• Fourth Quarter Revenue Increased 29% to $785 Million
• Company Continues Domestic and International Distribution Network Expansion
• Company Issues Fiscal 2014 Guidance

Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal fourth quarter and full year ended January 31, 2013.

Fiscal 2013 Fourth Quarter Results

For the fourth quarter of fiscal 2013, revenue increased 29.2% to $784.5 million from revenue of $607.0 million in the fourth quarter last year. All four of the Company’s revenue sources—equipment, parts, service, and rental and other—contributed to this period-over-period revenue growth. Equipment sales were $679.0 million for the fourth quarter of fiscal 2013, compared to $517.1 million in the fourth quarter last year. Parts sales were $53.5 million for the fourth quarter of fiscal 2013, compared to $45.7 million in the fourth quarter last year. Revenue generated from service was $34.2 million for the fourth quarter of fiscal 2013, compared to $27.3 million in the fourth quarter last year. Revenue from rental and other increased to $17.8 million from $16.9 million in the fourth quarter last year.

Gross profit for the fourth quarter of fiscal 2013 was $104.5 million, compared to $92.8 million in the fourth quarter last year. The Company’s gross profit margin was 13.3% in the fourth quarter of fiscal 2013, compared to 15.3% in the fourth quarter last year. The decrease in gross profit margin was primarily due to lower equipment margins and the change in sales mix, in which the higher margin parts and service businesses generated a smaller percentage of sales compared to the same quarter last year.

Operating expenses were 9.2% of revenue or $72.2 million for the fourth quarter of fiscal 2013, compared to 9.9% of revenue or $60.3 million for the fourth quarter of last year.

Floorplan interest expense increased to $4.3 million for the fourth quarter of 2013 compared to $3.2 million for the same period last year due to increased levels of interest-bearing equipment inventory. Other interest expense increased to $3.0 million for the fourth quarter of fiscal 2013 compared to $0.4 million for the same period last year due to the Company’s April 2012 convertible debt offering.

Pre-tax income for the fourth quarter of fiscal 2013 was $25.8 million, compared to $29.6 million in the fourth quarter last year. Pre-tax margin was 3.3% for the fourth quarter of fiscal 2013, compared to 4.9% in the fourth quarter last year. Pre-tax Agriculture segment income was $32.8 million for the fourth quarter of fiscal 2013, compared to $30.4 million in the fourth quarter last year. Pre-tax Construction segment loss was $5.5 million for the fourth quarter of fiscal 2013, compared to pre-tax income of $1.0 million in the fourth quarter last year. The growth in Agriculture pre-tax income was consistent with the Company’s expectation. The Construction pre-tax loss reflected difficult industry conditions as well as the Company not achieving its operating targets for this segment.

Net income attributable to common stockholders for the fourth quarter of fiscal 2013 was $15.4 million, compared to $17.6 million in the fourth quarter last year. Earnings per diluted share for the fourth quarter of fiscal 2013 were $0.73 compared to $0.84 in the fourth quarter last year.

Fiscal 2013 Full Year Results

For the full year ended January 31, 2013, revenue increased 32.5% to $2.20 billion from $1.66 billion in fiscal 2012. Gross margin for fiscal 2013 was 15.4%, compared to 16.6% in fiscal 2012. Pre-tax income for fiscal 2013 was $70.7 million for a pre-tax margin of 3.2%, compared to $73.6 million, or a pre-tax margin of 4.4%, in fiscal 2012. Net income attributable to common stockholders for fiscal 2013 was $42.0 million, or $2.00 per diluted share, compared to $43.8 million, or $2.18 per diluted share, in fiscal 2012. The full year weighted average diluted common shares outstanding for fiscal 2013 was 21.0 million, compared to 20.1 million weighted average diluted common shares outstanding in fiscal 2012.

Balance Sheet

The Company ended fiscal 2013 with cash and cash equivalents of $124.4 million. The Company’s inventory level was $929.2 million as of January 31, 2013, compared to $748.0 million at the end of fiscal 2012. This inventory level primarily reflected an increase in new equipment, which increased to $542.2 million at January 31, 2013 from $445.5 million at January 31, 2012, while used equipment increased to $275.6 million at January 31, 2013 from $219.8 million at January 31, 2012. Inventory level at the end of fiscal 2013 decreased $118.8 million from $1.05 billion at the end of the third quarter of fiscal 2013. The Company had available $307.1 million of its $1.0 billion total discretionary floorplan lines of credit as of January 31, 2013.

Acquisitions & New Store Openings

In fiscal 2013, the Company completed eight acquisitions, consisting of six agriculture equipment dealership locations in the United States, five construction equipment dealership locations in the United States, one independent rental yard location in the United States, and eight agriculture equipment dealership locations in Europe. The Company also opened a new construction dealership in Windsor, Colorado and three new agriculture dealership locations in Romania. In addition, the Company contracted with CNH to distribute Case Construction equipment in Romania and Bulgaria and to distribute CaseIH Agricultural products in Ukraine.

Subsequent to the end of fiscal 2013, the Company completed two acquisitions, consisting of two construction equipment dealership locations in the United States, including the Company’s first location in New Mexico. The Company also opened its initial Ukrainian dealer facilities in Kiev in April 2013.

Management Comments

David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, “In the fourth quarter, we continued to generate strong sales, which enabled us to exceed the high end of our fiscal 2013 annual sales guidance. Our Agriculture segment performed well in the fourth quarter and throughout fiscal 2013 despite certain weather related challenges farmers faced earlier in the year. Our Construction business generated top line growth in fiscal 2013; however, our bottom line results for this segment reflect difficult industry conditions as well as us falling short of our operational targets. To improve our overall Construction operating results, we are refocusing on generating stronger revenue growth, improving operating expenses and driving better pre-tax returns.”

Mr. Meyer continued, “In the fourth quarter, we began successfully executing on our inventory strategy to increase equipment turns and ended the year with a notable reduction in inventory as compared to the end of our third quarter. As we begin fiscal 2014, we expect to continue to generate strong sales results and remain focused on improving inventory turns. For our Agriculture segment, we anticipate continued overall growth in our domestic and international areas. Regarding our Construction segment, we anticipate better market conditions and are refocusing our efforts to improve the profitability of this business. We remain confident that our Construction segment is an integral part of our Company’s long-term growth strategy and will contribute to our top and bottom line growth. We are well positioned to strategically expand our footprint in the United States and internationally throughout fiscal 2014.”

Fiscal 2014 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 full year ending January 31, 2014, the Company anticipates increased revenue in the range of $2.35 billion to $2.55 billion, net income attributable to common stockholders in the range of $42.8 million to $49.2 million, and earnings per diluted share in the range of $2.00 to $2.30 based on estimated weighted average diluted common shares outstanding of 21.4 million.

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) 401-4668 from the U.S. International callers can dial (719) 325-2472. A telephone replay will be available approximately two hours after the call concludes and will be available through Wednesday, April 24, 2013, by dialing (877) 870-5176 from the U.S., or (858) 384-5517 from international locations, and entering confirmation code 1411336.