• Revenue for Fiscal First Quarter of 2017 was $285 million
• Company Exceeds First Quarter FY 2017 Aged Equipment Inventory Reduction Plan Goal
• Company Completed Previously-Announced $30 Million Senior Convertible Notes Repurchase
• Company Reiterates Full Year Fiscal 2017 Modeling Assumptions

WEST FARGO, N.D. (GLOBE NEWSWIRE) — 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, 2016.

Fiscal 2017 First Quarter Results

For the first quarter of fiscal 2017, revenue was $284.9 million, compared to $353.2 million in the first quarter last year. Equipment sales were $184.9 million for the first quarter of fiscal 2017, compared to $245.0 million in the first quarter last year. Parts sales were $57.5 million for the first quarter of fiscal 2017, compared to $61.5 million in the first quarter last year. Revenue generated from service was $31.0 million for the first quarter of fiscal 2017, compared to $32.9 million in the first quarter last year. Revenue from rental and other was $11.5 million for the first quarter of fiscal 2017, compared to $13.8 million in the first quarter last year.

Gross profit for the first quarter of fiscal 2017 was $53.5 million, compared to $60.4 million in the first quarter last year, primarily reflecting a decrease in revenue. The Company's gross profit margin was 18.8% in the first quarter of fiscal 2017, compared to 17.1% in the first quarter last year. This increase in gross profit margin was mainly due to an increase in equipment margins and the change in gross profit mix to the Company's higher-margin parts and service businesses. Gross profit from parts, service and rental and other for the first quarter of fiscal 2017 was 72.8% of overall gross profit, compared to 70.3% in the first quarter last year.

Operating expenses decreased by $2.6 million to $54.5 million, or 19.1% of revenue, for the first quarter of fiscal 2017, compared to $57.1 million, or 16.2% of revenue, for the first quarter of last year. The increase in operating expenses as a percentage of revenue was primarily due to the decrease in total revenue in the first quarter of fiscal 2017, as compared to the first quarter of fiscal 2016.

Floorplan interest expense was $3.7 million for the first quarter of fiscal 2017, compared to $4.6 million in the first quarter of fiscal 2016. The decrease in floorplan interest expense is primarily due to a decrease in the average level of interest-bearing inventory in the first quarter of fiscal 2017. Other interest expense decreased from $3.8 million in the first quarter of fiscal 2016 to $1.0 million in the first quarter of fiscal 2017, primarily due to a gain of $2.1 million recognized upon the repurchase of $30.1 million of our senior convertible notes in April 2016.

In the first quarter of fiscal 2017, the Company generated $1.7 million in adjusted EBITDA, compared to $5.1 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 2017 was $5.8 million, compared to loss of $8.8 million in the first quarter of last year. Adjusted pre-tax results for the first quarter are as follows:

• Total Company: Loss of $7.5 million for the first quarter of fiscal 2017, which excludes the $2.1 million gain on the senior convertible notes repurchase, compared to loss of $4.6 million in the first quarter last year.
• Agriculture segment: Loss of $3.9 million for the first quarter of fiscal 2017, compared to loss of $0.4 million in the first quarter last year.
• Construction segment: Loss of $2 million for the first quarter of fiscal 2017, compared to loss of $2.9 million in the first quarter last year.
• International segment: Loss of $0.3 million for the first quarter of fiscal 2017, compared to loss of $2.3 million in the first quarter last year.

Net loss attributable to common stockholders for the first quarter of fiscal 2017 was $3.6 million, or loss per diluted share of $0.17, compared to a loss of $6.2 million, or $0.29 per diluted share, for the first quarter of fiscal 2016. Excluding all non-GAAP adjustments, adjusted net loss attributable to common stockholders for the first quarter of fiscal 2017 was $4.5 million, or $0.21 per diluted share, compared to a loss of $2.9 million, or $0.13 per diluted share, for the first quarter of fiscal 2016.

Balance Sheet and Cash Flow

The Company ended the first quarter of fiscal 2017 with cash of $63.8 million. The Company's inventory level was $684.8 million as of April 30, 2016, compared to $689.5 million as of January 31, 2016. This inventory decrease includes a $6.0 million reduction in equipment inventory, which reflects a $20.9 million or 7.8% decrease in used equipment inventory, partially offset by a seasonal increase of new equipment inventory of $15.0 million. The Company had $446.3 million outstanding floorplan payables on $1.0 billion total discretionary floorplan lines of credit as of April 30, 2016, compared to $444.8 million outstanding as of January 31, 2016.

In April 2016, the Company repurchased $30.1 million face value ($27.1 million carrying value) of its senior convertible notes with $25.0 million in cash, and recognized a pre-tax gain of $2.1 million in the first quarter of fiscal 2017. This gain is not considered in the modeling assumptions discussed below as the Company considers it an adjustment to GAAP income (loss). This debt reduction improved the Company's ratio of total liabilities to tangible net worth to 2.0 as of April 30, 2016 from 2.1 as of January 31, 2016.

In the first three months of fiscal 2017, the Company's net cash used for operating activities was $24.9 million on a GAAP basis. The Company evaluates its cash flow from operating activities net of all floorplan payable activity and maintaining a constant level of equity in our equipment inventory. Taking these adjustments into account, adjusted net cash used for operating activities was $5.8 million in the first three months of fiscal 2017, compared to adjusted net cash provided by operating activities of $7.8 million in first three months of fiscal 2016.

Management Comments

David Meyer, Titan Machinery's Chairman and Chief Executive Officer, stated, "First quarter financial results were in-line with our expectations and we are on track to achieve our $100 million inventory reduction goal and modeling assumptions for fiscal 2017. As expected, we continue to face headwinds in the agricultural and construction segments, but believe we are well positioned to generate positive adjusted operating cash flow for fiscal 2017 due to improvements we have made in our operating expenses and planned reduction in our inventory."

Mr. Meyer continued, "We are confident we are taking the necessary steps to navigate through this challenging environment and are ahead of schedule in the marketing of our aged inventory, having sold $25 million of the $74 million targeted aged equipment inventory in the first quarter of fiscal 2017, which exceeded our first quarter target of $22 million. The deleveraging that we've accomplished in the past couple years and our expected continued operating cash flow enabled us to buy back $30.1 million of our senior convertible notes ahead of the maturity date and at a meaningful discount. This transaction further strengthened our balance sheet while providing a positive financial gain to our stockholders in the first quarter of fiscal 2017."

Fiscal 2017 Modeling Assumptions

The Company is reiterating the following modeling assumptions for fiscal 2017 that it believes will provide investors with relevant information about expectations regarding financial results and business trends:

• Agriculture Same Store Sales Down 13% to 18%
• Construction Same Store Sales Flat
• International Same Store Sales Flat
• Equipment Margins Between 7.7% and 8.3%
• Adjusted Diluted EPS Range from Slight Loss to Break-Even