Titan Machinery Inc. (NASDAQ:TITN)
For the second quarter of fiscal 2023 (ending July 31, 2022), Titan Machinery Inc. (NASDAQ:TITN) announced an adjusted EPS of $1.10, which was above the Zacks Consensus Estimate of 71 cents. From the same period a year ago, earnings per share were recorded at 56 cents, an increase of 96%. Growth was driven by solid results in agriculture, construction, and international markets.
According to the company’s stated earnings, Titan Machinery Inc. (NASDAQ:TITN) had its best quarterly earnings performance, with an EPS of $1.10. Profit was up 120% over the previous year.
The reporting quarter’s total revenues of $496.5 million were up 32% year over year. The revenue figure was higher than the expected $488 million.
Sales of equipment increased by 38%, to $375 million, while sales of parts increased by 19%, to $78 million. The reported quarter’s $33 million in service revenues is a 12 percent increase over the prior-year period’s $27 million in service revenues. Rental income, meanwhile, increased by 4 percent annually to $10.3 million.
Profits and Losses
Over the same period in the prior fiscal year, selling expenses increased by 30%, reaching $394 million. The company’s gross profit rose by 37% annually, reaching $103 million. Strong equipment margins, somewhat offset by revenue mix, led to a gross margin of 20.6%, up from 19.8% in the same quarter of the prior fiscal year.
The $69 million spent on operations was 20% higher than the previous fiscal year’s total. Year-on-year, our Adjusted EBITDA growth was 71%, reaching $40 million. During the fiscal year’s second quarter, the adjusted EBITDA margin increased to 8% from 6% in the same period a year ago.
Outcomes by Category
Thanks to increased sales and higher prices, agriculture saw a 59% increase in quarterly revenue, to $349 million, compared to the same period last fiscal year. The division’s pretax profit soared to $25 million, up 106% year over year.
The construction division posted $70 million in revenue during the second quarter of the fiscal year, a decline of 13% compared to the same period a year ago. Strong demand for equipment drove a 15% increase in same-store sales, partially offset by the loss of revenue from the sale of the company’s construction and consumer products stores in Montana and Wyoming, respectively. The division’s earnings before interest and taxes totaled $3.9 million, up from $2.8 million in the same period last year.
Sales from overseas increased by 3% year-over-year to $78m. The division’s pretax profit was $5.9 million, up from $0.4 million in the same period a year before.
Financial Situation
The first half of fiscal 2023 saw a net use of $21 million in cash for operations, down from the $28 million generated in the same period last year. After the close of the reported quarter, Titan Machinery Inc. (NASDAQ:TITN) had around $142 million in cash on hand. As of July 30, 2022, long-term debt was approximately $87 million, up from approximately $75 million on January 31, 2022.
Strategy for the Fiscal Year 2023
The previous forecast for Agriculture sales in fiscal 2023 was for a 37-42% growth; the new forecast from Titan Machinery Inc. (NASDAQ:TITN) is for a 50-55% increase. It is expected that the Construction division’s revenue growth will be lower by 5-10% compared to the prior fiscal year. As a result, it seems like the decrease won’t be as steep as the first estimates of 10-15%. Expect a drop in revenue of 5% or less from the International division. Profit per share for fiscal 2023 is now expected to be between $3.70 and $4.00 for Titan Machinery Inc. (NASDAQ:TITN), up from the previous forecast of $2.90 to $3.20.
Share Price
Titan Machinery Inc. (NASDAQ:TITN) stock price increased 11.6% over the past year, outpacing the industry’s 6.8% increase.
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Author Shariq Khan 
