For the third quarter of fiscal 2015, revenue was $493.1 million, compared to $588.0 million in the third quarter last year. Equipment sales were $343.5 million for the third quarter of fiscal 2015, compared to $441.8 million in the third quarter last year. Parts sales were $80.7 million for the third quarter of fiscal 2015, compared to $80.9 million in the third quarter last year. Revenue generated from service was $42.4 million for the third quarter of fiscal 2015, compared to $40.6 million in the third quarter last year. Revenue from rental and other increased to $26.6 million for the third quarter of fiscal 2015 from $24.7 million in the third quarter last year.
Gross profit for the third quarter of fiscal 2015 was $84.7 million, compared to $93.6 million in the third quarter last year, primarily reflecting a decrease in agriculture equipment revenue. The Company’s gross profit margin was 17.2% in the third quarter of fiscal 2015, compared to 15.9% in the third quarter last year, reflecting stability in the parts and service business. Gross profit from parts and service for the third quarter of fiscal 2015 was 61% of overall gross profit, compared to 55.2% in the third quarter last year.
Operating expenses were 14.1% of revenue or $69.5 million for the third quarter of fiscal 2015, compared to 12.7% of revenue or $75 million for the third quarter of last year. 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 third quarter of 2015, the Company recognized a $0.5 million charge from the balance sheet impact of the Ukrainian hryvnia devaluation.
Floorplan interest expense increased to $5.4 million for the third quarter of 2015, compared to $4.8 million for the same period last year primarily due to increased levels of interest-bearing equipment inventory.
Pre-tax income for the third quarter of fiscal 2015 was $5.7 million. Excluding the aforementioned Ukraine currency devaluation, adjusted pre-tax income for the third quarter of fiscal 2015 was $6.2 million. This compares to pre-tax income of $10.1 million in the third quarter last year. Pre-tax Agriculture segment income was $5.2 million for the third quarter of fiscal 2015, compared to pre-tax income of $16.7 million in the third quarter last year. Pre-tax Construction segment income was $0.1 million for the third quarter of fiscal 2015, compared to a pre-tax loss of $3.4 million in the third quarter last year. In the third quarter of fiscal 2015, adjusted pre-tax International segment loss was $0.9 million, compared to a pre-tax loss of $1.0 million in the third quarter last year.
Net income attributable to common stockholders for the third quarter of fiscal 2015 was $2.4 million, or earnings per diluted share of $0.11. Excluding the foreign currency losses of $0.5 million, adjusted net income attributable to common stockholders for the third quarter of fiscal 2015 was $2.9 million, or $0.14 per diluted share. This compares to net income attributable to common stockholders of $5.7 million, or $0.27 per diluted share, in the third quarter last year.
Fiscal 2015 First Nine Months Results
For the nine months ended October 31, 2014, revenue was $1.41 billion, compared to $1.52 billion in the same period last year. Gross profit margin for the first nine months of fiscal 2015 was 17.0%, compared to 16.5% in the same period last year. Net loss attributable to common stockholders for the first nine months of fiscal 2015 was $4.6 million, or loss per diluted share of $0.22. In the first nine months of fiscal 2015, the Company recognized charges of $8.3 million, including $4.9 million from the balance sheet impact of the Ukrainian hryvnia devaluation and store closing costs of $3.4 million, the majority of which was recognized in the first quarter of fiscal 2015. Excluding these charges, adjusted net earnings for the first nine months of fiscal 2015 was $2.3 million, or an earnings per diluted share of $0.11. This compares to net income of $9.1 million, or $0.43 per diluted share, in the same period last year.
Balance Sheet
The Company ended the third quarter of fiscal 2015 with cash of $110.2 million. The Company’s inventory level decreased to $1.06 billion as of Oct. 31, 2014, compared to inventory of $1.18 billion as of Oct. 31, 2013 and $1.08 billion as of Jan. 31, 2014. The Company had $761.2 million outstanding floorplan payables on $1.2 billion total discretionary floorplan lines of credit as of Oct. 31, 2014.
In the first nine months of fiscal 2015, the Company’s net cash used for operating activities was $82.6 million on a GAAP basis. The Company evaluates its cash flow from operating activities net of all floorplan payable activity. Taking this adjustment into account, the Company generated adjusted net cash provided by operating activities of $0.7 million.
Acquisition
In the third quarter, the Company acquired certain assets of Midland Equipment, Inc., consisting of one agriculture equipment store in Wayne, Nebraska, which expands the Company’s agriculture presence in the state. In its most recently reported fiscal year, Midland Equipment, Inc. generated revenue of approximately $4.5 million.
Management Comments
David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, “Our Agriculture segment continues to face a number of industry headwinds as we have previously discussed, including lower commodity prices and lower projected net farm income. While this has resulted in farmers’ reducing their spending on equipment and in turn impacted our financial results, we remain confident in our business model and the long-term outlook for the agriculture industry."
Mr. Meyer continued, “For our Construction segment, we reported another quarter of improved financial results, including same-store sales growth over 10%, higher equipment margins and an improvement in pre-tax income. Our results reflect the success of our operational initiatives and the realignment and consolidation of our Construction segment earlier this year along with ongoing improvements in the overall industry. We remain confident that we have taken the necessary steps to position our Construction segment for long-term growth and profitability. Our International segment continues to be impacted by geopolitical instability in Ukraine; however, we have implemented initiatives to improve this segment of our business and are encouraged by improving trends as compared to the second quarter of this fiscal year.
“Based on our year-to-date results and outlook for the final quarter, we are revising our annual guidance, as we expect that continued improvements to our Construction segment will be offset by ongoing headwinds for our Agriculture and International segments. We remain intensely focused on managing the controllable aspects of our business and expect a continued reduction in our inventory position and increased cash flow from operations in the fourth quarter."
Revised Fiscal 2015 Outlook
The Company evaluates its financial performance based on its customers’ annual production cycles as opposed to a quarterly basis, due to weather fluctuations and the seasonal nature of each customer’s business. For the fiscal year ending Jan. 31, 2015, the Company is revising its annual outlook. The Company expects revenue to be in the range of $1.85 billion to $2.0 billion, compared to its previous range of $1.9 billion to $2.1 billion. The Company expects adjusted net income attributable to common stockholders to be in the range of $2.1 million to $6.4 million, compared to its previous range of $6.4 million to $12.7 million. The Company also expects adjusted earnings per diluted share to be in the range of $0.10 to $0.30, compared to its previous range of $0.30 to $0.60, based on estimated weighted average diluted common shares outstanding of 21.1 million.
The Company expects GAAP net loss attributable to common stockholders to be in the range of $0.5 million to $4.8 million, compared to the previous range of breakeven to $6.3 million GAAP net income attributable to common stockholders, and GAAP loss per diluted share to be in the range of $0.02 to $0.23, compared to the previous range of $0.00 to $0.30 GAAP income per diluted share, based on estimated weighted average diluted common shares outstanding of 21.1 million. GAAP net income and earnings per diluted share guidance includes the impact of the $3.4 million pre-tax charge, or $0.10 per diluted share, associated with the Company’s realignment as well as $4.9 million, or $0.23 per diluted share, due to the balance sheet impact of the Ukrainian hryvnia devaluation, which were realized in the first nine months of fiscal 2015.
The Company expects to generate annual Non-GAAP cash flow from operations in the range of $40.0 million to $60.0 million for fiscal 2015, compared to the previous range of $50.0 to $70.0 million. This reflects an improvement of $90.8 million to $110.8 million compared to Non-GAAP cash flow from operations of $(50.8) million in fiscal 2014. The primary driver of the improved cash flow is the Company’s anticipated reduction in equipment inventory level of approximately $200 million in fiscal 2015.
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. 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.
Post a comment
Report Abusive Comment