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 second quarter ended July 31, 2018.

David Meyer, Titan Machinery’s chairman and chief executive officer, said, “Our second quarter results reflect the financial benefits of our fiscal 2018 restructuring efforts and our consistent focus on improving the quality and level of our equipment inventory, which have driven lower operating expenses and improved equipment gross profit margins. In the quarter, we also saw our lower expense base provide strong operating leverage as we experienced higher sales volumes.

“Along with increased equipment revenues, we also saw increased revenues from our parts and service businesses in the second quarter of fiscal 2019, which benefited from the late start to the spring planting season in many of our domestic and European markets. The strength in our parts and services businesses combined with lower operating expenses led to a significant increase in our second quarter absorption rate, from 80.1% in the second quarter last year to 88.6% in the second quarter this year.”

Fiscal 2019 Second Quarter Results

Consolidated Results

For the second quarter of fiscal 2019, revenue was $299.9 million, compared to $268.9 million in the second quarter last year. Equipment sales were $192.7 million for the second quarter of fiscal 2019, compared to $167.9 million in the second quarter last year. Parts sales were $60 million for the second quarter of fiscal 2019, compared to $55.6 million in the second quarter last year. Revenue generated from service was $31.3 million for the second quarter of fiscal 2019, compared to $30.5 million in the second quarter last year. Revenue from rental and other was $15.9 million for the second quarter of fiscal 2019, compared to $14.9 million in the second quarter last year.

Gross profit for the second quarter of fiscal 2019 was $58.9 million, compared to $52.8 million in the second quarter last year. Gross profit margins remained flat at 19.6% with the comparable period last year. The increase in gross profit was driven by higher revenue. The impact of higher equipment gross profit margins was offset by a higher mix of equipment revenue in the quarter resulting in the overall flat gross profit margin of 19.6%.

Operating expenses decreased by $2.9 million to $47.6 million, or 15.9% of revenue, for the second quarter of fiscal 2019, compared to $50.5 million, or 18.8% of revenue, for the second quarter of last year. These decreases are the result of cost savings arising from the company’s fiscal 2018 restructuring efforts that were completed early in the third quarter of fiscal 2018 and greater operating expense leverage on higher sales volumes.

Floorplan interest expense was $1.7 million for the second quarter of fiscal 2019, compared to $2.2 million in the second quarter of last year. The decrease in floorplan interest expense is primarily due to a decrease in the level of interest-bearing inventory in the second quarter of fiscal 2019.

In the second quarter of fiscal 2019, net income was $5.2 million, or earnings per diluted share of $0.23, compared to a net loss of $5.2 million, or a loss per diluted share of $0.24 for the second quarter of last year.

On an adjusted basis, net income for the second quarter of fiscal 2019 was $6.3 million, or adjusted earnings per diluted share of $0.28, compared to an adjusted net loss of $1.0 million, or an adjusted loss per diluted share of $0.04, for the second quarter of last year.

The Company generated $16.8 million in adjusted EBITDA in the second quarter of fiscal 2019, compared to $6.5 million in the second quarter of last year.

Segment Results

Agriculture Segment — Revenue for the second quarter of fiscal 2019 was $152.8 million, compared to $138.5 million in the second quarter last year. Revenue benefited from increased equipment revenue as well as an increase in parts and service activity due to the late start to the planting season.  Pre-tax income for the second quarter of fiscal 2019 was $5 million, compared to a pre-tax loss of $6.9 million in the second quarter last year. Adjusted pre-tax income for the second quarter of fiscal 2019 was $5.2 million, compared to an adjusted pre-tax loss of $1.7 million in the second quarter last year.

Construction Segment — Revenue for the second quarter of fiscal 2019 was $79.2 million, compared to $77.9 million in the second quarter last year. Our construction segment was break-even for the second quarter of fiscal 2019, compared to pre-tax income of $0.9 million in the second quarter last year. Adjusted pre-tax income for the second quarter of fiscal 2019 was $0.3 million, compared to adjusted pre-tax income of $1.2 million in the second quarter last year.

International Segment — Revenue for the second quarter of fiscal  2019 was $67.8 million, compared to $52.4 million in the second quarter last year. Our international segment revenue increase was driven by higher sales volumes in each of our equipment, parts and service businesses. Pre-tax income for the second quarter of fiscal 2019 was $3.7 million, compared to pre-tax income of $0.3 million in the second quarter last year. Adjusted pre-tax income for the second quarter of fiscal 2019 was $3.9 million compared to adjusted pre-tax income of $0.3 million in the second quarter last year. These increases were due to increased revenues and higher equipment gross profit margins.