in the third quarter last year. Revenue generated from service was $29.8 million for the third quarter of fiscal 2012, compared to $20.8 million in the third quarter last year.
“We are pleased with our year-to-date results, as we are positioned to deliver another record year of revenue and net income for Titan Machinery,” said David Meyer, Titan Machinery’s chairman and CEO. “Our strong financial performance in the third quarter was driven by solid execution on all fronts. Our Construction segment grew significantly compared to the year-ago period; a $3.4 million pre-tax income improvement. Industry and internal operating improvements positively impacted this segment, as well as our initiative to expand the rental business.”
Gross profit for the third quarter of fiscal 2012 was $74.0 million, compared to $48.0 million in the third quarter of last year. The company’s gross profit margin increased to 17.5 percent in the third quarter of fiscal 2012, compared to 15.4 percent in the third quarter last year, due to increased margins across all revenue streams and a change in sales mix to a larger percentage of revenue coming from higher margin parts, service and rental business. Gross profit from parts and service revenue for the third quarter of fiscal 2012 was 54 percent of overall gross profit and increased to $39.6 million from $26.1 million in the third quarter of last year.
Operating expenses were 11.8 percent of revenue for the third quarter of fiscal 2012 compared to 10.5 percent for the third quarter of last year reflecting a higher portion of overall business coming from our Construction segment, which normally has a higher gross margin but also higher operating expenses. This includes additional expenses associated with the company’s initiative to grow its rental business in the Construction segment. Regarding rentals, although there are higher expenses as a percentage of rental revenues, the higher rental gross profits more than offset the additional operating expenses.
Net income for the third quarter of fiscal 2012 was $12.8 million, compared to net income of $7.7 million in the third quarter last year. For the nine months ended Oct. 31, revenue increased 44.8 percent to $1.05 billion from $726.4 million for the same period last year. Net income for the first nine months of fiscal 2012 was $26.4 million, or $1.31 per diluted share, compared to $12.0 million, or $0.66 per diluted share, in the same period last year.
In the third quarter of fiscal 2012, the company completed two acquisitions, consisting of two agriculture equipment dealerships, opened one new construction equipment dealership in Dickinson, N.D., and consolidated and closed its Elk River, Minn., location.
“As we begin the final quarter of fiscal 2012 and look toward next year, we are well positioned for continued growth and profitability,” said Meyer. “In addition to expanding our footprint in the Upper Midwest through strategic acquisitions and new store openings, we recently announced the acquisition of AgroExpert in Romania, our first international expansion.”
Based on year-to-date results and its outlook for the remainder of fiscal 2012, the company is raising its revenue, net income and earnings per diluted share guidance range for the full year ending Jan. 31, 2012. The company now expects to achieve revenue in a range of $1.43 billion to $1.5 billion compared to the previous estimate of $1.33 billion to $1.41 billion. Net income is now expected to be in the range of $35.9 million to $37.9 million compared to the previous net income range of $31.8 million to $33.9 million. Earnings per diluted share is now expected to be in the range of $1.76 to $1.86 compared to the previous range of $1.56 to $1.66 based on estimated weighted average diluted shares outstanding of 20.4 million.
Titan Machinery, headquartered in West Fargo, N.D., owns and operates a network of full-service agricultural and construction equipment stores in the United States and Europe. It has 91 North American dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming and Wisconsin, as well as two European dealerships in Romania. The Titan Machinery dealerships represent one or more of the CNH Brands, including Case IH, New Holland Agriculture, Case Construction, New Holland Construction, Kobelco and CNH Capital.
