- Revenue for Fiscal First Quarter of 2016 was
$353 million -
- Adjusted EBITDA for Fiscal First Quarter was
$5.1 million -
- Company Reiterates Annual Fiscal 2016
Modeling Assumptions -
Titan Machinery Inc. (Nasdaq: TITN), a leading network of
full-service agricultural and construction equipment stores, today
reported financial results for the fiscal first quarter ended
April 30, 2015.
Fiscal 2015 First Quarter Results
For the first quarter of fiscal 2016, revenue was $353.2
million, compared to $465.5 million in the first quarter last year.
Equipment sales were $245.0 million for the first quarter of fiscal
2016, compared to $345.0 million in the first quarter last year.
Parts sales were $61.5 million for the first quarter of fiscal
2016, compared to $68.4 million in the first quarter last year.
Revenue generated from service was $32.9 million for the first
quarter of fiscal 2016, compared to $37.1 million in the first
quarter last year. Revenue from rental and other decreased to $13.8
million for the first quarter of fiscal 2016 from $15.0 million in
the first quarter last year.
Gross profit for the first quarter of fiscal 2016 was $60.4
million, compared to $75.9 million in the first quarter last year,
primarily reflecting a decrease in Agriculture equipment revenue.
The Company’s gross profit margin was 17.1% in the first quarter of
fiscal 2016, compared to 16.3% in the first quarter last year. This
increase in gross profit margin primarily reflects a larger portion
of gross profit coming from the Company's higher margin parts,
service, and rental and other businesses. Gross profit from parts
and service for the first quarter of fiscal 2016 was 65.3% of
overall gross profit, compared to 56.7% in the first quarter last
year.
Operating expenses were 16.2% of revenue or, $57.1 million, for
the first quarter of fiscal 2016, compared to 15.3% of revenue or,
$71.2 million, for the first quarter of last year. The decrease in
operating expenses was primarily due to cost savings associated
with the Company's realignment activities implemented in the first
quarters of fiscal 2016 and 2015. The increase in operating
expenses as a percentage of revenue was primarily due to the
deleveraging of fixed expenses as total revenue decreased from the
prior year.
In the first quarter of fiscal 2016, the Company recognized
impairment and realignment costs of $1.6 million, primarily related
to store closings and headcount reductions as part of the Company's
realignment plan. In the first quarter of fiscal 2015, the Company
recognized impairment and realignment costs of $2.8 million. The
Company recognized charges of $2.0 million and $3.1 million from
the balance sheet impact of the Ukrainian hryvnia devaluation in
the first quarters of 2016 and 2015, respectively.
Floorplan interest expense was $4.6 million for both the first
quarter of fiscal 2016 and first quarter of fiscal 2015.
In the first quarter of fiscal 2016, the Company generated $5.1
million in adjusted EBITDA, compared to $7.6 million in the first
quarter of last year. The Company includes floorplan interest
expense in its EBITDA calculation.
Pre-tax loss for the first quarter of fiscal 2016 was $8.8
million, which is essentially flat compared to pre-tax loss of $8.6
million in the first quarter of last year. Excluding all non-GAAP
adjustments, adjusted pre-tax loss for the first quarter of fiscal
2016 was $4.6 million. For the first quarter of 2015, excluding the
non-GAAP adjustments, adjusted pre-tax loss was $2.3 million.
Adjusted pre-tax Agriculture segment loss was $0.4 million for the
first quarter of fiscal 2016, compared to adjusted pre-tax income
of $4.2 million in the first quarter last year. Adjusted pre-tax
Construction segment loss was $2.9 million for the first quarter of
fiscal 2016, compared to adjusted pre-tax loss of $3.7 million in
the first quarter last year. Adjusted pre-tax International segment
loss was $2.3 million for the first quarter of fiscal 2016,
compared to adjusted pre-tax loss of $2.1 million in the first
quarter last year.
Net loss attributable to common stockholders for the first
quarter of fiscal 2016 was $6.2 million, or loss per diluted share
of $0.29, compared to $6.5 million, or $0.31 per diluted share, for
the first quarter of fiscal 2015. The net loss for the first
quarter of fiscal 2016 includes adjustments totaling $3.3 million,
or $0.16 per diluted share, compared to adjustments totaling $5.0
million, or $0.24 per diluted share, for the first quarter of
fiscal 2015. Excluding all non-GAAP adjustments, adjusted net loss
attributable to common stockholders for the first quarter of fiscal
2016 was $2.9 million, or $0.13 per diluted share, compared to
adjusted net loss attributable to common stockholders for the first
quarter of fiscal 2015 of $1.5 million, or $0.07 per diluted
share.
Balance Sheet
The Company ended the first quarter of fiscal 2016 with cash of
$104.4 million. The Company’s inventory level, including amounts
classified as held for sale, was $890.0 million as of
April 30, 2015, compared to inventory of $1.1 billion as of
April 30, 2014. The Company had, including amounts classified
as held for sale, $608.0 million outstanding floorplan payables on
$1.1 billion total discretionary floorplan lines of credit as of
April 30, 2015, reflecting a decrease of $190.5 million from
the balance of $798.5 million as of April 30, 2014. The
reduced floorplan levels has improved the Company's total
liabilities to tangible net worth to 2.6 as of April 30, 2015
from 3.2 as of April 30, 2014.
First Quarter Fiscal 2016 Realignment
In order to better align its business in certain markets, the
Company previously announced that during the first quarter of
fiscal 2016 it reduced headcount by approximately 14%, which
includes headcount reductions at stores in each of its operating
segments and its Shared Resource Center. This included the closing
of three Agriculture stores and one Construction store. In
addition, the Company has reduced discretionary spending levels
across all parts of the business and is restructuring certain
employee compensation and benefit programs to better align pay for
performance. The realignment costs associated with the headcount
reductions and store closings are estimated to total approximately
$2.0 million. The Company recognized $0.1 million in the fourth
quarter of fiscal 2015 and $1.9 million (or $0.05 per diluted
share) is expected to be recognized in fiscal 2016. The full-year
pro forma benefit to pre-tax earnings of this headcount reduction
is estimated to be approximately $21 million (or $0.59 per share),
which equates to a pro forma benefit of approximately $20 million
(or $0.56 per share) for fiscal 2016.
Management Comments
David Meyer, Titan Machinery’s Chairman and Chief Executive
Officer, stated, “Our financial results in the first quarter were
in-line with our expectations, as ongoing headwinds in the
agriculture industry continue to impact our results. In the first
quarter, we remained focused on managing the controllable aspects
of our business, including implementing a realignment plan that
significantly reduces our operating costs and is expected to
generate approximately $20 million in cost savings beginning in the
current fiscal year. We also continue to diligently manage our
inventory levels and expect to achieve meaningful reductions in
fiscal 2016."
Mr. Meyer continued, “We believe that we have taken the
necessary steps to navigate the challenging macroeconomic
conditions by better aligning our cost structure with the current
environment. While we continue to face a number of headwinds, we
are focused on execution in all three business segments and
strengthening our balance sheet. We remain confident that we are on
the right track to improve our long-term financial performance and
capitalize on future growth opportunities."
Fiscal 2016 Modeling Assumptions
The Company is reiterating the following modeling assumptions
for fiscal 2016 that it believes will provide investors with
relevant information about expectations regarding financial results
and business trends:
- Agriculture Same Store Sales Down 20.0%
to 25.0%
- Construction Same Store Sales Flat
- International Same Store Sales
Flat
- Equipment Margins Between 7.7% and
8.3%
- Expects to be profitable on an adjusted
diluted earnings per share basis
Conference Call and Presentation Information
The Company will host a conference call and audio webcast today
at 7:30 a.m. Central time (8:30 a.m. Eastern time). A copy of the
presentation that will accompany the prepared remarks from the
conference call is available on the Company’s website under
Investor Relations at www.titanmachinery.com. An archive of the
audio webcast will be available on the Company’s website under
Investor Relations at www.titanmachinery.com for 30 days following
the audio webcast.
Investors interested in participating in the live call can dial
(888) 505-4369 from the U.S. International callers can dial (719)
785-1765. A telephone replay will be available approximately two
hours after the call concludes and will be available through
Thursday, June 11, 2015, by dialing (877) 870-5176 from the U.S.,
or (858) 384-5517 from international locations, and entering
confirmation code 1050277.
Non-GAAP Financial Measures
Within this announcement, the Company makes reference to certain
adjusted financial measures, which have directly comparable GAAP
financial measures as identified in this release. These adjusted
measures are provided so that investors have the same financial
data that management uses with the belief that it will assist the
investment community in properly assessing the underlying
performance of the Company for the periods being reported. This
includes adjusted EBITDA, which the Company defines as net income
(loss) including noncontrolling interest, adjusted for net interest
(excluding floorplan interest expense), income taxes, depreciation,
amortization, and items included in its non-GAAP pre-tax income
(loss) reconciliation for each of the respective periods. The
presentation of this additional information is not meant to be
considered a substitute for measures prepared in accordance with
GAAP. Investors are encouraged to review the reconciliations of
adjusted financial measures used in this press release to their
most directly comparable GAAP financial measures as provided with
the financial statements attached to this press release.
About Titan Machinery Inc.
Titan Machinery Inc., founded in 1980 and headquartered in West
Fargo, North Dakota, is a multi-unit business with mature locations
and newly-acquired locations. The Company owns and operates a
network of full service agricultural and construction equipment
stores in the United States and Europe. The Titan Machinery network
consists of 92 North American dealerships in North Dakota, South
Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin,
Colorado, Arizona, and New Mexico, including three outlet stores,
and 16 European dealerships in Romania, Bulgaria, Serbia, and
Ukraine. The Titan Machinery dealerships represent one or more of
the CNH Industrial Brands (CNHI), including CaseIH, New Holland
Agriculture, Case Construction, New Holland Construction, and CNH
Capital. Additional information about Titan Machinery Inc. can be
found at www.titanmachinery.com.
Forward Looking Statements
Except for historical information contained herein, the
statements in this release are forward-looking and made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements made herein, which
include statements regarding Agriculture, Construction, and
International segment initiatives and improvements, segment revenue
realization, growth and profitability expectations, inventory
expectations, leverage expectations, and modeling assumptions and
expected results of operations for the fiscal year ending
January 31, 2016, involve known and unknown risks and
uncertainties that may cause Titan Machinery’s actual results in
current or future periods to differ materially from the forecasted
assumptions and expected results. The Company’s risks and
uncertainties include, among other things, a substantial dependence
on a single distributor, the continued availability of organic
growth and acquisition opportunities, potential difficulties
integrating acquired stores, industry supply levels, fluctuating
agriculture and construction industry economic conditions, the
success of recently implemented initiatives within the Company’s
operating segments, the uncertainty and fluctuating conditions in
the capital and credit markets, difficulties in conducting
international operations, foreign currency risks, governmental
agriculture policies, seasonal fluctuations, the ability of the
Company to reduce inventory levels, climate conditions, disruption
in receiving ample inventory financing, and increased competition
in the geographic areas served. These and other risks are more
fully described in Titan Machinery’s filings with the Securities
and Exchange Commission, including the Company’s most recently
filed Annual Report on Form 10-K. Titan Machinery conducts its
business in a highly competitive and rapidly changing environment.
Accordingly, new risk factors may arise. It is not possible for
management to predict all such risk factors, nor to assess the
impact of all such risk factors on Titan Machinery’s business or
the extent to which any individual risk factor, or combination of
factors, may cause results to differ materially from those
contained in any forward-looking statement. Titan Machinery
disclaims any obligation to update such factors or to publicly
announce results of revisions to any of the forward-looking
statements contained herein to reflect future events or
developments.
TITAN MACHINERY INC. Consolidated Balance
Sheets (in thousands, except per share data)
(Unaudited)
April 30, 2015 January 31, 2015 Assets Current
Assets Cash $ 104,355 $ 127,528 Receivables, net 64,892 76,382
Inventories 880,060 879,440 Prepaid expenses and other 5,179 10,634
Income taxes receivable 3,003 166 Deferred income taxes 18,488
19,025 Assets held for sale 14,946 15,312 Total
current assets 1,090,923 1,128,487 Intangibles and
Other Assets Intangible assets, net of accumulated amortization
5,360 5,458 Other 6,649 7,122 Total intangibles and
other assets 12,009 12,580 Property and Equipment,
net of accumulated depreciation 194,788 208,680
Total Assets $ 1,297,720 $ 1,349,747
Liabilities and Stockholders' Equity Current Liabilities
Accounts payable $ 17,539 $ 17,659 Floorplan payable 606,673
627,249 Current maturities of long-term debt 24,677 7,749 Customer
deposits 26,247 35,090 Accrued expenses 33,362 35,496 Income taxes
payable — 3,529 Liabilities held for sale 1,540 2,835
Total current liabilities 710,038 729,607 Long-Term
Liabilities Senior convertible notes 133,245 132,350 Long-term
debt, less current maturities 45,660 67,123 Deferred income taxes
39,244 38,996 Other long-term liabilities 3,488 3,312
Total long-term liabilities 221,637 241,781
Stockholders' Equity Common stock — — Additional paid-in-capital
240,505 240,180 Retained earnings 131,114 137,418 Accumulated other
comprehensive loss (5,729 ) (1,099 ) Total Titan Machinery Inc.
stockholders' equity 365,890 376,499 Noncontrolling interest 155
1,860 Total stockholders' equity 366,045
378,359
Total Liabilities and Stockholders' Equity $
1,297,720 $ 1,349,747
TITAN
MACHINERY INC. Consolidated Statements of Operations
(in thousands, except per share data) (Unaudited)
Three Months Ended April
30, 2015 2014 Revenue Equipment $ 244,983 $ 345,045 Parts 61,520
68,379 Service 32,902 37,084 Rental and other 13,791 14,955
Total Revenue 353,196 465,463 Cost of Revenue
Equipment 227,033 316,282 Parts 43,571 48,014 Service 11,360 14,403
Rental and other 10,797 10,825 Total Cost of Revenue
292,761 389,524 Gross Profit 60,435 75,939 Operating
Expenses 57,110 71,152 Impairment and Realignment Costs 1,601
2,801 Income from Operations 1,724 1,986 Other Income
(Expense) Interest income and other income (expense) (2,124 )
(2,578 ) Floorplan interest expense (4,599 ) (4,593 ) Other
interest expense (3,827 ) (3,441 ) Loss Before Income Taxes (8,826
) (8,626 ) Benefit from Income Taxes (1,936 ) (1,733 ) Net Loss
Including Noncontrolling Interest (6,890 ) (6,893 ) Less: Net Loss
Attributable to Noncontrolling Interest (586 ) (344 ) Net Loss
Attributable to Titan Machinery Inc. (6,304 ) (6,549 ) Net Loss
Allocated to Participating Securities 105 60 Net Loss
Attributable to Titan Machinery Inc. Common Stockholders $ (6,199 )
$ (6,489 ) Earnings (Loss) per Share - Diluted $ (0.29 ) $
(0.31 ) Weighted Average Common Shares - Diluted 21,044
20,951
TITAN MACHINERY INC.
Consolidated Condensed Statements of Cash Flows (in
thousands) (Unaudited)
Three Months Ended April 30, 2015 2014 Operating
Activities Net loss including noncontrolling interest $ (6,890 ) $
(6,893 ) Adjustments to reconcile net income including
noncontrolling interest to net cash used for operating activities
Depreciation and amortization 6,667 6,729 Impairment 152 — Deferred
income taxes 497 232 Other, net 2,522 978 Changes in assets and
liabilities Inventories 522 (41,963 ) Manufacturer floorplan
payable 12,980 (17,308 ) Other working capital (2,144 ) 3,623
Net Cash Provided by (Used for) Operating Activities 14,306
(54,602 ) Investing Activities Property and equipment
purchases (2,282 ) (5,707 ) Proceeds from sale of property and
equipment 634 471 Other, net 198 (887 ) Net Cash Used for
Investing Activities (1,450 ) (6,123 ) Financing Activities Net
change in non-manufacturer floorplan payable (30,001 ) 65,305 Net
proceeds from (payments on) long-term debt borrowings (4,876 )
3,327 Other, net (443 ) (207 ) Net Cash Provided by (Used for)
Financing Activities (35,320 ) 68,425 Effect of Exchange
Rate Changes on Cash (709 ) 69 Net Change in Cash (23,173 ) 7,769
Cash at Beginning of Period 127,528 74,242 Cash at
End of Period $ 104,355 $ 82,011
TITAN MACHINERY INC. Segment Results (in
thousands) (Unaudited) Three
Months Ended April 30, 2015 2014
% Change
Revenue Agriculture $ 239,855 $ 344,381
(30.4 )% Construction 81,171 91,765 (11.5 )% International 32,170
29,317 9.7 % Total $ 353,196 $ 465,463
(24.1 )%
Income (Loss) Before Income Taxes
Agriculture $ (1,086 ) $ 3,505 (131.0 )% Construction (3,565 )
(5,993 ) 40.5 % International (4,371 ) (5,265 ) 17.0 % Segment
income (loss) before income taxes (9,022 ) (7,753 ) (16.4 )% Shared
Resources 196 (873 ) 122.5 % Loss Before Income Taxes $
(8,826 ) $ (8,626 ) (2.3 )%
TITAN MACHINERY
INC. Non-GAAP Reconciliations (in thousands, except
per share data) (Unaudited)
Three Months Ended April 30, 2015 2014
Pre-Tax
Loss Loss Before Income Taxes $ (8,826 ) $ (8,626 ) Non-GAAP
Adjustments Debt Issuance Cost Write-Off 539 — Realignment / Store
Closing Costs 1,601 3,205 Ukraine Remeasurement 2,040 3,122
Total Non-GAAP Adjustments 4,180 6,327
Adjusted Pre-Tax Loss $ (4,646 ) $ (2,299 )
Adjusted
EBITDA Net Loss Including Noncontrolling Interest $ (6,890 ) $
(6,893 ) Adjustments Interest Expense, Net of Interest Income 3,097
3,211 Benefit from Income Taxes (1,936 ) (1,733 ) Depreciation and
amortization 6,667 6,729 Total Non-GAAP Adjustments to Pre-Tax
Income (Loss) 4,180 6,327 Total Adjustments 12,008
14,534 Adjusted EBITDA $ 5,118 $ 7,641
Net Loss Attributable to Titan Machinery Inc. Common
Stockholders Net Loss Attributable to Titan Machinery Inc.
Common Stockholders $ (6,199 ) $ (6,489 ) Non-GAAP Adjustments (1)
Debt Issuance Cost Write-Off 318 — Realignment / Store Closing
Costs 945 1,896 Ukraine Remeasurement 2,006 3,078
Total Non-GAAP Adjustments $ 3,269 $ 4,974 Adjusted
Net Loss Attributable to Titan Machinery Inc. Common Stockholders $
(2,930 ) $ (1,515 )
Earnings (Loss) per Share -
Diluted Earnings (Loss) per Share - Diluted $ (0.29 ) $ (0.31 )
Non-GAAP Adjustments (1) Debt Issuance Cost Write-Off 0.02 —
Realignment / Store Closing Costs 0.04 0.09 Ukraine Remeasurement
0.10 0.15 Total Non-GAAP Adjustments $ 0.16 $
0.24 Adjusted Earnings (Loss) per Share - Diluted $ (0.13 )
$ (0.07 ) (1) Adjustments are net of the impact of amounts
related to income taxes, attributable to noncontrolling interests,
and allocated to participating securities.
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version on businesswire.com: http://www.businesswire.com/news/home/20150528005368/en/
Investor Relations:ICR, Inc.John Mills,
Partner310-954-1105jmills@icrinc.com
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