Titan Machinery rents sells and services equipment from Case and other manufacturers

Titan Machinery Continues Downward Revenue Trend in Fiscal Second Quarter

Aug. 26, 2016

Titan Machinery, a network of full-service agricultural and construction equipment store posted $278.3 million in revenue for the second quarter of fiscal 2017 compared to $334.2 million in the second quarter of fiscal 2016, a 16.7-percent decrease. Revenue from rental and other, which is primarily rental, was $15.4 million for the quarter, compared to $18.3 million in the year-ago quarter, a 15.8-percent slide.

Michael Roth

Equipment sales declined 21.6 percent from $221 million a year ago to $173.3 million in the recently concluded quarter. Parts sales declined a more modest 6.1 percent from $62.1 million a year ago to $58.3 million, while revenue generated from service was almost flat, dropping from $32.8 million to $31.3 million.

Gross profit for the second quarter of fiscal 2017 was $52.9 million compared to $62.1 million in the year-ago period, reflecting a decrease in revenue. Gross profit from parts, service and rental and other for the second quarter of fiscal 2017 was 76.6 percent compared to 71.2 percent a year ago.

For the first six months of the fiscal year, revenue was $563.2 million compared to $687.4 million for the same period a year ago, an 18-percent decline.

“In the second quarter, we focused on managing the controllable aspects of our business to best navigate the challenging operating environment,” said David Meyer, Titan Machinery’s chairman and CEO. “We continue to concentrate on our inventory reduction, its positive impact on our balance sheet and expect to achieve the $100 million inventory reduction goal for fiscal 2017. We reduced used inventory in the first half of fiscal 2017 by $39 million or 15 percent and through the first six months of this year we exceeded our target by $13 million or 40 percent on our marketing plan of aged inventory through alternative channels.”

Meyer told an investor conference call that equipment and rental demand remain low in energy markets because of depressed oil prices. “Rental equipment continues to be relocated to the surrounding regions, which is creating a competitive rental market and keeping rental rates low in many of our locations in the upper Midwest,” he said, adding that the company expects its construction segment revenue to be flat in fiscal 2017 with improved operating results compared to last year “as we benefit from the operating and inventory initiatives we have put in place.”