David Meyer, Titan Machinery's chairman and chief executive officer, stated, "The ongoing strength of the broader agriculture sector continues to fuel demand for equipment across our business and equipment revenue grew 37% on a consolidated basis in the third quarter." The combination of our larger base of revenues, healthy inventory position and lean infrastructure has allowed for powerful operating leverage that drove a 109% increase in pre-tax income for the quarter. At the segment-level, this operating leverage is visible in our Agriculture segment, which benefited from better than expected crop yields across our footprint, and produced a pre-tax margin of 7%, which is a record quarterly high margin for the segment. Our Construction and International segments are also generating strong gains in profitability, each producing another solid quarter and building upon the improvements made fiscal year-to-date. We are excited about finishing the fiscal year on a strong note after a successful harvest and construction season and will continue to work toward delivering the unmatched customer service that Titan Machinery is known for."

Consolidated Results

For the third quarter of fiscal 2022, revenue increased to $454 million compared to $360.9 million in the third quarter last year. Equipment sales were $329.8 million for the third quarter of fiscal 2022, compared to $240.9 million in the third quarter last year. Parts sales were $80.5 million for the third quarter of fiscal 2022, compared to $76.8 million in the third quarter last year. Revenue generated from service was $32 million for the third quarter of fiscal 2022, compared to $30.7 million in the third quarter last year. Revenue from rental and other was $11.6 million for the third quarter of fiscal 2022, compared to $12.5 million in the third quarter last year. Rental revenue was down due to a decrease in inventory rentals, a reduced rental fleet and the January 2021 divestiture of the Company's construction stores in Arizona. While the fleet was smaller compared to the prior year, the dollar utilization of the fleet improved to 31.4% in the quarter compared to 25.7% in the same period last year.

Gross profit for the third quarter of fiscal 2022 was $92.5 million, compared to $72.6 million in the third quarter last year. The Company's gross profit margin increased to 20.4% in the third quarter of fiscal 2022, compared to 20.1% in the third quarter last year. Gross profit margin primarily increased due to stronger equipment margins, which were partially offset by mix, with a greater proportion of equipment revenue this year vs. higher margin parts and service revenue as compared to the third quarter of the prior year.

Operating expenses increased by $8.8 million to $62.9 million for the third quarter of fiscal 2022, compared to $54.1 million in the third quarter last year, primarily due to higher variable expenses on increased revenues. Operating expenses as a percentage of revenue decreased 110 basis points to 13.9% for the third quarter of fiscal 2022, compared to 15% of revenue in the prior year period. The Company did not recognize any impairments related to goodwill or intangible and long-lived assets in the current year period, but did recognize impairments of $2.6 million in the third quarter of fiscal 2021.

Floorplan and other interest expense was $1.3 million in the third quarter of fiscal 2022, compared to $1.7 million for the same period last year. The decrease was primarily due to lower floorplan borrowings.

Segments Results

Agriculture Segment - Revenue for the third quarter of fiscal 2022 was $281.5 million, compared to $220.6 million in the third quarter last year. The increase in revenue was primarily driven by strong demand for equipment. Pre-tax income for the third quarter of fiscal 2022 was $19.6 million, compared to $13.6 million of pre-tax income and adjusted pre-tax income of $13.8 million in the third quarter last year.

Construction Segment - Revenue for the third quarter of fiscal 2022 was $79.7 million, compared to $79 million in the third quarter last year. While revenue was essentially flat vs. the prior year period, same-store sales increased 11.1% primarily due to increased equipment demand, but was offset by the lost contributions from the Company's Arizona stores following the January 2021 divestiture. Pre-tax income for the third quarter of fiscal 2022 was $3.6 million, compared to $1.4 million in the third quarter last year.

International Segment - Revenue for the third quarter of fiscal 2022 was $92.7 million, compared to $61.2 million in the third quarter last year. The increase in revenue was primarily driven by strong equipment sales. Pre-tax income for the third quarter of fiscal 2022 was $6.3 million, compared to a pre-tax loss of $2.4 million in the third quarter last year. Adjusted pre-tax income for the third quarter of fiscal 2022 was $6.1 million, compared to $0.2 million in the third quarter last year.

Fiscal 2022 First Nine Months Results

Revenue was $1.2 billion for the first nine months of fiscal 2022, compared to $974.5 million for the same period last year. Net income for the first nine months of fiscal 2022 was $43.6 million, or $1.93 per diluted share, compared to net income of $18.6 million, or $0.83 per diluted share, for the same period last year. On an adjusted basis, net income for the first nine months of fiscal 2022 was $44.8 million, or $1.98 per diluted share, compared to an adjusted net income of $22.0 million, or $0.97 per diluted share, in the same period last year. Adjusted EBITDA was $78.6 million in the first nine months of fiscal 2022, compared to $51.7 million in the same period last year.

Fiscal 2022 Modeling Assumptions